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: JULY 31 ------------------------------------------------------ Date of reporting period: JANUARY 31, 2006 ------------------------------------------------------
ITEM 1. REPORTS TO STOCKHOLDERS. American Century Investments SEMIANNUAL REPORT [photo of man and woman] JANUARY 31, 2006 My Retirement Income Portfolio My Retirement 2015 Portfolio My Retirement 2025 Portfolio My Retirement 2035 Portfolio My Retirement 2045 Portfolio [american century investments logo and text logo] Table of Contents Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 MY RETIREMENT PORTFOLIOS Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Market Index Total Returns . . . . . . . . . . . . . . . . . . . . . . . 7 Types of Investments in Portfolios . . . . . . . . . . . . . . . . . . . 9 Underlying Fund Allocations . . . . . . . . . . . . . . . . . . . . . . 10 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . . . . 14 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . 18 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . . 22 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 25 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 OTHER INFORMATION Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . . 57 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 The opinions expressed in the Portfolio Commentary reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. 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 semiannual report for the My Retirement Portfolios for the six months ended January 31, 2006. 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 annual report dated July 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 Portfolios - Performance TOTAL RETURNS AS OF JANUARY 31, 2006 ----------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- MY RETIREMENT INCOME PORTFOLIO - -------------------------------------------------------------------------------- INVESTOR CLASS 2.47% 5.54% 7.51% 8/31/04 - -------------------------------------------------------------------------------- Institutional Class 2.58% 5.75% 7.70% 8/31/04 - -------------------------------------------------------------------------------- Advisor Class 2.35% 5.18% 7.19% 8/31/04 - -------------------------------------------------------------------------------- R Class 2.23% 5.01% 6.95% 8/31/04 - -------------------------------------------------------------------------------- MY RETIREMENT 2015 PORTFOLIO - -------------------------------------------------------------------------------- INVESTOR CLASS 4.28% 8.55% 10.97% 8/31/04 - -------------------------------------------------------------------------------- Institutional Class 4.38% 8.76% 11.16% 8/31/04 - -------------------------------------------------------------------------------- Advisor Class 4.22% 8.39% 10.73% 8/31/04 - -------------------------------------------------------------------------------- R Class 4.15% 8.12% 10.47% 8/31/04 - -------------------------------------------------------------------------------- MY RETIREMENT 2025 PORTFOLIO - -------------------------------------------------------------------------------- INVESTOR CLASS 5.84% 11.30% 13.85% 8/31/04 - -------------------------------------------------------------------------------- Institutional Class 5.95% 11.52% 14.05% 8/31/04 - -------------------------------------------------------------------------------- Advisor Class 5.76% 11.02% 13.57% 8/31/04 - -------------------------------------------------------------------------------- R Class 5.50% 10.75% 13.25% 8/31/04 - -------------------------------------------------------------------------------- RUSSELL 3000 INDEX(2) 5.35% 12.67% 15.51% -- - -------------------------------------------------------------------------------- LEHMAN BROTHERS U.S. AGGREGATE INDEX(2) 0.84% 1.80% 2.59% -- - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. -- A Reuters Company. (c)2006 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 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 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 for the funds' asset allocations as of January 31, 2006.) 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 funds' 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. (continued) - ------ 2 My Retirement Portfolios - Performance TOTAL RETURNS AS OF JANUARY 31, 2006 ----------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- MY RETIREMENT 2035 PORTFOLIO - -------------------------------------------------------------------------------- INVESTOR CLASS 7.08% 13.33% 16.30% 8/31/04 - -------------------------------------------------------------------------------- Institutional Class 7.11% 13.45% 16.51% 8/31/04 - -------------------------------------------------------------------------------- Advisor Class 6.91% 13.04% 16.04% 8/31/04 - -------------------------------------------------------------------------------- R Class 6.82% 12.76% 15.77% 8/31/04 - -------------------------------------------------------------------------------- MY RETIREMENT 2045 PORTFOLIO - -------------------------------------------------------------------------------- INVESTOR CLASS 7.57% 14.20% 17.49% 8/31/04 - -------------------------------------------------------------------------------- Institutional Class 7.68% 14.51% 17.76% 8/31/04 - -------------------------------------------------------------------------------- Advisor Class 7.49% 14.02% 17.22% 8/31/04 - -------------------------------------------------------------------------------- R Class 7.31% 13.73% 16.95% 8/31/04 - -------------------------------------------------------------------------------- RUSSELL 3000 INDEX(2) 5.35% 12.67% 15.51% -- - -------------------------------------------------------------------------------- LEHMAN BROTHERS U.S. AGGREGATE INDEX(2) 0.84% 1.80% 2.59% -- - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. -- A Reuters Company. (c)2006 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 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 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 for the funds' asset allocations as of January 31, 2006.) 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 funds' 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. (continued) - ------ 3 My Retirement Portfolios - Performance
GROWTH OF $10,000 OVER LIFE OF MY RETIREMENT INCOME PORTFOLIO -- INVESTOR CLASS
$10,000 investment made August 31, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-06-000011/growthmrpincome0603.gif)
* From 8/31/04, the Investor Class's inception date. Not annualized.
GROWTH OF $10,000 OVER LIFE OF MY RETIREMENT 2015 PORTFOLIO -- INVESTOR CLASS
$10,000 investment made August 31, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-06-000011/growthmrp20150603.gif)
* From 8/31/04, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. As interest rates rise, bond values will decline. 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 funds' 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. (continued) - ------ 4 My Retirement Portfolios - Performance
GROWTH OF $10,000 OVER LIFE OF MY RETIREMENT 2025 PORTFOLIO -- INVESTOR CLASS
$10,000 investment made August 31, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-06-000011/growthmrp20250603.gif)
* From 8/31/04, the Investor Class's inception date. Not annualized.
GROWTH OF $10,000 OVER LIFE OF MY RETIREMENT 2035 PORTFOLIO -- INVESTOR CLASS
$10,000 investment made August 31, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-06-000011/growthmrp20350603.gif)
* From 8/31/04, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. As interest rates rise, bond values will decline. 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 funds' 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. (continued) - ------ 5 My Retirement Portfolios - Performance
GROWTH OF $10,000 OVER LIFE OF MY RETIREMENT 2045 PORTFOLIO -- INVESTOR CLASS
$10,000 investment made August 31, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-06-000011/growthmrp20450603.gif)
* From 8/31/04, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. As interest rates rise, bond values will decline. 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 funds' 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. - ------ 6 My Retirement Portfolios - Portfolio Commentary PORTFOLIO MANAGERS: JEFF TYLER, GINA SANCHEZ, AND IRINA TORELLI PERFORMANCE SUMMARY The five American Century My Retirement Portfolios posted positive returns for the six months ended January 31, 2006, mirroring positive performances in domestic stock and bond markets, as well as strong international stock performance. Returns from international stocks were the biggest contributors to the portfolios' gains, while international bonds showed losses overall for the period. My Retirement Portfolios' six-month returns ranged from 2.47%* for the Income Portfolio, which is the most heavily weighted toward bonds, to 7.57% for the 2045 Portfolio, which had roughly 85% of its assets in international and domestic stocks. Because of the portfolios' broad exposure to a variety of asset classes and investment styles, a review of the economy and financial markets helps explain each Portfolio's return. MARKET ENVIRONMENT The resilient U.S. economy continued to expand, in spite of severe hurricane damage along the Gulf Coast, spiraling energy prices, and rising short-term interest rates. Crude oil futures topped $70 a barrel as Hurricane Katrina approached the Gulf Coast at the end of August. Though oil prices subsided considerably by year's end, they spiked again in January 2006, topping $68 a barrel. To combat inflation pressures, The Federal Reserve (the Fed) raised its overnight interest rate target five times MARKET INDEX TOTAL RETURNS AS OF JANUARY 31, 2006 - -------------------------------------------------------------------------------- 6 MONTHS(1) 1 YEAR - -------------------------------------------------------------------------------- U.S. STOCKS - --------------------------------------------------- Russell 1000 Index(2) 5.04% 12.07% - -------------------------------------------------------------------------------- Russell Midcap Index(2) 8.27% 21.45% - -------------------------------------------------------------------------------- Russell 2000 Index(2) 8.50% 18.89% - -------------------------------------------------------------------------------- S&P 500 Index(2) 4.68% 10.38% - -------------------------------------------------------------------------------- INTERNATIONAL STOCKS - --------------------------------------------------- MSCI EAFE Index 18.31% 22.76% - -------------------------------------------------------------------------------- U.S. FIXED INCOME - --------------------------------------------------- 10-Year U.S. Treasury Note -0.30% 0.33% - -------------------------------------------------------------------------------- 90-Day U.S. Treasury Bill Index(2) 1.86% 3.24% - -------------------------------------------------------------------------------- CSFB High-Yield Index II 1.40% 3.59% - -------------------------------------------------------------------------------- INTERNATIONAL BONDS - --------------------------------------------------- Citigroup Non-USD World Government Bond Index -1.19% -5.84% - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. -- A Reuters Company. (c)2006 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 and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. *All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. (continued) - ------ 7 My Retirement Portfolios - Portfolio Commentary (in quarter-point increments) between July 31, 2005, and January 31, 2006, pushing it from 3.25% up to 4.50%. STOCK MARKET REVIEW Overcoming the challenges of rising fuel costs and higher interest rates, U.S. corporations managed respectable earnings growth. The large-cap Russell 1000 Index returned 5.04% for the period, but trailed its smaller-cap counterparts, the Russell Midcap and Russell 2000 indices, which returned 8.27% and 8.50%, respectively. In the large-cap arena, value stocks outperformed growth stocks by a wide margin, while among mid- and small-caps, the reverse was true. Foreign stock markets outstripped their U.S. counterparts, showing double-digit returns for the six months, with emerging markets doing particularly well. The MSCI EAFE Index, a broad measure of foreign stock performance, returned 18.31%. The Japanese stock market posted double-digit gains as the country's economic outlook improved considerably. The rest of the Asian market was not far behind. European stocks posted healthy returns, courtesy of upbeat corporate profits, historically low interest rates, and increased business confidence. BOND MARKET REVIEW U.S. bonds eked out a small gain as short- and long-term yields continued to converge. The Fed's five interest rate increases during the period pushed U.S. short-term yields significantly higher: the two-year Treasury yield rose from 4.02% to 4.52% --a 50-basis-point increase. Longer-term yields also rose, but not as much. The yield on the 10-year Treasury Note gained 24 basis points, while the 30-year bond's yield gained 21 basis points. As a result, the Treasury yield curve "flattened" a little more overall, and was slightly inverted between the two-year and 10-year maturity portion. An inversion occurs when shorter-maturity yields are actually higher than longer maturity yields--in this case, two-year Treasury notes had higher yields than three- and five-year Treasurys, and the same yields as 10-year Treasurys. The Lehman Brothers U.S. Aggregate Index--a proxy for the broad U.S. bond market--returned 0.84% for the six months. Very short-term Treasurys, high-yield corporate securities, and mortgage-backed securities were the best performers, while long-term Treasurys had negative returns for the period. Money market rates continued to climb as the Fed pushed interest rates higher. The 90-day Treasury bill returned 1.86% for the six months. Foreign bonds had modest positive returns in local currency terms, but the dollar's strength in major foreign currency markets during the last four months of 2005 squelched returns for U.S. investors. Between September 1 and December 31, 2005, the U.S. dollar gained 5.5% versus the euro and 7.2% versus the Japanese yen. PORTFOLIO STRATEGY My Retirement Portfolios 2015, 2025, 2035, and 2045 seek the highest total return consistent with their particular asset mix. My Retirement Income seeks current income, with capital appreciation as a secondary objective. Each portfolio is a "fund of funds," which means it invests in other American Century (continued) - ------ 8 My Retirement Portfolios - Portfolio Commentary mutual funds to achieve its investment objective and target asset allocation. We will adjust each portfolio's target asset allocation annually. In general (with the exception of My Retirement Income) the portfolios' allocation to stocks will decrease and their allocations to bonds and money market instruments will increase each year until each portfolio's target year is reached. At that time, its asset mix will become fixed and match that of My Retirement Income. As you would expect, the higher-risk funds among My Retirement Portfolios' underlying funds offered the highest returns during the six months. Strong performances by international stock markets (especially emerging markets) made American Century Emerging Markets (+36.90%) and American Century International Growth (+19.41%) the top-performing funds among My Retirement Portfolio's basket of mutual fund investments. American Century Vista also posted a double-digit return (+13.25%) partly as a result of U.S. small- and mid-cap stocks' outperformance versus large-caps. Vista's return was also boosted by an overweight in energy stocks and a stake in foreign stocks. Meanwhile, returns from domestic stock funds such as American Century Equity Growth (+4.69%), and American Century Large Company Value (+3.95%) were pretty much in line with the 4.68% return of the broad S&P 500 Index. As is typical with lower-risk, higher-quality investments, bond fund returns TYPES OF INVESTMENTS IN PORTFOLIOS AS A % OF NET ASSETS AS OF 1/31/06 - -------------------------------------------------------------------------------- INCOME 2015 2025 2035 2045 - -------------------------------------------------------------------------------- EQUITY - ------------------- Large Cap Value 27.3% 27.9% 18.1% 20.6% 22.1% - -------------------------------------------------------------------------------- Large Cap Blend - - 11.4% 14.3% 15.3% - -------------------------------------------------------------------------------- Large Cap Growth 6.5% 8.9% 12.0% 14.0% 15.0% - -------------------------------------------------------------------------------- Large Cap Growth - International - 2.0% 3.2% 5.1% 6.6% - -------------------------------------------------------------------------------- Large Cap Blend - International 5.4% 7.1% 10.0% 10.8% 10.2% - -------------------------------------------------------------------------------- Mid Cap Growth 2.7% 4.6% 5.7% 7.5% 8.1% - -------------------------------------------------------------------------------- Small Cap Value 2.0% 2.2% 3.9% 3.9% 4.6% - -------------------------------------------------------------------------------- Real Estate 1.0% 1.5% 1.9% 2.4% 2.9% - -------------------------------------------------------------------------------- TOTAL EQUITY 44.9% 54.2% 66.2% 78.6% 84.8% - -------------------------------------------------------------------------------- FIXED INCOME - ------------------- Investment Grade 34.2% 31.5% 25.4% 18.8% 13.6% - -------------------------------------------------------------------------------- High-Yield 3.8% 3.5% 2.9% 2.0% 1.5% - -------------------------------------------------------------------------------- International 7.0% 5.2% 0.5% - - - -------------------------------------------------------------------------------- TOTAL FIXED-INCOME 45.0% 40.2% 28.8% 20.8% 15.1% - -------------------------------------------------------------------------------- MONEY MARKET 10.0% 5.5% 4.9% 0.5% - - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES 0.1% 0.1% 0.1% 0.1% 0.1% - -------------------------------------------------------------------------------- (continued) - ------ 9 My Retirement Portfolios - Portfolio Commentary were more modest. American Century Diversified Bond fund (+0.69%) reflected a lackluster performance by U.S. bonds overall during the period. American Century International Bond (-0.03%) was negatively affected by the U.S. dollar's strength in the last four months of 2005, but still outperformed the Citigroup Non-US World Government Bond Index, which returned -1.19%. The returns of each My Retirement Portfolio were consistent with their respective asset mixes. Those with the highest allocations in foreign stocks (My Retirement Portfolios 2035 and 2045) outperformed, while the portfolios with more conservative asset allocations offered more modest returns. An investment in My Retirement Portfolios entails some risks, including those associated with investing in stocks, bonds, and foreign securities. The value of the portfolios' shares will fluctuate over time. UNDERLYING FUND ALLOCATIONS -- INSTITUTIONAL CLASS AS A % OF NET ASSETS AS OF 1/31/06 - -------------------------------------------------------------------------------- INCOME 2015 2025 2035 2045 - -------------------------------------------------------------------------------- Equity Growth Fund - - 11.4% 14.3% 15.3% - -------------------------------------------------------------------------------- Income & Growth Fund 12.7% 11.9% 1.2% - - - -------------------------------------------------------------------------------- Large Company Value Fund 10.9% 11.1% 12.0% 14.2% 15.1% - -------------------------------------------------------------------------------- Real Estate Fund 1.0% 1.5% 1.9% 2.4% 2.9% - -------------------------------------------------------------------------------- Small Company Fund 2.0% 2.2% 3.9% 3.9% 4.6% - -------------------------------------------------------------------------------- Ultra Fund 6.5% 8.9% 12.0% 14.0% 15.0% - -------------------------------------------------------------------------------- Value Fund 3.7% 4.9% 4.9% 6.5% 7.0% - -------------------------------------------------------------------------------- Vista Fund 2.7% 4.6% 5.7% 7.5% 8.1% - -------------------------------------------------------------------------------- Emerging Markets Fund - 2.0% 3.2% 5.1% 6.6% - -------------------------------------------------------------------------------- International Growth Fund 5.4% 7.1% 10.0% 10.7% 10.2% - -------------------------------------------------------------------------------- Diversified Bond Fund 26.6% 24.5% 19.7% 14.7% 10.6% - -------------------------------------------------------------------------------- High-Yield Fund 3.8% 3.5% 2.9% 2.0% 1.5% - -------------------------------------------------------------------------------- Inflation-Adjusted Bond Fund 7.6% 7.0% 5.7% 4.1% 3.0% - -------------------------------------------------------------------------------- International Bond Fund 7.0% 5.2% 0.5% - - - -------------------------------------------------------------------------------- Premium Money Market Fund* 10.0% 5.5% 4.9% 0.5% - - -------------------------------------------------------------------------------- Other Assets and Liabilities 0.1% 0.1% 0.1% 0.1% 0.1% - -------------------------------------------------------------------------------- *Investor Class - ------ 10 My Retirement Portfolios - Schedule of Investments JANUARY 31, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- MY RETIREMENT INCOME PORTFOLIO MUTUAL FUNDS(1) - 99.9% DOMESTIC EQUITY FUNDS - 39.5% - -------------------------------------------------------------------------------- 111,478 Income & Growth Fund Institutional Class $ 3,476,999 - -------------------------------------------------------------------------------- 449,586 Large Company Value Fund Institutional Class 2,985,251 - -------------------------------------------------------------------------------- 10,221 Real Estate Fund Institutional Class 279,033 - -------------------------------------------------------------------------------- 50,710 Small Company Fund Institutional Class 539,554 - -------------------------------------------------------------------------------- 57,588 Ultra Fund Institutional Class 1,769,679 - -------------------------------------------------------------------------------- 143,967 Value Fund Institutional Class 1,019,286 - -------------------------------------------------------------------------------- 42,773 Vista Fund Institutional Class(2) 753,233 - -------------------------------------------------------------------------------- 10,823,035 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS - 38.0% - -------------------------------------------------------------------------------- 727,899 Diversified Bond Fund Institutional Class 7,293,548 - -------------------------------------------------------------------------------- 164,559 High-Yield Fund Institutional Class 1,051,532 - -------------------------------------------------------------------------------- 191,056 Inflation-Adjusted Bond Fund Institutional Class 2,097,795 - -------------------------------------------------------------------------------- 10,442,875 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS - 10.0% - -------------------------------------------------------------------------------- 2,741,225 Premium Money Market Fund Investor Class 2,741,225 - -------------------------------------------------------------------------------- INTERNATIONAL FIXED INCOME FUNDS - 7.0% - -------------------------------------------------------------------------------- 144,821 International Bond Fund Institutional Class 1,921,775 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS - 5.4% - -------------------------------------------------------------------------------- 137,706 International Growth Fund Institutional Class 1,488,602 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 99.9% (Cost $27,078,110) 27,417,512 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.1% 38,951 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $ 27,456,463 ================================================================================ 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. Shares Value - -------------------------------------------------------------------------------- MY RETIREMENT 2015 PORTFOLIO MUTUAL FUNDS(1) - 99.9% DOMESTIC EQUITY FUNDS - 45.1% - -------------------------------------------------------------------------------- 258,709 Income & Growth Fund Institutional Class $ 8,069,133 - -------------------------------------------------------------------------------- 1,130,396 Large Company Value Fund Institutional Class 7,505,829 - -------------------------------------------------------------------------------- 35,840 Real Estate Fund Institutional Class 978,432 - -------------------------------------------------------------------------------- 141,026 Small Company Fund Institutional Class 1,500,517 - -------------------------------------------------------------------------------- 195,957 Ultra Fund Institutional Class 6,021,759 - -------------------------------------------------------------------------------- 467,368 Value Fund Institutional Class 3,308,965 - -------------------------------------------------------------------------------- 178,282 Vista Fund Institutional Class(2) 3,139,546 - -------------------------------------------------------------------------------- 30,524,181 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS - 35.0% - -------------------------------------------------------------------------------- 1,652,178 Diversified Bond Fund Institutional Class 16,554,824 - -------------------------------------------------------------------------------- 371,734 High-Yield Fund Institutional Class 2,375,380 - -------------------------------------------------------------------------------- 431,815 Inflation-Adjusted Bond Fund Institutional Class 4,741,329 - -------------------------------------------------------------------------------- 23,671,533 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS - 9.1% - -------------------------------------------------------------------------------- 162,435 Emerging Markets Fund Institutional Class 1,380,698 - -------------------------------------------------------------------------------- 444,013 International Growth Fund Institutional Class 4,799,780 - -------------------------------------------------------------------------------- 6,180,478 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS - 5.5% - -------------------------------------------------------------------------------- 3,700,407 Premium Money Market Fund Investor Class 3,700,407 - -------------------------------------------------------------------------------- INTERNATIONAL FIXED INCOME FUNDS - 5.2% - -------------------------------------------------------------------------------- 264,255 International Bond Fund Institutional Class 3,506,664 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 99.9% (Cost $65,770,688) 67,583,263 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.1% 78,243 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $ 67,661,506 ================================================================================ 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. See Notes to Financial Statements. (continued) - ------ 11 My Retirement Portfolios - Schedule of Investments JANUARY 31, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- MY RETIREMENT 2025 PORTFOLIO MUTUAL FUNDS(1) - 99.9% DOMESTIC EQUITY FUNDS - 53.0% - -------------------------------------------------------------------------------- 516,262 Equity Growth Fund Institutional Class $ 12,452,239 - -------------------------------------------------------------------------------- 42,029 Income & Growth Fund Institutional Class 1,310,885 - -------------------------------------------------------------------------------- 1,982,369 Large Company Value Fund Institutional Class 13,162,930 - -------------------------------------------------------------------------------- 76,865 Real Estate Fund Institutional Class 2,098,415 - -------------------------------------------------------------------------------- 403,887 Small Company Fund Institutional Class 4,297,358 - -------------------------------------------------------------------------------- 429,846 Ultra Fund Institutional Class 13,209,167 - -------------------------------------------------------------------------------- 751,367 Value Fund Institutional Class 5,319,678 - -------------------------------------------------------------------------------- 354,773 Vista Fund Institutional Class(2) 6,247,553 - -------------------------------------------------------------------------------- 58,098,225 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS - 28.3% - -------------------------------------------------------------------------------- 2,162,151 Diversified Bond Fund Institutional Class 21,664,753 - -------------------------------------------------------------------------------- 495,673 High-Yield Fund Institutional Class 3,167,350 - -------------------------------------------------------------------------------- 570,909 Inflation-Adjusted Bond Fund Institutional Class 6,268,581 - -------------------------------------------------------------------------------- 31,100,684 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS - 13.2% - -------------------------------------------------------------------------------- 411,113 Emerging Markets Fund Institutional Class 3,494,461 - -------------------------------------------------------------------------------- 1,018,382 International Growth Fund Institutional Class 11,008,709 - -------------------------------------------------------------------------------- 14,503,170 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS - 4.9% - -------------------------------------------------------------------------------- 5,413,544 Premium Money Market Fund Investor Class 5,413,544 - -------------------------------------------------------------------------------- INTERNATIONAL FIXED INCOME FUNDS - 0.5% - -------------------------------------------------------------------------------- 40,947 International Bond Fund Institutional Class 543,367 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 99.9% (Cost $103,886,067) 109,658,990 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.1% 104,375 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $ 109,763,365 ================================================================================ 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. Shares Value - -------------------------------------------------------------------------------- MY RETIREMENT 2035 PORTFOLIO MUTUAL FUNDS(1) - 99.9% DOMESTIC EQUITY FUNDS - 62.8% - -------------------------------------------------------------------------------- 261,462 Equity Growth Fund Institutional Class $ 6,306,463 - -------------------------------------------------------------------------------- 941,569 Large Company Value Fund Institutional Class 6,252,018 - -------------------------------------------------------------------------------- 38,733 Real Estate Fund Institutional Class 1,057,411 - -------------------------------------------------------------------------------- 162,918 Small Company Fund Institutional Class 1,733,448 - -------------------------------------------------------------------------------- 200,328 Ultra Fund Institutional Class 6,156,079 - -------------------------------------------------------------------------------- 405,025 Value Fund Institutional Class 2,867,577 - -------------------------------------------------------------------------------- 188,998 Vista Fund Institutional Class(2) 3,328,255 - -------------------------------------------------------------------------------- 27,701,251 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS - 20.8% - -------------------------------------------------------------------------------- 642,843 Diversified Bond Fund Institutional Class 6,441,287 - -------------------------------------------------------------------------------- 140,235 High-Yield Fund Institutional Class 896,102 - -------------------------------------------------------------------------------- 164,945 Inflation-Adjusted Bond Fund Institutional Class 1,811,096 - -------------------------------------------------------------------------------- 9,148,485 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS - 15.8% - -------------------------------------------------------------------------------- 263,321 Emerging Markets Fund Institutional Class 2,238,229 - -------------------------------------------------------------------------------- 438,832 International Growth Fund Institutional Class 4,743,773 - -------------------------------------------------------------------------------- 6,982,002 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS - 0.5% - -------------------------------------------------------------------------------- 216,802 Premium Money Market Fund Investor Class 216,802 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 99.9% (Cost $41,443,149) 44,048,540 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.1% 30,449 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $ 44,078,989 ================================================================================ 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. See Notes to Financial Statements. (continued) - ------ 12 My Retirement Portfolios - Schedule of Investments JANUARY 31, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- MY RETIREMENT 2045 PORTFOLIO MUTUAL FUNDS(1) - 99.9% DOMESTIC EQUITY FUNDS - 68.0% - -------------------------------------------------------------------------------- 162,013 Equity Growth Fund Institutional Class $ 3,907,754 - -------------------------------------------------------------------------------- 582,644 Large Company Value Fund Institutional Class 3,868,756 - -------------------------------------------------------------------------------- 26,866 Real Estate Fund Institutional Class 733,442 - -------------------------------------------------------------------------------- 111,810 Small Company Fund Institutional Class 1,189,658 - -------------------------------------------------------------------------------- 124,139 Ultra Fund Institutional Class 3,814,791 - -------------------------------------------------------------------------------- 250,883 Value Fund Institutional Class 1,776,252 - -------------------------------------------------------------------------------- 117,240 Vista Fund Institutional Class(2) 2,064,596 - -------------------------------------------------------------------------------- 17,355,249 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS - 16.8% - -------------------------------------------------------------------------------- 197,527 Emerging Markets Fund Institutional Class 1,678,980 - -------------------------------------------------------------------------------- 241,409 International Growth Fund Institutional Class 2,609,631 - -------------------------------------------------------------------------------- 4,288,611 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS - 15.1% - -------------------------------------------------------------------------------- 270,867 Diversified Bond Fund Institutional Class 2,714,088 - -------------------------------------------------------------------------------- 59,438 High-Yield Fund Institutional Class 379,809 - -------------------------------------------------------------------------------- 69,076 Inflation-Adjusted Bond Fund Institutional Class 758,454 - -------------------------------------------------------------------------------- 3,852,351 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 99.9% (Cost $23,740,440) 25,496,211 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.1% 13,816 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $ 25,510,027 ================================================================================ 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. See Notes to Financial Statements. - ------ 13 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 August 1, 2005 to January 31, 2006. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century account (i.e., not a financial intermediary or retirement plan account), American Century may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is (continued) - ------ 14 Shareholder Fee Examples (Unaudited) 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 8/1/05- EXPENSE 8/1/05- EXPENSE 8/1/05 1/31/06 1/31/06 RATIO(1) 1/31/06 RATIO(2) - ---------------------------------------------------------------------------------------------------------- MY RETIREMENT INCOME PORTFOLIO SHAREHOLDER FEE EXAMPLE - ----------------------------------------------------------------------------------------------------------- ACTUAL - ----------------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,024.70 $1.02 0.20% $3.83 0.75% - ----------------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,025.80 $0.00 0.00%(3) $2.81 0.55% - ----------------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,023.50 $2.30 0.45% $5.10 1.00% - ----------------------------------------------------------------------------------------------------------- R Class $1,000 $1,022.30 $3.57 0.70% $6.37 1.25% - ----------------------------------------------------------------------------------------------------------- HYPOTHETICAL - ----------------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,024.20 $1.02 0.20% $3.82 0.75% - ----------------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,025.21 $0.00 0.00%(3) $2.80 0.55% - ----------------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,022.94 $2.29 0.45% $5.09 1.00% - ----------------------------------------------------------------------------------------------------------- R Class $1,000 $1,021.68 $3.57 0.70% $6.36 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 184, 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 of the underlying funds. 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, as well as interest, did not exceed 0.005%. (continued) - ------ 15 Shareholder Fee Examples (Unaudited) - ------------------------------------------------------------------------------------------------------------ EFFECTIVE BEGINNING ENDING EXPENSES PAID EXPENSES PAID EFFECTIVE ACCOUNT ACCOUNT DURING PERIOD(1) ANNUALIZED DURING PERIOD(2) ANNUALIZED VALUE VALUE 8/1/05- EXPENSE 8/1/05- EXPENSE 8/1/05 1/31/06 1/31/06 RATIO(1) 1/31/06 RATIO(2) - ------------------------------------------------------------------------------------------------------------ MY RETIREMENT 2015 PORTFOLIO SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------------------------ ACTUAL - ------------------------------------------------------------------------------------------------------------ Investor Class $1,000 $1,042.80 $1.03 0.20% $4.22 0.82% - ------------------------------------------------------------------------------------------------------------ Institutional Class $1,000 $1,043.80 $0.00 0.00%(3) $3.19 0.62% - ------------------------------------------------------------------------------------------------------------ Advisor Class $1,000 $1,042.20 $2.32 0.45% $5.51 1.07% - ------------------------------------------------------------------------------------------------------------ R Class $1,000 $1,041.50 $3.60 0.70% $6.79 1.32% - ------------------------------------------------------------------------------------------------------------ HYPOTHETICAL - ------------------------------------------------------------------------------------------------------------ Investor Class $1,000 $1,024.20 $1.02 0.20% $4.18 0.82% - ------------------------------------------------------------------------------------------------------------ Institutional Class $1,000 $1,025.21 $0.00 0.00%(3) $3.16 0.62% - ------------------------------------------------------------------------------------------------------------ Advisor Class $1,000 $1,022.94 $2.29 0.45% $5.45 1.07% - ------------------------------------------------------------------------------------------------------------ R Class $1,000 $1,021.68 $3.57 0.70% $6.72 1.32% - ------------------------------------------------------------------------------------------------------------ MY RETIREMENT 2025 PORTFOLIO SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------------------------ ACTUAL - ------------------------------------------------------------------------------------------------------------ Investor Class $1,000 $1,058.40 $1.04 0.20% $4.51 0.87% - ------------------------------------------------------------------------------------------------------------ Institutional Class $1,000 $1,059.50 $0.00 0.00%(3) $3.48 0.67% - ------------------------------------------------------------------------------------------------------------ Advisor Class $1,000 $1,057.60 $2.33 0.45% $5.81 1.12% - ------------------------------------------------------------------------------------------------------------ R Class $1,000 $1,055.00 $3.63 0.70% $7.10 1.37% - ------------------------------------------------------------------------------------------------------------ HYPOTHETICAL - ------------------------------------------------------------------------------------------------------------ Investor Class $1,000 $1,024.20 $1.02 0.20% $4.43 0.87% - ------------------------------------------------------------------------------------------------------------ Institutional Class $1,000 $1,025.21 $0.00 0.00%(3) $3.41 0.67% - ------------------------------------------------------------------------------------------------------------ Advisor Class $1,000 $1,022.94 $2.29 0.45% $5.70 1.12% - ------------------------------------------------------------------------------------------------------------ R Class $1,000 $1,021.68 $3.57 0.70% $6.97 1.37% - ------------------------------------------------------------------------------------------------------------ (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 184, 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 of the underlying funds. 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, as well as interest, did not exceed 0.005%. (continued) - ------ 16 Shareholder Fee Examples (Unaudited) - ------------------------------------------------------------------------------------------------------------ EFFECTIVE BEGINNING ENDING EXPENSES PAID EXPENSES PAID EFFECTIVE ACCOUNT ACCOUNT DURING PERIOD(1) ANNUALIZED DURING PERIOD(2) ANNUALIZED VALUE VALUE 8/1/05- EXPENSE 8/1/05- EXPENSE 8/1/05 1/31/06 1/31/06 RATIO(1) 1/31/06 RATIO(2) - ------------------------------------------------------------------------------------------------------------ MY RETIREMENT 2035 PORTFOLIO SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------------------------ ACTUAL - ------------------------------------------------------------------------------------------------------------ Investor Class $1,000 $1,070.80 $1.04 0.20% $4.85 0.93% - ------------------------------------------------------------------------------------------------------------ Institutional Class $1,000 $1,071.10 $0.00 0.00%(3) $3.81 0.73% - ------------------------------------------------------------------------------------------------------------ Advisor Class $1,000 $1,069.10 $2.35 0.45% $6.15 1.18% - ------------------------------------------------------------------------------------------------------------ R Class $1,000 $1,068.20 $3.65 0.70% $7.45 1.43% - ------------------------------------------------------------------------------------------------------------ HYPOTHETICAL - ------------------------------------------------------------------------------------------------------------ Investor Class $1,000 $1,024.20 $1.02 0.20% $4.74 0.93% - ------------------------------------------------------------------------------------------------------------ Institutional Class $1,000 $1,025.21 $0.00 0.00%(3) $3.72 0.73% - ------------------------------------------------------------------------------------------------------------ Advisor Class $1,000 $1,022.94 $2.29 0.45% $6.01 1.18% - ------------------------------------------------------------------------------------------------------------ R Class $1,000 $1,021.68 $3.57 0.70% $7.27 1.43% - ------------------------------------------------------------------------------------------------------------ MY RETIREMENT 2045 PORTFOLIO SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------------------------ ACTUAL - ------------------------------------------------------------------------------------------------------------ Investor Class $1,000 $1,075.70 $1.05 0.20% $4.97 0.95% - ------------------------------------------------------------------------------------------------------------ Institutional Class $1,000 $1,076.80 $0.00 0.00%(3) $3.93 0.75% - ------------------------------------------------------------------------------------------------------------ Advisor Class $1,000 $1,074.90 $2.35 0.45% $6.28 1.20% - ------------------------------------------------------------------------------------------------------------ R Class $1,000 $1,073.10 $3.66 0.70% $7.58 1.45% - ------------------------------------------------------------------------------------------------------------ HYPOTHETICAL - ------------------------------------------------------------------------------------------------------------ Investor Class $1,000 $1,024.20 $1.02 0.20% $4.84 0.95% - ------------------------------------------------------------------------------------------------------------ Institutional Class $1,000 $1,025.21 $0.00 0.00%(3) $3.82 0.75% - ------------------------------------------------------------------------------------------------------------ Advisor Class $1,000 $1,022.94 $2.29 0.45% $6.11 1.20% - ------------------------------------------------------------------------------------------------------------ R Class $1,000 $1,021.68 $3.57 0.70% $7.38 1.45% - ------------------------------------------------------------------------------------------------------------ (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 184, 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 of the underlying funds. 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, as well as interest, did not exceed 0.005%. - ------ 17 Statement of Assets and Liabilities JANUARY 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- INCOME 2015 2025 - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities in affiliates, at value (cost of $27,078,110, $65,770,688, and $103,886,067, respectively) $27,417,512 $67,583,263 $109,658,990 - --------------------------------- Cash 4,674 11,740 14,907 - --------------------------------- Distributions receivable from affiliates 38,695 77,742 103,809 - -------------------------------------------------------------------------------- 27,460,881 67,672,745 109,777,706 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Accrued administrative fees 4,078 10,417 13,602 - --------------------------------- Service and distribution fees payable 340 822 739 - -------------------------------------------------------------------------------- 4,418 11,239 14,341 - -------------------------------------------------------------------------------- NET ASSETS $27,456,463 $67,661,506 $109,763,365 ================================================================================ NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $27,030,474 $65,149,709 $102,931,859 - --------------------------------- Accumulated net investment loss (44,161) (81,731) (131,042) - --------------------------------- Undistributed net realized gain on investment transactions 130,748 780,953 1,189,625 - --------------------------------- Net unrealized appreciation on investments 339,402 1,812,575 5,772,923 - -------------------------------------------------------------------------------- $27,456,463 $67,661,506 $109,763,365 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $22,568,957 $58,793,969 $79,769,292 - --------------------------------- Shares outstanding 2,151,793 5,311,289 6,919,567 - --------------------------------- Net asset value per share $10.49 $11.07 $11.53 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $3,302,757 $3,889,506 $25,764,841 - --------------------------------- Shares outstanding 314,823 351,236 2,234,299 - --------------------------------- Net asset value per share $10.49 $11.07 $11.53 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $1,569,538 $4,867,563 $4,000,914 - --------------------------------- Shares outstanding 149,706 439,892 347,096 - --------------------------------- Net asset value per share $10.48 $11.07 $11.53 - -------------------------------------------------------------------------------- R CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $15,211 $110,468 $228,318 - --------------------------------- Shares outstanding 1,451 9,983 19,815 - --------------------------------- Net asset value per share $10.48 $11.07 $11.52 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 18 Statement of Assets and Liabilities JANUARY 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- 2035 2045 - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities in affiliates, at value (cost of $41,443,149 and $23,740,440, respectively) $44,048,540 $25,496,211 - --------------------------------------------- Cash 6,888 2,896 - --------------------------------------------- Receivable for capital shares sold -- 2,990 - --------------------------------------------- Distributions receivable from affiliates 30,140 10,605 - -------------------------------------------------------------------------------- 44,085,568 25,512,702 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Accrued administrative fees 6,140 2,508 - --------------------------------------------- Service and distribution fees payable 439 167 - -------------------------------------------------------------------------------- 6,579 2,675 - -------------------------------------------------------------------------------- NET ASSETS $44,078,989 $25,510,027 ================================================================================ NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $41,032,729 $23,540,501 - --------------------------------------------- Accumulated net investment loss (31,167) (14,332) - --------------------------------------------- Undistributed net realized gain on investment transactions 472,036 228,087 - --------------------------------------------- Net unrealized appreciation on investments 2,605,391 1,755,771 - -------------------------------------------------------------------------------- $44,078,989 $25,510,027 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $35,979,322 $14,951,040 - --------------------------------------------- Shares outstanding 3,018,845 1,240,391 - --------------------------------------------- Net asset value per share $11.92 $12.05 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $5,711,093 $9,661,502 - --------------------------------------------- Shares outstanding 478,947 801,277 - --------------------------------------------- Net asset value per share $11.92 $12.06 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $2,254,353 $882,922 - --------------------------------------------- Shares outstanding 189,160 73,280 - --------------------------------------------- Net asset value per share $11.92 $12.05 - -------------------------------------------------------------------------------- R CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $134,221 $14,563 - --------------------------------------------- Shares outstanding 11,264 1,209 - --------------------------------------------- Net asset value per share $11.92 $12.05 - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 19 Statement of Operations FOR THE SIX MONTHS ENDED JANUARY 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- INCOME 2015 2025 - -------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - --------------------------------------- Income distributions from underlying funds - affiliates $576,423 $1,334,272 $2,128,526 - -------------------------------------------------------------------------------- EXPENSES: - --------------------------------------- Administrative fees 21,406 50,393 67,258 - --------------------------------------- Service and distribution fees: - --------------------------------------- Advisor Class 1,524 2,246 2,128 - --------------------------------------- R Class 26 57 205 - --------------------------------------- Directors' fees and expenses 192 402 683 - -------------------------------------------------------------------------------- 23,148 53,098 70,274 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 553,275 1,281,174 2,058,252 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - --------------------------------------- Sale of investments in underlying funds (105,004) 127,268 275,853 - --------------------------------------- Capital gain distributions received from underlying funds 246,570 663,461 932,231 - -------------------------------------------------------------------------------- 141,566 790,729 1,208,084 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS (21,889) 513,098 2,446,932 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 119,677 1,303,827 3,655,016 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $672,952 $2,585,001 $5,713,268 ================================================================================ See Notes to Financial Statements. (continued) - ------ 20 Statement of Operations FOR THE SIX MONTHS ENDED JANUARY 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- 2035 2045 - -------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - ---------------------------------------------------- Income distributions from underlying funds - affiliates $ 795,863 $ 504,466 - -------------------------------------------------------------------------------- EXPENSES: - ---------------------------------------------------- Administrative fees 27,864 11,036 - ---------------------------------------------------- Service and distribution fees: - ---------------------------------------------------- Advisor Class 1,236 667 - ---------------------------------------------------- R Class 55 21 - ---------------------------------------------------- Directors' fees and expenses 235 142 - -------------------------------------------------------------------------------- 29,390 11,866 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 766,473 492,600 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - ---------------------------------------------------- Sale of investments in underlying funds 75,699 19,670 - ---------------------------------------------------- Capital gain distributions received from underlying funds 404,791 278,253 - -------------------------------------------------------------------------------- 480,490 297,923 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 1,300,800 791,642 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 1,781,290 1,089,565 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $2,547,763 $1,582,165 ================================================================================ See Notes to Financial Statements. - ------ 21 Statement of Changes in Net Assets SIX MONTHS ENDED JANUARY 31, 2006 (UNAUDITED) AND PERIOD ENDED JULY 31, 2005 - ------------------------------------------------------------------------------------------------ INCOME 2015 - ------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS 2006 2005(1) 2006 2005(1) - ------------------------------------------------------------------------------------------------ OPERATIONS - ------------------------------------------------------------------------------------------------ Net investment income (loss) $ 553,275 $ 274,595 $ 1,281,174 $ 472,765 - ------------------------------- Net realized gain (loss) 141,566 21,944 790,729 55,018 - ------------------------------- Change in net unrealized appreciation (depreciation) (21,889) 361,291 513,098 1,299,477 - ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations 672,952 657,830 2,585,001 1,827,260 - ------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------ From net investment income: - ------------------------------- Investor Class (527,988) (170,391) (1,493,964) (151,441) - ------------------------------- Institutional Class (83,792) (58,473) (101,538) (14,925) - ------------------------------- Advisor Class (30,732) (258) (73,173) (86) - ------------------------------- R Class (249) (148) (461) (82) - ------------------------------- From net realized gains: - ------------------------------- Investor Class (26,989) -- (57,981) -- - ------------------------------- Institutional Class (4,013) -- (3,679) -- - ------------------------------- Advisor Class (1,746) -- (3,112) -- - ------------------------------- R Class (14) -- (22) -- - ------------------------------------------------------------------------------------------------ Decrease in net assets from distributions (675,523) (229,270) (1,733,930) (166,534) - ------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS - ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from capital share transactions 7,769,287 19,261,187 22,745,137 42,404,572 - ------------------------------------------------------------------------------------------------ NET INCREASE (DECREASE) IN NET ASSETS 7,766,716 19,689,747 23,596,208 44,065,298 NET ASSETS - ------------------------------------------------------------------------------------------------ Beginning of period 19,689,747 -- 44,065,298 -- - ------------------------------------------------------------------------------------------------ End of period $27,456,463 $19,689,747 $67,661,506 $44,065,298 ================================================================================================ Accumulated undistributed net investment income (loss) $(44,161) $45,325 $(81,731) $306,231 ================================================================================================ (1) August 31, 2004 (fund inception) through July 31, 2005. See Notes to Financial Statements. (continued) - ------ 22 Statement of Changes in Net Assets SIX MONTHS ENDED JANUARY 31, 2006 (UNAUDITED) AND PERIOD ENDED JULY 31, 2005 - ------------------------------------------------------------------------------------------------ 2025 2035 - ------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS 2006 2005(1) 2006 2005(1) - ------------------------------------------------------------------------------------------------ OPERATIONS - ------------------------------------------------------------------------------------------------ Net investment income (loss) $ 2,058,252 $ 729,127 $ 766,473 $ 153,062 - ------------------------------- Net realized gain (loss) 1,208,084 120,684 480,490 27,190 - ------------------------------- Change in net unrealized appreciation (depreciation) 2,446,932 3,325,991 1,300,800 1,304,591 - ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations 5,713,268 4,175,802 2,547,763 1,484,843 - ------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------ From net investment income: - ------------------------------- Investor Class (1,904,998) (95,759) (741,605) (47,247) - ------------------------------- Institutional Class (702,282) (149,519) (121,935) (5,110) - ------------------------------- Advisor Class (63,954) (66) (33,882) (63) - ------------------------------- R Class (1,781) (62) (801) (59) - ------------------------------- From net realized gains: - ------------------------------- Investor Class (100,651) -- (29,595) -- - ------------------------------- Institutional Class (34,639) -- (4,508) -- - ------------------------------- Advisor Class (3,737) -- (1,501) -- - ------------------------------- R Class (116) -- (40) -- - ------------------------------------------------------------------------------------------------ Decrease in net assets from distributions (2,812,158) (245,406) (933,867) (52,479) - ------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS - ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from capital share transactions 31,666,780 71,265,079 17,373,634 23,659,095 - ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets 34,567,890 75,195,475 18,987,530 25,091,459 NET ASSETS - ------------------------------------------------------------------------------------------------ Beginning of period 75,195,475 -- 25,091,459 -- - ------------------------------------------------------------------------------------------------ End of period $109,763,365 $75,195,475 $44,078,989 $25,091,459 ================================================================================================ Accumulated undistributed net investment income (loss) $(131,042) $483,721 $(31,167) $100,583 ================================================================================================ (1) August 31, 2004 (fund inception) through July 31, 2005. See Notes to Financial Statements. (continued) - ------ 23 Statement of Changes in Net Assets SIX MONTHS ENDED JANUARY 31, 2006 (UNAUDITED) AND PERIOD ENDED JULY 31, 2005 - -------------------------------------------------------------------------------- 2045 - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005(1) - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income (loss) $ 492,600 $ 151,541 - -------------------------------------------- Net realized gain (loss) 297,923 (12,620) - -------------------------------------------- Change in net unrealized appreciation (depreciation) 791,642 964,129 - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 1,582,165 1,103,050 - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------- From net investment income: - -------------------------------------------- Investor Class (322,348) (11,612) - -------------------------------------------- Institutional Class (240,707) (67,702) - -------------------------------------------- Advisor Class (15,750) (65) - -------------------------------------------- R Class (228) (61) - -------------------------------------------- From net realized gains: - -------------------------------------------- Investor Class (32,689) -- - -------------------------------------------- Institutional Class (22,737) -- - -------------------------------------------- Advisor Class (1,761) -- - -------------------------------------------- R Class (29) -- - -------------------------------------------------------------------------------- Decrease in net assets from distributions (636,249) (79,440) - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions 9,531,961 14,008,540 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 10,477,877 15,032,150 NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 15,032,150 -- - -------------------------------------------------------------------------------- End of period $25,510,027 $15,032,150 ================================================================================ Accumulated undistributed net investment income (loss) $(14,332) $72,101 ================================================================================ (1) August 31, 2004 (fund inception) through July 31, 2005. See Notes to Financial Statements. - ------ 24 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 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 Income Portfolio (Income), My Retirement 2015 Portfolio (2015), My Retirement 2025 Portfolio (2025), My Retirement 2035 Portfolio (2035), and My Retirement 2045 Portfolio (2045) (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 investment objective of Income is to seek current income. Capital appreciation is a secondary objective of Income. The investment objectives of 2015, 2025, 2035, and 2045 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. 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 investment 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 investment strategy and invests primarily in securities of companies located in developed countries other than the United States. (continued) - ------ 25 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 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, nondollar-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 quarterly for Income. Distributions from net investment income, if any, are generally declared and paid annually for 2015, 2025, 2035, and 2045. 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) - ------ 26 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) DISTRIBUTION FEES -- The Board of Directors 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 six months ended January 31, 2006, 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 six months ended January 31, 2006, were as follows: - -------------------------------------------------------------------------------- INCOME 2015 2025 2035 2045 - -------------------------------------------------------------------------------- Purchases $14,974,767 $28,455,854 $37,487,233 $19,710,516 $11,140,069 - -------------------------------------------------------------------------------- Proceeds from sales $7,088,854 $5,533,008 $5,673,647 $2,108,746 $1,480,232 - -------------------------------------------------------------------------------- 4. CAPITAL SHARE TRANSACTIONS The corporation is authorized to issue 3,000,000,000 shares. Transactions in shares of the funds were as follows: - ----------------------------------------------------------------------------------------------- INCOME 2015 - ----------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------- INVESTOR CLASS - ----------------------------------------------------------------------------------------------- SIX MONTHS ENDED JANUARY 31, 2006 - ----------------------------------- Sold 912,226 $9,517,636 1,919,555 $20,989,649 - ----------------------------------- Issued in reinvestment of distributions 47,273 490,130 140,401 1,524,754 - ----------------------------------- Redeemed (289,486) (3,014,119) (474,580) (5,203,246) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 670,013 $6,993,647 1,585,376 $17,311,157 =============================================================================================== PERIOD ENDED JULY 31, 2005(1) - ----------------------------------- Sold 1,628,131 $16,739,912 3,902,409 $41,049,602 - ----------------------------------- Issued in reinvestment of distributions 15,257 157,830 14,144 148,658 - ----------------------------------- Redeemed (161,608) (1,674,191) (190,640) (2,029,041) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 1,481,780 $15,223,551 3,725,913 $39,169,219 =============================================================================================== (1) August 31, 2004 (fund inception) through July 31, 2005. (continued) - ------ 27 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ----------------------------------------------------------------------------------------------- INCOME 2015 - ----------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ----------------------------------------------------------------------------------------------- SIX MONTHS ENDED JANUARY 31, 2006 - ----------------------------------- Sold 26,995 $282,091 93,327 $1,024,306 - ----------------------------------- Issued in reinvestment of distributions 8,467 87,805 9,680 105,217 - ----------------------------------- Redeemed (22,092) (230,357) (26,983) (294,834) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 13,370 $139,539 76,024 $ 834,689 =============================================================================================== PERIOD ENDED JULY 31, 2005(1) - ----------------------------------- Sold 323,190 $3,315,596 290,244 $3,064,565 - ----------------------------------- Issued in reinvestment of distributions 5,659 58,473 1,419 14,925 - ----------------------------------- Redeemed (27,396) (284,000) (16,451) (174,484) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 301,453 $3,090,069 275,212 $2,905,006 =============================================================================================== ADVISOR CLASS - ----------------------------------------------------------------------------------------------- SIX MONTHS ENDED JANUARY 31, 2006 - ----------------------------------- Sold 138,112 $1,444,899 430,019 $4,720,463 - ----------------------------------- Issued in reinvestment of distributions 3,134 32,478 7,024 76,285 - ----------------------------------- Redeemed (81,040) (847,944) (26,785) (292,788) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 60,206 $629,433 410,258 $4,503,960 =============================================================================================== PERIOD ENDED JULY 31, 2005(1) - ----------------------------------- Sold 89,804 $942,528 32,661 $349,947 - ----------------------------------- Issued in reinvestment of distributions 25 258 8 86 - ----------------------------------- Redeemed (329) (3,435) (3,035) (32,846) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 89,500 $939,351 29,634 $317,187 =============================================================================================== R CLASS - ----------------------------------------------------------------------------------------------- SIX MONTHS ENDED JANUARY 31, 2006 - ----------------------------------- Sold 750 $7,811 8,722 $95,418 - ----------------------------------- Issued in reinvestment of distributions 25 263 44 483 - ----------------------------------- Redeemed (136) (1,406) (52) (570) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 639 $6,668 8,714 $95,331 =============================================================================================== PERIOD ENDED JULY 31, 2005(1) - ----------------------------------- Sold 803 $8,118 1,282 $13,304 - ----------------------------------- Issued in reinvestment of distributions 14 148 8 82 - ----------------------------------- Redeemed (5) (50) (21) (226) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 812 $8,216 1,269 $13,160 =============================================================================================== (1) August 31, 2004 (fund inception) through July 31, 2005. (continued) - ------ 28 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ----------------------------------------------------------------------------------------------- 2025 2035 - ----------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------- INVESTOR CLASS - ----------------------------------------------------------------------------------------------- SIX MONTHS ENDED JANUARY 31, 2006 - ---------------------------------- Sold 2,390,493 $26,876,483 1,311,677 $15,145,363 - ---------------------------------- Issued in reinvestment of distributions 176,794 1,988,938 65,522 758,749 - ---------------------------------- Redeemed (400,366) (4,529,428) (242,330) (2,795,044) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 2,166,921 $24,335,993 1,134,869 $13,109,068 =============================================================================================== PERIOD ENDED JULY 31, 2005(1) - ---------------------------------- Sold 5,016,269 $53,494,769 1,993,049 $21,476,590 - ---------------------------------- Issued in reinvestment of distributions 8,808 93,984 4,053 43,813 - ---------------------------------- Redeemed (272,431) (2,945,784) (113,126) (1,235,086) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 4,752,646 $50,642,969 1,883,976 $20,285,317 =============================================================================================== INSTITUTIONAL CLASS - ----------------------------------------------------------------------------------------------- SIX MONTHS ENDED JANUARY 31, 2006 - ---------------------------------- Sold 368,118 $4,158,935 187,683 $2,180,547 - ---------------------------------- Issued in reinvestment of distributions 65,504 736,921 10,919 126,443 - ---------------------------------- Redeemed (110,962) (1,253,228) (19,696) (227,863) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 322,660 $3,642,628 178,906 $2,079,127 =============================================================================================== PERIOD ENDED JULY 31, 2005(1) - ---------------------------------- Sold 2,033,515 $21,497,434 307,986 $3,348,138 - ---------------------------------- Issued in reinvestment of distributions 14,013 149,519 473 5,110 - ---------------------------------- Redeemed (135,889) (1,465,836) (8,418) (92,883) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 1,911,639 $20,181,117 300,041 $3,260,365 =============================================================================================== ADVISOR CLASS - ----------------------------------------------------------------------------------------------- SIX MONTHS ENDED JANUARY 31, 2006 - ---------------------------------- Sold 313,279 $3,539,573 238,770 $2,756,269 - ---------------------------------- Issued in reinvestment of distributions 6,012 67,691 3,055 35,383 - ---------------------------------- Redeemed (6,824) (77,885) (62,591) (731,720) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 312,467 $3,529,379 179,234 $2,059,932 =============================================================================================== PERIOD ENDED JULY 31, 2005(1) - ---------------------------------- Sold 38,181 $417,596 10,329 $112,516 - ---------------------------------- Issued in reinvestment of distributions 6 66 6 63 - ---------------------------------- Redeemed (3,558) (39,298) (409) (4,618) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 34,629 $378,364 9,926 $107,961 =============================================================================================== R CLASS - ----------------------------------------------------------------------------------------------- SIX MONTHS ENDED JANUARY 31, 2006 - ---------------------------------- Sold 13,934 $158,039 10,651 $124,692 - ---------------------------------- Issued in reinvestment of distributions 169 1,897 73 841 - ---------------------------------- Redeemed (104) (1,156) (2) (26) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 13,999 $158,780 10,722 $125,507 =============================================================================================== PERIOD ENDED JULY 31, 2005(1) - ---------------------------------- Sold 5,833 $62,823 537 $5,397 - ---------------------------------- Issued in reinvestment of distributions 6 62 5 59 - ---------------------------------- Redeemed (23) (256) -- (4) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 5,816 $62,629 542 $5,452 =============================================================================================== (1) August 31, 2004 (fund inception) through July 31, 2005. (continued) - ------ 29 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- 2045 - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED JANUARY 31, 2006 - -------------------------------------------- Sold 636,159 $7,434,559 - -------------------------------------------- Issued in reinvestment of distributions 29,951 349,829 - -------------------------------------------- Redeemed (72,394) (842,794) - -------------------------------------------------------------------------------- Net increase (decrease) 593,716 $6,941,594 ================================================================================ PERIOD ENDED JULY 31, 2005(1) - -------------------------------------------- Sold 775,796 $8,462,831 - -------------------------------------------- Issued in reinvestment of distributions 1,055 11,489 - -------------------------------------------- Redeemed (130,176) (1,401,282) - -------------------------------------------------------------------------------- Net increase (decrease) 646,675 $7,073,038 ================================================================================ INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED JANUARY 31, 2006 - -------------------------------------------- Sold 204,943 $2,403,261 - -------------------------------------------- Issued in reinvestment of distributions 22,555 263,444 - -------------------------------------------- Redeemed (47,475) (555,891) - -------------------------------------------------------------------------------- Net increase (decrease) 180,023 $2,110,814 ================================================================================ PERIOD ENDED JULY 31, 2005(1) - -------------------------------------------- Sold 696,708 $7,391,651 - -------------------------------------------- Issued in reinvestment of distributions 6,217 67,702 - -------------------------------------------- Redeemed (81,671) (898,297) - -------------------------------------------------------------------------------- Net increase (decrease) 621,254 $6,561,056 ================================================================================ ADVISOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED JANUARY 31, 2006 - -------------------------------------------- Sold 58,134 $676,752 - -------------------------------------------- Issued in reinvestment of distributions 1,501 17,511 - -------------------------------------------- Redeemed (19,333) (222,632) - -------------------------------------------------------------------------------- Net increase (decrease) 40,302 $471,631 ================================================================================ PERIOD ENDED JULY 31, 2005(1) - -------------------------------------------- Sold 32,973 $369,026 - -------------------------------------------- Issued in reinvestment of distributions 6 65 - -------------------------------------------- Redeemed (1) (7) - -------------------------------------------------------------------------------- Net increase (decrease) 32,978 $369,084 ================================================================================ R CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED JANUARY 31, 2006 - -------------------------------------------- Sold 677 $7,916 - -------------------------------------------- Issued in reinvestment of distributions 22 257 - -------------------------------------------- Redeemed (21) (251) - -------------------------------------------------------------------------------- Net increase (decrease) 678 $7,922 ================================================================================ PERIOD ENDED JULY 31, 2005(1) - -------------------------------------------- Sold 1,637 $17,906 - -------------------------------------------- Issued in reinvestment of distributions 6 61 - -------------------------------------------- Redeemed (1,112) (12,605) - -------------------------------------------------------------------------------- Net increase (decrease) 531 $ 5,362 ================================================================================ (1) August 31, 2004 (fund inception) through July 31, 2005. (continued) - ------ 30 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 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 January 31, 2006, 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 six months ended January 31, 2006 follows: - --------------------------------------------------------------------------------------------------------------- JULY 31, 2005 JANUARY 31, 2006 FUND/ SHARE PURCHASE SALES REALIZED DISTRIBUTIONS SHARE MARKET UNDERLYING FUND BALANCE COST COST GAIN (LOSS) RECEIVED(1) BALANCE VALUE - --------------------------------------------------------------------------------------------------------------- INCOME - --------------------------------------------------------------------------------------------------------------- Income & Growth Fund Institutional Class 63,205 $ 1,864,091 $ 340,479 $ (11,273) $167,749 111,478 $ 3,476,999 - ---------------------- Large Company Value Fund Institutional Class 255,484 1,573,235 284,889 (6,083) 89,572 449,586 2,985,251 - ---------------------- Real Estate Fund Institutional Class 36,908 426,777 1,087,643 114,764 37,824 10,221 279,033 - ---------------------- Small Company Fund Institutional Class 28,299 292,275 53,659 (3,504) 48,711 50,710 539,554 - ---------------------- Ultra Fund Institutional Class 33,757 892,343 168,380 (3,509) 5,291 57,588 1,769,679 - ---------------------- Value Fund Institutional Class 78,612 593,196 109,717 (9,695) 104,463 143,967 1,019,286 - ---------------------- Vista Fund Institutional Class(2) 26,609 321,321 65,772 (1,088) -- 42,773 753,233 - ---------------------- Diversified Bond Fund Institutional Class 683,389 3,623,293 3,236,236 (85,488) 172,126 727,899 7,293,548 - ---------------------- High-Yield Fund Institutional Class 135,990 465,954 292,120 (10,913) 36,786 164,559 1,051,532 - ---------------------- Inflation-Adjusted Bond Fund Institutional Class 77,632 1,411,487 175,941 (5,191) 40,083 191,056 2,097,795 - ---------------------- Premium Money Market Fund Investor Class 1,950,577 1,080,479 289,831 -- 44,116 2,741,225 2,741,225 - ---------------------- International Bond Fund Institutional Class 142,415 995,152 1,024,263 (82,864) 50,119 144,821 1,921,775 - ---------------------- International Growth Fund Institutional Class -- 1,435,164 64,928 (160) 26,153 137,706 1,488,602 - --------------------------------------------------------------------------------------------------------------- $14,974,767 $7,193,858 $(105,004) $822,993 $27,417,512 =============================================================================================================== (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. (continued) - ------ 31 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 5. AFFILIATED COMPANY TRANSACTIONS (CONTINUED) - --------------------------------------------------------------------------------------------------------------- JULY 31, 2005 JANUARY 31, 2006 FUND/ SHARE PURCHASE SALES REALIZED DISTRIBUTIONS SHARE MARKET UNDERLYING FUND BALANCE COST COST GAIN (LOSS) RECEIVED(1) BALANCE VALUE - --------------------------------------------------------------------------------------------------------------- 2015 - --------------------------------------------------------------------------------------------------------------- Income & Growth Fund Institutional Class 154,555 $ 3,417,381 $ 144,794 $ (2,775) $ 359,799 258,709 $ 8,069,133 - ---------------------- Large Company Value Fund Institutional Class 667,962 3,196,628 131,549 (2,071) 209,426 1,130,396 7,505,829 - ---------------------- Real Estate Fund Institutional Class 82,093 803,066 1,943,996 221,461 110,826 35,840 978,432 - ---------------------- Small Company Fund Institutional Class 83,960 629,259 26,892 (915) 124,140 141,026 1,500,517 - ---------------------- Ultra Fund Institutional Class 120,071 2,411,430 104,991 (1,220) 16,563 195,957 6,021,759 - ---------------------- Value Fund Institutional Class 291,215 1,358,156 70,786 (7,947) 313,333 467,368 3,308,965 - ---------------------- Vista Fund Institutional Class(2) 118,404 1,004,950 51,043 (384) -- 178,282 3,139,546 - ---------------------- Diversified Bond Fund Institutional Class 1,248,070 6,410,391 2,406,392 (75,841) 316,548 1,652,178 16,554,824 - ---------------------- High-Yield Fund Institutional Class 248,403 844,776 61,089 (2,224) 68,011 371,734 2,375,380 - ---------------------- Inflation-Adjusted Bond Fund Institutional Class 141,771 3,231,870 65,045 (2,453) 73,516 431,815 4,741,329 - ---------------------- Emerging Markets Fund Institutional Class 126,701 467,480 188,679 8,924 192,051 162,435 1,380,698 - ---------------------- International Growth Fund Institutional Class 289,887 1,601,039 76,589 (130) 77,954 444,013 4,799,780 - ---------------------- Premium Money Market Fund Investor Class 2,166,265 1,598,213 64,071 -- 50,031 3,700,407 3,700,407 - ---------------------- International Bond Fund Institutional Class 158,164 1,481,215 69,824 (7,157) 85,535 264,255 3,506,664 - --------------------------------------------------------------------------------------------------------------- $28,455,854 $5,405,740 $127,268 $1,997,733 $67,583,263 =============================================================================================================== (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 JANUARY 31, 2006 (UNAUDITED) 5. AFFILIATED COMPANY TRANSACTIONS (CONTINUED) - --------------------------------------------------------------------------------------------------------------- JULY 31, 2005 JANUARY 31, 2006 FUND/ SHARE PURCHASE SALES REALIZED DISTRIBUTIONS SHARE MARKET UNDERLYING FUND BALANCE COST COST GAIN (LOSS) RECEIVED(1) BALANCE VALUE - --------------------------------------------------------------------------------------------------------------- 2025 - --------------------------------------------------------------------------------------------------------------- Equity Growth Fund Institutional Class 391,775 $ 3,709,781 $ 824,593 $ 15,978 $ 113,600 516,262 $12,452,239 - ---------------------- Income & Growth Fund Institutional Class -- 1,356,275 3,621 (118) 55,374 42,029 1,310,885 - ---------------------- Large Company Value Fund Institutional Class 1,358,268 4,156,527 45,323 (1,304) 378,628 1,982,369 13,162,930 - ---------------------- Real Estate Fund Institutional Class 139,097 1,211,256 2,761,284 293,052 232,513 76,865 2,098,415 - ---------------------- Small Company Fund Institutional Class 284,592 1,266,883 18,809 (1,165) 362,319 403,887 4,297,358 - ---------------------- Ultra Fund Institutional Class 305,255 3,831,161 89,068 (713) 36,880 429,846 13,209,167 - ---------------------- Value Fund Institutional Class 493,523 1,914,356 21,749 (2,982) 513,436 751,367 5,319,678 - ---------------------- Vista Fund Institutional Class(2) 250,801 1,671,035 19,234 (447) -- 354,773 6,247,553 - ---------------------- Diversified Bond Fund Institutional Class 1,599,799 6,804,986 1,171,037 (40,536) 412,789 2,162,151 21,664,753 - ---------------------- High-Yield Fund Institutional Class 318,470 1,140,135 10,873 (461) 89,442 495,673 3,167,350 - ---------------------- Inflation-Adjusted Bond Fund Institutional Class 181,692 4,270,315 19,099 (875) 96,425 570,909 6,268,581 - ---------------------- Emerging Markets Fund Institutional Class 322,167 968,436 282,109 15,002 494,040 411,113 3,494,461 - ---------------------- International Growth Fund Institutional Class 736,854 2,881,799 111,536 432 181,450 1,018,382 11,008,709 - ---------------------- Premium Money Market Fund Investor Class 3,669,778 1,761,820 18,054 -- 80,413 5,413,544 5,413,544 - ---------------------- International Bond Fund Institutional Class -- 542,468 1,405 (10) 13,448 40,947 543,367 - --------------------------------------------------------------------------------------------------------------- $37,487,233 $5,397,794 $275,853 $3,060,757 $109,658,990 =============================================================================================================== (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 JANUARY 31, 2006 (UNAUDITED) 5. AFFILIATED COMPANY TRANSACTIONS (CONTINUED) - --------------------------------------------------------------------------------------------------------------- JULY 31, 2005 JANUARY 31, 2006 FUND/ SHARE PURCHASE SALES REALIZED DISTRIBUTIONS SHARE MARKET UNDERLYING FUND BALANCE COST COST GAIN (LOSS) RECEIVED(1) BALANCE VALUE - --------------------------------------------------------------------------------------------------------------- 2035 - --------------------------------------------------------------------------------------------------------------- Equity Growth Fund Institutional Class 151,602 $ 2,625,211 $ 57,364 $(1,175) $ 50,687 261,462 $ 6,306,463 - ---------------------- Large Company Value Fund Institutional Class 525,715 2,797,918 57,162 (1,010) 158,627 941,569 6,252,018 - ---------------------- Real Estate Fund Institutional Class 46,111 647,362 828,482 70,992 99,522 38,733 1,057,411 - ---------------------- Small Company Fund Institutional Class 94,342 727,567 16,690 (616) 129,998 162,918 1,733,448 - ---------------------- Ultra Fund Institutional Class 118,114 2,542,396 58,152 (1,922) 15,413 200,328 6,156,079 - ---------------------- Value Fund Institutional Class 229,177 1,301,789 31,026 (2,945) 243,336 405,025 2,867,577 - ---------------------- Vista Fund Institutional Class(2) 116,408 1,243,890 83,750 283 -- 188,998 3,328,255 - ---------------------- Diversified Bond Fund Institutional Class 341,334 3,089,744 58,961 (1,215) 99,354 642,843 6,441,287 - ---------------------- High-Yield Fund Institutional Class 67,923 467,682 7,482 (246) 21,167 140,235 896,102 - ---------------------- Inflation-Adjusted Bond Fund Institutional Class 38,763 1,386,125 7,378 (136) 22,584 164,945 1,811,096 - ---------------------- Emerging Markets Fund Institutional Class 178,035 888,726 227,220 12,908 281,795 263,321 2,238,229 - ---------------------- International Growth Fund Institutional Class 271,606 1,777,864 114,822 781 70,477 438,832 4,743,773 - ---------------------- Premium Money Market Fund Investor Class 487,118 214,242 484,558 -- 7,694 216,802 216,802 - --------------------------------------------------------------------------------------------------------------- $19,710,516 $2,033,047 $75,699 $1,200,654 $44,048,540 =============================================================================================================== (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. (continued) - ------ 34 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 5. AFFILIATED COMPANY TRANSACTIONS (CONTINUED) - --------------------------------------------------------------------------------------------------------------- JULY 31, 2005 JANUARY 31, 2006 FUND/ SHARE PURCHASE SALES REALIZED DISTRIBUTIONS SHARE MARKET UNDERLYING FUND BALANCE COST COST GAIN (LOSS) RECEIVED(1) BALANCE VALUE - --------------------------------------------------------------------------------------------------------------- 2045 - --------------------------------------------------------------------------------------------------------------- Equity Growth Fund Institutional Class 97,079 $ 1,605,764 $ 83,564 $(1,369) $ 32,488 162,013 $ 3,907,754 - ---------------------- Large Company Value Fund Institutional Class 336,548 1,709,273 83,515 (1,320) 101,011 582,644 3,868,756 - ---------------------- Real Estate Fund Institutional Class 27,584 401,645 415,521 29,174 69,627 26,866 733,442 - ---------------------- Small Company Fund Institutional Class 70,540 494,857 66,150 (910) 92,094 111,810 1,189,658 - ---------------------- Ultra Fund Institutional Class 75,644 1,554,549 84,684 (2,445) 9,820 124,139 3,814,791 - ---------------------- Value Fund Institutional Class 146,755 799,210 43,718 (2,731) 154,786 250,883 1,776,252 - ---------------------- Vista Fund Institutional Class(2) 74,600 761,626 77,947 15 -- 117,240 2,064,596 - ---------------------- Emerging Markets Fund Institutional Class 127,781 635,239 90,282 1,209 217,846 197,527 1,678,980 - ---------------------- International Growth Fund Institutional Class 146,045 998,015 49,729 (285) 39,823 241,409 2,609,631 - ---------------------- Diversified Bond Fund Institutional Class 147,197 1,300,224 58,302 (1,260) 42,605 270,867 2,714,088 - ---------------------- High-Yield Fund Institutional Class 29,301 199,127 7,472 (241) 9,099 59,438 379,809 - ---------------------- Inflation-Adjusted Bond Fund Institutional Class 16,707 579,970 8,154 (167) 9,669 69,076 758,454 - ---------------------- Premium Money Market Fund Investor Class 290,954 100,570 391,524 -- 3,851 -- -- - --------------------------------------------------------------------------------------------------------------- $11,140,069 $1,460,562 $19,670 $782,719 $25,496,211 =============================================================================================================== (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 book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of January 31, 2006, the components of investments for federal income tax purposes were as follows: - ------------------------------------------------------------------------------------------------ INCOME 2015 2025 2035 2045 - ------------------------------------------------------------------------------------------------ Federal tax cost of investments $27,221,032 $65,885,469 $103,955,429 $41,461,662 $23,821,483 ================================================================================================ Gross tax appreciation of investments $ 531,240 $2,357,396 $6,458,910 $2,775,799 $1,812,125 - ------------------------ Gross tax depreciation of investments (334,760) (659,602) (755,349) (188,921) (137,397) - ------------------------------------------------------------------------------------------------ Net tax appreciation (depreciation) of investments $ 196,480 $1,697,794 $5,703,561 $2,586,878 $1,674,728 ================================================================================================ 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. (continued) - ------ 35 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 7. CORPORATE EVENT Effective May 15, 2006, My Retirement Portfolios (MRP), which includes all the funds, will be repositioned and rebranded as LIVESTRONG(reg.tm) Portfolios from American Century Investments. At that time, the underlying funds in which MRP invests will be prohibited from investing in securities issued by companies assigned the Global Industry Classification Standard (GICS) for the tobacco industry. Accordingly, some of the underlying funds will be exchanged for no-tobacco (NT) tracker funds resulting in the funds realizing capital gains (losses). This could affect the tax liability of shareholders with taxable accounts, if the funds make year-end distributions. LIVESTRONG is a trademark of the Lance Armstrong Foundation. - ------ 36 My Retirement Income Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.51 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.24 0.29 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.01 0.52 - -------------------------------------------------------------------------------- Total From Investment Operations 0.25 0.81 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.26) (0.30) - ------------------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.27) (0.30) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.49 $10.51 ================================================================================ TOTAL RETURN(4) 2.47% 8.14% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.20%(6) 0.20%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.48%(6) 3.16%(6) - ------------------------------------------------------- Portfolio Turnover Rate 29% 6% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $22,569 $15,572 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 37 My Retirement Income Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.51 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.24 0.34 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.02 0.48 - -------------------------------------------------------------------------------- Total From Investment Operations 0.26 0.82 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.27) (0.31) - ------------------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.28) (0.31) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.49 $10.51 ================================================================================ TOTAL RETURN(4) 2.58% 8.31% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.68%(6) 3.36%(6) - ------------------------------------------------------- Portfolio Turnover Rate 29% 6% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $3,303 $3,169 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 38 My Retirement Income Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.51 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.24 0.18 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) (0.01) 0.61 - -------------------------------------------------------------------------------- Total From Investment Operations 0.23 0.79 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.25) (0.28) - ------------------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.26) (0.28) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.48 $10.51 ================================================================================ TOTAL RETURN(4) 2.35% 7.82% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.45%(6) 0.45%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.23%(6) 2.91%(6) - ------------------------------------------------------- Portfolio Turnover Rate 29% 6% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $1,570 $940 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 39 My Retirement Income Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.50 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.22 0.29 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.01 0.46 - -------------------------------------------------------------------------------- Total From Investment Operations 0.23 0.75 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.24) (0.25) - ------------------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.25) (0.25) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.48 $10.50 ================================================================================ TOTAL RETURN(4) 2.23% 7.61% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.70%(6) 0.70%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 3.98%(6) 2.66%(6) - ------------------------------------------------------- Portfolio Turnover Rate 29% 6% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $15 $9 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 40 My Retirement 2015 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.93 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.26 0.25 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.20 0.86 - -------------------------------------------------------------------------------- Total From Investment Operations 0.46 1.11 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.31) (0.18) - ------------------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.32) (0.18) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.07 $10.93 ================================================================================ TOTAL RETURN(4) 4.28% 11.17% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.20%(6) 0.20%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.77%(6) 2.61%(6) - ------------------------------------------------------- Portfolio Turnover Rate 10% 2% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $58,794 $40,717 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 41 My Retirement 2015 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.94 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.26 0.29 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.21 0.84 - -------------------------------------------------------------------------------- Total From Investment Operations 0.47 1.13 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.33) (0.19) - ------------------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.34) (0.19) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.07 $10.94 ================================================================================ TOTAL RETURN(4) 4.38% 11.32% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.97%(6) 2.81%(6) - ------------------------------------------------------- Portfolio Turnover Rate 10% 2% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $3,890 $3,011 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 42 My Retirement 2015 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.91 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.33 0.17 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.12 0.91 - -------------------------------------------------------------------------------- Total From Investment Operations 0.45 1.08 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.28) (0.17) - ------------------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.29) (0.17) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.07 $10.91 ================================================================================ TOTAL RETURN(4) 4.22% 10.88% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.45%(6) 0.45%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.52%(6) 2.36%(6) - ------------------------------------------------------- Portfolio Turnover Rate 10% 2% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $4,868 $323 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 43 My Retirement 2015 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.90 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.20 0.24 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.23 0.82 - -------------------------------------------------------------------------------- Total From Investment Operations 0.43 1.06 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.25) (0.16) - ------------------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.26) (0.16) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.07 $10.90 ================================================================================ TOTAL RETURN(4) 4.15% 10.59% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.70%(6) 0.70%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.27%(6) 2.11%(6) - ------------------------------------------------------- Portfolio Turnover Rate 10% 2% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $110 $14 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 44 My Retirement 2025 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.21 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.26 0.18 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.39 1.17 - -------------------------------------------------------------------------------- Total From Investment Operations 0.65 1.35 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.31) (0.14) - ------------------------------------------------------- From Net Realized Gains (0.02) -- - -------------------------------------------------------------------------------- Total Distributions (0.33) (0.14) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.53 $11.21 ================================================================================ TOTAL RETURN(4) 5.84% 13.57% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.20%(6) 0.20%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.50%(6) 2.08%(6) - ------------------------------------------------------- Portfolio Turnover Rate 6% 2% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $79,769 $53,285 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 45 My Retirement 2025 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.23 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.26 0.27 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.39 1.11 - -------------------------------------------------------------------------------- Total From Investment Operations 0.65 1.38 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.33) (0.15) - ------------------------------------------------------- From Net Realized Gains (0.02) -- - -------------------------------------------------------------------------------- Total Distributions (0.35) (0.15) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.53 $11.23 ================================================================================ TOTAL RETURN(4) 5.95% 13.74% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.70%(6) 2.28%(6) - ------------------------------------------------------- Portfolio Turnover Rate 6% 2% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $25,765 $21,458 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 46 My Retirement 2025 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.19 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.32 0.12 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.32 1.20 - -------------------------------------------------------------------------------- Total From Investment Operations 0.64 1.32 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.28) (0.13) - ------------------------------------------------------- From Net Realized Gains (0.02) -- - -------------------------------------------------------------------------------- Total Distributions (0.30) (0.13) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.53 $11.19 ================================================================================ TOTAL RETURN(4) 5.76% 13.28% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.45%(6) 0.45%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.25%(6) 1.83%(6) - ------------------------------------------------------- Portfolio Turnover Rate 6% 2% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $4,001 $388 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 47 My Retirement 2025 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.18 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.22 0.15 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.39 1.15 - -------------------------------------------------------------------------------- Total From Investment Operations 0.61 1.30 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.25) (0.12) - ------------------------------------------------------- From Net Realized Gains (0.02) -- - -------------------------------------------------------------------------------- Total Distributions (0.27) (0.12) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.52 $11.18 ================================================================================ TOTAL RETURN(4) 5.50% 13.10% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.70%(6) 0.70%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.00%(6) 1.58%(6) - ------------------------------------------------------- Portfolio Turnover Rate 6% 2% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $228 $65 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 48 My Retirement 2035 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.43 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.28 0.17 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.52 1.39 - -------------------------------------------------------------------------------- Total From Investment Operations 0.80 1.56 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.30) (0.13) - ------------------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.31) (0.13) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.92 $11.43 ================================================================================ TOTAL RETURN(4) 7.08% 15.71% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.20%(6) 0.20%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.75%(6) 1.62%(6) - ------------------------------------------------------- Portfolio Turnover Rate 7% 3% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $35,979 $21,537 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 49 My Retirement 2035 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.45 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.28 0.16 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.52 1.43 - -------------------------------------------------------------------------------- Total From Investment Operations 0.80 1.59 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.32) (0.14) - ------------------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.33) (0.14) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.92 $11.45 ================================================================================ TOTAL RETURN(4) 7.11% 15.98% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.95%(6) 1.82%(6) - ------------------------------------------------------- Portfolio Turnover Rate 7% 3% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $5,711 $3,435 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 50 My Retirement 2035 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.42 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.35 0.11 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.43 1.44 - -------------------------------------------------------------------------------- Total From Investment Operations 0.78 1.55 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.27) (0.13) - ------------------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.28) (0.13) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.92 $11.42 ================================================================================ TOTAL RETURN(4) 6.91% 15.53% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.45%(6) 0.45%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.50%(6) 1.37%(6) - ------------------------------------------------------- Portfolio Turnover Rate 7% 3% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $2,254 $113 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 51 My Retirement 2035 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.40 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.33 0.22 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.44 1.30 - -------------------------------------------------------------------------------- Total From Investment Operations 0.77 1.52 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.24) (0.12) - ------------------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.25) (0.12) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.92 $11.40 ================================================================================ TOTAL RETURN(4) 6.82% 15.24% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.70%(6) 0.70%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.25%(6) 1.12%(6) - ------------------------------------------------------- Portfolio Turnover Rate 7% 3% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $134 $6 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 52 My Retirement 2045 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.54 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.31 0.12 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.55 1.56 - -------------------------------------------------------------------------------- Total From Investment Operations 0.86 1.68 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.32) (0.14) - ------------------------------------------------------- From Net Realized Gains (0.03) -- - -------------------------------------------------------------------------------- Total Distributions (0.35) (0.14) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.05 $11.54 ================================================================================ TOTAL RETURN(4) 7.57% 16.86% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.20%(6) 0.20%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 5.10%(6) 1.83%(6) - ------------------------------------------------------- Portfolio Turnover Rate 8% 17% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $14,951 $7,465 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 53 My Retirement 2045 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.56 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.30 0.25 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.57 1.45 - -------------------------------------------------------------------------------- Total From Investment Operations 0.87 1.70 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.34) (0.14) - ------------------------------------------------------- From Net Realized Gains (0.03) -- - -------------------------------------------------------------------------------- Total Distributions (0.37) (0.14) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.06 $11.56 ================================================================================ TOTAL RETURN(4) 7.68% 17.11% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 5.30%(6) 2.03%(6) - ------------------------------------------------------- Portfolio Turnover Rate 8% 17% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $9,662 $7,181 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 54 My Retirement 2045 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.53 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.32 0.07 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.52 1.59 - -------------------------------------------------------------------------------- Total From Investment Operations 0.84 1.66 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.29) (0.13) - ------------------------------------------------------- From Net Realized Gains (0.03) -- - -------------------------------------------------------------------------------- Total Distributions (0.32) (0.13) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.05 $11.53 ================================================================================ TOTAL RETURN(4) 7.49% 16.57% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.45%(6) 0.45%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.85%(6) 1.58%(6) - ------------------------------------------------------- Portfolio Turnover Rate 8% 17% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $883 $380 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 55 My Retirement 2045 Portfolio - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.51 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------- Net Investment Income (Loss)(3) 0.30 0.18 - ------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.53 1.45 - -------------------------------------------------------------------------------- Total From Investment Operations 0.83 1.63 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------- From Net Investment Income (0.26) (0.12) - ------------------------------------------------------- From Net Realized Gains (0.03) -- - -------------------------------------------------------------------------------- Total Distributions (0.29) (0.12) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.05 $11.51 ================================================================================ TOTAL RETURN(4) 7.31% 16.38% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.70%(6) 0.70%(6) - ------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.60%(6) 1.33%(6) - ------------------------------------------------------- Portfolio Turnover Rate 8% 17% - ------------------------------------------------------- Net Assets, End of Period (in thousands) $15 $6 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) August 31, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 56 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 ratio of Institutional Class shares is lower than that of Investor Class shares; the total expense ratios of the Advisor and R Class shares is higher than that of Investor Class shares. INVESTOR CLASS shares are available for purchase in two ways: 1) directly from American Century without any commissions or other fees; or 2) through certain financial intermediaries (such as banks, broker-dealers, insurance companies and investment advisors), which may require payment of a transaction fee to the financial intermediary. 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. - ------ 57 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. - ------ 58 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The 90-DAY U.S. TREASURY BILL INDEX is derived from secondary market interest rates as published by the Federal Reserve Bank and includes three-month, six-month, and one-year instruments. The CITIGROUP NON-U.S. WORLD GOVERNMENT BOND INDEX is based on the Citigroup World Bond Index, and excludes issues denominated in U.S. dollars. The index measures the total return of government securities in major sectors of the international bond market. The CREDIT SUISSE FIRST BOSTON (CSFB) HIGH-YIELD INDEX II is designed to mirror the investable universe of the U.S. dollar-denominated high-yield debt market. Prior to October 2001, the index was known as the Donaldson, Lufkin, & Jenrette (DLJ) High-Yield Index. 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 RUSSELL 1000(reg.tm) INDEX is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest companies in the Russell 3000 Index (the 3,000 largest publicly traded U.S. companies, based on total market capitalization). The RUSSELL 2000(reg.tm) INDEX is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization. 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. The RUSSELL MIDCAP(reg.tm) INDEX measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. - ------ 59 Notes - ------ 60 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 PROFESSIONALS, 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 (c)2006 American Century Proprietary Holdings, Inc. All rights reserved. 0603 SH-SAN-48448N American Century Investments SEMIANNUAL REPORT [photo of man and woman] JANUARY 31, 2006 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 PORTFOLIOS Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Market Index Total Returns . . . . . . . . . . . . . . . . . . . . . . . 6 Types of Investments in Portfolios . . . . . . . . . . . . . . . . . . . 8 Underlying Fund Allocations . . . . . . . . . . . . . . . . . . . . . . 9 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . . . . 13 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . 15 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . . 19 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 22 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 OTHER INFORMATION Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 The opinions expressed in the Portfolio Commentary reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. 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 semi-annual report for the One Choice Portfolios(sm) for the six months ended January 31, 2006. 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 annual report dated July 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 Portfolios - Performance TOTAL RETURNS AS OF JANUARY 31, 2006 ---------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: VERY CONSERVATIVE -- INVESTOR CLASS 1.97% 4.03% 5.57% 9/30/04 - -------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: CONSERVATIVE -- INVESTOR CLASS 3.74% 7.01% 8.94% 9/30/04 - -------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: MODERATE -- INVESTOR CLASS 6.56% 11.62% 13.93% 9/30/04 - -------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: AGGRESSIVE -- INVESTOR CLASS 8.93% 15.18% 17.29% 9/30/04 - -------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: VERY AGGRESSIVE -- INVESTOR CLASS 10.51% 17.80% 20.27% 9/30/04 - -------------------------------------------------------------------------------- RUSSELL 3000 INDEX(2) 5.35% 12.67% 15.23% -- - -------------------------------------------------------------------------------- LEHMAN BROTHERS U.S. AGGREGATE INDEX(2) 0.84% 1.80% 2.55% -- - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. -- A Reuters Company. (c)2006 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 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 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 for the funds' asset allocations as of January 31, 2006.) 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 funds' 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. (continued) - ------ 2 One Choice Portfolios - Performance
GROWTH OF $10,000 OVER LIFE OF ONE CHOICE PORTFOLIO: VERY CONSERVATIVE
$10,000 investment made September 30, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-06-000011/growthocpvc0603.gif)
* From 9/30/04, the Investor Class's inception date. Not annualized.
GROWTH OF $10,000 OVER LIFE OF ONE CHOICE PORTFOLIO: CONSERVATIVE
$10,000 investment made September 30, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-06-000011/growthocpc0603.gif)
* From 9/30/04, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. As interest rates rise, bond values will decline. 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 funds' 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. (continued) - ------ 3 One Choice Portfolios - Performance
GROWTH OF $10,000 OVER LIFE OF ONE CHOICE PORTFOLIO: MODERATE
$10,000 investment made September 30, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-06-000011/growthocpm0603.gif)
* From 9/30/04, the Investor Class's inception date. Not annualized.
GROWTH OF $10,000 OVER LIFE OF ONE CHOICE PORTFOLIO: AGGRESSIVE
$10,000 investment made September 30, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-06-000011/growthocpa0603.gif)
* From 9/30/04, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. As interest rates rise, bond values will decline. 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 funds' 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. (continued) - ------ 4 One Choice Portfolios - Performance
GROWTH OF $10,000 OVER LIFE OF ONE CHOICE PORTFOLIO: VERY AGGRESSIVE
$10,000 investment made September 30, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-06-000011/growthocpva0603.gif)
* From 9/30/04, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. As interest rates rise, bond values will decline. 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 funds' 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 Portfolios - Portfolio Commentary PORTFOLIO MANAGERS: JEFF TYLER, GINA SANCHEZ, AND IRINA TORELLI PERFORMANCE SUMMARY The five American Century One Choice Portfolios posted positive returns for the six months ended January 31, 2006, mirroring positive performances in domestic stock and bond markets, as well as strong international stock performance. Returns from international stocks were the biggest contributors to the portfolios' gains, while international bonds showed losses overall for the period. The One Choice Portfolio's six-month returns ranged from 1.97%* for One Choice: Very Conservative, which is the most heavily weighted toward bonds, to 10.51% for One Choice: Very Aggressive, which had roughly 97% of its assets in international and domestic stocks. Because of the portfolios' broad exposure to a variety of asset classes and investment styles, a review of the economy and financial markets helps explain each portfolio's return. MARKET ENVIRONMENT The resilient U.S. economy continued to expand, in spite of severe hurricane damage along the Gulf Coast, spiraling energy prices, and rising short-term interest rates. Crude oil futures topped $70 a barrel as Hurricane Katrina approached the Gulf Coast at the end of August. Though oil prices subsided considerably by year's end, they spiked again in January 2006, topping $68 a barrel. To combat inflation pressures, The Federal Reserve (the Fed) raised its overnight interest rate target five times (in quarter-point increments) between July 31, 2005 MARKET INDEX TOTAL RETURNS AS OF JANUARY 31, 2006 - -------------------------------------------------------------------------------- 6 MONTHS(1) 1 YEAR - -------------------------------------------------------------------------------- U.S. STOCKS - ------------------------------------------------------ Russell 1000 Index(2) 5.04% 12.07% - -------------------------------------------------------------------------------- Russell Midcap Index(2) 8.27% 21.45% - -------------------------------------------------------------------------------- Russell 2000 Index(2) 8.50% 18.89% - -------------------------------------------------------------------------------- S&P 500 Index(2) 4.68% 10.38% - -------------------------------------------------------------------------------- INTERNATIONAL STOCKS - ------------------------------------------------------ MSCI EAFE Index 18.31% 22.76% - -------------------------------------------------------------------------------- U.S. FIXED INCOME - ------------------------------------------------------ 10-Year U.S. Treasury Note -0.30% 0.33% - -------------------------------------------------------------------------------- 90-Day U.S. Treasury Bill Index(2) 1.86% 3.24% - -------------------------------------------------------------------------------- CSFB High-Yield Index II 1.40% 3.59% - -------------------------------------------------------------------------------- INTERNATIONAL BONDS - ------------------------------------------------------ Citigroup Non-U.S. World Government Bond Index -1.19% -5.84% - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. -- A Reuters Company. (c)2006 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 and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. *Total returns for periods less than one year are not annualized. (continued) - ------ 6 One Choice Portfolios - Portfolio Commentary and January 31, 2006, pushing it from 3.25% up to 4.50%. STOCK MARKET REVIEW Overcoming the challenges of rising fuel costs and higher interest rates, U.S. corporations managed respectable earnings growth. The large-cap Russell 1000 Index returned 5.04% for the period, but trailed its smaller-cap counterparts, the Russell Midcap and Russell 2000 indices, which returned 8.27% and 8.50%, respectively. In the large-cap arena, value stocks outperformed growth stocks by a wide margin, while among mid- and small-caps, the reverse was true. Foreign stock markets outstripped their U.S. counterparts, showing double-digit returns for the six months, with emerging markets doing particularly well. The MSCI EAFE Index, a broad measure of foreign stock performance, returned 18.31%. The Japanese stock market posted double-digit gains as the country's economic prospects improved considerably. The rest of the Asian market was not far behind. European stocks posted healthy returns as the euro-zone's prospects improved, courtesy of upbeat corporate profits, historically low interest rates, and increased business confidence. BOND MARKET REVIEW U.S. bonds eked out a small gain as short- and long-term yields continued to converge. The Fed's five interest rate increases during the period pushed U.S. short-term yields significantly higher: the two-year Treasury yield rose from 4.02% to 4.52% -- a 50-basis-point increase. Longer-term yields also rose, but not as much. The yield on the 10-year Treasury Note gained 24 basis points, while the 30-year bond yield gained 21 basis points. As a result, the Treasury yield curve "flattened" a little more overall, and was slightly inverted between the two-year and 10-year maturity portion. The Lehman Brothers U.S. Aggregate Index--a proxy for the broad U.S. bond market--returned 0.84% for the six months. Very short-term Treasurys, high-yield corporate securities, and mortgage-backed securities were the best performers, while long-term Treasurys had negative returns for the period. Money market rates continued to climb as the Fed pushed interest rates higher. The 90-day U.S. Treasury Bill Index returned 1.86% for the six months. Foreign bonds had modest positive returns in local currency terms, but the dollar's strength in major foreign currency markets during the last four months of 2005 squelched returns for U.S. investors. Between September 1 and December 31, 2005, the U.S. currency gained 5.5% versus the euro and 7.2% versus the Japanese yen. PORTFOLIO STRATEGY Each One Choice Portfolio seeks the highest total return consistent with its particular asset mix. Each 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. The chart on page 9 shows the specific underlying fund allocations for each One Choice Portfolio. The neutral asset mix for each portfolio (which generally represents its long-term asset allocation strategy) is given at the end of this discussion, on page 9. As of January 31, 2006, the portfolios' asset allocations did not deviate significantly from their neutral asset mixes. Going forward, however, we may make adjustments to the asset mixes to take advantage of opportunities that we believe will help the portfolios better meet their investment objectives. As you would expect, the higher-risk funds among the One Choice Portfolios' (continued) - ------ 7 One Choice Portfolios - Portfolio Commentary underlying funds offered the highest returns during the six months. Strong performances by international stock markets (especially emerging markets) made American Century Emerging Markets (+36.63%) and American Century International Growth (+19.34%) the top-performing funds among the One Choice Portfolios' basket of mutual fund investments. American Century Vista also posted a double-digit return (+13.12%) partly as a result of U.S. small- and mid-cap stocks' outperformance versus large-caps. Vista's return was also boosted by an overweight in energy stocks and a stake in foreign stocks. Meanwhile, returns from domestic stock funds such as American Century Equity Growth (+4.53%), and American Century Large Company Value (+3.84%) were pretty much in line with the 4.68% return of the broad S&P 500 Index. As is typical with lower-risk, higher-quality investments, bond fund returns were more modest. American Century Diversified Bond fund (+0.59%) reflected a lackluster performance by U.S. bonds overall during the period. American Century International Bond (-0.19%) was negatively affected by the U.S. dollar's strength in the last four months of 2005, but still outperformed the Citigroup Non-U.S. World Government Bond Index, which returned -1.19%. The returns of each One Choice Portfolio were consistent with their respective asset mixes and objectives. Those with the highest allocations in foreign stocks--One Choice Portfolio: Very Aggressive and TYPES OF INVESTMENTS IN PORTFOLIOS AS A % OF NET ASSETS AS OF 1/31/06 - -------------------------------------------------------------------------------- VERY VERY CONSERVATIVE CONSERVATIVE MODERATE AGGRESSIVE AGGRESSIVE - -------------------------------------------------------------------------------- EQUITY - --------------- Large Cap Value 12.8% 16.9% 13.8% 11.8% 14.7% - -------------------------------------------------------------------------------- Large Cap Blend 5.4% 9.5% 16.3% 14.5% 17.4% - -------------------------------------------------------------------------------- Large Cap Blend -- International -- 6.9% 11.1% 13.5% 16.5% - -------------------------------------------------------------------------------- Large Cap Growth 2.6% 5.1% 8.3% 14.5% 17.6% - -------------------------------------------------------------------------------- Large Cap Growth -- International -- -- 4.5% 7.2% 8.1% - -------------------------------------------------------------------------------- Mid Cap Growth 2.1% 5.0% 8.2% 15.1% 17.9% - -------------------------------------------------------------------------------- Small Cap Value 1.0% 1.5% 2.0% 2.2% 2.4% - -------------------------------------------------------------------------------- Real Estate 2.2% 2.1% 2.0% 2.0% 2.0% - -------------------------------------------------------------------------------- TOTAL EQUITY 26.1% 47.0% 66.2% 80.8% 96.6% - -------------------------------------------------------------------------------- FIXED INCOME - --------------- Investment Grade 38.9% 35.3% 22.1% 12.6% 1.5% - -------------------------------------------------------------------------------- International 9.7% 7.8% 3.1% .-- -- - -------------------------------------------------------------------------------- High-Yield -- -- 2.8% 4.6% -- - -------------------------------------------------------------------------------- TOTAL FIXED-INCOME 48.6% 43.1% 28.0% 17.2% 1.5% - -------------------------------------------------------------------------------- MONEY MARKET 25.1% 9.8% 5.7% 1.9% 1.9% - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES 0.2% 0.1% 0.1% 0.1% -- - -------------------------------------------------------------------------------- (continued) - ------ 8 One Choice Portfolios - Portfolio Commentary One Choice Portfolio: Aggressive--offered the strongest returns, while One Choice Portfolio: Very Conservative, with the highest allocation in bonds and money market securities, offered the most modest return. NEUTRAL ASSET MIXES An investment in the One Choice Portfolios entails some risks, including those associated with investing in stocks, bonds, and foreign securities. The value of the portfolios' shares will fluctuate over time. The neutral asset mix for ONE CHOICE PORTFOLIO: VERY CONSERVATIVE is 25% stocks, 50% bonds, and 25% cash equivalents. This portfolio is expected to have the least short-term price volatility of the One Choice Portfolios. The neutral asset mix for ONE CHOICE PORTFOLIO: CONSERVATIVE is 45% stocks, 45% bonds, and 10% cash equivalents. The neutral asset mix for ONE CHOICE PORTFOLIO: MODERATE is 64% stocks, 30% bonds, and 6% cash equivalents. The neutral asset mix for ONE CHOICE PORTFOLIO: AGGRESSIVE is 79% stocks, 19% bonds, and 2% cash equivalents. The neutral asset mix for ONE CHOICE PORTFOLIO: VERY AGGRESSIVE is 96% stocks, 2% bonds, and 2% cash equivalents. UNDERLYING FUND ALLOCATIONS AS A % OF NET ASSETS AS OF 1/31/06 -- INVESTOR CLAS - -------------------------------------------------------------------------------- VERY VERY CONSERVATIVE CONSERVATIVE MODERATE AGGRESSIVE AGGRESSIVE - -------------------------------------------------------------------------------- Equity Growth Fund 5.4% 9.5% 16.3% 14.5% 17.4% - -------------------------------------------------------------------------------- Growth Fund 2.6% 5.1% 8.3% 14.5% 17.6% - -------------------------------------------------------------------------------- Large Company Value Fund 8.1% 10.8% 9.0% 7.8% 9.6% - -------------------------------------------------------------------------------- Real Estate Fund 2.2% 2.1% 2.0% 2.0% 2.0% - -------------------------------------------------------------------------------- Small Company Fund 1.0% 1.5% 2.0% 2.2% 2.4% - -------------------------------------------------------------------------------- Value Fund 4.7% 6.1% 4.8% 4.0% 5.1% - -------------------------------------------------------------------------------- Vista Fund 2.1% 5.0% 8.2% 15.1% 17.9% - -------------------------------------------------------------------------------- Emerging Markets Fund -- -- 4.5% 7.2% 8.1% - -------------------------------------------------------------------------------- International Growth Fund -- 6.9% 11.1% 13.5% 16.5% - -------------------------------------------------------------------------------- Diversified Bond Fund 38.9% 35.3% 22.1% 12.6% 1.5% - -------------------------------------------------------------------------------- High-Yield Fund -- -- 2.8% 4.6% -- - -------------------------------------------------------------------------------- International Bond Fund 9.7% 7.8% 3.1% -- -- - -------------------------------------------------------------------------------- Prime Money Market Fund 25.1% 9.8% 5.7% 1.9% 1.9% - -------------------------------------------------------------------------------- Other Assets and Liabilities 0.2% 0.1% 0.1% 0.1% -- - -------------------------------------------------------------------------------- - ------ 9 One Choice Portfolios - Schedule of Investments JANUARY 31, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: VERY CONSERVATIVE - -------------------------------------------------------------------------------- MUTUAL FUNDS(1) - 99.8% DOMESTIC FIXED INCOME FUNDS - 38.9% - -------------------------------------------------------------------------------- 464,089 Diversified Bond Fund Investor Class $ 4,650,171 - -------------------------------------------------------------------------------- DOMESTIC EQUITY FUNDS - 26.1% - -------------------------------------------------------------------------------- 26,829 Equity Growth Fund Investor Class 646,579 - -------------------------------------------------------------------------------- 14,737 Growth Fund Investor Class 310,951 - -------------------------------------------------------------------------------- 145,582 Large Company Value Fund Investor Class 966,664 - -------------------------------------------------------------------------------- 9,507 Real Estate Fund Investor Class 259,351 - -------------------------------------------------------------------------------- 11,672 Small Company Fund Investor Class 123,840 - -------------------------------------------------------------------------------- 79,165 Value Fund Investor Class 559,697 - -------------------------------------------------------------------------------- 14,745 Vista Fund Investor Class(2) 255,531 - -------------------------------------------------------------------------------- 3,122,613 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS - 25.1% - -------------------------------------------------------------------------------- 2,992,372 Prime Money Market Fund Investor Class 2,992,372 - -------------------------------------------------------------------------------- INTERNATIONAL FIXED INCOME FUNDS - 9.7% - -------------------------------------------------------------------------------- 87,297 International Bond Fund Investor Class 1,157,559 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 99.8% (Cost $11,846,868) 11,922,715 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.2% 23,822 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $ 11,946,537 ================================================================================ 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. Shares Value - -------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: CONSERVATIVE - -------------------------------------------------------------------------------- MUTUAL FUNDS(1) - 99.9% DOMESTIC EQUITY FUNDS - 40.1% - -------------------------------------------------------------------------------- 276,460 Equity Growth Fund Investor Class $ 6,662,686 - -------------------------------------------------------------------------------- 169,021 Growth Fund Investor Class 3,566,343 - -------------------------------------------------------------------------------- 1,143,268 Large Company Value Fund Investor Class 7,591,300 - -------------------------------------------------------------------------------- 54,541 Real Estate Fund Investor Class 1,487,878 - -------------------------------------------------------------------------------- 101,374 Small Company Fund Investor Class 1,075,578 - -------------------------------------------------------------------------------- 611,628 Value Fund Investor Class 4,324,210 - -------------------------------------------------------------------------------- 203,865 Vista Fund Investor Class(2) 3,532,980 - -------------------------------------------------------------------------------- 28,240,975 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS - 35.3% - -------------------------------------------------------------------------------- 2,479,091 Diversified Bond Fund Investor Class 24,840,493 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS - 9.8% - -------------------------------------------------------------------------------- 6,893,386 Prime Money Market Fund Investor Class 6,893,386 - -------------------------------------------------------------------------------- INTERNATIONAL FIXED INCOME FUNDS - 7.8% - -------------------------------------------------------------------------------- 416,817 International Bond Fund Investor Class 5,526,993 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS - 6.9% - -------------------------------------------------------------------------------- 447,951 International Growth Fund Investor Class 4,837,871 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 99.9% (Cost $68,676,926) 70,339,718 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.1% 94,792 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $ 70,434,510 ================================================================================ 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. See Notes to Financial Statements. (continued) - ------ 10 One Choice Portfolios - Schedule of Investments JANUARY 31, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: MODERATE - -------------------------------------------------------------------------------- MUTUAL FUNDS(1) - 99.9% DOMESTIC EQUITY FUNDS - 50.6% - -------------------------------------------------------------------------------- 1,105,321 Equity Growth Fund Investor Class $ 26,638,236 - -------------------------------------------------------------------------------- 640,479 Growth Fund Investor Class 13,514,107 - -------------------------------------------------------------------------------- 2,209,321 Large Company Value Fund Investor Class 14,669,891 - -------------------------------------------------------------------------------- 122,932 Real Estate Fund Investor Class 3,353,585 - -------------------------------------------------------------------------------- 304,513 Small Company Fund Investor Class 3,230,883 - -------------------------------------------------------------------------------- 1,109,179 Value Fund Investor Class 7,841,896 - -------------------------------------------------------------------------------- 771,353 Vista Fund Investor Class(2) 13,367,547 - -------------------------------------------------------------------------------- 82,616,145 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS - 24.9% - -------------------------------------------------------------------------------- 3,605,500 Diversified Bond Fund Investor Class 36,127,111 - -------------------------------------------------------------------------------- 720,263 High-Yield Fund Investor Class 4,602,481 - -------------------------------------------------------------------------------- 40,729,592 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS - 15.6% - -------------------------------------------------------------------------------- 883,472 Emerging Markets Fund Investor Class 7,403,495 - -------------------------------------------------------------------------------- 1,677,273 International Growth Fund Investor Class 18,114,548 - -------------------------------------------------------------------------------- 25,518,043 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS - 5.7% - -------------------------------------------------------------------------------- 9,332,809 Prime Money Market Fund Investor Class 9,332,809 - -------------------------------------------------------------------------------- INTERNATIONAL FIXED INCOME FUNDS - 3.1% - -------------------------------------------------------------------------------- 380,436 International Bond Fund Investor Class 5,044,581 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 99.9% (Cost $155,014,133) 163,241,170 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.1% 176,649 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $ 163,417,819 ================================================================================ 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. Shares Value - -------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: AGGRESSIVE - -------------------------------------------------------------------------------- MUTUAL FUNDS(1) - 99.9% DOMESTIC EQUITY FUNDS - 60.1% - -------------------------------------------------------------------------------- 701,508 Equity Growth Fund Investor Class $ 16,906,343 - -------------------------------------------------------------------------------- 807,008 Growth Fund Investor Class 17,027,869 - -------------------------------------------------------------------------------- 1,378,996 Large Company Value Fund Investor Class 9,156,533 - -------------------------------------------------------------------------------- 85,917 Real Estate Fund Investor Class 2,343,816 - -------------------------------------------------------------------------------- 240,337 Small Company Fund Investor Class 2,549,976 - -------------------------------------------------------------------------------- 664,846 Value Fund Investor Class 4,700,461 - -------------------------------------------------------------------------------- 1,016,322 Vista Fund Investor Class(2) 17,612,859 - -------------------------------------------------------------------------------- 70,297,857 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS - 20.7% - -------------------------------------------------------------------------------- 1,001,883 Emerging Markets Fund Investor Class 8,395,780 - -------------------------------------------------------------------------------- 1,464,775 International Growth Fund Investor Class 15,819,570 - -------------------------------------------------------------------------------- 24,215,350 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS - 17.2% - -------------------------------------------------------------------------------- 1,470,131 Diversified Bond Fund Investor Class 14,730,713 - -------------------------------------------------------------------------------- 844,036 High-Yield Fund Investor Class 5,393,390 - -------------------------------------------------------------------------------- 20,124,103 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS - 1.9% - -------------------------------------------------------------------------------- 2,183,327 Prime Money Market Fund Investor Class 2,183,327 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 99.9% (Cost $108,376,250) 116,820,637 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.1% 83,216 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $ 116,903,853 ================================================================================ 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. See Notes to Financial Statements. (continued) - ------ 11 One Choice Portfolios - Schedule of Investments JANUARY 31, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: VERY AGGRESSIVE - -------------------------------------------------------------------------------- MUTUAL FUNDS(1) - 100.0% DOMESTIC EQUITY FUNDS - 72.0% - -------------------------------------------------------------------------------- 351,315 Equity Growth Fund Investor Class $ 8,466,692 - -------------------------------------------------------------------------------- 404,554 Growth Fund Investor Class 8,536,089 - -------------------------------------------------------------------------------- 701,609 Large Company Value Fund Investor Class 4,658,684 - -------------------------------------------------------------------------------- 35,235 Real Estate Fund Investor Class 961,211 - -------------------------------------------------------------------------------- 109,325 Small Company Fund Investor Class 1,159,938 - -------------------------------------------------------------------------------- 348,685 Value Fund Investor Class 2,465,203 - -------------------------------------------------------------------------------- 503,147 Vista Fund Investor Class(2) 8,719,538 - -------------------------------------------------------------------------------- 34,967,355 - -------------------------------------------------------------------------------- INTERNATIONAL EQUITY FUNDS - 24.6% - -------------------------------------------------------------------------------- 470,309 Emerging Markets Fund Investor Class 3,941,189 - -------------------------------------------------------------------------------- 741,060 International Growth Fund Investor Class 8,003,448 - -------------------------------------------------------------------------------- 11,944,637 - -------------------------------------------------------------------------------- MONEY MARKET FUNDS - 1.9% - -------------------------------------------------------------------------------- 895,511 Prime Money Market Fund Investor Class 895,511 - -------------------------------------------------------------------------------- DOMESTIC FIXED INCOME FUNDS - 1.5% - -------------------------------------------------------------------------------- 73,421 Diversified Bond Fund Investor Class 735,678 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 100.0% (Cost $44,395,495) 48,543,181 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES(3) 4,839 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $ 48,548,020 ================================================================================ 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. See Notes to Financial Statements. - ------ 12 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 used to calculate the expense estimate in this example. If they were, the estimate of expenses you paid during the period would be higher. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from August 1, 2005 to January 31, 2006. 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) - ------ 13 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 8/1/05 - EXPENSE 8/1/05 - EXPENSE 8/1/05 1/31/06 1/31/06 RATIO(1) 1/31/06 RATIO(2) - -------------------------------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: VERY CONSERVATIVE - INVESTOR CLASS SHAREHOLDER FEE EXAMPLE - ---------------------- Actual $1,000 $1,019.70 $0.00 0.00%(3) $3.56 0.70% - -------------------------------------------------------------------------------------------------------- Hypothetical $1,000 $1,025.21 $0.00 0.00%(3) $3.57 0.70% - -------------------------------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: CONSERVATIVE - INVESTOR CLASS SHAREHOLDER FEE EXAMPLE - ---------------------- Actual $1,000 $1,037.40 $0.00 0.00%(3) $4.01 0.78% - -------------------------------------------------------------------------------------------------------- Hypothetical $1,000 $1,025.21 $0.00 0.00%(3) $3.97 0.78% - -------------------------------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: MODERATE - INVESTOR CLASS SHAREHOLDER FEE EXAMPLE - ---------------------- Actual $1,000 $1,065.60 $0.00 0.00%(3) $4.58 0.88% - -------------------------------------------------------------------------------------------------------- Hypothetical $1,000 $1,025.21 $0.00 0.00%(3) $4.48 0.88% - -------------------------------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: AGGRESSIVE - INVESTOR CLASS SHAREHOLDER FEE EXAMPLE - ---------------------- Actual $1,000 $1,089.30 $0.00 0.00%(3) $5.11 0.97% - -------------------------------------------------------------------------------------------------------- Hypothetical $1,000 $1,025.21 $0.00 0.00%(3) $4.94 0.97% - -------------------------------------------------------------------------------------------------------- ONE CHOICE PORTFOLIO: VERY AGGRESSIVE - INVESTOR CLASS SHAREHOLDER FEE EXAMPLE - ---------------------- Actual $1,000 $1,105.10 $0.00 0.00%(3) $5.41 1.02% - -------------------------------------------------------------------------------------------------------- Hypothetical $1,000 $1,025.21 $0.00 0.00%(3) $5.19 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 184, 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%. - ------ 14 Statement of Assets and Liabilities JANUARY 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- VERY CONSERVATIVE CONSERVATIVE MODERATE - ------------------------------------------------------------------------------- ASSETS - ---------------------------------- Investment securities in affiliates, at value (cost of $11,846,868, $68,676,926, and $155,014,133, respectively) $11,922,715 $70,339,718 $163,241,170 - ---------------------------------- Cash 71 -- 3,042 - ---------------------------------- Receivable for capital shares sold -- -- 15,000 - ---------------------------------- Distributions receivable from affiliates 23,751 97,439 158,607 - ------------------------------------------------------------------------------- 11,946,537 70,437,157 163,417,819 - ------------------------------------------------------------------------------- LIABILITIES - ---------------------------------- Disbursements in excess of demand deposit cash -- 2,647 -- - ------------------------------------------------------------------------------- NET ASSETS $11,946,537 $70,434,510 $163,417,819 =============================================================================== INVESTOR CLASS CAPITAL - ---------------------------------- SHARES, $0.01 PAR VALUE - ---------------------------------- Outstanding 1,170,894 6,597,569 14,322,597 =============================================================================== NET ASSET VALUE PER SHARE $10.20 $10.68 $11.41 =============================================================================== NET ASSETS CONSIST OF: - ---------------------------------- Capital (par value and paid-in surplus) $11,910,269 $68,475,912 $154,119,909 - ---------------------------------- Accumulated net investment loss (26,879) (69,589) (108,782) - ---------------------------------- Accumulated undistributed net realized gain (loss) on investment transactions (12,700) 365,395 1,179,655 - ---------------------------------- Net unrealized appreciation on investments 75,847 1,662,792 8,227,037 - ------------------------------------------------------------------------------- $11,946,537 $70,434,510 $163,417,819 =============================================================================== See Notes to Financial Statements. (continued) - ------ 15 Statement of Assets and Liabilities JANUARY 31, 2006 (UNAUDITED) - ------------------------------------------------------------------------------ AGGRESSIVE VERY AGGRESSIVE - ------------------------------------------------------------------------------ ASSETS - ------------------------------------------------------------------------------ Investment securities in affiliates, at value (cost of $108,376,250 and $44,395,495, respectively) $116,820,637 $48,543,181 - ---------------------------------- Cash 87 66 - ---------------------------------- Receivable for capital shares sold 5,000 -- - ---------------------------------- Distributions receivable from affiliates 78,129 4,773 - ------------------------------------------------------------------------------ NET ASSETS $116,903,853 $48,548,020 ============================================================================== INVESTOR CLASS CAPITAL - ------------------------------------------------------------------------------ SHARES, $0.01 PAR VALUE - ------------------------------------------------------------------------------ Outstanding 9,780,665 3,915,376 ============================================================================== NET ASSET VALUE PER SHARE $11.95 $12.40 ============================================================================== NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------ Capital (par value and paid-in surplus) $107,605,783 $44,010,568 - ---------------------------------- Accumulated net investment loss (55,688) (14,950) - ---------------------------------- Undistributed net realized gain on investment transactions 909,371 404,716 - ---------------------------------- Net unrealized appreciation on investments 8,444,387 4,147,686 - ------------------------------------------------------------------------------ $116,903,853 $48,548,020 ============================================================================== See Notes to Financial Statements. - ------ 16 Statement of Operations FOR THE SIX MONTHS ENDED JANUARY 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- VERY CONSERVATIVE CONSERVATIVE MODERATE - -------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - --------------------------------- Income distributions from underlying funds - affiliates $244,541 $1,202,859 $2,933,927 - -------------------------------------------------------------------------------- EXPENSES: - --------------------------------- Directors' fees and expenses 92 411 909 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 244,449 1,202,448 2,933,018 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - --------------------------------- Sale of investments in underlying funds (47,953) (28,698) (21,876) - --------------------------------- Capital gain distributions received from underlying funds 69,108 446,864 1,248,581 - -------------------------------------------------------------------------------- 21,155 418,166 1,226,705 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS (37,714) 794,123 4,997,698 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) (16,559) 1,212,289 6,224,403 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $227,890 $2,414,737 $9,157,421 ================================================================================ See Notes to Financial Statements. (continued) - ------ 17 Statement of Operations FOR THE SIX MONTHS ENDED JANUARY 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- VERY AGGRESSIVE AGGRESSIVE - -------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - --------------------------------- Income distributions from underlying funds - affiliates $2,083,324 $ 812,510 - -------------------------------------------------------------------------------- EXPENSES: - --------------------------------- Directors' fees and expenses 610 220 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 2,082,714 812,290 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - --------------------------------- Sale of investments in underlying funds (12,546) (9,413) - --------------------------------- Capital gain distributions received from underlying funds 953,710 445,127 - -------------------------------------------------------------------------------- 941,164 435,714 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS 5,570,721 2,794,354 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 6,511,885 3,230,068 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $8,594,599 $4,042,358 ================================================================================ See Notes to Financial Statements. - ------ 18 Statement of Changes in Net Assets SIX MONTHS ENDED JANUARY 31, 2006 (UNAUDITED) AND PERIOD ENDED JULY 31, 2005 - -------------------------------------------------------------------------------------------------- VERY CONSERVATIVE CONSERVATIVE - -------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005(1) 2006 2005(1) - -------------------------------------------------------------------------------------------------- OPERATIONS - --------------------------------- Net investment income (loss) $ 244,449 $ 128,039 $ 1,202,448 $ 446,428 - --------------------------------- Net realized gain (loss) 21,155 (21,506) 418,166 1,314 - --------------------------------- Change in net unrealized appreciation (depreciation) (37,714) 113,561 794,123 868,669 - -------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 227,890 220,094 2,414,737 1,316,411 - -------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - --------------------------------- From net investment income (296,101) (103,266) (1,353,919) (364,546) - --------------------------------- From net realized gains (12,349) -- (54,085) -- - -------------------------------------------------------------------------------------------------- Decrease in net assets from distributions (308,450) (103,266) (1,408,004) (364,546) - -------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - --------------------------------- Proceeds from shares sold 4,539,467 12,311,886 33,418,847 47,353,379 - --------------------------------- Proceeds from reinvestment of distributions 295,151 101,931 1,365,938 357,741 - --------------------------------- Payments for shares redeemed (2,939,707) (2,398,459) (8,540,212) (5,479,781) - -------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions 1,894,911 10,015,358 26,244,573 42,231,339 - -------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 1,814,351 10,132,186 27,251,306 43,183,204 - -------------------------------------------------------------------------------------------------- NET ASSETS - --------------------------------- Beginning of period 10,132,186 -- 43,183,204 -- - -------------------------------------------------------------------------------------------------- End of period $11,946,537 $10,132,186 $70,434,510 $43,183,204 ================================================================================================== Accumulated undistributed net investment income (loss) $(26,879) $24,773 $(69,589) $81,882 ================================================================================================== TRANSACTIONS IN SHARES OF THE FUND - --------------------------------- Sold 443,892 1,212,135 3,180,713 4,591,865 - --------------------------------- Issued in reinvestment of distributions 29,119 10,054 130,089 34,607 - --------------------------------- Redeemed (288,255) (236,051) (810,413) (529,292) - -------------------------------------------------------------------------------------------------- Net increase (decrease) in shares of the fund 184,756 986,138 2,500,389 4,097,180 ================================================================================================== (1) September 30, 2004 (fund inception) through July 31, 2005. See Notes to Financial Statements. (continued) - ------ 19 Statement of Changes in Net Assets SIX MONTHS ENDED JANUARY 31, 2006 (UNAUDITED) AND PERIOD ENDED JULY 31, 2005 - -------------------------------------------------------------------------------------------------- MODERATE AGGRESSIVE - -------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005(1) 2006 2005(1) OPERATIONS - --------------------------------- Net investment income (loss) $ 2,933,018 $ 726,877 $ 2,082,714 $ 371,007 - --------------------------------- Net realized gain (loss) 1,226,705 38,414 941,164 28,692 - --------------------------------- Change in net unrealized appreciation (depreciation) 4,997,698 3,229,339 5,570,721 2,873,666 - -------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 9,157,421 3,994,630 8,594,599 3,273,365 - -------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - --------------------------------- From net investment income (3,177,002) (591,675) (2,399,223) (110,186) - --------------------------------- From net realized gains (85,464) -- (60,485) -- - -------------------------------------------------------------------------------------------------- Decrease in net assets from distributions (3,262,466) (591,675) (2,459,708) (110,186) - -------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - --------------------------------- Proceeds from shares sold 67,687,272 100,255,773 51,302,693 66,267,797 - --------------------------------- Proceeds from reinvestment of distributions 3,148,042 569,483 2,416,462 109,534 - --------------------------------- Payments for shares redeemed (10,625,082) (6,915,579) (7,573,333) (4,917,370) - -------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions 60,210,232 93,909,677 46,145,822 61,459,961 - -------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 66,105,187 97,312,632 52,280,713 64,623,140 - -------------------------------------------------------------------------------------------------- NET ASSETS - --------------------------------- Beginning of period 97,312,632 -- 64,623,140 -- - -------------------------------------------------------------------------------------------------- End of period $163,417,819 $97,312,632 $116,903,853 $64,623,140 ================================================================================================== Accumulated undistributed net investment income (loss) $(108,782) $135,202 $(55,688) $260,821 ================================================================================================== TRANSACTIONS IN SHARES OF THE FUND - --------------------------------- Sold 6,124,196 9,472,568 4,491,090 6,188,212 - --------------------------------- Issued in reinvestment of distributions 284,515 53,589 210,677 10,324 - --------------------------------- Redeemed (959,892) (652,379) (662,642) (456,996) - -------------------------------------------------------------------------------------------------- Net increase (decrease) in shares of the fund 5,448,819 8,873,778 4,039,125 5,741,540 ================================================================================================== (1) September 30, 2004 (fund inception) through July 31, 2005. See Notes to Financial Statements. (continued) - ------ 20 Statement of Changes in Net Assets SIX MONTHS ENDED JANUARY 31, 2006 (UNAUDITED) AND PERIOD ENDED JULY 31, 2005 - -------------------------------------------------------------------------------- VERY AGGRESSIVE - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005(1) - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income (loss) $ 812,290 $ 84,733 - ----------------------------------------------- Net realized gain (loss) 435,714 (4,586) - ----------------------------------------------- Change in net unrealized appreciation (depreciation) 2,794,354 1,353,332 - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 4,042,358 1,433,479 - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------- From net investment income (877,223) (34,750) - ----------------------------------------------- From net realized gains (26,412) -- - -------------------------------------------------------------------------------- Decrease in net assets from distributions (903,635) (34,750) - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Proceeds from shares sold 23,190,655 27,501,415 - ----------------------------------------------- Proceeds from reinvestment of distributions 882,420 34,434 - ----------------------------------------------- Payments for shares redeemed (4,312,992) (3,285,364) - -------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions 19,760,083 24,250,485 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 22,898,806 25,649,214 - -------------------------------------------------------------------------------- NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 25,649,214 -- - -------------------------------------------------------------------------------- End of period $48,548,020 $25,649,214 ================================================================================ Accumulated undistributed net investment income (loss) $(14,950) $49,983 ================================================================================ TRANSACTIONS IN SHARES OF THE FUND - -------------------------------------------------------------------------------- Sold 1,971,289 2,531,600 - ----------------------------------------------- Issued in reinvestment of distributions 74,592 3,203 - ----------------------------------------------- Redeemed (363,971) (301,337) - -------------------------------------------------------------------------------- Net increase (decrease) in shares of the fund 1,681,910 2,233,466 ================================================================================ (1) September 30, 2004 (fund inception) through July 31, 2005. See Notes to Financial Statements. - ------ 21 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 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 investment 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 investment 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, nondollar-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. 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 (continued) - ------ 22 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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., 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) - ------ 23 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 3. INVESTMENT TRANSACTIONS Investment transactions for the six months ended January 31, 2006, were as follows: - -------------------------------------------------------------------------------- VERY VERY CONSERVATIVE CONSERVATIVE MODERATE AGGRESSIVE AGGRESSIVE - -------------------------------------------------------------------------------- Purchases $4,411,073 $27,326,832 $62,089,392 $47,366,485 $20,606,243 - -------------------------------------------------------------------------------- Proceeds from sales $2,517,677 $880,154 $1,036,211 $655,458 $493,648 - -------------------------------------------------------------------------------- 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 January 31, 2006, 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 six months ended January 31, 2006 follows: JULY 31, 2005 JANUARY 31, 2006 FUND/ SHARE PURCHASE SALES REALIZED DISTRIBUTIONS SHARE MARKET UNDERLYING FUND BALANCE COST COST GAIN (LOSS) RECEIVED(1) BALANCE VALUE - ------------------------------------------------------------------------------------------------------------- VERY CONSERVATIVE - ------------------------------------------------------------------------------------------------------------- Diversified Bond Fund Investor Class 391,418 $1,727,601 $1,005,629 $(20,300) $ 95,315 464,089 $ 4,650,171 - ---------------------- Equity Growth Fund Investor Class 22,761 219,806 127,993 (1,756) 5,811 26,829 646,579 - ---------------------- Growth Fund Investor Class 11,903 133,349 77,328 (459) 1,261 14,737 310,951 - ---------------------- Large Company Value Fund Investor Class 124,165 329,302 190,031 (2,226) 30,328 145,582 966,664 - ---------------------- Real Estate Fund Investor Class 8,158 87,072 51,894 (1,044) 29,285 9,507 259,351 - ---------------------- Small Company Fund Investor Class 9,958 43,724 26,115 (722) 11,540 11,672 123,840 - ---------------------- Value Fund Investor Class 67,880 196,686 115,485 (3,149) 60,419 79,165 559,697 - ---------------------- Vista Fund Investor Class(2) 12,240 89,322 51,923 (379) -- 14,745 255,531 - ---------------------- Prime Money Market Fund Investor Class 2,516,885 1,104,247 628,760 -- 50,682 2,992,372 2,992,372 - ---------------------- International Bond Fund Investor Class 72,312 479,964 290,472 (17,918) 29,008 87,297 1,157,559 - ------------------------------------------------------------------------------------------------------------- $4,411,073 $2,565,630 $(47,953) $313,649 $11,922,715 ============================================================================================================= (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. (continued) - ------ 24 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 4. AFFILIATED COMPANY TRANSACTIONS (CONTINUED) JULY 31, 2005 JANUARY 31, 2006 FUND/ SHARE PURCHASE SALES REALIZED DISTRIBUTIONS SHARE MARKET UNDERLYING FUND BALANCE COST COST GAIN (LOSS) RECEIVED(1) BALANCE VALUE - ----------------------------------------------------------------------------------------------------------- CONSERVATIVE - ----------------------------------------------------------------------------------------------------------- Equity Growth Fund Investor Class 173,586 $ 2,458,827 $ 80,239 $ (896) $ 53,362 276,460 $ 6,662,686 - -------------------- Growth Fund Investor Class 99,540 1,456,404 48,302 (630) 12,886 169,021 3,566,343 - -------------------- Large Company Value Fund Investor Class 723,578 2,847,285 92,894 (1,937) 211,677 1,143,268 7,591,300 - -------------------- Real Estate Fund Investor Class 34,730 545,301 19,070 (1,299) 149,087 54,541 1,487,878 - -------------------- Small Company Fund Investor Class 63,454 409,422 13,908 (640) 89,597 101,374 1,075,578 - -------------------- Value Fund Investor Class 388,674 1,685,559 60,573 (6,956) 417,630 611,628 4,324,210 - -------------------- Vista Fund Investor Class(2) 125,808 1,251,761 41,505 (471) -- 203,865 3,532,980 - -------------------- Diversified Bond Fund Investor Class 1,527,420 9,906,653 328,861 (8,415) 419,252 2,479,091 24,840,493 - -------------------- Prime Money Market Fund Investor Class 4,247,877 2,733,425 87,916 -- 97,123 6,893,386 6,893,386 - -------------------- International Bond Fund Investor Class 246,436 2,370,159 81,214 (7,298) 127,503 416,817 5,526,993 - -------------------- International Growth Fund Investor Class 283,278 1,662,036 54,370 (156) 71,606 447,951 4,837,871 - ----------------------------------------------------------------------------------------------------------- $27,326,832 $ 908,852 $(28,698) $1,649,723 $ 70,339,718 =========================================================================================================== MODERATE - ----------------------------------------------------------------------------------------------------------- Equity Growth Fund Investor Class 685,502 $ 9,934,284 $ 166,848 $ (1,055) $ 206,285 1,105,321 $ 26,638,236 - -------------------- Growth Fund Investor Class 381,958 5,357,521 88,699 (616) 46,932 640,479 13,514,107 - -------------------- Large Company Value Fund Investor Class 1,386,210 5,508,262 93,415 (171) 393,234 2,209,321 14,669,891 - -------------------- Real Estate Fund Investor Class 77,163 1,240,323 21,317 (522) 321,011 122,932 3,353,585 - -------------------- Small Company - ----------------- Fund Investor Class 187,605 1,241,338 21,311 (579) 257,525 304,513 3,230,883 - -------------------- Value Fund Investor Class 700,896 3,024,212 55,630 (3,825) 726,159 1,109,179 7,841,896 - -------------------- Vista Fund Investor Class(2) 474,302 4,736,724 78,840 (1,122) -- 771,353 13,367,547 - -------------------- Diversified Bond Fund Investor Class 2,193,900 14,461,621 244,751 (6,490) 588,567 3,605,500 36,127,111 - -------------------- High-Yield Fund Investor Class 433,575 1,862,625 32,419 (1,332) 123,373 720,263 4,602,481 - -------------------- Emerging Markets Fund Investor Class 567,697 2,483,524 41,766 (308) 1,020,798 883,472 7,403,495 - -------------------- International Growth Fund Investor Class 1,050,840 6,289,616 104,359 (756) 257,879 1,677,273 18,114,548 - -------------------- Prime Money Market Fund Investor Class 5,669,078 3,725,883 62,152 -- 127,276 9,332,809 9,332,809 - -------------------- International Bond Fund Investor Class 218,795 2,223,459 46,580 (5,100) 113,469 380,436 5,044,581 - ----------------------------------------------------------------------------------------------------------- $62,089,392 $1,058,087 $(21,876) $4,182,508 $163,241,170 =========================================================================================================== (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. (continued) - ------ 25 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 4. AFFILIATED COMPANY TRANSACTIONS (CONTINUED) JULY 31, 2005 JANUARY 31, 2006 FUND/ SHARE PURCHASE SALES REALIZED DISTRIBUTIONS SHARE MARKET UNDERLYING FUND BALANCE COST COST GAIN (LOSS) RECEIVED(1) BALANCE VALUE - ---------------------------------------------------------------------------------------------------------- AGGRESSIVE - ---------------------------------------------------------------------------------------------------------- Equity Growth Fund Investor Class 408,491 $ 6,868,003 $ 51,153 $ (119) $ 128,756 701,508 $ 16,906,343 - -------------------- Growth Fund Investor Class 458,526 7,159,635 53,275 (63) 58,643 807,008 17,027,869 - -------------------- Large Company Value Fund Investor Class 815,588 3,735,308 27,938 (196) 240,825 1,378,996 9,156,533 - -------------------- Real Estate Fund Investor Class 50,678 945,877 7,261 (177) 219,745 85,917 2,343,816 - -------------------- Small Company Fund Investor Class 138,854 1,065,328 8,122 (195) 200,076 240,337 2,549,976 - -------------------- Value Fund Investor Class 397,845 1,958,643 15,919 (1,365) 428,340 664,846 4,700,461 - -------------------- Vista Fund Investor Class(2) 592,325 6,686,082 49,549 116 -- 1,016,322 17,612,859 - -------------------- Emerging Markets Fund Investor Class 606,944 3,078,935 23,388 (515) 1,138,891 1,001,883 8,395,780 - -------------------- International Growth Fund Investor Class 863,460 5,975,816 44,285 107 222,241 1,464,775 15,819,570 - -------------------- Diversified Bond Fund Investor Class 847,859 6,310,570 47,308 (1,161) 231,802 1,470,131 14,730,713 - -------------------- High-Yield Fund Investor Class 475,460 2,368,427 18,134 (542) 138,989 844,036 5,393,390 - -------------------- Prime Money Market Fund Investor Class 1,242,908 947,455 7,036 -- 28,726 2,183,327 2,183,327 - -------------------- International Bond Fund Investor Class 3,550 266,406 314,636 (8,436) -- -- -- - ---------------------------------------------------------------------------------------------------------- $47,366,485 $ 668,004 $(12,546) $3,037,034 $116,820,637 ========================================================================================================== VERY AGGRESSIVE - ---------------------------------------------------------------------------------------------------------- Equity Growth Fund Investor Class 197,296 $ 3,657,808 $ 67,036 $ (825) $ 62,972 351,315 $ 8,466,692 - -------------------- Growth Fund Investor Class 222,764 3,787,334 70,389 (1,058) 28,733 404,554 8,536,089 - -------------------- Large Company Value Fund Investor Class 397,942 2,034,815 36,703 (687) 118,664 701,609 4,658,684 - -------------------- Real Estate Fund Investor Class 20,073 410,765 7,878 (354) 87,355 35,235 961,211 - -------------------- Small Company Fund Investor Class 60,748 514,715 9,755 (413) 88,666 109,325 1,159,938 - -------------------- Value Fund Investor Class 198,919 1,107,082 21,690 (2,428) 216,747 348,685 2,465,203 - -------------------- Vista Fund Investor Class(2) 282,778 3,529,900 64,780 (107) -- 503,147 8,719,538 - -------------------- Emerging Markets Fund Investor Class 275,063 1,545,630 28,586 (606) 521,511 470,309 3,941,189 - -------------------- International Growth Fund Investor Class 421,740 3,221,072 58,958 99 109,899 741,060 8,003,448 - -------------------- Prime Money Market Fund Investor Class 490,724 412,243 7,456 -- 11,422 895,511 895,511 - -------------------- Diversified Bond Fund Investor Class 46,535 275,543 5,289 (125) 11,668 73,421 735,678 - -------------------- International Bond Fund Investor Class 1,119 109,336 124,541 (2,909) -- -- -- - ---------------------------------------------------------------------------------------------------------- $20,606,243 $ 503,061 $ (9,413) $1,257,637 $ 48,543,181 ========================================================================================================== (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. (continued) - ------ 26 Notes to Financial Statements JANUARY 31, 2006 (UNAUDITED) 5. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of January 31, 2006, the components of investments for federal income tax purposes were as follows: - -------------------------------------------------------------------------------------------- VERY VERY CONSERVATIVE CONSERVATIVE MODERATE AGGRESSIVE AGGRESSIVE - -------------------------------------------------------------------------------------------- Federal tax cost of investments $11,928,825 $68,762,897 $155,089,518 $108,413,083 $44,434,192 ============================================================================================ Gross tax appreciation of investments $198,049 $2,420,760 $9,313,207 $8,874,633 $4,223,350 - ------------------------- Gross tax depreciation of investments (204,159) (843,939) (1,161,555) (467,079) (114,361) - -------------------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $ (6,110) $1,576,821 $ 8,151,652 $8,407,554 $4,108,989 ============================================================================================ 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. - ------ 27 One Choice Portfolio: Very Conservative - Financial Highlights For a Share Outstanding Throughout the Periods Indicated - ------------------------------------------------------------------------------- INVESTOR CLASS - ------------------------------------------------------------------------------- 2006(1) 2005(2) - ------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.27 $10.00 - -------------------------------------------- Income From Investment Operations - -------------------------------------------- Net Investment Income (Loss)(3) 0.21 0.25 - -------------------------------------------- Net Realized and Unrealized Gain (Loss) (0.01) 0.29 - ------------------------------------------------------------------------------- Total From Investment Operations 0.20 0.54 - ------------------------------------------------------------------------------- Distributions - -------------------------------------------- From Net Investment Income (0.26) (0.27) - -------------------------------------------- From Net Realized Gains (0.01) -- - ------------------------------------------------------------------------------- Total Distributions (0.27) (0.27) - ------------------------------------------------------------------------------- Net Asset Value, End of Period $10.20 $10.27 =============================================================================== TOTAL RETURN(4) 1.97% 5.43% - ------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00%(6) - -------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.15%(6) 3.00%(6) - -------------------------------------------- Portfolio Turnover Rate 22% 38% - -------------------------------------------- Net Assets, End of Period (in thousands) $11,947 $10,132 - ------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) September 30, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 28 One Choice Portfolio: Conservative - Financial Highlights For a Share Outstanding Throughout the Periods Indicated - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.54 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------- Net Investment Income (Loss)(3) 0.23 0.22 - -------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.16 0.58 - -------------------------------------------------------------------------------- Total From Investment Operations 0.39 0.80 - -------------------------------------------------------------------------------- Distributions - -------------------------------------------- From Net Investment Income (0.24) (0.26) - -------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.25) (0.26) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.68 $10.54 ================================================================================ TOTAL RETURN(4) 3.74% 8.08% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00%(6) - -------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.24%(6) 2.63%(6) - -------------------------------------------- Portfolio Turnover Rate 2% 12% - -------------------------------------------- Net Assets, End of Period (in thousands) $70,435 $43,183 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) September 30, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 29 One Choice Portfolio: Moderate - Financial Highlights For a Share Outstanding Throughout the Periods Indicated - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.97 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------- Net Investment Income (Loss)(3) 0.26 0.17 - -------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.45 0.99 - -------------------------------------------------------------------------------- Total From Investment Operations 0.71 1.16 - -------------------------------------------------------------------------------- Distributions - -------------------------------------------- From Net Investment Income (0.26) (0.19) - -------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.27) (0.19) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.41 $10.97 ================================================================================ TOTAL RETURN(4) 6.56% 11.71% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00%(6) - -------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.66%(6) 1.98%(6) - -------------------------------------------- Portfolio Turnover Rate 1% 3% - -------------------------------------------- Net Assets, End of Period (in thousands) $163,418 $97,313 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) September 30, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 30 One Choice Portfolio: Aggressive - Financial Highlights For a Share Outstanding Throughout the Periods Indicated - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.26 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------- Net Investment Income (Loss)(3) 0.28 0.14 - -------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.71 1.22 - -------------------------------------------------------------------------------- Total From Investment Operations 0.99 1.36 - -------------------------------------------------------------------------------- Distributions - -------------------------------------------- From Net Investment Income (0.29) (0.10) - -------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.30) (0.10) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.95 $11.26 ================================================================================ TOTAL RETURN(4) 8.93% 13.61% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00%(6) - -------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.84%(6) 1.52%(6) - -------------------------------------------- Portfolio Turnover Rate 1% 3% - -------------------------------------------- Net Assets, End of Period (in thousands) $116,904 $64,623 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) September 30, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 31 One Choice Portfolio: Very Aggressive - Financial Highlights For a Share Outstanding Throughout the Periods Indicated - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $11.48 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------- Net Investment Income (Loss)(3) 0.28 0.08 - -------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.92 1.49 - -------------------------------------------------------------------------------- Total From Investment Operations 1.20 1.57 - -------------------------------------------------------------------------------- Distributions - -------------------------------------------- From Net Investment Income (0.27) (0.09) - -------------------------------------------- From Net Realized Gains (0.01) -- - -------------------------------------------------------------------------------- Total Distributions (0.28) (0.09) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.40 $11.48 ================================================================================ TOTAL RETURN(4) 10.51% 15.81% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00%(6) - -------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.72%(6) 0.84%(6) - -------------------------------------------- Portfolio Turnover Rate 1% 8% - -------------------------------------------- Net Assets, End of Period (in thousands) $48,548 $25,649 - -------------------------------------------------------------------------------- (1) Six months ended January 31, 2006 (unaudited). (2) September 30, 2004 (fund inception) through July 31, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. (5) Ratio of operating expenses to average net assets does not include any expenses of the underlying funds. (6) Annualized. See Notes to Financial Statements. - ------ 32 Additional Information RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld. If you don't want us to withhold on this amount, you must notify us to not withhold the federal income tax. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the 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. - ------ 33 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The 90-DAY U.S. TREASURY BILL INDEX is derived from secondary market interest rates as published by the Federal Reserve Bank and includes three-month, six-month, and one-year instruments. The CITIGROUP NON-U.S. WORLD GOVERNMENT BOND INDEX is based on the Citigroup World Bond Index, and excludes issues denominated in U.S. dollars. The index measures the total return of government securities in major sectors of the international bond market. The CREDIT SUISSE FIRST BOSTON (CSFB) HIGH YIELD INDEX II is designed to mirror the investable universe of the U.S. dollar-denominated high-yield debt market. Prior to October 2001, the index was known as the Donaldson, Lufkin, & Jenrette (DLJ) High-Yield Index. 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 RUSSELL 1000(reg.tm) INDEX is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest companies in the Russell 3000 Index (the 3,000 largest publicly traded U.S. companies, based on total market capitalization). The RUSSELL 2000(reg.tm) INDEX is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization. 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. The RUSSELL MIDCAP(reg.tm) INDEX measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The S&P 500 INDEX is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. - ------ 34 Notes - ------ 35 Notes - ------ 36 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 PROFESSIONALS, 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 (c)2006 American Century Proprietary Holdings, Inc. All rights reserved. 0603 SH-SAN-48449N ITEM 2. CODE OF ETHICS. Not applicable for semiannual report filings. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semiannual report filings. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semiannual report filings. 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. During the reporting period, there were no material changes to the procedures by which shareholders may recommend nominees to the registrant's board. 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) Not applicable for semiannual report filings. (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: March 31, 2006 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: March 31, 2006 By: /s/ Maryanne L. Roepke ----------------------------------------------- Name: Maryanne L. Roepke Title: Sr. Vice President, Treasurer, and Chief Financial Officer (principal financial officer) Date: March 31, 2006