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) CHARLES A. ETHERINGTON, 4500 MAIN STREET, KANSAS CITY, MISSOURI 64111 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 816-531-5575 ---------------------------- Date of fiscal year end: 07-31 ----------------------------------------------------- Date of reporting period: 01-31-2009 ------------------------------------------------------
ITEM 1. REPORTS TO STOCKHOLDERS. [front cover] [american century investments logo and text logo ®] [livestrong(TM) portfolios text logo] SEMIANNUAL REPORT JANUARY 31, 2009 LIVESTRONG(TM) PORTFOLIOS FROM AMERICAN CENTURY INVESTMENTS:® LIVESTRONG(TM) Income Portfolio LIVESTRONG(TM) 2015 Portfolio LIVESTRONG(TM) 2020 Portfolio LIVESTRONG(TM) 2025 Portfolio LIVESTRONG(TM) 2030 Portfolio LIVESTRONG(TM) 2035 Portfolio LIVESTRONG(TM) 2040 Portfolio LIVESTRONG(TM) 2045 Portfolio LIVESTRONG(TM) 2050 Portfolio PRESIDENT'S LETTER JONATHAN THOMAS [photo of Jonathan Thomas] Dear Investor: Thank you for taking time to review the following discussions, from our experienced portfolio management team, of the fund reporting period ended January 31, 2009. It was a time of enormous upheaval and change. We understand and appreciate the challenges you have faced during this historic period, and share your concerns about the economy, the markets, and fund holdings. To help address these issues, I'd like to provide my perspective on how we have managed--and continue to manage--your investments in these uncertain times. As a company, American Century Investments® is well positioned to deal with market turmoil. We are financially strong and privately held, which allows us to align our resources with your long-term investment interests. In addition, our actively managed, team-based approach allows our portfolio teams to identify attractive investment opportunities regardless of market conditions. Our seasoned investment professionals have substantial experience and have successfully navigated previous market crises. These portfolio managers and analysts continue to use a team approach and follow disciplined investment processes designed to produce the best possible long-term results for you. For example, our equity investment teams are working closely with our fixed income group to monitor and assess credit crisis developments. The fixed income team anticipated dislocation in the credit markets and--through its disciplined processes and teamwork--helped reduce our exposure to investments that suffered substantial losses. How soon a sustainable recovery will occur is uncertain. But I am certain of this: Since 1958, we've demonstrated a consistent ability to execute solid, long-term investment strategies and the discipline to remain focused during times of volatility or shifts in the markets. We've stayed true to our principles, especially our belief that your success is the ultimate measure of our success. Thank you for your continued confidence in us. Sincerely, /s/ Jonathan Thomas Jonathan S. Thomas President and Chief Executive Officer American Century Investments TABLE OF CONTENTS LIVESTRONG(TM) PORTFOLIOS FROM AMERICAN CENTURY INVESTMENTS Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 10 Market Index Total Returns . . . . . . . . . . . . . . . . . . . . . 10 Underlying Fund Allocations. . . . . . . . . . . . . . . . . . . . . 11 Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . 14 FINANCIAL STATEMENTS Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 20 Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . 25 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . 28 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . 31 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 36 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . 56 OTHER INFORMATION Additional Information. . . . . . . . . . . . . . . . . . . . . . . . 92 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 93 American Century Investment Services, Inc., has entered into an agreement with the Lance Armstrong Foundation for rights to use the LIVESTRONG name. For more information about the foundation, visit livestrong.org. 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 Investments or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments' knowledge, such information is accurate at the time of printing. PERFORMANCE LIVESTRONG Portfolios Total Returns as of January 31, 2009 Average Annual Returns 6 Since Inception months(1) 1 year Inception Date LIVESTRONG INCOME PORTFOLIO INVESTOR CLASS -16.95% -18.38% 0.52% 8/31/04 RUSSELL 3000 INDEX(2) -34.92% -38.86% -4.15% -- CITIGROUP US BROAD INVESTMENT-GRADE BOND INDEX 4.70% 4.06% 4.85% -- Institutional Class -16.86% -18.20% 0.72% 8/31/04 Advisor Class -17.05% -18.59% 0.28% 8/31/04 R Class -17.18% -18.82% 0.01% 8/31/04 LIVESTRONG 2015 PORTFOLIO INVESTOR CLASS -19.92% -21.57% 0.87% 8/31/04 RUSSELL 3000 INDEX(2) -34.92% -38.86% -4.15% -- CITIGROUP US BROAD INVESTMENT-GRADE BOND INDEX 4.70% 4.06% 4.85% -- Institutional Class -19.81% -21.33% 1.08% 8/31/04 Advisor Class -19.98% -21.77% 0.62% 8/31/04 R Class -20.11% -21.96% 0.38% 8/31/04 LIVESTRONG 2020 PORTFOLIO INVESTOR CLASS -21.47% -- -25.47%(1) 5/30/08 RUSSELL 3000 INDEX(2) -34.92% -- -40.76%(1) -- CITIGROUP US BROAD INVESTMENT-GRADE BOND INDEX 4.70% -- 4.73%(1) -- Institutional Class -21.46% -- -25.39%(1) 5/30/08 Advisor Class -21.58% -- -25.58%(1) 5/30/08 R Class -21.70% -- -25.69%(1) 5/30/08 (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. -- A Reuters Company. © 2009 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 Citigroup US Broad Investment-Grade Bond Index represent 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 portfolio, which invests in a mix of equity and fixed-income securities. (See the Schedule of Investments for each LIVESTRONG Portfolio's asset allocations as of January 31, 2009.) 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. The performance of LIVESTRONG Portfolios is dependent on the performance of their underlying American Century Investments funds, and will assume the risks associated with these funds. The risks will vary according to each LIVESTRONG Portfolio's asset allocation, and a fund with a later target date is expected to be more volatile than one with an earlier target date. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as administrative fees) that reduce returns, while the total returns of the indices do not. - ------ 2 LIVESTRONG Portfolios Total Returns as of January 31, 2009 Average Annual Returns 6 Since Inception months(1) 1 year Inception Date LIVESTRONG 2025 PORTFOLIO INVESTOR CLASS -24.04% -25.95% 0.37% 8/31/04 RUSSELL 3000 INDEX(2) -34.92% -38.86% -4.15% -- CITIGROUP US BROAD INVESTMENT-GRADE BOND INDEX 4.70% 4.06% 4.85% -- Institutional Class -23.96% -25.81% 0.56% 8/31/04 Advisor Class -24.10% -26.14% 0.12% 8/31/04 R Class -24.31% -26.34% -0.15% 8/31/04 LIVESTRONG 2030 PORTFOLIO INVESTOR CLASS -26.13% -- -30.64%(1) 5/30/08 RUSSELL 3000 INDEX(2) -34.92% -- -40.76%(1) -- CITIGROUP US BROAD INVESTMENT-GRADE BOND INDEX 4.70% -- 4.73%(1) -- Institutional Class -26.23% -- -30.66%(1) 5/30/08 Advisor Class -26.35% -- -30.84%(1) 5/30/08 R Class -26.45% -- -30.94%(1) 5/30/08 LIVESTRONG 2035 PORTFOLIO INVESTOR CLASS -28.81% -31.03% -0.45% 8/31/04 RUSSELL 3000 INDEX(2) -34.92% -38.86% -4.15% -- CITIGROUP US BROAD INVESTMENT-GRADE BOND INDEX 4.70% 4.06% 4.85% -- Institutional Class -28.79% -30.95% -0.26% 8/31/04 Advisor Class -28.93% -31.20% -0.69% 8/31/04 R Class -28.98% -31.37% -0.93% 8/31/04 (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. -- A Reuters Company. © 2009 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 Citigroup US Broad Investment-Grade Bond Index represent 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 portfolio, which invests in a mix of equity and fixed-income securities. (See the Schedule of Investments for each LIVESTRONG Portfolio's asset allocations as of January 31, 2009.) 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. The performance of LIVESTRONG Portfolios is dependent on the performance of their underlying American Century Investments funds, and will assume the risks associated with these funds. The risks will vary according to each LIVESTRONG Portfolio's asset allocation, and a fund with a later target date is expected to be more volatile than one with an earlier target date. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as administrative fees) that reduce returns, while the total returns of the indices do not. - ------ 3 LIVESTRONG Portfolios Total Returns as of January 31, 2009 Average Annual Returns 6 Since Inception months(1) 1 year Inception Date LIVESTRONG 2040 PORTFOLIO INVESTOR CLASS -29.59% -- -34.59%(1) 5/30/08 RUSSELL 3000 INDEX(2) -34.92% -- -40.76%(1) -- CITIGROUP US BROAD INVESTMENT-GRADE BOND INDEX 4.70% -- 4.73%(1) -- Institutional Class -29.51% -- -34.51%(1) 5/30/08 Advisor Class -29.69% -- -34.68%(1) 5/30/08 R Class -29.82% -- -34.88%(1) 5/30/08 LIVESTRONG 2045 PORTFOLIO INVESTOR CLASS -31.72% -34.09% -1.12% 8/31/04 RUSSELL 3000 INDEX(2) -34.92% -38.86% -4.15% -- CITIGROUP US BROAD INVESTMENT-GRADE BOND INDEX 4.70% 4.06% 4.85% -- Institutional Class -31.65% -34.02% -0.93% 8/31/04 Advisor Class -31.86% -34.34% -1.39% 8/31/04 R Class -31.97% -34.50% -1.63% 8/31/04 LIVESTRONG 2050 PORTFOLIO INVESTOR CLASS -32.32% -- -37.53%(1) 5/30/08 RUSSELL 3000 INDEX(2) -34.92% -- -40.76%(1) -- CITIGROUP US BROAD INVESTMENT-GRADE BOND INDEX 4.70% -- 4.73%(1) -- Institutional Class -32.24% -- -37.46%(1) 5/30/08 Advisor Class -32.52% -- -37.72%(1) 5/30/08 R Class -32.55% -- -37.81%(1) 5/30/08 (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. -- A Reuters Company. © 2009 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 Citigroup US Broad Investment-Grade Bond Index represent 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 portfolio, which invests in a mix of equity and fixed-income securities. (See the Schedule of Investments for each LIVESTRONG Portfolio's asset allocations as of January 31, 2009.) 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. The performance of LIVESTRONG Portfolios is dependent on the performance of their underlying American Century Investments funds, and will assume the risks associated with these funds. The risks will vary according to each LIVESTRONG Portfolio's asset allocation, and a fund with a later target date is expected to be more volatile than one with an earlier target date. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as administrative fees) that reduce returns, while the total returns of the indices do not. - ------ 4 LIVESTRONG Portfolios Growth of $10,000 Over Life of LIVESTRONG Income Portfolio -- Investor Class $10,000 investment made August 31, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-09-000008/growthlivestrongincome0903.gif)
*From 8/31/04, the Investor Class's inception date. Not annualized. Growth of $10,000 Over Life of LIVESTRONG 2015 Portfolio -- Investor Class $10,000 investment made August 31, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-09-000008/growthlivestrong20150903.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. The performance of LIVESTRONG Portfolios is dependent on the performance of their underlying American Century Investments funds, and will assume the risks associated with these funds. The risks will vary according to each LIVESTRONG Portfolio's asset allocation, and a fund with a later target date is expected to be more volatile than one with an earlier target date. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as administrative fees) that reduce returns, while the total returns of the indices do not. - ------ 5 LIVESTRONG Portfolios Growth of $10,000 Over Life of LIVESTRONG 2020 Portfolio -- Investor Class $10,000 investment made May 30, 2008
![](https://capedge.com/proxy/N-CSRS/0001293210-09-000008/growthlivestrong20200903.gif)
*From 5/30/08, the Investor Class's inception date. Not annualized. Growth of $10,000 Over Life of LIVESTRONG 2025 Portfolio -- Investor Class $10,000 investment made August 31, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-09-000008/growthlivestrong20250903.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. The performance of LIVESTRONG Portfolios is dependent on the performance of their underlying American Century Investments funds, and will assume the risks associated with these funds. The risks will vary according to each LIVESTRONG Portfolio's asset allocation, and a fund with a later target date is expected to be more volatile than one with an earlier target date. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as administrative fees) that reduce returns, while the total returns of the indices do not. - ------ 6 LIVESTRONG Portfolios Growth of $10,000 Over Life of LIVESTRONG 2030 Portfolio -- Investor Class $10,000 investment made May 30, 2008
![](https://capedge.com/proxy/N-CSRS/0001293210-09-000008/growthlivestrong20300903.gif)
*From 5/30/08, the Investor Class's inception date. Not annualized. Growth of $10,000 Over Life of LIVESTRONG 2035 Portfolio -- Investor Class $10,000 investment made August 31, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-09-000008/growthlivestrong20350903.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. The performance of LIVESTRONG Portfolios is dependent on the performance of their underlying American Century Investments funds, and will assume the risks associated with these funds. The risks will vary according to each LIVESTRONG Portfolio's asset allocation, and a fund with a later target date is expected to be more volatile than one with an earlier target date. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as administrative fees) that reduce returns, while the total returns of the indices do not. - ------ 7 LIVESTRONG Portfolios Growth of $10,000 Over Life of LIVESTRONG 2040 Portfolio -- Investor Class $10,000 investment made May 30, 2008
![](https://capedge.com/proxy/N-CSRS/0001293210-09-000008/growthlivestrong20400903.gif)
*From 5/30/08, the Investor Class's inception date. Not annualized. Growth of $10,000 Over Life of LIVESTRONG 2045 Portfolio -- Investor Class $10,000 investment made August 31, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-09-000008/growthlivestrong20450903.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. The performance of LIVESTRONG Portfolios is dependent on the performance of their underlying American Century Investments funds, and will assume the risks associated with these funds. The risks will vary according to each LIVESTRONG Portfolio's asset allocation, and a fund with a later target date is expected to be more volatile than one with an earlier target date. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as administrative fees) that reduce returns, while the total returns of the indices do not. - ------ 8 LIVESTRONG Portfolios Growth of $10,000 Over Life of LIVESTRONG 2050 Portfolio -- Investor Class $10,000 investment made May 30, 2008
![](https://capedge.com/proxy/N-CSRS/0001293210-09-000008/growthlivestrong20500903.gif)
*From 5/30/08, the Investor Class's inception date. Not annualized. One-Year Returns Over Life of Class Periods ended January 31 2005* 2006 2007 2008 2009 LIVESTRONG Income Portfolio -- Investor Class 5.00% 5.54% 8.18% 4.58% -18.38% LIVESTRONG 2015 Portfolio -- Investor Class 6.80% 8.55% 9.07% 4.76% -21.57% LIVESTRONG 2025 Portfolio -- Investor Class 8.00% 11.30% 9.99% 3.82% -25.95% LIVESTRONG 2035 Portfolio -- Investor Class 9.33% 13.33% 11.38% 3.00% -31.03% LIVESTRONG 2045 Portfolio -- Investor Class 10.07% 14.20% 12.09% 2.46% -34.09% Russell 3000 Index 8.87% 12.67% 14.11% -3.08% -38.86% Citigroup US Broad Investment-Grade Bond Index 1.91% 1.91% 4.32% 9.32% 4.06% *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. The performance of LIVESTRONG Portfolios is dependent on the performance of their underlying American Century Investments funds, and will assume the risks associated with these funds. The risks will vary according to each LIVESTRONG Portfolio's asset allocation, and a fund with a later target date is expected to be more volatile than one with an earlier target date. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as administrative fees) that reduce returns, while the total returns of the indices do not. - ------ 9 PORTFOLIO COMMENTARY LIVESTRONG Portfolios Portfolio Managers: Jeff Tyler, Irina Torelli and Enrique Chang PERFORMANCE SUMMARY Each LIVESTRONG Portfolio posted double-digit declines for the six months ended January 31, 2009, with returns ranging from -16.95%* for LIVESTRONG Income Portfolio to -32.32%* for LIVESTRONG 2050 Portfolio (see pages 2-9 for more detailed performance information). The negative returns for LIVESTRONG Portfolios resulted largely from a historic decline in the global equity markets, while bonds generated modestly positive returns. Because of LIVESTRONG Portfolios' strategic exposure to a variety of asset classes, a review of the financial markets helps explain much of their performance. STOCK MARKET REVIEW The U.S. stock market suffered one of the worst declines in its history during the six-month period. The steep losses in the equity market were driven by a perfect storm of financial crises--a lack of liquidity in the credit markets, a loss of confidence in banks and other financial institutions, and a significant consumer-led economic downturn. According to the National Bureau of Economic Research, the U.S. economy has been in recession since December 2007, and economic conditions deteriorated further during the reporting period. The economy shed more than 2.5 million jobs in six months as the unemployment rate rose to its highest level since 1992. Retail sales fell by nearly 10%, while the housing market saw a surge in mortgage delinquencies and foreclosures. Further troubles in the mortgage market contributed to a worsening credit crunch and growing losses for many financial companies. The breaking point occurred in September 2008, when brokerage firm Lehman Brothers filed for bankruptcy, unleashing a torrent of takeovers and bailouts of struggling financial companies. The federal government acted quickly to provide cash infusions and other measures designed to restore liquidity and prevent a complete breakdown in the financial system. However, nursing the financial sector back to health remains an uphill battle. The persistent economic and financial struggles undermined investor confidence, sending stocks into a tailspin. The fourth quarter of 2008 was the worst quarter for the major stock indexes in 21 years, while January 2009 brought the biggest January decline in the market's history. As the accompanying table shows, declines for Market Index Total Returns For the six months ended January 31, 2009(1) U.S. STOCKS Russell 1000 Index (Large-Cap) -34.71% Russell Midcap Index -39.82% Russell 2000 Index (Small-Cap) -37.38% INTERNATIONAL STOCKS MSCI EAFE (Europe, Australasia, Far East) Index -40.75% MSCI EM (Emerging Markets) Index -48.59% U.S. FIXED INCOME Citigroup U.S. Broad Investment-Grade Bond Index 4.70% 10-Year U.S. Treasury Note 11.87% 90-Day U.S. Treasury Bill 0.72% INTERNATIONAL BONDS Citigroup Non-U.S. World Government Bond Index -0.88% (1) Total returns for periods less than one year are not annualized. *All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. - ------ 10 LIVESTRONG Portfolios the six-month period were consistent across all market capitalizations. Growth and value issues were mixed, however--growth outpaced value among large-cap shares, while value won out in the mid- and small-cap segments of the market. The financial and economic problems plaguing the U.S. spread throughout the globe, causing even sharper declines in foreign equity markets. The worldwide economic weakness led many of the world's central banks to coordinate policy and lower interest rates in an unprecedented effort to stimulate economic growth, but the uncertain timetable for recovery weighed on investor confidence. Emerging markets suffered the largest declines, losing nearly half of their value during the period as exports to developed countries withered and increasingly risk-averse investors shifted out of more-volatile markets. Among developed markets, Japan held up the best, while its neighbors in Asia and the Pacific Rim posted the largest losses. Underlying Fund Allocations(1) as a % of total investments as of January 31, 2009 LIVESTRONG LIVESTRONG LIVESTRONG LIVESTRONG LIVESTRONG Income 2015 2020 2025 2030 Portfolio Portfolio Portfolio Portfolio Portfolio EQUITY NT Equity Growth Fund 12.2% 11.8% 11.5% 11.9% 12.2% NT Growth Fund 6.4% 8.0% 9.2% 11.0% 12.8% NT Large Company Value Fund 9.9% 10.3% 10.4% 11.0% 11.7% NT Mid Cap Value Fund 3.8% 4.9% 5.3% 5.1% 5.3% NT Small Company Fund 1.9% 1.9% 2.3% 3.3% 4.0% NT Vista Fund 2.5% 3.7% 4.5% 5.0% 5.6% Real Estate Fund 0.9% 1.3% 1.4% 1.8% 1.9% NT Emerging Markets Fund -- 1.2% 2.1% 2.7% 3.3% NT International Growth Fund 4.8% 5.8% 6.7% 8.3% 9.2% TOTAL EQUITY 42.4% 48.9% 53.4% 60.1% 66.0% FIXED INCOME High-Yield Fund 4.2% 4.0% 3.7% 3.4% 2.9% Inflation- Adjusted Bond Fund 8.2% 7.9% 7.4% 6.8% 5.9% NT Diversified Bond Fund 27.8% 26.2% 25.7% 22.5% 20.4% International Bond Fund 7.0% 5.8% 4.5% 2.0% -- TOTAL FIXED INCOME 47.2% 43.9% 41.3% 34.7% 29.2% PREMIUM MONEY MARKET FUND 10.4% 7.2% 5.3% 5.2% 4.8% (1) Institutional Class, except Premium Money Market Fund Investor Class. - ------ 11 LIVESTRONG Portfolios BOND MARKET REVIEW U.S. bonds rallied during the six-month period as investors fleeing the volatility in the equity market looked to high-quality bonds--particularly Treasury securities--as a relatively safe place to hide. The Federal Reserve's efforts to stimulate economic activity--including an unprecedented series of interest rate cuts that lowered the federal funds rate target to nearly zero--also provided a lift to the bond market. Treasury bonds were by far the best performers, benefiting the most from the flight to quality. The surge in demand pushed the yields of many Treasury securities down to their lowest levels ever. High-quality mortgage-backed securities, especially those issued by government agencies, also posted solid gains. In contrast, the economic downturn and uncertain credit conditions, along with weaker corporate profits, put downward pressure on corporate bonds. High-yield corporate bonds experienced the sharpest declines as investors anticipated a significant increase in defaults. Foreign bonds posted modestly negative returns for the six-month period. As worldwide demand for U.S. Treasury securities increased, the U.S. dollar strengthened against many of the world's major currencies, most notably the euro and British pound. The stronger dollar weighed on foreign bond returns for U.S. investors. PORTFOLIO PERFORMANCE Each LIVESTRONG Portfolio is a "fund of funds" that invests in other American Century mutual funds to achieve its investment objective and target asset allocation. (See pages 11-12 for the specific underlying fund allocations for each LIVESTRONG Portfolio.) Underlying Fund Allocations(1) as a % of total investments as of January 31, 2009 LIVESTRONG LIVESTRONG LIVESTRONG LIVESTRONG 2035 2040 2045 2050 Portfolio Portfolio Portfolio Portfolio EQUITY NT Equity Growth Fund 13.2% 14.4% 14.2% 14.9% NT Growth Fund 13.9% 14.8% 15.0% 15.4% NT Large Company Value Fund 12.8% 13.5% 14.0% 14.6% NT Mid Cap Value Fund 6.4% 7.1% 7.2% 7.4% NT Small Company Fund 4.0% 3.8% 4.6% 4.9% NT Vista Fund 6.5% 7.4% 7.3% 7.7% Real Estate Fund 2.3% 2.4% 2.9% 3.0% NT Emerging Markets Fund 4.2% 5.0% 6.3% 6.5% NT International Growth Fund 9.9% 10.1% 10.0% 9.4% TOTAL EQUITY 73.2% 78.5% 81.5% 83.8% FIXED INCOME High-Yield Fund 2.6% 2.2% 1.9% 1.7% Inflation-Adjusted Bond Fund 5.1% 4.3% 3.8% 3.3% NT Diversified Bond Fund 17.0% 15.0% 12.8% 11.2% TOTAL FIXED INCOME 24.7% 21.5% 18.5% 16.2% PREMIUM MONEY MARKET FUND 2.1% -- -- -- (1) Institutional Class, except Premium Money Market Fund Investor Class. - ------ 12 LIVESTRONG Portfolios Within LIVESTRONG Portfolios, every stock fund declined by more than 25% for the six-month period. The weakest performers included Real Estate and NT Emerging Markets (in all Portfolios except for LIVESTRONG Income Portfolio), both of which declined by more than 50% and underperformed their respective benchmark indexes. The mid- and small-cap components, NT Vista and NT Small Company, and the NT International Growth fund were also among the most significant decliners, falling by more than 40%. Stock selection weighed on the performance of these three funds as well. LIVESTRONG Portfolios' value-oriented funds, NT Mid Cap Value and NT Large Company Value, were among the better performers. In particular, NT Mid Cap Value posted the best return, benefiting from favorable stock selection. The two large-cap offerings, NT Equity Growth and NT Growth, also held up well and modestly outperformed their respective benchmarks. The primary fixed-income component in each of LIVESTRONG Portfolios is NT Diversified Bond, which was the only fund in LIVESTRONG Portfolios to advance but underperformed the broad bond market indexes. Although an underweight position in corporate bonds added value during the period, NT Diversified Bond's overweight positions in areas of the market that typically have relatively low volatility--including high-quality municipal bonds, inflation-protected securities, and commercial mortgage-backed securities--detracted from results as these segments underperformed. The other three fixed-income components--High-Yield, Inflation-Adjusted Bond, and International Bond (only in LIVESTRONG Income Portfolio, LIVESTRONG 2015 Portfolio, LIVESTRONG 2020 Portfolio, and LIVESTRONG 2025 Portfolio)--all declined during the six-month period. It's worth noting, however, that High-Yield outperformed its benchmark by a sizable margin. OUTLOOK The near-term outlook for the economy, both in the U.S. and internationally, remains dismal as the ripple effects of the financial crisis continue to spread. The latest casualty is the domestic auto industry, which is teetering on the brink of bankruptcy as vehicle sales plunged to a 26-year low. There is no magic bullet to solve this downturn; the road to recovery will be difficult and painful. However, our caution is tempered by some modest optimism--we believe that we are nearing an inflection point where investors' focus will shift away from reacting to bad news and toward anticipating the beginning of a recovery. - ------ 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 Investments 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, 2008 to January 31, 2009. 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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. - ------ 14 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 Expenses Expenses Paid Paid Beginning Ending During During Effective Account Account Period(1) Annualized Period(2) Annualized Value Value 8/1/08 - Expense 8/1/08 - Expense 8/1/08 1/31/09 1/31/09 Ratio(1) 1/31/09 Ratio(2) LIVESTRONG Income Portfolio ACTUAL Investor Class $1,000 $830.50 $0.92 0.20% $3.51 0.76% Institutional Class $1,000 $831.40 $0.00 0.00%(3) $2.59 0.56% Advisor Class $1,000 $829.50 $2.08 0.45% $4.66 1.01% R Class $1,000 $828.20 $3.23 0.70% $5.81 1.26% HYPOTHETICAL Investor Class $1,000 $1,024.20 $1.02 0.20% $3.87 0.76% Institutional Class $1,000 $1,025.21 $0.00 0.00%(3) $2.85 0.56% Advisor Class $1,000 $1,022.94 $2.29 0.45% $5.14 1.01% R Class $1,000 $1,021.68 $3.57 0.70% $6.41 1.26% LIVESTRONG 2015 Portfolio ACTUAL Investor Class $1,000 $800.80 $0.91 0.20% $3.59 0.79% Institutional Class $1,000 $801.90 $0.00 0.00%(3) $2.68 0.59% Advisor Class $1,000 $800.20 $2.04 0.45% $4.72 1.04% R Class $1,000 $798.90 $3.17 0.70% $5.85 1.29% HYPOTHETICAL Investor Class $1,000 $1,024.20 $1.02 0.20% $4.02 0.79% Institutional Class $1,000 $1,025.21 $0.00 0.00%(3) $3.01 0.59% Advisor Class $1,000 $1,022.94 $2.29 0.45% $5.30 1.04% R Class $1,000 $1,021.68 $3.57 0.70% $6.56 1.29% (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 Investments 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 fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. - ------ 15 Effective Expenses Expenses Paid Paid Beginning Ending During During Effective Account Account Period(1) Annualized Period(2) Annualized Value Value 8/1/08 - Expense 8/1/08 - Expense 8/1/08 1/31/09 1/31/09 Ratio(1) 1/31/09 Ratio(2) LIVESTRONG 2020 Portfolio ACTUAL Investor Class $1,000 $785.30 $0.90 0.20% $3.64 0.81% Institutional Class $1,000 $785.40 $0.00 0.00%(3) $2.75 0.61% Advisor Class $1,000 $784.20 $2.02 0.45% $4.77 1.06% R Class $1,000 $783.00 $3.15 0.70% $5.89 1.31% HYPOTHETICAL Investor Class $1,000 $1,024.20 $1.02 0.20% $4.13 0.81% Institutional Class $1,000 $1,025.21 $0.00 0.00%(3) $3.11 0.61% Advisor Class $1,000 $1,022.94 $2.29 0.45% $5.40 1.06% R Class $1,000 $1,021.68 $3.57 0.70% $6.67 1.31% LIVESTRONG 2025 Portfolio ACTUAL Investor Class $1,000 $759.60 $0.89 0.20% $3.73 0.84% Institutional Class $1,000 $760.40 $0.00 0.00%(3) $2.84 0.64% Advisor Class $1,000 $759.00 $2.00 0.45% $4.83 1.09% R Class $1,000 $756.90 $3.10 0.70% $5.93 1.34% HYPOTHETICAL Investor Class $1,000 $1,024.20 $1.02 0.20% $4.28 0.84% Institutional Class $1,000 $1,025.21 $0.00 0.00%(3) $3.26 0.64% Advisor Class $1,000 $1,022.94 $2.29 0.45% $5.55 1.09% R Class $1,000 $1,021.68 $3.57 0.70% $6.82 1.34% (1) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 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 Investments 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 fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. - ------ 16 Effective Expenses Expenses Paid Paid Beginning Ending During During Effective Account Account Period(1) Annualized Period(2) Annualized Value Value 8/1/08 - Expense 8/1/08 - Expense 8/1/08 1/31/09 1/31/09 Ratio(1) 1/31/09 Ratio(2) LIVESTRONG 2030 Portfolio ACTUAL Investor Class $1,000 $738.70 $0.88 0.20% $3.77 0.86% Institutional Class $1,000 $737.70 $0.00 0.00%(3) $2.89 0.66% Advisor Class $1,000 $736.50 $1.97 0.45% $4.86 1.11% R Class $1,000 $735.50 $3.06 0.70% $5.95 1.36% HYPOTHETICAL Investor Class $1,000 $1,024.20 $1.02 0.20% $4.38 0.86% Institutional Class $1,000 $1,025.21 $0.00 0.00%(3) $3.36 0.66% Advisor Class $1,000 $1,022.94 $2.29 0.45% $5.65 1.11% R Class $1,000 $1,021.68 $3.57 0.70% $6.92 1.36% LIVESTRONG 2035 Portfolio ACTUAL Investor Class $1,000 $711.90 $0.86 0.20% $3.88 0.90% Institutional Class $1,000 $712.10 $0.00 0.00%(3) $3.02 0.70% Advisor Class $1,000 $710.70 $1.94 0.45% $4.96 1.15% R Class $1,000 $710.20 $3.02 0.70% $6.03 1.40% HYPOTHETICAL Investor Class $1,000 $1,024.20 $1.02 0.20% $4.58 0.90% Institutional Class $1,000 $1,025.21 $0.00 0.00%(3) $3.57 0.70% Advisor Class $1,000 $1,022.94 $2.29 0.45% $5.85 1.15% R Class $1,000 $1,021.68 $3.57 0.70% $7.12 1.40% (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 Investments 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 fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. - ------ 17 Effective Expenses Expenses Paid Paid Beginning Ending During During Effective Account Account Period(1) Annualized Period(2) Annualized Value Value 8/1/08 - Expense 8/1/08 - Expense 8/1/08 1/31/09 1/31/09 Ratio(1) 1/31/09 Ratio(2) LIVESTRONG 2040 Portfolio ACTUAL Investor Class $1,000 $704.10 $0.86 0.20% $3.91 0.91% Institutional Class $1,000 $704.90 $0.00 0.00%(3) $3.05 0.71% Advisor Class $1,000 $703.10 $1.93 0.45% $4.98 1.16% R Class $1,000 $701.80 $3.00 0.70% $6.05 1.41% HYPOTHETICAL Investor Class $1,000 $1,024.20 $1.02 0.20% $4.63 0.91% Institutional Class $1,000 $1,025.21 $0.00 0.00%(3) $3.62 0.71% Advisor Class $1,000 $1,022.94 $2.29 0.45% $5.90 1.16% R Class $1,000 $1,021.68 $3.57 0.70% $7.17 1.41% LIVESTRONG 2045 Portfolio ACTUAL Investor Class $1,000 $682.80 $0.85 0.20% $3.94 0.93% Institutional Class $1,000 $683.50 $0.00 0.00%(3) $3.10 0.73% Advisor Class $1,000 $681.40 $1.91 0.45% $5.00 1.18% R Class $1,000 $680.30 $2.96 0.70% $6.06 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% (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 Investments 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 fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. - ------ 18 Effective Expenses Expenses Paid Paid Beginning Ending During During Effective Account Account Period(1) Annualized Period(2) Annualized Value Value 8/1/08 - Expense 8/1/08 - Expense 8/1/08 1/31/09 1/31/09 Ratio(1) 1/31/09 Ratio(2) LIVESTRONG 2050 Portfolio ACTUAL Investor Class $1,000 $676.80 $0.85 0.20% $3.97 0.94% Institutional Class $1,000 $677.60 $0.00 0.00%(3) $3.13 0.74% Advisor Class $1,000 $674.80 $1.90 0.45% $5.02 1.19% R Class $1,000 $674.50 $2.95 0.70% $6.08 1.44% HYPOTHETICAL Investor Class $1,000 $1,024.20 $1.02 0.20% $4.79 0.94% Institutional Class $1,000 $1,025.21 $0.00 0.00%(3) $3.77 0.74% Advisor Class $1,000 $1,022.94 $2.29 0.45% $6.06 1.19% R Class $1,000 $1,021.68 $3.57 0.70% $7.32 1.44% (1) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 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 Investments 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 fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. - ------ 19 SCHEDULE OF INVESTMENTS LIVESTRONG Portfolios JANUARY 31, 2009 (UNAUDITED) Shares Value LIVESTRONG Income Portfolio Mutual Funds(1) -- 94.8% DOMESTIC FIXED INCOME FUNDS -- 38.2% 1,045,310 High-Yield Fund Institutional Class $ 5,017,488 929,023 Inflation-Adjusted Bond Fund Institutional Class 9,847,644 3,294,543 NT Diversified Bond Fund Institutional Class 33,241,939 ------------ 48,107,071 ------------ DOMESTIC EQUITY FUNDS -- 35.6% 2,206,045 NT Equity Growth Fund Institutional Class 14,537,837 1,058,920 NT Growth Fund Institutional Class 7,645,402 2,036,188 NT Large Company Value Fund Institutional Class 11,830,252 695,785 NT Mid Cap Value Fund Institutional Class 4,564,350 439,566 NT Small Company Fund Institutional Class 2,219,808 449,897 NT Vista Fund Institutional Class(2) 2,951,324 117,312 Real Estate Fund Institutional Class 1,122,676 ------------ 44,871,649 ------------ MONEY MARKET FUNDS -- 9.9% 12,447,184 Premium Money Market Fund Investor Class 12,447,184 ------------ INTERNATIONAL FIXED INCOME FUNDS -- 6.6% 630,499 International Bond Fund Institutional Class 8,303,672 ------------ INTERNATIONAL EQUITY FUNDS -- 4.5% 954,994 NT International Growth Fund Institutional Class 5,710,864 ------------ TOTAL INVESTMENT SECURITIES -- 94.8% (Cost $131,853,120) 119,440,440 ------------ OTHER ASSETS AND LIABILITIES -- 5.2%(3) 6,529,581 ------------ TOTAL NET ASSETS -- 100.0% $125,970,021 ============ Notes to Schedule of Investments (1) Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (2) Non-income producing. (3) Category includes amounts related to receivable for capital shares sold. See Notes to Financial Statements. Shares Value LIVESTRONG 2015 Portfolio Mutual Funds(1) -- 94.8% DOMESTIC EQUITY FUNDS -- 39.7% 4,579,813 NT Equity Growth Fund Institutional Class $ 30,180,968 2,809,616 NT Growth Fund Institutional Class 20,285,428 4,518,345 NT Large Company Value Fund Institutional Class 26,251,584 1,884,570 NT Mid Cap Value Fund Institutional Class 12,362,779 953,906 NT Small Company Fund Institutional Class 4,817,225 1,441,559 NT Vista Fund Institutional Class(2) 9,456,627 338,509 Real Estate Fund Institutional Class 3,239,531 ------------ 106,594,142 ------------ DOMESTIC FIXED INCOME FUNDS -- 36.1% 2,120,779 High-Yield Fund Institutional Class 10,179,739 1,890,843 Inflation-Adjusted Bond Fund Institutional Class 20,042,936 6,634,329 NT Diversified Bond Fund Institutional Class 66,940,380 ------------ 97,163,055 ------------ MONEY MARKET FUNDS -- 6.9% 18,467,883 Premium Money Market Fund Investor Class 18,467,883 ------------ INTERNATIONAL EQUITY FUNDS -- 6.6% 616,063 NT Emerging Markets Fund Institutional Class 3,049,512 2,474,086 NT International Growth Fund Institutional Class 14,795,034 ------------ 17,844,546 ------------ INTERNATIONAL FIXED INCOME FUNDS -- 5.5% 1,123,071 International Bond Fund Institutional Class 14,790,845 ------------ TOTAL INVESTMENT SECURITIES -- 94.8% (Cost $301,792,102) 254,860,471 ------------ OTHER ASSETS AND LIABILITIES -- 5.2%(3) 13,928,743 ------------ TOTAL NET ASSETS -- 100.0% $268,789,214 ============ Notes to Schedule of Investments (1) Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (2) Non-income producing. (3) Category includes amounts related to receivable for capital shares sold. - ------ 20 LIVESTRONG Portfolios Shares Value LIVESTRONG 2020 Portfolio Mutual Funds(1) -- 89.9% DOMESTIC EQUITY FUNDS -- 40.1% 1,528,435 NT Equity Growth Fund Institutional Class $ 10,072,387 1,103,554 NT Growth Fund Institutional Class 7,967,660 1,560,493 NT Large Company Value Fund Institutional Class 9,066,464 697,064 NT Mid Cap Value Fund Institutional Class 4,572,740 400,067 NT Small Company Fund Institutional Class 2,020,338 596,838 NT Vista Fund Institutional Class(2) 3,915,257 125,877 Real Estate Fund Institutional Class 1,204,643 ------------ 38,819,489 ------------ DOMESTIC FIXED INCOME FUNDS -- 33.1% 678,703 High-Yield Fund Institutional Class 3,257,774 607,568 Inflation-Adjusted Bond Fund Institutional Class 6,440,221 2,210,542 NT Diversified Bond Fund Institutional Class 22,304,369 ------------ 32,002,364 ------------ INTERNATIONAL EQUITY FUNDS -- 7.9% 364,370 NT Emerging Markets Fund Institutional Class 1,803,631 971,224 NT International Growth Fund Institutional Class 5,807,920 ------------ 7,611,551 ------------ MONEY MARKET FUNDS -- 4.8% 4,627,725 Premium Money Market Fund Investor Class 4,627,725 ------------ INTERNATIONAL FIXED INCOME FUNDS -- 4.0% 295,410 International Bond Fund Institutional Class 3,890,550 ------------ TOTAL INVESTMENT SECURITIES -- 89.9% (Cost $92,147,363) 86,951,679 ------------ OTHER ASSETS AND LIABILITIES -- 10.1%(3) 9,768,566 ------------ TOTAL NET ASSETS -- 100.0% $96,720,245 ============ Notes to Schedule of Investments (1) Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (2) Non-income producing. (3) Category includes amounts related to receivable for capital shares sold. See Notes to Financial Statements. Shares Value LIVESTRONG 2025 Portfolio Mutual Funds(1) -- 97.4% DOMESTIC EQUITY FUNDS -- 47.9% 6,141,398 NT Equity Growth Fund Institutional Class $ 40,471,813 5,175,307 NT Growth Fund Institutional Class 37,365,717 6,451,109 NT Large Company Value Fund Institutional Class 37,480,943 2,653,861 NT Mid Cap Value Fund Institutional Class 17,409,328 2,238,802 NT Small Company Fund Institutional Class 11,305,950 2,589,375 NT Vista Fund Institutional Class(2) 16,986,300 629,260 Real Estate Fund Institutional Class 6,022,018 ------------ 167,042,069 ------------ DOMESTIC FIXED INCOME FUNDS -- 31.8% 2,375,770 High-Yield Fund Institutional Class 11,403,696 2,172,607 Inflation-Adjusted Bond Fund Institutional Class 23,029,634 7,571,529 NT Diversified Bond Fund Institutional Class 76,396,728 ------------ 110,830,058 ------------ INTERNATIONAL EQUITY FUNDS -- 10.7% 1,839,981 NT Emerging Markets Fund Institutional Class 9,107,906 4,706,249 NT International Growth Fund Institutional Class 28,143,369 ------------ 37,251,275 ------------ MONEY MARKET FUNDS -- 5.1% 17,709,924 Premium Money Market Fund Investor Class 17,709,924 ------------ INTERNATIONAL FIXED INCOME FUNDS -- 1.9% 520,220 International Bond Fund Institutional Class 6,851,297 ------------ TOTAL INVESTMENT SECURITIES -- 97.4% (Cost $420,884,510) 339,684,623 ------------ OTHER ASSETS AND LIABILITIES -- 2.6%(3) 9,226,605 ------------ TOTAL NET ASSETS -- 100.0% $348,911,228 ============ Notes to Schedule of Investments (1) Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (2) Non-income producing. (3) Category includes amounts related to receivable for capital shares sold. - ------ 21 LIVESTRONG Portfolios Shares Value LIVESTRONG 2030 Portfolio Mutual Funds(1) -- 89.1% DOMESTIC EQUITY FUNDS -- 47.6% 1,209,182 NT Equity Growth Fund Institutional Class $ 7,968,509 1,155,607 NT Growth Fund Institutional Class 8,343,483 1,316,282 NT Large Company Value Fund Institutional Class 7,647,598 529,574 NT Mid Cap Value Fund Institutional Class 3,474,006 517,640 NT Small Company Fund Institutional Class 2,614,082 553,761 NT Vista Fund Institutional Class(2) 3,632,672 126,989 Real Estate Fund Institutional Class 1,215,285 ------------ 34,895,635 ------------ DOMESTIC FIXED INCOME FUNDS -- 26.1% 400,798 High-Yield Fund Institutional Class 1,923,831 365,657 Inflation-Adjusted Bond Fund Institutional Class 3,875,964 1,319,282 NT Diversified Bond Fund Institutional Class 13,311,555 ------------ 19,111,350 ------------ INTERNATIONAL EQUITY FUNDS -- 11.1% 431,705 NT Emerging Markets Fund Institutional Class 2,136,939 1,002,255 NT International Growth Fund Institutional Class 5,993,485 ------------ 8,130,424 ------------ MONEY MARKET FUNDS -- 4.3% 3,157,608 Premium Money Market Fund Investor Class 3,157,608 ------------ TOTAL INVESTMENT SECURITIES -- 89.1% (Cost $69,916,711) 65,295,017 ------------ OTHER ASSETS AND LIABILITIES -- 10.9%(3) 7,951,191 ------------ TOTAL NET ASSETS -- 100.0% $73,246,208 ============ Notes to Schedule of Investments (1) Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (2) Non-income producing. (3) Category includes amounts related to receivable for capital shares sold. See Notes to Financial Statements. Shares Value LIVESTRONG 2035 Portfolio Mutual Funds(1) -- 96.0% DOMESTIC EQUITY FUNDS -- 56.7% 3,629,289 NT Equity Growth Fund Institutional Class $ 23,917,014 3,484,248 NT Growth Fund Institutional Class 25,156,271 3,976,787 NT Large Company Value Fund Institutional Class 23,105,132 1,763,289 NT Mid Cap Value Fund Institutional Class 11,567,176 1,434,913 NT Small Company Fund Institutional Class 7,246,311 1,806,075 NT Vista Fund Institutional Class(2) 11,847,852 435,140 Real Estate Fund Institutional Class 4,164,290 ------------ 107,004,046 ------------ DOMESTIC FIXED INCOME FUNDS -- 23.7% 981,942 High-Yield Fund Institutional Class 4,713,322 867,122 Inflation-Adjusted Bond Fund Institutional Class 9,191,493 3,054,543 NT Diversified Bond Fund Institutional Class 30,820,339 ------------ 44,725,154 ------------ INTERNATIONAL EQUITY FUNDS -- 13.6% 1,542,849 NT Emerging Markets Fund Institutional Class 7,637,102 2,994,620 NT International Growth Fund Institutional Class 17,907,828 ------------ 25,544,930 ------------ MONEY MARKET FUNDS -- 2.0% 3,805,491 Premium Money Market Fund Investor Class 3,805,491 ------------ TOTAL INVESTMENT SECURITIES -- 96.0% (Cost $239,457,913) 181,079,621 ------------ OTHER ASSETS AND LIABILITIES -- 4.0%(3) 7,618,888 ------------ TOTAL NET ASSETS -- 100.0% $188,698,509 ============ Notes to Schedule of Investments (1) Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (2) Non-income producing. (3) Category includes amounts related to receivable for capital shares sold. - ------ 22 LIVESTRONG Portfolios Shares Value LIVESTRONG 2040 Portfolio Mutual Funds(1) -- 79.7% DOMESTIC EQUITY FUNDS -- 50.6% 433,418 NT Equity Growth Fund Institutional Class $ 2,856,225 404,267 NT Growth Fund Institutional Class 2,918,808 461,130 NT Large Company Value Fund Institutional Class 2,679,165 214,979 NT Mid Cap Value Fund Institutional Class 1,410,262 149,971 NT Small Company Fund Institutional Class 757,353 224,319 NT Vista Fund Institutional Class(2) 1,471,533 49,075 Real Estate Fund Institutional Class 469,648 ------------ 12,562,994 ------------ DOMESTIC FIXED INCOME FUNDS -- 17.1% 90,437 High-Yield Fund Institutional Class 434,098 80,875 Inflation-Adjusted Bond Fund Institutional Class 857,275 293,622 NT Diversified Bond Fund Institutional Class 2,962,646 ------------ 4,254,019 ------------ INTERNATIONAL EQUITY FUNDS -- 12.0% 200,292 NT Emerging Markets Fund Institutional Class 991,445 333,095 NT International Growth Fund Institutional Class 1,991,908 ------------ 2,983,353 ------------ TOTAL INVESTMENT SECURITIES -- 79.7% (Cost $21,650,145) 19,800,366 ------------ OTHER ASSETS AND LIABILITIES -- 20.3%(3) 5,039,765 ------------ TOTAL NET ASSETS -- 100.0% $24,840,131 ============ Notes to Schedule of Investments (1) Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (2) Non-income producing. (3) Category includes amounts related to receivable for capital shares sold. See Notes to Financial Statements. Shares Value LIVESTRONG 2045 Portfolio Mutual Funds(1) -- 97.4% DOMESTIC EQUITY FUNDS -- 63.5% 2,085,773 NT Equity Growth Fund Institutional Class $ 13,745,244 2,004,440 NT Growth Fund Institutional Class 14,472,057 2,327,160 NT Large Company Value Fund Institutional Class 13,520,800 1,060,227 NT Mid Cap Value Fund Institutional Class 6,955,089 882,638 NT Small Company Fund Institutional Class 4,457,322 1,082,651 NT Vista Fund Institutional Class(2) 7,102,190 293,228 Real Estate Fund Institutional Class 2,806,192 ------------ 63,058,894 ------------ DOMESTIC FIXED INCOME FUNDS -- 18.0% 390,051 High-Yield Fund Institutional Class 1,872,245 343,717 Inflation-Adjusted Bond Fund Institutional Class 3,643,400 1,220,906 NT Diversified Bond Fund Institutional Class 12,318,941 ------------ 17,834,586 ------------ INTERNATIONAL EQUITY FUNDS -- 15.9% 1,232,266 NT Emerging Markets Fund Institutional Class 6,099,717 1,612,050 NT International Growth Fund Institutional Class 9,640,059 ------------ 15,739,776 ------------ TOTAL INVESTMENT SECURITIES -- 97.4% (Cost $137,063,226) 96,633,256 ------------ OTHER ASSETS AND LIABILITIES -- 2.6%(3) 2,585,045 ------------ TOTAL NET ASSETS -- 100.0% $99,218,301 ============ Notes to Schedule of Investments (1) Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (2) Non-income producing. (3) Category includes amounts related to receivable for capital shares sold. - ------ 23 LIVESTRONG Portfolios Shares Value LIVESTRONG 2050 Portfolio Mutual Funds(1) -- 87.5% DOMESTIC EQUITY FUNDS -- 59.4% 62,555 NT Equity Growth Fund Institutional Class $ 412,238 59,773 NT Growth Fund Institutional Class 431,561 69,752 NT Large Company Value Fund Institutional Class 405,259 31,515 NT Mid Cap Value Fund Institutional Class 206,738 26,679 NT Small Company Fund Institutional Class 134,729 32,375 NT Vista Fund Institutional Class(2) 212,380 8,612 Real Estate Fund Institutional Class 82,417 ------------ 1,885,322 ------------ DOMESTIC FIXED INCOME FUNDS -- 14.2% 9,786 High-Yield Fund Institutional Class 46,973 8,663 Inflation-Adjusted Bond Fund Institutional Class 91,828 30,740 NT Diversified Bond Fund Institutional Class 310,166 ------------ 448,967 ------------ INTERNATIONAL EQUITY FUNDS -- 13.9% 36,207 NT Emerging Markets Fund Institutional Class 179,225 43,857 NT International Growth Fund Institutional Class 262,265 ------------ 441,490 ------------ TOTAL INVESTMENT SECURITIES -- 87.5% (Cost $3,286,473) 2,775,779 ------------ OTHER ASSETS AND LIABILITIES -- 12.5%(3) 396,220 ------------ TOTAL NET ASSETS -- 100.0% $3,171,999 ============ Notes to Schedule of Investments (1) Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (2) Non-income producing. (3) Category includes amounts related to receivable for capital shares sold. See Notes to Financial Statements. - ------ 24 STATEMENT OF ASSETS AND LIABILITIES JANUARY 31, 2009 (UNAUDITED) LIVESTRONG LIVESTRONG LIVESTRONG Income 2015 2020 Portfolio Portfolio Portfolio ASSETS Investment securities in affiliates, at value (cost of $131,853,120, $301,792,102 and $92,147,363, respectively) $119,440,440 $254,860,471 $86,951,679 Cash 20,688 42,922 13,706 Receivable for capital shares sold 7,133,992 13,980,125 10,107,261 Distributions receivable from affiliates 110,931 212,978 66,508 ------------- ------------- ------------ 126,706,051 269,096,496 97,139,154 ------------- ------------- ------------ LIABILITIES Payable for capital shares redeemed 713,960 261,438 404,262 Accrued administrative fees 19,061 38,211 14,020 Distribution and service fees payable 3,009 7,633 627 ------------- ------------- ------------ 736,030 307,282 418,909 ------------- ------------- ------------ NET ASSETS $125,970,021 $268,789,214 $96,720,245 ============= ============= ============ NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $143,709,380 $322,942,001 $103,313,524 Undistributed net investment income 63,947 110,376 51,412 Accumulated net realized loss on investment transactions (5,390,626) (7,331,532) (1,449,007) Net unrealized depreciation on investments (12,412,680) (46,931,631) (5,195,684) ------------- ------------- ------------ $125,970,021 $268,789,214 $ 96,720,245 ============= ============= ============ INVESTOR CLASS, $0.01 PAR VALUE Net assets $98,235,028 $193,891,564 $84,203,113 Shares outstanding 11,519,391 22,409,431 11,467,990 Net asset value per share $8.53 $8.65 $7.34 INSTITUTIONAL CLASS, $0.01 PAR VALUE Net assets $14,837,755 $39,697,145 $10,469,308 Shares outstanding 1,739,675 4,584,710 1,426,339 Net asset value per share $8.53 $8.66 $7.34 ADVISOR CLASS, $0.01 PAR VALUE Net assets $10,936,196 $25,077,393 $971,154 Shares outstanding 1,282,844 2,899,021 132,371 Net asset value per share $8.52 $8.65 $7.34 R CLASS, $0.01 PAR VALUE Net assets $1,961,042 $10,123,112 $1,076,670 Shares outstanding 230,088 1,170,215 146,728 Net asset value per share $8.52 $8.65 $7.34 See Notes to Financial Statements. - ------ 25 JANUARY 31, 2009 (UNAUDITED) LIVESTRONG LIVESTRONG LIVESTRONG 2025 2030 2035 Portfolio Portfolio Portfolio ASSETS Investment securities in affiliates, at value (cost of $420,884,510, $69,916,711 and $239,457,913, respectively) $339,684,623 $65,295,017 $181,079,621 Cash 54,356 10,432 30,469 Receivable for capital shares sold 9,603,806 8,009,705 7,705,246 Distributions receivable from affiliates 239,323 39,412 93,256 ------------ ----------- ------------ 349,582,108 73,354,566 188,908,592 ------------ ----------- ------------ LIABILITIES Payable for capital shares redeemed 612,217 97,202 177,545 Accrued administrative fees 50,702 10,370 27,067 Distribution and service fees payable 7,961 786 5,471 ------------ ----------- ------------ 670,880 108,358 210,083 ------------ ----------- ------------ NET ASSETS $348,911,228 $73,246,208 $188,698,509 ============ =========== ============ NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $439,338,136 $79,149,926 $253,047,097 Undistributed net investment income 140,953 29,277 57,259 Accumulated net realized loss on investment transactions (9,367,974) (1,311,301) (6,027,555) Net unrealized depreciation on investments (81,199,887) (4,621,694) (58,378,292) ------------ ----------- ------------ $348,911,228 $73,246,208 $188,698,509 ============ =========== ============ INVESTOR CLASS, $0.01 PAR VALUE Net assets $265,379,845 $62,522,779 $136,878,262 Shares outstanding 31,641,120 9,133,103 16,680,666 Net asset value per share $8.39 $6.85 $8.21 INSTITUTIONAL CLASS, $0.01 PAR VALUE Net assets $50,772,437 $8,536,773 $29,420,840 Shares outstanding 6,053,868 1,247,595 3,583,494 Net asset value per share $8.39 $6.84 $8.21 ADVISOR CLASS, $0.01 PAR VALUE Net assets $27,067,705 $618,605 $18,638,042 Shares outstanding 3,227,612 90,429 2,271,235 Net asset value per share $8.39 $6.84 $8.21 R CLASS, $0.01 PAR VALUE Net assets $5,691,241 $1,568,051 $3,761,365 Shares outstanding 678,833 229,291 458,364 Net asset value per share $8.38 $6.84 $8.21 See Notes to Financial Statements. - ------ 26 JANUARY 31, 2009 (UNAUDITED) LIVESTRONG LIVESTRONG LIVESTRONG 2040 2045 2050 Portfolio Portfolio Portfolio ASSETS Investment securities in affiliates, at value (cost of $21,650,145, $137,063,226 and $3,286,473, respectively) $19,800,366 $96,633,256 $2,775,779 Cash 3,489 14,785 336 Receivable for capital shares sold 5,118,158 2,651,679 401,049 Distributions receivable from affiliates 8,028 35,911 837 ----------- ------------ ---------- 24,930,041 99,335,631 3,178,001 ----------- ------------ ---------- LIABILITIES Payable for capital shares redeemed 86,214 101,566 5,680 Accrued administrative fees 3,147 12,957 289 Distribution and service fees payable 549 2,807 33 ----------- ------------ ---------- 89,910 117,330 6,002 ----------- ------------ ---------- NET ASSETS $24,840,131 $99,218,301 $3,171,999 =========== ============ ========== NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $27,160,902 $145,096,384 $3,749,164 Undistributed net investment income 4,573 15,984 591 Accumulated net realized loss on investment transactions (475,565) (5,464,097) (67,062) Net unrealized depreciation on investments (1,849,779) (40,429,970) (510,694) ----------- ------------ ---------- $24,840,131 $ 99,218,301 $3,171,999 =========== ============ ========== INVESTOR CLASS, $0.01 PAR VALUE Net assets $18,265,609 $63,861,903 $1,795,203 Shares outstanding 2,827,937 8,027,107 290,718 Net asset value per share $6.46 $7.96 $6.18 INSTITUTIONAL CLASS, $0.01 PAR VALUE Net assets $5,126,751 $23,778,979 $1,285,299 Shares outstanding 794,036 2,987,832 208,084 Net asset value per share $6.46 $7.96 $6.18 ADVISOR CLASS, $0.01 PAR VALUE Net assets $295,957 $9,771,308 $21,830 Shares outstanding 45,842 1,228,760 3,536 Net asset value per share $6.46 $7.95 $6.17 R CLASS, $0.01 PAR VALUE Net assets $1,151,814 $1,806,111 $69,667 Shares outstanding 178,492 227,121 11,289 Net asset value per share $6.45 $7.95 $6.17 See Notes to Financial Statements. - ------ 27 STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JANUARY 31, 2009 (UNAUDITED) LIVESTRONG LIVESTRONG LIVESTRONG Income 2015 2020 Portfolio Portfolio Portfolio INVESTMENT INCOME (LOSS) INCOME: Income distributions from underlying funds -- affiliates $ 1,589,289 $ 4,504,268 $ 176,924 ------------- ------------- ------------ EXPENSES: Administrative fees 64,137 183,748 17,518 Distribution and service fees: Advisor Class 10,184 29,874 743 R Class 2,564 12,234 1,623 Directors' fees and expenses 1,328 4,108 94 ------------- ------------- ------------ 78,213 229,964 19,978 ------------- ------------- ------------ NET INVESTMENT INCOME (LOSS) 1,511,076 4,274,304 156,946 ------------- ------------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES NET REALIZED GAIN (LOSS) ON: Sale of investments in underlying funds (4,856,452) (6,246,399) (1,465,251) Capital gain distributions received from underlying funds 170,959 496,675 16,355 ------------- ------------- ------------ (4,685,493) (5,749,724) (1,448,896) ------------- ------------- ------------ CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS IN UNDERLYING FUNDS (12,466,072) (46,387,967) (5,183,618) ------------- ------------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES (17,151,565) (52,137,691) (6,632,514) ------------- ------------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(15,640,489) $(47,863,387) $(6,475,568) ============= ============= ============ See Notes to Financial Statements. - ------ 28 FOR THE SIX MONTHS ENDED JANUARY 31, 2009 (UNAUDITED) LIVESTRONG LIVESTRONG LIVESTRONG 2025 2030 2035 Portfolio Portfolio Portfolio INVESTMENT INCOME (LOSS) INCOME: Income distributions from underlying funds -- affiliates $ 5,263,075 $ 110,239 $ 2,606,176 ------------ ------------ ------------- EXPENSES: Administrative fees 237,485 12,946 139,101 Distribution and service fees: Advisor Class 33,303 410 22,618 R Class 9,606 2,649 7,133 Directors' fees and expenses 5,495 78 3,291 ------------- ------------ ------------- 285,889 16,083 172,143 ------------- ------------ ------------- NET INVESTMENT INCOME (LOSS) 4,977,186 94,156 2,434,033 ------------- ------------ ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES NET REALIZED GAIN (LOSS) ON: Sale of investments in underlying funds (7,532,852) (1,320,880) (4,939,990) Capital gain distributions received from underlying funds 569,172 10,596 248,559 ------------- ------------ ------------- (6,963,680) (1,310,284) (4,691,431) ------------- ------------ ------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS IN UNDERLYING FUNDS (78,033,627) (4,615,378) (54,367,447) ------------- ------------ ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES (84,997,307) (5,925,662) (59,058,878) ------------- ------------ ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(80,020,121) $(5,831,506) $(56,624,845) ============= ============ ============= See Notes to Financial Statements. - ------ 29 FOR THE SIX MONTHS ENDED JANUARY 31, 2009 (UNAUDITED) LIVESTRONG LIVESTRONG LIVESTRONG 2040 2045 2050 Portfolio Portfolio Portfolio INVESTMENT INCOME (LOSS) INCOME: Income distributions from underlying funds -- affiliates $ 41,884 $ 1,497,765 $ 20,618 ------------ ------------- ---------- EXPENSES: Administrative fees 4,666 75,336 888 Distribution and service fees: Advisor Class 211 12,457 105 R Class 1,846 3,637 17 Directors' fees and expenses 44 2,099 20 ------------ ------------- ---------- 6,767 93,529 1,030 ------------ ------------- ---------- NET INVESTMENT INCOME (LOSS) 35,117 1,404,236 19,588 ------------ ------------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES NET REALIZED GAIN (LOSS) ON: Sale of investments in underlying funds (479,158) (4,009,498) (68,259) Capital gain distributions received from underlying funds 3,811 116,143 1,904 ------------ ------------- ---------- (475,347) (3,893,355) (66,355) ------------ ------------- ---------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS IN UNDERLYING FUNDS (1,850,140) (36,852,190) (491,988) ------------ ------------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES (2,325,487) (40,745,545) (558,343) ------------ ------------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(2,290,370) $(39,341,309) $(538,755) ============ ============= ========== See Notes to Financial Statements. - ------ 30 STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED JANUARY 31, 2009 (UNAUDITED) AND YEAR ENDED JULY 31, 2008 LIVESTRONG LIVESTRONG Income Portfolio 2015 Portfolio Increase (Decrease) in Net Assets 2009 2008 2009 2008 OPERATIONS Net investment income (loss) $ 1,511,076 $ 2,364,664 $ 4,274,304 $ 6,986,331 Net realized gain (loss) (4,685,493) 136,900 (5,749,724) 1,570,407 Change in net unrealized appreciation (depreciation) (12,466,072) (2,516,968) (46,387,967) (10,467,082) ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations (15,640,489) (15,404) (47,863,387) (1,910,344) ------------ ------------ ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Investor Class (1,133,831) (1,807,377) (5,150,679) (5,029,481) Institutional Class (227,596) (358,453) (667,576) (526,172) Advisor Class (181,479) (251,073) (842,999) (486,532) R Class (21,696) (5,401) (170,136) (120,545) From net realized gains: Investor Class (405,727) (100,501) (1,965,341) (582,593) Institutional Class (79,352) (18,324) (241,939) (57,480) Advisor Class (72,879) (12,887) (344,341) (60,961) R Class (12,048) (264) (74,791) (16,447) ------------ ------------ ------------ ------------ Decrease in net assets from distributions (2,134,608) (2,554,280) (9,457,802) (6,880,211) ------------ ------------ ------------ ------------ CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions 75,992,845 9,686,579 117,878,676 39,105,101 ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS 58,217,748 7,116,895 60,557,487 30,314,546 NET ASSETS Beginning of period 67,752,273 60,635,378 208,231,727 177,917,181 ------------ ------------ ------------ ------------ End of period $125,970,021 $67,752,273 $268,789,214 $208,231,727 ============ ============ ============ ============ Undistributed net investment income $63,947 $117,473 $110,376 $2,667,462 ============ ============ ============ ============ See Notes to Financial Statements. - ------ 31 SIX MONTHS ENDED JANUARY 31, 2009 (UNAUDITED) AND YEAR ENDED JULY 31, 2008 (EXCEPT AS NOTED) LIVESTRONG LIVESTRONG 2020 Portfolio 2025 Portfolio Increase (Decrease) in Net Assets 2009 2008(1) 2009 2008 OPERATIONS Net investment income (loss) $ 156,946 $ 1,601 $ 4,977,186 $ 9,062,338 Net realized gain (loss) (1,448,896) (111) (6,963,680) 2,488,135 Change in net unrealized appreciation (depreciation) (5,183,618) (12,066) (78,033,627) (19,833,288) ----------- ---------- ------------ ------------ Net increase (decrease) in net assets resulting from operations (6,475,568) (10,576) (80,020,121) (8,282,815) ----------- ---------- ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Investor Class (71,188) -- (5,950,421) (6,067,533) Institutional Class (11,369) -- (1,225,708) (1,379,241) Advisor Class (12,872) -- (799,325) (459,566) R Class (11,706) -- (135,485) (45,611) From net realized gains: Investor Class -- -- (3,244,436) (763,010) Institutional Class -- -- (624,145) (162,933) Advisor Class -- -- (471,571) (62,855) R Class -- -- (87,038) (6,836) ----------- ---------- ------------ ------------ Decrease in net assets from distributions (107,135) -- (12,538,129) (8,947,585) ----------- ---------- ------------ ------------ CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions 102,202,130 1,111,394 151,015,227 69,996,157 ----------- ---------- ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS 95,619,427 1,100,818 58,456,977 52,765,757 NET ASSETS Beginning of period 1,100,818 -- 290,454,251 237,688,494 ----------- ---------- ------------ ------------ End of period $96,720,245 $1,100,818 $348,911,228 $290,454,251 =========== ========== ============ ============ Undistributed net investment income $51,412 $1,601 $140,953 $3,274,706 =========== ========== ============ ============ (1) May 30, 2008 (fund inception) through July 31, 2008. See Notes to Financial Statements. - ------ 32 SIX MONTHS ENDED JANUARY 31, 2009 (UNAUDITED) AND YEAR ENDED JULY 31, 2008 (EXCEPT AS NOTED) LIVESTRONG LIVESTRONG 2030 Portfolio 2035 Portfolio Increase (Decrease) in Net Assets 2009 2008(1) 2009 2008 OPERATIONS Net investment income (loss) $ 94,156 $ 635 $ 2,434,033 $ 4,814,697 Net realized gain (loss) (1,310,284) (1,017) (4,691,431) 1,871,450 Change in net unrealized appreciation (depreciation) (4,615,378) (6,316) (54,367,447) (14,197,827) ----------- -------- ------------ ------------ Net increase (decrease) in net assets resulting from operations (5,831,506) (6,698) (56,624,845) (7,511,680) ----------- -------- ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Investor Class (36,628) -- (2,790,829) (3,073,496) Institutional Class (8,184) -- (561,509) (715,004) Advisor Class (5,403) -- (435,681) (352,833) R Class (15,299) -- (73,784) (45,651) From net realized gains: Investor Class -- -- (2,117,074) (398,845) Institutional Class -- -- (396,869) (86,908) Advisor Class -- -- (363,962) (50,009) R Class -- -- (68,580) (7,128) ----------- -------- ------------ ------------ Decrease in net assets from distributions (65,514) -- (6,808,288) (4,729,874) ----------- -------- ------------ ------------ CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions 78,499,238 650,688 77,873,472 58,612,954 ----------- -------- ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS 72,602,218 643,990 14,440,339 46,371,400 NET ASSETS Beginning of period 643,990 -- 174,258,170 127,886,770 ----------- -------- ------------ ------------ End of period $73,246,208 $643,990 $188,698,509 $174,258,170 =========== ======== ============ ============ Undistributed net investment income $29,277 $635 $57,259 $1,485,029 =========== ======== ============ ============ (1) May 30, 2008 (fund inception) through July 31, 2008. See Notes to Financial Statements. - ------ 33 SIX MONTHS ENDED JANUARY 31, 2009 (UNAUDITED) AND YEAR ENDED JULY 31, 2008 (EXCEPT AS NOTED) LIVESTRONG LIVESTRONG 2040 Portfolio 2045 Portfolio Increase (Decrease) in Net Assets 2009 2008(1) 2009 2008 OPERATIONS Net investment income (loss) $ 35,117 $ 499 $ 1,404,236 $ 3,354,239 Net realized gain (loss) (475,347) (218) (3,893,355) 659,386 Change in net unrealized appreciation (depreciation) (1,850,140) 361 (36,852,190) (11,088,022) ----------- -------- ------------ ------------ Net increase (decrease) in net assets resulting from operations (2,290,370) 642 (39,341,309) (7,074,397) ----------- -------- ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Investor Class (16,296) -- (1,472,652) (1,730,903) Institutional Class (1,179) -- (568,816) (914,356) Advisor Class (2,891) -- (216,154) (270,802) R Class (10,677) -- (30,162) (24,577) From net realized gains: Investor Class -- -- (1,312,952) (215,140) Institutional Class -- -- (470,646) (106,359) Advisor Class -- -- (213,458) (36,814) R Class -- -- (33,383) (3,687) ----------- -------- ------------ ------------ Decrease in net assets from distributions (31,043) -- (4,318,223) (3,302,638) ----------- -------- ------------ ------------ CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions 26,312,879 848,023 26,360,109 40,338,967 ----------- -------- ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS 23,991,466 848,665 (17,299,423) 29,961,932 NET ASSETS Beginning of period 848,665 -- 116,517,724 86,555,792 ----------- -------- ------------ ------------ End of period $24,840,131 $848,665 $ 99,218,301 $116,517,724 =========== ======== ============ ============ Undistributed net investment income $4,573 $499 $15,984 $899,532 =========== ======== ============ ============ (1) May 30, 2008 (fund inception) through July 31, 2008. See Notes to Financial Statements. - ------ 34 SIX MONTHS ENDED JANUARY 31, 2009 (UNAUDITED) AND PERIOD ENDED JULY 31, 2008 LIVESTRONG 2050 Portfolio Increase (Decrease) in Net Assets 2009 2008(1) OPERATIONS Net investment income (loss) $ 19,588 $ 547 Net realized gain (loss) (66,355) (707) Change in net unrealized appreciation (depreciation) (491,988) (18,706) ---------- --------- Net increase (decrease) in net assets resulting from operations (538,755) (18,866) ---------- --------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Investor Class (8,507) -- Institutional Class (10,356) -- Advisor Class (179) -- R Class (502) -- ---------- --------- Decrease in net assets from distributions (19,544) -- ---------- --------- CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions 3,248,540 500,624 ---------- --------- NET INCREASE (DECREASE) IN NET ASSETS 2,690,241 481,758 NET ASSETS Beginning of period 481,758 -- ---------- --------- End of period $3,171,999 $481,758 ========== ========= Undistributed net investment income $591 $547 ========== ========= (1) May 30, 2008 (fund inception) through July 31, 2008. See Notes to Financial Statements. - ------ 35 NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2009 (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. LIVESTRONG Income Portfolio, LIVESTRONG 2015 Portfolio, LIVESTRONG 2020 Portfolio, LIVESTRONG 2025 Portfolio, LIVESTRONG 2030 Portfolio, LIVESTRONG 2035 Portfolio, LIVESTRONG 2040 Portfolio, LIVESTRONG 2045 Portfolio and LIVESTRONG 2050 Portfolio (collectively, the funds) are nine 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 Investments family of funds (the underlying funds). The funds are diversified under the 1940 Act. Additionally, the underlying funds are generally diversified and so indirectly provide broad exposure to a large number of securities. The investment objective of LIVESTRONG Income Portfolio is to seek current income. Capital appreciation is a secondary objective. The investment objectives of the eight target-year LIVESTRONG Portfolios 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 LIVESTRONG Income Portfolio. 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 distribution and shareholder servicing 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. All classes of LIVESTRONG 2020 Portfolio, LIVESTRONG 2030 Portfolio, LIVESTRONG 2040 Portfolio and LIVESTRONG 2050 Portfolio commenced sale on May 30, 2008, the funds' inception date. 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). The underlying funds are not permitted to invest in securities issued by companies assigned the Global Industry Classification Standard (GICS) for the tobacco industry. A brief description of each of the underlying funds follows. DOMESTIC EQUITY FUNDS NT EQUITY GROWTH seeks long-term capital growth. It uses a quantitative investment strategy to construct an optimized portfolio drawn primarily from large publicly traded U.S. companies without regard to dividend yield. NT GROWTH seeks long-term capital growth. It uses a growth investment strategy and generally invests in larger U.S. companies. NT 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. NT MID CAP VALUE seeks long-term capital growth with income as a secondary objective. It uses a value investment strategy and invests primarily in mid-sized U.S. companies. NT SMALL COMPANY seeks long-term capital growth. It uses a quantitative investment strategy and invests primarily in smaller U.S. companies. NT VISTA seeks long-term capital growth. It uses a growth investment strategy and generally invests in medium-sized and smaller U.S. companies. - ------ 36 REAL ESTATE seeks high total investment return through a combination of capital appreciation and current income. It invests primarily in equity securities issued by real estate investment trusts and companies engaged in the real estate industry. INTERNATIONAL EQUITY FUNDS NT EMERGING MARKETS seeks capital growth. It uses a growth investment strategy and invests primarily in securities of companies located in emerging market countries. NT 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 HIGH-YIELD seeks high current income by investing in a diversified portfolio of high-yield corporate bonds and other debt securities. As a secondary objective, the fund seeks capital appreciation, but only when consistent with its primary objective of maximizing current income. INFLATION-ADJUSTED BOND seeks to provide total return and inflation protection consistent with investment in inflation-indexed securities. NT 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. INTERNATIONAL FIXED INCOME FUNDS INTERNATIONAL BOND seeks high total return by investing in high-quality, non-dollar-denominated government and corporate debt securities outside the United States. MONEY MARKET FUNDS PREMIUM MONEY MARKET seeks to earn the highest level of current income while preserving the value of shareholder investments by investing in high-quality, very short-term debt securities issued by corporations, banks and governments. SECURITY VALUATIONS -- Investments in the underlying funds are valued at their reported net asset value. The underlying funds have specific valuation policies. If an event occurs after the value of a security was established but before the net asset value per share of an underlying fund was determined that was likely to materially change the net asset value of the underlying fund, that security would be valued as determined in accordance with procedures adopted by the Board of Directors / Trustees. If the underlying fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued as determined by the Board of Directors / Trustees or its designee, in accordance with procedures adopted by the Board of Directors / Trustees, if such determination would materially impact an underlying fund's net asset value. Certain other circumstances may cause the underlying fund to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence. SECURITY TRANSACTIONS -- For financial reporting purposes, 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. - ------ 37 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. All tax years for the funds remain subject to examination by tax authorities. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes. Interest and penalties associated with any federal or state income tax obligations, if any, are recorded as interest expense. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income, if any, are generally declared and paid quarterly for LIVESTRONG Income Portfolio. Distributions from net investment income, if any, are generally declared and paid annually for the eight target-date LIVESTRONG Portfolios. 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 Class, Advisor Class and R Class of the funds is 0.20%. There is no administrative fee for the Institutional Class. DISTRIBUTION FEES -- The Board of Directors has adopted a separate Master Distribution and Individual Shareholder Services Plan for the Advisor Class and R Class (collectively the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the Advisor Class and R Class will each pay American Century Investment Services, Inc. (ACIS) an annual distribution and service fee of 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 financial intermediaries for distribution and individual shareholder services. Fees incurred under the plans during the six months ended January 31, 2009, 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. - ------ 38 3. INVESTMENT TRANSACTIONS Investment transactions for the six months ended January 31, 2009, were as follows: LIVESTRONG LIVESTRONG LIVESTRONG LIVESTRONG LIVESTRONG Income 2015 2020 2025 2030 Portfolio Portfolio Portfolio Portfolio Portfolio Purchases $93,047,706 $133,943,908 $103,082,547 $175,416,361 $77,258,996 Proceeds from sales $23,869,183 $34,246,076 $10,581,696 $40,242,065 $6,671,239 LIVESTRONG LIVESTRONG LIVESTRONG LIVESTRONG 2035 2040 2045 2050 Portfolio Portfolio Portfolio Portfolio Purchases $86,094,847 $22,484,078 $33,881,743 $3,043,713 Proceeds from sales $19,639,827 $1,202,729 $12,736,424 $189,167 4. CAPITAL SHARE TRANSACTIONS The corporation is authorized to issue 3,000,000,000 shares. Transactions in shares of the funds were as follows: Six months ended Year ended January 31, 2009 July 31, 2008 Shares Amount Shares Amount LIVESTRONG Income Portfolio INVESTOR CLASS Sold 17,461,595 $156,366,284 1,523,508 $ 16,847,911 Issued in reinvestment of distributions 162,737 1,500,704 168,042 1,850,738 Redeemed (10,745,691) (95,377,930) (1,040,699) (11,448,990) ------------ ------------ ----------- ------------ 6,878,641 62,489,058 650,851 7,249,659 ------------ ------------ ----------- ------------ INSTITUTIONAL CLASS Sold 1,011,222 8,836,405 499,845 5,531,784 Issued in reinvestment of distributions 33,304 306,948 34,216 376,777 Redeemed (219,896) (2,047,497) (368,318) (4,091,466) ------------ ------------ ----------- ------------ 824,630 7,095,856 165,743 1,817,095 ------------ ------------ ----------- ------------ ADVISOR CLASS Sold 693,465 6,366,120 635,076 7,022,165 Issued in reinvestment of distributions 27,751 254,316 23,937 263,705 Redeemed (217,347) (2,076,427) (615,687) (6,916,439) ------------ ------------ ----------- ------------ 503,869 4,544,009 43,326 369,431 ------------ ------------ ----------- ------------ R CLASS Sold 206,237 1,945,255 36,733 404,679 Issued in reinvestment of distributions 3,760 33,736 517 5,665 Redeemed (12,946) (115,069) (14,376) (159,950) ------------ ------------ ----------- ------------ 197,051 1,863,922 22,874 250,394 ------------ ------------ ----------- ------------ Net increase (decrease) 8,404,191 $ 75,992,845 882,794 $ 9,686,579 ============ ============ =========== ============ - ------ 39 Six months ended Year ended January 31, 2009 July 31, 2008(1) Shares Amount Shares Amount LIVESTRONG 2015 Portfolio INVESTOR CLASS Sold 18,364,377 $ 169,422,418 4,935,566 $ 58,173,266 Issued in reinvestment of distributions 786,589 7,063,567 471,644 5,574,831 Redeemed (10,951,040) (100,519,200) (2,930,959) (34,481,030) ------------ ------------- ----------- ------------ 8,199,926 75,966,785 2,476,251 29,267,067 ------------ ------------- ----------- ------------ INSTITUTIONAL CLASS Sold 3,184,934 28,986,270 653,459 7,690,482 Issued in reinvestment of distributions 101,282 909,515 49,378 583,652 Redeemed (266,153) (2,629,191) (457,705) (5,457,023) ------------ ------------- ----------- ------------ 3,020,063 27,266,594 245,132 2,817,111 ------------ ------------- ----------- ------------ ADVISOR CLASS Sold 1,098,696 10,823,735 1,442,194 16,986,326 Issued in reinvestment of distributions 130,939 1,175,836 46,319 547,493 Redeemed (474,876) (4,746,533) (965,001) (11,738,341) ------------ ------------- ----------- ------------ 754,759 7,253,038 523,512 5,795,478 ------------ ------------- ----------- ------------ R CLASS Sold 994,357 9,206,070 208,185 2,486,903 Issued in reinvestment of distributions 26,161 234,927 11,492 135,950 Redeemed (216,971) (2,048,738) (121,357) (1,397,408) ------------ ------------- ----------- ------------ 803,547 7,392,259 98,320 1,225,445 ------------ ------------- ----------- ------------ Net increase (decrease) 12,778,295 $ 117,878,676 3,343,215 $ 39,105,101 ============ ============= =========== ============ LIVESTRONG 2020 Portfolio INVESTOR CLASS Sold 25,238,767 $ 196,019,285 114,155 $1,093,368 Issued in reinvestment of distributions 9,330 71,188 -- -- Redeemed (13,893,129) (106,790,526) (1,133) (10,810) ------------ ------------- ----------- ------------ 11,354,968 89,299,947 113,022 1,082,558 ------------ ------------- ----------- ------------ INSTITUTIONAL CLASS Sold 1,423,525 10,496,010 1,687 16,336 Issued in reinvestment of distributions 1,490 11,369 -- -- Redeemed (363) (2,735) -- -- ------------ ------------- ----------- ------------ 1,424,652 10,504,644 1,687 16,336 ------------ ------------- ----------- ------------ ADVISOR CLASS Sold 131,335 1,127,035 625 6,250 Issued in reinvestment of distributions 1,687 12,872 -- -- Redeemed (1,276) (9,818) -- -- ------------ ------------- ----------- ------------ 131,746 1,130,089 625 6,250 ------------ ------------- ----------- ------------ R CLASS Sold 161,095 1,382,606 625 6,250 Issued in reinvestment of distributions 1,534 11,706 -- -- Redeemed (16,526) (126,862) -- -- ------------ ------------- ----------- ------------ 146,103 1,267,450 625 6,250 ------------ ------------- ----------- ------------ Net increase (decrease) 13,057,469 $ 102,202,130 115,959 $1,111,394 ============ ============= =========== ============ (1) May 30, 2008 (fund inception) through July 31, 2008 for LIVESTRONG 2020 Portfolio. - ------ 40 Six months ended Year ended January 31, 2009 July 31, 2008(1) Shares Amount Shares Amount LIVESTRONG 2025 Portfolio INVESTOR CLASS Sold 27,327,946 $ 247,143,790 7,227,400 $ 87,956,265 Issued in reinvestment of distributions 1,046,971 9,160,993 554,236 6,811,558 Redeemed (15,227,723) (136,259,183) (3,452,073) (41,430,297) ------------ ------------- ----------- ------------ 13,147,194 120,045,600 4,329,563 53,337,526 ------------ ------------- ----------- ------------ INSTITUTIONAL CLASS Sold 2,523,068 22,282,915 1,003,427 12,207,554 Issued in reinvestment of distributions 211,413 1,849,853 125,482 1,542,174 Redeemed (512,761) (4,980,919) (874,062) (10,878,957) ------------ ------------- ----------- ------------ 2,221,720 19,151,849 254,847 2,870,771 ------------ ------------- ----------- ------------ ADVISOR CLASS Sold 1,069,223 10,425,532 1,600,667 19,440,964 Issued in reinvestment of distributions 144,407 1,263,560 42,508 522,421 Redeemed (403,498) (4,002,222) (609,735) (7,683,302) ------------ ------------- ----------- ------------ 810,132 7,686,870 1,033,440 12,280,083 ------------ ------------- ----------- ------------ R CLASS Sold 486,458 4,582,212 173,823 2,090,704 Issued in reinvestment of distributions 23,819 208,417 4,062 49,926 Redeemed (68,268) (659,721) (52,910) (632,853) ------------ ------------- ----------- ------------ 442,009 4,130,908 124,975 1,507,777 ------------ ------------- ----------- ------------ Net increase (decrease) 16,621,055 $ 151,015,227 5,742,825 $ 69,996,157 ============ ============= =========== ============ LIVESTRONG 2030 Portfolio INVESTOR CLASS Sold 19,717,627 $144,135,929 69,257 $655,977 Issued in reinvestment of distributions 5,047 36,137 -- -- Redeemed (10,656,250) (77,014,215) (2,578) (24,039) ------------ ------------- ----------- ------------ 9,066,424 67,157,851 66,679 631,938 ------------ ------------- ----------- ------------ INSTITUTIONAL CLASS Sold 1,265,917 8,770,203 625 6,250 Issued in reinvestment of distributions 1,145 8,184 -- -- Redeemed (20,092) (138,097) -- -- ------------ ------------- ----------- ------------ 1,246,970 8,640,290 625 6,250 ------------ ------------- ----------- ------------ ADVISOR CLASS Sold 104,595 849,579 625 6,250 Issued in reinvestment of distributions 756 5,403 -- -- Redeemed (15,547) (112,801) -- -- ------------ ------------- ----------- ------------ 89,804 742,181 625 6,250 ------------ ------------- ----------- ------------ R CLASS Sold 258,062 2,169,346 625 6,250 Issued in reinvestment of distributions 2,140 15,299 -- -- Redeemed (31,536) (225,729) -- -- ------------ ------------- ----------- ------------ 228,666 1,958,916 625 6,250 ------------ ------------- ----------- ------------ Net increase (decrease) 10,631,864 $ 78,499,238 68,554 $650,688 ============ ============= =========== ============ (1) May 30, 2008 (fund inception) through July 31, 2008 for LIVESTRONG 2030 Portfolio. - ------ 41 Six months ended Year ended January 31, 2009 July 31, 2008(1) Shares Amount Shares Amount LIVESTRONG 2035 Portfolio INVESTOR CLASS Sold 11,882,346 $107,312,124 5,273,716 $ 67,011,195 Issued in reinvestment of distributions 568,003 4,896,188 265,648 3,469,367 Redeemed (6,412,924) (57,012,530) (1,862,588) (23,625,688) ----------- ------------ ----------- ------------ 6,037,425 55,195,782 3,676,776 46,854,874 ----------- ------------ ----------- ------------ INSTITUTIONAL CLASS Sold 1,677,196 14,554,404 542,257 6,886,635 Issued in reinvestment of distributions 111,052 958,378 61,402 801,912 Redeemed (194,650) (1,972,447) (315,217) (4,091,617) ----------- ------------ ----------- ------------ 1,593,598 13,540,335 288,442 3,596,930 ----------- ------------ ----------- ------------ ADVISOR CLASS Sold 853,620 8,309,315 1,057,731 13,387,446 Issued in reinvestment of distributions 91,719 791,531 30,822 402,842 Redeemed (257,774) (2,602,038) (527,772) (7,020,874) ----------- ------------ ----------- ------------ 687,565 6,498,808 560,781 6,769,414 ----------- ------------ ----------- ------------ R CLASS Sold 293,314 2,802,407 160,015 2,063,991 Issued in reinvestment of distributions 15,842 136,718 3,922 51,263 Redeemed (31,146) (300,578) (58,210) (723,518) ----------- ------------ ----------- ------------ 278,010 2,638,547 105,727 1,391,736 ----------- ------------ ----------- ------------ Net increase (decrease) 8,596,598 $ 77,873,472 4,631,726 $ 58,612,954 =========== ============ =========== ============ LIVESTRONG 2040 Portfolio INVESTOR CLASS Sold 5,758,343 $ 40,200,294 90,295 $837,273 Issued in reinvestment of distributions 2,393 16,296 -- -- Redeemed (3,022,273) (20,856,900) (821) (8,000) ----------- ------------ ----------- ------------ 2,738,463 19,359,690 89,474 829,273 ----------- ------------ ----------- ------------ INSTITUTIONAL CLASS Sold 793,625 5,139,717 625 6,250 Issued in reinvestment of distributions 173 1,179 -- -- Redeemed (387) (2,649) -- -- ----------- ------------ ----------- ------------ 793,411 5,138,247 625 6,250 ----------- ------------ ----------- ------------ ADVISOR CLASS Sold 50,590 395,919 625 6,250 Issued in reinvestment of distributions 424 2,891 -- -- Redeemed (5,797) (41,256) -- -- ----------- ------------ ----------- ------------ 45,217 357,554 625 6,250 ----------- ------------ ----------- ------------ R CLASS Sold 183,828 1,497,704 625 6,250 Issued in reinvestment of distributions 1,568 10,677 -- -- Redeemed (7,529) (50,993) -- -- ----------- ------------ ----------- ------------ 177,867 1,457,388 625 6,250 ----------- ------------ ----------- ------------ Net increase (decrease) 3,754,958 $ 26,312,879 91,349 $848,023 =========== ============ =========== ============ (1) May 30, 2008 (fund inception) through July 31, 2008 for LIVESTRONG 2040 Portfolio. - ------ 42 Six months ended Year ended January 31, 2009 July 31, 2008(1) Shares Amount Shares Amount LIVESTRONG 2045 Portfolio INVESTOR CLASS Sold 3,511,476 $ 32,135,846 3,499,543 $ 45,795,739 Issued in reinvestment of distributions 328,649 2,767,177 145,128 1,938,913 Redeemed (1,748,907) (15,821,836) (1,307,691) (16,851,978) ----------- ------------ ----------- ------------ 2,091,218 19,081,187 2,336,980 30,882,674 ----------- ------------ ----------- ------------ INSTITUTIONAL CLASS Sold 823,474 7,301,464 896,299 11,781,809 Issued in reinvestment of distributions 123,451 1,039,462 76,344 1,020,715 Redeemed (493,116) (4,721,161) (561,204) (7,352,345) ----------- ------------ ----------- ------------ 453,809 3,619,765 411,439 5,450,179 ----------- ------------ ----------- ------------ ADVISOR CLASS Sold 335,573 3,089,183 593,456 7,704,375 Issued in reinvestment of distributions 50,634 426,339 23,025 307,616 Redeemed (91,281) (889,788) (362,137) (4,775,098) ----------- ------------ ----------- ------------ 294,926 2,625,734 254,344 3,236,893 ----------- ------------ ----------- ------------ R CLASS Sold 121,292 1,134,281 86,662 1,132,673 Issued in reinvestment of distributions 6,076 51,161 1,521 20,338 Redeemed (15,226) (152,019) (29,548) (383,790) ----------- ------------ ----------- ------------ 112,142 1,033,423 58,635 769,221 ----------- ------------ ----------- ------------ Net increase (decrease) 2,952,095 $ 26,360,109 3,061,398 $ 40,338,967 =========== ============ =========== ============ LIVESTRONG 2050 Portfolio INVESTOR CLASS Sold 406,397 $ 2,812,594 51,078 $488,874 Issued in reinvestment of distributions 1,292 8,453 -- -- Redeemed (167,285) (1,119,818) (764) (7,000) ----------- ------------ ----------- ------------ 240,404 1,701,229 50,314 481,874 ----------- ------------ ----------- ------------ INSTITUTIONAL CLASS Sold 212,200 1,478,789 625 6,250 Issued in reinvestment of distributions 1,583 10,356 -- -- Redeemed (6,324) (45,786) -- -- ----------- ------------ ----------- ------------ 207,459 1,443,359 625 6,250 ----------- ------------ ----------- ------------ ADVISOR CLASS Sold 2,884 21,076 625 6,250 Issued in reinvestment of distributions 27 179 -- -- ----------- ------------ ----------- ------------ 2,911 21,255 625 6,250 ----------- ------------ ----------- ------------ R CLASS Sold 11,359 87,103 625 6,250 Issued in reinvestment of distributions 77 502 -- -- Redeemed (772) (4,908) -- -- ----------- ------------ ----------- ------------ 10,664 82,697 625 6,250 ----------- ------------ ----------- ------------ Net increase (decrease) 461,438 $ 3,248,540 52,189 $500,624 =========== ============ =========== ============ (1) May 30, 2008 (fund inception) through July 31, 2008 for LIVESTRONG 2050 Portfolio. - ------ 43 5. AFFILIATED COMPANY TRANSACTIONS Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. A summary of the transactions for each underlying fund during the six months ended January 31, 2009 follows: July 31, 2008 January 31, 2009 Fund/ Underlying Share Purchase Sales Realized Distributions Share Market Fund Balance Cost Cost Gain (Loss) Received(1) Balance Value LIVESTRONG Income Portfolio High-Yield Fund Institutional Class 439,813 $ 3,532,866 $ 889,444 $ (186,251) $ 116,269 1,045,310 $ 5,017,488 Inflation- Adjusted Bond Fund Institutional Class 467,270 6,688,373 1,990,644 (82,087) 126,275 929,023 9,847,644 NT Diversified Bond Fund Institutional Class 1,817,937 22,912,798 8,181,247 (107,832) 847,053 3,294,543 33,241,939 NT Equity Growth Fund Institutional Class 856,240 12,698,989 3,636,157 (1,169,523) 100,286 2,206,045 14,537,837 NT Growth Fund Institutional Class 388,477 6,458,259 1,626,742 (495,048) 31,517 1,058,920 7,645,402 NT Large Company Value Fund Institutional Class 769,386 10,996,510 3,346,150 (1,250,258) 99,978 2,036,188 11,830,252 NT Mid Cap Value Fund Institutional Class 292,448 3,734,956 1,010,061 (270,420) 32,952 695,785 4,564,350 NT Small Company Fund Institutional Class 153,329 2,050,493 560,442 (212,121) 4,015 439,566 2,219,808 NT Vista Fund Institutional Class(2) 142,931 2,656,544 675,897 (240,448) -- 449,897 2,951,324 Real Estate Fund Institutional Class 30,326 1,185,996 377,554 (203,066) 19,140 117,312 1,122,676 Premium Money Market Fund Investor Class 7,041,280 8,613,929 3,208,025 -- 83,873 12,447,184 12,447,184 International Bond Fund Institutional Class 326,382 6,058,992 1,819,029 (105,679) 248,633 630,499 8,303,672 NT International Growth Fund Institutional Class 297,235 5,459,001 1,404,243 (533,719) 50,257 954,994 5,710,864 ----------- ----------- ------------ ------------- ------------ $93,047,706 $28,725,635 $(4,856,452) $1,760,248 $119,440,440 =========== =========== ============ ============= ============ (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. - ------ 44 July 31, 2008 January 31, 2009 Fund/ Underlying Share Purchase Sales Realized Distributions Share Market Fund Balance Cost Cost Gain (Loss) Received(1) Balance Value LIVESTRONG 2015 Portfolio NT Equity Growth Fund Institutional Class 2,552,134 $ 17,282,796 $ 2,920,529 $ (928,424) $ 298,435 4,579,813 $ 30,180,968 NT Growth Fund Institutional Class 1,481,964 11,827,756 1,811,123 (536,091) 120,233 2,809,616 20,285,428 NT Large Company Value Fund Institutional Class 2,441,771 16,293,935 2,915,639 (1,122,747) 316,930 4,518,345 26,251,584 NT Mid Cap Value Fund Institutional Class 1,133,888 6,435,860 1,255,652 (312,991) 127,652 1,884,570 12,362,779 NT Small Company Fund Institutional Class 475,348 3,119,117 499,767 (180,880) 12,438 953,906 4,817,225 NT Vista Fund Institutional Class(2) 708,665 6,270,401 1,287,494 (483,626) -- 1,441,559 9,456,627 Real Estate Fund Institutional Class 127,130 2,547,102 411,259 (199,385) 77,374 338,509 3,239,531 High-Yield Fund Institutional Class 1,291,014 4,657,190 935,805 (183,563) 312,358 2,120,779 10,179,739 Inflation- Adjusted Bond Fund Institutional Class 1,370,511 8,374,235 3,176,969 (186,281) 368,729 1,890,843 20,042,936 NT Diversified Bond Fund Institutional Class 5,290,466 28,766,054 15,576,344 (309,538) 2,396,901 6,634,329 66,940,380 Premium Money Market Fund Investor Class 14,169,337 8,092,484 3,793,938 -- 162,189 18,467,883 18,467,883 NT Emerging Markets Fund Institutional Class 306,469 3,062,492 1,826,959 (995,126) -- 616,063 3,049,512 NT International Growth Fund Institutional Class 1,152,707 10,467,201 1,584,444 (606,316) 184,561 2,474,086 14,795,034 International Bond Fund Institutional Class 808,465 6,747,285 2,496,553 (201,431) 623,143 1,123,071 14,790,845 ------------ ----------- ------------ ------------- ------------ $133,943,908 $40,492,475 $(6,246,399) $5,000,943 $254,860,471 ============ =========== ============ ============= ============ (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. - ------ 45 July 31, 2008 January 31, 2009 Fund/ Share Purchase Sales Realized Distributions Share Market Underlying Fund Balance Cost Cost Gain (Loss) Received(1) Balance Value LIVESTRONG 2020 Portfolio NT Equity Growth Fund Institutional Class 13,523 $ 12,653,078 $ 1,562,211 $ (278,176) $ 7,583 1,528,435 $10,072,387 NT Growth Fund Institutional Class 9,493 9,568,878 1,167,262 (204,120) 5,507 1,103,554 7,967,660 NT Large Company Value Fund Institutional Class 13,966 11,882,091 1,499,235 (293,608) 9,249 1,560,493 9,066,464 NT Mid Cap Value Fund Institutional Class 6,894 5,672,009 677,970 (103,258) 4,154 697,064 4,572,740 NT Small Company Fund Institutional Class 3,331 2,593,733 330,002 (71,384) 481 400,067 2,020,338 NT Vista Fund Institutional Class(2) 4,392 4,668,892 577,765 (107,393) -- 596,838 3,915,257 Real Estate Fund Institutional Class 835 1,632,330 232,407 (71,987) 3,115 125,877 1,204,643 High-Yield Fund Institutional Class 6,418 3,504,078 376,363 (25,172) 23,661 678,703 3,257,774 Inflation- Adjusted Bond Fund Institutional Class 6,564 6,980,415 733,099 (13,329) 4,948 607,568 6,440,221 NT Diversified Bond Fund Institutional Class 25,513 24,573,769 2,603,140 (2,969) 107,009 2,210,542 22,304,369 NT Emerging Markets Fund Institutional Class 2,495 2,353,926 316,783 (80,378) -- 364,370 1,803,631 NT International Growth Fund Institutional Class 7,356 7,259,242 909,286 (185,452) 8,117 971,224 5,807,920 Premium Money Market Fund Investor Class 55,710 5,126,554 554,539 -- 7,241 4,627,725 4,627,725 International Bond Fund Institutional Class 2,934 4,613,552 506,885 (28,025) 12,214 295,410 3,890,550 ------------ ----------- ------------ ------------- ----------- $103,082,547 $12,046,947 $(1,465,251) $193,279 $86,951,679 ============ =========== ============ ============= =========== (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. - ------ 46 July 31, 2008 January 31, 2009 Fund/ Share Purchase Sales Realized Distributions Share Market Underlying Fund Balance Cost Cost Gain (Loss) Received(1) Balance Value LIVESTRONG 2025 Portfolio NT Equity Growth Fund Institutional Class 3,602,431 $ 21,009,529 $ 2,903,528 $(1,001,302) $ 413,797 6,141,398 $ 40,471,813 NT Growth Fund Institutional Class 2,941,097 19,482,613 2,550,160 (863,576) 224,110 5,175,307 37,365,717 NT Large Company Value Fund Institutional Class 3,752,460 21,188,974 3,749,983 (1,536,209) 470,723 6,451,109 37,480,943 NT Mid Cap Value Fund Institutional Class 1,680,943 8,279,472 1,578,666 (390,719) 184,802 2,653,861 17,409,328 NT Small Company Fund Institutional Class 1,174,267 6,744,052 887,436 (336,418) 29,956 2,238,802 11,305,950 NT Vista Fund Institutional Class(2) 1,249,163 10,566,617 1,277,036 (516,038) -- 2,589,375 16,986,300 Real Estate Fund Institutional Class 245,954 4,444,352 581,117 (304,412) 146,288 629,260 6,022,018 High-Yield Fund Institutional Class 1,544,407 4,863,310 1,213,677 (233,034) 361,827 2,375,770 11,403,696 Inflation- Adjusted Bond Fund Institutional Class 1,639,867 9,286,050 4,066,366 (249,190) 440,301 2,172,607 23,029,634 NT Diversified Bond Fund Institutional Class 6,276,546 31,938,667 19,408,795 (417,414) 2,774,013 7,571,529 76,396,728 NT Emerging Markets Fund Institutional Class 740,611 7,531,860 1,066,918 (609,600) -- 1,839,981 9,107,906 NT International Growth Fund Institutional Class 2,276,565 18,684,694 2,281,446 (975,308) 355,271 4,706,249 28,143,369 Premium Money Market Fund Investor Class 15,395,670 7,456,273 5,142,019 -- 168,796 17,709,924 17,709,924 International Bond Fund Institutional Class 305,876 3,939,898 1,067,770 (99,632) 262,363 520,220 6,851,297 ------------ ----------- ------------ ------------- ------------ $175,416,361 $47,774,917 $(7,532,852) $5,832,247 $339,684,623 ============ =========== ============ ============= ============ (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. - ------ 47 July 31, 2008 January 31, 2009 Fund/ Underlying Share Purchase Sales Realized Distributions Share Market Fund Balance Cost Cost Gain (Loss) Received(1) Balance Value LIVESTRONG 2030 Portfolio NT Equity Growth Fund Institutional Class 8,437 $ 9,867,231 $1,067,558 $ (217,998) $ 5,526 1,209,182 $ 7,968,509 NT Growth Fund Institutional Class 7,661 9,858,174 1,032,863 (209,556) 5,766 1,155,607 8,343,483 NT Large Company Value Fund Institutional Class 9,291 9,871,725 1,089,339 (241,356) 7,342 1,316,282 7,647,598 NT Mid Cap Value Fund Institutional Class 4,234 4,257,078 452,479 (81,573) 3,001 529,574 3,474,006 NT Small Company Fund Institutional Class 3,119 3,293,882 358,231 (87,053) 593 517,640 2,614,082 NT Vista Fund Institutional Class(2) 3,204 4,267,885 461,006 (101,407) -- 553,761 3,632,672 Real Estate Fund Institutional Class 642 1,614,345 202,159 (71,050) 3,130 126,989 1,215,285 High-Yield Fund Institutional Class 2,819 2,041,977 188,433 (16,862) 13,926 400,798 1,923,831 Inflation- Adjusted Bond Fund Institutional Class 2,949 4,150,276 378,676 (10,595) 2,116 365,657 3,875,964 NT Diversified Bond Fund Institutional Class 11,435 14,482,317 1,329,463 (9,259) 66,008 1,319,282 13,311,555 NT Emerging Markets Fund Institutional Class 2,059 2,728,465 307,932 (84,436) -- 431,705 2,136,939 NT International Growth Fund Institutional Class 5,964 7,376,596 806,436 (189,735) 8,627 1,002,255 5,993,485 Premium Money Market Fund Investor Class 26,107 3,449,045 317,544 -- 4,800 3,157,608 3,157,608 ----------- ---------- ------------ ------------- ----------- $77,258,996 $7,992,119 $(1,320,880) $120,835 $65,295,017 =========== ========== ============ ============= =========== (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. - ------ 48 July 31, 2008 January 31, 2009 Fund/ Underlying Share Purchase Sales Realized Distributions Share Market Fund Balance Cost Cost Gain (Loss) Received(1) Balance Value LIVESTRONG 2035 Portfolio NT Equity Growth Fund Institutional Class 2,449,303 $10,856,878 $ 2,867,111 $(1,018,818) $ 272,513 3,629,289 $ 23,917,014 NT Growth Fund Institutional Class 2,222,291 10,865,132 1,155,647 (400,645) 163,345 3,484,248 25,156,271 NT Large Company Value Fund Institutional Class 2,606,109 11,423,056 2,942,301 (1,290,681) 318,231 3,976,787 23,105,132 NT Mid Cap Value Fund Institutional Class 1,312,467 4,758,461 1,933,995 (546,899) 136,873 1,763,289 11,567,176 NT Small Company Fund Institutional Class 814,541 3,855,697 361,561 (98,484) 20,703 1,434,913 7,246,311 NT Vista Fund Institutional Class(2) 1,024,146 6,433,981 1,028,898 (449,927) -- 1,806,075 11,847,852 Real Estate Fund Institutional Class 189,899 2,812,197 183,357 (82,225) 109,173 435,140 4,164,290 High-Yield Fund Institutional Class 675,627 2,004,924 736,644 (149,640) 154,613 981,942 4,713,322 Inflation- Adjusted Bond Fund Institutional Class 716,608 3,590,950 2,221,620 (162,768) 191,217 867,122 9,191,493 NT Diversified Bond Fund Institutional Class 2,815,854 11,391,308 9,261,690 (301,575) 1,211,622 3,054,543 30,820,339 NT Emerging Markets Fund Institutional Class 676,185 5,728,787 354,671 (195,427) -- 1,542,849 7,637,102 NT International Growth Fund Institutional Class 1,580,696 10,438,926 605,220 (242,901) 244,542 2,994,620 17,907,828 Premium Money Market Fund Investor Class 2,798,043 1,934,550 927,102 -- 31,903 3,805,491 3,805,491 ----------- ----------- ------------ ------------- ------------ $86,094,847 $24,579,817 $(4,939,990) $2,854,735 $181,079,621 =========== =========== ============ ============= ============ (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. - ------ 49 July 31, 2008 January 31, 2009 Fund/ Realized Underlying Share Purchase Sales Gain Distributions Share Market Fund Balance Cost Cost (Loss) Received(1) Balance Value LIVESTRONG 2040 Portfolio NT Equity Growth Fund Institutional Class 12,654 $ 3,331,589 $ 246,061 $ (74,225) $ 3,481 433,418 $ 2,856,225 NT Growth Fund Institutional Class 11,476 3,256,329 236,539 (74,208) 3,266 404,267 2,918,808 NT Large Company Value Fund Institutional Class 14,033 3,265,378 257,591 (79,737) 4,432 461,130 2,679,165 NT Mid Cap Value Fund Institutional Class 7,065 1,622,906 113,265 (26,736) 2,076 214,979 1,410,262 NT Small Company Fund Institutional Class 4,216 902,749 68,762 (25,446) 292 149,971 757,353 NT Vista Fund Institutional Class(2) 5,346 1,634,695 123,580 (45,418) -- 224,319 1,471,533 Real Estate Fund Institutional Class 1,073 589,748 56,539 (28,232) 1,979 49,075 469,648 High-Yield Fund Institutional Class 2,749 436,823 28,031 (4,721) 3,731 90,437 434,098 Inflation- Adjusted Bond Fund Institutional Class 2,805 869,797 57,957 (4,121) 1,072 80,875 857,275 NT Diversified Bond Fund Institutional Class 11,113 3,056,573 214,652 (4,326) 20,704 293,622 2,962,646 NT Emerging Markets Fund Institutional Class 4,109 1,201,602 102,307 (45,697) -- 200,292 991,445 NT International Growth Fund Institutional Class 7,910 2,315,889 176,603 (66,291) 4,662 333,095 1,991,908 ----------- ---------- ---------- ------------- ----------- $22,484,078 $1,681,887 $(479,158) $45,695 $19,800,366 =========== ========== ========== ============= =========== (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. - ------ 50 July 31, 2008 January 31, 2009 Fund/ Share Purchase Sales Realized Distributions Share Market Underlying Fund Balance Cost Cost Gain (Loss) Received(1) Balance Value LIVESTRONG 2045 Portfolio NT Equity Growth Fund Institutional Class 1,767,703 $ 4,196,666 $ 2,523,340 $ (860,779) $ 189,369 2,085,773 $13,745,244 NT Growth Fund Institutional Class 1,603,749 4,180,317 1,335,432 (438,582) 109,334 2,004,440 14,472,057 NT Large Company Value Fund Institutional Class 1,911,044 4,553,121 2,452,634 (1,053,798) 223,346 2,327,160 13,520,800 NT Mid Cap Value Fund Institutional Class 949,245 1,740,054 1,281,746 (332,198) 96,662 1,060,227 6,955,089 NT Small Company Fund Institutional Class 651,548 1,624,879 419,684 (106,059) 15,357 882,638 4,457,322 NT Vista Fund Institutional Class(2) 740,940 2,913,530 462,638 (181,612) -- 1,082,651 7,102,190 Real Estate Fund Institutional Class 155,018 1,516,953 411,652 (155,980) 85,261 293,228 2,806,192 High-Yield Fund Institutional Class 341,459 511,395 364,559 (67,037) 73,375 390,051 1,872,245 Inflation- Adjusted Bond Fund Institutional Class 362,388 931,651 1,228,012 (86,462) 95,636 343,717 3,643,400 NT Diversified Bond Fund Institutional Class 1,428,483 2,867,553 5,090,889 (172,900) 573,229 1,220,906 12,318,941 NT Emerging Markets Fund Institutional Class 631,758 4,230,832 545,682 (303,434) -- 1,232,266 6,099,717 NT International Growth Fund Institutional Class 1,037,672 4,614,792 629,654 (250,657) 152,339 1,612,050 9,640,059 ----------- ----------- ------------ ------------- ----------- $33,881,743 $16,745,922 $(4,009,498) $1,613,908 $96,633,256 =========== =========== ============ ============= =========== (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. - ------ 51 July 31, 2008 January 31, 2009 Fund/ Realized Underlying Share Purchase Sales Gain Distributions Share Market Fund Balance Cost Cost (Loss) Received(1) Balance Value LIVESTRONG 2050 Portfolio NT Equity Growth Fund Institutional $ Class 7,438 $ 458,270 $ 39,329 $(12,185) $ 2,244 62,555 412,238 NT Growth Fund Institutional Class 6,726 458,225 26,419 (7,887) 2,185 59,773 431,561 NT Large Company Value Fund Institutional Class 8,267 466,584 40,098 (12,920) 2,969 69,752 405,259 NT Mid Cap Value Fund Institutional Class 4,102 221,760 17,229 (4,199) 1,349 31,515 206,738 NT Small Company Fund Institutional Class 2,807 154,405 9,025 (2,937) 229 26,679 134,729 NT Vista Fund Institutional Class(2) 3,119 232,243 15,023 (5,891) -- 32,375 212,380 Real Estate Fund Institutional Class 681 102,244 7,706 (2,975) 1,457 8,612 82,417 High-Yield Fund Institutional Class 1,255 45,439 4,199 (771) 913 9,786 46,973 Inflation- Adjusted Bond Fund Institutional Class 1,312 88,319 11,412 (1,068) 518 8,663 91,828 NT Diversified Bond Fund Institutional Class 5,134 309,850 51,912 (1,812) 7,933 30,740 310,166 NT Emerging Markets Fund Institutional Class 2,839 211,102 15,930 (8,007) -- 36,207 179,225 NT International Growth Fund Institutional Class 4,230 295,272 19,144 (7,607) 2,725 43,857 262,265 ---------- -------- --------- ------------- ---------- $3,043,713 $257,426 $(68,259) $22,522 $2,775,779 ========== ======== ========= ============= ========== (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. 6. INVESTMENTS IN UNDERLYING FUNDS 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, 2009, the following LIVESTRONG Portfolios owned 25% or more of the total outstanding shares of the underlying funds: LIVESTRONG LIVESTRONG LIVESTRONG 2015 2025 2035 Portfolio Portfolio Portfolio NT Diversified Bond Fund 26% 30% -- NT Emerging Markets Fund -- 29% 25% NT Equity Growth Fund -- 28% -- NT Growth Fund -- 30% -- NT International Growth Fund -- 31% -- NT Large Company Value Fund -- 28% -- NT Mid Cap Value Fund -- 28% -- NT Small Company Fund -- 32% -- NT Vista Fund -- 30% -- As of January 31, 2009, the funds, in aggregate, owned 100% of the total outstanding shares of the underlying NT Diversified Bond, NT Emerging Markets, NT Equity Growth, NT Growth, NT International Growth, NT Large Company Value, NT Mid Cap Value, NT Small Company and NT Vista funds. - ------ 52 7. FAIR VALUE MEASUREMENTS The funds' securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the funds. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows: * Level 1 valuation inputs consist of actual quoted prices based on an active market; * Level 2 valuation inputs consist of significant direct or indirect observable market data; or * Level 3 valuation inputs consist of significant unobservable inputs such as a fund's own assumptions. The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not an indication of the risks associated with investing in these securities or other financial instruments. The following is a summary of the valuation inputs used to determine the fair value of the funds' securities as of January 31, 2009: Value of Investment Fund/Valuation Inputs Securities LIVESTRONG Income Portfolio Level 1 -- Quoted Prices $119,440,440 Level 2 -- Other Significant Observable Inputs -- Level 3 -- Significant Unobservable Inputs -- ------------ $119,440,440 ============ LIVESTRONG 2015 Portfolio Level 1 -- Quoted Prices $254,860,471 Level 2 -- Other Significant Observable Inputs -- Level 3 -- Significant Unobservable Inputs -- ------------ $254,860,471 ============ LIVESTRONG 2020 Portfolio Level 1 -- Quoted Prices $86,951,679 Level 2 -- Other Significant Observable Inputs -- Level 3 -- Significant Unobservable Inputs -- ------------ $86,951,679 ============ LIVESTRONG 2025 Portfolio Level 1 -- Quoted Prices $339,684,623 Level 2 -- Other Significant Observable Inputs -- Level 3 -- Significant Unobservable Inputs -- ------------ $339,684,623 ============ LIVESTRONG 2030 Portfolio Level 1 -- Quoted Prices $65,295,017 Level 2 -- Other Significant Observable Inputs -- Level 3 -- Significant Unobservable Inputs -- ------------ $65,295,017 ============ LIVESTRONG 2035 Portfolio Level 1 -- Quoted Prices $181,079,621 Level 2 -- Other Significant Observable Inputs -- Level 3 -- Significant Unobservable Inputs -- ------------ $181,079,621 ============ - ------ 53 Value of Investment Fund/Valuation Inputs Securities LIVESTRONG 2040 Portfolio Level 1 -- Quoted Prices $19,800,366 Level 2 -- Other Significant Observable Inputs -- Level 3 -- Significant Unobservable Inputs -- ------------ $19,800,366 ============ LIVESTRONG 2045 Portfolio Level 1 -- Quoted Prices $96,633,256 Level 2 -- Other Significant Observable Inputs -- Level 3 -- Significant Unobservable Inputs -- ------------ $96,633,256 ============ LIVESTRONG 2050 Portfolio Level 1 -- Quoted Prices $2,775,779 Level 2 -- Other Significant Observable Inputs -- Level 3 -- Significant Unobservable Inputs -- ------------ $2,775,779 ============ 8. RISK FACTORS Some of the underlying funds invest in foreign securities, which are generally riskier than U.S. securities. As a result, the funds are subject to foreign risk, meaning that political events (such as civil unrest, national elections and imposition of exchange controls), social, and economic events (such as labor strikes and rising inflation), and natural disasters occurring in a country where the funds invest could cause the funds' investments in that country to experience gains or losses. Investing in emerging markets may accentuate these risks. - ------ 54 9. 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, 2009, the components of investments for federal income tax purposes were as follows: LIVESTRONG LIVESTRONG LIVESTRONG LIVESTRONG LIVESTRONG Income 2015 2020 2025 2030 Portfolio Portfolio Portfolio Portfolio Portfolio Federal tax cost of investments $136,809,125 $304,270,018 $92,465,147 $425,578,315 $70,826,334 ============= ============= ============ ============= ============ Gross tax appreciation of investments $ 179,273 $ 319,102 $ 266,611 $ 381,777 $ 135,292 Gross tax depreciation of investments (17,547,958) (49,728,649) (5,780,079) (86,275,469) (5,666,609) ------------- ------------- ------------ ------------- ------------ Net tax appreciation (depreciation) of investments $(17,368,685) $(49,409,547) $(5,513,468) $(85,893,692) $(5,531,317) ============= ============= ============ ============= ============ LIVESTRONG LIVESTRONG LIVESTRONG LIVESTRONG 2035 2040 2045 2050 Portfolio Portfolio Portfolio Portfolio Federal tax cost of investments $240,350,051 $22,068,207 $141,407,630 $3,304,850 ============= ============ ============= ============ Gross tax appreciation of investments $ 121,971 $ 22,714 $ 40,387 $-- Gross tax depreciation of investments (59,392,401) (2,290,555) (44,814,761) (529,071) ------------- ------------ ------------- ------------ Net tax appreciation (depreciation) of investments $(59,270,430) $(2,267,841) $(44,774,374) $(529,071) ============= ============ ============= ============ 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. 10. RECENTLY ISSUED ACCOUNTING STANDARDS The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), in September 2006, which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands the required financial statement disclosures about fair value measurements. The adoption of FAS 157 did not materially impact the determination of fair value. In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities -- an amendment of FASB Statement No. 133" (FAS 161). FAS 161 is effective for interim periods beginning after November 15, 2008. FAS 161 amends and expands disclosures about derivative instruments and hedging activities. FAS 161 requires qualitative disclosures about the objectives and strategies of derivative instruments, quantitative disclosures about the fair value amounts of and gains and losses on derivative instruments, and disclosures of credit-risk-related contingent features in hedging activities. Management is currently evaluating the impact that adopting FAS 161 will have on the financial statement disclosures. - ------ 55 FINANCIAL HIGHLIGHTS LIVESTRONG Income Portfolio Investor Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $10.64 $11.06 $10.45 $10.51 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.19 0.40 0.33 0.37 0.29 Net Realized and Unrealized Gain (Loss) (1.97) (0.38) 0.75 (0.07) 0.52 -------- -------- -------- -------- -------- Total From Investment Operations (1.78) 0.02 1.08 0.30 0.81 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.24) (0.42) (0.32) (0.35) (0.30) From Net Realized Gains (0.09) (0.02) (0.15) (0.01) -- -------- -------- -------- -------- -------- Total Distributions (0.33) (0.44) (0.47) (0.36) (0.30) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.53 $10.64 $11.06 $10.45 $10.51 ======== ======== ======== ======== ======== TOTAL RETURN(4) (16.95)% 0.11% 10.51% 2.99% 8.14% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.20%(6) 0.20% 0.20% 0.20% 0.20%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 4.16%(6) 3.61% 3.03% 3.51% 3.16%(6) Portfolio Turnover Rate 33% 26% 22% 120% 6% Net Assets, End of Period (in thousands) $98,235 $49,378 $44,109 $27,374 $15,572 (1) Six months ended January 31, 2009 (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 LIVESTRONG Income Portfolio Institutional Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $10.64 $11.06 $10.45 $10.51 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.23 0.42 0.35 0.37 0.34 Net Realized and Unrealized Gain (Loss) (2.00) (0.38) 0.75 (0.05) 0.48 -------- -------- -------- -------- -------- Total From Investment Operations (1.77) 0.04 1.10 0.32 0.82 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.25) (0.44) (0.34) (0.37) (0.31) From Net Realized Gains (0.09) (0.02) (0.15) (0.01) -- -------- -------- -------- -------- -------- Total Distributions (0.34) (0.46) (0.49) (0.38) (0.31) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.53 $10.64 $11.06 $10.45 $10.51 ======== ======== ======== ======== ======== TOTAL RETURN(4) (16.86)% 0.31% 10.73% 3.20% 8.31% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00% 0.00% 0.00% 0.00%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 4.36%(6) 3.81% 3.23% 3.71% 3.36%(6) Portfolio Turnover Rate 33% 26% 22% 120% 6% Net Assets, End of Period (in thousands) $14,838 $9,737 $8,285 $4,409 $3,169 (1) Six months ended January 31, 2009 (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. Other expenses, which include the fees and expenses of the fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. (6) Annualized. See Notes to Financial Statements. - ------ 57 LIVESTRONG Income Portfolio Advisor Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $10.64 $11.05 $10.45 $10.51 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.20 0.35 0.31 0.33 0.18 Net Realized and Unrealized Gain (Loss) (2.00) (0.35) 0.74 (0.05) 0.61 -------- -------- -------- -------- -------- Total From Investment Operations (1.80) -- 1.05 0.28 0.79 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.23) (0.39) (0.30) (0.33) (0.28) From Net Realized Gains (0.09) (0.02) (0.15) (0.01) -- -------- -------- -------- -------- -------- Total Distributions (0.32) (0.41) (0.45) (0.34) (0.28) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.52 $10.64 $11.05 $10.45 $10.51 ======== ======== ======== ======== ======== TOTAL RETURN(4) (17.05)% (0.05)% 10.13% 2.83% 7.82% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.45%(6) 0.45% 0.45% 0.45% 0.45%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 3.91%(6) 3.36% 2.78% 3.26% 2.91%(6) Portfolio Turnover Rate 33% 26% 22% 120% 6% Net Assets, End of Period (in thousands) $10,936 $8,285 $8,129 $2,966 $940 (1) Six months ended January 31, 2009 (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. - ------ 58 LIVESTRONG Income Portfolio R Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $10.63 $11.05 $10.44 $10.50 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.17 0.30 0.27 0.26 0.29 Net Realized and Unrealized Gain (Loss) (1.97) (0.34) 0.76 (0.01) 0.46 -------- -------- -------- -------- -------- Total From Investment Operations (1.80) (0.04) 1.03 0.25 0.75 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.22) (0.36) (0.27) (0.30) (0.25) From Net Realized Gains (0.09) (0.02) (0.15) (0.01) -- -------- -------- -------- -------- -------- Total Distributions (0.31) (0.38) (0.42) (0.31) (0.25) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.52 $10.63 $11.05 $10.44 $10.50 ======== ======== ======== ======== ======== TOTAL RETURN(4) (17.18)% (0.40)% 9.97% 2.48% 7.61% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.70%(6) 0.70% 0.70% 0.70% 0.70%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 3.66%(6) 3.11% 2.53% 3.01% 2.66%(6) Portfolio Turnover Rate 33% 26% 22% 120% 6% Net Assets, End of Period (in thousands) $1,961 $351 $112 $37 $9 (1) Six months ended January 31, 2009 (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. - ------ 59 LIVESTRONG 2015 Portfolio Investor Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $11.39 $11.91 $11.09 $10.93 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.21 0.43 0.32 0.37 0.25 Net Realized and Unrealized Gain (Loss) (2.46) (0.49) 1.04 0.11 0.86 -------- -------- -------- -------- -------- Total From Investment Operations (2.25) (0.06) 1.36 0.48 1.11 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.35) (0.41) (0.27) (0.31) (0.18) From Net Realized Gains (0.14) (0.05) (0.27) (0.01) -- -------- -------- -------- -------- -------- Total Distributions (0.49) (0.46) (0.54) (0.32) (0.18) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.65 $11.39 $11.91 $11.09 $10.93 ======== ======== ======== ======== ======== TOTAL RETURN(4) (19.92)% (0.67)% 12.46% 4.46% 11.17% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.20%(6) 0.20% 0.20% 0.20% 0.20%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 4.24%(6) 3.62% 2.74% 3.27% 2.61%(6) Portfolio Turnover Rate 17% 20% 18% 123% 2% Net Assets, End of Period (in thousands) $193,892 $161,838 $139,725 $89,431 $40,717 (1) Six months ended January 31, 2009 (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. - ------ 60 LIVESTRONG 2015 Portfolio Institutional Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $11.41 $11.93 $11.10 $10.94 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.21 0.44 0.34 0.33 0.29 Net Realized and Unrealized Gain (Loss) (2.45) (0.48) 1.05 0.17 0.84 -------- -------- -------- -------- -------- Total From Investment Operations (2.24) (0.04) 1.39 0.50 1.13 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.37) (0.43) (0.29) (0.33) (0.19) From Net Realized Gains (0.14) (0.05) (0.27) (0.01) -- -------- -------- -------- -------- -------- Total Distributions (0.51) (0.48) (0.56) (0.34) (0.19) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.66 $11.41 $11.93 $11.10 $10.94 ======== ======== ======== ======== ======== TOTAL RETURN(4) (19.81)% (0.46)% 12.77% 4.67% 11.32% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00% 0.00% 0.00% 0.00%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 4.44%(6) 3.82% 2.94% 3.47% 2.81%(6) Portfolio Turnover Rate 17% 20% 18% 123% 2% Net Assets, End of Period (in thousands) $39,697 $17,845 $15,736 $10,439 $3,011 (1) Six months ended January 31, 2009 (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. Other expenses, which include the fees and expenses of the fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. (6) Annualized. See Notes to Financial Statements. - ------ 61 LIVESTRONG 2015 Portfolio Advisor Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $11.37 $11.89 $11.07 $10.91 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.21 0.38 0.30 0.31 0.17 Net Realized and Unrealized Gain (Loss) (2.46) (0.47) 1.03 0.14 0.91 -------- -------- -------- -------- -------- Total From Investment Operations (2.25) (0.09) 1.33 0.45 1.08 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.33) (0.38) (0.24) (0.28) (0.17) From Net Realized Gains (0.14) (0.05) (0.27) (0.01) -- -------- -------- -------- -------- -------- Total Distributions (0.47) (0.43) (0.51) (0.29) (0.17) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.65 $11.37 $11.89 $11.07 $10.91 ======== ======== ======== ======== ======== TOTAL RETURN(4) (19.98)% (0.93)% 12.20% 4.22% 10.88% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.45%(6) 0.45% 0.45% 0.45% 0.45%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 3.99%(6) 3.37% 2.49% 3.02% 2.36%(6) Portfolio Turnover Rate 17% 20% 18% 123% 2% Net Assets, End of Period (in thousands) $25,077 $24,384 $19,270 $9,556 $323 (1) Six months ended January 31, 2009 (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. - ------ 62 LIVESTRONG 2015 Portfolio R Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $11.36 $11.88 $11.06 $10.90 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.19 0.39 0.25 0.19 0.24 Net Realized and Unrealized Gain (Loss) (2.45) (0.51) 1.05 0.23 0.82 -------- -------- -------- -------- -------- Total From Investment Operations (2.26) (0.12) 1.30 0.42 1.06 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.31) (0.35) (0.21) (0.25) (0.16) From Net Realized Gains (0.14) (0.05) (0.27) (0.01) -- -------- -------- -------- -------- -------- Total Distributions (0.45) (0.40) (0.48) (0.26) (0.16) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.65 $11.36 $11.88 $11.06 $10.90 ======== ======== ======== ======== ======== TOTAL RETURN(4) (20.11)% (1.19)% 11.92% 4.05% 10.59% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.70%(6) 0.70% 0.70% 0.70% 0.70%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 3.74%(6) 3.12% 2.24% 2.77% 2.11%(6) Portfolio Turnover Rate 17% 20% 18% 123% 2% Net Assets, End of Period (in thousands) $10,123 $4,165 $3,187 $351 $14 (1) Six months ended January 31, 2009 (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. - ------ 63 LIVESTRONG 2020 Portfolio Investor Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.49 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.06 0.03 Net Realized and Unrealized Gain (Loss) (2.09) (0.54) -------- -------- Total From Investment Operations (2.03) (0.51) -------- -------- Distributions From Net Investment Income (0.12) -- -------- -------- Net Asset Value, End of Period $7.34 $9.49 ======== ======== TOTAL RETURN(4) (21.47)% (5.10)% 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 1.78%(6) 1.89%(6) Portfolio Turnover Rate 66% 0% Net Assets, End of Period (in thousands) $84,203 $1,073 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. - ------ 64 LIVESTRONG 2020 Portfolio Institutional Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.50 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.19 0.04 Net Realized and Unrealized Gain (Loss) (2.22) (0.54) -------- -------- Total From Investment Operations (2.03) (0.50) -------- -------- Distributions From Net Investment Income (0.13) -- -------- -------- Net Asset Value, End of Period $7.34 $9.50 ======== ======== TOTAL RETURN(4) (21.46)% (5.00)% 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 1.98%(6) 2.09%(6) Portfolio Turnover Rate 66% 0% Net Assets, End of Period (in thousands) $10,469 $16 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. Other expenses, which include the fees and expenses of the fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. (6) Annualized. See Notes to Financial Statements. - ------ 65 LIVESTRONG 2020 Portfolio Advisor Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.49 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.15 0.04 Net Realized and Unrealized Gain (Loss) (2.19) (0.55) -------- -------- Total From Investment Operations (2.04) (0.51) -------- -------- Distributions From Net Investment Income (0.11) -- -------- -------- Net Asset Value, End of Period $7.34 $9.49 ======== ======== TOTAL RETURN(4) (21.58)% (5.10)% 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 1.53%(6) 1.64%(6) Portfolio Turnover Rate 66% 0% Net Assets, End of Period (in thousands) $971 $6 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. - ------ 66 LIVESTRONG 2020 Portfolio R Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.49 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.14 0.03 Net Realized and Unrealized Gain (Loss) (2.20) (0.54) -------- -------- Total From Investment Operations (2.06) (0.51) -------- -------- Distributions From Net Investment Income (0.09) -- -------- -------- Net Asset Value, End of Period $7.34 $9.49 ======== ======== TOTAL RETURN(4) (21.70)% (5.10)% 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 1.28%(6) 1.39%(6) Portfolio Turnover Rate 66% 0% Net Assets, End of Period (in thousands) $1,077 $6 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. - ------ 67 LIVESTRONG 2025 Portfolio Investor Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $11.63 $12.35 $11.49 $11.21 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.17 0.42 0.28 0.34 0.18 Net Realized and Unrealized Gain (Loss) (2.95) (0.69) 1.34 0.27 1.17 -------- -------- -------- -------- -------- Total From Investment Operations (2.78) (0.27) 1.62 0.61 1.35 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.30) (0.40) (0.24) (0.31) (0.14) From Net Realized Gains (0.16) (0.05) (0.52) (0.02) -- -------- -------- -------- -------- -------- Total Distributions (0.46) (0.45) (0.76) (0.33) (0.14) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.39 $11.63 $12.35 $11.49 $11.21 ======== ======== ======== ======== ======== TOTAL RETURN(4) (24.04)% (2.39)% 14.45% 5.48% 13.57% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.20%(6) 0.20% 0.20% 0.20% 0.20%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 3.60%(6) 3.40% 2.34% 2.98% 2.08%(6) Portfolio Turnover Rate 15% 18% 18% 120% 2% Net Assets, End of Period (in thousands) $265,380 $215,024 $174,984 $112,202 $53,285 (1) Six months ended January 31, 2009 (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. - ------ 68 LIVESTRONG 2025 Portfolio Institutional Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $11.64 $12.37 $11.51 $11.23 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.19 0.43 0.31 0.37 0.27 Net Realized and Unrealized Gain (Loss) (2.96) (0.69) 1.34 0.26 1.11 -------- -------- -------- -------- -------- Total From Investment Operations (2.77) (0.26) 1.65 0.63 1.38 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.32) (0.42) (0.27) (0.33) (0.15) From Net Realized Gains (0.16) (0.05) (0.52) (0.02) -- -------- -------- -------- -------- -------- Total Distributions (0.48) (0.47) (0.79) (0.35) (0.15) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.39 $11.64 $12.37 $11.51 $11.23 ======== ======== ======== ======== ======== TOTAL RETURN(4) (23.96)% (2.27)% 14.67% 5.77% 13.74% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00% 0.00% 0.00% 0.00%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 3.80%(6) 3.60% 2.54% 3.18% 2.28%(6) Portfolio Turnover Rate 15% 18% 18% 120% 2% Net Assets, End of Period (in thousands) $50,772 $44,611 $44,250 $31,399 $21,458 (1) Six months ended January 31, 2009 (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. Other expenses, which include the fees and expenses of the fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. (6) Annualized. See Notes to Financial Statements. - ------ 69 LIVESTRONG 2025 Portfolio Advisor Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $11.61 $12.34 $11.48 $11.19 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.17 0.35 0.26 0.29 0.12 Net Realized and Unrealized Gain (Loss) (2.95) (0.66) 1.33 0.30 1.20 -------- -------- -------- -------- -------- Total From Investment Operations (2.78) (0.31) 1.59 0.59 1.32 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.28) (0.37) (0.21) (0.28) (0.13) From Net Realized Gains (0.16) (0.05) (0.52) (0.02) -- -------- -------- -------- -------- -------- Total Distributions (0.44) (0.42) (0.73) (0.30) (0.13) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.39 $11.61 $12.34 $11.48 $11.19 ======== ======== ======== ======== ======== TOTAL RETURN(4) (24.10)% (2.73)% 14.17% 5.30% 13.28% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.45%(6) 0.45% 0.45% 0.45% 0.45%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 3.35%(6) 3.15% 2.09% 2.73% 1.83%(6) Portfolio Turnover Rate 15% 18% 18% 120% 2% Net Assets, End of Period (in thousands) $27,068 $28,073 $17,076 $7,404 $388 (1) Six months ended January 31, 2009 (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. - ------ 70 LIVESTRONG 2025 Portfolio R Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $11.60 $12.32 $11.46 $11.18 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.16 0.36 0.22 0.19 0.15 Net Realized and Unrealized Gain (Loss) (2.97) (0.70) 1.34 0.36 1.15 -------- -------- -------- -------- -------- Total From Investment Operations (2.81) (0.34) 1.56 0.55 1.30 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.25) (0.33) (0.18) (0.25) (0.12) From Net Realized Gains (0.16) (0.05) (0.52) (0.02) -- -------- -------- -------- -------- -------- Total Distributions (0.41) (0.38) (0.70) (0.27) (0.12) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.38 $11.60 $12.32 $11.46 $11.18 ======== ======== ======== ======== ======== TOTAL RETURN(4) (24.31)% (2.90)% 13.90% 4.95% 13.10% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.70%(6) 0.70% 0.70% 0.70% 0.70%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 3.10%(6) 2.90% 1.84% 2.48% 1.58%(6) Portfolio Turnover Rate 15% 18% 18% 120% 2% Net Assets, End of Period (in thousands) $5,691 $2,746 $1,378 $545 $65 (1) Six months ended January 31, 2009 (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. - ------ 71 LIVESTRONG 2030 Portfolio Investor Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.39 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.04 0.02 Net Realized and Unrealized Gain (Loss) (2.49) (0.63) -------- -------- Total From Investment Operations (2.45) (0.61) -------- -------- Distributions From Net Investment Income (0.09) -- -------- -------- Net Asset Value, End of Period $6.85 $9.39 ======== ======== TOTAL RETURN(4) (26.13)% (6.10)% 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 1.45%(6) 1.49%(6) Portfolio Turnover Rate 55% 4% Net Assets, End of Period (in thousands) $62,523 $626 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. - ------ 72 LIVESTRONG 2030 Portfolio Institutional Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.40 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.14 0.04 Net Realized and Unrealized Gain (Loss) (2.60) (0.64) -------- -------- Total From Investment Operations (2.46) (0.60) -------- -------- Distributions From Net Investment Income (0.10) -- -------- -------- Net Asset Value, End of Period $6.84 $9.40 ======== ======== TOTAL RETURN(4) (26.23)% (6.00)% 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 1.65%(6) 1.69%(6) Portfolio Turnover Rate 55% 4% Net Assets, End of Period (in thousands) $8,537 $6 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. Other expenses, which include the fees and expenses of the fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. (6) Annualized. See Notes to Financial Statements. - ------ 73 LIVESTRONG 2030 Portfolio Advisor Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.39 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.12 0.03 Net Realized and Unrealized Gain (Loss) (2.59) (0.64) -------- -------- Total From Investment Operations (2.47) (0.61) -------- -------- Distributions From Net Investment Income (0.08) -- -------- -------- Net Asset Value, End of Period $6.84 $9.39 ======== ======== TOTAL RETURN(4) (26.35)% (6.10)% 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 1.20%(6) 1.24%(6) Portfolio Turnover Rate 55% 4% Net Assets, End of Period (in thousands) $619 $6 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. - ------ 74 LIVESTRONG 2030 Portfolio R Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.39 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.11 0.02 Net Realized and Unrealized Gain (Loss) (2.59) (0.63) -------- -------- Total From Investment Operations (2.48) (0.61) -------- -------- Distributions From Net Investment Income (0.07) -- -------- -------- Net Asset Value, End of Period $6.84 $9.39 ======== ======== TOTAL RETURN(4) (26.45)% (6.10)% 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 0.95%(6) 0.99%(6) Portfolio Turnover Rate 55% 4% Net Assets, End of Period (in thousands) $1,568 $6 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. - ------ 75 LIVESTRONG 2035 Portfolio Investor Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $12.10 $13.09 $11.85 $11.43 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.15 0.41 0.24 0.31 0.17 Net Realized and Unrealized Gain (Loss) (3.62) (0.95) 1.71 0.42 1.39 -------- -------- -------- -------- -------- Total From Investment Operations (3.47) (0.54) 1.95 0.73 1.56 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.24) (0.40) (0.19) (0.30) (0.13) From Net Realized Gains (0.18) (0.05) (0.52) (0.01) -- -------- -------- -------- -------- -------- Total Distributions (0.42) (0.45) (0.71) (0.31) (0.13) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.21 $12.10 $13.09 $11.85 $11.43 ======== ======== ======== ======== ======== TOTAL RETURN(4) (28.81)% (4.33)% 16.86% 6.45% 15.71% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.20%(6) 0.20% 0.20% 0.20% 0.20%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 3.05%(6) 3.19% 1.87% 2.61% 1.62%(6) Portfolio Turnover Rate 12% 16% 23% 141% 3% Net Assets, End of Period (in thousands) $136,878 $128,815 $91,220 $52,206 $21,537 (1) Six months ended January 31, 2009 (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. - ------ 76 LIVESTRONG 2035 Portfolio Institutional Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $12.12 $13.11 $11.87 $11.45 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.16 0.44 0.26 0.30 0.16 Net Realized and Unrealized Gain (Loss) (3.63) (0.95) 1.72 0.45 1.43 -------- -------- -------- -------- -------- Total From Investment Operations (3.47) (0.51) 1.98 0.75 1.59 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.26) (0.43) (0.22) (0.32) (0.14) From Net Realized Gains (0.18) (0.05) (0.52) (0.01) -- -------- -------- -------- -------- -------- Total Distributions (0.44) (0.48) (0.74) (0.33) (0.14) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.21 $12.12 $13.11 $11.87 $11.45 ======== ======== ======== ======== ======== TOTAL RETURN(4) (28.79)% (4.13)% 17.07% 6.66% 15.98% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00% 0.00% 0.00% 0.00%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 3.25%(6) 3.39% 2.07% 2.81% 1.82%(6) Portfolio Turnover Rate 12% 16% 23% 141% 3% Net Assets, End of Period (in thousands) $29,421 $24,120 $22,314 $11,104 $3,435 (1) Six months ended January 31, 2009 (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. Other expenses, which include the fees and expenses of the fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. (6) Annualized. See Notes to Financial Statements. - ------ 77 LIVESTRONG 2035 Portfolio Advisor Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $12.09 $13.08 $11.83 $11.42 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.14 0.35 0.21 0.26 0.11 Net Realized and Unrealized Gain (Loss) (3.62) (0.92) 1.72 0.43 1.44 -------- -------- -------- -------- -------- Total From Investment Operations (3.48) (0.57) 1.93 0.69 1.55 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.22) (0.37) (0.16) (0.27) (0.13) From Net Realized Gains (0.18) (0.05) (0.52) (0.01) -- -------- -------- -------- -------- -------- Total Distributions (0.40) (0.42) (0.68) (0.28) (0.13) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.21 $12.09 $13.08 $11.83 $11.42 ======== ======== ======== ======== ======== TOTAL RETURN(4) (28.93)% (4.58)% 16.67% 6.10% 15.53% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.45%(6) 0.45% 0.45% 0.45% 0.45%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 2.80%(6) 2.94% 1.62% 2.36% 1.37%(6) Portfolio Turnover Rate 12% 16% 23% 141% 3% Net Assets, End of Period (in thousands) $18,638 $19,145 $13,378 $5,224 $113 (1) Six months ended January 31, 2009 (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. - ------ 78 LIVESTRONG 2035 Portfolio R Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $12.07 $13.06 $11.82 $11.40 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.14 0.43 0.18 0.16 0.22 Net Realized and Unrealized Gain (Loss) (3.62) (1.03) 1.71 0.51 1.30 -------- -------- -------- -------- -------- Total From Investment Operations (3.48) (0.60) 1.89 0.67 1.52 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.20) (0.34) (0.13) (0.24) (0.12) From Net Realized Gains (0.18) (0.05) (0.52) (0.01) -- -------- -------- -------- -------- -------- Total Distributions (0.38) (0.39) (0.65) (0.25) (0.12) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.21 $12.07 $13.06 $11.82 $11.40 ======== ======== ======== ======== ======== TOTAL RETURN(4) (28.98)% (4.84)% 16.30% 5.93% 15.24% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.70%(6) 0.70% 0.70% 0.70% 0.70%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 2.55%(6) 2.69% 1.37% 2.11% 1.12%(6) Portfolio Turnover Rate 12% 16% 23% 141% 3% Net Assets, End of Period (in thousands) $3,761 $2,178 $975 $296 $6 (1) Six months ended January 31, 2009 (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. - ------ 79 LIVESTRONG 2040 Portfolio Investor Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.29 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.04 0.01 Net Realized and Unrealized Gain (Loss) (2.78) (0.72) -------- -------- Total From Investment Operations (2.74) (0.71) -------- -------- Distributions From Net Investment Income (0.09) -- -------- -------- Net Asset Value, End of Period $6.46 $9.29 ======== ======== TOTAL RETURN(4) (29.59)% (7.10)% 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 1.57%(6) 1.10%(6) Portfolio Turnover Rate 28% 3% Net Assets, End of Period (in thousands) $18,266 $831 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. - ------ 80 LIVESTRONG 2040 Portfolio Institutional Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.29 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.14 0.03 Net Realized and Unrealized Gain (Loss) (2.88) (0.74) -------- -------- Total From Investment Operations (2.74) (0.71) -------- -------- Distributions From Net Investment Income (0.09) -- -------- -------- Net Asset Value, End of Period $6.46 $9.29 ======== ======== TOTAL RETURN(4) (29.51)% (7.10)% 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 1.77%(6) 1.30%(6) Portfolio Turnover Rate 28% 3% Net Assets, End of Period (in thousands) $5,127 $6 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. Other expenses, which include the fees and expenses of the fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. (6) Annualized. See Notes to Financial Statements. - ------ 81 LIVESTRONG 2040 Portfolio Advisor Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.29 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.10 0.02 Net Realized and Unrealized Gain (Loss) (2.85) (0.73) -------- -------- Total From Investment Operations (2.75) (0.71) -------- -------- Distributions From Net Investment Income (0.08) -- -------- -------- Net Asset Value, End of Period $6.46 $9.29 ======== ======== TOTAL RETURN(4) (29.69)% (7.10)% 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 1.32%(6) 0.85%(6) Portfolio Turnover Rate 28% 3% Net Assets, End of Period (in thousands) $296 $6 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. - ------ 82 LIVESTRONG 2040 Portfolio R Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.28 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.09 0.02 Net Realized and Unrealized Gain (Loss) (2.85) (0.74) -------- -------- Total From Investment Operations (2.76) (0.72) -------- -------- Distributions From Net Investment Income (0.07) -- -------- -------- Net Asset Value, End of Period $6.45 $9.28 ======== ======== TOTAL RETURN(4) (29.82)% (7.20)% 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 1.07%(6) 0.60%(6) Portfolio Turnover Rate 28% 3% Net Assets, End of Period (in thousands) $1,152 $6 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. - ------ 83 LIVESTRONG 2045 Portfolio Investor Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $12.24 $13.40 $11.96 $11.54 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.14 0.42 0.22 0.31 0.12 Net Realized and Unrealized Gain (Loss) (4.00) (1.12) 1.92 0.46 1.56 -------- -------- -------- -------- -------- Total From Investment Operations (3.86) (0.70) 2.14 0.77 1.68 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.22) (0.41) (0.17) (0.32) (0.14) From Net Realized Gains (0.20) (0.05) (0.53) (0.03) -- -------- -------- -------- -------- -------- Total Distributions (0.42) (0.46) (0.70) (0.35) (0.14) -------- -------- -------- -------- -------- Net Asset Value, End of Period $7.96 $12.24 $13.40 $11.96 $11.54 ======== ======== ======== ======== ======== TOTAL RETURN(4) (31.72)% (5.53)% 18.23% 6.76% 16.86% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.20%(6) 0.20% 0.20% 0.20% 0.20%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 2.80%(6) 3.19% 1.62% 2.62% 1.83%(6) Portfolio Turnover Rate 13% 18% 25% 137% 17% Net Assets, End of Period (in thousands) $63,862 $72,649 $48,229 $22,437 $7,465 (1) Six months ended January 31, 2009 (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. - ------ 84 LIVESTRONG 2045 Portfolio Institutional Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $12.25 $13.42 $11.98 $11.56 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.15 0.44 0.23 0.35 0.25 Net Realized and Unrealized Gain (Loss) (4.00) (1.12) 1.93 0.44 1.45 -------- -------- -------- -------- -------- Total From Investment Operations (3.85) (0.68) 2.16 0.79 1.70 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.24) (0.44) (0.19) (0.34) (0.14) From Net Realized Gains (0.20) (0.05) (0.53) (0.03) -- -------- -------- -------- -------- -------- Total Distributions (0.44) (0.49) (0.72) (0.37) (0.14) -------- -------- -------- -------- -------- Net Asset Value, End of Period $7.96 $12.25 $13.42 $11.98 $11.56 ======== ======== ======== ======== ========= TOTAL RETURN(4) (31.65)% (5.40)% 18.44% 6.96% 17.11% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00% 0.00% 0.00% 0.00%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 3.00%(6) 3.39% 1.82% 2.82% 2.03%(6) Portfolio Turnover Rate 13% 18% 25% 137% 17% Net Assets, End of Period (in thousands) $23,779 $31,054 $28,483 $13,397 $7,181 (1) Six months ended January 31, 2009 (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. Other expenses, which include the fees and expenses of the fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. (6) Annualized. See Notes to Financial Statements. - ------ 85 LIVESTRONG 2045 Portfolio Advisor Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $12.22 $13.38 $11.94 $11.53 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.13 0.39 0.18 0.20 0.07 Net Realized and Unrealized Gain (Loss) (4.00) (1.13) 1.92 0.53 1.59 -------- -------- -------- -------- -------- Total From Investment Operations (3.87) (0.74) 2.10 0.73 1.66 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.20) (0.37) (0.13) (0.29) (0.13) From Net Realized Gains (0.20) (0.05) (0.53) (0.03) -- -------- -------- -------- -------- -------- Total Distributions (0.40) (0.42) (0.66) (0.32) (0.13) -------- -------- -------- -------- -------- Net Asset Value, End of Period $7.95 $12.22 $13.38 $11.94 $11.53 ======== ======== ======== ======== ======== TOTAL RETURN(4) (31.86)% (5.78)% 17.96% 6.51% 16.57% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.45%(6) 0.45% 0.45% 0.45% 0.45%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 2.55%(6) 2.94% 1.37% 2.37% 1.58%(6) Portfolio Turnover Rate 13% 18% 25% 137% 17% Net Assets, End of Period (in thousands) $9,771 $11,411 $9,091 $4,177 $380 (1) Six months ended January 31, 2009 (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. - ------ 86 LIVESTRONG 2045 Portfolio R Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $12.21 $13.36 $11.93 $11.51 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.11 0.38 0.12 0.12 0.18 Net Realized and Unrealized Gain (Loss) (3.99) (1.14) 1.94 0.59 1.45 -------- -------- -------- -------- -------- Total From Investment Operations (3.88) (0.76) 2.06 0.71 1.63 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.18) (0.34) (0.10) (0.26) (0.12) From Net Realized Gains (0.20) (0.05) (0.53) (0.03) -- -------- -------- -------- -------- -------- Total Distributions (0.38) (0.39) (0.63) (0.29) (0.12) -------- -------- -------- -------- -------- Net Asset Value, End of Period $7.95 $12.21 $13.36 $11.93 $11.51 ======== ======== ======== ======== ======== TOTAL RETURN(4) (31.97)% (5.96)% 17.58% 6.24% 16.38% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.70%(6) 0.70% 0.70% 0.70% 0.70%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 2.30%(6) 2.69% 1.12% 2.12% 1.33%(6) Portfolio Turnover Rate 13% 18% 25% 137% 17% Net Assets, End of Period (in thousands) $1,806 $1,403 $753 $165 $6 (1) Six months ended January 31, 2009 (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. - ------ 87 LIVESTRONG 2050 Portfolio Investor Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.23 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.08 0.02 Net Realized and Unrealized Gain (Loss) (3.06) (0.79) -------- -------- Total From Investment Operations (2.98) (0.77) -------- -------- Distributions From Net Investment Income (0.07) -- -------- -------- Net Asset Value, End of Period $6.18 $9.23 ======== ======== TOTAL RETURN(4) (32.32)% (7.70)% 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 2.79%(6) 1.16%(6) Portfolio Turnover Rate 14% 3% Net Assets, End of Period (in thousands) $1,795 $464 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. - ------ 88 LIVESTRONG 2050 Portfolio Institutional Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.23 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.12 0.03 Net Realized and Unrealized Gain (Loss) (3.09) (0.80) -------- -------- Total From Investment Operations (2.97) (0.77) -------- -------- Distributions From Net Investment Income (0.08) -- -------- -------- Net Asset Value, End of Period $6.18 $9.23 ======== ======== TOTAL RETURN(4) (32.24)% (7.70)% 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 2.99%(6) 1.36%(6) Portfolio Turnover Rate 14% 3% Net Assets, End of Period (in thousands) $1,285 $6 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. Other expenses, which include the fees and expenses of the fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. (6) Annualized. See Notes to Financial Statements. - ------ 89 LIVESTRONG 2050 Portfolio Advisor Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.23 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.10 0.02 Net Realized and Unrealized Gain (Loss) (3.10) (0.79) -------- -------- Total From Investment Operations (3.00) (0.77) -------- -------- Distributions From Net Investment Income (0.06) -- -------- -------- Net Asset Value, End of Period $6.17 $9.23 ======== ======== TOTAL RETURN(4) (32.52)% (7.70)% 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 2.54%(6) 0.91%(6) Portfolio Turnover Rate 14% 3% Net Assets, End of Period (in thousands) $22 $6 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. - ------ 90 LIVESTRONG 2050 Portfolio R Class For a Share Outstanding Throughout the Periods Indicated 2009(1) 2008(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.22 $10.00 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.08 0.02 Net Realized and Unrealized Gain (Loss) (3.08) (0.80) -------- -------- Total From Investment Operations (3.00) (0.78) -------- -------- Distributions From Net Investment Income (0.05) -- -------- -------- Net Asset Value, End of Period $6.17 $9.22 ======== ======== TOTAL RETURN(4) (32.55)% (7.80)% 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 2.29%(6) 0.66%(6) Portfolio Turnover Rate 14% 3% Net Assets, End of Period (in thousands) $70 $6 (1) Six months ended January 31, 2009 (unaudited). (2) May 30, 2008 (fund inception) through July 31, 2008. (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. - ------ 91 ADDITIONAL INFORMATION RETIREMENT ACCOUNT INFORMATION As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans 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. 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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information. 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 Investments' website at americancentury.com and on the Securities and Exchange Commission's website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The 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 website at sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The funds also make their complete schedule of portfolio holdings for the most recent quarter of their fiscal year available on their website at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 92 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 CITIGROUP NON-US 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 CITIGROUP US BROAD INVESTMENT-GRADE (BIG) BOND INDEX is a market- capitalization-weighted index that includes fixed-rate Treasury, government- sponsored, mortgage, asset-backed, and investment-grade issues with a maturity of one year or longer. Morgan Stanley Capital International (MSCI) has developed several indices that measure the performance of foreign stock markets. The MSCI EAFE (EUROPE, AUSTRALASIA, FAR EAST) INDEX is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EM (EMERGING MARKETS) INDEX represents the performance of stocks in global emerging market countries. The RUSSELL 1000® INDEX is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL 2000® 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® 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. The RUSSELL MIDCAP® INDEX measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. - ------ 93 NOTES - ------ 94 NOTES - ------ 95 NOTES - ------ 96 [back cover] [american century investments logo and text logo ®] 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 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. American Century Investment Services, Inc., Distributor ©2009 American Century Proprietary Holdings, Inc. All rights reserved. 0903 CL-SAN-64735N
[front cover] SEMIANNUAL REPORT JANUARY 31, 2009 [american century investments logo and text logo ®] AMERICAN CENTURY INVESTMENTS ONE CHOICE PORTFOLIO®: VERY CONSERVATIVE ONE CHOICE PORTFOLIO®: CONSERVATIVE ONE CHOICE PORTFOLIO®: MODERATE ONE CHOICE PORTFOLIO®: AGGRESSIVE ONE CHOICE PORTFOLIO®: VERY AGGRESSIVE PRESIDENT'S LETTER [photo of Chief Executive Officer] JONATHAN THOMAS Dear Investor: Thank you for taking time to review the following discussions, from our experienced portfolio management team, of the fund reporting period ended January 31, 2009. It was a time of enormous upheaval and change. We understand and appreciate the challenges you have faced during this historic period, and share your concerns about the economy, the markets, and fund holdings. To help address these issues, I'd like to provide my perspective on how we have managed--and continue to manage--your investments in these uncertain times. As a company, American Century Investments® is well positioned to deal with market turmoil. We are financially strong and privately held, which allows us to align our resources with your long-term investment interests. In addition, our actively managed, team-based approach allows our portfolio teams to identify attractive investment opportunities regardless of market conditions. Our seasoned investment professionals have substantial experience and have successfully navigated previous market crises. These portfolio managers and analysts continue to use a team approach and follow disciplined investment processes designed to produce the best possible long-term results for you. For example, our equity investment teams are working closely with our fixed income group to monitor and assess credit crisis developments. The fixed income team anticipated dislocation in the credit markets and--through its disciplined processes and teamwork--helped reduce our exposure to investments that suffered substantial losses. How soon a sustainable recovery will occur is uncertain. But I am certain of this: Since 1958, we've demonstrated a consistent ability to execute solid, long-term investment strategies and the discipline to remain focused during times of volatility or shifts in the markets. We've stayed true to our principles, especially our belief that your success is the ultimate measure of our success. Thank you for your continued confidence in us. Sincerely, /s Jonathan Thomas Jonathan S. Thomas President and Chief Executive Officer American Century Investments TABLE OF CONTENTS ONE CHOICE PORTFOLIOS Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 6 Market Index Total Returns . . . . . . . . . . . . . . . . . . . . 6 Underlying Fund Allocations. . . . . . . . . . . . . . . . . . . . 7 Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . 10 FINANCIAL STATEMENTS Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 12 Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . 15 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . 17 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . 19 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 22 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . 30 OTHER INFORMATION Additional Information. . . . . . . . . . . . . . . . . . . . . . . . 35 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 36 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 Investments or any other person in the American Century Investments organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century Investments 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 Investments by third party vendors. To the best of American Century Investments' knowledge, such information is accurate at the time of printing. PERFORMANCE One Choice Portfolios Total Returns as of January 31, 2009 Average Annual Returns Since Inception 6 months(1) 1 year Inception Date ONE CHOICE PORTFOLIO: VERY CONSERVATIVE -- INVESTOR CLASS -8.63% -9.40% 2.17% 9/30/04 ONE CHOICE PORTFOLIO: CONSERVATIVE -- INVESTOR CLASS -16.64% -18.19% 0.93% 9/30/04 ONE CHOICE PORTFOLIO: MODERATE -- INVESTOR CLASS -24.67% -26.51% 0.09% 9/30/04 ONE CHOICE PORTFOLIO: AGGRESSIVE -- INVESTOR CLASS -31.21% -33.17% -0.90% 9/30/04 ONE CHOICE PORTFOLIO: VERY AGGRESSIVE -- INVESTOR CLASS -36.54% -38.87% -2.11% 9/30/04 RUSSELL 3000 INDEX(2) -34.92% -38.86% -4.56% -- CITIGROUP US BROAD INVESTMENT-GRADE BOND INDEX 4.70% 4.06% 4.88% -- (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. - A Reuters Company. © 2009 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 investable U.S. equity market and provides a broad measure of equity performance. The Citigroup US Broad Investment-Grade Bond 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. None of the indices are intended to represent the composition of the portfolio, which invests in a mix of equity and fixed-income securities. (See the Schedule of Investments for the portfolio's asset allocations as of January 31, 2009.) 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. The performance of the portfolios is dependent on the performance of their underlying American Century funds, and will assume the risks associated with these funds. The risks will vary according to each portfolio's asset allocation, and the risk level assigned to each portfolio is intended to reflect the relative short-term price volatility among the funds in each. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 2 One Choice Portfolios Growth of $10,000 Over Life of One Choice Portfolio: Very Conservative $10,000 investment made September 30, 2004
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*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/0001293210-09-000008/growthocpconserv0903.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. The performance of the portfolios is dependent on the performance of their underlying American Century funds, and will assume the risks associated with these funds. The risks will vary according to each portfolio's asset allocation, and the risk level assigned to each portfolio is intended to reflect the relative short-term price volatility among the funds in each. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 3 One Choice Portfolios Growth of $10,000 Over Life of One Choice Portfolio: Moderate $10,000 investment made September 30, 2004
![](https://capedge.com/proxy/N-CSRS/0001293210-09-000008/growthocpmoderate0903.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/0001293210-09-000008/growthocpaggressive0903.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. The performance of the portfolios is dependent on the performance of their underlying American Century funds, and will assume the risks associated with these funds. The risks will vary according to each portfolio's asset allocation, and the risk level assigned to each portfolio is intended to reflect the relative short-term price volatility among the funds in each. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 4 One Choice Portfolios Growth of $10,000 Over Life of One Choice Portfolio: Very Aggressive $10,000 investment made September 30, 2004
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*From 9/30/04, the Investor Class's inception date. Not annualized. One-Year Returns Over Life of Class Periods ended January 31 2005* 2006 2007 2008 2009 One Choice Portfolio: Very Conservative -- Investor Class 3.35% 4.03% 6.75% 5.57% -9.40% One Choice Portfolio: Conservative -- Investor Class 4.78% 7.01% 8.46% 4.61% -18.19% One Choice Portfolio: Moderate -- Investor Class 6.65% 11.62% 10.41% 3.94% -26.51% One Choice Portfolio: Aggressive -- Investor Class 7.45% 15.18% 11.32% 4.41% -33.17% One Choice Portfolio: Very Aggressive -- Investor Class 8.65% 17.80% 12.62% 3.46% -38.87% Russell 3000 Index 7.22% 12.67% 14.11% -3.08% -38.86% Citigroup US Broad Investment-Grade Bond Index 1.65% 1.91% 4.32% 9.32% 4.06% *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. The performance of the portfolios is dependent on the performance of their underlying American Century funds, and will assume the risks associated with these funds. The risks will vary according to each portfolio's asset allocation, and the risk level assigned to each portfolio is intended to reflect the relative short-term price volatility among the funds in each. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 5 PORTFOLIO COMMENTARY One Choice Portfolios Portfolio Managers: Jeff Tyler, Irina Torelli and Enrique Chang PERFORMANCE SUMMARY Each of the five One Choice Portfolios declined for the six months ended January 31, 2009, with returns ranging from -8.63%* for One Choice Portfolio: Very Conservative to -36.54%* for One Choice Portfolio: Very Aggressive (see pages 2-5 for more detailed performance information). The negative returns for the One Choice Portfolios resulted largely from a historic decline in the global equity markets, while bonds generated modestly positive returns. Because of the Portfolios' strategic exposure to a variety of asset classes, a review of the financial markets helps explain much of their performance. STOCK MARKET REVIEW The U.S. stock market suffered one of the worst declines in its history during the six-month period. The steep losses in the equity market were driven by a perfect storm of financial crises--a lack of liquidity in the credit markets, a loss of confidence in banks and other financial institutions, and a significant consumer-led economic downturn. According to the National Bureau of Economic Research, the U.S. economy has been in recession since December 2007, and economic conditions deteriorated further during the reporting period. The economy shed more than 2.5 million jobs in six months as the unemployment rate rose to its highest level since 1992. Retail sales fell by nearly 10%, while the housing market saw a surge in mortgage delinquencies and foreclosures. Further troubles in the mortgage market contributed to a worsening credit crunch and growing losses for many financial companies. The breaking point occurred in September 2008, when brokerage firm Lehman Brothers filed for bankruptcy, unleashing a torrent of takeovers and bailouts of struggling financial companies. The federal government acted quickly to provide cash infusions and other measures designed to restore liquidity and prevent a complete breakdown in the financial system. However, nursing the financial sector back to health remains an uphill battle. The persistent economic and financial struggles undermined investor confidence, sending stocks into a tailspin. The fourth quarter of 2008 was the worst quarter for the major stock indexes in 21 years, while January 2009 brought the biggest January decline in the market's history. As the accompanying table shows, declines for the six-month period were consistent across all market capitalizations. Growth and value issues were mixed, however--growth outpaced value among large-cap shares, while value won out in the mid- and small-cap segments of the market. Market Index Total Returns For the 6 months ended January 31, 2009* U.S. STOCKS Russell 1000 Index (Large-Cap) -34.71% Russell Midcap Index -39.82% Russell 2000 Index (Small-Cap) -37.38% INTERNATIONAL STOCKS MSCI EAFE (Europe, Australasia, Far East) Index -40.75% MSCI EM (Emerging Markets) Index -48.59% U.S. FIXED INCOME Citigroup US Broad Investment-Grade Bond Index 4.70% 10-Year U.S. Treasury Note 11.87% 90-Day U.S. Treasury Bill 0.72% INTERNATIONAL BONDS Citigroup Non-US World Government Bond Index -0.88% *Total returns for periods less than one year are not annualized. - ------ 6 One Choice Portfolios The financial and economic problems plaguing the U.S. spread throughout the globe, causing even sharper declines in foreign equity markets. The worldwide economic weakness led many of the world's central banks to coordinate policy and lower interest rates in an unprecedented effort to stimulate economic growth, but the uncertain timetable for recovery weighed on investor confidence. Emerging markets suffered the largest declines, losing nearly half of their value during the period as exports to developed countries withered and increasingly risk-averse investors shifted out of more-volatile markets. Among developed markets, Japan held up the best, while its neighbors in Asia and the Pacific Rim posted the largest losses. BOND MARKET REVIEW U.S. bonds rallied during the six-month period as investors fleeing the volatility in the equity market looked to high-quality bonds--particularly Treasury securities--as a relatively safe place to hide. The Federal Reserve's efforts to stimulate economic activity--including an unprecedented series of interest rate cuts that lowered the federal funds rate target to nearly zero--also provided a lift to the bond market. Underlying Fund Allocations as a % of net assets as of January 31, 2009(1) Very Very Conservative Conservative Moderate Aggressive Aggressive EQUITY Equity Growth Fund 4.2% 8.1% 15.2% 14.0% 17.7% Growth Fund 2.8% 5.0% 8.4% 15.1% 18.8% Large Company Value Fund 6.6% 9.6% 8.5% 7.7% 9.8% Real Estate Fund 1.3% 1.3% 1.2% 1.4% 1.3% Small Company Fund 0.9% 1.3% 1.8% 2.1% 2.3% Value Fund 4.5% 6.3% 4.9% 4.3% 5.6% Vista Fund 1.4% 3.8% 6.8% 13.4% 16.6% Emerging Markets Fund -- -- 3.6% 5.9% 7.0% International Growth Fund -- 5.4% 9.4% 11.9% 15.2% TOTAL EQUITY 21.7% 40.8% 59.8% 75.8% 94.3% FIXED INCOME Diversified Bond Fund 42.9% 40.9% 28.5% 17.8% 3.4% High-Yield Fund -- -- 2.2% 4.2% -- International Bond Fund 9.8% 8.0% 3.1% -- -- TOTAL FIXED INCOME 52.7% 48.9% 33.8% 22.0% 3.4% PRIME MONEY MARKET FUND 25.3% 10.3% 6.4% 2.2% 2.2% OTHER ASSETS AND LIABILITIES 0.3% --(2) --(2) --(2) 0.1% (1) Underlying fund investments represent Investor Class. (2) Category is less than 0.05% of total net assets. - ------ 7 One Choice Portfolios Treasury bonds were by far the best performers, benefiting the most from the flight to quality. The surge in demand pushed the yields of many Treasury securities down to their lowest levels ever. High-quality mortgage-backed securities, especially those issued by government agencies, also posted solid gains. In contrast, the economic downturn and uncertain credit conditions, along with weaker corporate profits, put downward pressure on corporate bonds. High-yield corporate bonds experienced the sharpest declines as investors anticipated a significant increase in defaults. Foreign bonds posted modestly negative returns for the six-month period. As worldwide demand for U.S. Treasury securities increased, the U.S. dollar strengthened against many of the world's major currencies, most notably the euro and British pound. The stronger dollar weighed on foreign bond returns for U.S. investors. PORTFOLIO PERFORMANCE Each One Choice Portfolio is a "fund of funds" that invests in other American Century Investments mutual funds to achieve its investment objective and target asset allocation. (See page 7 for the specific underlying fund allocations for each One Choice Portfolio.) Within the Portfolios, every stock fund declined by more than 25% for the six-month period. The weakest performers included Real Estate and Emerging Markets, both of which declined by more than 50%. The mid- and small-cap components, Vista and Small Company, and the International Growth fund were also among the most significant decliners, falling by more than 40%. The Portfolios' value-oriented funds, Value and Large Company Value, held up the best, along with the two large-cap offerings, Equity Growth and Growth. The only fund in the Portfolios to advance during the period was Diversified Bond, reflecting the generally positive environment for domestic bonds. The other two fixed-income components, High-Yield and International Bond, both declined. PORTFOLIO STRATEGY Each Portfolio has a "neutral" asset mix (the target allocations for stocks, bonds, and cash) that remains fixed over time. However, our management strategy involves making modest tactical adjustments to each Portfolio's actual asset mix to add value and improve the Portfolios' ability to meet their investment objectives. Our broad tactical allocation for the Portfolios remained consistent throughout the six-month period--a slight overweight position in bonds and a matching underweight position in stocks. This defensive positioning had a favorable impact on performance as bonds outperformed stocks by a wide margin during the period. In the Portfolios' equity portion, we remained neutral with regard to market capitalization, but we also maintained our emphasis on growth via an overweight position in the Growth fund and underweight positions in the two value funds. This positioning detracted modestly from overall results as the Portfolios' value components outperformed our growth-oriented holdings. In particular, the Value fund posted the best return, benefiting from favorable stock selection. In contrast, stock selection detracted from results in the Portfolios' growth holdings, especially Vista and International Growth. - ------ 8 One Choice Portfolios The primary fixed-income component in each of the Portfolios is Diversified Bond, which posted a positive return but underperformed the broad bond market indexes. Although an underweight position in corporate bonds added value during the period, Diversified Bond's overweight positions in areas of the market that typically have relatively low volatility--including high-quality municipal bonds, inflation-protected securities, and commercial mortgage-backed securities--weighed on results as these segments underperformed. An underweight position in the High-Yield fund (only held in One Choice Portfolio: Moderate and One Choice Portfolio: Aggressive) contributed positively to performance. OUTLOOK The near-term outlook for the economy, both in the U.S. and internationally, remains dismal as the ripple effects of the financial crisis continue to spread. The latest casualty is the domestic auto industry, which is teetering on the brink of bankruptcy as vehicle sales plunged to a 26-year low. There is no magic bullet to solve this downturn; the road to recovery will be difficult and painful. As a result, we continue to believe caution is warranted when it comes to our asset allocation. We plan to maintain our underweight position in stocks and overweight position in high-quality bonds. However, we are tempering our caution with some modest optimism--we are maintaining our tilt toward growth stocks because we believe that we are nearing an inflection point where investors' focus will shift away from reacting to bad news and toward anticipating the beginning of a recovery. - ------ 9 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 Investments 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, 2008 to January 31, 2009. 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 Investments fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century Investments account (i.e., not a financial intermediary or retirement plan account), American Century Investments 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 Investments 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 Investments Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - ------ 10 Expenses Effective Paid Expenses Ending During Paid During Effective Beginning Account Period(1) Annualized Period(2) Annualized Account Value 8/1/08 - Expense 8/1/08 - Expense Value 8/1/08 1/31/09 1/31/09 Ratio(1) 1/31/09 Ratio(2) One Choice Portfolio: Very Conservative Actual $1,000 $913.70 $0.00 0.00%(3) $3.28 0.68% Hypothetical $1,000 $1,025.21 $0.00 0.00%(3) $3.47 0.68% One Choice Portfolio: Conservative Actual $1,000 $833.60 $0.00 0.00%(3) $3.51 0.76% Hypothetical $1,000 $1,025.21 $0.00 0.00%(3) $3.87 0.76% One Choice Portfolio: Moderate Actual $1,000 $753.30 $0.00 0.00%(3) $3.76 0.85% Hypothetical $1,000 $1,025.21 $0.00 0.00%(3) $4.33 0.85% One Choice Portfolio: Aggressive Actual $1,000 $687.90 $0.00 0.00%(3) $4.00 0.94% Hypothetical $1,000 $1,025.21 $0.00 0.00%(3) $4.79 0.94% One Choice Portfolio: Very Aggressive Actual $1,000 $634.60 $0.00 0.00%(3) $4.12 1.00% Hypothetical $1,000 $1,025.21 $0.00 0.00%(3) $5.09 1.00% (1) Expenses are equal to the fund'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 Investments funds in which the fund invests are not included in the fund's annualized expense ratio. (2) Effective expenses reflect the sum of expenses borne directly by the fund 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 fund'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 fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. - ------ 11 SCHEDULE OF INVESTMENTS One Choice Portfolios JANUARY 31, 2009 (UNAUDITED) Shares Value One Choice Portfolio: Very Conservative Mutual Funds(1) -- 99.7% DOMESTIC FIXED INCOME FUNDS -- 42.9% 3,850,636 Diversified Bond Fund Investor Class $39,430,513 ------------ MONEY MARKET FUNDS -- 25.3% 23,246,757 Prime Money Market Fund Investor Class 23,246,757 ------------ DOMESTIC EQUITY FUNDS -- 21.7% 267,870 Equity Growth Fund Investor Class 3,833,220 164,556 Growth Fund Investor Class 2,583,529 1,607,436 Large Company Value Fund Investor Class 6,124,331 129,171 Real Estate Fund Investor Class 1,234,875 173,525 Small Company Fund Investor Class 794,744 1,026,951 Value Fund Investor Class 4,107,804 118,920 Vista Fund Investor Class(2) 1,267,687 ------------ 19,946,190 ------------ INTERNATIONAL FIXED INCOME FUNDS -- 9.8% 682,765 International Bond Fund Investor Class 8,992,015 ------------ TOTAL INVESTMENT SECURITIES -- 99.7% (Cost $101,747,389) 91,615,475 ------------ OTHER ASSETS AND LIABILITIES -- 0.3% 297,553 ------------ TOTAL NET ASSETS -- 100.0% $91,913,028 ============ Notes to Schedule of Investments (1) Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (2) Non-income producing. Shares Value One Choice Portfolio: Conservative Mutual Funds(1) -- 100.0% DOMESTIC FIXED INCOME FUNDS -- 40.9% 8,869,426 Diversified Bond Fund Investor Class $ 90,822,922 ------------ DOMESTIC EQUITY FUNDS -- 35.4% 1,256,649 Equity Growth Fund Investor Class 17,982,647 714,059 Growth Fund Investor Class 11,210,726 5,584,037 Large Company Value Fund Investor Class 21,275,181 313,655 Real Estate Fund Investor Class 2,998,542 643,409 Small Company Fund Investor Class 2,946,813 3,499,941 Value Fund Investor Class 13,999,764 783,910 Vista Fund Investor Class(2) 8,356,481 ------------ 78,770,154 ------------ MONEY MARKET FUNDS -- 10.3% 22,765,057 Prime Money Market Fund Investor Class 22,765,057 ------------ INTERNATIONAL FIXED INCOME FUNDS -- 8.0% 1,353,702 International Bond Fund Investor Class 17,828,256 ------------ INTERNATIONAL EQUITY FUNDS -- 5.4% 1,769,518 International Growth Fund Investor Class 12,015,027 ------------ TOTAL INVESTMENT SECURITIES -- 100.0% (Cost $273,258,318) 222,201,416 ------------ OTHER ASSETS AND LIABILITIES(3) 88,779 ------------ TOTAL NET ASSETS -- 100.0% $222,290,195 ============ Notes to Schedule of Investments (1) Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (2) Non-income producing. (3) Category is less than 0.05% of total net assets. See Notes to Financial Statements. - ------ 12 One Choice Portfolios Shares Value One Choice Portfolio: Moderate Mutual Funds(1) -- 100.0% DOMESTIC EQUITY FUNDS -- 46.8% 4,921,561 Equity Growth Fund Investor Class $ 70,427,538 2,483,671 Growth Fund Investor Class 38,993,635 10,248,100 Large Company Value Fund Investor Class 39,045,261 586,006 Real Estate Fund Investor Class 5,602,217 1,786,448 Small Company Fund Investor Class 8,181,932 5,701,387 Value Fund Investor Class 22,805,548 2,926,477 Vista Fund Investor Class(2) 31,196,245 ------------ 216,252,376 ------------ DOMESTIC FIXED INCOME FUNDS -- 30.7% 12,870,276 Diversified Bond Fund Investor Class 131,791,626 2,066,373 High-Yield Fund Investor Class 9,918,590 ------------ 141,710,216 ------------ INTERNATIONAL EQUITY FUNDS -- 13.0% 4,071,718 Emerging Markets Fund Investor Class 16,531,175 6,415,532 International Growth Fund Investor Class 43,561,462 ------------ 60,092,637 ------------ MONEY MARKET FUNDS -- 6.4% 29,410,351 Prime Money Market Fund Investor Class 29,410,351 ------------ INTERNATIONAL FIXED INCOME FUNDS -- 3.1% 1,084,663 International Bond Fund Investor Class 14,285,012 ------------ TOTAL INVESTMENT SECURITIES -- 100.0% (Cost $629,655,327) 461,750,592 ------------ OTHER ASSETS AND LIABILITIES(3) 3,837 ------------ TOTAL NET ASSETS -- 100.0% $461,754,429 ============ Notes to Schedule of Investments (1) Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (2) Non-income producing. (3) Category is less than 0.05% of total net assets. Shares Value One Choice Portfolio: Aggressive Mutual Funds(1) -- 100.0% DOMESTIC EQUITY FUNDS -- 58.0% 2,804,746 Equity Growth Fund Investor Class $ 40,135,915 2,765,474 Growth Fund Investor Class 43,417,942 5,768,489 Large Company Value Fund Investor Class 21,977,943 430,272 Real Estate Fund Investor Class 4,113,400 1,310,594 Small Company Fund Investor Class 6,002,521 3,099,692 Value Fund Investor Class 12,398,768 3,589,557 Vista Fund Investor Class(2) 38,264,678 ------------ 166,311,167 ------------ DOMESTIC FIXED INCOME FUNDS -- 22.0% 4,994,143 Diversified Bond Fund Investor Class 51,140,024 2,499,349 High-Yield Fund Investor Class 11,996,875 ------------ 63,136,899 ------------ INTERNATIONAL EQUITY FUNDS -- 17.8% 4,180,510 Emerging Markets Fund Investor Class 16,972,871 4,993,689 International Growth Fund Investor Class 33,907,148 ------------ 50,880,019 ------------ MONEY MARKET FUNDS -- 2.2% 6,256,738 Prime Money Market Fund Investor Class 6,256,738 ------------ TOTAL INVESTMENT SECURITIES -- 100.0% (Cost $418,440,657) 286,584,823 ------------ OTHER ASSETS AND LIABILITIES(3) 131,941 ------------ TOTAL NET ASSETS -- 100.0% $286,716,764 ============ Notes to Schedule of Investments (1) Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (2) Non-income producing. (3) Category is less than 0.05% of total net assets. See Notes to Financial Statements. - ------ 13 One Choice Portfolios Shares Value One Choice Portfolio: Very Aggressive Mutual Funds(1) -- 99.9% DOMESTIC EQUITY FUNDS -- 72.1% 1,424,966 Equity Growth Fund Investor Class $ 20,391,263 1,384,436 Growth Fund Investor Class 21,735,645 2,967,737 Large Company Value Fund Investor Class 11,307,078 153,194 Real Estate Fund Investor Class 1,464,535 580,322 Small Company Fund Investor Class 2,657,875 1,627,546 Value Fund Investor Class 6,510,184 1,792,757 Vista Fund Investor Class(2) 19,110,790 ------------ 83,177,370 ------------ INTERNATIONAL EQUITY FUNDS -- 22.2% 1,992,813 Emerging Markets Fund Investor Class 8,090,821 2,589,622 International Growth Fund Investor Class 17,583,533 ------------ 25,674,354 ------------ DOMESTIC FIXED INCOME FUNDS -- 3.4% 380,196 Diversified Bond Fund Investor Class 3,893,207 ------------ MONEY MARKET FUNDS -- 2.2% 2,514,285 Prime Money Market Fund Investor Class 2,514,285 ------------ TOTAL INVESTMENT SECURITIES -- 99.9% (Cost $179,399,819) 115,259,216 ------------ OTHER ASSETS AND LIABILITIES -- 0.1% 76,525 ------------ TOTAL NET ASSETS -- 100.0% $115,335,741 ============ Notes to Schedule of Investments (1) Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. (2) Non-income producing. See Notes to Financial Statements. - ------ 14 STATEMENT OF ASSETS AND LIABILITIES JANUARY 31, 2009 (UNAUDITED) Very Conservative Conservative Moderate ASSETS Investment securities in affiliates, at value (cost of $101,747,389, $273,258,318 and $629,655,327, respectively) $91,615,475 $222,201,416 $461,750,592 Cash 45 44 51 Receivable for capital shares sold 262,242 69,289 106,224 Distributions receivable from affiliates 112,288 226,536 380,861 ------------ ------------ ------------- 91,990,050 222,497,285 462,237,728 ------------ ------------ ------------- LIABILITIES Payable for capital shares redeemed 77,022 207,090 483,299 ------------ ------------ ------------- NET ASSETS $91,913,028 $222,290,195 $461,754,429 ============ ============ ============= INVESTOR CLASS CAPITAL SHARES, $0.01 PAR VALUE Outstanding 9,999,141 25,597,697 55,449,797 ============ ============ ============= NET ASSET VALUE PER SHARE $9.19 $8.68 $8.33 ============ ============ ============= NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $103,506,094 $281,207,434 $651,263,353 Undistributed net investment income 35,743 104,036 283,021 Accumulated net realized loss on investment transactions (1,496,895) (7,964,373) (21,887,210) Net unrealized depreciation on investments (10,131,914) (51,056,902) (167,904,735) ------------ ------------ ------------- $ 91,913,028 $222,290,195 $461,754,429 ============ ============ ============= See Notes to Financial Statements. - ------ 15 JANUARY 31, 2009 (UNAUDITED) Aggressive Very Aggressive ASSETS Investment securities in affiliates, at value (cost of $418,440,657 and $179,399,819, respectively) $286,584,823 $115,259,216 Cash -- 32 Receivable for capital shares sold 88,458 87,695 Distributions receivable from affiliates 187,201 11,465 ------------- ------------ 286,860,482 115,358,408 ------------- ------------ LIABILITIES Disbursements in excess of demand deposit cash 1,713 -- Payable for capital shares redeemed 142,005 22,667 ------------- ------------ 143,718 22,667 ------------- ------------ NET ASSETS $286,716,764 $115,335,741 ============= ============ INVESTOR CLASS CAPITAL SHARES, $0.01 PAR VALUE Outstanding 35,830,256 15,072,548 ============= ============ NET ASSET VALUE PER SHARE $8.00 $7.65 ============= ============ NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $432,512,738 $188,436,447 Undistributed net investment income 184,107 5,301 Accumulated net realized loss on investment transactions (14,124,247) (8,965,404) Net unrealized depreciation on investments (131,855,834) (64,140,603) ------------- ------------ $286,716,764 $115,335,741 ============= ============ See Notes to Financial Statements. - ------ 16 STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JANUARY 31, 2009 (UNAUDITED) Very Conservative Conservative Moderate INVESTMENT INCOME (LOSS) INCOME: Income distributions from underlying funds -- affiliates $1,963,885 $ 5,145,139 $ 8,956,576 ------------ ------------- -------------- EXPENSES: Directors' fees and expenses 1,623 4,735 10,398 ------------ ------------- -------------- NET INVESTMENT INCOME (LOSS) 1,962,262 5,140,404 8,946,178 ------------ ------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES NET REALIZED GAIN (LOSS) ON: Sale of investments in underlying funds (1,152,189) (7,009,415) (18,943,433) Capital gain distributions received from underlying funds 348,402 975,187 1,570,883 ------------ ------------- -------------- (803,787) (6,034,228) (17,372,550) ------------ ------------- -------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS IN UNDERLYING FUNDS (9,218,586) (46,001,177) (151,128,948) ------------ ------------- -------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES (10,022,373) (52,035,405) (168,501,498) ------------ ------------- -------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(8,060,111) $(46,895,001) $(159,555,320) ============ ============= ============== See Notes to Financial Statements. - ------ 17 FOR THE SIX MONTHS ENDED JANUARY 31, 2009 (UNAUDITED) Aggressive Very Aggressive INVESTMENT INCOME (LOSS) INCOME: Income distributions from underlying funds -- affiliates $4,413,520 $1,324,731 -------------- ------------- EXPENSES: Directors' fees and expenses 6,605 2,738 -------------- ------------- NET INVESTMENT INCOME (LOSS) 4,406,915 1,321,993 -------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES NET REALIZED GAIN (LOSS) ON: Sale of investments in underlying funds (11,565,660) (6,988,914) Capital gain distributions received from underlying funds 734,298 242,903 -------------- ------------- (10,831,362) (6,746,011) -------------- ------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON INVESTMENTS IN UNDERLYING FUNDS (126,753,254) (60,705,472) -------------- ------------- NET REALIZED AND UNREALIZED GAIN (LOSS) ON AFFILIATES (137,584,616) (67,451,483) -------------- ------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(133,177,701) $(66,129,490) ============== ============= See Notes to Financial Statements. - ------ 18 STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED JANUARY 31, 2009 (UNAUDITED) AND YEAR ENDED JULY 31, 2008 Very Conservative Conservative Increase (Decrease) in Net Assets 2009 2008 2009 2008 OPERATIONS Net investment income (loss) $ 1,962,262 $ 2,478,125 $5,140,404 $ 10,153,312 Net realized gain (loss) (803,787) 79,690 (6,034,228) 3,830,386 Change in net unrealized appreciation (depreciation) (9,218,586) (1,636,979) (46,001,177) (14,808,867) ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations (8,060,111) 920,836 (46,895,001) (825,169) ------------ ------------ ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS From net investment income (2,140,675) (2,410,671) (5,632,644) (10,130,613) From net realized gains (540,084) (190,807) (5,048,736) (1,699,068) ------------ ------------ ------------ ------------ Decrease in net assets from distributions (2,680,759) (2,601,478) (10,681,380) (11,829,681) ------------ ------------ ------------ ------------ CAPITAL SHARE TRANSACTIONS Proceeds from shares sold 44,880,673 61,070,373 41,811,093 124,622,410 Proceeds from reinvestment of distributions 2,606,942 2,523,121 10,494,325 11,587,346 Payments for shares redeemed (29,435,081) (18,294,303) (55,514,452) (68,308,853) ------------ ------------ ------------ ------------ Net increase (decrease) in net assets from capital share transactions 18,052,534 45,299,191 (3,209,034) 67,900,903 ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS 7,311,664 43,618,549 (60,785,415) 55,246,053 NET ASSETS Beginning of period 84,601,364 40,982,815 283,075,610 227,829,557 ------------ ------------ ------------ ------------ End of period $91,913,028 $84,601,364 $222,290,195 $283,075,610 ============ ============ ============ ============ Undistributed net investment income $35,743 $214,156 $104,036 $596,276 ============ ============ ============ ============ TRANSACTIONS IN SHARES OF THE FUND Sold 4,614,198 5,778,020 4,284,867 11,004,414 Issued in reinvestment of distributions 270,495 240,759 1,127,767 1,027,071 Redeemed (3,050,284) (1,737,192) (5,803,692) (6,066,675) ------------ ------------ ------------ ------------ Net increase (decrease) in shares of the fund 1,834,409 4,281,587 (391,058) 5,964,810 ============ ============ ============ ============ See Notes to Financial Statements. - ------ 19 SIX MONTHS ENDED JANUARY 31, 2009 (UNAUDITED) AND YEAR ENDED JULY 31, 2008 Moderate Aggressive Increase (Decrease) in Net Assets 2009 2008 2009 2008 OPERATIONS Net investment income (loss) $8,946,178 $22,149,221 $ 4,406,915 $ 13,192,478 Net realized gain (loss) (17,372,550) 17,144,180 (10,831,362) 13,994,819 Change in net unrealized appreciation (depreciation) (151,128,948) (57,887,670) (126,753,254) (46,739,387) ------------- ------------- ------------- ------------ Net increase (decrease) in net assets resulting from operations (159,555,320) (18,594,269) (133,177,701) (19,552,090) ------------- ------------- ------------- ------------ DISTRIBUTIONS TO SHAREHOLDERS From net investment income (9,693,779) (22,191,149) (7,875,977) (12,099,339) From net realized gains (19,257,364) (7,139,825) (15,603,260) (5,382,224) ------------- ------------- ------------- ------------ Decrease in net assets from distributions (28,951,143) (29,330,974) (23,479,237) (17,481,563) ------------- ------------- ------------- ------------ CAPITAL SHARE TRANSACTIONS Proceeds from shares sold 55,499,396 217,735,355 37,969,665 132,300,578 Proceeds from reinvestment of distributions 28,443,966 28,522,524 23,215,070 17,179,195 Payments for shares redeemed (85,515,779) (132,875,879) (43,897,615) (83,381,419) ------------- ------------- ------------- ------------ Net increase (decrease) in net assets from capital share transactions (1,572,417) 113,382,000 17,287,120 66,098,354 ------------- ------------- ------------- ------------ NET INCREASE (DECREASE) IN NET ASSETS (190,078,880) 65,456,757 (139,369,818) 29,064,701 NET ASSETS Beginning of period 651,833,309 586,376,552 426,086,582 397,021,881 ------------- ------------- ------------- ------------ End of period $461,754,429 $651,833,309 $286,716,764 $426,086,582 ============= ============= ============= ============ Undistributed net investment income $283,021 $1,030,622 $184,107 $3,653,169 ============= ============= ============= ============ TRANSACTIONS IN SHARES OF THE FUND Sold 5,562,542 17,467,088 3,772,260 9,774,368 Issued in reinvestment of distributions 3,171,175 2,286,713 2,770,289 1,248,488 Redeemed (8,872,213) (10,763,714) (4,487,135) (6,239,855) ------------- ------------- ------------- ------------ Net increase (decrease) in shares of the fund (138,496) 8,990,087 2,055,414 4,783,001 ============= ============= ============= ============ See Notes to Financial Statements. - ------ 20 SIX MONTHS ENDED JANUARY 31, 2009 (UNAUDITED) AND YEAR ENDED JULY 31, 2008 Very Aggressive Increase (Decrease) in Net Assets 2009 2008 OPERATIONS Net investment income (loss) $1,321,993 $4,662,990 Net realized gain (loss) (6,746,011) 6,374,361 Change in net unrealized appreciation (depreciation) (60,705,472) (24,701,859) ------------ ------------ Net increase (decrease) in net assets resulting from operations (66,129,490) (13,664,508) ------------ ------------ DISTRIBUTIONS TO SHAREHOLDERS From net investment income (1,902,013) (4,620,307) From net realized gains (7,869,388) (2,398,527) ------------ ------------ Decrease in net assets from distributions (9,771,401) (7,018,834) ------------ ------------ CAPITAL SHARE TRANSACTIONS Proceeds from shares sold 19,568,765 70,762,147 Proceeds from reinvestment of distributions 9,521,101 6,950,948 Payments for shares redeemed (19,311,871) (44,414,955) ------------ ------------ Net increase (decrease) in net assets from capital share transactions 9,777,995 33,298,140 ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS (66,122,896) 12,614,798 NET ASSETS Beginning of period 181,458,637 168,843,839 ------------ ------------ End of period $115,335,741 $181,458,637 ============ ============ Undistributed net investment income $5,301 $585,321 ============ ============ TRANSACTIONS IN SHARES OF THE FUND Sold 2,036,168 4,916,535 Issued in reinvestment of distributions 1,172,550 472,854 Redeemed (1,974,563) (3,134,435) ------------ ------------ Net increase (decrease) in shares of the fund 1,234,155 2,254,954 ============ ============ See Notes to Financial Statements. - ------ 21 NOTES TO FINANCIAL STATEMENTS JANUARY 31, 2009 (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 Investments family of funds (the underlying funds). The funds are diversified under the 1940 Act. Additionally, 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 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 large 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 high total investment return through a combination of capital appreciation and current income. 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. 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. - ------ 22 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. As a secondary objective, the fund seeks capital appreciation, but only when consistent with its primary objective of maximizing current income. INTERNATIONAL FIXED INCOME FUNDS INTERNATIONAL BOND seeks high total return by investing in high-quality, non-dollar-denominated government and corporate debt securities issued 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, very short-term debt securities issued by corporations, banks and governments. SECURITY VALUATIONS -- Investments in the underlying funds are valued at their reported net asset value. The underlying funds have specific valuation policies. If an event occurs after the value of a security was established but before the net asset value per share of an underlying fund was determined that was likely to materially change the net asset value of the underlying fund, that security would be valued as determined in accordance with procedures adopted by the Board of Directors/Trustees. If the underlying fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued as determined by the Board of Directors/Trustees or its designee, in accordance with procedures adopted by the Board of Directors/Trustees, if such determination would materially impact an underlying fund's net asset value. Certain other circumstances may cause the underlying fund to use alternative procedures to value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence. SECURITY TRANSACTIONS -- For financial reporting purposes, 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. All tax years for the funds remain subject to examination by tax authorities. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months. Accordingly, no provision has been made for federal or state income taxes. Interest and penalties associated with any federal or state income tax obligations, if any, are recorded as interest expense. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions 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. - ------ 23 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. (ACGIM), 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, 2009, were as follows: Very Very Conservative Conservative Moderate Aggressive Aggressive Purchases $28,163,268 $36,291,595 $64,441,559 $39,984,113 $17,139,507 Proceeds from sales $10,574,746 $43,549,216 $83,549,007 $40,719,109 $15,612,274 - ------ 24 4. AFFILIATED COMPANY TRANSACTIONS Investments are funds within the American Century Investments family of funds, of which certain funds may be deemed to be under common control because of the same board of directors. A summary of transactions for each underlying fund for the six months ended January 31, 2009 follows: January 31, 2009 July 31, 2008 Fund/ Share Purchase Sales Realized Distributions Share Market Underlying Fund Balance Cost Cost Gain (Loss) Received(1) Balance Value One Choice Portfolio: Very Conservative Diversified Bond Fund Investor Class 3,366,876 $9,735,066 $4,976,169 $(208,683) $1,177,487 3,850,636 $39,430,513 Prime Money Market Fund Investor Class 20,791,066 5,876,839 3,421,148 -- 269,709 23,246,757 23,246,757 Equity Growth Fund Investor Class 177,467 1,900,972 442,597 (129,025) 46,974 267,870 3,833,220 Growth Fund Investor Class 108,101 1,280,659 292,114 (82,898) 13,322 164,556 2,583,529 Large Company Value Fund Investor Class 1,083,408 3,080,526 800,087 (277,882) 222,834 1,607,436 6,124,331 Real Estate Fund Investor Class 85,642 839,961 250,551 (111,025) 40,551 129,171 1,234,875 Small Company Fund Investor Class 111,321 445,307 106,979 (37,239) 653 173,525 794,744 Value Fund Investor Class 764,986 1,593,112 479,723 (148,975) 70,179 1,026,951 4,107,804 Vista Fund Investor Class(2) 67,551 783,016 169,322 (64,640) -- 118,920 1,267,687 International Bond Fund Investor Class 545,520 2,627,810 788,245 (91,822) 470,578 682,765 8,992,015 ----------- ----------- ------------ ---------- ----------- $28,163,268 $11,726,935 $(1,152,189) $2,312,287 $91,615,475 =========== =========== ============ ========== =========== One Choice Portfolio: Conservative Diversified Bond Fund Investor Class 10,405,102 $ 7,777,605 $23,549,302 $(576,848) $2,996,004 8,869,426 $ 90,822,922 Equity Growth Fund Investor Class 1,117,887 4,655,945 3,161,456 (1,038,923) 253,384 1,256,649 17,982,647 Growth Fund Investor Class 630,845 2,962,027 1,812,909 (501,734) 59,914 714,059 11,210,726 Large Company Value Fund Investor Class 5,059,222 5,324,524 4,194,633 (1,573,196) 838,633 5,584,037 21,275,181 Real Estate Fund Investor Class 285,565 1,047,014 925,965 (426,155) 109,577 313,655 2,998,542 Small Company Fund Investor Class 556,933 922,703 613,053 (238,381) 2,525 643,409 2,946,813 Value Fund Investor Class 3,490,382 1,761,168 2,488,689 (865,828) 268,462 3,499,941 13,999,764 Vista Fund Investor Class(2) 600,645 3,465,211 1,645,158 (646,118) -- 783,910 8,356,481 Prime Money Market Fund Investor Class 27,310,715 1,995,615 6,541,273 -- 300,522 22,765,057 22,765,057 International Bond Fund Investor Class 1,455,057 1,637,017 3,148,624 (162,846) 1,062,961 1,353,702 17,828,256 International Growth Fund Investor Class 1,404,203 4,742,766 2,477,569 (979,386) 228,344 1,769,518 12,015,027 ----------- ----------- ------------ ---------- ------------ $36,291,595 $50,558,631 $(7,009,415) $6,120,326 $222,201,416 =========== =========== ============ ========== ============ (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. - ------ 25 January 31, 2009 Fund/ July 31, Underlying Fund 2008 Share Purchase Realized Distributions Share Balance Cost Sales Cost Gain (Loss) Received(1) Balance Market Value One Choice Portfolio: Moderate Equity Growth Fund Investor Class 4,691,102 $10,882,821 $ 10,035,528 $ (3,561,664) $ 1,032,282 4,921,561 $ 70,427,538 Growth Fund Investor Class 2,350,836 6,190,881 4,884,419 (1,333,894) 208,252 2,483,671 38,993,635 Large Company Value Fund Investor Class 9,973,669 5,393,966 6,159,574 (2,400,726) 1,564,703 10,248,100 39,045,261 Real Estate Fund Investor Class 656,157 449,607 2,556,228 (1,094,111) 218,468 586,006 5,602,217 Small Company Fund Investor Class 1,708,539 1,355,439 1,379,803 (544,316) 7,004 1,786,448 8,181,932 Value Fund Investor Class 6,177,671 1,124,808 4,911,844 (1,669,738) 453,652 5,701,387 22,805,548 Vista Fund Investor Class(2) 2,420,599 9,543,179 4,854,391 (1,930,544) -- 2,926,477 31,196,245 Diversified Bond Fund Investor Class 16,394,956 5,849,433 41,589,823 (1,010,684) 4,467,908 12,870,276 131,791,626 High-Yield Fund Investor Class 2,231,525 449,845 1,564,134 (316,688) 454,697 2,066,373 9,918,590 Emerging Markets Fund Investor Class 2,892,755 8,037,078 3,824,029 (2,153,329) -- 4,071,718 16,531,175 International Growth Fund Investor Class 5,387,461 13,139,996 6,998,190 (2,821,597) 828,408 6,415,532 43,561,462 Prime Money Market Fund Investor Class 38,694,460 1,349,911 10,634,020 -- 406,216 29,410,351 29,410,351 International Bond Fund Investor Class 1,256,612 674,595 3,100,457 (106,142) 885,869 1,084,663 14,285,012 ----------- ------------ ------------- ----------- ------------ $64,441,559 $102,492,440 $(18,943,433) $10,527,459 $461,750,592 =========== ============ ============= =========== ============ One Choice Portfolio: Aggressive Equity Growth Fund Investor Class 2,770,430 $ 3,523,131 $ 4,287,077 $ (1,557,016) $ 597,835 2,804,746 $ 40,135,915 Growth Fund Investor Class 2,712,624 4,126,925 4,028,552 (1,103,552) 228,727 2,765,474 43,417,942 Large Company Value Fund Investor Class 5,795,421 1,549,838 2,560,688 (1,000,812) 880,307 5,768,489 21,977,943 Real Estate Fund Investor Class 428,808 451,344 738,033 (347,621) 152,744 430,272 4,113,400 Small Company Fund Investor Class 1,256,722 796,621 727,731 (288,884) 5,076 1,310,594 6,002,521 Value Fund Investor Class 3,433,888 778,717 3,358,408 (1,061,141) 247,674 3,099,692 12,398,768 Vista Fund Investor Class(2) 3,052,797 9,807,364 4,361,606 (1,729,202) -- 3,589,557 38,264,678 Diversified Bond Fund Investor Class 6,598,190 2,931,860 19,173,419 (383,281) 1,744,691 4,994,143 51,140,024 High-Yield Fund Investor Class 2,918,653 732,882 3,464,934 (759,063) 567,022 2,499,349 11,996,875 Emerging Markets Fund Investor Class 3,073,841 7,246,350 2,919,777 (1,652,326) -- 4,180,510 16,972,871 International Growth Fund Investor Class 4,403,715 7,672,586 4,120,093 (1,682,762) 636,770 4,993,689 33,907,148 Prime Money Market Fund Investor Class 8,434,694 366,495 2,544,451 -- 86,972 6,256,738 6,256,738 ----------- ------------ ------------- ----------- ------------ $39,984,113 $52,284,769 $(11,565,660) $5,147,818 $286,584,823 =========== ============ ============= =========== ============ (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. - ------ 26 January 31, 2009 Fund/ July 31, Underlying Fund 2008 Share Purchase Realized Distributions Share Balance Cost Sales Cost Gain (Loss) Received(1) Balance Market Value One Choice Portfolio: Very Aggressive Equity Growth Fund Investor Class 1,450,710 $ 1,791,868 $ 3,408,712 $(1,138,220) $307,677 1,424,966 $ 20,391,263 Growth Fund Investor Class 1,402,637 1,895,833 3,065,075 (792,221) 114,594 1,384,436 21,735,645 Large Company Value Fund Investor Class 3,078,875 1,039,013 2,465,483 (866,434) 454,363 2,967,737 11,307,078 Real Estate Fund Investor Class 182,136 207,205 1,231,703 (529,741) 57,370 153,194 1,464,535 Small Company Fund Investor Class 593,391 259,589 543,499 (196,081) 2,242 580,322 2,657,875 Value Fund Investor Class 1,887,777 571,354 2,507,720 (706,620) 132,309 1,627,546 6,510,184 Vista Fund Investor Class(2) 1,586,013 4,054,371 2,412,868 (909,657) -- 1,792,757 19,110,790 Emerging Markets Fund Investor Class 1,507,458 3,189,340 1,559,043 (875,784) -- 1,992,813 8,090,821 International Growth Fund Investor Class 2,320,955 3,611,771 2,325,026 (912,988) 329,046 2,589,622 17,583,533 Diversified Bond Fund Investor Class 525,838 311,362 1,803,629 (61,168) 134,270 380,196 3,893,207 Prime Money Market Fund Investor Class 3,584,914 207,801 1,278,430 -- 35,763 2,514,285 2,514,285 ----------- ----------- ------------ ----------- ------------ $17,139,507 $22,601,188 $(6,988,914) $1,567,634 $115,259,216 =========== =========== ============ =========== ============ (1) Distributions received includes distributions from net investment income and from capital gains from the underlying funds. (2) Non-income producing. 5. INVESTMENTS IN UNDERLYING FUNDS 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. 6. FAIR VALUE MEASUREMENTS The funds' securities valuation process is based on several considerations and may use multiple inputs to determine the fair value of the positions held by the funds. In conformity with accounting principles generally accepted in the United States of America, the inputs used to determine a valuation are classified into three broad levels as follows: * Level 1 valuation inputs consist of actual quoted prices based on an active market; * Level 2 valuation inputs consist of significant direct or indirect observable market data; or * Level 3 valuation inputs consist of significant unobservable inputs such as a fund's own assumptions. The level classification is based on the lowest level input that is significant to the fair valuation measurement. The valuation inputs are not an indication of the risks associated with investing in these securities or other financial instruments. - ------ 27 The following is a summary of the valuation inputs used to determine the fair value of the funds' securities as of January 31, 2009: Value of Fund/Valuation Inputs Investment Securities ONE CHOICE PORTFOLIO: VERY CONSERVATIVE Level 1 -- Quoted Prices $91,615,475 Level 2 -- Other Significant Observable Inputs -- Level 3 -- Significant Unobservable Inputs -- ------------- $91,615,475 ============= ONE CHOICE PORTFOLIO: CONSERVATIVE Level 1 -- Quoted Prices $222,201,416 Level 2 -- Other Significant Observable Inputs -- Level 3 -- Significant Unobservable Inputs -- ------------- $222,201,416 ============= ONE CHOICE PORTFOLIO: MODERATE Level 1 -- Quoted Prices $461,750,592 Level 2 -- Other Significant Observable Inputs -- Level 3 -- Significant Unobservable Inputs -- ------------- $461,750,592 ============= ONE CHOICE PORTFOLIO: AGGRESSIVE Level 1 -- Quoted Prices $286,584,823 Level 2 -- Other Significant Observable Inputs -- Level 3 -- Significant Unobservable Inputs -- ------------- $286,584,823 ============= ONE CHOICE PORTFOLIO: VERY AGGRESSIVE Level 1 -- Quoted Prices $115,259,216 Level 2 -- Other Significant Observable Inputs -- Level 3 -- Significant Unobservable Inputs -- ------------- $115,259,216 ============= 7. RISK FACTORS Some of the underlying funds invest in foreign securities, which are generally riskier than U.S. securities. As a result, the funds are subject to foreign risk, meaning that political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters occurring in a country where the funds invest could cause the funds' investments in that country to experience gains or losses. Investing in emerging markets may accentuate these risks. - ------ 28 8. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of 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, 2009, the components of investments for federal income tax purposes were as follows: Very Very Conservative Conservative Moderate Aggressive Aggressive Federal tax cost of investments $ 102,009,651 $274,540,059 $632,489,847 $423,468,220 $185,780,181 ============= ============= ============== ============== ============= Gross tax appreciation of investments $ 556,939 $ 2,339,194 $ 3,777,346 $ 1,444,584 $ 4,358 Gross tax depreciation of investments (10,951,115) (54,677,837) (174,516,601) (138,327,981) (70,615,323) ------------- ------------- -------------- -------------- ------------- Net tax appreciation (depreciation) of investments $(10,394,176) $(52,338,643) $(170,739,255) $(136,883,397) $(70,520,965) ============= ============= ============== ============== ============= 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. 9. RECENTLY ISSUED ACCOUNTING STANDARDS The Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), in September 2006, which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands the required financial statement disclosures about fair value measurements. The adoption of FAS 157 did not materially impact the determination of fair value. In March 2008, the FASB issued Statement of Financial Accounting Standards No. 161, "Disclosures about Derivative Instruments and Hedging Activities -- an amendment of FASB Statement No. 133" (FAS 161). FAS 161 is effective for interim periods beginning after November 15, 2008. FAS 161 amends and expands disclosures about derivative instruments and hedging activities. FAS 161 requires qualitative disclosures about the objectives and strategies of derivative instruments, quantitative disclosures about the fair value amounts of and gains and losses on derivative instruments, and disclosures of credit-risk-related contingent features in hedging activities. Management is currently evaluating the impact that adopting FAS 161 will have on the financial statement disclosures. - ------ 29 FINANCIAL HIGHLIGHTS One Choice Portfolio: Very Conservative Investor Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $10.36 $10.55 $10.23 $10.27 $10.00 -------- ------- ------- ------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.21 0.43 0.40 0.37 0.25 Net Realized and Unrealized Gain (Loss) (1.09) (0.12) 0.33 (0.04) 0.29 -------- ------- ------- ------- -------- Total From Investment Operations (0.88) 0.31 0.73 0.33 0.54 -------- ------- ------- ------- -------- Distributions From Net Investment Income (0.23) (0.46) (0.39) (0.36) (0.27) From Net Realized Gains (0.06) (0.04) (0.02) (0.01) -- -------- ------- ------- ------- -------- Total Distributions (0.29) (0.50) (0.41) (0.37) (0.27) -------- ------- ------- ------- -------- Net Asset Value, End of Period $9.19 $10.36 $10.55 $10.23 $10.27 ======== ======= ======= ======= ======== TOTAL RETURN(4) (8.63)% 2.91% 7.23% 3.27% 5.43% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00% 0.00% 0.00% 0.00%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 4.35%(6) 4.06% 3.83% 3.67% 3.00%(6) Portfolio Turnover Rate 12% 17% 17% 34% 38% Net Assets, End of Period (in thousands) $91,913 $84,601 $40,983 $19,852 $10,132 (1) Six months ended January 31, 2009 (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. Other expenses, which include the fees and expenses of the fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. (6) Annualized. See Notes to Financial Statements. - ------ 30 One Choice Portfolio: Conservative Investor Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $10.89 $11.38 $10.66 $10.54 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.20 0.44 0.35 0.34 0.22 Net Realized and Unrealized Gain (Loss) (1.99) (0.40) 0.75 0.12 0.58 -------- -------- -------- -------- -------- Total From Investment Operations (1.79) 0.04 1.10 0.46 0.80 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.22) (0.45) (0.35) (0.33) (0.26) From Net Realized Gains (0.20) (0.08) (0.03) (0.01) -- -------- -------- -------- -------- -------- Total Distributions (0.42) (0.53) (0.38) (0.34) (0.26) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.68 $10.89 $11.38 $10.66 $10.54 ======== ======== ======== ======== ======== TOTAL RETURN(4) (16.64)% 0.18% 10.41% 4.45% 8.08% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00% 0.00% 0.00% 0.00%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 4.11%(6) 3.85% 3.14% 3.23% 2.63%(6) Portfolio Turnover Rate 14% 18% 7% 8% 12% Net Assets, End of Period (in thousands) $222,290 $283,076 $227,830 $110,384 $43,183 (1) Six months ended January 31, 2009 (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. Other expenses, which include the fees and expenses of the fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. (6) Annualized. See Notes to Financial Statements. - ------ 31 One Choice Portfolio: Moderate Investor Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $11.73 $12.58 $11.34 $10.97 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.16 0.43 0.35 0.34 0.17 Net Realized and Unrealized Gain (Loss) (3.02) (0.70) 1.29 0.38 0.99 -------- -------- -------- -------- -------- Total From Investment Operations (2.86) (0.27) 1.64 0.72 1.16 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.18) (0.44) (0.35) (0.34) (0.19) From Net Realized Gains (0.36) (0.14) (0.05) (0.01) -- -------- -------- -------- -------- -------- Total Distributions (0.54) (0.58) (0.40) (0.35) (0.19) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.33 $11.73 $12.58 $11.34 $10.97 ======== ======== ======== ======== ======== TOTAL RETURN(4) (24.67)% (2.37)% 14.56% 6.68% 11.71% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00% 0.00% 0.00% 0.00%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 3.30%(6) 3.44% 2.85% 3.02% 1.98%(6) Portfolio Turnover Rate 12% 18% 7% 7% 3% Net Assets, End of Period (in thousands) $461,754 $651,833 $586,377 $253,610 $97,313 (1) Six months ended January 31, 2009 (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. Other expenses, which include the fees and expenses of the fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. (6) Annualized. See Notes to Financial Statements. - ------ 32 One Choice Portfolio: Aggressive Investor Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $12.62 $13.69 $11.83 $11.26 $10.00 -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.13 0.41 0.32 0.31 0.14 Net Realized and Unrealized Gain (Loss) (4.04) (0.90) 1.87 0.56 1.22 -------- -------- -------- -------- -------- Total From Investment Operations (3.91) (0.49) 2.19 0.87 1.36 -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.24) (0.40) (0.28) (0.29) (0.10) From Net Realized Gains (0.47) (0.18) (0.05) (0.01) -- -------- -------- -------- -------- -------- Total Distributions (0.71) (0.58) (0.33) (0.30) (0.10) -------- -------- -------- -------- -------- Net Asset Value, End of Period $8.00 $12.62 $13.69 $11.83 $11.26 ======== ======== ======== ======== ======== TOTAL RETURN(4) (31.21)% (3.97)% 18.78% 7.84% 13.61% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00% 0.00% 0.00% 0.00%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 2.58%(6) 3.07% 2.46% 2.68% 1.52%(6) Portfolio Turnover Rate 12% 17% 7% 6% 3% Net Assets, End of Period (in thousands) $286,717 $426,087 $397,022 $191,350 $64,623 (1) Six months ended January 31, 2009 (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. Other expenses, which include the fees and expenses of the fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. (6) Annualized. See Notes to Financial Statements. - ------ 33 One Choice Portfolio: Very Aggressive Investor Class For a Share Outstanding Throughout the Years Ended July 31 (except as noted) 2009(1) 2008 2007 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $13.11 $14.58 $12.23 $11.48 $10.00 -------- -------- -------- ------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.09 0.36 0.25 0.25 0.08 Net Realized and Unrealized Gain (Loss) (4.84) (1.27) 2.40 0.78 1.49 -------- -------- -------- ------- -------- Total From Investment Operations (4.75) (0.91) 2.65 1.03 1.57 -------- -------- -------- ------- -------- Distributions From Net Investment Income (0.14) (0.37) (0.24) (0.27) (0.09) From Net Realized Gains (0.57) (0.19) (0.06) (0.01) -- -------- -------- -------- ------- -------- Total Distributions (0.71) (0.56) (0.30) (0.28) (0.09) -------- -------- -------- ------- -------- Net Asset Value, End of Period $7.65 $13.11 $14.58 $12.23 $11.48 ======== ======== ======== ======= ======== TOTAL RETURN(4) (36.54)% (6.63)% 21.87% 9.00% 15.81% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets(5) 0.00%(6) 0.00% 0.00% 0.00% 0.00%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 1.89%(6) 2.53% 1.85% 2.08% 0.84%(6) Portfolio Turnover Rate 11% 15% 8% 9% 8% Net Assets, End of Period (in thousands) $115,336 $181,459 $168,844 $77,262 $25,649 (1) Six months ended January 31, 2009 (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. Other expenses, which include the fees and expenses of the fund's independent directors and its legal counsel, as well as interest, did not exceed 0.005%. (6) Annualized. See Notes to Financial Statements. - ------ 34 ADDITIONAL INFORMATION RETIREMENT ACCOUNT INFORMATION As required by law, distributions you receive from certain IRAs, or 403(b), 457 and qualified plans 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. 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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information. 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 Investments' website at americancentury.com and on the Securities and Exchange Commission's website at sec.gov. Information regarding how the investment advisor voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The 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 website at sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The funds also make their complete schedule of portfolio holdings for the most recent quarter of their fiscal year available on their website at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 35 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 CITIGROUP US BROAD INVESTMENT-GRADE (BIG) BOND INDEX is a market- capitalization-weighted index that includes fixed-rate Treasury, government- sponsored, mortgage, asset-backed, and investment-grade issues with a maturity of one year or longer. The CITIGROUP NON-US 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. Morgan Stanley Capital International (MSCI) has developed several indices that measure the performance of foreign stock markets. The MSCI EAFE (EUROPE, AUSTRALASIA, FAR EAST) INDEX is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EM (EMERGING MARKETS) INDEX represents the performance of stocks in global emerging market countries. The RUSSELL 1000® INDEX is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL 2000® 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® 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. The RUSSELL MIDCAP® INDEX measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. - ------ 36 [back cover] [american century investments logo and text logo ®] 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 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. American Century Investment Services, Inc., Distributor ©2009 American Century Proprietary Holdings, Inc. All rights reserved. 0903 CL-SAN-64736N
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. INVESTMENTS. (a) The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form. (b) Not applicable. 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/ Jonathan S. Thomas ---------------------------------------- Name: Jonathan S. Thomas Title: President Date: March 31, 2009 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/ Jonathan S. Thomas ---------------------------------------- Name: Jonathan S. Thomas Title: President (principal executive officer) Date: March 31, 2009 By: /s/ Robert J. Leach ---------------------------------------- Name: Robert J. Leach Title: Vice President, Treasurer, and Chief Financial Officer (principal financial officer) Date: March 31, 2009