As filed with the Securities and Exchange Commission on March 26, 1997
1933 Act File No. 33-79482; 1940 Act File No. 811-8532
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 __X__
Pre-Effective Amendment No.____ _____
Post-Effective Amendment No.__2__ __X__
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 _X__
Amendment No.__2__
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
---------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
American Century Tower, 4500 Main Street, Kansas City, MO 64111
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: 816-531-5575
James E. Stowers III
Twentieth Century Tower, 4500 Main Street, Kansas City, MO 64111
----------------------------------------------------------------
(Name and address of Agent for service)
Approximate Date of Proposed Public Offering: April 1, 1997
It is proposed that this filing will become effective (check appropriate box)
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on April 1, 1997 pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a) of Rule 485
_____ on (date) pursuant to paragraph (a) of Rule 485
_____ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
_____ on (date) pursuant to paragraph (a)(2) of Rule 485
The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2. The Rule 24F-2 Notice for the
fiscal year ending November 30, 1996, was filed on January 28, 1997.
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<PAGE>
================================================================================
CROSS REFERENCE SHEET
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N-1A Item No. Location
------------- --------
PART A
Item 1. Cover Page Cover Page
Item 2. Synopsis Transaction and Operating
Expense Table
Item 3. Condensed Financial Financial Highlights
Information
Item 4. General Description Investment Policies of
Registrant the Funds; Other Investment
Practices, Their Characteristics
and Risks; Performance
Advertising; Distribution
of Fund Shares; Further
Information About
American Century
Item 5. Management of the Management
Fund
Item 6. Capital Stock and Further Information About
Other Securities American Century
Item 7. Purchase of Securities How to Open An Account;
Being Offered How to Exchange From One
Account to Another;
Share Price; Distribution
Item 8. Redemption How to Redeem Shares;
Signature Guarantee
Item 9. Pending Legal N/A
Proceedings
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PART B
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Item 10. Cover Page Cover Page
Item 11. Table of Contents Table of Contents
Item 12. General Information N/A
Item 13. Investment Objectives Investment Objectives of
and Policies the Funds; Fundamental Policies
of the Funds; Additional
Investment Restrictions;
Forward Currency Exchange
Contracts; An Explanation of
Fixed Income Securities Ratings;
Short Sales; Portfolio Turnover
Item 14. Management of the Officers and Directors;
Registrant Management;
Custodians
Item 15. Control Persons Capital Stock
and Principal
Holders of Securities
Item 16. Investment Advisory Management;
and Other Services Custodians
Item 17. Brokerage Allocation Brokerage;
Performance Advertising
Item 18. Capital Stock and Capital Stock;
Other Securities Multiple Class Structure
Item 19. Purchase, Redemption N/A
and Pricing of
Securities Being
Offered
Item 20. Tax Status N/A
Item 21. Underwriters N/A
Item 22. Calculation of Yield Performance Advertising
Quotations of Money
Market Funds
Item 23. Financial Statements Financial Statements
<PAGE>
PROSPECTUS
[American Century Logo]
APRIL 1, 1997
AMERICAN
CENTURY
GROUP
Strategic Allocation: Conservative
Strategic Allocation: Moderate
Strategic Allocation: Aggressive
INVESTOR CLASS
[front cover]
AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS
American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios. To
help you find the funds that may meet your investment needs, American Century
funds have been divided into three groups based on investment style and
objectives. These groups, which appear below, are designed to help simplify your
fund decisions.
American Century Investments
BENHAM GROUP(R) AMERICAN CENTURY GROUP TWENTIETH CENTURY(R) GROUP
MONEY MARKET FUNDS ASSET ALLOCATION &
GOVERNMENT BOND FUNDS BALANCED FUNDS GROWTH FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS INTERNATIONAL FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS
Strategic Allocation: Conservative
Strategic Allocation: Moderate
Strategic Allocation: Aggressive
PROSPECTUS
APRIL 1, 1997
Strategic Allocation: Conservative / Strategic
Allocation: Moderate / Strategic Allocation: Aggressive
INVESTOR CLASS
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
American Century Strategic Asset Allocations, Inc., is a part of American
Century Investments, a family of funds that includes nearly 70 no-load mutual
funds covering a variety of investment opportunities. Three of the funds that
diversify their investments among stocks, bonds and money market instruments are
described in this Prospectus. Their investment objectives are listed on page 2
of this Prospectus. The other funds are described in separate prospectuses.
Through its Investor Class of shares, American Century offers investors a
full line of no-load funds, investments that have no sales charges or
commissions.
This Prospectus gives you information about the funds that you should know
before investing. Please read this Prospectus carefully and retain it for future
reference. Additional information is included in the Statement of Additional
Information dated April 1, 1997, and filed with the Securities and Exchange
Commission. It is incorporated into this Prospectus by reference. To obtain a
copy without charge, call or write:
American Century Investments
4500 Main Street o P.O. Box 419200
Kansas City, Missouri 64141-6200 o 1-800-345-2021
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-634-4113 o In Missouri: 816-753-1865
Internet: www.americancentury.com
Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
Prospectus 1
INVESTMENT OBJECTIVES OF THE FUNDS
AMERICAN CENTURY
STRATEGIC ALLOCATION: CONSERVATIVE
AMERICAN CENTURY
STRATEGIC ALLOCATION: MODERATE
AMERICAN CENTURY
STRATEGIC ALLOCATION: AGGRESSIVE
The investment objective of each fund is to provide as high a level of
total return (capital appreciation plus dividend and interest income) as is
consistent with its risk profile. Each fund seeks to achieve its investment
objective by diversifying investments among three asset classes -- equity
securities, bonds and cash equivalent instruments, the mix of which will depend
on the risk profile of the particular fund. The funds are designed for investors
with investment time horizons of at least five years who want to diversify their
investments among these various asset classes through a single investment
vehicle. See "Investment Policies of the Funds," page 6.
There is no assurance that the funds will achieve their respective
investment objectives.
NO PERSON IS AUTHORIZED BY THE FUNDS TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUNDS, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.
2 Investment Objectives American Century Investments
TABLE OF CONTENTS
Investment Objectives of the Funds ....................2
Transaction and Operating Expense Table ...............4
Financial Highlights ..................................5
INFORMATION REGARDING THE FUNDS
Investment Policies of the Funds ......................6
Asset Allocation Funds ............................6
Investment Strategy and
Asset Diversification ...........................6
Investment Approach and Practices .................7
General Portfolio Management ......................8
Other Investment Practices,
Their Characteristics
and Risks ..........................................9
Equity Securities .................................9
Foreign Securities ................................9
Mortgage-Related and Other
Asset-Backed Securities ........................10
Forward Currency Exchange Contracts
and Options Thereon ..............................11
Portfolio Turnover ................................12
Repurchase Agreements .............................12
Futures Contracts .................................12
Derivative Securities .............................13
When-Issued Securities ............................14
Short Sales .......................................14
Rule 144A Securities ..............................14
Performance Advertising ...............................14
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
American Century Investments ..........................16
Investing in American Century .........................16
How to Open an Account ................................16
By Mail ..................................16
By Wire ..................................16
By Exchange ..............................17
In Person ................................17
Subsequent Investments ............................17
By Mail ..................................17
By Telephone .............................17
By Online Access .........................17
By Wire ..................................17
In Person ................................17
Automatic Investment Plan .........................17
How to Exchange from One
Account to Another .................................17
By Mail ..................................18
By Telephone .............................18
By Online Access .........................18
How to Redeem Shares ..................................18
By Mail ..................................18
By Telephone .............................18
By Check-A-Month .........................18
Other Automatic Redemptions ..............18
Redemption Proceeds ...............................18
By Check .................................18
By Wire and ACH ..........................18
Special Requirements
for Large Redemptions ...........................19
Redemption of Shares in
Low-Balance Accounts ............................19
Signature Guarantee ...................................19
Special Shareholder Services ..........................19
Automated Information Line19
Online Account Access ....................20
Open Order Service .......................20
Tax-Qualified Retirement Plans ...........20
Important Policies
Regarding Your Investments .........................20
Reports to Shareholders ...............................21
Employer-Sponsored Retirement Plans
and Institutional Accounts .........................22
ADDITIONAL INFORMATION YOU SHOULD KNOW
Share Price ...........................................23
When Share Price Is Determined ....................23
How Share Price Is Determined .....................23
Where to Find Information
About Share Price ...............................24
Distributions .........................................24
Taxes .................................................24
Tax-Deferred Accounts .............................24
Taxable Accounts ..................................25
Management ............................................25
Investment Management .............................25
Code of Ethics ....................................27
Transfer and Administrative Services ..............27
Distribution of Fund Shares ...........................28
Further Information About American Century ............28
Prospectus Table of Contents 3
<TABLE>
<CAPTION>
TRANSACTION AND OPERATING EXPENSE TABLE
Strategic Strategic Strategic
Allocation: Allocation: Allocation:
Conservative Moderate Aggressive
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load
<S> <C> <C> <C>
Imposed on Purchases ............. none none none
Maximum Sales Load Imposed
on Reinvested Dividends .......... none none none
Deferred Sales Load ................ none none none
Redemption Fee (1) ................. none none none
Exchange Fee ....................... none none none
ANNUAL FUND OPERATING EXPENSES (as a percentage of net assets):
Management Fees .................... 1.00% (2) 1.10% (3) 1.20% (4)
12b-1 Fees ......................... none none none
Other Expenses(5) .................. 0.00% 0.00% 0.00%
Total Fund Operating Expenses ...... 1.00% 1.10% 1.20%
EXAMPLE:
You would pay the following
expenses on 1 year $10 $11 $12
a $1,000 investment,
assuming a 5% annual 3 years 32 35 38
return and redemption
at the end of each
time period(6):
(1) Redemption proceeds sent by wire transfer are subject to a $10 processing
fee.
(2) The fund pays an annual management fee equal to 1.00% of its first $1
billion of average net assets and .90% of average net assets over $1
billion.
(3) The fund pays an annual management fee equal to 1.10% of its first $1
billion of average net assets and 1.00% of average net assets over $1
billion.
(4) The fund pays an annual management fee equal to 1.20% of its first $1
billion of average net assets and 1.10% of average net assets over $1
billion.
(5) Other expenses, which include the fees and expenses (including legal
counsel fees) of those directors who are not "interested persons" as
defined in the Investment Company Act, were less than 0.01 of 1% of average
net assets for the fund's most recent fiscal year.
(6) Assumes that the average net assets of the funds remain constant at less
than $1 billion.
</TABLE>
The purpose of this table is to help you understand the various costs and
expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the class of shares of the funds offered by
this Prospectus. The example set forth above assumes reinvestment of all
dividends and distributions and uses a 5% annual rate of return as required by
Securities and Exchange Commission regulations.
NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE
CONSIDERED INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS
AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The shares offered by this Prospectus are Investor Class shares and have no
up-front or deferred sales charges, commissions, or 12b-1 fees. The funds offer
two other classes of shares, primarily to institutional investors, that have
different fee structures than the Investor Class. The difference in the fee
structures among the classes is the result of their separate arrangements for
shareholder and distribution services and not the result of any difference in
amounts charged by the manager for core investment advisory services.
Accordingly, the core investment advisory expenses do not vary by class. A
difference in fees will result in different performance for the other classes.
For additional information about the various classes, see "Further Information
About American Century," page 28.
4 Transaction and Operating Expense Table American Century Investments
FINANCIAL HIGHLIGHTS
The Financial Highlights for the period presented have been audited by
Ernst & Young LLP, independent auditors, whose report thereon appears in the
funds' annual report, which is incorporated by reference into the Statement of
Additional Information. The annual report contains additional performance
information and will be made available without charge upon request. The
information presented is for a share outstanding throughout the period ended
November 30, 1996.
<TABLE>
Strategic Strategic Strategic
Allocation: Allocation: Allocation:
Conservative(1) Moderate(1) Aggressive(1)
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C>
Beginning of Period ............ $5.00 $5.00 $5.00
----- ----- -----
Income from
Investment Operations
Net Investment Income ....... .13(2) .10(2) .07(2)
Net Realized and Unrealized
Gain on Investment
Transactions .............. .22 .39 .46
----- ----- -----
Total from Investment
Operations ................ .35 .49 .53
----- ----- -----
Distributions
From Net
Investment Income ......... (.09) (.07) --
----- ----- -----
Net Asset Value,
End of Period ................... $5.26 $5.42 $5.53
===== ===== =====
Total Return(3) ............. 7.02% 9.91% 10.60%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to Average
Net Assets ................ 1.01%(4) 1.10%(4) 1.20%(4)
Ratio of Net Investment
Income to Average
Net Assets ................ 3.67%(4) 2.52%(4) 1.72%(4)
Portfolio Turnover Rate ..... 44% 78% 64%
Average Commission Paid
per Investment
Security Traded ........... $.0271 $.0186 $.0202
Net Assets,
End of Period
(in thousands) ............ $33,110 $57,836 $46,276
(1) February 15, 1996 (inception) through November 30, 1996.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gain
distributions, if any. Total returns are not annualized.
(4) Annualized.
</TABLE>
Prospectus Financial Highlights 5
INFORMATION REGARDING THE FUNDS
INVESTMENT POLICIES OF THE FUNDS
Each fund's investment objective is to obtain as high a level of total
return (capital appreciation plus dividend and interest income) as is consistent
with such fund's risk profile. As with all mutual funds, there can be no
assurance that the funds will achieve their investment objectives.
You should be aware that the names of the funds are intended to reflect the
relative short-term price volatility risk among the three asset allocation funds
offered in this Prospectus and not as an indication of the manager's assessment
of the riskiness of the funds as compared to other mutual funds, including other
mutual funds within the American Century family of funds.
ASSET ALLOCATION FUNDS
The funds pursue a flexible approach that diversifies the funds' assets
among various classes and categories of assets. Each fund has its own mix, which
gives it a distinct risk profile and return potential. The three funds enable
investors to select the level of risk that is appropriate for their particular
situations and investment goals. See "Investment Strategy and Asset
Diversification," this page.
STRATEGIC ALLOCATION: CONSERVATIVE
The asset mix of Strategic Allocation: Conservative seeks to provide
shareholders with regular income through its emphasis on bonds and money market
securities, combined with the potential for moderate long-term total return as a
result of its stake in equity securities. The fund's emphasis on bonds and money
market securities should help to provide a measure of principal protection while
the stock market is in a decline.
STRATEGIC ALLOCATION: MODERATE
The asset mix of Strategic Allocation: Moderate emphasizes investments in
equity securities, but maintains a sizable stake in bonds and money market
securities. This asset mix seeks to provide long-term growth and some regular
income, while helping to moderate losses when the stock market declines.
STRATEGIC ALLOCATION: AGGRESSIVE
The asset mix of Strategic Allocation: Aggressive emphasizes investments in
equity securities, but maintains a portion of its assets in bonds and money
market securities. This asset mix seeks to provide long-term growth, together
with a small amount of income to help cushion the volatility of the equity
portfolio.
INVESTMENT STRATEGY AND ASSET DIVERSIFICATION
The funds seek to achieve their investment objectives by pursuing a
strategic asset allocation strategy. Each fund will diversify its investments
among three major asset classes -- equity securities, bonds and cash equivalent
instruments.
Each fund has its own neutral mix that represents a benchmark as to how
that fund's investments will be generally allocated among the major asset
classes over the long term. Each fund's neutral mix is set forth below:
Neutral Mixes
Equity Cash
Fund Securities Bonds Equivalents
Strategic Allocation:
Conservative 40% 45% 15%
Strategic Allocation:
Moderate 60% 30% 10%
Strategic Allocation:
Aggressive 75% 20% 5%
The mix of a fund will vary over short-term periods depending on the
relative performance of the various asset classes (for example, when one class
of assets increases or decreases in value at a different rate than the other
classes). In addition, the manager may temporarily emphasize or de-emphasize a
class of assets based on market conditions regarding the relative value of the
asset class in the near term. However, each fund has operating ranges that
restrict
6 Information Regarding the Funds American Century Investments
the amount by which the assets of each class may fluctuate. Those operating
ranges are set forth below:
Operating Ranges
Equity Cash
Fund Securities Bonds Equivalents
Strategic Allocation:
Conservative 34-46% 38-52% 10-25%
Strategic Allocation:
Moderate 50-70% 20-40% 5-20%
Strategic Allocation:
Aggressive 60-90% 10-30% 0-15%
In addition to diversifying among asset classes, the assets in the equity
and bond classes are further diversified among investment categories (or
sectors) and styles within those classes. See "Investment Approach and
Practices," this page. The allocation of assets within a fund's operating range
and among the different investment categories within each class is designed to
provide a diversified portfolio emphasizing total return.
INVESTMENT APPROACH AND PRACTICES
As described above, each fund's assets are allocated among major asset
classes according to their respective asset mix and subject to the applicable
operating ranges. Each fund's assets are further diversified among various
investment categories and disciplines within the major asset classes, as
described below.
Equity Securities
The equity portion of a fund's portfolio may be invested in any type of
domestic or foreign equity security, primarily common stocks, that meets certain
fundamental and technical standards of selection. The manager utilizes both a
growth and a value investment discipline in managing the equity portion of each
fund's portfolio.
The growth discipline seeks long-term capital appreciation by investing in
companies whose earnings and revenue trends meet the manager's standards of
selection, which generally means that the companies have demonstrated, or, in
the manager's opinion, have the prospects for demonstrating, accelerating
earnings and revenues as compared to prior periods and/or industry competitors.
The value investment discipline seeks capital growth by investing in equity
securities of well-established companies that are believed by the manager to be
temporarily undervalued.
The manager believes that both value investing and growth investing provide
the potential for appreciation over time. Value investing tends to provide less
volatile results. This lower volatility means that the price of value stocks
tends not to fall as significantly as growth stocks do in down markets. However,
value stocks do not usually appreciate as significantly as growth stocks do in
up markets. In keeping with the diversification theme of these funds, and as a
result of management's belief that these styles are complementary, both
disciplines will be represented to some degree in each portfolio at all times.
As noted, the value investment discipline tends to be less volatile than
the growth style. As a result, Strategic Allocation: Conservative will generally
have a higher proportion of its equity investments in value stocks than the
other two funds. Likewise, Strategic Allocation: Aggressive will generally have
a greater proportion of growth stocks than either Strategic Allocation: Moderate
or Strategic Allocation: Conservative.
In addition, the equity portion of each fund's portfolio will be further
diversified among small, medium and large companies. This approach provides
investors with an additional level of diversification and enables investors to
achieve a broader exposure to the various capitalization ranges without having
to invest in multiple funds.
Although the funds will remain exposed to each of the investment
disciplines and categories described above, a particular discipline or
investment category may be emphasized when, in the manager's opinion, such
discipline or investment category is undervalued relative to the other
disciplines or categories. See "Other Investment Practices, Their
Characteristics and Risks," page 9.
Bonds
The fixed income portion of a fund's portfolio will include U.S. Treasury
securities, securities issued or guaranteed by the U.S. government or a foreign
government, or an agency or instrumentality of the U.S. or a foreign government,
and non-convertible debt obliga-
Prospectus Information Regarding the Funds 7
tions issued by U.S. or foreign corporations. The funds may also invest in
mortgage-related and other asset-backed securities as described under
"Mortgage-Related and Other Asset Backed Securities," page 10. As with the
equity portion of a fund's portfolio, the bond portion of a fund's portfolio
will be diversified among the various types of fixed income investment
categories described above. The manager's strategy is to actively manage the
portfolio by investing the fund's assets in sectors it believes are undervalued
(relative to the other sectors) and which represent better relative long-term
investment opportunities.
The value of fixed income securities fluctuates based on changes in
interest rates and in the credit quality of the issuer. Debt securities that
comprise part of a fund's fixed income portfolio will primarily be limited to
"investment grade" obligations. However, Strategic Allocation: Moderate may
invest up to 5% of its assets, and Strategic Allocation: Aggressive may invest
up to 10% of its assets, in "high yield" securities. "Investment grade" means
that at the time of purchase, such obligations are rated within the four highest
categories by a nationally recognized statistical rating organization [for
example, at least Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by
Standard & Poor's Corporation ("S&P")], or, if not rated, are of equivalent
investment quality as determined by the investment manager. According to
Moody's, bonds rated Baa are medium-grade and possess some speculative
characteristics. A BBB rating by S&P indicates S&P's belief that a security
exhibits a satisfactory degree of safety and capacity for repayment, but is more
vulnerable to adverse economic conditions and changing circumstances.
"High yield" securities, sometimes referred to as "junk bonds," are higher
risk, non-convertible debt obligations that are rated below investment grade
securities, or are unrated, but with similar credit quality.
There are no credit or maturity restrictions on the fixed income securities
in which the high yield portion of a fund's portfolio may be invested. Debt
securities rated lower than Baa by Moody's or BBB by S&P or their equivalent are
considered by many to be predominantly speculative. Changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments on such securities than is the case with
higher quality debt securities. Regardless of rating levels, all debt securities
considered for purchase by the fund are analyzed by the investment manager to
determine, to the extent reasonably possible, that the planned investment is
sound, given the investment objective of the fund. See "An Explanation of Fixed
Income Securities Ratings" in the Statement of Additional Information.
Under normal market conditions, the maturities of fixed-income securities
in which the funds invest will range from 2 to 30 years.
Cash Equivalents
The cash equivalent portion of a fund's portfolio may be invested in
high-quality money market instruments (denominated in U.S. dollars or foreign
currencies), including U.S. government obligations, obligations of domestic and
foreign banks, short-term corporate debt instruments and repurchase agreements.
GENERAL PORTFOLIO MANAGEMENT
Within each asset class, each fund's holdings will be invested across
industry groups and issuers that meet its investment criteria. This diversity of
investment is intended to help reduce the risk created by over-concentration in
a particular industry or issuer.
The funds are "strategic" rather than "tactical" allocation funds, which
means that the manager does not try to time the market to identify the exact
time when a major reallocation should be made. Instead, the manager utilizes a
longer-term approach in pursuing the funds' investment objectives, and thus
selects a blend of investments in the various asset classes.
The manager regularly reviews each fund's investments and allocations and
may make changes in the particular securities within each asset class or to a
fund's asset mix (within the defined operating ranges) to favor investments that
it believes will provide the most favorable outlook for achieving a fund's
objective. Recommended reallocations may be implemented promptly or may be
implemented gradually. In order to minimize the impact of reallocations on a
fund's performance, the manager will generally attempt to reallocate assets
gradually.
In determining the allocation of assets among U.S. and foreign capital
markets, the manager considers the condition and growth potential of the various
economies; the relative valuations of the markets; and
8 Information Regarding the Funds American Century Investments
social, political, and economic factors that may affect the markets.
In selecting securities in foreign currencies, the manager considers, among
other factors, the impact of foreign exchange rates relative to the U.S. dollar
value of such securities. The manager may seek to hedge all or a part of a
fund's foreign currency exposure through the use of forward foreign currency
contracts or options thereon. See "Forward Currency Exchange Contracts and
Options Thereon," page 11.
The funds attempt to diversify across asset classes and investment
categories to a greater extent than mutual funds that invest primarily in equity
securities or primarily in fixed income securities. However, the funds are
designed to fit three general risk profiles and may not provide an appropriately
balanced investment plan for all investors.
The funds' investment objectives, as identified on page 2 of this
Prospectus, and any other investment policies designated as "fundamental" in
this Prospectus or in the Statement of Additional Information, cannot be changed
without the approval of the shareholders entitled to cast a majority of the
outstanding votes of the corporation, as defined by the Investment Company Act.
Unless otherwise noted, all other investment policies and practices are
nonfundamental and may be changed without shareholder approval.
OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS
For additional information, see "Additional Investment Restrictions" in the
Statement of Additional Information.
EQUITY SECURITIES
In addition to investing in common stocks, the funds may invest in other
equity securities and equity equivalents. Other equity securities and equity
equivalents include securities that permit the fund to receive an equity
interest in an issuer, the opportunity to acquire an equity interest in an
issuer, or the opportunity to receive a return on its investment that permits
the fund to benefit from the growth over time in the equity of an issuer.
Examples of equity securities and equity equivalents include preferred stock,
convertible preferred stock and convertible debt securities.
Each fund will limit its purchase of convertible debt securities to those
that, at the time of purchase, are rated at least B- by S&P or B3 by Moody's, or
if not rated by S&P or Moody's are of equivalent investment quality as
determined by the manager. A fund's investments in convertible debt securities
and other high yield, non-convertible debt securities rated below investment
grade will comprise less than 35% of the fund's net assets. Debt securities
rated below the four highest categories are not considered "investment grade"
obligations. These securities have speculative characteristics and present more
credit risk than investment grade obligations. For a description of the S&P and
Moody's ratings categories, see "An Explanation of Fixed Income Securities
Ratings," in the Statement of Additional Information. Equity equivalents may
also include securities whose value or return is derived from the value or
return of a different security. Depositary receipts are an example of the type
of equity equivalent security in which the funds might invest.
FOREIGN SECURITIES
Each of the funds may invest in the securities of foreign issuers,
including debt securities of foreign governments and their agencies, when these
securities meet its standards of selection. The manager defines "foreign issuer"
as an issuer of securities that is domiciled outside the United States, derives
at least 50% of its total revenue from production or sales outside the United
States, and/or whose principal trading market is outside the United States.
Strategic Allocation: Conservative will generally invest between 7 and 17%
of its assets in foreign securities; Strategic Allocation: Moderate will
generally invest between 10 and 30% of its assets in foreign securities; and
Strategic Allocation: Aggressive will generally invest between 15 and 35% of its
assets in foreign securities. With regard to foreign investments by Strategic
Allocation: Conservative, the principal activities of such issuers will be
located in developed countries. With regard to Strategic Allocation: Aggressive
and Strategic Allocation: Moderate, the principal activities of such issuers may
be located in either developed or developing countries, but the majority of the
activities will be in developed countries.
Prospectus Information Regarding the Funds 9
The funds may make such investments either directly in foreign securities
or indirectly by purchasing depositary receipts or depositary shares of similar
instruments ("depositary receipts") for foreign securities. Depositary receipts
are securities that are listed on exchanges or quoted in the domestic
over-the-counter markets in one country but represent shares of issuers
domiciled in another country. Direct investments in foreign securities may be
made either on foreign securities exchanges or in the over-the-counter markets.
Subject to its investment objective and policies, each fund may invest in
common stocks, convertible securities, preferred stocks, bonds, notes and other
debt securities of foreign issuers and debt securities of foreign governments
and their agencies. The credit quality standards applicable to domestic
securities purchased by each fund are also applicable to its foreign securities
investments.
Investments in foreign securities may present certain risks, including
those resulting from fluctuations in currency exchange rates, future political
and economic developments, reduced availability of public information concerning
issuers, and the fact that foreign issuers are not generally subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements comparable to those applicable to domestic issuers.
Strategic Allocation: Moderate and Strategic Allocation: Aggressive may
invest a portion of their international holdings in securities of issuers in
emerging market (developing) countries. The funds consider "emerging market
countries" to include all countries that are considered by the manager to be
developing or emerging countries. Currently, the countries not included in this
category for the funds offered by this Prospectus are the United States, Canada,
Japan, the United Kingdom, Germany, Austria, France, Hong Kong, Italy, Ireland,
Singapore, Spain, Belgium, the Netherlands, Switzerland, Sweden, Finland,
Norway, Denmark, Australia and New Zealand. In addition, as used in this
Prospectus, "securities of issuers in emerging market countries" means (i)
securities of issuers the principal securities trading market for which is an
emerging market country or (ii) securities of issuers having their principal
place of business or principal office in emerging market countries.
Investing in emerging market countries involves significantly higher risk
than investing in countries with developed markets as a result of uncertainty
regarding the companies and the markets in which they operate. Securities prices
can be more volatile than in developed countries as a result of investor
concerns regarding the stability of the government, internal economic pressures,
and the impact of external economic factors. In addition, securities markets in
emerging market countries may trade a small number of securities and may be
unable to respond effectively to increases in trading volume, potentially
resulting in a lack of liquidity and in volatility in the price of securities
traded on those markets. Also, securities markets in emerging market countries
typically offer less regulatory protection for investors. See "Investing in
Emerging Market Countries," in the Statement of Additional Information.
MORTGAGE-RELATED AND OTHER
ASSET-BACKED SECURITIES
The funds may purchase mortgage-related and other asset-backed securities.
Mortgage pass-through securities are securities representing interests in
"pools" of mortgages in which payments of both interest and principal on the
securities are generally made monthly, in effect "passing through" monthly
payments made by the individual borrowers on the residential mortgage loans that
underlie the securities (net of fees paid to the issuer or guarantor of the
securities).
Early repayment of principal on mortgage pass-through securities (arising
from prepayments of principal due to sale of the underlying property,
refinancing, or foreclosure, net of fees and costs which may be incurred) may
expose the funds to a lower rate of return upon reinvestment of principal. Also,
if a security subject to prepayment were purchased at a premium, in the event of
prepayment, the value of the premium would be lost. Like other fixed-income
securities, when interest rates rise, the value of a mortgage-related security
generally will decline; however, when interest rates decline, the value of
mortgage-related securities with prepayment features may not increase as much as
other fixed-income securities.
10 Information Regarding the Funds American Century Investments
Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by the
full faith and credit of the U.S. government in the case of securities
guaranteed by the Government National Mortgage Association (GNMA), or guaranteed
by agencies or instrumentalities of the U.S. government in the case of
securities guaranteed by the Federal National Mortgage Association (FNMA) or the
Federal Home Loan Mortgage Corporation (FHLMC), which are supported only by the
discretionary authority of the U.S. government to purchase the agency's
obligations.
Mortgage pass-through securities created by nongovernmental issuers (such
as commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers) may be supported
by various forms of insurance or guarantees, including individual loan, title,
pool and hazard insurance and letters of credit, which may be issued by
governmental entities, private insurers, or the mortgage poolers.
The funds may also invest in collateralized mortgage obligations (CMOs).
CMOs are mortgage-backed securities issued by government agencies;
single-purpose, stand-alone financial subsidiaries; trusts established by
financial institutions; or similar institutions. The funds may buy CMOs that
meet the following criteria:
o are collateralized by pools of mortgages in which payment of principal and
interest of each mortgage is guaranteed by an agency or instrumentality of
the U.S. government;
o are collateralized by pools of mortgages in which payment of principal and
interest are guaranteed by the issuer, and the guarantee is collateralized
by U.S. government securities; and
o are securities in which the proceeds of the issue are invested in mortgage
securities and payments of principal and interest are supported by the
credit of an agency or instrumentality of the U.S. government.
FORWARD CURRENCY EXCHANGE CONTRACTS
AND OPTIONS THEREON
Some of the securities held by the funds may be denominated in foreign
currencies. Other securities, such as depositary receipts, may be denominated in
U.S. dollars but have a value that is dependent on the performance of a foreign
security, as valued in the currency of its home country. As a result, the value
of a fund's portfolio may be affected by changes in the exchange rate between
foreign currencies and the U.S. dollar, as well as by changes in the market
value of the securities themselves. The performance of foreign currencies
relative to the dollar may be a factor in the overall performance of a fund.
To protect against adverse movements in exchange rates between currencies,
the funds may, for hedging purposes only, enter into forward currency exchange
contracts and buy put and call options relating to interest rate futures
contracts. A forward currency exchange contract obligates the fund to purchase
or sell a specific currency at a future date at a specific price. An option is a
contractual right to acquire a financial asset, such as a security, the
securities of a market index, a foreign currency or a foreign currency exchange
contract, at a specific price at the end of a specified term.
Each fund may elect to enter into a forward currency exchange contract or
an option thereon with respect to a specific purchase or sale of a security, or
with respect to the fund's portfolio positions generally.
By entering into a forward currency exchange contract or an option thereon
with respect to the specific purchase or sale of a security denominated in a
foreign currency, the funds can "lock in" an exchange rate between the trade and
settlement dates for that purchase or sale. This practice is sometimes referred
to as "transaction hedging." Each fund may enter into transaction hedging
contracts with respect to all or a substantial portion of its foreign securities
trades.
When the manager believes that a particular currency may decline in value
compared to the dollar, the funds may enter into forward currency exchange
contracts or options thereon to sell an amount of foreign currency equal to the
value of some or all of a fund's portfolio securities either denominated in, or
whose value is tied to, that currency. This practice is some-
Prospectus Information Regarding the Funds 11
times referred to as "portfolio hedging." A fund may not enter into a portfolio
hedging transaction where the fund would be obligated to deliver an amount of
foreign currency in excess of the aggregate value of the fund's portfolio
securities or other assets denominated in, or whose value is tied to, that
currency.
Each fund will make use of portfolio hedging to the extent deemed
appropriate by the manager. However, it is anticipated that the funds will enter
into portfolio hedges much less frequently than transaction hedges.
If a fund enters into a forward currency exchange contract or an option
thereon, the fund, when required, will instruct its custodian bank to segregate
cash or liquid high-grade securities in a separate account in an amount
sufficient to cover its obligation under the contract. For options sold, a fund
will segregate cash or liquid high-grade securities equal to the value of the
securities underlying the options unless the options are otherwise secured.
Those assets will be valued at market daily, and if the value of the segregated
securities declines, additional cash or securities will be added so that the
value of the account is not less than the amount of the fund's commitment. At
any given time, no more than 10% of a fund's assets will be committed to a
segregated account in connection with portfolio hedging transactions.
Predicting the relative future values of currencies is very difficult, and
there is no assurance that any attempt to protect the funds against adverse
currency movements through the use of forward currency exchange contracts will
be successful. In addition, the use of forward currency exchange contracts tends
to limit the potential gains that might result from a positive change in the
relationship between the foreign currency and the U.S. dollar.
PORTFOLIO TURNOVER
The portfolio turnover rates of the funds are shown in the financial
information on page 5 of this Prospectus.
Investment decisions to purchase and sell securities are based on the
anticipated contribution of the security in question to a fund's objectives. The
manager believes that the rate of portfolio turnover is irrelevant when it
determines a change is in order to achieve those objectives and, accordingly,
the annual portfolio turnover rate cannot be accurately predicted.
The portfolio turnover of each fund may be higher than other mutual funds
with similar investment objectives. Higher turnover would generate
correspondingly greater brokerage commissions, which is a cost that the funds
pay directly. Portfolio turnover may also affect the character of capital gains,
if any, realized and distributed by a fund since short-term capital gains are
taxable as ordinary income.
REPURCHASE AGREEMENTS
Each fund may invest in repurchase agreements when such transactions
present an attractive short-term return on cash that is not otherwise committed
to the purchase of securities pursuant to the fund's investment policies.
A repurchase agreement occurs when a fund purchases an interest-bearing
obligation from a bank or broker-dealer registered under the Securities Exchange
Act of 1934 and simultaneously agrees to sell it back on a specified date in the
future (usually less than one week later) at a higher price. The repurchase
price reflects an agreed-upon interest rate during the time the fund's money is
invested in the security and is considered by the staff of the SEC to be a loan
by the fund. Since the interest-bearing obligation purchased constitutes
security for the repurchase obligation, a repurchase agreement can be considered
a loan collateralized by the interest-bearing obligation.
A fund's risk in connection with repurchase agreements is the ability of
the seller to pay the repurchase price on the repurchase date. If the seller
defaults, the fund may incur costs, delays or losses.
The funds will enter into repurchase agreements only with those commercial
banks and broker-dealers whose creditworthiness has been reviewed and found
satisfactory by the funds' manager pursuant to criteria adopted by the funds'
Board of Directors.
FUTURES CONTRACTS
Each fund may enter into domestic and foreign futures contracts. A futures
contract is an agreement to take or make delivery of a financial asset at a
specific price at the end of the contract period. Some futures contracts, such
as market index futures, require settlement in cash based on the difference
between the value of the underlying financial assets at the beginning and at the
end of the contract period.
12 Information Regarding the Funds American Century Investments
Rather than actually purchasing the specific financial assets, or the securities
of a market index, the manager may purchase a futures contract, which reflects
the value of such underlying securities. For example, S&P 500 futures reflect
the value of the underlying companies that comprise the S&P 500 Composite Stock
Price Index. If the aggregate market value of the underlying index securities
increases or decreases during the contract period, the value of the S&P 500
futures can be expected to reflect such increase or decrease. The manager may
use index futures to efficiently expose to the equity markets a portion of a
fund's assets that is being held for future investment opportunities.
When a fund enters into a futures contract, it must make a deposit of cash
or high-quality debt securities, known as "initial margin," as partial security
for its performance under the contract. As the value of the underlying financial
assets fluctuates, either party to the contract is required to make additional
margin payments, known as "variation margin," to cover any additional obligation
it may have under the contract. Assets set aside by a fund as initial or
variable margin may not be disposed of so long as the fund maintains the
contract.
The funds may not purchase leveraged futures. A fund will deposit in a
segregated account with its custodian bank cash or high-quality debt securities
in an amount equal to the fluctuating market value of the index contracts it has
purchased, less any margin deposited on its position. The funds will only invest
in exchange-traded futures.
DERIVATIVE SECURITIES
To the extent permitted by its investment objectives and policies, each of
the funds may invest in securities that are commonly referred to as "derivative"
securities. Generally, a derivative is a financial arrangement the value of
which is based on, or "derived" from, a traditional security, asset, or market
index. Certain derivative securities are more accurately described as
"index/structured" securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such
as depositary receipts or S&P 500 futures), currencies, interest rates, indices
or other financial indicators ("reference indices").
Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities.
There are many different types of derivatives and many different ways to
use them. Futures and options are commonly used for traditional hedging purposes
to attempt to protect a fund from exposure to changing interest rates,
securities prices, or currency exchange rates and for cash management purposes
as a low-cost method of gaining exposure to a particular securities market
without investing directly in those securities.
No fund may invest in a derivative security unless the reference index or
the instrument to which it relates is an eligible investment for the fund. For
example, a security whose underlying value is linked to the S&P 500 Index would
be a permissible investment since each of the funds may invest in the securities
of companies comprising the S&P 500 Index (assuming they otherwise meet the
other requirements for the fund), while a security whose underlying value is
linked to the price of oil would not be a permissible investment since the funds
may not invest in oil and gas leases or futures.
The return of a derivative security may increase or decrease, depending
upon changes in the reference index or instrument to which it relates.
There are a range of risks associated with derivative investments,
including:
o the risk that the underlying security, interest rate, market index or other
financial asset will not move in the direction the portfolio manager
anticipates;
o the possibility that there may be no liquid secondary market, or the
possibility that price fluctuation limits may be imposed by the exchange,
either of which may make it difficult or impossible to close out a position
when desired;
o the risk that adverse price movements in an instrument can result in a loss
substantially greater than a fund's initial investment; and
o the risk that the counterparty will fail to perform its obligations.
The Board of Directors has approved the manager's policy regarding
investments in derivative secu-
Prospectus Information Regarding the Funds 13
rities. That policy specifies factors that must be considered in connection with
a purchase of derivative securities. The policy also establishes a committee
that must review certain proposed purchases before the purchases can be made.
The manager will report on fund activity in derivative securities to the Board
of Directors as necessary. In addition, the board will review the manager's
policy for investments in derivative securities annually.
WHEN-ISSUED SECURITIES
Each fund may purchase new issues of securities on a when-issued basis
without limit when, in the opinion of the manager, such purchases will further
the investment objectives of such fund. The price of when-issued securities is
established at the time the commitment to purchase is made. Delivery of and
payment for these securities typically occur 15 to 45 days after the commitment
to purchase. Market rates of interest on debt securities at the time of delivery
may be higher or lower than those contracted for on the when-issued security.
Accordingly, the value of such security may decline prior to delivery, which
could result in a loss to the fund. A separate account consisting of cash or
high-quality liquid debt securities in an amount at least equal to the
when-issued commitments will be established and maintained with the custodian.
No income will accrue to the fund prior to delivery.
SHORT SALES
Each fund may engage in short sales if, at the time of the short sale, the
fund owns or has the right to acquire an equal amount of the security being sold
short at no additional cost. These transactions allow a fund to hedge against
price fluctuations by locking in a sale price for securities it does not wish to
sell immediately.
A fund may make a short sale when it wants to sell the security it owns at
a current attractive price, but also wishes to defer recognition of gain or loss
for federal income tax purposes and for purposes of satisfying certain tests
applicable to regulated investment companies under the Internal Revenue Code and
Regulations.
RULE 144A SECURITIES
The funds may, from time to time, purchase Rule 144A securities when they
present attractive investment opportunities that otherwise meet the funds'
criteria for selection. Rule 144A securities are securities that are privately
placed with and traded among qualified institutional investors rather than the
general public. Although Rule 144A securities are considered "restricted
securities," they are not necessarily illiquid.
With respect to securities eligible for resale under Rule 144A, the staff
of the Securities and Exchange Commission has taken the position that the
liquidity of such securities in the portfolio of a fund offering redeemable
securities is a question of fact for the Board of Directors to determine, such
determination to be based upon a consideration of the readily available trading
markets and the review of any contractual restrictions. The staff also
acknowledges that, while the board retains ultimate responsibility, it may
delegate this function to the manager. Accordingly, the board has established
guidelines and procedures for determining the liquidity of Rule 144A securities
and has delegated the day-to-day function of determining the liquidity of Rule
144A securities to the manager. The board retains the responsibility to monitor
the implementation of the guidelines and procedures it has adopted.
Since the secondary market for such securities is limited to certain
qualified institutional investors, the liquidity of such securities may be
limited accordingly and a fund may, from time to time, hold a Rule 144A security
that is illiquid. In such an event, the funds' manager will consider appropriate
remedies to minimize the effect on such fund's liquidity. No fund may invest
more than 15% of its assets in illiquid securities (securities that may not be
sold within seven days at approximately the price used in determining the net
asset value of fund shares).
PERFORMANCE ADVERTISING
From time to time, the funds may advertise performance data. Fund
performance may be shown by presenting one or more performance measurements,
including cumulative total return or average annual total return. Performance
data may be quoted separately for the Investor Class and for the other classes
offered by the funds.
14 Information Regarding the Funds American Century Investments
Cumulative total return data is computed by considering all elements of
return, including reinvestment of dividends and capital gains distributions,
over a stated period of time. Average annual total return is determined by
computing the annual compound return over a stated period of time that would
have produced the fund's cumulative total return over the same period if the
fund's performance had remained constant throughout.
A quotation of yield reflects a fund's income over a stated period of time
expressed as a percentage of the fund's share price.
Yield is calculated by adding over a 30-day (or one month) period all
interest and dividend income (net of fund expenses) calculated on each day's
market values, dividing this sum by the average number of fund shares
outstanding during the period, and expressing the result as a percentage of the
fund's share price on the last day of the 30-day (or one month) period. The
percentage is then annualized. Capital gains and losses are not included in the
calculation.
Yields are calculated according to accounting methods that are standardized
in accordance with SEC rules for all stock and bond funds. Because yield
accounting methods differ from the methods used for other accounting purposes, a
fund's yield may not equal the income paid on your shares or the income reported
in the fund's financial statements.
The funds may also include in advertisements data comparing performance
with the performance of non-related investment media, published editorial
comments and performance rankings compiled by independent organizations (such as
Lipper Analytical Services) and publications that monitor the performance of
mutual funds. Performance information may be quoted numerically or may be
presented in a table, graph or other illustration. In addition, fund performance
may be compared to well-known indices of market performance including the
Standard & Poor's (S&P) 500 Index and the Dow Jones Industrial Average. Fund
performance may also be compared, on a relative basis, to the other funds in our
fund family. This relative comparison, which may be based upon historical or
expected fund performance, volatility or other fund characteristics, may be
presented numerically, graphically or in text. Fund performance may also be
combined or blended with other funds in our fund family, and that combined or
blended performance may be compared to the same indices to which individual
funds may be compared.
All performance information advertised by the funds is historical in nature
and is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.
Prospectus Information Regarding the Funds 15
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
AMERICAN CENTURY INVESTMENTS
The funds offered by this Prospectus are a part of the American Century
Investments family of mutual funds. Our family provides a full range of
investment opportunities, from the aggressive equity growth funds in our
Twentieth Century Group, to the fixed income funds in our Benham Group, to the
moderate risk and specialty funds in our American Century Group. Please call
1-800-345-2021 for a brochure or prospectuses for the other funds in the
American Century Investments family.
INVESTING IN AMERICAN CENTURY
The following section explains how to invest in American Century funds,
including purchases, redemptions, exchanges and special services. You will find
more detail about doing business with us by referring to the Investor Services
Guide that you will receive when you open an account.
If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan or through a bank, broker-dealer or other
financial intermediary, the following sections, as well as the information
contained in our Investor Services Guide, may not apply to you. Please read
"Employer-Sponsored Retirement Plans and Institutional Accounts," page 22.
HOW TO OPEN AN ACCOUNT
To open an account, you must complete and sign an application, furnishing
your taxpayer identification number. (You must also certify whether you are
subject to withholding for failing to report income to the IRS.) Investments
received without a certified taxpayer identification number will be returned.
The minimum investment is $2,500 [$1,000 for IRA and Uniform
Gifts/Transfers to Minors Acts ("UGMA/ UTMA") accounts]. These minimums will be
waived if you establish an automatic investment plan to your account that is the
equivalent of at least $50 per month. See "Automatic Investment Plan," page 17.
The minimum investment requirements may be different for some types of
retirement accounts. Call one of our Investor Services Representatives for
information on our retirement plans, which are available for individual
investors or for those investing through their employers.
Please note: If you register your account as belonging to multiple owners
(e.g., as joint tenants), you must provide us with specific authorization on
your application in order for us to accept written or telephone instructions
from a single owner. Otherwise, all owners will have to agree to any
transactions that involve the account (whether the transaction request is in
writing or over the telephone).
You may invest in the following ways:
By Mail
Send a completed application and check or money order payable in U.S.
dollars to American Century Investments.
By Wire
You may make your initial investment by wiring funds. To do so, call us or
mail a completed application and provide your bank with the following
information:
o Receiving bank and routing number:
Commerce Bank, N.A. (101000019)
o Beneficiary (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111
o Beneficiary account number (BNF ACCT):
2804918
o Reference for Beneficiary (RFB):
American Century account number into which you are investing. If more
than one, leave blank and see Bank to Bank Information below.
o Originator to Beneficiary (OBI):
Name and address of owner of account into which you are investing.
o Bank to Bank Information
(BBI or Free Form Text):
o Taxpayer identification or Social Security number.
16 How to Invest with American Century Investments American Century Investments
o If more than one account, account numbers and amount to be invested
in each account.
o Current tax year, previous tax year or rollover designation if an
IRA. Specify whether IRA, SEP-IRA or SARSEP-IRA.
By Exchange
Call 1-800-345-2021 from 7 a.m. to 7 p.m. Central time to get information
on opening an account by exchanging from another American Century account. See
this page for more information on exchanges.
In Person
If you prefer to work with a representative in person, please visit one of
our Investors Centers, located at:
4500 Main Street
Kansas City, Missouri 64111
1665 Charleston Road
Mountain View, California 94043
2000 S. Colorado Blvd.
Denver, Colorado 80222
SUBSEQUENT INVESTMENTS
Subsequent investments may be made by an automatic bank, payroll or
government direct deposit (see "Automatic Investment Plan," this page) or by any
of the methods below. The minimum investment requirement for subsequent
investments: $250 for checks submitted without the remittance portion of a
previous statement or confirmation, $50 for all other types of subsequent
investments.
By Mail
When making subsequent investments, enclose your check with the remittance
portion of the confirmation of a previous investment. If the investment slip is
not available, indicate your name, address and account number on your check or a
separate piece of paper. (Please be aware that the investment minimum for
subsequent investments is higher without an investment slip.)
By Telephone
Once your account is open, you may make investments by telephone if you
have authorized us (by choosing "Full Services" on your application) to draw on
your bank account. You may call an Investor Services Representative or use our
Automated Information Line.
By Online Access
Once your account is open, you may make investments online if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account.
By Wire
You may make subsequent investments by wire. Follow the wire transfer
instructions on page 16 and indicate your account number.
In Person
You may make subsequent investments in person at one of our Investors
Centers. The locations of our three Investors Centers are listed on this page.
AUTOMATIC INVESTMENT PLAN
You may elect on your application to make investments automatically by
authorizing us to draw on your bank account regularly. Such investments must be
at least the equivalent of $50 per month. You also may choose an automatic
payroll or government direct deposit. If you are establishing a new account,
check the appropriate box under "Automatic Investments" on your application to
receive more information. If you would like to add a direct deposit to an
existing account, please call one of our Investor Services Representatives.
HOW TO EXCHANGE FROM ONE ACCOUNT TO ANOTHER
As long as you meet any minimum investment requirements, you may exchange
your fund shares to our other funds up to six times per year per account. An
exchange request will be processed as of the same day it is received, if it is
received before the funds' net asset values are calculated, which is one hour
prior to the close of the New York Stock Exchange for funds issued by the
American Century Target Maturities Trust, and at the close of the Exchange for
all of our other funds. See "When Share Price is Determined," page 23.
For any single exchange, the shares of each fund being acquired must have a
value of at least $100. However, we will allow investors to set up an Automatic
Exchange Plan between any two funds in the amount of
Prospectus How to Invest with American Century Investments 17
at least $50 per month. See our Investor Services Guide for further information
about exchanges.
If, in any 90-day period, the total of your exchanges and your redemptions
from any one account exceeds the lesser of $250,000 or 1% of the fund's assets,
further exchanges will be subject to special requirements to comply with our
policy on large redemptions. See "Special Requirements for Large Redemptions,"
page 19.
By Mail
You may direct us in writing to exchange your shares from one American
Century account to another. For additional information, please see our Investor
Services Guide.
By Telephone
You can make exchanges over the telephone (either with an Investor Services
Representative or using our Automated Information Line -- see page 19) if you
have authorized us to accept telephone instructions. You can authorize this by
selecting "Full Services" on your application or by calling us at 1-800-345-2021
to get the appropriate form.
By Online Access
You can make exchanges online if you have authorized us to accept
instructions over the Internet. You can authorize this by selecting "Full
Services" on your application or by calling us at 1-800-345-2021 to get the
appropriate form.
HOW TO REDEEM SHARES
We will redeem or "buy back" your shares at any time. Redemptions will be
made at the next net asset value determined after a complete redemption request
is received. For large redemptions, please read "Special Requirements for Large
Redemptions," page 19.
Please note that a request to redeem shares in an IRA or 403(b) plan must
be accompanied by an executed IRS Form W4-P and a reason for withdrawal as
specified by the IRS.
By Mail
Your written instructions to redeem shares may be made either by a
redemption form, which we will send you upon request, or by a letter to us.
Certain redemptions may require a signature guarantee. Please see "Signature
Guarantee," page 19.
By Telephone
If you have authorized us to accept telephone instructions, you may redeem
your shares by calling an Investor Services Representative.
By Check-A-Month
If you have at least a $10,000 balance in your account, you may redeem
shares by Check-A-Month. A Check-A-Month plan automatically redeems enough
shares each month to provide you with a check in an amount you choose (minimum
$50). To set up a Check-A-Month plan or to request a brochure, please call an
Investor Services Representative.
Other Automatic Redemptions
If you have at least a $10,000 balance in your account, you may elect to
make redemptions automatically by authorizing us to send funds to you or to your
account at a bank or other financial institution. To set up automatic
redemptions, call one of our Investor Services Representatives.
REDEMPTION PROCEEDS
Please note that shortly after a purchase of shares is made by check or
electronic draft (also known as an ACH draft) from your bank, we may wait up to
15 days or longer to send redemption proceeds (to allow your purchase funds to
clear). No interest is paid on the redemption proceeds after the redemption is
processed but before your redemption proceeds are sent.
Redemption proceeds may be sent to you in one of the following ways:
By Check
Ordinarily, all redemption checks will be made payable to the registered
owner of the shares and will be mailed only to the address of record. For more
information, please refer to our Investor Services Guide.
By Wire and ACH
You may authorize us to transmit redemption proceeds by wire or ACH. These
services will be effective 15 days after we receive the authorization.
Your bank will usually receive wired funds within 48 hours of transmission.
Funds transferred by ACH may be received up to seven days after transmission.
Wired funds are subject to a $10 fee to cover bank wire
18 How to Invest with American Century Investments American Century Investments
charges, which is deducted from redemption proceeds. Once the funds are
transmitted, the time of receipt and the funds' availability are not under our
control.
SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS
We have elected to be governed by Rule 18f-1 under the Investment Company
Act, which obligates each fund to make certain redemptions in cash. This
requirement to pay redemptions in cash applies to situations where one
shareholder redeems, during any 90-day period, up to the lesser of $250,000 or
1% of the assets of the fund. Although redemptions in excess of this limitation
will also normally be paid in cash, we reserve the right under unusual
circumstances to honor these redemptions by making payment in whole or in part
in readily marketable securities (a "redemption-in-kind").
If payment is made in securities, the securities will be selected by the
fund, will be valued in the same manner as they are in computing the fund's net
asset value and will be provided without prior notice.
If your redemption would exceed this limit and you would like to avoid
being paid in securities, please provide us with an unconditional instruction to
redeem at least 15 days prior to the date on which the redemption transaction is
to occur. The instruction must specify the dollar amount or number of shares to
be redeemed and the date of the transaction. This minimizes the effect of the
redemption on the fund and its remaining shareholders.
Despite the fund's right to redeem fund shares through a
redemption-in-kind, we do not expect to exercise this option unless a fund has
an unusually low level of cash to meet redemptions and/or is experiencing
unusually strong demands for its cash. Such a demand might be caused, for
example, by extreme market conditions that result in an abnormally high level of
redemption requests concentrated in a short period of time. Absent these or
similar circumstances, we expect redemptions in excess of $250,000 to be paid in
cash in any fund with assets of more than $50 million if total redemptions from
any one account in any 90-day period do not exceed one-half of 1% of the total
assets of the fund.
REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS
Whenever the shares held in an account have a value of less than the
required minimum, a letter will be sent advising you to either bring the value
of the shares held in the account up to the minimum or to establish an automatic
investment that is the equivalent of at least $50 per month. If action is not
taken within 90 days of the letter's date, the shares held in the account will
be redeemed and the proceeds from the redemption will be sent by check to your
address of record. We reserve the right to increase the investment minimums.
SIGNATURE GUARANTEE
To protect your accounts from fraud, some transactions will require a
signature guarantee. Which transactions will require a signature guarantee will
depend on which service options you elect when you open your account. For
example, if you choose "In Writing Only," a signature guarantee would be
required when:
o redeeming more than $25,000; or
o establishing or increasing a Check-A-Month or automatic transfer on an
existing account.
You can obtain a signature guarantee from a bank or trust company, credit
union, broker-dealer, securities exchange or association, clearing agency or
savings association, as defined by federal law.
For a more in-depth explanation of our signature guarantee policy, or if
you live outside the United States and would like to know how to obtain a
signature guarantee, please consult our Investor Services Guide.
We reserve the right to require a signature guarantee on any transaction,
or to change this policy at any time.
SPECIAL SHAREHOLDER SERVICES
We offer several service options to make your account easier to manage.
These are listed on the account application. Please make note of these options
and elect the ones that are appropriate for you. Be aware that the "Full
Services" option offers you the most flexibility. You will find more information
about each of these service options in our Investor Services Guide.
Our special shareholder services include:
Automated Information Line
We offer an Automated Information Line, 24 hours a day, seven days a week,
at 1-800-345-8765. By calling the Automated Information Line, you may listen to
Prospectus How to Invest with American Century Investments 19
fund prices, yields and total return figures. You may also use the Automated
Information Line to make investments into your accounts (if we have your bank
information on file) and obtain your share balance, value and most recent
transactions. If you have authorized us to accept telephone instructions, you
also may exchange shares from one fund to another via the Automated Information
Line. Redemption instructions cannot be given via the Automated Information
Line.
Online Account Access
You may contact us 24 hours a day, seven days a week, at
www.americancentury.com to access your funds' daily share prices, receive
updates on major market indices and view historical performance of your funds.
If you select "Full Services" on your application, you can use your personal
access code and Social Security number to view your account balances and account
activity, make subsequent investments from your bank account or exchange shares
from one fund to another.
Open Order Service
Through our open order service, you may designate a price at which to buy
shares of a variable-priced fund by exchange from one of our money market funds,
or a price at which to sell shares of a variable-priced fund by exchange to one
of our money market funds. The designated purchase price must be equal to or
lower, or the designated sale price equal to or higher, than the variable-priced
fund's net asset value at the time the order is placed. If the designated price
is met within 90 calendar days, we will execute your exchange order
automatically at that price (or better). Open orders not executed within 90 days
will be canceled.
If the fund you have selected deducts a distribution from its share price,
your order price will be adjusted accordingly so the distribution does not
inadvertently trigger an open order transaction on your behalf. If you close or
re-register the account from which the shares are to be redeemed, your open
order will be canceled.
Because of their time-sensitive nature, open order transactions are
accepted only by telephone or in person. These transactions are subject to
exchange limitations described in each fund's prospectus, except that orders and
cancellations received before 2 p.m. Central time are effective the same day,
and orders or cancellations received after 2 p.m. Central time are effective the
next business day.
Tax-Qualified Retirement Plans
Each fund is available for your tax-deferred retirement plan. Call or write
us and request the appropriate forms for:
o Individual Retirement Accounts (IRAs);
o 403(b)plans for employees of public school systems and non-profit
organizations; or
o Profit sharing plans and pension plans for corporations and other
employers.
If your IRA and 403(b) accounts do not total $10,000, each account is
subject to an annual $10 fee, up to a total of $30 per year.
You can also transfer your tax-deferred plan to us from another company or
custodian. Call or write us for a Request to Transfer form.
IMPORTANT POLICIES REGARDING YOUR INVESTMENTS
Every account is subject to policies that could affect your investment.
Please refer to the Investor Services Guide for further information about the
policies discussed below, as well as further detail about the services we offer.
(1) We reserve the right for any reason to suspend the offering of shares for a
period of time, or to reject any specific purchase order (including
purchases by exchange). Additionally, purchases may be refused if, in the
opinion of the manager, they are of a size that would disrupt the
management of the fund.
(2) We reserve the right to make changes to any stated investment requirements,
including those that relate to purchases, transfers and redemptions. In
addition, we may also alter, add to or terminate any investor services and
privileges. Any changes may affect all shareholders or only certain series
or classes of shareholders.
(3) Shares being acquired must be qualified for sale in your state of
residence.
(4) Transactions requesting a specific price and date, other than open orders,
will be refused. Once you have mailed or otherwise transmitted your
transaction instructions to us, they may
20 How to Invest with American Century Investments American Century Investments
not be modified or canceled.
(5) If a transaction request is made by a corporation, partnership, trust,
fiduciary, agent or unincorporated association, we will require evidence
satisfactory to us of the authority of the individual making the request.
(6) We have established procedures designed to assure the authenticity of
instructions received by telephone. These procedures include requesting
personal identification from callers, recording telephone calls, and
providing written confirmations of telephone transactions. These procedures
are designed to protect shareholders from unauthorized or fraudulent
instructions. If we do not employ reasonable procedures to confirm the
genuineness of instructions, then we may be liable for losses due to
unauthorized or fraudulent instructions. The company, its transfer agent
and investment advisor will not be responsible for any loss due to
instructions they reasonably believe are genuine.
(7) All signatures should be exactly as the name appears in the registration.
If the owner's name appears in the registration as Mary Elizabeth Jones,
she should sign that way and not as Mary E. Jones.
(8) Unusual stock market conditions have in the past resulted in an increase in
the number of shareholder telephone calls. If you experience difficulty in
reaching us during such periods, you may send your transaction instructions
by mail, express mail or courier service, or you may visit one of our
Investors Centers. You may also use our Automated Information Line if you
have requested and received an access code and are not attempting to redeem
shares.
(9) If you fail to provide us with the correct certified taxpayer
identification number, we may reduce any redemption proceeds by $50 to
cover the penalty the IRS will impose on us for failure to report your
correct taxpayer identification number on information reports.
(10) We will perform special inquiries on shareholder accounts. A research fee
of $15 per hour may be applied.
REPORTS TO SHAREHOLDERS
At the end of each calendar quarter, we will send you a consolidated
statement that summarizes all of your American Century holdings, as well as an
individual statement for each fund you own that reflects all year-to-date
activity in your account. You may request a statement of your account activity
at any time.
With the exception of most automatic transactions, each time you invest,
redeem, transfer or exchange shares, we will send you a confirmation of the
transaction. See the Investor Services Guide for more detail.
Carefully review all the information relating to transactions on your
statements and confirmations to ensure that your instructions were acted on
properly. Please notify us immediately in writing if there is an error. If you
fail to provide notification of an error with reasonable promptness, i.e.,
within 30 days of non-automatic transactions or within 30 days of the date of
your consolidated quarterly statement, in the case of automatic transactions, we
will deem you to have ratified the transaction.
No later than January 31 of each year, we will send you reports that you
may use in completing your U.S. income tax return. See the Investor Services
Guide for more information.
Each year, we will send you an annual and a semiannual report relating to
your fund, each of which is incorporated herein by reference. The annual report
includes audited financial statements and a list of portfolio securities as of
the fiscal year end. The semiannual report includes unaudited financial
statements for the first six months of the fiscal year, as well as a list of
portfolio securities at the end of the period. You also will receive an updated
prospectus at least once each year. Please read these materials carefully, as
they will help you understand your fund.
Prospectus How to Invest with American Century Investments 21
EMPLOYER-SPONSORED RETIREMENT
PLANS AND INSTITUTIONAL ACCOUNTS
Information contained in our Investor Services Guide pertains to
shareholders who invest directly with American Century rather than through an
employer-sponsored retirement plan or through a financial intermediary.
If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan, your ability to purchase shares of the
funds, exchange them for shares of other American Century funds, and redeem them
will depend on the terms of your plan.
If you own or are considering purchasing fund shares through a bank,
broker-dealer, insurance company or other financial intermediary, your ability
to purchase, exchange and redeem shares will depend on your agreement with, and
the policies of, such financial intermediary.
You may reach one of our Institutional Service Representatives by calling
1-800-345-3533 to request information about our funds and services, to obtain a
current prospectus or to get answers to any questions about our funds that you
are unable to obtain through your plan administrator or financial intermediary.
22 How to Invest with American Century Investments American Century Investments
ADDITIONAL INFORMATION YOU SHOULD KNOW
SHARE PRICE
WHEN SHARE PRICE IS DETERMINED
The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of a fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. For all American Century funds, except funds issued by the American
Century Target Maturities Trust, net asset value is determined as of the close
of regular trading on each day that the New York Stock Exchange is open, usually
3 p.m. Central time. The net asset values for the Target Maturities funds are
determined one hour prior to the close of the Exchange.
Investments and requests to redeem or exchange shares will receive the
share price next determined after we receive your investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares received by us or one of our agents before the time as of which the net
asset value is determined, are effective on, and will receive the price
determined, that day. Investment, redemption and exchange requests received
thereafter are effective on, and receive the price determined on, the next day
the Exchange is open.
Investments are considered received only when payment is received by us.
Wired funds are considered received on the day they are deposited in our bank
account if they are deposited before the time as of which the net asset value of
the fund is determined.
Investments by telephone pursuant to your prior authorization to us to draw
on your bank account are considered received at the time of your telephone call.
Investment and transaction instructions received by us on any business day
by mail prior to the time as of which the net asset value of the fund is
determined, will receive that day's price. Investments and instructions received
after that time will receive the price determined on the next business day.
If you invest in fund shares through an employer-sponsored retirement plan
or other financial intermediary, it is the responsibility of your plan
recordkeeper or financial intermediary to transmit your purchase, exchange and
redemption requests to the funds' transfer agent prior to the applicable cut-off
time for receiving orders and to make payment for any purchase transactions in
accordance with the funds' procedures or any contractual arrangement with the
funds or the funds' distributor in order for you to receive that day's price.
HOW SHARE PRICE IS DETERMINED
The valuation of assets for determining net asset value may be summarized
as follows:
Portfolio securities of each fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. Portfolio securities primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on the exchange where primarily traded. If no sale is reported, or if
local convention or regulation so provides, the mean of the latest bid and asked
price is used. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices or at
the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the Board of Directors.
Debt securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service or at the most
recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the Board of Directors.
The value of an exchange-traded foreign security is determined in its
national currency as of the close of trading on the foreign exchange on which it
is traded or as of the close of business on the New York Stock Exchange, if that
is earlier. That value is then converted to dollars at the prevailing foreign
exchange rate.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is
Prospectus Additional Information You Should Know 23
normally completed at various times before the close of business on each day
that the New York Stock Exchange is open. If an event were to occur after the
value of a security was established but before the net asset value per share was
determined, which was likely to materially change the net asset value, then that
security would be valued at fair value as determined in accordance with
procedures adopted by the Board of Directors.
Trading of these securities in foreign markets may not take place on every
New York Stock Exchange business day. In addition, trading may take place in
various foreign markets on Saturdays or on other days when the Exchange is not
open and on which a fund's net asset value is not calculated. Therefore, such
calculation does not take place contemporaneously with the determination of the
prices of many of the portfolio securities used in such calculation and the
value of a fund's portfolio may be affected on days when shares of the fund may
not be purchased or redeemed.
WHERE TO FIND INFORMATION ABOUT SHARE PRICE
The net asset values of the Investor Class of the funds are published in
leading newspapers daily. The net asset value of each fund may also be obtained
by calling us or by accessing our Web site (www.americancentury.com).
DISTRIBUTIONS
Distributions from net investment income are declared and paid quarterly by
Strategic Allocation: Conservative and Strategic Allocation: Moderate. Such
distributions are declared and paid annually by Strategic Allocation:
Aggressive. Distributions from net realized securities gains, if any, are
declared and paid annually, usually in December, but the funds may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code, in all events in a manner consistent
with the provisions of the Investment Company Act.
Participants in employer-sponsored retirement or savings plans must
reinvest all distributions. For shareholders investing in taxable accounts,
distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distributions made
shortly after a purchase, made by check or ACH, may be held up to 15 days. You
may elect to have distributions on shares of Individual Retirement Accounts and
403(b) plans paid in cash only if you are at least 591/2 years old or
permanently and totally disabled. Distribution checks normally are mailed within
seven days after the record date. Please consult our Investor Services Guide for
further information regarding your distribution options.
A distribution on shares of a fund does not increase the value of your
shares or your total return. At any given time, the value of your shares
includes the undistributed net gains, if any, realized by the fund on the sale
of portfolio securities and undistributed dividends and interest received, less
fund expenses.
Because undistributed gains and dividends are included in the value of your
shares prior to distribution, when they are distributed, the value of your
shares will be reduced by the amount of the distribution. If you buy your shares
through a taxable account just before the distribution, you will pay the full
price for your shares and then receive a portion of the purchase price back as a
taxable distribution. See "Taxes," this page.
TAXES
Each fund has elected to be taxed under Subchapter M of the Internal
Revenue Code, which means that to the extent its income is distributed to
shareholders, it pays no income taxes.
TAX-DEFERRED ACCOUNTS
If fund shares are purchased through tax-deferred accounts, such as a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions paid by the funds will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.
Employer-sponsored retirement and savings plans are governed by complex tax
rules. If you elect to participate in your employer's plan, consult your plan
administrator, your plan's summary plan description, or a professional tax
advisor regarding the tax consequences of participation in the plan,
contributions to, and withdrawals or distributions from the plan.
24 Additional Information You Should Know American Century Investments
TAXABLE ACCOUNTS
If fund shares are purchased through taxable accounts, distributions of net
investment income and net short-term capital gains are taxable to you as
ordinary income. Distributions from net long-term capital gains are taxable as
long-term capital gains regardless of the length of time you have held the
shares on which such distributions are paid. However, you should note that any
loss realized upon the sale or redemption of shares held for six months or less
will be treated as a long-term capital loss to the extent of any distribution of
long-term capital gain to you with respect to such shares.
Dividends and interest received by the funds on foreign securities, and, in
limited circumstances capital gains realized by the funds upon the sale of such
securities, may give rise to withholding and other taxes imposed by foreign
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. Foreign countries generally do not impose taxes
on capital gains in respect of investments by non-resident investors. The
foreign taxes paid by a fund will reduce its dividends.
Distributions are taxable to you regardless of whether they are taken in
cash or reinvested, even if the value of your shares is below your cost. If you
purchase shares shortly before a distribution, you must pay income taxes on the
distribution, even though the value of your invest- ment (plus cash received, if
any) remains the same. In addition, the share price at the time you purchase
shares may include unrealized gains in the securities held in the investment
portfolio of the fund. If these portfolio securities are subsequently sold and
the gains are realized, they will, to the extent not offset by capital losses,
be paid to you as a distribution of capital gains and will be taxable to you as
short-term or long-term capital gains. See "Distributions," page 24.
In January of the year following the distribution, if you own shares in a
taxable account, you will receive a Form 1099-DIV notifying you of the status of
your distributions for federal income tax purposes.
Distributions may also be subject to state and local taxes, even if all or
a substantial part of such distributions are derived from interest on U.S.
government obligations, which, if you received them directly, would be exempt
from state income tax. However, most but not all states allow this tax exemption
to pass through to fund shareholders when a fund pays distributions to its
shareholders. You should consult your tax advisor about the tax status of such
distributions in your own state.
If you have not complied with certain provisions of the Internal Revenue
Code and Regulations, we are required by federal law to withhold and remit to
the IRS 31% of reportable payments (which may include dividends, capital gains
distributions and redemptions). Those regulations require you to certify that
the Social Security number or tax identification number you provide is correct
and that you are not subject to 31% withholding for previous under-reporting to
the IRS. You will be asked to make the appropriate certification on your
application. Payments reported by us that omit your Social Security number or
tax identification number will subject us to a penalty of $50, which will be
charged against your account if you fail to provide the certification by the
time the report is filed. This charge is not refundable.
Redemption of shares of a fund (including redemptions made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders will generally recognize gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. Assuming
that shareholders hold such shares as a capital asset, the gain or loss will be
a capital gain or loss and generally will be long term if shareholders have held
such shares for a period of more than one year. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the "wash sale" rules of
the Code, resulting in a postponement of the recognition of such loss for
federal income tax purposes.
MANAGEMENT
INVESTMENT MANAGEMENT
Under the laws of the State of Maryland, the Board of Directors is
responsible for managing the business and affairs of the funds. Acting pursuant
to an investment management agreement entered into with the funds, American
Century Investment Management,
Prospectus Additional Information You Should Know 25
Inc. serves as the investment manager of the funds. Its principal place of
business is American Century Tower, 4500 Main Street, Kansas City, Missouri
64111. The manager has been providing investment management services to
investment companies and institutional clients since it was founded in 1958.
In June 1995, American Century Companies, Inc. ("ACC"), the parent of the
manager, acquired Benham Management International, Inc. In the acquisition,
Benham Management Corporation ("BMC"), the investment adviser to the Benham
Group of mutual funds, became a wholly owned subsidiary of ACC. Certain
employees of BMC provide investment management services to funds managed by the
manager, while certain employees of the manager provide investment management
services to funds managed by BMC.
The manager supervises and manages the investment portfolio of each fund
and directs the purchase and sale of its investment securities. It utilizes a
team of portfolio managers, assistant portfolio managers and analysts acting
together to manage the assets of the funds. The team meets regularly to review
portfolio holdings and to discuss purchase and sale activity. The team adjusts
holdings in the funds' portfolios and the funds' asset mix as it deems
appropriate in pursuit of the funds' investment objectives. Individual portfolio
manager members of the team may also adjust portfolio holdings of the funds or
of sectors of the funds as necessary between team meetings.
The portfolio manager members of the teams managing the funds described in
this Prospectus and their work experience for the last five years are as
follows:
James E. Stowers, III, President and Portfolio Manager, joined American
Century in 1981. He is a member of the team that manages Growth and Ultra.
C. Casey Colton, Portfolio Manager, joined BMC in 1990 as a Municipal
Analyst. Mr. Colton was promoted to Portfolio Manager in 1995 and co-manages the
Benham GNMA Income Fund.
Phillip N. Davidson, Vice President and Portfolio Manager, joined American
Century in September 1993 as a Portfolio Manager. Prior to joining American
Century, Mr. Davidson served as an investment manager for Boatmen's Trust
Company in St. Louis, Missouri. He is a member of the team that manages Value
and Equity Income.
Glenn A. Fogle, Vice President and Portfolio Manager, joined American
Century in September 1990 as an Investment Analyst, a position he held until
March 1993. At that time he was promoted to Portfolio Manager. He is a member of
the team that manages Vista and Giftrust.
Norman E. Hoops, Senior Vice President and Fixed Income Portfolio Manager,
joined American Century as Vice President and Portfolio Manager in November
1989. In April 1993, he became Senior Vice President. He is a member of the team
that manages Limited-Term Bond, Intermediate-Term Bond, Benham Bond and the
fixed income portion of Balanced.
Mark S. Kopinski, Vice President and Portfolio Manager, rejoined American
Century in April 1997. From June 1995 to March 1997, Mr. Kopinski served as Vice
President and Portfolio Manager for Federated Investors, Inc. Prior to June
1995, Mr. Kopinski was a Vice President and Portfolio Manager for American
Century. He is a member of the team that manages International Growth and
International Discovery and was a member of the team at its inception in 1991.
David Schroeder, Vice President and Portfolio Manager, joined BMC in July
1990. Mr. Schroeder has primary responsibility for the day-to-day operations of
the Benham Treasury Note, Benham Short-Term, and Benham Long-Term Funds. He also
manages Benham Target Maturities Trust.
John D. Seitzer, Portfolio Manager, joined American Century in June 1993 as
an Investment Analyst, a position he held until July 1996. At that time he was
promoted to Portfolio Manager. Prior to joining American Century, Mr. Seitzer
attended Indiana University from August 1991 to June 1993, where he obtained his
MBA degree. He is a member of the team that manages Vista and Giftrust.
Henrik Strabo, Vice President and Portfolio Manager, joined American
Century in 1993 as an Investment Analyst on the International Growth and
International Discovery team and has been a Portfolio Manager member of the team
since 1994. Prior to joining American Century, Mr. Strabo was Vice President,
International Equity Sales with Barclays de Zoete Wedd from 1991 to 1993.
26 Additional Information You Should Know American Century Investments
Jeffrey R. Tyler, Senior Vice President and Portfolio Manager, joined BMC
in January 1988 as a Portfolio Manager. Mr. Tyler supervises the team of other
Portfolio Managers who assist in the management of the various investment
categories of the funds. Mr. Tyler also co-manages the Benham GNMA Income Fund.
He also has primary responsibility for the day-to-day operations of the Benham
Capital Manager Fund and oversees the portfolio manager's operation of the
Benham European Government Bond Fund.
Peter A. Zuger, Vice President and Portfolio Manager, joined American
Century in June 1993 as a Portfolio Manager. Prior to joining Twentieth Century,
Mr. Zuger served as an investment manager in the Trust Department of NBD Bancorp
in Detroit, Michigan. He is a member of the team that manages Value and Equity
Income.
The activities of the manager are subject only to directions of the funds'
Board of Directors. The manager pays all the expenses of the funds except
brokerage, taxes, interest, fees and expenses of the non-interested person
directors (including counsel fees) and extraordinary expenses.
For the services provided to the Investor Class of the funds, the manager
receives an annual fee of 1.00% of average net assets up to $1 billion and 0.90%
of average net assets in excess of $1 billion for Strategic Allocation:
Conservative, 1.10% of average net assets up to $1 billion and 1.00% of average
net assets in excess of $1 billion for Strategic Allocation: Moderate, and 1.20%
of average net assets up to $1 billion and 1.10% of average net assets in excess
of $1 billion for Strategic Allocation: Aggressive.
On the first business day of each month, each fund pays a management fee to
the manager for the previous month at the specified rate. The fee for the
previous month is calculated by multiplying the applicable fee for such fund by
the aggregate average daily closing value of each fund's net assets during the
previous month by a fraction, the numerator of which is the number of days in
the previous month and the denominator of which is 365 (366 in leap years).
The management fees paid by the funds to the manager may be higher than
those paid by many investment companies. However, most if not all of such
companies also pay, in addition, certain of their own expenses, while virtually
all of the funds' expenses, except as specified above, are paid by the manager.
CODE OF ETHICS
The funds and the manager have adopted a Code of Ethics, which restricts
personal investing practices by employees of the manager and its affiliates.
Among other provisions, the Code of Ethics requires that employees with access
to information about the purchase or sale of securities in the funds' portfolios
obtain preclearance before executing personal trades. With respect to Portfolio
Managers and other investment personnel, the Code of Ethics prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of fund shareholders
come before the interests of the people who manage those funds.
TRANSFER AND ADMINISTRATIVE SERVICES
American Century Services Corporation, 4500 Main Street, Kansas City,
Missouri 64111, acts as transfer agent and dividend-paying agent for the funds.
It provides facilities, equipment and personnel to the funds and is paid for
such services by the manager.
Certain recordkeeping and administrative services that would otherwise be
performed by the transfer agent may be performed by an insurance company or
other entity providing similar services for various retirement plans using
shares of the funds as a funding medium, by broker-dealers and financial
advisors for their customers investing in shares of American Century or by
sponsors of multi mutual fund no- or low-transaction fee programs. The manager
or an affiliate may enter into contracts to pay them for such recordkeeping and
administrative services out of its unified management fee.
Although there is no sales charge levied by the funds, transactions in
shares of the funds may be executed by brokers or investment advisors who charge
a transaction-based fee or other fee for their services. Such charges may vary
among broker-dealers and financial advisors, but in all cases will be retained
by the broker-dealer or financial advisor and not remitted to the funds or the
manager. You should be aware of the fact that these transactions may be made
directly with American Century without incurring such fees.
Prospectus Additional Information You Should Know 27
From time to time, special services may be offered to shareholders who
maintain higher share balances in our family of funds. These services may
include the waiver of minimum investment requirements, expedited confirmation of
shareholder transactions, newsletters and a team of personal representatives.
Any expenses associated with these special services will be paid by the manager.
The manager and transfer agent are both wholly owned by American Century
Companies, Inc. James E. Stowers Jr., Chairman of the funds' Board of Directors,
controls American Century Companies by virtue of his ownership of a majority of
its common stock.
DISTRIBUTION OF FUND SHARES
The funds' shares are distributed by American Century Investment Services,
Inc., a registered broker-dealer and an affiliate of the manager. The manager
pays all expenses for promoting and distributing the Investor Class of fund
shares offered by this Prospectus. The Investor Class of shares does not pay any
commissions or other fees to the distributor or to any other broker-dealers or
financial intermediaries in connection with the distribution of fund shares.
FURTHER INFORMATION ABOUT AMERICAN CENTURY
American Century Strategic Asset Allocations, Inc., the issuer of the
funds, was organized as a Maryland corporation on April 4, 1994.
The corporation is a diversified, open-end management investment company
whose shares were first offered for sale February 15, 1996. Its business and
affairs are managed by its officers under the direction of its Board of
Directors.
The principal office of the funds is American Century Tower, 4500 Main
Street, P.O. Box 419200, Kansas City, Missouri 64141-6200. All inquiries may be
made by mail to that address, or by phone to 1-800-345-2021 (international
calls: 816-531-5575).
American Century Strategic Asset Allocations, Inc. issues three series of
$0.01 par value shares. Each series is commonly referred to as a fund. The
assets belonging to each series of shares are held separately by the custodian.
American Century offers three classes of each of the funds offered by this
Prospectus: an Investor Class, a Service Class, and an Advisor Class. The shares
offered by this Prospectus are Investor Class shares and have no up-front
charges, commissions, or 12b-1 fees.
The other classes of shares are primarily offered to institutional
investors or through institutional distribution channels, such as
employer-sponsored retirement plans or through banks, broker-dealers, insurance
companies or other financial intermediaries. The other classes have different
fees, expenses, and/or minimum investment requirements than the Investor Class.
The difference in the fee structures among the classes is the result of their
separate arrangements for shareholder and distribution services and not the
result of any difference in amounts charged by the manager for core investment
advisory services. Accordingly, the core investment advisory expenses do not
vary by class. Different fees and expenses will affect performance. For
additional information concerning the other classes of shares not offered by
this Prospectus, call us at 1-800-345-3533 or contact a sales representative or
financial intermediary who offers those classes of shares.
Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences among the various classes are (a) each class
may be subject to different expenses specific to that class, (b) each class has
a different identifying designation or name, (c) each class has exclusive voting
rights with respect to matters solely affecting such class, and (d) each class
may have different exchange privileges.
Each share, irrespective of series or class, is entitled to one vote for
each dollar of net asset value applicable to such share on all questions, except
for those matters that must be voted on separately by the series or class of
shares affected. Matters affecting only one series or class are voted upon only
by that series or class.
Shares have non-cumulative voting rights, which means that the holders of
more than 50% of the votes cast in an election of directors can elect all of the
directors if they choose to do so, and in such event the holders of the
remaining votes will not be able to elect any person or persons to the Board of
Directors.
Unless required by the Investment Company Act, it will not be necessary for
the funds to hold annual meetings of shareholders. As a result, shareholders
28 Additional Information You Should Know American Century Investments
may not vote each year on the election of directors or the appointment of
auditors. However, pursuant to the funds' bylaws, the holders of at least 10% of
the votes entitled to be cast may request the funds to hold a special meeting of
shareholders. We will assist in the communication with other shareholders.
WE RESERVE THE RIGHT TO CHANGE ANY OF OUR POLICIES, PRACTICES AND
PROCEDURES DESCRIBED IN THIS PROSPECTUS, INCLUDING THE STATEMENT OF ADDITIONAL
INFORMATION, WITHOUT SHAREHOLDER APPROVAL EXCEPT IN THOSE INSTANCES WHERE
SHAREHOLDER APPROVAL IS EXPRESSLY REQUIRED.
Prospectus Additional Information You Should Know 29
P.O. Box 419200
Kansas City, Missouri
64141-6200
Person-to-person assistance:
1-800-345-2021 or 816-531-5575
Automated Information Line:
1-800-345-8765
Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865
Fax: 816-340-7962
Internet: www.americancentury.com
[american century logo]
American
Century(sm)
9704 [recycled logo]
SH-BKT-7909 Recycled
<PAGE>
PROSPECTUS
[American Century Logo]
American
Century(sm)
APRIL 1, 1997
AMERICAN
CENTURY
GROUP
Strategic Allocation: Conservative
Strategic Allocation: Moderate
Strategic Allocation: Aggressive
ADVISOR CLASS
[front cover]
AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS
American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios. To
help you find the funds that may meet your investment needs, American Century
funds have been divided into three groups based on investment style and
objectives. These groups, which appear below, are designed to help simplify your
fund decisions.
AMERICAN CENTURY INVESTMENTS
BENHAM GROUP(R) AMERICAN CENTURY GROUP TWENTIETH CENTURY(R) GROUP
MONEY MARKET FUNDS ASSET ALLOCATION & GROWTH FUNDS
GOVERNMENT BOND FUNDS BALANCED FUNDS INTERNATIONAL FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS
Strategic Allocation: Conservative
Strategic Allocation: Moderate
Strategic Allocation: Aggressive
PROSPECTUS
APRIL 1, 1997
Strategic Allocation: Conservative / Strategic
Allocation: Moderate / Strategic Allocation: Aggressive
ADVISOR CLASS
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
American Century Strategic Asset Allocations, Inc., is a part of American
Century Investments, a family of funds that includes nearly 70 no-load and
low-load mutual funds covering a variety of investment opportunities. Three of
the funds that diversify their investments among stocks, bonds and money market
instruments are described in this Prospectus. Their investment objectives are
listed on page 2 of this Prospectus. The other funds are described in separate
prospectuses.
Each fund's shares offered in this Prospectus (the Advisor Class shares)
are sold at their net asset value with no sales charges or commissions. The
Advisor Class shares are subject to a Rule 12b-1 shareholder services fee and
distribution fee as described in this Prospectus.
The Advisor Class shares are intended for purchase by participants in
employer-sponsored retirement or savings plans and for persons purchasing shares
through broker-dealers, banks, insurance companies and other financial
intermediaries that provide various administrative and distribution services.
This Prospectus gives you information about the funds that you should know
before investing. Please read this Prospectus carefully and retain it for future
reference. Additional information is included in the Statement of Additional
Information dated April 1, 1997, and filed with the Securities and Exchange
Commission. It is incorporated into this Prospectus by reference. To obtain a
copy without charge, call or write:
American Century Investments
4500 Main Street o P.O. Box 419385
Kansas City, Missouri 64141-6385 o 1-800-345-3533
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-345-1833 o In Missouri: 816-753-0700
Internet: www.americancentury.com
Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Prospectus 1
INVESTMENT OBJECTIVES OF THE FUNDS
AMERICAN CENTURY
STRATEGIC ALLOCATION: CONSERVATIVE
AMERICAN CENTURY
STRATEGIC ALLOCATION: MODERATE
AMERICAN CENTURY
STRATEGIC ALLOCATION: AGGRESSIVE
The investment objective of each fund is to provide as high a level of
total return (capital appreciation plus dividend and interest income) as is
consistent with its risk profile. Each fund seeks to achieve its investment
objective by diversifying investments among three asset classes -- equity
securities, bonds and cash equivalent instruments, the mix of which will depend
on the risk profile of the particular fund. The funds are designed for investors
with investment time horizons of at least five years who want to diversify their
investments among these various asset classes through a single investment
vehicle. See "Investment Policies of the Funds," page 7.
There is no assurance that the funds will achieve their respective
investment objectives.
NO PERSON IS AUTHORIZED BY THE FUNDS TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUNDS, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.
2 Investment Objectives American Century Investments
TABLE OF CONTENTS
Investment Objectives of the Funds 2
Transaction and Operating Expense Table 4
Financial Highlights 5
Performance Information of Other Class 6
INFORMATION REGARDING THE FUNDS
Investment Policies of the Funds ......................7
Asset Allocation Funds ............................7
Investment Strategy
and Asset Diversification .......................7
Investment Approach and Practices .................8
General Portfolio Management ......................9
Other Investment Practices,
Their Characteristics
and Risks ..........................................10
Equity Securities .................................10
Foreign Securities ................................10
Mortgage-Related and Other
Asset-Backed Securities ........................11
Forward Currency Exchange Contracts
and Options Thereon ............................12
Portfolio Turnover ................................13
Repurchase Agreements .............................13
Futures Contracts .................................13
Derivative Securities .............................14
When-Issued Securities ............................15
Short Sales .......................................15
Rule 144A Securities ..............................15
Performance Advertising ...............................15
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
How to Purchase and Sell American
Century Funds ......................................17
How to Exchange from One American Century
Fund to Another ....................................17
How to Redeem Shares ..................................17
Special Requirements
for Large Redemptions ..........................17
Telephone Services ....................................18
Investors Line ....................................18
ADDITIONAL INFORMATION YOU SHOULD KNOW
Share Price ...........................................19
When Share Price Is Determined ....................19
How Share Price Is Determined .....................19
Where to Find Information
About Share Price ..............................20
Distributions .........................................20
Taxes .................................................20
Tax-Deferred Accounts .............................20
Taxable Accounts ..................................20
Management ............................................21
Investment Management .............................21
Code of Ethics ....................................23
Transfer and Administrative Services ..............23
Distribution of Fund Shares ...........................23
Service and Distribution Fees .....................23
Further Information About American Century ............24
Prospectus Table of Contents 3
<TABLE>
<CAPTION>
TRANSACTION AND OPERATING EXPENSE TABLE
Strategic Strategic Strategic
Allocation: Allocation: Allocation:
Conservative Moderate Aggressive
SHAREHOLDER TRANSACTION EXPENSES:
<S> <C> <C> <C>
Maximum Sales Load
Imposed on Purchases ............. none none none
Maximum Sales Load Imposed
on Reinvested Dividends .......... none none none
Deferred Sales Load ................ none none none
Redemption Fee ..................... none none none
Exchange Fee ....................... none none none
ANNUAL FUND OPERATING EXPENSES (as a percentage of net assets):
Management Fees .................... 0.75% (1) 0.85% (2) 0.95% (3)
12b-1 Fees(4) ...................... 0.50% 0.50% 0.50%
Other Expenses(5) .................. 0.00% 0.00% 0.00%
Total Fund Operating Expenses ...... 1.25% 1.35% 1.45%
EXAMPLE:
You would pay the
following expenses on 1 year $13 $14 $15
a $1,000 investment,
assuming a 5%
annual return 3 years 40 43 46
and redemption at
the end of each time period(6):
(1) The fund pays an annual management fee equal to 0.75% of its first $1
billion of average net assets and 0.65% of average net assets over $1
billion.
(2) The fund pays an annual management fee equal to 0.85% of its first $1
billion of average net assets and 0.75% of average net assets over $1
billion.
(3) The fund pays an annual management fee equal to 0.95% of its first $1
billion of average net assets and 0.85% of average net assets over $1
billion.
(4) The 12b-1 fee is designed to permit investors to purchase Advisor Class
shares through broker-dealers, banks, insurance companies and other
financial intermediaries. A portion of the fee is used to compensate them
for ongoing recordkeeping and administrative services that would otherwise
be performed by an affiliate of the manager, and a portion is used to
compensate them for distribution and other shareholder services. See
"Service and Distribution Fees," page 23.
(5) Other expenses, which include the fees and expenses (including legal
counsel fees) of those directors who are not "interested persons" as
defined in the Investment Company Act, were less than 0.01% of 1% of
average net assets for the fund's most recent fiscal year.
(6) Assumes that the average net assets of the funds remain constant at less
than $1 billion.
</TABLE>
The purpose of this table is to help you understand the various costs and
expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in the class of shares of the American Century
funds offered by this Prospectus. The example set forth above assumes
reinvestment of all dividends and distributions and uses a 5% annual rate of
return as required by Securities and Exchange Commission regulations.
NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE
CONSIDERED INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS
AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.
The shares offered by this Prospectus are Advisor Class shares. The funds
offer two other classes of shares, one of which is primarily made available to
retail investors and one that is primarily made available to institutional
investors. The other classes have different fee structures than the Advisor
Class. The difference in the fee structures among the classes is the result of
their separate arrangements for shareholder and distribution services and not
the result of any difference in amounts charged by the manager for core
investment advisory services. Accordingly, the core investment advisory expenses
do not vary by class. A difference in fees will result in different performance
for those other classes. For additional information about the various classes,
see "Further Information About American Century," page 24.
4 Transaction and Operating Expense Table American Century Investments
FINANCIAL HIGHLIGHTS
The sale of the Advisor Class of the funds commenced on October 2, 1996.
Performance information of the original class of shares, which commenced
operations on February 15, 1996, is presented on page 6.
The Financial Highlights for the period presented have been audited by
Ernst & Young LLP, independent auditors, whose report thereon appears in the
funds' annual report, which is incorporated by reference into the Statement of
Additional Information. The annual report contains additional performance
information and will be made available without charge upon request. The
information presented is for a share outstanding throughout the period ended
November 30, 1996.
<TABLE>
Strategic Strategic Strategic
Allocation: Allocation: Allocation:
Conservative(1) Moderate(1) Aggressive(1)
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C>
Beginning of Period .............. $5.09 $5.24 $5.37
----- ----- -----
Income from
Investment Operations
Net Investment Income ......... .03(2) .02(2) .01(2)
Net Realized and Unrealized
Gain on
Investment
Transactions .............. .14 .16 .15
----- ----- -----
Total from
Investment Operations .... .17 .18 .16
----- ----- -----
Net Asset Value, End of Period ..... $5.26 $5.42 $5.53
===== ===== =====
Total Return(3) ............... 3.34% 3.44% 2.98%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ........... 1.25%(4) 1.35%(4) 1.45%(4)
Ratio of Net Investment
Income to Average
Net Assets ................. 3.25%(4) 2.10%(4) 1.31%(4)
Portfolio Turnover Rate ....... 44% 78% 64%
Average Commission
Paid per Investment
Security Traded ............ $.0271 $.0186 $.0202
Net Assets,
End of Period
(in thousands) ............. $3,973 $7,566 $5,872
</TABLE>
(1) October 2, 1996 (commencement of sale of the Advisor Class) through
November 30, 1996.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gain
distributions, if any. Total returns are not annualized.
(4) Annualized.
Prospectus Financial Highlights 5
PERFORMANCE INFORMATION OF OTHER CLASS
The original class of shares of the funds were designated the "Investor
Class" established September 3, 1996. The financial information in the following
table reflects the performance of the funds' Investor Class of shares. Investor
Class shares have a total expense ratio that is 0.25% lower than the Advisor
Class shares offered by this Prospectus. Had the Advisor Class been in existence
for such funds for the time period presented, the performance would be lower as
a result of the additional expense.
The performance information for the period presented has been audited by
Ernst & Young LLP, independent auditors, whose report thereon appears in the
funds' annual report, which is incorporated by reference into the Statement of
Additional Information. The annual report contains additional performance
information and will be made available upon request and without charge. The
information presented is for an Investor Class share outstanding throughout the
period ended November 30, 1996.
<TABLE>
Strategic Strategic Strategic
Allocation: Allocation: Allocation:
Conservative(1) Moderate(1) Aggressive(1)
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C>
Beginning of Period ........... $5.00 $5.00 $5.00
----- ----- -----
Income from
Investment Operations
Net Investment Income ....... .13(2) .10(2) .07(2)
Net Realized and
Unrealized Gain on
Investment Transactions .. .22 .39 .46
----- ----- -----
Total from
Investment Operations .... .35 .49 .53
----- ----- -----
Distributions
From Net Investment Income .. (.09) (.07) --
----- ----- -----
Net Asset Value, End of Period ... $5.26 $5.42 $5.53
===== ===== =====
Total Return(3) ............. 7.02% .91% 10.60%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to Average
Net Assets ............... 1.01%(4) 1.10%(4) 1.20%(4)
Ratio of Net Investment
Income to Average
Net Assets ............... 3.67%(4) 2.52%(4) 1.72%(4)
Portfolio Turnover Rate ..... 44% 78% 64%
Average Commission Paid
per Investment
Security Traded .......... $.0271 $.0186 $.0202
Net Assets, End of
Period (in thousands) .... $33,110 $57,836 $46,276
</TABLE>
(1) February 15, 1996 (inception) through November 30, 1996.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gain
distributions, if any. Total returns are not annualized.
(4) Annualized.
6 Performance Information Of Other Class American Century Investments
INFORMATION REGARDING THE FUNDS
INVESTMENT POLICIES OF THE FUNDS
Each fund's investment objective is to obtain as high a level of total
return (capital appreciation plus dividend and interest income) as is consistent
with such fund's risk profile. As with all mutual funds, there can be no
assurance that the funds will achieve their investment objectives.
You should be aware that the names of the funds are intended to reflect the
relative short-term price volatility risk among the three asset allocation funds
offered in this Prospectus and not as an indication of the manager's assessment
of the riskiness of the funds as compared to other mutual funds, including other
mutual funds within the American Century family of funds.
ASSET ALLOCATION FUNDS
The funds pursue a flexible approach that diversifies the funds' assets
among various classes and categories of assets. Each fund has its own mix, which
gives it a distinct risk profile and return potential. The three funds enable
investors to select the level of risk that is appropriate for their particular
situations and investment goals. See "Investment Strategy and Asset
Diversification," this page.
Strategic Allocation: Conservative
The asset mix of Strategic Allocation: Conservative seeks to provide
shareholders with regular income through its emphasis on bonds and money market
securities, combined with the potential for moderate long-term total return as a
result of its stake in equity securities. The fund's emphasis on bonds and money
market securities should help to provide a measure of principal protection while
the stock market is in a decline.
Strategic Allocation: Moderate
The asset mix of Strategic Allocation: Moderate emphasizes investments in
equity securities, but maintains a sizable stake in bonds and money market
securities. This asset mix seeks to provide long-term growth and some regular
income, while helping to moderate losses when the stock market declines.
Strategic Allocation: Aggressive
The asset mix of Strategic Allocation: Aggressive emphasizes investments in
equity securities, but maintains a portion of its assets in bonds and money
market securities. This asset mix seeks to provide long-term growth, together
with a small amount of income to help cushion the volatility of the equity
portfolio.
INVESTMENT STRATEGY AND ASSET DIVERSIFICATION
The funds seek to achieve their investment objectives by pursuing a
strategic asset allocation strategy. Each fund will diversify its investments
among three major asset classes -- equity securities, bonds and cash equivalent
instruments.
Each fund has its own neutral mix that represents a benchmark as to how
that fund's investments will be generally allocated among the major asset
classes over the long term. Each fund's neutral mix is set forth below:
Neutral Mixes
Equity Cash
Fund Securities Bonds Equivalents
Strategic Allocation:
Conservative 40% 45% 15%
Strategic Allocation:
Moderate 60% 30% 10%
Strategic Allocation:
Aggressive 75% 20% 5%
The mix of a fund will vary over short-term periods depending on the
relative performance of the various asset classes (for example, when one class
of assets increases or decreases in value at a different rate than the other
classes). In addition, the manager may temporarily emphasize or de-emphasize a
class of assets based on market conditions regarding the relative value of the
asset class in the near term. However, each fund has operating ranges that
restrict
Prospectus Information Regarding the Funds 7
the amount by which the assets of each class may fluctuate. Those operating
ranges are set forth below:
Operating Ranges
Equity Cash
Fund Securities Bonds Equivalents
Strategic Allocation:
Conservative 34-46% 38-52% 10-25%
Strategic Allocation:
Moderate 50-70% 20-40% 5-20%
Strategic Allocation:
Aggressive 60-90% 10-30% 0-15%
In addition to diversifying among asset classes, the assets in the equity
and bond classes are further diversified among investment categories (or
sectors) and styles within those classes. See "Investment Approach and
Practices," below. The allocation of assets within a fund's operating range and
among the different investment categories within each class is designed to
provide a diversified portfolio emphasizing total return.
INVESTMENT APPROACH AND PRACTICES
As described above, each fund's assets are allocated among major asset
classes according to their respective asset mix and subject to the applicable
operating ranges. Each fund's assets are further diversified among various
investment categories and disciplines within the major asset classes, as
described below.
Equity Securities
The equity portion of a fund's portfolio may be invested in any type of
domestic or foreign equity security, primarily common stocks, that meets certain
fundamental and technical standards of selection. The manager utilizes both a
growth and a value investment discipline in managing the equity portion of each
fund's portfolio.
The growth discipline seeks long-term capital appreciation by investing in
companies whose earnings and revenue trends meet the manager's standards of
selection, which generally means that the companies have demonstrated, or, in
the manager's opinion, have the prospects for demonstrating, accelerating
earnings and revenues as compared to prior periods and/or industry competitors.
The value investment discipline seeks capital growth by investing in equity
securities of well-established companies that are believed by the manager to be
temporarily undervalued.
The manager believes that both value investing and growth investing provide
the potential for appreciation over time. Value investing tends to provide less
volatile results. This lower volatility means that the price of value stocks
tends not to fall as significantly as growth stocks do in down markets. However,
value stocks do not usually appreciate as significantly as growth stocks do in
up markets. In keeping with the diversification theme of these funds, and as a
result of management's belief that these styles are complementary, both
disciplines will be represented to some degree in each portfolio at all times.
As noted, the value investment discipline tends to be less volatile than
the growth style. As a result, Strategic Allocation: Conservative will generally
have a higher proportion of its equity investments in value stocks than the
other two funds. Likewise, Strategic Allocation: Aggressive will generally have
a greater proportion of growth stocks than either Strategic Allocation: Moderate
or Strategic Allocation: Conservative.
In addition, the equity portion of each fund's portfolio will be further
diversified among small, medium and large companies. This approach provides
investors with an additional level of diversification and enables investors to
achieve a broader exposure to the various capitalization ranges without having
to invest in multiple funds.
Although the funds will remain exposed to each of the investment
disciplines and categories described above, a particular discipline or
investment category may be emphasized when, in the manager's opinion, such
discipline or investment category is undervalued relative to the other
disciplines or categories. See "Other Investment Practices, Their
Characteristics and Risks," page 10.
Bonds
The fixed income portion of a fund's portfolio will include U.S. Treasury
securities, securities issued or guaranteed by the U.S. government or a foreign
government, or an agency or instrumentality of the U.S. or a foreign government,
and non-convertible debt obliga-
8 Information Regarding the Funds American Century Investments
tions issued by U.S. or foreign corporations. The funds may also invest in
mortgage-related and other asset-backed securities as described under
"Mortgage-Related and Other Asset-Backed Securities," page 11. As with the
equity portion of a fund's portfolio, the bond portion of a fund's portfolio
will be diversified among the various types of fixed income investment
categories described above. The manager's strategy is to actively manage the
portfolio by investing the fund's assets in sectors it believes are undervalued
(relative to the other sectors) and which represent better relative long-term
investment opportunities.
The value of fixed income securities fluctuates based on changes in
interest rates and in the credit quality of the issuer. Debt securities that
comprise part of a fund's fixed income portfolio will primarily be limited to
"investment grade" obligations. However, Strategic Allocation: Moderate may
invest up to 5% of its assets, and Strategic Allocation: Aggressive may invest
up to 10% of its assets, in "high yield" securities. "Investment grade" means
that at the time of purchase, such obligations are rated within the four highest
categories by a nationally recognized statistical rating organization [for
example, at least Baa by Moody's Investors Service, Inc. ("Moody's") or BBB by
Standard & Poor's Corporation ("S&P")], or, if not rated, are of equivalent
investment quality as determined by the investment manager. According to
Moody's, bonds rated Baa are medium-grade and possess some speculative
characteristics. A BBB rating by S&P indicates S&P's belief that a security
exhibits a satisfactory degree of safety and capacity for repayment, but is more
vulnerable to adverse economic conditions and changing circumstances.
"High yield" securities, sometimes referred to as "junk bonds," are higher
risk, non-convertible debt obligations that are rated below investment grade
securities, or are unrated, but with similar credit quality.
There are no credit or maturity restrictions on the fixed income securities
in which the high yield portion of a fund's portfolio may be invested. Debt
securities rated lower than Baa by Moody's or BBB by S&P or their equivalent are
considered by many to be predominantly speculative. Changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments on such securities than is the case with
higher quality debt securities. Regardless of rating levels, all debt securities
considered for purchase by the fund are analyzed by the investment manager to
determine, to the extent reasonably possible, that the planned investment is
sound, given the investment objective of the fund. See "An Explanation of Fixed
Income Securities Ratings" in the Statement of Additional Information.
Under normal market conditions, the maturities of fixed-income securities
in which the funds invest will range from 2 to 30 years.
Cash Equivalents
The cash equivalent portion of a fund's portfolio may be invested in
high-quality money market instruments (denominated in U.S. dollars or foreign
currencies), including U.S. government obligations, obligations of domestic and
foreign banks, short-term corporate debt instruments and repurchase agreements.
GENERAL PORTFOLIO MANAGEMENT
Within each asset class, each fund's holdings will be invested across
industry groups and issuers that meet its investment criteria. This diversity of
investment is intended to help reduce the risk created by over-concentration in
a particular industry or issuer.
The funds are "strategic" rather than "tactical" allocation funds, which
means that the manager does not try to time the market to identify the exact
time when a major reallocation should be made. Instead, the manager utilizes a
longer-term approach in pursuing the funds' investment objectives, and thus
selects a blend of investments in the various asset classes.
The manager regularly reviews each fund's investments and allocations and
may make changes in the particular securities within each asset class or to a
fund's asset mix (within the defined operating ranges) to favor investments that
it believes will provide the most favorable outlook for achieving a fund's
objective. Recommended reallocations may be implemented promptly or may be
implemented gradually. In order to minimize the impact of reallocations on a
fund's performance, the manager will generally attempt to reallocate assets
gradually.
In determining the allocation of assets among U.S. and foreign capital
markets, the manager considers the condition and growth potential of the various
economies; the relative valuations of the markets; and
Prospectus Information Regarding the Funds 9
social, political, and economic factors that may affect the markets.
In selecting securities in foreign currencies, the manager considers, among
other factors, the impact of foreign exchange rates relative to the U.S. dollar
value of such securities. The manager may seek to hedge all or a part of a
fund's foreign currency exposure through the use of forward foreign currency
contracts or options thereon. See "Forward Currency Exchange Contracts and
Options Thereon," page 12.
The funds attempt to diversify across asset classes and investment
categories to a greater extent than mutual funds that invest primarily in equity
securities or primarily in fixed income securities. However, the funds are
designed to fit three general risk profiles and may not provide an appropriately
balanced investment plan for all investors.
The funds' investment objectives, as identified on the front cover of this
Prospectus, and any other investment policies designated as "fundamental" in
this Prospectus or in the Statement of Additional Information, cannot be changed
without the approval of the shareholders entitled to cast a majority of the
outstanding votes of the corporation, as defined by the Investment Company Act.
Unless otherwise noted, all other investment policies and practices are
nonfundamental and may be changed without shareholder approval.
OTHER INVESTMENT PRACTICES, THEIR CHARACTERISTICS
AND RISKS
For additional information, see "Additional Investment Restrictions" in the
Statement of Additional Information.
EQUITY SECURITIES
In addition to investing in common stocks, the funds may invest in other
equity securities and equity equivalents. Other equity securities and equity
equivalents include securities that permit the fund to receive an equity
interest in an issuer, the opportunity to acquire an equity interest in an
issuer, or the opportunity to receive a return on its investment that permits
the fund to benefit from the growth over time in the equity of an issuer.
Examples of equity securities and equity equivalents include preferred stock,
convertible preferred stock and convertible debt securities.
Each fund will limit its purchase of convertible debt securities to those
that, at the time of purchase, are rated at least B- by S&P or B3 by Moody's, or
if not rated by S&P or Moody's are of equivalent investment quality as
determined by the manager. A fund's investments in convertible debt securities
and other high yield, non-convertible debt securities rated below investment
grade will comprise less than 35% of the fund's net assets. Debt securities
rated below the four highest categories are not considered "investment grade"
obligations. These securities have speculative characteristics and present more
credit risk than investment grade obligations. For a description of the S&P and
Moody's ratings categories, see "An Explanation of Fixed Income Securities
Ratings," in the Statement of Additional Information. Equity equivalents may
also include securities whose value or return is derived from the value or
return of a different security. Depositary receipts are an example of the type
of equity equivalent security in which the funds might invest.
FOREIGN SECURITIES
Each of the funds may invest in the securities of foreign issuers,
including debt securities of foreign governments and their agencies, when these
securities meet its standards of selection. The manager defines "foreign issuer"
as an issuer of securities that is domiciled outside the United States, derives
at least 50% of its total revenue from production or sales outside the United
States, and/or whose principal trading market is outside the United States.
Strategic Allocation: Conservative will generally invest between 7 and 17%
of its assets in foreign securities; Strategic Allocation: Moderate will
generally invest between 10 and 30% of its assets in foreign securities; and
Strategic Allocation: Aggressive will generally invest between 15 and 35% of its
assets in foreign securities. With regard to foreign investments by Strategic
Allocation: Conservative, the principal activities of such issuers will be
located in developed countries. With regard to Strategic Allocation: Aggressive
and Strategic Allocation: Moderate, the principal activities of such issuers may
be located in either developed or developing countries, but the majority of the
activities will be in developed countries.
10 Information Regarding the Funds American Century Investments
The funds may make such investments either directly in foreign securities
or indirectly by purchasing depositary receipts or depositary shares of similar
instruments ("depositary receipts") for foreign securities. Depositary receipts
are securities that are listed on exchanges or quoted in the domestic
over-the-counter markets in one country but represent shares of issuers
domiciled in another country. Direct investments in foreign securities may be
made either on foreign securities exchanges or in the over-the-counter markets.
Subject to its investment objective and policies, each fund may invest in
common stocks, convertible securities, preferred stocks, bonds, notes and other
debt securities of foreign issuers and debt securities of foreign governments
and their agencies. The credit quality standards applicable to domestic
securities purchased by each fund are also applicable to its foreign securities
investments.
Investments in foreign securities may present certain risks, including
those resulting from fluctuations in currency exchange rates, future political
and economic developments, reduced availability of public information concerning
issuers, and the fact that foreign issuers are not generally subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements comparable to those applicable to domestic issuers.
Strategic Allocation: Moderate and Strategic Allocation: Aggressive may
invest a portion of their international holdings in securities of issuers in
emerging market (developing) countries. The funds consider "emerging market
countries" to include all countries that are considered by the manager to be
developing or emerging countries. Currently, the countries not included in this
category for the funds offered by this Prospectus are the United States, Canada,
Japan, the United Kingdom, Germany, Austria, France, Hong Kong, Italy, Ireland,
Singapore, Spain, Belgium, the Netherlands, Switzerland, Sweden, Finland,
Norway, Denmark, Australia and New Zealand. In addition, as used in this
Prospectus, "securities of issuers in emerging market countries" means (i)
securities of issuers the principal securities trading market for which is an
emerging market country or (ii) securities of issuers having their principal
place of business or principal office in emerging market countries.
Investing in emerging market countries involves significantly higher risk
than investing in countries with developed markets as a result of uncertainty
regarding the companies and the markets in which they operate. Securities prices
can be more volatile than in developed countries as a result of investor
concerns regarding the stability of the government, internal economic pressures,
and the impact of external economic factors. In addition, securities markets in
emerging market countries may trade a small number of securities and may be
unable to respond effectively to increases in trading volume, potentially
resulting in a lack of liquidity and in volatility in the price of securities
traded on those markets. Also, securities markets in emerging market countries
typically offer less regulatory protection for investors. See "Investing in
Emerging Market Countries," in the Statement of Additional Information.
MORTGAGE-RELATED AND OTHER
ASSET-BACKED SECURITIES
The funds may purchase mortgage-related and other asset-backed securities.
Mortgage pass-through securities are securities representing interests in
"pools" of mortgages in which payments of both interest and principal on the
securities are generally made monthly, in effect "passing through" monthly
payments made by the individual borrowers on the residential mortgage loans that
underlie the securities (net of fees paid to the issuer or guarantor of the
securities).
Early repayment of principal on mortgage pass-through securities (arising
from prepayments of principal due to sale of the underlying property,
refinancing, or foreclosure, net of fees and costs which may be incurred) may
expose the funds to a lower rate of return upon reinvestment of principal. Also,
if a security subject to prepayment were purchased at a premium, in the event of
prepayment, the value of the premium would be lost. Like other fixed-income
securities, when interest rates rise, the value of a mortgage-related security
generally will decline; however, when interest rates decline, the value of
mortgage-related securities with prepayment features may not increase as much as
other fixed-income securities.
Payment of principal and interest on some mortgage pass-through securities
(but not the market value of the securities themselves) may be guaranteed by
Prospectus Information Regarding the Funds 11
the full faith and credit of the U.S. government in the case of securities
guaranteed by the Government National Mortgage Association (GNMA), or guaranteed
by agencies or instrumentalities of the U.S. government in the case of
securities guaranteed by the Federal National Mortgage Association (FNMA) or the
Federal Home Loan Mortgage Corporation (FHLMC), which are supported only by the
discretionary authority of the U.S. government to purchase the agency's
obligations.
Mortgage pass-through securities created by nongovernmental issuers (such
as commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers and other secondary market issuers) may be supported
by various forms of insurance or guarantees, including individual loan, title,
pool and hazard insurance and letters of credit, which may be issued by
governmental entities, private insurers, or the mortgage poolers.
The funds may also invest in collateralized mortgage obligations (CMOs).
CMOs are mortgage-backed securities issued by government agencies;
single-purpose, stand-alone financial subsidiaries; trusts established by
financial institutions; or similar institutions. The funds may buy CMOs that
meet the following criteria:
o are collateralized by pools of mortgages in which payment of principal and
interest of each mortgage is guaranteed by an agency or instrumentality of
the U.S. government;
o are collateralized by pools of mortgages in which payment of principal and
interest are guaranteed by the issuer, and the guarantee is collateralized
by U.S. government securities; and
o are securities in which the proceeds of the issue are invested in mortgage
securities and payments of principal and interest are supported by the
credit of an agency or instrumentality of the U.S. government.
FORWARD CURRENCY EXCHANGE CONTRACTS
AND OPTIONS THEREON
Some of the securities held by the funds may be denominated in foreign
currencies. Other securities, such as depositary receipts, may be denominated in
U.S. dollars but have a value that is dependent on the performance of a foreign
security, as valued in the currency of its home country. As a result, the value
of a fund's portfolio may be affected by changes in the exchange rate between
foreign currencies and the U.S. dollar, as well as by changes in the market
value of the securities themselves. The performance of foreign currencies
relative to the U.S. dollar may be a factor in the overall performance of a
fund.
To protect against adverse movements in exchange rates between currencies,
the funds may, for hedging purposes only, enter into forward currency exchange
contracts and buy put and call options relating to interest rate futures
contracts. A forward currency exchange contract obligates a fund to purchase or
sell a specific currency at a future date at a specific price. An option is a
contractual right to acquire a financial asset, such as a security, the
securities of a market index, a foreign currency or a foreign currency exchange
contract, at a specific price at the end of a specified term.
A fund may elect to enter into a forward currency exchange contract or an
option thereon with respect to a specific purchase or sale of a security, or
with respect to the fund's portfolio positions generally.
By entering into a forward currency exchange contract or an option thereon
with respect to the specific purchase or sale of a security denominated in a
foreign currency, the funds can "lock in" an exchange rate between the trade and
settlement dates for that purchase or sale. This practice is sometimes referred
to as "transaction hedging." Each fund may enter into transaction hedging
contracts with respect to all or a substantial portion of its foreign securities
trades.
When the manager believes that a particular currency may decline in value
compared to the dollar, the funds may enter into forward currency exchange
contracts or options thereon to sell an amount of foreign currency equal to the
value of some or all of a fund's portfolio securities either denominated in, or
whose value is tied to, that currency. This practice is sometimes referred to as
"portfolio hedging." A fund may not enter into a portfolio hedging transaction
where the fund would be obligated to deliver an amount of foreign currency in
excess of the aggregate value of the fund's portfolio securities or other assets
denominated in, or whose value is tied to, that currency.
Each fund will make use of portfolio hedging to the extent deemed
appropriate by the manager.
12 Information Regarding the Funds American Century Investments
However, it is anticipated that the funds will enter into portfolio hedges much
less frequently than transaction hedges.
If a fund enters into a forward currency exchange contract or an option
thereon, the fund, when required, will instruct its custodian bank to segregate
cash or liquid high-grade securities in a separate account in an amount
sufficient to cover its obligation under the contract. For options sold, a fund
will segregate cash or liquid high-grade securities equal to the value of the
securities underlying the options unless the options are otherwise secured.
Those assets will be valued at market daily, and if the value of the segregated
securities declines, additional cash or securities will be added so that the
value of the account is not less than the amount of the fund's commitment. At
any given time, no more than 10% of a fund's assets will be committed to a
segregated account in connection with portfolio hedging transactions.
Predicting the relative future values of currencies is very difficult, and
there is no assurance that any attempt to protect the funds against adverse
currency movements through the use of forward currency exchange contracts will
be successful. In addition, the use of forward currency exchange contracts tends
to limit the potential gains that might result from a positive change in the
relationship between the foreign currency and the U.S. dollar.
PORTFOLIO TURNOVER
The portfolio turnover rates of the funds are shown in the financial
information on pages 5 and 6 of this Prospectus.
Investment decisions to purchase and sell securities are based on the
anticipated contribution of the security in question to a fund's objectives. The
manager believes that the rate of portfolio turnover is irrelevant when it
determines a change is in order to achieve those objectives and, accordingly,
the annual portfolio turnover rate cannot be anticipated.
The portfolio turnover of the funds may be higher than other investment
companies with similar investment objectives. Higher turnover would generate
correspondingly greater brokerage commissions, which is a cost that the funds
pay directly. Portfolio turnover may also affect the character of capital gains,
if any, realized and distributed by a fund since short-term capital gains are
taxable as ordinary income.
REPURCHASE AGREEMENTS
Each fund may invest in repurchase agreements when such transactions
present an attractive short-term return on cash that is not otherwise committed
to the purchase of securities pursuant to the fund's investment policies.
A repurchase agreement occurs when a fund purchases an interest-bearing
obligation from a bank or broker-dealer registered under the Securities Exchange
Act of 1934 and simultaneously agrees to sell it back on a specified date in the
future (usually less than one week later) at a higher price. The repurchase
price reflects an agreed-upon interest rate during the time the fund's money is
invested in the security and is considered by the staff of the SEC to be a loan
by the fund. Since the interest-bearing obligation purchased constitutes
security for the repurchase obligation, a repurchase agreement can be considered
a loan collateralized by the interest-bearing obligation.
A fund's risk in connection with repurchase agreements is the ability of
the seller to pay the repurchase price on the repurchase date. If the seller
defaults, the fund may incur costs, delays or losses.
The funds will enter into repurchase agreements only with those commercial
banks and broker-dealers whose creditworthiness has been reviewed and found
satisfactory by the funds' manager pursuant to criteria adopted by the funds'
Board of Directors.
FUTURES CONTRACTS
Each fund may enter into domestic and foreign futures contracts. A futures
contract is an agreement to take or make delivery of a financial asset at a
specific price at the end of the contract period. Some futures contracts, such
as market index futures, require settlement in cash based on the difference
between the value of the underlying financial assets at the beginning and at the
end of the contract period. Rather than actually purchasing the specific
financial assets, or the securities of a market index, the manager may purchase
a futures contract, which reflects the value of such underlying securities. For
example, S&P 500 futures reflect the value of the underlying companies that
comprise the S&P 500 Composite Stock Price Index. If the aggregate market value
of the underlying index securities increases or decreases during the
Prospectus Information Regarding the Funds 13
contract period, the value of the S&P 500 futures can be expected to reflect
such increase or decrease. The manager may use index futures to efficiently
expose to the equity markets a portion of a fund's assets that is being held for
future investment opportunities.
When a fund enters into a futures contract, it must make a deposit of cash
or high-quality debt securities, known as "initial margin," as partial security
for its performance under the contract. As the value of the underlying financial
assets fluctuates, either party to the contract is required to make additional
margin payments, known as "variation margin," to cover any additional obligation
it may have under the contract. Assets set aside by a fund as initial or
variable margin may not be disposed of so long as the fund maintains the
contract.
The funds may not purchase leveraged futures. A fund will deposit in a
segregated account with its custodian bank cash or high-quality debt securities
in an amount equal to the fluctuating market value of the index contracts it has
purchased, less any margin deposited on its position. The funds will only invest
in exchange-traded futures.
DERIVATIVE SECURITIES
To the extent permitted by its investment objectives and policies, each of
the funds may invest in securities that are commonly referred to as "derivative"
securities. Generally, a derivative is a financial arrangement the value of
which is based on, or "derived" from, a traditional security, asset, or market
index. Certain derivative securities are more accurately described as
"index/structured" securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such
as depositary receipts or S&P 500 futures), currencies, interest rates, indices
or other financial indicators ("reference indices").
Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities.
There are many different types of derivatives and many different ways to
use them. Futures and options are commonly used for traditional hedging purposes
to attempt to protect a fund from exposure to changing interest rates,
securities prices, or currency exchange rates and for cash management purposes
as a low-cost method of gaining exposure to a particular securities market
without investing directly in those securities.
No fund may invest in a derivative security unless the reference index or
the instrument to which it relates is an eligible investment for the fund. For
example, a security whose underlying value is linked to the S&P 500 Index would
be a permissible investment since each of the funds may invest in the securities
of companies comprising the S&P 500 Index (assuming they otherwise meet the
other requirements for the fund), while a security whose underlying value is
linked to the price of oil would not be a permissible investment since the funds
may not invest in oil and gas leases or futures.
The return of a derivative security may increase or decrease, depending
upon changes in the reference index or instrument to which it relates.
There are a range of risks associated with derivative investments,
including:
o the risk that the underlying security, interest rate, market index or other
financial asset will not move in the direction the portfolio manager
anticipates;
o the possibility that there may be no liquid secondary market, or the
possibility that price fluctuation limits may be imposed by the exchange,
either of which may make it difficult or impossible to close out a position
when desired;
o the risk that adverse price movements in an instrument can result in a loss
substantially greater than a fund's initial investment; and
o the risk that the counterparty will fail to perform its obligations.
The Board of Directors has approved the manager's policy regarding
investments in derivative securities. That policy specifies factors that must be
considered in connection with a purchase of derivative securities. The policy
also establishes a committee that must review certain proposed purchases before
the purchases can be made. The manager will report on fund activity in
derivative securities to the Board of Directors as necessary. In addition, the
board will review the manager's policy for investments in derivative securities
annually.
14 Information Regarding the Funds American Century Investments
WHEN-ISSUED SECURITIES
Each fund may purchase new issues of securities on a when-issued basis
without limit when, in the opinion of the manager, such purchases will further
the investment objectives of such fund. The price of when-issued securities is
established at the time the commitment to purchase is made. Delivery of and
payment for these securities typically occur 15 to 45 days after the commitment
to purchase. Market rates of interest on debt securities at the time of delivery
may be higher or lower than those contracted for on the when-issued security.
Accordingly, the value of such security may decline prior to delivery, which
could result in a loss to the fund. A separate account consisting of cash or
high-quality liquid debt securities in an amount at least equal to the
when-issued commitments will be established and maintained with the custodian.
No income will accrue to the fund prior to delivery.
SHORT SALES
Each fund may engage in short sales if, at the time of the short sale, the
fund owns or has the right to acquire an equal amount of the security being sold
short at no additional cost. These transactions allow a fund to hedge against
price fluctuations by locking in a sale price for securities it does not wish to
sell immediately.
A fund may make a short sale when it wants to sell the security it owns at
a current attractive price, but also wishes to defer recognition of gain or loss
for federal income tax purposes and for purposes of satisfying certain tests
applicable to regulated investment companies under the Internal Revenue Code.
RULE 144A SECURITIES
The funds may, from time to time, purchase Rule 144A securities when they
present attractive investment opportunities that otherwise meet the funds'
criteria for selection. Rule 144A securities are securities that are privately
placed with and traded among qualified institutional investors rather than the
general public. Although Rule 144A securities are considered "restricted
securities," they are not necessarily illiquid.
With respect to securities eligible for resale under Rule 144A, the staff
of the Securities and Exchange Commission has taken the position that the
liquidity of such securities in the portfolio of a fund offering redeemable
securities is a question of fact for the Board of Directors to determine, such
determination to be based upon a consideration of the readily available trading
markets and the review of any contractual restrictions. The staff also
acknowledges that, while the board retains ultimate responsibility, it may
delegate this function to the manager. Accordingly, the board has established
guidelines and procedures for determining the liquidity of Rule 144A securities
and has delegated the day-to-day function of determining the liquidity of Rule
144A securities to the manager. The board retains the responsibility to monitor
the implementation of the guidelines and procedures it has adopted.
Since the secondary market for such securities is limited to certain
qualified institutional investors, the liquidity of such securities may be
limited accordingly and a fund may, from time to time, hold a Rule 144A security
that is illiquid. In such an event, the funds' manager will consider appropriate
remedies to minimize the effect on such fund's liquidity. No fund may invest
more than 15% of its assets in illiquid securities (securities that may not be
sold within seven days at approximately the price used in determining the net
asset value of fund shares).
PERFORMANCE ADVERTISING
From time to time, the funds may advertise performance data. Fund
performance may be shown by presenting one or more performance measurements,
including cumulative total return or average annual total return. Performance
data may be quoted separately for the Advisor Class and for the other classes
offered by the funds.
Cumulative total return data is computed by considering all elements of
return, including reinvestment of dividends and capital gains distributions,
over a stated period of time. Average annual total return is determined by
computing the annual compound return over a stated period of time that would
have produced the fund's cumulative total return over the same period if the
fund's performance had remained constant throughout.
A quotation of yield reflects a fund's income over a stated period of time
expressed as a percentage of the fund's share price.
Prospectus Information Regarding the Funds 15
Yield is calculated by adding over a 30-day (or one month) period all
interest and dividend income (net of fund expenses) calculated on each day's
market values, dividing this sum by the average number of fund shares
outstanding during the period, and expressing the result as a percentage of the
fund's share price on the last day of the 30-day (or one month) period. The
percentage is then annualized. Capital gains and losses are not included in the
calculation.
Yields are calculated according to accounting methods that are standardized
in accordance with SEC rules for all stock and bond funds. Because yield
accounting methods differ from the methods used for other accounting purposes, a
fund's yield may not equal the income paid on your shares or the income reported
in the fund's financial statements.
The funds may also include in advertisements data comparing performance
with the performance of non-related investment media, published editorial
comments and performance rankings compiled by independent organizations (such as
Lipper Analytical Services) and publications that monitor the performance of
mutual funds. Performance information may be quoted numerically or may be
presented in a table, graph or other illustration. In addition, fund performance
may be compared to well-known indicies of market performance including the
Standard & Poor's (S&P) 500 Index and the Dow Jones Industrial Average. Fund
performance may also be compared, on a relative basis, to the other funds in our
fund family. This relative comparison, which may be based upon historical or
expected fund performance, volatility or other fund characteristics, may be
presented numerically, graphically or in text. Fund performance may also be
combined or blended with other funds in our fund family, and that combined or
blended performance may be compared to the same indices to which individual
funds may be compared.
All performance information advertised by the funds is historical in nature
and is not intended to represent or guarantee future results. The value of fund
shares when redeemed may be more or less than their original cost.
16 Information Regarding the Funds American Century Investments
HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS
The following section explains how to purchase, exchange and redeem Advisor
Class shares of the funds offered by this Prospectus.
HOW TO PURCHASE AND SELL AMERICAN
CENTURY FUNDS
One or more of the funds offered by this Prospectus is available as an
investment option under your employer-sponsored retirement or savings plan or
through or in connection with a program, product or service offered by a
financial intermediary, such as a bank, broker-dealer or insurance company.
Since all records of your share ownership are maintained by your plan sponsor,
plan recordkeeper, or other financial intermediary, all orders to purchase,
exchange and redeem shares must be made through your employer or other financial
intermediary, as applicable.
If you are purchasing through a retirement or savings plan, the
administrator of your plan or your employee benefits office can provide you with
information on how to participate in your plan and how to select American
Century funds as an investment option.
If you are purchasing through a financial intermediary, you should contact
your service representative at the financial intermediary for information about
how to select American Century funds.
If you have questions about a fund, see "Investment Policies of the Funds,"
page 7, or call one of our Institutional Service Representatives at
1-800-345-3533.
Orders to purchase shares are effective on the day we receive payment. See
"When Share Price is Determined," page 19.
We may discontinue offering shares generally in the funds (including any
class of shares of a fund) or in any particular state without notice to
shareholders.
HOW TO EXCHANGE FROM ONE AMERICAN CENTURY
FUND TO ANOTHER
Your plan or program may permit you to exchange your investment in the
shares of a fund for shares of another fund in our family. See your plan
administrator, employee benefits office or financial intermediary for details on
the rules in your plan governing exchanges.
Exchanges are made at the respective net asset values, next computed after
receipt of the exchange instruction by us. If in any 90-day period, the total of
the exchanges and redemptions from the account of any one plan participant or
financial intermediary client exceeds the lesser of $250,000 or 1% of a fund's
assets, further exchanges may be subject to special requirements to comply with
our policy on large equity fund redemptions. See "Special Requirements for Large
Redemptions," this page.
HOW TO REDEEM SHARES
Subject to any restrictions imposed by your employer's plan or financial
intermediary's program, you can sell ("redeem") your shares through the plan or
financial intermediary at their net asset value. Your plan administrator,
trustee, or financial intermediary or other designated person must provide us
with redemption instructions. The shares will be redeemed at the net asset value
next computed after receipt of the instructions in good order. See "When Share
Price Is Determined," page 19. If you have any questions about how to redeem,
contact your plan administrator, employee benefits office, or service
representative at your financial intermediary, as applicable.
SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS
We have elected to be governed by Rule18f-1 under the Investment Company
Act, which obligates each fund to redeem shares in cash, with respect to any one
participant account during any 90-day period, up to the lesser of $250,000 or 1%
of the assets of the fund. Although redemptions in excess of this limitation
will also normally be paid in cash, we reserve the right to honor these
redemptions by making payment in whole or in part in readily marketable
securities (a "redemption-in-kind"). If payment is made in securities, the
securities will be selected by the fund, will be valued in the same manner as
they are in computing the fund's net asset value and will be provided to the
Prospectus How to Invest with American Century Investments 17
redeeming plan participant or financial intermediary in lieu of cash without
prior notice.
If you expect to make a large redemption and would like to avoid any
possibility of being paid in securities, you may do so by providing us with an
unconditional instruction to redeem at least 15 days prior to the date on which
the redemption transaction is to occur. The instruction must specify the dollar
amount or number of shares to be redeemed and the date of the transaction.
Receipt of your instruction 15 days prior to the transaction provides the fund
with sufficient time to raise the cash in an orderly manner to pay the
redemption and thereby minimizes the effect of the redemption on the fund and
its remaining shareholders.
Despite its right to redeem fund shares through a redemption-in-kind, we do
not expect to exercise this option unless a fund has an unusually low level of
cash to meet redemptions and/or is experiencing unusually strong demands for its
cash. Such a demand might be caused, for example, by extreme market conditions
that result in an abnormally high level of redemption requests concentrated in a
short period of time. Absent these or similar circumstances, we expect
redemptions in excess of $250,000 to be paid in cash in any fund with assets of
more than $50 million if total redemptions from any one account in any 90-day
period do not exceed one-half of 1% of the total assets of the fund.
TELEPHONE SERVICES
INVESTORS LINE
To request information about our funds and a current prospectus, or get
answers to any questions that you may have about the funds and the services we
offer, call one of our Institutional Service Representatives at 1-800-345-3533.
18 How to Invest with American Century Investments American Century Investments
ADDITIONAL INFORMATION YOU SHOULD KNOW
SHARE PRICE
WHEN SHARE PRICE IS DETERMINED
The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of a fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. For all American Century funds, except funds issued by the American
Century Target Maturities Trust, net asset value is determined at the close of
regular trading on each day that the New York Stock Exchange is open, usually 3
p.m. Central time. The net asset values for the Target Maturities funds are
determined one hour prior to the close of the Exchange.
Investments and requests to redeem or exchange shares will receive the
share price next determined after we receive your investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares received by us or one of our agents before the time as of which the net
asset value is determined, are effective on, and will receive the price
determined, that day. Investment, redemption and exchange requests received
thereafter are effective on, and receive the price determined on, the next day
the Exchange is open.
Investments are considered received only when payment is received by us.
Wired funds are considered received on the day they are deposited in our bank
account if they are deposited before the time as of which the net asset value of
the fund is determined.
It is the responsibility of your plan recordkeeper or financial
intermediary to transmit your purchase, exchange and redemption requests to the
funds' transfer agent prior to the applicable cut-off time for receiving orders
and to make payment for any purchase transactions in accordance with the fund's
procedures or any contractual arrangement with the funds or the funds'
distributor in order for you to receive that day's price.
HOW SHARE PRICE IS DETERMINED
The valuation of assets for determining net asset value may be summarized
as follows:
The portfolio securities of each fund, except as otherwise noted, listed or
traded on a domestic securities exchange are valued at the last sale price on
that exchange. Portfolio securities primarily traded on foreign securities
exchanges are generally valued at the preceding closing values of such
securities on the exchange where primarily traded. If no sale is reported, or if
local convention or regulation so provides, the mean of the latest bid and asked
price is used. Depending on local convention or regulation, securities traded
over-the-counter are priced at the mean of the latest bid and asked prices or at
the last sale price. When market quotations are not readily available,
securities and other assets are valued at fair value as determined in accordance
with procedures adopted by the Board of Directors.
Debt securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service or at the most
recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the Board of Directors.
The value of an exchange-traded foreign security is determined in its
national currency as of the close of trading on the foreign exchange on which it
is traded or as of the close of business on the New York Stock Exchange, if that
is earlier. That value is then converted to dollars at the prevailing foreign
exchange rate.
Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed at various times before the close
of business on each day that the New York Stock Exchange is open. If an event
were to occur after the value of a security was established but before the net
asset value per share was determined, which was likely to materially change the
net asset value, then that security would be valued at fair value as determined
in accordance with procedures adopted by the Board of Directors.
Prospectus Additional Information You Should Know 19
Trading of these securities in foreign markets may not take place on every
New York Stock Exchange business day. In addition, trading may take place in
various foreign markets on Saturdays or on other days when the Exchange is not
open and on which a fund's net asset value is not calculated. Therefore, such
calculation does not take place contemporaneously with the determination of the
prices of many of the portfolio securities used in such calculation and the
value of a fund's portfolio may be affected on days when shares of the fund may
not be purchased or redeemed.
WHERE TO FIND INFORMATION ABOUT SHARE PRICE
The net asset values of the Investor Class of the funds are published in
leading newspapers daily. Because the total expense ratio for the Advisor Class
shares is 0.25% higher than the Investor Class, their net asset values will be
lower than the Investor Class. The net asset value of the Advisor Class of each
fund may be obtained by calling us.
DISTRIBUTIONS
Distributions from net investment income are declared and paid quarterly by
Strategic Allocation: Conservative and Strategic Allocation: Moderate. Such
distributions are declared and paid annually by Strategic Allocation:
Aggressive. Distributions from net realized securities gains, if any, are
declared and paid annually, usually in December, but the funds may make
distributions on a more frequent basis to comply with the distribution
requirements of the Internal Revenue Code, in all events in a manner consistent
with the provisions of the Investment Company Act.
Participants in employer-sponsored retirement or savings plans must
reinvest all distributions. For shareholders investing in taxable accounts,
distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distributions made
shortly after a purchase, made by check or ACH, may be held up to 15 days. You
may elect to have distributions on shares of Individual Retirement Accounts and
403(b) plans paid in cash only if you are at least 591/2 years old or
permanently and totally disabled. Distribution checks normally are mailed within
seven days after the record date.
A distribution on shares of a fund does not increase the value of your
shares or your total return. At any given time, the value of your shares
includes the undistributed net gains, if any, realized by the fund on the sale
of portfolio securities and undistributed dividends and interest received, less
fund expenses.
Because undistributed gains and dividends are included in the value of your
shares prior to distribution, when they are distributed, the value of your
shares will be reduced by the amount of the distribution. If you buy your shares
through a taxable account just before the distribution, you will pay the full
price for your shares and then receive a portion of the purchase price back as a
taxable distribution. See "Taxes," this page.
TAXES
Each fund has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code, which means that to the extent its
income is distributed to shareholders, it pays no income taxes.
TAX-DEFERRED ACCOUNTS
If fund shares are purchased through tax-deferred accounts, such as a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions paid by the funds will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.
Employer-sponsored retirement and savings plans are governed by complex tax
rules. If you elect to participate in your employer's plan, consult your plan
administrator, your plan's summary plan description, or a professional tax
advisor regarding the tax consequences of participation in the plan,
contributions to, and withdrawals or distributions from the plan.
TAXABLE ACCOUNTS
If fund shares are purchased through taxable accounts, distributions of net
investment income and net short-term capital gains are taxable to you as
ordinary income. Distributions from net long-term capital gains are taxable as
long-term capital gains regardless of the length of time you have held the
shares on which such distributions are paid. However, you should note that any
loss realized upon the sale or redemption of shares held for six months or less
will
20 Additional Information You Should Know American Century Investments
be treated as a long-term capital loss to the extent of any distribution of
long-term capital gain to you with respect to such shares.
Dividends and interest received by the funds on foreign securities, and, in
limited circumstances capital gains realized by the funds upon the sale of such
securities, may give rise to withholding and other taxes imposed by foreign
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. Foreign countries generally do not impose taxes
on capital gains in respect of investments by non-resident investors. The
foreign taxes paid by a fund will reduce its dividends.
Distributions are taxable to you regardless of whether they are taken in
cash or reinvested, even if the value of your shares is below your cost. If you
purchase shares shortly before a distribution, you must pay income taxes on the
distribution, even though the value of your investment (plus cash received, if
any) remains the same. In addition, the share price at the time you purchase
shares may include unrealized gains in the securities held in the investment
portfolio of the fund. If these portfolio securities are subsequently sold and
the gains are realized, they will, to the extent not offset by capital losses,
be paid to you as a distribution of capital gains and will be taxable to you as
short-term or long-term capital gains. See "Distributions," page 20.
In January of the year following the distribution, if you own shares in a
taxable account, you will receive a Form 1099-DIV notifying you of the status of
your distributions for federal income tax purposes.
Distributions also may be subject to state and local taxes, even if all or
a substantial part of such distributions are derived from interest on U.S.
government obligations, which, if you received them directly, would be exempt
from state income tax. However, most but not all states allow this tax exemption
to pass through to fund shareholders when a fund pays distributions to its
shareholders. You should consult your tax advisor about the tax status of such
distributions in your own state.
If you have not complied with certain provisions of the Internal Revenue
Code and Regulations, either we or your financial intermediary is required by
federal law to withhold and remit to the IRS 31% of reportable payments (which
may include dividends, capital gains distributions and redemptions). Those
regulations require you to certify that the Social Security number or tax
identification number you provide is correct and that you are not subject to 31%
withholding for previous under-reporting to the IRS. You will be asked to make
the appropriate certification on your application. Payments reported by us that
omit your Social Security number or tax identification number will subject us to
a penalty of $50, which will be charged against your account if you fail to
provide the certification by the time the report is filed. This charge is not
refundable.
Redemption of shares of a fund (including redemptions made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
shareholders will generally recognize gain or loss in an amount equal to the
difference between the basis of the shares and the amount received. Assuming
that shareholders hold such shares as a capital asset, the gain or loss will be
a capital gain or loss and generally will be long term if shareholders have held
such shares for a period of more than one year. If a loss is realized on the
redemption of fund shares, the reinvestment in additional fund shares within 30
days before or after the redemption may be subject to the "wash sale" rules of
the Code, resulting in a postponement of the recognition of such loss for
federal income tax purposes.
MANAGEMENT
INVESTMENT MANAGEMENT
Under the laws of the State of Maryland, the Board of Directors is
responsible for managing the business and affairs of the funds. Acting pursuant
to an investment management agreement entered into with the funds, American
Century Investment Management, Inc. serves as the investment manager of the
funds. Its principal place of business is American Century Tower, 4500 Main
Street, Kansas City, Missouri 64111. The manager has been providing investment
management services to investment companies and institutional clients since it
was founded in 1958.
In June 1995, American Century Companies, Inc. ("ACC"), the parent of the
manager, acquired Benham Management International, Inc. In the acquisition,
Benham Management Corporation ("BMC"), the investment advisor to the Benham
Group of
Prospectus Additional Information You Should Know 21
mutual funds, became a wholly owned subsidiary of ACC. Certain employees of BMC
provide investment management services to American Century funds, while certain
American Century employees provide investment management services to Benham
funds.
The manager supervises and manages the investment portfolio of each fund
and directs the purchase and sale of its investment securities. It utilizes a
team of portfolio managers, assistant portfolio managers and analysts acting
together to manage the assets of the funds. The team meets regularly to review
portfolio holdings and to discuss purchase and sale activity. The team adjusts
holdings in the funds' portfolios and the funds' asset mix as it deems
appropriate in pursuit of the funds' investment objectives. Individual portfolio
manager members of the team may also adjust portfolio holdings of the funds or
of sectors of the funds as necessary between team meetings.
The portfolio manager members of the teams managing the funds described in
this Prospectus and their work experience for the last five years are as
follows:
James E. Stowers, III, President and Portfolio Manager, joined American
Century in 1981. He is a member of the team that manages Growth and Ultra.
C. Casey Colton, Portfolio Manager, joined BMC in 1990 as a Municipal
Analyst. Mr. Colton was promoted to Portfolio Manager in 1995 and co-manages the
Benham GNMA Income Fund.
Phillip N. Davidson, Vice President and Portfolio Manager, joined American
Century in September 1993 as a Portfolio Manager. Prior to joining American
Century, Mr. Davidson served as an investment manager for Boatmen's Trust
Company in St. Louis, Missouri. He is a member of the team that manages Value
and Equity Income.
Glenn A. Fogle, Vice President and Portfolio Manager, joined American
Century in September 1990 as an Investment Analyst, a position he held until
March 1993. At that time he was promoted to Portfolio Manager. He is a member of
the team that manages Vista and Giftrust.
Norman E. Hoops, Senior Vice President and Fixed Income Portfolio Manager,
joined American Century as Vice President and Portfolio Manager in November
1989. In April 1993, he became Senior Vice President. He is a member of the team
that manages Limited-Term Bond, Intermediate-Term Bond, Benham Bond and the
fixed income portion of Balanced.
Mark S. Kopinski, Vice President and Portfolio Manager, rejoined American
Century in April 1997. From June 1995 to March 1997, Mr. Kopinski served as Vice
President and Portfolio Manager for Federated Investors, Inc. Prior to June
1995, Mr. Kopinski was a Vice President and Portfolio Manager for American
Century. He is a member of the team that manages International Growth and
International Discovery and was a member of the team at its inception in 1991.
David Schroeder, Vice President and Portfolio Manager for BMC, joined BMC
in July 1990. Mr. Schroeder has primary responsibility for the day-to-day
operations of the Benham Treasury Note, Benham Short-Term, and Benham Long-Term
Funds. He also manages Benham Target Maturities Trust.
John D. Seitzer, Portfolio Manager, joined American Century in June 1993 as
an Investment Analyst, a position he held until July 1996. At that time he was
promoted to Portfolio Manager. Prior to joining American Century, Mr. Seitzer
attended Indiana University from August 1991 to June 1993, where he obtained his
MBA degree. He is a member of the team that manages Vista and Giftrust.
Henrik Strabo, Vice President and Portfolio Manager, joined American
Century in 1993 as an Investment Analyst on the International Growth and
International Discovery team and has been a Portfolio Manager member of the team
since 1994. Prior to joining American Century, Mr. Strabo was Vice President,
International Equity Sales with Barclays de Zoete Wedd from 1991 to 1993.
Jeffrey R. Tyler, Senior Vice President and Portfolio Manager for BMC,
joined BMC in January 1988 as a Portfolio Manager. Mr. Tyler supervises the team
of other Portfolio Managers who assist in the management of the various
investment categories of the funds. Mr. Tyler also co-manages the Benham GNMA
Income Fund. He also has primary responsibility for the day-to-day operations of
the Benham Capital Manager Fund and oversees the portfolio manager's operation
of the Benham European Government Bond Fund.
22 Additional Information You Should Know American Century Investments
Peter A. Zuger, Vice President and Portfolio Manager, joined American
Century in June 1993 as a Portfolio Manager. Prior to joining American Century,
Mr. Zuger served as an investment manager in the Trust Department of NBD Bancorp
in Detroit, Michigan. He is a member of the team that manages Value and Equity
Income.
The activities of the manager are subject only to directions of the funds'
Board of Directors. The manager pays all the expenses of the funds except
brokerage, taxes, interest, fees and expenses of the non-interested person
directors (including counsel fees) and extraordinary expenses.
For the services provided to the Advisor Class of the funds, the manager
receives an annual fee of 0.75% of average net assets up to $1 billion and 0.65%
of average net assets in excess of $1 billion for Strategic Allocation:
Conservative, 0.85% of average net assets up to $1 billion and 0.75% of average
net assets in excess of $1 billion for Strategic Allocation: Moderate, and 0.95%
of average net assets up to $1 billion and 0.85% of average net assets in excess
of $1 billion for Strategic Allocation: Aggressive.
On the first business day of each month, each fund pays a management fee to
the manager for the previous month at the specified rate. The fee for the
previous month is calculated by multiplying the applicable fee for such fund by
the aggregate average daily closing value of each fund's net assets during the
previous month by a fraction, the numerator of which is the number of days in
the previous month and the denominator of which is 365 (366 in leap years).
CODE OF ETHICS
The funds and the manager have adopted a Code of Ethics, which restricts
personal investing practices by employees of the manager and its affiliates.
Among other provisions, the Code of Ethics requires that employees with access
to information about the purchase or sale of securities in the funds' portfolios
obtain preclearance before executing personal trades. With respect to Portfolio
Managers and other investment personnel, the Code of Ethics prohibits
acquisition of securities in an initial public offering, as well as profits
derived from the purchase and sale of the same security within 60 calendar days.
These provisions are designed to ensure that the interests of fund shareholders
come before the interests of the people who manage those funds.
TRANSFER AND ADMINISTRATIVE SERVICES
American Century Services Corporation, 4500 Main Street, Kansas City,
Missouri 64111, acts as transfer agent and dividend-paying agent for the funds.
It provides facilities, equipment and personnel to the funds and is paid for
such services by the manager.
From time to time, special services may be offered to shareholders who
maintain higher share balances in the American Century family of funds. These
services may include the waiver of minimum investment requirements, expedited
confirmation of shareholder transactions, newsletters and a team of personal
representatives. Any expenses associated with these special services will be
paid by the manager.
The manager and transfer agent are both wholly owned by American Century
Companies, Inc. James E. Stowers Jr., Chairman of the funds' Board of Directors,
controls American Century Companies by virtue of his ownership of a majority of
its common stock.
DISTRIBUTION OF FUND SHARES
The funds' shares are distributed by American Century Investment Services,
Inc., a registered broker-dealer and an affiliate of the manager. As agent for
the funds and the manager, the distributor enters into contracts with various
banks, broker-dealers, insurance companies and other financial intermediaries
with respect to the sale of the funds' shares and/or the use of the funds'
shares in various financial services. The manager (or an affiliate) pays all
expenses incurred in promoting sales of, and distributing, the Advisor Class and
in securing such services out of the Rule 12b-1 fees described in the section
that follows.
SERVICE AND DISTRIBUTION FEES
Rule 12b-1 adopted by the Securities and Exchange Commission under the
Investment Company Act permits investment companies that adopt a written plan to
pay certain expenses associated with the distribution of their shares. Pursuant
to that rule, the funds' Board of Directors and the initial shareholder of the
funds' Advisor Class shares have approved and adopted a Master Distribution and
Shareholder Services Plan (the "Plan"). Pursuant to the Plan, each
Prospectus Additional Information You Should Know 23
fund pays the manager a shareholder services fee and a distribution fee, each
equal to 0.25% (for a total of 0.50%) per annum of the average daily net assets
of the shares of the fund's Advisor Class. The shareholder services fee is paid
for the purpose of paying the costs of securing certain shareholder and
administrative services, and the distribution fee is paid for the purpose of
paying the costs of providing various distribution services. All or a portion of
such fees are paid by the manager to the banks, broker-dealers, insurance
companies or other financial intermediaries through which such shares are made
available.
The Plan has been adopted and will be administered in accordance with the
requirements of Rule 12b-1 under the Investment Company Act. For additional
information about the Plan and its terms, see "Master Distribution and
Shareholder Services Plan" in the Statement of Additional Information. Fees paid
pursuant to the Plan may be paid for shareholder services and the maintenance of
accounts and therefore may constitute "service fees" for purposes of applicable
rules of the National Association of Securities Dealers.
FURTHER INFORMATION ABOUT AMERICAN CENTURY
American Century Strategic Asset Allocations, Inc., the issuer of the
funds, was organized as a Maryland corporation on April 4, 1994.
The corporation is a diversified, open-end management investment company
whose shares were first offered for sale February 15, 1996. Its business and
affairs are managed by its officers under the direction of its Board of
Directors.
The principal office of the funds is American Century Tower, 4500 Main
Street, P.O. Box 419385, Kansas City, Missouri 64141-6385. All inquiries may be
made by mail to that address, or by telephone to 1-800-345-3533 (international
calls: 816-531-5575).
American Century Strategic Asset Allocations, Inc. issues three series of
$.01 par value shares. The assets belonging to each series of shares are held
separately by the custodian.
American Century offers three classes of each of the funds offered by this
Prospectus: an Investor Class, a Service Class, and an Advisor Class. The shares
offered by this Prospectus are Advisor Class shares.
The Investor Class is primarily made available to retail investors. The
Service Class is primarily offered to institutional investors or through
institutional distribution channels, such as employer-sponsored retirement plans
or through banks, broker-dealers, insurance companies or other financial
intermediaries. The other classes have different fees, expenses, and/or minimum
investment requirements than the Advisor Class. The difference in the fee
structures among the classes is the result of their separate arrangements for
shareholder and distribution services and not the result of any difference in
amounts charged by the manager for core investment advisory services.
Accordingly, the core investment advisory expenses do not vary by class.
Different fees and expenses will affect performance. For additional information
concerning the Investor Class of shares, call one of our Investor Services
Representatives at 1-800-345-2021. For information concerning the Service Class
of shares, call one of our Institutional Service Representatives at
1-800-345-3533 or contact a sales representative or financial intermediary who
offers those classes of shares.
Except as described below, all classes of shares of a fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences among the various classes are (a) each class
may be subject to different expenses specific to that class, (b) each class has
a different identifying designation or name, (c) each class has exclusive voting
rights with respect to matters solely affecting such class, and (d) each class
may have different exchange privileges.
Each share, irrespective of series or class, is entitled to one vote for
each dollar of net asset value applicable to such share on all questions, except
for those matters that must be voted on separately by the series or class of
shares affected. Matters affecting only one series or class are voted upon only
by that series or class.
Shares have non-cumulative voting rights, which means that the holders of
more than 50% of the votes cast in an election of directors can elect all of the
directors if they choose to do so, and in such event the holders of the
remaining votes will not be able to elect any person or persons to the Board of
Directors.
Unless required by the Investment Company Act,
24 Additional Information You Should Know American Century Investments
it will not be necessary for the funds to hold annual meetings of shareholders.
As a result, shareholders may not vote each year on the election of directors or
the appointment of auditors. However, pursuant to the funds' bylaws, the holders
of at least 10% of the votes entitled to be cast may request the funds to hold a
special meeting of shareholders. We will assist in the communication with other
shareholders.
WE RESERVE THE RIGHT TO CHANGE ANY OF OUR POLICIES, PRACTICES AND
PROCEDURES DESCRIBED IN THIS PROSPECTUS, INCLUDING THE STATEMENT OF ADDITIONAL
INFORMATION, WITHOUT SHAREHOLDER APPROVAL EXCEPT IN THOSE INSTANCES WHERE
SHAREHOLDER APPROVAL IS EXPRESSLY REQUIRED.
Prospectus Additional Information You Should Know 25
NOTES
26 Notes
NOTES
Notes 27
NOTES
28 Notes
NOTES
Notes 29
P.O. Box 419385
Kansas City, Missouri
64141-6385
Person-to-person assistance:
1-800-345-3533 or 816-531-5575
Telecommunications Device for the Deaf:
1-800-345-1833 or 816-753-0700
Fax: 816-340-4655
Internet: www.americancentury.com
[american century logo]
American
Century(sm)
9704 [recycled logo]
SH-BKT-7908 Recycled
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
[American Century Logo]
American
Century(sm)
APRIL 1, 1997
AMERICAN
CENTURY
GROUP
Strategic Allocation: Conservative
Strategic Allocation: Moderate
Strategic Allocation: Aggressive
[front cover]
STATEMENT OF ADDITIONAL INFORMATION
APRIL 1, 1997
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
This Statement is not a prospectus but should be read in conjunction with
the current Prospectus of American Century Strategic Asset Allocations, Inc.,
dated April 1, 1997. Please retain this document for future reference. To obtain
the Prospectus, call American Century toll-free at 1-800-345-2021 (international
calls: 816-531-5575), or write P.O. Box 419200, Kansas City, Missouri
64141-6200.
TABLE OF CONTENTS
Investment Objectives of the Funds .............2
Additional Investment Restrictions .............2
Forward Currency Exchange Contracts ............3
Futures Contracts ..............................4
An Explanation of Fixed
Income Securities Ratings ...................5
Investing in Emerging Market Countries .........7
Short Sales ....................................7
Portfolio Turnover .............................7
Officers and Directors .........................8
Management .....................................10
Custodians .....................................11
Independent Auditors ...........................11
Capital Stock ..................................11
Multiple Class Structure .......................12
Taxes ..........................................14
Brokerage ......................................14
Performance Advertising ........................15
Redemptions in Kind ............................16
Holidays .......................................16
Financial Statements ...........................16
Statement of Additional Information 1
INVESTMENT OBJECTIVES OF THE FUNDS
The investment objective of each fund comprising American Century Strategic
Asset Allocations, Inc. is described on page 2 of the Prospectus. In seeking to
achieve its objective, a fund must conform to certain policies, some of which
are designated in the Prospectus or in this Statement of Additional Information
as "fundamental" and cannot be changed without shareholder approval. The
following paragraph is also a statement of fundamental policy with respect to
selection of investments.
In general, within the restrictions outlined herein, each series has broad
powers with respect to investing funds or holding them uninvested. Investments
are varied according to what is judged advantageous under changing economic
conditions. It is our policy to retain maximum flexibility in management without
restrictive provisions as to the proportion of one or another class of
securities that may be held, subject to the investment restrictions described
below.
ADDITIONAL INVESTMENT RESTRICTIONS
Additional fundamental policies that may be changed only with shareholder
approval provide that each series of shares:
(1) Shall not, with regard to 75% of its portfolio, purchase the security of
any one issuer if such purchase would cause more than 5% of the fund's
assets at market to be invested in the securities of such issuer, except
U.S. government securities, or if the purchase would cause more than 10% of
the outstanding voting securities of any one issuer to be held in a fund's
portfolio.
(2) Shall not invest for control or for management or concentrate its
investment in a particular company or a particular industry. No more than
25% of the assets of a fund, exclusive of cash and U.S. government
securities, will be invested in securities of any one industry.
(3) Shall not buy securities on margin nor sell short (unless it owns or by
virtue of its ownership of other securities has the right to obtain
securities equivalent in kind and amount to the securities sold without
additional cost); however, a fund may make margin deposits in connection
with the use of any financial instrument or any transaction in securities
permitted by its fundamental policies.
(4) Shall not issue any senior security.
(5) Shall not underwrite any securities.
(6) Shall not invest more than 15% of its assets in illiquid investments.
(7) Shall not lend its portfolio securities except to unaffiliated persons and
subject to the rules and regulations adopted under the Investment Company
Act. No such rules and regulations have been issued, but it is American
Century's policy that such loans must be secured continuously by cash
collateral maintained on a current basis in an amount at least equal to the
market value of the securities loaned or by irrevocable letters of credit.
During the existence of the loan, a fund must continue to receive the
equivalent of the interest and dividends paid by the issuer on the
securities loaned and interest on the investment of the collateral; the
fund must have the right to call the loan and obtain the securities loaned
at any time on five days' notice, including the right to call the loan to
enable the fund to vote the securities. To comply with the regulations of
certain state securities administrators, such loans may not exceed
one-third of the fund's net assets valued at market.
(8) Shall not borrow any money, except in an amount not in excess of 5% of the
total assets of the fund and then only for emergency and extraordinary
purposes. Note: This investment restriction does not prohibit escrow and
collateral arrangements in connection with investment in futures contracts
and related options by a fund.
(9) Shall not purchase or sell real estate, except that a fund may purchase
securities of issuers that deal in real estate and may purchase securities
that are secured by interests in real estate.
The Investment Company Act imposes certain additional restrictions upon
acquisition by the funds of securities issued by insurance companies,
broker-dealers, underwriters or investment advisors, and upon transactions with
affiliated persons as therein defined. It also defines and forbids the creation
of cross and circular ownership.
2 American Century Investments
The Investment Company Act also provides that the funds may not invest more
than 25% of their assets in the securities of issuers engaged in a single
industry. In determining industry groups for purposes of this standard, the
Securities and Exchange Commission ordinarily uses the Standard Industry
Classification codes developed by the United States Office of Management and
Budget. In the interest of ensuring adequate diversification, the funds monitor
industry concentration using a more restrictive list of industry groups than
that recommended by the SEC. The funds believe that these classifications are
reasonable and are not so broad that the primary economic characteristics of the
companies in a single class are materially different. The use of these more
restrictive industry classifications may, however, cause the funds to forego
investment possibilities which may otherwise be available to them under the
Investment Company Act.
Neither the SEC nor any other agency of the federal or state government
participates in or supervises the funds' management or their investment
practices or policies.
FORWARD CURRENCY EXCHANGE CONTRACTS
The funds conduct their foreign currency exchange transactions either on a
spot (i.e., cash) basis at the spot rate prevailing in the foreign currency
exchange market, or through entering into forward foreign currency exchange
contracts to purchase or sell foreign currencies.
Each fund expects to use forward contracts under two circumstances:
(1) When the manager wishes to "lock in" the U.S. dollar price of a security
when a fund is purchasing or selling a security denominated in a foreign
currency, the fund would be able to enter into a forward contract to do so;
or
(2) When the manager believes that the currency of a particular foreign country
may suffer a substantial decline against the U.S. dollar, a fund would be
able to enter into a forward contract to sell foreign currency for a fixed
U.S. dollar amount approximating the value of some or all of the fund's
portfolio securities either denominated in, or whose value is tied to, such
foreign currency.
As to the first circumstance, when a fund enters into a trade for the
purchase or sale of a security denominated in a foreign currency, it may be
desirable to establish (lock in) the U.S. dollar cost or proceeds. By entering
into forward contracts in U.S. dollars for the purchase or sale of a foreign
currency involved in an underlying security transaction, the fund will be able
to protect itself against a possible loss between trade and settlement dates
resulting from the adverse change in the relationship between the U.S. dollar
and the subject foreign currency.
Under the second circumstance, when the manager believes that the currency
of a particular country may suffer a substantial decline relative to the U.S.
dollar, a fund could enter into a forward contract to sell for a fixed dollar
amount the amount in foreign currencies approximating the value of some or all
of its portfolio securities either denominated in, or whose value is tied to,
such foreign currency. The fund will place cash or high-grade liquid securities
in a separate account with its custodian in an amount sufficient to cover its
obligation under the contract entered into under the second circumstance. If the
value of the securities placed in the separate account declines, additional cash
or securities will be placed in the account on a daily basis so that the value
of the account equals the amount of the fund's commitments with respect to such
contracts.
The precise matching of forward contracts in the amounts and values of
securities involved would not generally be possible since the future values of
such foreign currencies will change as a consequence of market movements in the
values of those securities between the date the forward contract is entered into
and the date it matures. Predicting short-term currency market movements is
extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. The manager does not intend to enter into such
contracts on a regular basis. Normally, consideration of the prospect for
currency parities will be incorporated into the long-term investment decisions
made with respect to overall diversification strategies. However, the manager
believes that it is important to have flexibility to enter into such forward
contracts when it determines that a fund's best interests may be served.
Generally, a fund will not enter into a forward
Statement of Additional Information 3
contract with a term of greater than one year. At the maturity of the forward
contract, the fund may either sell the portfolio security and make delivery of
the foreign currency, or it may retain the security and terminate the obligation
to deliver the foreign currency by purchasing an "offsetting" forward contract
with the same currency trader obligating the fund to purchase, on the same
maturity date, the same amount of the foreign currency.
It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of the forward contract. Accordingly, it
may be necessary for a fund to purchase additional foreign currency on the spot
market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the fund is obligated to
deliver and if a decision is made to sell the security and make delivery of the
foreign currency the fund is obligated to deliver.
FUTURES CONTRACTS
As described in the Prospectus, each fund may enter into futures contracts.
Unlike when a fund purchases securities, no purchase price for the underlying
securities is paid by the fund at the time it purchases a futures contract. When
a futures contract is entered into, both the buyer and seller of the contract
are required to deposit with a futures commission merchant ("FCM") cash or
high-grade debt securities in an amount equal to a percentage of the contract's
value, as set by the exchange on which the contract is traded. This amount is
known as "initial margin" and is held by the fund's custodian for the benefit of
the FCM in the event of any default by the fund in the payment of any future
obligations.
The value of a futures contract is adjusted daily to reflect the
fluctuation of the value of the underlying securities. This is a process known
as marking the contract to market. If the value of a party's position declines,
that party is required to make additional "variation margin" payments to the FCM
to settle the change in value. The party that has a gain is generally entitled
to receive all or a portion of this amount.
The funds maintain from time to time a percentage of their assets in cash
or high-grade liquid securities to provide for redemptions or to hold for future
investment in securities consistent with the funds' investment objectives. The
funds may enter into index futures contracts as an efficient means to expose the
funds' cash position to the domestic equity market. The manager believes that
the purchase of futures contracts is an efficient means to effectively be fully
invested in equity securities.
The funds intend to comply with guidelines of eligibility for exclusion
from the definition of the term "commodity pool operator" adopted by the
Commodity Futures Trading Commission ("CFTC") and the National Futures
Association, which regulate trading in the futures markets. To do so, the
aggregate initial margin required to establish such positions may not exceed 5%
of the fair market value of a fund's net assets, after taking into account
unrealized profits and unrealized losses on any contracts it has entered into.
The principal risks generally associated with the use of futures include:
o the possible absence of a liquid secondary market for any particular
instrument may make it difficult or impossible to close out a position when
desired (liquidity risk);
o the risk that the counter party to the contract may fail to perform its
obligations or the risk of bankruptcy of the FCM holding margin deposits
(counter-party risk);
o the risk that the securities to which the futures contract relates may go
down in value (market risk); and
o adverse price movements in the underlying securities can result in losses
substantially greater than the value of a fund's investment in that
instrument because only a fraction of a contract's value is required to be
deposited as initial margin (leverage risk); provided, however, that the
funds may not purchase leveraged futures, so there is no leverage risk
involved in the funds' use of futures.
A liquid secondary market is necessary to close out a contract. The funds
may seek to manage liquidity risk by investing in exchange-traded futures.
Exchange-traded futures pose less risk that there will not be a liquid secondary
market than privately negotiated instruments. Through their clearing
corporations, the futures exchanges guarantee the performance of the contracts.
Futures contracts are generally settled within a day
4 American Century Investments
from the date they are closed out, as compared to three days for most types of
equity securities. As a result, futures contracts can provide more liquidity
than an investment in the actual underlying securities. Nevertheless, there is
no assurance that a liquid secondary market will exist for any particular
futures contract at any particular time. Liquidity may also be influenced by an
exchange-imposed daily price fluctuation limit, which halts trading if a
contract's price moves up or down more than the established limit on any given
day. On volatile trading days when the price fluctuation limit is reached, it
may be impossible for a fund to enter into new positions or close out existing
positions. If the secondary market for a futures contract is not liquid because
of price fluctuation limits or otherwise, a fund may not be able to promptly
liquidate unfavorable futures positions and potentially could be required to
continue to hold a futures position until liquidity in the market is
re-established. As a result, such fund's access to other assets held to cover
its futures positions also could be impaired until liquidity in the market is
re-established.
The funds manage counter-party risk by investing in exchange-traded index
futures. In the event of the bankruptcy of the FCM that holds margin on behalf
of a fund, that fund may be entitled to the return of margin owed to such fund
only in proportion to the amount received by the FCM's other customers. The
manager will attempt to minimize the risk by monitoring the creditworthiness of
the FCMs with which the funds do business.
AN EXPLANATION OF FIXED INCOME SECURITIES RATINGS
As described in the Prospectus, the funds may invest in fixed income
securities. The fixed income securities that comprise part of a fund's bond
portfolio will primarily be limited to investment grade obligations, provided,
that Strategic Allocation: Moderate may invest up to 5% of its assets, and
Strategic Allocation: Aggressive may invest up to 10% of its assets, in high
yield securities. In addition, each fund may invest a portion of its equity
portfolio in convertible securities, which may be rated below investment grade
(but not below B- by S&P or B3 by Moody's).
Fixed income securities ratings provide the manager with current assessment
of the credit rating of an issuer with respect to a specific fixed income
security. The following is a description of the rating categories utilized by
the rating services referenced in the Prospectus disclosure:
The following summarizes the ratings used by Standard & Poor's Corporation
for bonds:
AAA-This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay interest and repay principal.
AA-Debt rated AA is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only to a small
degree.
A-Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher rated
categories.
BBB-Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate
protection parameters, adverse economic conditions or changing
circumstances are more likely to lead to a weakened capacity to pay
interest and repay principal for debt in this category than in higher-rated
categories.
BB-Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or
exposure to adverse business, financial or economic conditions, which could
lead to inadequate capacity to meet timely interest and principal payments.
The BB rating category is also used for debt subordinated to senior debt
that is assigned an actual or implied BBB- rating.
B-Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse
business, financial or economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B rating category is
also used for debt subordinated to senior debt that is assigned an actual
or implied BB or BB- rating.
CCC-Debt rated CCC has a currently identifiable vulnerability to default
and is dependent upon favorable business, financial and economic conditions
to meet timely payment of interest and
Statement of Additional Information 5
repayment of principal. In the event of adverse business, financial or
economic conditions, it is not likely to have the capacity to pay interest
and repay principal. The CCC rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied B or B-
rating.
CC-The rating CC typically is applied to debt subordinated to senior debt
that is assigned an actual or implied CCC rating.
C-The rating C typically is applied to debt subordinated to senior debt
that is assigned an actual or implied CCC- debt rating. The C rating may be
used to cover a situation where a bankruptcy petition has been filed, but
debt service payments are continued.
CI-The rating CI is reserved for income bonds on which no interest is being
paid.
D-Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even
if the applicable grace period has not expired, unless S&P believes that
such payments will be made during such grace period. The D rating also will
be used upon the filing of a bankruptcy petition if debt service payments
are jeopardized.
To provide more detailed indications of credit quality, the ratings from AA
to CCC may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.
The following summarizes the ratings used by Moody's Investors Service,
Inc. for bonds:
Aaa-Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or exceptionally
stable margin, and principal is secure. While the various protective
elements are likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such issues.
Aa-Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities, or
fluctuation of protective elements may be of greater amplitude, or there
may be other elements present that make the long-term risk appear somewhat
larger than the Aaa securities.
A-Bonds that are rated A possess many favorable investment attributes and
are to be considered as upper-medium-grade obligations. Factors giving
security to principal and interest are considered adequate but elements may
be present that suggest a susceptibility to impairment some time in the
future.
Baa-Bonds that are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and, in fact, have speculative characteristics as well.
Ba-Bonds that are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of
interest and principal payments may be very moderate, and thereby not well
safeguarded, during both good and bad times in the future. Uncertainty of
position characterizes bonds in this class.
B-Bonds that are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.
Caa-Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.
Ca-Bonds that are rated Ca represent obligations that are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C-Bonds that are rated C are the lowest-rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining
any real investment standing.
Moody's applies numerical modifiers 1, 2 and 3 in each generic rating
category from Aa through B. The modifier 1 indicates that the bond being rated
ranks in the higher end of its generic rating category; the modifier 2 indicates
a mid-range ranking; and the
6 American Century Investments
modifier 3 indicates a ranking in the lower end of that generic rating category.
In the event any of a fund's fixed income securities are downgraded from
one category to another by a securities ratings agency, the manager intends to
evaluate the reasons for such downgrade and other available information
regarding the issuer and will take action it deems appropriate regarding whether
or not to continue holding such securities.
INVESTING IN EMERGING MARKET COUNTRIES
Strategic Allocation: Moderate and Strategic Allocation: Aggressive may
invest a portion of their international holdings in securities of issuers in
emerging market countries. Investing in securities of issuers in emerging market
countries involves exposure to significantly higher risk than investing in
countries with developed markets. Emerging market countries may have economic
structures that are generally less diverse and mature, and political systems
that can be expected to be less stable than those of developed countries.
Securities prices in emerging market countries can be significantly more
volatile than in developed countries, reflecting the greater uncertainties of
investing in lesser developed markets and economies. In particular, emerging
market countries may have relatively unstable governments, and may present the
risk of nationalization of businesses, expropriation confiscatory taxation or in
certain instances, reversion to closed-market, centrally planned economics. Such
countries may also have less protection of property rights than developed
countries.
The economies of emerging market countries may be predominantly based on
only a few industries or may be dependent on revenues from particular
commodities or on international aid of developmental assistance, may be highly
vulnerable to changes in local or global trade conditions, and may suffer from
extreme and volatile debt burdens or inflation rates. In addition, securities
markets in emerging market countries may trade a small number of securities and
may be unable to respond effectively to increases in trading volume, potentially
resulting in a lack of liquidity and in volatility in the price of securities
traded on those markets. Also, securities markets in emerging market countries
typically offer less regulatory protection for investors.
SHORT SALES
A fund may engage in short sales if, at the time of the short sale, the
fund owns or has the right to acquire an equal amount of the security being sold
short at no additional cost.
In a short sale, the seller does not immediately deliver the securities
sold and is said to have a short position in those securities until delivery
occurs. To make delivery to the purchaser, the executing broker borrows the
securities being sold short on behalf of the seller. While the short position is
maintained, the seller collateralizes its obligation to deliver the securities
sold short in an amount equal to the proceeds of the short sale plus an
additional margin amount established by the Board of Governors of the Federal
Reserve. If a fund engages in a short sale, the collateral account will be
maintained by the fund's custodian. There will be certain additional transaction
costs associated with short sales, but the fund will endeavor to offset these
costs with income from the investment of the cash proceeds of short sales.
A fund may make a short sale, as described above, when it wants to sell the
security it owns at a current attractive price, but also wishes to defer
recognition of gain or loss for federal income tax purposes and for purposes of
satisfying certain tests applicable to regulated investment companies under the
Internal Revenue Code. In such a case, any future losses in the fund's long
position in substantially identical securities may not become deductible for tax
purposes until all or some part of the short position has been closed.
PORTFOLIO TURNOVER
With respect to each series of shares, the manager will purchase and sell
securities without regard to the length of time the security has been held.
Accordingly, the rate of portfolio turnover may be greater than other investment
companies with similar investment objectives.
The funds intend to purchase a given security whenever the manager believes
it will contribute to the stated objective of a fund, even if the same security
has only recently been sold. In selling a given security, the manager keeps in
mind that (1) profits from sales of securities held less than three months must
be limited in order to meet the requirements of
Statement of Additional Information 7
Subchapter M of the Internal Revenue Code, and (2) profits from sales of
securities are taxed to shareholders. Subject to those considerations, a fund
will sell a given security, no matter for how long or how short a period it has
been held in the portfolio, and no matter whether the sale is at a gain or at a
loss, if the manager believes that the security is not fulfilling its purpose,
either because, among other things, it did not live up to the manager's
expectations, or because it may be replaced with another security holding
greater promise, or because it has reached its optimum potential, or because of
a change in the circumstances of a particular company or industry or in general
economic conditions, or because of some combination of such reasons.
When a general decline in securities prices is anticipated, a fund may
decrease its position in such category and increase its position in one or both
of the other asset categories, and when a rise in price levels is anticipated, a
fund may increase its position in such category and decrease its position in the
other categories. However, the funds will, under most circumstances, be
essentially fully invested within the operating ranges set forth in the
Prospectus.
Since investment decisions are based on the anticipated contribution of the
security in question to a fund's objectives, the manager believes that the rate
of portfolio turnover is irrelevant when it believes a change is in order to
achieve those objectives, and a fund's annual portfolio turnover rate cannot be
anticipated and may be comparatively high. This disclosure regarding portfolio
turnover is a statement of fundamental policy and may be changed only by a vote
of the shareholders.
Since the manager does not take portfolio turnover rate into account in
making investment decisions, (1) the manager has no intention of accomplishing
any particular rate of portfolio turnover, whether high or low, and (2) the
portfolio turnover rates in the past should not be considered as a
representation of the rates which will be attained in the future.
OFFICERS AND DIRECTORS
The principal officers and directors of the corporation, their principal
business experience during the past five years, and their affiliations with the
funds' investment manager, American Century Investment Management, Inc. and its
transfer agent, American Century Services Corporation, are listed below. Unless
otherwise noted, the business address of each director and officer is American
Century Tower, 4500 Main Street, Kansas City, Missouri 64111. All persons named
as officers of the Corporation also serve in similar capacities for other funds
advised by the manager. Those directors that are "interested persons" as defined
in the Investment Company Act of 1940 are indicated by an asterisk(*).
James E. Stowers Jr.,* Chairman of the Board and Director; Chairman of the
Board, Director and controlling shareholder of American Century Companies, Inc.,
parent corporation of American Century Investment Management, Inc. and American
Century Services Corporation; Chairman of the Board and Director of American
Century Investment Management, Inc. and American Century Services Corporation;
father of James E. Stowers III.
James E. Stowers III,* President, Chief Executive Officer and Director;
President, Chief Executive Officer and Director, American Century Companies,
Inc., American Century Investment Management, Inc. and American Century Services
Corporation.
Thomas A. Brown, Director; 2029 Wyandotte, Kansas City, Missouri; Chief
Executive Officer, Associated Bearing Company, a corporation engaged in the sale
of bearings and power transmission products.
Robert W. Doering, M.D., Director; 6420 Prospect, Kansas City, Missouri;
general surgeon.
D. D. (Del) Hock, Director; 1225 Seventeenth Street #900, Denver, Colorado;
Chairman, President and Chief Executive Officer, Public Service Company of
Colorado.
Linsley L. Lundgaard, Vice Chairman of the Board and Director; 18648 White
Wing Drive, Rio Verde, Arizona; retired; formerly Vice President and National
Sales Manager, Flour Milling Division, Cargill, Inc.
Donald H. Pratt, Director; P.O. Box 419917, Kansas City, Missouri;
President, Butler Manufacturing Company.
Lloyd T. Silver Jr., Director; 2300 West 70th Terrace, Mission Hills,
Kansas; President, LSC, Inc., manufacturer's representative.
M. Jeannine Strandjord, Director; 908 West 121st Street, Kansas City,
Missouri; Senior Vice President and Treasurer, Sprint Corporation.
William M. Lyons, Executive Vice President, Chief Operating Officer,
Secretary and General Counsel;
8 American Century Investments
Executive Vice President, Chief Operating Officer and General Counsel, American
Century Companies, Inc., American Century Investment Management, Inc. and
American Century Services Corporation.
Robert T. Jackson, Executive Vice President and Principal Financial
Officer; Executive Vice President and Treasurer, American Century Companies,
Inc., American Century Investment Management, Inc. and American Century Services
Corporation; formerly Executive Vice President, Kemper Corporation.
Maryanne Roepke, CPA, Vice President, Treasurer and Principal Accounting
Officer; Vice President, American Century Services Corporation.
Patrick A. Looby, Vice President; Vice President, American Century Services
Corporation.
Merele A. May, Controller.
The Board of Directors has established four standing committees: the
Executive Committee, the Audit Committee, the Compliance Committee and the
Nominating Committee.
Messrs. Stowers Jr., Stowers III and Lundgaard constitute the Executive
Committee of the Board of Directors. The committee performs the functions of the
Board of Directors between meetings of the Board, subject to the limitations on
its power set out in the Maryland General Corporation Law, and except for
matters required by the Investment Company Act to be acted upon by the whole
Board.
Messrs. Lundgaard (chairman), Doering and Hock and Ms. Strandjord
constitute the Audit Committee. The functions of the Audit Committee include
recommending the engagement of the funds' independent auditors, reviewing the
arrangements for and scope of the annual audit, reviewing comments made by the
independent auditors with respect to internal controls and the considerations
given or the corrective action taken by management and reviewing nonaudit
services provided by the independent auditors.
Messrs. Brown (chairman), Pratt and Silver constitute the Compliance
Committee. The functions of the Compliance Committee include reviewing the
results of the funds' compliance testing program, reviewing quarterly reports
from the manager to the Board regarding various compliance matters and
monitoring the implementation of the funds' Code of Ethics, including any
violations thereof.
The Nominating Committee has as its principal role the consideration and
recommendation of individuals for nomination as directors. The names of
potential director candidates are drawn from a number of sources, including
recommendations from members of the Board, management and shareholders. This
committee also reviews and makes recommendations to the Board with respect to
the composition of Board committees and other Board-related matters, including
its organization, size, composition, responsibilities, functions and
compensation. The members of the nominating committee are Messrs. Pratt
(chairman), Lundgaard and Stowers III.
The Directors of the corporation also serve as Directors for other funds
advised by the manager. Each Director who is not an "interested person" as
defined in the Investment Company Act receives for service as a member of the
Board of all six of such companies an annual director's fee of $44,000, and an
additional fee of $1,000 per regular Board meeting attended and $500 per special
Board meeting and committee meeting attended. In addition, those directors who
are not "interested persons" and serve as chairman of a committee of the Board
of Directors receive an additional $2,000 for such services. These fees and
expenses are divided among the six investment companies based upon their
relative net assets. Under the terms of the management agreement with the
manager, the funds are responsible for paying such fees and expenses. Set forth
below is the aggregate compensation paid for the periods indicated by the funds
and by the American Century family of funds as a whole to each Director who is
not an "interested person" as defined in the Investment Company Act.
Aggregate Total Compensation from
Compensation the American Century
Director from the corporation1 Family of Funds2
- ------------------------------------------------------------------------
Thomas A. Brown $243 $46,333
Robert W. Doering, M.D. 225 42,833
Linsley L. Lundgaard 244 46,333
Donald H. Pratt 234 44,667
Lloyd T. Silver, Jr. 233 44,333
M. Jeannine Strandjord 231 43,833
John M. Urie3 216 37,167
D. D. (Del) Hock3 27 8,833
- -----------------------------------------------------------------------
1 Includes compensation actually paid by the corporation from February 15,
1996 through November 30, 1996.
2 Includes compensation paid by the fifteen investment company members of the
American Century family of funds for the calendar year ended December 31,
1996.
3 Mr. Hock replaced Mr. Urie as an independent director effective October 31,
1996.
Statement of Additional Information 9
Those Directors who are "interested persons," as defined in the Investment
Company Act, receive no fee as such for serving as a Director. The salaries of
such individuals, who also are officers of the funds, are paid by the manager.
MANAGEMENT
A description of the responsibilities and method of compensation of the
funds' investment manager, American Century Investment Management, Inc., appears
in the Prospectus under the caption "Management."
During the period ended November 30, 1996, the management fees of the
manager were:
For the period ended
Fund November 30, 1996
- ------------------------------------------------------------------
Strategic Allocation: Conservative
Management fees $ 118,774
Average net assets 16,741,548
Strategic Allocation: Moderate
Management fees 292,871
Average net assets 34,070,475
Strategic Allocation: Aggressive
Management fees 217,333
Average net assets 24,464,346
- ------------------------------------------------------------------
The Advisor Class of the funds commenced operations on October 2, 1996. The
management fees shown above include $4,575 paid on Advisor Class shares of
Strategic Allocation: Conservative, $9,815 paid on Advisor Class shares of
Strategic Allocation: Moderate and $8,332 paid on Advisor Class shares of
Strategic Allocation: Aggressive for the 59 day period ended November 30, 1996.
The management agreement shall continue in effect until the earlier of the
expiration of two years from the date of its execution or until the first
meeting of shareholders following such execution and for as long thereafter as
its continuance is specifically approved at least annually by (i) the funds'
Board of Directors, or by the vote of a majority of outstanding votes (as
defined in the Investment Company Act) and (ii) by the vote of a majority of the
Directors of the funds who are not parties to the agreement or interested
persons of the manager, cast in person at a meeting called for the purpose of
voting on such approval.
The management agreement provides that it may be terminated at any time
without payment of any penalty by the funds' Board of Directors, or by a vote of
a majority of the funds' shareholders, on 60 days' written notice to the
manager, and that it shall be automatically terminated if it is assigned.
The management agreement provides that the manager shall not be liable to
the funds or its shareholders for anything other than willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and duties.
The management agreement also provides that the manager and its officers,
directors and employees may engage in other business, devote time and attention
to any other business whether of a similar or dissimilar nature, and render
services to others.
Certain investments may be appropriate for the funds and also for other
clients advised by the manager. Investment decisions for the funds and other
clients are made with a view to achieving their respective investment objectives
after consideration of such factors as their current holdings, availability of
cash for investment, and the size of their investment generally. A particular
security may be bought or sold for only one client or series, or in different
amounts and at different times for more than one but less than all clients or
series. In addition, purchases or sales of the same security may be made for two
or more clients or series on the same date. Such transactions will be allocated
among clients in a manner believed by the manager to be equitable to each. In
some cases this procedure could have an adverse effect on the price or amount of
the securities purchased or sold by a fund.
The manager may aggregate purchase and sale orders of the funds with
purchase and sale orders of its other clients when the manager believes that
such aggregation provides the best execution for the funds. The funds' Board of
Directors has approved the policy of the manager with respect to the aggregation
of portfolio transactions. Where portfolio transactions have been aggregated,
the funds participate at the average share price for all transactions in that
security on a given day and share transaction costs on a pro rata basis. The
manager will not aggregate portfolio transactions of the funds unless it
believes such aggregation is consistent with its duty to seek best execution on
behalf of the funds and the terms of the management agreement. The manager
receives no additional compensation or remuneration as a result of such
aggregation.
10 American Century Investments
In addition to managing the funds, on February 28, 1997, the manager was
also acting as an investment adviser to 12 institutional accounts and to five
registered investment companies, American Century Mutual Funds, Inc., American
Century World Mutual Funds, Inc., American Century Premium Reserves, Inc., TCI
Portfolios, Inc. and American Century Capital Portfolios, Inc.
American Century Services Corporation provides physical facilities,
including computer hardware and software and personnel, for the day-to-day
administration of the funds and of the manager. The manager pays American
Century Services Corporation for such services.
As stated in the Prospectus, all of the stock of American Century Services
Corporation and American Century Investment Management, Inc. is owned by
American Century Companies, Inc.
CUSTODIANS
The Chase Manhattan Bank, 770 Broadway, 10th floor, New York, New York
10003-9598, Commerce Bank, N.A., 1000 Walnut, Kansas City, Missouri 64105, and
United Missouri Bank of Kansas City, N.A., 10th and Grand, Kansas City, Missouri
64105, each serves as custodian of assets of the funds. The custodians take no
part in determining the investment policies of the funds or in deciding which
securities are purchased or sold by the funds. The funds, however, may invest in
certain obligations of the custodians and may purchase or sell certain
securities from or to the custodians.
INDEPENDENT AUDITORS
At a meeting held on December 12, 1996, the Board of Directors of the
corporation appointed Deloitte & Touche LLP, 1010 Grand Avenue, Kansas City,
Missouri 64106, as the independent auditors of the funds to examine the
financial statements of the funds for the fiscal year ending November 30, 1997.
The appointment of Deloitte & Touche was recommended by the Audit Committee of
the Board of Directors. As the independent auditors of the funds, Deloitte &
Touche will provide services including (1) audit of the annual financial
statements, (2) assistance and consultation in connection with SEC filings and
(3) review of the annual federal income tax return filed for each fund by
American Century.
Ernst & Young LLP, One Kansas City Place, 1200 Main Street, Kansas City,
Missouri 64105, served as independent auditors for the funds for the period
ended November 30, 1996.
CAPITAL STOCK
The funds' capital stock is described in the Prospectus under the heading
"Further Information About American Century."
The corporation currently has three series of shares outstanding. Each
series of shares is further divided into three classes. The funds may in the
future issue one or more additional series or class of shares without a vote of
the shareholders. The assets belonging to each series or class of shares are
held separately by the custodian and the shares of each series or class
represent a beneficial interest in the principal, earnings and profits (or
losses) of investment and other assets held for that series or class. Your
rights as a shareholder are the same for all series or classes of securities
unless otherwise stated. Within their respective series or class, all shares
will have equal redemption rights. Each share, when issued, is fully paid and
non-assessable. Each share, irrespective of series or class, is entitled to one
vote for each dollar of net asset value represented by such share on all
questions.
In the event of complete liquidation or dissolution of the funds,
shareholders of each series or class of shares will be entitled to receive, pro
rata, all of the assets less the liabilities of that series or class.
As of February 28, 1997, in excess of 5% of the outstanding shares of the
following funds were owned of record by:
Name of Shareholder
Fund and Percentage
- ----------------------------------------------------------------------------
Strategic Allocation:
Conservative American Century Companies, Inc. - 33.5%
The Chase Manhattan Bank NA Trustee
GEC-USA Employees Savings and Investment
Trust - 17.8%
James B. Anderson Trustee American Chamber
of Commerce Executives Amended & Restated
MPP Plan and Trust - 6.2%
Strategic Allocation:
Moderate The Chase Manhattan Bank NA Trustee GEC-
USA Employees Savings and Investment
Trust - 20.7%
Statement of Additional Information 11
Name of Shareholder
Fund and Percentage
- ----------------------------------------------------------------------------
Strategic Allocation:
Moderate UMB Bank NA Trustee Lincare Inc. Employees
Salary Reduction Thrift Plan and Trust- 5.7%
Chase Manhattan Bank NA Trustee Hazeltine
Corporation and Subsidiaries Companies
Ret/Savings Plan and Trust - 5.1%
Strategic Allocation:
Aggressive The Chase Manhattan Bank NA Trustee GEC-
USA Employees Savings and Investment
Trust - 22.3%
James B. Anderson Trustee American Chamber
of Commerce Executives Amended & Restated
MPP Plan and Trust - 5.5%
- ----------------------------------------------------------------------------
MULTIPLE CLASS STRUCTURE
The funds' Board of Directors has adopted a multiple class plan (the
"Multiclass Plan") pursuant to Rule 18f-3 adopted by the Securities and Exchange
Commission ("SEC"). Pursuant to such plan, the funds may issue up to three
classes of shares: an Investor Class, a Service Class and an Advisor Class.
The Investor Class is made available to investors directly by the
investment manager through its affiliated broker dealer, American Century
Investment Services, Inc., for a single unified management fee, without any load
or commission. The Service and Advisor Classes are made available to
institutional shareholders or through financial intermediaries that do not
require the same level of shareholder and administrative services from the
manager as Investor Class shareholders. As a result, the manager is able to
charge these classes a lower management fee. In addition to the management fee,
however, Service Class shares are subject to a Shareholder Services Plan
(described below), and the Advisor Class shares are subject to a Master
Distribution and Shareholder Services Plan (also described below). Both plans
have been adopted by the funds' Board of Directors and initial shareholder in
accordance with Rule 12b-1 adopted by the SEC under the Investment Company Act.
Rule 12b-1
Rule 12b-1 permits an investment company to pay expenses associated with
the distribution of its shares in accordance with a plan adopted by the
investment company's Board of Directors and approved by its shareholders.
Pursuant to such rule, the Board of Directors and initial shareholder of the
funds' Service Class and Advisor Class have approved and entered into a
Shareholder Services Plan, with respect to the Service Class, and a Master
Distribution and Shareholder Services Plan, with respect to the Advisor Class
(collectively, the "Plans"). Both Plans are described below.
In adopting the Plans, the Board of Directors (including a majority of
directors who are not "interested persons" of the funds (as defined in the
Investment Company Act), hereafter referred to as the "independent directors")
determined that there was a reasonable likelihood that the Plans would benefit
the funds and the shareholders of the affected classes. Pursuant to Rule 12b-1,
information with respect to revenues and expenses under the Plans is presented
to the Board of Directors quarterly for its consideration in connection with its
deliberations as to the continuance of the Plans. Continuance of the Plans must
be approved by the Board of Directors (including a majority of the independent
directors) annually. The Plans may be amended by a vote of the Board of
Directors (including a majority of the independent directors), except that the
Plans may not be amended to materially increase the amount to be spent for
distribution without majority approval of the shareholders of the affected
class. The Plans terminate automatically in the event of an assignment and may
be terminated upon a vote of a majority of the independent directors or by vote
of a majority of the outstanding voting securities of the affected class.
All fees paid under the plans will be made in accordance with Section 26 of
the Rules of Fair Practice of the National Association of Securities Dealers.
Shareholder Services Plan
As described in the Prospectus, the funds' Service Class of shares are made
available to participants in employer-sponsored retirement or savings plans and
to persons purchasing through financial intermediaries, such as banks,
broker-dealers and insurance companies. In such circumstances, certain
recordkeeping and administrative services that are provided by the funds'
transfer agent for the Investor Class shareholders may be performed by a plan
sponsor (or its agents) or by a financial intermediary. To enable the funds'
shares to be made available through such plans
12 American Century Investments
and financial intermediaries, and to compensate them for such services, the
funds' investment manager has reduced its management fee by 0.25% per annum with
respect to the Service Class shares and the funds' Board of Directors has
adopted a Shareholder Services Plan. Pursuant to the Shareholder Services Plan,
the Service Class shares pay a shareholder services fee of 0.25% annually of the
aggregate average daily net assets of the funds' Service Class shares.
American Century Investment Services, Inc. (the "Distributor") enters into
contracts with each financial intermediary for the provision of certain
shareholder services and utilizes the shareholder services fees under the
Shareholder Services Plan to pay for such services. Payments may be made for a
variety of shareholder services, including, but are not limited to, (1)
receiving, aggregating and processing purchase, exchange and redemption request
from beneficial owners (including contract owners of insurance products that
utilize the funds as underlying investment medium) of shares and placing
purchase, exchange and redemption orders with the Distributor; (2) providing
shareholders with a service that invests the assets of their accounts in shares
pursuant to specific or pre-authorized instructions; (3) processing dividend
payments from a fund on behalf of shareholders and assisting shareholders in
changing dividend options, account designations and addresses; (4) providing and
maintaining elective services such as check writing and wire transfer services;
(5) acting as shareholder of record and nominee for beneficial owners; (6)
maintaining account records for shareholders and/or other beneficial owners; (7)
issuing confirmations of transactions; (8) providing subaccounting with respect
to shares beneficially owned by customers of third parties or providing the
information to a fund as necessary for such subaccounting; (9) preparing and
forwarding shareholder communications from the funds (such as proxies,
shareholder reports, annual and semi-annual financial statements and dividend,
distribution and tax notices) to shareholders and/or other beneficial owners;
(10) providing other similar administrative and sub-transfer agency services;
and (11) paying "service fees" for the provision of personal, continuing
services to investors, as contemplated by the Rules of Fair Practice of the NASD
(collectively referred to as "Shareholder Services"). Shareholder Services do
not include those activities and expenses that are primarily intended to result
in the sale of additional shares of the funds.
Master Distribution and Shareholder Services Plan
As described in the Prospectus, the funds' Advisor Class of shares are also
made available to participants in employer-sponsored retirement or savings plans
and to persons purchasing through financial intermediaries, such as banks,
broker-dealers and insurance companies. The Distributor enters into contracts
with various banks, broker dealers, insurance companies and other financial
intermediaries with respect to the sale of the funds' shares and/or the use of
the funds' shares in various investment products or in connection with various
financial services.
As with the Service Class, certain recordkeeping and administrative
services that are provided by the funds' transfer agent for the Investor Class
shareholders may be performed by a plan sponsor (or its agents) or by a
financial intermediary for shareholders in the Advisor Class. In addition to
such services, the financial intermediaries provide various distribution
services.
To enable the funds' shares to be made available through such plans and
financial intermediaries, and to compensate them for such services, the funds'
investment manager has reduced its management fee by 0.25% per annum with
respect to the Advisor Class shares and the funds' Board of Directors has
adopted a Master Distribution and Shareholder Services Plan (the "Distribution
Plan"). Pursuant to such Plan, the Advisor Class shares pay a fee of 0.50%
annually of the aggregate average daily net assets of the funds' Advisor Class
shares, 0.25% of which is paid for Shareholder Services (as described above) and
0.25% of which is paid for distribution services.
Distribution services include any activity undertaken or expense incurred
that is primarily intended to result in the sale of Advisor Class shares, which
services may include but are not limited to, (1) the payment of sales
commission, ongoing commissions and other payments to brokers, dealers,
financial institutions or others who sell Advisor Class shares pursuant to
Selling Agreements; (2) compensation to registered representatives or other
employees of Distributor who engage in or support distribution of the funds'
Advisor
Statement of Additional Information 13
Class shares; (3) compensation to, and expenses (including overhead and
telephone expenses) of, Distributor; (4) the printing of prospectuses,
statements of additional information and reports for other than existing
shareholders; (5) the preparation, printing and distribution of sales literature
and advertising materials provided to the funds' shareholders and prospective
shareholders; (6) receiving and answering correspondence from prospective
shareholders, including distributing prospectuses, statements of additional
information, and shareholder reports; (7) the providing of facilities to answer
questions from prospective investors about fund shares; (8) complying with
federal and state securities laws pertaining to the sale of fund shares; (9)
assisting investors in completing application forms and selecting dividend and
other account options; (10) the providing of other reasonable assistance in
connection with the distribution of fund shares; (11) the organizing and
conducting of sales seminars and payments in the form of transactional
compensation or promotional incentives; (12) profit on the foregoing; (13) the
payment of "service fees" for the provision of personal, continuing services to
investors, as contemplated by the Rules of Fair Practice of the NASD and (14)
such other distribution and services activities as the manager determines may be
paid for by the funds pursuant to the terms of this Agreement and in accordance
with Rule 12b-1 of the Investment Company Act.
TAXES
Each fund has elected to be taxed under Subchapter M of the Internal
Revenue Code as a regulated investment company. If they qualify, they will not
be subject to U.S. federal income tax on net ordinary income and net capital
gains, which are distributed to its shareholders within certain time periods
specified in the Code. Amounts not distributed on a timely basis would be
subject to federal and state corporate income tax and to a nondeductible 4%
excise tax.
Distributions by the funds from net investment income and net short-term
capital gains are taxable to shareholders as ordinary income. The dividends
received deduction available to corporate shareholders for dividends received
from a fund will apply to ordinary income distributions only to the extent that
they are attributable to the fund's dividend income from U.S. corporations. In
addition, the dividends received deduction will be limited if the shares with
respect to which the dividends are received are treated as debt-financed or are
deemed to have been held less than 46 days by a fund.
Distributions from net long-term capital gains are taxable to a shareholder
as long-term capital gains regardless of the length of time the shares on which
such distributions are paid have been held by the shareholder. However,
shareholders should note that any loss realized upon the sale or redemption of
shares held for six months or less will be treated as a long-term capital loss
to the extent of any distribution of long-term capital gain to the shareholder
with respect to such shares.
Redemption of shares of a fund will be a taxable transaction for federal
income tax purposes and shareholders will generally recognize gain or loss in an
amount equal to the difference between the basis of the shares and the amount
received. Assuming that shareholders hold such shares as a capital asset, the
gain or loss will be a capital gain or loss and will generally be long term if
shareholders have held such shares for a period of more than one year. If a loss
is realized on the redemption of fund shares, the reinvestment in additional
fund shares within 30 days before or after the redemption may be subject to the
"wash sale" rules of the Internal Revenue Code, resulting in a postponement of
the recognition of such loss for federal income tax purposes.
In addition to the federal income tax consequences described above relating
to an investment in shares of the funds, there may be other federal, state or
local tax considerations that depend upon the circumstances of each particular
investor. Prospective shareholders are therefore urged to consult their tax
advisors with respect to the effect of this investment on their own situations.
BROKERAGE
Under the management agreement between the funds and the manager, the
manager has the responsibility of selecting brokers to execute portfolio
transactions. The funds' policy is to secure the most favorable prices and
execution of orders on its portfolio transactions. So long as that policy is
met, the manager may take into consideration the factors discussed under this
caption when selecting brokers.
14 American Century Investments
The manager receives statistical and other information and services without
cost from brokers and dealers. The manager evaluates such information and
services, together with all other information that it may have, in supervising
and managing the investments of the funds. Because such information and services
may vary in amount, quality and reliability, their influence in selecting
brokers varies from none to very substantial. The manager proposes to continue
to place some of the funds' brokerage business with one or more brokers who
provide information and services. Such information and services will be in
addition to and not in lieu of the services required to be performed by the
manager. The manager does not utilize brokers who provide such information and
services for the purpose of reducing the expense of providing required services
to the funds.
In the period from February 15, 1996 (inception) through November 30, 1996,
brokerage commissions paid by each fund were as follows:
Period ended
Fund November 30, 1996
- ----------------------------------------------------------------
Strategic Allocation: Conservative $22,060
Strategic Allocation: Moderate 81,203
Strategic Allocation: Aggressive 74,216
- ----------------------------------------------------------------
The brokerage commissions paid by the funds may exceed those that another
broker might have charged for effecting the same transactions because of the
value of the brokerage and/or research services provided by the broker. Research
services furnished by brokers through whom the funds effect securities
transactions may be used by the manager in servicing all of its accounts, and
not all such services may be used by the manager in managing the portfolios of
the funds.
The staff of the SEC has expressed the view that the best price and
execution of over-the-counter transactions in portfolio securities may be
secured by dealing directly with principal market makers, thereby avoiding the
payment of compensation to another broker. In certain situations, the officers
of the funds and the manager believe that the facilities, expert personnel and
technological systems of a broker enable the funds to secure as good a net price
by dealing with a broker instead of a principal market maker, even after payment
of the compensation to the broker. The funds normally place their
over-the-counter transactions with principal market makers but also may deal on
a brokerage basis when utilizing electronic trading networks or as circumstances
warrant.
PERFORMANCE ADVERTISING
Fund Performance
Individual fund performance may be compared to various indices including
the Standard & Poor's (S&P) 500 Index, the Dow Jones Industrial Average, the
Lehman Aggregate Bond Index and the Three-Month Treasury Bill Index.
Average annual total return is calculated by determining each fund's
cumulative total return for the stated period and then computing the annual
compound return that would produce the cumulative total return if the fund's
performance had been constant over that period. The following table sets forth
the cumulative total return since inception for the Investor Class of the funds
for the period from February 15, 1996 through November 30, 1996. Cumulative
total return includes all elements of return, including reinvestment of
dividends and capital gains distribution. Annualization of a fund's return
assumes that the partial year performance will be constant throughout the
period. Actual return through the period may be greater or less than the
annualized data.
Fund Cumulative Total Return1
- -----------------------------------------------------------------------
Strategic Allocation: Conservative 7.02%
Strategic Allocation: Moderate 9.91%
Strategic Allocation: Aggressive 10.60%
- -----------------------------------------------------------------------
1For the period February 15, 1996 (inception) through November 30, 1996.
The funds also may elect to advertise cumulative total return and average
annual total return, computed as described above, over periods of time other
than one, five and 10 years and cumulative total return over various time
periods.
Additional Performance Comparisons
Investors may judge the performance of the funds by comparing their
performance to the performance of other mutual funds or mutual fund portfolios
with comparable investment objectives and policies through various mutual fund
or market indices such as those prepared by Dow Jones & Co., Inc. Standard &
Poor's Corporation, Shearson Lehman Brothers, Inc., J. P. Morgan & Company,
Salomon Brothers, Inc.,
Statement of Additional Information 15
the Morgan Stanley Capital International EAFE (Europe, Australia and Far East)
Index, Donoghue's Money Fund Average, the Bank Rate Monitor National Index of
21/2-year CD rates, IFC Global Composite Index, and to composite indices
consisting of two or more of the above to more accurately reflect fund holdings,
and to data prepared by Lipper Analytical Services, Inc. or Morningstar, Inc.,
and to the Consumer Price Index. Comparisons may also be made to indices or data
published in Money Magazine, Forbes, Barron's, The Wall Street Journal, The New
York Times, Business Week, Pensions and Investments, U.S.A. Today, and other
similar publications or services. In addition to performance information,
general information about the funds that appears in a publication such as those
mentioned above or in the Prospectus under the heading "Performance Advertising"
may be included in advertisements and in reports to shareholders.
Permissible Advertising Information
From time to time, the funds may, in addition to any other permissible
information, include the following types of information in advertisements,
supplemental sales literature and reports to shareholders:
(1) discussions of general economic or financial principles (such as the
effects of compounding and the benefits of dollar-cost averaging);
(2) discussions of general economic trends;
(3) presentations of statistical data to supplement such discussions;
(4) descriptions of past or anticipated portfolio holdings for one or more of
the funds;
(5) descriptions of investment strategies for one or more of the funds;
(6) descriptions or comparisons of various savings and investment products
(including, but not limited to, qualified retirement plans and individual
stocks and bonds). which may or may not include the funds;
(7) comparisons of investment products (including the funds) with relevant
market or industry indices or other appropriate benchmarks;
(8) discussions of fund rankings or ratings by recognized ratings
organizations; and
(9) testimonials describing the experience of persons that have invested in one
or more of the funds.
The funds may also include calculations, such as hypothetical compounding
examples, which describe hypothetical investment results in such communications.
Such performance examples will be based on an express set of assumptions and are
not indicative of the performance of any of the funds.
REDEMPTIONS IN KIND
The funds' policy with regard to large redemptions is described in detail
in the Prospectus under the heading "Special Requirements for Large
Redemptions."
The funds have elected to be governed by Rule 18f-1 under the Investment
Company Act of 1940, pursuant to which the funds are obligated to redeem shares
solely in cash up to the lesser of $250,000 or 1% of the net asset value of a
fund during any 90-day period for any one shareholder. If shares are redeemed in
kind, the redeeming shareholder might incur brokerage costs in converting the
assets to cash. The securities delivered will be selected at the sole discretion
of the manager and will not necessarily be representative of the entire
portfolio and will be securities that the manager regards as least desirable.
The method of valuing securities used to make redemptions in kind will be the
same as the method of valuing portfolio securities described in the Prospectus
under the heading "How Share Price is Determined," and such valuation will be
made as of the same time the redemption price is determined.
HOLIDAYS
The funds do not determine the net asset value of its shares on days when
the New York Stock Exchange is closed. Currently, the Exchange is closed on
Saturdays and Sundays and on holidays, namely New Year's Day, Presidents' Day,
Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving and
Christmas.
FINANCIAL STATEMENTS
The financial statements of the funds for the period February 15, 1996
(inception) to November 30, 1996, are included in the annual report to
shareholders for that period which is incorporated herein by reference. You may
receive copies of the annual report without charge upon request to the funds at
the
16 American Century Investments
address and phone number shown on page 1 of this Statement of Additional
Information.
Statement of Additional Information 17
P.O. Box 419200
Kansas City, Missouri
64141-6200
Person-to-person assistance:
1-800-345-2021 or 816-531-5575
Automated Information Line:
1-800-345-8765
Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865
Fax: 816-340-7962
Internet: www.americancentury.com
[American Century logo]
American
Century(sm)
9703 [recycled logo]
SH-BKT-8223 Recycled
<PAGE>
PART C. OTHER INFORMATION.
ITEM 24. Financial Statements and Exhibits
(a) Financial Statements
(i) Financial Statements filed in Part A of the Registration
Statement:
1. Financial Highlights
(ii) Financial Statements filed in Part B of the Registration
Statement (each of the following financial statements is
contained in the Registrant's Annual Report dated November
30, 1996, and which is incorporated by reference into Part B
of this Registration Statement):
1. Statements of Assets and Liabilities at November 30,
1996.
2. Statements of Operations for the year ended November
30, 1996.
3. Statements of Changes in Net Assets for the year ended
November 30, 1996.
4. Notes to Financial Statements as of November 30, 1996.
5. Schedule of Investments as of November 30, 1996.
6. Report of Independent Certified Public Accountants
dated January 3, 1997.
(b) Exhibits (all exhibits not filed herewith are being incorporated
herein by reference).
1. (a) Articles of Incorporation of Twentieth Century
Strategic Asset Allocations, Inc.(filed electronically
as an exhibit to Pre-Effective Amendment No. 3 on Form
N-1A on December 1, 1995, File No. 33-79482).
(b) Articles of Amendment of Twentieth Century Strategic
Asset Allocations, Inc., dated November 28, 1995 (filed
electronically as an exhibit to Pre-Effective Amendment
No. 3 on Form N-1A on December 1, 1995, File No.
33-79482).
(c) Articles Supplementary of Twentieth Century Strategic
Asset Allocations, Inc., dated December 28, 1995 (filed
electronically as an exhibit to Pre-Effective Amendment
No. 4 on Form N-1A on February 5, 1996, File No.
33-79482).
(d) Articles of Amendment of Twentieth Century Strategic
Asset Allocations, Inc., dated January 30, 1996 (filed
electronically as an exhibit to Pre-Effective Amendment
No. 4 on Form N-1A on February 5, 1996, File No.
33-79482).
(e) Articles Supplementary of Twentieth Century Strategic
Asset Allocations, Inc., dated January 30, 1996 (filed
electronically as an exhibit to Pre-Effective Amendment
No. 4 on Form N-1A on February 5, 1996, File No.
33-79482).
(f) Articles of Amendment of Twentieth Century Strategic
Asset Allocations, Inc., dated December 2, 1996 (filed
herewith as EX-99.B1f).
(g) Articles Supplementary of American Century Strategic
Asset Allocations, Inc., dated December 2, 1996 (filed
herewith as EX-99.B1g).
2. By-Laws of Twentieth Century Strategic Asset Allocations,
Inc (filed electronically as an exhibit to Pre-Effective
Amendment No. 3 on Form N-1A on December 1, 1995, File No.
33-79482).
3. Voting Trust Agreements:
NONE
4. Specimen copy of stock certificate - all series(filed
herewith as EX-99.B4).
5. (a) Management Agreement, dated as of February 1, 1996, by
and between Twentieth Century Strategic Asset
Allocations, Inc. and Investors Research Corporation
(filed electronically as an exhibit to Pre-Effective
Amendment No. 4 on Form N-1A on February 5, 1996, File
No. 33-79482).
(b) Management Agreement - Advisor Class between Twentieth
Century Strategic Asset Allocations, Inc. and Investors
Research Corporation dated September 1, 1996 (filed
electronically as an Exhibit to Post-Effective
Amendment No. 1 on Form N-1A on August 14, 1996, File
No. 33-79482).
(c) Management Agreement - Service Class between Twentieth
Century Strategic Asset Allocations, Inc. and Investors
Research Corporation dated September 1, 1996 (filed
electronically as an Exhibit to Post-Effective
Amendment No. 1 on Form N-1A on August 14, 1996, File
No. 33-79482).
6. Distribution Agreement between TCI Portfolios, Inc.,
Twentieth Century Capital Portfolios, Inc., Twentieth
Century Investors, Inc., Twentieth Century Premium Reserves,
Inc., Twentieth Century Strategic Asset Allocations, Inc.,
Twentieth Century World Investors, Inc., and Twentieth
Century Securities, Inc. dated September 3, 1996 (filed
electronically as an exhibit to Post-Effective Amendment No.
75 on form N-1A of Twentieth Century Investors, Inc., File
No. 2-14213).
7. Bonus and Profit Sharing Plan, Etc.:
NONE
8. (a) Custodian Agreement, dated as of February 1, 1996, by
and between Twentieth Century Strategic Asset
Allocations, Inc. and The Chase Manhattan Bank, N.A.
(filed electronically as an exhibit to Pre-Effective
Amendment No. 4 on Form N-1A on February 5, 1996, File
No. 33-79482).
(b) Custody Agreement, dated September 12, 1995, by and
among United Missouri Bank of Kansas City, N.A.,
Investors Research Corporation, Twentieth Century
Investors, Inc., Twentieth Century World Investors,
Inc., Twentieth Century Premium Reserves, Inc., and
Twentieth Century Capital Portfolios, Inc. (filed
electronically as an exhibit to Pre-Effective Amendment
No. 4 on Form N-1A on February 5, 1996, File No.
33-79482).
(c) Amendment No. 1 to Custody Agreement, dated January 25,
1996, by and among the United Missouri Bank of Kansas
City, N.A., Investors Research Corporation, Twentieth
Century Investors, Inc., Twentieth Century World
Investors, Inc., Twentieth Century Premium Reserves,
Inc., Twentieth Century Capital Portfolios, Inc., and
Twentieth Century Strategic Asset Allocations, Inc.
(filed electronically as an exhibit to Pre-Effective
Amendment No. 4 on Form N-1A on February 5, 1996, File
No. 33-79482).
(d) Custodian Agreement for ACH transactions, dated as of
February 1, 1996, by and between Twentieth Century
Strategic Asset Allocations, Inc. and United Missouri
Bank of Kansas City, N.A. (filed electronically as an
exhibit to Pre-Effective Amendment No. 4 on Form N-1A
on February 5, 1996, File No. 33-79482).
(e) Global Custody Agreement between The Chase Manhattan
Bank and The Twentieth Century and Benham Funds, dated
August 9, 1996 (filed electronically as an Exhibit to
Post-Effective Amendment No. 31 on Form N1-A of
American Century Government Income Trust, File No.
2-99222).
(f) Master Agreement between Commerce Bank, N.A. and
Twentieth Century Services, Inc. dated January 22, 1997
(filed electronically as an Exhibit to Post-Effective
Amendment No. 76 on Form N-1A of American Century
Mutual Funds, Inc., File No. 2-14213).
9. Transfer Agency Agreement, dated as of February 1, 1996, by
and between Twentieth Century Strategic Asset Allocations,
Inc. and Twentieth Century Services, Inc. (filed
electronically as an exhibit to Pre-Effective Amendment No.
4 on Form N-1A on February 5, 1996, File No. 33-79482).
10. Opinion and Consent of Counsel (filed herewith as
EX-99.B10).
11. Consent of Ernst & Young LLP (filed herewith as EX-99.B11).
12. Annual Report dated November 30, 1996 (filed electronically
on January 29, 1997).
13. Agreements of Initial Capital, Etc.:
NONE
14. Model Retirement Plans (filed on May 6, 1991, as Exhibits
14(a)-(d) to Pre-Effective Amendment No.2 to the
Registration Statement on Form N-1A of Twentieth Century
World Investors, Inc., File No. 33-39242).
15. (a) Master Distribution and Shareholder Services Plan of
Twentieth Century Capital Portfolios, Inc. Twentieth
Century Investors, Inc., Twentieth Century Strategic
Asset Allocations, Inc. and Twentieth Century World
Investors, Inc. (Advisor Class) dated September 3, 1996
(filed electronically as an exhibit to Post-Effective
Amendment No. 75 on Form N-1A of Twentieth Century
Investors, Inc., File No. 2-14213).
(b) Shareholder Services Plan of Twentieth Century Capital
Portfolios, Inc., Twentieth Century Investors, Inc.,
Twentieth Century Strategic Asset Allocations, Inc.,
and Twentieth Century World Investors, Inc. (Service
Class) dated September 3, 1996 (filed electronically
as an exhibit to Post-Effective Amendment No. 75 on
Form N-1A of Twentieth Century Investors, Inc., File
No. 2-14213).
16. Schedule of Computation for Performance Advertising
Quotations (filed herewith as EX-99.B19).
17. Power of Attorney (filed herewith as EX-99.B17).
18. Multiple Class Plan of Twentieth Century Capital Portfolios,
Inc., Twentieth Century Investors, Inc., Twentieth Century
Strategic Asset Allocations, Inc. and Twentieth Century
World Investors, Inc. dated September 3, 1996, (filed
electronically as an exhibit to Post-Effective Amendment
No. 75 on Form N-1A of Twentieth Century Investors, Inc.,
File No. 2-14213).
27. (a) Financial Data Schedule for Strategic Allocation:
Conservative (filed herewith as EX-27.7.1).
(b) Financial Data Schedule for Strategic Allocation:
Moderate (filed herewith as Ex-27.7.2).
(c) Financial Data Schedule for Strategic Allocation:
Aggressive (filed herewith as Ex-27.7.3).
ITEM 25. Persons Controlled by or Under Common Control with Registrant:
NONE
ITEM 26. Number of Holders of Securities:
Number of Record Holders
As of February 28, 1997
Investor Institutional Advisor
Title of Series Class Class Class
- --------------- ---------------------------------------
Strategic Allocation: Conservative 810 0 1
Strategic Allocation: Moderate 2,756 0 1
Strategic Allocation: Aggressive 4,748 0 1
ITEM 27. Indemnification.
The Registrant is a Maryland corporation. Section 2-418 of the
Maryland General Corporation Law allows a Maryland corporation
to indemnity its officers, directors, employees and agents to
the extent provided in such statute.
Article Ninth of the Registrant's Articles of Incorporation,
Exhibit 1, requires the indemnification of the Registrant's
directors and officers to the extent permitted by Section
2-418 of the Maryland General Corporation Law, the Investment
Company Act of 1940 and all other applicable laws.
The Registrant intends to purchase an insurance policy
insuring its officers and directors against certain
liabilities that such officers and directors may incur while
acting in such capacities and providing reimbursement to the
Registrant for sums which it may be permitted or required to
pay to its officers and directors by way of indemnification
against such liabilities, subject in either case to clauses
respecting deductibility and participation.
ITEM 28. Business and Other Connections of Investment Advisor.
American Century Investment Management, Inc., the investment
advisor, is engaged in the business of managing investments for
registered investment companies, deferred compensation plans and
other institutional investors.
ITEM 29 Principal Underwriters.
(a) The Registrant's distribution agent, American Century
Investment Services, Inc., is distribution agent to:
Capital Preservation Fund, Inc.
Capital Preservation Fund II, Inc.
American Century California Tax-Free and Municipal Funds
American Century Government Income Trust
American Century Municipal Trust
American Century Target Maturities Trust
Benham Equity Funds
American Century International Funds
American Century Investment Trust
American Century Manager Funds
TCI Portfolios, Inc.
American Century Capital Portfolios, Inc.
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century World Mutual Funds, Inc.
<TABLE>
<S> <C> <C>
(b) (1) (2) (3)
Name and Principal Business Positions and Offices with Positions and Offices with
Address* Underwriter Registrant
J. Stowers Jr. Director, Chairman & President Director, Chairman
J. Stowers III Director, Chief Executive Officer Director, President & Chief Executive
Officer
Dennis von Waaden Director none
B. Lyons Chief Operating Officer, Executive Executive Vice President, Secretary
Vice President & General Counsel & General Counsel
B. Jackson Executive Vice President, Chief Executive Vice President & Chief
Financial Officer & Treasurer Financial Officer
G. Snyder Executive Vice President none
S. Barney Senior Vice President none
B. Jeter Senior Vice President none
T. Kmak Senior Vice President none
J. Rogers Senior Vice President none
D. Darfler Vice President none
S. Dillman Vice President none
R. Gernstetter Vice President none
D. Hughes Vice President none
M. Killen Vice President none
D. Larabee Vice President none
J. Lopez Vice President none
B. Mayhew Vice President none
M. Miller Vice President none
M. Robinson Vice President none
J. Stifler Vice President none
D. Swan Vice President none
J. Szablewski Vice President none
E. Bur Chief Accounting Officer none
C. Etherington Assistant Secretary Assistant Secretary
P. Looby Assistant Secretary Vice President & Assistant Secretary
D. Reinmiller Assistant Secretary Assistant Secretary
W. Welte Assistant Secretary none
M. Roepke Assistant Treasurer Vice President,Treasurer &
Chief Accounting Officer
----------------
* All addresses are 4500 Main Street, Kansas City, MO 64111
(c) NONE.
</TABLE>
ITEM 30. Location of Accounts and Records.
All accounts, books and other documents required to be maintained
by Section 31(a) of the 1940 Act, and the rules promulgated
thereunder, are in the possession of Registrant, American Century
Services Corporation and American Century Investment Management,
Inc., all located at 4500 Main Street, Kansas City, Missouri
64111.
ITEM 31. Management Services:
NONE
ITEM 32. Undertakings.
(a) None.
(b) None.
(c) The Registrant hereby undertakes to furnish each person to
whom a prospectus is delivered with a copy of the
Registrant's latest annual report to shareholders, upon
request and without charge.
(d) The Registrant hereby undertakes that it will, if requested
to do so by the holders of at least 10% of the Registrant's
outstanding votes, call a meeting of shareholders for the
purpose of voting upon the question of the removal of a
director and to assist in communication with other
shareholders as required by Section 16(c).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant has duly caused this
Post-Effective Amendment No. 2 to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Kansas
City, State of Missouri on the 26th day of March, 1997.
American Century Strategic Asset
Allocations, Inc.
(Registrant)
By: /s/ James E. Stowers III
James E. Stowers III, President
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 2 has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
<S> <C> <C>
*James E. Stowers, Jr. Chairman of the Board, March 26, 1997
- ------------------------- Director and Principal
James E. Stowers, Jr. Executive Officer
/s/ James E. Stowers III President and Director March 26, 1997
- -------------------------
James E. Stowers, III
*Robert T. Jackson Executive Vice President-Finance March 26, 1997
- ------------------------- and Principal
Robert T. Jackson Financial Officer
*Maryanne Roepke Treasurer and Principal March 26, 1997
- ------------------------- Accounting Officer
Maryanne Roepke
*Thomas A. Brown Director March 26, 1997
- -------------------------
Thomas A. Brown
*Robert W. Doering, M.D. Director March 26, 1997
- -------------------------
Robert W. Doering, M.D.
*Linsley L. Lundgaard Director March 26, 1997
- -------------------------
Linsley L. Lundgaard
*Donald H. Pratt Director March 26, 1997
- -------------------------
Donald H. Pratt
*Lloyd T. Silver, Jr. Director March 26, 1997
- -------------------------
Lloyd T. Silver, Jr.
*M. Jeannine Strandjord Director March 26, 1997
- -------------------------
M. Jeannine Strandjord
*D. D. (Del) Hock Director March 26, 1997
- -------------------------
D. D. (Del) Hock
*By /s/ James E. Stowers III
James E. Stowers III
Attorney-in-Fact
</TABLE>
EXHIBIT INDEX
Exhibit Description of Document
Number
EX-99.B1a Articles of Incorporation of Twentieth Century Strategic Asset
Allocations, Inc. (filed electronically as Exhibit 1a to
Pre-Effective Amendment No. 3 on Form N-1A, filed on December 1,
1995, and incorporated herein by reference).
EX-99.B1b Articles of Amendment of Twentieth Century Strategic Asset
Allocations, Inc., dated November 28, 1995 (filed electronically
as Exhibit 1b to Pre-Effective Amendment No. 3 on Form N-1A, filed
December 1, 1995, and incorporated herein by reference).
EX-99.B1c Articles Supplementary of Twentieth Century Strategic Asset
Allocations, Inc., dated December 26, 1995 (filed electronically as
Exhibit 1c to Pre-Effective Amendment No. 4 on Form N-1A, filed on
February 5, 1996, and incorporated herein by reference).
EX-99.B1d Articles of Amendment of Twentieth Century Strategic Asset
Allocations, Inc., dated January 29, 1996 (filed electronically
as Exhibit 1d to Pre-Effective Amendment No. 4 on Form N-1A, filed
on February 5, 1996, and incorporated herein by reference).
EX-99.B1e Articles Supplementary of Twentieth Century Strategic Asset
Allocations, Inc., dated January 29, 1996 (filed electronically as
Exhibit 1e to Pre-Effective Amendment No. 4 on Form N-1A, filed on
February 5, 1996, and incorporated herein by reference).
EX-99.B1f Articles of Amendment of Twentieth Century Strategic Asset
Allocations, Inc., dated December 2, 1996.
EX-99.B1g Articles Supplementary of American Century Strategic Asset
Allocations, Inc., dated December 2, 1996.
EX-99.B2 By-Laws of Twentieth Century Strategic Asset Allocations, Inc.
(filed electronically as Exhibit 2 to Pre-Effective Amendment No. 3
on Form N-1A, filed December 1, 1995, and incorporated herein by
reference).
EX-99.B4 Specimen certificate representing shares of common stock of
American Century Strategic Asset Allocations, Inc.
EX-99.B5a Management Agreement, dated as of February 1, 1996, by and between
Twentieth Century Strategic Asset Allocations, Inc. and Investors
Research Corporation (filed electronically as Exhibit 5(a) to
Pre-Effective Amendment No. 4 on Form N-1A, filed February 5, 1996,
and incorporated herein by reference).
EX-99.B5b Management Agreement - Advisor Class between Twentieth Century
Strategic Asset Allocations, Inc. and Investors Research
Corporation dated September 1, 1996 (filed electronically as
Exhibit 5(b) to Post-Effective Amendment No. 1 on Form N-1A, filed
August 14, 1996, and incorporated herein by reference).
EX-99.B5c Management Agreement - Service Class between Twentieth Century
Strategic Asset Allocations, Inc. and Investors Research
Corporation dated September 1, 1996 (filed electronically as
Exhibit 5(c) to Post-Effective Amendment No. 1 on Form N-1A, filed
August 14, 1996, and incorporated herein by reference).
EX-99.B6 Distribution Agreement between TCI Portfolios, Inc., Twentieth
Century Capital Portfolios, Inc., Twentieth Century Investors,
Inc., Twentieth Century Premium Reserves, Inc., Twentieth Century
Strategic Asset Allocations, Inc., Twentieth Century World
Investors, Inc., and Twentieth Century Securities, Inc. dated
September 3, 1996 (filed electronically as Exhibit 6 to
Post-Effective Amendment No. 75 on form N-1A of Twentieth Century
Investors, Inc., File No. 2-14213, and incorporated herein by
reference).
EX-99.B8a Custodian Agreement, dated as of February 1, 1996, by and between
Twentieth Century Strategic Asset Allocations, Inc. and The Chase
Manhattan Bank, N.A. (filed electronically as Exhibit 8a to
Pre-Effective Amendment No. 4 on Form N-1A, filed February 5, 1996,
and incorporated herein by reference).
EX-99.B8b Custody Agreement, dated September 12, 1995, by and among United
Missouri Bank of Kansas City, N.A., Investors Research Corporation,
Twentieth Century Investors, Inc., Twentieth Century World
Investors, Inc., Twentieth Century Premium Reserves, Inc., and
Twentieth Century Capital Portfolios, Inc (filed electronically as
Exhibit 8c to Pre-Effective Amendment No. 4 on Form N-1A, filed
February 5, 1996, and incorporated herein by reference).
EX-99.B8c Amendment No. 1 to Custody Agreement, dated January 25, 1996, by
and among the United Missouri Bank of Kansas City, N.A., Investors
Research Corporation, Twentieth Century Investors, Inc., Twentieth
Century World Investors, Inc., Twentieth Century Premium Reserves,
Inc., Twentieth Century Capital Portfolios, Inc., and Twentieth
Century Strategic Asset Allocations, Inc. (filed as Exhibit 8e to
Pre-Effective Amendment No. 4 on Form N-1A, filed February 5, 1996,
and incorporated herein by reference).
EX-99.B8d Custodian Agreement for ACH transactions, dated as of February 1,
1996, by and between Twentieth Century Strategic Asset Allocations,
Inc. and United Missouri Bank of Kansas City, N.A. (filed
electronically as Exhibit 8d to Pre-Effective Amendment No. 4 on
Form N-1A, filed February 5, 1996, and incorporated herein by
reference).
EX-99.B8e Global Custody Agreement between The Chase Manhattan Bank and The
Twentieth Century and Benham Funds, dated August 9, 1996 (filed
electronically as an Exhibit to Post-Effective Amendment No. 31 on
Form N1-A of American Century Government Income Trust, File No.
2-99222, and incorporated herein by reference).
EX-99.B8f Master Agreement between Commerce Bank, N.A. and Twentieth Century
Services, Inc. dated January 22, 1997 (filed as Exhibit 8(d) to
Post-Effective Amendment No. 76 on Form N-1A of American Century
Mutual Funds, Inc., File No. 2-14213, and incorporated herein by
reference).
EX-99.B9 Transfer Agency Agreement, dated as of February 1, 1996, by and
between Twentieth Century Strategic Asset Allocations, Inc. and
Twentieth Century Services, Inc. (filed as Exhibit 9 to
Pre-Effective Amendment No. 4 on Form N-1A, filed February 5, 1996,
and incorporated herein by reference).
EX-99.B10 Opinion and Consent of Counsel.
EX-99.B11 Consent of Ernst & Young LLP.
EX-99.B12 Annual Report dated November 30, 1996 (filed electronically on
January 29, 1997, and incorporated herein by reference).
EX-99.B14 Model Retirement Plans (filed as Exhibits 14a, 14b, 14c, and 14d to
Pre-Effective Amendment No. 2 to the Registration Statement on Form
N-1A of Twentieth Century World Investors, Inc., File No. 33-39242,
and incorporated herein by reference).
EX-99.B15a Master Distribution and Shareholder Services Plan of Twentieth
Century Capital Portfolios, Inc., Twentieth Century Investors,
Inc., Twentieth Century Strategic Asset Allocations, Inc. and
Twentieth Century World Investors, Inc. (Advisor Class) dated
September 3, 1996 (filed electronically as Exhibit 15a to
Post-Effective Amendment No. 75 on Form N-1A of Twentieth Century
Investors, Inc., File No. 2-14213, and incorporated herein by
reference).
EX-99.B15b Shareholder Services Plan of Twentieth Century Capital Portfolios,
Inc., Twentieth Century Investors, Inc., Twentieth Century
Strategic Asset Allocations, Inc. and Twentieth Century World
Investors, Inc. (Service Class) dated September 3, 1996. (filed
electronically as Exhibit 15b to Post-Effective Amendment No. 75 on
Form N-1A of Twentieth Century Investors, Inc., File No. 2-14213,
and incorporated herein by reference).
EX-99.B16 Schedules for Computations of Advertising Performance Quotations.
EX-99.B17 Power of Attorney.
EX-99.B18 Multiple Class Plan of Twentieth Century Capital Portfolios, Inc.,
Twentieth Century Investors, Inc., Twentieth Century Strategic
Asset Allocations, Inc. and Twentieth Century World Investors, Inc.
dated September 3, 1996 (filed electronically as Exhibit 18 to
Post-Effective No. 75 on Form N-1A of Twentieth Century Investors,
Inc., File No. 2-14213, and incorporated herein by reference).
EX-27.7.1 Financial Data Schedule for Strategic Allocation: Conservative.
EX-27.7.2 Financial Data Schedule for Strategic Allocation: Moderate.
EX-27.7.3 Financial Data Schedule for Strategic Allocation: Aggressive.
ARTICLES OF AMENDMENT
OF
TWENTIETH CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
The undersigned, William M. Lyons, in accordance with the Maryland
General Corporation Law, does hereby certify that:
1. He is the duly elected Executive Vice President of Twentieth Century
Strategic Asset Allocations, Inc., a Maryland corporation (the "Corporation").
2. The amendment to the Articles of Incorporation of the Corporation,
which was approved as of November 23, 1996 by the Board of Directors of the
Corporation at a meeting pursuant to Section 2-605(a)(4) of the Maryland General
Corporation Law, is as follows:
The Articles of Incorporation of the Corporation are hereby
amended by deleting all of the present Article SECOND and inserting in
lieu therefor the following Article SECOND:
"SECOND: The name of the Corporation is
American Century Strategic Asset Allocations, Inc."
3. The amendment shall be effective January 1, 1997.
IN WITNESS WHEREOF, the undersigned hereby acknowledges that these
Articles of Amendment are the act of the Corporation and states, that to the
best of his knowledge, information and belief, the matters and facts stated
herein are true in all material respects, and that this statement is made under
penalties of perjury.
Dated this 2nd day of December, 1996.
/s/ William M. Lyons
William M. Lyons
Executive Vice President
Witness:
/s/ Charles A. Etherington
Charles A. Etherington
Assistant Secretary
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
ARTICLES SUPPLEMENTARY
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC., a Maryland
corporation whose principal Maryland office is located in Baltimore, Maryland
(the "Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: The Corporation is registered as an open-end company under the
Investment Company Act of 1940.
SECOND: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Section 2-605(a)(4) of the Maryland General
Corporation Law, the Board of Directors of the Corporation has renamed the duly
established and allocated series of the Corporation's stock as follows:
<TABLE>
New Series Name Prior Series Name
- ----------------------------------------------------------------------------------------------
<S> <C>
American Century Strategic Allocation: Conservative Strategic Allocation: Conservative
American Century Strategic Allocation: Moderate Strategic Allocation: Moderate
American Century Strategic Allocation: Aggressive Strategic Allocation: Aggressive
</TABLE>
The name changes shall be effective on January 1, 1997.
THIRD: Except as otherwise provided by the express provisions of these
Articles Supplementary, nothing herein shall limit, by inference or otherwise,
the discretionary right of the Board of Directors to serialize, classify or
reclassify and issue any unissued shares of any Series or Class or any unissued
shares that have not been allocated to a Series or Class, and to fix or alter
all terms thereof, to the full extent provided by the Articles of Incorporation
of the Corporation.
FOURTH: A description of the series and classes of shares, including
the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions for
redemption is set forth in the Articles of Incorporation of the Corporation and
is not changed by these Articles Supplementary, except with respect to the
creation and/or designation of the various Series.
FIFTH: The Board of Directors of the Corporation duly adopted
resolutions renaming the Series, as set forth in Article SECOND.
IN WITNESS WHEREOF, AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
has caused these Articles Supplementary to be signed and acknowledged in its
name and on its behalf by its Executive Vice President and its corporate seal to
be hereunto affixed and attested to by its Assistant Secretary on this 2nd day
of December, 1996.
AMERICAN CENTURY STRATEGIC
ATTEST: ASSET ALLOCATIONS, INC.
/s/ Patrick A. Looby By: /s/ William M. Lyons
-------------------- --------------------
Name: Patrick A. Looby Name: William M. Lyons
Title:Assistant Secretary Title:Executive Vice President
THE UNDERSIGNED Executive Vice President of AMERICAN CENTURY STRATEGIC
ASSET ALLOCATIONS, INC., who executed on behalf of said Corporation the
foregoing Articles Supplementary to the Charter, of which this certificate is
made a part, hereby acknowledges, in the name of and on behalf of said
Corporation, the foregoing Articles Supplementary to the Charter to be the
corporate act of said Corporation, and further certifies that, to the best of
his knowledge, information and belief, the matters and facts set forth therein
with respect to the approval thereof are true in all material respects under the
penalties of perjury.
Dated: December 2, 1996 /s/ William M. Lyons
--------------------
William M. Lyons, Executive Vice President
Specimen Stock Certificate
AMERICAN CENTURY (name of series)
A Series of the Capital Stock of
American Century Strategic Asset Allocations, Inc.
Incorporated Under the Laws of the State of Maryland
NUMBER DATED SHARES
This is to Certify that
IS THE OWNER OF THE FULLY PAID AND NON-ASSESSABLE SHARES STATED ABOVE OF
American Century (name of series)
(name of class)
A series of the Capital Stock, Par Value $0.01, of
American Century Strategic Asset Allocations, Inc.
(american century logo)
American
Century (sm)
[printed vertically along right margin]
Countersigned:
By---------------Transfer Clerk
The Corporation will furnish without charge to each Shareholder who so
requests the designations and the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption of each series and class of stock of the
Corporation.
This certificate and the shares represented hereby are issued and shall
be held subject to all the provisions of the Articles of Incorporation of the
Corporation and all amendments thereto, copies of which are on file at the
executive offices of the Corporation, and the holder hereof by acceptance of
this certificate consents and agrees to be bound by all of said provisions.
This certificate is not valid until countersigned by an authorized
Transfer Clerk of the Corporation.
WITNESS the facsimile signatures of the Corporation's duly authorized
officers.
/s/William M. Lyons /s/James E. Stowers III
William M. Lyons James E. Stowers III
SECRETARY PRESIDENT
[front of certificate]
FOR VALUE RECEIVED,-------------HEREBY SELL, ASSIGN AND TRANSFER
unto----------------------------------------------------------------------------
- --------------------------------------------------------------------------------
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint
- ------------------------------------------------------------------------Attorney
to transfer the said Stock on the books of the within named issuer with full
power of substitution in the premises.
DATED:------------------- -------------------------------
Signature
-------------------------------
Signature
(signature guarantee stamp)
[printed vertically along far right margin]
NOTICE: The signature(s) on this assignment must correspond with the
name(s) as written upon the face of the certificate, in every particular,
without alteration or any change whatever.
The signature(s) must be guaranteed by a bank or trust company, credit
union, broker-dealer, securities exchange or association, clearing agency or
savings association, as defined by federal law. Notarized or witnessed
signatures are not acceptable as guaranteed signatures.
[back of certificate]
CHARLES A. ETHERINGTON
Attorney At Law
4500 Main Street, P.O. Box 418210
Kansas City, Missouri 64141-9210
Telephone (816)340-4051
Telecopier (816)340-4964
March 26, 1997
American Century Strategic Asset Allocations, Inc.
American Century Tower
4500 Main Street
Kansas City, Missouri 64111
Ladies and Gentlemen:
As counsel to American Century Strategic Asset Allocations, Inc. I am
generally familiar with its affairs. Based upon this familiarity, and upon the
examination of such documents as I have deemed relevant, it is my opinion that
the shares of the Corporation described in Post-Effective Amendment No. 2 to its
Registration Statement on Form N-1A to be filed with the Securities and Exchange
Commission on March 26, 1997, will, when issued, be validly issued, fully paid
and nonassessable.
For the record, it should be stated that I am an officer and employee of
American Century Services Corporation, an affiliated corporation of American
Century Investment Management, Inc., the investment adviser of American Century
Strategic Asset Allocations, Inc.
I hereby consent to the use of this opinion as an exhibit to Post-Effective
Amendment No. 2.
Very truly yours,
/s/ Charles A. Etherington
Charles A. Etherington
ERNST & YOUNG LLP
Certified Public Accountants
One Kansas City Place * Suite 2000
1200 Main Street
Kansas City, Missouri 64105
Telephone (816) 474-5200
Fax (816) 480-5555
CONSENT OF
INDEPENDENT AUDITORS
American Century Strategic Asset Allocations, Inc.
American Century Tower
4500 Main Street
Kansas City, Missouri 64111
We consent to the references to our firm under the captions "Financial
Highlights" and "Independent Auditors" in the Post-Effective Amendment No. 2 to
the Registration Statement (Form N-1A) and related Prospectus of American
Century Strategic Asset Allocations, Inc. and to the incorporation by reference
therein of our report dated January 3, 1997, with respect to the financial
statements of American Century Strategic Asset Allocations, Inc. included in its
Annual Report to Shareholders for the period ended November 30, 1996.
/s/Ernst & Young LLP
ERNST & YOUNG LLP
Kansas City, Missouri
March 26, 1997
SCHEDULE OF COMPUTATION OF PERFORMANCE ADVERTISING QUOTATIONS
Set forth below is a representative calculation of the cumulative total
return performance quotation included in the Statement of Additional Information
of American Century Strategic Asset Allocations, Inc.
1. The cumulative total return of Strategic Allocation: Aggressive from
February 15, 1996 (inception) to November 30, 1996 as quoted in the Statement of
Additional Information, was 10.60%.
This return was calculated as follows:
(ERV - P)
C = ---------
P
where,
C = cumulative total return
P = a hypothetical initial payment of $1,000
ERV = ending redeemable value of the hypothetical $1,000 payment at the end
of the period.
Applying the actual return figures of the fund for the period February 15,
1996 through November 30, 1996.
(1,106-1,000)
C = ---------------
1,000
C = 10.60%
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, American Century
Strategic Asset Allocations, Inc., hereinafter called the "Corporation", and
certain directors and officers of the Corporation, do hereby constitute and
appoint James E. Stowers, Jr., James E. Stowers III, William M. Lyons, and
Patrick A. Looby, and each of them individually, their true and lawful attorneys
and agents to take any and all action and execute any and all instruments which
said attorneys and agents may deem necessary or advisable to enable the
Corporation to comply with the Securities Act of 1933 and/or the Investment
Company Act of 1940, as amended, and any rules, regulations, orders, or other
requirements of the United States Securities and Exchange Commission thereunder,
in connection with the registration under the Securities Act of 1933 and/or the
Investment Company Act of 1940, as amended, including specifically, but without
limitation of the foregoing, power and authority to sign the name of the
Corporation in its behalf and to affix its corporate seal, and to sign the names
of each of such directors and officers in their capacities as indicated, to any
amendment or supplement to the Registration Statement filed with the Securities
and Exchange Commission under the Securities Act of 1933 and/or the Investment
Company Act of 1940, as amended, and to any instruments or documents filed or to
be filed as a part of or in connection with such Registration Statement; and
each of the undersigned hereby ratifies and confirms all that said attorneys and
agents shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the Corporation has caused this Power to be
executed by its duly authorized officers on this the 15th day of February, 1997.
AMERICAN CENTURY STRATEGIC ASSET
ALLOCATIONS, INC.
By:/s/ James E. Stowers III
James E. Stowers III, President
SIGNATURE AND TITLE
/s/ James E. Stowers, Jr. /s/ Robert W. Doering, M.D.
James E. Stowers, Jr. Robert W. Doering, M.D.
Chairman and Director Director
/s/ James E. Stowers III /s/ Linsley L. Lundgaard
James E. Stowers III Linsley L. Lundgaard
President, Director and Director
Principal Executive Officer
/s/ Robert T. Jackson /s/ Donald H. Pratt
Robert T. Jackson Donald H. Pratt
Executive Vice President, Director
Principal Financial Officer
/s/ Maryanne Roepke /s/ Lloyd T. Silver
Maryanne Roepke Lloyd T. Silver
Vice President and Treasurer, Director
Principal Accounting Officer
/s/ Thomas A. Brown /s/ M. Jeannine Strandjord
Thomas A. Brown M. Jeannine Strandjord
Director Director
/s/D.D. ("Del") Hock
D.D. ("Del") Hock
Attest: Director
By:/s/ William M. Lyons
William M. Lyons, Secretary
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT. INFORMATION PRESENTED IS A TOTAL OF ALL CLASSES,
EXCEPT WHERE SUCH PRESENTATION IS NOT POSSIBLE(SUCH AS PER SHARE DATA). IN THOSE
CASES, ONLY THE INVESTOR CLASS INFORMATION IS PRESENTED.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> STRATEGIC ALLOCATION: CONSERVATIVE
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> NOV-30-1996 <F1>
<INVESTMENTS-AT-COST> 35,334,180
<INVESTMENTS-AT-VALUE> 36,719,052
<RECEIVABLES> 648,581
<ASSETS-OTHER> 99,429
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 37,467,062
<PAYABLE-FOR-SECURITIES> 322,657
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 61,458
<TOTAL-LIABILITIES> 384,115
<SENIOR-EQUITY> 70,520
<PAID-IN-CAPITAL-COMMON> 35,354,401
<SHARES-COMMON-STOCK> 7,052,098
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 192,595
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 73,373
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1,392,058
<NET-ASSETS> 37,082,947
<DIVIDEND-INCOME> 88,950
<INTEREST-INCOME> 474,042
<OTHER-INCOME> 0
<EXPENSES-NET> 123,086
<NET-INVESTMENT-INCOME> 439,906
<REALIZED-GAINS-CURRENT> 60,039
<APPREC-INCREASE-CURRENT> 1,392,058
<NET-CHANGE-FROM-OPS> 1,892,003
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 233,977 <F2>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 7,944,474
<NUMBER-OF-SHARES-REDEEMED> 938,542
<SHARES-REINVESTED> 46,166 <F2>
<NET-CHANGE-IN-ASSETS> 37,082,947
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 118,774
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 123,086
<AVERAGE-NET-ASSETS> 15,013,885
<PER-SHARE-NAV-BEGIN> 5.00 <F2>
<PER-SHARE-NII> 0.13 <F2>
<PER-SHARE-GAIN-APPREC> 0.22 <F2>
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.09 <F2>
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.26 <F2>
<EXPENSE-RATIO> 1.01 <F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
<FN>
<F1>SCHEDULE RELFECTS THE TOTAL FOR ALL CLASSES, EXCEPT WHERE INDICATED.
<F2>INVESTOR CLASS INFORMATION ONLY.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT. INFORMATION PRESENTED IS A TOTAL OF ALL CLASSES,
EXCEPT WHERE SUCH PRESENTATION IS NOT POSSIBLE(SUCH AS PER SHARE DATA). IN THOSE
CASES, ONLY THE INVESTOR CLASS INFORMATION IS PRESENTED.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> STRATEGIC ALLOCATION: MODERATE
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> NOV-30-1996 <F1>
<INVESTMENTS-AT-COST> 58,855,541
<INVESTMENTS-AT-VALUE> 62,738,902
<RECEIVABLES> 2,382,479
<ASSETS-OTHER> 472,187
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 65,593,568
<PAYABLE-FOR-SECURITIES> 87,812
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 103,434
<TOTAL-LIABILITIES> 191,246
<SENIOR-EQUITY> 120,731
<PAID-IN-CAPITAL-COMMON> 61,109,434
<SHARES-COMMON-STOCK> 12,073,128
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 266,895
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 5,069
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,900,193
<NET-ASSETS> 65,402,322
<DIVIDEND-INCOME> 256,321
<INTEREST-INCOME> 718,970
<OTHER-INCOME> 0
<EXPENSES-NET> 300,047
<NET-INVESTMENT-INCOME> 675,144
<REALIZED-GAINS-CURRENT> (5,837)
<APPREC-INCREASE-CURRENT> 3,900,193
<NET-CHANGE-FROM-OPS> 4,569,600
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 397,443<F2>
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 17,467,164
<NUMBER-OF-SHARES-REDEEMED> 5,470,362
<SHARES-REINVESTED> 76,326<F2>
<NET-CHANGE-IN-ASSETS> 65,402,322
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 292,871
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 300,047
<AVERAGE-NET-ASSETS> 33,691,577
<PER-SHARE-NAV-BEGIN> 5.00<F2>
<PER-SHARE-NII> 0.10<F2>
<PER-SHARE-GAIN-APPREC> 0.39<F2>
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.07<F2>
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.42<F2>
<EXPENSE-RATIO> 1.10<F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
<FN>
<F1>SCHEDULE RELFECTS THE TOTAL FOR ALL CLASSES, EXCEPT WHERE INDICATED.
<F2>INVESTOR CLASS INFORMATION ONLY.
</FN>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE ANNUAL
REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC. AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH REPORT. INFORMATION PRESENTED IS A TOTAL OF ALL CLASSES,
EXCEPT WHERE SUCH PRESENTATION IS NOT POSSIBLE(SUCH AS PER SHARE DATA). IN THOSE
CASES, ONLY THE INVESTOR CLASS INFORMATION IS PRESENTED.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> STRATEGIC ALLOCATION: AGGRESSIVE
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1996
<PERIOD-END> NOV-30-1996 <F1>
<INVESTMENTS-AT-COST> 49,089,984
<INVESTMENTS-AT-VALUE> 52,134,166
<RECEIVABLES> 630,682
<ASSETS-OTHER> 1,083,527
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53,848,375
<PAYABLE-FOR-SECURITIES> 1,621,057
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 79,278
<TOTAL-LIABILITIES> 1,700,335
<SENIOR-EQUITY> 94,241
<PAID-IN-CAPITAL-COMMON> 49,000,271
<SHARES-COMMON-STOCK> 9,424,136
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 301,109
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (304,969)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 3,057,388
<NET-ASSETS> 52,148,040
<DIVIDEND-INCOME> 193,861
<INTEREST-INCOME> 341,313
<OTHER-INCOME> 0
<EXPENSES-NET> 223,147
<NET-INVESTMENT-INCOME> 312,027
<REALIZED-GAINS-CURRENT> (315,887)
<APPREC-INCREASE-CURRENT> 3,057,388
<NET-CHANGE-FROM-OPS> 3,053,528
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 11,454,858
<NUMBER-OF-SHARES-REDEEMED> 2,030,722
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 52,148,040
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 217,333
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 223,147
<AVERAGE-NET-ASSETS> 22,914,341
<PER-SHARE-NAV-BEGIN> 5.00 <F2>
<PER-SHARE-NII> 0.07 <F2>
<PER-SHARE-GAIN-APPREC> 0.46 <F2>
<PER-SHARE-DIVIDEND> 0.00
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 5.53 <F2>
<EXPENSE-RATIO> 1.20 <F2>
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00
<FN>
<F1>SCHEDULE RELFECTS THE TOTAL FOR ALL CLASSES, EXCEPT WHERE INDICATED.
<F2>INVESTOR CLASS INFORMATION ONLY.
</FN>
</TABLE>
