[front cover]
May 31, 1998
Semiannual Report
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[graphic of computer screen, eye glasses, keyboard]
American century Group
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Strategic Allocation:
Conservative
Moderate
Aggressive
[american century logo(reg.sm)]
American
Century(reg.tm)
[inside front cover]
A Note from the Founder
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On our 40th anniversary, I would personally like to express my profound
appreciation for the confidence you have shown in American Century. We are
grateful for the opportunity to manage your money, and we will do our utmost to
continue to meet your expectations and justify your confidence in us.
I founded American Century on the belief that if we can make you
successful, you, in tern, will make us successful. That is the principle that
will guide us in the future.
Sincerely,
/s/James E. Stowers
About our New Report Design
- ---------------------------
Why We Changed
We're trying hard to be reader-friendly. Our reports contain a lot of very
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managers. We hope the new design will make the reports more interesting and
understandable, while helping you keep abreast of your fund's strategy and
performance.
What's New
The reports are designed to be attractive and easy to use whether you're
reading them in depth or just skimming.
New features include:
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The Bottom Line
The new design actually costs slightly less than the old one. We
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We believe we've come up with a more interesting, informative and user-
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We hope you enjoy it.
[left margin]
American Century Group
Strategic Allocation:
Conservative
(TWSCX)
American Century Group
Strategic Allocation:
Moderate
(TWSMX)
American Century Group
Strategic Allocation:
Aggressive
(TWSAX)
[40 Year logo]
Four Decades of Serving Investors
40 Years
American Century(reg tm.)
1958 - 1998
Our Message to You
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[photo James E. Stowers, Jr. with James E. Stowers III, seated]
James E. Stowers, Jr. with James E. Stowers III, seated
In general, the global financial markets performed well during the six
months ended May 31, 1998. The U.S. stock market maintained its upward momentum,
U.S. bond yields hit record lows, and European stocks soared. The solid returns
of our Strategic Asset Allocation funds during the six-month period reflected
this environment.
But areas of concern also appeared. Asian markets continued to suffer under
the weight of a serious financial crisis. The effects of the Asian economic
turmoil began to spread to the rest of the world's economies and produced weaker
earnings at many U.S. corporations.
The uncertain market conditions reinforce the importance of a diversified
investment portfolio. By holding a mix of domestic and foreign stocks, bonds and
money market funds, you can cushion your portfolio against the effects of a
decline in any single investment.
The Strategic Asset Allocation funds were designed to give you this kind of
diversification in a single investment. But even if these three funds don't
match your needs exactly, they can still be useful as a base investment in
building your own diversified portfolio.
For example, a younger investor willing to accept more volatility to get
higher returns might combine our Aggressive portfolio with an aggressive growth
stock fund and an international stock fund. Or an older investor might divide an
investment between our Conservative portfolio, an intermediate-term bond fund
and a money market fund to emphasize dividend income and capital preservation.
If you'd like to learn more about diversification or other investment
topics, we have a wealth of free educational brochures and booklets available by
mail. You can also get educational information on our Web site
(www.americancentury.com). We've recently added several new features to the
site, including retirement investing calculators and online investment tracking.
We're committed to making your relationship with us as easy and productive as
possible.
We appreciate your investment with American Century.
Sincerely,
/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
CHAIRMAN OF THE BOARD AND FOUNDER CHIEF EXECUTIVE OFFICER
[right margin]
Table of Contents
Report Highlights ...................................................... 2
Market Perspective ..................................................... 3
STRATEGIC ALLOCATION: CONSERVATIVE
Performance Information ................................................ 5
Management Q&A ......................................................... 6
Schedule of Investments ................................................ 9
STRATEGIC ALLOCATION: MODERATE
Performance Information ................................................ 20
Management Q&A ......................................................... 21
Schedule of Investments ................................................ 24
STRATEGIC ALLOCATION: AGGRESSIVE
Performance Information ................................................ 37
Management Q&A ......................................................... 38
Schedule of Investments ................................................ 41
FINANCIAL STATEMENTS
Statements of Assets and
Liabilities .......................................................... 53
Statements of Operations ............................................... 54
Statements of Changes
in Net Assets ........................................................ 55
Notes to Financial
Statements ........................................................... 56
Financial Highlights ................................................... 60
OTHER INFORMATION
Share Class and Retirement
Account Information .................................................... 66
Background Information
Investment Philosophy
and Policies ....................................................... 67
Comparative Indices .................................................. 67
Neutral Asset Mixes .................................................. 67
Investment Team
Leaders ............................................................ 67
Glossary ............................................................... 68
www.americancentury.com 1
Report Highlights
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MARKET PERSPECTIVE
* The continuing financial crisis in Asia contributed to slowing economic
growth and low inflation worldwide.
* Favorable economic conditions and heavy cash flows boosted U.S. stock returns
* Among foreign stocks, European markets provided the best investment returns,
while Asian stocks struggled.
* Domestic bonds were relatively stable, but low inflation and strong foreign
demand led to positive returns overall.
STRATEGIC ALLOCATION: CONSERVATIVE
* For the six months ended May 31, 1998, the fund's return was in line with
that of its benchmark (a mix of eight market indices).
* We made few changes to Strategic Conservative's asset mix; instead, we
focused on making adjustments within each asset class:
* U.S. bonds--reduced holdings of Treasury bonds and added government agency
and asset-backed securities.
* U.S. stocks--began to shift from value-oriented stocks to large-company
growth stocks.
* Foreign stocks--virtually eliminated Asia and invested double our neutral
weighting in Europe.
* Going forward, we plan to take a more defensive position by modestly reducing
our U.S. stock holdings and adding to our U.S. bonds and cash.
STRATEGIC ALLOCATION: MODERATE
* For the six months ended May 31, 1998, the fund's return beat that of its
benchmark (a mix of 10 market indices).
* We made few changes to Strategic Moderate's asset mix; instead, we focused on
making adjustments within each asset class:
* U.S. stocks--began to shift from value-oriented stocks to large-company
growth stocks.
* U.S. bonds--reduced holdings of Treasury bonds and added government agency
and asset-backed securities.
* Foreign stocks--virtually eliminated Asia and invested double our neutral
weighting in Europe.
* Going forward, we plan to take a more defensive position by modestly
reducing our U.S. stock holdings and adding to our U.S. bonds and cash.
STRATEGIC ALLOCATION: AGGRESSIVE
* For the six months ended May 31, 1998, the fund's return beat that of its
benchmark (a mix of 11 market indices).
* We made few changes to Strategic Aggressive's asset mix; instead, we focused
on making adjustments within each asset class:
* U.S. stocks--began to shift from value-oriented stocks to large-company
growth stocks.
* Foreign stocks--virtually eliminated Asia and invested double our neutral
weighting in Europe.
* U.S. bonds--reduced holdings of Treasury bonds and added government agency
and asset-backed securities.
* Going forward, we plan to take a more defensive position by modestly reducing
our U.S. stock holdings and adding to our U.S. bonds and cash.
[left margin]
CONSERVATIVE(1)
(TWSCX)
TOTAL RETURNS: AS OF 5/31/98
6 Months 7.49%(2)
1 Year 15.99%
NET ASSETS: $169.3 million
INCEPTION DATE: 2/15/96
MODERATE(1)
(TWSMX)
TOTAL RETURNS: AS OF 5/31/98
6 Months 10.71%(2)
1 Year 20.24%
NET ASSETS: $241.0 million
INCEPTION DATE: 2/15/96
AGGRESSIVE(1)
(TWSAX)
TOTAL RETURNS: AS OF 5/31/98
6 Months 12.74%(2)
1 Year 22.62%
NET ASSETS: $137.0 million
INCEPTION DATE: 2/15/96
(1) Investor Class.
(2) Not annualized.
See Total Returns on pages 5, 20 and 37.
Investment terms are defined in the Glossary on page 68.
2 1-800-345-2021
Market Perspective with Jeff Tyler
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[photo of Jeff Tyler, senior vice president and lead manager of the Strategic
Asset Allocation funds]
Jeff Tyler, senior vice president and lead manager of the Strategic Asset
Allocation funds
SPOTLIGHT ON ASIA
During the six months ended May 31, 1998, the theme permeating the global
stock and bond markets was the financial meltdown in Asia. In mid-1997, a
currency crisis among Southeast Asian countries pushed their economies into
recession and sent their financial markets into freefall. Since then, the
effects of this crisis have had a growing impact on the rest of the world:
* SLOWER GLOBAL ECONOMIC GROWTH--a lack of consumer demand in Asia has
reduced economic activity in many countries that export to the region.
Although the U.S. economy has held up so far, countries as diverse as
Brazil and Italy have seen dramatic economic slowdowns.
* LOW WORLDWIDE INFLATION--in an effort to rebuild their economies, Asian
countries have cut prices on their exports. This has weakened the pricing
power of companies elsewhere in the world and kept global inflation to a
minimum.
* FALLING COMMODITIES PRICES--weak demand from Asia has pushed the prices of
raw materials (such as oil, gold and grains) substantially lower. The
Goldman Sachs Commodities Index, a broad index of commodities prices, fell
more than 30% during the six-month period.
We expect Asia's economic, political and social health to remain factors in
the performance of the global financial markets for the foreseeable future.
U.S. STOCKS
Between 1995 and 1997, the U.S. stock market enjoyed one of the best
three-year performance periods in its history. This was especially true for
large-company stock indices like the S&P 500, which returned more than 20% in
each of the three calendar years. During the six months ended May 31, the S&P
500 barely paused to catch its breath, gaining just over 15%. Small-company
stocks, represented by the Russell 2000, trailed large-cap stocks but still
posted solid returns (see the accompanying table).
Why did U.S. stocks perform so well? Economic conditions remained ideal,
with robust growth and minimal inflation. Low interest rates helped keep
corporate borrowing expenses down and made bonds a less attractive investment
alternative to stocks. Given this generally positive business climate, it's not
surprising that cash continued to flow heavily into stocks.
Merger activity also benefited the stock market. Most significant were the
"megamergers" among large banks and financial companies, but other high-profile
mergers in the media, telecommunications and automobile industries helped lift
the market as a whole.
Although U.S. stocks performed well, weaker corporate earnings--a casualty
of the fallout from Asia--led to increased market volatility late in the period.
In the first quarter of 1998, the earnings of the companies in the S&P 500
declined by about 2% compared with the first quarter of 1997. In April and May,
when first-quarter earnings were reported, the S&P 500 dropped by 1%, while the
Russell 2000 slipped 5%.
[right margin]
"WE EXPECT ASIA'S ECONOMIC, POLITICAL AND SOCIAL HEALTH TO REMAIN FACTORS IN THE
PERFORMANCE OF THE GLOBAL FINANCIAL MARKETS FOR THE FORESEEABLE FUTURE."
U.S. STOCK MARKET PERFORMANCE
FOR THE SIX MONTHS ENDED MAY 31, 1998
S&P 500 15.06%
RUSSELL 2000 6.86%
FOREIGN STOCK MARKET PERFORMANCE
FOR THE SIX MONTHS ENDED MAY 31, 1998
MORGAN STANLEY EAFE(reg.tm) INDEX
(IN U.S. DOLLARS) 16.22%
MORGAN STANLEY EAFE(reg.tm) INDEX
(IN LOCAL CURRENCIES) 20.41%
Indices are defined on page 67.
www.americancentury.com 3
Market Perspective with Jeff Tyler
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(Continued)
FOREIGN STOCKS
As the table on page 3 illustrates, foreign stocks provided some of the
best returns in the world during the six-month period. However, there was a
great deal of regional disparity. The Morgan Stanley Europe index returned about
30%, while the Morgan Stanley Far East index posted an 11% decline.
Asian markets continued to struggle amid efforts to recover from their
financial problems. Japan is in recession, manufacturing output in the region is
down substantially, and consumer spending has virtually disappeared.
In contrast, there has been a powerful bull market in Europe for several
years now. Low interest rates have sparked solid economic growth across the
Continent. On the corporate front, European businesses are improving their
accounting standards, consolidating to cut costs, and competing globally.
Another positive factor is the onset of economic and monetary union (EMU)
in 1999. Eleven European countries will join together under a common currency
and a single central bank. EMU has already made it easier and cheaper for many
European companies to do business throughout the union.
U.S. BONDS
Although fixed-income securities posted favorable returns during the
six-month period (see the accompanying table), the U.S. bond market was fairly
stable overall. The 30-year Treasury bond yield experienced its least-volatile
six-month period since 1979, fluctuating between 6.14% and 5.69% (the lowest
yield since the late '70s).
Despite strong U.S. economic growth and evidence of increasing labor costs,
bond yields fell and prices rose throughout much of the period. Several factors
favored bonds:
* Inflation remained low, rising at an annual rate of just 1.4% for the
six-month period.
* The federal budget deficit narrowed, reducing the government's borrowing
needs. The Treasury cut back its debt issuance, and the lower supply
boosted bond prices.
* Demand increased for U.S. bonds as a "safe haven" from Asian markets and,
to a lesser extent, domestic stock market volatility.
* The Federal Reserve held short-term interest rates steady.
The Fed didn't act because higher rates would make U.S. bonds even more
attractive to foreign investors, which would further strengthen the U.S. dollar
and make it harder for Asia to recover. The bond market knows this--over the
past three months, U.S. Treasury bond prices have moved in lockstep with the
dollar's value against the Japanese yen.
Treasury securities, especially those with long maturities, were the
best-performing fixed-income sector during the period. Corporate bonds, which
saw increased supply as businesses took advantage of historically low interest
rates, trailed Treasurys. Mortgage-backed securities struggled with increased
refinancing activity.
FOREIGN BONDS
Overseas bond markets benefited from low inflation around the globe. They
provided returns on par with U.S. bonds, though the strong dollar reduced those
returns somewhat (see the table).
Interest rates in Europe continued to converge as EMU moved closer to
becoming a reality. Rates in countries like Italy and Spain, which have
traditionally been higher than in other European nations, have fallen over the
past couple of years, producing healthy bond returns.
[left margin]
"THE 30-YEAR TREASURY BOND YIELD EXPERIENCED ITS LEAST-VOLATILE SIX-MONTH PERIOD
SINCE 1979."
U.S. BOND MARKET PERFORMANCE
FOR THE SIX MONTHS ENDED MAY 31, 1998
SALOMON BROTHERS BROAD INVESTMENT
GRADE BOND INDEX 4.16%
LEHMAN AGGREGATE
BOND INDEX 4.09%
FOREIGN BOND MARKET PERFORMANCE
FOR THE SIX MONTHS ENDED MAY 31, 1998
SALOMON BROTHERS NON-U.S.
WORLD GOVERNMENT BOND INDEX
(IN U.S. DOLLARS) 1.42%
SALOMON BROTHERS NON-U.S.
WORLD GOVERNMENT BOND INDEX
(IN LOCAL CURRENCIES) 5.12%
Indices are defined on page 67.
4 1-800-345-2021
<TABLE>
Strategic Conservative--Performance
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TOTAL RETURNS AS OF MAY 31, 1998
INVESTOR CLASS (INCEPTION 2/15/96) ADVISOR CLASS (INCEPTION 10/2/96)
STRATEGIC LEHMAN THREE-MONTH STRATEGIC LEHMAN THREE-MONTH
ALLOCATION: S&P 500 AGGREGATE U.S. ALLOCATION: S&P 500 AGGREGATE U.S.
CONSERVATIVE BOND INDEX TREASURY BILL CONSERVATIVE BOND INDEX TREASURY BILL
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 MONTHS(1)... 7.49% 15.03% 4.09% 2.55% 7.35% 15.03% 4.09% 2.55%
1 YEAR ....... 15.99% 30.68% 10.91% 5.16% 15.77% 30.68% 10.91% 5.16%
- ----------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
LIFE OF FUND.. 11.20% 27.71% 7.79%(2) 5.15%(2) 13.23% 33.51% 9.54% 5.16%
(1) Returns for periods less than one year are not annualized.
(2) Since 2/29/96, the date nearest the class's inception for which data are
available.
</TABLE>
See pages 66-68 for more information about share classes, returns, and the
comparative indices.
[line graph - data below]
GROWTH OF $10,000 OVER LIFE OF FUND
$10,000 investment made 2/29/96
Value on May 31, 1998
Strategic: Lehman 3-Month
Conservative S&P 500 Aggregate T-Bill
2/29/96 $10,000 $10,000 $10,000 $10,000
3/31/96 $10,040 $10,133 $9,930 $10,041
4/30/96 $10,145 $10,269 $9,875 $10,082
5/31/96 $10,186 $10,504 $9,855 $10,125
6/30/96 $10,221 $10,586 $9,987 $10,167
7/31/96 $10,037 $10,102 $10,014 $10,211
8/31/96 $10,160 $10,292 $9,997 $10,254
9/30/96 $10,440 $10,911 $10,172 $10,297
10/31/96 $10,584 $11,197 $10,397 $10,339
11/30/96 $10,832 $12,018 $10,575 $10,382
12/31/96 $10,772 $11,822 $10,477 $10,425
1/31/97 $10,876 $12,544 $10,509 $10,469
2/28/97 $10,814 $12,619 $10,535 $10,513
3/31/97 $10,636 $12,141 $10,418 $10,558
4/30/97 $10,762 $12,847 $10,574 $10,603
5/31/97 $11,118 $13,600 $10,674 $10,648
6/30/97 $11,386 $14,258 $10,801 $10,691
7/31/97 $11,830 $15,367 $11,092 $10,736
8/31/97 $11,642 $14,484 $10,998 $10,783
9/30/97 $12,053 $15,319 $11,160 $10,827
10/31/97 $11,901 $14,791 $11,322 $10,871
11/30/97 $12,009 $15,450 $11,374 $10,919
12/31/97 $12,156 $15,757 $11,488 $10,966
1/31/98 $12,202 $15,917 $11,636 $11,012
2/28/98 $12,569 $17,038 $11,627 $11,058
3/31/98 $12,873 $17,951 $11,667 $11,105
4/30/98 $12,920 $18,115 $11,728 $11,150
5/31/98 $12,896 $17,773 $11,839 $11,197
The charts are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see Total Returns table
above). The chart at left shows the growth of a $10,000 investment over the life
of the fund, while the chart below shows the fund's year-by-year performance.
The S&P 500, Lehman Aggregate Bond, and Three-Month Treasury Bill indices are
provided for comparison in each chart. Past performance does not guarantee
future results. Investment return and principal value will fluctuate, and
redemption value may be more or less than original cost. Strategic
Conservative's returns include operating expenses (such as transaction costs and
management fees) that reduce returns, while the returns of the indices do not.
[bar chart - data below]
ONE-YEAR RETURNS OVER LIFE OF FUND (PERIODS ENDING MAY 31)
Strategic: Lehman 3-Month
Conservative S&P 500 Aggregate T-Bill
2/29/96-5/31/96 1.86% 5.04% -1.45% 1.25%
5/31/96-5/31/97 9.16% 29.48% 8.32% 5.17%
5/31/97-5/31/98 15.99% 30.68% 10.91% 5.16%
* From 2/29/96 (the date nearest the fund's inception for which index data are
available).
www.americancentury.com 5
Strategic Conservative--Q&A
- -----------------------------------------------------------------------------
An interview with Jeff Tyler and Brian Howell, portfolio managers on the
American Century Strategic Asset Allocation funds management team.
HOW DID THE STRATEGIC CONSERVATIVE FUND PERFORM?
For the six months ended May 31, 1998, the fund's Investor Class shares
posted a total return of 7.49%, compared with the 7.58% return of its benchmark.
(See the Total Returns table on the previous page for other fund performance
comparisons.)
WHAT IS THE FUND'S BENCHMARK?
It's a combination of eight different market indices--four U.S. stock
indices, one foreign stock index, one U.S. bond index, one foreign bond index,
and one money market index. These indices represent the various asset classes in
which the fund invests and are weighted to match the fund's neutral asset mix.
Strategic Conservative slightly underperformed its benchmark, mainly
because of its U.S. stock holdings. We got great returns from our foreign
stocks, but they made up less than 10% of the portfolio.
DID YOU MAKE ANY CHANGES TO THE ASSET MIX OVER THE PAST SIX MONTHS?
We kept the portfolio pretty close to its neutral mix of 45% bonds, 40%
stocks, 15% cash. But stocks outperformed bonds and cash during the period, so
we did some minor rebalancing. We sold some stocks in April and shifted the
proceeds into bonds and money market securities to maintain neutral weightings.
Instead of making significant changes to the asset mix, we concentrated on
making adjustments within each asset class to try to enhance performance.
THE FUND'S BIGGEST HOLDING IS U.S. BONDS. WHAT ADJUSTMENTS DID YOU MAKE TO THIS
PORTION OF THE PORTFOLIO?
We cut back our Treasury holdings quite a bit as their yields hit all-time
lows. In their place, we added some callable government agency securities.
Callable securities tend to offer higher yields because they can be redeemed--or
called--by the issuer before the maturity date.
Calling a bond is kind of like refinancing a home mortgage--when interest
rates fall significantly, homeowners can often reduce their interest payments by
taking out a new mortgage and paying off the old one. Bond issuers do the same
thing with callable bonds when rates decline. But interest rates were fairly
stable during the past six months, so there wasn't any incentive for issuers to
call these bonds. As a result, the fund got some extra yield with very little
risk of a call.
We also bought more asset-backed securities, including bonds backed by
commercial mortgages and home-equity loans. These bonds added greater
diversification to the fund's fixed-income holdings. We purchased them when they
were more attractively priced than most corporate bonds, and they have since
performed better than corporates.
[left margin]
"WE KEPT THE PORTFOLIO PRETTY CLOSE TO ITS NEUTRAL MIX OF 45% BONDS, 40% STOCKS,
15% CASH."
[pie chart]
ASSET ALLOCATION (AS OF MAY 31, 1998)
PERCENT OF FUND INVESTMENTS
U.S. Stocks 33%
Foreign Stocks 7%
Money Market Securities 15%
Foreign Bonds 5%
U.S. Bonds 40%
See page 67 for the fund's neutral asset mix.
Investment terms are defined in the Glossary on page 68.
6 1-800-345-2021
Strategic Conservative--Q&A
- -----------------------------------------------------------------------------
(Continued)
WHAT ABOUT THE FUND'S EQUITY HOLDINGS?
Late in the period, we began moving away from value-oriented U.S. stocks
toward an emphasis on large-company growth stocks. This was a difficult
decision, because there are a lot of very attractive values among the stocks of
small- and mid-sized companies. However, when corporate earnings start to
weaken--as they have recently--investors tend to gravitate toward large-company
stocks with relatively consistent growth and earnings.
We also looked for companies that rely on domestic consumer demand. A good
example is Home Depot, which is a chain of retail stores that sells building
materials and home improvement products. Home Depot's customers are in the U.S.,
where economic conditions are favorable and consumer demand is healthy. As a
result, the drop-off in demand from Asia hasn't negatively affected the
company's sales.
If anything, Asia has had a positive effect on Home Depot's business--some
of the products the company sells are produced in Asia, so its stores are
getting these products at cheaper prices. It's not surprising that Home Depot's
stock returned more than 40% during the six-month period.
HOW HAS ASIA INFLUENCED YOUR FOREIGN INVESTMENTS?
We've virtually eliminated Asia from our foreign stock portfolio (see the
chart on this page). In contrast, we are almost double our neutral weighting in
Europe. European equity returns were among the best in the world, so this shift
definitely added to the fund's returns. However, foreign stocks make up a small
part of Strategic Conservative's overall portfolio.
LOOKING AHEAD, WHAT ARE YOUR PLANS FOR THE FUND'S ASSET ALLOCATION STRUCTURE?
We intend to position the portfolio more defensively in the coming months.
With U.S. stock market indices at or near all-time highs and U.S. bond yields
close to record lows, we think it makes sense to be a little cautious.
For the Strategic Conservative fund, this means cutting back on U.S. stocks
and shifting into U.S. bonds and cash. We believe that bonds have better return
potential than stocks for the second half of 1998.
WHAT MAKES BONDS MORE ATTRACTIVE THAN STOCKS?
It comes down to whether you think the high stock prices or low bond yields
are sustainable going forward. For bonds, the reasons behind the low interest
rate environment are a lack of inflation and the financial crisis in Asia. These
situations aren't likely to change in the next six months--it will be awhile
before Asia solves its economic problems, and in the meantime, expectations of
low commodities prices and cheap exports from Asia should help keep global
inflation low.
[right margin]
FUND'S U.S. STOCKS (AS OF MAY 31, 1998)
NUMBER OF COMPANIES 341
DIVIDEND YIELD 1.75%
PRICE/EARNINGS RATIO 25.1
% OF FUND'S % OF
U.S. STOCKS FUND
TOP 5 U.S. STOCKS
NATIONSBANK CORP. 2.0% 0.7%
MERCANTILE
BANCORPORATION INC. 1.5% 0.5%
AMEREN CORPORATION 1.4% 0.5%
AMOCO CORP. 1.3% 0.4%
MICROSOFT CORP. 1.3% 0.4%
FUND'S FOREIGN STOCKS (AS OF MAY 31, 1998)
NUMBER OF COMPANIES 110
DIVIDEND YIELD 1.20%
% OF FUND'S % OF
COUNTRY FOREIGN STOCKS FUND
TOP 5 FOREIGN STOCKS
ING GROEP N.V. NETHERLANDS 3.3% 0.2%
MANNESMANN AG GERMANY 2.7% 0.2%
MISYS PLC U.K. 2.5% 0.2%
JULIUS BAER
HOLDING AG SWITZERLAND 2.2% 0.2%
AXA-UAP FRANCE 2.1% 0.2%
[pie chart]
PERCENT OF FUND'S FOREIGN STOCKS
Europe 89%
Asia/Pacific 5%
Americas
(excluding U.S.) 6%
www.americancentury.com 7
Strategic Conservative--Q&A
- -----------------------------------------------------------------------------
(Continued)
The stock market rally, on the other hand, has been dependent on a healthy
U.S. economy and solid corporate earnings growth. Corporate profits are already
lower than they were a year ago, and we expect them to remain lackluster through
the end of this year. In addition, a big build-up of inventories in the first
quarter and weak consumer demand from Asia will probably slow the economy.
The bottom line is that we see more downside risk in stocks than in bonds.
And even if both markets go sideways for the rest of the year, bonds offer
interest rates of 5-6% a year, whereas stocks pay out dividends of 2% or
less--if they pay any at all.
ARE YOU PLANNING TO SHIFT SIGNIFICANTLY OUT OF U.S. STOCKS?
No. The adjustments I'm talking about are likely to be fairly small.
Strategic Conservative is managed to maintain a specific strategic position, so
we don't stray too far from its neutral asset mix. To make sure of this, the
fund's prospectus includes operating ranges for each asset class that we are
obligated to stay within. For example, our neutral weighting for stocks is 40%,
and we must keep it between 34% and 46%.
ARE THERE STILL GOOD INVESTMENT OPPORTUNITIES OVERSEAS?
Definitely. Europe is still a great place to invest, especially for stocks,
as privatization and productivity improvements sweep the Continent. Unemployment
remains an issue, and it might get worse before it gets better as companies cut
costs and become more efficient. But if Europe continues along the same path
that the U.S. started on five years ago, the region will likely have healthier
economies and lower unemployment down the road.
Asia, on the other hand, is not yet a buying opportunity. Japan still needs
to address its banking crisis, economic woes, and growing government budget
deficit. Until Japan starts to make some progress, the rest of Asia won't be
able to fully recover from its own problems.
As a result, we plan to maintain at least a neutral weighting in foreign
stocks and continue our concentration in Europe.
[left margin]
"THE BOTTOM LINE IS THAT WE SEE MORE DOWNSIDE RISK IN STOCKS THAN IN BONDS."
[pie charts]
FUND'S U.S. BONDS (AS OF MAY 31, 1998)
NUMBER OF SECURITIES 95
WEIGHTED AVERAGE MATURITY 13.70 YEARS
AVERAGE DURATION 4.65 YEARS
PERCENT OF FUND'S U.S. BONDS
Mortgage-Backed 26%
U.S. Treasury Bonds 7%
U.S. Govt. Agency 8%
Asset-Backed 11%
U.S. Treas. Notes 22%
Corporate Securities 26%
FUND'S FOREIGN BONDS (AS OF MAY 31, 1998)
NUMBER OF SECURITIES 19
WEIGHTED AVERAGE MATURITY 5.30 YEARS
AVERAGE DURATION 4.61 YEARS
PERCENT OF FUND'S FOREIGN BONDS
Europe 59%
Asia/Pacific 27%
Americas
(excluding U.S.) 14%
8 1-800-345-2021
Conservative--Schedule of Investments
- -----------------------------------------------------------------------------
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
COMMON STOCKS
AEROSPACE & DEFENSE--1.6%
1,500 Anaren Microwave, Inc.(1) $ 25,078
1,500 BE Aerospace, Inc.(1) 43,359
5,100 Boeing Co. 242,888
3,400 Bombardier Inc. Cl B ORD 87,437
19,800 British Aerospace PLC ORD 175,484
600 Cordant Technologies Inc. 29,925
5,600 General Dynamics Corp. 248,850
600 Gulfstream Aerospace Corp.(1) 25,500
3,500 Litton Industries, Inc.(1) 202,781
3,200 Lockheed Martin Corp. 359,200
10,500 Raytheon Co. Cl B 574,219
800 Triumph Group, Inc.(1) 39,200
7,600 United Technologies Corp. 714,400
------------------
2,768,321
------------------
AGRICULTURE--0.1%
3,900 Pioneer Hi-Bred International,
Inc. 148,444
------------------
AIRLINES--0.1%
1,000 AMR Corp.(1) 153,938
6,900 British Airways plc ORD 73,035
100 Delta Air Lines Inc. 11,500
500 Midway Airlines Corp.(1) 9,625
200 US Airways Group Inc.(1) 14,000
------------------
262,098
------------------
AUTOMOBILES & AUTO PARTS--1.3%
100 Bayerische Motoren Werke
(BMW) AG ORD 105,770
20 Bayerische Motoren Werke
(BMW) AG ORD(1) 20,896
1,000 Bridgestone Corp. ORD 22,753
2,000 Chrysler Corp. 111,250
1,700 Coachmen Industries, Inc. 40,481
19,600 Cooper Tire and Rubber Company 464,275
1,400 Daimler-Benz AG ORD 141,020
1,700 Dura Automotive Systems, Inc.(1) 62,369
1,500 Excel Industries, Inc. 29,813
4,900 Ford Motor Co. 254,188
1,000 Gentex Corp.(1) 36,531
2,000 Honda Motor Co., Ltd. ORD 67,972
900 Magna International Inc. Cl A ORD 63,286
500 PACCAR Inc. 27,609
14,600 Superior Industries International,
Inc. 425,225
2,400 Tower Automotive, Inc.(1) 112,650
323 Volkswagen AG ORD 261,838
------------------
2,247,926
------------------
Shares Value
- -----------------------------------------------------------------------------
BANKING--4.2%
3,000 Banc One Corp. $ 165,375
55,000 Banca di Roma ORD 113,323
2,487 Banca Popolare di Bergamo
Credito Varesino SpA ORD 58,452
1,200 Banco Popular Espanol SA ORD 95,101
4,900 BankAmerica Corp. 405,169
2,100 Bankers Trust New York Corp. 259,350
1,200 Banque Nationale de Paris ORD 102,439
2,800 Chase Manhattan Corp. 380,625
600 Citicorp 89,475
600 Corporacion Bancaria de Espana
SA ORD 51,071
900 Credit Suisse Group ORD 197,802
20,000 Credito Italiano ORD 111,462
2,200 Deutsche Pfandbrief-und
Hypothekenbank AG ORD 176,000
1,500 First Security Corp. 34,031
5,000 First Union Corp. 276,563
10,600 First Virginia Banks, Inc. 553,850
1,500 GreenPoint Financial Corp. 61,781
1,200 Imperial Bancorp(1) 35,100
2,100 Mellon Bank Corp. 141,619
16,800 Mercantile Bancorporation Inc. 858,900
15,300 Merita OY Ltd. Cl A ORD 96,161
15,400 NationsBank Corp. 1,166,537
4,400 Norwest Corp. 171,050
1,400 Peoples Heritage Financial
Group, Inc. 31,456
5,000 PNC Bank Corp. 288,750
400 Providian Financial Corp. 25,450
5,200 Regions Financial Corp. 213,525
800 Societe Generale Cl A ORD 158,370
130 Union Bank of Switzerland ORD 218,230
8,300 Wachovia Corp. 664,519
400 Wells Fargo & Co. 144,600
300 Zions Bancorporation 15,544
------------------
7,361,680
------------------
BIOTECHNOLOGY--0.2%
3,000 Genzyme Corp.(1) 82,219
2,500 IDEC Pharmaceuticals Corp.(1) 78,594
1,300 Immunex Corp.(1) 80,438
1,500 PathoGenesis Corp.(1) 53,625
200 Sangstat Medical Corp.(1) 5,238
------------------
300,114
------------------
BROADCASTING & MEDIA--0.2%
4,000 CBS Corporation 127,000
1,600 Clear Channel Communications,
Inc.(1) 153,400
See Notes to Financial Statements
www.americancentury.com 9
Conservative--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
300 Heftel Broadcasting Corp.(1) $ 11,353
200 Jacor Communications, Inc.(1) 10,563
900 Societe Television Francaise 1
ORD 126,896
------------------
429,212
------------------
BUILDING & HOME IMPROVEMENTS--0.1%
700 American Standard Companies
Inc.(1) 33,775
1,900 Premark International, Inc. 60,919
------------------
94,694
------------------
BUSINESS SERVICES & SUPPLIES--0.6%
363 Altran Technologies SA ORD 74,286
700 Applied Graphics Technologies,
Inc.(1) 33,600
1,400 Billing Information Concepts
Corp.(1) 32,550
9,000 Capita Group Plc ORD 79,472
2,061 Cendant Corp.(1) 44,698
1,800 Dun & Bradstreet Corp. (The) 60,750
1,600 First Consulting Group, Inc.(1) 35,550
900 HA-LO Industries, Inc.(1) 27,844
5,600 Hays plc ORD 102,372
2,950 International Telecommunication
Data Systems, Inc.(1) 73,197
2,600 Kelly Services, Inc. Cl A 96,038
2,500 Metamor Worldwide, Inc.(1) 75,078
900 Metzler Group, Inc. (The)(1) 24,947
1,300 PMT Services, Inc.(1) 25,269
700 U.S. Filter Corp.(1) 21,306
2,400 Vedior NV ORD (Acquired
1/27/98-2/2/98,
Cost $51,667)(2) 76,346
14,000 WPP Group plc ORD 89,575
------------------
972,878
------------------
CHEMICALS & RESINS--1.2%
1,800 Air Products and Chemicals, Inc. 156,600
6,800 Dow Chemical Co. 658,750
11,900 Great Lakes Chemical Corp. 476,000
9,100 Lubrizol Corp. 316,225
7,800 Nalco Chemical Co. 292,500
2,900 Praxair, Inc. 143,006
------------------
2,043,081
------------------
COMMUNICATIONS EQUIPMENT--0.9%
1,800 Advanced Fibre Communications,
Inc.(1) 66,713
1,800 Ascend Communications, Inc.(1) 77,681
4,600 Ericsson (L.M.) Telephone Co.
ADR 128,369
1,200 Europolitan Holdings AB ORD 74,501
Shares Value
- -----------------------------------------------------------------------------
1,300 Excel Switching Corp.(1) $ 25,594
4,300 Lucent Technologies Inc. 305,031
8,200 Motorola, Inc. 434,088
2,600 Nokia Corp. Cl A ADR 168,838
1,500 Northern Telecom Ltd. ORD 96,103
2,700 RELTEC Corp.(1) 99,225
1,100 Tekelec(1) 48,778
1,100 Tellabs, Inc.(1) 75,591
------------------
1,600,512
------------------
COMMUNICATIONS SERVICES--1.8%
3,600 AirTouch Communications, Inc(1) 171,450
718 Alcatel Alsthom Compagnie
Generale ORD 153,532
8,600 Ameritech Corp. 364,963
5,700 AT&T Corp. 346,988
1,700 BCE Inc. ORD 78,623
2,200 Bell Atlantic Corp. 201,575
4,600 BellSouth Corp. 296,700
2,626 Energis plc ORD(1) 37,075
2,200 NetCom Systems AB Cl B ORD(1) 84,139
1 NTT Data Corp. ORD 40,035
7,800 SBC Communications Inc. 303,225
1,500 Tele Danmark A/S Cl B ORD 140,296
18,700 Telecom Italia SpA ORD 141,205
5,236 Telefonica de Espana ORD 233,716
1,600 Teleglobe Inc. ORD 83,008
17,600 Vodafone Group plc ORD 193,331
6,600 WorldCom, Inc.(1) 300,506
------------------
3,170,367
------------------
COMPUTER PERIPHERALS--0.3%
2,100 Cisco Systems Inc.(1) 158,616
3,200 EMC Corp. (Mass.)(1) 132,600
4,300 FORE Systems, Inc.(1) 94,197
400 Lexmark International Group, Inc.
Cl A(1) 22,200
200 MICROS Systems, Inc.(1) 11,713
3,500 Xylan Corp.(1) 84,109
------------------
503,435
------------------
COMPUTER SOFTWARE & SERVICES--2.3%
3,900 At Home Corp. Series A(1) 135,281
2,200 BMC Software, Inc.(1) 101,269
2,500 Borland International, Inc.(1) 20,703
1,600 Cadence Design Systems, Inc.(1) 56,400
1,700 Cap Gemini N.V. ORD 133,168
1,733 Cap Gemini SA ORD 258,531
2,800 CBT Group Plc ADR(1) 139,650
400 CDW Computer Centers, Inc.(1) 16,475
See Notes to Financial Statements
10 1-800-345-2021
Conservative--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
300 Citrix Systems, Inc.(1) $ 15,656
2,000 CMG plc ORD 56,148
800 Computer Sciences Corp. 41,550
5,100 Compuware Corp.(1) 234,122
600 Concord EFS, Inc.(1) 19,163
3,100 Electronic Arts Inc.(1) 134,463
6,700 Electronic Data Systems Corp. 243,713
2,500 Geac Computer Corp. Ltd. ORD(1) 91,416
3,000 Getronics N.V. ORD 149,113
4,500 GTECH Holdings Corp.(1) 145,969
2,000 HBO & Co. 115,438
2,600 J.D. Edwards & Company(1) 95,631
900 JDA Software Group, Inc.(1) 40,641
1,600 Lernout & Hauspie Speech
Products N.V.(1) 85,900
2,000 Logica plc ORD 59,004
1,100 Macromedia, Inc.(1) 17,428
1,100 Mastech Corp.(1) 20,797
8,500 Microsoft Corp.(1) 721,172
5,231 Misys plc ORD 315,566
800 Network Associates Inc.(1) 49,025
1,000 Oracle Systems Corp.(1) 23,594
2,200 Parametric Technology Corp.(1) 67,444
900 Project Software & Development,
Inc.(1) 20,306
2,300 QuadraMed Corp.(1) 55,559
1,300 Saville Systems Ireland plc ADR(1) 52,081
1,500 SEMA Group plc ORD 58,759
300 Shared Medical Systems Corp. 21,825
2,400 Sterling Software, Inc.(1) 65,250
1,400 Superior Consultant Holdings
Corp.(1) 59,500
1,000 Symantec Corp.(1) 23,875
2,300 Unisys Corp.(1) 56,350
2,300 Vanstar Corp.(1) 33,494
400 Visio Corp.(1) 18,750
------------------
4,070,179
------------------
COMPUTER SYSTEMS--0.3%
800 Apple Computer, Inc.(1) 21,275
2,200 Dell Computer Corp.(1) 181,294
9,000 Fujitsu Ltd. ORD 103,039
1,200 Hewlett-Packard Co. 74,550
1,300 International Business Machines
Corp. 152,588
2,400 Sun Microsystems, Inc.(1) 96,075
------------------
628,821
------------------
CONSTRUCTION & PROPERTY
DEVELOPMENT--0.1%
700 Assa Abloy AB Cl B ORD 27,396
600 Dycom Industries, Inc.(1) 17,175
Shares Value
- -----------------------------------------------------------------------------
900 Kaufman & Broad Home Corp. $ 23,119
1,100 Lafarge SA ORD 111,544
900 NVR, Inc.(1) 28,913
------------------
208,147
------------------
CONSUMER PRODUCTS--0.5%
700 Avon Products, Inc. 57,269
600 Colgate-Palmolive Co. 52,200
1,200 Electrolux AB Cl B ORD 119,324
1,900 Gillette Company 222,538
4,700 Helen of Troy Ltd.(1) 89,741
1,600 Maytag Corp. 80,700
3,600 NBTY, Inc.(1) 62,775
2,500 Procter & Gamble Co. (The) 209,844
2,300 Rayovac Corporation(1) 48,300
500 Whirlpool Corp. 34,156
------------------
976,847
------------------
CONTROL & MEASUREMENT--0.1%
2,500 Beckman Instruments, Inc. 139,375
500 Keyence Corporation ORD 60,088
400 Waters Corp(.(1)) 23,300
------------------
222,763
------------------
DIVERSIFIED COMPANIES--0.4%
3,000 General Electric Co. (U.S.) 250,125
100 Honeywell Inc. 8,394
2,200 Siebe plc ORD 55,119
6,000 Tyco International Ltd. 332,250
1,400 Unilever N.V. 110,513
------------------
756,401
------------------
ELECTRICAL & ELECTRONIC
COMPONENTS--1.1%
1,000 Aiwa Co., Ltd. ORD 30,098
17,000 AMP, Inc. 646,000
3,400 Analog Devices, Inc.(1) 83,938
1,200 Burr-Brown Corp.(1) 30,788
1,700 Cree Research, Inc.(1) 26,031
800 Eaton Corp. 71,850
8,700 General Signal Corp. 357,788
400 Intel Corp. 28,563
126 Le Carbone-Lorraine ORD 57,464
7,000 Minebea Company Ltd. ORD 71,623
700 Philips Electronics N.V. 66,588
1,900 REMEC, Inc.(1) 27,253
1,600 Sanmina Corp.(1) 124,600
1,100 Sony Corp. ORD 92,670
600 Texas Instruments Inc. 30,825
2,300 Uniphase Corp.(1) 117,156
400 Vitesse Semiconductor Corp.(1) 10,238
------------------
1,873,473
------------------
See Notes to Financial Statements
www.americancentury.com 11
Conservative--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
ENERGY (PRODUCTION & MARKETING)--3.3%
17,800 Amoco Corp. $ 744,263
10,600 Apache Corp. 362,388
7,400 Atlantic Richfield Co. 583,675
15,100 Burlington Resources Inc. 636,088
6,100 Chevron Corp. 487,238
10,200 Exxon Corp. 719,100
8,600 Murphy Oil Corp. 432,688
25,800 Seagull Energy Corp.(1) 427,313
3,100 Sun Company, Inc. 131,750
4,800 Texaco Inc. 277,200
4,600 Ultramar Diamond Shamrock
Corp. 146,913
18,500 Unocal Corp. 659,063
1,800 Williams Companies, Inc. (The) 58,388
------------------
5,666,067
------------------
ENERGY (SERVICES)--0.4%
500 BJ Services Co.(1) 16,344
1,100 Diamond Offshore Drilling, Inc. 52,594
2,300 Ensco International Inc. 58,219
2,000 EVI, Inc.(1) 101,125
1,100 Global Industries, Ltd.(1) 23,409
2,500 Noble Drilling Corp.(1) 73,750
1,200 Petroleum Geo-Services ASA ADR(1) 78,600
5,300 Tidewater Inc. 201,400
1,300 Transocean Offshore 64,106
900 Veritas DGC Inc.(1) 46,631
------------------
716,178
------------------
ENVIRONMENTAL SERVICES--0.6%
16,300 Browning-Ferris Industries, Inc. 579,669
1,800 Superior Services Inc.(1) 54,900
3,222 USA Waste Services, Inc.(1) 152,038
6,600 Waste Management, Inc. 214,500
------------------
1,001,107
------------------
FINANCIAL SERVICES--2.6%
2,200 AMRESCO, INC.(1) 74,250
10,900 Amvescap Plc ORD 116,620
1,543 Associates First Capital Corp. 115,436
16,400 Banca Intesa S.p.A. ORD 102,165
3,700 Bank of Ireland ORD 69,511
1,100 Bear Stearns Companies Inc. 59,675
20,200 CIT Group Holdings, Inc. (The)
Cl A 636,300
600 Deutsche Bank AG ORD 51,630
1,300 Dresdner Bank AG ORD 73,048
3,700 Equitable Companies Inc. 254,838
6,500 Fannie Mae 389,188
7,900 Heller Financial, Inc.(1) 220,213
6,194 ING Groep N.V. ORD 425,166
Shares Value
- -----------------------------------------------------------------------------
2,500 Investor's Group, Inc. ORD $ 91,159
97 Julius Baer Holding AG ORD 279,235
1,500 Lehman Brothers Holdings, Inc. 106,406
1,000 Merrill Lynch & Co., Inc. 89,500
4,200 Morgan Stanley Dean Witter,
Discover & Co. 327,863
4,450 Newcourt Credit Group Inc. ORD
(Acquired 9/25/97-2/6/98,
Cost $174,494)(2) 218,489
2,412 Provident Financial plc ORD 37,833
1,050 Schroders plc ORD 30,814
2,500 Sirrom Capital Corp. 66,563
9,500 Skandia Forsakrings AB ORD 138,669
9,599 Travelers Group, Inc. 585,539
------------------
4,560,110
------------------
FOOD & BEVERAGE--2.3%
2,500 American Italian Pasta Co. Cl A(1) 89,688
37,671 Archer-Daniels-Midland Co. 711,040
1,900 Bestfoods 107,231
1,100 Coca-Cola Company (The) 86,213
3,100 Coca-Cola Enterprises, Inc. 116,444
400 Dean Foods Co. 19,700
10,300 Diageo plc ORD 116,421
700 Groupe Danone ORD 188,390
1,100 Hershey Foods Corp. 76,175
4,700 Hormel Foods Corp. 158,038
36,300 IBP, Inc. 703,313
400 Lancaster Colony Corp. 16,150
800 Lance, Inc. 16,825
106 Nestle S.A. ORD 226,750
2,300 Northland Cranberries, Inc. 36,513
1,600 PepsiCo, Inc. 65,300
2,300 Quaker Oats Co. (The) 132,681
700 Raisio Group plc ORD 130,953
3,200 Richfood Holdings, Inc. 78,200
3,000 Smithfield Foods, Inc.(1) 81,094
600 Suiza Foods Corp.(1) 35,063
20,100 Tyson Foods, Inc. Cl A 424,613
15,600 Universal Foods Corp. 371,475
------------------
3,988,270
------------------
FURNITURE & FURNISHINGS--0.1%
600 CompX International Inc.(1) 13,950
1,300 Ethan Allen Interiors Inc. 65,406
2,400 Furniture Brands International,
Inc.(1) 70,800
700 O'Sullivan Industries Holdings,
Inc.(1) 10,500
------------------
160,656
------------------
See Notes to Financial Statements
12 1-800-345-2021
Conservative--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
HEALTHCARE--0.1%
500 Cardinal Health, Inc. $ 44,563
600 Concentra Managed Care, Inc.(1) 14,063
800 Hooper Holmes, Inc. 18,600
1,000 Province Healthcare Co.(1) 25,656
500 Tenet Healthcare Corp.(1) 17,500
2,100 Wellpoint Health Networks Inc.(1) 136,500
------------------
256,882
------------------
INDUSTRIAL EQUIPMENT &
MACHINERY--0.7%
8,000 Caterpillar Inc. 439,500
8,900 Ingersoll-Rand Co. 401,056
2,100 Johnstown America Industries,
Inc.(1) 38,063
350 Mannesmann AG ORD 342,157
------------------
1,220,776
------------------
INSURANCE--2.6%
5,600 Aetna Inc. 437,850
408 Allianz AG ORD 128,892
6,300 Allstate Corp. 592,988
800 American International Group, Inc. 99,050
1,533 ASR Verzekeringsgroep N.V. ORD 133,725
2,362 Axa-UAP ORD 268,714
7,300 Chubb Corp. (The) 580,806
900 CMAC Investment Corp. 54,450
3,800 CNA Financial Corp.(1) 574,750
2,500 Conseco Inc. 116,563
2,500 Gallagher (Arthur J.) & Co. 107,813
300 General Re Corp. 65,963
1,100 LandAmerica Financial Group, Inc. 52,525
3,000 Lincoln National Corp. 269,625
2,700 Orion Capital Corp. 152,044
13,300 SAFECO Corp. 620,944
3,400 Sampo Insurance Company Ltd.
ORD 157,918
5,900 Storebrand ASA ORD(1) 54,724
800 Unitrin, Inc. 55,750
------------------
4,525,094
------------------
LEISURE--0.5%
625 Accor SA ORD 171,337
400 Anchor Gaming(1) 36,263
500 Disney (Walt) Co. 56,563
4,200 Eastman Kodak Co. 299,775
5,400 Polaroid Corp. 219,038
12,514 Thomson Travel Group plc ORD(1) 36,664
------------------
819,640
------------------
Shares Value
- -----------------------------------------------------------------------------
MACHINERY & EQUIPMENT--0.1%
2,100 Deere & Co. $ 108,938
1,000 National-Oilwell, Inc.(1) 34,938
2,600 Pinnacle Systems, Inc.(1) 87,425
400 Sundstrand Corp. 24,800
------------------
256,101
------------------
MEDICAL EQUIPMENT & SUPPLIES--0.4%
1,100 Advanced Technology
Laboratories, Inc.(1) 49,809
800 AmeriSource Health Corp.(1) 43,500
1,900 CONMED Corp.(1) 40,434
1,100 Cyberonics, Inc.(1) 12,513
800 CyberOptics Corp.(1) 13,625
1,100 Datascope Corp.(1) 30,697
1,000 Guidant Corp. 64,438
3,000 Hillenbrand Industries, Inc. 185,250
2,800 STERIS Corp.(1) 174,825
400 Teleflex Inc. 16,175
------------------
631,266
------------------
METALS & MINING--0.5%
3,900 Aluminum Co. of America 270,563
8,400 Arch Coal Inc. 203,175
7,500 Reynolds Metals Co. 435,000
------------------
908,738
------------------
OFFICE EQUIPMENT & SUPPLIES--0.3%
2,200 Kronos Inc.(1) 78,375
3,500 Xerox Corp. 359,625
------------------
438,000
------------------
PAPER & FOREST PRODUCTS--0.3%
1,600 Bowater Inc. 81,000
1,000 Consolidated Papers, Inc. 28,938
3,000 Rayonier, Inc. 140,813
12,300 Westvaco Corp. 350,550
------------------
601,301
------------------
PERSONAL SERVICES--0.1%
2,000 Block (H & R), Inc. 88,000
------------------
PHARMACEUTICALS--2.1%
1,100 Barr Laboratories, Inc.(1) 44,894
2,000 Bergen Brunswig Corp. Cl A 83,000
5,100 Bristol-Myers Squibb Co. 548,250
1,200 Dura Pharmaceuticals, Inc.(1) 31,388
1,300 Elan Corp., plc ADR(1) 79,544
3,600 Forest Laboratories, Inc.(1) 118,800
800 Herbalife International, Inc. 20,350
1,900 Johnson & Johnson 131,219
900 Lilly (Eli) & Co. 55,294
See Notes to Financial Statements
www.americancentury.com 13
Conservative--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
23,300 Mallinckrodt Inc. $ 717,931
500 McKesson Corp. 39,063
3,600 Merck & Co., Inc. 421,425
2,200 Nature's Sunshine Products, Inc. 50,669
63 Novartis AG ORD 106,522
1,534 Novo Nordisk A/S Cl B ORD 241,383
2,800 Pfizer, Inc. 293,475
1,200 Pharmacia & Upjohn Inc. 53,025
3,700 Roberts Pharmaceutical Corp.(1) 61,050
1,400 Schein Pharmaceutical, Inc.(1) 36,925
3,700 Schering-Plough Corp. 309,644
2,000 Takeda Chemical Inds. ORD 51,555
400 Twinlab Corp.(1) 14,725
11 UCB SA ORD 52,281
1,600 Zeneca Group plc ORD 65,001
------------------
3,627,413
------------------
PRINTING & PUBLISHING--0.4%
4,500 Banta Corp. 142,453
7,900 Deluxe Corp. 265,144
1,200 Media Arts Group, Inc.(1) 23,175
4,600 Mondadori (Arnoldo) Editore SpA
ORD 56,214
4,900 VNU Tijdschriftengroep
Nederland ORD 168,050
------------------
655,036
------------------
RAILROAD--0.4%
800 Canadian National Railway
Company ORD 47,355
13,200 CSX Corp. 628,650
------------------
676,005
------------------
RESTAURANTS--0.2%
1,000 Buffets, Inc.(1) 16,313
2,100 Cheesecake Factory Inc.(1) 42,394
4,490 CKE Restaurants, Inc. 142,558
3,000 Compass Group PLC ORD 62,187
8,000 TelePizza, S.A. ORD(1) 80,438
------------------
343,890
------------------
RETAIL (APPAREL)--0.3%
1,100 DM Management Co.(1) 33,688
1,000 Hennes & Mauritz AB Cl B ORD 56,092
4,100 Liz Claiborne, Inc. 207,819
400 Payless ShoeSource, Inc.(1) 28,025
2,900 Stage Stores, Inc.(1) 135,213
------------------
460,837
------------------
RETAIL (FOOD & DRUG)--0.6%
2,300 CVS Corp. 161,431
8,400 Giant Food Inc. Cl A 361,200
4,404 Koninklijke Ahold NV ORD 139,000
Shares Value
- -----------------------------------------------------------------------------
10,388 La Rinascente SpA ORD $ 55,502
3,700 Safeway Inc.(1) 134,819
8,900 Somerfield plc ORD 57,598
3,800 Universal Corp. 142,738
------------------
1,052,288
------------------
RETAIL (GENERAL MERCHANDISE)--1.0%
16,400 Dillard's Inc. Cl A 689,825
1,700 Douglas Holding AG ORD 92,381
800 Family Dollar Stores, Inc. 13,250
900 Fossil, Inc.(1) 17,353
3,250 Fred's, Inc. 76,375
1,000 Ito-Yokado Co., Ltd. ORD 49,683
600 Meyer (Fred), Inc.(1) 25,800
2,700 Penney (J.C.) Company, Inc. 193,894
200 Pinault-Printemps-Redoute SA
ORD 164,551
6,100 Wal-Mart Stores, Inc. 336,644
------------------
1,659,756
------------------
RETAIL (SPECIALTY)--0.4%
500 Action Performance Cos. Inc. 13,906
4,750 Corporate Express, Inc.(1) 55,070
900 CSK Auto Corp.(1) 24,188
7,700 Food Lion, Inc. Cl A 74,353
2,100 Home Depot, Inc. 164,981
1,500 Tandy Corp. 66,375
7,700 Toys 'R' Us, Inc.(1) 204,050
1,100 Wilmar Industries, Inc.(1) 26,538
------------------
629,461
------------------
RUBBER & PLASTICS(3)
600 Illinois Tool Works Inc. 39,600
------------------
STEEL--0.1%
4,000 Bethlehem Steel Corporation(1) 49,000
700 Carpenter Technology Corp. 37,100
------------------
86,100
------------------
TEXTILES & APPAREL--0.1%
2,600 Dexter Corp. (The) 107,250
------------------
TOBACCO--0.1%
1,300 Philip Morris Companies Inc. 48,588
5,500 UST Inc. 146,438
------------------
195,026
------------------
TRANSPORTATION--0.1%
1,600 AirNet Systems Inc.(1) 37,600
3,900 Allied Holdings, Inc.(1) 70,200
2,700 XTRA Corp. 141,750
------------------
249,550
------------------
See Notes to Financial Statements
14 1-800-345-2021
Conservative--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares/Principal Amount Value
- -----------------------------------------------------------------------------
UTILITIES--2.0%
10,600 AGL Resources Inc. $ 212,000
21,100 Ameren Corporation 825,538
1,100 Energy East Corp. 44,688
4,300 Enova Corp. 109,919
12,100 Entergy Corp. 318,381
10,600 Florida Progress Corp. 437,250
4,800 FPL Group, Inc. 294,900
4,800 Kansas City Power & Light Co. 138,000
3,800 Minnesota Power & Light Co. 149,863
11,300 PacifiCorp 260,606
11,200 Texas Utilities Co. 442,400
2,500 VEBA AG ORD 164,146
500 Vivendi ORD 100,401
------------------
3,498,092
------------------
TOTAL COMMON STOCKS--40.1% 69,757,883
------------------
(Cost $60,163,441)
PREFERRED STOCKS
CHEMICALS & RESINS(3)
800 Henkel KGaA ORD 71,709
------------------
COMPUTER SOFTWARE & SERVICES--0.1%
300 SAP AG ORD 166,387
------------------
TOTAL PREFERRED STOCKS--0.1% 238,096
------------------
(Cost $170,466)
U.S. TREASURY SECURITIES
$3,400,000 U.S. Treasury Notes, 7.75%,
11/30/99 3,506,046
5,800,000 U.S. Treasury Notes, 6.625%,
7/31/01 5,974,817
1,600,000 U.S. Treasury Notes, 5.75%,
8/15/03 1,612,704
4,000,000 U.S. Treasury Notes, 6.625%,
5/15/07 4,265,200
1,050,000 U.S. Treasury Bonds, 8.75%,
5/15/17 1,391,597
3,500,000 U.S. Treasury Bonds, 6.125%,
11/15/27 3,659,565
------------------
TOTAL U.S. TREASURY SECURITIES--11.7% 20,409,929
------------------
(Cost $20,179,480)
Principal Amount Value
- -----------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES
$1,350,000 FHLMC, 7.93%, 1/20/05 $ 1,505,588
500,000 FHLMC, 7.09%, 11/24/06 503,205
500,000 FNMA, 5.25%, 1/15/03 490,140
500,000 FNMA, 6.45%, 6/10/03 497,665
1,500,000 FNMA, 7.69%, 9/13/06 1,578,885
550,000 FNMA MTN, 7.00%, 2/20/07 566,363
700,000 FNMA MTN, 7.49%, 5/22/07 718,872
------------------
TOTAL U.S. GOVERNMENT
AGENCY SECURITIES--3.4% 5,860,718
------------------
(Cost $5,682,864)
SOVEREIGN GOVERNMENTS & AGENCIES
ESP 45,000,000 Bonos Y Oblig Del Estado,
10.50%, 10/30/03 376,998
DEM 2,650,000 Deutschland Republic,
6.00%, 9/15/03 1,584,952
FRF 8,500,000 France O.A.T., 6.75%,
10/25/03 1,566,096
CAD 500,000 Government of Canada,
6.50%, 6/1/04 364,807
NLG 200,000 Government of Netherlands,
8.25%, 2/15/02 112,183
JPY 210,000,000 Japan Global, 4.10%,
12/22/03 1,762,802
BEF 4,000,000 Kingdom of Belgium, 9.00%,
6/27/01 122,822
DKK 1,000,000 Kingdom of Denmark, 8.00%,
5/15/03 167,723
SEK 1,000,000 Kingdom of Sweden,
13.00%, 6/15/01 157,060
AUD 300,000 Queensland Treasury Corp.,
8.00%, 8/14/01 203,717
ITL 800,000,000 Republic of Italy, 6.75%,
2/1/07 507,551
GBP 800,000 United Kingdom Treasury,
8.00%, 6/10/03 1,420,422
------------------
TOTAL SOVEREIGN GOVERNMENTS
& AGENCIES--4.8% 8,347,133
------------------
(Cost $8,212,353)
See Notes to Financial Statements
www.americancentury.com 15
Conservative--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Principal Amount Value
- -----------------------------------------------------------------------------
MORTGAGE-BACKED SECURITIES(4)
$ 575,605 FHLMC Gold Pool #E68523,
6.50%, 10/7/03 $ 580,382
43,681 FNMA Pool #343829, 6.50%,
4/1/11 44,007
781,199 FNMA Pool #341477, 6.50%,
5/1/11 787,034
240,558 FNMA Pool #346400, 6.50%,
5/1/11 242,355
504,860 FNMA Pool #346779, 6.50%,
5/1/11 508,631
212,187 FNMA Pool #369034, 6.50%,
2/1/12 213,644
476,505 FNMA Pool #377181, 6.50%,
4/1/12 479,778
847,762 FNMA Pool #378039, 6.50%,
5/1/12 853,586
88,266 FNMA Pool #250576, 7.00%,
6/1/26 89,668
841,430 FNMA Pool #373510, 7.50%,
3/1/27 865,899
361,328 GNMA Pool #351417, 7.00%,
1/15/24 368,153
168,701 GNMA Pool #361446, 8.00%,
7/15/24 175,681
234,191 GNMA Pool #377238, 8.50%,
7/20/24 246,004
228,199 GNMA Pool #355903, 8.00%,
9/15/24 237,642
883,337 GNMA Pool #404303, 8.25%,
10/15/24 927,548
197,585 GNMA Pool #392995, 8.75%,
3/15/25 212,825
175,280 GNMA Pool #372335, 7.50%,
4/15/25 180,884
225,242 GNMA Pool #001991, 9.00%,
4/20/25 239,383
653,013 GNMA Pool #009297, 8.25%,
7/20/25 679,996
308,671 GNMA Pool #002273, 9.00%,
8/20/26 327,488
448,410 GNMA Pool #412177, 7.00%,
9/15/25 456,315
479,976 GNMA Pool #416856, 7.50%,
10/15/25 495,374
266,554 GNMA Pool #425081, 7.50%,
2/15/26 275,075
262,406 GNMA Pool #422006, 7.50%,
5/15/26 270,795
377,965 GNMA Pool #417068, 8.00%,
5/15/26 393,454
248,515 GNMA Pool #402680, 8.00%,
5/15/26 258,699
Principal Amount Value
- -----------------------------------------------------------------------------
$ 81,780 GNMA Pool #402682, 7.50%,
6/15/26 $ 84,394
1,250,886 GNMA Pool #431942, 8.25%,
7/15/26 1,314,193
942,275 GNMA Pool #456569, 7.50%,
11/15/27 972,192
1,373,913 GNMA Pool #457351, 7.00%,
12/15/27 1,397,420
3,531,832 GNMA Pool #466804, 6.50%,
4/15/28 3,519,542
------------------
TOTAL MORTGAGE-BACKED
SECURITIES--10.2% 17,698,041
------------------
(Cost $17,464,167)
ASSET-BACKED SECURITIES(4)
600,000 AMRESCO, INC., Series 1998-2,
Class A4 SEQ, 6.45%,
4/25/27 600,000
600,000 California Infrastructure SCE-1,
Series 1997-1, Class A6, 6.38%,
4/27/05 613,911
188,054 Capital Equipment Receivables
Trust, Series 1997-1, Class A1,
5.79%, 12/15/98 188,298
1,700,000 First Union-Lehman Brothers
Commercial Mortgage, Series
1998 C2, Class A1 SEQ, 6.28%,
6/18/07 1,710,891
600,000 Money Store (The) Home Equity
Trust, Series 1995
C, Class A9 SEQ,
6.375%, 12/12/00 602,877
500,000 Money Store (The) Home Equity
Trust, Series 1997
C, Class AF6 SEQ,
6.67%, 3/1/03 505,718
992,688 Morgan Stanley Capital I,
Series 1998 WF1, Class
A1 SEQ, 6.25%, 7/15/07 1,000,664
994,734 Mortgage Capital Funding, Inc.,
Series 1998 MC1, Class A1
SEQ, 6.42%, 6/18/07 1,008,784
441,899 Textron Financial Corp.
Receivables Trust, Series
1997 A, Class A, 6.05%,
3/16/09 (Acquired 9/18/97,
Cost $441,313)(2) 442,410
600,000 United Companies Financial Corp.,
Home Equity Loan, Series
1997 C, Class A7, 6.85%,
1/15/29 609,885
------------------
TOTAL ASSET-BACKED SECURITIES--4.2% 7,283,438
------------------
(Cost $7,230,940)
See Notes to Financial Statements
16 1-800-345-2021
Conservative--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Principal Amount Value
- -----------------------------------------------------------------------------
CORPORATE BONDS
AEROSPACE & DEFENSE--0.6%
$ 200,000 Lockheed Martin Corp., 6.85%,
5/15/01 $ 204,254
800,000 Lockheed Martin Corp., 7.25%,
5/15/06 849,480
------------------
1,053,734
------------------
BANKING--1.6%
550,000 Citicorp, 7.125%, 5/15/06 578,006
500,000 First Bank System Inc., 7.625%,
5/1/05 536,905
1,000,000 HSBC America Capital, 8.38%,
5/15/27 1,066,170
600,000 NationsBank Corporation, 6.60%,
5/15/10 610,890
------------------
2,791,971
------------------
COMMUNICATIONS SERVICES--1.3%
1,500,000 Cable & Wireless Communications,
6.625%, 3/6/05 1,522,185
600,000 WorldCom, Inc., 7.55%, 4/1/04 634,536
------------------
2,156,721
------------------
ENERGY (PRODUCTION & MARKETING)--0.7%
600,000 Enron Corp., 6.625%, 11/15/05 608,226
500,000 Enron Corp., 6.75%, 7/1/05 512,365
------------------
1,120,591
------------------
ENERGY (SERVICES)--0.2%
350,000 Petro Geo-Services ASA, 7.125%,
3/30/28 356,283
------------------
FINANCIAL SERVICES--2.9%
600,000 Advanta Corp., MTN, Series B,
7.00%, 5/1/01 555,834
600,000 Comdisco Inc., 7.75%, 9/1/99 611,676
200,000 Ford Motor Credit Co., 6.125%,
1/9/06 198,132
600,000 Ford Motor Credit Co., 6.25%,
11/8/00 603,576
400,000 Ford Motor Credit Co., 6.55%,
9/10/02 407,376
500,000 Japanese Financial Corp. for
Municipal Enterprises, 7.375%,
4/27/05 540,090
800,000 Lehman Brothers Holdings Inc.,
MTN, Series 1998 E, 6.00%,
2/26/01 797,920
500,000 Merrill Lynch & Co. Inc., 8.00%,
2/1/02 531,360
1,000,000 Wharf International Finance Ltd.,
7.625%, 3/13/07 845,050
------------------
5,091,014
------------------
Principal Amount Value
- -----------------------------------------------------------------------------
LEISURE--0.2%
$ 300,000 Time Warner Inc., 6.85%,
1/15/26 $ 311,712
------------------
METALS & MINING--0.4%
100,000 Alcan Aluminium Ltd., 5.875%,
4/1/00 100,017
500,000 Barrick Gold Corp., 7.50%,
5/1/07 533,375
------------------
633,392
------------------
OFFICE EQUIPMENT & SUPPLIES--0.3%
550,000 Xerox Capital Trust, 8.00%,
2/1/27 (Acquired 7/17/97,
Cost $572,132)(2) 593,797
------------------
PRINTING & PUBLISHING--0.5%
500,000 News America Holdings Inc.,
9.125%, 10/15/99 522,080
300,000 News America Inc., 6.625%,
1/9/08 (Acquired 2/12/98,
Cost $298,725)(2) 299,445
------------------
821,525
------------------
RAILROAD--0.1%
200,000 Norfolk Southern Corp., 7.90%,
5/15/97 231,618
------------------
RETAIL (GENERAL MERCHANDISE)--0.5%
800,000 Sears Roebuck Acceptance Corp.,
6.00%, 3/20/03 794,992
100,000 Sears, Roebuck and Co., 6.00%,
5/1/00 99,975
------------------
894,967
------------------
TOBACCO--0.3%
250,000 Philip Morris Companies Inc.,
6.80%, 12/1/03 255,148
280,000 Philip Morris Companies Inc.,
7.75%, 5/1/99 284,183
------------------
539,331
------------------
UTILITIES--0.5%
300,000 CalEnergy Co. Inc., 7.63%,
10/15/07 302,949
300,000 Citizens Utilities Co., 7.60%,
6/1/06 327,345
250,000 Virginia Electric & Power, 8.00%,
3/1/04 273,070
------------------
903,364
------------------
TOTAL CORPORATE BONDS--10.1% 17,500,020
------------------
(Cost $17,302,238)
See Notes to Financial Statements
www.americancentury.com 17
Conservative--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Principal Amount Value
- -----------------------------------------------------------------------------
COMMERCIAL PAPER(5)
BANKING--3.2%
$1,035,000 Falcon Asset Securities Corp.,
5.51%, 6/22/98 (Acquired
4/21/98, Cost $1,025,178)(2) $ 1,031,288
2,230,000 Falcon Asset Securities Corp.,
5.55%, 6/11/98 (Acquired
5/21/98, Cost $2,222,780)(2) 2,225,660
600,000 Falcon Asset Securities Corp.,
5.65%, 6/1/98 (Acquired
5/28/98, Cost $599,623)(2) 599,729
1,030,000 Rabobank Nederland NV, 5.51%,
6/2/98 1,029,381
750,000 Societe Generale, 5.52%,
6/25/98 746,975
------------------
5,633,033
------------------
ENERGY (PRODUCTION &
MARKETING)--1.0%
1,634,000 Statoil-Den Norske Stats, 5.53%,
6/1/98 1,633,263
------------------
FINANCIAL SERVICES--4.4%
700,000 Ford Motor Credit Co., 5.52%,
7/10/98 695,614
3,000,000 General Electric Capital Corp.,
5.37%, 6/5/98 2,996,850
3,000,000 General Motors Acceptance Corp.,
5.44%, 6/8/98 2,995,506
1,000,000 Mitsubishi International Corp.,
5.55%, 8/4/98 990,023
------------------
7,677,993
------------------
INSURANCE--0.9%
1,500,000 SAFECO Credit Company, 5.55%,
6/23/98 1,494,398
------------------
RETAIL (FOOD & DRUG)--1.1%
2,000,000 Southland Corporation, 5.42%,
8/18/98 1,975,918
------------------
TOTAL COMMERCIAL PAPER--10.6% 18,414,605
------------------
(Cost $18,421,727)
Principal Amount Value
- -----------------------------------------------------------------------------
CERTIFICATES OF DEPOSIT
$2,000,000 Chase Manhattan Bank USA
North America, 5.56%, 7/7/98 $ 2,000,084
3,000,000 National Westminster Bank PLC,
5.65%, 3/3/99 3,000,000
------------------
TOTAL CERTIFICATES OF DEPOSIT--2.9% 5,000,084
------------------
(Cost $4,998,562)
TEMPORARY CASH INVESTMENTS--1.9%
Repurchase Agreement, B.A. Security
Services, Inc., (U.S. Treasury obligations),
in a joint trading account at 5.51%, dated
5/29/98, due 6/1/98 (Delivery value
$3,301,515) 3,300,000
------------------
(Cost $3,300,000)
TOTAL INVESTMENT SECURITIES--100.0% $173,809,947
==================
(Cost $163,126,238)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Contracts Settlement Unrealized
to Sell Date Value Gain
- -----------------------------------------------------------------------------
548,531 DEM 6/29/98 $307,785 $ 2,470
2,070,545 FRF 6/29/98 346,441 3,154
198,834 GBP 6/29/98 324,114 568
32,126,000 JPY 6/29/98 232,210 1,861
306,443 NLG 6/29/98 152,559 1,225
151,798 SEK 6/29/98 102,635 875
------------------------------------
$1,465,744 $10,153
====================================
(Value on Settlement Date $1,475,897)
Forward foreign currency exchange contracts are used by the portfolio management
team in an effort to protect foreign investments against declines in foreign
currencies. This is also known as hedging. The contracts are called "forward"
because they allow your fund to exchange a foreign currency for U.S. dollars at
a date in the future--and at a price (known as the exchange rate) agreed upon
when the contract is initially entered into.
See Notes to Financial Statements
18 1-800-345-2021
Conservative--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
AUD = Australian Dollar
BEF = Belgian Franc
CAD = Canadian Dollar
DEM = German Mark
DKK = Danish Krone
ESP = Spanish Peseta
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
FRF = French Franc
GBP = British Pound
GNMA = Government National Mortgage Association
ITL = Italian Lira
JPY = Japanese Yen
MTN = Medium Term Note
NLG = Netherlands Guilder
ORD = Foreign Ordinary Share
SEK = Swedish Krona
(1) Non-income producing.
(2) Security was purchased under Rule 144A or Section 4(2) of the Securities
Act of 1933 and, unless registered under the Act or exempted from
registration, may only be sold to qualified institutional investors. The
aggregate value of restricted securities at May 31, 1998, was $5,487,164,
which represented 3.1% of net assets.
(3) Industry is less than 0.05% of total investment securities.
(4) Final maturity indicated. Expected remaining maturity used for purposes of
calculating the weighted average portfolio maturity.
(5) The rates for commercial paper are the yield to maturity at purchase.
- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments your fund owned on the last day of the reporting period.
The schedule includes:
* a list of each investment
* the share amount (stocks) or principal amount (bonds) of each investment
* the market value of each investment
* the percentage of investments in each industry, as applicable
* the percent and dollar breakdown of each investment category
See Notes to Financial Statements
www.americancentury.com 19
<TABLE>
Strategic Moderate--Performance
- -----------------------------------------------------------------------------
TOTAL RETURNS AS OF MAY 31, 1998
INVESTOR CLASS (INCEPTION 2/15/96) ADVISOR CLASS (INCEPTION 10/2/96)
STRATEGIC LEHMAN THREE-MONTH STRATEGIC LEHMAN THREE-MONTH
ALLOCATION: S&P 500 AGGREGATE U.S. ALLOCATION: S&P 500 AGGREGATE U.S.
MODERATE BOND INDEX TREASURY BILL MODERATE BOND INDEX TREASURY BILL
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 MONTHS(1)... 10.71% 15.03% 4.09% 2.55% 10.62% 15.03% 4.09% 2.55%
1 YEAR ....... 20.24% 30.68% 10.91% 5.16% 19.79% 30.68% 10.91% 5.16%
- -----------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
LIFE OF FUND.. 14.98% 27.71% 7.79%(2) 5.15%(2) 16.50% 33.51% 9.54% 5.16%
</TABLE>
(1) Returns for periods less than one year are not annualized.
(2) Since 2/29/96, the date nearest the class's inception for which data are
available.
See pages 66-68 for more information about share classes, returns, and the
comparative indices.
[line chart - data below]
GROWTH OF $10,000 OVER LIFE OF FUND
$10,000 investment made 2/29/96
Value on May 31, 1998
Strategic: Lehman 3-Month
Moderate S&P 500 Aggregate T-Bill
2/29/96 $10,000 $10,000 $10,000 $10,000
3/31/96 $10,081 $10,133 $9,930 $10,041
4/30/96 $10,314 $10,269 $9,875 $10,082
5/31/96 $10,394 $10,504 $9,855 $10,125
6/30/96 $10,411 $10,586 $9,987 $10,167
7/31/96 $10,085 $10,102 $10,014 $10,211
8/30/96 $10,309 $10,292 $9,997 $10,254
9/30/96 $10,650 $10,911 $10,172 $10,297
10/31/96 $10,773 $11,197 $10,397 $10,339
11/30/96 $11,080 $12,018 $10,575 $10,382
12/31/96 $11,019 $11,822 $10,477 $10,425
1/31/97 $11,204 $12,544 $10,509 $10,469
2/28/97 $11,122 $12,619 $10,535 $10,513
3/31/97 $10,825 $12,141 $10,418 $10,558
4/30/97 $10,990 $12,847 $10,574 $10,603
5/31/97 $11,530 $13,600 $10,674 $10,648
6/30/97 $11,851 $14,258 $10,801 $10,691
7/31/97 $12,414 $15,367 $11,092 $10,736
8/31/97 $12,143 $14,484 $10,998 $10,783
9/30/97 $12,711 $15,319 $11,160 $10,827
10/31/97 $12,396 $14,791 $11,322 $10,871
11/30/97 $12,522 $15,450 $11,374 $10,919
12/31/97 $12,699 $15,757 $11,488 $10,966
1/31/98 $12,742 $15,917 $11,636 $11,012
2/28/98 $13,353 $17,038 $11,627 $11,058
3/31/98 $13,819 $17,951 $11,667 $11,105
4/30/98 $13,929 $18,115 $11,728 $11,150
5/31/98 $13,863 $17,773 $11,839 $11,197
The charts are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see Total Returns table
above). The chart at left shows the growth of a $10,000 investment over the life
of the fund, while the chart below shows the fund's year-by-year performance.
The S&P 500, Lehman Aggregate Bond, and Three-Month Treasury Bill indices are
provided for comparison in each chart. Past performance does not guarantee
future results. Investment return and principal value will fluctuate, and
redemption value may be more or less than original cost. Strategic Moderate's
returns include operating expenses (such as transaction costs and management
fees) that reduce returns, while the returns of the indices do not.
[bar chart - data below]
ONE-YEAR RETURNS OVER LIFE OF FUND (PERIODS ENDING MAY 31)
Strategic: Lehman 3-Month
Moderate S&P 500 Aggregate T-Bill
2/29/96-5/31/96 3.94% 5.04% -1.45% 1.25%
5/31/96-5/31/97 10.92% 29.48% 8.32% 5.17%
5/31/97-5/31/98 20.24% 30.68% 10.91% 5.16%
* From 2/29/96 (the date nearest the fund's inception for which index data are
available).
20 1-800-345-2021
Strategic Moderate--Q&A
- --------------------------------------------------------------------------------
An interview with Jeff Tyler and Brian Howell, portfolio managers on the
American Century Strategic Asset Allocation funds management team.
HOW DID THE STRATEGIC MODERATE FUND PERFORM?
For the six months ended May 31, 1998, the fund's Investor Class shares
posted a total return of 10.71%, compared with the 8.54% return of its
benchmark. (See the Total Returns table on the previous page for other fund
performance comparisons.)
WHAT IS THE FUND'S BENCHMARK?
It's a combination of 10 different market indices--four U.S. stock indices,
two foreign stock indices, two U.S. bond indices, one foreign bond index, and
one money market index. These indices represent the various asset classes in
which the fund invests and are weighted to match the fund's neutral asset mix.
Strategic Moderate beat its benchmark during the period, mainly because of
the significant outperformance of its foreign stock holdings.
WHY DID YOUR FOREIGN STOCKS DO SO WELL?
Asia was the main difference. We virtually eliminated Asian stocks from our
foreign stock portfolio, and we are almost double our neutral weighting in
Europe (see the chart on page 22). In contrast, Asia is more than a third of the
foreign stock portion of the benchmark.
Asian stock market performance was a disaster, while European equity
returns were among the best in the world, with many countries returning better
than 30% during the six-month period. Even though foreign stocks are just 15% of
the portfolio, our shift into Europe added substantially to returns.
DID YOU MAKE ANY CHANGES TO THE ASSET MIX OVER THE PAST SIX MONTHS?
We kept the portfolio pretty close to its neutral mix of 60% stocks, 30%
bonds, 10% cash. But stocks outperformed bonds and cash during the period, so we
did some minor rebalancing. We sold some stocks in April and shifted the
proceeds into bonds and money market securities to maintain neutral weightings.
Instead of making significant changes to the asset mix, we concentrated on
making adjustments within each asset class to try to enhance performance. Our
shift into European stocks is one example of this approach.
THE FUND'S BIGGEST HOLDING IS U.S. STOCKS. WHAT ADJUSTMENTS DID YOU MAKE TO THIS
PORTION OF THE PORTFOLIO?
We began moving away from smaller, value-oriented stocks toward an emphasis
on large-company growth stocks. This was a difficult decision, because there are
a lot of very attractive values among the stocks of small- and mid-sized
companies. However, when corporate earnings start to weaken--as they have
recently--investors tend to gravitate toward large-company stocks with
relatively consistent growth and earnings.
We also looked for companies that rely on domestic consumer demand. A good
example is Home Depot, which is a chain of retail stores that sells building
[right margin]
"STRATEGIC MODERATE BEAT ITS BENCHMARK DURING THE PERIOD, MAINLY BECAUSE OF THE
SIGNIFICANT OUTPERFORMANCE OF ITS FOREIGN STOCK HOLDINGS."
[pie chart]
ASSET ALLOCATION (AS OF MAY 31, 1998)
PERCENT OF FUND INVESTMENTS
U.S. Stocks 42%
Foreign Stocks 15%
Money Market Securities 14%
Foreign Bonds 7%
U.S. Bonds 22%
See page 67 for the fund's neutral asset mix.
Investment terms are defined in the Glossary on page 68.
www.americancentury.com 21
Strategic Moderate--Q&A
- -----------------------------------------------------------------------------
(Continued)
materials and home improvement products. Home Depot's customers are in the U.S.,
where economic conditions are favorable and consumer demand is healthy. As a
result, the drop-off in demand from Asia hasn't negatively affected the
company's sales.
If anything, Asia has had a positive effect on Home Depot's business--some
of the products the company sells are produced in Asia, so its stores are
getting these products at cheaper prices. It's not surprising that Home Depot's
stock returned more than 40% during the six-month period.
WHAT ABOUT THE FUND'S U.S. BOND HOLDINGS?
We cut back our Treasury holdings quite a bit as their yields hit all-time
lows. In their place, we added some callable government agency securities.
Callable securities tend to offer higher yields because they can be redeemed--or
called--by the issuer before the maturity date.
Calling a bond is kind of like refinancing a home mortgage--when interest
rates fall significantly, homeowners can often reduce their interest payments by
taking out a new mortgage and paying off the old one. Bond issuers do the same
thing with callable bonds when rates decline. But interest rates were fairly
stable during the past six months, so there wasn't any incentive for issuers to
call these bonds. As a result, the fund got some extra yield with very little
risk of a call.
We also bought more asset-backed securities, including bonds backed by
commercial mortgages and home-equity loans. These bonds added greater
diversification to the fund's fixed-income holdings. We purchased them when they
were more attractively priced than most corporate bonds, and they have since
performed better than corporates.
LOOKING AHEAD, WHAT ARE YOUR PLANS FOR THE FUND'S ASSET ALLOCATION STRUCTURE?
We intend to position the portfolio more defensively in the coming months.
With U.S. stock market indices at or near all-time highs and U.S. bond yields
close to record lows, we think it makes sense to be a little cautious.
For the Strategic Moderate fund, this means cutting back on U.S. stocks and
shifting into U.S. bonds and cash. Domestically, we believe that bonds have
better return potential than stocks for the second half of 1998.
[left margin]
FUND'S U.S. STOCKS (AS OF MAY 31, 1998)
NUMBER OF COMPANIES 350
DIVIDEND YIELD 1.59%
PRICE/EARNINGS RATIO 25.1
% OF FUND'S % OF
U.S. STOCKS FUND
TOP 5 U.S. STOCKS
MICROSOFT CORP. 1.8% 0.8%
UNITED TECHNOLOGIES CORP. 1.7% 0.7%
DOW CHEMICAL CO. 1.7% 0.7%
MORGAN STANLEY DEAN WITTER,
DISCOVER & CO. 1.7% 0.7%
NATIONSBANK CORP. 1.5% 0.6%
FUND'S FOREIGN STOCKS (AS OF MAY 31, 1998)
NUMBER OF COMPANIES 212
DIVIDEND YIELD 1.19%
% OF FUND'S % OF
COUNTRY FOREIGN STOCKS FUND
TOP 5 FOREIGN STOCKS
ING GROEP N.V. NETHERLANDS 2.3% 0.3%
MANNESMANN AG GERMANY 1.8% 0.3%
MISYS PLC U.K. 1.7% 0.3%
JULIUS BAER
HOLDING AG SWITZERLAND 1.6% 0.2%
MARSCHOLLEK,
LAUTENSCHLAEGER
UND PARTNER AG GERMANY 1.5% 0.2%
[pie chart]
PERCENT OF FUND'S FOREIGN STOCKS
Europe 88%
Asia/Pacific 4%
Americas
(excluding U.S.) 7%
South Africa 1%
22 1-800-345-2021
Strategic Moderate--Q&A
- -----------------------------------------------------------------------------
(Continued)
WHAT MAKES U.S. BONDS MORE ATTRACTIVE THAN STOCKS?
It comes down to whether you think the high stock prices or low bond yields
are sustainable going forward. For bonds, the reasons behind the low interest
rate environment are a lack of inflation and the financial crisis in Asia. These
situations aren't likely to change in the next six months--it will be awhile
before Asia solves its economic problems, and in the meantime, expectations of
low commodities prices and cheap exports from Asia should help keep global
inflation low.
The stock market rally, on the other hand, has been dependent on a healthy
U.S. economy and solid corporate earnings growth. Corporate profits are already
lower than they were a year ago, and we expect them to remain lackluster through
the end of this year. In addition, a big build-up of inventories in the first
quarter and weak consumer demand from Asia will probably slow the economy.
The bottom line is that we see more downside risk in stocks than in bonds.
And even if both markets go sideways for the rest of the year, bonds offer
interest rates of 5-6% a year, whereas stocks pay out dividends of 2% or
less--if they pay any at all.
ARE YOU PLANNING TO SHIFT SIGNIFICANTLY OUT OF U.S. STOCKS?
No. The adjustments I'm talking about are likely to be fairly small.
Strategic Moderate is managed to maintain a specific strategic position, so we
don't stray too far from its neutral asset mix. To make sure of this, the fund's
prospectus includes operating ranges for each asset class that we are obligated
to stay within. For example, our neutral weighting for stocks is 60%, and we
must keep it between 50% and 70%.
ARE THERE STILL GOOD INVESTMENT OPPORTUNITIES OVERSEAS?
Definitely. Europe is still a great place to invest, especially for stocks,
as privatization and productivity improvements sweep the Continent. Unemployment
remains an issue, and it might get worse before it gets better as companies cut
costs and become more efficient. But if Europe continues along the same path
that the U.S. started on five years ago, the region will likely have healthier
economies and lower unemployment down the road.
Asia, on the other hand, is not yet a buying opportunity. Japan still needs
to address its banking crisis, economic woes, and growing government budget
deficit. Until Japan starts to make some progress, the rest of Asia won't be
able to fully recover from its own problems.
As a result, we plan to maintain at least a neutral weighting in foreign
stocks and continue our concentration in Europe.
[right margin]
"THE BOTTOM LINE IS THAT WE SEE MORE DOWNSIDE RISK IN STOCKS THAN IN BONDS."
[pie charts]
FUND'S U.S. BONDS (AS OF MAY 31, 1998)
NUMBER OF SECURITIES 120
WEIGHTED AVERAGE MATURITY 14.66 YEARS
AVERAGE DURATION 4.66 YEARS
PERCENT OF FUND'S U.S. BONDS
Corporate Securities 41%
U.S. Govt. Agency 7%
U.S. Treasury Bonds 7%
Asset-Backed 9%
U.S. Treas. Notes 14%
Mortgage-Backed 22%
FUND'S FOREIGN BONDS (AS OF MAY 31, 1998)
NUMBER OF SECURITIES 14
WEIGHTED AVERAGE MATURITY 5.50 YEARS
AVERAGE DURATION 4.75 YEARS
PERCENT OF FUND'S FOREIGN BONDS
Europe 70%
Asia/Pacific 21%
Americas
(excluding U.S.) 9%
www.americancentury.com 23
Moderate--Schedule of Investments
- -----------------------------------------------------------------------------
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
COMMON STOCKS, RIGHTS & WARRANTS
AEROSPACE & DEFENSE--2.0%
3,900 Anaren Microwave, Inc.(1) $ 65,203
3,700 BE Aerospace, Inc.(1) 106,953
5,800 Boeing Co. 276,225
5,900 Bombardier Inc. Cl B ORD 151,729
34,300 British Aerospace PLC ORD 303,996
1,100 Cie des Signaux SA ORD 85,486
1,900 Cordant Technologies Inc. 94,763
11,000 General Dynamics Corp. 488,813
1,600 Gulfstream Aerospace Corp.(1) 68,000
4,500 Litton Industries, Inc.(1) 260,719
4,100 Lockheed Martin Corp. 460,225
13,200 Raytheon Co. Cl B 721,875
2,700 Triumph Group, Inc.(1) 132,300
19,700 United Technologies Corp. 1,851,682
-----------------
5,067,969
-----------------
AGRICULTURE--0.2%
10,800 Pioneer Hi-Bred International, Inc. 411,075
-----------------
AIRLINES--0.3%
2,100 AMR Corp.(1) 323,269
15,100 British Airways plc ORD 159,831
1,100 Continental Airlines, Inc. Cl B(1) 62,219
300 Delta Air Lines Inc. 34,500
7,400 Finnair Oyj ORD 76,379
2,400 Midway Airlines Corp.(1) 46,200
1,900 US Airways Group Inc.(1) 133,000
-----------------
835,398
-----------------
AUTOMOBILES & AUTO PARTS--1.6%
300 Bayerische Motoren Werke
(BMW) AG ORD 317,311
60 Bayerische Motoren Werke
(BMW) AG ORD(1) 62,689
3,000 Bridgestone Corp. ORD 68,260
5,000 Chrysler Corp. 278,125
5,600 Coachmen Industries, Inc. 133,350
24,500 Cooper Tire and Rubber Company 580,344
2,800 Daimler-Benz AG ORD 282,039
4,600 Dura Automotive Systems, Inc.(1) 168,763
8,000 Ford Motor Co. 415,000
4,000 Honda Motor Co., Ltd. ORD 135,945
1,700 Magna International Inc. Cl A ORD 119,540
900 PACCAR Inc. 49,697
100 Porsche AG ORD 274,510
18,600 Superior Industries International,
Inc. 541,725
6,500 Tower Automotive, Inc.(1) 305,094
498 Volkswagen AG ORD 403,701
-----------------
4,136,093
-----------------
Shares Value
- -----------------------------------------------------------------------------
BANKING--5.3%
7,700 Banc One Corp. $ 424,463
93,200 Banca di Roma ORD 192,031
4,772 Banca Popolare di Bergamo
Credito Varesino SpA ORD 112,156
6,300 Banca Popolare di Brescia ORD 130,165
525 Banco Espirito Santo e Comercial
de Lisboa, SA ORD(1) 18,454
4,200 Banco Espirito Santo e Comercial
de Lisboa, SA ORD 147,631
4,200 Banco Espirito Santo e Comercial
de Lisboa, SA Rights ORD(1) 29,526
6,700 Banco Mello, S.A. ORD 93,265
2,000 Banco Popular Espanol SA ORD 158,502
9,100 BankAmerica Corp. 752,456
2,000 Bankers Trust New York Corp. 247,000
2,100 Banque Nationale de Paris ORD 179,268
7,400 Chase Manhattan Corp. 1,005,938
2,000 Citicorp 298,250
1,400 Corporacion Bancaria de Espana
SA ORD 119,167
2,350 Credit Suisse Group ORD 516,484
30,400 Credito Italiano ORD 169,422
3,900 Deutsche Pfandbrief-und
Hypothekenbank AG ORD 312,000
2,600 Erste Bank Der Oesterreichischen
Sparkassen AG ORD 157,551
8,700 Espirito Santo Financial Holding
S.A. ADR 221,306
4,500 First Security Corp. 102,094
16,400 First Union Corp. 907,125
13,900 First Virginia Banks, Inc. 726,275
2,550 Imperial Bancorp(1) 74,588
2,600 Mellon Bank Corp. 175,338
21,000 Mercantile Bancorporation Inc. 1,073,625
25,800 Merita OY Ltd. Cl A ORD 162,153
1,000 National Mortgage Bank of
Greece ORD 71,525
21,200 NationsBank Corp. 1,605,900
9,400 Norwest Corp. 365,425
6,300 PNC Bank Corp. 363,825
4,000 Peoples Heritage Financial Group,
Inc. 89,875
1,900 Providian Financial Corp. 120,888
6,500 Regions Financial Corp. 266,906
1,700 Societe Generale Cl A ORD 336,535
250 Union Bank of Switzerland ORD 419,672
3,075 Van der Moolen Holding N.V. ORD 222,383
10,300 Wachovia Corp. 824,644
500 Wells Fargo & Co. 180,750
700 Zions Bancorporation 36,269
-----------------
13,410,830
-----------------
See Notes to Financial Statements
24 1-800-345-2021
Moderate--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
BASIC MATERIALS(2)
400 Nucor Corp. $ 20,600
------------------
BIOTECHNOLOGY--0.3%
6,800 Genzyme Corp.(1) 186,363
6,900 IDEC Pharmaceuticals Corp.(1) 216,919
3,400 Immunex Corp.(1) 210,375
4,000 PathoGenesis Corp.(1) 143,000
------------------
756,657
------------------
BROADCASTING & MEDIA--0.7%
9,600 CBS Corporation 304,800
4,600 Clear Channel Communications,
Inc.(1) 441,025
1,841 Havas Advertising SA ORD 389,052
1,841 Havas Advertising Warrants
ORD(1) 5,228
700 Heftel Broadcasting Corp. Cl A(1) 26,491
600 Jacor Communications, Inc.(1) 31,688
9,596 Primedia Limited Cl N ORD 76,314
2,000 Societe Television Francaise 1
ORD 281,991
37,700 Taylor Nelson AGB plc ORD 83,686
------------------
1,640,275
------------------
BUILDING & HOME IMPROVEMENTS--0.2%
1,900 American Standard Companies
Inc.(1) 91,675
12,800 Cemex SA de CV Cl B Rights
ORD(1) 133
11,100 Premark International, Inc. 355,894
5,900 Royal Group Technologies Ltd.
ORD(1) 159,832
------------------
607,534
------------------
BUSINESS SERVICES & SUPPLIES--1.7%
7,500 Admiral plc ORD 151,183
1,725 Altran Technologies SA ORD 353,011
1,900 Applied Graphics Technologies,
Inc.(1) 91,200
500 Athlon Groep N.V. ORD 89,219
3,500 Billing Information Concepts
Corp.(1) 81,375
11,800 Bracknell Corp. ORD(1) 42,136
1,762 Brunel International NV ORD 68,749
14,200 CGI Group, Inc. ORD(1) 293,507
16,000 Capita Group Plc ORD 141,283
4,504 Cendant Corp.(1) 97,681
500 Creyf's NV ORD 130,327
9,600 Dun & Bradstreet Corp. (The) 324,000
4,200 Goode Durrant plc ORD 39,075
3,500 HA-LO Industries, Inc.(1) 108,281
Shares Value
- -----------------------------------------------------------------------------
9,500 Hays plc ORD $ 173,666
7,650 International Telecommunication
Data Systems, Inc.(1) 189,816
5,900 Kelly Services, Inc. Cl A 217,931
6,900 Metamor Worldwide, Inc.(1) 207,216
2,700 Metzler Group, Inc. (The)(1) 74,841
5,100 PMT Services, Inc.(1) 99,131
9,337 Parity plc ORD 130,301
17,615 Robert Walters plc ORD 148,212
10,000 Select Appointments Holdings plc
ORD 143,062
600 Sixt AG ORD 93,445
8,100 Triad Group PLC ORD 98,693
1,800 U.S. Filter Corp.(1) 54,788
7,100 Unique International NV ORD 237,502
5,000 Valassis Communications, Inc.(1) 175,938
4,100 Vedior NV ORD (Acquired
8/8/97-2/2/98,
Cost $87,685)(3) 130,424
28,500 WPP Group plc ORD 182,349
------------------
4,368,342
------------------
CHEMICALS & RESINS--1.6%
2,300 Air Products and Chemicals, Inc. 200,100
19,400 Dow Chemical Co. 1,879,375
2,700 du Pont (E.I.) de Nemours & Co. 207,900
14,900 Great Lakes Chemical Corp. 596,000
16,100 Lubrizol Corp. 559,475
9,300 Nalco Chemical Co. 348,750
3,700 Praxair, Inc. 182,456
------------------
3,974,056
------------------
COMMUNICATIONS EQUIPMENT--1.3%
5,400 Advanced Fibre Communications,
Inc.(1) 200,138
4,600 Ascend Communications, Inc.(1) 198,519
9,800 Ericsson (L.M.) Telephone Co.
ADR 273,481
1,645,100 Ericsson Telecomunicacoes S.A.
ORD 33,395
2,100 Europolitan Holdings AB ORD 130,377
3,700 Excel Switching Corp.(1) 72,844
13,200 Lucent Technologies Inc. 936,375
10,300 Motorola, Inc. 545,256
4,600 Nokia Corp. Cl A ADR 298,713
2,400 Northern Telecom Ltd. ORD 153,765
7,100 RELTEC Corp.(1) 260,925
3,100 Tekelec(1) 137,466
2,800 Tellabs, Inc.(1) 192,413
------------------
3,433,667
------------------
See Notes to Financial Statements
www.americancentury.com 25
Moderate--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
COMMUNICATIONS SERVICES--3.2%
19,500 AT&T Corp. $ 1,187,063
8,300 AirTouch Communications, Inc.(1) 395,288
1,242 Alcatel Alsthom Compagnie
Generale ORD 265,580
18,000 Ameritech Corp. 763,875
3,100 BCE Inc. ORD 143,372
1,500 Bell Atlantic Corp. 137,438
14,500 BellSouth Corp. 935,250
5,000 Datacraft Asia Limited ORD 14,500
5,123 Energis plc ORD(1) 72,329
7,700 GTE Corp. 449,006
1,800 Global TeleSystems Group, Inc.(1) 68,906
3,900 Hellenic Telecommunication
Organization SA (OTE) ORD 114,469
2,300 Intrasoft S.A. ORD 153,079
4,600 Magyar Tavkozlesi Rt. ADR(1) 128,800
2 NTT Data Corp. ORD 80,069
4,000 NetCom Systems AB Cl B ORD(1) 152,979
1,900 Portugal Telecom S.A. ORD 99,727
15,100 SBC Communications Inc. 587,013
3,200 Tele Danmark A/S Cl B ORD 299,299
600 Telecel-Comunicacaoes Pessoais,
SA ORD(1) 104,975
35,300 Telecom Italia SpA ORD(1) 266,553
9,818 Telefonica de Espana ORD 438,240
3,500 Teleglobe Inc. ORD 181,579
1,400 Telinfo NV ORD(1) 137,603
30,500 Vodafone Group plc ORD 335,034
15,300 WorldCom, Inc.(1) 696,628
------------------
8,208,654
------------------
COMPUTER PERIPHERALS--0.5%
2,600 Certicom Corp. ORD(1) 58,918
4,650 Cisco Systems Inc.(1) 351,220
8,100 EMC Corp. (Mass.)(1) 335,644
11,400 FORE Systems, Inc.(1) 249,731
700 MICROS Systems, Inc.(1) 40,994
9,200 Xylan Corp.(1) 221,088
------------------
1,257,595
------------------
COMPUTER SOFTWARE & SERVICES--4.1%
10,400 At Home Corp. Series A(1) 360,750
4,800 BMC Software, Inc.(1) 220,950
5,200 CBT Group Plc ADR(1) 259,350
1,200 CDW Computer Centers, Inc.(1) 49,425
3,800 CMG plc ORD 106,681
8,600 Cadence Design Systems, Inc.(1) 303,150
3,200 Cap Gemini N.V. ORD 250,669
2,416 Cap Gemini SA ORD 360,422
1,900 Computer Sciences Corp. 98,681
12,300 Compuware Corp.(1) 564,647
1,600 Deltek Systems, Inc.(1) 33,400
Shares Value
- -----------------------------------------------------------------------------
8,000 Electronic Arts Inc.(1) $ 347,000
14,700 Electronic Data Systems Corp. 534,713
3,500 Enator AB ORD 110,209
131,263 Founder Hong Kong Limited ORD 81,732
2,000 Fuji Soft ABC, Inc. ORD 69,844
4,900 Geac Computer Corp. Ltd. ORD(1) 179,176
5,600 Getronics N.V. ORD 278,344
5,700 GTECH Holdings Corp.(1) 184,894
3,800 HBO & Co. 219,331
7,400 J.D. Edwards & Company(1) 272,181
2,000 JDA Software Group, Inc.(1) 90,313
3,700 JetForm Corp.(1) 70,531
3,200 Lernout & Hauspie Speech
Products N.V.(1) 171,800
3,900 Logica plc ORD 115,058
3,600 Macromedia, Inc.(1) 57,038
3,100 Mastech Corp.(1) 58,609
2,000 May & Speh, Inc.(1) 33,313
2,800 Meitec ORD 95,363
23,200 Microsoft Corp.(1) 1,968,375
10,859 Misys plc ORD 655,081
1,400 Network Associates Inc.(1) 85,794
3,848 Ordina Beheer N.V. ORD(1) 129,484
11,600 Oshap Technologies, Ltd.(1) 96,788
6,800 Parametric Technology Corp.(1) 208,463
1,000 PeopleSoft, Inc.(1) 43,625
2,000 Project Software & Development,
Inc.(1) 45,125
3,200 Provida ASA ORD(1) 71,234
5,700 QuadraMed Corp.(1) 137,691
306 Resco AB Cl B ORD 10,104
5,700 Sage Group plc (The) ORD 137,692
2,400 Saville Systems Ireland plc ADR(1) 96,150
2,800 SEMA Group plc ORD 109,684
701 Simac Techniek N.V. ORD 143,726
4,700 Sterling Software, Inc.(1) 127,781
4,200 Superior Consultant Holdings
Corp.(1) 178,500
3,700 Symantec Corp.(1) 88,338
1,400 Tieto Corp. Cl B ORD 307,063
5,800 Unisys Corp.(1) 142,100
6,500 Vanstar Corp.(1) 94,656
------------------
10,455,028
------------------
COMPUTER SYSTEMS--0.5%
2,600 Apple Computer, Inc.(1) 69,144
5,600 Dell Computer Corp.(1) 461,475
17,000 Fujitsu Ltd. ORD 194,628
1,300 International Business Machines
Corp. 152,588
1,000 OPTIMUS S.A. ORD(1) 18,333
1,100 Stratus Computer, Inc.(1) 39,669
5,400 Sun Microsystems, Inc.(1) 216,169
------------------
1,152,006
------------------
See Notes to Financial Statements
26 1-800-345-2021
Moderate--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
CONSTRUCTION & PROPERTY DEVELOPMENT--0.4%
1,500 Assa Abloy AB Cl B ORD $ 58,706
500 DLW AG ORD(1) 86,555
1,700 Fluor Corp. 81,069
900 Grupo Acciona SA ORD 231,423
15,300 Jarvis plc ORD 190,916
2,200 Kaufman & Broad Home Corp. 56,513
2,100 Lafarge SA ORD 212,947
2,200 NVR, Inc.(1) 70,675
------------------
988,804
------------------
CONSUMER PRODUCTS--1.1%
1,500 Atag Holding N.V. ORD 103,410
1,800 Avon Products, Inc. 147,263
2,100 Colgate-Palmolive Co. 182,700
2,600 Electrolux AB Cl B ORD 258,535
4,300 Gillette Company 503,638
11,500 Helen of Troy Ltd.(1) 219,578
1,200 Mattel, Inc. 45,450
4,300 Maytag Corp. 216,881
9,200 NBTY, Inc.(1) 160,425
5,100 National Service Industries 260,100
5,800 Procter & Gamble Co. (The) 486,838
6,400 Rayovac Corporation(1) 134,400
2,200 Whirlpool Corp. 150,288
------------------
2,869,506
------------------
CONTROL & MEASUREMENT--0.1%
3,500 Beckman Instruments, Inc. 195,125
900 Keyence Corporation ORD 108,158
900 Waters Corp.(1) 52,425
------------------
355,708
------------------
DIVERSIFIED COMPANIES--0.9%
6,175 Asko Oyj Cl A ORD 132,591
9,750 Bodycote International plc ORD 199,720
600 Fiskars Oyj AB Cl A ORD 85,152
7,600 General Electric Co. (U.S.) 633,650
4,200 Siebe plc ORD 105,228
6,000 Tyco International Ltd. 886,000
2,700 Unilever N.V. 213,131
------------------
2,255,472
------------------
ELECTRICAL & ELECTRONIC
COMPONENTS--1.4%
21,500 AMP, Inc. 817,000
3,000 Aiwa Co., Ltd. ORD 90,294
9,000 Analog Devices, Inc.(1) 222,188
2,850 Burr-Brown Corp.(1) 73,120
4,500 Cree Research, Inc.(1) 68,906
1,000 Draka Holding N.V. ORD 42,746
Shares Value
- -----------------------------------------------------------------------------
800 Eaton Corp. $ 71,850
10,800 Elektrim Spolka Akcyjna S.A.
ORD 141,999
10,900 General Signal Corp. 448,263
3,100 Intel Corp. 221,359
300 Le Carbone-Lorraine ORD 136,819
15,000 Minebea Company Ltd. ORD 153,478
1,300 Philips Electronics N.V. 123,663
4,400 REMEC, Inc.(1) 63,113
4,000 Sanmina Corp.(1) 311,500
115 Sartorius AG ORD 57,983
1,800 Sony Corp. ORD 151,642
1,200 Texas Instruments Inc. 61,650
6,100 Uniphase Corp.(1) 310,719
800 Vitesse Semiconductor Corp.(1) 20,475
------------------
3,588,767
------------------
ENERGY (PRODUCTION & MARKETING)--3.0%
22,500 Amoco Corp. 940,781
13,200 Apache Corp. 451,275
9,200 Atlantic Richfield Co. 725,650
18,800 Burlington Resources Inc. 791,950
1,200 Camco International, Inc. 83,700
15,000 Canadian 88 Energy Corp. ORD(1) 66,953
8,200 Chevron Corp. 654,975
13,400 Exxon Corp. 944,700
10,700 Murphy Oil Corp. 538,344
32,300 Seagull Energy Corp.(1) 534,969
9,900 Sun Company, Inc. 420,750
6,100 Texaco Inc. 352,275
5,200 Ultramar Diamond Shamrock
Corp. 166,075
23,300 Unocal Corp. 830,063
3,600 Williams Companies, Inc. (The) 116,775
------------------
7,619,235
------------------
ENERGY (SERVICES)--0.8%
2,500 BJ Services Co.(1) 81,719
7,400 Berkley Petroleum Corp. ORD(1) 60,216
3,100 Det Sondenfjelds-Norske
Dampskibsselskab Cl A ORD 66,338
2,500 Diamond Offshore Drilling, Inc. 119,531
5,500 EVI, Inc.(1) 278,094
7,000 Ensco International Inc. 177,188
3,000 Global Industries, Ltd.(1) 63,844
7,100 Noble Drilling Corp.(1) 209,450
2,100 Petroleum Geo-Services ASA
ADR(1) 137,550
14,200 Tidewater Inc. 539,600
3,600 Transocean Offshore 177,525
2,100 Veritas DGC Inc.(1) 108,806
------------------
2,019,861
------------------
See Notes to Financial Statements
www.americancentury.com 27
Moderate--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
ENVIRONMENTAL SERVICES--0.6%
20,500 Browning-Ferris Industries, Inc. $ 729,031
3,700 Superior Services Inc.(1) 112,850
4,000 Tomra Systems ASA ORD 124,023
8,975 USA Waste Services, Inc.(1) 423,508
8,100 Waste Management, Inc. 263,250
------------------
1,652,662
------------------
FINANCIAL SERVICES--4.7%
5,700 AMRESCO, INC.(1) 192,375
20,500 Amvescap Plc ORD 219,331
7,088 Associates First Capital Corp. 530,271
27,700 Banca Intesa S.p.A. ORD 172,559
3,200 Banca Nazionale del Lavoro
ORD(1) 86,396
9,000 Bank of Ireland ORD 169,080
3,200 Bear Stearns Companies Inc. 173,600
25,300 CIT Group Holdings, Inc. (The)
Cl A 796,950
9,800 Close Brothers Group plc ORD 130,364
23,400 Corporacion Financiera Reunida,
S.A. ORD(1) 337,878
1,200 Deutsche Bank AG ORD 103,261
2,300 Dresdner Bank AG ORD 129,238
6,600 Equitable Companies Inc. 454,575
16,500 Fannie Mae 987,938
9,900 Heller Financial, Inc.(1) 275,963
12,937 ING Groep N.V. ORD 888,016
4,300 Investor's Group, Inc. ORD 156,793
209 Julius Baer Holding AG ORD 601,652
5,780 Kempen & Company NV ORD 408,527
2,600 Lehman Brothers Holdings, Inc. 184,438
17,800 Merkantildata ASA ORD 248,827
900 Merrill Lynch & Co., Inc. 80,550
23,800 Morgan Stanley Dean Witter,
Discover & Co. 1,857,888
9,520 Newcourt Credit Group Inc. ORD
(Acquired 2/15/96-1/6/98,
Cost $303,726)(3) 467,420
8,400 OM Gruppen AB ORD 171,337
4,824 Provident Financial plc ORD 75,667
1,050 Schroders plc ORD 30,814
6,500 Sirrom Capital Corp. 173,063
18,500 Skandia Forsakrings AB ORD 270,040
23,699 Travelers Group, Inc. 1,445,639
200 Vontobel Holding AG Cl B ORD 283,152
------------------
12,103,602
------------------
Shares Value
- -----------------------------------------------------------------------------
FOOD & BEVERAGE--2.7%
7,100 American Italian Pasta Co. Cl A(1) $ 254,713
47,367 Archer-Daniels-Midland Co. 894,052
3,200 Bestfoods 180,600
1,300 Campofrio Alimentacion SA ORD(1) 109,283
2,400 Coca-Cola Company (The) 188,100
8,600 Coca-Cola Enterprises, Inc. 323,038
21,300 Diageo plc ORD 240,754
800 Earthgrains Company 42,250
1,420 Fomento Economico Mexica
UBD ORD 47,122
1,300 Groupe Danone ORD 349,866
2,400 Grupo Industrial Emprex Class B
ORD 12,943
700 Hain Food Group, Inc. (The)(1) 15,772
3,300 Hershey Foods Corp. 228,525
6,900 Hormel Foods Corp. 232,013
47,100 IBP, Inc. 912,563
12,700 Iceland Group Plc ORD 50,475
4,900 Lance, Inc. 103,053
190 Nestle S.A. ORD 406,438
6,000 Northland Cranberries, Inc. Cl A 95,250
5,000 OY Hartwall AB ORD 145,145
1,900 PepsiCo, Inc. 77,544
4,400 Quaker Oats Co. (The) 253,825
1,100 Raisio Group plc ORD 205,784
4,500 Richfood Holdings, Inc. 109,969
8,000 Smithfield Foods, Inc.(1) 216,250
1,700 South African Breweries Ltd. ORD 47,945
1,600 Suiza Foods Corp.(1) 93,500
25,300 Tyson Foods, Inc. Cl A 534,463
19,400 Universal Foods Corp. 461,963
------------------
6,833,198
------------------
FURNITURE & FURNISHINGS--0.2%
1,500 CompX International Inc.(1) 34,875
3,600 Ethan Allen Interiors Inc. 181,125
6,100 Furniture Brands International,
Inc.(1) 179,950
2,400 O'Sullivan Industries Holdings,
Inc.(1) 36,000
------------------
431,950
------------------
HEALTHCARE--0.2%
1,400 Cardinal Health, Inc. 124,775
1,000 Concentra Managed Care, Inc.(1) 23,438
2,400 Province Healthcare Co.(1) 61,575
1,600 RehabCare Group, Inc.(1) 41,450
1,500 Tenet Healthcare Corp.(1) 52,500
4,900 Wellpoint Health Networks Inc.(1) 318,500
------------------
622,238
------------------
See Notes to Financial Statements
28 1-800-345-2021
Moderate--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
INDUSTRIAL EQUIPMENT & MACHINERY--0.9%
37,000 Ashtead Group plc ORD $ 164,567
15,000 Caterpillar Inc. 824,063
8,500 Ingersoll-Rand Co. 383,031
7,300 Johnstown America Industries,
Inc.(1) 132,313
700 Mannesmann AG ORD 684,314
------------------
2,188,288
------------------
INSURANCE--3.4%
3,193 ASR Verzekeringsgroep N.V. ORD 278,529
7,000 Aetna Inc. 547,313
1,203,800 Aksigorta A.S. ORD 73,397
720 Allianz AG ORD(1) 227,439
14,400 Allstate Corp. 1,355,400
2,400 American International Group, Inc. 297,150
3,557 Axa-UAP ORD 404,664
2,600 CMAC Investment Corp. 157,300
4,800 CNA Financial Corp.(1) 726,000
9,200 Chubb Corp. (The) 731,975
7,400 Companhia de Seguros Mundial
Confianca, SA ORD(1) 227,583
4,500 Conseco Inc. 209,813
6,800 Everest Reinsurance Holdings, Inc. 264,350
4,800 Gallagher (Arthur J.) & Co. 207,000
1,800 General Re Corp. 395,775
1,900 LandAmerica Financial Group, Inc. 90,725
1,700 Liberty Life Association of Africa
Ltd. ORD 47,154
6,900 Lincoln National Corp. 620,138
1,400 Orion Capital Corp. 78,838
4,400 Pohjola Insurance Group Cl B
ORD 240,858
79,200 Premafin Finanziaria S.p.A. ORD(1) 68,425
19,500 SAFECO Corp. 910,406
10,900 Sage Group Limited ORD 57,613
6,200 Sampo Insurance Company Ltd.
ORD 287,968
11,500 Storebrand ASA ORD(1) 106,665
------------------
8,612,478
------------------
LEISURE--0.6%
1,295 Accor SA ORD 355,011
1,000 Anchor Gaming(1) 90,656
5,200 Eastman Kodak Co. 371,150
2,800 Infogrames Entertainment SA
ORD(1) 176,813
5,700 Jackpot Enterprises, Inc.(1) 69,825
200 Moevenpick Holding AG Bearer
ORD 113,935
Shares Value
- -----------------------------------------------------------------------------
6,700 Polaroid Corp. $ 271,769
2,000 Scandic Hotels AB ORD 76,490
27,086 Thomson Travel Group plc ORD(1) 79,357
------------------
1,605,006
------------------
MACHINERY & EQUIPMENT--0.5%
600 Aviation Sales Co.(1) 22,913
7,600 Deere & Co. 394,250
400 Georg Fischer AG ORD 175,285
1,400 National-Oilwell, Inc.(1) 48,913
7,200 Pinnacle Systems, Inc.(1) 242,100
100 Rieter Holdings Ltd. ORD(1) 75,777
4,900 Sundstrand Corp. 303,800
900 Swisslog Holding AG ORD 94,047
------------------
1,357,085
------------------
MEDICAL EQUIPMENT & SUPPLIES--0.6%
2,100 Advanced Technology
Laboratories, Inc.(1) 95,091
3,000 AmeriSource Health Corp.(1) 163,125
5,700 CONMED Corp.(1) 121,303
1,600 Cyberonics, Inc.(1) 18,200
2,200 CyberOptics Corp.(1) 37,469
2,400 Datascope Corp.(1) 66,975
2,100 Guidant Corp. 135,319
7,100 Hillenbrand Industries, Inc. 438,425
7,400 STERIS Corp.(1) 462,038
2,200 Teleflex Inc. 88,963
------------------
1,626,908
------------------
METALS & MINING--0.6%
5,655 Aalberts Industries N.V. ORD 172,582
4,900 Aluminum Co. of America 339,938
11,400 Arch Coal Inc. 275,738
5,800 Mytilineos S.A. ORD 89,968
3,900 Parker-Hannifin Corp. 160,144
9,400 Reynolds Metals Co. 545,200
------------------
1,583,570
------------------
NATURAL GAS(2)
2,100 NUI Corp. 51,713
------------------
OFFICE EQUIPMENT & SUPPLIES--0.5%
6,400 Kronos Inc.(1) 228,000
2,700 Samas Groep N.V. ORD 200,631
8,800 Xerox Corp. 904,200
------------------
1,332,831
------------------
PAPER & FOREST PRODUCTS--0.4%
4,400 Bowater Inc. 222,750
600 Chesapeake Corp. 21,300
2,400 Consolidated Papers, Inc. 69,450
3,700 Rayonier, Inc. 173,669
15,400 Westvaco Corp. 438,900
------------------
926,069
------------------
See Notes to Financial Statements
www.americancentury.com 29
Moderate--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
PHARMACEUTICALS--3.0%
2,900 Barr Laboratories, Inc.(1) $ 118,356
6,000 Bergen Brunswig Corp. Cl A 249,000
13,100 Bristol-Myers Squibb Co. 1,408,250
2,900 Dura Pharmaceuticals, Inc.(1) 75,853
2,300 Elan Corp., plc ADR(1) 140,731
9,600 Forest Laboratories, Inc.(1) 316,800
1,100 Genentech, Inc.(1) 75,900
1,300 ICN Pharmaceuticals, Inc. 56,144
1,900 Lilly (Eli) & Co. 116,731
30,300 Mallinckrodt Inc. 933,619
1,300 McKesson Corp. 101,563
8,500 Merck & Co., Inc. 995,031
8,700 Nature's Sunshine Products, Inc. 200,372
126 Novartis AG ORD 213,044
3,164 Novo Nordisk A/S Cl B ORD 497,872
5,300 Pfizer, Inc. 555,506
3,200 Pharmacia & Upjohn Inc. 141,400
9,300 Roberts Pharmaceutical Corp.(1) 153,450
3,700 Schein Pharmaceutical, Inc.(1) 97,588
6,200 Schering-Plough Corp. 518,863
4,000 Takeda Chemical Inds. ORD 103,111
1,500 Twinlab Corp.(1) 55,219
18 UCB SA ORD 85,551
2,700 Warner-Lambert Co. 172,294
4,100 Zeneca Group plc ORD 166,564
------------------
7,548,812
------------------
PRINTING & PUBLISHING--0.5%
5,700 Banta Corp. 180,441
16,600 Deluxe Corp. 557,138
11,800 Gruppo Editoriale L'Espresso ORD 107,312
3,300 Media Arts Group, Inc.(1) 63,731
8,700 Mondadori (Arnoldo) Editore SpA
ORD 106,318
9,500 VNU Tijdschriftengroep
Nederland ORD 325,811
------------------
1,340,751
------------------
RAILROAD--0.4%
16,600 CSX Corp. 790,575
2,000 Canadian National Railway
Company ORD 118,386
------------------
908,961
------------------
REAL ESTATE(2)
3,903 Castellum AB ORD 47,269
------------------
Shares Value
- -----------------------------------------------------------------------------
RESTAURANTS--0.3%
4,000 Buffets, Inc.(1) $ 65,250
11,980 CKE Restaurants, Inc. 380,365
5,850 Cheesecake Factory Inc.(1) 118,097
5,900 Compass Group PLC ORD 122,301
14,000 TelePizza, S.A. ORD(1) 140,766
------------------
826,779
------------------
RETAIL (APPAREL)--0.4%
2,800 DM Management Co.(1) 85,750
1,900 Hennes & Mauritz AB Cl B ORD 106,576
3,800 Liz Claiborne, Inc. 192,613
1,200 Payless ShoeSource, Inc.(1) 84,075
7,500 Stage Stores, Inc.(1) 349,688
2,100 TJX Companies, Inc. (The) 98,175
------------------
916,877
------------------
RETAIL (FOOD & DRUG)--0.9%
5,400 Albertson's, Inc. 250,088
6,000 CVS Corp. 421,125
124,800 Dairy Farm International Holdings
Ltd. ORD 137,280
10,600 Giant Food Inc. Cl A 455,800
8,786 Koninklijke Ahold NV ORD 277,306
19,185 La Rinascente SpA ORD(1) 102,503
9,600 Safeway Inc.(1) 349,800
17,200 Somerfield plc ORD 111,313
6,900 Universal Corp. 259,181
------------------
2,364,396
------------------
RETAIL (GENERAL MERCHANDISE)--1.2%
3,900 Bon-Ton Stores, Inc.(1) 65,813
21,900 Dillard's Inc. Cl A 921,169
3,100 Douglas Holding AG ORD 168,459
2,200 Family Dollar Stores, Inc. 36,438
3,200 Federated Department Stores,
Inc.(1) 165,800
8,900 Fred's, Inc. 209,150
2,000 Ito-Yokado Co., Ltd. ORD 99,366
1,000 Meyer (Fred), Inc.(1) 43,000
3,400 Penney (J.C.) Company, Inc. 244,163
400 Pinault-Printemps-Redoute SA
ORD 329,101
13,100 Wal-Mart Stores, Inc. 722,956
------------------
3,005,415
------------------
RETAIL (SPECIALTY)--0.5%
700 Action Performance Cos. Inc.(1) 19,469
3,200 CSK Auto Corp.(1) 86,000
13,429 Corporate Express, Inc.(1) 155,692
21,400 Food Lion, Inc. Cl A 206,644
4,800 Home Depot, Inc. 377,100
See Notes to Financial Statements
30 1-800-345-2021
Moderate--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
3,100 Tandy Corp. $ 137,175
9,700 Toys 'R' Us, Inc.(1) 257,050
600 Watsco, Inc. 17,625
2,700 Wilmar Industries, Inc.(1) 65,138
------------------
1,321,893
------------------
STEEL--0.1%
9,500 Bethlehem Steel Corporation(1) 116,375
1,800 Carpenter Technology Corp. 95,400
------------------
211,775
------------------
TEXTILES & APPAREL--0.2%
4,300 Dexter Corp. (The) 177,375
1,700 Nautica Enterprises, Inc.(1) 49,619
18,800 WS Atkins plc ORD 156,956
------------------
383,950
------------------
TOBACCO--0.1%
5,300 Philip Morris Companies Inc. 198,088
6,800 UST Inc. 181,050
------------------
379,138
------------------
TRANSPORTATION--0.2%
4,000 AirNet Systems Inc.(1) 94,000
10,300 Allied Holdings, Inc.(1) 185,400
5,111 Internatio-Muller NV ORD 184,178
3,000 XTRA Corp. 157,500
------------------
621,078
------------------
UTILITIES--2.1%
13,400 AGL Resources Inc. 268,000
26,300 Ameren Corporation 1,028,988
14,400 Enova Corp. 368,100
15,100 Entergy Corp. 397,319
6,200 FPL Group, Inc. 380,913
13,700 Florida Progress Corp. 565,125
6,100 Kansas City Power & Light Co. 175,375
13,700 Minnesota Power & Light Co. 540,294
14,200 PacifiCorp 327,488
5,100 Public Service Co. of New Mexico 110,606
14,100 Texas Utilities Co. 556,950
3,500 UGI Corp. 88,594
2,600 Utilicorp United Inc. 92,463
4,000 VEBA AG ORD 262,633
1,100 Vivendi ORD 220,882
------------------
5,383,730
------------------
TOTAL COMMON STOCKS,
RIGHTS & WARRANTS--57.0% 145,621,554
------------------
(Cost $122,914,021)
Shares/Principal Amount Value
- -----------------------------------------------------------------------------
PREFERRED STOCKS
CHEMICALS & RESINS(2)
1,400 Henkel KGaA ORD $ 125,490
------------------
COMMUNICATIONS EQUIPMENT(2)
691,900 Telerj Celular S.A. Cl B ORD(1) 50,528
------------------
COMMUNICATIONS SERVICES(2)
691,900 Telecomunicacoes do Rio de
Janeiro S.A. ORD 57,746
------------------
COMPUTER SOFTWARE & SERVICES--0.1%
500 SAP AG ORD 277,311
------------------
FINANCIAL SERVICES--0.2%
1,140 Marschollek, Lautenschlaeger und
Partner AG ORD 565,210
------------------
TEXTILES & APPAREL(2)
50 Hugo Boss AG ORD 107,843
------------------
TOTAL PREFERRED STOCKS--0.4% 1,184,128
------------------
(Cost $608,676)
U.S. TREASURY SECURITIES
$1,300,000 U.S. Treasury Notes, 7.75%,
11/30/99 1,340,547
3,625,000 U.S. Treasury Notes, 6.625%,
7/31/01 3,734,258
1,625,000 U.S. Treasury Notes, 5.75%,
8/15/03 1,637,903
1,400,000 U.S. Treasury Notes, 6.625%,
5/15/07 1,492,820
3,800,000 U.S. Treasury Bonds, 6.125%,
11/15/27 3,973,242
------------------
TOTAL U.S. TREASURY SECURITIES--4.8% 12,178,770
------------------
(Cost $12,175,619)
U.S. GOVERNMENT AGENCY SECURITIES
1,000,000 FFCB, MTN, 6.15%, 12/29/00 1,001,670
700,000 FHLMC, 7.09%, 11/24/06 704,487
500,000 FNMA, 5.25%, 1/15/03 490,140
700,000 FNMA MTN, 7.00%, 2/20/07 720,825
900,000 FNMA MTN, 7.49%, 5/22/07 924,264
------------------
TOTAL U.S. GOVERNMENT
AGENCY SECURITIES--1.5% 3,841,386
------------------
(Cost $3,806,079)
See Notes to Financial Statements
www.americancentury.com 31
Moderate--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Principal Amount Value
- -----------------------------------------------------------------------------
SOVEREIGN GOVERNMENTS & AGENCIES
ESP 90,000,000 Bonos Y Oblig Del Estado,
10.50%, 10/30/03 $ 753,996
DEM 6,050,000 Deutschland Republic, 6.00%,
9/15/03 3,618,476
FRF 17,500,000 France O.A.T., 6.75%,
10/25/03 3,224,315
CAD 1,000,000 Government of Canada,
6.50%, 6/1/04 729,614
JPY 410,000,000 Japan Global, 4.10%,
12/22/03 3,441,662
AUD 700,000 Queensland Treasury Corp.,
8.00%, 8/14/01 475,341
ITL 2,300,000,000 Republic of Italy, 6.75%,
2/1/07 1,459,209
GBP 1,625,000 United Kingdom Treasury,
8.00%, 6/10/03 2,885,232
------------------
TOTAL SOVEREIGN GOVERNMENTS
& AGENCIES--6.5% 16,587,845
------------------
(Cost $16,740,367)
MORTGAGE-BACKED SECURITIES(4)
$ 287,803 FHLMC Gold Pool #E68523,
6.50%, 12/1/12 290,192
87,627 FHLMC Gold Pool #C00465,
8.00%, 6/1/26 91,012
349,330 FHLMC Gold Pool #D72306,
8.00%, 6/1/26 362,828
147,197 FHLMC Gold Pool #D72431,
8.00%, 6/1/26 152,885
288,531 FHLMC Gold Pool #D72499,
8.00%, 7/1/26 299,679
854,676 FNMA Pool #373899, 6.50%,
3/1/12 860,547
184,102 FNMA Pool #125477, 6.50%,
4/1/12 185,367
815,293 FNMA Pool #369085, 6.50%,
4/1/12 820,894
59,313 FNMA Pool #377181, 6.50%,
4/1/12 59,721
949,962 FNMA Pool #377379, 6.50%,
4/1/12 956,488
219,530 FNMA Pool #341078, 7.00%,
5/1/26 223,018
353,063 FNMA Pool #250576, 7.00%,
6/1/26 358,673
841,430 FNMA Pool #373510, 7.50%,
3/1/27 865,899
535,922 GNMA Pool #397233, 9.50%,
2/20/25 576,228
329,309 GNMA Pool #392995, 8.75%,
3/15/25 354,709
225,242 GNMA Pool #001991, 9.00%,
4/20/25 239,383
Principal Amount Value
- -----------------------------------------------------------------------------
$ 261,805 GNMA Pool #416856, 7.50%,
10/15/25 $ 270,204
152,792 GNMA Pool #421254, 7.50%,
11/15/25 157,693
301,582 GNMA Pool #416761, 7.50%,
6/15/26 311,224
942,275 GNMA Pool #456569, 7.50%,
11/15/27 972,192
981,366 GNMA Pool #457351, 7.00%,
12/15/27 998,157
1,392,474 GNMA Pool #449491, 7.50%,
12/15/27 1,436,685
1,513,642 GNMA Pool #466804, 6.50%,
4/15/28 1,508,375
------------------
TOTAL MORTGAGE-BACKED SECURITIES--4.8% 12,352,053
------------------
(Cost $12,084,005)
ASSET-BACKED SECURITIES(4)
1,200,000 AMRESCO, INC., Series 1998-2,
Class A4 SEQ, 6.45%,
4/25/27 1,200,000
400,000 California Infrastructure SCE-1,
Series 1997-1, Class A6,
6.38%, 4/27/05 409,274
188,054 Capital Equipment Receivables
Trust, Series 1997-1, Class A1,
5.79%, 12/15/98 188,298
1,200,000 First Union-Lehman Brothers
Commercial Mortgage, Series
1998 C2, Class A1 SEQ,
6.28%, 6/18/07 1,207,688
500,000 Money Store (The) Home Equity
Trust, Series 1997 C, Class
AF4 SEQ, 6.37%, 10/27/00 502,563
400,000 Money Store (The) Home Equity
Trust, Series 1995 C, Class A9
SEQ, 6.375%, 12/12/00 401,918
300,000 Money Store (The) Home Equity
Trust, Series 1997 C, Class
AF6 SEQ, 6.67%, 3/1/03 303,431
595,613 Morgan Stanley Capital I, Series
1998 WF1, Class A1 SEQ,
6.25%, 7/15/07 600,398
220,950 Textron Financial Corp. Receivables
Trust, Series 1997 A, Class A,
6.05%, 3/16/09 (Acquired
9/18/97, Cost $220,657)(3) 221,205
300,000 United Companies Financial Corp.,
Home Equity Loan, Series
1997 C, Class A7, 6.85%,
1/15/29 304,943
------------------
TOTAL ASSET-BACKED SECURITIES--2.1% 5,339,718
------------------
(Cost $5,310,577)
See Notes to Financial Statements
32 1-800-345-2021
Moderate--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Principal Amount Value
- -----------------------------------------------------------------------------
CORPORATE BONDS
AEROSPACE & DEFENSE--0.2%
$ 400,000 Lockheed Martin Corp., 6.85%,
5/15/01 $ 408,508
200,000 Lockheed Martin Corp., 7.25%,
5/15/06 212,370
------------------
620,878
------------------
BANKING--0.8%
500,000 Bay View Capital Corp., 9.125%,
8/15/02 516,250
400,000 Citicorp, 7.125%, 5/15/06 420,368
650,000 First Bank System Inc., 7.625%,
5/1/05 697,977
400,000 NationsBank Corporation, 6.60%,
5/15/10 407,260
------------------
2,041,855
------------------
BROADCASTING & MEDIA--0.1%
250,000 Fox Family Worldwide Inc., 9.25%,
11/1/07 245,000
------------------
CHEMICALS & RESINS--0.1%
250,000 Texas Petrochemical Corp.,
11.125%, 7/1/01 275,000
------------------
COMMUNICATIONS SERVICES--0.8%
250,000 360 Communications Co.,
7.125%, 3/1/03 258,310
1,000,000 Cable & Wireless Communications,
6.625%, 3/6/05 1,014,790
100,000 Tele-Communications Inc., 8.25%,
1/15/03 107,820
250,000 Teleport Communications Group
Inc., 7.86%, 7/1/07(5) 216,250
400,000 WorldCom, Inc., 7.55%, 4/1/04 423,024
------------------
2,020,194
------------------
COMPUTER SOFTWARE & SERVICES--0.1%
250,000 Unisys Corp., 12.00%, 4/15/03 283,750
------------------
ELECTRICAL & ELECTRONIC
COMPONENTS--0.2%
250,000 DII Group, Inc., 8.50%, 9/15/07
(Acquired 9/17/97, Cost
$250,000)(3) 249,375
250,000 Trench Electric & Trench Inc.,
10.25%, 12/15/07 253,750
------------------
503,125
------------------
Principal Amount Value
- -----------------------------------------------------------------------------
ENERGY (PRODUCTION &
MARKETING)--1.1%
$ 250,000 Belco Oil & Gas Corp., 8.875%,
9/15/07 $ 251,875
400,000 Enron Corp., 6.625%, 11/15/05 405,484
500,000 Ocean Energy, Inc., 10.375%,
10/15/05 556,250
750,000 Oryx Energy Co., 8.375%,
7/15/04 812,498
500,000 Stone Energy Corp., 8.75%,
9/15/07 (Acquired 9/16/97,
Cost $496,415)(3) 507,500
200,000 Triton Energy Ltd., 8.75%,
4/15/02 208,000
------------------
2,741,607
------------------
ENERGY (SERVICES)--0.3%
500,000 Cliffs Drilling Company, 10.25%,
5/15/03 537,500
250,000 Petro Geo-Services ASA, 7.125%,
3/30/28 254,488
------------------
791,988
------------------
FINANCIAL SERVICES--1.8%
400,000 Advanta Corp., MTN, Series B,
7.00%, 5/1/01 370,556
250,000 AMRESCO, INC., Series 1998 A,
9.875%, 3/15/05 256,875
500,000 Comdisco, Inc., 6.50%, 4/30/99 502,140
400,000 Comdisco, Inc., 7.75%, 9/1/99 407,784
600,000 Ford Motor Credit Co., 6.55%,
9/10/02 611,064
400,000 Ford Motor Credit Co., 6.125%,
1/9/06 396,264
250,000 Intertek Finance PLC, Series B,
10.25%, 11/1/06 265,938
500,000 Lehman Brothers Holdings Inc.,
MTN, Series 1998 E, 6.00%,
2/26/01 498,700
200,000 Merrill Lynch & Co. Inc., 8.00%,
2/1/02 212,544
500,000 Metris Companies Inc., 10.00%,
11/1/04 525,625
500,000 Wharf International Finance Ltd.,
7.625%, 3/13/07 422,525
------------------
4,470,015
------------------
FOOD & BEVERAGE--0.2%
250,000 Friendly Ice Cream, 10.50%,
12/1/07 266,250
125,000 RJR Nabisco Holdings Corp.,
8.75%, 4/15/04 131,143
------------------
397,393
------------------
See Notes to Financial Statements
www.americancentury.com 33
Moderate--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Principal Amount Value
- -----------------------------------------------------------------------------
INSURANCE--0.2%
$ 400,000 Aetna Services, Inc., 6.75%,
8/15/01 $ 409,152
------------------
LEISURE--0.2%
100,000 Paramount Communications, Inc.,
7.50%, 1/15/02 102,232
100,000 Time Warner Inc., 8.11%,
8/15/06 110,027
350,000 Time Warner Inc., 6.85%,
1/15/26 363,664
------------------
575,923
------------------
METALS & MINING--0.3%
100,000 Alcan Aluminium Ltd., 5.875%,
4/1/00 100,017
400,000 Barrick Gold Corp., 7.50%,
5/1/07 426,700
250,000 Kaiser Aluminum & Chemical,
12.75%, 2/1/98 266,250
------------------
792,967
------------------
OFFICE EQUIPMENT & SUPPLIES--0.3%
250,000 Fisher Scientific International
Inc., 7.125%, 12/15/05 238,750
250,000 Fisher Scientific International
Inc., 9.00%, 2/1/08 250,625
350,000 Xerox Capital Trust, 8.00%,
2/1/27 (Acquired 7/17/97,
Cost $364,084)(3) 377,871
------------------
867,246
------------------
PAPER & FOREST PRODUCTS--0.1%
150,000 Domtar, Inc. 8.75%, 8/1/06 156,000
------------------
PRINTING & PUBLISHING--0.1%
200,000 News America Inc., 6.625%,
1/9/08 (Acquired 2/12/98,
Cost $199,150)(3) 199,630
------------------
RAILROAD--0.2%
450,000 Norfolk Southern Corp., 7.90%,
5/15/97 521,141
------------------
REAL ESTATE--0.1%
300,000 Spieker Properties, Inc., 6.80%,
12/15/01 305,718
------------------
RESTAURANTS--0.2%
500,000 Apple South Inc., 9.75%, 6/1/06 537,500
------------------
RETAIL (GENERAL MERCHANDISE)--0.6%
150,000 Federated Department Stores,
8.50%, 6/15/03 163,569
1,300,000 Sears Roebuck Acceptance Corp.,
6.00%, 3/20/03 1,291,862
------------------
1,455,431
------------------
Principal Amount Value
- -----------------------------------------------------------------------------
STEEL--0.1%
$ 250,000 Armco Inc., 9.00%, 9/15/07
(Acquired 9/9/97, Cost
$248,700)(3) $ 257,500
------------------
TOBACCO--0.3%
220,000 Philip Morris Companies Inc.,
7.75%, 5/1/99 223,287
450,000 Philip Morris Companies Inc.,
6.80%, 12/1/03 459,266
------------------
682,553
------------------
TRANSPORTATION--0.2%
250,000 Atlas Air, Inc., 10.75%, 8/1/05 267,500
250,000 Kitty Hawk, Inc., 9.95%,
11/15/04 258,125
------------------
525,625
------------------
UTILITIES--0.6%
500,000 AES Corp. (The), 8.50%, 11/1/07 511,250
500,000 Avon Energy Partners Holdings,
7.05%, 12/11/07 (Acquired
1/20/98, Cost $519,810)(3) 519,285
200,000 CalEnergy Co. Inc., 7.63%,
10/15/07 201,966
400,000 PG&E Corp., 6.25%, 3/1/04 405,332
------------------
1,637,833
------------------
TOTAL CORPORATE BONDS--9.2% 23,315,024
------------------
(Cost $22,872,018)
COMMERCIAL PAPER(6)
BANKING--2.5%
800,000 Falcon Asset Securities Corp.,
5.65%, 6/1/98 (Acquired
5/28/98, Cost $799,498)(3) 799,639
2,200,000 Falcon Asset Securities Corp.,
5.55%, 6/11/98 (Acquired
5/21/98, Cost $2,192,878)(3) 2,195,719
1,555,000 Falcon Asset Securities Corp.,
5.51%, 6/18/98 (Acquired
4/21/98, Cost $1,541,196)(3) 1,550,351
2,000,000 IMI Funding Corp. (USA), 5.58%,
8/12/98 1,977,686
------------------
6,523,395
------------------
ELECTRICAL & ELECTRONIC
COMPONENTS--1.2%
3,000,000 Siemens Capital Corp., 5.50%,
6/19/98 2,990,583
------------------
ENERGY (PRODUCTION & MARKETING)--0.8%
1,500,000 Statoil-Den Norske Stats, 5.53%,
6/1/98 1,499,324
500,000 Statoil-Den Norske Stats, 5.52%,
7/10/98 496,867
------------------
1,996,191
------------------
See Notes to Financial Statements
34 1-800-345-2021
Moderate--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Principal Amount Value
- -----------------------------------------------------------------------------
FINANCIAL SERVICES--5.0%
$ 350,000 Corporate Receivables Corporation,
5.60%, 7/30/98 (Acquired
5/26/98, Cost $346,461)(3) $ 346,767
493,000 Countrywide Home Loans, Inc.,
5.55%, 6/8/98 492,261
1,000,000 Countrywide Home Loans, Inc.,
5.53%, 6/25/98 995,967
1,000,000 Credit Suisse First Boston Inc.,
5.50%, 7/14/98 993,139
1,000,000 Ford Motor Credit Co., 5.65%,
6/3/98 999,249
1,500,000 Ford Motor Credit Co., 5.52%,
7/10/98 1,490,601
1,500,000 Ford Motor Credit Co., 5.51%,
7/24/98 1,487,480
4,000,000 General Motors Acceptance Corp.,
5.44%, 6/8/98 3,994,008
1,011,000 Mitsubishi International Corp.,
5.54%, 6/4/98 1,010,090
1,000,000 Mitsubishi International Corp.,
5.55%, 8/4/98 990,023
------------------
12,799,585
------------------
INSURANCE--1.2%
1,500,000 American Family Financial
Services, Inc., 5.50%, 6/11/98 1,497,081
1,500,000 SAFECO Credit Company, 5.55%,
6/23/98 1,494,398
------------------
2,991,479
------------------
TOTAL COMMERCIAL PAPER--10.7% 27,301,233
------------------
(Cost $27,113,236)
CERTIFICATES OF DEPOSIT--0.8%
2,000,000 National Westminster Bank PLC,
5.65%, 3/3/99 2,000,000
------------------
(Cost $1,999,042)
Principal Amount Value
- -----------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS--2.2%
Repurchase Agreement, BA Security Services,
Inc., (U.S. Treasury obligations), in a joint
trading account at 5.51%, dated 5/29/98,
due 6/1/98 (Delivery value $5,702,617) $ 5,700,000
------------------
(Cost $5,700,000)
TOTAL INVESTMENT SECURITIES--100.0% $ 255,421,711
==================
(Cost $231,323,640)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Contracts Settlement Unrealized
to Sell Date Value Gain
- -----------------------------------------------------------------------
425,618 CHF 6/29/98 $ 287,774 $ 2,453
1,302,547 DEM 6/29/98 730,870 5,865
4,520,660 FRF 6/29/98 756,391 6,886
504,832 GBP 6/29/98 822,912 1,443
65,503,100 JPY 6/29/98 473,463 3,794
954,718 NLG 6/29/98 475,296 3,817
--------------------------------
$3,546,706 $24,258
================================
(Value on Settlement Date $3,570,964)
Forward foreign currency exchange contracts are used by the portfolio management
team in an effort to protect foreign investments against declines in foreign
currencies. This is also known as hedging. The contracts are called "forward"
because they allow your fund to exchange a foreign currency for U.S. dollars at
a date in the future--and at a price (known as the exchange rate) agreed upon
when the contract is initially entered into.
See Notes to Financial Statements
www.americancentury.com 35
Moderate--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
AUD = Australian Dollar
CAD = Canadian Dollar
CHF = Swiss Franc
DEM = German Mark
ESP = Spanish Peseta
FFCB = Federal Farm Credit Bank
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
FRF = French Franc
GBP = British Pound
GNMA = Government National Mortgage Association
ITL = Italian Lira
JPY = Japanese Yen
MTN = Medium Term Note
NLG = Netherlands Guilder
ORD = Foreign Ordinary Share
(1) Non-income producing.
(2) Industry is less than 0.05% of total investment securities.
(3) Security was purchased under Rule 144A or Section 4(2) of the Securities
Act of 1933 and, unless registered under the Act or exempted from
registration, may only be sold to qualified institutional investors. The
aggregate value of restricted securities at May 31, 1998, was $7,822,686,
which represented 3.1% of net assets.
(4) Final maturity indicated. Expected remaining maturity used for purposes of
calculating the weighted average portfolio maturity.
(5) Step-coupon security. Yield to maturity at purchase is indicated. These
securities become interest bearing at a predetermined rate and future date
and are purchased at a substantial discount from their value at maturity.
(6) The rates for commercial paper are the yield to maturity at purchase.
- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments your fund owned on the last day of the reporting period.
The schedule includes:
* a list of each investment
* the share amount (stocks) or principal amount (bonds) of each investment
* the market value of each investment
* the percentage of investments in each industry, as applicable
* the percent and dollar breakdown of each investment category
See Notes to Financial Statements
36 1-800-345-2021
Strategic Aggressive--Performance
- -----------------------------------------------------------------------------
TOTAL RETURNS AS OF MAY 31, 1998
<TABLE>
INVESTOR CLASS (INCEPTION 2/15/96) ADVISOR CLASS (INCEPTION 10/2/96)
STRATEGIC LEHMAN THREE-MONTH STRATEGIC LEHMAN THREE-MONTH
ALLOCATION: S&P 500 AGGREGATE U.S. ALLOCATION: S&P 500 AGGREGATE U.S.
AGGRESSIVE BOND INDEX TREASURY BILL AGGRESSIVE BOND INDEX TREASURY BILL
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
6 MONTHS(1)... 12.74% 15.03% 4.09% 2.55% 12.61% 15.03% 4.09% 2.55%
1 YEAR ....... 22.62% 30.68% 10.91% 5.16% 22.31% 30.68% 10.91% 5.16%
- ---------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
LIFE OF FUND.. 16.53% 27.71% 7.79%(2) 5.15%(2) 18.07% 33.51% 9.54% 5.16%
(1) Returns for periods less than one year are not annualized.
(2) Since 2/29/96, the date nearest the class's inception for which data are
available.
</TABLE>
See pages 66-68 for more information about share classes, returns, and the
comparative indices.
[line chart - data below]
GROWTH OF $10,000 OVER LIFE OF FUND
$10,000 investment made 2/29/96
Value on May 31, 1998
Strategic: Lehman 3-Month
Aggressive S&P 500 Aggregate T-Bill
2/29/96 $10,000 $10,000 $10,000 $10,000
3/31/96 $10,101 $10,133 $9,930 $10,041
4/30/96 $10,423 $10,269 $9,875 $10,082
5/31/96 $10,544 $10,504 $9,855 $10,125
6/30/96 $10,524 $10,586 $9,987 $10,167
7/31/96 $10,081 $10,102 $10,014 $10,211
8/30/96 $10,323 $10,292 $9,997 $10,254
9/30/96 $10,766 $10,911 $10,172 $10,297
10/31/96 $10,847 $11,197 $10,397 $10,339
11/30/96 $11,149 $12,018 $10,575 $10,382
12/31/96 $11,068 $11,822 $10,477 $10,425
1/31/97 $11,352 $12,544 $10,509 $10,469
2/28/97 $11,190 $12,619 $10,535 $10,513
3/31/97 $10,804 $12,141 $10,418 $10,558
4/30/97 $11,007 $12,847 $10,574 $10,603
5/31/97 $11,657 $13,600 $10,674 $10,648
6/30/97 $12,063 $14,258 $10,801 $10,691
7/31/97 $12,774 $15,367 $11,092 $10,736
8/31/97 $12,408 $14,484 $10,998 $10,783
9/30/97 $13,078 $15,319 $11,160 $10,827
10/31/97 $12,571 $14,791 $11,322 $10,871
11/30/97 $12,692 $15,450 $11,374 $10,919
12/31/97 $12,865 $15,757 $11,488 $10,966
1/31/98 $12,907 $15,917 $11,636 $11,012
2/28/98 $13,697 $17,038 $11,627 $11,058
3/31/98 $14,294 $17,951 $11,667 $11,105
4/30/98 $14,443 $18,115 $11,728 $11,150
5/31/98 $14,294 $17,773 $11,839 $11,197
The charts are based on Investor Class shares only; performance for other
classes will vary due to differences in fee structures (see Total Returns table
above). The chart at left shows the growth of a $10,000 investment over the life
of the fund, while the chart below shows the fund's year-by-year performance.
The S&P 500, Lehman Aggregate Bond, and Three-Month Treasury Bill indices are
provided for comparison in each chart. Past performance does not guarantee
future results. Investment return and principal value will fluctuate, and
redemption value may be more or less than original cost. Strategic Aggressive's
returns include operating expenses (such as transaction costs and management
fees) that reduce returns, while the returns of the indices do not.
[bar chart - data below]
ONE-YEAR RETURNS OVER LIFE OF FUND (PERIODS ENDING MAY 31)
Strategic: Lehman 3-Month
Aggressive S&P 500 Aggregate T-Bill
2/29/96-5/31/96 5.44% 5.04% -1.45% 1.25%
5/31/96-5/31/97 10.55% 29.48% 8.32% 5.17%
5/31/97-5/31/98 22.62% 30.68% 10.91% 5.16%
* From 2/29/96 (the date nearest the fund's inception for which index data are
available).
www.americancentury.com 37
Strategic Aggressive--Q&A
- -----------------------------------------------------------------------------
An interview with Jeff Tyler and Brian Howell, portfolio managers on the
American Century Strategic Asset Allocation funds management team.
HOW DID THE STRATEGIC AGGRESSIVE FUND PERFORM?
For the six months ended May 31, 1998, the fund's Investor Class shares
posted a total return of 12.74%, compared with the 9.60% return of its
benchmark. (See the Total Returns table on the previous page for other fund
performance comparisons.)
WHAT IS THE FUND'S BENCHMARK?
It's a combination of 11 different market indices--four U.S. stock indices,
two foreign stock indices, two U.S. bond indices, two foreign bond indices, and
one money market index. These indices represent the various asset classes in
which the fund invests and are weighted to match the fund's neutral asset mix.
Strategic Aggressive beat its benchmark during the period, mainly because
of the significant outperformance of its foreign stock holdings.
WHY DID YOUR FOREIGN STOCKS DO SO WELL?
Asia was the main difference. We virtually eliminated Asian stocks from our
foreign stock portfolio, and we are almost double our neutral weighting in
Europe (see the chart on page 39). In contrast, Asia is more than a third of the
foreign stock portion of the benchmark.
Asian stock market performance was a disaster, while European equity
returns were among the best in the world, with many countries returning better
than 30% during the six-month period. Foreign stocks make up 20% of the
portfolio, so our shift into Europe added substantially to returns.
DID YOU MAKE ANY CHANGES TO THE ASSET MIX OVER THE PAST SIX MONTHS?
We kept the portfolio pretty close to its neutral mix of 75% stocks, 20%
bonds, 5% cash. But stocks outperformed bonds and cash during the period, so we
did some minor rebalancing. We sold some stocks in April and shifted the
proceeds into bonds and money market securities to maintain neutral weightings.
Instead of making significant changes to the asset mix, we concentrated on
making adjustments within each asset class to try to enhance performance. Our
shift into European stocks is one example of this approach.
THE FUND'S BIGGEST HOLDING IS U.S. STOCKS. WHAT ADJUSTMENTS DID YOU MAKE TO THIS
PORTION OF THE PORTFOLIO?
We began moving away from smaller, value-oriented stocks toward an emphasis
on large-company growth stocks. This was a difficult decision, because there are
a lot of very attractive values among the stocks of small- and mid-sized
companies. However, when corporate earnings start to weaken--as they have
recently--investors tend to gravitate toward large-company stocks with
relatively consistent growth and earnings.
We also looked for companies that rely on domestic consumer demand. A good
example is Home Depot, which is a chain of retail stores that sells building
materials and home improvement products. Home Depot's customers are in the U.S.,
where economic conditions are favorable and consumer demand is healthy. As a
result, the drop-off in demand from Asia hasn't negatively affected the
company's sales.
[left margin]
"STRATEGIC AGGRESSIVE BEAT ITS BENCHMARK DURING THE PERIOD, MAINLY BECAUSE OF
THE SIGNIFICANT OUTPERFORMANCE OF ITS FOREIGN STOCK HOLDINGS."
[pie chart]
ASSET ALLOCATION (AS OF MAY 31, 1998)
PERCENT OF FUND INVESTMENTS
U.S. Stocks 53%
Foreign Stocks 20%
Money Market Securities 9%
Foreign Bonds 6%
U.S. Bonds 12%
See page 67 for the fund's neutral asset mix.
Investment terms are defined in the Glossary on page 68.
38 1-800-345-2021
Strategic Aggressive--Q&A
- -----------------------------------------------------------------------------
(Continued)
If anything, Asia has had a positive effect on Home Depot's business--some
of the products the company sells are produced in Asia, so its stores are
getting these products at cheaper prices. It's not surprising that Home Depot's
stock returned more than 40% during the six-month period.
WHAT ABOUT THE FUND'S U.S. BOND HOLDINGS?
We cut back our Treasury holdings quite a bit as their yields hit all-time
lows. In their place, we added some callable government agency securities.
Callable securities tend to offer higher yields because they can be redeemed--or
called--by the issuer before the maturity date.
Calling a bond is kind of like refinancing a home mortgage--when interest
rates fall significantly, homeowners can often reduce their interest payments by
taking out a new mortgage and paying off the old one. Bond issuers do the same
thing with callable bonds when rates decline. But interest rates were fairly
stable during the past six months, so there wasn't any incentive for issuers to
call these bonds. As a result, the fund got some extra yield with very little
risk of a call.
We also bought more asset-backed securities, including bonds backed by
commercial mortgages and home-equity loans. These bonds added greater
diversification to the fund's fixed-income holdings. We purchased them when they
were more attractively priced than most corporate bonds, and they have since
performed better than corporates.
LOOKING AHEAD, WHAT ARE YOUR PLANS FOR THE FUND'S ASSET ALLOCATION STRUCTURE?
We intend to position the portfolio more defensively in the coming months.
With U.S. stock market indices at or near all-time highs and U.S. bond yields
close to record lows, we think it makes sense to be a little cautious.
For the Strategic Aggressive fund, this means cutting back on U.S. stocks
and shifting into U.S. bonds and cash. Domestically, we believe that bonds have
better return potential than stocks for the second half of 1998.
WHAT MAKES U.S. BONDS MORE ATTRACTIVE THAN STOCKS?
It comes down to whether you think the high stock prices or low bond yields
are sustainable going forward. For bonds, the reasons behind the low interest
rate environment are a lack of inflation and the financial crisis in Asia. These
situations aren't likely to change in the next six months--it will be awhile
before Asia solves its economic problems, and in the meantime, expectations of
low commodities prices and cheap exports from Asia should help keep global
inflation low.
[right margin]
FUND'S U.S. STOCKS (AS OF MAY 31, 1998)
NUMBER OF COMPANIES 352
DIVIDEND YIELD 1.36%
PRICE/EARNINGS RATIO 27.8
% OF FUND'S % OF
U.S. STOCKS FUND
TOP 5 U.S. STOCKS
ALLSTATE CORP. 1.5% 0.8%
MICROSOFT CORP. 1.4% 0.7%
TYCO INTERNATIONAL LTD. 1.2% 0.6%
FANNIE MAE 1.2% 0.6%
DOW CHEMICAL CO. 1.2% 0.6%
FUND'S FOREIGN STOCKS (AS OF MAY 31, 1998)
NUMBER OF COMPANIES 217
DIVIDEND YIELD 1.16%
% OF FUND'S % OF
COUNTRY FOREIGN STOCKS FUND
TOP 5 FOREIGN STOCKS
ING GROEP N.V. NETHERLANDS 2.2% 0.4%
MARSCHOLLEK,
LAUTENSCHLAEGER
UND PARTNER AG GERMANY 2.1% 0.4%
MANNESMANN AG GERMANY 2.0% 0.4%
MISYS PLC U.K. 1.6% 0.3%
JULIUS BAER
HOLDING AG SWITZERLAND 1.6% 0.3%
[pie chart]
PERCENT OF FUND'S FOREIGN STOCKS
Europe 87%
Asia/Pacific 4%
Americas
(excluding U.S.) 7%
South Africa 1%
Middle East 1%
www.americancentury.com 39
Strategic Aggressive--Q&A
- -----------------------------------------------------------------------------
(Continued)
The stock market rally, on the other hand, has been dependent on a healthy
U.S. economy and solid corporate earnings growth. Corporate profits are already
lower than they were a year ago, and we expect them to remain lackluster through
the end of this year. In addition, a big build-up of inventories in the first
quarter and weak consumer demand from Asia will probably slow the economy.
The bottom line is that we see more downside risk in stocks than in bonds.
And even if both markets go sideways for the rest of the year, bonds offer
interest rates of 5-6% a year, whereas stocks pay out dividends of 2% or
less--if they pay any at all.
ARE YOU PLANNING TO SHIFT SIGNIFICANTLY OUT OF U.S. STOCKS?
No. The adjustments I'm talking about are likely to be fairly small.
Strategic Aggressive is managed to maintain a specific strategic position, so we
don't stray too far from its neutral asset mix. To make sure of this, the fund's
prospectus includes operating ranges for each asset class that we are obligated
to stay within. For example, our neutral weighting for stocks is 75%, and we
must keep it between 60% and 90%.
ARE THERE STILL GOOD INVESTMENT OPPORTUNITIES OVERSEAS?
Definitely. Europe is still a great place to invest, especially for stocks,
as privatization and productivity improvements sweep the Continent. Unemployment
remains an issue, and it might get worse before it gets better as companies cut
costs and become more efficient. But if Europe continues along the same path
that the U.S. started on five years ago, the region will likely have healthier
economies and lower unemployment down the road.
Asia, on the other hand, is not yet a buying opportunity. Japan still needs
to address its banking crisis, economic woes, and growing government budget
deficit. Until Japan starts to make some progress, the rest of Asia won't be
able to fully recover from its own problems.
As a result, we plan to maintain at least a neutral weighting in foreign
stocks and continue our concentration in Europe.
[left margin]
"THE BOTTOM LINE IS THAT WE SEE MORE DOWNSIDE RISK IN STOCKS THAN IN BONDS."
[pie charts]
FUND'S U.S. BONDS (AS OF MAY 31, 1998)
NUMBER OF SECURITIES 65
WEIGHTED AVERAGE MATURITY 14.11 YEARS
AVERAGE DURATION 4.64 YEARS
PERCENT OF FUND'S U.S. BONDS
Corporate Securities 53%
U.S. Govt. Agency 4%
U.S. Treasury Bonds 5%
Asset-Backed 8%
U.S. Treas. Notes 12%
Mortgage-Backed 18%
FUND'S FOREIGN BONDS (AS OF MAY 31, 1998)
NUMBER OF SECURITIES 18
WEIGHTED AVERAGE MATURITY 5.50 YEARS
AVERAGE DURATION 4.77 YEARS
PERCENT OF FUND'S FOREIGN BONDS
Europe 50%
Asia/Pacific 16%
Americas
(excluding U.S.) 34%
40 1-800-345-2021
Aggressive--Schedule of Investments
- -----------------------------------------------------------------------------
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
COMMON STOCKS, RIGHTS & WARRANTS
AEROSPACE & DEFENSE-2.0%
4,600 Anaren Microwave, Inc.(1) $ 76,906
4,200 BE Aerospace, Inc.(1) 121,406
4,300 Boeing Co. 204,788
4,000 Bombardier Inc. Cl B ORD 102,867
26,300 British Aerospace PLC ORD 233,093
800 Cie des Signaux SA ORD 62,172
1,100 Cordant Technologies Inc. 54,863
6,400 General Dynamics Corp. 284,400
1,900 Gulfstream Aerospace Corp.(1) 80,750
2,500 Litton Industries, Inc.(1) 144,844
2,200 Lockheed Martin Corp. 246,950
7,100 Raytheon Co. Cl B 388,281
2,500 Triumph Group, Inc.(1) 122,500
8,900 United Technologies Corp. 836,600
------------------
2,960,420
------------------
AGRICULTURE-0.2%
9,300 Pioneer Hi-Bred International,
Inc. 353,981
------------------
AIRLINES-0.4%
1,300 AMR Corp.(1) 200,119
12,300 British Airways plc ORD 130,193
200 Delta Air Lines Inc. 23,000
5,600 Finnair Oyj ORD 57,800
2,800 Midway Airlines Corp.(1) 53,900
1,000 US Airways Group Inc.(1) 70,000
------------------
535,012
------------------
AUTOMOBILES & AUTO PARTS-2.0%
180 Bayerische Motoren Werke
(BMW) AG ORD 190,387
36 Bayerische Motoren Werke
(BMW) AG ORD(1) 37,613
3,000 Bridgestone Corp. ORD 68,260
3,000 Chrysler Corp. 166,875
5,200 Coachmen Industries, Inc. 123,825
13,100 Cooper Tire and Rubber Company 310,306
2,000 Daimler-Benz AG ORD 201,457
4,600 Dura Automotive Systems, Inc.(1) 168,763
4,800 Ford Motor Co. 249,000
3,000 Honda Motor Co., Ltd. ORD 101,959
1,300 Magna International Inc. Cl A ORD 91,413
400 PACCAR Inc. 22,088
100 Porsche AG ORD 274,510
10,100 Superior Industries International,
Inc. 294,163
7,400 Tower Automotive, Inc.(1) 347,338
380 Volkswagen AG ORD 308,045
------------------
2,956,002
------------------
Shares Value
- -----------------------------------------------------------------------------
BANKING-6.2%
11,020 Banc One Corp. $ 607,478
101,700 Banca di Roma ORD 209,545
3,198 Banca Popolare di Bergamo
Credito Varesino SpA ORD 75,163
5,400 Banca Popolare di Brescia ORD 111,570
412 Banco Espirito Santo e Comercial
de Lisboa, SA ORD(1) 14,482
3,300 Banco Espirito Santo e Comercial
de Lisboa, SA ORD 115,996
3,300 Banco Espirito Santo e Comercial
de Lisboa, SA Rights ORD(1) 23,199
10,700 Banco Mello, S.A. ORD 148,946
1,300 Banco Popular Espanol SA ORD 103,026
3,400 BankAmerica Corp. 281,138
1,700 Banque Nationale de Paris ORD 145,122
5,200 Chase Manhattan Corp. 706,875
1,500 Citicorp 223,688
1,000 Corporacion Bancaria de Espana
SA ORD 85,119
1,600 Credit Suisse Group ORD 351,648
19,900 Credito Italiano ORD 110,904
500 Crestar Financial Corp. 28,719
3,100 Deutsche Pfandbrief-und
Hypothekenbank AG ORD 248,000
2,100 Erste Bank Der Oesterreichischen
Sparkassen AG ORD 127,252
6,700 Espirito Santo Financial Holding
S.A. ADR 170,431
4,500 First Security Corp. 102,094
11,900 First Union Corp. 658,219
7,300 First Virginia Banks, Inc. 381,425
3,000 Imperial Bancorp(1) 87,750
1,700 Mellon Bank Corp. 114,644
11,250 Mercantile Bancorporation Inc. 575,156
16,800 Merita OY Ltd. Cl A ORD 105,588
700 National Mortgage Bank of
Greece ORD 50,067
11,600 NationsBank Corp. 878,700
10,200 Norwest Corp. 396,525
3,400 PNC Bank Corp. 196,350
4,300 Peoples Heritage Financial
Group, Inc. 96,616
1,600 Providian Financial Corp. 101,800
1,600 Redfed Bancorp Inc.(1) 32,350
3,500 Regions Financial Corp. 143,719
1,300 Societe Generale Cl A ORD 257,350
160 Union Bank of Switzerland ORD 268,590
2,050 Van der Moolen Holding N.V.
ORD 148,255
5,400 Wachovia Corp. 432,338
300 Wells Fargo & Co. 108,450
800 Zions Bancorporation 41,450
------------------
9,065,737
------------------
See Notes to Financial Statements
www.americancentury.com 41
Aggressive--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
BIOTECHNOLOGY-0.5%
3,800 Genzyme Corp.(1) $ 104,144
7,400 IDEC Pharmaceuticals Corp.(1) 232,638
3,600 Immunex Corp.(1) 222,750
3,700 PathoGenesis Corp.(1) 132,275
------------------
691,807
------------------
BROADCASTING & MEDIA-1.0%
11,000 CBS Corporation 349,250
5,100 Clear Channel Communications,
Inc.(1) 488,963
1,102 Havas Advertising SA ORD 232,882
1,102 Havas Advertising Warrants
ORD(1) 3,130
800 Heftel Broadcasting Corp.(1) 30,275
700 Jacor Communications, Inc.(1) 36,969
6,899 Primedia Limited Cl N ORD 54,865
1,300 Societe Television Francaise 1
ORD 183,294
29,000 Taylor Nelson AGB plc ORD 64,374
------------------
1,444,002
------------------
BUILDING & HOME IMPROVEMENTS-0.3%
2,100 American Standard Companies
Inc.(1) 101,325
9,800 Cemex SA de CV Cl B Rights
ORD(1) 102
8,200 Premark International, Inc. 262,913
4,600 Royal Group Technologies Ltd.
ORD(1) 124,615
------------------
488,955
------------------
BUSINESS SERVICES & SUPPLIES-2.4%
5,800 Admiral plc ORD 116,914
1,700 Altran Technologies SA ORD 347,895
2,000 Applied Graphics Technologies,
Inc.(1) 96,000
400 Athlon Groep N.V. ORD 71,375
3,700 Billing Information Concepts
Corp.(1) 86,025
8,700 Bracknell Corp. ORD(1) 31,066
1,342 Brunel International NV ORD 52,362
12,400 CGI Group, Inc. ORD(1) 256,302
10,000 Capita Group Plc ORD 88,302
3,304 Cendant Corp.(1) 71,656
400 Creyf's NV ORD 104,261
4,000 Dun & Bradstreet Corp. (The) 135,000
4,200 Goode Durrant plc ORD 39,075
4,000 HA-LO Industries, Inc.(1) 123,750
6,200 Hays plc ORD 113,340
8,450 International Telecommunication
Data Systems, Inc.(1) 209,666
2,600 Kelly Services, Inc. Cl A 96,038
7,600 Metamor Worldwide, Inc.(1) 228,238
Shares Value
- -----------------------------------------------------------------------------
2,850 Metzler Group, Inc. (The)(1) $ 78,998
5,400 PMT Services, Inc. 104,963
6,075 Parity plc ORD 84,779
14,748 Robert Walters plc ORD 124,090
8,700 Select Appointments Holdings
plc ORD 124,464
400 Sixt AG ORD 62,297
7,700 Triad Group PLC ORD 93,820
2,200 U.S. Filter Corp.(1) 66,963
5,882 Unique International NV ORD 196,759
1,900 Valassis Communications, Inc.(1) 66,856
3,000 Vedior NV ORD (Acquired
8/8/97-2/2/98,
Cost $64,626)(2) 95,432
18,400 WPP Group plc ORD 117,727
------------------
3,484,413
------------------
CHEMICALS & RESINS-1.4%
1,200 Air Products and Chemicals, Inc. 104,400
9,300 Dow Chemical Co. 900,938
2,400 du Pont (E.I.) de Nemours & Co. 184,800
8,200 Great Lakes Chemical Corp. 328,000
7,600 Lubrizol Corp. 264,100
5,200 Nalco Chemical Co. 195,000
1,900 Praxair, Inc. 93,694
------------------
2,070,932
------------------
COMMUNICATIONS EQUIPMENT-1.9%
5,700 Advanced Fibre Communications,
Inc.(1) 211,256
5,100 Ascend Communications, Inc.(1) 220,097
8,200 Ericsson (L.M.) Telephone Co.
ADR 228,831
1,577,500 Ericsson Telecomunicacoes S.A.
ORD 32,023
1,700 Europolitan Holdings AB ORD 105,543
4,400 Excel Switching Corp.(1) 86,625
9,200 Lucent Technologies Inc. 652,625
5,600 Motorola, Inc. 296,450
3,400 Nokia Corp. Cl A ADR 220,788
1,800 Northern Telecom Ltd. ORD 115,324
7,900 RELTEC Corp.(1) 290,325
3,200 Tekelec(1) 141,900
3,300 Tellabs, Inc.(1) 226,772
------------------
2,828,559
------------------
COMMUNICATIONS SERVICES-4.1%
8,100 AT&T Corp. 493,088
9,300 AirTouch Communications, Inc.(1) 442,913
1,190 Alcatel Alsthom Compagnie
Generale ORD 254,460
10,600 Ameritech Corp. 449,838
2,100 BCE Inc. ORD 97,123
4,100 Bell Atlantic Corp. 375,663
See Notes to Financial Statements
42 1-800-345-2021
Aggressive--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
7,500 BellSouth Corp. $ 483,750
3,000 Datacraft Asia Limited ORD 8,700
2,946 Energis plc ORD(1) 41,593
3,200 GTE Corp. 186,600
1,300 Global TeleSystems Group, Inc.(1) 49,766
2,700 Hellenic Telecommunication
Organization SA (OTE) ORD 79,248
1,700 Intrasoft S.A. ORD 113,146
3,500 Magyar Tavkozlesi Rt. ADR(1) 98,000
1 NTT Data Corp. ORD 40,035
2,700 NetCom Systems AB Cl B ORD(1) 103,261
1,300 Portugal Telecom S.A. ORD 68,234
14,200 SBC Communications Inc. 552,025
2,300 Tele Danmark A/S Cl B ORD 215,121
600 Telecel-Comunicacaoes Pessoais,
SA ORD(1) 104,975
26,200 Telecom Italia SpA ORD(1) 197,838
6,545 Telefonica de Espana ORD 292,145
2,600 Teleglobe Inc. ORD 134,888
1,100 Telinfo NV ORD(1) 108,117
22,600 Vodafone Group plc ORD 248,254
16,600 WorldCom, Inc.(1) 755,819
------------------
5,994,600
------------------
COMPUTER PERIPHERALS-1.0%
2,200 Certicom Corp. ORD(1) 49,854
5,750 Cisco Systems Inc.(1) 434,305
9,500 EMC Corp. (Mass.)(1) 393,656
12,600 FORE Systems, Inc.(1) 276,019
900 MICROS Systems, Inc.(1) 52,706
10,100 Xylan Corp.(1) 242,716
------------------
1,449,256
------------------
COMPUTER SOFTWARE & SERVICES-5.7%
11,700 At Home Corp. Series A(1) 405,844
6,800 BMC Software, Inc.(1) 313,013
4,000 CBT Group Plc ADR(1) 199,500
700 CDW Computer Centers, Inc.(1) 28,831
2,000 CMG plc ORD 56,148
6,000 Cadence Design Systems, Inc.(1) 211,500
2,500 Cap Gemini N.V. ORD 195,835
1,538 Cap Gemini SA ORD 229,441
2,300 Computer Sciences Corp. 119,456
13,400 Compuware Corp.(1) 615,144
1,900 Deltek Systems, Inc.(1) 39,663
8,900 Electronic Arts Inc.(1) 386,038
8,800 Electronic Data Systems Corp. 320,100
2,500 Enator AB ORD(1) 78,721
145,847 Founder Hong Kong Limited ORD 90,813
2,000 Fuji Soft ABC, Inc. ORD 69,844
4,700 Geac Computer Corp. Ltd. ORD(1) 171,863
4,700 Getronics N.V. ORD 233,610
Shares Value
- -----------------------------------------------------------------------------
3,100 GTECH Holdings Corp.(1) $ 100,556
2,800 HBO & Co. 161,613
7,800 J.D. Edwards & Company(1) 286,894
2,500 JDA Software Group, Inc.(1) 112,891
1,800 JetForm Corp.(1) 34,313
3,000 Lernout & Hauspie Speech
Products N.V.(1) 161,063
2,800 Logica plc ORD 82,606
4,000 Macromedia, Inc.(1) 63,375
3,100 Mastech Corp.(1) 58,609
2,500 May & Speh, Inc.(1) 41,641
2,000 Meitec ORD 68,116
12,700 Microsoft Corp.(1) 1,077,516
7,949 Misys plc ORD 479,532
900 Network Associates Inc.(1) 55,153
1,400 Oracle Systems Corp.(1) 33,031
4,284 Ordina Beheer N.V. ORD(1) 144,156
10,100 Oshap Technologies, Ltd.(1) 84,272
7,100 Parametric Technology Corp.(1) 217,659
2,100 Project Software & Development,
Inc.(1) 47,381
2,400 Provida ASA ORD(1) 53,425
6,400 QuadraMed Corp.(1) 154,600
242 Resco AB Cl B ORD(1) 7,990
3,800 Sage Group plc (The) ORD 91,795
1,900 Saville Systems Ireland plc ADR(1) 76,119
2,000 SEMA Group plc ORD 78,346
700 Shared Medical Systems Corp. 50,925
501 Simac Techniek N.V. ORD 102,720
3,400 Sterling Software, Inc.(1) 92,438
4,500 Superior Consultant Holdings
Corp.(1) 191,250
1,300 Symantec Corp.(1) 31,038
700 Tieto Corp. Cl B ORD 153,531
3,200 Unisys Corp.(1) 78,400
6,700 Vanstar Corp.(1) 97,569
700 Visio Corp.(1) 32,813
------------------
8,368,700
------------------
COMPUTER SYSTEMS-0.9%
1,000 Apple Computer, Inc.(1) 26,594
5,900 Dell Computer Corp.(1) 486,197
18,000 Fujitsu Ltd. ORD 206,077
2,000 Hewlett-Packard Co. 124,250
2,500 International Business Machines
Corp. 293,438
1,000 OPTIMUS S.A. ORD(1) 18,333
3,100 Sun Microsystems, Inc.(1) 124,097
------------------
1,278,986
------------------
See Notes to Financial Statements
www.americancentury.com 43
Aggressive--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
CONSTRUCTION & PROPERTY DEVELOPMENT-0.5%
1,100 Assa Abloy AB Cl B ORD $ 43,051
400 DLW AG ORD(1) 69,244
700 Grupo Acciona SA ORD 179,996
12,400 Jarvis plc ORD 154,729
2,800 Kaufman & Broad Home Corp. 71,925
2,100 Lafarge SA ORD 212,947
2,400 NVR, Inc.(1) 77,100
------------------
808,992
------------------
CONSUMER PRODUCTS-1.8%
1,000 Atag Holding N.V. ORD 68,940
1,100 Avon Products, Inc. 89,994
2,400 Colgate-Palmolive Co. 208,800
1,900 Electrolux AB Cl B ORD 188,929
4,800 Gillette Company 562,200
12,500 Helen of Troy Ltd.(1) 238,672
700 Mattel, Inc. 26,513
4,900 Maytag Corp. 247,144
10,100 NBTY, Inc.(1) 176,119
1,600 National Service Industries 81,600
6,500 Procter & Gamble Co. (The) 545,594
6,000 Rayovac Corporation(1) 126,000
1,000 Whirlpool Corp. 68,313
------------------
2,628,818
------------------
CONTROL & MEASUREMENT-0.2%
1,800 Beckman Instruments, Inc. 100,350
600 Keyence Corporation ORD 72,105
1,000 Waters Corp.(1) 58,250
------------------
230,705
------------------
DIVERSIFIED COMPANIES-1.4%
4,841 Asko Oyj Cl A ORD 103,947
7,375 Bodycote International plc ORD 151,070
400 Fiskars Oyj AB Cl A ORD 56,768
7,800 General Electric Co. (U.S.) 650,325
3,000 Siebe plc ORD 75,163
16,800 Tyco International Ltd. 930,300
1,800 Unilever N.V. 142,088
------------------
2,109,661
------------------
ELECTRICAL & ELECTRONIC
COMPONENTS-2.0%
11,800 AMP, Inc. 448,400
2,000 Aiwa Co., Ltd. ORD 60,196
9,500 Analog Devices, Inc.(1) 234,531
2,700 Burr-Brown Corp.(1) 69,272
5,300 Cree Research, Inc.(1) 81,156
600 Draka Holding N.V. ORD 25,647
800 Eaton Corp. 71,850
8,300 Elektrim Spolka Akcyjna S.A.
ORD 109,129
Shares Value
- -----------------------------------------------------------------------------
5,800 General Signal Corp. $ 238,525
4,200 Intel Corp. 299,906
300 Le Carbone-Lorraine ORD 136,819
9,000 Minebea Company Ltd. ORD 92,087
900 Philips Electronics N.V. 85,613
4,800 REMEC, Inc.(1) 68,850
4,500 Sanmina Corp.(1) 350,438
179 Sartorius AG ORD 90,252
1,700 Sony Corp. ORD 143,217
900 Texas Instruments Inc. 46,238
6,700 Uniphase Corp.(1) 341,281
1,200 Vitesse Semiconductor Corp.(1) 30,713
------------------
3,024,120
------------------
ENERGY (PRODUCTION & MARKETING)-2.9%
12,100 Amoco Corp. 505,931
7,000 Apache Corp. 239,313
4,700 Atlantic Richfield Co. 370,713
10,500 Burlington Resources Inc. 442,313
900 Camco International, Inc. 62,775
15,000 Canadian 88 Energy Corp. ORD(1) 66,953
4,100 Chevron Corp. 327,488
6,800 Exxon Corp. 479,400
5,700 Murphy Oil Corp. 286,781
17,200 Seagull Energy Corp.(1) 284,875
4,500 Sun Company, Inc. 191,250
3,400 Texaco Inc. 196,350
3,100 Ultramar Diamond Shamrock Corp. 99,006
12,600 Unocal Corp. 448,875
6,800 Williams Companies, Inc. (The) 220,575
------------------
4,222,598
------------------
ENERGY (SERVICES)-1.2%
6,600 Berkley Petroleum Corp. ORD(1) 53,706
2,900 BJ Services Co.(1) 94,794
2,400 Det Sondenfjelds-Norske
Dampskibsselskab Cl A ORD 51,358
2,800 Diamond Offshore Drilling, Inc. 133,875
5,800 EVI, Inc.(1) 293,263
5,100 Ensco International Inc. 129,094
3,400 Global Industries, Ltd.(1) 72,356
7,900 Noble Drilling Corp.(1) 233,050
1,900 Parker Drilling Co.(1) 16,031
1,600 Petroleum Geo-Services ASA
ADR(1) 104,800
1,000 Rowan Companies, Inc.(1) 25,563
100 Schoeller-Bleckmann Oilfield
Equipment AG ORD 12,900
5,800 Tidewater Inc. 220,400
4,000 Transocean Offshore 197,250
2,400 Veritas DGC Inc.(1) 124,350
------------------
1,762,790
------------------
See Notes to Financial Statements
44 1-800-345-2021
Aggressive--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
ENVIRONMENTAL SERVICES-0.8%
11,100 Browning-Ferris Industries, Inc. $ 394,744
4,500 Superior Services Inc.(1) 137,250
1,600 Tomra Systems ASA ORD 49,609
9,190 USA Waste Services, Inc.(1) 433,653
4,300 Waste Management, Inc. 139,750
------------------
1,155,006
------------------
FINANCIAL SERVICES-5.4%
6,400 AMRESCO, INC.(1) 216,000
15,100 Amvescap Plc ORD 161,556
3,947 Associates First Capital Corp. 295,285
18,200 Banca Intesa S.p.A. ORD 113,378
2,800 Banca Nazionale del Lavoro
ORD(1) 75,596
6,000 Bank of Ireland ORD 112,720
2,000 Bear Stearns Companies Inc. 108,500
13,600 CIT Group Holdings, Inc. (The)
Cl A 428,400
9,100 Close Brothers Group plc ORD 121,052
18,300 Corporacion Financiera Reunida,
S.A. ORD(1) 264,238
900 Deutsche Bank AG ORD 77,445
1,600 Dresdner Bank AG ORD 89,905
2,600 Equitable Companies Inc. 179,075
15,100 Fannie Mae 904,113
5,400 Heller Financial, Inc.(1) 150,525
9,379 ING Groep N.V. ORD 643,789
2,800 Investor's Group, Inc. ORD 102,098
160 Julius Baer Holding AG ORD 460,595
4,522 Kempen & Company NV ORD 319,613
1,900 Lehman Brothers Holdings, Inc. 134,781
14,600 Merkantildata ASA ORD 204,094
1,500 Merrill Lynch & Co., Inc. 134,250
9,170 Morgan Stanley Dean Witter,
Discover & Co. 715,833
8,380 Newcourt Credit Group Inc. ORD
(Acquired 2/15/96-2/6/98,
Cost $281,603)(2) 411,447
6,200 OM Gruppen AB ORD 126,463
3,570 Provident Financial plc ORD 55,997
1,050 Schroders plc ORD 30,814
7,200 Sirrom Capital Corp. 191,700
14,500 Skandia Forsakrings AB ORD 211,653
13,100 Travelers Group, Inc. 799,100
100 Vontobel Holding AG Cl B ORD 141,576
------------------
7,981,591
------------------
FOOD & BEVERAGE-3.3%
7,100 American Italian Pasta Co. Cl A(1) 254,713
25,677 Archer-Daniels-Midland Co. 484,653
5,500 Bestfoods 310,406
1,000 Campofrio Alimentacion SA
ORD(1) 84,064
Shares Value
- -----------------------------------------------------------------------------
2,900 Coca-Cola Company (The) $ 227,288
8,300 Coca-Cola Enterprises, Inc. 311,769
15,300 Diageo plc ORD 172,936
1,220 Fomento Economico Mexica UBD
ORD(1) 40,485
900 Groupe Danone ORD 242,215
2,000 Grupo Industrial Emprex Class B
ORD 10,786
900 Hain Food Group, Inc. (The)(1) 20,278
2,800 Hershey Foods Corp. 193,900
2,800 Hormel Foods Corp. 94,150
25,500 IBP, Inc. 494,063
9,500 Iceland Group Plc ORD 37,757
1,300 Lance, Inc. 27,341
140 Nestle S.A. ORD 299,481
7,300 Northland Cranberries, Inc. 115,888
3,500 OY Hartwall AB ORD 101,602
4,900 PepsiCo, Inc. 199,981
2,200 Quaker Oats Co. (The) 126,913
800 Raisio Group plc ORD 149,661
4,800 Richfood Holdings, Inc. 117,300
4,400 Smithfield Foods, Inc.(1) 118,938
1,400 South African Breweries Ltd. ORD 39,484
1,700 Suiza Foods Corp.(1) 99,344
13,700 Tyson Foods, Inc. Cl A 289,413
10,400 Universal Foods Corp. 247,650
------------------
4,912,459
------------------
FURNITURE & FURNISHINGS-0.3%
2,100 CompX International Inc.(1) 48,825
3,600 Ethan Allen Interiors Inc. 181,125
7,000 Furniture Brands International,
Inc.(1) 206,500
3,100 O'Sullivan Industries Holdings,
Inc.(1) 46,500
------------------
482,950
------------------
HEALTHCARE-0.3%
1,200 Cardinal Health, Inc. 106,950
1,200 Concentra Managed Care, Inc.(1) 28,125
1,100 Hooper Holmes, Inc. 25,575
2,500 Province Healthcare Co.(1) 64,141
1,400 RehabCare Group, Inc.(1) 36,269
1,100 Tenet Healthcare Corp.(1) 38,500
2,900 Wellpoint Health Networks Inc.(1) 188,500
------------------
488,060
------------------
INDUSTRIAL EQUIPMENT & MACHINERY-1.2%
44,000 Ashtead Group plc ORD 195,701
9,900 Caterpillar Inc. 543,881
6,200 Ingersoll-Rand Co. 279,388
7,700 Johnstown America Industries,
Inc.(1) 139,563
600 Mannesmann AG ORD 586,555
------------------
1,745,088
------------------
See Notes to Financial Statements
www.americancentury.com 45
Aggressive--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
INSURANCE-4.0%
2,357 ASR Verzekeringsgroep N.V. ORD $ 205,603
3,700 Aetna Inc. 289,294
868,600 Aksigorta A.S. ORD 52,959
611 Allianz AG ORD(1) 193,025
12,600 Allstate Corp. 1,185,886
2,200 American International Group, Inc. 272,388
2,141 Axa-UAP ORD 243,572
2,900 CMAC Investment Corp. 175,450
2,700 CNA Financial Corp.(1) 408,375
5,000 Chubb Corp. (The) 397,813
5,100 Companhia de Seguros Mundial
Confianca, SA ORD(1) 156,848
4,200 Conseco Inc. 195,825
2,400 Everest Reinsurance Holdings, Inc. 93,300
3,000 Gallagher (Arthur J.) & Co. 129,375
1,300 General Re Corp. 285,838
3,400 Kingsway Financial Services
ORD(1) 41,325
2,100 LandAmerica Financial Group, Inc. 100,275
1,000 Liberty Life Association of Africa
Ltd. ORD 27,737
4,000 Lincoln National Corp. 359,500
1,200 Orion Capital Corp. 67,575
3,200 Pohjola Insurance Group Cl B
ORD 175,170
59,100 Premafin Finanziaria S.p.A. ORD(1) 51,060
10,300 SAFECO Corp. 480,881
8,100 Sage Group Limited ORD 42,814
4,700 Sampo Insurance Company Ltd.
ORD 218,298
8,200 Storebrand ASA ORD(1) 76,057
500 Vesta Insurance Group, Inc. 26,344
------------------
5,952,587
------------------
LEISURE-0.8%
990 Accor SA ORD 271,398
600 Anchor Gaming(1) 54,394
1,400 Disney (Walt) Co. 158,375
2,800 Eastman Kodak Co. 199,850
2,500 Infogrames Entertainment SA
ORD(1) 157,868
200 Moevenpick Holding AG Bearer
ORD 113,935
3,500 Polaroid Corp. 141,969
1,500 Scandic Hotels AB ORD 57,367
20,779 Thomson Travel Group plc ORD(1) 60,878
------------------
1,216,034
------------------
MACHINERY & EQUIPMENT-0.6%
1,000 Aviation Sales Co.(1) 38,188
3,400 Deere & Co. 176,375
250 Georg Fischer AG ORD 109,553
Shares Value
- -----------------------------------------------------------------------------
7,800 Pinnacle Systems, Inc.(1) $ 262,275
90 Rieter Holdings Ltd. ORD(1) 68,199
2,500 Sundstrand Corp. 155,000
600 Swisslog Holding AG ORD 62,698
------------------
872,288
------------------
MEDICAL EQUIPMENT & SUPPLIES-0.8%
1,200 Advanced Technology
Laboratories, Inc.(1) 54,338
1,600 AmeriSource Health Corp.(1) 87,000
5,100 CONMED Corp.(1) 108,534
2,000 Cyberonics, Inc.(1) 22,750
2,700 CyberOptics Corp.(1) 45,984
1,100 Datascope Corp.(1) 30,697
2,500 Guidant Corp. 161,094
2,900 Hillenbrand Industries, Inc. 179,075
2,300 Physician Sales & Service, Inc.(1) 28,822
7,700 STERIS Corp.(1) 480,772
1,600 Teleflex Inc. 64,700
------------------
1,263,766
------------------
METALS & MINING-0.6%
4,738 Aalberts Industries N.V. ORD 144,596
2,800 Aluminum Co. of America 194,250
6,200 Arch Coal Inc. 149,963
4,400 Mytilineos S.A. ORD 68,252
700 Parker-Hannifin Corp. 28,744
5,200 Reynolds Metals Co. 301,600
------------------
887,405
------------------
OFFICE EQUIPMENT & SUPPLIES-0.6%
6,100 Kronos Inc.(1) 217,313
1,700 Samas Groep N.V. ORD 126,323
5,400 Xerox Corp. 554,850
------------------
898,486
------------------
PAPER & FOREST PRODUCTS-0.4%
4,800 Bowater Inc. 243,000
3,000 Consolidated Papers, Inc. 86,813
2,000 Rayonier, Inc. 93,875
8,200 Westvaco Corp. 233,700
------------------
657,388
------------------
PERSONAL SERVICES(3)
700 Block (H & R), Inc. 30,800
------------------
PHARMACEUTICALS-4.4%
3,300 Barr Laboratories, Inc.(1) 134,681
6,500 Bergen Brunswig Corp. Cl A 269,750
8,200 Bristol-Myers Squibb Co. 881,500
1,800 Dura Pharmaceuticals, Inc.(1) 47,081
1,900 Elan Corp., plc ADR(1) 116,256
10,700 Forest Laboratories, Inc.(1) 353,100
See Notes to Financial Statements
46 1-800-345-2021
Aggressive--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
800 Genentech, Inc.(1) $ 55,200
1,000 Herbalife International, Inc. 25,438
2,100 Lilly (Eli) & Co. 129,019
15,500 Mallinckrodt Inc. 477,594
1,600 McKesson Corp. 125,000
6,000 Merck & Co., Inc. 702,375
4,000 Nature's Sunshine Products, Inc. 92,125
125 Novartis AG ORD 211,353
2,341 Novo Nordisk A/S Cl B ORD 368,369
7,600 Pfizer, Inc. 796,575
3,400 Pharmacia & Upjohn Inc. 150,238
2,000 Richter Gedeon Rt. GDR
(Acquired 6/24/97-4/23/98,
Cost $206,250)(1)(2) 168,299
10,200 Roberts Pharmaceutical Corp.(1) 168,300
4,100 Schein Pharmaceutical, Inc.(1) 108,138
7,200 Schering-Plough Corp. 602,550
2,500 SkyePharma plc ORD(1) 3,346
3,000 Takeda Chemical Inds. ORD 77,333
1,600 Twinlab Corp.(1) 58,900
14 UCB SA ORD 66,540
3,000 Warner-Lambert Co. 191,438
2,700 Zeneca Group plc ORD 109,689
------------------
6,490,187
------------------
PRINTING & PUBLISHING-0.7%
3,000 Banta Corp. 94,969
13,300 Deluxe Corp. 446,381
10,100 Gruppo Editoriale L'Espresso ORD 91,852
3,500 Media Arts Group, Inc.(1) 67,594
6,100 Mondadori (Arnoldo) Editore SpA
ORD 74,545
7,300 VNU Tijdschriftengroep Nederland
ORD 250,360
------------------
1,025,701
------------------
RAILROAD-0.4%
9,000 CSX Corp. 428,625
1,800 Canadian National Railway
Company ORD 106,548
------------------
535,173
------------------
REAL ESTATE(3)
2,845 Castellum AB ORD 34,455
------------------
RESTAURANTS-0.5%
4,400 Buffets, Inc.(1) 71,775
12,660 CKE Restaurants, Inc. 401,955
5,400 Cheesecake Factory Inc.(1) 109,013
4,200 Compass Group PLC ORD 87,062
10,000 TelePizza, S.A. ORD(1) 100,547
------------------
770,352
------------------
Shares Value
- -----------------------------------------------------------------------------
RETAIL (APPAREL)-0.5%
3,200 DM Management Co.(1) $ 98,000
1,400 Hennes & Mauritz AB Cl B ORD 78,529
1,500 Liz Claiborne, Inc. 76,031
500 Payless ShoeSource, Inc.(1) 35,031
8,000 Stage Stores, Inc.(1) 373,000
1,200 TJX Companies, Inc. (The) 56,100
------------------
716,691
------------------
RETAIL (FOOD & DRUG)-1.1%
5,900 CVS Corp. 414,106
86,800 Dairy Farm International Holdings
Ltd. ORD 95,480
5,800 Giant Food Inc. Cl A 249,400
6,365 Koninklijke Ahold NV ORD 200,893
14,777 La Rinascente SpA ORD(1) 78,952
9,100 Safeway Inc.(1) 331,581
16,700 Somerfield plc ORD 108,077
3,000 Universal Corp. 112,688
------------------
1,591,177
------------------
RETAIL (GENERAL MERCHANDISE)-1.7%
2,400 Bon-Ton Stores, Inc.(1) 40,500
13,300 Dillard's Inc. Cl A 559,431
2,500 Douglas Holding AG ORD 135,854
2,700 Family Dollar Stores, Inc. 44,719
700 Federated Department Stores,
Inc.(1) 36,269
8,825 Fred's, Inc. 207,388
100 Galeries Lafayette ORD 96,893
2,000 Ito-Yokado Co., Ltd. ORD 99,366
1,200 Meyer (Fred), Inc.(1) 51,600
2,900 Penney (J.C.) Company, Inc. 208,256
300 Pinault-Printemps-Redoute SA
ORD 246,826
13,500 Wal-Mart Stores, Inc. 745,031
------------------
2,472,133
------------------
RETAIL (SPECIALTY)-0.9%
1,300 Action Performance Cos. Inc.(1) 36,156
3,500 CSK Auto Corp.(1) 94,063
14,953 Corporate Express, Inc.(1) 173,361
23,500 Food Lion, Inc. Cl A 226,922
5,600 Home Depot, Inc. 439,950
1,800 Tandy Corp. 79,650
5,600 Toys 'R' Us, Inc.(1) 148,400
900 Watsco, Inc. 26,438
2,700 Wilmar Industries, Inc.(1) 65,138
------------------
1,290,078
------------------
See Notes to Financial Statements
www.americancentury.com 47
Aggressive--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Shares Value
- -----------------------------------------------------------------------------
RUBBER & PLASTICS-0.1%
1,800 Illinois Tool Works Inc. $ 118,800
------------------
STEEL-0.1%
4,400 Bethlehem Steel Corporation(1) 53,900
2,300 Carpenter Technology Corp. 121,900
------------------
175,800
------------------
TEXTILES & APPAREL-0.2%
3,300 Dexter Corp. (The) 136,125
15,100 WS Atkins plc ORD 126,065
------------------
262,190
------------------
TOBACCO-0.2%
3,100 Philip Morris Companies Inc. 115,863
3,700 UST Inc. 98,513
------------------
214,376
------------------
TRANSPORTATION-0.4%
5,000 AirNet Systems Inc.(1) 117,500
11,200 Allied Holdings, Inc.(1) 201,600
4,089 Internatio-Muller NV ORD 147,350
1,900 XTRA Corp. 99,750
------------------
566,200
------------------
UTILITIES-2.1%
7,000 AGL Resources Inc. 140,000
14,100 Ameren Corporation 551,663
2,100 Energy East Corp. 85,313
7,500 Enova Corp. 191,719
8,100 Entergy Corp. 213,131
3,200 FPL Group, Inc. 196,600
7,400 Florida Progress Corp. 305,250
3,100 Kansas City Power & Light Co. 89,125
6,800 Minnesota Power & Light Co. 268,175
7,600 PacifiCorp 175,275
1,100 Public Service Co. of New Mexico 23,856
7,700 Texas Utilities Co. 304,150
1,200 UGI Corp. 30,375
2,200 Utilicorp United Inc. 78,238
2,900 VEBA AG ORD 190,409
1,100 Vivendi ORD 220,882
------------------
3,064,161
------------------
TOTAL COMMON STOCKS,
RIGHTS & WARRANTS-72.4% 106,630,428
------------------
(Cost $91,531,052)
PREFERRED STOCKS
CHEMICALS & RESINS-0.1%
1,000 Henkel KGaA ORD 89,636
------------------
COMMUNICATIONS EQUIPMENT(3)
471,000 Telerj Celular S.A. Cl B ORD(1) 34,396
------------------
Shares/Principal Amount Value
- -----------------------------------------------------------------------------
COMMUNICATIONS SERVICES(3)
471,000 Telecomunicacoes do Rio de
Janeiro S.A. ORD $ 39,310
------------------
COMPUTER SOFTWARE & SERVICES-0.2%
400 SAP AG ORD 221,849
------------------
FINANCIAL SERVICES-0.4%
1,229 Marschollek, Lautenschlaeger und
Partner AG ORD 609,336
------------------
TEXTILES & APPAREL-0.1%
60 Hugo Boss AG ORD 129,412
------------------
TOTAL PREFERRED STOCKS-0.8% 1,123,939
------------------
(Cost $429,709)
U.S. TREASURY SECURITIES
$ 600,000 U.S. Treasury Notes, 7.75%,
11/30/99 618,714
400,000 U.S. Treasury Notes, 6.625%,
7/31/01 412,056
625,000 U.S. Treasury Notes, 5.75%,
8/15/03 629,963
350,000 U.S. Treasury Notes, 6.625%,
5/15/07 373,205
850,000 U.S. Treasury Bonds, 6.125%,
11/15/27 888,752
------------------
TOTAL U.S. TREASURY SECURITIES-2.0% 2,922,690
------------------
(Cost $2,899,737)
U.S. GOVERNMENT AGENCY SECURITIES
100,000 FHLMC, 7.09%, 11/24/06 100,641
200,000 FNMA MTN, 7.00%, 2/20/07 205,950
400,000 FNMA MTN, 7.49%, 5/22/07 410,784
------------------
TOTAL U.S. GOVERNMENT
AGENCY SECURITIES-0.5% 717,375
------------------
(Cost $702,932)
SOVEREIGN GOVERNMENTS & AGENCIES
$ 500,000 Argentine Discount Notes,
VRN, 6.625%, 11/30/98,
resets semi-annually off
the 6-month LIBOR plus
0.8125% with no caps,
final maturity 3/31/23 414,375
ESP 30,000,000 Bonos Y Oblig Del Estado,
10.50%, 10/30/03 251,332
$ 250,000 Brazil NMB L, VRN, 6.69%,
10/15/98, resets semi-
annually off the 6-month
LIBOR plus 0.875% with
no caps, final maturity
4/15/09 200,156
See Notes to Financial Statements
48 1-800-345-2021
Aggressive--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Principal Amount Value
- -----------------------------------------------------------------------------
DEM 2,200,000 Deutschland Republic,
6.00%, 9/15/03 $ 1,315,810
FRF 6,000,000 France O.A.T., 6.75%,
10/25/03 1,105,479
CAD 400,000 Government of Canada,
6.50%, 6/1/04 291,845
JPY 155,000,000 Japan Global, 4.10%,
12/22/03 1,301,116
$ 100,000 Quebec Province, 8.80%,
4/15/03 111,121
AUD 300,000 Queensland Treasury Corp.,
8.00%, 8/14/01 203,717
$ 237,500 Republic of Argentina,
6.625%, 9/30/98, resets
semi-annually off the
6-month LIBOR plus
0.8125% with no caps 213,156
242,500 Republic of Brazil EI, VRN,
6.625%, 10/15/98,
resets semi-annually
off the 6-month LIBOR plus
0.8125% with no caps,
final maturity 4/15/06 206,428
ITL 1,000,000,000 Republic of Italy, 6.75%,
2/1/07 634,439
GBP 650,000 United Kingdom Treasury,
8.00%, 6/10/03 1,154,093
$ 250,000 United Mexican States,
8.50%, 9/15/02 253,843
500,000 United Mexican States, VRN,
6.48%, 11/4/98, resets
semi-annually off the 6-month
LIBOR plus 0.8125%
with no caps,
final maturity 12/31/19 456,875
642,855 Venezuela FLIRB, VRN, 6.625%,
9/30/98, resets semi-annually
off the 6-month LIBOR plus 0.875%
with no caps,
final maturity 3/31/07 559,686
------------------
TOTAL SOVEREIGN
GOVERNMENTS & AGENCIES-5.9% 8,673,471
------------------
(Cost $8,774,388)
MORTGAGE-BACKED SECURITIES(4)
95,935 FHLMC Gold Pool #E68523,
6.50%, 10/7/03 96,731
365,282 FNMA Pool #377181, 6.50%,
4/1/12 367,791
88,266 FNMA Pool #250576, 7.00%,
6/1/26 89,668
841,430 FNMA Pool #373510, 7.50%,
3/1/27 865,899
213,567 GNMA Pool #397233, 9.50%,
2/20/25 229,629
Principal Amount Value
- -----------------------------------------------------------------------------
$ 131,724 GNMA Pool #392995, 8.75%,
3/15/25 $ 141,883
140,224 GNMA Pool #372335, 7.50%,
4/15/25 144,707
130,903 GNMA Pool #416856, 7.50%,
10/15/25 135,102
122,670 GNMA Pool #402682, 7.50%,
6/15/26 126,591
294,410 GNMA Pool #457351, 7.00%,
12/15/27 299,447
605,457 GNMA Pool #466804, 6.50%,
4/15/28 603,350
------------------
TOTAL MORTGAGE-BACKED
SECURITIES-2.1% 3,100,798
------------------
(Cost $3,034,427)
ASSET-BACKED SECURITIES(4)
300,000 AMRESCO, INC., Series 1998-2,
Class A4 SEQ, 6.45%,
4/25/27 300,000
188,054 Capital Equipment Receivables
Trust, Series 1997-1, Class A1,
5.79%, 12/15/98 188,298
300,000 First Union-Lehman Brothers
Commercial Mortgage, Series
1998-C2, Class A1 SEQ,
6.28%, 6/18/07 301,922
200,000 Money Store (The) Home Equity
Trust, Series 1997-C, Class
AF6 SEQ, 6.67%, 3/1/03 202,287
198,538 Morgan Stanley Capital I, Series
1998-WF1, Class A1 SEQ,
6.25%, 7/15/07 200,133
73,650 Textron Financial Corp.
Receivables Trust, Series
1997-A, Class A, 6.05%,
3/16/09 (Acquired 9/18/97,
Cost $73,552)(2) 73,735
100,000 United Companies Financial Corp.,
Home Equity Loan, Series
1997-C, Class A7, 6.85%,
1/15/29 101,648
------------------
TOTAL ASSET-BACKED SECURITIES-0.9% 1,368,023
------------------
(Cost $1,361,622)
CORPORATE BONDS
AEROSPACE & DEFENSE-0.2%
300,000 Lockheed Martin Corp., 7.25%,
5/15/06 318,555
------------------
AIRLINES-0.1%
150,000 United Air Lines, 9.00%,
12/15/03 166,896
------------------
See Notes to Financial Statements
www.americancentury.com 49
Aggressive--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Principal Amount Value
- -----------------------------------------------------------------------------
BANKING-0.6%
$ 500,000 Bay View Capital Corp., 9.125%,
8/15/02 $ 516,250
300,000 Citicorp, 7.125%, 5/15/06 315,276
------------------
831,526
------------------
COMMUNICATIONS SERVICES-0.4%
150,000 360 Communications Co.,
7.125%, 3/1/03 154,986
100,000 Tele-Communications Inc., 8.25%,
1/15/03 107,820
250,000 Teleport Communications Group
Inc., 7.86%, 7/1/07(5) 216,250
100,000 WorldCom, Inc., 7.55%, 4/1/04 105,756
------------------
584,812
------------------
ELECTRICAL & ELECTRONIC
COMPONENTS-0.6%
350,000 Anixter International Inc., 8.00%,
9/15/03 370,706
250,000 DII Group, Inc., 8.50%, 9/15/07
(Acquired 9/17/97, Cost
$250,000)(2) 249,375
250,000 Trench Electric & Trench Inc.,
10.25%, 12/15/07 253,750
------------------
873,831
------------------
ENERGY (PRODUCTION & MARKETING)-1.3%
250,000 Belco Oil & Gas Corp., Series B,
10.50%, 4/1/06 269,375
100,000 Enron Corp., 6.625%, 11/15/05 101,371
500,000 Ocean Energy, Inc., 10.375%,
10/15/05 556,250
525,000 Oryx Energy Co., 8.375%,
7/15/04 568,748
250,000 Stone Energy Corp., 8.75%,
9/15/07 (Acquired 9/16/97,
Cost $248,208)(2) 253,750
200,000 Triton Energy Ltd., 8.75%,
4/15/02 208,000
------------------
1,957,494
------------------
ENERGY (SERVICES)-0.4%
500,000 Cliffs Drilling Company, 10.25%,
5/15/03 537,500
100,000 Petro Geo-Services ASA, 7.125%,
3/30/28 101,795
------------------
639,295
------------------
FINANCIAL SERVICES-0.6%
100,000 Advanta Corp., MTN, Series B,
7.00%, 5/1/01 92,639
300,000 Comdisco, Inc., 6.50%, 4/30/99 301,284
100,000 General Motors Acceptance Corp.,
8.50%, 2/4/02 107,669
Principal Amount Value
- -----------------------------------------------------------------------------
$ 500,000 Wharf International Finance Ltd.,
7.625%, 3/13/07 $ 422,525
------------------
924,117
------------------
HEALTHCARE-0.3%
500,000 Tenet Healthcare Corp., 7.875%,
1/15/03 512,995
------------------
INSURANCE-0.1%
100,000 Aetna Services, Inc., 6.75%,
8/15/01 102,288
------------------
LEISURE-0.3%
125,000 Time Warner Inc., 8.11%,
8/15/06 137,534
350,000 Time Warner Inc., 6.85%,
1/15/26 363,664
------------------
501,198
------------------
OFFICE EQUIPMENT & SUPPLIES-0.1%
100,000 Xerox Capital Trust, 8.00%,
2/1/27 (Acquired 7/17/97,
Cost $104,024)(2) 107,963
------------------
REAL ESTATE-0.2%
275,000 Spieker Properties, Inc., 6.80%,
12/15/01 280,242
------------------
RETAIL (GENERAL MERCHANDISE)-0.4%
200,000 Federated Department Stores,
8.50%, 6/15/03 218,092
300,000 Sears Roebuck Acceptance Corp.,
6.00%, 3/20/03 298,122
------------------
516,214
------------------
TEXTILES & APPAREL-0.2%
250,000 Worldtex, Inc. Series B, 9.625%,
12/15/07 (Acquired
11/20/97, Cost $250,000)(2) 253,750
------------------
TOBACCO-0.2%
300,000 Philip Morris Companies Inc.,
6.80%, 12/1/03 306,177
------------------
UTILITIES-0.1%
100,000 PG&E Corp., 6.25%, 3/1/04 101,333
------------------
TOTAL CORPORATE BONDS-6.1% 8,978,686
------------------
(Cost $6,473,694)
See Notes to Financial Statements
50 1-800-345-2021
Aggressive--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
Principal Amount Value
- -----------------------------------------------------------------------------
COMMERCIAL PAPER(6)
ENERGY (PRODUCTION & MARKETING)-1.0%
$1,500,000 Statoil-Den Norske Stats, 5.53%,
6/1/98 $ 1,499,324
------------------
FINANCIAL SERVICES-4.3%
1,000,000 Credit Suisse First Boston Inc.,
5.50%, 7/14/98 993,139
512,000 Falcon Asset Securities Corp.,
5.65%, 6/1/98 (Acquired
5/28/98, Cost $511,679)(2) 511,769
4,000,000 General Motors Acceptance Corp.,
5.44%, 6/8/98 3,994,008
925,000 Mitsubishi International Corp.,
5.55%, 8/4/98 915,771
------------------
6,414,687
------------------
INSURANCE-0.7%
1,000,000 SAFECO Credit Company, 5.55%,
6/23/98 996,265
------------------
TOTAL COMMERCIAL PAPER-6.0% 8,910,276
------------------
(Cost $8,913,681)
CERTIFICATES OF DEPOSIT-0.7%
1,000,000 National Westminster Bank PLC,
5.65%, 3/3/99 1,000,000
------------------
(Cost $999,521)
TEMPORARY CASH INVESTMENTS-2.6%
Repurchase Agreement, BA Securities, Inc.,
(U.S. Treasury obligations), in a joint
trading account at 5.51%, dated 5/29/98,
due 6/1/98 (Delivery value $3,901,791) 3,900,000
------------------
(Cost $3,900,000)
TOTAL INVESTMENT SECURITIES-100.0% $147,325,686
------------------
(Cost $129,020,763)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Contracts Settlement Unrealized
to Sell Date Value Gain
- ---------------------------------------------------------------------------
306,115 CHF 6/29/98 $ 206,974 $ 1,765
795,123 DEM 6/29/98 446,150 3,580
2,733,445 FRF 6/29/98 457,357 4,164
321,958 GBP 6/29/98 524,814 920
32,809,850 JPY 6/29/98 237,153 1,901
720,431 NLG 6/29/98 358,658 2,880
---------------------------------
$2,231,106 $15,210
=================================
(Value on Settlement Date $2,246,316)
Forward foreign currency exchange contracts are used by the portfolio management
team in an effort to protect foreign investments against declines in foreign
currencies. This is also known as hedging. The contracts are called "forward"
because they allow your fund to exchange a foreign currency for U.S. dollars at
a date in the future--and at a price (known as the exchange rate) agreed upon
when the contract is initially entered into.
See Notes to Financial Statements
www.americancentury.com 51
Aggressive--Schedule of Investments
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
AUD = Australian Dollar
CAD = Canadian Dollar
CHF = Swiss Franc
DEM = German Mark
ESP = Spanish Peseta
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
FRF = French Franc
GBP = British Pound
GNMA = Government National Mortgage Association
ITL = Italian Lira
JPY = Japanese Yen
LIBOR = London Interbank Offered Rate
MTN = Medium Term Note
NLG = Netherlands Guilder
ORD = Foreign Ordinary Share
VRN = Variable Rate Note. Interest reset date is indicated and used in
calculating the weighted average portfolio maturity. Rate shown is
effective May 31, 1998.
resets = The frequency with which a security's coupon changes, based on current
market conditions or an underlying index. The more frequently a security
resets, the less risk the investor is taking that the coupon will vary
significantly from current market rates.
(1) Non-income producing.
(2) Security was purchased under Rule 144A or Section 4(2) of the Securities
Act of 1933 and, unless registered under the Act or exempted from
registration, may only be sold to qualified institutional investors. The
aggregate value of restricted securities at May 31, 1998, was $2,125,520,
which represented 1.4% of net assets.
(3) Industry is less than 0.05% of total investment securities.
(4) Final maturity indicated. Expected remaining maturity used for purposes of
calculating the weighted average portfolio maturity.
(5) Step-coupon security. Yield to maturity at purchase is indicated. These
securities become interest bearing at a predetermined rate and future date
and are purchased at a substantial discount from their value at maturity.
(6) The rates for commercial paper are the yield to maturity at purchase.
- --------------------------------------------------------------------------------
UNDERSTANDING THE SCHEDULE OF INVESTMENTS--This schedule tells you which
investments your fund owned on the last day of the reporting period.
The schedule includes:
* a list of each investment
* the share amount (stocks) or principal amount (bonds) of each investment
* the market value of each investment
* the percentage of investments in each industry, as applicable
* the percent and dollar breakdown of each investment category
See Notes to Financial Statements
52 1-800-345-2021
<TABLE>
<CAPTION>
Statements of Assets and Liabilities
- -----------------------------------------------------------------------------
MAY 31, 1998 (UNAUDITED)
STRATEGIC STRATEGIC STRATEGIC
ALLOCATION: ALLOCATION: ALLOCATION:
CONSERVATIVE MODERATE AGGRESSIVE
ASSETS
Investment securities, at value
(identified cost of $163,126,238,
$231,323,640 and $129,020,763,
<S> <C> <C> <C>
respectively) (Note 3) .............$173,809,947 $255,421,711 $147,325,686
Cash ................................. 360,746 -- --
Receivable for investments sold ...... 3,009,255 5,085,647 2,023,375
Receivable for forward foreign
currency exchange contracts ........ 10,153 24,258 15,210
Dividends and interest receivable .... 1,310,150 1,621,078 700,951
---------- ---------- ----------
178,500,251 262,152,694 150,065,222
----------- ----------- -----------
LIABILITIES
Disbursements in excess of
demand deposit cash ................ 57,620 2,037,568 340,249
Payable for investments purchased .... 2,678,839 5,054,492 2,034,383
Payable for capital shares redeemed .. 329,778 54,039 75,499
Accrued management fees (Note 2) ..... 148,510 236,067 148,466
Distribution fees payable (Note 2) ... 1,294 2,940 2,211
Service fees payable (Note 2) ........ 1,294 2,940 2,211
Other liabilities .................... 202 258 238
----------- ----------- -----------
3,217,537 7,388,304 2,603,257
----------- ----------- -----------
Net assets ...........................$175,282,714 $254,764,390 $147,461,965
============ ============ ============
NET ASSETS CONSIST OF:
Capital (par value and
paid in surplus) ...................$158,390,865 $220,589,248 $122,760,311
Undistributed net investment
income ............................. 1,100,894 1,251,266 924,279
Accumulated undistributed
net realized gain
from investment and foreign
currency transactions .............. 5,097,514 8,802,432 5,457,950
Net unrealized appreciation
on investments and translation
of assets and liabilities in
foreign currencies (Note 3) ........ 10,693,441 24,121,444 18,319,425
---------- ---------- ----------
$175,282,714 $254,764,390 $147,461,965
============ ============ ============
Investor Class, $0.01 Par Value
Net assets ...........................$169,262,488 $240,979,471 $137,006,655
Shares outstanding ................... 30,325,397 38,139,688 20,434,806
Net asset value per share ............$ 5.58 $ 6.32 $ 6.70
Advisor Class, $0.01 Par Value
Net assets ...........................$ 6,020,226 $ 13,784,919 $ 10,455,310
Shares outstanding ................... 1,077,337 2,183,898 1,560,928
Net asset value per share ............$ 5.59 $ 6.31 $ 6.70
</TABLE>
- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF ASSETS AND LIABILITIES--This statement details
what the fund owns (assets), what it owes (liabilities), and its net assets as
of the last day of the period. If you subtract what the fund owes from what it
owns, you get the fund's net assets. For each class of shares, the net assets
divided by the total number of fund shares outstanding gives you the price of an
individual share, or the net asset value per share.
NET ASSETS are also broken out by capital (money invested by shareholders); net
income not yet paid to shareholders; net gains earned on investment activity but
not yet paid to shareholders or net losses on investment activity (known as
realized gains or losses); and gains or losses on securities still owned by the
fund (known as unrealized appreciation or depreciation). This breakout tells you
the value of net assets that are performance-related, such as investment gains
or losses, and the value of net assets that are not related to performance, such
as shareholder investments and redemptions.
See Notes to Financial Statements
www.americancentury.com 53
<TABLE>
<CAPTION>
hStatements of Operations
- --------------------------------------------------------------------------------
STRATEGIC STRATEGIC STRATEGIC
FOR THE SIX MONTHS ALLOCATION: ALLOCATION: ALLOCATION:
ENDED MAY 31, 1998 (UNAUDITED) CONSERVATIVE MODERATE AGGRESSIVE
INVESTMENT INCOME
Income:
<S> <C> <C> <C>
Interest ............................ $ 3,154,862 $ 3,161,529 $ 1,141,417
Dividends (net of foreign taxes
withheld of $14,579,
$43,979, and $32,184,
respectively) ..................... 564,877 1,113,823 693,174
--------- --------- ---------
3,719,739 4,275,352 1,834,591
--------- --------- ---------
Expenses (Note 2):
Management fees ..................... 841,374 1,318,233 788,328
Distribution fees - Advisor Class ... 6,409 16,696 11,325
Services fees - Advisor Class ....... 6,409 16,696 11,325
Directors' fees and expenses ........ 935 1,353 764
--------- --------- ---------
855,127 1,352,978 811,742
--------- --------- ---------
Net investment income ............... 2,864,612 2,922,374 1,022,849
--------- --------- ---------
REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS AND
FOREIGN CURRENCY (NOTE 3)
Net realized gain (loss) on:
Investments ......................... 5,365,108 9,530,789 6,052,818
Foreign currency transactions ....... 6,095 (23,233) 11,821
--------- --------- ---------
5,371,203 9,507,556 6,064,639
--------- --------- ---------
Change in net unrealized
appreciation on:
Investments ......................... 3,930,711 12,278,237 8,563,723
Translation of assets and liabilities
in foreign currencies ............. 6,158 15,215 7,762
--------- --------- ---------
3,936,869 12,293,452 8,571,485
--------- --------- ---------
Net realized and unrealized
gain on investments and
foreign currency .................. 9,308,072 21,801,008 14,636,124
--------- --------- ---------
Net Increase in Net Assets
Resulting from Operations ......... $ 12,172,684 $ 24,723,382 $ 15,658,973
============ ============ ============
</TABLE>
- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF OPERATIONS--This statement breaks out how each
fund's net assets changed during the period as a result of the fund's
operations. It tells you how much money the fund made or lost after taking into
account income, fees and expenses, and investment gains or losses. It does not
include shareholder transactions and distributions.
Fund OPERATIONS include:
* interest income earned from investments
* management fees and other expenses
* gains or losses from selling investments (known as realized gains or losses)
* gains or losses on current fund holdings (known as unrealized appreciation or
depreciation)
See Notes to Financial Statements
54 1-800-345-2021
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 1998 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 1997
STRATEGIC ALLOCATION: STRATEGIC ALLOCATION: STRATEGIC ALLOCATION:
CONSERVATIVE MODERATE AGGRESSIVE
1998 1997 1998 1997 1998 1997
OPERATIONS
<S> <C> <C> <C> <C> <C> <C>
Net investment income ................. $ 2,864,612 $ 2,737,787 $ 2,922,374 $ 3,467,169 $ 1,022,849 $ 1,412,566
Net realized gain on investments
and foreign currency transactions ... 5,371,203 8,306,339 9,507,556 6,702,937 6,064,639 3,912,369
Change in net unrealized
appreciation on investments
and translation of
assets and liabilites in
foreign currencies .................. 3,936,869 (2,095,441) 12,293,452 7,927,799 8,571,485 6,690,552
Net increase in net assets
resulting from operations ........... 12,172,684 8,948,685 24,723,382 18,097,905 15,658,973 12,015,487
DISTRIBUTIONS
TO SHAREHOLDERS
From net investment income:
Investor Class ...................... (2,874,145) (1,635,899) (2,806,309) (2,707,084) (1,584,225) (334,675)
Advisor Class ....................... (85,700) (118,709) (129,492) (152,937) (95,179) (40,079)
From net realized gain
from investment transactions:
Investor Class ...................... (7,295,785) (1,061,595) (6,635,893) (80,982) (3,703,277) --
Advisor Class ....................... (204,754) (70,914) (295,112) (10,493) (268,899) --
Decrease in net assets
from distributions .................. (10,460,384) (2,887,117) (9,866,806) (2,951,496) (5,651,580) (374,754)
CAPITAL SHARE
TRANSACTIONS (NOTE 4)
Net increase in net assets from
capital share transactions .......... 12,584,619 117,841,280 29,950,465 129,408,618 19,862,928 53,802,871
Net increase in net assets ............ 14,296,919 123,902,848 44,807,041 144,555,027 29,870,321 65,443,604
NET ASSETS
Beginning of period ................... 160,985,795 37,082,947 209,957,349 65,402,322 117,591,644 52,148,040
End of period ......................... $ 175,282,714 $ 160,985,795 $ 254,764,390 $ 209,957,349 $ 147,461,965 $ 117,591,644
Undistributed net
investment income ..................... $ 1,100,894 $ 1,196,127 $ 1,251,266 $ 1,264,693 $ 924,279 $ 1,580,834
</TABLE>
- --------------------------------------------------------------------------------
UNDERSTANDING THE STATEMENTS OF CHANGES IN NET ASSETS--These statements show how
each fund's net assets changed over the past two reporting periods. It details
how much a fund grew or shrank as a result of:
* operations--a summary of the Statement of Operations from the previous page
for the most recent period
* distributions--income and gains distributed to shareholders
* share transactions--shareholders' purchases, reinvestments, and redemptions
Net assets at the beginning of the period plus the sum of operations,
distributions to shareholders and capital share transactions result in net
assets at the end of the period.
See Notes to Financial Statements
www.americancentury.com 55
Notes to Financial Statements
- -----------------------------------------------------------------------------
MAY 31, 1998 (UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION--American Century Strategic Asset Allocations, Inc. (the
Corporation) is registered under the Investment Company Act of 1940 as an
open-end diversified management investment company. American Century Strategic
Allocation: Conservative (Strategic Allocation: Conservative), American Century
Strategic Allocation: Moderate (Strategic Allocation: Moderate) and American
Century Strategic Allocation: Aggressive (Strategic Allocation: Aggressive) (the
Funds) are three of the funds currently issued by the Corporation. The Funds'
investment objective is to provide as high a level of total return (capital
appreciation plus dividend and interest income) as is consistent with each
Fund's risk profile. The Funds seek to achieve this 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 each Fund. The
Funds are authorized to issue two classes of shares: the Investor Class and the
Advisor Class. The two classes of shares differ principally in their respective
shareholder servicing and distribution expenses and arrangements. All shares of
each Fund represent an equal pro rata interest in the assets of the class to
which such shares belong, and have identical voting, dividend, liquidation and
other rights and the same terms and conditions, except for class specific
expenses and exclusive rights to vote on matters affecting only individual
classes. The following significant accounting policies, related to all classes
of the Funds, are in accordance with accounting policies generally accepted in
the investment company industry.
SECURITY VALUATIONS--Portfolio securities traded primarily on a principal
securities exchange are valued at the last reported sales price, or the mean of
the latest bid and asked prices where no last sales price is available.
Securities traded over-the-counter are valued at the mean of the latest bid and
asked prices or, in the case of certain foreign securities, at the last reported
sales price, depending on local convention or regulation. Debt securities not
traded on a principal securities exchange are valued through a commercial
pricing service or at the mean of the most recent bid and asked prices. When
valuations are not readily available, securities are valued at fair value as
determined in accordance with procedures adopted by the Board of Directors.
SECURITY TRANSACTIONS--Security transactions are accounted for as of the
trade date. Net realized gains and losses are determined on the identified cost
basis, which is also used for federal income tax purposes.
INVESTMENT INCOME--Dividend income less foreign taxes withheld (if any) is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes accretion of discounts and amortization of premiums.
FOREIGN CURRENCY TRANSACTIONS--The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially expressed in
foreign currencies are converted into U.S. dollars at prevailing exchange rates.
Purchases and sales of investment securities, dividend and interest income, and
certain expenses are translated at the rates of exchange prevailing on the
respective dates of such transactions.
Net realized foreign currency exchange gains or losses arise from sales of
foreign currencies and the difference between asset and liability amounts
initially stated in foreign currencies and the U.S. dollar value of the amounts
actually received or paid. Net unrealized foreign currency exchange gains or
losses arise from changes in the value of assets and liabilities, other than
portfolio securities, resulting from changes in the exchange rates.
Net realized and unrealized foreign currency exchange gains or losses
occurring during the holding period of portfolio securities are a component of
realized gain (loss) on investments and unrealized appreciation (depreciation)
on investments, respectively.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS--The Funds may enter into
forward foreign currency exchange contracts for the purpose of settling specific
purchases or sales of securities denominated in a foreign currency or to hedge
the Funds' exposure to foreign currency exchange rate fluctuations. When
required, the Funds will segregate assets in an amount sufficient to cover their
obligations under the hedge contracts. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the Funds and the
resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. Forward contracts involve elements of market risk in
excess of the amount reflected in the Statements of Assets and Liabilities. The
Funds bear the risk of an unfavorable change in the foreign currency exchange
rate underlying the forward contract. Additionally, losses may arise if the
counterparties do not perform under the contract terms.
REPURCHASE AGREEMENTS--The Funds may enter into repurchase agreements with
institutions that the Funds' investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The Funds require that the collateral,
56 1-800-345-2021
Notes to Financial Statements
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
represented by securities, received in a repurchase transaction be transferred
to the custodian in a manner sufficient to enable the Funds to obtain those
securities in the event of a default under the repurchase agreement. ACIM
monitors, on a daily basis, the securities transferred to ensure the value,
including accrued interest, of the securities under each repurchase agreement is
equal to or greater than amounts owed to the Funds under each repurchase
agreement.
JOINT TRADING ACCOUNT--Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Funds, along with other registered
investment companies having management agreements with ACIM, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury or Agency obligations.
INCOME TAX STATUS--It is the policy of the Funds to distribute all net
investment income and net realized capital gains to shareholders and to
otherwise qualify as a regulated investment company under provisions of the
Internal Revenue Code. Accordingly, no provision has been made for federal or
state income taxes.
DISTRIBUTIONS TO SHAREHOLDERS--Distributions to shareholders are recorded
on the ex-dividend date. Distributions from net investment income are declared
and paid quarterly, with the exception of those for Strategic Allocation:
Aggressive which are declared and paid annually. Distributions from net realized
capital gains are declared and paid annually.
The character of distributions made during the year from net investment
income or net realized capital gains may differ from their ultimate
characterization for federal income tax purposes. These differences reflect the
differing character of certain income items and net capital gains and losses for
financial statement and tax purposes and may result in reclassification among
certain capital accounts.
USE OF ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, and the reported amounts of increases and decreases in
net assets from operations during the reporting period. Actual results could
differ from those estimates.
ADDITIONAL INFORMATION - Funds Distributor, Inc. (FDI) is the Corporation's
distributor. Certain officers of FDI are also officers of the Corporation.
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES
The Corporation has entered into Management Agreements with ACIM that
provide each Fund with investment advisory and management services in exchange
for a single, unified management fee per class. The Agreements provide that all
expenses of the Funds, except brokerage commissions, taxes, interest, expenses
of those directors who are not considered "interested persons" as defined in the
Investment Company Act of 1940 (including counsel fees) and extraordinary
expenses, will be paid by ACIM. The fee is computed daily and paid monthly based
on each class's average daily closing net assets during the previous month. The
annual management fee for each class of the Funds is as follows:
<TABLE>
STRATEGIC ALLOCATION: STRATEGIC ALLOCATION: STRATEGIC ALLOCATION:
CONSERVATIVE MODERATE AGGRESSIVE
INVESTOR ADVISOR INVESTOR ADVISOR INVESTOR ADVISOR
AVERAGE NET ASSETS
<S> <C> <C> <C> <C> <C> <C>
First $1 billion ....... 1.00% 0.75% 1.10% 0.85% 1.20% 0.95%
Over $1 billion ........ 0.90% 0.65% 1.00% 0.75% 1.10% 0.85%
</TABLE>
The Board of Directors has adopted the Advisor Class Master Distribution and
Shareholder Services Plan (the Plan), pursuant to Rule 12b-1 of the Investment
Company Act of 1940. The Plan provides that the Funds will pay ACIM an annual
distribution fee equal to 0.25% and service fee equal to 0.25%. The fees are
computed daily and paid monthly based on the Advisor Class's average daily
closing net assets during the previous month. The distribution fee provides
compensation for distribution expenses incurred by financial intermediaries in
connection with
www.americancentury.com 57
Notes to Financial Statements
- -----------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
distributing shares of the Advisor Class including, but not limited to, payments
to brokers, dealers, and financial institutions that have entered into sales
agreements with respect to shares of the Funds. The service fee provides
compensation for shareholder and administrative services rendered by ACIM, its
affiliates or independent third party providers. Fees incurred under the Plan
during the period ended May 31, 1998, were $12,818 in Strategic Allocation:
Conservative, $33,392 in Strategic Allocation: Moderate and $22,650 in Strategic
Allocation: Aggressive.
Certain officers and directors of the Corporation are also officers and/or
directors, and, as a group, controlling stockholders of American Century
Companies, Inc., the parent of the Corporation's investment manager, ACIM, and
the Corporation's transfer agent, American Century Services Corporation.
- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
Investment transactions, excluding short-term investments, for the six months
ended May 31, 1998, were as follows:
<TABLE>
STRATEGIC ALLOCATION: STRATEGIC ALLOCATION: STRATEGIC ALLOCATION:
CONSERVATIVE MODERATE AGGRESSIVE
PURCHASES
<S> <C> <C> <C>
Investment Securities other
than U.S. Government
& Agency Obligations ...... $62,171,244 $133,284,566 $84,580,340
U.S. Government &
Agency Obligations ........ 31,543,359 18,342,116 3,951,722
PROCEEDS FROM SALES
Investment Securities other
than U.S. Government
& Agency Obligations ...... $53,537,384 $116,840,846 $72,448,220
U.S. Government &
Agency Obligations ........ 35,130,881 18,950,044 4,832,018
On May 31, 1998, the composition of unrealized appreciation and depreciaton
of investment securities based on the aggregate cost of investments for federal
income tax purposes was as follows:
STRATEGIC ALLOCATION: STRATEGIC ALLOCATION: STRATEGIC ALLOCATION:
CONSERVATIVE MODERATE AGGRESSIVE
Appreciation ................ $12,539,027 $26,827,302 $20,326,087
Depreciation ................ (2,262,832) (3,533,315) (2,686,880)
------------------------------------------------------------------
Net ......................... $10,276,195 $23,293,987 $17,639,207
==================================================================
Federal Tax Cost ............ $163,533,752 $232,127,724 $129,686,479
==================================================================
</TABLE>
58 1-800-345-2021
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1998 (UNAUDITED)
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
<TABLE>
Transactions in shares of the Funds were as follows:
STRATEGIC ALLOCATION: STRATEGIC ALLOCATION: STRATEGIC ALLOCATION:
CONSERVATIVE MODERATE AGGRESSIVE
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT
INVESTOR CLASS
<S> <C> <C> <C> <C> <C> <C>
Authorized shares ........... 50,000,000 50,000,000 50,000,000
========== ========== ==========
Six Months ended May 31, 1998
Sold ........................ 6,503,503 $35,495,207 12,645,633 $75,836,064 5,956,158 $37,817,087
Issued in reinvestment
of distributions ............ 1,701,284 8,987,911 1,620,451 9,383,773 895,817 5,276,601
Redeemed .................... (6,136,791) (33,611,858) (9,804,636) (59,481,956) (3,944,993) (24,919,732)
---------- ----------- ---------- ----------- ---------- -----------
Net increase ................ 2,067,996 $10,871,260 4,461,448 $25,737,881 2,906,982 $18,173,956
========= =========== ========= =========== ========= ===========
Year ended November 30, 1997
Sold ........................ 15,110,838 $ 80,391,536 32,728,841 $184,160,266 15,672,301 $90,016,196
Issued in acquisition ....... 15,634,044 84,083,213 -- -- -- --
Issued in reinvestment
of distributions ............ 493,328 2,628,610 492,287 2,759,037 61,577 333,753
Redeemed .................... (9,277,253) (49,311,307) (10,218,993) (57,762,540) (6,568,831) (38,102,524)
---------- ----------- ----------- ----------- ---------- -----------
Net increase ................ 21,960,957 $117,792,052 23,002,135 $129,156,763 9,165,047 $52,247,425
========== ============ ========== ============ ========= ===========
ADVISOR CLASS
Authorized shares ........... 25,000,000 25,000,000 25,000,000
========== ========== ==========
Six Months ended May 31, 1998
Sold ........................ 457,188 $2,527,131 1,463,635 $8,694,135 412,551 $2,682,642
Issued in reinvestment
of distributions ............ 54,856 290,450 73,385 424,601 61,708 364,076
Redeemed .................... (200,207) (1,104,222) (787,965) (4,906,152) (212,133) (1,357,746)
-------- ---------- -------- ---------- -------- ----------
Net increase ................ 311,837 $1,713,359 749,055 $4,212,584 262,126 $1,688,972
========== ============ ========== ============ ========= ===========
Year ended November 30, 1997
Sold ........................ 502,309 $2,650,382 941,573 $5,242,310 937,541 $5,585,021
Issued in reinvestment
of distributions ............ 35,677 189,621 29,539 163,429 7,395 40,079
Redeemed .................... (528,140) (2,790,775) (933,292) (5,153,884) (707,493) (4,069,654)
-------- ---------- -------- ---------- -------- ----------
Net increase ................ 9,846 $ 49,228 37,820 $ 251,855 237,443 $1,555,446
========== ============ ========== ============ ========= ===========
</TABLE>
www.americancentury.com 59
<TABLE>
<CAPTION>
Conservative--Financial Highlights
- -----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
Investor Class
1998(1) 1997 1996(2)
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C>
Beginning of Period .................. $ 5.55 $ 5.26 $ 5.00
------------- ------------- -------------
Income From
Investment Operations
Net Investment Income(3) ........... 0.09 0.19 0.13
Net Realized and Unrealized
Gain on Investment Transactions .... 0.30 0.36 0.22
------------- ------------- -------------
Total From Investment Operations ... 0.39 0.55 0.35
------------- ------------- -------------
Distributions
From Net Investment Income ......... (0.10) (0.17) (0.09)
From Net Realized Gain on
Investment Transactions ............ (0.26) (0.09) --
------------- ------------- -------------
Total Distributions ................ (0.36) (0.26) (0.09)
------------- ------------- -------------
Net Asset Value, End of Period ....... $ 5.58 $ 5.55 $ 5.26
============= ============= =============
Total Return(4) .................... 7.49% 10.87% 7.02%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets .............. 1.00%(5) 1.00% 1.01%(5)
Ratio of Net Investment Income
to Average Net Assets .............. 3.39%(5) 3.48% 3.67%(5)
Portfolio Turnover Rate .............. 65% 124% 44%
Average Commission Paid per
Share of Equity Security Traded ...... $ 0.0342 $ 0.0322 $ 0.0271
Net Assets, End of Period
(in thousands) ....................... $ 169,262 $ 156,733 $ 33,110
</TABLE>
(1) Six months ended May 31, 1998 (unaudited).
(2) February 15, 1996 (inception) through November 30, 1996.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--These pages itemize current period
activity and statistics and provide comparison data for the last five fiscal
years (or less, if the class is not five years old).
On a per-share basis, it includes:
* share price at the beginning of the period
* investment income and capital gains or losses
* income and capital gains distributions paid to shareholders
* share price at the end of the period
It also includes some key statistics for the period:
* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions
* expense ratio--operating expenses as a percentage of average net assets
* net income ratio--net investment income as a percentage of average net assets
* portfolio turnover--the percentage of the portfolio that was replaced
See Notes to Financial Statements
60 1-800-345-2021
<TABLE>
<CAPTION>
Conservative--Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
Advisor Class
1998(1) 1997 1996(2)
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C>
Beginning of Period .................. $ 5.56 $ 5.26 $ 5.09
----------- ----------- -----------
Income From
Investment Operations
Net Investment Income(3) ........... 0.09 0.17 0.03
Net Realized and Unrealized
Gain on Investment Transactions .... 0.30 0.38 0.14
----------- ----------- -----------
Total From Investment Operations ... 0.39 0.55 0.17
----------- ----------- -----------
Distributions
From Net Investment Income ......... (0.10) (0.16) --
From Net Realized Gain
on Investment Transactions ......... (0.26) (0.09) --
----------- ----------- -----------
Total Distributions ................ (0.36) (0.25) --
----------- ----------- -----------
Net Asset Value, End of Period ....... $ 5.59 $ 5.56 $ 5.26
=========== =========== ===========
Total Return(4) .................... 7.35% 10.77% 3.34%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets .............. 1.25%(5) 1.25% 1.25%(5)
Ratio of Net Investment Income
to Average Net Assets .............. 3.14%(5) 3.23% 3.25%(5)
Portfolio Turnover Rate .............. 65% 124% 44%
Average Commission Paid per
Share of Equity Security Traded .... $ 0.0342 $ 0.0322 $ 0.0271
Net Assets, End of Period
(in thousands) ..................... $ 6,020 $ 4,253 $ 3,973
</TABLE>
(1) Six months ended May 31, 1998 (unaudited).
(2) October 2, 1996 (commencement of sale) through November 30, 1996.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
See Notes to Financial Statements
www.americancentury.com 61
<TABLE>
<CAPTION>
Moderate--Financial Highlights
- -----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
Investor Class
1998(1) 1997 1996(2)
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C>
Beginning of Period .................. $ 5.98 $ 5.42 $ 5.00
------------- ------------- -------------
Income From Investment Operations
Net Investment Income(3) ........... 0.07 0.14 0.10
Net Realized and Unrealized
Gain on Investment Transactions .... 0.55 0.56 0.39
------------- ------------- -------------
Total From Investment Operations ... 0.62 0.70 0.49
------------- ------------- -------------
Distributions
From Net Investment Income ......... (0.08) (0.13) (0.07)
From Net Realized Gain
on Investment Transactions ......... (0.20) (0.01) --
------------- ------------- -------------
Total Distributions ................ (0.28) (0.14) (0.07)
------------- ------------- -------------
Net Asset Value, End of Period ....... $ 6.32 $ 5.98 $ 5.42
============= ============= =============
Total Return(4) .................... 10.71% 13.02% 9.91%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets .............. 1.10%(5) 1.10% 1.10%(5)
Ratio of Net Investment Income
to Average Net Assets ............... 2.43%(5) 2.43% 2.52%(5)
Portfolio Turnover Rate .............. 74% 119% 78%
Average Commission Paid per
Share of Equity Security Traded .... $ 0.0104 $ 0.0102 $ 0.0186
Net Assets, End of Period
(in thousands) ....................... $ 240,979 $ 201,384 $ 57,836
</TABLE>
(1) Six months ended May 31, 1998 (unaudited).
(2) February 15, 1996 (inception) through November 30, 1996.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--These pages itemize current period
activity and statistics and provide comparison data for the last five fiscal
years (or less, if the class is not five years old).
On a per-share basis, it includes:
* share price at the beginning of the period
* investment income and capital gains or losses
* income and capital gains distributions paid to shareholders
* share price at the end of the period
It also includes some key statistics for the period:
* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions
* expense ratio--operating expenses as a percentage of average net assets
* net income ratio--net investment income as a percentage of average net assets
* portfolio turnover--the percentage of the portfolio that was replaced
See Notes to Financial Statements
62 1-800-345-2021
<TABLE>
<CAPTION>
Moderate--Financial Highlights
- -----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
Advisor Class
1998(1) 1997 1996(2)
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C>
Beginning of Period .................. $ 5.98 $ 5.42 $ 5.24
------------ ------------ ------------
Income From Investment Operations
Net Investment Income(3) ........... 0.07 0.12 0.02
Net Realized and Unrealized
Gain on Investment Transactions .... 0.53 0.56 0.16
------------ ------------ ------------
Total From Investment Operations ... 0.60 0.68 0.18
------------ ------------ ------------
Distributions
From Net Investment Income ......... (0.07) (0.11) --
From Net Realized Gain
on Investment Transactions ......... (0.20) (0.01) --
------------ ------------ ------------
Total Distributions ................ (0.27) (0.12) --
------------ ------------ ------------
Net Asset Value, End of Period ....... $ 6.31 $ 5.98 $ 5.42
============ ============ ============
Total Return(4) .................... 10.62% 12.72% 3.44%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets .............. 1.35%(5) 1.35% 1.35%(5)
Ratio of Net Investment Income
to Average Net Assets .............. 2.18%(5) 2.18% 2.10%(5)
Portfolio Turnover Rate .............. 74% 119% 78%
Average Commission Paid per
Share of Equity Security Traded .... $ 0.0104 $ 0.0102 $ 0.0186
Net Assets, End of Period
(in thousands) ..................... $ 13,785 $ 8,573 $ 7,566
</TABLE>
(1) Six months ended May 31, 1998 (unaudited).
(2) October 2, 1996 (commencement of sale) through November 30, 1996.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
See Notes to Financial Statements
www.americancentury.com 63
<TABLE>
<CAPTION>
Aggressive--Financial Highlights
- -----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
Investor Class
1998(1) 1997 1996(2)
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C>
Beginning of Period .................. $ 6.25 $ 5.53 $ 5.00
------------- ------------- -------------
Income From Investment Operations
Net Investment Income(3) ........... 0.05 0.09 0.07
Net Realized and Unrealized
Gain on Investment Transactions .... 0.70 0.67 0.46
------------- ------------- -------------
Total From Investment Operations ... 0.75 0.76 0.53
------------- ------------- -------------
Distributions
From Net Investment Income ......... (0.09) (0.04) --
From Net Realized Gain
on Investment Transactions ......... (0.21) -- --
------------- ------------- -------------
Total Distributions ................ (0.30) (0.04) --
------------- ------------- -------------
Net Asset Value, End of Period ....... $ 6.70 $ 6.25 $ 5.53
============= ============= =============
Total Return(4) .................... 12.74% 13.84% 10.60%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets .............. 1.20%(5) 1.20% 1.20%(5)
Ratio of Net Investment Income
to Average Net Assets .............. 1.56%(5) 1.58% 1.72%(5)
Portfolio Turnover Rate .............. 72% 135% 64%
Average Commission Paid per
Share of Equity Security Traded .... $ 0.0100 $ 0.0091 $ 0.0202
Net Assets, End of Period
(in thousands) ..................... $ 137,007 $ 109,497 $ 46,276
</TABLE>
(1) Six months ended May 31, 1998 (unaudited).
(2) February 15, 1996 (inception) through November 30, 1996.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
- --------------------------------------------------------------------------------
UNDERSTANDING THE FINANCIAL HIGHLIGHTS--These pages itemize current period
activity and statistics and provide comparison data for the last five fiscal
years (or less, if the class is not five years old).
On a per-share basis, it includes:
* share price at the beginning of the period
* investment income and capital gains or losses
* income and capital gains distributions paid to shareholders
* share price at the end of the period
It also includes some key statistics for the period:
* total return--the overall percentage return of the fund, assuming reinvestment
of all distributions
* expense ratio--operating expenses as a percentage of average net assets
* net income ratio--net investment income as a percentage of average net assets
* portfolio turnover--the percentage of the portfolio that was replaced
See Notes to Financial Statements
64 1-800-345-2021
<TABLE>
<CAPTION>
Aggressive--Financial Highlights
- -----------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
Advisor Class
1998(1) 1997 1996(2)
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C>
Beginning of Period .................. $ 6.23 $ 5.53 $ 5.37
------------ ------------ ------------
Income From Investment Operations
Net Investment Income(3) ........... 0.04 0.07 0.01
Net Realized and Unrealized
Gain on Investment Transactions .... 0.71 0.67 0.15
------------ ------------ ------------
Total From Investment Operations ... 0.75 0.74 0.16
------------ ------------ ------------
Distributions
From Net Investment Income ......... (0.07) (0.04) --
From Net Realized Gain
on Investment Transactions ......... (0.21) -- --
------------ ------------ ------------
Total Distributions ................ (0.28) (0.04) --
------------ ------------ ------------
Net Asset Value, End of Period ....... $ 6.70 $ 6.23 $ 5.53
============ ============ ============
Total Return(4) .................... 12.61% 13.43% 2.98%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets .............. 1.45%(5) 1.45% 1.45%(5)
Ratio of Net Investment Income
to Average Net Assets .............. 1.31%(5) 1.33% 1.31%(5)
Portfolio Turnover Rate .............. 72% 135% 64%
Average Commission Paid per
Share of Equity Security Traded .... $ 0.0100 $ 0.0091 $ 0.0202
Net Assets, End of Period
(in thousands) ..................... $ 10,455 $ 8,095 $ 5,872
</TABLE>
(1) Six months ended May 31, 1998 (unaudited).
(2) October 2, 1996 (commencement of sale) through November 30, 1996.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
See Notes to Financial Statements
www.americancentury.com 65
Share Class and Retirement Account Information
- --------------------------------------------------------------------------------
SHARE CLASSES
Until September 3, 1996, the Strategic Asset Allocation funds issued one
class of fund shares, reflecting the fact that most investors bought their
shares directly from American Century. All investors paid the same annual
unified management fee and did not pay any commissions or other fees to purchase
shares from American Century.
Now more share purchases are made by investors through financial
intermediaries (who ordinarily are compensated for the additional services they
provide). In September 1996, American Century began to offer two classes of
shares for the Strategic Asset Allocation funds. One class is for investors who
buy directly from American Century, the other for investors who buy through
financial intermediaries.
The original class of Strategic Asset Allocation shares is called the
INVESTOR CLASS. All shares issued and outstanding before September 3, 1996, have
been designated as Investor Class shares. Investor Class shares may also be
purchased after September 3, 1996. Investor Class shareholders do not pay any
commissions or other fees for purchase of fund shares directly from American
Century. Investors who buy Investor Class shares through a broker-dealer may be
required to pay the broker-dealer a transaction fee. THE PRICE AND PERFORMANCE
OF THE INVESTOR CLASS SHARES ARE LISTED IN NEWSPAPERS. NO OTHER CLASS IS
CURRENTLY LISTED.
In addition, there is an ADVISOR CLASS, which is sold through banks,
broker-dealers, insurance companies and financial advisors. Advisor Class shares
are subject to a 0.50% Rule 12b-1 service and distribution fee. Half of that fee
is available to pay for recordkeeping and administrative services, and half is
available to pay for distribution services provided by the financial
intermediary through which the Advisor Class shares are purchased. The total
expense ratio of the Advisor Class is 0.25% higher than the total expense ratio
of the Investor Class.
Both classes of shares represent a pro rata interest in the funds and
generally have the same rights and preferences.
IMPORTANT NOTICE FOR ALL IRA AND 403(B) SHAREHOLDERS
As required by law, any distributions you receive from an IRA and certain
403(b) distributions [not eligible for rollover to an IRA or to another 403(b)]
are subject to federal income tax withholding at the rate of 10% of the total
amount withdrawn, unless you elect not to have withholding apply. If you don't
want us to withhold on this amount, you may send us a written notice not to have
the federal income tax withheld. Your written notice is valid for six months
from the date of receipt at American Century. Even if you plan to roll over the
amount you withdraw to another tax-deferred account, the withholding rate still
applies to the withdrawn amount unless we have received a written notice not to
withhold federal income tax within six months prior to the withdrawal.
When you plan to withdraw, you may make your election by completing our
Conversions/ Redemptions form or an IRS Form W-4P. Call American Century for
either form. Your written election is valid for only six months from the date of
receipt at American Century. You may revoke your election at any time by sending
a written notice to us.
Remember, even if you elect not to have income tax withheld, you are liable
for paying income tax on the taxable portion of your withdrawal. If you elect
not to have income tax withheld or you don't have enough income tax withheld,
you may be responsible for payment of estimated tax. You may incur penalties
under the estimated tax rules if your withholding and estimated tax payments are
not sufficient.
66 1-800-345-2021
Background Information
- -----------------------------------------------------------------------------
INVESTMENT PHILOSOPHY AND POLICIES
Each American Century Strategic Asset Allocation fund invests in a
diversified portfolio of stocks, bonds and money market securities, with the
objective of achieving as high a level of total return as is consistent with the
fund's asset mix. The funds rely on a team management approach--groups of
managers are responsible for the ongoing active management of the individual
fund components.
STRATEGIC ALLOCATION: CONSERVATIVE emphasizes bonds and money market
securities to provide regular income and principal protection. The fund also
provides the potential for moderate long-term growth by investing a portion of
its assets in stocks.
STRATEGIC ALLOCATION: MODERATE emphasizes common stocks for their long-term
growth prospects, but it maintains a sizable stake in bonds and money market
securities to provide some income and increase overall price stability.
STRATEGIC ALLOCATION: AGGRESSIVE focuses primarily on common stocks as a
source of long-term growth, but it maintains a small portion of its assets in
bonds and money market securities to provide a modest amount of income and help
cushion the share price volatility of the stock portion.
COMPARATIVE INDICES
The indices listed below are used in the report to serve as fund
performance comparisons. They are not investment products available for
purchase.
The S&P 500 is composed of 500 large-capitalization stocks traded on
domestic exchanges. It is considered to be a broad measure of U.S. stock market
performance.
The RUSSELL 2000 is created by taking the 3,000 largest stocks (based on
market value) and removing the biggest 1,000. It is considered a broad measure
of small-company stock performance.
The SALOMON BROTHERS BROAD INVESTMENT GRADE INDEX consists of Treasury,
government agency, mortgage-backed and corporate securities with maturities of
one year or more.
The LEHMAN AGGREGATE BOND INDEX reflects the price fluctuations of Treasury
securities, agency securities, corporate bond issues and mortgage-backed
securities.
The MORGAN STANLEY EUROPE, AUSTRALIA, FAR EAST (EAFE(reg.tm)) INDEX is a
widely followed group of stocks from 22 different countries.
The SALOMON BROTHERS NON-U.S. WORLD GOVERNMENT BOND INDEX consists of
fixed-income government bonds from 16 countries.
The THREE-MONTH TREASURY BILL INDEX is derived from secondary market
interest rates as published by the Federal Reserve Bank.
[right margin]
THE FUNDS' NEUTRAL ASSET MIXES*
CON MOD AGG
STOCKS 40% 60% 75%
BONDS 45% 30% 20%
CASH
(MONEY MARKET
SECURITIES) 15% 10% 5%
* The funds' actual asset mixes will vary from the neutral mixes based on
investment performance. Fund managers regularly review the portfolios and
rebalance the asset mixes to stay within the funds' preset operating ranges.
INVESTMENT TEAM LEADERS
PORTFOLIO MANAGERS:
JEFF TYLER
BRIAN HOWELL
www.americancentury.com 67
Glossary
- -----------------------------------------------------------------------------
RETURNS
* TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.
* AVERAGE ANNUAL RETURNS illustrate the annually compounded returns that would
have produced the fund's cumulative total returns if the fund's performance had
been constant over the entire period. Average annual returns smooth out
variations in a fund's return; they are not the same as fiscal year-by-year
results. For fiscal year-by-year returns, please refer to the "Financial
Highlights" on pages 60-65.
STOCK PORTFOLIO STATISTICS
* NUMBER OF COMPANIES--the number of different companies held by a fund on a
given date.
* DIVIDEND YIELD--a percentage return calculated by dividing a company's annual
cash dividend by the current market value of the company's stock.
* PRICE/EARNINGS RATIO--a stock value measurement calculated by dividing a
company's stock price by its earnings per share, with the result expressed as a
multiple instead of a percentage. (Earnings per share is calculated by dividing
a company's after-tax earnings by its outstanding shares.)
BOND PORTFOLIO STATISTICS
* NUMBER OF SECURITIES--the number of different securities held by a fund on a
given date.
* WEIGHTED AVERAGE MATURITY (WAM)--a measurement of the sensitivity of a
fixed-income portfolio to interest rate changes. WAM indicates the average time
until the securities in the portfolio mature, weighted by dollar amount. The
longer the WAM, the more interest rate exposure and sensitivity the portfolio
has.
* AVERAGE DURATION--another measure of the sensitivity of a fixed-income
portfolio to interest rate changes. Duration is a time-weighted average of the
interest and principal payments of the securities in a portfolio. As the
duration of a portfolio increases, so does the impact of a change in interest
rates on the value of the portfolio.
FIXED-INCOME SECURITY TYPES
* ASSET-BACKED SECURITIES--debt securities that represent ownership in a pool of
receivables, such as credit card debt, auto loans or mortgages.
* CORPORATE SECURITIES--debt securities or instruments issued by corporations.
Short-term corporate securities are typically issued to raise cash and cover
current expenses in anticipation of future revenues; long-term corporate
securities are issued to finance capital expenditures, such as new plant
construction or equipment purchases.
* FOREIGN GOVERNMENT SECURITIES--debt securities issued or guaranteed by foreign
governments or their political subdivisions. Some of these securities are direct
obligations of the issuing government; others are backed by some form of
government sponsorship.
* MORTGAGE-BACKED SECURITIES--debt securities that represent ownership in pools
of mortgage loans. Most mortgage-backed securities are structured as
"pass-throughs"--the monthly payments of principal and interest on the mortgages
in the pool are collected by the bank that is servicing the mortgages and are
"passed through" to investors. While the payments of principal and interest are
considered secure (many are backed by government agency guarantees), the cash
flow is less certain than in other fixed-income investments. Mortgages that are
paid off early reduce future interest payments from the pool.
* U.S. GOVERNMENT AGENCY SECURITIES--debt securities issued by U.S. government
agencies (such as the Federal Home Loan Bank and the Federal Farm Credit Bank).
Some agency securities are backed by the full faith and credit of the U.S.
government, while others are guaranteed only by the issuing agency. Government
agency securities include discount notes (maturing in one year or less) and
medium-term notes, debentures and bonds (maturing in three months to 50 years).
* U.S. TREASURY SECURITIES--debt securities issued by the U.S. Treasury and
backed by the direct "full faith and credit" pledge of the U.S. government.
Treasury securities include bills (maturing in one year or less), notes
(maturing in two to ten years) and bonds (maturing in more than ten years).
68 1-800-345-2021
[inside back cover]
[american century logo(reg.sm)]
American
Century(reg.tm)
P.O. Box 419200
Kansas City, Missouri
64141-6200
Investor Services:
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 816-444-3485
Fax: 816-340-7962
Internet: www.americancentury.com
American Century Strategic Asset Allocations, Inc.
Investment Manager
American Century Investment Management, Inc.
Kansas City, Missouri
This report and the statements it contains are submitted for the general
information of our shareholders. The report is not authorized for distribution
to prospective investors unless preceded or accompanied by an effective
prospectus.
(C) 1998 American Century Services Corporation Funds Distributor, Inc.
[recycled logo]
Recycled
[back cover]
[40 Year logo]
Four Decades of Serving Investors
40 Years
American Century(reg tm.)
1958 - 1998
American Century Investments Bulk Rate
P.O. Box 419200 U.S. Postage Paid
Kansas City, MO 64141-6200 American Century
www.americancentury.com Companies
9807 (C)1998 American Century Services Corporation
SH-BKT-13098 Funds Distributor, Inc.
