SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |X|
Pre-Effective Amendment No. |_|
Post-Effective Amendment No. 7 |X|
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |X|
Amendment No. 7 |X|
(Check appropriate box or boxes.)
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
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(Exact Name of Registrant as Specified in Charter)
4500 Main Street, Kansas City, MO 64141-6200
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(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (816) 531-5575
David C. Tucker, Esq., 4500 Main Street, Kansas City, MO 64141-6200
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(Name and Address of Agent for Service)
Approximate Date of Proposed Public Offering: April 1, 2000
It is proposed that this filing will become effective (check appropriate box)
|_| immediately upon filing pursuant to paragraph (b)
|X| on April 1, 2000 pursuant to paragraph (b)
|_| 60 days after filing pursuant to paragraph (a)(1)
|_| on (date) pursuant to paragraph (a)(1)
|_| 75 days after filing pursuant to paragraph (a)(2)
|_| on (date) pursuant to paragraph (a)(2) of rule 485.
If appropriate, check the following box:
|_| This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
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<TITLE>American Century Strategic Allocation 485B</TITLE>
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<P><FONT size="6"><I>Your <BR>
</I>A<FONT size="5">MERICAN</FONT> C<FONT size="5">ENTURY</FONT><I><BR>
prospectus</I></FONT></P>
<P> </P>
<P><FONT size="3"><B>Strategic Allocation: Conservative Fund</B></FONT></P>
<P><FONT size="3"><B>Strategic Allocation: Moderate Fund</B></FONT></P>
<P><FONT size="3"><B>Strategic Allocation: Aggressive Fund</B></FONT></P>
<P> </P>
</TD>
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<P align="RIGHT"><FONT size="3">April 1, 2000<BR>
Advisor Class</FONT></P>
<P align="RIGHT"><FONT size="3"><I>The Securities and Exchange Commission
has not approved or disapproved these securities or determined if this
Prospectus is accurate or complete. Anyone who tells you otherwise is
committing a crime.</I></FONT></P>
<P align="RIGHT"><FONT size="3">Funds Distributor, Inc.<BR>
and American Century<BR>
Investment Services, Inc.,<BR>
Distributors</FONT></P>
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<P align="right"> </P>
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<DIV align="right"><FONT size=3>[AMERICAN CENTURY LOGO]</FONT></DIV>
</TD>
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<DIV align="center"><FONT size=3>[AMERICAN<BR>
CENTURY<BR>
LOGO]</FONT></DIV>
</TD>
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<TD width="460"> </TD>
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<P> </P>
<P align="center"><FONT size="3"><I>American Century<BR>
Investments</I></FONT></P>
<P align="center"><I><FONT size="3">P.O. Box 419385<BR>
Kansas City, MO<BR>
64141-6385</FONT></I></P>
</TD>
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<P><FONT size="3">Dear Investor,</FONT></P>
<P><FONT size="3">Planning and maintaining your investment portfolio is
a big job. However, an easy-to-understand Prospectus can make your work
a lot less daunting. We hope you'll find this Prospectus easy to understand,
and more importantly, that it gives you confidence in the investment decisions
you have made or are soon to make.</FONT></P>
<P><FONT size="3">As you begin to read through this Prospectus, take a look
at the table of contents to understand how it is organized. The first
four sections take a close-up look at the funds.</FONT></P>
<P><FONT size="3"><I>An Overview of the Funds </I>— Learn about fund
goals, strategies and risks, and who may or may not want to invest.</FONT></P>
<P><FONT size="3"><I>Fund Performance History</I> — See how the funds
performed from year to year.</FONT></P>
<P><FONT size="3"><I>Fees and Expenses</I> — Find out about fund management
fees and other expenses associated with investing.</FONT></P>
<P><FONT size="3"><I>Objectives, Strategies and Risks</I> — Take a
more detailed look at the principal investment objectives, strategies
and risks presented in the <I>Overview of the Funds</I> section. </FONT></P>
<P><FONT size="3">As you continue to read, the <I>Management</I> section
will acquaint you with the fund management team, and <I>Investing with
American Century</I> gives an overview about how to invest and manage
your account.</FONT></P>
<P><FONT size="3"><I>Share Price and Distributions, Taxes, </I>and<I> Financial
Highlights </I>wrap up the Prospectus with important financial information
you'll need to make an informed decision.</FONT></P>
<P><FONT size="3">Naturally, you may have questions about investing after
you read through the Prospectus. Our Web site, www.americancentury.com,
offers information that could answer many of your questions. Or, an Investor
Relations Representative will be happy to help weekdays, 7 a.m. to 7 p.m.
and Saturdays, 9 a.m. to 2 p.m. Central time. Give us a call at 1-800-345-2021.</FONT></P>
<P><FONT size="3">Sincerely,</FONT></P>
<P><FONT size="3">/s/ Mark Killen</FONT></P>
<P><FONT size="3">Mark Killen<BR>
Senior Vice President<BR>
American Century Investment Services, Inc.</FONT></P>
</TD>
</TR>
</TABLE>
<P align="center">
<P align="center"><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=4><B>Table of Contents</B></FONT></P>
<P><FONT SIZE=3><A href="#A">An Overview of the Funds</A></FONT></P>
<P><FONT SIZE=3><A href="#B">Fund Performance History</A></FONT></P>
<P><FONT SIZE=3><A href="#C">Fees and Expenses</A></FONT></P>
<P><FONT SIZE=3><A href="#D">Objectives, Strategies and Risks</A></FONT></P>
<P><FONT SIZE=3> Strategic Allocation: Conservative
Fund</FONT></P>
<P><FONT SIZE=3> Strategic Allocation: Moderate
Fund</FONT></P>
<P><FONT SIZE=3> Strategic Allocation: Aggressive
Fund</FONT></P>
<P><FONT SIZE=3><A href="#E">Management</A></FONT></P>
<P><FONT SIZE=3><A href="#F">Investing with American Century</A></FONT></P>
<P><FONT SIZE=3><A href="#G">Share Price and Distributions</A></FONT></P>
<P><FONT SIZE=3><A href="#H">Taxes</A></FONT></P>
<P><FONT SIZE=3><A href="#I">Multiple Class Information</A></FONT></P>
<P><FONT SIZE=3><A href="#J">Financial Highlights</A></FONT></P>
<P><FONT SIZE=3><A href="#K">Performance Information of Other Class</A></FONT></P>
<P><FONT SIZE=3><I>Throughout this book you'll find definitions of key investment
terms and phrases. When you see a word printed in blue italics, look for its
definition in the left margin.</I></FONT></P>
<P><FONT SIZE=3><I>This symbol highlights special information and helpful tips.</I></FONT></P>
<P><FONT SIZE=4><B><A NAME="A"></A>An Overview of the Funds</B></FONT></P>
<P><FONT SIZE=3><B>What are the funds' investment objectives?</B></FONT></P>
<P><FONT SIZE=3>These funds are asset allocation funds. They seek the highest
level of total return consistent with their risk profiles. The risk profiles of the funds vary because
they invest in different mixes of asset types, such as stocks, bonds and money
market instruments. </FONT></P>
<P><FONT SIZE=3><I><B>Total return</B> includes capital appreciation plus dividend
and interest income</I></FONT></P>
<P><FONT SIZE=3><B>What are the funds' primary investment strategies and principal
risks?</B></FONT></P>
<P><FONT SIZE=3>The following table indicates each fund's neutral mix. The neutral
mix represents a benchmark as to how a fund's investments generally will be allocated among the
major asset classes over the long term.</FONT></P>
Equity Fixed-Income or
Securities Debt Securities Cash
Fund (Stocks) (Bonds) Equivalents
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Strategic Allocation: Conservative 45% 45% 10%
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Strategic Allocation: Moderate 63% 31% 6%
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Strategic Allocation: Aggressive 78% 20% 2%
<P><FONT SIZE=3>In selecting stocks for the equity portion of the funds, the fund
managers may choose stocks of U.S. or foreign companies of any size. The fund
managers invest the fixed-income portion of the funds primarily in investment-grade
debt securities.</FONT></P>
<P><FONT SIZE=3><B>The funds' principal risks include</B></FONT></P>
<UL>
<LI><FONT SIZE=2><B><FONT size="3">Market Risk</FONT></B><FONT size="3"> —
The value of a fund's shares will go up and down based on the performance of
the companies whose securities it owns and other factors generally
affecting the securities market.</FONT></FONT></LI>
<LI><FONT SIZE=3><B>Interest Rate Risk</B> — When interest rates change,
the value of the funds' fixed-income securities will be affected.</FONT></LI>
<LI><FONT SIZE=3><B>Credit Risk</B> — The value of a fund's fixed-income
securities also will be affected by the continued ability of the issuers of
these securities to make interest and principal payments as they become due.
</FONT></LI>
<LI><FONT SIZE=3><B>Principal Loss</B> — As with all mutual funds, if you
sell your shares when their value is less than the price you paid, you will
lose money.</FONT></LI>
</UL>
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <I>An investment in the funds
is not a bank deposit, and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation (FDIC) or any other government agency.</I> </FONT></P>
<P><FONT SIZE=3><B>Who <I>may</I> want to invest in the funds?</B></FONT></P>
<P><FONT SIZE=3>The funds may be a good investment if you are</FONT></P>
<UL>
<LI><FONT SIZE=3>seeking funds that combine the potential for long-term capital
growth with income</FONT></LI>
<LI><FONT SIZE=3>seeking the convenience of funds that invest in both equity
and fixed-income securities</FONT></LI>
<LI><FONT SIZE=3>comfortable with the risks associated with the funds' investment
strategy</FONT></LI>
<LI><FONT SIZE=3>investing through an IRA or other tax-advantaged retirement
plan</FONT></LI>
</UL>
<P><FONT SIZE=3><B>Who <I>may not</I> want to invest in the funds?</B></FONT></P>
<P><FONT SIZE=3>The funds may not be a good investment if you are</FONT></P>
<UL>
<LI><FONT SIZE=3>not seeking current income from your investment</FONT></LI>
<LI><FONT SIZE=3>investing for a short period of time</FONT></LI>
<LI><FONT SIZE=3>uncomfortable with volatility in the value of your investment</FONT></LI>
</UL>
<P><FONT SIZE=4><B><A NAME="B"></A>Fund Performance History</B></FONT></P>
<P><FONT SIZE=3><B>Strategic Allocation: Conservative Fund</B></FONT></P>
<P><FONT SIZE=3><B>Strategic Allocation: Moderate Fund</B></FONT></P>
<P><FONT SIZE=3><B>Strategic Allocation: Aggressive Fund</B></FONT></P>
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <I>The performance information
on this page is designed to help you see how the funds' returns can vary. Keep
in mind that past performance does not predict how the funds will perform in
the future.</I></FONT></P>
<P align="left"><FONT size="3"><B>Annual Total Returns</B></FONT></P>
<P><FONT SIZE=3>The following bar chart shows the performance of the funds' Advisor
Class shares for each full calendar year in the life of each fund. It indicates
the volatility of the funds' historical returns from year to year. </FONT></P>
<P align="center"><FONT SIZE=3>[GRAPHIC OMITTED]</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=3>[The following table was depicted as a bar graph
in the printed material.]</FONT></P>
1997 1998 1999
Strategic Allocation Fund: Conservative 12.75% 10.19% 10.97%
Strategic Allocation Fund: Moderate 14.77% 12.55% 22.03%
Strategic Allocation Fund: Aggressive 15.94% 13.53% 33.38%
<P><FONT SIZE=3>The highest and lowest quarterly returns for the period reflected
in the bar chart are: </FONT></P>
Highest Lowest
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Conservative 9.34% (4Q 1999) -3.15% (3Q 1998)
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Moderate 17.32% (4Q 1999) -7.66% (3Q 1998)
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Aggressive 25.28% (4Q 1999) -11.11% (3Q 1998)
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <I>For current performance
information, please call us at 1-800-345-3533 or visit American Century's Web
site at www.americancentury.com.</I></FONT></P>
<P><FONT SIZE=3><B>Average Annual Total Returns</B></FONT></P>
<P><FONT SIZE=3>The following table shows the average annual total returns of
the funds' Advisor Class shares for the periods indicated. The benchmarks are
unmanaged indices that have no operating costs and are included in the table
for performance comparison. </FONT></P>
For the calendar year ended December 31, 1999 1 year Life of Fund(1)
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Strategic Allocation: Conservative 10.97% 11.31%
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Strategic Allocation: Moderate 22.03% 16.05%
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Strategic Allocation: Aggressive 33.38% 19.72%
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S&P 500 Index 21.04% 28.31%(2)
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Lehman Aggregate Bond Index -0.82% 6.24%(2)
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Three-Month U.S. Treasury Bill 4.74% 4.95%(2)
<OL>
<LI><FONT SIZE=2><I>The inception date for the funds' Advisor Class was October
2, 1996.</I></FONT></LI>
<LI><FONT SIZE=2><I>Since September 30, 1996, the date closest to the funds'
inception for which data are available.</I></FONT></LI>
</OL>
<P><FONT SIZE=4><B><A NAME="C"></A>Fees and Expenses</B></FONT></P>
<P><FONT SIZE=3>There are no sales loads, fees or other charges </FONT></P>
<UL>
<LI><FONT SIZE=3>to buy fund shares directly from American Century</FONT></LI>
<LI><FONT SIZE=3>to reinvest dividends in additional shares</FONT></LI>
<LI><FONT SIZE=3>to exchange into the Advisor Class shares of other American
Century funds</FONT></LI>
<LI><FONT SIZE=3>to redeem your shares</FONT></LI>
</UL>
<P><FONT SIZE=3>The following table describes the fees and expenses you will pay
if you buy and hold shares of the funds.</FONT></P>
<P><FONT SIZE=3><B>Annual Operating Expenses (expenses that are deducted from
fund assets)</B></FONT></P>
Management Distribution and Other Total Annual Fund
Fee(1) Service (12b-1) Fees(2) Expenses(3) Operating Expenses
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Strategic Allocation: Conservative 0.75% 0.50% 0.00% 1.25%
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Strategic Allocation: Moderate 0.85% 0.50% 0.00% 1.35%
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Strategic Allocation: Aggressive 0.95% 0.50% 0.00% 1.45%
<OL>
<LI><FONT SIZE=2><I>Based on expenses incurred during the funds' most recent
fiscal year. The funds have stepped fee schedules. As a result, the funds'
management fee rate generally decreases as fund assets increase.</I></FONT></LI>
<LI><FONT SIZE=2><I>The 12b-1 fee is designed to permit investors to purchase
Advisor Class shares through broker-dealers, banks, insurance companies and
other financial intermediaries. A portion of the fee is used to compensate
them for ongoing recordkeeping and administrative services that would otherwise
be performed by an affiliate of the advisor, and a portion is used to compensate
them for distribution and other shareholder services. For more information,
see Service and Distribution Fees, page 15.</I></FONT></LI>
<LI><FONT SIZE=2><I>Other expenses, which include the fees and expenses of the
funds' independent directors and their legal counsel as well as interest,
were less than 0.005% for the most recent fiscal year.</I></FONT></LI>
</OL>
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <I>Use this example to compare
the costs of investing in other funds. Of course, your actual costs may be higher
or lower. </I></FONT></P>
<P><FONT SIZE=3><B>Example</B></FONT></P>
<P><FONT SIZE=3>The examples in the table below are intended to help you compare
the costs of investing in a fund with the costs of investing in other mutual
funds. Assuming you . . .</FONT></P>
<UL>
<LI><FONT SIZE=3>invest $10,000 in the fund</FONT></LI>
<LI><FONT SIZE=3>redeem all of your shares at the end of the periods shown below
</FONT></LI>
<LI><FONT SIZE=3>earn a 5% return each year </FONT></LI>
<LI><FONT SIZE=3>incur the same operating expenses as shown above</FONT></LI>
</UL>
<P><FONT SIZE=3>. . . your cost of investing in the fund would be:</FONT></P>
1 year 3 years 5 years 10 years
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Strategic Allocation: Conservative $127 $395 $683 $1,503
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Strategic Allocation: Moderate $137 $426 $736 $1,614
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Strategic Allocation: Aggressive $147 $456 $788 $1,724
<P><FONT SIZE=4><B><A NAME="D"></A>Objectives, Strategies and Risks</B></FONT></P>
<P><FONT SIZE=3><B>Strategic Allocation: Conservative Fund</B></FONT></P>
<P><FONT SIZE=3><B>Strategic Allocation: Moderate Fund</B></FONT></P>
<P><FONT SIZE=3><B>Strategic Allocation: Aggressive Fund</B></FONT></P>
<P><FONT SIZE=3><B>What are the funds' investment objectives?</B></FONT></P>
<P><FONT SIZE=3>The funds are asset allocation funds. That is, they diversify
their assets among various classes of investments such as stocks, bonds and
money market instruments. Each fund holds a different mix of these asset types,
which gives it a distinct risk profile and return potential.</FONT></P>
<UL>
<LI><FONT SIZE=2><B><FONT size="3">Strategic Allocation: Conservative</FONT></B><FONT size="3">
seeks regular income through its emphasis on bonds and money market securities.
It also has the potential for moderate long-term total return as a result
of its stake in equity securities.</FONT></FONT></LI>
<LI><FONT SIZE=3><B>Strategic Allocation: Moderate</B> seeks long-term capital
growth with some regular income. It emphasizes investments in equity securities,
but maintains a sizeable stake in bonds and money market securities.</FONT></LI>
<LI><FONT SIZE=3><B>Strategic Allocation: Aggressive</B> seeks long-term capital
growth with a small amount of income. It emphasizes investments in equity
securities, but maintains a portion of its assets in bonds and money market
securities.</FONT></LI>
</UL>
<P><FONT SIZE=3>You should be aware that the names of the three asset allocation
funds offered in this Prospectus are intended to reflect the relative short-term
price volatility risk among the funds and are not an indication of the advisor's
assessment of the riskiness of the funds as compared to other mutual funds,
including other mutual funds within the American Century family of funds.</FONT></P>
<P><FONT SIZE=3><B>How do the funds pursue their investment objectives?</B></FONT></P>
<P><FONT SIZE=3>The funds' strategic asset allocation strategy diversifies investments
among equity securities, bonds and cash-equivalent instruments. The funds may invest in any
type of U.S. or foreign equity security that meets certain fundamental and technical
standards. The fund advisor draws on growth, value and quantitative investment
techniques in managing the equity portion of the funds' portfolios and diversifies
the funds' equity investments among small, medium and large companies.</FONT></P>
<P><FONT SIZE=3>The growth strategy looks for companies with earnings and revenues
that are not only growing, but growing at a successively faster, or accelerating,
pace. This strategy is based on the premise that, over the long term, the stocks
of companies with accelerating <BR>
earnings and revenues have a greater-than-average chance to increase in value.
The value investment discipline seeks capital growth by investing in equity securities
of well-established companies that the funds' managers believe to be temporarily
undervalued. The primary quantitative management technique the managers use
is portfolio optimization. The managers may construct a portion of the funds'
portfolios to match the risk characteristics of the S&P 500 and then optimize
each portfolio to achieve the desired balance of risk and return potential.
</FONT></P>
<P><FONT SIZE=3>Although the funds will remain exposed to each of the investment
disciplines and categories described above, a particular discipline or investment
category may be emphasized when, in the managers' opinion, such discipline or
investment category is undervalued relative to the other disciplines or categories.</FONT></P>
<P><FONT SIZE=3>The funds also invest in a variety of debt securities payable
in both U.S. and foreign currencies. The funds primarily invest in investment-grade
securities, that is, securities rated in the four highest categories by independent
rating organizations. However, Strategic Allocation: Moderate may invest up
to 5% of its assets, and Strategic Allocation: Aggressive may invest up to 10%
of its assets, in high-yield securities. High-yield securities are higher risk,
nonconvertible debt obligations that are rated below investment-grade. The funds
may also invest in unrated securities based on the funds' advisor's assessment
of their credit quality. Under normal market conditions, the weighted avereage
maturity for the fixed-income portfolio will be in the three- to 10-year range.</FONT></P>
<P><FONT SIZE=3>The funds may invest the cash-equivalent portion of their portfolios
in high-quality money market investments (denominated in U.S. dollars or foreign
currencies).</FONT></P>
<P><FONT SIZE=3>The following table shows the operating ranges in which each fund's
asset mix generally will vary over short-term periods. These variations may
be due to differences in asset class performance or prevailing market conditions.</FONT></P>
<P><FONT SIZE=3><B>Operating Ranges</B></FONT></P>
Equity Fixed-Income or
Securities Debt Securities Cash
Fund (Stocks) (Bonds) Equivalents
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Strategic Allocation: Conservative 39-51% 38-52% 5-20%
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Strategic Allocation: Moderate 53-73% 21-41% 0-15%
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Strategic Allocation: Aggressive 63-93% 10-30% 0-15%
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <I>Fixed-income securities
are rated by nationally recognized securities rating organizations (SROs), such
as Moody's and Standard & Poor's. Each SRO has its own system for classifying
securities, but each tries to indicate a company's ability to make timely payments
of interest and principal. A detailed description of SROs, their ratings system
and what we do if a security isn't rated is included in the Statement of Additional
Information.</I></FONT></P>
<P><FONT SIZE=3><B>What are the principal risks of investing in the funds?</B></FONT></P>
<P><FONT SIZE=3>The value of a fund's shares depends on the value of the stocks
and other securities it owns. The value of the individual securities a fund
owns will go up and down depending on the performance of the companies that
issued them, general market and economic conditions, and investor confidence.</FONT></P>
<P><FONT SIZE=3>The value of the funds' fixed-income securities will be affected
primarily by rising or falling interest rates and the continued ability of the
issuers of these securities to make payments of interest and principal as they
become due.</FONT></P>
<P><FONT SIZE=3>When interest rates change, the amount of income a fund generates
will be affected. Generally, when interest rates rise, a fund's income and its
share value will decline. The opposite is true when interest rates decline.</FONT></P>
<P><FONT SIZE=3>The lowest-rated investment-grade bonds in which the funds may
invest contain some speculative characteristics. Having those bonds in the funds'
portfolios means the funds' value may go down more if interest rates or other
economic conditions change than if the funds contained only higher-rated bonds.
In addition, Strategic Allocation: Moderate and Strategic Allocation: Aggressive
may invest in higher-risk high-yield securities, sometimes referred to as junk
bonds. These securities are considered to be predominantly speculative and are
more likely to be negatively affected by changes in interest rates or other
economic conditions.</FONT></P>
<P><FONT SIZE=3>As with all funds, your shares may be worth more or less at any
given time than the price you paid for them. If you sell your shares when the
value is less than the price you paid, you will lose money.</FONT></P>
<P><FONT SIZE=3>Although the fund managers intend to invest the funds' assets
primarily in U.S. securities, the funds may invest in foreign securities. Foreign
investment involves additional risks, including fluctuations in currency exchange
rates, less stable political and economic structures, reduced availability of
public information, and lack of uniform financial reporting and regulatory practices
similar to those that apply in the United States. These factors make investing
in foreign securities generally riskier than investing in U.S. stocks. </FONT></P>
<P><FONT SIZE=3>These funds are intended for investors who seek to diversify their
assets among various classes of investments, such as stocks, bonds and money
market instruments, and who are willing to accept the risks associated with
the funds' investment strategies.</FONT></P>
<P><FONT SIZE=4><B><A NAME="E"></A>Management</B></FONT></P>
<P><FONT SIZE=3><B>Who manages the funds?</B></FONT></P>
<P><FONT SIZE=3>The Board of Directors, investment advisor and fund management
team play key roles in the management of the funds.</FONT></P>
<P><FONT SIZE=3><B>The Board of Directors</B></FONT></P>
<P><FONT SIZE=3>The Board of Directors oversees the management of the funds and
meets at least quarterly to review reports about fund operations. Although the
Board of Directors does not manage the funds, it has hired an investment advisor
to do so. More than two-thirds of the directors are independent of the funds'
advisor; that is, they are not employed by and have no financial interest in
the advisor.</FONT></P>
<P><FONT SIZE=3><B>The Investment Advisor</B></FONT></P>
<P><FONT SIZE=3>The funds' investment advisor is American Century Investment Management,
Inc. The advisor has been managing mutual funds since 1958. The advisor is headquartered
at 4500 Main Street, Kansas City, Missouri 64111.</FONT></P>
<P><FONT SIZE=3>The advisor is responsible for managing the investment portfolios
of the funds and directing the purchase and sale of their investment securities.
The advisor also arranges for transfer agency, custody and all other services
necessary for the funds to operate.</FONT></P>
<P><FONT SIZE=3>For the services it provided to the funds during the most recent
fiscal year, the advisor received a unified management fee based on a percentage
of the average net assets of the Advisor Class shares of each fund. The amount
of the management fee for a fund is calculated on a class-by-class basis daily
and paid monthly. </FONT></P>
<P><FONT SIZE=3>Out of that fee, the advisor paid all expenses of managing and
operating the funds except brokerage expenses, taxes, interest, fees and expenses
of the independent directors (including legal counsel fees), and extraordinary
expenses.</FONT></P>
Management Fees Paid by the Funds to the Advisor as a
Percentage of Average Net Assets for the Most Recent Fiscal Year Ended November 30, 1999
- ------------------------------------------------------------------------------------------
Strategic Allocation: Conservative 0.75%
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Strategic Allocation: Moderate 0.85%
- ------------------------------------------------------------------------------------------
Strategic Allocation: Aggressive 0.95%
<P><FONT SIZE=4><B>The Fund Management Team</B></FONT></P>
<P><FONT SIZE=3>The advisor uses a team of portfolio managers, assistant portfolio
managers and analysts to manage the funds. The team meets regularly to review
portfolio holdings and discuss purchase and sale activity. Team members buy
and sell securities for a fund as they see fit, guided by the fund's investment
objective and strategy.</FONT></P>
<P><FONT SIZE=3>The portfolio managers on the investment team are identified below:</FONT></P>
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <B>Code of Ethics</B></FONT></P>
<P><FONT SIZE=3><I>American Century has a Code of Ethics designed to ensure that
the interests of fund shareholders come before the interests of the people who
manage the funds. Among other provisions, the Code of Ethics prohibits portfolio
managers and other investment personnel from buying securities in an initial
public offering or profiting from the purchase and sale of the same security
within 60 calendar days. In addition, the Code of Ethics requires portfolio
managers and other employees with access to information about the purchase or
sale of securities by the funds to obtain approval before executing permitted
personal trades.</I></FONT></P>
<P><FONT SIZE=3><B>Jeffrey R. Tyler</B></FONT></P>
<P><FONT SIZE=3>Mr. Tyler, Senior Vice President and Senior Portfolio Manager,
has been a member of the team that manages the funds since their inception in
February 1996. He also is a member of the teams that manage Equity Growth, Income
& Growth and Balanced. He joined American Century as a Portfolio Manager
in January 1988. He has a bachelor's degree in business economics from the University
of California-Santa Barbara and an MBA in finance and economics from Northwestern
University. He is a Chartered Financial Analyst.</FONT></P>
<P><FONT SIZE=3><B>Christopher K. Boyd</B></FONT></P>
<P><FONT SIZE=3>Mr. Boyd, Vice President and Senior Portfolio Manager, has been
a member of the team that manages the funds since rejoining American Century
in January 1998. He is also a member of the teams that manage Giftrust and New
Opportunities. With the exception of 1997, he has been with American Century
since March 1988 and served as a Portfolio Manager since December 1992. During
1997, he was in private practice as an investment advisor. He has a bachelor
of science from the University of Kansas and an MBA from Dartmouth College.
He is a Chartered Financial Analyst.</FONT></P>
<P><FONT SIZE=3><B>Phillip N. Davidson</B></FONT></P>
<P><FONT SIZE=3>Mr. Davidson, Senior Vice President and Senior Portfolio Manager,
has been a member of the team that manages the funds since their inception in
February 1996. He is also a member of the teams that manage Value and Equity
Income. Prior to joining American Century, he spent 11 years at Boatmen's Trust
Company in St. Louis and served as Vice President and Portfolio Manager responsible
for institutional value equity clients. He has a bachelor's degree in finance
and an MBA from Illinois State University.</FONT></P>
<P><FONT SIZE=3><B>Glenn A. Fogle</B></FONT></P>
<P><FONT SIZE=3>Mr. Fogle, Vice President and Senior Portfolio Manager, has been
a member of the team that manages the funds since their inception in February
1996. He also is a member of the team that manages Vista, where he has been
a Portfolio Manager since March 1993. He joined American Century in September
1990 as an Investment Analyst. He has a bachelor of arts and an MBA in finance
from Texas Christian University. He is a Chartered Financial Analyst.</FONT></P>
<P><FONT SIZE=3><B>C. Kim Goodwin</B></FONT></P>
<P><FONT SIZE=3>Ms. Goodwin, Senior Vice President and Senior Portfolio Manager,
has been a member of the team that manages the funds since October 1997. She
also is a member of the team that manages Growth. She joined American Century
in 1997. Before joining American Century, she served as Senior Vice President
and Portfolio Manager at Putnam Investments from May 1996 to September 1997,
and Vice President and Portfolio Manager at Prudential Investments from February
1993 to April 1996. She has a bachelor of arts from Princeton University and
an MBA in finance and a master's in public affairs from the University of Texas.</FONT></P>
<P><FONT SIZE=3><B>Norman E. Hoops</B></FONT></P>
<P><FONT SIZE=3>Mr. Hoops, Senior Vice President and Senior Portfolio Manager,
has been a member of the team that manages the funds since their inception in
February 1996. He also is a member of the teams that manage Limited-Term Bond,
Bond and the fixed-income portion of Balanced. He joined American Century as
Vice President and Portfolio Manager in November 1989. In April 1993, he became
Senior Vice President. He has a bachelor of arts from Indiana University and
an MBA from Butler University.</FONT></P>
<P><FONT SIZE=3><B>Brian Howell</B></FONT></P>
<P><FONT SIZE=3>Mr. Howell, Vice President and Portfolio Manager, has been a member
of the team that manages the funds since May 1997. He joined American Century
in 1988. He was Portfolio Manager of the Capital Preservation Fund from May
1995 to May 1997. He has a bachelor's degree in mathematics/statistics and an
MBA from the University of California-Berkeley.</FONT></P>
<P><FONT SIZE=3><B>Mark S. Kopinski</B></FONT></P>
<P><FONT SIZE=3>Mr. Kopinski, Senior Vice President and Senior Portfolio Manager,
has been a member of the team that manages the funds since April 1997. He also
is a member of the teams that manage International Growth, International Discovery
and the Emerging Markets Fund. Before rejoining American Century, he served
as Vice President and Portfolio Manager at Federated Investors, Inc. from June
1995 to March 1997. From 1990 to 1995, he served as Vice President and a member
of the team that managed International Growth and International Discovery. He
has a bachelor's degree in business administration from Monmouth College and
an MA in Asian studies from the University of Illinois.</FONT></P>
<P><FONT SIZE=3><B>Scott A. Moore</B></FONT></P>
<P><FONT SIZE=3>Mr. Moore, Vice President and Portfolio Manager, has been a member
of the team that manages the funds since February 1999. He is also a member
of the teams that manage Value and Equity Income. He joined American Century
in August 1993 as an Investment Analyst. He has a bachelor's degree in finance
from Southern Illinois University and an MBA in finance from the University
of Missouri-Columbia. He is a Chartered Financial Analyst.</FONT></P>
<P><FONT SIZE=3><B>John D. Seitzer</B></FONT></P>
<P><FONT SIZE=3>Mr. Seitzer, Vice President and Portfolio Manager, has been a
member of the team that manages the funds since December 1996. He also is a
member of the team that manages Giftrust. He joined American Century in June
1993 as an Investment Analyst and was promoted to Portfolio Manager in July
1996. He has a bachelor's degree in accounting and finance from Kansas State
University and an MBA in finance from Indiana University. He is a Chartered
Financial Analyst and a Certified Public Accountant.</FONT></P>
<P><FONT SIZE=3><B>Henrik Strabo</B></FONT></P>
<P><FONT SIZE=3>Mr. Strabo, Chief Investment Officer—International Equities,
has been a member of the team that manages the funds since their inception in
February 1996. He also is a member of the team that manages Global Growth, International
Growth and International Discovery. He joined American Century in 1993 as an
Investment Analyst and was promoted to Portfolio Manager in April 1994. He has
a bachelor's degree in business from the University of Washington.</FONT></P>
<P><FONT SIZE=3><B>Denise Tabacco</B></FONT></P>
<P><FONT SIZE=3>Ms. Tabacco, Portfolio Manager, has been a member of the team
that manages the funds since January 1998. She also is a member of the team
that manages the Prime Money Market Fund. She joined American Century in 1988,
becoming a member of its portfolio department in 1991. She has a bachelor's
degree in accounting from San Diego State University and an MBA in finance from
Golden Gate University.</FONT></P>
<P><FONT SIZE=3><B>Fundamental Investment Policies</B></FONT></P>
<P><FONT SIZE=3>Fundamental investment policies contained in the Statement of
Additional Information and the investment objectives of the funds may not be
changed without a shareholder vote. The Board of Directors may change any other
policies and investment strategies.</FONT></P>
<P><FONT SIZE=4><B><A NAME="F"></A>Investing with American Century</B></FONT></P>
<P><FONT SIZE=3><B>Eligibility for Advisor Class Shares</B></FONT></P>
<P><FONT SIZE=3>The Advisor Class shares are intended for purchase by participants
in employer-sponsored retirement or savings plans and for persons purchasing
shares through broker-dealers, banks, insurance companies, and other financial
intermediaries that provide various administrative and distribution services.</FONT></P>
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <I>Financial intermediaries
include banks, broker-dealers, insurance companies and investment advisors.</I></FONT></P>
<P><FONT SIZE=3><B>Investing through Financial Intermediaries</B></FONT></P>
<P><FONT SIZE=3>If you do business with us through a financial intermediary or
a retirement plan, your ability to purchase, exchange and redeem shares will
depend on the policies of that entity. Some policy differences may include</FONT></P>
<UL>
<LI><FONT SIZE=3>minimum investment requirements</FONT></LI>
<LI><FONT SIZE=3>exchange policies</FONT></LI>
<LI><FONT SIZE=3>fund choices</FONT></LI>
<LI><FONT SIZE=3>cutoff time for investments</FONT></LI>
</UL>
<P><FONT SIZE=3>Please contact your financial intermediary or plan sponsor for
a complete description of its policies. Copies of the funds' annual report,
semiannual report and Statement of Additional Information are available from
your intermediary or plan sponsor.</FONT></P>
<P><FONT SIZE=3>Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American Century's
transfer agent. In some circumstances, American Century will pay the service
provider a fee for performing those services.</FONT></P>
<P><FONT SIZE=3>Although transactions in fund shares may be made directly with
American Century at no charge, you also may purchase, redeem and exchange fund
shares through financial intermediaries that charge a transaction-based or other
fee for their services. Those charges are retained by the intermediary and are
not shared with American Century or the funds.</FONT></P>
<P><FONT SIZE=3>American Century has contracts with certain financial intermediaries
requiring them to track the time investment orders are received and to comply
with procedures relating to the transmission of orders. The funds have authorized
those intermediaries to accept orders on each fund's behalf up to the time at
which the net asset value is determined. If those orders are transmitted to
American Century and paid for in accordance with the contract, they will be
priced at the net asset value next determined after your request is received
in the form required by the intermediary on a fund's behalf.</FONT></P>
<P><FONT SIZE=3><B>Modifying or Canceling an Investment</B></FONT></P>
<P><FONT SIZE=3>Investment instructions are irrevocable. That means that once
you have mailed or otherwise transmitted your investment instruction, you may
not modify or cancel it. Each fund reserves the right to suspend the offering
of shares for a period of time, and each fund reserves the right to reject any
specific purchase order (including purchases by exchange or conversion). Additionally,
we may refuse a purchase if, in our judgment, it is of a size that would disrupt
the management of a fund.</FONT></P>
<P><FONT SIZE=3><B>Abusive Trading Practices</B></FONT></P>
<P><FONT SIZE=3>We do not permit market timing or other abusive trading practices
in our funds.</FONT></P>
<P><FONT SIZE=3>Excessive, short-term (market timing) or other abusive trading
practices may disrupt portfolio management strategies and harm fund performance.
To minimize harm to the funds and their shareholders, we reserve the right to
reject any purchase order (including exchanges) from any investor we believe
has a history of abusive trading or whose trading, in our judgment, has been
or may be disruptive to a fund. In making this judgment, we may consider trading
done in multiple accounts under common ownership or control. We also reserve
the right to delay delivery of your redemption proceeds—up to seven days—or
to honor certain redemptions with securities, rather than cash, as described
in the next section.</FONT></P>
<P><FONT SIZE=3><B>Special Requirements for Large Redemptions</B></FONT></P>
<P><FONT SIZE=3>If, during any 90-day period, you redeem fund shares worth more
than $250,000 (or 1% of the assets of the fund if that percentage is less than
$250,000), we reserve the right to pay part or all of the redemption proceeds
in excess of this amount in readily marketable securities instead of in cash.
The securities would be selected from the fund's portfolio by the fund managers.
A payment in securities can help the fund's remaining shareholders avoid tax
liabilities that they might otherwise have incurred had the fund sold securities
prematurely to pay the entire redemption amount in cash.</FONT></P>
<P><FONT SIZE=3>We will value these securities in the same manner as we do in
computing the fund's net asset value. We may provide these securities in lieu
of cash without prior notice. </FONT></P>
<P><FONT SIZE=3>Also, if payment is made in securities, a shareholder may have
to pay brokerage or other transaction costs to convert the securities to cash.</FONT></P>
<P><FONT SIZE=3>If your redemption would exceed this limit and you would like
to avoid being paid in securities, please provide us with an unconditional instruction
to redeem at least 15 days prior to the date on which the redemption transaction
is to occur. The instruction must specify the dollar amount or number of shares
to be redeemed and the date of the transaction. This minimizes the effect of
the redemption on the fund and its remaining shareholders.</FONT></P>
<P><FONT SIZE=4><B><A NAME="G"></A>Share Price and Distributions</B></FONT></P>
<P><FONT SIZE=3><B>Share Price</B></FONT></P>
<P><FONT SIZE=3><I>The <B>net asset value,</B> or NAV, of a fund is the price
of the fund's shares.</I></FONT></P>
<P><FONT SIZE=3>American Century determines the net asset value (NAV) of each
fund as of the close of regular trading on the New York Stock Exchange (usually
4 p.m. Eastern time) on each day the Exchange is open. On days when the Exchange
is not open (including certain U.S. holidays), we do not calculate the NAV.
The NAV of a fund share is the current value of the fund's assets, minus any
liabilities, divided by the number of fund shares outstanding.</FONT></P>
<P><FONT SIZE=3>If current market prices of securities owned by a fund are not
readily available, the advisor may determine their fair value in accordance
with procedures adopted by the fund's Board. Trading of securities in foreign
markets may not take place every day the Exchange is open. Also, trading in
some foreign markets may take place on weekends or holidays when a fund's NAV
is not calculated. So, the value of a fund's portfolio may be affected on days
when you can't purchase or redeem shares of the fund.</FONT></P>
<P><FONT SIZE=3>We will price your purchase, exchange or redemption at the NAV
next determined after we receive your transaction request in good order. </FONT></P>
<P><FONT SIZE=3><I><B>Capital gains</B> are increases in the values of capital
assets, such as stock, from the time the assets are purchased.</I></FONT></P>
<P><FONT SIZE=3><B>Distributions</B></FONT></P>
<P><FONT SIZE=3>Federal tax laws require each fund to make distributions to its
shareholders in order to qualify as a "regulated investment company." Qualification
as a regulated investment company means that the funds will not be subject to
state or federal income tax on amounts distributed. The distributions generally
consist of dividends and interest received by a fund, as well as <I><B>capital
gains</B></I> realized on the sale of investment securities. </FONT></P>
<P><FONT SIZE=3>The funds pay distributions of substantially all of their income
quarterly, with the exception of Strategic Allocation: Aggressive, which pays
such distributions annually. Distributions from realized capital gains are generally
paid twice a year, usually in March and December. The funds may make more frequent
distributions, if necessary, to comply with Internal Revenue Code provisions.
The funds' distributions may be taxable as ordinary income, capital gains or
a combination of the two. Capital gains are taxed at different rates depending
on the length of time the fund held the securities that were sold. Distributions
are reinvested automatically in additional shares unless you choose another
option.</FONT></P>
<P><FONT SIZE=3>Participants in employer-sponsored retirement or savings plans
must reinvest all distributions. For shareholders investing through taxable
accounts, we will reinvest distributions unless you elect to receive them in
cash.</FONT></P>
<P><FONT SIZE=4><B><A NAME="H"></A>Taxes</B></FONT></P>
<P><FONT SIZE=3>The tax consequences of owning shares of the funds will vary depending
on whether you own them through a taxable or tax-deferred account. Tax consequences
result from distributions by the funds of dividend and interest income they
have received or capital gains they have generated through their investment
activities. Tax consequences also result from sales of fund shares by investors
after the net asset value has increased or decreased.</FONT></P>
<P><FONT SIZE=3><B>Tax-Deferred Accounts</B></FONT></P>
<P><FONT SIZE=3>If you purchase fund shares through a tax-deferred account, such
as an IRA or a qualified employer-sponsored retirement or savings plan, income
and capital gains distributions usually will not be subject to current taxation,
but will accumulate in your account under the plan on a tax-deferred basis.
Likewise, moving from one fund to another fund within a plan or tax-deferred
account generally will not cause you to be taxed. For information about the
tax consequences of making purchases or withdrawals through a tax-deferred account,
please consult your plan administrator, your summary plan description or a professional
tax advisor.</FONT></P>
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <B>Buying a Dividend</B></FONT></P>
<P><FONT SIZE=3><I>Purchasing fund shares in a taxable account shortly before
a distribution is sometimes known as buying a dividend. In taxable accounts,
you must pay income taxes on the distribution whether you reinvest the distribution
or take it in cash. In addition, you will have to pay taxes on the distribution
whether the value of your investment decreased, increased or remained the same
after you bought the fund shares.</I></FONT></P>
<P><FONT SIZE=3><I>The risk in buying a dividend is that a fund's portfolio may
build up taxable gains throughout the period covered by a distribution, as securities
are sold at a profit. The funds distribute those gains to you, after subtracting
any losses, even if you did not own the shares when the gains occurred.</I></FONT></P>
<P><FONT SIZE=3><I>If you buy a dividend, you incur the full tax liability of
the distribution period, but you may not enjoy the full benefit of the gains
realized in the fund's portfolio.</I></FONT></P>
<P><FONT SIZE=3><B>Taxable Accounts</B></FONT></P>
<P><FONT SIZE=3>If you own fund shares through a taxable account, distributions
by the fund and sales by you of fund shares may cause you to be taxed on your
investment.</FONT></P>
<P><FONT SIZE=3><B>Taxability of Distributions</B></FONT></P>
<P><FONT SIZE=3>Fund distributions may consist of income earned by the fund from
sources such as dividends and interest, or capital gains generated from the
sale of fund investments. Distributions of income are taxed as ordinary income.
Distributions of capital gains are classified either as short term or long term
and are taxed as follows:</FONT></P>
Type of Distribution Tax Rate for 15% Bracket Tax Rate for 28% Bracket or Above
- ----------------------------------------------------------------------------------------------
Short-term capital gains Ordinary income rate Ordinary income rate
- ----------------------------------------------------------------------------------------------
Long-term capital gains 10% 20%
<P><FONT SIZE=3>The tax status of any distributions of capital gains is determined
by how long the fund held the underlying security that was sold, not by how
long you have been invested in the fund, or whether you reinvest your distributions
in additional shares or take them in cash. American Century will inform you
of the tax status of fund distributions for each calendar year in an annual
tax mailing (Form 1099-DIV).</FONT></P>
<P><FONT SIZE=3>Distributions also may be subject to state and local taxes. Because
everyone's tax situation is unique, you may want to consult your tax professional
about federal, state and local tax consequences.</FONT></P>
<P><FONT SIZE=3><B>Taxes on Transactions</B></FONT></P>
<P><FONT SIZE=3>Your redemptions—including exchanges to other American Century
funds—are subject to capital gains tax. The table above can provide a general
guide for your potential tax liability when selling or exchanging fund shares.
Short-term capital gains are gains on fund shares you held for 12 months or
less. Long-term capital gains are gains on fund shares you held for more than
12 months. If your shares decrease in value, their sale or exchange will result
in a long-term or short-term capital loss. However, you should note that loss
realized upon the sale or redemption of shares held for six months or less will
be treated as a long-term capital loss to the extent of any distribution of
long-term capital gain to you with respect to those shares. If a loss is realized
on the redemption of fund shares, the reinvestment in additional fund shares
within 30 days before or after the redemption may be subject to the wash sale
rules of the Internal Revenue Code. This may result in a postponement of the
recognition of such loss for federal income tax purposes. </FONT></P>
<P><FONT SIZE=3>If you have not certified to us that your Social Security number
or tax identification number is correct and that you are not subject to 31%
withholding, we are required to withhold and remit 31% of dividends, capital
gains distributions and redemptions to the IRS.</FONT></P>
<P><FONT SIZE=4><B><A NAME="I"></A>Multiple Class Information</B></FONT></P>
<P><FONT SIZE=3>American Century offers two classes of the funds: Investor Class
and Advisor Class. The shares offered by this Prospectus are Advisor Class shares
and are offered primarily through employer-sponsored retirement plans, or through
institutions like banks, broker-dealers and insurance companies.</FONT></P>
<P><FONT SIZE=3>American Century offers another class of shares that has no up-front
or deferred charges, commissions, or 12b-1 fees. The other class has different
fees, expenses and/or minimum investment requirements from the Advisor Class.
The difference in the fee structures between the classes is the result of their
separate arrangements for shareholder and distribution services and not the
result of any difference in amounts charged by the advisor for core investment
advisory services. Accordingly, the core investment advisory expenses do not
vary by class. Different fees and expenses will affect performance. For additional
information concerning the other class of shares not offered by this Prospectus,
call us at 1-800-345-2021 for Investor Class shares. You also can contact a
sales representative or financial intermediary who offers that class of shares.</FONT></P>
<P><FONT SIZE=3>Except as described below, all classes of shares of the funds
have identical voting, dividend, liquidation and other rights, preferences,
terms and conditions. The only differences between the classes are (a) each
class may be subject to different expenses specific to that class; (b) each
class has a different identifying designation or name; (c) each class has exclusive
voting rights with respect to matters solely affecting such class; and (d) each
class may have different exchange privileges.</FONT></P>
<P><FONT SIZE=3><B>Service and Distribution Fees</B></FONT></P>
<P><FONT SIZE=3>Investment Company Act Rule 12b-1 permits mutual funds that adopt
a written plan to pay certain expenses associated with the distribution of their
shares out of fund assets. The funds' Advisor Class shares have a 12b-1 Plan.
Under the Plan, the funds' Advisor Class pays an annual fee of 0.50% of Advisor
Class average net assets, half for certain shareholder and administrative services
and half for distribution services. The advisor, as paying agent for the funds,
pays all or a portion of such fees to the banks, broker-dealers and insurance
companies that make such shares available. Because these fees are paid out of
the funds' assets on an ongoing basis, over time these fees will increase the
cost of your investment and may cost you more than paying other types of sales
charges. For additional information about the Plan and its terms, see <I>Multiple
Class Structure — Master Distribution and Shareholder Services Plan</I> in
the Statement of Additional Information.</FONT></P>
<P><FONT SIZE=4><B><A NAME="J"></A>Financial Highlights</B></FONT></P>
<P><FONT SIZE=3><B>Understanding the Financial Highlights</B></FONT></P>
<P><FONT SIZE=3>The tables on the next few pages itemize what contributed to the
changes in share price during the most recently ended fiscal year. They also
show the changes in share price for this period in comparison to changes over
the last five fiscal years.</FONT></P>
<P><FONT SIZE=3>On a per-share basis, each table includes as appropriate</FONT></P>
<UL>
<LI><FONT SIZE=3>share price at the beginning of the period</FONT></LI>
<LI><FONT SIZE=3>investment income and capital gains or losses</FONT></LI>
<LI><FONT SIZE=3>distributions of income and capital gains paid to investors</FONT></LI>
<LI><FONT SIZE=3>share price at the end of the period</FONT></LI>
</UL>
<P><FONT SIZE=3>Each table also includes some key statistics for the period as
appropriate</FONT></P>
<UL>
<LI><FONT SIZE=2><B><FONT size="3">Total Return</FONT></B><FONT size="3"> —
the overall percentage of return of the fund, assuming the <BR>
reinvestment of all distributions</FONT></FONT></LI>
<LI><FONT SIZE=3><B>Expense Ratio</B> — operating expenses as a percentage
of average net assets</FONT></LI>
<LI><FONT SIZE=3><B>Net Income Ratio</B> — net investment income as a percentage
of average net assets</FONT></LI>
<LI><FONT SIZE=3><B>Portfolio Turnover</B> — the percentage of the fund's
buying and selling activity</FONT></LI>
</UL>
<P><FONT SIZE=3>The Financial Highlights have been audited by Deloitte & Touche
LLP, independent auditors. Their Independent Auditors' Report is included in the funds' annual
report for the year ended November 30, 1999, which is incorporated by reference
into the Statement of Additional Information, and is available upon request.</FONT></P>
<P><FONT SIZE=4><B>Strategic Allocation: Conservative Fund </B></FONT></P>
<P><FONT SIZE=3>Advisor Class</FONT></P>
<P><FONT SIZE=3><I>For a Share Outstanding Throughout the Years Ended November
30 (except as noted)</I></FONT></P>
<P><FONT SIZE=3><B>Per-Share Data</B></FONT></P>
1999 1998 1997 1996(1)
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 5.59 $ 5.56 $ 5.26 $5.09
----------------------------------------------
Income From Investment Operations
Net Investment Income(2) 0.15 0.17 0.17 0.03
Net Realized and Unrealized Gain on Investment Transactions 0.30 0.31 0.38 0.14
----------------------------------------------
Total From Investment Operations 0.45 0.48 0.55 0.17
----------------------------------------------
Distributions
From Net Investment Income (0.16) (0.19) (0.16) --
From Net Realized Gain on Investment Transactions (0.19) (0.26) (0.09) --
----------------------------------------------
Total Distributions (0.35) (0.45) (0.25) --
----------------------------------------------
Net Asset Value, End of Period $ 5.69 $ 5.59 $ 5.56 $5.26
==============================================
Total Return(3) 8.32% 9.06% 10.77% 3.34%
<P><FONT SIZE=3><B>Ratios/Supplemental Data</B></FONT></P>
1999 1998 1997 1996(1)
- --------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 1.25% 1.25% 1.25% 1.25%(4)
Ratio of Net Investment Income to Average Net Assets 2.76% 3.10% 3.23% 3.25%(4)
Portfolio Turnover Rate 105% 113% 124% 44%
Net Assets, End of Period (in thousands) $8,876 $6,596 $4,253 $3,973
<OL>
<LI><FONT SIZE=2><I>October 2, 1996 (commencement of sale) through November
30, 1996.</I></FONT></LI>
<LI><FONT SIZE=2><I>Computed using average shares outstanding throughout the
period.</I></FONT></LI>
<LI><FONT SIZE=2><I>Total return assumes reinvestment of dividends and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized.</I></FONT></LI>
<LI><FONT SIZE=2><I>Annualized.</I></FONT></LI>
</OL>
<P><FONT SIZE=4><B>Strategic Allocation: Moderate Fund</B></FONT></P>
<P><FONT SIZE=3>Advisor Class</FONT></P>
<P><FONT SIZE=3><I>For a Share Outstanding Throughout the Years Ended November
30 (except as noted)</I></FONT></P>
<P><FONT SIZE=3><B>Per-Share Data</B></FONT></P>
1999 1998 1997 1996(1)
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 6.22 $ 5.98 $ 5.42 $5.24
----------------------------------------------
Income From Investment Operations
Net Investment Income(2) 0.11 0.13 0.12 0.02
Net Realized and Unrealized Gain on Investment Transactions 0.88 0.45 0.56 0.16
----------------------------------------------
Total From Investment Operations 0.99 0.58 0.68 0.18
----------------------------------------------
Distributions
From Net Investment Income (0.11) (0.14) (0.11) --
From Net Realized Gain on Investment Transactions (0.21) (0.20) (0.01) --
----------------------------------------------
Total Distributions (0.32) (0.34) (0.12) --
----------------------------------------------
Net Asset Value, End of Period $ 6.89 $ 6.22 $ 5.98 $5.42
==============================================
Total Return(3) 16.66% 10.07% 12.72% 3.44%
<P><FONT SIZE=3><B>Ratios/Supplemental Data</B></FONT></P>
1999 1998 1997 1996(1)
- --------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 1.35% 1.35% 1.35% 1.35%(4)
Ratio of Net Investment Income to Average Net Assets 1.67% 2.13% 2.18% 2.10%(4)
Portfolio Turnover Rate 107% 127% 119% 78%
Net Assets, End of Period (in thousands) $15,979 $13,251 $8,573 $7,566
<OL>
<LI><FONT SIZE=2><I>October 2, 1996 (commencement of sale) through November
30, 1996.</I></FONT></LI>
<LI><FONT SIZE=2><I>Computed using average shares outstanding throughout the
period.</I></FONT></LI>
<LI><FONT SIZE=2><I>Total return assumes reinvestment of dividends and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized.</I></FONT></LI>
<LI><FONT SIZE=2><I>Annualized.</I></FONT></LI>
</OL>
<P><FONT SIZE=4><B>Strategic Allocation: Aggressive Fund</B></FONT></P>
<P><FONT SIZE=3>Advisor Class</FONT></P>
<P><FONT SIZE=3><I>For a Share Outstanding Throughout the Years Ended November
30 (except as noted)</I></FONT></P>
<P><FONT SIZE=3><B>Per-Share Data</B></FONT></P>
1999 1998 1997 1996(1)
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 6.52 $ 6.23 $ 5.53 $5.37
----------------------------------------------
Income From Investment Operations
Net Investment Income(2) 0.05 0.08 0.07 0.01
Net Realized and Unrealized Gain on Investment Transactions 1.55 0.49 0.67 0.15
----------------------------------------------
Total From Investment Operations 1.60 0.57 0.74 0.16
----------------------------------------------
Distributions
From Net Investment Income (0.06) (0.07) (0.04) --
From Net Realized Gain on Investment Transactions (0.17) (0.21) -- --
----------------------------------------------
Total Distributions (0.23) (0.28) (0.04) --
----------------------------------------------
Net Asset Value, End of Period $ 7.89 $ 6.52 $ 6.23 $5.53
==============================================
Total Return(3) 25.46% 9.66% 13.43% 2.98%
<P><FONT SIZE=3><B>Ratios/Supplemental Data</B></FONT></P>
1999 1998 1997 1996(1)
- ---------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 1.45% 1.45% 1.45% 1.45%(4)
Ratio of Net Investment Income to Average Net Assets 0.77% 1.24% 1.33% 1.31%(4)
Portfolio Turnover Rate 115% 134% 135% 64%
Net Assets, End of Period (in thousands) $13,417 $10,228 $8,095 $5,872
<OL>
<LI><FONT SIZE=2><I>October 2, 1996 (commencement of sale) through November
30, 1996.</I></FONT></LI>
<LI><FONT SIZE=2><I>Computed using average shares outstanding throughout the
period.</I></FONT></LI>
<LI><FONT SIZE=2><I>Total return assumes reinvestment of dividends and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized.</I></FONT></LI>
<LI><FONT SIZE=2><I>Annualized.</I></FONT></LI>
</OL>
<P><FONT SIZE=4><B><A NAME="K"></A>Performance Information of Other Class</B></FONT></P>
<P><FONT SIZE=3>The following financial information is provided to show the performance
of the funds' original class of shares. This class, the Investor Class, has
a total expense ratio that is 0.25% lower than the Advisor Class. If the Advisor
Class had existed during the periods presented, its performance would have been
lower because of the additional expense.</FONT></P>
<P><FONT SIZE=3>The tables on the next few pages itemize what contributed to the
changes in share price during the most recently ended fiscal year. They also
show the changes in share price for this period in comparison to changes over
the last five fiscal years.</FONT></P>
<P><FONT SIZE=3>On a per-share basis, each table includes as appropriate</FONT></P>
<UL>
<LI><FONT SIZE=3>share price at the beginning of the period</FONT></LI>
<LI><FONT SIZE=3>investment income and capital gains or losses</FONT></LI>
<LI><FONT SIZE=3>distributions of income and capital gains paid to investors</FONT></LI>
<LI><FONT SIZE=3>share price at the end of the period</FONT></LI>
</UL>
<P><FONT SIZE=3>Each table also includes some key statistics for the period as
appropriate</FONT></P>
<UL>
<LI><FONT SIZE=3><B>Total Return </B>— the overall percentage of return
of the fund, assuming the <BR>
reinvestment of all distributions</FONT></LI>
<LI><FONT SIZE=3><B>Expense Ratio</B> — operating expenses as a percentage
of average net assets</FONT></LI>
<LI><FONT SIZE=3><B>Net Income Ratio</B> — net investment income as a percentage
of average net assets</FONT></LI>
<LI><FONT SIZE=3><B>Portfolio Turnover</B> — the percentage of the fund's
buying and selling activity</FONT></LI>
</UL>
<P><FONT SIZE=3>The Financial Highlights have been audited by Deloitte & Touche
LLP, independent <BR>
auditors. Their Independent Auditors' Report is included in the funds' annual
report for the year ended November 30, 1999, which is incorporated by reference
into the Statement of Additional Information, and is available upon request.</FONT></P>
<P><FONT SIZE=4><B>Strategic Allocation: Conservative Fund</B></FONT></P>
<P><FONT SIZE=3>Investor Class</FONT></P>
<P><FONT SIZE=3><I>For a Share Outstanding Throughout the Years Ended November
30 (except as noted)</I></FONT></P>
<P><FONT SIZE=3><B>Per-Share Data</B></FONT></P>
1999 1998 1997 1996(1)
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 5.59 $ 5.55 $ 5.26 $ 5.00
----------------------------------------------
Income From Investment Operations
Net Investment Income(2) 0.17 0.18 0.19 0.13
Net Realized and Unrealized Gain on Investment Transactions 0.28 0.31 0.36 0.22
----------------------------------------------
Total From Investment Operations 0.45 0.49 0.55 0.35
Distributions
From Net Investment Income (0.16) (0.19) (0.17) (0.09)
From Net Realized Gain on Investment Transactions (0.19) (0.26) (0.09) --
----------------------------------------------
Total Distributions (0.35) (0.45) (0.26) (0.09)
----------------------------------------------
Net Asset Value, End of Period $ 5.69 $ 5.59 $ 5.55 $ 5.26
==============================================
Total Return(3) 8.47% 9.43% 10.87% 7.02%
<P><FONT SIZE=3><B>Ratios/Supplemental Data</B></FONT></P>
1999 1998 1997 1996(1)
- ---------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 1.00% 1.00% 1.00% 1.01%(4)
Ratio of Net Investment Income to Average Net Assets 3.01% 3.35% 3.48% 3.67%(4)
Portfolio Turnover Rate 105% 113% 124% 44%
Net Assets, End of Period (in thousands) $167,083 $180,970 $156,733 $33,110
<OL>
<LI><FONT SIZE=2><I>February 15, 1996 (inception) through November 30, 1996.</I></FONT></LI>
<LI><FONT SIZE=2><I>Computed using average shares outstanding throughout the
period.</I></FONT></LI>
<LI><FONT SIZE=2><I>Total return assumes reinvestment of dividends and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized.</I></FONT></LI>
<LI><FONT SIZE=2><I>Annualized.</I></FONT></LI>
</OL>
<P><FONT SIZE=4><B>Strategic Allocation: Moderate Fund</B></FONT></P>
<P><FONT SIZE=3>Investor Class</FONT></P>
<P><FONT SIZE=3><I>For a Share Outstanding Throughout the Years Ended November
30 (except as noted)</I></FONT></P>
<P><FONT SIZE=3><B>Per-Share Data</B></FONT></P>
1999 1998 1997 1996(1)
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 6.22 $ 5.98 $ 5.42 $ 5.00
----------------------------------------------
Income From Investment Operations
Net Investment Income(2) 0.12 0.15 0.14 0.10
Net Realized and Unrealized Gain on Investment Transactions 0.88 0.45 0.56 0.39
----------------------------------------------
Total From Investment Operations 1.00 0.60 0.70 0.49
Distributions
From Net Investment Income (0.12) (0.16) (0.13) (0.07)
From Net Realized Gain on Investment Transactions (0.21) (0.20) (0.01) --
----------------------------------------------
Total Distributions (0.33) (0.36) (0.14) (0.07)
----------------------------------------------
Net Asset Value, End of Period $ 6.89 $ 6.22 $ 5.98 $ 5.42
==============================================
Total Return(3) 16.97% 10.32% 13.02% 9.91%
<P><FONT SIZE=3><B>Ratios/Supplemental Data</B></FONT></P>
1999 1998 1997 1996(1)
- -----------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 1.10% 1.10% 1.10% 1.10%(4)
Ratio of Net Investment Income to Average Net Assets 1.92% 2.38% 2.43% 2.52%(4)
Portfolio Turnover Rate 107% 127% 119% 78%
Net Assets, End of Period (in thousands) $375,592 $261,721 $201,384 $57,836
<OL>
<LI><FONT SIZE=2><I>February 15, 1996 (inception) through November 30, 1996.</I></FONT></LI>
<LI><FONT SIZE=2><I>Computed using average shares outstanding throughout the
period.</I></FONT></LI>
<LI><FONT SIZE=2><I>Total return assumes reinvestment of dividends and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized.</I></FONT></LI>
<LI><FONT SIZE=2><I>Annualized.</I></FONT></LI>
</OL>
<P><FONT SIZE=4><B>Strategic Allocation: Aggressive Fund</B></FONT></P>
<P><FONT SIZE=3>Investor Class</FONT></P>
<P><FONT SIZE=3><I>For a Share Outstanding Throughout the Years Ended November
30 (except as noted)</I></FONT></P>
<P><FONT SIZE=3><B>Per-Share Data</B></FONT></P>
1999 1998 1997 1996(1)
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 6.54 $ 6.25 $ 5.53 $ 5.00
----------------------------------------------
Income From Investment Operations
Net Investment Income(2) 0.07 0.10 0.09 0.07
Net Realized and Unrealized Gain on Investment Transactions 1.55 0.49 0.67 0.46
----------------------------------------------
Total From Investment Operations 1.62 0.59 0.76 0.53
Distributions
From Net Investment Income (0.08) (0.09) (0.04) --
From Net Realized Gain on Investment Transactions (0.17) (0.21) -- --
----------------------------------------------
Total Distributions (0.25) (0.30) (0.04) --
----------------------------------------------
Net Asset Value, End of Period $ 7.91 $ 6.54 $ 6.25 $ 5.53
==============================================
Total Return(3) 25.69% 9.93% 13.84% 10.60%
<P><FONT SIZE=3><B>Ratios/Supplemental Data</B></FONT></P>
1999 1998 1997 1996(1)
- -----------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 1.20% 1.20% 1.20% 1.20%(4)
Ratio of Net Investment Income to Average Net Assets 1.02% 1.49% 1.58% 1.72%(4)
Portfolio Turnover Rate 115% 134% 135% 64%
Net Assets, End of Period (in thousands) $192,831 $145,125 $109,497 $46,276
<OL>
<LI><FONT SIZE=2><I>February 15, 1996 (inception) through November 30, 1996.</I></FONT></LI>
<LI><FONT SIZE=2><I>Computed using average shares outstanding throughout the
period.</I></FONT></LI>
<LI><FONT SIZE=2><I>Total return assumes reinvestment of dividends and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized.</I></FONT></LI>
<LI><FONT SIZE=2><I>Annualized.</I></FONT></LI>
</OL>
<P><FONT SIZE=3>More information about the funds is contained in these documents</FONT></P>
<P><FONT SIZE=3><B>Annual and Semiannual Reports </B></FONT></P>
<P><FONT SIZE=3>These reports contain more information about the funds' investments
and the market conditions and investment strategies that significantly affected
the funds' performance during the most recent fiscal period.</FONT></P>
<P><FONT SIZE=3><B>Statement of Additional Information (SAI) </B></FONT></P>
<P><FONT SIZE=3>The SAI contains a more detailed, legal description of the funds'
operations, investment restrictions, policies and practices. The SAI is incorporated
by reference into this Prospectus. This means that it is legally part of this
Prospectus, even if you don't request a copy.</FONT></P>
<P><FONT SIZE=3>You may obtain a free copy of the SAI or annual and semiannual
reports, and ask questions about the funds or your accounts, by contacting American
Century at the address or telephone numbers listed below.</FONT></P>
<P><FONT SIZE=3>You also can get information about the funds (including the SAI)
from the Securities and Exchange Commission (SEC). The SEC charges a duplicating
fee to provide copies of this information.</FONT></P>
<TABLE cellspacing=0 border=0 width=600>
<TR>
<TD valign="TOP">
<P><FONT size="3"><I>In person </I></FONT>
</TD>
<TD valign="TOP">
<P><FONT size=2><FONT size="3">SEC Public Reference Room<BR>
</FONT><FONT size="3">Washington, D.C.<BR>
</FONT><FONT size="3">Call 202-942-8090 for location and hours.<BR>
</FONT></FONT></P>
</TD>
</TR>
<TR>
<TD valign="TOP">
<P><FONT size=3><I>On the Internet </I> </FONT>
</TD>
<TD valign="TOP">
<UL>
<LI><FONT size="3">EDGAR database at www.sec.gov </FONT></LI>
<LI><FONT size="3">By email request at [email protected]<BR>
</FONT></LI>
</UL>
</TD>
</TR>
<TR>
<TD valign="TOP">
<P><FONT size=3><I>By mail </I> </FONT>
</TD>
<TD valign="TOP">
<P><FONT size=3>SEC Public Reference Section <BR>
Washington, D.C. 20549-0102 </FONT></P>
</TD>
</TR>
</TABLE>
<BR>
<P><FONT size="2">Investment Company Act File No. 811-8532</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=3>[AMERICAN CENTURY LOGO]</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=3>American Century Investments<BR>
P.O. Box 419200<BR>
Kansas City, Missouri 64141-6200</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=3>1-800-345-2021 or 816-531-5575</FONT></P>
<P><FONT SIZE=2>0004<BR>
SH-PRS-19559</FONT></P>
<P><FONT SIZE=4><B>Notes</B></FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=4><B>Notes</B></FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P><FONT SIZE=2> </FONT></P>
<TABLE border="0" cellspacing="0" cellpadding="0" width="600">
<TR>
<TD width="241"> </TD>
<TD width="359">
<P><FONT size="6"><I>Your <BR>
</I>A<FONT size="5">MERICAN</FONT> C<FONT size="5">ENTURY</FONT><I><BR>
prospectus</I></FONT></P>
<P> </P>
<P><FONT size="3"><B>Strategic Allocation: Conservative Fund</B></FONT></P>
<P><FONT size="3"><B>Strategic Allocation: Moderate Fund</B></FONT></P>
<P><FONT size="3"><B>Strategic Allocation: Aggressive Fund</B></FONT></P>
<P> </P>
</TD>
</TR>
<TR>
<TD valign="top" width="241">
<P align="RIGHT"><FONT size="3">April 1, 2000<BR>
Investor Class</FONT></P>
<P align="RIGHT"><FONT size="3"><I>The Securities and Exchange Commission
has not approved or disapproved these securities or determined if this
Prospectus is accurate or complete. Anyone who tells you otherwise is
committing a crime.</I></FONT></P>
<P align="RIGHT"><FONT size="3">Funds Distributor, Inc.<BR>
and American Century<BR>
Investment Services, Inc.,<BR>
Distributors</FONT></P>
<P align="right">
<P align="right"> </P>
</TD>
<TD width="359"> </TD>
</TR>
<TR>
<TD width="241"> </TD>
<TD valign="top" width="359">
<DIV align="right"><FONT size=3>[AMERICAN CENTURY LOGO]</FONT></DIV>
</TD>
</TR>
</TABLE>
<P><FONT SIZE=2> </FONT></P>
<TABLE border="0" cellspacing="0" cellpadding="0" width="600">
<TR valign="top">
<TD width="118">
<DIV align="center"><FONT size=3>[AMERICAN<BR>
CENTURY<BR>
LOGO]</FONT></DIV>
</TD>
<TD width="22"> </TD>
<TD width="460"> </TD>
</TR>
<TR valign="top">
<TD width="118">
<P> </P>
<P align="center"><FONT size="3"><I>American Century<BR>
Investments</I></FONT></P>
<P align="center"><I><FONT size="3">P.O. Box 419200<BR>
Kansas City, MO<BR>
64141-6200</FONT></I></P>
</TD>
<TD width="22"> </TD>
<TD width="460">
<P><FONT size="3">Dear Investor,</FONT></P>
<P><FONT size="3">Planning and maintaining your investment portfolio is
a big job. However, an easy-to-understand Prospectus can make your work
a lot less daunting. We hope you'll find this Prospectus easy to understand,
and more importantly, that it gives you confidence in the investment decisions
you have made or are soon to make.</FONT></P>
<P><FONT size="3">As you begin to read through this Prospectus, take a look
at the table of contents to understand how it is organized. The first
four sections take a close-up look at the funds.</FONT></P>
<P><FONT size="3"><I>An Overview of the Funds </I>— Learn about fund
goals, strategies and risks, and who may or may not want to invest.</FONT></P>
<P><FONT size="3"><I>Fund Performance History</I> — See how the funds
performed from year to year.</FONT></P>
<P><FONT size="3"><I>Fees and Expenses</I> — Find out about fund management
fees and other expenses associated with investing.</FONT></P>
<P><FONT size="3"><I>Objectives, Strategies and Risks</I> — Take a
more detailed look at the principal investment objectives, strategies
and risks presented in the <I>Overview of the Funds</I> section. </FONT></P>
<P><FONT size="3">As you continue to read, the <I>Management</I> section
will acquaint you with the fund management team, and <I>Investing with
American Century</I> gives an overview about how to invest and manage
your account.</FONT></P>
<P><FONT size="3"><I>Share Price and Distributions, Taxes, </I>and<I> Financial
Highlights </I>wrap up the Prospectus with important financial information
you'll need to make an informed decision.</FONT></P>
<P><FONT size="3">Naturally, you may have questions about investing after
you read through the Prospectus. Our Web site, www.americancentury.com,
offers information that could answer many of your questions. Or, an Investor
Relations Representative will be happy to help weekdays, 7 a.m. to 7 p.m.
and Saturdays, 9 a.m. to 2 p.m. Central time. Give us a call at 1-800-345-2021.</FONT></P>
<P><FONT size="3">Sincerely,</FONT></P>
<P><FONT size="3">/s/ Mark Killen</FONT></P>
<P><FONT size="3">Mark Killen<BR>
Senior Vice President<BR>
American Century Investment Services, Inc.</FONT></P>
</TD>
</TR>
</TABLE>
<P><FONT SIZE=2><FONT size="3"><BR>
</FONT><FONT size="4"><B>Table of Contents</B></FONT></FONT></P>
<P><FONT SIZE=3><A href="#ZA">An Overview of the Funds</A></FONT></P>
<P><FONT SIZE=3><A href="#ZB">Fund Performance History</A></FONT></P>
<P><FONT SIZE=3><A href="#ZC">Fees and Expenses</A></FONT></P>
<P><FONT SIZE=3><A href="#ZD">Objectives, Strategies and Risks</A></FONT></P>
<P><FONT SIZE=3> Strategic Allocation: Conservative
Fund</FONT></P>
<P><FONT SIZE=3> Strategic Allocation: Moderate
Fund</FONT></P>
<P><FONT SIZE=3> Strategic Allocation: Aggressive
Fund</FONT></P>
<P><FONT SIZE=3><A href="#ZE">Management</A></FONT></P>
<P><FONT SIZE=3><A href="#ZF">Investing with American Century</A></FONT></P>
<P><FONT SIZE=3><A href="#ZG">Share Price and Distributions</A></FONT></P>
<P><FONT SIZE=3><A href="#ZH">Taxes</A></FONT></P>
<P><FONT SIZE=3><A href="#ZI">Multiple Class Information</A></FONT></P>
<P><FONT SIZE=3><A href="#ZJ">Financial Highlights</A></FONT></P>
<P><FONT SIZE=3><I>Throughout this book you'll find definitions of key investment
terms and phrases. When you see a word printed in blue italics, look for its
definition in the left margin.</I></FONT></P>
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <I>This symbol highlights special
information and helpful tips.</I></FONT></P>
<P><FONT SIZE=4><B><A NAME="ZA"></A>An Overview of the Funds</B></FONT></P>
<P><FONT SIZE=3><B>What are the funds' investment objectives?</B></FONT></P>
<P><FONT SIZE=3>These funds are asset allocation funds. They seek the highest
level of total return consistent with their risk profiles. The risk profiles
of the funds vary because they invest in different mixes of asset types, such
as stocks, bonds and money market instruments. </FONT></P>
<P><FONT SIZE=3><I><B>Total return</B> includes capital appreciation plus dividend and interest
income.</I></FONT></P>
<P><FONT SIZE=3><B>What are the funds' primary investment strategies and principal
risks?</B></FONT></P>
<P><FONT SIZE=3>The following table indicates each fund's neutral mix. The neutral
mix represents a benchmark as to how a fund's investments generally will be
allocated among the major asset classes over the long term.</FONT></P>
Equity Fixed-Income or
Securities Debt Securities Cash
Fund (Stocks) (Bonds) Equivalents
- ------------------------------------------------------------------------------------------
Strategic Allocation: Conservative 45% 45% 10%
- ------------------------------------------------------------------------------------------
Strategic Allocation: Moderate 63% 31% 6%
- ------------------------------------------------------------------------------------------
Strategic Allocation: Aggressive 78% 20% 2%
<P><FONT SIZE=3>In selecting stocks for the equity portion of the funds, the fund
managers may choose stocks of U.S. or foreign companies of any size. The fund
managers invest the fixed-income portion of the funds primarily in investment-grade
debt securities.</FONT></P>
<P><FONT SIZE=3><B>The funds' principal risks include</B></FONT></P>
<UL>
<LI><FONT SIZE=3><B>Market Risk</B> — The value of a fund's shares will
go up and down based on the performance of the companies whose securities
it owns and other factors generally affecting the securities market.</FONT></LI>
<LI><FONT SIZE=3><B>Interest Rate Risk</B> — When interest rates change,
the value of the funds' fixed-income securities will be affected.</FONT></LI>
<LI><FONT SIZE=3><B>Credit Risk</B> — The value of a fund's fixed-income
securities also will be affected by the continued ability of the issuers of
these securities to make interest and principal payments as they become due.
</FONT></LI>
<LI><FONT SIZE=3><B>Principal Loss</B> — As with all mutual funds, if you
sell your shares when their value is less than the price you paid, you will
lose money.</FONT></LI>
</UL>
<P><FONT SIZE=3><B>Who <I>may</I> want to invest in the funds?</B></FONT></P>
<P><FONT SIZE=3>The funds may be a good investment if you are</FONT></P>
<UL>
<LI><FONT SIZE=3>seeking funds that combine the potential for long-term capital
growth with income</FONT></LI>
<LI><FONT SIZE=3>seeking the convenience of funds that invest in both equity
and fixed-income securities</FONT></LI>
<LI><FONT SIZE=3>comfortable with the risks associated with the funds' investment
strategy</FONT></LI>
<LI><FONT SIZE=3>investing through an IRA or other tax-advantaged retirement
plan</FONT></LI>
</UL>
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <I>An investment in the funds
is not a bank deposit, and it is not insured or guaranteed by the Federal Deposit
Insurance Corporation (FDIC) or any other government agency.</I> </FONT></P>
<P><FONT SIZE=3><B>Who <I>may not</I> want to invest in the funds?</B></FONT></P>
<P><FONT SIZE=3>The funds may not be a good investment if you are</FONT></P>
<UL>
<LI><FONT SIZE=3>not seeking current income from your investment</FONT></LI>
<LI><FONT SIZE=3>investing for a short period of time</FONT></LI>
<LI><FONT SIZE=3>uncomfortable with volatility in the value of your investment</FONT></LI>
</UL>
<P><FONT SIZE=4><B><A NAME="ZB"></A>Fund Performance History</B></FONT></P>
<P><FONT SIZE=3><B>Strategic Allocation: Conservative Fund</B></FONT></P>
<P><FONT SIZE=3><B>Strategic Allocation: Moderate Fund</B></FONT></P>
<P><FONT SIZE=3><B>Strategic Allocation: Aggressive Fund</B></FONT></P>
<P><FONT SIZE=3><B>Annual Total Returns</B></FONT></P>
<P><FONT SIZE=3>The following bar chart shows the performance of the funds' Investor
Class shares for each full calendar year in the life of each fund. It indicates
the volatility of the funds' historical returns from year to year. </FONT></P>
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <I>The performance information
on this page is designed to help you see how the funds' returns can vary. Keep
in mind that past performance does not predict how the funds will perform in
the future.</I></FONT></P>
<P align="center"><FONT SIZE=3>[GRAPHIC OMITTED]</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=3>[The following table was depicted as a bar graph
in the printed material.]</FONT></P>
1997 1998 1999
Strategic Allocation Fund: Conservative 12.84% 10.53% 11.17%
Strategic Allocation Fund: Moderate 15.24% 12.75% 22.28%
Strategic Allocation Fund: Aggressive 16.23% 13.80% 33.83%
<P><FONT SIZE=3>The highest and lowest quarterly returns for the period reflected
in the bar chart are: </FONT></P>
Highest Lowest
- --------------------------------------------------------------------------------
Conservative 9.40% (4Q 1999) -2.95% (3Q 1998)
- --------------------------------------------------------------------------------
Moderate 17.38% (4Q 1999) -7.60% (3Q 1998)
- --------------------------------------------------------------------------------
Aggressive 25.34% (4Q 1999) -11.09% (3Q 1998)
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <I>For current performance
information, please call us at 1-800-345-2021 or visit American Century's Web
site at www.americancentury.com.</I></FONT></P>
<P><FONT SIZE=3><B>Average Annual Total Returns</B></FONT></P>
<P><FONT SIZE=3>The following table shows the average annual total returns of
the funds' Investor Class shares for the periods indicated. The benchmarks are
unmanaged indices that have no operating costs and are included in the table
for performance comparison. </FONT></P>
For the calendar year ended December 31, 1999 1 year Life of Fund(1)
- --------------------------------------------------------------------------------
Strategic Allocation: Conservative 11.17% 10.57%
- --------------------------------------------------------------------------------
Strategic Allocation: Moderate 22.28% 15.31%
- --------------------------------------------------------------------------------
Strategic Allocation: Aggressive 33.83% 18.71%
- --------------------------------------------------------------------------------
S&P 500 Index 21.04% 26.22%(2)
- --------------------------------------------------------------------------------
Lehman Aggregate Bond Index -0.82% 5.73%(2)
- --------------------------------------------------------------------------------
Three-Month U.S. Treasury Bill 4.74% 4.97%(2)
<OL>
<LI><FONT SIZE=2><I>The inception date for the funds' Investor Class was February
15, 1996.</I></FONT></LI>
<LI><FONT SIZE=2><I>Since February 29, 1996, the date closest to the funds'
inception for which data are available. </I></FONT></LI>
</OL>
<P><FONT SIZE=4><B><A NAME="ZC"></A>Fees and Expenses</B></FONT></P>
<P><FONT SIZE=3>There are no sales loads, fees or other charges </FONT></P>
<UL>
<LI><FONT SIZE=3>to buy fund shares directly from American Century</FONT></LI>
<LI><FONT SIZE=3>to reinvest dividends in additional shares</FONT></LI>
<LI><FONT SIZE=3>to exchange into the Investor Class shares of other American
Century funds</FONT></LI>
<LI><FONT SIZE=3>to redeem your shares</FONT></LI>
</UL>
<P><FONT SIZE=3>The following table describes the fees and expenses you will pay
if you buy and hold shares of the funds.</FONT></P>
<P><FONT SIZE=3><B>Annual Operating Expenses (expenses that are deducted from
fund assets)</B></FONT></P>
Management Distribution and Other Total Annual Fund
Fee(1) Service (12b-1) Fees Expenses(2) Operating Expenses
- ------------------------------------------------------------------------------------------------------------------------
Strategic Allocation: Conservative 1.00% None 0.00% 1.00%
- ------------------------------------------------------------------------------------------------------------------------
Strategic Allocation: Moderate 1.10% None 0.00% 1.10%
- ------------------------------------------------------------------------------------------------------------------------
Strategic Allocation: Aggressive 1.20% None 0.00% 1.20%
<OL>
<LI><FONT SIZE=2><I>Based on expenses incurred during the funds' most recent
fiscal year. The funds have stepped fee schedules. As a result, the funds'
management fee rate generally decreases as fund assets increase.</I></FONT></LI>
<LI><FONT SIZE=2><I>Other expenses, which include the fees and expenses of the
funds' independent directors and their legal counsel as well as interest,
were less than 0.005% for the most recent fiscal year.</I></FONT></LI>
</OL>
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <I>Use this example to compare
the costs of investing in other funds. Of course, your actual costs may be higher
or lower. </I></FONT></P>
<P><FONT SIZE=3><B>Example</B></FONT></P>
<P><FONT SIZE=3>The examples in the table below are intended to help you compare
the costs of investing in a fund with the costs of investing in other mutual
funds. Assuming you . . .</FONT></P>
<UL>
<LI><FONT SIZE=3>invest $10,000 in the fund</FONT></LI>
<LI><FONT SIZE=3>redeem all of your shares at the end of the periods shown below
</FONT></LI>
<LI><FONT SIZE=3>earn a 5% return each year </FONT></LI>
<LI><FONT SIZE=3>incur the same operating expenses as shown above</FONT></LI>
</UL>
<P><FONT SIZE=3>. . . your cost of investing in the fund would be:</FONT></P>
1 year 3 years 5 years 10 years
- ---------------------------------------------------------------------------------------
Strategic Allocation: Conservative $102 $318 $551 $1,219
- ---------------------------------------------------------------------------------------
Strategic Allocation: Moderate $112 $349 $604 $1,334
- ---------------------------------------------------------------------------------------
Strategic Allocation: Aggressive $122 $380 $657 $1,447
<P><FONT SIZE=4><B><A NAME="ZD"></A>Objectives, Strategies and Risks</B></FONT></P>
<P><FONT SIZE=3><B>Strategic Allocation: Conservative Fund</B></FONT></P>
<P><FONT SIZE=3><B>Strategic Allocation: Moderate Fund</B></FONT></P>
<P><FONT SIZE=3><B>Strategic Allocation: Aggressive Fund</B></FONT></P>
<P><FONT SIZE=3><B>What are the funds' investment objectives?</B></FONT></P>
<P><FONT SIZE=3>The funds are asset allocation funds. That is, they diversify
their assets among various classes of investments such as stocks, bonds and
money market instruments. Each fund holds a different mix of these asset types,
which gives it a distinct risk profile and return potential.</FONT></P>
<UL>
<LI><FONT SIZE=3><B>Strategic Allocation: Conservative</B> seeks regular income
through its emphasis on bonds and money market securities. It also has the
potential for moderate long-term total return as a result of its stake in
equity securities.</FONT></LI>
<LI><FONT SIZE=3><B>Strategic Allocation: Moderate</B> seeks long-term capital
growth with some regular income. It emphasizes investments in equity securities,
but maintains a sizeable stake in bonds and money market securities.</FONT></LI>
<LI><FONT SIZE=3><B>Strategic Allocation: Aggressive</B> seeks long-term capital
growth with a small amount of income. It emphasizes investments in equity
securities, but maintains a portion of its assets in bonds and money market
securities.</FONT></LI>
</UL>
<P><FONT SIZE=3>You should be aware that the names of the three asset allocation
funds offered in this Prospectus are intended to reflect the relative short-term
price volatility risk among the funds and are not an indication of the advisor's
assessment of the riskiness of the funds as compared to other mutual funds,
including other mutual funds within the American Century family of funds.</FONT></P>
<P><FONT SIZE=3><B>How do the funds pursue their investment objectives?</B></FONT></P>
<P><FONT SIZE=3>The funds' strategic asset allocation strategy diversifies investments
among equity securities, bonds and cash-equivalent instruments. The funds may
invest in any type of U.S. or foreign equity security that meets certain fundamental
and technical standards. The fund advisor draws on growth, value and quantitative
investment techniques in managing the equity portion of the funds' portfolios
and diversifies the funds' equity investments among small, medium and large
companies.</FONT></P>
<P><FONT SIZE=3>The growth strategy looks for companies with earnings and revenues
that are not only growing, but growing at a successively faster, or accelerating,
pace. This strategy is based on the premise that, over the long term, the stocks
of companies with accelerating earnings and revenues have a greater-than-average
chance to increase in value. The value investment discipline seeks capital growth
by investing in equity securities of well-established companies that the funds'
managers believe to be temporarily undervalued. The primary quantitative management
technique the managers use is portfolio optimization. The managers may construct
a portion of the funds' portfolios to match the risk characteristics of the
S&P 500 and then optimize each portfolio to achieve the desired balance
of risk and return potential. </FONT></P>
<P><FONT SIZE=3>Although the funds will remain exposed to each of the investment
disciplines and categories described above, a particular discipline or investment
category may be emphasized when, in the managers' opinion, such discipline or
investment category is undervalued relative to the other disciplines or categories.</FONT></P>
<P><FONT SIZE=3>The funds also invest in a variety of debt securities payable
in both U.S. and foreign currencies. The funds primarily invest in investment-grade
securities, that is, securities rated in the four highest categories by independent
rating organizations. However, Strategic Allocation: Moderate may invest up
to 5% of its assets, and Strategic Allocation: Aggressive may invest up to 10%
of its assets, in high-yield securities. High-yield securities are higher risk,
nonconvertible debt obligations that are rated below investment-grade. The funds
may also invest in unrated securities based on the funds' advisor's assessment
of their credit quality. Under normal market conditions, the weighted average
maturity for the fixed-income portfolio will be in the three- to 10-year range.</FONT></P>
<P><FONT SIZE=3>The funds may invest the cash-equivalent portion of their portfolios
in high-quality money market investments (denominated in U.S. dollars or foreign
currencies).</FONT></P>
<P><FONT SIZE=3>The following table shows the operating ranges in which each fund's
asset mix generally will vary over short-term periods. These variations may
be due to differences in asset class performance or prevailing market conditions.</FONT></P>
<P><FONT SIZE=3><B>Operating Ranges</B></FONT></P>
Equity Fixed-Income or
Securities Debt Securities Cash
Fund (Stocks) (Bonds) Equivalents
- ------------------------------------------------------------------------------------------
Strategic Allocation: Conservative 39-51% 38-52% 5-20%
- ------------------------------------------------------------------------------------------
Strategic Allocation: Moderate 53-73% 21-41% 0-15%
- ------------------------------------------------------------------------------------------
Strategic Allocation: Aggressive 63-93% 10-30% 0-15%
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <I>Fixed-income securities
are rated by nationally recognized securities rating organizations (SROs), such
as Moody's and Standard & Poor's. Each SRO has its own system for classifying
securities, but each tries to indicate a company's ability to make timely payments
of interest and principal. A detailed description of SROs, their ratings system
and what we do if a security isn't rated is included in the Statement of Additional
Information.</I></FONT></P>
<P><FONT SIZE=3><B>What are the principal risks of investing in the funds?</B></FONT></P>
<P><FONT SIZE=3>The value of a fund's shares depends on the value of the stocks
and other securities it owns. The value of the individual securities a fund
owns will go up and down depending on the performance of the companies that
issued them, general market and economic conditions, and investor confidence.</FONT></P>
<P><FONT SIZE=3>The value of the funds' fixed-income securities will be affected
primarily by rising or falling interest rates and the continued ability of the
issuers of these securities to make payments of interest and principal as they
become due.</FONT></P>
<P><FONT SIZE=3>When interest rates change, the amount of income a fund generates
will be affected. Generally, when interest rates rise, a fund's income and its
share value will decline. The opposite is true when interest rates decline.</FONT></P>
<P><FONT SIZE=3>The lowest-rated investment-grade bonds in which the funds may
invest contain some speculative characteristics. Having those bonds in the funds'
portfolios means the funds' value may go down more if interest rates or other
economic conditions change than if the funds contained only higher-rated bonds.
In addition, Strategic Allocation: Moderate and Strategic Allocation: Aggressive
may invest in higher-risk high-yield securities, sometimes referred to as junk
bonds. These securities are considered to be predominantly speculative and are
more likely to be negatively affected by changes in interest rates or other
economic conditions.</FONT></P>
<P><FONT SIZE=3>As with all funds, your shares may be worth more or less at any
given time than the price you paid for them. If you sell your shares when the
value is less than the price you paid, you will lose money.</FONT></P>
<P><FONT SIZE=3>Although the fund managers intend to invest the funds' assets
primarily in U.S. securities, the funds may invest in foreign securities. Foreign
investment involves additional risks, including fluctuations in currency exchange
rates, less stable political and economic structures, reduced availability of
public information, and lack of uniform financial reporting and regulatory practices
similar to those that apply in the United States. These factors make investing
in foreign securities generally riskier than investing in U.S. stocks. </FONT></P>
<P><FONT SIZE=3>These funds are intended for investors who seek to diversify their
assets among various classes of investments, such as stocks, bonds and money
market instruments, and who are willing to accept the risks associated with
the funds' investment strategies.</FONT></P>
<P><FONT SIZE=4><B><A NAME="ZE"></A>Management</B></FONT></P>
<P><FONT SIZE=3><B>Who manages the funds?</B></FONT></P>
<P><FONT SIZE=3>The Board of Directors, investment advisor and fund management
team play key roles in the management of the funds.</FONT></P>
<P><FONT SIZE=3><B>The Board of Directors</B></FONT></P>
<P><FONT SIZE=3>The Board of Directors oversees the management of the funds and
meets at least quarterly to review reports about fund operations. Although the
Board of Directors does not manage the funds, it has hired an investment advisor
to do so. More than two-thirds of the directors are independent of the funds'
advisor; that is, they are not employed by and have no financial interest in
the advisor.</FONT></P>
<P><FONT SIZE=3><B>The Investment Advisor</B></FONT></P>
<P><FONT SIZE=3>The funds' investment advisor is American Century Investment Management,
Inc. The advisor has been managing mutual funds since 1958. The advisor is headquartered
at 4500 Main Street, Kansas City, Missouri 64111.</FONT></P>
<P><FONT SIZE=3>The advisor is responsible for managing the investment portfolios
of the funds and directing the purchase and sale of their investment securities.
The advisor also arranges for transfer agency, custody and all other services
necessary for the funds to operate.</FONT></P>
<P><FONT SIZE=3>For the services it provided to the funds during the most recent
fiscal year, the advisor received a unified management fee based on a percentage
of the average net assets of the Investor Class shares of each fund. The amount
of the management fee for a fund is calculated on a class-by-class basis daily
and paid monthly. </FONT></P>
<P><FONT SIZE=3>Out of that fee, the advisor paid all expenses of managing and
operating the funds except brokerage expenses, taxes, interest, fees and expenses
of the independent directors (including legal counsel fees), and extraordinary
expenses. A portion of the management fee may be paid by the funds' advisor
to unaffiliated third parties who provide recordkeeping and administrative services
that would otherwise be performed by an affiliate of the advisor.</FONT></P>
Management Fees Paid by the Funds to the Advisor as a
Percentage of Average Net Assets for the Most Recent Fiscal Year Ended November 30, 1999
- ------------------------------------------------------------------------------------------------------
Strategic Allocation: Conservative 1.00%
- ------------------------------------------------------------------------------------------------------
Strategic Allocation: Moderate 1.10%
- ------------------------------------------------------------------------------------------------------
Strategic Allocation: Aggressive 1.20%
<P><FONT SIZE=3><B>The Fund Management Team</B></FONT></P>
<P><FONT SIZE=3>The advisor uses a team of portfolio managers, assistant portfolio
managers and analysts to manage the funds. The team meets regularly to review
portfolio holdings and discuss purchase and sale activity. Team members buy
and sell securities for a fund as they see fit, guided by the fund's investment
objective and strategy.</FONT></P>
<P><FONT SIZE=3>The portfolio managers on the investment team are identified below:</FONT></P>
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <B>Code of Ethics</B></FONT></P>
<P><FONT SIZE=3><I>American Century has a Code of Ethics designed to ensure that
the interests of fund shareholders come before the interests of the people who
manage the funds. Among other provisions, the Code of Ethics prohibits portfolio
managers and other investment personnel from buying securities in an initial
public offering or profiting from the purchase and sale of the same security
within 60 calendar days. In addition, the Code of Ethics requires portfolio
managers and other employees with access to information about the purchase or
sale of securities by the funds to obtain approval before executing permitted
personal trades.</I></FONT></P>
<P><FONT SIZE=3><B>Jeffrey R. Tyler</B></FONT></P>
<P><FONT SIZE=3>Mr. Tyler, Senior Vice President and Senior Portfolio Manager,
has been a member of the team that manages the funds since their inception in
February 1996. He also is a member of the teams that manage Equity Growth, Income
& Growth and Balanced. He joined American Century as a Portfolio Manager
in January 1988. He has a bachelor's degree in business economics from the University
of California-Santa Barbara and an MBA in finance and economics from Northwestern
University. He is a Chartered Financial Analyst.</FONT></P>
<P><FONT SIZE=3><B>Christopher K. Boyd</B></FONT></P>
<P><FONT SIZE=3>Mr. Boyd, Vice President and Senior Portfolio Manager, has been
a member of the team that manages the funds since rejoining American Century
in January 1998. He is also a member of the teams that manage Giftrust and New
Opportunities. With the exception of 1997, he has been with American Century
since March 1988 and served as a Portfolio Manager since December 1992. During
1997, he was in private practice as an investment advisor. He has a bachelor
of science from the University of Kansas and an MBA from Dartmouth College.
He is a Chartered Financial Analyst.</FONT></P>
<P><FONT SIZE=3><B>Phillip N. Davidson</B></FONT></P>
<P><FONT SIZE=3>Mr. Davidson, Senior Vice President and Senior Portfolio Manager,
has been a member of the team that manages the funds since their inception in
February 1996. He is also a member of the teams that manage Value and Equity
Income. Prior to joining American Century, he spent 11 years at Boatmen's Trust
Company in St. Louis and served as Vice President and Portfolio Manager responsible
for institutional value equity clients. He has a bachelor's degree in finance
and an MBA from Illinois State University.</FONT></P>
<P><FONT SIZE=3><B>Glenn A. Fogle</B></FONT></P>
<P><FONT SIZE=3>Mr. Fogle, Vice President and Senior Portfolio Manager, has been
a member of the team that manages the funds since their inception in February
1996. He also is a member of the team that manages Vista, where he has been
a Portfolio Manager since March 1993. He joined American Century in September
1990 as an Investment Analyst. He has a bachelor of arts and an MBA in finance
from Texas Christian University. He is a Chartered Financial Analyst.</FONT></P>
<P><FONT SIZE=3><B>C. Kim Goodwin</B></FONT></P>
<P><FONT SIZE=3>Ms. Goodwin, Senior Vice President and Senior Portfolio Manager,
has been a member of the team that manages the funds since October 1997. She
also is a member of the team that manages Growth. She joined American Century
in 1997. Before joining American Century, she served as Senior Vice President
and Portfolio Manager at Putnam Investments from May 1996 to September 1997,
and Vice President and Portfolio Manager at Prudential Investments from February
1993 to April 1996. She has a bachelor of arts from Princeton University and
an MBA in finance and a master's in public affairs from the University of Texas.</FONT></P>
<P><FONT SIZE=3><B>Norman E. Hoops</B></FONT></P>
<P><FONT SIZE=3>Mr. Hoops, Senior Vice President and Senior Portfolio Manager,
has been a member of the team that manages the funds since their inception in
February 1996. He also is a member of the teams that manage Limited-Term Bond,
Bond and the fixed-income portion of Balanced. He joined American Century as
Vice President and Portfolio Manager in November 1989. In April 1993, he became
Senior Vice President. He has a bachelor of arts from Indiana University and
an MBA from Butler University.</FONT></P>
<P><FONT SIZE=3><B>Brian Howell</B></FONT></P>
<P><FONT SIZE=3>Mr. Howell, Vice President and Portfolio Manager, has been a member
of the team that manages the funds since May 1997. He joined American Century
in 1988. He was Portfolio Manager of the Capital Preservation Fund from May
1995 to May 1997. He has a bachelor's degree in mathematics/statistics and an
MBA from the University of California-Berkeley.</FONT></P>
<P><FONT SIZE=3><B>Mark S. Kopinski</B></FONT></P>
<P><FONT SIZE=3>Mr. Kopinski, Senior Vice President and Senior Portfolio Manager,
has been a member of the team that manages the funds since April 1997. He also
is a member of the teams that manage International Growth, International Discovery
and the Emerging Markets Fund. Before rejoining American Century, he served
as Vice President and Portfolio Manager at Federated Investors, Inc. from June
1995 to March 1997. From 1990 to 1995, he served as Vice President and a member
of the team that managed International Growth and International Discovery. He
has a bachelor's degree in business administration from Monmouth College and
an MA in Asian studies from the University of Illinois.</FONT></P>
<P><FONT SIZE=3><B>Scott A. Moore</B></FONT></P>
<P><FONT SIZE=3>Mr. Moore, Vice President and Portfolio Manager, has been a member
of the team that manages the funds since February 1999. He is also a member
of the teams that manage Value and Equity Income. He joined American Century
in August 1993 as an Investment Analyst. He has a bachelor's degree in finance
from Southern Illinois University and an MBA in finance from the University
of Missouri-Columbia. He is a Chartered Financial Analyst.</FONT></P>
<P><FONT SIZE=3><B>John D. Seitzer</B></FONT></P>
<P><FONT SIZE=3>Mr. Seitzer, Vice President and Portfolio Manager, has been a
member of the team that manages the funds since December 1996. He also is a
member of the team that manages Giftrust. He joined American Century in June
1993 as an Investment Analyst and was promoted to Portfolio Manager in July
1996. He has a bachelor's degree in accounting and finance from Kansas State
University and an MBA in finance from Indiana University. He is a Chartered
Financial Analyst and a Certified Public Accountant.</FONT></P>
<P><FONT SIZE=3><B>Henrik Strabo</B></FONT></P>
<P><FONT SIZE=3>Mr. Strabo, Chief Investment Officer—International Equities,
has been a member of the team that manages the funds since their inception in
February 1996. He also is a member of the team that manages Global Growth, International
Growth and International Discovery. He joined American Century in 1993 as an
Investment Analyst and was promoted to Portfolio Manager in April 1994. He has
a bachelor's degree in business from the University of Washington.</FONT></P>
<P><FONT SIZE=3><B>Denise Tabacco</B></FONT></P>
<P><FONT SIZE=3>Ms. Tabacco, Portfolio Manager, has been a member of the team
that manages the funds since January 1998. She also is a member of the team
that manages the Prime Money Market Fund. She joined American Century in 1988,
becoming a member of its portfolio department in 1991. She has a bachelor's
degree in accounting from San Diego State University and an MBA in finance from
Golden Gate University.</FONT></P>
<P><FONT SIZE=3><B>Fundamental Investment Policies</B></FONT></P>
<P><FONT SIZE=3>Fundamental investment policies contained in the Statement of
Additional Information and the investment objectives of the funds may not be
changed without a shareholder vote. The Board of Directors may change any other
policies and investment strategies.</FONT></P>
<P><FONT SIZE=4><B><A NAME="ZF"></A>Investing with American Century</B></FONT></P>
<P><FONT SIZE=3><B>Services Automatically Available to You</B></FONT></P>
<P><FONT SIZE=3>You automatically will have access to the services listed below
when you open your account. If you do not want these services, see Conducting
Business in Writing below.</FONT></P>
<P><FONT SIZE=3><B>Conducting Business in Writing </B></FONT></P>
<P><FONT SIZE=3>If you prefer to conduct business in writing only, you can indicate
this on the account application. If you choose this option, you must provide
written instructions to invest, exchange and redeem. All account owners must
sign transaction instructions (with signatures guaranteed for redemptions in
excess of $100,000). If you want to add services later, you can complete an
Investor Service Options form.</FONT></P>
<P><FONT SIZE=3><B>Ways to Manage Your Account</B></FONT></P>
<TABLE cellspacing=0 border=0 width=600>
<TR>
<TD valign="TOP" colspan="5">
<HR width="100%" size="1" noshade>
</TD>
</TR>
<TR>
<TD valign="TOP">
<P><FONT size="2"><B>By telephone</B></FONT><BR>
<B><FONT size="2">Investor Relations<BR>
</FONT></B><FONT size="2">1-800-345-2021</FONT><BR>
<B><FONT size="2">Business, Not-For-Profit<BR>
and Employer-Sponsored<BR>
Retirement Plans<BR>
</FONT></B><FONT size="2">1-800-345-3533</FONT><BR>
<FONT size="2"><B>Automated Information Line</B></FONT><B><BR>
</B><FONT size="2">1-800-345-8765</FONT></P>
<P><FONT size=2>[GRAPHIC OMITTED:<BR>
TELEPHONE] </FONT>
</TD>
<TD valign="TOP">
<P>
</TD>
<TD valign="TOP">
<P><FONT size=2><B>Open an account<BR>
</B>If you are a current investor, you can open an account by exchanging
shares from another American Century account. </FONT></P>
<P><FONT size=2><B>Exchange shares</B><BR>
Call or use our Automated Information Line if you have authorized us to
accept telephone instructions. </FONT></P>
</TD>
<TD valign="TOP">
<P>
</TD>
<TD valign="TOP">
<P><FONT size=2><B>Make additional investments<BR>
</B>Call or use our Automated Information Line if you have authorized
us to invest from your bank account.</FONT></P>
<P><FONT size=2><B>Sell shares<BR>
</B>Call a Service Representative. </FONT></P>
</TD>
</TR>
<TR>
<TD valign="TOP" colspan="5">
<HR width="100%" size="1" noshade>
</TD>
</TR>
<TR>
<TD valign="TOP">
<P><FONT size=2><B>Online<BR>
</B>www.americancentury.com</FONT></P>
<P><FONT size=2>[GRAPHIC OMITTED:<BR>
COMPUTER] </FONT>
</TD>
<TD valign="TOP">
<P>
</TD>
<TD valign="TOP">
<P><FONT size=2><B>Open an account<BR>
</B>If you are a current investor, you can open an account by exchanging
shares from another American Century account. </FONT></P>
<P><FONT size=2><B>Exchange shares<BR>
</B>Exchange shares from another American Century account. </FONT></P>
</TD>
<TD valign="TOP">
<P>
</TD>
<TD valign="TOP">
<P><FONT size=2><B>Make additional investments<BR>
</B>Make an additional investment into an established American Century
account if you have authorized us to invest from your bank account.</FONT></P>
<P><FONT size=2><B>Sell shares<BR>
</B>Not available. </FONT></P>
</TD>
</TR>
<TR>
<TD valign="TOP" colspan="5">
<HR width="100%" size="1" noshade>
</TD>
</TR>
<TR>
<TD valign="TOP">
<P><FONT size=2><B>By mail or fax<BR>
</B>P.O. Box 419200<BR>
Kansas City, MO 64141-6200</FONT></P>
<P><FONT size=2>Fax<BR>
816-340-7962</FONT></P>
<P><FONT size=2>[GRAPHIC OMITTED:<BR>
ENVELOPE] </FONT>
</TD>
<TD valign="TOP">
<P>
</TD>
<TD valign="TOP">
<P><FONT size=2><B>Open an account<BR>
</B>Send a signed, completed application and check or money order payable
to American Century Investments.</FONT></P>
<P><FONT size=2><B>Exchange shares<BR>
</B>Send written instructions to exchange your shares from one American
Century account to another. </FONT></P>
</TD>
<TD valign="TOP">
<P>
</TD>
<TD valign="TOP">
<P><FONT size=2><B>Make additional investments<BR>
</B>Send your check or money order for at least $50 with an investment
slip or $250 without an investment slip. If you don't have an investment
slip, include your name, address and account number on your check or money
order.</FONT></P>
<P><FONT size=2><B>Sell shares<BR>
</B>Send written instructions or a redemption form to sell shares. Call
a Service Representative to request a form. </FONT></P>
</TD>
</TR>
</TABLE>
<P><FONT SIZE=2> </FONT></P>
<P ALIGN="left"><FONT SIZE=3><B>A Note about Mailings to Shareholders</B></FONT></P>
<P><FONT SIZE=3>To reduce expenses and demonstrate respect for our environment,
we will deliver a single copy of most financial reports and prospectuses to
investors who share an address, even if the accounts are registered under different
names. If you would like to receive separate mailings, please call us and we
will begin individual delivery within 30 days. If you'd like to reduce mailbox
clutter even more, visit www.americancentury.com and sign up to receive these
documents by email. In most cases, we also will deliver account statements for
all the investors in a household in a single envelope.</FONT></P>
<P><FONT SIZE=3><B>Your Guide to Services and Policies</B></FONT></P>
<P><FONT SIZE=3>When you open an account, you will receive a services guide, which
explains the services available to you and the policies of the funds and the
transfer agent.</FONT></P>
<TABLE cellspacing=0 border=0 width=600>
<TR>
<TD valign="TOP" colspan="5">
<HR width="100%" size="1" noshade>
</TD>
</TR>
<TR>
<TD valign="TOP">
<P><FONT size=2><B>Automatically</B></FONT></P>
<P><FONT size=2>[GRAPHIC OMITTED:<BR>
ARROW IN A CIRCLE] </FONT>
</TD>
<TD valign="TOP">
<P>
</TD>
<TD valign="TOP">
<P><FONT size=2><B>Open an account<BR>
</B>Not available.</FONT></P>
<P><FONT size=2><B>Exchange shares<BR>
</B>Send written instructions to set up an automatic exchange of your
shares from one American Century account to another. </FONT></P>
</TD>
<TD valign="TOP">
<P>
</TD>
<TD valign="TOP">
<P><FONT size=2><B>Make additional investments<BR>
</B>With the automatic investment privilege, you can purchase shares on
a regular basis. You must invest at least $600 per year per account.</FONT></P>
<P><FONT size=2><B>Sell shares<BR>
</B>If you have at least $10,000 in your account, you may sell shares
automatically by establishing Check-A-Month or Automatic Redemption plans.
</FONT></P>
</TD>
</TR>
<TR>
<TD valign="TOP" colspan="5">
<HR width="100%" size="1" noshade>
</TD>
</TR>
<TR>
<TD valign="TOP">
<P><FONT size=2><B>By wire</B></FONT></P>
<P><FONT size=2>[GRAPHIC OMITTED: POINTING FINGER] Please remember if you
request redemptions by wire, $10 will be deducted from the amount redeemed.
Your bank also may charge a fee.</FONT></P>
<P><FONT size=2>[GRAPHIC OMITTED:<BR>
FAX MACHINE] </FONT>
</TD>
<TD valign="TOP">
<P>
</TD>
<TD valign="TOP">
<P><FONT size=2><B>Open an account<BR>
</B>Call to set up your account or mail a completed application to the
address provided in the "By mail" section. Give your bank the following
information to wire money.</FONT></P>
<UL>
<LI><font size="2">Our bank information:</font></LI>
<font size="2"><BR>
Commerce Bank N.A. <BR>
Routing No. 101000019<BR>
Account No. 2804918 </font>
<LI><font size="2">The fund name </font></LI>
<LI><font size="2">Your American Century account number* </font></LI>
<LI><font size="2">Your name </font></LI>
<LI><font size="2">The contribution year (for IRAs only)<BR>
<I>* For additional investments only</I></font></LI>
</UL>
</TD>
<TD valign="TOP">
<P>
</TD>
<TD valign="TOP">
<P><FONT size=2><B>Make additional investments<BR>
</B>Follow the wire instructions.</FONT></P>
<P><FONT size=2><B>Sell shares<BR>
</B>You can receive redemption proceeds by wire or electronic transfer.
</FONT></P>
<P><FONT size=2><B>Exchange shares<BR>
</B>Not available. </FONT></P>
</TD>
</TR>
<TR>
<TD valign="TOP" colspan="5">
<HR width="100%" size="1" noshade>
</TD>
</TR>
<TR>
<TD valign="TOP">
<P><FONT size=2><B>In person </B> </FONT>
</TD>
<TD valign="TOP">
<P>
</TD>
<TD valign="TOP" colspan=3>
<P><FONT size=2>If you prefer to handle your transactions in person, visit
one of our Investor Centers and a representative can help you open an
account, make additional investments, and sell or exchange shares. </FONT>
</TD>
</TR>
<TR>
<TD valign="TOP"><FONT size="2"> </FONT></TD>
<TD valign="TOP"> </TD>
<TD valign="TOP"><FONT size="2"> </FONT></TD>
<TD valign="TOP"> </TD>
<TD valign="TOP"><FONT size="2"> </FONT></TD>
</TR>
<TR>
<TD valign="TOP">
<P><FONT size=2>[GRAPHIC OMITTED:<BR>
MALE FIGURE] </FONT>
</TD>
<TD valign="TOP">
<P>
</TD>
<TD valign="TOP">
<P><FONT size=2>4500 Main St.<BR>
Kansas City, Missouri<BR>
8 a.m. to 5:30 p.m., Monday – Friday</FONT></P>
<P><FONT size=2>1665 Charleston Road<BR>
Mountain View, California<BR>
8 a.m. to 5 p.m., Monday – Friday </FONT>
</TD>
<TD valign="TOP">
<P>
</TD>
<TD valign="TOP">
<P><FONT size=2>4917 Town Center Drive<BR>
Leawood, Kansas<BR>
8 a.m. to 6 p.m.,<BR>
Monday – Friday <BR>
8 a.m. to noon, Saturday</FONT></P>
<P><FONT size=2>9445 East County Line Road, Suite A<BR>
Englewood, Colorado<BR>
8 a.m. to 6 p.m.,<BR>
Monday – Friday<BR>
8 a.m. to noon, Saturday </FONT>
</TD>
</TR>
</TABLE>
<P ALIGN="left"><FONT SIZE=2><BR>
<B><FONT size="3">Minimum Initial Investment Amounts</FONT></B></FONT></P>
To open an account, the minimum investments are:
- --------------------------------------------------------------------------------
Individual or Joint $2,500
- --------------------------------------------------------------------------------
Traditional IRA $1,000
- --------------------------------------------------------------------------------
Roth IRA $1,000
- --------------------------------------------------------------------------------
Education IRA $500
- --------------------------------------------------------------------------------
UGMA/UTMA $2,500
- --------------------------------------------------------------------------------
403(b) $1,000(1)
- --------------------------------------------------------------------------------
Qualified Retirement Plans $2,500(2)
<OL>
<LI><FONT SIZE=2><I>For each fund you select, American Century will waive the
fund minimum if you make a contribution of at least $50 a month. If your contribution
is less than $50, you may make only one fund choice.</I></FONT></LI>
<LI><FONT SIZE=2><I>The minimum investment requirements may be different for
some types of retirement accounts.</I></FONT></LI>
</OL>
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <I>A redemption is the sale
of all or a portion of the shares in an account, including as a part of an exchange
to another American Century account.</I></FONT></P>
<P><FONT SIZE=3><B>Redemption of Shares in Low-Balance Accounts</B></FONT></P>
<P><FONT SIZE=3>If your redemption activity causes your account balance to fall
below the minimum initial investment amount, we will notify you and give you
90 days to meet the minimum. If you do not meet the deadline, American Century
will redeem the shares in the account and send the proceeds to your address
of record.</FONT></P>
<P><FONT SIZE=3><B>Modifying or Canceling an Investment</B></FONT></P>
<P><FONT SIZE=3>Investment instructions are irrevocable. That means that once
you have mailed or otherwise transmitted your investment instruction, you may
not modify or cancel it. Each fund reserves the right to suspend the offering
of shares for a period of time, and each fund reserves the right to reject any
specific purchase order (including purchases by exchange or conversion). Additionally,
we may refuse a purchase if, in our judgment, it is of a size that would disrupt
the management of a fund.</FONT></P>
<P><FONT SIZE=3><B>Abusive Trading Practices</B></FONT></P>
<P><FONT SIZE=3>We do not permit market timing or other abusive trading practices
in our funds.</FONT></P>
<P><FONT SIZE=3>Excessive, short-term (market timing) or other abusive trading
practices may disrupt portfolio management strategies and harm fund performance.
To minimize harm to the funds and their shareholders, we reserve the right to
reject any purchase order (including exchanges) from any investor we believe
has a history of abusive trading or whose trading, in our judgment, has been
or may be disruptive to a fund. In making this judgment, we may consider trading
done in multiple accounts under common ownership or control. We also reserve
the right to delay delivery of your redemption proceeds—up to seven days—or
to honor certain redemptions with securities, rather than cash, as described
in the next section.</FONT></P>
<P><FONT SIZE=3><B>Special Requirements for Large Redemptions</B></FONT></P>
<P><FONT SIZE=3>If, during any 90-day period, you redeem fund shares worth more
than $250,000 (or 1% of the assets of the fund if that percentage is less than
$250,000), we reserve the right to pay part or all of the redemption proceeds
in excess of this amount in readily marketable securities instead of in cash.
The securities would be selected from the fund's portfolio by the fund managers.
A payment in securities can help the fund's remaining shareholders avoid tax
liabilities that they might otherwise have incurred had the fund sold securities
prematurely to pay the entire redemption amount in cash.</FONT></P>
<P><FONT SIZE=3>We will value these securities in the same manner as we do in
computing the fund's net asset value. We may provide these securities in lieu
of cash without prior notice. </FONT></P>
<P><FONT SIZE=3>Also, if payment is made in securities, a shareholder may have
to pay brokerage or other transaction costs to convert the securities to cash.</FONT></P>
<P><FONT SIZE=3>If your redemption would exceed this limit and you would like
to avoid being paid in securities, please provide us with an unconditional instruction
to redeem at least 15 days prior to the date on which the redemption transaction
is to occur. The instruction must specify the dollar amount or number of shares
to be redeemed and the date of the transaction. This minimizes the effect of
the redemption on the fund and its remaining shareholders.</FONT></P>
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <I>Financial intermediaries
include banks, broker-dealers, insurance companies and investment advisors.</I></FONT></P>
<P><FONT SIZE=3><B>Investing through Financial Intermediaries</B></FONT></P>
<P><FONT SIZE=3>If you do business with us through a financial intermediary or
a retirement plan, your ability to purchase, exchange and redeem shares will
depend on the policies of that entity. Some policy differences may include</FONT></P>
<UL>
<LI><FONT SIZE=3>minimum investment requirements</FONT></LI>
<LI><FONT SIZE=3>exchange policies</FONT></LI>
<LI><FONT SIZE=3>fund choices</FONT></LI>
<LI><FONT SIZE=3>cutoff time for investments</FONT></LI>
</UL>
<P><FONT SIZE=3>Please contact your financial intermediary or plan sponsor for
a complete description of its policies. Copies of the funds' annual report,
semiannual report and Statement of Additional Information are available from
your intermediary or plan sponsor.</FONT></P>
<P><FONT SIZE=3>Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American Century's
transfer agent. In some circumstances, American Century will pay the service
provider a fee for performing those services.</FONT></P>
<P><FONT SIZE=3>Although transactions in fund shares may be made directly with
American Century at no charge, you also may purchase, redeem and exchange fund
shares through financial intermediaries that charge a transaction-based or other
fee for their services. Those charges are retained by the intermediary and are
not shared with American Century or the funds.</FONT></P>
<P><FONT SIZE=3>American Century has contracts with certain financial intermediaries
requiring them to track the time investment orders are received and to comply
with procedures relating to the transmission of orders. The funds have authorized
those intermediaries to accept orders on each fund's behalf up to the time at
which the net asset value is determined. If those orders are transmitted to
American Century and paid for in accordance with the contract, they will be
priced at the net asset value next determined after your request is received
in the form required by the intermediary on a fund's behalf.</FONT></P>
<P><FONT SIZE=4><B><A NAME="ZG"></A>Share Price and Distributions</B></FONT></P>
<P><FONT SIZE=3><B>Share Price</B></FONT></P>
<P><FONT SIZE=3><I>The <B>net asset value,</B> or NAV, of a fund is the price
of the fund's shares.</I></FONT></P>
<P><FONT SIZE=3>American Century determines the <i><b>net asset value</b></i>
(NAV) of each fund as of the close of regular trading on the New York Stock
Exchange (usually 4 p.m. Eastern time) on each day the Exchange is open. On
days when the Exchange is not open (including certain U.S. holidays), we do
not calculate the NAV. The NAV of a fund share is the current value of the fund's
assets, minus any liabilities, divided by the number of fund shares outstanding.</FONT></P>
<P><FONT SIZE=3>If current market prices of securities owned by a fund are not
readily available, the advisor may determine their fair value in accordance
with procedures adopted by the fund's Board. Trading of securities in foreign
markets may not take place every day the Exchange is open. Also, trading in
some foreign markets may take place on weekends or holidays when a fund's NAV
is not calculated. So, the value of a fund's portfolio may be affected on days
when you can't purchase or redeem shares of the fund.</FONT></P>
<P><FONT SIZE=3>We will price your purchase, exchange or redemption at the NAV
next determined after we receive your transaction request in good order. </FONT></P>
<P><FONT SIZE=3><I><B>Capital gains</B> are increases in the values of capital
assets, such as stock, from the time the assets are purchased.</I></FONT></P>
<P><FONT SIZE=3><B>Distributions</B></FONT></P>
<P><FONT SIZE=3>Federal tax laws require each fund to make distributions to its
shareholders in order to qualify as a "regulated investment company." Qualification
as a regulated investment company means that the funds will not be subject to
state or federal income tax on amounts distributed. The distributions generally
consist of dividends and interest received by a fund, as well as <B><I>capital
gains</I></B> realized on the sale of investment securities. </FONT></P>
<P><FONT SIZE=3>The funds pay distributions of substantially all of their income
quarterly, with the exception of Strategic Allocation: Aggressive, which pays
such distributions annually. Distributions from realized capital gains are generally
paid twice a year, usually in March and December. The funds may make more frequent
distributions, if necessary, to comply with Internal Revenue Code provisions.
The funds' distributions may be taxable as ordinary income, capital gains or
a combination of the two. Capital gains are taxed at different rates depending
on the length of time the fund held the securities that were sold. Distributions
are reinvested automatically in additional shares unless you choose another
option.</FONT></P>
<P><FONT SIZE=3>You will participate in fund distributions, when they are declared,
starting the day after your purchase is effective. For example, if you purchase
shares on a day that a distribution is declared, you will not receive that distribution.
If you redeem shares, you will receive any distribution declared on the day
you redeem. If you redeem all shares, we will include any such distributions
received with your redemption proceeds. </FONT></P>
<P><FONT SIZE=3>Participants in employer-sponsored retirement or savings plans
must reinvest all distributions. For shareholders investing through taxable
accounts, we will reinvest distributions unless you elect to receive them in
cash. Please consult your services guide for further information regarding distributions
and your distribution options.</FONT></P>
<P><FONT SIZE=4><B><A NAME="ZH"></A>Taxes</B></FONT></P>
<P><FONT SIZE=3>The tax consequences of owning shares of the funds will vary depending
on whether you own them through a taxable or tax-deferred account. Tax consequences
result from distributions by the funds of dividend and interest income they
have received or capital gains they have generated through their investment
activities. Tax consequences also result from sales of fund shares by investors
after the net asset value has increased or decreased.</FONT></P>
<P><FONT SIZE=3><B>Tax-Deferred Accounts</B></FONT></P>
<P><FONT SIZE=3>If you purchase fund shares through a tax-deferred account, such
as an IRA or a qualified employer-sponsored retirement or savings plan, income
and capital gains distributions usually will not be subject to current taxation,
but will accumulate in your account under the plan on a tax-deferred basis.
Likewise, moving from one fund to another fund within a plan or tax-deferred
account generally will not cause you to be taxed. For information about the
tax consequences of making purchases or withdrawals through a tax-deferred account,
please consult your plan administrator, your summary plan description or a professional
tax advisor.</FONT></P>
<P><FONT SIZE=3><B>Taxable Accounts</B></FONT></P>
<P><FONT SIZE=3>If you own fund shares through a taxable account, distributions
by the fund and sales by you of fund shares may cause you to be taxed on your
investment.</FONT></P>
<P><FONT SIZE=3>[GRAPHIC OMITTED: POINTING FINGER] <B>Buying a Dividend</B></FONT></P>
<P><FONT SIZE=3><I>Purchasing fund shares in a taxable account shortly before
a distribution is sometimes known as buying a dividend. In taxable accounts,
you must pay income taxes on the distribution whether you reinvest the distribution
or take it in cash. In addition, you will have to pay taxes on the distribution
whether the value of your investment decreased, increased or remained the same
after you bought the fund shares.</I></FONT></P>
<P><FONT SIZE=3><I>The risk in buying a dividend is that a fund's portfolio may
build up taxable gains throughout the period covered by a distribution, as securities
are sold at a profit. The funds distribute those gains to you, after subtracting
any losses, even if you did not own the shares when the gains occurred.</I></FONT></P>
<P><FONT SIZE=3><I>If you buy a dividend, you incur the full tax liability of
the distribution period, but you may not enjoy the full benefit of the gains
realized in the fund's portfolio.</I></FONT></P>
<P><FONT SIZE=3><B>Taxability of Distributions</B></FONT></P>
<P><FONT SIZE=3>Fund distributions may consist of income earned by the fund from
sources such as dividends and interest, or capital gains generated from the
sale of fund investments. Distributions of income are taxed as ordinary income.
Distributions of capital gains are classified either as short term or long term
and are taxed as follows:</FONT></P>
Type of Distribution Tax Rate for 15% Bracket Tax Rate for 28% Bracket or Above
- ----------------------------------------------------------------------------------------------
Short-term capital gains Ordinary income rate Ordinary income rate
- ----------------------------------------------------------------------------------------------
Long-term capital gains 10% 20%
<P><FONT SIZE=3>The tax status of any distributions of capital gains is determined
by how long the fund held the underlying security that was sold, not by how
long you have been invested in the fund, or whether you reinvest your distributions
in additional shares or take them in cash. American Century will inform you
of the tax status of fund distributions for each calendar year in an annual
tax mailing (Form 1099-DIV).</FONT></P>
<P><FONT SIZE=3>Distributions also may be subject to state and local taxes. Because
everyone's tax situation is unique, you may want to consult your tax professional
about federal, state and local tax consequences.</FONT></P>
<P><FONT SIZE=3><B>Taxes on Transactions</B></FONT></P>
<P><FONT SIZE=3>Your redemptions—including exchanges to other American Century
funds—are subject to capital gains tax. The table above can provide a general
guide for your potential tax liability when selling or exchanging fund shares.
Short-term capital gains are gains on fund shares you held for 12 months or
less. Long-term capital gains are gains on fund shares you held for more than
12 months. If your shares decrease in value, their sale or exchange will result
in a long-term or short-term capital loss. However, you should note that loss
realized upon the sale or redemption of shares held for six months or less will
be treated as a long-term capital loss to the extent of any distribution of
long-term capital gain to you with respect to those shares. If a loss is realized
on the redemption of fund shares, the reinvestment in additional fund shares
within 30 days before or after the redemption may be subject to the wash sale
rules of the Internal Revenue Code. This may result in a postponement of the
recognition of such loss for federal income tax purposes. </FONT></P>
<P><FONT SIZE=3>If you have not certified to us that your Social Security number
or tax identification number is correct and that you are not subject to 31%
withholding, we are required to withhold and remit 31% of dividends, capital
gains distributions and redemptions to the IRS.</FONT></P>
<P><FONT SIZE=4><B><A NAME="ZI"></A>Multiple Class Information</B></FONT></P>
<P><FONT SIZE=3>American Century offers two classes of the funds: Investor Class
and Advisor Class. The shares offered by this Prospectus are Investor Class
shares and have no up-front or deferred charges, commissions, or 12b-1 fees.
</FONT></P>
<P><FONT SIZE=3>American Century offers the other class of shares primarily through
employer-sponsored retirement plans or through institutions like banks, broker-dealers
and insurance companies. The other class has different fees, expenses and/or
minimum investment requirements from the Investor Class. The difference in the
fee structures between the classes is the result of their separate arrangements
for shareholder and distribution services and not the result of any difference
in amounts charged by the advisor for core investment advisory services. Accordingly,
the core investment advisory expenses do not vary by class. Different fees and
expenses will affect performance. For additional information concerning the
other class of shares not offered by this Prospectus, call us at 1-800-345-3533
for Advisor Class shares. You also can contact a sales representative or financial
intermediary who offers that class of shares.</FONT></P>
<P><FONT SIZE=3>Except as described below, all classes of shares of the funds
have identical voting, dividend, liquidation and other rights, preferences,
terms and conditions. The only differences between the classes are (a) each
class may be subject to different expenses specific to that class; (b) each
class has a different identifying designation or name; (c) each class has exclusive
voting rights with respect to matters solely affecting such class; and (d) each
class may have different exchange privileges.</FONT></P>
<P><FONT SIZE=4><B><A NAME="ZJ"></A>Financial Highlights</B></FONT></P>
<P><FONT SIZE=3><B>Understanding the Financial Highlights</B></FONT></P>
<P><FONT SIZE=3>The tables on the next few pages itemize what contributed to the
changes in share price during the most recently ended fiscal year. They also
show the changes in share price for this period in comparison to changes over
the last five fiscal years.</FONT></P>
<P><FONT SIZE=3>On a per-share basis, each table includes as appropriate</FONT></P>
<UL>
<LI><FONT SIZE=3>share price at the beginning of the period</FONT></LI>
<LI><FONT SIZE=3>investment income and capital gains or losses</FONT></LI>
<LI><FONT SIZE=3>distributions of income and capital gains paid to investors</FONT></LI>
<LI><FONT SIZE=3>share price at the end of the period</FONT></LI>
</UL>
<P><FONT SIZE=3>Each table also includes some key statistics for the period as
appropriate</FONT></P>
<UL>
<LI><FONT SIZE=3><B>Total Return</B> — the overall percentage of return
of the fund, assuming the reinvestment of all distributions</FONT></LI>
<LI><FONT SIZE=3><B>Expense Ratio</B> — operating expenses as a percentage
of average net assets</FONT></LI>
<LI><FONT SIZE=3><B>Net Income Ratio</B> — net investment income as a percentage
of average net assets</FONT></LI>
<LI><FONT SIZE=3><B>Portfolio Turnover</B> — the percentage of the fund's
buying and selling activity</FONT></LI>
</UL>
<P><FONT SIZE=3>The Financial Highlights have been audited by Deloitte & Touche
LLP, independent auditors. Their Independent Auditors' Report is included in
the funds' annual report for the year ended November 30, 1999, which is incorporated
by reference into the Statement of Additional Information, and is available
upon request.</FONT></P>
<P><FONT SIZE=4><B>Strategic Allocation: Conservative Fund</B></FONT></P>
<P><FONT size=3>Investor Class</FONT></P>
<P><FONT size=3><I>For a Share Outstanding Throughout the Years Ended November
30 (except as noted)</I></FONT></P>
<P><FONT size=3><B>Per-Share Data</B></FONT></P>
1999 1998 1997 1996(1)
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 5.59 $ 5.55 $ 5.26 $ 5.00
----------------------------------------------
Income From Investment Operations
Net Investment Income(2) 0.17 0.18 0.19 0.13
Net Realized and Unrealized Gain on Investment Transactions 0.28 0.31 0.36 0.22
----------------------------------------------
Total From Investment Operations 0.45 0.49 0.55 0.35
----------------------------------------------
Distributions
From Net Investment Income (0.16) (0.19) (0.17) (0.09)
From Net Realized Gain on Investment Transactions (0.19) (0.26) (0.09) --
----------------------------------------------
Total Distributions (0.35) (0.45) (0.26) (0.09)
----------------------------------------------
Net Asset Value, End of Period $ 5.69 $ 5.59 $ 5.55 $ 5.26
==============================================
Total Return(3) 8.47% 9.43% 10.87% 7.02%
<P><FONT size=3><B>Ratios/Supplemental Data</B></FONT></P>
1999 1998 1997 1996(1)
- ---------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 1.00% 1.00% 1.00% 1.01%(4)
Ratio of Net Investment Income to Average Net Assets 3.01% 3.35% 3.48% 3.67%(4)
Portfolio Turnover Rate 105% 113% 124% 44%
Net Assets, End of Period (in thousands) $167,083 $180,970 $156,733 $33,110
<OL>
<LI><FONT size=2><I>February 15, 1996 (inception) through November 30, 1996.</I></FONT></LI>
<LI><FONT size=2><I>Computed using average shares outstanding throughout the
period.</I></FONT></LI>
<LI><FONT size=2><I>Total return assumes reinvestment of dividends and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized.</I></FONT></LI>
<LI><FONT size=2><I>Annualized.</I></FONT></LI>
</OL>
<P><FONT size=4><B>Strategic Allocation: Moderate Fund</B></FONT></P>
<P><FONT size=3>Investor Class</FONT></P>
<P><FONT size=3><I>For a Share Outstanding Throughout the Years Ended November
30 (except as noted)</I></FONT></P>
<P><FONT size=3><B>Per-Share Data</B></FONT></P>
1999 1998 1997 1996(1)
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 6.22 $ 5.98 $ 5.42 $ 5.00
----------------------------------------------
Income From Investment Operations
Net Investment Income(2) 0.12 0.15 0.14 0.10
Net Realized and Unrealized Gain on Investment Transactions 0.88 0.45 0.56 0.39
----------------------------------------------
Total From Investment Operations 1.00 0.60 0.70 0.49
----------------------------------------------
Distributions
From Net Investment Income (0.12) (0.16) (0.13) (0.07)
From Net Realized Gain on Investment Transactions (0.21) (0.20) (0.01) --
----------------------------------------------
Total Distributions (0.33) (0.36) (0.14) (0.07)
----------------------------------------------
Net Asset Value, End of Period $ 6.89 $ 6.22 $ 5.98 $ 5.42
==============================================
Total Return(3) 16.97% 10.32% 13.02% 9.91%
<P><FONT size=3><B>Ratios/Supplemental Data</B></FONT></P>
1999 1998 1997 1996(1)
- -----------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 1.10% 1.10% 1.10% 1.10%(4)
Ratio of Net Investment Income to Average Net Assets 1.92% 2.38% 2.43% 2.52%(4)
Portfolio Turnover Rate 107% 127% 119% 78%
Net Assets, End of Period (in thousands) $375,592 $261,721 $201,384 $57,836
<OL>
<LI><FONT size=2><I>February 15, 1996 (inception) through November 30, 1996.</I></FONT></LI>
<LI><FONT size=2><I>Computed using average shares outstanding throughout the
period.</I></FONT></LI>
<LI><FONT size=2><I>Total return assumes reinvestment of dividends and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized.</I></FONT></LI>
<LI><FONT size=2><I>Annualized.</I></FONT></LI>
</OL>
<P><FONT size=4><B>Strategic Allocation: Aggressive Fund</B></FONT></P>
<P><FONT size=3>Investor Class</FONT></P>
<P><FONT size=3><I>For a Share Outstanding Throughout the Years Ended November
30 (except as noted)</I></FONT></P>
<P><FONT size=3><B>Per-Share Data</B></FONT></P>
1999 1998 1997 1996(1)
- ---------------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $ 6.54 $ 6.25 $ 5.53 $ 5.00
----------------------------------------------
Income From Investment Operations
Net Investment Income(2) 0.07 0.10 0.09 0.07
Net Realized and Unrealized Gain on Investment Transactions 1.55 0.49 0.67 0.46
----------------------------------------------
Total From Investment Operations 1.62 0.59 0.76 0.53
----------------------------------------------
Distributions
From Net Investment Income (0.08) (0.09) (0.04) --
From Net Realized Gain on Investment Transactions (0.17) (0.21) -- --
----------------------------------------------
Total Distributions (0.25) (0.30) (0.04) --
----------------------------------------------
Net Asset Value, End of Period $ 7.91 $ 6.54 $ 6.25 $ 5.53
==============================================
Total Return(3) 25.69% 9.93% 13.84% 10.60%
<P><FONT size=3><B>Ratios/Supplemental Data</B></FONT></P>
1999 1998 1997 1996(1)
- -----------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 1.20% 1.20% 1.20% 1.20%(4)
Ratio of Net Investment Income to Average Net Assets 1.02% 1.49% 1.58% 1.72%(4)
Portfolio Turnover Rate 115% 134% 135% 64%
Net Assets, End of Period (in thousands) $192,831 $145,125 $109,497 $46,276
<OL>
<LI><FONT size=2><I>February 15, 1996 (inception) through November 30, 1996.</I></FONT></LI>
<LI><FONT size=2><I>Computed using average shares outstanding throughout the
period.</I></FONT></LI>
<LI><FONT size=2><I>Total return assumes reinvestment of dividends and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized.</I></FONT></LI>
<LI><FONT size=2><I>Annualized.</I></FONT></LI>
</OL>
<P><FONT SIZE=3>More information about the funds is contained in these documents</FONT></P>
<P><FONT SIZE=3><B>Annual and Semiannual Reports </B></FONT></P>
<P><FONT SIZE=3>These reports contain more information about the funds' investments
and the market conditions and investment strategies that significantly affected
the funds' performance during the most recent fiscal period.</FONT></P>
<P><FONT SIZE=3><B>Statement of Additional Information (SAI) </B></FONT></P>
<P><FONT SIZE=3>The SAI contains a more detailed, legal description of the funds'
operations, investment restrictions, policies and practices. The SAI is incorporated
by reference into this Prospectus. This means that it is legally part of this
Prospectus, even if you don't request a copy.</FONT></P>
<P><FONT SIZE=3>You may obtain a free copy of the SAI or annual and semiannual
reports, and ask questions about the funds or your accounts, by contacting American
Century at the address or telephone numbers listed below.</FONT></P>
<P><FONT SIZE=3>You also can get information about the funds (including the SAI)
from the Securities and Exchange Commission (SEC). The SEC charges a duplicating
fee to provide copies of this information.</FONT></P>
<TABLE cellspacing=0 border=0 width=600>
<TR>
<TD valign="TOP">
<P><FONT size="3"><I>In person </I></FONT>
</TD>
<TD valign="TOP">
<P><FONT size=2><FONT size="3">SEC Public Reference Room<BR>
</FONT><FONT size="3">Washington, D.C.<BR>
</FONT><FONT size="3">Call 202-942-8090 for location and hours.<BR>
</FONT></FONT></P>
</TD>
</TR>
<TR>
<TD valign="TOP">
<P><FONT size=3><I>On the Internet </I> </FONT>
</TD>
<TD valign="TOP">
<UL>
<LI><FONT size="3">EDGAR database at www.sec.gov </FONT></LI>
<LI><FONT size="3">By email request at [email protected]<BR>
</FONT></LI>
</UL>
</TD>
</TR>
<TR>
<TD valign="TOP">
<P><FONT size=3><I>By mail </I> </FONT>
</TD>
<TD valign="TOP">
<P><FONT size=3>SEC Public Reference Section <BR>
Washington, D.C. 20549-0102 </FONT></P>
</TD>
</TR>
</TABLE>
<BR>
<P><FONT size="2">Investment Company Act File No. 811-8532</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=3>[AMERICAN CENTURY LOGO]</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=3>American Century Investments<BR>
P.O. Box 419200<BR>
Kansas City, Missouri 64141-6200</FONT></P>
<P ALIGN="CENTER"><FONT SIZE=3>1-800-345-2021 or 816-531-5575</FONT></P>
<P><FONT SIZE=2>0004<BR>
SH-PRS-19554</FONT></P>
<P><FONT SIZE=2> </FONT></P>
<P> </P>
<P> </P>
<TABLE border="0" cellspacing="0" cellpadding="0" width="600">
<TR>
<TD width="245"> </TD>
<TD width="355">
<P><FONT size="6"><I> </I>A<FONT size="5">MERICAN</FONT> C<FONT size="5">ENTURY</FONT><I><BR>
statement of<BR>
additional information</I></FONT></P>
<P><FONT size="3"><B>Strategic Allocation: Conservative Fund</B></FONT></P>
<P><B><FONT size="3">Strategic Allocation: Moderate Fund</FONT></B></P>
<P><B><FONT size="3">Strategic Allocation: Aggressive Fund</FONT></B></P>
<P> </P>
</TD>
</TR>
<TR>
<TD width="245">
<P align="right"><FONT size="3">APRIL 1, 2000</FONT></P>
<P align="right"><FONT size="3">American Century Strategic<BR>
Asset Allocations, Inc.</FONT></P>
<P align="right"><FONT size="3"> <I>This Statement of Additional Information
adds to the discussion in the funds' Prospectus, dated April 1, 2000,
but is not a prospectus. The Statement of Additional Information should
be read in conjunction with the funds' current Prospectus. If you would
like a copy of a Prospectus, please contact us at the address or telephone
numbers listed on the back cover or visit American Century's Web site
at www.americancentury.com.</I></FONT></P>
<P align="right"><I><FONT size="3">This Statement of Additional Information
incorporates by reference certain information that appears in the funds'
annual and semiannual reports, which are delivered to all shareholders.
You may obtain a free copy of the funds' annual or semiannual reports
by calling 1-800-345-2021</FONT></I><FONT size="3">.</FONT></P>
<P align="right"><FONT size="3">Funds Distributor, Inc. and <BR>
American Century Investment<BR>
Services, Inc., Distributors</FONT></P>
</TD>
<TD width="355"> </TD>
</TR>
</TABLE>
<P><FONT size=4><B>TABLE OF CONTENTS</B></FONT></P>
<P><FONT size=3><A href="#XB">The Funds' History</A></FONT></P>
<P><FONT size=3><A href="#XC">Fund Investment Guidelines</A></FONT></P>
<P><FONT size=3><A href="#XD">Fund Investments and Risks</A></FONT></P>
<P><FONT size=3> <A href="#XE">Investment Strategies
and Risks</A></FONT></P>
<P><FONT size=3> <A href="#XF">Investment Policies</A></FONT></P>
<P><FONT size=3> <A href="#XG">Portfolio Turnover</A></FONT></P>
<P><FONT size=3><A href="#XH">Management</A></FONT></P>
<P><FONT size=3> <A href="#XI">The Board of
Directors</A></FONT></P>
<P><FONT size=3> <A href="#XJ">Officers</A></FONT></P>
<P><FONT size=3> <A href="#XK">Code of Ethics</A></FONT></P>
<P><FONT size=3><A href="#XL">The Funds' Principal Shareholders</A></FONT></P>
<P><FONT size=3><A href="#XM">Service Providers</A></FONT></P>
<P><FONT size=3> <A href="#XN">Investment Advisor</A></FONT></P>
<P><FONT size=3> <A href="#XO">Transfer Agent
and Administrator</A></FONT></P>
<P><FONT size=3> <A href="#XP">Distributor</A></FONT></P>
<P><FONT size=3><A href="#XQ">Other Service Providers</A></FONT></P>
<P><FONT size=3> <A href="#XR">Custodian Banks</A></FONT></P>
<P><FONT size=3> <A href="#XS">Independent Auditors</A></FONT></P>
<P><FONT size=3><A href="#XT">Brokerage Allocation</A></FONT></P>
<P><FONT size=3> <A href="#XU">The Equity Portion
of the Funds</A></FONT></P>
<P><FONT size=3> <A href="#XV">The Fixed-Income
Portion of the Funds</A></FONT></P>
<P><FONT size=3><A href="#XW">Information about Fund Shares</A></FONT></P>
<P><FONT size=3> <A href="#XX">Multiple Class
Structure</A></FONT></P>
<P><FONT size=3> <A href="#XY">Buying and Selling
Fund Shares</A></FONT></P>
<P><FONT size=3> <A href="#XZ">Valuation of
the Funds' Securities</A></FONT></P>
<P><FONT size=3><A href="#XAA">Taxes</A></FONT></P>
<P><FONT size=3> <A href="#XBB">Federal Income
Taxes</A></FONT></P>
<P><FONT size=3> <A href="#XCC">State and Local
Taxes</A></FONT></P>
<P><FONT size=3><A href="#XDD">How Fund Performance Information Is Calculated</A></FONT></P>
<P><FONT size=3> <A href="#XEE">Performance
Comparisons</A></FONT></P>
<P><FONT size=3> <A href="#XFF">Permissible
Advertising Information</A></FONT></P>
<P><FONT size=3> <A href="#XGG">Multiple Class
Performance Advertising</A></FONT></P>
<P><FONT size=3><A href="#XHH">Financial Statements</A></FONT></P>
<P><FONT size=3><A href="#XII">Explanation of Fixed-Income Securities Ratings</A></FONT></P>
<P><FONT size="4"><B><A NAME="XB"></A>THE FUNDS' HISTORY</B></FONT></P>
<P><FONT size="3">American Century Strategic Asset Allocations, Inc. is a registered
open-end management investment company that was organized as a Maryland corporation
on April 4, 1994. Prior to January 1, 1997, it was known as Twentieth Century
Strategic Asset Allocations, Inc. Throughout this Statement of Additional Information,
we refer to American Century Strategic Asset Allocations, Inc. as the corporation.</FONT></P>
<P><FONT size="3">Each fund described in this Statement of Additional Information
is a separate series of the corporation and operates for many purposes as if
it were an independent company. Each fund has its own investment objective,
strategy, management team, assets, and tax identification and stock registration
numbers. </FONT></P>
INVESTOR CLASS ADVISOR CLASS
- ----------------------------------------------------------------------------------------------------
Fund Ticker Inception Date Ticker Inception Date
- ----------------------------------------------------------------------------------------------------
Strategic Allocation: Conservative TWSCX 2/15/1996 ACCAX 10/2/1996
- ----------------------------------------------------------------------------------------------------
Strategic Allocation: Moderate TWSMX 2/15/1996 ACOAX 10/2/1996
- ----------------------------------------------------------------------------------------------------
Strategic Allocation: Aggressive TWSAX 2/15/1996 ACVAX 10/2/1996
- ----------------------------------------------------------------------------------------------------
<P><FONT size="4"><B><A NAME="XC"></A>FUND INVESTMENT GUIDELINES</B></FONT></P>
<P><FONT size="3">This section explains the extent to which the funds' advisor,
American Century Investment Management, Inc., can use various investment vehicles
and strategies in managing a fund's assets. Descriptions of the investment techniques
and risks associated with each appear in the section, <i>Investment Strategies
and Risks, </i>which begins on page 5. In the case of the funds' principal investment
strategies, these descriptions elaborate upon discussions contained in the Prospectus.</FONT></P>
<P><FONT size="3">Each fund is a diversified open-end investment company as defined
in the Investment Company Act of 1940 (the Investment Company Act). Diversified
means that, with respect to 75% of its total assets, each fund will not invest
more than 5% of its total assets in the securities of a single issuer or own
more than 10% of the outstanding voting securities of a single issuer. </FONT></P>
<P><FONT size="3">To meet federal tax requirements for qualification as a regulated
investment company, each fund must limit its investments so that at the close
of each quarter of its taxable year </FONT></P>
<P><FONT size="3">(1) no more than 25% of its total assets are invested in the
securities of a single issuer (other than the U.S government or a regulated
investment company), and </FONT></P>
<P><FONT size="3">(2) with respect to at least 50% of its total assets, no more
than 5% of its total assets are invested in the securities of a single issuer.
</FONT></P>
<P><FONT size="3">In general, within the restrictions outlined here and in the
funds' Prospectus, the fund managers have broad powers to decide how to invest
fund assets, including the power to hold them uninvested.</FONT></P>
<P><FONT size="3">Investments are varied according to what is judged advantageous
under changing economic conditions. It is the advisor's policy to retain maximum
flexibility in management without restrictive provisions as to the proportion
of one or another class of securities that may be held, subject to the investment
restrictions described in the funds' Prospectus and below.</FONT></P>
<P><FONT size="3">As described in the funds' Prospectus, each fund's assets are
allocated among major asset classes based on the fund's target allocation and
subject to the applicable operating ranges. Each fund's assets are further diversified
among various investment categories and disciplines within the major asset classes.</FONT></P>
<P><FONT size="3">The equity portion of a fund's portfolio may be invested in
any type of domestic or foreign equity or equity-equivalent security, primarily
common stocks, that meets certain fundamental and technical standards of selection.
Equity equivalents include securities that permit the fund to receive an equity
interest in an issuer, the opportunity to acquire an equity interest in an issuer,
or the opportunity to receive a return on its investment that permits the fund
to benefit from the growth over time in the equity of an issuer. Examples of
equity securities and equity equivalents include preferred stock, convertible
preferred stock and convertible debt securities. Equity equivalents also may
include securities whose value or return is derived from the value or return
of a different security. Depositary receipts, which are described below under
the heading <i>Foreign Securities,</i> are an example of the type of derivative
security in which the funds might invest. Derivative securities are discussed
in greater detail below under the heading <i>Derivative Securities.</i></FONT></P>
<P><FONT size="3">The funds' managers use several investment disciplines in managing
the equity portion of each fund's portfolio, including growth, value and quantitative
management strategies. The growth discipline seeks long-term capital appreciation
by investing in companies whose earnings and revenue trends meet the advisor's
standards of selection, which generally means that the companies have demonstrated,
or, in the managers' opinion, have the prospects for demonstrating, accelerating
earnings and revenues as compared to prior period and/or industry competitors.
The value investment discipline seeks capital growth by investing in equity
securities of well-established companies that the managers believe to be temporarily
undervalued.</FONT></P>
<P><FONT size="3">The advisor believes both value investing and growth investing
provide the potential for appreciation over time. Value investing tends to provide
less volatile results. This lower volatility means that the price of value stocks
tends not to fall as significantly as the price of growth stocks in down markets.
However, value stocks do not usually appreciate as significantly as growth stocks
do in up markets. In keeping with the diversification theme of these funds,
and as a result of management's belief that these styles are complementary,
both disciplines will be represented to some degree in each portfolio at all
times.</FONT></P>
<P><FONT size="3">As noted, the value investment discipline tends to be less volatile
than the growth style. As a result, Strategic Allocation: Conservative will
generally have a higher proportion of its equity investments in value stocks
than the other two funds. Likewise, Strategic Allocation: Aggressive will generally
have a greater proportion of growth stocks than either Strategic Allocation:
Moderate or Strategic Allocation: Conservative.</FONT></P>
<P><FONT size="3">In addition, the equity portion of each fund's portfolio will
be further diversified among small, medium and large companies. This approach
provides investors with an additional level of diversification and enables investors
to achieve a broader exposure to the various capitalization ranges without having
to invest in multiple funds.</FONT></P>
<P><FONT size="3">The funds' managers also may apply quantitative management techniques
to a portion of each fund's portfolio. These techniques combine elements of
both growth and value investing and are intended to reduce overall volatility
relative to the market. Quantitative management combines two investment management
approaches. The first is active management, which allows the managers to select
investments for a fund without reference to an index or investment model. The
second is indexing, in which the managers try to match a portion of a fund's
portfolio composition to that of a particular index.</FONT></P>
<P><FONT size="3">The primary quantitative management technique the managers use
is portfolio optimization. The managers construct a portion of the funds' portfolios
to match the risk characteristics of the S&P 500 and then optimize each
portfolio to achieve the desired balance of risk and return potential.</FONT></P>
<P><FONT size="3">Although the funds will remain exposed to each of the investment
disciplines and categories described above, a particular discipline or investment
category may be emphasized when, in the managers' opinion, such discipline or
investment category is undervalued relative to the other disciplines or categories.</FONT></P>
<P><FONT size="3">The fixed-income portion of a fund's portfolio may include U.S.
Treasury securities, securities issued or guaranteed by the U.S. government
or a foreign government, or an agency or instrumentality of the U.S. or a foreign
government, and nonconvertible debt obligations issued by U.S. or foreign corporations.
The funds also may invest in mortgage-related and other asset-backed securities,
which are described in greater detail under the heading <i>Mortgage-Related
and Other Asset-Backed Securities.</i> As with the equity portion of a fund's
portfolio, the bond portion of a fund's portfolio will be diversified among
the various types of fixed-income investment categories described above. The
managers' strategy is to actively manage the portfolio by investing the fund's
assets in sectors they believe are undervalued (relative to the other sectors)
and that represent better relative long-term investment opportunities.</FONT></P>
<P><FONT size="3">The value of fixed-income securities fluctuates based on changes
in interest rates and in the credit quality of the issuer. Debt securities that
comprise part of a fund's fixed-income portfolio will be limited primarily to
investment-grade obligations. However, Strategic Allocation: Moderate may invest
up to 5% of its assets, and Strategic Allocation: Aggressive may invest up to
10% of its assets, in "high-yield" securities. Investment-grade means that at
the time of purchase, such obligations are rated within the four highest categories
by a nationally recognized statistical rating organization [for example, at
least Baa by Moody's Investors Service, Inc. (Moody's) or BBB by Standard &
Poor's Corporation (S&P)], or, if not rated, are of equivalent investment
quality as determined by the managers. According to Moody's, bonds rated Baa
are medium-grade and possess some speculative characteristics. A BBB rating
by S&P indicates S&P's belief that a security exhibits a satisfactory
degree of safety and capacity for repayment, but is more vulnerable to adverse
economic conditions and changing circumstances.</FONT></P>
<P><FONT size="3">High-yield securities, sometimes referred to as junk bonds,
are higher-risk, nonconvertible debt obligations that are rated below investment-grade
securities, or are unrated, but with similar credit quality.</FONT></P>
<P><FONT size="3">There are no credit or maturity restrictions on the fixed-income
securities in which the high-yield portion of a fund's portfolio may be invested.
Debt securities rated lower than Baa by Moody's or BBB by S&P or their equivalent
are considered by many to be predominantly speculative. Changes in economic
conditions or other circumstances are more likely to lead to a weakened capacity
to make principal and interest payments on such securities than is the case
with higher-quality debt securities. Regardless of rating levels, all debt securities
considered for purchase by the fund are analyzed by the managers to determine,
to the extent reasonably possible, that the planned investment is consistent
with the investment objective of the fund.</FONT></P>
<P><FONT size="3">Under normal market conditions, the weighted average maturity
for the fixed-income portfolio will be in the three- to 10-year range.</FONT></P>
<P><FONT size="3">The cash-equivalent portion of a fund's portfolio may be invested
in high-quality money market instruments (denominated in U.S. dollars or foreign
currencies), including U.S. government obligations, obligations of domestic
and foreign banks, short-term corporate debt instruments and repurchase agreements.</FONT></P>
<P><FONT size="3">Within each asset class, each fund's holdings will be invested
across industry groups and issuers that meet its investment criteria. This diversity
of investment is intended to help reduce the risk created by overconcentration
in a particular industry or issuer.</FONT></P>
<P><FONT size="3">The funds are "strategic" rather than "tactical" allocation
funds, which means the managers do not try to time the market to identify the
exact time when a major reallocation should be made. Instead, the managers use
a longer-term approach in pursuing the funds' investment objectives, and thus
select a blend of investments in the various asset classes.</FONT></P>
<P><FONT size="3">The managers regularly review each fund's investments and allocations
and may make changes in the securities holdings within each asset class or to
a fund's asset mix (within the defined operating ranges) to favor investments
that they believe will provide the most favorable outlook for achieving a fund's
objective. Recommended reallocations may be implemented promptly or may be implemented
gradually. In order to minimize the impact of reallocations on a fund's performance,
the managers will generally attempt to reallocate assets gradually.</FONT></P>
<P><FONT size="3">In determining the allocation of assets among U.S. and foreign
capital markets, the managers consider the condition and growth potential of
the various economies; the relative valuations of the markets; and social, political
and economic factors that may affect the markets.</FONT></P>
<P><FONT size="3">In selecting securities in foreign currencies, the managers
consider, among other factors, the impact of foreign exchange rates relative
to the U.S. dollar value of such securities. The managers may seek to hedge
all or a part of a fund's foreign currency exposure through the use of forward
foreign currency contracts or options thereon.</FONT></P>
<P><FONT size="3">The funds attempt to diversify across asset classes and investment
categories to a greater extent than mutual funds that invest primarily in equity
securities or primarily in fixed-income securities. However, the funds are designed
to fit three general risk profiles and may not provide an appropriately balanced
investment plan for all investors.</FONT></P>
<P><FONT size="4"><B><A NAME="XD"></A>FUND INVESTMENTS AND RISKS</B></FONT></P>
<P><B><FONT size="3"><A NAME="XE"></A>INVESTMENT STRATEGIES AND RISKS</FONT></B></P>
<P><FONT size="3">In addition to investing in common stocks, bonds and cash-equivalent
instruments, the funds' managers also may use the various investment vehicles
and techniques described in this section in managing the funds' assets. This
section also details the risks associated with each, because each investment
vehicle and technique contributes to a fund's overall risk profile. </FONT></P>
<P><FONT size="3"><B>Foreign Securities</B></FONT></P>
<P><FONT size="3">Each fund may invest in the securities (including debt securities)
of foreign issuers, including foreign governments, when these securities meet
its standards of selection. Securities of foreign issuers may trade in the U.S.
or foreign securities markets.</FONT></P>
<P><FONT size="3">The following table shows the operating ranges in which each
fund's assets invested in securities of foreign issuers generally will vary.</FONT></P>
Fund Percentage Generally Invested in Foreign Securities
- ----------------------------------------------------------------------------------------------
Strategic Allocation: Conservative 3-15%
Strategic Allocation: Moderate 5-25%
Strategic Allocation: Aggressive 10-30%
- ----------------------------------------------------------------------------------------------
<P><FONT size="3">The funds may make such investments either directly in foreign
securities or indirectly by purchasing depositary receipts or depositary shares
of similar instruments (depositary receipts) for foreign securities. Depositary
receipts are securities that are listed on exchanges or quoted in the domestic
over-the-counter markets in one country but represent shares of issuers domiciled
in another country. Direct investments in foreign securities may be made either
on foreign securities exchanges or in the over-the-counter markets.</FONT></P>
<P><FONT size="3">Subject to its investment objective and policies, each fund
may invest in common stocks, convertible securities, preferred stocks, bonds,
notes and other debt securities of foreign issuers, and debt securities of foreign
governments and their agencies. The credit quality standards applicable to domestic
debt securities purchased by each fund are also applicable to its foreign securities
investments. </FONT></P>
<P><FONT size="3">Investments in foreign securities may present certain risks,
including: </FONT></P>
<P><FONT size="3"><B><I>Currency Risk.</I></B> The value of the foreign investments
held by the funds may be significantly affected by changes in currency exchange
rates. The dollar value of a foreign security generally decreases when the value
of the dollar rises against the foreign currency in which the security is denominated
and tends to increase when the value of the dollar falls against such currency.
In addition, the value of fund assets may be affected by losses and other expenses
incurred in converting between various currencies in order to purchase and sell
foreign securities, and by currency restrictions, exchange control regulation,
currency devaluations and political developments.</FONT></P>
<P><FONT size="3"><B><I>Political and Economic Risk.</I></B> The economies of
many of the countries in which the funds invest are not as developed as the
economy of the United States and may be subject to significantly different forces.
Political or social instability, expropriation, nationalization, confiscatory
taxation and limitations on the removal of funds or other assets, also could
adversely affect the value of investments. Further, the funds may encounter
difficulties or be unable to enforce ownership rights, pursue legal remedies
or obtain judgments in foreign courts.</FONT></P>
<P><FONT size="3"><B><I>Regulatory Risk.</I></B> Foreign companies generally are
not subject to the regulatory controls imposed on U.S. issuers and, in general,
there is less publicly available information about foreign securities than is
available about domestic securities. Many foreign companies are not subject
to uniform accounting, auditing and financial reporting standards, practices
and requirements comparable to those applicable to domestic companies. Income
from foreign securities owned by the funds may be reduced by a withholding tax
at the sources, which would reduce dividend income payable to shareholders.</FONT></P>
<P><FONT size="3"><B><I>Market and Trading Risk.</I></B> Brokerage commission
rates in foreign countries, which generally are fixed rather than subject to
negotiation as in the United States, are likely to be higher. The securities
markets in many of the countries in which the funds may invest have substantially
less trading volume than the principal U.S. markets. As a result, the securities
of some companies in these countries may be less liquid and more volatile than
comparable U.S. securities. Furthermore, one securities broker may represent
all or a significant part of the trading volume in a particular country, resulting
in higher trading costs and decreased liquidity due to a lack of alternative
trading partners. There generally is less government regulation and supervision
of foreign stock exchanges, brokers and issuers, which may make it difficult
to enforce contractual obligations.</FONT></P>
<P><FONT size="3"><B><I>Clearance and Settlement Risk.</I></B> Foreign securities
markets also have different clearance and settlement procedures, and in certain
markets there have been times when settlements have been unable to keep pace
with the volume of securities transactions, making it difficult to conduct such
transactions. Delays in clearance and settlement could result in temporary periods
when assets of the funds are uninvested and no return is earned. The inability
of the funds to make intended security purchases due to clearance and settlement
problems could cause the funds to miss attractive investment opportunities.
Inability to dispose of portfolio securities due to clearance and settlement
problems could result either in losses to the funds due to subsequent declines
in the value of the portfolio security or, if the fund has entered into a contract
to sell the security, liability to the purchaser.</FONT></P>
<P><FONT size="3"><B><I>Ownership Risk.</I></B> Evidence of securities ownership
may be uncertain in many foreign countries. As a result, there is a risk that
a fund's trade details could be incorrectly or fraudulently entered at the time
of the transaction, resulting in a loss to the fund.</FONT></P>
<P><FONT size="3"><B>Investing in Emerging Market Countries</B></FONT></P>
<P><FONT size="3">Strategic Allocation: Moderate and Strategic Allocation: Aggressive
may invest a minority portion of their international holdings in securities
of issuers in emerging market (developing) countries. The funds consider "emerging
market countries" to include all countries that are considered by the advisor
to be developing or emerging countries. Currently, the countries not included
in this category for the funds are the United States, Canada, Japan, the United
Kingdom, Germany, Austria, France, Hong Kong, Italy, Ireland, Luxembourg, Singapore,
Spain, Belgium, the Netherlands, Portugal, Switzerland, Sweden, Finland, Norway,
Denmark, Australia and New Zealand. In addition, as used in this Statement of
Additional Information, "securities of issuers in emerging market countries"
means (i) securities of issuers, for which the principal securities trading
market is an emerging market country or (ii) securities of issuers having their
principal place of business or principal office in an emerging market country.</FONT></P>
<P><FONT size="3">Investing in securities of issuers in emerging market countries
involves exposure to significantly higher risk than investing in countries with
developed markets. Emerging market countries may have economic structures that
generally are less diverse and mature, and political systems that can be expected
to be less stable than those of developed countries. Securities prices in emerging
market countries can be significantly more volatile than in developed countries,
reflecting the greater uncertainties of investing in lesser developed markets
and economies. In particular, emerging market countries may have relatively
unstable governments, and may present the risk of nationalization of businesses,
expropriation, confiscatory taxation or in certain instances, reversion to closed-market,
centrally planned economies. Such countries may also have less protection of
property rights than developed countries.</FONT></P>
<P><FONT size="3">The economies of emerging market countries may be predominantly
based on only a few industries or may be dependent on revenues from particular
commodities or on international aid or developmental assistance, may be highly
vulnerable to changes in local or global trade conditions, and may suffer from
extreme and volatile debt burdens or inflation rates. In addition, securities
markets in emerging market countries may trade a relatively small number of
securities and may be unable to respond effectively to increases in trading
volume, potentially resulting in a lack of liquidity and in volatility in the
price of securities traded on those markets. Also, securities markets in emerging
market countries typically offer less regulatory protection for investors. </FONT></P>
<P><FONT size="3"><B>Mortgage-Related and Other Asset-Backed Securities</B></FONT></P>
<P><FONT size="3">The funds may purchase mortgage-related and other asset-backed
securities. Mortgage pass-through securities are securities representing interests
in "pools" of mortgages in which payments of both interest and principal on
the securities are generally made monthly, in effect "passing through" monthly
payments made by the individual borrowers on the residential mortgage loans
that underlie the securities (net of fees paid to the issuer or guarantor of
the securities).</FONT></P>
<P><FONT size="3">Early repayment of principal on mortgage pass-through securities
(arising from prepayments of principal due to sale of the underlying property,
refinancing or foreclosure, net of fees and costs that may be incurred) may
expose the funds to a lower rate of return upon reinvestment of principal. Also,
if a security subject to prepayment were purchased at a premium, in the event
of prepayment, the value of the premium would be lost. As with other fixed-income
securities, when interest rates rise, the value of a mortgage-related security
generally will decline; however, when interest rates decline, the value of mortgage-related
securities with prepayment features may not increase as much as other fixed-income
securities.</FONT></P>
<P><FONT size="3">Payment of principal and interest on some mortgage pass-through
securities (but not the market value of the securities themselves) may be guaranteed
by the full faith and credit of the U.S. government, as in the case of securities
guaranteed by the Government National Mortgage Association (GNMA), or guaranteed
by agencies or instrumentalities of the U.S. government, as in the case of securities
guaranteed by the Federal National Mortgage Association (FNMA) or the Federal
Home Loan Mortgage Corporation (FHLMC), which are supported only by the discretionary
authority of the U.S. government to purchase the agency's obligations.</FONT></P>
<P><FONT size="3">Mortgage pass-through securities created by nongovernmental
issuers (such as commercial banks, savings and loan institutions, private mortgage
insurance companies, mortgage bankers, and other secondary market issuers) may
be supported by various forms of insurance or guarantees, including individual
loan, title, pool and hazard insurance, and letters of credit, which may be
issued by governmental entities, private insurers or the mortgage poolers.</FONT></P>
<P><FONT size="3">The funds also may invest in collateralized mortgage obligations
(CMOs). CMOs are mortgage-backed securities issued by government agencies; single-purpose,
stand-alone financial subsidiaries; trusts established by financial institutions;
or similar institutions. The funds may buy CMOs that:</FONT></P>
<UL>
<LI><FONT size="3">are collateralized by pools of mortgages in which payment
of principal and interest of each mortgage is guaranteed by an agency or instrumentality
of the U.S. government; </FONT></LI>
<LI><FONT size="3">are collateralized by pools of mortgages in which payment
of principal and interest are guaranteed by the issuer, and the guarantee
is collateralized by U.S. government securities; and </FONT></LI>
<LI><FONT size="3">are securities in which the proceeds of the issue are invested
in mortgage securities and payments of principal and interest are supported
by the credit of an agency or instrumentality of the U.S. government. </FONT></LI>
</UL>
<P><FONT size="3"><B>Forward Currency Exchange Contracts</B></FONT></P>
<P><FONT size="3">Each fund may purchase and sell foreign currency on a spot (i.e.,
cash) basis and may engage in forward currency contracts, currency options and
futures transactions for hedging or any other lawful purpose. See <I>Derivative
Securities, </I>page 10.</FONT></P>
<P><FONT size="3">The funds expect to use forward contracts under two circumstances:</FONT></P>
<P><FONT size="3">(1) When a fund's managers wish to lock in the U.S. dollar price
of a security when the fund is purchasing or selling a security denominated
in a foreign currency, the fund would be able to enter into a forward contract
to do so; or</FONT></P>
<P><FONT size="3">(2) When a fund's managers believe the currency of a particular
foreign country may suffer a substantial decline against the U.S. dollar, the
fund would be able to enter into a forward contract to sell foreign currency
for a fixed U.S. dollar amount approximating the value of some or all of its
portfolio securities either denominated in, or whose value is tied to, such
foreign currency.</FONT></P>
<P><FONT size="3">In the first circumstance, when a fund enters into a trade for
the purchase or sale of a security denominated in a foreign currency, it may
be desirable to establish (lock in) the U.S. dollar cost or proceeds. By entering
into forward contracts in U.S. dollars for the purchase or sale of a foreign
currency involved in an underlying security transaction, the fund will be able
to protect itself against a possible loss between trade and settlement dates
resulting from the adverse change in the relationship between the U.S. dollar
and the subject foreign currency.</FONT></P>
<P><FONT size="3">Under the second circumstance, when a fund's managers believe
the currency of a particular country may suffer a substantial decline relative
to the U.S. dollar, the fund could enter into a foreign contract to sell for
a fixed dollar amount the amount in foreign currencies approximating the value
of some or all of its portfolio securities either denominated in, or whose value
is tied to, such foreign currency. The fund will segregate on its records cash
or securities in an amount sufficient to cover its obligations under the contract.</FONT></P>
<P><FONT size="3">The precise matching of forward contracts in the amounts and
values of securities involved generally would not be possible because the future
values of such foreign currencies will change as a consequence of market movements
in the values of those securities between the date the forward contract is entered
into and the date it matures. Predicting short-term currency market movements
is extremely difficult, and the successful execution of short-term hedging strategy
is highly uncertain. The funds' managers do not intend to enter into such contracts
on a regular basis. Normally, consideration of the prospect for currency parities
will be incorporated into the long-term investment decisions made with respect
to overall diversification strategies. However, the funds' managers believe
it is important to have flexibility to enter into such forward contracts when
they determine that a fund's best interests may be served.</FONT></P>
<P><FONT size="3">At the maturity of the forward contract, the fund may either
sell the portfolio security and make delivery of the foreign currency, or it
may retain the security and terminate the obligation to deliver the foreign
currency by purchasing an offsetting forward contract with the same currency
trader obligating the fund to purchase, on the same maturity date, the same
amount of the foreign currency.</FONT></P>
<P><FONT size="3">It is impossible to forecast with absolute precision the market
value of portfolio securities at the expiration of the forward contract. Accordingly,
it may be necessary for a fund to purchase additional foreign currency on the
spot market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the fund is obligated to
deliver and if a decision is made to sell the security and make delivery of
the foreign currency the fund is obligated to deliver.</FONT></P>
<P><FONT size="3"><B>Convertible Debt Securities</B></FONT></P>
<P><FONT size="3">A convertible debt security is a fixed-income security that
offers the potential for capital appreciation through a conversion feature that
enables the holder to convert the fixed-income security into a stated number
of shares of common stock. As fixed-income securities, convertible debt securities
provide a stable stream of income, with generally higher yields than common
stocks. Convertible debt securities offer the potential to benefit from increases
in the market price of the underlying common stock, however, they generally
offer lower yields than nonconvertible securities of similar quality. Of course,
as with all fixed-income securities, there can be no assurance of current income
because the issuers of the convertible debt securities may default on their
obligations. In addition, there can be no assurance of capital appreciation
because the value of the underlying common stock will fluctuate.</FONT></P>
<P><FONT size="3">Convertible debt securities generally are subordinated to other
similar but nonconvertible securities of the same issuer, although convertible
bonds, as corporate debt obligations, enjoy seniority in right of payment to
all equity securities, and convertible preferred stock is senior to common stock
of the same issuer. Because of the subordination feature, however, convertible
securities typically have lower ratings than similar nonconvertible securities.</FONT></P>
<P><FONT size="3">Unlike a convertible security that is a single security, a synthetic
convertible security is comprised of two distinct securities that together resemble
convertible securities in certain respects. Synthetic convertible securities
are created by combining nonconvertible bonds or preferred stocks with warrants
or stock call options. The options that will form elements of synthetic convertible
securities will be listed on a securities exchange or NASDAQ. The two components
of a synthetic convertible security, which will be issued with respect to the
same entity, generally are not offered as a unit, and may be purchased and sold
by the fund at different times. Synthetic convertible securities differ from
convertible securities in certain respects. Each component of a synthetic convertible
security has a separate market value and responds differently to market fluctuations.
Investing in a synthetic convertible security involves the risk normally found
in holding the securities comprising the synthetic convertible security.</FONT></P>
<P><FONT size="3">Each fund will limit its holdings of convertible debt securities
to those that, at the time of purchase, are rated at least B- by S&P or
B3 by Moody's, or, if not rated by S&P or Moody's, are of equivalent investment
quality as determined by the funds' managers. A fund's investments in convertible
debt securities and other high-yield, non-convertible debt securities rated
below investment grade will comprise less than 35% of the fund's net assets.</FONT></P>
<P><FONT size="3"><B>Short Sales</B></FONT></P>
<P><FONT size="3">A fund may engage in short sales if, at the time of the short
sale, the fund owns or has the right to acquire securities equivalent in kind
and amount to the securities being sold short.</FONT></P>
<P><FONT size="3">In a short sale, the seller does not immediately deliver the
securities sold and is said to have a short position in those securities until
delivery occurs. To make delivery to the purchaser, the executing broker borrows
the securities being sold short on behalf of the seller. While the short position
is maintained, the seller collateralizes its obligation to deliver the securities
sold short in an amount equal to the proceeds of the short sale plus an additional
margin amount established by the Board of Governors of the Federal Reserve.
If a fund engages in a short sale, the collateral account will be maintained
by the fund's custodian. While the short sale is open, the fund will maintain
in a segregated custodial account an amount of securities convertible into,
or exchangeable for, such equivalent securities at no additional cost. These
securities would constitute the fund's long position.</FONT></P>
<P><FONT size="3">A fund may make a short sale, as described above, when it wants
to sell the security it owns at a current attractive price, but also wishes
to defer recognition of gain or loss for federal income tax purposes. There
will be certain additional transaction costs associated with short sales, but
the fund will endeavor to offset these costs with income from the investment
of the cash proceeds of short sales.</FONT></P>
<P><FONT size="3"><B>Portfolio Lending</B></FONT></P>
<P><FONT size="3">In order to realize additional income, a fund may lend its portfolio
securities. Such loans may not exceed one-third of the fund's total assets valued
at market except </FONT></P>
<UL>
<LI><FONT size="3">the purchase of debt securities in accordance with its investment
objective, policies and limitations, or </FONT></LI>
<LI><FONT size="3">by engaging in repurchase agreements with respect to portfolio
securities. </FONT></LI>
</UL>
<P><FONT size="3"><B>Derivative Securities</B></FONT></P>
<P><FONT size="3">To the extent permitted by its investment objectives and policies,
each of the funds may invest in securities that are commonly referred to as
derivative securities. Generally, a derivative is a financial arrangement, the
value of which is based on, or derived from, a traditional security, asset or
market index. Certain derivative securities are described more accurately as
index/structured securities. Index/structured securities are derivative securities
whose value or performance is linked to other equity securities (such as depositary
receipts), currencies, interest rates, indices or other financial indicators
(reference indices).</FONT></P>
<P><FONT size="3">Some derivatives, such as mortgage-related and other asset-backed
securities, are in many respects like any other investment, although they may
be more volatile or less liquid than more traditional debt securities.</FONT></P>
<P><FONT size="3">There are many different types of derivatives and many different
ways to use them. Futures and options are commonly used for traditional hedging
purposes to attempt to protect a fund from exposure to changing interest rates,
securities prices or currency exchange rates, and for cash management purposes
as a low-cost method of gaining exposure to a particular securities market without
investing directly in those securities.</FONT></P>
<P><FONT size="3">No fund may invest in a derivative security unless the reference
index or the instrument to which it relates is an eligible investment for the
fund. For example, a security whose underlying value is linked to the price
of oil would not be a permissible investment because the funds may not invest
in oil and gas leases or futures.</FONT></P>
<P><FONT size="3">The return on a derivative security may increase or decrease,
depending upon changes in the reference index or instrument to which it relates.</FONT></P>
<P><FONT size="3">There are risks associated with derivative investments, including:</FONT></P>
<UL>
<LI><FONT size="3">the risk that the underlying security, interest rate, market
index or other financial asset will not move in the direction the fund managers
anticipate; </FONT></LI>
<LI><FONT size="3">the possibility that there may be no liquid secondary market,
or the possibility that price fluctuation limits may be imposed by the exchange,
either of which may make it difficult or impossible to close out a position
when desired; </FONT></LI>
<LI><FONT size="3">the risk that adverse price movements in an instrument can
result in a loss substantially greater than a fund's initial investment; and
</FONT></LI>
<LI><FONT size="3">the risk that the counterparty will fail to perform its obligations.</FONT></LI>
</UL>
<P><FONT size="3">The Board of Directors has approved the advisor's policy regarding
investments in derivative securities. That policy specifies factors that must
be considered in connection with a purchase of derivative securities. The policy
also establishes a committee that must review certain proposed purchases before
the purchases can be made. The advisor will report on fund activity in derivative
securities to the Board of Directors as necessary. In addition, the board will
review the advisor's policy for investments in derivative securities annually.</FONT></P>
<P><FONT size="3"><B>Investment in Companies with Limited Operating Histories</B></FONT></P>
<P><FONT size="3">The funds may invest a portion of their assets in the securities
of issuers with limited operating histories. The managers consider an issuer
to have a limited operating history if that issuer has a record of less than
three years of continuous operation. The managers will consider periods of capital
formation, incubation, consolidations, and research and development in determining
whether a particular issuer has a record of three years of continuous operation.</FONT></P>
<P><FONT size="3">Investments in securities of issuers with limited operating
histories may involve greater risks than investments in securities of more mature
issuers. By their nature, such issuers present limited operating histories and
financial information upon which the managers may base their investment decision
on behalf of the funds. In addition, financial and other information regarding
such issuers, when available, may be incomplete or inaccurate.</FONT></P>
<P><FONT size="3"><B>Repurchase Agreements</B></FONT></P>
<P><FONT size="3">Each fund may invest in repurchase agreements when they present
an attractive short-term return on cash that is not otherwise committed to the
purchase of securities pursuant to the investment policies of that fund.</FONT></P>
<P><FONT size="3">A repurchase agreement occurs when, at the time a fund purchases
an interest-bearing obligation, the seller (a bank or a broker-dealer registered
under the Securities Exchange Act of 1934) agrees to purchase it on a specified
date in the future at an agreed-upon price. The repurchase price reflects an
agreed-upon interest rate during the time the fund's money is invested in the
security.</FONT></P>
<P><FONT size="3">Because the security purchased constitutes security for the
repurchase obligation, a repurchase agreement can be considered a loan collateralized
by the security purchased. The fund's risk is the ability of the seller to pay
the agreed-upon repurchase price on the repurchase date. If the seller defaults,
the fund may incur costs in disposing of the collateral, which would reduce
the amount realized thereon. If the seller seeks relief under the bankruptcy
laws, the disposition of the collateral may be delayed or limited. To the extent
the value of the security decreases, the fund could experience a loss.</FONT></P>
<P><FONT size="3">The funds will limit repurchase agreement transactions to securities
issued by the U.S. government and its agencies and instrumentalities, and will
enter into such transactions with those banks and securities dealers who are
deemed creditworthy by the funds' advisor.</FONT></P>
<P><FONT size="3">No fund will invest more than 15% of its assets in repurchase
agreements maturing in more than seven days and other illiquid securities.</FONT></P>
<P><FONT size="3"><B>Variable- and Floating-Rate Obligations</B></FONT></P>
<P><FONT size="3">Variable- and floating-rate demand obligations (VRDOs and FRDOs)
carry rights that permit holders to demand payment of the unpaid principal plus
accrued interest, from the issuers or from financial intermediaries. Floating-rate
securities, or floaters, have interest rates that change whenever there is a
change in a designated base rate; variable-rate instruments provide for a specified,
periodic adjustment in the interest rate, which typically is based on an index.
These rate formulas are designed to result in a market value for the VRDO or
FRDO that approximates par value.</FONT></P>
<P><FONT size="3"><B>Obligations with Term Puts Attached</B></FONT></P>
<P><FONT size="3">Fixed-rate bonds subject to third-party puts and participation
interests in such bonds held by a bank in trust or otherwise have tender options
or demand features that permit the funds to tender (or put) their bonds to an
institution at periodic intervals and to receive the principal amount thereof.</FONT></P>
<P><FONT size="3">The managers expect the funds will pay more for securities with
puts attached than for securities without these liquidity features.</FONT></P>
<P><FONT size="3">Because it is difficult to evaluate the likelihood of exercise
or the potential benefit of a put, puts normally will be determined to have
a value of zero, regardless of whether any direct or indirect consideration
is paid. Accordingly, puts as separate securities are not expected to affect
the funds' weighted average maturities. When a fund has paid for a put, the
cost will be reflected as unrealized depreciation on the underlying security
for the period the put is held. Any gain on the sale of the underlying security
will be reduced by the cost of the put.</FONT></P>
<P><FONT size="3">There is a risk that the seller of a put will not be able to
repurchase the underlying obligation when (or if) a fund attempts to exercise
the put. To minimize such risks, the funds will purchase obligations with puts
attached only from sellers deemed creditworthy by the fund managers under the
direction of the Board of Directors.</FONT></P>
<P><FONT size="3"><B>When-Issued and Forward Commitment Agreements</B></FONT></P>
<P><FONT size="3">The funds may sometimes purchase new issues of securities on
a when-issued or forward commitment basis in which the transaction price and
yield are each fixed at the time the commitment is made, but payment and delivery
occur at a future date (typically 15 to 45 days later).</FONT></P>
<P><FONT size="3">When purchasing securities on a when-issued or forward commitment
basis, a fund assumes the rights and risks of ownership, including the risks
of price and yield fluctuations. Market rates of interest on debt securities
at the time of delivery may be higher or lower than those contracted for on
the when-issued security. Accordingly, the value of that security may decline
prior to delivery, which could result in a loss to the fund. While the fund
will make commitments to purchase or sell securities with the intention of actually
receiving or delivering them, it may sell the securities before the settlement
date if doing so is deemed advisable as a matter of investment strategy.</FONT></P>
<P><FONT size="3">In purchasing securities on a when-issued or forward commitment
basis, a fund will establish and maintain until the settlement date a segregated
account consisting of cash, cash equivalents or other appropriate liquid securities
in an amount sufficient to meet the purchase price. When the time comes to pay
for the when-issued securities, the fund will meet its obligations with available
cash, through the sale of securities, or, although it would not normally expect
to do so, by selling the when-issued securities themselves (which may have a
market value greater or less than the fund's payment obligation). Selling securities
to meet when-issued or forward commitment obligations may generate taxable capital
gains or losses.</FONT></P>
<P><FONT size="3"><B>Inverse Floaters</B></FONT></P>
<P><FONT size="3">An inverse floater is a type of derivative security that bears
an interest rate that moves inversely to market interest rates. As market interest
rates rise, the interest rate on inverse floaters goes down, and vice versa.
Generally, this is accomplished by expressing the interest rate on the inverse
floater as an above-market fixed rate of interest, reduced by an amount determined
by reference to a market-based or bond-specific floating interest rate (as well
as by any fees associated with administering the inverse floater program).</FONT></P>
<P><FONT size="3">Inverse floaters may be issued in conjunction with an equal
amount of Dutch Auction floating-rate bonds (floaters), or a market-based index
may be used to set the interest rate on these securities. A Dutch Auction is
an auction system in which the price of the security is gradually lowered until
it meets a responsive bid and is sold. Floaters and inverse floaters may be
brought to market (1) by a broker-dealer who purchases fixed-rate bonds and
places them in a trust; or (2) by an issuer seeking to reduce interest expenses
by using a floater/inverse floater structure in lieu of fixed-rate bonds.</FONT></P>
<P><FONT size="3">In the case of a broker-dealer structured offering (where underlying
fixed-rate bonds have been placed in a trust), distributions from the underlying
bonds are allocated to floater and inverse floater holders in the following
manner:</FONT></P>
<P><FONT size="3">(i) Floater holders receive interest based on rates set at a
six-month interval or at a Dutch Auction, which is typically held every 28 to
35 days. Current and prospective floater holders bid the minimum interest rate
that they are willing to accept on the floaters, and the interest rate is set
just high enough to ensure that all of the floaters are sold.</FONT></P>
<P><FONT size="3">(ii) Inverse floater holders receive all of the interest that
remains on the underlying bonds after floater interest and auction fees are
paid.</FONT></P>
<P><FONT size="3">Procedures for determining the interest payment on floaters
and inverse floaters brought to market directly by the issuer are comparable,
although the interest paid on the inverse floaters is based on a presumed coupon
rate that would have been required to bring fixed-rate bonds to market at the
time the floaters and inverse floaters were issued.</FONT></P>
<P><FONT size="3">Where inverse floaters are issued in conjunction with floaters,
inverse floater holders may be given the right to acquire the underlying security
(or to create a fixed-rate bond) by calling an equal amount of corresponding
floaters. The underlying security may then be held or sold. However, typically,
there are time constraints and other limitations associated with any right to
combine interests and claim the underlying security.</FONT></P>
<P><FONT size="3">Floater holders subject to a Dutch Auction procedure generally
do not have the right to put back their interests to the issuer or to a third
party. If a Dutch Auction fails, the floater holder may be required to hold
its position until the underlying bond matures, during which time interest on
the floater is capped at a predetermined rate.</FONT></P>
<P><FONT size="3">The secondary market for floaters and inverse floaters may be
limited. The market value of inverse floaters tends to be significantly more
volatile than the market value of fixed-rate bonds. The interest rates on inverse
floaters may be significantly reduced, even to zero, if interest rates rise.</FONT></P>
<P><FONT size="3"><B>Other Investment Companies</B></FONT></P>
<P><FONT size="3">Each of the funds may invest up to 10% of its total assets in
other mutual funds, including those managed by the advisor, provided that the
investment is consistent with the fund's investment policies and restrictions.
Under the Investment Company Act, each fund's investment in such securities,
subject to certain exceptions, currently is limited to (a) 3% of the total voting
stock of any one investment company; (b) 5% of the fund's total assets with
respect to any one investment company; and (c) 10% of the fund's total assets
in the aggregate. Such purchases will be made in the open market where no commission
or profit to a sponsor or dealer results from the purchase other than the customary
brokers' commissions. As a shareholder of another investment company, a fund
would bear, along with other shareholders, its pro rata portion of the other
investment company's expenses, including advisory fees. These expenses would
be in addition to the management fee that each fund bears directly in connection
with its own operations.</FONT></P>
<P><FONT size="3"><B>Futures and Options</B></FONT></P>
<P><FONT size="3">Each fund may enter into futures contracts, options or options
on futures contracts. Generally, futures transactions will be used to</FONT></P>
<UL>
<LI><FONT size="3">protect against a decline in market value of the funds' securities
(taking a short futures position), or </FONT></LI>
<LI><FONT size="3">protect against the risk of an increase in market value for
securities in which the fund generally invests at a time when the fund is
not fully invested (taking a long futures position), or </FONT></LI>
<LI><FONT size="3">provide a temporary substitute for the purchase of an individual
security that may not be purchased in an orderly fashion.</FONT></LI>
</UL>
<P><FONT size="3">Some futures and options strategies, such as selling futures,
buying puts and writing calls, hedge a fund's investments against price fluctuations.
Other strategies, such as buying futures, writing puts and buying calls, tend
to increase market exposure. Although other techniques may be used to control
a fund's exposure to market fluctuations, the use of futures contracts may be
a more effective means of hedging this exposure. While a fund pays brokerage
commissions in connection with opening and closing out futures positions, these
costs are lower than the transaction costs incurred in the purchase and sale
of the underlying securities.</FONT></P>
<P><FONT size="3">For example, the sale of a future by a fund means the fund becomes
obligated to deliver the security (or securities, in the case of an index future)
at a specified price on a specified date. The purchase of a future means the
fund becomes obligated to buy the security (or securities) at a specified price
on a specified date. Futures contracts provide for the sale by one party and
purchase by another party of a specific security at a specified future time
and price. The fund managers may engage in futures and options transactions
based on securities indices that are consistent with the funds' investment objectives.
Examples of indices that may be used include the Bond Buyer Index of Municipal
Bonds for the fixed-income portion of the funds, or the S&P 500 Index for
the equity portion of the funds. The managers also may engage in futures and
options transactions based on specific securities, such as U.S. Treasury bonds
or notes. Futures contracts are traded on national futures exchanges. Futures
exchanges and trading are regulated under the Commodity Exchange Act by the
Commodity Futures Trading Commission (CFTC), a U.S. government agency.</FONT></P>
<P><FONT size="3">Index futures contracts differ from traditional futures contracts
in that when delivery takes place, no stocks or bonds change hands. Instead,
these contracts settle in cash at the spot market value of the index. Although
other types of futures contracts by their terms call for actual delivery or
acceptance of the underlying securities, in most cases the contracts are closed
out before the settlement date. A futures position may be closed by taking an
opposite position in an identical contract (i.e., buying a contract that has
previously been sold or selling a contract that has previously been bought).</FONT></P>
<P><FONT size="3">Unlike when the fund purchases or sells a bond, no price is
paid or received by the fund upon the purchase or sale of the future. Initially,
the fund will be required to deposit an amount of cash or securities equal to
a varying specified percentage of the contract amount. This amount is known
as initial margin. The margin deposit is intended to ensure completion of the
contract (delivery or acceptance of the underlying security) if it is not terminated
prior to the specified delivery date. A margin deposit does not constitute a
margin transaction for purposes of the funds' investment restrictions. Minimum
initial margin requirements are established by the futures exchanges and may
be revised. In addition, brokers may establish margin deposit requirements that
are higher than the exchange minimums. Cash held in the margin account generally
is not income-producing. Subsequent payments to and from the broker, called
variation margin, will be made on a daily basis as the price of the underlying
debt securities or index fluctuates, making the future more or less valuable,
a process known as marking the contract to market. Changes in variation margin
are recorded by the fund as unrealized gains or losses. At any time prior to
expiration of the future, the fund may elect to close the position by taking
an opposite position that will operate to terminate its position in the future.
A final determination of variation margin is then made; additional cash is required
to be paid by or released to the fund and the fund realizes a loss or gain.</FONT></P>
<P><FONT size="3"><B><I>Risks Related to Futures and Options Transactions</I></B></FONT></P>
<P><FONT size="3">Futures and options prices can be volatile, and trading in these
markets involves certain risks. If the fund managers apply a hedge at an inappropriate
time or judge interest rate or equity market trends incorrectly, futures and
options strategies may lower a fund's return.</FONT></P>
<P><FONT size="3">A fund could suffer losses if it is unable to close out its
position because of an illiquid secondary market. Futures contracts may be closed
out only on an exchange that provides a secondary market for these contracts,
and there is no assurance that a liquid secondary market will exist for any
particular futures contract at any particular time. Consequently, it may not
be possible to close a futures position when the fund managers consider it appropriate
or desirable to do so. In the event of adverse price movements, a fund would
be required to continue making daily cash payments to maintain its required
margin. If the fund had insufficient cash, it might have to sell portfolio securities
to meet daily margin requirements at a time when the fund managers would not
otherwise elect to do so. In addition, a fund may be required to deliver or
take delivery of instruments underlying futures contracts it holds. The fund
managers will seek to minimize these risks by limiting the contracts entered
into on behalf of the funds to those traded on national futures exchanges and
for which there appears to be a liquid secondary market.</FONT></P>
<P><FONT size="3">A fund could suffer losses if the prices of its futures and
options positions were poorly correlated with its other investments, or if securities
underlying futures contracts purchased by a fund had different maturities than
those of the portfolio securities being hedged. Such imperfect correlation may
give rise to circumstances in which a fund loses money on a futures contract
at the same time that it experiences a decline in the value of its hedged portfolio
securities. A fund also could lose margin payments it has deposited with a margin
broker, if, for example, the broker became bankrupt.</FONT></P>
<P><FONT size="3">Most futures exchanges limit the amount of fluctuation permitted
in futures contract prices during a single trading day. The daily limit establishes
the maximum amount that the price of a futures contract may vary either up or
down from the previous day's settlement price at the end of the trading session.
Once the daily limit has been reached in a particular type of contract, no trades
may be made on that day at a price beyond the limit. However, the daily limit
governs only price movement during a particular trading day and, therefore,
does not limit potential losses. In addition, the daily limit may prevent liquidation
of unfavorable positions. Futures contract prices have occasionally moved to
the daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses.</FONT></P>
<P><FONT size="3"><B><I>Options on Futures</I></B></FONT></P>
<P><FONT size="3">By purchasing an option on a futures contract, a fund obtains
the right, but not the obligation, to sell the futures contract (a put option)
or to buy the contract (a call option) at a fixed strike price. A fund can terminate
its position in a put option by allowing it to expire or by exercising the option.
If the option is exercised, the fund completes the sale of the underlying security
at the strike price. Purchasing an option on a futures contract does not require
a fund to make margin payments unless the option is exercised.</FONT></P>
<P><FONT size="3">Although they do not currently intend to do so, the funds may
write (or sell) call options that obligate them to sell (or deliver) the option's
underlying instrument upon exercise of the option. While the receipt of option
premiums would mitigate the effects of price declines, the funds would give
up some ability to participate in a price increase on the underlying security.
If a fund were to engage in options transactions, it would own the futures contract
at the time a call were written and would keep the contract open until the obligation
to deliver it pursuant to the call expired.</FONT></P>
<P><FONT size="3"><B><I>Restrictions on the Use of Futures Contracts and Options</I></B></FONT></P>
<P><FONT size="3">Each fund may enter into futures contracts, options or options
on futures contracts.</FONT></P>
<P><FONT size="3">Under the Commodity Exchange Act, a fund may enter into futures
and options transactions (a) for hedging purposes without regard to the percentage
of assets committed to initial margin and option premiums or (b) for purposes
other than hedging, provided that assets committed to initial margin and option
premiums do not exceed 5% of the fund's total assets. To the extent required
by law, each fund will segregate cash or securities on its records in an amount
sufficient to cover its obligations under the futures contracts and options.</FONT></P>
<P><FONT size="3"><B>Restricted and Illiquid Securities</B></FONT></P>
<P><FONT size="3">The funds may, from time to time, purchase restricted or illiquid
securities, including Rule 144A securities, when they present attractive investment
opportunities that otherwise meet the funds' criteria for selection. Rule 144A
securities are securities that are privately placed with and traded among qualified
institutional investors rather than the general public. Although Rule 144A securities
are considered restricted securities, they are not necessarily illiquid.</FONT></P>
<P><FONT size="3">With respect to securities eligible for resale under Rule 144A,
the staff of the Securities and Exchange Commission (SEC) has taken the position
that the liquidity of such securities in the portfolio of a fund offering redeemable
securities is a question of fact for the Board of Directors to determine, such
determination to be based upon a consideration of the readily available trading
markets and the review of any contractual restrictions. Accordingly, the Board
of Directors is responsible for developing and establishing the guidelines and
procedures for determining the liquidity of Rule 144A securities. As allowed
by Rule 144A, the Board of Directors of the funds has delegated the day-to-day
function of determining the liquidity of Rule 144A securities to the fund managers.
The board retains the responsibility to monitor the implementation of the guidelines
and procedures it has adopted.</FONT></P>
<P><FONT size="3">Because the secondary market for such securities is limited
to certain qualified institutional investors, the liquidity of such securities
may be limited accordingly and a fund may, from time to time, hold a Rule 144A
or other security that is illiquid. In such an event, the fund managers will
consider appropriate remedies to minimize the effect on such fund's liquidity.
</FONT></P>
<P><FONT size="3"><B>Zero-Coupon, Step-Coupon and Pay-In-Kind Securities</B></FONT></P>
<P><FONT size="3">Zero-coupon, step-coupon and pay-in-kind securities are debt
securities that do not make regular cash interest payments. Zero-coupon and
step-coupon securities are sold at a deep discount to their face value. Pay-in-kind
securities pay interest through the issuance of additional securities. Because
such securities do not pay current cash income, the price of these securities
can be volatile when interest rates fluctuate. While these securities do not
pay current cash income, federal income tax law requires the holders of zero-coupon,
step-coupon and pay-in-kind securities to include in income each year the portion
of the original issue discount and other noncash income on such securities accrued
during that year. In order to continue to qualify for treatment as a regulated
investment company under the Internal Revenue Code and avoid certain excise
tax, the funds may be required to dispose of other portfolio securities, which
may occur in periods of adverse market prices, in order to generate cash to
meet these distribution requirements.</FONT></P>
<P><FONT size="3"><B>Loan Interests</B></FONT></P>
<P><FONT size="3">Loan interests are interests in amounts owed by a corporate,
governmental or other borrower to lenders or lending syndicates. Loan interests
purchased by the funds may have a maturity of any number of days or years, and
may be acquired from U.S. and foreign banks, insurance companies, finance companies
or other financial institutions that have made loans or are members of a lending
syndicate or from the holders of loan interests. Loan interests involve the
risk of loss in case of default or bankruptcy of the borrower and, in the case
of participation interests, involve a risk of insolvency of the agent lending
bank or other financial intermediary. Loan interests are not rated by any nationally
recognized securities rating organization and are, at present, not readily marketable
and may be subject to contractual restrictions on resale.</FONT></P>
<P><FONT size="3"><B><A NAME="XF"></A>INVESTMENT POLICIES</B></FONT></P>
<P><FONT size="3">Unless otherwise indicated, with the exception of the percentage
limitations on borrowing, the restrictions described below apply at the time
a fund enters into a transaction. Accordingly, any later increase or decrease
beyond the specified limitation resulting from a change in a fund's net assets
will not be considered in determining whether it has complied with its investment
restrictions.</FONT></P>
<P><FONT size="3"><B>Fundamental Investment Policies</B></FONT></P>
<P><FONT size="3">The funds' fundamental investment restrictions are set forth
below. These investment restrictions may not be changed without approval of
a majority of the outstanding votes of shareholders of a fund, as determined
in accordance with the Investment Company Act.</FONT></P>
Subject Policy
- ------------------------------------------------------------------------------------------
Senior Securities A fund may not issue senior securities, except as
permitted under the Investment Company Act.
- --------------------------------------------------------------------------------
Borrowing A fund may not borrow money, except for temporary or
emergency purposes (not for leveraging or investment) in
an amount not exceeding 33 1/3% of the fund's total
assets.
- --------------------------------------------------------------------------------
Lending A fund may not lend any security or make any other loan
if, as a result, more than 33 1/3% of the fund's total
assets would be lent to other parties, except (i)
through the purchase of debt securities in accordance
with its investment objective, policies and limitations
or (ii) by engaging in repurchase agreements with
respect to portfolio securities.
- --------------------------------------------------------------------------------
Real Estate A fund may not purchase or sell real estate unless
acquired as a result of ownership of securities or other
instruments. This policy shall not prevent a fund from
investing in securities or other instruments backed by
real estate or securities of companies that deal in real
estate or are engaged in the real estate business.
- --------------------------------------------------------------------------------
Concentration A fund may not concentrate its investments in securities
of issuers in a particular industry (other than
securities issued or guaranteed by the U.S. government
or any of its agencies or instrumentalities).
- --------------------------------------------------------------------------------
Underwriting A fund may not act as an underwriter of securities
issued by others, except to the extent that the fund may
be considered an underwriter within the meaning of the
Securities Act of 1933 in the disposition of restricted
securities.
- --------------------------------------------------------------------------------
Commodities A fund may not purchase or sell physical commodities
unless acquired as a result of ownership of securities
or other instruments, provided that this limitation
shall not prohibit the fund from purchasing or selling
options and futures contracts or from investing in
securities or other instruments backed by physical
commodities.
- --------------------------------------------------------------------------------
Control A fund may not invest for purposes of exercising control
over management.
- --------------------------------------------------------------------------------
<P><FONT size="3">For purposes of the investment restrictions relating to lending
and borrowing, the funds have received an exemptive order from the SEC regarding
interfund lending. Under the terms of the exemptive order, the funds may borrow
money from or lend money to other funds, advised by ACIM, that permit such transactions.
All such transactions will be subject to the limits set above for borrowing
and lending. The funds will borrow money through the program only when the costs
are equal to or lower than the cost of short-term bank loans. Interfund loans
and borrowing normally extend only overnight, but can have a maximum duration
of seven days. The funds will lend through the program only when the returns
are higher than those available for other short-term instruments (such as repurchase
agreements). The funds may have to borrow from a bank at a higher interest rate
if an interfund loan is called or not renewed. Any delay in repayment to a lending
fund could result in a lost investment opportunity or additional borrowing charges.</FONT></P>
<P><FONT size="3">For purposes of the investment restriction relating to concentration,
a fund shall not purchase any securities that would cause 25% or more of the
value of the fund's total assets at the time of purchase to be invested in the
securities of one or more issuers conducting their principal business activities
in the same industry, provided that (a) there is no limitation with respect
to obligations issued or guaranteed by the U.S. government, any state, territory
or possession of the United States, the District of Columbia or any of their
authorities, agencies, instrumentalities or political subdivisions and repurchase
agreements secured by such instruments, (b) wholly owned finance companies will
be considered to be in the industries of their parents if their activities are
primarily related to financing the activities of the parents, (c) utilities
will be divided according to their services, for example, gas, gas transmission,
electric and gas, and electric and telephone will each be considered a separate
industry, and (d) personal credit and business credit businesses will be considered
separate industries.</FONT></P>
<P><FONT size="3"><B>Nonfundamental Investment Policies</B></FONT></P>
<P><FONT size="3">In addition, the funds are subject to the following investment
restrictions that are not fundamental and may be changed by the Board of Directors.</FONT></P>
Subject Policy
- --------------------------------------------------------------------------------
Leveraging A fund may not purchase additional investment securities
at any time during which outstanding borrowings exceed
5% of the total assets of the fund.
- --------------------------------------------------------------------------------
Liquidity A fund may not purchase any security or enter into a
repurchase agreement if, as a result, more than 15% of
its net assets would be invested in illiquid securities.
Illiquid securities include repurchase agreements not
entitling the holder to payment of principal and
interest within seven days, and securities that are
illiquid by virtue of legal or contractual restrictions
on resale or the absence of a readily available market.
- --------------------------------------------------------------------------------
Short Sales A fund may not sell securities short, unless it owns or
has the right to obtain securities equivalent in kind
and amount to the securities sold short, and provided
that transactions in futures contracts and options are
not deemed to constitute selling securities short.
- --------------------------------------------------------------------------------
Margin A fund may not purchase securities on margin, except to
obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin
payments in connection with futures contracts and
options on futures contracts shall not constitute
purchasing securities on margin.
- --------------------------------------------------------------------------------
Futures & Options A fund may enter into futures contracts, and write and
buy put and call options relating to futures contracts.
A fund may not, however, enter into leveraged futures
transactions if it would be possible for the fund to
lose more money than it invested.
- --------------------------------------------------------------------------------
Issuers with Limited A fund may invest up to 5% of its assets in the
Operating Histories securities of issuers with limited operating histories.
An issuer is considered to have a limited operating
history if that issuer has a record of less than three
years of continuous operation. Periods of capital
formation, incubation, consolidations, and research and
development may be considered in determining whether a
particular issuer has a record of three years of
continuous operation.
- --------------------------------------------------------------------------------
<P><FONT size="3">The Investment Company Act imposes certain additional restrictions
upon acquisition by the funds of securities issued by insurance companies, broker-dealers,
underwriters or investment advisors, and upon transactions with affiliated persons
as therein defined. It also defines and forbids the creation of cross and circular
ownership. Neither the SEC nor any other federal or state government participates
in or supervises the management of the funds or their investment practices or
policies.</FONT></P>
<P><FONT size="3"><B><A NAME="XG"></A>PORTFOLIO TURNOVER</B></FONT></P>
<P><FONT size="3">The portfolio turnover rates of the funds are shown in the Financial
Highlights tables in the Prospectus.</FONT></P>
<P><FONT size="3">With respect to each fund, the managers will purchase and sell
securities without regard to the length of time the security has been held.
Accordingly, each fund's rate of portfolio turnover may be substantial.</FONT></P>
<P><FONT size="3">The fund managers intend to purchase a given security whenever
they believe it will contribute to the stated objective of the fund. In order
to achieve each fund's investment objective, the fund managers may sell a given
security, no matter for how long or for how short a period it has been held
in the portfolio, and no matter whether the sale is at a gain or at a loss,
if the managers believe that the security is not fulfilling its purpose, either
because, among other things, it did not live up to the managers' expectations,
or because it may be replaced with another security holding greater promise,
or because it has reached its optimum potential, or because of a change in the
circumstances of a particular company or industry or in general economic conditions,
or because of some combination of such reasons.</FONT></P>
<P><FONT size="3">When a general decline in security prices is anticipated, a
fund may decrease its position in such category and increase its position in
one or both of the other asset categories, and when a rise in price levels is
anticipated, a fund may increase its position in such category and decrease
its position in the other categories. However, the funds will, under most circumstances,
be essentially fully invested within the operating ranges set forth in the Prospectus.</FONT></P>
<P><FONT size="3">Because investment decisions are based on the anticipated contribution
of the security in question to a fund's objectives, the managers believe the
rate of portfolio turnover is irrelevant when they believe a change is in order
to achieve those objectives. As a result, a fund's annual portfolio turnover
rate cannot be anticipated and may be higher than that of other mutual funds
with similar investment objectives. Higher turnover would generate correspondingly
greater brokerage commissions, which is a cost the funds pay directly. Portfolio
turnover also may affect the character of capital gains realized and distributed
by the fund, if any, because short-term capital gains are taxable as ordinary
income. This disclosure regarding portfolio turnover is a statement of fundamental
policy and may be changed only by a vote of the shareholders.</FONT></P>
<P><FONT size="3">Because the managers do not take portfolio turnover rate into
account in making investment decisions, (1) the managers have no intention of
accomplishing any particular rate of portfolio turnover, whether high or low,
and (2) the portfolio turnover rates in the past should not be considered as
representative of the rates that will be attained in the future. </FONT></P>
<P><FONT size="4"><B><A NAME="XH"></A>MANAGEMENT</B></FONT></P>
<P><B><FONT size="3"><A NAME="XI"></A>THE BOARD OF DIRECTORS</FONT></B></P>
<P><FONT size="3">The Board of Directors oversees the management of the funds
and meets at least quarterly to review reports about fund operations. Although
the Board of Directors does not manage the funds, it has hired the advisor to
do so. Two-thirds of the directors are independent of the funds' advisor; that
is, they are not employed by and have no financial interest in the advisor.</FONT></P>
<P><FONT size="3">The individuals listed in the following table whose names are
marked by an asterisk (*) are interested persons of the funds (as defined in
the Investment Company Act) by virtue of, among other considerations, their
affiliation with either the funds; their advisor, American Century Investment
Management, Inc. (ACIM); the funds' agent for transfer and administrative services,
American Century Services Corporation (ACSC); the parent corporation, American
Century Companies, Inc. (ACC); ACC's subsidiaries (including ACIM and ACSC);
the funds' distribution agent and co-administrator, Funds Distributor, Inc.
(FDI); the funds' other distribution agent, American Century Investment Services,
Inc. (ACIS); or other funds advised by the advisor. Each director listed below
serves as a director of six registered investment companies in the American
Century family of funds, which are also advised by the advisor. </FONT></P>
Name (Age) Position(s) Held
With Funds Principal Occupation(s) during Past Five Years
- ---------------------------------------------------------------------------------------------------------------
James E. Stowers, Jr.* (76) Director, Chairman, Director and controlling shareholder, ACC
4500 Main St. Chairman of Chairman, ACIM, ACSC, ACIS and six other ACC
Kansas City, MO 64111 the Board subsidiaries
Director, ACIM, ACSC, ACIS and 10 other ACC
subsidiaries(1)
- ---------------------------------------------------------------------------------------------------------------
James E. Stowers III* (41) Director Chief Executive Officer and Director, ACC
4500 Main St. Chief Executive Officer, ACIM, ACSC, ACIS and six
Kansas City, MO 64111 other ACC subsidiaries
Director, ACIM, ACSC, ACIS and 11 other
ACC subsidiaries(2)
- ---------------------------------------------------------------------------------------------------------------
Thomas A. Brown (60) Director Director of Plains States Development, Applied
4500 Main St. Industrial Technologies, Inc., a corporation engaged
Kansas City, MO 64111 in the sale of bearings and power transmission
products
- ---------------------------------------------------------------------------------------------------------------
Robert W. Doering, M.D. (67) Director Retired, formerly a general surgeon
4500 Main St.
Kansas City, MO 64111
- ---------------------------------------------------------------------------------------------------------------
Andrea C. Hall, Ph.D. (55) Director Senior Vice President and Director,
4500 Main St. Midwest Research Institute
Kansas City, MO 64111
- ---------------------------------------------------------------------------------------------------------------
D.D. (Del) Hock (65) Director Retired, formerly Chairman, Public Service Company
4500 Main St. of Colorado
Kansas City, MO 64111 Director, Service Tech, Inc., Hathaway
Corporation, and J.D. Edwards & Company
- ---------------------------------------------------------------------------------------------------------------
Donald H. Pratt (62) Director, Chairman and Director, Butler Manufacturing
4500 Main St. Vice Chairman Company
Kansas City, MO 64111 of the Board Director, Atlas-Copco North America Inc.
- ---------------------------------------------------------------------------------------------------------------
M. Jeannine Strandjord (54) Director Senior Vice President, Long Distance Finance,
4500 Main St. Sprint Corporation
Kansas City, MO 64111 Director, DST Systems, Inc.
- ---------------------------------------------------------------------------------------------------------------
<OL>
<LI><I><FONT size="2">Father of James E. Stowers III</FONT></I></LI>
<LI><I><FONT size="2">Son of James E. Stowers, Jr.</FONT></I></LI>
</OL>
<P><FONT size="3"><B>Committees</B></FONT></P>
<P><FONT size="3">The Board has four committees to oversee specific functions
of the funds' operations. Information about these committees appears in the
table below. The Director first named serves as chairman of the committee.</FONT></P>
Committee Members Function of Committee
- -------------------------------------------------------------------------------------------------------
Executive James E. Stowers, Jr. The Executive Committee performs the functions of
James E. Stowers III the Board of Directors between Board meetings,
Donald H. Pratt subject to the limitations on its power set out in the
Maryland General Corporation Law, and except for
matters required by the Investment Company Act to
be acted upon by the whole Board.
- -------------------------------------------------------------------------------------------------------
Compliance Thomas A. Brown The Compliance Committee reviews the results of the
Donald H. Pratt funds' compliance testing program, reviews quarterly
Andrea C. Hall, Ph.D. reports from the advisor to the Board regarding
various compliance matters and monitors the
implementation of the funds' Code of Ethics,
including any violations.
- -------------------------------------------------------------------------------------------------------
Audit M. Jeannine Strandjord The Audit Committee recommends the engagement of
Robert W. Doering, M.D. the funds' independent auditors and oversees its
D.D. (Del) Hock activities. The Committee receives reports from the
advisor's Internal Audit Department, which is
accountable to the Committee. The Committee
also receives reporting about compliance matters
affecting the funds.
- -------------------------------------------------------------------------------------------------------
Nominating Donald H. Pratt The Nominating Committee primarily considers and
Andrea C. Hall, Ph.D. recommends individuals for nomination as directors.
D.D. (Del) Hock The names of potential director candidates are drawn
from a number of sources, including
recommendations from members of the Board,
management and shareholders. This committee also
reviews and makes recommendations to the Board
with respect to the composition of Board
committees and other Board-related matters,
including its organization, size, composition,
responsibilities, functions and compensation.
- -------------------------------------------------------------------------------------------------------
<P><FONT size="3"><B><I>Compensation of Directors</I></B></FONT></P>
<P><FONT size="3">The directors also serve as directors for five American Century
investment companies other than the corporation. Each director who is not an
interested person as defined in the Investment Company Act receives compensation
for service as a member of the board of all six such companies based on a schedule
that takes into account the number of meetings attended and the assets of the
funds for which the meetings are held. These fees and expenses are divided among
the six investment companies based, in part, upon their relative net assets.
Under the terms of the management agreement with the advisor, the funds are
responsible for paying such fees and expenses.</FONT></P>
<P><FONT size="3">The following table shows the aggregate compensation paid by
the corporation for the periods indicated and by the six investment companies
served by the board to each director who is not an interested person as defined
in the Investment Company Act.</FONT></P>
Aggregate Director Compensation for Fiscal Year Ended November 30, 1999
- ------------------------------------------------------------------------------------------
Total Compensation Total Compensation from the
Name of Director from the Funds(1) American Century Family of Funds(2)
- ------------------------------------------------------------------------------------------
Thomas A. Brown $738 $59,590
Robert W. Doering, M.D. $721 $55,750
Andrea C. Hall, Ph.D. $727 $56,250
D.D. (Del) Hock $700 $56,000
Donald H. Pratt $753 $57,497
Lloyd T. Silver, Jr.(3) $724 $56,000
M. Jeannine Strandjord $744 $58,000
- ------------------------------------------------------------------------------------------
<OL>
<LI><FONT size="2"><I>Includes compensation paid to the directors during the
fiscal year ended November 30, 1999, and also includes amounts deferred at
the election of the directors under the Amended and Restated American Century
Mutual Funds Deferred Compensation Plan for Non-Interested Directors. The
total amount of deferred compensation included in the preceding table is as
follows: Mr. Brown, $210; Dr. Hall, $317; Mr. Hock, $435; Mr. Pratt, $218;
Mr. Silver, $372 and Ms. Strandjord, $595.</I></FONT></LI>
<LI><FONT size="2"><I>Includes compensation paid by the six investment company
members of the American Century family of funds served by this Board.</I></FONT></LI>
<LI><FONT size="2"><I>Mr. Silver retired from the board on March 4, 2000.</I></FONT></LI>
</OL>
<P><FONT size="3">The funds have adopted the Amended and Restated American Century
Mutual Funds Deferred Compensation Plan for Non-Interested Directors. Under
the plan, the independent directors may defer receipt of all or any part of
the fees to be paid to them for serving as directors of the funds.</FONT></P>
<P><FONT size="3">All deferred fees are credited to an account established in
the name of the directors. The amounts credited to the account then increase
or decrease, as the case may be, in accordance with the performance of one or
more of the American Century funds that are selected by the director. The account
balance continues to fluctuate in accordance with the performance of the selected
fund or funds until final payment of all amounts is credited to the account.
Directors are allowed to change their designation of mutual funds from time
to time.</FONT></P>
<P><FONT size="3">No deferred fees are payable until such time as a director resigns,
retires or otherwise ceases to be a member of the Board of Directors. Directors
may receive deferred fee account balances either in a lump sum payment or in
substantially equal installment payments to be made over a period not to exceed
10 years. Upon the death of a director, all remaining deferred fee account balances
are paid to the director's beneficiary or, if none, to the director's estate.</FONT></P>
<P><FONT size="3">The plan is an unfunded plan and, accordingly, the funds have
no obligation to segregate assets to secure or fund the deferred fees. To date,
the funds have voluntarily funded their obligations. The rights of directors
to receive their deferred fee account balances are the same as the rights of
a general unsecured creditor of the funds. The plan may be terminated at any
time by the administrative committee of the plan. If terminated, all deferred
fee account balances will be paid in a lump sum.</FONT></P>
<P><FONT size="3">No deferred fees were paid to any director under the plan during
the fiscal year ended November 30, 1999.</FONT></P>
<P><FONT size="3"><B><A NAME="XJ"></A>OFFICERS</B></FONT></P>
<P><FONT size="3">Background information about the officers of the funds is provided
in the table below. All persons named as officers of the funds also serve in
similar capacities for the 12 other investment companies advised by ACIM. Not
all officers of the funds are listed; only those officers with policy-making
functions for the funds are listed. No officer is compensated for his or her
service as an officer of the funds. The individuals listed in the following
table are interested persons of the funds (as defined in the Investment Company
Act) by virtue of, among other considerations, their affiliation with either
the funds, ACC, ACC's subsidiaries (including ACIM and ACSC), or the funds'
distributor (FDI), as specified in the following table. </FONT></P>
Name (Age) Positions Held With Principal Occupation(s)
Address Funds During Past Five Years
- --------------------------------------------------------------------------------------------------------------
George A. Rio (45) President Executive Vice President and Director of Client
60 State Street Services, FDI (March 1998 to present)
Boston, MA 02109 Senior Vice President and Senior Key Account
Manager, Putnam Mutual Funds (June 1995 to March
1998)
Director Business Development, First Data
Corporation (May 1994 to June 1995)
- --------------------------------------------------------------------------------------------------------------
Christopher J. Kelley (35) Vice President Vice President and Associate General Counsel,
60 State Street FDI (since July 1996)
Boston, MA 02109 Assistant Counsel, Forum Financial Group
(April 1994 to July 1996)
- --------------------------------------------------------------------------------------------------------------
Mary A. Nelson (35) Vice President Vice President and Manager of Treasury Services
60 State Street and Administration, FDI (1994 to present)
Boston, MA 02109
- --------------------------------------------------------------------------------------------------------------
Maryanne Roepke, CPA (44) Vice President Senior Vice President and Treasurer, ACSC
4500 Main Street and Treasurer
Kansas City, MO 64111
- --------------------------------------------------------------------------------------------------------------
David C. Tucker (41) Vice President Senior Vice President, ACIM, ACSC, ACIS and
4500 Main Street three other ACC subsidiaries (June 1998
Kansas City, MO 64111 to present)
General Counsel, ACC and nine ACC subsidiaries
(June 1998 to present)
Consultant to mutual fund industry (May 1997 to
April 1998)
Vice President and General Counsel, Janus
Companies (1990 to 1997)
- --------------------------------------------------------------------------------------------------------------
Paul Carrigan Jr. (50) Secretary Secretary, ACC (February 1998 to present)
4500 Main Street Director of Legal Operations (February 1996
Kansas City, MO 64111 to present)
Board Communications Manager, The Benham Company
(April 1994 to January 1996)
- --------------------------------------------------------------------------------------------------------------
C. Jean Wade (36) Controller Vice President and Controller-Fund Accounting, ACSC
4500 Main Street
Kansas City, MO 64111
- --------------------------------------------------------------------------------------------------------------
Merele May (37) Controller Vice President and Controller-Fund Accounting, ACSC
4500 Main Street
Kansas City, MO 64111
- --------------------------------------------------------------------------------------------------------------
Robert J. Leach (32) Controller Vice President and Controller-Fund Accounting, ACSC
4500 Main Street
Kansas City, MO 64111
- --------------------------------------------------------------------------------------------------------------
Jon Zindel (32) Tax Officer Vice President of Taxation, ACSC
4500 Main Street (1996 to present)
Kansas City, MO 64111 Vice President, ACIM and 15 other ACC
subsidiaries (April 1999 to present)
Treasurer, American Century Ventures, Inc.
(December 1999 to present)
Tax Manager, Price Waterhouse LLP (1989 to 1996)
- --------------------------------------------------------------------------------------------------------------
<P><FONT size="4"><B><A NAME="XK"></A>CODE OF ETHICS</B></FONT></P>
<P><FONT size="3">The funds, their investment advisor and principal underwriters
have adopted codes of ethics under Rule 17j-1 of the Investment Company Act.
The codes of ethics of the funds, their investment advisor and American Century
Investment Services, Inc., one of the funds' principal underwriters, permit
access persons (personnel who have access to portfolio transaction information)
to invest in securities, including securities that may be purchased or held
by the funds, provided that they first obtain approval from their appropriate
compliance department before making such investments. The code of ethics of
FDI, the funds' other principal underwriter, permits personnel subject to the
code to invest in publicly traded securities, without restrictions.</FONT></P>
<P><FONT size="4"><B><A NAME="XL"></A>THE FUNDS' PRINCIPAL SHAREHOLDERS</B></FONT></P>
<P><FONT size="3">As of March 3, 2000, the following companies were the record
owners of more than 5% of the outstanding shares of any class of a fund.</FONT></P>
Percentage
of Shares
Fund Shareholder Outstanding
- ---------------------------------------------------------------------------------------
STRATEGIC ALLOCATION:
CONSERVATIVE
Investor None
Advisor Fulvest & Co
Lancaster, Pennsylvania 5.0%
United Missouri Bank TR
Carolina First Bancshares PSP
Kansas City, Missouri 26.4%
American Chamber of Commerce Executives
Amended & Restated 401K Plan & Trust
Springfield, Missouri 61.1%
- ---------------------------------------------------------------------------------------
STRATEGIC ALLOCATION:
MODERATE
Investor UMB NA TR
M A Hanna Company 401-K & Retirement Plan
Kansas City, Missouri 6.5%
Advisor UMB NA TR
Trendwest Resorts Inc 401K Plan & Trust
Kansas City, Missouri 7.3%
Tourbend & Co
Westwood, Massachusetts 6.1%
American Chamber of Commerce Executives
Amended & Restated 401K Plan & Trust
Springfield, Missouri 60.2%
- ---------------------------------------------------------------------------------------
STRATEGIC ALLOCATION:
AGGRESSIVE
Investor UMB NA TR
BAE Employee Svgs Inv Plan Trust
Kansas City, Missouri 6.1%
Advisor American Chamber of Commerce Executives
Amended & Restated 401K Plan & Trust
Springfield, Missouri 73.3%
- ---------------------------------------------------------------------------------------
<P><FONT size="3">The funds are unaware of any other shareholders, beneficial
or of record, who own more than 5% of any class of a fund's outstanding shares.
As of March 3, 2000, the officers and directors of the funds, as a group, owned
less than 1% of any class of a fund's outstanding shares.</FONT></P>
<P><FONT size="4"><B><A NAME="XM"></A>SERVICE PROVIDERS</B></FONT></P>
<P><FONT size="3">The funds have no employees. To conduct the funds' day-to-day
activities, the funds have hired a number of service providers. Each service
provider has a specific function to fill on behalf of the funds and is described
below.</FONT></P>
<P><FONT size="3">ACIM and ACSC are both wholly owned by ACC. James E. Stowers
Jr., Chairman of ACC, controls ACC by virtue of his ownership of a majority
of its voting stock.</FONT></P>
<P><FONT size="3"><B><A NAME="XN"></A>INVESTMENT ADVISOR</B></FONT></P>
<P><FONT size="3">American Century Investment Management, Inc. serves as the investment
advisor for each of the funds. A description of the responsibilities of the
advisor appears in the Prospectus under the heading <i>Management.</i></FONT></P>
<P><FONT size="3">For the services provided to the funds, the advisor receives
a monthly fee based on a percentage of the average net assets of the fund as
follows:</FONT></P>
Fund Class Percentage of Net Assets
- -------------------------------------------------------------------------------------
Strategic Allocation: Conservative Investor 1.00% of first $1 billion
.90% $1 billion and over
Advisor .75% of first $1 billion
.65% $1 billion and over
- -------------------------------------------------------------------------------------
Strategic Allocation: Moderate Investor 1.10% of first $1 billion
1.00% $1 billion and over
Advisor .85% of first $1 billion
.75% $1 billion and over
- -------------------------------------------------------------------------------------
Strategic Allocation: Aggressive Investor 1.20% of first $1 billion
1.10% $1 billion and over
Advisor .95% of first $1 billion
.85% $1 billion and over
- -------------------------------------------------------------------------------------
<P><FONT size="3">On the first business day of each month, the funds pay a management
fee to the advisor for the previous month at the specified rate. The fee for
the previous month is calculated by multiplying the applicable fee for the fund
by the aggregate average daily closing value of a fund's net assets during the
previous month. This number is then multiplied by a fraction, the numerator
of which is the number of days in the previous month and the denominator of
which is 365 (366 in leap years).</FONT></P>
<P><FONT size="3">The management agreement shall continue in effect until the
earlier of the expiration of two years from the date of its execution or until
the first meeting of shareholders following such execution and for as long thereafter
as its continuance is specifically approved at least annually by </FONT></P>
<P><FONT size="3">(1) the funds' Board of Directors, or by the vote of a majority
of outstanding votes (as defined in the Investment Company Act) and </FONT></P>
<P><FONT size="3">(2) the vote of a majority of the directors of the funds who
are not parties to the agreement or interested persons of the advisor, cast
in person at a meeting called for the purpose of voting on such approval.</FONT></P>
<P><FONT size="3">The management agreement provides that it may be terminated
at any time without payment of any penalty by the funds' Board of Directors,
or by a vote of a majority of outstanding votes, on 60 days' written notice
to the advisor, and that it shall be automatically terminated if it is assigned.</FONT></P>
<P><FONT size="3">The management agreement states that the advisor shall not be
liable to the funds or their shareholders for anything other than willful misfeasance,
bad faith, gross negligence or reckless disregard of its obligations and duties.</FONT></P>
<P><FONT size="3">The management agreement also provides that the advisor and
its officers, directors and employees may engage in other business, devote time
and attention to any other business whether of a similar or dissimilar nature,
and render services to others.</FONT></P>
<P><FONT size="3">Certain investments may be appropriate for the funds and also
for other clients advised by the advisor. Investment decisions for the funds
and other clients are made with a view to achieving their respective investment
objectives after consideration of such factors as their current holdings, availability
of cash for investment and the size of their investment generally. A particular
security may be bought or sold for only one client or fund, or in different
amounts and at different times for more than one but less than all clients or
funds. In addition, purchases or sales of the same security may be made for
two or more clients or funds on the same date. Such transactions will be allocated
among clients in a manner believed by the advisor to be equitable to each. In
some cases this procedure could have an adverse effect on the price or amount
of the securities purchased or sold by a fund.</FONT></P>
<P><FONT size="3">The advisor may aggregate purchase and sale orders of the funds
with purchase and sale orders of its other clients when the advisor believes
that such aggregation provides the best execution for the funds. The Board of
Directors has approved the policy of the advisor with respect to the aggregation
of portfolio transactions. Where portfolio transactions have been aggregated,
the funds participate at the average share price for all transactions in that
security on a given day and share transaction costs on a pro rata basis. The
advisor will not aggregate portfolio transactions of the funds unless it believes
such aggregation is consistent with its duty to seek best execution on behalf
of the funds and the terms of the management agreement. The advisor receives
no additional compensation or remuneration as a result of such aggregation.</FONT></P>
<P><FONT size="3">Unified management fees incurred by each fund by class for the
fiscal periods ended November 30, 1999, 1998 and 1997, are indicated in the
following table.</FONT></P>
Unified Management Fees
- --------------------------------------------------------------------------------
Fund 1999 1998 1997
- --------------------------------------------------------------------------------
Strategic Allocation: Conservative
Investor $1,819,048 $1,702,193 $ 762,315
Advisor 52,077 42,903 30,490
- --------------------------------------------------------------------------------
Strategic Allocation: Moderate
Investor $3,445,446 $2,640,608 $1,498,878
Advisor 126,141 1,112,851 66,449
- --------------------------------------------------------------------------------
Strategic Allocation: Aggressive
Investor $1,983,696 $1,579,928 $1,011,207
Advisor 109,986 92,096 61,573
- --------------------------------------------------------------------------------
<P><FONT size="3"><B><A NAME="XO"></A>TRANSFER AGENT AND ADMINISTRATOR</B></FONT></P>
<P><FONT size="3">American Century Services Corporation, 4500 Main Street, Kansas
City, Missouri 64111, serves as transfer agent and dividend-paying agent for
the funds. It provides physical facilities, computer hardware and software and
personnel, for the day-to-day administration of the funds and the advisor. The
advisor pays ACSC for these services.</FONT></P>
<P><FONT size="3">From time to time, special services may be offered to shareholders
who maintain higher share balances in our family of funds. These services may
include the waiver of minimum investment requirements, expedited confirmation
of shareholder transactions, newsletters and a team of personal representatives.
Any expenses associated with these special services will be paid by the advisor.</FONT></P>
<P><FONT size="3">Pursuant to a Sub-Administration Agreement with the advisor,
Funds Distributor, Inc. (FDI) serves as the co-Administrator for the funds.
FDI is responsible for (i) providing certain officers of the funds and (ii)
reviewing and filing marketing and sales literature on behalf of the funds.
The fees and expenses of FDI are paid by the advisor out of its unified fee.</FONT></P>
<P><FONT size="3"><B><A NAME="XP"></A>DISTRIBUTOR</B></FONT></P>
<P><FONT size="3">The funds' shares are distributed by FDI and ACIS, both registered
broker-dealers. FDI is a wholly owned, indirect subsidiary of Boston Institutional
Group, Inc. FDI's principal business address is 60 State Street, Suite 1300,
Boston, Massachusetts 02109. ACIS is a wholly owned subsidiary of ACC, and is
located at 4500 Main Street, Kansas City, Missouri 64111. The distributors are
the principal underwriter of the funds' shares. The distributors make a continuous,
best-efforts underwriting of the funds' shares. This means the distributors
have no liability for unsold shares.</FONT></P>
<P><FONT size="4"><B><A NAME="XQ"></A>OTHER SERVICE PROVIDERS</B></FONT></P>
<P><B><FONT size="3"><A NAME="XR"></A>CUSTODIAN BANKS</FONT></B></P>
<P><FONT size="3">Chase Manhattan Bank, 770 Broadway, 10th Floor, New York, New
York 10003-9598, and Commerce Bank, N.A., 1000 Walnut, Kansas City, Missouri
64105, each serves as custodian of the assets of the funds. The custodians take
no part in determining the investment policies of the funds or in deciding which
securities are purchased or sold by the funds. The funds, however, may invest
in certain obligations of the custodians and may purchase or sell certain securities
from or to the custodians.</FONT></P>
<P><FONT size="3"><B><A NAME="XS"></A>INDEPENDENT AUDITORS</B></FONT></P>
<P><FONT size="3">Deloitte & Touche LLP is the independent auditor of the
funds. The address of Deloitte & Touche LLP is 1010 Grand Boulevard, Kansas
City, Missouri 64106. As the independent auditor of the funds, Deloitte &
Touche provides services including </FONT></P>
<P><FONT size="3">(1) audit of the annual financial statements for each fund,
</FONT></P>
<P><FONT size="3">(2) assistance and consultation in connection with SEC filings,
and </FONT></P>
<P><FONT size="3">(3) review of the annual federal income tax return filed for
each fund.</FONT></P>
<P><FONT size="4"><B><A NAME="XT"></A>BROKERAGE ALLOCATION</B></FONT></P>
<P><B><FONT size="3"><A NAME="XU"></A>THE EQUITY PORTION OF THE FUNDS</FONT></B></P>
<P><FONT size="3">Under the management agreement between the funds and the advisor,
the advisor has the responsibility of selecting brokers and dealers to execute
portfolio transactions. The funds' policy is to secure the most favorable prices
and execution of orders on its portfolio transactions. So long as that policy
is met, the advisor may take into consideration the factors discussed below
when selecting brokers.</FONT></P>
<P><FONT size="3">The advisor receives statistical and other information and services,
including research, without cost from brokers and dealers. The advisor evaluates
such information and services, together with all other information that it may
have, in supervising and managing the investments of the funds. Because such
information and services may vary in amount, quality and reliability, their
influence in selecting brokers varies from none to very substantial. The advisor
proposes to continue to place some of the funds' brokerage business with one
or more brokers who provide information and services. Such information and services
will be in addition to and not in lieu of services required to be performed
by the advisor. The advisor does not use brokers that provide such information
and services for the purpose of reducing the expense of providing required services
to the funds.</FONT></P>
<P><FONT size="3">In the years ended November 30, 1999, 1998 and 1997, the brokerage
commissions of each fund were as follows:</FONT></P>
Fund 1999 1998 1997
- --------------------------------------------------------------------------------
Strategic Allocation: Conservative $172,611 $198,409 $127,134
- --------------------------------------------------------------------------------
Strategic Allocation: Moderate 471,843 521,010 337,258
- --------------------------------------------------------------------------------
Strategic Allocation: Aggressive 303,115 359,809 254,195
- --------------------------------------------------------------------------------
<P><FONT size="3">The brokerage commissions paid by the funds may exceed those
that another broker might have charged for effecting the same transactions,
because of the value of the brokerage and research services provided by the
broker. Research services furnished by brokers through whom the funds effect
securities transactions may be used by the advisor in servicing all of its accounts,
and not all such services may be used by the advisor in managing the portfolios
of the funds.</FONT></P>
<P><FONT size="3">The staff of the SEC has expressed the view that the best price
and execution of over-the-counter transactions in portfolio securities may be
secured by dealing directly with principal market makers, thereby avoiding the
payment of compensation to another broker. In certain situations, the officers
of the funds and the advisor believe that the facilities, expert personnel and
technological systems of a broker often enable the funds to secure as good a
net price by dealing with a broker instead of a principal market maker, even
after payment of the compensation to the broker. The funds regularly place their
over-the-counter transactions with principal market makers, but also may deal
on a brokerage basis when utilizing electronic trading networks or as circumstances
warrant.</FONT></P>
<P><B><A NAME="XV"></A>THE FIXED-INCOME PORTION OF THE FUNDS</B></P>
<P><FONT size="3">Under the management agreement between the funds and the advisor,
the advisor has the responsibility of selecting brokers and dealers to execute
portfolio transactions. In many transactions, the selection of the broker or
dealer is determined by the availability of the desired security and its offering
price. In other transactions, the selection of a broker or dealer is a function
of the selection of market and the negotiation of price, as well as the broker's
general execution and operational and financial capabilities in the type of
transaction involved. The advisor will seek to obtain prompt execution of orders
at the most favorable prices or yields. The advisor may choose to purchase and
sell portfolio securities to and from dealers who provide statistical and other
information and services, including research, to the funds and to the advisor.
Such information and services will be in addition to and not in lieu of the
services required to be performed by the advisor, and the expenses of the advisor
will not necessarily be reduced as a result of the receipt of such supplemental
information.</FONT></P>
<P><FONT size="3">The funds generally purchase and sell debt securities through
principal transactions, meaning that the funds normally purchase securities
directly from the issuer or a primary market-maker acting as principal for the
securities on a net basis. The funds do not pay brokerage commissions on these
transactions, although the purchase price for debt securities usually includes
an undisclosed compensation. Purchases of securities from underwriters typically
include a commission or concession paid by the issuer to the underwriter, and
purchases from dealers serving as market-makers typically include a dealer's
mark-up (i.e., a spread between the bid and asked prices). During the fiscal
years ended November 30, 1997, 1998 and 1999, the funds did not pay any brokerage
commissions.</FONT></P>
<P><FONT size="4"><B><A NAME="XW"></A>INFORMATION ABOUT FUND SHARES</B></FONT></P>
<P><FONT size="3">Each of the three funds named on the front of this Statement
of Additional Information is a series of shares issued by the corporation, and
shares of each fund have equal voting rights. In addition, each series (or fund)
may be divided into separate classes. See <I>Multiple Class Structure,</I> which
follows. Additional funds and classes may be added without a shareholder vote.</FONT></P>
<P><FONT size="3">Each fund votes separately on matters affecting that fund exclusively.
Voting rights are not cumulative, so investors holding more than 50% of the
corporation's (i.e., all funds') outstanding shares may be able to elect a Board
of Directors. The corporation undertakes dollar-based voting, meaning that the
number of votes a shareholder is entitled to is based upon the dollar amount
of the shareholder's investment. The election of directors is determined by
the votes received from all of the corporation's shareholders without regard
to whether a majority of shares of any one fund voted in favor of a particular
nominee or all nominees as a group.</FONT></P>
<P><FONT size="3">The assets belonging to each series or class of shares are held
separately by the custodian, and the shares of each series or class represent
a beneficial interest in the principal, earnings and profit (or losses) of investments
and other assets held for each series or class. Within their respective series
or class, all shares have equal redemption rights. Each share, when issued,
is fully paid and non-assessable.</FONT></P>
<P><FONT size="3">In the event of complete liquidation or dissolution of the funds,
shareholders of each series or class of shares will be entitled to receive,
pro rata, all of the assets less the liabilities of that series or class.</FONT></P>
<P><FONT size="3">Each shareholder has rights to dividends and distributions declared
by the fund he or she owns and to the net assets of such fund upon its liquidation
or dissolution proportionate to his or her share ownership interest in the fund.
</FONT></P>
<P><FONT size="3"><B><A NAME="XX"></A>MULTIPLE CLASS STRUCTURE</B></FONT></P>
<P><FONT size="3">The corporation's Board of Directors has adopted a multiple
class plan (the Multiclass Plan) pursuant to Rule 18f-3 adopted by the SEC.
Pursuant to such plan, the funds may issue up to four classes of shares: an
Investor Class, an Institutional Class, a Service Class and an Advisor Class.
Not all funds offer all four classes.</FONT></P>
<P><FONT size="3">The Investor Class is made available to investors directly without
any load or commission, for a single unified management fee. The Institutional,
Service and Advisor Classes are made available to institutional shareholders
or through financial intermediaries that do not require the same level of shareholder
and administrative services from the advisor as Investor Class shareholders.
As a result, the advisor is able to charge these classes a lower total management
fee. In addition to the management fee, however, the Advisor Class shares are
subject to a Master Distribution and Shareholder Services Plan (described below).
The plan has been adopted by the funds' Board of Directors and initial shareholder
in accordance with Rule 12b-1 adopted by the SEC under the Investment Company
Act.</FONT></P>
<P><FONT size="3"><B>Rule 12b-1</B></FONT></P>
<P><FONT size="3">Rule 12b-1 permits an investment company to pay expenses associated
with the distribution of its shares in accordance with a plan adopted by the
investment company's Board of Directors and approved by its shareholders. Pursuant
to such rule, the Board of Directors and initial shareholder of the funds' Advisor
Class have approved and entered into a Master Distribution and Shareholder Services
Plan, with respect to the Advisor Class (the Plan). The Plan is described below.</FONT></P>
<P><FONT size="3">In adopting the Plan, the Board of Directors (including a majority
of directors who are not interested persons of the funds [as defined in the
Investment Company Act], hereafter referred to as the independent directors)
determined that there was a reasonable likelihood that the Plan would benefit
the funds and the shareholders of the affected class. Pursuant to Rule 12b-1,
information with respect to revenues and expenses under the Plan is presented
to the Board of Directors quarterly for its consideration in connection with
its deliberations as to the continuance of the Plan. Continuance of the Plan
must be approved by the Board of Directors (including a majority of the independent
directors) annually. The Plan may be amended by a vote of the Board of Directors
(including a majority of the independent directors), except that the Plan may
not be amended to materially increase the amount to be spent for distribution
without majority approval of the shareholders of the affected class. The Plan
terminates automatically in the event of an assignment and may be terminated
upon a vote of a majority of the independent directors or by vote of a majority
of the outstanding voting securities of the affected class.</FONT></P>
<P><FONT size="3">All fees paid under the Plan will be made in accordance with
Section 26 of the Rules of Fair Practice of the National Association of Securities
Dealers (NASD).</FONT></P>
<P><FONT size="3"><B>Master Distribution and Shareholder Services Plan</B></FONT></P>
<P><FONT size="3">As described in the Prospectus, the funds' Advisor Class shares
are made available to participants in employer-sponsored retirement or savings
plans and to persons purchasing through financial intermediaries such as banks,
broker-dealers and insurance companies. The funds' distributor enters into contracts
with various banks, broker-dealers, insurance companies and other financial
intermediaries, with respect to the sale of the funds' shares and/or the use
of the funds' shares in various investment products or in connection with various
financial services.</FONT></P>
<P><FONT size="3">Certain recordkeeping and administrative services that are provided
by the funds' transfer agent for the Investor Class shareholders may be performed
by a plan sponsor (or its agents) or by a financial intermediary for shareholders
in the Advisor Class. In addition to such services, the financial intermediaries
provide various distribution services.</FONT></P>
<P><FONT size="3">To enable the funds' shares to be made available through such
plans and financial intermediaries, and to compensate them for such services,
the funds' advisor has reduced its management fee by 0.25% per annum with respect
to the Advisor Class shares, and the funds' Board of Directors has adopted a
Master Distribution and Shareholder Services Plan (the Distribution Plan). Pursuant
to such Plan, the Advisor Class shares pay a fee of 0.50% annually of the aggregate
average daily net assets of the funds' Advisor Class shares, 0.25% of which
is paid for shareholder services (as described below) and 0.25% of which is
paid for distribution services. During the fiscal year ended November 30, 1999,
the aggregate amount of fees paid under the Plan was:</FONT></P>
Strategic Allocation: Conservative $34,718
Strategic Allocation: Moderate $74,201
Strategic Allocation: Aggressive $57,888
<P><FONT size="3">Payments may be made for a variety of shareholder services,
including, but not limited to,</FONT></P>
<P><FONT size="3">a) receiving, aggregating and processing purchase, exchange
and redemption requests from beneficial owners (including contract owners of
insurance products that utilize the funds as underlying investment media) of
shares and placing purchase, exchange and redemption orders with the funds'
distributor; </FONT></P>
<P><FONT size="3">b) providing shareholders with a service that invests the assets
of their accounts in shares pursuant to specific or pre-authorized instructions;
</FONT></P>
<P><FONT size="3">c) processing dividend payments from a fund on behalf of shareholders
and assisting shareholders in changing dividend options, account designations
and addresses; </FONT></P>
<P><FONT size="3">d) providing and maintaining elective services such as check-writing
and wire transfer services; </FONT></P>
<P><FONT size="3">e) acting as shareholder of record and nominee for beneficial
owners; </FONT></P>
<P><FONT size="3">f) maintaining account records for shareholders and/or other
beneficial owners; </FONT></P>
<P><FONT size="3">g) issuing confirmations of transactions; </FONT></P>
<P><FONT size="3">h) providing subaccounting with respect to shares beneficially
owned by customers of third parties or providing the information to a fund as
necessary for such subaccounting; </FONT></P>
<P><FONT size="3">i) preparing and forwarding shareholder communications from
the funds (such as proxies, shareholder reports, annual and semiannual financial
statements, and dividend, distribution and tax notices) to shareholders and/or
other beneficial owners; and </FONT></P>
<P><FONT size="3">j) providing other similar administrative and sub-transfer agency
services. </FONT></P>
<P><FONT size="3">Shareholder services do not include those activities and expenses
that are primarily intended to result in the sale of additional shares of the
funds. During the fiscal year ended November 30, 1999, the amount of fees paid
under the Plan for shareholder services was: </FONT></P>
Strategic Allocation: Conservative $17,359
Strategic Allocation: Moderate $37,100
Strategic Allocation: Aggressive $28,944
<P><FONT size="3">Distribution services include any activity undertaken or expense
incurred that is primarily intended to result in the sale of Advisor Class shares,
which services may include but not limited to, </FONT></P>
<P><FONT size="3">a) the payment of sales commissions, ongoing commissions and
other payments to brokers, dealers, financial institutions or others who sell
Advisor Class shares pursuant to selling agreements; </FONT></P>
<P><FONT size="3">b) compensation to registered representatives or other employees
of the distributors who engage in or support distribution of the funds' Advisor
Class shares; </FONT></P>
<P><FONT size="3">c) compensation to, and expenses (including overhead and telephone
expenses) of, the distributors; </FONT></P>
<P><FONT size="3">d) the printing of prospectuses, statements of additional information
and reports for other-than-existing shareholders; </FONT></P>
<P><FONT size="3">e) the preparation, printing and distribution of sales literature
and advertising materials provided to the funds' shareholders and prospective
shareholders; </FONT></P>
<P><FONT size="3">f) receiving and answering correspondence from prospective shareholders,
including distributing prospectuses, statements of additional information, and
shareholder reports; </FONT></P>
<P><FONT size="3">g) the providing of facilities to answer questions from prospective
investors about fund shares; </FONT></P>
<P><FONT size="3">h) complying with federal and state securities laws pertaining
to the sale of fund shares; </FONT></P>
<P><FONT size="3">i) assisting investors in completing application forms and selecting
dividend and other account options; </FONT></P>
<P><FONT size="3">j) the providing of other reasonable assistance in connection
with the distribution of fund shares; </FONT></P>
<P><FONT size="3">k) the organizing and conducting of sales seminars and payments
in the form of transactional and compensation or promotional incentives; </FONT></P>
<P><FONT size="3">l) profit on the foregoing; </FONT></P>
<P><FONT size="3">m) the payment of "service fees" for the provision of personal,
continuing services to investors, as contemplated by the Rules of Fair Practice
of the NASD; and </FONT></P>
<P><FONT size="3">n) such other distribution and services activities as the advisor
determines may be paid for by the funds pursuant to the terms of the agreement
between the corporation and the funds' distributor and in accordance with Rule
12b-1 of the Investment Company Act.</FONT></P>
<P><FONT size="3">During the fiscal year ended November 30, 1999, the amount of
fees paid under the Plan for distribution services was:</FONT></P>
Strategic Allocation: Conservative $17,359
Strategic Allocation: Moderate $37,100
Strategic Allocation: Aggressive $28,944
<P><FONT size="3"><B><A NAME="XY"></A>BUYING AND SELLING FUND SHARES</B></FONT></P>
<P><FONT size="3">Information about buying, selling and exchanging fund shares
is contained in the funds' Prospectus and <i>Your Guide to American Century.</i>
The Prospectus and guide are available to investors without charge and may be
obtained by calling us.</FONT></P>
<P><FONT size="3"><B><A NAME="XZ"></A>VALUATION OF THE FUNDS' SECURITIES</B></FONT></P>
<P><FONT size="3">Each fund's NAV is calculated as of the close of business of
the New York Stock Exchange (the Exchange) each day the Exchange is open for
business. The Exchange usually closes at 4 p.m. Eastern time. The Exchange typically
observes the following holidays: New Year's Day, Martin Luther King Jr. Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving
Day and Christmas Day. Although the funds expect the same holidays to be observed
in the future, the Exchange may modify its holiday schedule at any time.</FONT></P>
<P><FONT size="3">Each fund's NAV is calculated by adding the value of all portfolio
securities and other assets, deducting liabilities and dividing the result by
the number of shares outstanding. Expenses and interest earned on portfolio
securities are accrued daily.</FONT></P>
<P><FONT size="3">The portfolio securities of the fund, except as otherwise noted,
listed or traded on a domestic securities exchange are valued at the last sale
price on that exchange. Portfolio securities primarily traded on foreign securities
exchanges generally are valued at the preceding closing values of such securities
on the exchange where primarily traded. If no sale is reported, or if local
convention or regulation so provides, the mean of the latest bid and asked prices
is used. Depending on local convention or regulation, securities traded over-the-counter
are priced at the mean of the latest bid and asked prices, or at the last sale
price. When market quotations are not readily available, securities and other
assets are valued at fair value as determined in accordance with procedures
adopted by the Board of Directors.</FONT></P>
<P><FONT size="3">Debt securities not traded on a principal securities exchange
are valued through valuations obtained from a commercial pricing service or
at the most recent mean of the bid and asked prices provided by investment dealers
in accordance with procedures established by the Board of Directors.</FONT></P>
<P><FONT size="3">The value of an exchange-traded foreign security is determined
in its national currency as of the close of trading on the foreign exchange
on which it is traded or as of the close of business on the New York Stock Exchange,
if that is earlier. That value is then translated to dollars at the prevailing
foreign exchange rate.</FONT></P>
<P><FONT size="3">Trading in securities on European and Far Eastern securities
exchanges and over-the-counter markets is normally completed at various times
before the close of business on each day that the New York Stock Exchange is
open. If an event were to occur after the value of a security was established
but before the net asset value per share was determined that was likely to materially
change the net asset value, then that security would be valued at fair value
as determined in accordance with procedures adopted by the Board of Directors.</FONT></P>
<P><FONT size="3">Trading of these securities in foreign markets may not take
place on every New York Stock Exchange business day. In addition, trading may
take place in various foreign markets and on some electronic trading networks
on Saturdays or on other days when the New York Stock Exchange is not open and
on which the funds' net asset values are not calculated. Therefore, such calculation
does not take place contemporaneously with the determination of the prices of
many of the portfolio securities used in such calculation and the value of the
funds' portfolio may be affected on days when shares of the fund may not be
purchased or redeemed.</FONT></P>
<P><FONT size="4"><B><A NAME="XAA"></A>TAXES</B></FONT></P>
<P><B><FONT size="3"><A NAME="XBB"></A>FEDERAL INCOME TAXES</FONT></B></P>
<P><FONT size="3">Each fund intends to qualify annually as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986, as amended
(the Code). By so qualifying, a fund will be exempt from federal income taxes
to the extent that it distributes substantially all of its net investment income
and net realized capital gains (if any) to shareholders. If a fund fails to
qualify as a regulated investment company, it will be liable for taxes, significantly
reducing its distributions to shareholders and eliminating shareholders' ability
to treat distributions of the funds in the manner they were realized by the
funds.</FONT></P>
<P><FONT size="3">If fund shares are purchased through taxable accounts, distributions
of net investment income and net short-term capital gains are taxable to you
as ordinary income. The dividends from net income may qualify for the 70% dividends-received
deduction for corporations to the extent that the fund held shares receiving
the dividend for more than 45 days.</FONT></P>
<P><FONT size="3">Distributions from gains on assets held longer than 12 months
are taxable as long-term gains regardless of the length of time you have held
the shares. However, you should note that any loss realized upon the sale or
redemption of shares held for six months or less will be treated as a long-term
capital loss to the extent of any distributions of long-term capital gains to
you with respect to such shares.</FONT></P>
<P><FONT size="3">Dividends and interest received by a fund on foreign securities
may give rise to withholding and other taxes imposed by foreign countries. Tax
conventions between certain countries and the United States may reduce or eliminate
such taxes. Foreign countries generally do not impose taxes on capital gains
with respect to investments by non-resident investors. The foreign taxes paid
by a fund will reduce its dividends.</FONT></P>
<P><FONT size="3">If more than 50% of the value of a fund's total assets at the
end of its fiscal year consists of securities of foreign corporations, the fund
may qualify for and make an election with the Internal Revenue Service with
respect to such fiscal year so that fund shareholders may be able to claim a
foreign tax credit in lieu of a deduction for foreign income taxes paid by the
fund. If such an election is made, the foreign taxes paid by the fund will be
treated as income received by you. In order for you to utilize the foreign tax
credit, you must have held your shares for 16 days or more during the 30-day
period, beginning 15 days prior to the ex-dividend date for the mutual fund
shares. The mutual fund must meet a similar holding period requirement with
respect to foreign securities to which a dividend is attributable. Any portion
of the foreign tax credit that is ineligible as a result of the fund not meeting
the holding period requirement will be deducted in computing net investment
income.</FONT></P>
<P><FONT size="3">If a fund purchases the securities of certain foreign investment
funds or trusts called passive foreign investment companies (PFICs), capital
gains on the sale of such holdings will be deemed to be ordinary income regardless
of how long the fund holds its investment. The fund also may be subject to corporate
income tax and an interest charge on certain dividends and capital gains earned
from these investments, regardless of whether such income and gains are distributed
to shareholders. In the alternative, the fund may elect to recognize cumulative
gains on such investments as of the last day of its fiscal year and distribute
them to shareholders. Any distribution attributable to a PFIC is characterized
as ordinary income.</FONT></P>
<P><FONT size="3">If you have not complied with certain provisions of the Internal
Revenue Code and Regulations, either American Century or your financial intermediary
is required by federal law to withhold and remit 31% of reportable payments
(which may include dividends, capital gains distributions and redemptions) to
the IRS. Those regulations require you to certify that the Social Security number
or tax identification number you provide is correct and that you are not subject
to 31% withholding for previous under-reporting to the IRS. You will be asked
to make the appropriate certification on your application. Payments reported
by us that omit your Social Security number or tax identification number will
subject us to a penalty of $50, which will be charged against your account if
you fail to provide the certification by the time the report is filed, and is
not refundable.</FONT></P>
<P><FONT size="3">Redemption of shares of a fund (including a redemption made
in an exchange transaction) will be a taxable transaction for federal income
tax purposes and you generally will recognize gain or loss in an amount equal
to the difference between the basis of the shares and the amount received. If
a loss is realized on the redemption of fund shares, the reinvestment in additional
fund shares within 30 days before or after the redemption may be subject to
the "wash sale" rules of the Code, resulting in a postponement of the recognition
of such loss for federal income tax purposes.</FONT></P>
<P><FONT size="3"><B><A NAME="XCC"></A>STATE AND LOCAL TAXES</B></FONT></P>
<P><FONT size="3">Distributions also may be subject to state and local taxes,
even if all or a substantial part of such distributions are derived from interest
on U.S. government obligations which, if you received them directly, would be
exempt from state income tax. However, most but not all states allow this tax
exemption to pass through to fund shareholders when a fund pays distributions
to its shareholders. You should consult your tax advisor about the tax status
of such distributions in your own state.</FONT></P>
<P><FONT size="4"><B><A NAME="XDD"></A>HOW FUND PERFORMANCE INFORMATION IS CALCULATED</B></FONT></P>
<P><FONT size="3">The funds may quote performance in various ways. Fund performance
may be shown by presenting one or more performance measurements, including cumulative
total return, average annual total return or yield.</FONT></P>
<P><FONT size="3">All performance information advertised by the funds is historical
in nature and is not intended to represent or guarantee future results. The
value of fund shares when redeemed may be more or less than their original cost.</FONT></P>
<P><FONT size="3">Total returns quoted in advertising and sales literature reflect
all aspects of a fund's return, including the effect of reinvesting dividends
and capital gains distributions (if any) and any change in the fund's NAV during
the period.</FONT></P>
<P><FONT size="3">Average annual total returns are calculated by determining the
growth or decline in value of a hypothetical historical investment in a fund
during a stated period and then calculating the annually compounded percentage
rate that would have produced the same result if the rate of growth or decline
in value had been constant throughout the period. For example, a cumulative
total return of 100% over 10 years would produce an average annual return of
7.18%, which is the steady annual rate that would equal 100% growth on a compounded
basis in 10 years. While average annual total returns are a convenient means
of comparing investment alternatives, investors should realize that the funds'
performance is not constant over time, but changes from year to year, and that
average annual total returns represent averaged figures as opposed to actual
year-to-year performance.</FONT></P>
<P><FONT size="3">The following tables set forth the average annual total return
for the various classes of the funds for the one-year period ended November
30, 1999, the last day of the funds' fiscal year and the period since inception.</FONT></P>
Average Annual Total Returns-Investor Class
- -------------------------------------------------------------------------
Fund 1 year From Inception
- -------------------------------------------------------------------------
Strategic Allocation: Conservative(1) 8.47% 9.46%
Strategic Allocation: Moderate(1) 16.97% 13.26%
Strategic Allocation: Aggressive(1) 25.69% 15.73%
- -------------------------------------------------------------------------
<OL>
<LI><FONT size="2"><I>Commenced operations on February 15, 1996.</I></FONT></LI>
</OL>
Average Annual Total Returns-Advisor Class
- -------------------------------------------------------------------------
Fund 1 year From Inception
- -------------------------------------------------------------------------
Strategic Allocation: Conservative(1) 8.32% 10.02%
Strategic Allocation: Moderate(1) 16.66% 13.61%
Strategic Allocation: Aggressive(1) 25.46% 16.19%
- -------------------------------------------------------------------------
<OL>
<LI><FONT size="2"><I>Commenced operations on October 2, 1996. </I></FONT></LI>
</OL>
<P><FONT size="3">In addition to average annual total returns, each fund may quote
unaveraged or cumulative total returns reflecting the simple change in value
of an investment over a stated period, including periods other than one, five
and 10 years. Average annual and cumulative total returns may be quoted as percentages
or as dollar amounts and may be calculated for a single investment, a series
of investments or a series of redemptions over any time period. Total returns
may be broken down into their components of income and capital (including capital
gains and changes in share price) to illustrate the relationship of these factors
and their contributions to total return.</FONT></P>
<P><FONT size="3"><B><A NAME="XEE"></A>PERFORMANCE COMPARISONS</B></FONT></P>
<P><FONT size="3">The funds' performance may be compared with the performance
of other mutual funds tracked by mutual fund rating services or with other indices
of market performance. This may include comparisons with funds that, unlike
the American Century funds, are sold with a sales charge or deferred sales charge.
Sources of economic data that may be used for such comparisons may include,
but are not limited to: U.S. Treasury bill, note and bond yields, money market
fund yields, U.S. government debt and percentage held by foreigners, the U.S.
money supply, net free reserves, and yields on current-coupon GNMAs (source:
Board of Governors of the Federal Reserve System); the federal funds and discount
rates (source: Federal Reserve Bank of New York); yield curves for U.S. Treasury
securities and AA/AAA-rated corporate securities (source: Bloomberg Financial
Markets); yield curves for AAA-rated, tax-free municipal securities (source:
Telerate); yield curves for foreign government securities (sources: Bloomberg
Financial Markets and Data Resources, Inc.); total returns on foreign bonds
(source: J.P. Morgan Securities Inc.); various U.S. and foreign government reports;
the junk bond market (source: Data Resources, Inc.); the CRB Futures Index (source:
Commodity Index Report); the price of gold (sources: London a.m./p.m. fixing
and New York Comex Spot Price); rankings of any mutual fund or mutual fund category
tracked by Lipper, Inc. or Morningstar, Inc.; mutual fund rankings published
in major, nationally distributed periodicals; data provided by the Investment
Company Institute; Ibbotson Associates, Stocks, Bonds, Bills and Inflation;
major indices of stock market performance; and indices and historical data supplied
by major securities brokerage or investment advisory firms. The funds also may
utilize reprints from newspapers and magazines furnished by third parties to
illustrate historical performance or to provide general information about the
funds.</FONT></P>
<P><B><A NAME="XFF"></A>PERMISSIBLE ADVERTISING INFORMATION</B></P>
<P><FONT size="3">From time to time, the funds may include, in addition to any
other permissible information, the following types of information in advertisements,
supplemental sales literature and reports to shareholders: </FONT></P>
<P><FONT size="3">(1) discussions of general economic or financial principles
(such as the effects of compounding and the benefits of dollar-cost averaging);
</FONT></P>
<P><FONT size="3">(2) discussions of general economic trends; </FONT></P>
<P><FONT size="3">(3) presentations of statistical data to supplement such discussions;
</FONT></P>
<P><FONT size="3">(4) descriptions of past or anticipated portfolio holdings for
one or more of the funds; </FONT></P>
<P><FONT size="3">(5) descriptions of investment strategies for one or more of
the funds;</FONT></P>
<P><FONT size="3">(6) descriptions or comparisons of various savings and investment
products (including, but not limited to, qualified retirement plans and individual
stocks and bonds), which may or may not include the funds; </FONT></P>
<P><FONT size="3">(7) comparisons of investment products (including the funds)
with relevant market or industry indices or other appropriate benchmarks; </FONT></P>
<P><FONT size="3">(8) discussions of fund rankings or ratings by recognized rating
organizations; and </FONT></P>
<P><FONT size="3">(9) testimonials describing the experience of persons who have
invested in one or more of the funds. The funds also may include calculations,
such as hypothetical compounding examples, which describe hypothetical investment
results in such communications. Such performance examples will be based on an
express set of assumptions and are not indicative of the performance of any
of the funds.</FONT></P>
<P><FONT size="3"><B><A NAME="XGG"></A>MULTIPLE CLASS PERFORMANCE ADVERTISING</B></FONT></P>
<P><FONT size="3">Pursuant to the Multiple Class Plan, the corporation may issue
additional classes of existing funds or introduce new funds with multiple classes
available for purchase. To the extent a new class is added to an existing fund,
the advisor may, in compliance with SEC and NASD rules, regulations and guidelines,
market the new class of shares using the historical performance information
of the original class of shares. When quoting performance information for the
new class of shares for periods prior to the first full quarter after inception,
the original class' performance will be restated to reflect the expenses of
the new class and for periods after the first full quarter after inception,
actual performance of the new class will be used.</FONT></P>
<P><FONT size="4"><B><A NAME="XHH"></A>FINANCIAL STATEMENTS</B></FONT></P>
<P><FONT size="3">The financial statements of the funds are included in the annual
reports to shareholders for the fiscal year ended November 30, 1999. The annual
report is incorporated herein by reference. You may receive copies of the reports
without charge upon request to American Century at the address and telephone
numbers shown on the back cover of this Statement of Additional Information.</FONT></P>
<P><FONT size="4"><B><A NAME="XII"></A>EXPLANATION OF FIXED-INCOME SECURITIES RATINGS</B></FONT></P>
<P><FONT size="3">As described in the Prospectus, the funds may invest in fixed-income
securities. Those investments, however, are subject to certain credit quality
restrictions, as noted in the Prospectus. The following is a summary of the
rating categories referenced in the Prospectus disclosure.</FONT></P>
Bond Ratings
- --------------------------------------------------------------------------------
S&P Moody's Description
- --------------------------------------------------------------------------------
AAA Aaa These are the highest ratings assigned by S&P and Moody's
to a debt obligation. They indicate an extremely strong
capacity to pay interest and repay principal.
- --------------------------------------------------------------------------------
AA Aa Debt rated in this category is considered to have a very
strong capacity to pay interest and repay principal and
differs from AAA/Aaa issues only in a small degree.
- --------------------------------------------------------------------------------
A A Debt rated A has a strong capacity to pay interest and
repay principal, although it is somewhat more susceptible
to the adverse effects of changes in circumstances and
economic conditions than debt in higher-rated categories.
- --------------------------------------------------------------------------------
BBB Baa Debt rated BBB/Baa is regarded as having an adequate
capacity to pay interest and repay principal. Whereas it
normally exhibits adequate protection parameters, adverse
economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and
repay principal for debt in this category than in
higher-rated categories.
- --------------------------------------------------------------------------------
BB Ba Debt rated BB/Ba has less near-term vulnerability to
default than other speculative issues. However, it faces
major ongoing uncertainties or exposure to adverse
business, financial or economic conditions that could lead
to inadequate capacity to meet timely interest and
principal payments. The BB rating category also is used
for debt subordinated to senior debt that is assigned an
actual or implied BBB- rating.
- --------------------------------------------------------------------------------
B B Debt rated B has a greater vulnerability to default but
currently has the capacity to meet interest payments and
principal repayments. Adverse business, financial or
economic conditions will likely impair capacity or
willingness to pay interest and repay principal. The B
rating category is also used for debt subordinated to
senior debt that is assigned an actual or implied BB/Ba or
BB-/Ba3 rating.
- --------------------------------------------------------------------------------
CCC Caa Debt rated CCC/Caa has a currently identifiable
vulnerability to default and is dependent upon favorable
business, financial and economic conditions to meet timely
payment of interest and repayment of principal. In the
event of adverse business, financial or economic
conditions, it is not likely to have the capacity to pay
interest and repay principal. The CCC/Caa rating category
is also used for debt subordinated to senior debt that is
assigned an actual or implied B or B-/B3 rating.
- --------------------------------------------------------------------------------
CC Ca The rating CC/Ca typically is applied to debt subordinated
to senior debt that is assigned an actual or implied
CCC/Caa rating.
- --------------------------------------------------------------------------------
C C The rating C typically is applied to debt subordinated to
senior debt, which is assigned an actual or implied
CCC/Caa3 debt rating. The C rating may be used to cover a
situation where a bankruptcy petition has been filed, but
debt service payments are continued.
- --------------------------------------------------------------------------------
CI - The rating CI is reserved for income bonds on which no
interest is being paid.
- --------------------------------------------------------------------------------
D D Debt rated D is in payment default. The D rating category
is used when interest payments or principal payments are
not made on the date due even if the applicable grace
period has not expired, unless S&P believes that such
payments will be made during such grace period. The D
rating also will be used upon the filing of a bankruptcy
petition if debt service payments are jeopardized.
- --------------------------------------------------------------------------------
<P><FONT size="3">To provide more detailed indications of credit quality, the
Standard & Poor's ratings from AA to CCC may be modified by the addition
of a plus or minus sign to show relative standing within these major rating
categories. Similarly, Moody's adds numerical modifiers (1,2,3) to designate
relative standing within its major bond rating categories. Fitch Investors Service,
Inc. also rates bonds and uses a ratings system that is substantially similar
to that used by Standard & Poor's.</FONT></P>
Commercial Paper Ratings
- --------------------------------------------------------------------------------
S&P Moody's Description
- --------------------------------------------------------------------------------
A-1 Prime-1 This indicates that the degree of safety regarding
(P-1) timely payment is strong. Standard & Poor's rates
those issues determined to possess extremely strong
safety characteristics as A-1+.
- --------------------------------------------------------------------------------
A-2 Prime-2 Capacity for timely payment on commercial paper is
(P-2) satisfactory, but the relative degree of safety is
not as high as for issues designated A-1. Earnings
trends and coverage ratios, while sound, will be more
subject to variation. Capitalization characteristics,
while still appropriated, may be more affected by
external conditions. Ample alternate liquidity is
maintained.
- --------------------------------------------------------------------------------
A-3 Prime-3 Satisfactory capacity for timely repayment. Issues
(P-3) that carry this rating are somewhat more vulnerable
to the adverse changes in circumstances than
obligations carrying the higher designations.
- --------------------------------------------------------------------------------
Note Ratings
- ----------------------------------------------------------------------------------
S&P Moody's Description
- ----------------------------------------------------------------------------------
SP-1 MIG-1; VMIG-1 Notes are of the highest quality enjoying strong
protection from established cash flows of funds for
their servicing or from established and broad-based
access to the market for refinancing, or both.
- ----------------------------------------------------------------------------------
SP-2 MIG-2; VMIG-2 Notes are of high quality with margins of protection
ample, although not so large as in the preceding
group.
- ----------------------------------------------------------------------------------
SP-3 MIG-3; VMIG-3 Notes are of favorable quality with all security
elements accounted for, but lacking the undeniable
strength of the preceding grades. Market access for
refinancing, in particular, is likely to be less well-
established.
- ----------------------------------------------------------------------------------
SP-4 MIG-4; VMIG-4 Notes are of adequate quality, carrying specific risk
but having protection and not distinctly or
predominantly speculative.
- ----------------------------------------------------------------------------------
<B>MORE INFORMATION ABOUT THE FUNDS IS CONTAINED IN THESE DOCUMENTS</B>
<P><B><FONT size="3">Annual and Semiannual Reports</FONT></B></P>
<P><FONT size="3">These contain more information about the funds' investments
and the market conditions and investment strategies that significantly affected
the funds' performance during the most recent fiscal period. The annual and
semiannual reports are incorporated by reference into this SAI. This means that
these are legally part of this SAI.</FONT></P>
<P><FONT size="3">You can receive a free copy of the annual and semiannual reports,
and ask any questions about the funds and your accounts, by contacting American
Century at the address or telephone numbers listed below.</FONT></P>
<P><FONT size="3">If you own or are considering purchasing fund shares through
</FONT></P>
<UL>
<LI><FONT size="3">an employer-sponsored retirement plan</FONT></LI>
<LI><FONT size="3">a bank</FONT></LI>
<LI><FONT size="3">a broker-dealer</FONT></LI>
<LI><FONT size="3">an insurance company</FONT></LI>
<LI><FONT size="3">another financial intermediary</FONT></LI>
</UL>
<P><FONT size="3">you can receive the annual and semiannual reports directly from
them.</FONT></P>
<P><FONT size="3">You also can get information about the funds from the Securities
and Exchange Commission (SEC). The SEC charges a duplicating fee to provide
copies of this information.</FONT></P>
<TABLE cellspacing=0 border=0 width=600>
<TR>
<TD valign="TOP">
<P><FONT size="3"><I>In person </I></FONT>
</TD>
<TD valign="TOP">
<P><FONT size=2><FONT size="3">SEC Public Reference Room<BR>
</FONT><FONT size="3">Washington, D.C.<BR>
</FONT><FONT size="3">Call 1-202-942-8090 for location and hours.<BR>
<BR>
</FONT></FONT></P>
</TD>
</TR>
<TR>
<TD valign="TOP">
<P><FONT size=3><I>On the Internet </I> </FONT>
</TD>
<TD valign="TOP">
<UL>
<LI><FONT size="3">EDGAR database at www.sec.gov </FONT></LI>
<LI><FONT size="3">By email request at [email protected]<BR>
</FONT></LI>
</UL>
</TD>
</TR>
<TR>
<TD valign="TOP">
<P><FONT size=3><I>By mail </I> </FONT>
</TD>
<TD valign="TOP">
<P><FONT size=3>SEC Public Reference Section <BR>
Washington, D.C. 20549-0102 </FONT>
</TD>
</TR>
</TABLE>
<P><FONT size="2">Investment Company Act File No. 811-8532</FONT></P>
<HR width="100%" size="2" noshade>
<P><FONT size="3">[AMERICAN CENTURY LOGO]</FONT></P>
<P><FONT size="3"><B>American Century Investments<BR>
</B>P.O. Box 419200<BR>
Kansas City, Missouri 64141-6200</FONT></P>
<P><FONT size="3"><B>Investor Relations<BR>
</B>1-800-345-2021 or 816-531-5575</FONT></P>
<P><FONT size="3"><B>Automated Information Line<BR>
</B>1-800-345-8765</FONT></P>
<P><FONT size="3"><B>www.americancentury.com</B></FONT></P>
<P><FONT size="3"><B>Fax<BR>
</B>816-340-7962</FONT></P>
<P><FONT size="3"><B>Telecommunications Device for the Deaf<BR>
</B>1-800-634-4113 or 816-444-3485</FONT></P>
<P><FONT size="3"><B>Business, Not-For-Profit and Employer-<BR>
Sponsored Retirement Plans<BR>
</B>1-800-345-3533</FONT></P>
<P><FONT size="2">SH-SAI-19561 0004</FONT></P>
</BODY>
</HTML>
<PAGE>
PART C. OTHER INFORMATION.
ITEM 23. Exhibits (all exhibits not filed herewith are being incorporated
herein by reference).
(a) (1) Articles of Incorporation of Twentieth Century Strategic
Asset Allocations, Inc. (filed electronically as an
Exhibit to Pre-Effective Amendment No. 3 to the
Registration Statement on Form N-1A on December 1,
1995).
(2) Articles of Amendment of Twentieth Century Strategic
Asset Allocations, Inc., dated November 28, 1995 (filed
electronically as an Exhibit to Pre-Effective Amendment
No. 3 to the Registration Statement on Form N-1A on
December 1, 1995).
(3) Articles Supplementary of Twentieth Century Strategic
Asset Allocations, Inc., dated December 28, 1995 (filed
electronically as an Exhibit to Pre-Effective Amendment
No. 4 to the Registration Statement on Form N-1A on
February 5, 1996).
(4) Articles of Amendment of Twentieth Century Strategic
Asset Allocations, Inc., dated January 30, 1996 (filed
electronically as an Exhibit to Pre-Effective Amendment
No. 4 to the Registration Statement on Form N-1A on
February 5, 1996).
(5) Articles Supplementary of Twentieth Century Strategic
Asset Allocations, Inc., dated January 30, 1996 (filed
electronically as an Exhibit to Pre-Effective Amendment
No. 4 to the Registration Statement on Form N-1A on
February 5, 1996).
(6) Articles Supplementary of Twentieth Century Strategic
Asset Allocations, Inc., dated September 9, 1996 (filed
electronically as an exhibit to Post-Effective Amendment
No. 4 to the Registration Statement on Form N-1A on
January 5, 1999).
(7) Articles of Amendment of Twentieth Century Strategic
Asset Allocations, Inc., dated December 2, 1996 (filed
electronically as an exhibit to Post-Effective Amendment
No. 2 to the Registration Statement on Form N-1A on
March 26, 1997).
(8) Articles Supplementary of American Century Strategic
Asset Allocations, Inc., dated December 2, 1996 (filed
electronically as an exhibit to Post-Effective Amendment
No. 2 to the Registration Statement on Form N-1A on
March 26, 1997).
<PAGE>
(9) Articles Supplementary of American Century Strategic
Asset Allocations, Inc., dated February 16, 1999 (filed
electronically as an exhibit to Post-Effective Amendment
No. 6 to the Registration Statement on Form N-1A on
March 30, 1999)
(10) Articles Supplementary of American Century Strategic
Asset Allocations, Inc., dated August 2, 1999, included
herein.
(b) (1) By-Laws of Twentieth Century Strategic Asset
Allocations, Inc. (filed electronically as an Exhibit to
Pre-Effective Amendment No. 3 to the Registration
Statement on Form N-1A on December 1, 1995).
(2) Amendment to By-Laws of American Century Strategic Asset
Allocations, Inc. (filed electronically as an Exhibit to
Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A of American Century Capital
Portfolios, Inc., No. 33-64872).
(c) Registrant hereby incorporates by reference, as though set
forth fully herein, Article Fifth, Article Seventh, Article
Eighth and Article Ninth of Registrant's Articles of
Incorporation, appearing as Exhibit (a)(1) to Pre-Effective
Amendment No. 3 to the Registration Statement on Form N-1A of
the Registrant; and Sections 3, 4, 5, 7, 8, 9, 10, 11, 22, 25,
30, 31, 33, 39 and 45 of Registrant's By-Laws appearing as
Exhibit (b)(1) to Pre-Effective Amendment No. 3 to the
Registration Statement on Form N-1A and Sections 25, 30 and 31
of Registrant's By-Laws appearing as Exhibit (b)(2) to
Post-Effective Amendment No. 9 to the Registration Statement
on Form N-1A of American Century Capital Portfolios, Inc., No.
33-64872.
(d) Management Agreement, between American Century Strategic Asset
Allocations, Inc. and American Century Investment Management,
Inc., dated August 1, 1997 (filed electronically as an Exhibit
to Post-Effective Amendment No. 3 to the Registration
Statement on Form N-1A on April 1, 1998, File No. 33-79482).
(e) (1) Distribution Agreement between American Century
Strategic Asset Allocations, Inc. and Funds Distributor,
Inc. dated January 15, 1998 (filed electronically as an
Exhibit to Post-Effective Amendment No. 28 to the
Registration Statement on Form N-1A of American Century
Target Maturities Trust on January 30, 1998, File No.
2-94608).
(2) Amendment No. 1 to the Distribution Agreement between
American Century Strategic Asset Allocations, Inc. and
<PAGE>
Funds Distributor, Inc. dated June 1, 1998 (filed
electronically as an Exhibit to Post-Effective Amendment
No. 11 to the Registration Statement on Form N-1A of
American Century Capital Portfolios, Inc. on June 26,
1998, File. No. 33-64872).
(3) Amendment No. 2 to the Distribution Agreement between
American Century Strategic Asset Allocations, Inc. and
Funds Distributor, Inc. dated November 13, 1998 (filed
electronically as an Exhibit to Post-Effective Amendment
No. 12 to the Registration Statement on Form N-1A of
American Century World Mutual Funds, Inc. on November
13, 1998, File No. 33-39242).
(4) Amendment No. 3 to the Distribution Agreement between
American Century Strategic Asset Allocations, Inc. and
Funds Distributor, Inc. dated January 29, 1999 (filed
electronically as an Exhibit to Post-Effective Amendment
No. 28 to the Registration Statement on Form N-1A of
American Century California Tax-Free and Municipal
Funds, on December 28, 1998, File No. 2-82734).
(5) Amendment No. 4 to the Distribution Agreement between
American Century Strategic Asset Allocations, Inc. and
Funds Distributor, Inc. dated July 30, 1999 (filed
electronically as an Exhibit to Post-Effective Amendment
No. 16 to the Registration Statement of American Century
Capital Portfolios, Inc., on July 29, 1999, File No.
33-64872).
(6) Amendment No. 5 to the Distribution Agreement between
American Century Strategic Asset Allocations, Inc. and
Funds Distributor, Inc. (filed electronically as an
Exhibit to Post-Effective Amendment No. 87 to the
Registration Statement of American Century Mutual Funds,
Inc. on November 29, 1999, File No. 2-14213).
(7) Distribution Agreement between American Century
Strategic Asset Allocations, Inc. and American Century
Investment Services, Inc. dated March 13, 2000 (filed
electronically as an Exhibit to Post-Effective Amendment
No. 17 to the Registration Statement of American Century
World Mutual Funds, Inc. on March 30, 2000, File No
33-39242).
(f) Not applicable.
(g) (1) Global Custody Agreement between The Chase Manhattan
Bank and The Twentieth Century and Benham Funds, dated
August 9, 1996 (filed electronically as an Exhibit to
Post-Effective Amendment No. 31 to the Registration
Statement on Form N1-A of American Century Government
Income Trust, File No. 2-99222).
(2) Master Agreement between Commerce Bank, N.A. and
Twentieth Century Services, Inc. dated January 22, 1997
<PAGE>
(filed electronically as an Exhibit to Post-Effective
Amendment No. 76 to the Registration Statement on Form
N-1A of American Century Mutual Funds, Inc., File No.
2-14213).
(h) (1) Transfer Agency Agreement, dated as of February 1, 1996,
by and between Twentieth Century Strategic Asset
Allocations, Inc. and Twentieth Century Services, Inc.
(filed electronically as an Exhibit to Pre-Effective
Amendment No. 4 to the Registration Statement on Form
N-1A on February 5, 1996, File No. 33-79482).
(2) Credit Agreement between American Century Funds and The
Chase Manhattan Bank, as Administrative Agent dated as
of December 21, 1999 (filed electronically as Exhibit h3
to Post-Effective Amendment No. 29 to the Registration
Statement of American Century California Tax-Free and
Municipal Funds on December 29, 1999, File No. 2-82734).
(i) Opinion and Consent of Counsel, (filed electronically as an
Exhibit to Post-Effective Amendment No. 6 to the Registration
Statement on Form N-1A on March 30, 1999 File No. 33-79482)
(j) (1) Consent of Deloitte & Touche LLP, included herein.
(2) Power of Attorney (filed electronically as an Exhibit to
Post-Effective Amendment No. 6 to the Registration
Statement on Form N-1A on March 30, 1999, File No.
33-79482).
(k) Not applicable.
(l) Not applicable.
(m) (1) Master Distribution and Shareholder Services Plan of
Twentieth Century Capital Portfolios, Inc. Twentieth
Century Investors, Inc., Twentieth Century Strategic
Asset Allocations, Inc. and Twentieth Century World
Investors, Inc. (Advisor Class) dated September 3, 1996
(filed electronically as an Exhibit to Post-Effective
Amendment No. 9 to the Registration Statement on Form
N-1A of American Century Capital Portfolios, Inc., File
No. 33-64872).
(2) Amendment No. 1 to Master Distribution and Shareholder
Services Plan of American Century Capital Portfolios,
Inc., American Century Mutual Funds, Inc., American
Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. (Advisor Class) dated
June 13, 1997 (filed electronically as an Exhibit to
Post-Effective Amendment No. 77 to the Registration
Statement on Form N-1A of American Century Mutual
<PAGE>
Funds, Inc., File No. 2-14213).
(3) Amendment No. 2 to Master Distribution and Shareholder
Services Plan of American Century Capital Portfolios,
Inc., American Century Mutual Funds, Inc., American
Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. (Advisor Class) dated
September 30, 1997 (filed electronically as an Exhibit
to Post-Effective Amendment No. 78 to the Registration
Statement on Form N-1A of American Century Mutual Funds,
Inc., File No. 2-14213).
(4) Amendment No. 3 to Master Distribution and Shareholder
Services Plan of American Century Capital Portfolios,
Inc., American Century Mutual Funds, Inc., American
Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. (Advisor Class) dated
June 30, 1998 (filed electronically as an Exhibit to
Post-Effective Amendment No. 11 to the Registration
Statement on Form N-1A of American Century Capital
Portfolios, Inc. on June 26, 1998, File No. 33-64872).
(5) Amendment No. 4 to Master Distribution and Shareholder
Services Plan of American Century Capital Portfolios,
Inc., American Century Mutual Funds, Inc., American
Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. (Advisor Class) dated
November 13, 1998 (filed electronically as an Exhibit to
Post-Effective Amendment No. 12 to the Registration
Statement on Form N-1A of American Century World Mutual
Funds, Inc. on November 13, 1998, File No. 33-39242).
(6) Amendment No. 5 to Master Distribution and Shareholder
Services Plan of American Century Capital Portfolios,
Inc., American Century Mutual Funds, Inc., American
Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. (Advisor Class) dated
February 16, 1999 (filed electronically as an Exhibit to
Post-Effective Amendment No. 83 to the Registration
Statement on Form N-1A of American Century Mutual Funds,
Inc. on February 26, 1999, File No. 2-14213).
(7) Amendment No. 6 to Master Distribution and Shareholder
Services Plan of American Century Capital Portfolios,
Inc., American Century Mutual Funds, Inc., American
Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. (Advisor Class) dated
July 30, 1999 (filed electronically as an Exhibit to
Post-Effective Amendment No. 16 to the Registration
Statement on Form N-1A of American Century Capital
Portfolios, Inc. on July 29, 1999, File No. 33-64872).
(8) Amendment No. 7 to Master Distribution and Shareholder
Services Plan of American Century Capital Portfolios,
Inc., American Century Mutual Funds, Inc., American
Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. (Advisor Class) (filed
<PAGE>
electronically as an Exhibit to Post-Effective Amendment
No. 87 to the Registration Statement on Form N-1A of
American Century Mutual Funds, Inc. on November 29,
1999, File No. 2-14213).
(9) Shareholder Services Plan of Twentieth Century Capital
Portfolios, Inc., Twentieth Century Investors, Inc.,
Twentieth Century Strategic Asset Allocations, Inc., and
Twentieth Century World Investors, Inc. (Service Class)
dated September 3, 1996 (filed electronically as an
Exhibit to Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A of American Century
Capital Portfolios, Inc., File No. 33-64872).
(o) (1) Multiple Class Plan of Twentieth Century Capital
Portfolios, Inc., Twentieth Century Investors, Inc.,
Twentieth Century Strategic Asset Allocations, Inc. and
Twentieth Century World Investors, Inc. dated September
3, 1996, (filed electronically as an Exhibit to
Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A of American Century Capital
Portfolios, Inc., File No. 33-64872).
(2) Amendment No. 1 to Multiple Class Plan of American
Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual
Funds, Inc. dated June 13, 1997 (filed electronically as
an Exhibit to Post-Effective Amendment No. 77 to the
Registration Statement on Form N-1A of American Century
Mutual Funds, Inc., File No. 2-14213).
(3) Amendment No. 2 to Multiple Class Plan of American
Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual
Funds, Inc. dated September 30, 1997 (filed
electronically as an Exhibit to Post-Effective Amendment
No. 78 to the Registration Statement on Form N-1A of
American Century Mutual Funds, Inc., File No. 2-14213).
(4) Amendment No. 3 to Multiple Class Plan of American
Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual
Funds, Inc. dated June 30, 1998 (filed electronically as
an Exhibit to Post-Effective Amendment No. 11 to the
Registration Statement on Form N-1A of American Century
Capital Portfolios, Inc. on June 26, 1998, File No.
33-64872).
(5) Amendment No. 4 to Multiple Class Plan of American
Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Strategic Asset
<PAGE>
Allocations, Inc. and American Century World Mutual
Funds, Inc. dated November 13, 1998 (filed
electronically as an Exhibit to Post-Effective Amendment
No. 12 to the Registration Statement on Form N-1A of
American Century World Mutual Funds, Inc. on November
13, 1998, File No. 33-39242).
(6) Amendment No. 5 to Multiple Class Plan of American
Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual
Funds, Inc. dated January 29, 1999 (filed electronically
as an Exhibit to Post-Effective Amendment No. 14 to the
Registration Statement on Form N-1A of American Century
Capital Portfolios, Inc. on December 29, 1998, File No.
33-64872).
(7) Amendment No. 6 to Multiple Class Plan of American
Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual
Funds, Inc. dated July 30, 1999 (filed electronically as
Exhibit o7 to Post-Effective Amendment No. 16 to the
Registration Statement on Form N-1A of American Century
Capital Portfolios, Inc. on July 29, 1999, File No.
33-64872).
(8) Amendment No. 7 to Multiple Class Plan of American
Century Capital Portfolios, Inc., American Century
Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual
Funds, Inc. dated November 19, 1999 (filed
electronically as Exhibit o8 to Post-Effective Amendment
No. 87 to the Registration Statement on Form N-1A of
American Century Mutual Funds, Inc. on November 29,
1999, File No. 2-14213).
(p) (1) American Century Investments Code of Ethics, (filed
electronically as an Exhibit to Post-Effective Amendment
No. 16 to the Registration Statement on Form N-1A of
American Century World Mutual Funds, Inc. on March 10,
2000, File No. 33-39242).
(2) Funds Distributor, Inc. Code of Ethics (filed
electronically as an Exhibit to Post-Effective Amendment
No. 16 to the Registration Statement on Form N-1A of
American Century World Mutual Funds, Inc. on March 10,
2000, File No. 33-39242).
ITEM 24. Persons Controlled by or Under Common Control with Registrant:
NONE.
ITEM 25. Indemnification.
The Registrant is a Maryland corporation. Section 2-418 of the
Maryland General Corporation Law allows a Maryland corporation to
indemnify its officers, directors, employees and agents to the
extent
<PAGE>
provided in such statute.
Article Ninth of the Registrant's Articles of Incorporation requires
the indemnification of the Registrant's directors and officers to
the extent permitted by Section 2-418 of the Maryland General
Corporation Law, the Investment Company Act of 1940 and all other
applicable laws.
The Registrant has purchased an insurance policy insuring its
officers and directors against certain liabilities that such
officers and directors may incur while acting in such capacities and
providing reimbursement to the Registrant for sums which it may be
permitted or required to pay to its officers and directors by way of
indemnification against such liabilities, subject in either case to
clauses respecting deductibility and participation.
ITEM 26. Business and Other Connections of Investment Advisor.
NONE.
ITEM 27 Principal Underwriters.
(a) Funds Distributor, Inc. ("FDI") acts as principal underwriter
for the following investment companies.
American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
The Brinson Funds
CDC MPT+ Funds
Dresdner RCM Capital Funds, Inc.
Dresdner RCM Global Funds, Inc.
Dresdner RCM Investment Funds, Inc.
J.P. Morgan Institutional Funds
J.P. Morgan Funds
JPM Series Trust
JPM Series Trust II
LaSalle Partners Funds, Inc.
Kobrick-Cendant Investment Trust
Merrimac Series
Monetta Fund, Inc.
Monetta Trust
The Montgomery Funds I
The Montgomery Funds II
The Munder Framlington Funds Trust
<PAGE>
The Munder Funds Trust
The Munder Funds, Inc.
National Investors Cash Management Fund, Inc.
Nomura Pacific Basin Fund, Inc.
Orbitex Group of Funds
The Saratoga Advantage Trust
SG Cowen Funds, Inc.
SG Cowen Income + Growth Fund, Inc.
SG Cowen Standby Reserve Fund, Inc.
SG Cowen Standby Tax-Exempt Reserve Fund, Inc.
SG Cowen Series Funds, Inc.
The Skyline Funds
SoGen Funds, Inc.
SoGen Variable Funds, Inc.
St. Clair Funds, Inc.
TD Waterhouse Trust
Waterhouse Investors Family of Funds, Inc.
WEBS Index Fund, Inc.
FDI is registered with the Securities and Exchange Commission as a
broker-dealer and is a member of the National Association of Securities Dealers.
FDI is located at 60 State Street, Suite 1300, Boston, Massachusetts 02109. FDI
is an indirect wholly-owned subsidiary of Boston Institutional Group, Inc., a
holding company all of whose outstanding shares are owned by key employees.
(b) The following is a list of the executive officers, directors and
partners of FDI:
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- --------------------------------------------------------------------------------
Marie E. Connolly Director, President and none
Chief Executive Officer
George A. Rio Executive Vice President President,
Principal Executive
and Principal
Financial Officer
Donald R. Roberson Executive Vice President none
William S. Nichols Executive Vice President none
Margaret W. Chambers Senior Vice President, none
General Counsel, Chief
Compliance Officer,
Secretary and Clerk
Joseph F. Tower, III Director, Senior Vice none
President, Treasurer and
Chief Financial Officer
<PAGE>
Paula R. David Senior Vice President none
Gary S. MacDonald Senior Vice President none
Judith K. Benson Senior Vice President none
William J. Nutt Chairman and Director none
William J. Stetter Vice President and none
Chief Financial Officer
- ----------
* All addresses are 60 State Street, Suite 1300, Boston, Massachusetts 02109
(c) Not applicable.
II. (a) American Century Investment Services, Inc. (ACIS) acts as
principal underwriter for the following investment companies:
American Century California Tax-Free and Municipal Funds
American Century Capital Portfolios, Inc.
American Century Government Income Trust
American Century International Bond Funds
American Century Investment Trust
American Century Municipal Trust
American Century Mutual Funds, Inc.
American Century Premium Reserves, Inc.
American Century Quantitative Equity Funds
American Century Strategic Asset Allocations, Inc.
American Century Target Maturities Trust
American Century Variable Portfolios, Inc.
American Century World Mutual Funds, Inc.
ACIS is registered with the Securities and Exchange Commission as a
broker-dealer and is a member of the National Association of Securities Dealers.
ACIS is located at 4500 Main Street, Kansas City, Missouri 64111. ACIS is a
wholly-owned subsidiary of American Century Companies, Inc.
(b) The following is a list of the executive officers and partners
of ACIS:
Name and Principal Positions and Offices Positions and Offices
Business Address* with Underwriter with Registrant
- --------------------------------------------------------------------------------
W. Gordon Snyder President and Director none
James E. Stowers III Chief Executive Officer Director
William M. Lyons Executive Vice President none
and Director
<PAGE>
Robert T. Jackson Executive Vice President none
and Chief Financial Officer
Kevin Cuccias Senior Vice President none
Brian Jeter Senior Vice President none
Mark Killen Senior Vice President none
Tom Kmak Senior Vice President none
David C. Tucker Senior Vice President none
James E. Stowers, Jr. Chairman and Director Director
- ----------
* All addresses are 4500 Main Street, Kansas City, Missouri 64111
(c) Not applicable.
ITEM 28. Location of Accounts and Records.
All accounts, books and other documents required to be maintained by
Section 31(a) of the 1940 Act, and the rules promulgated thereunder,
are in the possession of Registrant, American Century Services
Corporation and American Century Investment Management, Inc., all
located at 4500 Main Street, Kansas City, Missouri 64111.
ITEM 29. Management Services.
Not applicable.
ITEM 30. Undertakings.
Not applicable.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment No. 7 to its
Registration Statement pursuant to Rule 485(b) promulgated under the Securities
Act of 1933, as amended and has duly caused this Post-Effective Amendment No. 7
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Kansas City, State of Missouri on the 31st day of March, 2000.
American Century Strategic Asset Allocations, Inc.
(Registrant)
By: /*/George A. Rio
George A. Rio
President and Principal Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 7 has been signed below by the following persons in
the capacities and on the dates indicated.
Signature Title Date
*George A. Rio President, Principal Executive March 31, 2000
George A. Rio and Principal Financial Officer
*Maryanne Roepke Vice President and Treasurer March 31, 2000
Maryanne Roepke
*James E. Stowers, Jr. Chairman of the Board and March 31, 2000
James E. Stowers, Jr. Director
*James E. Stowers III Director March 31, 2000
James E. Stowers III
*Thomas A. Brown Director March 31, 2000
Thomas A. Brown
*Robert W. Doering, M.D. Director March 31, 2000
Robert W. Doering, M.D.
*Andrea C. Hall, Ph.D. Director March 31, 2000
Andrea C. Hall, Ph.D.
*Donald H. Pratt Director March 31, 2000
Donald H. Pratt
*M. Jeannine Strandjord Director March 31, 2000
M. Jeannine Strandjord
*D. D. (Del) Hock Director March 31, 2000
D. D. (Del) Hock
*By /s/ Charles A. Etherington
Charles A. Etherington
Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit Description of Document
Number
EX-99.a1 Articles of Incorporation of Twentieth Century Strategic Asset
Allocations, Inc. (filed electronically as Exhibit 1a to
Pre-Effective Amendment No. 3 to the Registration Statement on
Form N-1A, filed on December 1, 1995, and incorporated herein by
reference).
EX-99.a2 Articles of Amendment of Twentieth Century Strategic Asset
Allocations, Inc., dated November 28, 1995 (filed electronically
as Exhibit 1b to Pre-Effective Amendment No. 3 to the
Registration Statement on Form N-1A, filed December 1, 1995, and
incorporated herein by reference).
EX-99.a3 Articles Supplementary of Twentieth Century Strategic Asset
Allocations, Inc., dated December 26, 1995 (filed electronically
as Exhibit 1c to Pre-Effective Amendment No. 4 to the
Registration Statement on Form N-1A, filed on February 5, 1996,
and incorporated herein by reference).
EX-99.a4 Articles of Amendment of Twentieth Century Strategic Asset
Allocations, Inc., dated January 29, 1996 (filed electronically
as Exhibit 1d to Pre-Effective Amendment No. 4 to the
Registration Statement on Form N-1A, filed on February 5, 1996,
and incorporated herein by reference).
EX-99.a5 Articles Supplementary of Twentieth Century Strategic Asset
Allocations, Inc., dated January 29, 1996 (filed electronically
as Exhibit 1e to Pre-Effective Amendment No. 4 to the
Registration Statement on Form N-1A, filed on February 5, 1996,
and incorporated herein by reference).
EX-99.a6 Articles Supplementary of Twentieth Century Strategic Asset
Allocations, Inc., dated September 9, 1996 (filed electronically
as an exhibit to Post-Effective Amendment No. 4 to the
Registration Statement on Form N-1A, filed on January 5, 1999,
and incorporated herein by reference).
EX-99.a7 Articles of Amendment of Twentieth Century Strategic Asset
Allocations, Inc., dated December 2, 1996 (filed electronically
as Exhibit 1f to Post-Effective Amendment No. 2 to the
Registration Statement on Form N-1A, filed on March 26, 1997, and
incorporated herein by reference).
EX-99.a8 Articles Supplementary of American Century Strategic Asset
Allocations, Inc., dated December 2, 1996 (filed electronically
as
<PAGE>
Exhibit 1g to Post-Effective Amendment No. 2 to the Registration
Statement on Form N-1A, filed on March 26, 1997, and incorporated
herein by reference).
EX-99.a9 Articles Supplementary of American Century Strategic Asset
Allocations, Inc., dated February 16, 1999, (filed electronically
as an Exhibit to Post-Effective Amendment No. 6 to the
Registration Statement on Form N-1A, filed on March 30, 1999, and
incorporated herein by reference).
EX-99.a10 Articles Supplementary of American Century Strategic Asset
Allocations, Inc., dated August 2, 1999, is included herein.
EX-99.b1 By-Laws of Twentieth Century Strategic Asset Allocations, Inc.
(filed electronically as Exhibit 2 to Pre-Effective Amendment No.
3 to the Registration Statement on Form N-1A, filed December 1,
1995, and incorporated herein by reference).
EX-99.b2 Amendment of By-Laws of American Century Mutual Funds, Inc.
(filed as Exhibit 2b to Post-Effective Amendment No. 9 to the
Registration Statement on Form N-1A of American Century Capital
Portfolios, Inc., File No. 33-64872, and incorporated herein by
reference).
EX-99.d Management Agreement between American Century Strategic Asset
Allocations, Inc. and American Century Investment Management,
Inc., dated August 1, 1997 (filed electronically as Exhibit d to
Post-Effective Amendment No. 3 to the Registration Statement on
Form N-1A on April 1, 1998, File No. 33-79482, and incorporated
herein by reference).
EX-99.e1 Distribution Agreement between American Century Strategic Asset
Allocations, Inc., and Funds Distributor, Inc. dated January 15,
1998 (filed electronically as Exhibit 6 to Post-Effective
Amendment No. 28 to the Registration Statement on form N-1A of
American Century Target Maturities Trust, Inc., File No. 2-94608,
and incorporated herein by reference).
EX-99.e2 Amendment No. 1 to Distribution Agreement between American
Century Strategic Asset Allocations, Inc. and Funds Distributor,
Inc. dated June 1, 1998 (filed electronically as Exhibit B6b to
Post-Effective Amendment No. 11 to the Registration Statement on
Form N-1A of American Century Capital Portfolios, Inc. File No.
33-64872, filed June 26, 1998, and incorporated herein by
reference).
EX-99.e3 Amendment No. 2 to Distribution Agreement between American
Century Strategic Asset Allocations, Inc. and Funds Distributor,
Inc. dated November 13, 1998 (filed as a part of Post-Effective
Amendment No. 12 to the Registration Statement on Form N-1A of
American Century World Mutual Funds, Inc., File No. 33-39242,
filed November 13, 1998, and incorporated herein by reference).
EX-99.e4 Amendment No. 3 to Distribution Agreement between American
Century Strategic Asset Allocations, Inc. and Funds Distributor,
Inc. dated January 29, 1999 (filed electronically as Exhibit e4
to Post-Effective Amendment No. 28 to the Registration Statement
on
<PAGE>
Form N-1A of American Century California Tax-Free and Municipal
Funds, File No. 2-82734, filed December 28, 1998, and
incorporated herein by reference).
EX-99.e5 Amendment No. 4 to the Distribution Agreement between American
Century Strategic Asset Allocations, Inc. and Funds Distributor,
Inc. dated July 30, 1999 (filed electronically as an Exhibit to
Post-Effective Amendment No. 16 to the Registration Statement of
American Century Capital Portfolios, Inc., File No. 33-64872, on
July 29, 1999, and incorporated herein by reference).
EX-99.e6 Amendment No. 5 to the Distribution Agreement between American
Century Strategic Asset Allocations, Inc. and Funds Distributor,
Inc. (filed electronically as an Exhibit to Post-Effective
Amendment No. 87 to the Registration Statement of American
Century Mutual Funds, Inc., File No. 2-14213 on November 29,
1999, and incorporated herein by reference).
EX-99.e7 Distribution Agreement between American Century Strategic Asset
Allocations, Inc. and American Century Investment Services, Inc.
dated March 13, 2000 (filed electronically as an Exhibit to
Post-Effective Amendment No. 17 to the Registration Statement on
Form N-1A of American Century World Mutual Funds, Inc., File No.
33-39242, on March 30, 2000, and incorporated herein by
reference).
EX-99.g1 Global Custody Agreement between The Chase Manhattan Bank and The
Twentieth Century and Benham Funds, dated August 9, 1996 (filed
electronically as an Exhibit to Post-Effective Amendment No. 31
to the Registration Statement on Form N1-A of American Century
Government Income Trust, Commission File No. 2-99222, and
incorporated herein by reference).
EX-99.g2 Master Agreement between Commerce Bank, N.A. and Twentieth
Century Services, Inc. dated January 22, 1997 (filed as Exhibit
8(d) to Post-Effective Amendment No. 76 to the Registration
Statement on Form N-1A of American Century Mutual Funds, Inc.,
Commission File No. 2-14213, and incorporated herein by
reference).
EX-99.h1 Transfer Agency Agreement, dated as of February 1, 1996, by and
between Twentieth Century Strategic Asset Allocations, Inc. and
Twentieth Century Services, Inc. (filed as Exhibit 9 to
Pre-Effective Amendment No. 4 to the Registration Statement on
Form N-1A, filed February 5, 1996, and incorporated herein by
reference).
EX-99.h2 Credit Agreement between American Century Funds and The Chase
Manhattan Bank as Administrative Agent dated as of December 21,
1999 (filed electronically as Exhibit h3 to Post-Effective
Amendment No. 29 to the Registration Statement of American
Century California Tax-Free and Municipal Funds, File No.
2-82734, on December 29, 1999, and incorporated herein by
reference).
EX-99.i Opinion and Consent of Counsel (filed electronically as an
Exhibit to Post-Effective Amendment No. 6 to the Registration
Statement on Form N-1A on March 30, 1999, File No. 33-79482, and
incorporated herein by reference).
<PAGE>
EX-99.j1 Consent of Deloitte & Touche LLP filed herewith.
EX-99.j2 Power of Attorney dated February 19, 1999 (filed electronically
as an Exhibit to Post-Effective Amendment No. 6 to the
Registration Statement on Form N-1A on March 30, 1999, File No.
33-79482, and incorporated herein by reference).
EX-99.m1 Master Distribution and Shareholder Services Plan of Twentieth
Century Capital Portfolios, Inc., Twentieth Century Investors,
Inc., Twentieth Century Strategic Asset Allocations, Inc. and
Twentieth Century World Investors, Inc. (Advisor Class) dated
September 3, 1996 (filed electronically as a part of
Post-Effective Amendment No. 9 to the Registration Statement on
Form N-1A of American Century Capital Portfolios, Inc.,
Commission File No. 33-64872, and incorporated herein by
reference).
EX-99.m2 Amendment No. 1 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American
Century Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual Funds, Inc.
(Advisor Class) dated June 13, 1997 (filed as a part of
Post-Effective Amendment No. 77 to the Registration Statement on
Form N-1A of American Century Mutual Funds, Inc., Commission File
No. 2-14213, and incorporated herein by reference).
EX-99.m3 Amendment No. 2 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American
Century Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual Funds, Inc.
(Advisor Class) dated September 30, 1997 (filed as a part of
Post-Effective Amendment No. 78 to the Registration Statement on
Form N-1A of American Century Mutual Funds, Inc., Commission File
No. 2-14213, and incorporated herein by reference).
EX-99.m4 Amendment No. 3 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American
Century Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual Funds, Inc.
(Advisor Class) dated June 30, 1998 (filed as a part of
Post-Effective Amendment No. 11 to the Registration Statement on
Form N-1A of American Century Capital Portfolios, Inc., File No.
33-64872, filed on June 26, 1998, and incorporated herein by
reference).
EX-99.m5 Amendment No. 4 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American
Century Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual Funds, Inc.
(Advisor Class) dated November 13, 1998 (filed as a part of
Post-Effective Amendment No. 12 to the Registration Statement on
Form N-1A of American Century World Mutual Funds, Inc., File No.
33-39242, filed on November 13, 1998, and incorporated herein by
reference).
EX-99.m6 Amendment No. 5 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American
Century
<PAGE>
Mutual Funds, Inc., American Century Strategic Asset Allocations,
Inc. and American Century World Mutual Funds, Inc. (Advisor
Class) dated February 16, 1999 (filed electronically as a part of
Post-Effective Amendment No. 83 to the Registration Statement on
Form N-1A of American Century Mutual Funds, Inc., File No.
2-14213, filed on February 26, 1999, and incorporated herein by
reference).
EX-99.m7 Amendment No. 6 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American
Century Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual Funds, Inc.,
(Advisor Class) dated July 30, 1999 (filed electronically as an
Exhibit to Post-Effective Amendment No. 16 to the Registration
Statement on Form N-1A of American Century Capital Portfolios,
Inc., File No. 33-64872, on July 29, 1999 and incorporated herein
by reference).
EX-99.m8 Amendment No. 7 to Master Distribution and Shareholder Services
Plan of American Century Capital Portfolios, Inc., American
Century Mutual Funds, Inc., American Century Strategic Asset
Allocations, Inc. and American Century World Mutual Funds, Inc.
dated November 19, 1999 (Advisor Class) (filed electronically as
an Exhibit to Post-Effective Amendment No. 87 on Form N-1A of
American Century Mutual Funds, Inc., File No. 2-14213, on
November 29, 1999 and incorporated herein by reference).
EX-99.m9 Shareholder Services Plan of Twentieth Century Capital
Portfolios, Inc., Twentieth Century Investors, Inc., Twentieth
Century Strategic Asset Allocations, Inc. and Twentieth Century
World Investors, Inc. (Service Class) dated September 3, 1996,
(filed electronically as a part of Post-Effective Amendment No. 9
to the Registration Statement on Form N-1A of American Century
Capital Portfolios, Inc., File No. 33-64872). and incorporated
herein by reference).
EX-99.o1 Multiple Class Plan of Twentieth Century Capital Portfolios,
Inc., Twentieth Century Investors, Inc., Twentieth Century
Strategic Asset Allocations, Inc. and Twentieth Century World
Investors, Inc. dated September 3, 1996 (filed electronically as
a part of Post-Effective Amendment No. 9 to the Registration
Statement on Form N-1A of American Century Capital Portfolios,
Inc., File No. 33-64872, and incorporated herein by reference).
EX-99.o2 Amendment No. 1 to Multiple Class Plan of American Century
Capital Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. dated June 13, 1997 (filed
electronically as a part of Post-Effective Amendment No. 77 to
the Registration Statement on Form N-1A of American Century
Mutual Funds, Inc., File No. 2-14213, and incorporated herein by
reference).
EX-99.o3 Amendment No. 2 to Multiple Class Plan of American Century
Capital Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. dated September 30, 1997 (filed
electronically as a part of Post-Effective Amendment No. 78 to
the Registration Statement on Form N-1A of American Century
Mutual
<PAGE>
Funds, Inc., File No. 2-14213, and incorporated herein by
reference).
EX-99.o4 Amendment No. 3 to Multiple Class Plan of American Century
Capital Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. dated June 30, 1998 (filed as a
part of Post-Effective Amendment No. 11 to the Registration
Statement on Form N-1A of American Century Capital Portfolios,
Inc., File No. 33-64872, filed on June 26, 1998, and incorporated
herein by reference).
EX-99.o5 Amendment No. 4 to Multiple Class Plan of American Century
Capital Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. dated November 13, 1998 (filed
as a part of Post-Effective Amendment No. 12 to the Registration
Statement on Form N-1A of American Century World Mutual Funds,
Inc., File No. 33-39242, filed on November 13, 1998, and
incorporated herein by reference).
EX-99.o6 Amendment No. 5 to Multiple Class Plan of American Century
Capital Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. dated January 29, 1999 (filed as
a part of Post-Effective Amendment No. 14 to the Registration
Statement on Form N-1A of American Century Capital Portfolios,
Inc., File No. 33-64872, filed on December 29, 1998, and
incorporated herein by reference).
EX-99.o7 Amendment No. 6 to Multiple Class Plan of American Century
Capital Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. dated July 30, 1999 (filed
electronically as Exhibit o7 to Post-Effective Amendment No. 16
to the Registration Statement on Form N-1A of American Century
Capital Portfolios, Inc., File No. 33-64872, on July 29, 1999,
and incorporated herein by reference).
EX-99.o8 Amendment No. 7 to Multiple Class Plan of American Century
Capital Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Strategic Asset Allocations, Inc. and American
Century World Mutual Funds, Inc. dated November 19, 1999 (filed
electronically as Exhibit o8 to Post-Effective Amendment No. 87
to the Registration Statement on Form N-1A of American Century
Mutual Funds, Inc., File No. 2-14213, on November 29, 1999, and
incorporated herein by reference).
EX-99.p1 American Century Investments Code of Ethics (filed electronically
as an Exhibit to Post-Effective Amendment No. 16 to the
Registration Statement on Form N-1A of American Century World
Mutual Funds, Inc., File No. 33-39242, on March 10, 2000, and
incorporated herein by reference).
EX-99.p2 Fund Distributor, Inc. Code of Ethics (filed electronically as an
Exhibit to Post-Effective Amendment No. 16 to the Registration
Statement on Form N-1A of American Century World Mutual Funds,
Inc., File No. 33-39242, on March 10, 2000, and incorporated
herein by reference).
Independent Auditors' Consent
We consent to the incorporation by reference in this Post-Effective Amendment
No. 7 to the Registration Statement No. 33-79482 of American Century Strategic
Asset Allocations, Inc. on Form N-1A of our report dated January 12, 2000,
appearing in the Annual Report of the three funds comprising American Century
Strategic Asset Allocations, Inc., for the year ended November 30, 1999, and to
the reference to us under the caption "Financial Highlights" in the
Prospectuses, which are part of such Registration Statement.
Kansas City, Missouri
March 27, 2000
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC.
ARTICLES SUPPLEMENTARY
AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC., a Maryland corporation
whose principal Maryland office is located in Baltimore, Maryland (the
"Corporation"), hereby certifies to the State Department of Assessments and
Taxation of Maryland that:
FIRST: Pursuant to authority expressly vested in the Board of Directors by
Article FIFTH and Article SEVENTH of the Articles of Incorporation of the
Corporation, the Board of Directors of the Corporation has allocated Six Hundred
Million (600,000,000) shares of the One Billion (1,000,000,000) shares of
authorized capital stock of the Corporation, par value One Cent ($0.01) per
share, for an aggregate par value of Six Million Dollars ($6,000,000). As a
result of the action taken by the Board of Directors referenced in Article FIRST
of these Articles Supplementary, the three (3) Series of stock of the
Corporation and the number of shares and aggregate par value of each is as
follows:
Series Number of Shares Aggregate Par Value
------ ---------------- -------------------
Strategic Allocation: Conservative Fund 200,000,000 $2,000,000
Strategic Allocation: Moderate Fund 200,000,000 $2,000,000
Strategic Allocation: Aggressive Fund 200,000,000 $2,000,000
The par value of each share of stock in each Series is One Cent ($0.01) per
share.
SECOND: Pursuant to authority expressly vested in the Board of Directors
by Article FIFTH and Article SEVENTH of the Articles of Incorporation, the Board
of Directors of the Corporation (a) has duly established three (3) classes of
shares (each hereinafter referred to as a "Class") for the Series of the capital
stock of the Corporation and (b) has allocated the shares designated to the
Series in Article FIRST above among the Classes of shares. As a result of the
action taken by the Board of Directors, the Classes of shares of the three (3)
Series of stock of the Corporation and the number of shares and aggregate par
value of each is as follows:
<PAGE>
<TABLE>
<CAPTION>
Number of
Shares Aggregate
Series Name Class Name as Allocated Par Value
----------- ---------- ------------ ---------
<S> <C> <C> <C>
Strategic Allocation: Conservative Fund Investor 100,000,000 $1,000,000
Institutional 50,000,000 500,000
Service 0 0
Advisor 50,000,000 500,000
Strategic Allocation: Moderate Fund Investor 100,000,000 $1,000,000
Institutional 50,000,000 500,000
Service 0 0
Advisor 50,000,000 500,000
Strategic Allocation: Aggressive Fund Investor 100,000,000 $1,000,000
Institutional 50,000,000 500,000
Service 0 0
Advisor 50,000,000 500,000
</TABLE>
THIRD: Except as otherwise provided by the express provisions of these
Articles Supplementary, nothing herein shall limit, by inference or otherwise,
the discretionary right of the Board of Directors to serialize, classify or
reclassify and issue any unissued shares of any Series or Class or any unissued
shares that have not been allocated to a Series or Class, and to fix or alter
all terms thereof, to the full extent provided by the Articles of Incorporation
of the Corporation.
FOURTH: A description of the series and classes of shares, including the
preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions for
redemption is set forth in the Articles of Incorporation of the Corporation and
is not changed by these Articles Supplementary, except with respect to the
creation and/or designation of the various Series.
FIFTH: The Board of Directors of the Corporation duly adopted resolutions
dividing into Series the authorized capital stock of the Corporation and
allocating shares to each Series as set forth in these Articles Supplementary.
<PAGE>
IN WITNESS WHEREOF, AMERICAN CENTURY STRATEGIC ASSET ALLOCATIONS, INC. has
caused these Articles Supplementary to be signed and acknowledged in its name
and on its behalf by its Vice President and attested to by its Assistant
Secretary on this 2nd day of August, 1999.
AMERICAN CENTURY STRATEGIC
ATTEST: ASSET ALLOCATIONS, INC.
/s/ Brian L. Brogan By: /s/ David C. Tucker
- ------------------------------------ ------------------------------------
Name: Brian L. Brogan Name: David C. Tucker
Title: Assistant Secretary Title: Vice President
THE UNDERSIGNED Vice President of AMERICAN CENTURY STRATEGIC ASSET
ALLOCATIONS, INC., who executed on behalf of said Corporation the foregoing
Articles Supplementary to the Charter, of which this certificate is made a part,
hereby acknowledges, in the name of and on behalf of said Corporation, the
foregoing Articles Supplementary to the Charter to be the corporate act of said
Corporation, and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects under the penalties of
perjury.
Dated: August 2, 1999. /s/ David C. Tucker
----------------------------------------
David C. Tucker, Vice President
