Q1 2021

(as of 12/15/2020)

Global Macroeconomic Outlook

U.S. Equity
GREG WOODHAMS, CFA
Co-Chief Investment Officer
Global Growth Equity
KEVIN TONEY, CFA
Chief Investment Officer
Global Value Equity
PERUVEMBA SATISH, CFA
Chief Investment Officer
Disciplined Equity

Global Equity
KEITH CREVELING, CFA
Co-Chief Investment Officer
Global Growth Equity

Global Fixed Income

CHARLES TAN
Co-Chief Investment Officer
Global Fixed Income
JOHN LOVITO
Co-Chief Investment Officer
Global Fixed Income

Multi-Asset Strategies
RICH WEISS
Chief Investment Officer
Multi-Asset Strategies

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 Key Takeaways
} The global economy continues to recover, but headwinds linger, including lockdowns,
fiscal aid uncertainty and wavering consumer confidence.
} Declining volatility, low interest rates, healthy corporate credit markets and positive
trends in other market stress measures are providing a favorable backdrop for global
equities.
} U.S. politics could yet affect markets because a belated “blue wave” would make it
easier to implement policies on taxes, regulation and infrastructure spending.
} Economic growth rates and earnings growth rates are higher in emerging markets
than developed markets. EM valuations remain attractive.
} The pandemic continues to accelerate the global economy’s digital transformation,
creating opportunities well beyond the technology sector.
} Millennials migrating from urban cores is reshaping the U.S. real estate market and
creating opportunities for housing-related companies and timber real estate
investment trusts.
} Improving corporate fundamentals are providing a boost to corporate bonds, while a
booming U.S. residential real estate market is highlighting opportunities in the
securitized sector.
} Among emerging markets, we favor local currency debt, particularly in countries
where inflation is low and yield curves are steep.

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 With a handful of trading days remaining, year-to-date performance numbers
indicate the market is on track for an above-average year. But as we’ve all
experienced in 2020, there’s more to that data than meets the eye. Looking
back, many of us have choice words to describe the year, and above-average
probably isn’t one of them.
We entered 2020 recommending our clients have a clear picture of their risk VICTOR ZHANG
exposure. Trade tensions and another Brexit deadline were among our chief Chief Investment Officer
concerns. But those worries soon seemed inconsequential after COVID-19 American Century Investments
exploded into a pandemic that crashed financial markets and brought much of
the global economy to a halt. Despite these extraordinary circumstances, our
recommendation remains the same: Invest with conviction but understand the
risks you’re taking.
Overcoming Adversity
When I think about what it took to get to where we are today, I’m awed by the
resilience of individuals, communities and institutions. Governments and
central banks implemented globally coordinated fiscal and monetary stimulus
to help stabilize the economy and inject timely liquidity into the markets. In a
matter of months, medical researchers worldwide developed multiple effective
vaccines to combat COVID-19. The disease has taken an enormously tragic toll,
but the mortality rate is falling as medical professionals continue to develop
more effective treatment protocols.
As an investor, I’m also awed by our society’s adaptability. Most of us have
adjusted to life under pandemic restrictions. Some businesses continue to
struggle, while others are breaking new ground as key trends expand and
accelerate. From telemedicine and videoconferencing to 5G and electric
vehicles, businesses and consumers are quickly adapting to timely innovations.
We’ll highlight some of those changes and what they mean to investors in this
issue of Investment Outlook.
Approaching 2021 with Confidence
Never underestimating humanity’s collective power to overcome adversity will
be a significant takeaway from this unforgettable year. We’re close to wide
distribution of highly effective vaccines that medical scientists believe will
slow and eventually stop the spread of COVID-19. Economic growth is
improving. And, after a lost year, we expect corporate profits to approach pre-
pandemic levels by late 2021. Lastly, U.S. election results have lessened political
uncertainty, and we’re hopeful our national leaders can agree on further
stimulus to support the individuals and businesses the pandemic has hurt the
most.
Despite these positive trends, the coming months of the pandemic may test
your resolve. As always, we urge you to maintain a focus on your long-term
investment objectives. In the near term, execute your investment strategy
confidently and with a clear appreciation of the risks you’re taking.
We wish you all the best in the new year. Thank you for investing with us.

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 GLOBAL MACROECONOMIC
OUTLOOK
*Outlook as of December 15, 2020

Global Economy
Lockdowns Threaten Economic Recovery
While the U.S. economy continues to rebound from the pandemic’s effects, a resurgence in
coronavirus cases may threaten the positive path. Key economic indicators remain strong,
including manufacturing, home prices, employment and consumer spending. But renewed
lockdown measures, combined with uncertainty surrounding additional fiscal aid and consumer
confidence, remain risks. With vaccines on the horizon, we expect growth to improve in 2021.
Virus trajectory influences Europe Faces Another Downturn
outlook After rebounding from a record economic decline in 2020’s second quarter, Europe faces the
prospect of another downturn amid coronavirus-related closures and curfews. Similarly, the
U.K.’s economy continues to struggle with a rise in infections and new lockdowns. The looming
deadline to forge a trade agreement with the eurozone is also adding to the economic
uncertainty. We expect growth in Europe and the U.K. to return to pre-virus levels in late 2021
or early 2022.
China's Recovery Bucks Global Trends
Strong domestic demand and export growth, along with central bank accommodations, aided
China’s economic recovery. China remains the only major economy likely to report economic
growth for 2020. Nevertheless, ongoing trade tensions with the U.S. and Europe likely will
continue to create economic headwinds. Rising COVID-19 infection rates worldwide, along with
deglobalization trends, may also pressure China’s growth.

Inflation

U.S. Inflation Remains Weak, for Now

Falling energy, apparel and transportation services costs kept annual headline inflation relatively
weak and below market expectations in October. Longer-term market-based inflation
expectations continue to rise but remain below historical averages. We believe these indicators
don’t accurately reflect the longer-term inflationary effects of soaring federal debt, a weaker U.S.
dollar and onshoring trends among U.S. businesses. We expect these factors to eventually drive
U.S. inflation significantly higher.
Inflation mostly muted
Europe Wrestles with Deflation
Annual inflation in the eurozone continues to decline, as the region struggles with renewed
lockdowns and slowing growth. But, U.K. inflation recently inched higher due to rising prices in
several categories. Nevertheless, we expect the effects of pandemic-related shutdowns to keep
inflation well below central bank targets in developed markets.
EM Inflation Mixed
Inflation rates in Latin American and European emerging market (EM) countries generally
remain higher than in developed markets and close to central bank targets. Meanwhile, inflation
remains weak in many Asian nations. In China, inflation has steadily declined and recently fell to
its lowest level since 2009, primarily due to weakness in food prices. At the other end of the
spectrum, Turkey continues to struggle with high inflation amid currency weakness.

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 Monetary Policy

Fed Assesses Its Options

Concerned about the economic effects of mounting coronavirus cases, the Federal Reserve
(Fed) believes the U.S. economy needs more fiscal and monetary support. The Fed is
maintaining its near-0% interest rate policy and bond-buying efforts but considering other steps
as several emergency lending programs expire at year-end. For example, policymakers are
considering shifting their bond-buying to longer-dated Treasuries, increasing the dollar amount
of bond purchases or altering the makeup of those bond purchases. We still believe the Fed will
Monetary support continues do whatever it takes to support the economy.
Europe Seeks More Stimulus
Amid mounting downside risks and ongoing deflation, European Central Bank officials are
recalibrating existing monetary stimulus programs. They also believe the region needs more
fiscal aid. Meanwhile, the Bank of England is keeping rates at record lows and increasing its
bond-buying efforts as recession fears grow. However, with rates already at or near 0% and
bond-buying efforts well underway, policymakers have few options. We still expect central banks
to use every policy tactic available to support their economies.
China Considers Withdrawing Stimulus
With China reporting a robust economic recovery, People’s Bank of China officials are
considering unwinding the monetary stimulus launched in early 2020. That stimulus included
two interest rate cuts to combat the economic effects of the pandemic. However, given the
fragile global economic recovery and the rising default risk in China’s corporate sector, a full
stimulus withdrawal seems unlikely.

Interest Rates

U.S. Rates Remain Contained

Given the Fed’s extremely dovish interest rate policy and ongoing quantitative easing program,
we expect U.S. Treasury yields to remain in a low and relatively tight range. It’s unlikely the 10-
year Treasury yield will top 1% any time soon, largely because the Fed doesn’t want rates to
climb much higher. Low rates are keeping companies’ borrowing costs low, which in turn is
supporting the financial markets. Low rates are also aiding the government’s deficit funding.
No impetus for rising rates European Rates Still Negative
With weak growth and significant central bank stimulus, most government bond yields in Europe
remain in negative territory. U.K. rates are modestly higher and slightly positive, while rates in
Japan linger near the central bank’s 0% target. We expect rates in developed markets to stay at
these unusually low levels through 2021.
EM Yields Are Higher
Government bond yields in EM countries are generally higher than in developed markets. Given
the mounting global economic uncertainty, we believe this dynamic provides opportunities to
own local rates investments in EM countries where rates are higher and more likely to fall or
remain stable, including South Africa, Mexico, Peru and Indonesia.

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 U.S. Equity
Businesses Break New Ground as Key Trends Expand and Accelerate
The pandemic is pulling forward growth themes. Even amid the most dismal earnings
forecasts of 2020, it was clear COVID-19 was accelerating certain trends. These include
cloud computing, the Internet of Things, digital payments and buildout of the 5G cellular
network. So, while overall corporate earnings posted their biggest declines since the financial
crisis, some companies didn’t miss a beat. The best performers included companies providing
technology that enables working from home, videoconferencing, video streaming and social
networking. As we enter 2021, we expect these trends to continue as new consumer habits
and business practices born of the pandemic become permanent.
GREG WOODHAMS, CFA
Co-Chief Investment Officer The impact of transformational technology isn’t limited to tech companies. The economy’s
Global Growth Equity digital transformation extends well beyond businesses we consider to be technology
companies. For example, in health care, computational biology is enabling drug discovery that
wouldn’t have been possible a few years ago. Telemedicine will only get better with 5G
networks. In the industrial sector, autonomous vehicles will become a reality with 5G
networks. Meanwhile, payment networks and digitization are driving online purchases and
home delivery for everything from highly specialized technical products to everyday goods.
Sustainability continues to drive corporate and investor decision-making. In recent years,
companies have made great strides in reporting their advances in environmental, social and
governance (ESG) sustainability. Many have established sustainability desks dedicated to
engaging with investors on ESG topics. The market’s enthusiastic response has been
reflected in the number of assets flowing into ESG portfolios. For our part, even in strategies
without explicit ESG mandates, we seek to identify potential financial impacts that come
from ESG issues.

Structural Changes Can Drive Long-Term Investment Returns

De-densification is reshaping the real estate market. The millennial migration from urban
cores will likely be with us in 2021 and beyond. Ongoing effects of the pandemic, continued
low mortgage interest rates and the acceptance of work-from-home practices should boost
KEVIN TONEY, CFA this trend. Beneficiaries should include home builders, landlords of single-family homes,
Chief Investment Officer timber real estate investment trusts (REITs) and a variety of housing-related companies. We
Global Value Equity expect remote work to further reduce urban office needs and accelerate suburban office
needs going forward.
Renewable energy offers long-term investment opportunities for utilities. Declining
technology costs and growing environmental concerns have created opportunities for utilities
to transition power generation from coal and natural gas to renewable sources such as solar
and wind. Investments in renewable generation will lead to higher capital spending, drive
long-term rate growth and potentially increase earnings per share. We believe government
entities will support renewables by enacting policies intended to lower greenhouse gases
and combat global warming. Renewables should also propel advancements in related
technology, such as battery storage.
The era of the electric vehicle (EV) is near. Concerns over climate change, regulatory
pressures, technical innovations in batteries and significant investments in EV platforms are
helping increase global adoption of EVs. Select vehicle manufacturers, EV
powertrain/component suppliers and charging infrastructure suppliers may benefit from this
historic disruption of the automobile industry. Autonomous vehicles (AVs) are progressing at
a somewhat slower pace. Companies that can deliver Advanced Driver Assistance Systems
and related components will benefit from the AV trend, particularly in its early stages of
development.

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 The Outlook for Stocks Brightens as the Earnings Recovery Widens
Conditions are favorable for global equities. Our proprietary model of risk and financial
conditions is positive on equities. Stock market volatility is falling, interest rates remain low,
corporate credit markets appear healthy and other measures of market stress all look
positive or are trending in the right direction. This is a remarkable contrast from just a
quarter ago when the relationship between high and low growth and high- and low-
profitability companies was at the highest levels in decades. Now, these measures have just
begun to return to normal, with plenty of room for a sustained recovery by value-oriented
stocks and lagging sectors relative to the previous handful of high-fliers.
PERUVEMBA SATISH, CFA
There’s a broader opportunity set. All over the globe, we’re seeing a definite improvement Chief Investment Officer
in corporate earnings. This is particularly true in more economically cyclical sectors such as Disciplined Equity
financials, materials and energy. Better fundamentals after underperforming in 2020 means
these economically sensitive stocks are attractively valued as we head into the new year.
Contrast these conditions with the pandemic bear market and recovery, when earnings
growth was scarce and gains were concentrated in a handful of sectors and industries.
Keep an eye on inflation. Even as an economic recovery seems to be increasingly likely in
the new year, inflation remains modest. Of course, it pays to remember where we’re coming
from—the rate of inflation fell to virtually zero in mid-2020, the lowest level in five years.
Inflation has since rebounded somewhat but is still nowhere near where it stood before the
pandemic. What’s more, our measure shows downside risks to inflation emerging in the near
term. Current yields for Treasury inflation-protected securities (TIPS) also suggest a benign
inflation outlook. Nevertheless, we think inflation deserves watching—if the COVID
economic shock eases and growth rebounds as widely expected in the second half of 2021,
it would seem reasonable for inflation to catch up with growth.

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 Global EQUITY

The Pandemic and Politics Color the Outlook for Global Equities
The efficacy of COVID-19 vaccines will determine the speed and slope of a global recovery.
In a best-case scenario, drug companies would make effective vaccines widely available globally
by late first quarter or early second quarter. This would boost consumer confidence and lessen
the need for further economic restrictions. A risk to this scenario includes another prolonged
wave of the pandemic that forces more shutdowns and dampens economic activity. The incoming
Biden administration has promised to aggressively combat the virus, making stricter stay-at-home
KEITH CREVELING, CFA orders a possibility if the pandemic isn’t brought under control or vaccines don’t prove to be
Co-Chief Investment Officer effective. Effective vaccines should benefit previously hard-hit industries such as travel and
Global Growth Equity aerospace, where we are seeing some companies with potential upside. We would expect to see
a rotation into these areas from the more defensive firms with recurring revenue, which saw a
huge run-up during the lockdowns.
U.S. politics may yet affect the future of equity markets. A smooth transition for the Biden
administration remains uncertain. We are also closely watching the U.S. Senate runoff elections
in Georgia in early January. A belated “blue wave” would make it easier for President-elect Joe
Biden to implement campaign policies, such as higher corporate taxes, more regulation, green
initiatives and infrastructure spending. Conversely, a Republican-controlled Senate could continue
gridlock and prevent Biden from achieving much of his agenda. We expect to see more fiscal
stimulus, which could benefit consumer-facing sectors. Conversely, the potential return of
industry regulations relaxed under the Trump administration would likely have negative impacts
on corporate earnings and equity prices.
We expect the rotation from large-cap to small-cap companies to continue. Small-cap stocks,
in general, are at lower valuations on a historical basis and tend to outperform large caps in the
early stages of economic recovery. We also believe they operate better in less efficient markets,
creating opportunities for active managers to add alpha.

The Case for Emerging Markets Remains Solid into 2021

EM equities look attractive as the world recovers from the pandemic. We think a global
cyclical recovery, boosted by positive vaccine news, supports global equities as the world
emerges from this health crisis. EM countries have put the worst of COVID-19 shutdowns behind
them. Economies are gradually reopening, and earnings are recovering. Economic growth rates
and earnings growth rates remain greater in emerging markets—and valuations remain
attractive—relative to developed markets. In our view, improving Purchasing Managers’ Index
data, recent earnings revisions and ongoing central bank accommodation support this positive
outlook.
We expect reduced geopolitical risk. While we note President-elect Biden’s tough words for
China on the campaign trail, we expect improved relations between the U.S. and China. The new
administration is likely to take a more deliberate and multilateral approach to trade. In that case,
U.S. trade policies will likely become more predictable, thereby lowering tensions and potentially
benefitting EM stocks.
Central bank policies support EM. Central banks around the world remain extremely
accommodative. Fed policies should help keep the U.S. dollar (USD) relatively weak. Rate cuts
chip away at the USD’s yield advantage, while ongoing fiscal stimulus increases U.S. current
account deterioration. Historically, a weaker USD has been supportive of EM economies and
currencies and there has been a strong negative correlation between the USD and EM equities.

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 GLOBAL FIXED INCOME
U.S. Credit p Corporate fundamentals are slowly recovering, balance sheets remain defensive and
issuers are taking advantage of attractive refinancing opportunities. This backdrop
drives our positive view toward U.S. credit. We favor companies with stable cash
flows and improving fundamentals. Additionally, our “vaccine credits” in the travel and
leisure industries are benefitting from positive COVID-19 vaccine news. As the
economy normalizes in 2021, we expect high-yield securities to outperform
investment-grade corporates, as higher-rated issuers have retraced most of their
CHARLES TAN widening from March 2020.
Co-Chief Investment Officer
Global Fixed Income U.S. l We believe the backdrop for most securitized bonds remains positive, largely due to
Securitized the robust U.S. housing market and an accommodative Fed. In this environment, we
favor higher-yielding credit-sensitive securities, including non-agency collateralized
mortgage obligations (CMOs) and collateralized loan obligations (CLOs). We remain
cautious toward securities backed by commercial real estate, given changing office
and shopping trends in the wake of the pandemic. We also are finding value among
asset-backed securities (ABS).

U.S. l We continue to underweight nominal U.S. Treasuries, which we believe will remain
Government rangebound amid the Fed’s lower-for-longer interest rate policy. However, we believe
Treasury inflation-protected securities (TIPS) remain attractive. Breakeven rates
remain below historical averages and, in our view, don’t reflect mounting longer-term
inflationary pressures. Specifically, we believe the massive increase in U.S. debt, a
weaker U.S. dollar and onshoring trends among U.S. businesses ultimately will drive
inflation much higher.

U.S. p The prospects of higher taxes and increased federal government spending under a
Municipal Biden administration should generally boost demand for tax-advantaged municipal
bonds (munis). We see specific opportunities in general obligation (GO) bonds of
municipalities with strong balance sheets, ample reserves and high pension funding
ratios. We also believe essential service revenue bonds (water/sewer, public power)
offer important defensive characteristics. Among credit-sensitive munis, we believe
spread levels continue to indicate value.

European n We have a neutral position in European credit. A weak regional economic outlook,
Debt new coronavirus lockdown measures and global trade uncertainties are diminishing
the effectiveness of quantitative easing on risk assets. The combination of fair
valuations and negative yields is also weighing on our sentiment. But we are finding
value among select financial bonds and industrial hybrid securities. We also have
exposure to semi-core and peripheral European sovereigns, which should benefit
JOHN LOVITO from sustained central bank stimulus.
Co-Chief Investment Officer
Global Fixed Income
Emerging p We believe the best EM debt opportunities are in local rates securities in countries
Markets where yield curves are steep and inflation is low. Our largest positions are in South
Africa, Peru, Mexico and Indonesia. We are more cautious toward external
Sovereign
sovereigns due to valuation concerns, particularly in investment-grade countries.

Emerging l Our outlook toward EM corporate debt is turning more positive because the worst of
Markets the pandemic is likely behind us. Although the potential for downgrades and
Corporate defaults has declined, our positions tend to be idiosyncratic and driven by specific
valuation opportunities. With inflation pressures building and COVID-19 vaccines
arriving, we favor select positions in commodity companies and higher-yielding
companies across the ratings spectrum.

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 MULTI-ASSET STRATEGIES
For Now, Risk On, but Diversification Remains the Watchword
Near-term Wall Street economic forecasts are all over the map. Some firms are calling
for healthy growth this quarter and next, while others fear a double-dip recession. We
think it makes sense to err on the side of caution because so many of our biggest
cities reinstituted strict lockdown measures. Despite this uncertain near-term economic
outlook, more and more investors are betting on a recovery in the second half of 2021.

RICH WEISS The broad distribution of seemingly effective vaccines on the horizon suggests we’re
Chief Investment Officer likely to return to some semblance of normalcy in the new year. This prospect is
Multi-Asset Strategies leading to stock market gains in small-cap stocks and economically sensitive sectors
such as energy and financials. Bonds, too, reflect this recovery story with corporate
yields trading at pre-crisis levels.
But while longer-term economic prospects are improving, significant risks remain. One
such risk is the potential long-term scarring impact of the 2020 recession on labor
markets. It can be hard to recover from job losses resulting from business closures and
structural economic changes (e.g., shift to working from home) that affect entire
industries. The effects could be seen in a drop in business investment, a rise in business
failures or even a shrinking in the financial system’s capacity. We must remain aware of
the risk of deep, persistent joblessness.

Asset Class
Our long-term strategic allocations are carefully crafted to maximize risk-adjusted
returns over time. We move off these long-term positions when we see a compelling
near-term opportunity. Data often conflict and rather than churn the portfolios and
make frequent changes, we stay true to our carefully constructed neutral allocations.
So, we remain neutral at a high level, preferring to make adjustments at the sub-asset
class level where we see clearer, more compelling opportunities.

Equity Region

Our model currently prefers U.S. equities over developed market equities. Economic
fundamentals, forward earnings growth projections and market sentiment all argue for
an overweight to U.S. equities.

Our qualitative view broadly supports EM equities, based largely on hopes for a
meaningful economic recovery in 2021. Our quantitative model has also been trending
toward EM over U.S. in recent months. Nevertheless, for now at least, we are sticking to
our long-term strategic allocation while we monitor the data and look for greater clarity
on the virus and economy.

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 U.S. Equity Size and Style

We continue to see sharp moves in the short-term data that inform our preference
by size. Our quantitative model has fluctuated in recent months from a slight
preference for large caps to a modest bias toward small caps. With so much
uncertainty over near-term economic and market conditions, this is a relationship
we are monitoring carefully going forward.

After maintaining a consistent large-cap growth overweight for over a year and a
half, we rotated to a neutral position on the U.S. growth/value trade in late 2020.
This positioning reflected a shift in the broader economy, as fundamentals moved
away from favoring growth. Similarly, value stocks looked cheap relative to the
historical valuation spread of value and growth, but not so significantly cheap as to
make value a screaming bargain. So, while we have removed our growth
overweight, we have not moved all the way toward a preference for value.

Fixed Income

We are overweight U.S. corporate credit, with a strong preference for high-yield
over investment-grade corporate debt. Positive economic trends, ongoing Fed
support for corporate credit, declining volatility and strong investor demand for
high-yield/risky assets all support an overweight position. Similarly, emerging
market debt is also attractive, benefiting from attractive yields and better relative
growth.

Alternatives

We continue to emphasize an overweight to real estate investment trusts (REITs),

particularly relative to bonds. REITs performed poorly for much of 2020 despite low
Treasury yields and mortgage rates. Valuation metrics and dividend yields for REITs
are compelling, while parts of the sector such as commercial real estate depressed
by the coronavirus could rebound in a sustained economic recovery. Security
selection remains important because the effects of the pandemic and resulting
shutdowns are so uneven. Some property types—such as office and retail space—
face challenges, while others—such as data centers and logistics/warehouses—are
direct beneficiaries from the changing economic and social conditions.

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 GLOSSARY
Alpha. Alpha is typically used to represent the value added or subtracted by active investment management strategies. It shows
how an actively managed investment portfolio performed compared with the expected portfolio returns produced simply by
benchmark volatility (beta) and market changes. A positive alpha shows that an investment manager has been able to capture
more of the upside movement in the benchmark while softening the downswings. A negative alpha means that the manager's
strategies have caught more benchmark downside than upside.
Alternative investments. Alternative mutual funds that hold a variety of non-traditional investments also often employ more complex
trading strategies than traditional mutual funds. These alternative asset classes and investment strategies have unique risks making
them more suitable for investors with an above-average tolerance for risk.
Asset-backed securities (ABS). A form of securitized debt (defined below) backed by assets that include such items as auto
loans, home equity loans, student loans, small business loans, and credit card debt.
BBB credit rating. Securities and issuers rated AAA to BBB are considered/perceived “investment-grade”; those rated below
BBB are considered/perceived non-investment-grade or more speculative.
Bank loans. Bank-financed debt for companies with below-investment-grade credit ratings.
Breakeven inflation rate. The breakeven inflation rate is the difference between the nominal yield (usually the market yield, which
includes an inflation premium) on a fixed- income investment and the real yield (with no inflation premium) on an inflation-linked
investment of similar maturity and credit quality. If inflation averages more than the breakeven rate, the inflation-linked investment
will outperform the investment with the nominal yield. Conversely, if inflation averages above the breakeven rate, the investment
with the nominal yield will outperform the inflation-linked investment.
Central bank. The entity responsible for oversight of a nation’s monetary system, including policies and interest rates.
Collateralized loan obligations (CLOs). A form of securitized debt (defined below), typically backed by pools of corporate loans
and their payments.
Collateralized mortgage obligations (CMOs). A form of securitized debt derived from mortgage-backed securities.
Commercial mortgage-backed securities (CMBS). Mortgage-backed securities (defined below) that represent ownership in pools
of commercial real estate loans used to finance the construction and improvement of income-producing properties, including office
buildings, shopping centers, industrial parks, warehouses, hotels, and apartment complexes.
Corporate securities. Debt instruments issued by corporations, as distinct from those issued by governments, government agencies
or municipalities. Corporate securities typically have the following features: 1) they are taxable; 2) they tend to have more credit
(default) risk than government or municipal securities, so they tend to have higher yields than comparable-maturity securities in
those sectors; and 3) they are traded on major exchanges, with prices published in newspapers.
Credit quality. The letter ratings indicate the creditworthiness of the underlying bonds in the portfolio and generally range from
AAA (highest) to D (lowest).
Credit ratings. Credit ratings are measurements of quality assigned by a Credit Rating Agency (CRA) to issuers of certain types of
debt obligations as well as the debt instruments themselves.
Debt security. A debt instrument, including bonds, certificates of deposit or preferred stocks.
Default. Failure of a debtor to make timely payments of interest and principal as they become due, or to meet some other provision
of a bond indenture. In the event of default, bondholders may make claims against the assets of the issuer to recoup their
principal.
Default rate. A credit quality measurement used in bond or other debt analysis, a default rate measures how often a bond
(categorized by issuer, sector, credit rating, etc.) or other borrower has defaulted (missed or delayed scheduled payments) over a
given period. Default rates are also used as an economic measurement because they tend to rise and fall with the health of the
economy.
Deflation. The opposite of inflation (see below); considered a highly undesirable economic outcome by economists and
policymakers, it describes a decline in prices for goods, assets and services.
Downside risk. An estimation of what an investor may stand to lose from a particular investment if market prices decline.
Duration. A measure of the price sensitivity of a fixed-income investment to changes in interest rates. The longer the duration, the
more a fixed-income investment’s price will change when interest rates change.
Environmental, Social, Governance (ESG) Criteria. The risk and/or opportunity to a company's market valuation resulting from
environmental, social and governance (ESG) factors. Depending on the sector, environmental and social factors include, but are
not limited to, 1) climate change, 2) water stress, 3) product safety and quality (supply chain and manufacturing), 4) cybersecurity
and data privacy, and 5) human capital management. Regardless of the sector, governance factors include: 1) business
(mis)conduct, 2) board composition, independence and entrenchment, 3) accounting practices, 4) ownership structure, and 5)
executive pay-for-sustainability performance alignment.
Eurozone. The eurozone represents member states that participate in the economic and monetary union (EMU) with the European
Union (EU). The eurozone currently includes Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy,
Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia, and Spain.

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 Federal Reserve (Fed). The Fed is the U.S. central bank responsible for monetary policies affecting the U.S. financial system and
the economy.
Full faith and credit pledge. The unconditional commitment to pay principal and interest on debt, usually guaranteed by a
government entity (e.g., the U.S. Treasury).
Fundamentals. In the context of investment analysis, fundamentals are typically those factors used to determine economic value
(growth, interest rates, inflation, employment) and/or financial value (income, expenses, assets, credit quality), as opposed to
“technical” based more on market price (into which fundamental factors are considered to have been “priced in”), trend and volume
factors (such as supply and demand), and momentum.
General obligation (GO) bonds. One of the biggest sectors in the municipal securities market. Typically, these bonds are secured
by the full faith and credit pledge of the issuer and usually supported by the issuer's taxing power (tax revenues provide the means
by which most interest payments are made). GO bonds can be issued by states, counties, cities, towns and regional districts to
fund a variety of public projects, including construction of and improvements to schools, highways, and water and sewer systems.
Gross domestic product (GDP). A measure of the total economic output in goods and services for an economy.
High-yield bonds. High-yield bonds are fixed-income securities with lower credit quality and lower credit ratings. High-yield
securities are those rated below BBB- by Standard & Poor’s.
Inflation. Inflation, sometimes referred to as headline inflation, reflects rising prices for consumer goods and services, or
equivalently, a declining value of money. Core inflation excludes food and energy prices, which tend to be volatile. It is the opposite
of deflation (see above).
Investment-grade corporate bond or credit. A debt security with a relatively low risk of default issued and sold by a corporation to
investors.
Mortgage-backed securities (MBS). A form of securitized debt that represents ownership in pools of mortgage loans and their
payments.
Municipal bonds. Long-term municipal securities with maturities of 10 years or longer.
Municipal securities. Debt securities typically issued by or on behalf of U.S. state and local governments, their agencies or
authorities to raise money for a variety of public purposes, including financing for state and local governments as well as financing
for specific projects and public facilities.
Non-agency commercial mortgage-backed securities (CMBS). MBS that represent ownership in pools of commercial real estate
loans used to finance the construction and improvement of income-producing properties, including office buildings, shopping
centers, industrial parks, warehouses, hotels, and apartment complexes. Typically issued by financial institutions, non-agency
CMBS are not guaranteed by the U.S. government or a government-sponsored enterprise.
Purchasing Managers’ Index (PMI). Indicator of the economic health of the manufacturing sector, based on monthly surveys.
Quality. Nationally recognized statistical rating organizations assign quality ratings to reflect forward-looking opinions on the
creditworthiness of loan issuers. Securities from higher-quality issuers carry a lower default risk than securities from lower-quality
issuers.
Quantitative easing. A policy in which a central bank buys government securities or other market securities to lower interest rates
and increase the money supply.
REITs. Real estate investment trusts (REITs) are securities that trade like stocks and invest in real estate through properties or
mortgages.
Securitized debt. Securitized debt results from aggregating debt instruments into a pool of similar debts, then issuing new
securities backed by the pool.
Sovereign debt. Debt issued by the national government in a foreign currency. Also referred to as government debt.
Spreads, credit spreads. Measured differences between two interest rates or yields compared with each other.
Spreads typically are measured between fixed-income securities of the same credit quality, but different maturities (“maturity
spreads”), or of the same maturity, but different credit quality (“credit spreads”).
Spread sectors. These are typically non-Treasury securities that usually trade in fixed-income markets at higher yields than same-
maturity U.S. Treasury securities. The yield difference between Treasuries and non-Treasuries is the “spread,” hence the name
“spread sectors” for non-Treasuries.
Treasury inflation-protected securities (TIPS). TIPS are a special type of U.S. Treasury security designed to address a fundamental,
long-standing fixed-income market issue—that the fixed interest payments and principal values at maturity of most fixed-income
securities don’t adjust for inflation. TIPS interest payments and principal values do The adjustments include upward or downward
changes to both principal and coupon interest based on inflation.
Treasury note. A treasury note is a debt security issued by the U.S. government with a fixed interest rate and maturity ranging from
one to 10 years.
Treasury yield. The yield of a Treasury security (most often refers to U.S. Treasury securities issued by the U.S. government).
Yield. The rate of return on bonds and other fixed-income securities.
Yield curve. A line graph showing the yields of fixed-income securities from a single sector from a range of different maturities at a
single point in time.

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 American Century Investments® is a leading asset manager focused on delivering
investment results and building long-term client relationships while supporting
research that can improve human health and save lives. It’s how we and our clients
together Prosper With Purpose®.
Every day people are increasingly focused on investing to make the world a better
place for themselves, their families, their organizations and the world at large. It is
possible to live a more meaningful and impactful life and give back something that’s
more valuable than money.
When you invest with us, you can also invest in the future of others and have the
potential to impact the lives of millions. That’s possible because of the distinct
relationship with the Stowers Institute for Medical Research, which owns more than
40% of American Century. Our dividend payments provide ongoing financial support
for the Institute’s work of uncovering the causes, treatments and prevention of life-
threatening diseases, like cancer. Together we can become a powerful force for good.
A strategy or emphasis on environmental, social and governance factors (“ESG”) may limit the investment
opportunities available to a portfolio. Therefore, the portfolio may underperform or perform differently than other
portfolios that do not have an ESG investment focus. A portfolio’s ESG investment focus may also result in the
portfolio investing in securities or industry sectors that perform differently or maintain a different risk profile than
the market generally or compared to underlying holdings that are not screened for ESG standards.
International investing involves special risks, such as political instability and currency fluctuations. Investing in
emerging markets may accentuate these risks.
Alternative mutual funds that hold a variety of non-traditional investments often employ more complex trading
strategies than traditional mutual funds. Each of these different alternative asset classes and investment
strategies have unique risks making them more suitable for investors with an above average tolerance for risk.
Investment return and principal value of security investments will fluctuate. The value at the time of redemption
may be more or less than the original cost. Past performance is no guarantee of future results.
As with all investments, there are risks of fluctuating prices, uncertainty of dividends, rates of return and yields.
Current and future holdings are subject to market risk and will fluctuate in value.
Historically, small- and mid-cap stocks have been more volatile than the stocks of larger, more established
companies.
Diversification does not assure a profit, nor does it protect against loss of principal.
Generally, as interest rates rise, bond values will decline. The opposite is true when interest rates decline.
Past performance is no guarantee of future results. Mutual fund investing involves market risk. Investment return
and fund share value will fluctuate. It is possible to lose money by investing in mutual funds.
The opinions expressed are those of the chief investment officers and are no guarantee of the future
performance of any American Century Investments portfolio. Statements regarding specific holdings represent
personal views and compensation has not been received in connection with such views.
This information is not intended to serve as investment advice. The information is not intended as a personalized
recommendation or fiduciary advice and should not be relied upon for investment, accounting, legal or tax
advice.

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