Quarterly Performance Update

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Synchronized global growth, healthy corporate profits, and generally accommodative monetary policy helped drive stocks higher throughout the world. In the U.S., the annualized economic growth exceeded 3% in the second and third quarters, marking the strongest back-to-back quarterly growth in three years. That news, combined with a sweeping U.S. tax-reform package, provided an additional boost to the U.S. stock market. U.S. stocks, as measured by the S&P 500® Index, gained +6.64%, outperforming other developed markets and broad global equity indices. The S&P 500 posted its first-ever perfect year, with positive total returns in each month of 2017, and the broad U.S. stock benchmark reached 62 new highs during 2017.

Stock performance outside the U.S. was more modest in developed markets and stronger in emerging markets (EM). Developed markets stocks (MSCI EAFE Index) gained +4.23%, while EM stocks (MSCI Emerging Markets Index) rallied +7.44%. Japan was a main driver of EAFE performance, aided by double-digit corporate earnings growth, positive economic news, and continued central bank support. Meanwhile, positive global growth trends, firming commodity prices, subdued global inflation, supportive central banks, and a weak U.S. dollar provided a positive backdrop for EM stocks.

Despite improving economic growth, another Federal Reserve rate hike, and the passage of significant tax-reform legislation, U.S. bonds advanced modestly. While all sectors delivered positive returns, strength in the corporate bond sector largely accounted for the +0.39% quarterly gain for the Bloomberg Barclays U.S. Aggregate Bond Index. Corporate bonds benefited from upbeat earnings, tax reform, and investor demand for yield. The broad U.S. Treasury sector was nearly flat, but Treasury inflation-protected securities rallied on rising inflation expectations. Weak inflation and continued central bank stimulus in Europe and Japan helped drive non-U.S. bond returns modestly higher, particularly in U.S. dollars. Continued weakness in the U.S. dollar versus most major currencies helped elevate non-U.S. bond returns for unhedged U.S.-based investors.

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The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.

Generally, as interest rates rise, the value of the securities held in the fund will decline. The opposite is true when interest rates decline.

International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks.

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Source: MSCI. Morgan Stanley Capital International (MSCI) makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used to create indices or financial products. This report is not approved or produced by MSCI.

Source: Bloomberg Index Services Ltd

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