Smart Tax Solutions. Managed to preserve capital, fight taxes

Transcription

1 Smart Tax Solutions Managed to preserve capital, fight taxes

2 Seek to Preserve Capital and Fight Taxes with Municipal Bond Funds Keeping more of what you earn is a no-nonsense financial strategy that s aimed directly at your bottom line. One of the best ways to accomplish this is by more effectively managing your tax burden. American Century Investments can help with municipal bond funds that seek to generate tax-free income and preserve capital. Learn more about how our funds can be part of a four-step plan to developing a smart tax solution for your portfolio. Understand the Impact of Taxes on Your Income Regardless of how much you earn, taxes take a big bite out of your purchasing power. And, with budget shortfalls plaguing all levels of government, potential policy changes could leave you with an even larger tax burden. Consider the Benefits of Municipal Bonds Municipal bonds offer the unique benefit of generating income that s free from federal taxes and, in some cases, free from state and local taxes. In addition, municipal bonds may help diversify a stock heavy portfolio, and they have a history of low relative volatility.* Navigate the Municipal Bond Market with Mutual Funds The Credit Crisis fundamentally changed municipal bond investing. Now more than ever, you should consider taking advantage of the insight and expertise offered by a professionally managed mutual fund. Choose a Leader for Smart Tax Solutions American Century Investments has been managing bond funds since 197 and has developed a rigorous approach to managing tax-free bond portfolios. Spanning maturities and risk levels, our municipal bond funds can be part of a tax-smart solution that s right for you. 1 *Based on a comparison of the S&P 500 Index and the Barclays Municipal Bond Index for the -year period ended 1/31/013.

3 Understand the Impact of Taxes on Your Income Taxes immediately strip away the purchasing power of the money you earn. For instance, if you re paying the highest federal tax rate of 39.6%, you re bringing home roughly $60 for every $0 you earn. Your take-home pay is even less when you consider state, local and other taxes. But you don t have to be in the top tax bracket for taxes to have a big impact on your bottom line. Americans on average spend more on taxes than they do on housing, food and clothing combined1. Moreover, many observers believe there s a chance your tax burden could grow due to overall government spending at a time when tax rates are near historical lows. T he top federal tax rate is well below its all-time high. 0% 0% Top Marginal U.S. Income Tax Rate 80% 80% 60% 60% 0% 0% 0% 0% % % What does the future hold? 000s 1990s 1990s 1980s 1980s 1970s 1970s 1960s 1960s 1950s 1950s 190s 190s 1930s 1930s 190s 190s 19s 19s 0s 000s 00s 0s 030s 00s 00s 030s 050s 00s 050s Your tax burden could grow due to overall government spending at a time when tax rates are near historical lows. Source: Tax Foundation 1 Source: Internal Revenue Service

4 Consider the Benefits of Municipal While your earned income and most of your investment income is taxable, municipal bonds offer the distinct advantage of paying interest that is free from federal taxes. In some cases, municipal bond income also is exempt from state and/or local income taxes. Investing in this market with an American Century Investments municipal bond fund provides important benefits. Tax Equivalent Yield = Tax-Free Municipal Bond Fund Yield 1 - Tax Rate Tax-free income The interest earned from municipal bonds has the potential to provide a consistent monthly income stream, and the tax exemption on interest may be beneficial if you re in a high tax bracket. Portfolio diversification Municipal bond performance has not been highly correlated with the equity market.* This means they may help diversify a stock heavy portfolio. Lower relative volatility Historically, municipal bonds have been less volatile than stocks.* This gives them the potential to reduce the overall volatility of your portfolio. Measure Your Fund s Tax Equivalent Yield At first glance, the value of a municipal bond fund s yield may appear to be lower than the yield of a comparable taxable bond fund. Dig deeper. When your tax situation is considered, the municipal bond fund s yield may turn out to be more attractive. Use our worksheet to determine the fund s tax equivalent yield. This is the amount you d have to earn from a taxable fund to match the yield of a tax-free investment. Your Portfolio % Your Federal Tax Rate % Municipal Bond Fund Yield % Tax Equivalent Yield Example 39.6% Federal Tax Rate.00% Municipal Bond Fund Yield 3.31% Tax Equivalent Yield = =.00% % The example above shows the municipal bond fund s tax equivalent yield is 3.31%. This means that you d have to generate a yield of 3.31% from a taxable fund to match municipal bond fund s.00% yield. The tax equivalent yield would have been even higher if state, local and other taxes were taken into account. Use the worksheet below to perform a personalized tax equivalent yield calculation for your portfolio. Compare this to the yield of a taxable fund you re considering 3 *Based on a comparison of the S&P 500 Index and the Barclays Municipal Bond Index for the -year period ended 1/31/013. The hypothetical situation on this page contains assumptions that are intended for illustrative purposes only and are not representative of the performance of any security. There is no assurance similar results can be achieved, and this information should not be relied upon as a specific recommendation to buy or sell securities.

5 Navigate the Municipal Bond Market with Mutual Funds The Credit Crisis of 008 fundamentally changed the municipal bond market. The pool of insured securities has shrunk to approximately % of newly issued bonds, making it impractical and risky for most investors to build and maintain a portfolio of individual municipal bonds.* Against this backdrop, you should consider taking advantage of the resources, expertise and risk management of a professionally managed mutual fund from American Century Investments. Rigorous credit research Every security in our portfolios goes through a thorough review by veteran analysts and will undergo intense scrutiny as long as we own it. Diversification Our funds may own several hundred securities across a wide swath of issuers and maturities to limit concentration in one area. Liquidity Your bond fund shares can be redeemed on any business day. Selling an individual bond before maturity may take longer and require a bidding process through an intermediary. Lower minimum investment The minimum initial investment for an American Century Investments municipal bond fund is $5,000. The minimum investment for individual bonds may be higher, making the capital requirement for constructing a diversified portfolio of individual securities prohibitively high for many investors. The Municipal Bond Market Requires PROFESSIONAL MANAGEMENT 1,000,000+ outstanding municipal securities 3 ONLY 3.6% of new issues are insured 6,000+ Municipal Bond Issuers How Do You Choose? 3 *Prior to the Credit Crisis, many municipal bonds were backed by insurance that guaranteed the payment of principal and interest if the issuer defaulted. Today, due to industry changes, only a small portion of newly issued bonds are backed by insurance. 3 Source: U.S. Securities and Exchange Commission, 01 Source: Thomson Reuters, 013

6 Choose a Leader for Smart Tax Solutions American Century Investments has been managing fixed income portfolios since 197. Today we invest more than $36 billion* in fixed income assets, which includes our diverse municipal bond product line. Our investment management practices are designed to provide individuals and institutions with a high level of risk-adjusted total return and tax-free income over the long term. Extensive Credit Research Research is the heart and soul of our municipal bond investment process. Our tenured municipal credit research and analysis team painstakingly assesses each issuer s ability to make their interest payments and pay par value at maturity. Comprehensive Risk Management Our dedicated risk management team focuses on understanding all facets of risk. Ultimately, we don t want to simply minimize risk. Rather, we want to maximize return for the level of risk we take. Aligned with Bond Investors Expectations Our 0 years of experience listening to our shareholders helps us understand what investors want. That s why the key characteristics of a municipal bond investment repayment of principal, low correlations with stocks, lower relative volatility and tax-free income are inherent throughout our investment management practices. 5 *As of 1/31/013. Data presented reflect past performance of Investor Class shares. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and fund share value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end visit americancentury.com. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains. There is no guarantee the fund will meet its investment objective.

7 Intermediate-Term Tax-Free Long-Term Tax-Free High-Yield Municipal Fund Category National Tax-Free Intermediate National Tax-Free Long-Term National High-Yield Tax-Free Role in Portfolio Core holding For investors seeking monthly federal tax-free income. Core holding For investors with long time horizons and tolerance for principal fluctuation during rising interest rate cycles. Satellite holding For investors with a higher risk tolerance who are seeking higher federal tax-free income potential. Goal and Strategy Total return and current income that is exempt from federal income taxes through investment-grade, intermediate-term municipal bonds. Total return and current income that is exempt from federal income taxes through investment-grade, long-term municipal bonds. Total return and current income that is exempt from federal income taxes through high-yield municipal bonds. Distinguishing Characteristics Seeks monthly federal tax-free income while avoiding alternative minimum tax (AMT) exposure. Seeks monthly federal tax-free income while avoiding alternative minimum tax (AMT) exposure. Designed to provide shareholders with a high level of federal tax-free income. Fast Facts as of 1/31/013 (Investor Class) Inception Date: 3//87 Avg Team Experience: years Positive Results: of 6 years Inception Date: /3/06 Avg Team Experience: 19 years Positive Results: 5 of 7 years Inception Date: 3/31/98 Avg Team Experience: years Positive Results: 11 of 15 years Average Annual Total Return as of 1/31/013 (Investor Class) %.88% 3.67% % 5.66% 3.88% % 9.03% 3.53% 0 3 s 5 s s Expense Ratio: 0.7% 0 3 s 5 s Lifetime Expense Ratio: 0.7% 0 3 s 5 s s Expense Ratio: 0.61% Tickers Investor: TWTIX Institutional: AXBIX A: TWWOX C: TWTCX Investor: ACLVX Institutional: ACLSX A: MMBAX C: ACTCX Investor: ABHYX Institutional: AYMIX A: AYMAX C: AYMCX Risk Fixed income investment risks may include credit, price and interest rate risk. Investment income may be subject to certain state and local taxes and depending on your individual tax status may be subject to the federal alternative minimum tax. Capital gains are not exempt from state and federal income tax. The High-Yield Municipal Fund may invest in lower-rated securities, which are subject to greater default and liquidity risk because they are more sensitive to real or perceived economic changes. 3 6

8 California Intermediate-Term Tax-Free California Long-Term Tax-Free California High-Yield Municipal California Tax-Free Intermediate California Tax-Free Long-Term California High-Yield Tax-Free Core holding for California residents For investors seeking monthly income free of state and federal taxes. Core holding for California residents For investors with long time horizons and tolerance for principal fluctuation during rising interest rate cycles. Satellite holding for California residents For investors with a higher risk tolerance who are seeking higher federal tax-free income potential. Total return and current income that is exempt from federal and California income taxes through investment-grade, intermediate-term municipal bonds. Total return and current income that is exempt from federal and California income taxes through investment-grade, long-term municipal bonds. Total return and current income that is exempt from federal and California income taxes through high-yield municipal bonds. Seeks to provide monthly California state and federal tax-free income while avoiding alternative minimum tax (AMT) exposure. Inception Date: 11/9/83 Avg Team Experience: 19 years Positive Results: 6 of 30 years % 5.% 3.71% Seeks to provide monthly California state and federal tax-free income while avoiding alternative minimum tax (AMT) exposure. Inception Date: 11/9/83 Avg Team Experience: 19 years Positive Results: 5 of 30 years % 6.56% 3.99% Designed to provide a high level of California state and federal tax-free income. Inception Date: 1/30/86 Avg Team Experience: 19 years Positive Results: 1 of 7 years % 8.%.5% REMOVE FOR SHORTER FLAP 0 3 s 5 s s Expense Ratio: 0.7% 0 3 s 5 s s Expense Ratio: 0.7% 0 3 s 5 s s Expense Ratio: 0.50% Investor: BCITX Institutional: BCTIX A: BCIAX C: BCIYX Investor: BCLTX Institutional: BCLIX A: ALTAX C: ALTCX Investor: BCHYX Institutional: BCHIX A: CAYAX C: CAYCX In addition to the risk noted on page 6, the funds above invest primarily in municipal securities from California. Therefore, their yields and share prices will be affected by political and economic developments within California. Further, the California High-Yield Municipal Fund may invest in lower-rated securities, which are subject to greater default and liquidity risk because they are more sensitive to real or perceived economic changes. This fund guide must be accompanied by the most recent American Century Investor Class Performance Summary. 7

9 You should consider the fund s investment objectives, risks, charges and expenses carefully before you invest. The fund s prospectus or summary prospectus, which can be obtained by visiting americancentury.com, contains this and other information about the fund, and should be read carefully before investing. REMOVE FOR SHORTER FLAP This information is for informational purposes only and is not intended as tax advice. Please consult your tax advisor for more detailed information or for advice regarding your individual situation. IRS Circular 30 Disclosure: American Century Companies, Inc. and its affiliates do not provide tax advice. Accordingly, any discussion of U.S. tax matters contained herein (including any attachments) is not intended or written to be used, and cannot be used, in connection with the promotion, marketing or recommendation by anyone unaffiliated with American Century Companies, Inc. of any of the matters addressed herein or for the purpose of avoiding U.S. tax-related penalties. Investment return and principal value of 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. The two main risks related to fixed income investing are interest rate risk and credit risk. Typically, when interest rates rise, there is a corresponding decline in the market value of bonds. Credit risk refers to the possibility that the issuer of the bond will not be able to make principal and interest payments. There may be less information available on the financial condition of issuers of municipal securities than for public corporations. The market for municipal bonds may be less liquid than for taxable bonds. Investment income may be subject to certain state and local taxes and, depending on your tax status, the federal alternative minimum tax (AMT). Capital gains are not exempt from state and federal income tax. The yield and share price of funds that invest primarily in California municipal securities and securities issued by U. S. territories will be affected by political and economic developments within those states and territories. There is no guarantee that all of the fund s income will be exempt from federal or state or local income taxes. The portfolio managers are permitted to invest up to 0% of the fund s assets in debt securities with interest payments that are subject to federal income tax, California state or local income tax and/or the federal alternative minimum tax. The High-Yield Municipal and California High-Yield Municipal funds may invest in lower rated securities, which are subject to greater credit risk, default risk and liquidity risk. Diversification does not assure a profit nor does it protect against loss of principal. Tax Equivalent Yield refers to the pre-tax yield required from a taxable bond in order to equal the tax-free yield of a municipal bond. The Barclays Municipal Bond Index is a rules-based, market-value-weighted index engineered for the long-term tax-exempt bond market. The S&P 500 Index is a market value-weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity and industry group representation that are considered to be leading firms in dominant industries. Non-FDIC Insured May Lose Value No Bank Guarantee

10 Actively Investing in Your Success Performance is what our clients expect, and we believe the ultimate measure of our performance is the quality of the relationship with our clients. Our culture is firmly rooted in the principles of discipline, integrity and teamwork. We relentlessly focus on delivering superior investment performance and building long-term client relationships. Four foundational characteristics help us deliver on our commitment: Performance focus for more than 50 years Professional money management is our sole focus Privately controlled and independent Profits with a purpose American Century Investment Services, Inc., Distributor 01 American Century Proprietary Holdings, Inc. All rights reserved. P.O. Box Kansas City, MO americancentury.com IN-BRO-8 10 You should consider the fund s investment objectives, risks, charges and expenses carefully before you invest. The fund s prospectus or summary prospectus, which can be obtained by visiting americancentury.com, contains this and other information about the fund, and should be read carefully before investing. 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. The value and/or returns of a portfolio will fluctuate with market and economic conditions. International investing involves special risk considerations, including economic and political conditions, inflation rates and currency fluctuations. The fund s investments in fixed income securities are subject to the risks associated with debt securities including credit, price and interest rate risk. The fund may invest in small- and mid-cap stocks which have historically been more volatile than the stock of larger, more-established companies. The performance of the portfolio is partially dependent on the performance of the underlying American Century funds and will assume the risks associated with these funds.

11 Investor Class Performance Summary For period ended March 31, 016 Data presented reflects past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and fund share value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call or visit Performance reflects Investor Class shares. Data assumes reinvestment of dividends and capital gains. For information about other share classes available, please consult the prospectus. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY BE DIFFERENT THAN THE FIGURES SHOWN. 7-Day Current Yield Before Waiver 7-Day Current Yield After Waiver Since Inception Fund Inception Date Gross Net Expense Expense Ratio Ratio Ticker Taxable Money Market % % % % % % % % % Capital Preservation,, 8 CPFXX /13/ Prime Money Market 1,, 8 BPRXX /17/ U.S. Government Money Market,,8, 36 TCRXX /01/ Tax-Free Money Market % % % % % % % % % California Tax-Free Money Market 1,8,,, 8 BCTXX /09/ Tax-Free Money Market 1,8,, 8 BNTXX /31/ Since Inception Fund Inception Date Gross Expense Ratio Net Expense Ratio Ticker Qtr Taxable Bond % % % % % % % % Core Plus 9,1 ACCNX /30/ Diversified Bond ADFIX /0/ Emerging Markets Debt 1 AEDVX /9/ Ginnie Mae BGNMX /3/ Global Bond 1,39, 1 AGBVX /31/ Government Bond CPTNX /16/ High-Yield 9, ABHIX /30/ Inflation-Adjusted Bond 11 ACITX // International Bond 7 BEGBX /07/ Short Duration 9,1 ACSNX /30/ Short Duration Inflation Protection Bond 11 APOIX /31/ Short Duration Strategic Income 9,37, 39 ASDVX /8/ Short-Term Government TWUSX /15/ Strategic Income 9,39, 5 ASIEX /8/ Zero Coupon 00 3 BTTTX /9/ Zero Coupon 05 3 BTTRX /15/ Tax-Free Bond % % % % % % % % California High-Yield Municipal 8,9,,, 7 BCHYX /30/ California Intermediate-Term Tax-Free 8,,, 7 Bond BCITX /09/ California Long-Term Tax-Free 8,,, 7 BCLTX /09/ High-Yield Municipal 8, 9, ABHYX /31/ Intermediate-Term Tax-Free Bond 8, TWTIX /0/ Long-Term Tax-Free 8, ACLVX /03/ Value % % % % % % % % Capital Value 39, ACTIX /31/ Equity Income TWEIX /01/ Income & Growth BIGRX /17/ Large Company Value ALVIX /30/ Mid Cap Value, 8,38 ACMVX /31/ Small Cap Value ASVIX /31/ Value TWVLX /01/ Blend % % % % % % % % Equity Growth BEQGX /09/ Fundamental Equity 1, 3 AFDIX /9/ Small Company ASQIX /31/ americancentury.com

12 Fund Inception Date Gross Expense Ratio Ticker Qtr Since Inception Growth % % % % % % % % All Cap Growth TWGTX /5/ Disciplined Growth ADSIX /30/ Focused Growth AFSIX /8/ Growth TWCGX /30/ Heritage TWHIX // Legacy Focused Large Cap 17 ACFOX /31/ Legacy Large Cap 17 ACGOX /31/ Legacy Multi Cap 17 ACMNX /31/ New Opportunities, 33,39 TWNOX /6/ Select TWCIX /30/ Small Cap Growth ANOIX /01/ Ultra 8 TWCUX /0/ Veedot 16 AMVIX /30/ New Opportunities, Small Cap Growth and Veedot each have a % redemption fee on shares held less than 60 days. Global and Non-U.S. Equity % % % % % % % % Net Expense Ratio Emerging Markets 1,39, TWMIX /30/ Emerging Markets Value 1,9, 39 AEVVX /31/ Global Growth 1 TWGGX /01/ International Core Equity 1 ACIMX /30/ International Discovery 7, TWEGX /01/ International Growth 7 TWIEX /09/ International Opportunities 7,30, 39 AIOIX /01/ International Value 7 ACEVX /03/ Emerging Markets, Global Growth, International Core Equity, International Discovery, International Growth, International Opportunities and International Value each have a % redemption free on shares held less than 60 days. Asset Allocation % % % % % % % % Balanced TWBIX /0/ Multi-Asset Income 39, 5 AMJVX /01/ One Choice 00 Portfolio 31 ARBVX /30/ One Choice 05 Portfolio 31 ARWIX /31/ One Choice 030 Portfolio 31 ARCVX /30/ One Choice 035 Portfolio 31 ARYIX /31/ One Choice 00 Portfolio 31 ARDVX /30/ One Choice 05 Portfolio 31 AROIX /31/ One Choice 050 Portfolio 31 ARFVX /30/ One Choice 055 Portfolio 31 AREVX /31/ One Choice 060 Portfolio 31 ARGVX /30/ One Choice In Retirement Portfolio 31 ARTOX /31/ One Choice Portfolio: Aggressive 31 AOGIX /30/ One Choice Portfolio: Conservative 31 AOCIX /30/ One Choice Portfolio: Moderate 31 AOMIX /30/ One Choice Portfolio: Very Aggressive 31 AOVIX /30/ One Choice Portfolio: Very Conservative 31 AONIX /30/ Strategic Allocation: Aggressive 6, 35,39 TWSAX /15/ Strategic Allocation: Conservative 6 TWSCX /15/ Strategic Allocation: Moderate 6 TWSMX /15/ A One Choice Portfolio's target date is the approximate year when investors plan to retire or start withdrawing their money. The principal value of the investment is not guaranteed at any time, including at the target date. Over time, the asset mix and weightings are adjusted to be more conservative. In general, as the target year approaches, the portfolio's allocation becomes more conservative by decreasing the allocation to stocks and increasing the allocation to bonds and money market instruments. Specialty/Alternative % % % % % % % % AC Alternatives Equity Market Neutral 3,,19,1 ALHIX /30/ AC Alternatives Income 6 ALNNX /31/ AC Alternatives Market Neutral Value 3,5,1,5,3, 39 ACVVX /31/ Core Equity Plus 1 ACPVX /31/ Disciplined Growth Plus 1 ACDJX /31/ Global Allocation 15,39, 3 AGAVX /31/ Global Gold 7, 13,18 BGEIX /17/ Global Real Estate 7,18,0, 3,39 ARYVX /9/ Real Estate 18, 0 REACX /1/ Strategic Inflation Opportunities 1,16,7,39, 0 ASIOX /30/ Utilities 18 BULIX /01/ Global Gold has a 1% redemption fee on shares held for less than 60 days. americancentury.com

13 Disclosures You should consider the fund s investment objectives, risks, and charges and expenses carefully before you invest. The fund s prospectus or summary prospectus, which can be obtained by contacting your financial professional, contains this and other information about the fund, and should be read carefully before investing. For information about other share classes available, please consult the prospectus. Performance less than one year, when quoted, is not annualized. Expense ratio is as of the fund's current prospectus. 1 An investment in the fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money by investing in the fund. You could lose money by investing in the fund. Although the fund seeks to preserve the value of your investment at $1 per share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund's sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time. 3 Alternative mutual funds often hold a variety of non-traditional investments, and also 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. On June 30, 015, Equity Market Neutral Fund's name was changed to AC Alternatives Equity Market Neutral. The fund better aligns with non-traditional strategies and as a result will be renamed under a new product line: AC Alternatives from American Century Investments. Only the fund's name changed. 5 On June 30, 015, Market Neutral Value Fund's name was changed to AC Alternatives Market Neutral Value. The fund better aligns with non-traditional strategies and as a result will be renamed under a new product line: AC Alternatives from American Century Investments. Only the fund's name changed. 6 Alternative mutual funds generally hold a variety of non-traditional investments, and generally employ more complex trading strategies than traditional mutual funds. Specifically, the AC Alternatives Income Fund may invest in, among other securities, lower-rated debt securities; securities backed by other assets (like mortgages or auto loans); companies engaged in the real estate industry; and entities that must invest in energy infrastructure, financial services or real estate to obtain special tax status. The fund may invest in these strategies directly, through short positions (effectively borrowing and then selling a security with a future delivery date in hopes that it will decline in price in the interim), or through other derivatives, such as futures or options. Each of these alternative asset classes and investment strategies has unique risks typically making them more suitable for investors with an above average tolerance for risk or longer investment horizon. Specifically, among other risks, lower-rated debt securities may be subject to greater default and liquidity risk; assetbacked securities may be subject to prepayment, credit and default risk; real estate securities may be subject to changes in economic conditions and interest rates; and special tax entities may be subject to a change in tax status and the risks of concentrating in a particular region or industry. In addition, these investments may be executed through investment strategies with unique risks. One of the risks of investing through short positions includes that the stock price will go up, exposing the short seller to potentially unlimited price risk. One of the risks of investing in derivatives is volatility. Specifically, derivatives investing can be typically executed for less than investing directly in the underlying asset. Small movements in the underlying asset s price, however, can result in significant volatility in the related derivative investment. In addition, most derivative investments involve a counterparty, which subjects the investment to the credit risk of each counterparty to a derivatives transaction. 7 International investing involves special risk considerations, including economic and political conditions, inflation rates and currency fluctuations. 8 Investment income may be subject to certain state and local taxes and, depending on your tax status, the federal alternative minimum tax. Capital gains are not exempt from federal income tax. 9 The lower-rated securities in which the fund invests are subject to greater credit risk, default risk and liquidity risk. Not available for sale in all states. 11 The prospectus contains very important information about the characteristics of the underlying security and potential tax implications of owning this fund. 1 International investing involves special risk considerations, including economic and political conditions, inflation rates and currency fluctuations. Investing in emerging markets may accentuate these risks. 13 Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future. 1 Although the fund s performance has historically benefited from investments in initial public offerings (IPOs), future IPO exposure likely will be limited by the fund s investment process. 15 The value and/or returns of a portfolio will fluctuate with market and economic conditions. The fund s investments in fixed income securities are subject to the risks associated with debt securities including credit, price and interest rate risk. The performance of the portfolio is partially dependent on the performance of the underlying American Century funds and will assume the risks associated with these funds. 16 The fund's strategy may result in higher portfolio turnover that could result in increased commission costs, affecting the funds performance, as well as capital gains tax liabilities to the shareholder. 17 Investment return and principal value will fluctuate, and it is possible to lose money by investing. Because each of these funds may, at times, concentrate its investments in a specific area, during such times they may be subject to greater risks and market fluctuations than when the portfolio represents a broader range of securities. The funds strategies may also result in higher portfolio turnover that could result in increased commission costs, affecting the funds performance, as well as capital gains tax liabilities to the shareholder. Because the Legacy Focused Large Cap fund is classified as nondiversified, which gives the managers the flexibility to hold large positions in one security, a price change in any one security may have a greater impact than would be the case if the fund were diversified. 18 Due to the limited focus of this fund, it may experience greater volatility than funds with a broader investment strategy. The fund is not intended to serve as a complete investment program by itself. 19 Under normal circumstances the fund s security selection process may result in the managers taking long positions in a market sector or industry that is not offset, or not offset to the same extent, by corresponding short positions in the same market sector or industry, and vice versa. This may result in increased risk and opportunity for loss should the securities in a particular market sector or industry not perform as predicted by our security selection process. The fund s portfolio turnover may be very high which could result in relatively high transaction costs which could hurt the fund s performance and cause capital gains tax liabilities. 0 This fund may be subject to many of the same risks as a direct investment in real estate. These risks include changes in economic conditions, interest rates, property values, property tax increases, overbuilding and increased competition, environmental contamination, zoning and natural disasters. This is due to the fact that the value of the fund s investments may be affected by the value of the real estate owned by the companies in which it invests. To the extent the fund invests in companies that make loans to real estate companies, the fund also may be subject to interest rate risk and credit risk. 1 Fund shown may take short positions. A short position arises when the fund sells stock that it does not own but was borrowed in anticipation that the market price of the stock will decline. If the market price declines, the fund can replace the borrowed stock at a lower price and capture the value represented by the difference between the higher sale price and the lower replacement price. Conversely, if the price of the stock goes up after the fund borrows the stock, the fund will lose money because it will have to pay more to replace the borrowed stock than it received when it sold the stock short. Any loss will be increased by the amount of compensation, interest or dividends, and transaction costs the fund must pay to the lender of the borrowed security. In addition, because the fund s loss on a short sale stems from increases in the value of the stock sold short, the extent of such loss, like the price of the stock sold short, is theoretically unlimited. By contrast, a fund s loss on a long position arises from decreases in the value of the stock and therefore is limited by the fact that a stock s value cannot drop below americancentury.com

14 zero. In addition, the fund may not be able to close out a short position at a particular time or price advantageous to the fund and there is some risk the lender of the stock sold short will terminate the loan at an inopportune time. Historically, small- and/or mid-cap stocks have been more volatile than the stocks of larger, more established companies. Smaller companies may have limited resources, product lines and markets, and their securities may trade less frequently and in more limited volumes than those of larger companies. 3 Although you can potentially earn a dependable return if you hold your shares to maturity, you should be prepared for dramatic price fluctuations which may result in significant gains or losses if sold prior to maturity. With the risks of fluctuating prices and the uncertainty of rates of return and yield inherent in investing, credit risk, and liquidity risk, it is possible to lose money if you sell your shares when their value is less than the price you paid. Fund shares are not guaranteed by the U.S. government. 5 Returns or yields for the fund would have been lower if.30% of the management fee had not been waived. The advisor expects this waiver to continue until July 31, 016 and cannot terminate it prior to such date without the approval of the Board of Directors. Review the annual or semiannual report for the most current information. 6 The fund s actual asset mixes will vary from the neutral mix based on investment performance. Fund managers regularly review the portfolio and will rebalance the asset mix to stay within the fund s preset operating range. The risk designations are relative only to the three Strategic Allocation Funds and do not represent comparisons with any other investment. 7 The value of the fund's shares may fluctuate significantly in the short term. At any given time your shares may be worth less than the price you paid for them. Since inflation-indexed securities trade at prevailing real, or after-inflation, interest rates, changes in these rates affect the value of such securities owned by the fund. Generally, when real interest rates rise, the value of these securities will decline. The opposite is true when real interest rates decline. 8 Returns or yields for the fund would have been lower if a portion of the management fee had not been waived. Review the annual or semiannual report for the most 9 Returns or yields for the fund would have been lower if.07% of the management fee had not been waived. The advisor expects this waiver to continue until October 31, 016, and cannot terminate it prior to such date without the approval of the Board of Directors. Review the annual or semiannual report for the most 30 Returns or yields for the fund would have been lower if.0% of the management fee had not been waived. This advisor expects this waiver to continue until March 31, 017, and cannot terminate it prior to such date without the approval of the Board of Directors. Review the annual or semiannual report for the most 31 Estimate of the pro rata share of the expenses incurred by the underlying funds expenses based on each fund s target asset allocation as of the date of the prospectus and each underlying fund s total annual operating expenses. The total expense results from combining the annual fund operating expenses with the estimated underlying fund expenses. Please consult the prospectus for a detailed overview of the expenses and charges. 3 The portfolio managers use an approach to stock investing that relies heavily on quantitative tools to identify companies, regardless of size, industry type or geographic location, whose share price patterns suggest their stocks are likely to increase in value. Among the risks associated with the fund, is the reliance on the fund s computer-based investment process. If the investment style embedded in this process falls out of favor with the market, the fund s performance may suffer. 33 Returns or yields for the fund would have been lower if.15% of the management fee had not been waived. The advisor expects this waiver to continue until February 8, 017, and cannot terminate it prior to such date without the approval of the Board of Directors. Review the annual or semiannual report for the most 3 Returns or yields for the fund would have been lower if.0% of the management fee had not been waived. The advisor expects this waiver to continue until February 8, 017, and cannot terminate it prior to such date without the approval of the Board of Directors. Review the annual or semiannual report for the most 35 Returns or yields for the fund would have been lower if.05% of the management fee had not been waived. The advisor expects this waiver to continue until March 31, 017, and cannot terminate it prior to such date without the approval of the Board of Directors. Review the annual or semiannual report for the most 36 Effective December 1, 015, Premium Money Market was renamed U.S. Government Money Market. 37 The advisor will waive the portion of the fund s management fee equal to the expenses attributable to the management fees of the American Century funds in which the fund invests. The amount of this waiver fluctuates depending on the fund's daily allocation to other American Century funds. This waiver is expected to remain in effect permanently and it cannot be terminated without the approval of the Board of Trustees. Effective July 8, 015, the advisor also agreed to waive an additional 0.09 percentage points of the fund s management fee. The advisor expects this fee waiver to continue until July 31, 016, and cannot terminate it without the approval of the Board of Trustees. 38 This fund is closed to new investors. Investors who established accounts in the fund prior to the closing date may continue to invest in their account. 39 The gross expense ratio is the fund s total annual operating costs, expressed as a percentage of the fund s average net assets for a given time period. It is gross of any fee waivers or expense reimbursement. The net expense ratio is the expense ratio after the application of any waivers or reimbursement. This is the actual ratio that investors paid during the fund s most recent fiscal year. Please see the prospectus for more information. 0 Returns or yields for the fund would have been lower if.0% of the management fee had not been waived. The advisor expects this waiver to continue until October 31, 016, and cannot terminate it prior to such date without the approval of the Board of Directors. Review the annual or semiannual report for the most 1 Returns or yields for the fund would have been lower if.1% of the management fee had not been waived. The advisor expects this waiver to continue until October 31, 016, and cannot terminate it prior to such date without the approval of the Board of Directors. Review the annual or semiannual report for the most Returns or yields for the fund would have been lower if.% of the management fee had not been waived. The advisor expects this waiver to continue until February 8, 017, and cannot terminate it prior to such date without the approval of the Board of Directors. Review the annual or semiannual report for the most 3 The advisor will waive the portion of the fund's management fee equal to the expenses attributable to the management fees of the American Century funds in which the fund invests. The amount of this waiver fluctuates depending on the fund's daily allocations to other American Century funds. This waiver is expected to remain in effect permanently. The advisor has also agreed to waive an additional 0.6% of the management fee, which is expected to continue until March 31, 017, and cannot be terminated without the approval of the board of directors. Returns or yields for the fund would have been lower if.5% of the management fee had not been waived. The advisor expects this waiver to continue until March 31, 017, and cannot terminate it prior to such date without the approval of the Board of Directors. Review the annual or semiannual report for the most 5 The advisor will waive the portion of the fund s management fee equal to the expenses attributable to the management fees of the American Century funds in which the fund invests. The amount of this waiver fluctuates depending on the fund s daily allocation to other American Century funds. This waiver is expected to remain in effect permanently and it cannot be terminated without the approval of the Board of Trustees. American Century Investment Services, Inc., Distributor 016 American Century Proprietary Holdings, Inc. All rights reserved. IN-BRO-8869 americancentury.com