Quarterly Performance Update

Global Uncertainty Sank Stocks, Buoyed Government Bonds

Third Quarter 2015

Download the full PDF version, which includes a table of standardized performance for our entire fund lineup and benchmark indices for comparison.

Mounting economic weakness and stock market volatility in China sent ripples throughout global financial markets. Stocks and other risk assets plunged. Factors that triggered equity market losses kept the Federal Reserve's (Fed's) rate hike on hold and led to government bond market gains.

Widespread concerns about global growth sparked sharp financial market volatility during the third quarter. China was the catalyst for the turmoil. An abrupt currency devaluation from China’s central bank in August, followed by a sharp downturn in China’s equity market, fueled fears that the world’s second-largest economy was cooling at a greater pace than its government originally reported. Slowing demand from China helped drive already-low commodity prices even lower, which contributed to investors’ angst and further fueled the sell-off among global stocks. These factors also contributed to the Fed’s decision in September to delay its first short-term rate
hike since 2006.

In this environment, broad U.S. and non-U.S. stock benchmarks plunged as investors exited equities and other risk assets in favor of safer ground. In the U.S., the S&P 500® Index broke a 10-quarter winning streak. Healthy stock market gains in July gave way to steep declines in August and September, leaving the broad U.S. stock market benchmark with a total return of -6.44% for the July-September period. But despite the decline, the U.S. stock market still fared better than others, particularly emerging markets, where economic, commodity, and currency woes triggered even deeper declines. Emerging markets stocks (MSCI Emerging Markets Index) declined -17.90%, sharply lagging non-U.S. developed market stocks, which fell -10.23% (MSCI EAFE Index).

Modestly improving U.S. economic data took a back seat to global uncertainty, and the U.S. Treasury market benefited from its perceived "safe-haven" status. The U.S. Treasury yield curve fell and flattened as longer-maturity yields decreased on global growth concerns and weak inflation. Most U.S. investment-grade bond sectors posted gains, and the Barclays U.S. Aggregate Bond Index advanced 1.23%. Outside the U.S., European bond markets were the best performers, led by the U.K. and peripheral markets such as Spain and Italy. The U.S. dollar was mixed but mostly stronger against major foreign currencies, reducing non-U.S. bond market returns for unhedged U.S. investors.

The opinions expressed are those of American Century Investments (or the fund manager) and are no guarantee of the future performance of any American Century Investments fund. This information is for educational purposes only and is not intended as investment advice.

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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: Barclays Indices

For detailed descriptions of indices or investing terms referenced above, refer to our glossary.

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