ck0001293210-20240731
December
1, 2024
American
Century Investments
Statement
of Additional Information
American
Century Asset Allocation Portfolios, Inc.
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One
Choice®
In
Retirement Portfolio |
One
Choice®
2045 Portfolio |
One
Choice®
Blend+ 2015 Portfolio |
| Investor
Class (ARTOX) |
Investor
Class (AROIX) |
Investor
Class (AAAFX) |
| I
Class (ATTIX) |
I
Class (AOOIX) |
I
Class (AAAHX) |
| A
Class (ARTAX) |
A
Class (AROAX) |
A
Class (AAAJX) |
| C
Class (ATTCX) |
C
Class (AROCX) |
R
Class (AAAKX) |
| R
Class (ARSRX) |
R
Class (ARORX) |
R6
Class (AAALX) |
| R6
Class (ARDTX) |
R6
Class (ARDOX) |
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One
Choice®
2025 Portfolio |
One
Choice®
2050 Portfolio |
One
Choice®
Blend+ 2020 Portfolio |
| Investor
Class (ARWIX) |
Investor
Class (ARFVX) |
Investor
Class (AAAMX) |
| I
Class (ARWFX) |
I
Class (ARFSX) |
I
Class (AAAOX) |
| A
Class (ARWAX) |
A
Class (ARFMX) |
A
Class (AABEX) |
| C
Class (ARWCX) |
C
Class (ARFDX) |
R
Class (AABGX) |
| R
Class (ARWRX) |
R
Class (ARFWX) |
R6
Class (AABHX) |
| R6
Class (ARWDX) |
R6
Class (ARFEX) |
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One
Choice®
2030 Portfolio |
One
Choice®
2055 Portfolio |
One
Choice®
Blend+ 2025 Portfolio |
| Investor
Class (ARCVX) |
Investor
Class (AREVX) |
Investor
Class (AABJX) |
| I
Class (ARCSX) |
I
Class (ARENX) |
I
Class (AABKX) |
| A
Class (ARCMX) |
A
Class (AREMX) |
A
Class (AABQX) |
| C
Class (ARWOX) |
C
Class (AREFX) |
R
Class (AABRX) |
| R
Class (ARCRX) |
R
Class (AREOX) |
R6
Class (AABVX) |
| R6
Class (ARCUX) |
R6
Class (AREUX) |
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One
Choice®
2035 Portfolio |
One
Choice®
2060 Portfolio |
One
Choice®
Blend+ 2030 Portfolio |
| Investor
Class (ARYIX) |
Investor
Class (ARGVX) |
Investor
Class (AABWX) |
| I
Class (ARLIX) |
I
Class (ARGNX) |
I
Class (AAEWX) |
| A
Class (ARYAX) |
A
Class (ARGMX) |
A
Class (AABZX) |
| C
Class (ARLCX) |
C
Class (ARGHX) |
R
Class (AACHX) |
| R
Class (ARYRX) |
R
Class (ARGRX) |
R6
Class (AACJX) |
| R6
Class (ARLDX) |
R6
Class (ARGDX) |
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One
Choice®
2040 Portfolio |
One
Choice®
2065 Portfolio |
One
Choice®
Blend+ 2035 Portfolio |
| Investor
Class (ARDVX) |
Investor
Class (ARHVX) |
Investor
Class (AACKX) |
| I
Class (ARDSX) |
I
Class (ARHUX) |
I
Class (AACLX) |
| A
Class (ARDMX) |
A
Class (ARHMX) |
A
Class (AACMX) |
| C
Class (ARNOX) |
C
Class (ARHEX) |
R
Class (AACPX) |
| R
Class (ARDRX) |
R
Class (ARHFX) |
R6
Class (AACQX) |
| R6
Class (ARDUX) |
R6
Class (ARHSX) |
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One
Choice®
Blend+ 2040 Portfolio |
One
Choice®
Blend+ 2065 Portfolio |
| Investor
Class (AACSX) |
Investor
Class (AAEKX) |
| I
Class (AACUX) |
I
Class (AAELX) |
| A
Class (AACVX) |
A
Class (AAEOX) |
| R
Class (AACWX) |
R
Class (AAEUX) |
| R6
Class (AACZX) |
R6
Class (AAEVX) |
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One
Choice®
Blend+ 2045 Portfolio |
One
Choice®
Portfolio: Very Conservative |
| Investor
Class (AADHX) |
Investor
Class (AONIX) |
| I
Class (AADJX) |
R
Class (AORHX) |
| A
Class (AADKX) |
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| R
Class (AADLX) |
One
Choice®
Portfolio: Conservative |
| R6
Class (AADMX) |
Investor
Class (AOCIX) |
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| R
Class (AORSX) |
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One
Choice®
Blend+ 2050 Portfolio |
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| Investor
Class (AADNX) |
One
Choice®
Portfolio: Moderate |
| I
Class (AADOX) |
Investor
Class (AOMIX) |
| A
Class (AADPX) |
R
Class (AORMX) |
| R
Class (AADQX) |
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| R6
Class (AADUX) |
One
Choice®
Portfolio: Aggressive |
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| Investor
Class (AOGIX) |
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One
Choice®
Blend+ 2055 Portfolio |
R
Class (AORYX) |
| Investor
Class (AADVX) |
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| I
Class (AADWX) |
One
Choice®
Portfolio: Very Aggressive |
| A
Class (AADZX) |
Investor
Class (AOVIX) |
| R
Class (AAEDX) |
R
Class (AORVX) |
| R6
Class (AAEEX) |
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One
Choice®
Blend+ 2060 Portfolio |
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| Investor
Class (AAEFX) |
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| I
Class (AAEGX) |
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| A
Class (AAEHX) |
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| R
Class (AAEIX) |
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| R6
Class (AAEJX) |
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This
statement of additional information adds to the discussion in the funds’
prospectuses dated December 1, 2024, but is not a prospectus. The
statement of additional information should be read in conjunction with the
funds’ current prospectuses. If you would like a copy of a prospectus,
please contact us at one of the addresses or telephone numbers listed on
the back cover or visit American Century Investments’ website at
americancentury.com. |
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This
statement of additional information incorporates by reference certain
information that appears in the funds’ financial statements, which are
included in the funds’ Form N-CSR. You may obtain a free copy of the
funds’ annual reports, as well as financial statements and other
information, by calling 1-800-345-2021.
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©2024
American Century Proprietary Holdings, Inc. All rights reserved.
American
Century Asset Allocation Portfolios, Inc. is a registered open-end management
investment company that was organized as a Maryland corporation on June 4, 2004.
Throughout this statement of additional information, we refer to American
Century Asset Allocation Portfolios, Inc. as the corporation.
Throughout
this statement of additional information, One Choice In Retirement Portfolio,
One Choice 2025 Portfolio, One Choice 2030 Portfolio, One Choice 2035 Portfolio,
One Choice 2040 Portfolio, One Choice 2045 Portfolio, One Choice 2050 Portfolio,
One Choice 2055 Portfolio, One Choice 2060 Portfolio, and One Choice 2065
Portfolio are collectively referred to as the “One Choice Target Date
Portfolios.” The One Choice Blend+ 2015 Portfolio, One Choice Blend+ 2020
Portfolio, One Choice Blend+ 2025 Portfolio, One Choice Blend+ 2030 Portfolio,
One Choice Blend+ 2035 Portfolio, One Choice Blend+ 2040 Portfolio, One Choice
Blend+ 2045 Portfolio, One Choice Blend+ 2050 Portfolio, One Choice Blend+ 2055
Portfolio, One Choice Blend+ 2060 Portfolio, and One Choice Blend+ 2065
Portfolio are collectively referred to as the “One Choice Blend+ Portfolios.”
Additionally, One Choice Portfolio: Very Conservative, One Choice Portfolio:
Conservative, One Choice Portfolio: Moderate, One Choice Portfolio: Aggressive
and One Choice Portfolio: Very Aggressive are collectively referred to as “One
Choice Target Risk Portfolios.”
Each
of the funds described in this statement of additional information is a separate
series of the corporation and operates for many purposes as if it were an
independent company. Each fund has its own investment objective, strategy,
management team, assets, and tax identification and stock registration numbers.
Prior to May 31, 2013, One Choice In Retirement Portfolio was known as
LIVESTRONG Income Portfolio and the remaining target-dated One Choice Portfolios
were known as the LIVESTRONG Portfolios, and prior to May 15, 2006, these funds
were known as the My Retirement Portfolios.
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| Fund/Class |
Ticker
Symbol |
Inception
Date |
| One
Choice In Retirement Portfolio |
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| Investor
Class |
ARTOX |
08/31/2004 |
| I
Class |
ATTIX |
08/31/2004 |
| A
Class |
ARTAX |
08/31/2004 |
| C
Class |
ATTCX |
03/01/2010 |
| R
Class |
ARSRX |
08/31/2004 |
| R6
Class |
ARDTX |
10/23/2017 |
| One
Choice 2025 Portfolio |
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| Investor
Class |
ARWIX |
08/31/2004 |
| I
Class |
ARWFX |
08/31/2004 |
| A
Class |
ARWAX |
08/31/2004 |
| C
Class |
ARWCX |
03/01/2010 |
| R
Class |
ARWRX |
08/31/2004 |
| R6
Class |
ARWDX |
10/23/2017 |
| One
Choice 2030 Portfolio |
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| Investor
Class |
ARCVX |
05/30/2008 |
| I
Class |
ARCSX |
05/30/2008 |
| A
Class |
ARCMX |
05/30/2008 |
| C
Class |
ARWOX |
03/01/2010 |
| R
Class |
ARCRX |
05/30/2008 |
| R6
Class |
ARCUX |
10/23/2017 |
| One
Choice 2035 Portfolio |
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| Investor
Class |
ARYIX |
08/31/2004 |
| I
Class |
ARLIX |
08/31/2004 |
| A
Class |
ARYAX |
08/31/2004 |
| C
Class |
ARLCX |
03/01/2010 |
| R
Class |
ARYRX |
08/31/2004 |
| R6
Class |
ARLDX |
10/23/2017 |
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| Fund/Class |
Ticker
Symbol |
Inception
Date |
| One
Choice 2040 Portfolio |
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| Investor
Class |
ARDVX |
05/30/2008 |
| I
Class |
ARDSX |
05/30/2008 |
| A
Class |
ARDMX |
05/30/2008 |
| C
Class |
ARNOX |
03/01/2010 |
| R
Class |
ARDRX |
05/30/2008 |
| R6
Class |
ARDUX |
10/23/2017 |
| One
Choice 2045 Portfolio |
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| Investor
Class |
AROIX |
08/31/2004 |
| I
Class |
AOOIX |
08/31/2004 |
| A
Class |
AROAX |
08/31/2004 |
| C
Class |
AROCX |
03/01/2010 |
| R
Class |
ARORX |
08/31/2004 |
| R6
Class |
ARDOX |
10/23/2017 |
| One
Choice 2050 Portfolio |
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| Investor
Class |
ARFVX |
05/30/2008 |
| I
Class |
ARFSX |
05/30/2008 |
| A
Class |
ARFMX |
05/30/2008 |
| C
Class |
ARFDX |
03/01/2010 |
| R
Class |
ARFWX |
05/30/2008 |
| R6
Class |
ARFEX |
10/23/2017 |
| One
Choice 2055 Portfolio |
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| Investor
Class |
AREVX |
03/31/2011 |
| I
Class |
ARENX |
03/31/2011 |
| A
Class |
AREMX |
03/31/2011 |
| C
Class |
AREFX |
03/31/2011 |
| R
Class |
AREOX |
03/31/2011 |
| R6
Class |
AREUX |
10/23/2017 |
| One
Choice 2060 Portfolio |
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| Investor
Class |
ARGVX |
09/30/2015 |
| I
Class |
ARGNX |
09/30/2015 |
| A
Class |
ARGMX |
09/30/2015 |
| C
Class |
ARGHX |
09/30/2015 |
| R
Class |
ARGRX |
09/30/2015 |
| R6
Class |
ARGDX |
10/23/2017 |
| One
Choice 2065 Portfolio |
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| Investor
Class |
ARHVX |
09/23/2020 |
| I
Class |
ARHUX |
09/23/2020 |
| A
Class |
ARHMX |
09/23/2020 |
| C
Class |
ARHEX |
09/23/2020 |
| R
Class |
ARHFX |
09/23/2020 |
| R6
Class |
ARHSX |
09/23/2020 |
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| Fund/Class |
Ticker
Symbol |
Inception
Date |
| One
Choice Blend+ 2015 Portfolio |
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| Investor
Class |
AAAFX |
03/10/2021 |
| I
Class |
AAAHX |
03/10/2021 |
| A
Class |
AAAJX |
03/10/2021 |
| R
Class |
AAAKX |
03/10/2021 |
| R6
Class |
AAALX |
03/10/2021 |
| One
Choice Blend+ 2020 Portfolio |
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| Investor
Class |
AAAMX |
03/10/2021 |
| I
Class |
AAAOX |
03/10/2021 |
| A
Class |
AABEX |
03/10/2021 |
| R
Class |
AABGX |
03/10/2021 |
| R6
Class |
AABHX |
03/10/2021 |
| One
Choice Blend+ 2025 Portfolio |
| |
| Investor
Class |
AABJX |
03/10/2021 |
| I
Class |
AABKX |
03/10/2021 |
| A
Class |
AABQX |
03/10/2021 |
| R
Class |
AABRX |
03/10/2021 |
| R6
Class |
AABVX |
03/10/2021 |
| One
Choice Blend+ 2030 Portfolio |
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| Investor
Class |
AABWX |
03/10/2021 |
| I
Class |
AAEWX |
03/10/2021 |
| A
Class |
AABZX |
03/10/2021 |
| R
Class |
AACHX |
03/10/2021 |
| R6
Class |
AACJX |
03/10/2021 |
| One
Choice Blend+ 2035 Portfolio |
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| Investor
Class |
AACKX |
03/10/2021 |
| I
Class |
AACLX |
03/10/2021 |
| A
Class |
AACMX |
03/10/2021 |
| R
Class |
AACPX |
03/10/2021 |
| R6
Class |
AACQX |
03/10/2021 |
| One
Choice Blend+ 2040 Portfolio |
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| Investor
Class |
AACSX |
03/10/2021 |
| I
Class |
AACUX |
03/10/2021 |
| A
Class |
AACVX |
03/10/2021 |
| R
Class |
AACWX |
03/10/2021 |
| R6
Class |
AACZX |
03/10/2021 |
| One
Choice Blend+ 2045 Portfolio |
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| Investor
Class |
AADHX |
03/10/2021 |
| I
Class |
AADJX |
03/10/2021 |
| A
Class |
AADKX |
03/10/2021 |
| R
Class |
AADLX |
03/10/2021 |
| R6
Class |
AADMX |
03/10/2021 |
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| Fund/Class |
Ticker
Symbol |
Inception
Date |
| One
Choice Blend+ 2050 Portfolio |
| |
| Investor
Class |
AADNX |
03/10/2021 |
| I
Class |
AADOX |
03/10/2021 |
| A
Class |
AADPX |
03/10/2021 |
| R
Class |
AADQX |
03/10/2021 |
| R6
Class |
AADUX |
03/10/2021 |
| One
Choice Blend+ 2055 Portfolio |
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| Investor
Class |
AADVX |
03/10/2021 |
| I
Class |
AADWX |
03/10/2021 |
| A
Class |
AADZX |
03/10/2021 |
| R
Class |
AAEDX |
03/10/2021 |
| R6
Class |
AAEEX |
03/10/2021 |
| One
Choice Blend+ 2060 Portfolio |
| |
| Investor
Class |
AAEFX |
03/10/2021 |
| I
Class |
AAEGX |
03/10/2021 |
| A
Class |
AAEHX |
03/10/2021 |
| R
Class |
AAEIX |
03/10/2021 |
| R6
Class |
AAEJX |
03/10/2021 |
| One
Choice Blend+ 2065 Portfolio |
| |
| Investor
Class |
AAEKX |
03/10/2021 |
| I
Class |
AAELX |
03/10/2021 |
| A
Class |
AAEOX |
03/10/2021 |
| R
Class |
AAEUX |
03/10/2021 |
| R6
Class |
AAEVX |
03/10/2021 |
| One
Choice Portfolio: Very Conservative |
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| Investor
Class |
AONIX |
09/30/2004 |
| R
Class |
AORHX |
03/20/2015 |
| One
Choice Portfolio: Conservative |
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| Investor
Class |
AOCIX |
09/30/2004 |
| R
Class |
AORSX |
03/20/2015 |
| One
Choice Portfolio: Moderate |
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| Investor
Class |
AOMIX |
09/30/2004 |
| R
Class |
AORMX |
03/20/2015 |
| One
Choice Portfolio: Aggressive |
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| Investor
Class |
AOGIX |
09/30/2004 |
| R
Class |
AORYX |
03/20/2015 |
| One
Choice Portfolio: Very Aggressive |
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| Investor
Class |
AOVIX |
09/30/2004 |
| R
Class |
AORVX |
03/20/2015 |
The
funds’ advisor, American Century Investment Management, Inc., intends to operate
the funds as “funds of funds,” meaning that substantially all of the funds’
assets will be invested in other American Century Investments mutual funds (the
underlying funds), as described in the funds’ prospectuses. More details about
each of the underlying funds are available in its prospectus and statement of
additional information, which are available on our website. This section
explains the extent to which the underlying funds’ advisor can use various
investment vehicles and strategies in managing the underlying funds’ assets.
Descriptions of the investment techniques and risks associated with each appear
in the section, Investment
Strategies and Risks,
which begins on page 8. In the case of the funds’ principal investment
strategies, these descriptions elaborate upon the discussion contained in the
prospectus.
Each
fund is diversified as defined in the Investment Company Act of 1940 (the
Investment Company Act). Diversified means that, with respect to 75% of its
total assets, each fund will not invest more than 5% of its total assets in the
securities of a single issuer or own more than 10% of the outstanding voting
securities of a single issuer (other than U.S. government securities and
securities of other investment companies). Additionally, the underlying funds
are generally diversified and so indirectly provide broad exposure to a large
number of securities.
To
meet federal tax requirements for qualification as a regulated investment
company, each fund must limit its investments so that at the close of each
quarter of its taxable year
(1)no
more than 25% of its total assets are invested in the securities of a single
issuer (other than the U.S. government or a regulated investment company),
and
(2)with
respect to at least 50% of its total assets, no more than 5% of its total assets
are invested in the securities of a single issuer (other than the U.S.
government or a regulated investment company) and it does not own more than 10%
of the outstanding voting securities of a single issuer.
In
general, within the restrictions outlined here and in the funds’ prospectuses,
the portfolio managers have broad powers to decide how to invest fund
assets.
Investments
are varied according to what is judged advantageous under changing economic
conditions. It is the advisor’s policy to retain maximum flexibility in
management without restrictive provisions as to the proportion of one or another
class of securities that may be held, subject to the investment restrictions
described in the funds’ prospectuses and below. Unless otherwise noted, all
investment restrictions described below and in each fund’s prospectus are
measured at the time of the transaction in the security. If market action
affecting fund securities (including, but not limited to, appreciation,
depreciation or a credit rating event) causes a fund to exceed an
investment restriction, the advisor is not required to take immediate
action. Under normal market conditions, however, the advisor’s policies
and procedures indicate that the advisor will not make any purchases that will
make the fund further outside the investment restriction.
As
described in the funds’ prospectuses, each fund’s assets are allocated among
underlying funds that represent major asset classes, including equity securities
(stock funds), fixed-income securities (bond funds) and short-term investments
(short-term funds). Through the underlying funds, each fund’s assets are further
diversified among various investment categories and disciplines within the major
asset classes.
The
equity portion of a fund’s portfolio may be indirectly invested in any type of
domestic or foreign equity or equity-equivalent security, primarily common
stocks, that meets certain fundamental and technical standards of selection.
Equity equivalents include securities that permit the fund to receive an equity
interest in an issuer, the opportunity to acquire an equity interest in an
issuer, or the opportunity to receive a return on its investment that permits
the fund to benefit from the growth over time in the equity of an issuer.
Examples of equity securities and equity equivalents include preferred stock and
convertible securities. Equity equivalents also may include securities whose
value or return is derived from the value or return of a different security.
Derivative instruments are discussed in greater detail on page 10 under the
heading Derivative
Instruments.
The
underlying funds’ portfolio managers use several investment disciplines in
managing the equity portion of each fund’s portfolio, including growth, value
and quantitative management disciplines. The growth discipline generally seeks
long-term capital appreciation by investing in companies whose earnings and
revenue trends meet the advisor’s investment criteria. This includes companies
whose earnings and revenues are not only growing, but growing at an accelerating
pace. It also includes companies whose growth rates, although still negative,
are less negative than prior periods. The value investment discipline seeks
capital growth by investing in equity securities of companies that the managers
believe to be temporarily undervalued.
The
advisor believes both value investing and growth investing provide the potential
for appreciation over time. Value investing tends to provide less volatile
results. This lower volatility means that the price of value stocks tends not to
fall as significantly as the price of growth stocks in down markets. However,
value stocks do not usually appreciate as significantly as growth stocks do in
up markets. In keeping with the diversification theme of these funds, and as a
result of management’s belief that these styles are complementary, both
disciplines will be represented to some degree in each portfolio at all
times.
As
noted, the value investment discipline tends to be less volatile than the growth
investment discipline. As a result, the more conservative funds (including
portfolios with earlier target years) will generally have a higher proportion of
their equity investments in
value
stocks than the more aggressive funds (including funds with more distant target
years). Likewise, the more aggressive funds will generally have a greater
proportion of growth stocks than the more conservative funds.
In
addition, the equity portion of each fund’s portfolio will be further
diversified among underlying funds that invest in small, medium and large
companies. This approach provides investors with an additional level of
diversification and enables investors to achieve a broader exposure to the
various capitalization ranges without having to invest directly in multiple
funds.
Quantitative
management disciplines also may be represented in a portion of each fund’s
portfolio. These disciplines combine elements of both growth and value investing
and are intended to reduce overall volatility relative to the market. American
Century Investments’ quantitative management disciplines utilize a multi-step
process that draws heavily on computer technology. In the first step, the
portfolio managers rank stocks from most attractive to least attractive using a
computer model that combines measures of a stock’s value, as well as measures of
its growth potential, among others. To measure value, the managers may use
ratios of stock price-to-book value and stock price-to-cash flow, among others.
To measure growth, the managers may use the rate of growth of a company’s
earnings and changes in its earnings estimates, as well as other
factors.
In
the second step, the managers use a technique called portfolio optimization. In
portfolio optimization, the managers build a portfolio of stocks from the
ranking described above that they believe will provide the optimal balance
between risk and expected return. The goal is to create a fund that provides
better returns than its benchmark without taking on significant additional
risk.
Finally,
the managers review the output of the quantitative model, considering factors
such as risk management, transaction costs, and liquidity
management.
A
portion of each fund’s portfolio also may be invested in underlying funds that
use short selling as a principal investment strategy. A short position arises
when a fund sells a security it does not own but has borrowed in anticipation
that the market price of the security will decline. The proceeds from the
security sold short are used to buy additional securities (a long position). A
fund’s use of short selling creates leverage in an attempt to increase
returns.
The
fixed-income portion of a fund’s portfolio indirectly may include U.S. Treasury
securities, securities issued or guaranteed by the U.S. government or a foreign
government, or an agency or instrumentality of the U.S. or a foreign government,
and nonconvertible debt obligations issued by U.S. or foreign corporations. Some
of the underlying funds also may invest in mortgage-related and other
asset-backed securities, which are described in greater detail on page 19 under
the heading Mortgage-Related
and Other Asset-Backed Securities.
As with the equity portion of a fund’s portfolio, the fixed-income portion of a
fund’s portfolio will be diversified among the various fixed-income investment
categories described above.
The
value of fixed-income securities fluctuates based on changes in interest rates
and in the credit quality of the issuers. Debt securities that comprise part of
a fund’s fixed-income portfolio may include investment-grade and high-yield
securities. Investment-grade means that at the time of purchase, such
obligations are rated within the four highest categories by a nationally
recognized statistical rating organization for example, at least Baa by Moody’s
Investors Service, Inc. (Moody’s) or BBB by Standard & Poor’s Corporation
(S&P), or, if not rated, are of equivalent investment quality as determined
by the managers. According to Moody’s, bonds rated Baa are medium-grade and
possess some speculative characteristics. A BBB rating by S&P indicates
S&P’s belief that a security exhibits a satisfactory degree of safety and
capacity for repayment but is more vulnerable to adverse economic conditions and
changing circumstances.
High-yield
securities, sometimes referred to as junk bonds, are higher risk, nonconvertible
debt obligations that are rated below investment-grade securities, or are
unrated, but with similar credit quality. Each One Choice Target Date Portfolio
and One Choice Blend+ Portfolio may invest a minority portion of its assets in
the High Income Fund or other underlying funds that invest primarily in below
investment-grade (high-yield) securities. One Choice Portfolio: Very
Conservative, One Choice Portfolio: Conservative and One Choice Portfolio:
Moderate may invest up to 5% of their assets, and One Choice Portfolio:
Aggressive and One Choice Portfolio: Very Aggressive may invest up to 10% of
their assets in the High Income Fund or other similar underlying funds.
There
are no credit or maturity restrictions on the fixed-income securities in which
the high-yield portion of a fund’s portfolio may be indirectly invested. Debt
securities rated below investment grade are considered by many to be
predominantly speculative. Changes in economic conditions or other circumstances
are more likely to lead to a weakened capacity to make principal and interest
payments on such securities than is the case with higher-quality debt
securities. Regardless of rating levels, all debt securities considered for
purchase by an underlying fund are analyzed by the managers to determine, to the
extent reasonably possible, that the planned investment is consistent with the
investment objective of the fund.
Short-term
investments include underlying funds that invest in fixed-income or debt
instruments and have a shorter-term weighted average duration, typically three
years or less. Duration is an indication of the relative sensitivity of a
security’s market value to changes in interest rates.
The
funds also may invest in underlying funds that invest primarily in foreign
securities.
The
funds are primarily “strategic” rather than “tactical” allocation funds, which
means the managers generally do not try to time the market to identify when a
major reallocation should be made. Instead, the managers use a longer-term
approach in pursuing the funds’ investment objectives and thus select a blend of
underlying funds in the various asset classes. However, in order to better
balance risks
in
changing market environments, the portfolio managers may make modest deviations
from the neutral mix in light of prevailing market conditions.
Other
than One Choice In Retirement Portfolio, each One Choice Target Date Portfolio’s
neutral mix is adjusted according to a predetermined glide path until the fund
reaches its target date. By the time a fund reaches its target date, its neutral
mix will become fixed and will match that of One Choice In Retirement Portfolio.
The One Choice Blend+ Portfolios' neutral mixes will be similarly adjusted
according to a predetermined glide path (decreasing exposure to stocks and
increasing exposure to bonds and short-term investments) until five years after
the target date. The managers also will review each fund’s allocations quarterly
to determine whether rebalancing is appropriate. For the One Choice Target Risk
Portfolios, the managers regularly review each fund’s investments and
allocations and may make changes in the underlying fund holdings within each
asset class or to a fund’s asset mix (generally within the operating ranges
stated in the prospectus) to emphasize investments that they believe will
provide the most favorable outlook for achieving the fund’s objective.
Recommended reallocations may be implemented promptly or may be implemented
gradually. In order to minimize the impact of reallocations on a fund’s
performance, the managers will generally attempt to reallocate assets
gradually.
The
funds attempt to diversify across asset classes and investment categories to a
greater extent than funds that invest primarily in equity securities or
primarily in fixed-income securities. However, the funds are managed to a
specific target year or a general risk profile and may not provide an
appropriately balanced investment plan for all investors.
The
underlying funds’ portfolio managers also may use the investment vehicles and
techniques described in this section in managing the underlying funds’ assets.
This section also details the risks associated with each, because each
investment vehicle and technique contributes to the One Choice Target Date
Portfolios’, One Choice Blend+ Portfolios, and the One Choice Target Risk
Portfolios’ overall risk profiles. In the Investment
Strategies and Risks
section, references to funds mean the underlying funds, unless otherwise
noted.
Bank
Loans
Some
of the funds may invest in bank loans, which include senior secured and
unsecured floating rate loans of corporations, partnerships, or other entities.
Typically, these loans hold a senior position in the borrower’s capital
structure, may be secured by the borrower’s assets and have interest rates that
reset frequently. These loans are usually rated non-investment grade by the
rating agencies. An economic downturn generally leads to higher non-payment and
default rates by borrowers, and a bank loan can lose a substantial part of its
value due to these and other adverse conditions and events. However, as compared
to junk bonds, senior floating rate loans are typically senior in the capital
structure and are often secured by collateral of the borrower. A fund’s
investments in bank loans are subject to credit risk, and there is no assurance
that the liquidation of collateral would satisfy the claims of the borrower’s
obligations in the event of non-payment of scheduled interest or principal, or
that the collateral could be readily liquidated. The interest rates on many bank
loans reset frequently, and therefore investors are subject to the risk that the
return will be less than anticipated when the investment was first made. Most
bank loans, like most investment grade bonds, are not traded on any national
securities exchange. Bank loans generally have less liquidity than investment
grade bonds and there may be less publicly available information about them.
A
fund eligible to invest in bank loans may purchase bank loans from the primary
market, from other lenders (sometimes referred to as loan assignments) or it may
also acquire a participation interest in another lender’s portion of the bank
loan. Large bank loans to corporations or governments may be shared or
syndicated among several lenders, usually commercial or investment banks. A fund
may participate in such syndicates, or can buy part of a loan, becoming a direct
lender. Participation interests involve special types of risk, including
liquidity risk and the risks of being a lender. Risks of being a lender include
credit risk (the borrower’s ability to meet required principal and interest
payments under the terms of the loan), industry risk (the borrower’s industry’s
exposure to rapid change or regulation), financial risk (the effectiveness of
the borrower’s financial policies and use of leverage), liquidity risk (the
adequacy of the borrower’s back-up sources of cash), and collateral risk (the
sufficiency of the collateral’s value to repay the loan in the event of
non-payment or default by the borrower). If a fund purchases a participation
interest, it may only be able to enforce its rights through the lender, and may
assume the credit risk of the lender in addition to the credit risk of the
borrower.
In
addition, transactions in bank loans may take more than seven days to settle. As
a result, the proceeds from the sale of bank loans may not be readily available
to make additional investments or to meet the fund’s redemption obligations. To
mitigate these risks, the fund monitors its short-term liquidity needs in light
of the longer settlement period of bank loans. Some bank loan interests may not
be considered securities or registered under the Securities Act of 1933 and
therefore not afforded the protections of the federal securities
laws.
Convertible
Securities
A
convertible security is a bond, debenture, note, preferred stock or other
security that may be converted into or exchanged for a prescribed amount of
common stock of the same or a different issuer within a particular time period
at a specified price or formula. A convertible security entitles the holder to
receive the interest paid or accrued on debt or the dividend paid on preferred
stock until the convertible security matures or is redeemed, converted or
exchanged. Before conversion or exchange, such securities ordinarily provide a
stream of income with generally higher yields than common stocks of the same or
similar issuers, but lower than the yield on non-convertible debt. Of course,
there can be no assurance of current income because issuers of convertible
securities may default on their obligations. In addition, there can be no
assurance of capital appreciation because the value of the underlying common
stock will fluctuate. Because of the conversion feature, the managers consider
some convertible securities to be equity equivalents.
The
price of a convertible security will normally fluctuate in some proportion to
changes in the price of the underlying asset. A convertible security is subject
to risks relating to the activities of the issuer and/or general market and
economic conditions. The stream of income typically paid on a convertible
security may tend to cushion the security against declines in the price of the
underlying asset. However, the stream of income causes fluctuations based upon
changes in interest rates and the credit quality of the issuer. In general, the
value of a convertible security is a function of (1) its yield in comparison
with yields of other securities of comparable maturity and quality that do not
have a conversion privilege, and (2) its worth, at market value, if converted or
exchanged into the underlying common stock. The price of a convertible security
often reflects such variations in the price of the underlying common stock in a
way that a non-convertible security does not. At any given time, investment
value generally depends upon such factors as the general level of interest
rates, the yield of similar nonconvertible securities, the financial strength of
the issuer and the seniority of the security in the issuer’s capital
structure.
A
convertible security may be subject to redemption at the option of the issuer at
a predetermined price. If a convertible security held by a fund is called for
redemption, the fund would be required to permit the issuer to redeem the
security and convert it to underlying common stock or to cash, or would sell the
convertible security to a third party, which may have an adverse effect on the
fund. A convertible security may feature a put option that permits the holder of
the convertible security to sell that security back to the issuer at a
predetermined price. A fund generally invests in convertible securities for
their favorable price characteristics and total return potential and normally
would not exercise an option to convert unless the security is called or
conversion is forced.
Contingent
convertible securities (sometimes referred to as CoCos or Additional Tier 1
instruments) generally either convert into equity or have their principal
written down upon the occurrence of certain trigger events, which may be linked
to the issuer’s stock price, regulatory capital thresholds, regulatory actions
relating to the issuer’s continued viability, or other pre-specified events.
Under certain circumstances, CoCos may be subject to an automatic write-down of
the principal amount or value of the securities, sometimes to zero, thereby
cancelling the securities. If such an event occurs, a fund may not have any
rights to repayment of the principal amount of the securities that has not
become due. Additionally, a fund may not be able to collect interest payments or
dividends on such securities. In the event of liquidation or dissolution of the
issuer, CoCos generally rank junior to the claims of holders of the issuer’s
other debt obligations. CoCos also may provide for the mandatory conversion of
the security into common stock of the issuer under certain circumstances.
Because the common stock of an issuer may not pay a dividend, a fund may
experience reduced yields (or no yield) as a result of the conversion.
Conversion of the security from debt to equity would deepen the subordination of
the investor and thereby worsen the fund’s standing in bankruptcy.
Counterparty
Risk
A
fund will be exposed to the credit risk of the counterparties with which, or the
brokers, dealers and exchanges through which, it deals, whether it engaged in
exchange traded or off-exchange transactions.
A
fund is subject to the risk that issuers of the instruments in which it invests
and trades may default on their obligations under those instruments, and that
certain events may occur that have an immediate and significant adverse effect
on the value of those instruments. There can be no assurance that an
issuer of an instrument in which a fund invests will not default, or that an
event that has an immediate and significant adverse effect on the value of an
instrument will not occur, and that a fund will not sustain a loss on a
transaction as a result.
Transactions
entered into by a fund may be executed on various U.S. and non-U.S. exchanges,
and may be cleared and settled through various clearinghouses, custodians,
depositories and prime brokers throughout the world. Although a fund
attempts to execute, clear and settle the transactions through entities the
advisor believes to be sound, there can be no assurance that a failure by any
such entity will not lead to a loss to a fund.
Cyber
Security Risk
As
the funds increasingly rely on technology and information systems to operate,
they become susceptible to operational risks linked to security breaches in
those information systems. Both calculated attacks and unintentional events can
cause failures in the funds’ information systems. Cyber attacks can include
acquiring unauthorized access to information systems, usually through hacking or
the use of malicious software, for purposes of stealing assets or confidential
information, corrupting data, or disrupting fund operations. Cyber attacks can
also occur without direct access to information systems, for example by making
network services unavailable to
intended
users. Cyber security failures by, or breaches of the information systems of,
the advisor, distributors, broker-dealers, other service providers (including,
but not limited to, index providers, fund accountants, custodians, transfer
agents and administrators), or the issuers of securities the fund invests in may
also cause disruptions and impact the funds’ business operations. Breaches
in information security may result in financial losses, interference with the
funds’ ability to calculate NAV, impediments to trading, inability of fund
shareholders to transact business, violations of applicable privacy and other
laws, regulatory fines, penalties, reputational damage, reimbursement or other
compensation costs, or additional compliance costs. Additionally, the funds may
incur substantial costs to prevent future cyber incidents. The funds have
business continuity plans in the event of, and risk management systems to help
prevent, such cyber attacks, but these plans and systems have limitations
including the possibility that certain risks have not been identified. Moreover,
the funds do not control the cyber security plans and systems of our service
providers and other third party business partners. The funds and their
shareholders could be negatively impacted as a result.
Derivative
Instruments
To
the extent permitted by their investment objectives and policies, the funds may
invest in derivative instruments. Generally, a derivative instrument is a
financial arrangement the value of which is based on, or derived from, a
traditional security, asset, or market index. A fund may not invest in a
derivative instrument if its credit, interest rate, liquidity, counterparty or
other associated risks are outside acceptable limits set forth in its
prospectus. The advisor has a derivatives risk management program that includes
policies and procedures reasonably designed to manage each fund’s respective
derivatives risk. The derivatives risk management program complies with Rule
18f-4 of the Investment Company Act. Unless a fund qualifies as a limited
derivatives user, the fund will be required to participate in the derivatives
risk management program, which includes compliance with value-at-risk based
leverage limits, oversight by a derivatives risk manager, and additional
reporting and disclosure regarding its derivatives positions. A fund designated
as a limited derivatives user has policies and procedures to manage its
aggregate derivatives risk. The advisor will report on the derivatives risk
management program to the Board of Directors/Trustees on a quarterly basis.
Examples
of common derivative instruments include futures contracts, warrants, structured
notes, credit default swaps, options contracts, swap transactions and forward
currency contracts.
The
risks associated with investments in derivatives differ from, and may be greater
than, the risks associated with investing directly in traditional
investments.
Leverage
Risk
– Relatively small market movements may cause large changes in an investment’s
value. Leverage is associated with certain types of derivatives or trading
strategies. Certain transactions in derivatives (such as futures transactions or
sales of put options) involve substantial leverage and may expose a fund to
potential losses that exceed the amount of initial investment.
Hedging
Risk
– When used to hedge against a position in a fund, losses on a derivative
instrument are typically offset by gains on the hedged position, and vice versa.
Thus, though hedging can minimize or cancel out losses, it can also have the
same effect on gains. Occasionally, there may be imperfect matching between the
derivative and the underlying security, such a match may prevent the fund from
achieving the intended hedge or expose it to a risk of loss. There is no
guarantee that a fund’s hedging strategy will be effective. Portfolio managers
may decide not to hedge against any given risk either because they deem such
risk improbable or they do not foresee the occurrence of the risk. Additionally,
certain risks may be impossible to hedge against.
Correlation
Risk
– The value of the underlying security, interest rate, market index or other
financial asset may not move in the direction the portfolio managers anticipate.
Additionally, the value of the derivative may not move or react to changes in
the underlying security, interest rate, market index or other financial asset as
anticipated.
Illiquidity
Risk
– There may be no liquid secondary market, which may make it difficult or
impossible to close out a position when desired. For exchange-traded derivatives
contracts, daily limits on price fluctuations and speculative position limits
set by the exchanges on which a fund transacts in derivative instruments may
prevent profitable liquidation of positions, subjecting a fund to the potential
of greater losses.
Settlement
Risk
– A fund may have an obligation to deliver securities or currency pursuant to a
derivatives transaction that such fund does not own at the inception of the
derivatives trade.
Counterparty
Risk
– A counterparty may fail to perform its obligations. Because bi-lateral
derivative transactions are traded between counterparties based on contractual
relationships, a fund is subject to the risk that a counterparty will not
perform its obligations under the related contracts. Although each fund
intends to enter into transactions only with counterparties which the advisor
believes to be creditworthy, there can be no assurance that a counterparty will
not default and that the funds will not sustain a loss on a transaction as a
result. In situations where a fund is required to post margin or other
collateral with a counterparty, the counterparty may fail to segregate the
collateral or may commingle the collateral with the counterparty’s own
assets. As a result, in the event of the counterparty’s bankruptcy or
insolvency, a fund’s collateral may be subject to the conflicting claims of the
counterparty’s creditors, and a fund may be exposed to the risk of a court
treating a fund as a general unsecured creditor of the counterparty, rather than
as the owner of the collateral.
Volatility
Risk
– A fund could face higher volatility because some derivative instruments create
leverage.
Foreign
Currency Exchange Transactions
A
fund may conduct foreign currency transactions on a spot basis (i.e., for prompt
delivery and settlement) or forward basis (i.e., by entering into forward
currency exchange contracts, currency options and futures transactions for
hedging or any other lawful purpose). Although foreign exchange dealers
generally do not charge a fee for such transactions, they do realize a profit
based on the difference between the prices at which they are buying and selling
various currencies.
Forward
contracts are customized transactions that require a specific amount of a
currency to be delivered at a specific exchange rate on a specific date or range
of dates in the future. Forward contracts are generally traded in an interbank
market directly between currency traders (usually larger commercial banks) and
their customers. The parties to a forward contract may agree to offset or
terminate the contract before its maturity, or may hold the contract to maturity
and complete the contemplated currency exchange.
The
following summarizes the principal currency management strategies involving
forward contracts. A fund may also use swap agreements, indexed securities, and
options and futures contracts relating to foreign currencies for the same
purposes.
(1)Settlement
Hedges or Transaction Hedges –
When the portfolio managers wish to lock in the U.S. dollar price of or proceeds
from a foreign currency denominated security when a fund is purchasing or
selling the security, a fund may enter into a forward contract to do so. This
type of currency transaction, often called a “settlement hedge” or “transaction
hedge,” protects the fund against an adverse change in foreign currency values
between the date a security is purchased or sold and the date on which payment
is made or received (i.e., settled). Forward contracts to purchase or sell a
foreign currency may also be used by a fund in anticipation of future purchases
or sales of securities denominated in foreign currency, even if the specific
investments have not yet been selected by the portfolio managers. This strategy
is often referred to as “anticipatory hedging.”
(2)Position
Hedges –
When the portfolio managers believe that the currency of a particular foreign
country may suffer substantial decline against the U.S. dollar, a fund may enter
into a forward contract to sell foreign currency for a fixed U.S. dollar amount
approximating the value of some or all of its portfolio securities either
denominated in, or whose value is tied to, such foreign currency. This use of a
forward contract is sometimes referred to as a “position hedge.” For example, if
a fund owned securities denominated in Euro, it could enter into a forward
contract to sell Euro in return for U.S. dollars to hedge against possible
declines in the Euro’s value. This hedge would tend to offset both positive and
negative currency fluctuations, but would not tend to offset changes in security
values caused by other factors.
A
fund could also hedge the position by entering into a forward contract to sell
another currency expected to perform similarly to the currency in which the
fund’s existing investments are denominated. This type of hedge, often called a
“proxy hedge,” could offer advantages in terms of cost, yield or efficiency, but
may not hedge currency exposure as effectively as a simple position hedge
against U.S. dollars. This type of hedge may result in losses if the currency
used to hedge does not perform similarly to the currency in which the hedged
securities are denominated.
The
precise matching of forward contracts in the amounts and values of securities
involved generally would not be possible because the future values of such
foreign currencies will change as a consequence of market movements in the
values of those securities between the date the forward contract is entered into
and the date it matures. Predicting short-term currency market movements is
extremely difficult, and the successful execution of a short-term hedging
strategy is highly uncertain. Normally, consideration of the prospect for
currency parities will be incorporated into the long-term investment decisions
made with respect to overall diversification strategies. However, the managers
believe that it is important to have flexibility to enter into such forward
contracts when they determine that a fund’s best interests may be
served.
At
the maturity of the forward contract, the fund may either sell the portfolio
security and make delivery of the foreign currency, or it may retain the
security and terminate the obligation to deliver the foreign currency by
purchasing an “offsetting” forward contract with the same currency trader
obligating the fund to purchase, on the same maturity date, the same amount of
the foreign currency.
It
is impossible to forecast with absolute precision the market value of portfolio
securities at the expiration of the forward contract. Accordingly, it may be
necessary for a fund to purchase additional foreign currency on the spot market
(and bear the expense of such purchase) if the market value of the security is
less than the amount of foreign currency the fund is obligated to deliver and if
a decision is made to sell the security and make delivery of the foreign
currency the fund is obligated to deliver.
(3)Shifting
Currency Exposure –
A fund may also enter into forward contracts to shift its investment exposure
from one currency into another for hedging purposes or to enhance returns. This
may include shifting exposure from U.S. dollars to foreign currency, or from one
foreign currency to another foreign currency and may result in the fund being
obligated to deliver an amount in excess of the value of its securities or other
assets denominated in that currency (a “net short” position). This strategy
tends to limit exposure to the currency sold, and increase exposure to the
currency that is purchased, much as if a fund had sold a security denominated in
one currency and purchased an equivalent security denominated in another
currency. For example, if the portfolio managers believed that the U.S. dollar
may suffer a substantial decline against the Euro, they could enter into a
forward contract to purchase Euros for a fixed amount of U.S. dollars. This
transaction would protect against losses resulting from a decline in the value
of the U.S. dollar, but would cause the fund to assume the risk of fluctuations
in the value of the Euro.
Successful
use of currency management strategies will depend on the fund management team’s
skill in analyzing currency values. Currency management strategies may
substantially subject a fund’s investment exposure to changes in currency rates
and could result in losses to a fund if currencies do not perform as the
portfolio managers anticipate. For example, if a currency’s value rose at a time
when the portfolio manager hedged a fund by selling the currency in exchange for
U.S. dollars, a fund would not participate in the currency’s appreciation.
Similarly, if the portfolio managers increase a fund’s exposure to a currency
and that currency’s value declines, a fund will sustain a loss. There is no
assurance that the portfolio managers’ use of foreign currency management
strategies will be advantageous to a fund or that they will hedge at appropriate
times.
The
fund will generally cover outstanding forward contracts by maintaining liquid
portfolio securities denominated in, or whose value is tied to, the currency
underlying the forward contract or the currency being hedged.
Certain
funds may also invest in nondeliverable forward (NDF) currency transactions. An
NDF is a transaction that represents an agreement between the fund and a
counterparty to buy or sell a specified amount of a particular currency at an
agreed upon foreign exchange rate on a future date. Unlike other currency
transactions, there is no physical delivery of the currency on the settlement of
an NDF transaction. Rather, the fund and the counterparty agree to net the
settlement by making a payment in U.S. dollars or another fully convertible
currency that represents any difference between the foreign exchange rate agreed
upon at the inception of the NDF agreement and the actual exchange rate on the
agreed upon future date. The fund may use an NDF contract to gain exposure to
foreign currencies which are not internationally traded or if the markets for
such currencies are heavily regulated or highly taxed. When currency exchange
rates do not move as anticipated, a fund could sustain losses on the NDF
transaction. This risk is heightened when the transactions involve currencies of
emerging market countries. Additionally, certain NDF transactions which involve
currencies of less developed countries or with respect to certain other
currencies, may be relatively illiquid.
Futures
and Options
Futures
and options are commonly used for traditional hedging purposes to attempt to
protect a fund from exposure to changing interest rates, securities prices or
currency exchange rates. They also are used for cash management purposes as a
low-cost method of gaining exposure to a particular securities market without
investing directly in those securities.
Futures
A
fund may enter into futures contracts, options or options on futures contracts.
Futures contracts provide for the sale by one party and purchase by another
party of a specific security at a specified future time and price. Generally,
futures transactions will be used to
•protect
against a decline in market value of the fund’s securities (taking a short
futures position),
•protect
against the risk of an increase in market value for securities in which the fund
generally invests at a time when the fund is not fully invested (taking a long
futures position), or
•provide
a temporary substitute for the purchase of an individual security that may not
be purchased in an orderly fashion.
Some
futures and options strategies, such as selling futures, buying puts and writing
calls, hedge a fund’s investments against price fluctuations. Other strategies,
such as buying futures, writing puts and buying calls, tend to increase market
exposure. Although other techniques may be used to control a fund’s exposure to
market fluctuations, the use of futures contracts may be a more effective means
of hedging this exposure. While a fund pays brokerage commissions in connection
with opening and closing out futures positions, these costs are lower than the
transaction costs incurred in the purchase and sale of the underlying
securities.
The
sale of a future by a fund means the fund becomes obligated to deliver the
security (or securities, in the case of an index future) at a specified price on
a specified date. The purchase of a future means the fund becomes obligated to
buy the security (or securities) at a specified price on a specified date. The
portfolio managers may engage in futures and options transactions based on
securities indices that are consistent with the funds’ investment objectives,
such as the S&P 500 Index. The managers also may engage in futures and
options transactions based on specific securities. Futures contracts are traded
on national futures exchanges. Futures exchanges and trading are regulated under
the Commodity Exchange Act by the Commodity Futures Trading Commission (CFTC), a
U.S. government agency.
Index
futures contracts differ from traditional futures contracts in that when
delivery takes place, no stocks or bonds change hands. Instead, these contracts
settle in cash at the spot market value of the index. Although other types of
futures contracts by their terms call for actual delivery or acceptance of the
underlying securities, in most cases the contracts are closed out before the
settlement date. A futures position may be closed by taking an opposite position
in an identical contract (i.e., buying a contract that has previously been sold
or selling a contract that has previously been bought).
Unlike
when the fund purchases or sells a security, no price is paid or received by the
fund upon the purchase or sale of the future. Initially, the fund will be
required to deposit an amount of cash or securities equal to a varying specified
percentage of the contract amount. This amount is known as initial margin. The
margin deposit is intended to ensure completion of the contract (delivery or
acceptance of the underlying security) if it is not terminated prior to the
specified delivery date. A margin deposit does not constitute a margin
transaction for purposes of the fund’s investment restrictions. Minimum initial
margin requirements are established by the futures exchanges and may be revised.
In addition, brokers may establish margin deposit requirements that are higher
than the exchange minimums. Cash held in the margin accounts generally is not
income-producing. However, coupon bearing securities, such
as
Treasury bills and bonds, held in margin accounts generally will earn income.
Subsequent payments to and from the broker, called variation margin, will be
made on a daily basis as the price of the underlying securities or index
fluctuates, making the future more or less valuable, a process known as marking
the contract to market. Changes in variation margin are recorded by the fund as
unrealized gains or losses. At any time prior to expiration of the future, the
fund may elect to close the position by taking an opposite position. A final
determination of variation margin is then made; additional cash is required to
be paid by or released to the fund and the fund realizes a loss or
gain.
Options
By
buying a put option, a fund obtains the right (but not the obligation) to sell
the instrument underlying the option at a fixed strike price and in return a
fund pays the current market price for the option (known as the option premium).
A fund may terminate its position in a put option it has purchased by allowing
it to expire, by exercising the option or by entering into an offsetting
transaction, if a liquid market exists. If the option is allowed to expire, a
fund will lose the entire premium it paid. If a fund exercises a put option on a
security, it will sell the instrument underlying the option at the strike price.
The buyer of a typical put option can expect to realize a gain if the value of
the underlying instrument falls substantially. However, if the price of the
instrument underlying the option does not fall enough to offset the cost of
purchasing the option, a put buyer can expect to suffer a loss limited to the
amount of the premium paid, plus related transaction costs.
The
features of call options are essentially the same as those of put options,
except that the buyer of a call option obtains the right to purchase, rather
than sell, the instrument underlying the option at the option’s strike price.
The buyer of a typical call option can expect to realize a gain if the value of
the underlying instrument increases substantially and can expect to suffer a
loss if security prices do not rise sufficiently to offset the cost of the
option.
When
a fund writes a put option, it takes the opposite side of the transaction from
the option’s buyer. In return for the receipt of the premium, a fund assumes the
obligation to pay the strike price for the instrument underlying the option if
the other party to the option chooses to exercise it. A fund may seek to
terminate its position in a put option it writes before exercise by purchasing
an offsetting option in the market at its current price. Otherwise, a fund must
continue to be prepared to pay the strike price while the option is outstanding,
regardless of price changes, and must continue to post margin as discussed
below. If the price of the underlying instrument rises, a put writer would
generally realize as profit the premium it received. If the price of the
underlying instrument remains the same over time, it is likely that the writer
will also profit, because it should be able to close out the option at a lower
price. If the price of the underlying instrument falls, the put writer would
expect to suffer a loss.
A
fund writing a call option is obligated to sell or deliver the option’s
underlying instrument in return for the strike price upon exercise of the
option. Writing calls generally is a profitable strategy if the price of the
underlying instrument remains the same or falls. A call writer offsets part of
the effect of a price decline by receipt of the option premium, but gives up
some ability to participate in security price increases. The writer of an
exchange traded put or call option on a security, an index of securities or a
futures contract is required to deposit cash or securities or a letter of credit
as margin and to make mark to market payments of variation margin as the
position becomes unprofitable.
Options
on Futures
By
purchasing an option on a futures contract, a fund obtains the right, but not
the obligation, to sell the futures contract (a put option) or to buy the
contract (a call option) at a fixed strike price. A fund can terminate its
position in a put option by allowing it to expire or by exercising the option.
If the option is exercised, the fund completes the sale of the underlying
security at the strike price. Purchasing an option on a futures contract does
not require a fund to make margin payments unless the option is
exercised.
Some
of the funds may write (or sell) call options that obligate them to sell (or
deliver) the option’s underlying instrument upon exercise of the option. While
the receipt of option premiums would mitigate the effects of price declines, the
funds would give up some ability to participate in a price increase on the
underlying security. If a fund were to engage in options transactions, it would
own the futures contract at the time a call was written and would keep the
contract open until the obligation to deliver it pursuant to the call
expired.
Risks
Related to Futures and Options Transactions
Futures
and options prices can be volatile, and trading in these markets involves
certain risks. If the portfolio managers apply a hedge at an inappropriate time
or judge interest rate or equity market trends incorrectly, futures and options
strategies may lower a fund’s return.
A
fund could suffer losses if it is unable to close out its position because of an
illiquid secondary market. Futures contracts may be closed out only on an
exchange that provides a secondary market for these contracts, and there is no
assurance that a liquid secondary market will exist for any particular futures
contract at any particular time. Consequently, it may not be possible to close a
futures position when the portfolio managers consider it appropriate or
desirable to do so. In the event of adverse price movements, a fund would be
required to continue making daily cash payments to maintain its required margin.
If the fund had insufficient cash, it might have to sell portfolio securities to
meet daily margin requirements at a time when the portfolio managers would not
otherwise elect to do so. In addition, a fund may be required to deliver or take
delivery of instruments underlying futures contracts it holds. The portfolio
managers
will seek to minimize these risks by limiting the futures contracts entered into
on behalf of the funds to those traded on national futures exchanges and for
which there appears to be a liquid secondary market.
A
fund could suffer losses if the prices of its futures and options positions were
poorly correlated with its other investments or if securities underlying futures
contracts purchased by a fund had different maturities than those of the
portfolio securities being hedged. Such imperfect correlation may give rise to
circumstances in which a fund loses money on a futures contract at the same time
that it experiences a decline in the value of its hedged portfolio securities. A
fund also could lose margin payments it has deposited with a margin broker if,
for example, the broker became bankrupt.
Most
futures exchanges limit the amount of fluctuation permitted in futures contract
prices during a single trading day. The daily limit establishes the maximum
amount that the price of a futures contract may vary either up or down from the
previous day’s settlement price at the end of the trading session. Once the
daily limit has been reached in a particular type of contract, no trades may be
made on that day at a price beyond the limit. However, the daily limit governs
only price movement during a particular trading day and, therefore, does not
limit potential losses. In addition, the daily limit may prevent liquidation of
unfavorable positions. Futures contract prices have occasionally moved to the
daily limit for several consecutive trading days with little or no trading,
thereby preventing prompt liquidation of futures positions and subjecting some
futures traders to substantial losses.
If
a fund’s futures commission merchant (FCM) becomes bankrupt or insolvent, or
otherwise defaults on its obligations to the fund, the fund may not receive all
amounts owed to it in respect of its trading, despite the clearinghouse fully
discharging all of its obligations. The Commodity Exchange Act requires an
FCM to segregate all funds received from its customers with respect to regulated
futures transactions from such FCM’s proprietary funds. If an FCM were not
to do so to the full extent required by law, the assets of an account might not
be fully protected in the event of the bankruptcy of an FCM. Furthermore,
in the event of an FCM’s bankruptcy, a fund would be limited to recovering only
a pro rata share of all available funds segregated on behalf of an FCM’s
combined customer accounts, even though certain property specifically traceable
to the fund (for example, U.S. Treasury bills deposited by the fund) was held by
an FCM. FCM bankruptcies have occurred in which customers were unable to
recover from the FCM’s estate the full amount of their funds on deposit with
such FCM and owing to them. Such situations could arise due to various
factors, or a combination of factors, including inadequate FCM capitalization,
inadequate controls on customer trading and inadequate customer capital.
In addition, in the event of the bankruptcy or insolvency of a clearinghouse,
the fund might experience a loss of funds deposited through its FCM as margin
with the clearinghouse, a loss of unrealized profits on its open positions, and
the loss of funds owed to it as realized profits on closed positions. Such
a bankruptcy or insolvency might also cause a substantial delay before the fund
could obtain the return of funds owed to it by an FCM who was a member of such
clearinghouse.
When
purchasing an option on a futures contract, the fund assumes the risk of the
premium paid for the option plus related transaction costs. The purchase of an
option on a futures contract also entails the risk that changes in the value of
the underlying futures contract will not be fully reflected in the value of the
option purchased.
Restrictions
on the Use of Futures Contracts and Options
Some
funds may enter into futures contracts, options, options on futures contracts,
or swap agreements as permitted under the Commodity Futures Trading Commission
(CFTC) rules. The advisor to each fund has claimed exclusion from the definition
of the term “commodity pool operator” under the Commodity Exchange Act and,
therefore, are not subject to registration or regulation as a commodity pool
operator under that Act with respect to its provision of services to each
fund.
Certain
rules adopted by the CFTC may impose additional limits on the ability of a fund
to invest in futures contracts, options on futures, swaps, and certain other
commodity interests if its investment advisor does not register with the CFTC as
a “commodity pool operator” with respect to such fund. It is expected that the
funds will be able to execute their investment strategies within the limits
adopted by the CFTC’s rules. As a result, the advisor does not intend to
register with the CFTC as a commodity pool operator on behalf of any of the
funds. In the event that one of the funds engages in transactions that
necessitate future registration with the CFTC, the advisor will register as a
commodity pool operator and comply with applicable regulations with respect to
that fund.
Swap
Agreements
A
fund may invest in swap agreements, consistent with its investment objective and
strategies. A fund may enter into a swap agreement in order to, for example,
attempt to obtain or preserve a particular return or spread at a lower cost than
obtaining a return or spread through purchases and/or sales of instruments in
other markets; protect against currency fluctuations; attempt to manage duration
to protect against any increase in the price of securities the fund anticipates
purchasing at a later date; or gain exposure to certain markets in the most
economical way possible.
Swap
agreements are two-party contracts entered into primarily by institutional
investors for periods ranging from a few weeks to more than one year. In a
standard “swap” transaction, two parties agree to exchange the returns (or
differentials in rates of return) earned or realized on particular predetermined
investments or instruments, which may be adjusted for an interest factor. The
gross returns to be exchanged or “swapped” between the parties are generally
calculated with respect to a “notional amount,” i.e., the return on or increase
in value of a particular dollar amount invested at a particular interest rate,
in a particular foreign currency, or in a “basket” of securities representing a
particular index. Forms of swap agreements include, for example, interest rate
swaps, under which fixed- or floating-rate interest payments on a specific
principal amount are exchanged and total return swaps, under which one
party
agrees to pay the other the total return of a defined underlying asset (usually
an index, including inflation indexes, stock, bond or defined portfolio of loans
and mortgages) in exchange for fee payments, often a variable stream of
cashflows based on a reference rate. The funds may enter into credit default
swap agreements to hedge an existing position by purchasing or selling credit
protection. Credit default swaps enable an investor to buy/sell protection
against a credit event of a specific issuer. The seller of credit protection
against a security or basket of securities receives an up-front or periodic
payment to compensate against potential default event(s). The fund may enhance
returns by selling protection or attempt to mitigate credit risk by buying
protection. Market supply and demand factors may cause distortions between the
cash securities market and the credit default swap market.
Whether
a fund’s use of swap agreements will be successful depends on the advisor’s
ability to predict correctly whether certain types of investments are likely to
produce greater returns than other investments. Interest rate swaps could result
in losses if interest rate changes are not correctly anticipated by the fund.
Total return swaps could result in losses if the reference index, security, or
investments do not perform as anticipated by the fund. Credit default swaps
could result in losses if the fund does not correctly evaluate the
creditworthiness of the issuer on which the credit default swap is based.
Because they are two-party contracts and because they may have terms of greater
than seven days, swap agreements may be considered to be illiquid. Moreover, a
fund bears the risk of loss of the amount expected to be received under a swap
agreement in the event of the default or bankruptcy of a swap agreement
counterparty. The funds will enter into swap agreements only with counterparties
that meet certain standards of creditworthiness or that are cleared through a
Derivatives Clearing Organization (“DCO”). Certain restrictions imposed on the
funds by the Internal Revenue Code may limit the funds’ ability to use swap
agreements.
The
Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”)
and related regulatory developments require the clearing and exchange-trading of
certain standardized derivative instruments that the CFTC and SEC have defined
as “swaps.” The CFTC has implemented mandatory exchange-trading and clearing
requirements under the Dodd-Frank Act and the CFTC continues to approve
contracts for central clearing. Although exchange trading is designed to
decrease counterparty risk, it does not do so entirely because the fund will
still be subject to the credit risk of the central clearinghouse. Cleared swaps
are subject to margin requirements imposed by both the central clearinghouse and
the clearing member FCM. Uncleared swaps are now subject to posting and
collecting collateral on a daily basis to secure mark-to-market obligations
(variation margin). Swaps data reporting may subject a fund
to administrative costs, and the safeguards established to
protect trader anonymity may not function as expected.
Exchange trading, central clearing, margin
requirements, and data reporting regulations may increase a fund’s
cost of hedging risk and, as a result, may affect shareholder
returns.
Equity
Equivalents
In
addition to investing in common stocks, the funds may invest in other equity
securities and equity equivalents, including securities that permit a fund to
receive an equity interest in an issuer, the opportunity to acquire an equity
interest in an issuer, or the opportunity to receive a return on its investment
that permits the fund to benefit from the growth over time in the equity of an
issuer. Examples of equity securities and equity equivalents include preferred
stock, convertible preferred stock and convertible securities.
Equity
equivalents also may include securities whose value or return is derived from
the value or return of a different security.
Foreign
Securities
The
funds may invest in the securities (including debt securities) of foreign
issuers, including foreign governments, when these securities meet their
standards of selection. Securities of foreign issuers may trade in the U.S. or
foreign securities markets.
The
funds may make such investments either directly in foreign securities or
indirectly by purchasing depositary receipts or depositary shares of similar
instruments (depositary receipts) for foreign securities. Depositary receipts
are securities that are listed on exchanges or quoted in the domestic
over-the-counter markets in one country, but represent shares of issuers
domiciled in another country. Direct investments in foreign securities may be
made either on foreign securities exchanges or in the over-the-counter
markets.
Subject
to their investment objective and policies, the funds may invest in common
stocks, convertible securities, preferred stocks, bonds, notes and other debt
securities of foreign issuers and debt securities of foreign governments and
their agencies. The credit quality standards applicable to domestic debt
securities purchased by each fund are also applicable to its foreign securities
investments.
Investments
in foreign securities may present certain risks, including:
Currency
Risk
– The value of the foreign investments held by the funds may be significantly
affected by changes in currency exchange rates. The dollar value of a foreign
security generally decreases when the value of the dollar rises against the
foreign currency in which the security is denominated and tends to increase when
the value of the dollar falls against such currency. In addition, the value of
fund assets may be affected by losses and other expenses incurred in converting
between various currencies in order to purchase and sell foreign securities, and
by currency restrictions, exchange control regulation, currency devaluations and
political developments.
Social,
Political and Economic Risk
– The economies of many of the countries in which the funds invest are not as
developed as the economy of the United States and may be subject to
significantly different forces. Political or social instability, expropriation,
nationalization, confiscatory taxation and limitations on the removal of funds
or other assets also could adversely affect the value of
investments.
Further, the funds may find it difficult or be unable to enforce ownership
rights, pursue legal remedies or obtain judgments in foreign
courts.
Regulatory
Risk
– Foreign companies generally are not subject to the regulatory controls imposed
on U.S. issuers and, in general, there is less publicly available information
about foreign securities than is available about domestic securities. Many
foreign companies are not subject to uniform accounting, auditing and financial
reporting standards, practices and requirements comparable to those applicable
to domestic companies and there may be less stringent investor protection and
disclosure standards in some foreign markets. Certain jurisdictions do not
currently provide the Public Company Accounting Oversight Board (“PCAOB”) with
sufficient access to inspect audit work papers and practices, or otherwise do
not cooperate with U.S. regulators, potentially exposing investors in U.S.
capital markets to significant risks. Income from foreign securities owned by
the funds may be reduced by a withholding tax at the source, which would reduce
dividend income payable to shareholders.
Market
and Trading Risk
– Brokerage commission rates in foreign countries, which generally are fixed
rather than subject to negotiation as in the United States, are likely to be
higher. The securities markets in many of the countries in which the funds may
invest have substantially less trading volume than the principal U.S. markets.
As a result, the securities of some companies in these countries may be less
liquid, more volatile and harder to value than comparable U.S. securities.
Furthermore, one securities broker may represent all or a significant part of
the trading volume in a particular country, resulting in higher trading costs
and decreased liquidity due to a lack of alternative trading partners. There
generally is less government regulation and supervision of foreign stock
exchanges, brokers and issuers, which may make it difficult to enforce
contractual obligations.
Clearance
and Settlement Risk
– Foreign securities markets also have different clearance and settlement
procedures, and in certain markets there have been times when settlements have
been unable to keep pace with the volume of securities transactions, making it
difficult to conduct such transactions. Delays in clearance and settlement could
result in temporary periods when assets of the funds are uninvested and no
return is earned. The inability of the funds to make intended security purchases
due to clearance and settlement problems could cause the funds to miss
attractive investment opportunities. Inability to dispose of portfolio
securities due to clearance and settlement problems could result either in
losses to the funds due to subsequent declines in the value of the portfolio
security or, if the fund has entered into a contract to sell the security,
liability to the purchaser.
Ownership
Risk
– Evidence of securities ownership may be uncertain in many foreign countries.
In many of these countries, the most notable of which is the Russian Federation,
the ultimate evidence of securities ownership is the share register held by the
issuing company or its registrar. While some companies may issue share
certificates or provide extracts of the company’s share register, these are not
negotiable instruments and are not effective evidence of securities ownership.
In an ownership dispute, the company’s share register is controlling. As a
result, there is a risk that a fund’s trade details could be incorrectly or
fraudulently entered on the issuer’s share register at the time of the
transaction, or that a fund’s ownership position could thereafter be altered or
deleted entirely, resulting in a loss to the fund. While the funds intend to
invest directly in Russian companies that utilize an independent registrar,
there can be no assurance that such investments will not result in a loss to the
funds.
Sanctions
– The U.S. may impose economic sanctions against companies in various sectors of
certain countries. This could limit a fund's investment opportunities in such
countries, impairing the fund’s ability to invest in accordance with its
investment strategy and/or to meet its investment objective. For example, a fund
may be prohibited from investing in securities issued by companies subject to
such sanctions. In addition, the sanctions may require a fund to freeze its
existing investments in sanctioned companies, prohibiting the fund from selling
or otherwise transacting in these investments. Current sanctions or the threat
of potential sanctions may also impair the value or liquidity of affected
securities and negatively impact a fund.
In
early 2022, the United States and countries throughout the world imposed
economic sanctions on Russia in response to its military invasion of Ukraine.
The sanctions are broad and include restrictions on the Russian government as
well as Russian companies, individuals, and banking entities. The sanctions and
other measures, such as boycotts or changes in consumer preferences, will likely
cause declines in the value and liquidity of Russian securities, downgrades in
the credit ratings of Russian securities, devaluation of Russia’s currency, and
increased market volatility and disruption in Russia and throughout the world.
Sanctions and similar measures, such as banning Russia from financial
transaction systems that facilitate international transfers of funds, could
limit or prevent the funds from selling and buying impacted securities both in
Russia and in other markets. Such measures will likely cause significant delay
in the settlement of impacted securities transactions or prevent settlement all
together. The lack of available market prices for such securities may cause the
funds to use fair value procedures to value certain securities. The consequences
of the war and sanctions may negatively impact other regional and global
economic markets. Additionally, Russia may take counter measures or engage in
retaliatory actions—including cyberattacks and espionage—which could further
disrupt global markets and supply chains. Companies in other countries that do
business with Russia and the global commodities market for oil and natural gas,
especially, will likely feel the impact of the sanctions. The sanctions,
together with the potential for a wider armed or cyber conflict, could increase
financial market volatility globally and negatively impact the funds’
performance beyond any direct exposure to Russian issuers or
securities.
United
Kingdom Investment Risk
- Commonly known as “Brexit,” the United Kingdom's exit from the EU occurred in
January of 2021. The UK and the EU continue to work to establish regulatory
frameworks for cooperation on financial services. Continuing uncertainty in the
UK, EU, and other financial markets may result in volatility, fluctuations in
asset values and exchange rates, decreased liquidity and unwillingness or
inability of financial and other counterparties to enter into transactions.
Risk
of Investing in China
- Investing in Chinese securities is riskier than investing in U.S. securities.
Although the Chinese government is currently implementing reforms to promote
foreign investment and reduce government economic control, there is no guarantee
that the reforms will be ongoing or effective. Investing in China involves risk
of loss due to nationalization, expropriation, and confiscation of assets and
property. Losses may also occur due to new or expanded restrictions on foreign
investments or repatriation of capital. Participants in the Chinese market are
subject to less regulation and oversight than participants in the U.S. market.
This may lead to trading volatility, difficulty in the settlement and recording
of transactions, and uncertainty in interpreting and applying laws and
regulations. Reduction in spending on Chinese products and services, institution
of tariffs or other trade barriers, or a downturn in the economies of any of
China's key trading partners may adversely affect the securities of Chinese
issuers. Regional conflict could also have an adverse effect on the Chinese
economy.
The
SEC and the PCAOB continue to have concerns about their ability to inspect
international auditing standards of U.S. companies operating in China and
PCAOB-registered auditing firms in China. Because the SEC and PCAOB have limited
access to information about these auditing firms and are restricted from
inspecting the audit work and practices of registered accountants in China,
there is the risk that material information about Chinese issuers may be
unavailable. As a result, there is substantially greater risk that disclosures
will be incomplete or misleading and, in the event of investor harm,
substantially less access to recourse, in comparison to U.S. domestic companies.
The
U.S. government may occasionally place restrictions on investments in Chinese
companies. For example, in November 2020, an Executive Order was issued that
prohibits U.S. persons from purchasing or investing in certain publicly-traded
securities of companies identified as “Communist Chinese military companies” or
in instruments that are designed to provide investment exposure to those
companies. The companies identified may change from time to time. A fund may
incur losses if more investors attempt to sell such securities or if the fund is
unable to participate in an otherwise attractive investment. Securities that are
or become prohibited may become less liquid and their market prices may decline.
In addition, the market for securities of other Chinese-based issuers may also
be negatively impacted, resulting in reduced liquidity and price
declines.
Due
to Chinese governmental restrictions on foreign ownership of companies in
certain industries, Chinese operating companies often rely on variable interest
entity (VIE) structures to raise capital from non-Chinese investors. In a VIE
structure, a China-based operating company establishes an entity—typically
offshore—that enters into service and other contracts with the Chinese company
designed to provide economic exposure to the company. The offshore entity then
issues shares that are sold to non-Chinese investors. A U.S.-listed company and
its China-based VIE might appear to be the same company—because they are
presented in a consolidated manner—but they are not. The U.S.-listed company’s
control over the China-based company is predicated on contracts with the
China-based company, not equity ownership. The Chinese government has never
explicitly approved these structures and thus could determine at any time, and
without notice, that the VIE’s underlying contractual arrangements violate
Chinese law. If either the China-based company (or its officers, directors, or
Chinese equity owners) breach those contracts with the U.S.-listed shell
company, or Chinese law changes in a way that affects the enforceability of
these arrangements, or those contracts are otherwise not enforceable under
Chinese law, U.S. investors may suffer losses with limited recourse available.
Additionally, investments in the U.S.-listed company may be affected by
conflicts of interest and duties between the legal owners of the China-based VIE
and the stockholders of the U.S.-listed company. Finally, if Chinese companies
listed on U.S. exchanges, including ADRs and companies that rely on VIE
structures, do not meet U.S. accounting standards and auditor oversight
requirements they may be delisted, which would likely decrease the liquidity and
value of these securities.
Inflation-Indexed
Securities
The
funds may purchase inflation-indexed securities issued by the U.S. Treasury,
U.S. government agencies and instrumentalities other than the U.S. Treasury, and
entities other than the U.S. Treasury or U.S. government agencies and
instrumentalities.
Inflation-indexed
securities are designed to offer a return linked to inflation, thereby
protecting future purchasing power of the money invested in them. However,
inflation-indexed securities provide this protected return only if held to
maturity. In addition, inflation-indexed securities may not trade at par value.
Real interest rates (the market rate of interest less the anticipated rate of
inflation) change over time as a result of many factors, such as what investors
are demanding as a true value for money. When real rates do change,
inflation-indexed securities prices will be more sensitive to these changes than
conventional bonds, because these securities were sold originally based upon a
real interest rate that is no longer prevailing. Should market expectations for
real interest rates rise, the price of inflation-indexed securities and the
share price of a fund holding these securities will fall. Investors in the funds
should be prepared to accept not only this share price volatility but also the
possible adverse tax consequences it may cause.
An
investment in securities featuring inflation-adjusted principal and/or interest
involves factors not associated with more traditional fixed-principal
securities. Such factors include the possibility that the inflation index may be
subject to significant changes, that changes in the index may or may not
correlate to changes in interest rates generally or changes in other indices, or
that the resulting
interest
may be greater or less than that payable on other securities of similar
maturities. In the event of sustained deflation, it is possible that the amount
of semiannual interest payments, the inflation-adjusted principal of the
security or the value of the stripped components will decrease. If any of these
possibilities are realized, a fund’s net asset value could be negatively
affected.
Initial
Public Offerings
The
funds may invest in initial public offerings (IPOs) of common stock or other
equity securities issued by a company. The purchase of securities in an IPO may
involve higher transaction costs than those associated with the purchase of
securities already traded on exchanges or other established markets. In addition
to the risks associated with equity securities generally, IPO securities may be
subject to additional risk due to factors such as the absence of a prior public
market, unseasoned trading and speculation, a potentially small number of
securities available for trading, limited information about the issuer and other
factors. These factors may cause IPO shares to be volatile in price. While a
fund may hold IPO securities for a period of time, it may sell them in the
aftermarket soon after the purchase, which could increase portfolio turnover and
lead to increased expenses such as commissions and transaction costs.
Investments in IPOs could have a magnified impact (either positive or negative)
on performance if a fund’s assets are relatively small. The impact of IPOs on a
fund’s performance may tend to diminish as assets grow.
Inverse
Floaters
An
inverse floater is a type of derivative instrument that bears an interest rate
that moves inversely to market interest rates. As market interest rates rise,
the interest rate on inverse floaters goes down, and vice versa. Generally, this
is accomplished by expressing the interest rate on the inverse floater as an
above-market fixed rate of interest, reduced by an amount determined by
reference to a market-based or bond-specific floating interest rate (as well as
by any fees associated with administering the inverse floater
program).
Inverse
floaters may be issued in conjunction with an equal amount of Dutch Auction
floating-rate bonds (floaters), or a market-based index may be used to set the
interest rate on these securities. A Dutch Auction is an auction system in which
the price of the security is gradually lowered until it meets a responsive bid
and is sold. Floaters and inverse floaters may be brought to market (1) by a
broker-dealer who purchases fixed-rate bonds and places them in a trust; or (2)
by an issuer seeking to reduce interest expenses by using a floater/inverse
floater structure in lieu of fixed-rate bonds.
In
the case of a broker-dealer structured offering (where underlying fixed-rate
bonds have been placed in a trust), distributions from the underlying bonds are
allocated to floater and inverse floater holders in the following
manner:
(i)Floater
holders receive interest based on rates set at a six-month interval or at a
Dutch Auction, which is typically held every 28 to 35 days. Current and
prospective floater holders bid the minimum interest rate that they are willing
to accept on the floaters, and the interest rate is set just high enough to
ensure that all of the floaters are sold.
(ii)Inverse
floater holders receive all of the interest that remains, if any, on the
underlying bonds after floater interest and auction fees are paid. The interest
rates on inverse floaters may be significantly reduced, even to zero, if
interest rates rise.
Procedures
for determining the interest payment on floaters and inverse floaters brought to
market directly by the issuer are comparable, although the interest paid on the
inverse floaters is based on a presumed coupon rate that would have been
required to bring fixed-rate bonds to market at the time the floaters and
inverse floaters were issued.
Where
inverse floaters are issued in conjunction with floaters, inverse floater
holders may be given the right to acquire the underlying security (or to create
a fixed-rate bond) by calling an equal amount of corresponding floaters. The
underlying security may then be held or sold. However, typically, there are time
constraints and other limitations associated with any right to combine interests
and claim the underlying security.
Floater
holders subject to a Dutch Auction procedure generally do not have the right to
put back their interests to the issuer or to a third party. If a Dutch Auction
fails, the floater holder may be required to hold its position until the
underlying bond matures, during which time interest on the floater is capped at
a predetermined rate.
The
secondary market for floaters and inverse floaters may be limited. The market
value of inverse floaters tends to be significantly more volatile than the
market value of fixed-rate bonds.
Investing
in Emerging Market Countries
The
funds may invest in securities of issuers in emerging market (developing)
countries. The funds generally consider a security to be an emerging markets
security if its issuer is located outside the following developed countries
list, which is subject to change: Australia, Austria, Belgium, Bermuda, Canada,
Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Japan,
Luxembourg, The Netherlands, New Zealand, Norway, Portugal, Singapore, Spain,
Sweden, Switzerland, the United Kingdom and the United States. Certain funds may
consider additional countries to be emerging markets, as described in those
funds’ prospectuses or statements of additional information. In determining
where a company is located, the portfolio managers will consider various
factors, including where the company is headquartered, where the company’s
principal operations are located, where a majority of the company’s revenues are
derived, where the principal trading market is located and the country in which
the company was legally organized. The weight given to each of these factors
will vary depending on the circumstances in a given case.
Investing
in securities of issuers in emerging market countries involves exposure to
significantly higher risk than investing in countries with developed markets.
Risks of investing in emerging markets countries may relate to lack of
liquidity, market manipulation, limited reliable access to capital, and
differing foreign investment structures. Emerging market countries may have
economic structures that generally are less diverse and mature, and political
systems that can be expected to be less stable than those of developed
countries. Securities prices in emerging market countries can be significantly
more volatile than in developed countries, reflecting the greater uncertainties
of investing in lesser developed markets and economies. In particular, emerging
market countries may have relatively unstable governments, and may present the
risk of nationalization of businesses, expropriation, confiscatory taxation or
in certain instances, reversion to closed-market, centrally planned economies.
Such countries may also have less protection of property rights than developed
countries.
The
economies of emerging market countries may be based predominantly on only a few
industries or may be dependent on revenues from particular commodities or on
international aid or developmental assistance, may be highly vulnerable to
changes in local or global trade conditions, and may suffer from extreme and
volatile debt burdens or inflation rates. In addition, securities markets in
emerging market countries may trade a relatively small number of securities and
may be unable to respond effectively to increases in trading volume, potentially
resulting in a lack of liquidity and in volatility in the price of securities
traded on those markets. Also, securities markets in emerging market countries
typically offer less regulatory protection for investors.
Investment
in Issuers with Limited Operating Histories
Some
funds may invest a portion of their assets in the equity securities of issuers
with limited operating histories. The managers consider an issuer to have a
limited operating history if that issuer has a record of less than three years
of continuous operation. The managers will consider periods of capital
formation, incubation, consolidations, and research and development in
determining whether a particular issuer has a record of three years of
continuous operation.
Investments
in securities of issuers with limited operating histories may involve greater
risks than investments in securities of more mature issuers. By their nature,
such issuers present limited operating histories and financial information upon
which the managers may base their investment decision on behalf of the funds. In
addition, financial and other information regarding such issuers, when
available, may be incomplete or inaccurate.
For
purposes of this limitation, “issuers” refers to operating companies that issue
securities for the purposes of issuing debt or raising capital as a means of
financing their ongoing operations. It does not, however, refer to registered
investment companies, or other entities, corporate or otherwise, that are
created for the express purpose of securitizing obligations or income streams.
For example, a fund’s investments in a trust created for the purpose of pooling
mortgage obligations or other financial assets would not be subject to the
limitation.
LIBOR
Transition Risk
The
London Interbank Offered Rate (“LIBOR”) is a benchmark interest rate intended to
be representative of the rate at which major international banks who are members
of the British Bankers Association lend to one another over short-terms.
Following manipulation allegations, financial institutions have started the
process of phasing out the use of LIBOR. The transition process to a replacement
rate or rates may lead to increased volatility or illiquidity in markets for
instruments that currently rely on LIBOR. The transition may also result in a
change in the value of certain instruments the funds hold or a change in the
cost of temporary borrowing for the funds. As LIBOR is discontinued, the LIBOR
replacement rate may be lower than market expectations, which could have an
adverse impact on the value of preferred and debt-securities with floating or
fixed-to-floating rate coupons. The transition away from LIBOR could result in
losses to the funds.
Loan
Participation Notes
In
terms of their functioning and investment risk, loan participation notes
("LPNs") are comparable to an investment in "normal" bonds. In return for
the investor's commitment of capital, the issuer makes regular interest payments
and, at maturity or in accordance with an agreed upon amortization schedule, the
note is repaid at par.
However,
in contrast to "normal" bonds, there are three parties involved in the issuance
of an LPN. The legal issuer, typically a bankruptcy-remote, limited
purpose entity, issues notes to investors and uses the proceeds received from
investors to make loans to the borrower-with each loan generally having
substantially identical payment terms to the related note issued by the issuer.
The borrower is typically an operating company, and the issuer’s obligations
under a note are typically limited to the extent of any capital repayments and
interest payments made by the borrower under the related loan.
Accordingly, the investor generally assumes the credit risk of the
underlying borrower. The loan participation note structure is generally
used to provide the borrower more efficient financing in the capital markets
than the borrower would be able to obtain if it issued notes directly.
In
the event of a default by the borrower of an LPN, the fund may experience delays
in receiving payments of interest and principal while the note issuer enforces
and liquidates the underlying collateral, and there is no guarantee that the
underlying collateral will cover the principal and interest owed to the fund
under the LPN.
LPNs
are generally subject to liquidity risk. Even though an LPN may be traded
on an exchange there can be no assurance that a liquid market will develop for
the LPNs, that holders of the LPNs will be able to sell their LPNs, or that such
holders will be able to sell their LPNs for a price that reflects their value.
Depending
on the creditworthiness of the underlying borrower, LPNs may be subject to the
risk of investing in high-yield securities. Additionally, LPNs are
generally utilized by foreign borrowers and therefore may be subject to the risk
of investing in foreign securities and emerging market risk. Such foreign
risk could include interest payments being subject to withholding
tax.
Loans
of Portfolio Securities
In
order to realize additional income, a fund may lend its portfolio securities.
Such loans may not exceed one-third of the fund’s total assets valued at market,
however, this limitation does not apply to purchases of debt securities in
accordance with the fund’s investment objectives, policies and limitations, or
to repurchase agreements with respect to portfolio
securities.
Cash
received from the borrower as collateral through loan transactions may be
invested in other eligible securities. Investing this cash subjects that
investment to market appreciation or depreciation. If a borrower defaults on a
securities loan because of insolvency or other reasons, the lending fund could
experience delays or costs in recovering the securities it loaned; if the value
of the loaned securities increased over the value of the collateral, the fund
could suffer a loss. To minimize the risk of default on securities loans, the
advisor adheres to guidelines prescribed by the Board of Directors governing
lending of securities. These guidelines strictly govern:
•the
type and amount of collateral that must be received by the fund;
•the
circumstances under which additions to that collateral must be made by
borrowers;
•the
return to be received by the fund on the loaned securities;
•the
limitations on the percentage of fund assets on loan; and
•the
credit standards applied in evaluating potential borrowers of portfolio
securities.
In
addition, the guidelines require that the fund have the option to terminate any
loan of a portfolio security at any time and set requirements for recovery of
securities from borrowers.
Mortgage-Related
and Other Asset-Backed Securities
The
funds may purchase mortgage-related and other asset-backed securities. Mortgage
pass-through securities are securities representing interests in “pools” of
mortgages in which payments of both interest and principal on the securities are
generally made monthly, in effect “passing through” monthly payments made by the
individual borrowers on the residential mortgage loans that underlie the
securities (net of fees paid to the issuer or guarantor of the
securities).
Early
repayment of principal on mortgage pass-through securities (arising from
prepayments of principal due to sale of the underlying property, refinancing or
foreclosure, net of fees and costs that may be incurred) may expose the funds to
a lower rate of return upon reinvestment of principal. Also, if a security
subject to prepayment were purchased at a premium, in the event of prepayment,
the value of the premium would be lost. As with other fixed-income securities,
when interest rates rise, the value of a mortgage-related security generally
will decline; however, when interest rates decline, the value of
mortgage-related securities with prepayment features may not increase as much as
other fixed-income securities.
Payment
of principal and interest on some mortgage pass-through securities (but not the
market value of the securities themselves) may be guaranteed by the full faith
and credit of the U.S. government, as in the case of securities guaranteed by
the Government National Mortgage Association (GNMA), or guaranteed by agencies
or instrumentalities of the U.S. government, as in the case of securities
guaranteed by the Federal National Mortgage Association (Fannie Mae) or the
Federal Home Loan Mortgage Corporation (Freddie Mac), which are supported only
by the discretionary authority of the U.S. government to purchase the agency’s
obligations. Since September 2008, Fannie Mae and Freddie Mac have operated
under a conservatorship administered by the Federal Housing Finance Agency
(FHFA). In addition, the U.S. Treasury has entered into senior preferred stock
purchase agreements (SPSPAs) to provide additional financing to Fannie Mae and
Freddie Mac. Although the SPSPAs are intended to provide Fannie Mae and Freddie
Mac with the necessary cash resources to meet their obligations, Fannie Mae and
Freddie Mac continue to operate as going concerns while in conservatorship, and
each remains liable for all of its obligations, including its guaranty
obligations, associated with its mortgage-backed securities.
The
future status and role of Fannie Mae or Freddie Mac could be impacted by, among
other things, the actions taken and restrictions placed on Fannie Mae or Freddie
Mac by the FHFA in its role as conservator, the restrictions placed on Fannie
Mae’s or Freddie Mac’s operations and activities under the senior preferred
stock purchase agreements, market responses to developments at Fannie Mae or
Freddie Mac, and future legislative and regulatory action that alters the
operations, ownership, structure and/or mission of Fannie Mae or Freddie Mac,
each of which may, in turn, impact the value of, and cash flows on, any
securities guaranteed by Fannie Mae and Freddie Mac.
Mortgage
pass-through securities created by nongovernmental issuers (such as commercial
banks, savings and loan institutions, private mortgage insurance companies,
mortgage bankers and other secondary market issuers) may be supported by various
forms of insurance or guarantees, including individual loan, title, pool and
hazard insurance and letters of credit, which may be issued by governmental
entities, private insurers or the mortgage poolers.
The
funds also may invest in collateralized mortgage obligations (CMOs). CMOs are
mortgage-backed securities issued by government agencies; single-purpose,
stand-alone financial subsidiaries; trusts established by financial
institutions; or similar institutions. The funds may buy CMOs
that:
•are
collateralized by pools of mortgages in which payment of principal and interest
of each mortgage is guaranteed by an agency or instrumentality of the U.S.
government;
•are
collateralized by pools of mortgages in which payment of principal and interest
are guaranteed by the issuer, and the guarantee is collateralized by U.S.
government securities; and
•are
securities in which the proceeds of the issue are invested in mortgage
securities and payments of principal and interest are supported by the credit of
an agency or instrumentality of the U.S. government.
To-Be-Announced
Mortgage-Backed Securities
To-be-announced
(TBA) commitments are forward agreements for the purchase or sale of securities,
which are described in greater detail under the heading When-Issued
and Forward Commitment Agreements.
A fund may gain exposure to mortgage-backed securities through TBA transactions.
TBA mortgage-backed securities typically are debt securities structured by
agencies such as Fannie Mae and Freddie Mac. In a typical TBA mortgage
transaction, certain terms (such as price) are fixed, with delayed payment and
delivery on an agreed upon future settlement date. The specific mortgage-backed
securities to be delivered are not typically identified at the trade date but
the delivered security must meet specified terms (such as issuer, interest rate,
and underlying mortgage terms). Consequently, TBA mortgage-backed transactions
involve increased interest rate risk because the underlying mortgages may be
less favorable at delivery than anticipated. TBA mortgage contracts also involve
a risk of loss if the value of the underlying security to be purchased declines
prior to delivery date. The yield obtained for such securities may be higher or
lower than yields available in the market on delivery date. The funds may also
take short positions in TBA investments. To enter a short sale of a TBA
security, a fund effectively agrees to sell a security it does not own at a
future date and price. The funds generally anticipate closing short TBA
positions before delivery of the respective security is required, however if the
fund is unable to close a position, the fund would have to purchase the
securities needed to settle the short sale. Such purchases could be at a
different price than anticipated, and the fund would lose or gain money based on
the acquisition price.
Credit
Risk Transfer Securities
Credit
risk transfer securities (CRTs) transfer the credit risk related to certain
types of mortgage-backed securities to the owner of the credit risk transfer.
Government entities, such as Fannie Mae or Freddie Mac, primarily issue CRTs.
CRTs trade in an active over the counter market facilitated by well-known
investment banks. Though an active OTC market for trading exists, CRTs may be
less liquid than exchange traded securities. CRTs are unguaranteed and unsecured
fixed or floating rate general obligations. Holders of CRTs receive compensation
for providing credit protection to the issuer. The issuer of the CRT selects the
pool of mortgage loans based on that entity’s eligibility criteria, and the
performance of the CRTs will be directly affected by the selection of such
underlying mortgage loans. The risks associated with an investment in a CRT
differ from the risks of investing in mortgage-backed securities issued by
government entities or issued by private issuers because some or all of the
mortgage default or credit risk associated with the underlying mortgage loans is
transferred to investors. Accordingly, investors in CRTs could lose some or all
of their investment if the underlying mortgage loans default.
Obligations
with Term Puts Attached
The
funds may invest in fixed-rate bonds subject to third-party puts and
participation interests in such bonds that are held by a bank in trust or
otherwise, which have tender options or demand features attached. These tender
options or demand features permit the funds to tender (or put) their bonds to an
institution at periodic intervals and to receive the principal amount thereof.
The managers expect the funds will pay more for securities with puts attached
than for securities without these liquidity features.
Because
it is difficult to evaluate the likelihood of exercise or the potential benefit
of a put, puts normally will be determined to have a value of zero, regardless
of whether any direct or indirect consideration is paid. Accordingly, puts as
separate securities are not expected to affect the funds’ weighted average
maturities. When a fund has paid for a put, the cost will be reflected as
unrealized depreciation on the underlying security for the period the put is
held. Any gain on the sale of the underlying security will be reduced by the
cost of the put.
There
is a risk that the seller of an obligation with a put attached will not be able
to repurchase the underlying obligation when (or if) a fund attempts to exercise
the put. To minimize such risks, the funds will purchase obligations with puts
attached only from sellers deemed creditworthy by the portfolio managers under
the direction of the Board of Directors.
Other
Investment Companies
Each
of the One Choice Target Date Portfolios, One Choice Blend+ Portfolios, and One
Choice Target Risk Portfolios may invest up to 100% of its total assets in other
American Century Investments funds in reliance on Section 12(d)(1)(G) of the
Investment Company Act of 1940.
Each
of the underlying funds may invest in other investment companies, such as
closed-end investment companies, unit investment trusts, exchange-traded funds
(ETFs) and other open-end investment companies, provided that the investment is
consistent with the fund’s investment policies and restrictions. Under the
Investment Company Act, each underlying fund’s investment in such securities,
subject to certain exceptions, currently is limited to:
(a)3%
of the total voting stock of any one investment company,
(b)5%
of the fund’s total assets with respect to any one investment company;
and
(c)10%
of the fund’s total assets in the aggregate.
A
fund’s investments in other investment companies may include money market funds
managed by the advisor. Investments in money market funds are not subject to the
percentage limitations set forth above.
As
a shareholder of another investment company, a fund would bear, along with other
shareholders, its pro rata portion of the other investment company’s expenses,
including advisory fees. These expenses would be in addition to the management
fee that each fund bears directly in connection with its own
operations.
ETFs
are a type of fund bought and sold on a securities exchange. An ETF trades like
common stock and may be actively managed or index-based. A fund may purchase an
ETF to temporarily gain exposure to a portion of the U.S. or a foreign market
while awaiting purchase of underlying securities, to gain exposure to specific
asset classes or sectors, or as a substitute for investing directly in
securities. The risks of owning an ETF generally reflect the risks of owning the
underlying securities. Additionally, because the price of ETF shares is based on
market price rather than net asset value (NAV), shares may trade at a price
greater than NAV (a premium) or less than NAV (a discount). A fund may also
incur brokerage commissions, as well as the cost of the bid/ask spread, when
purchase or selling ETF shares.
Repurchase
Agreements
Each
fund may invest in repurchase agreements when they present an attractive
short-term return on cash that is not otherwise committed to the purchase of
securities pursuant to the investment policies of that fund. A repurchase
agreement occurs when, at the time a fund purchases an interest-bearing
obligation, the seller (a bank or a broker-dealer registered under the
Securities Exchange Act of 1934) agrees to purchase it on a specified date in
the future at an agreed-upon price. The repurchase price reflects an agreed-upon
interest rate during the time the fund’s money is invested in the
security.
Because
the security purchased constitutes collateral for the repurchase obligation, a
repurchase agreement can be considered a loan collateralized by the security
purchased. The fund’s risk is the seller’s ability to pay the agreed-upon
repurchase price on the repurchase date. If the seller defaults, the fund may
incur costs in disposing of the collateral, which would reduce the amount
realized thereon. If the seller seeks relief under the bankruptcy laws, the
disposition of the collateral may be delayed or limited. To the extent the value
of the security decreases, the fund could experience a loss.
The
funds will limit repurchase agreement transactions to securities issued by the
U.S. government and its agencies and instrumentalities, and will enter into such
transactions with those banks and securities dealers who are deemed creditworthy
by the funds’ advisor.
Repurchase
agreements maturing in more than seven days would count toward a fund’s 15%
limit on illiquid securities.
Restricted
and Illiquid Securities
The
funds may, from time to time, purchase restricted or illiquid securities,
including Rule 144A securities, when they present attractive investment
opportunities that otherwise meet the funds’ criteria for selection. Restricted
securities include securities that cannot be sold to the public without
registration under the Securities Act of 1933 or the availability of an
exemption from registration, or that are “not readily marketable” because they
are subject to other legal or contractual delays in or restrictions on resale.
Rule 144A securities are securities that are privately placed with and traded
among qualified institutional investors rather than the general public. Although
Rule 144A securities are considered restricted securities, they are not
necessarily illiquid.
With
respect to securities eligible for resale under Rule 144A, the advisor will
determine the liquidity of such securities pursuant to the fund’s Liquidity Risk
Management Program, approved by the Board of Directors in accordance with Rule
22e-4.
Because
the secondary market for such securities is limited to certain qualified
institutional investors, the liquidity of such securities may be limited
accordingly and a fund may, from time to time, hold a Rule 144A or other
security that is illiquid. In such an event, the portfolio managers will
consider appropriate remedies to minimize the effect on such fund’s liquidity.
Each fund may invest no more that 15% (5% for money market funds) of the value
of its assets in illiquid securities.
Short
Sales
A
fund engages in short selling when it sells a security it does not own. To sell
a security short, a fund must borrow the security from someone else to deliver
it to the buyer. That fund then replaces the borrowed security by purchasing it
at the market price at or before the time of replacement. Until it replaces the
security, the fund repays the person that lent it the security for any interest
or dividends that may have been paid or accrued during the period of the loan.
Each fund may engage in short sales for cash management purposes only if, at the
time of the short sale, the fund owns or has the right to acquire securities
equivalent in kind and amount to the securities being sold short.
In
short sale transactions, a fund’s gain is limited to the price at which it sold
the security short; its loss is limited only by the maximum price it must pay to
acquire the security less the price at which the security was sold. In theory,
losses from short sales may be unlimited. In order to borrow the security, a
fund may be required to pay compensation to the lender for securities that are
difficult to borrow due to demand or other factors. Short sales also cause a
fund to incur brokerage fees and other transaction costs. Therefore, the amount
of any gain a fund may receive from a short sale transaction is decreased and
the amount of any loss increased by the amount of compensation to the lender,
accrued interest or dividends and transaction costs a fund may be required to
pay.
There
is no guarantee that a fund will be able to close out a short position at any
particular time or at a particular price. During the time that a fund is short a
security, it is subject to the risk that the lender of the security will
terminate the loan at a time when the fund is unable to borrow the same security
from another lender. If that occurs, the fund may be “bought in” at the price
required to purchase the security needed to close out the short position, which
may be a disadvantageous price.
Short-Term
Securities
The
funds may invest a portion of their assets in money market and other short-term
securities.
Examples
of those securities include:
•Securities
issued or guaranteed by the U.S. government and its agencies and
instrumentalities
•Commercial
Paper
•Certificates
of Deposit and Euro Dollar Certificates of Deposit
•Bankers’
Acceptances
•Short-term
notes, bonds, debentures or other debt instruments
•Repurchase
agreements
•Money
market funds
Structured
Investments
A
structured investment is a security whose value or performance is linked to an
underlying index or other security or asset class. Structured investments
include asset-backed securities (ABS), commercial and residential
mortgage-backed securities (MBS and CMBS), and collateralized mortgage
obligations (CMO), which are described more fully below. Structured investments
also include securities backed by other types of collateral. Structured
investments involve the transfer of specified financial assets to a special
purpose entity, generally a corporation or trust, or the deposit of financial
assets with a custodian; and the issuance of securities or depositary receipts
backed by, or representing interests in, those assets. Structured investments
may be organized and operated to restructure the investment characteristics of
the underlying security. The cash flow on the underlying instruments may be
apportioned among the newly issued structured investments to create securities
with different investment characteristics, such as varying maturities, payment
priorities and interest rate provisions, and the extent of such payments made
with respect to structured investments is dependent on the extent of the cash
flow on the underlying instruments.
Structured
investments are generally individually negotiated agreements or traded over the
counter and, as such, there is no active trading market for such investments.
Thus, structured investments may be less liquid than other securities. Because
structured investments typically involve no credit enhancement, their credit
risk generally will be equivalent to that of the underlying instruments.
Structured investments are subject to such risks as the inability or
unwillingness of the issuers of the underlying securities to repay principal and
interest (credit risk), and requests by the issuers of the underlying securities
to reschedule or restructure outstanding debt and to extend additional loan
amounts (prepayment or extension risk).
U.S.
Government Securities
U.S.
Treasury bills, notes, zero-coupon bonds and other bonds are direct obligations
of the U.S. Treasury, which has never failed to pay interest and repay principal
when due. Treasury bills have initial maturities of one year or less, Treasury
notes from two to 10 years, and Treasury bonds more than 10 years. Although U.S.
Treasury securities carry little principal risk if held to maturity, the prices
of these securities (like all debt securities) change between issuance and
maturity in response to fluctuating market interest rates.
A
number of U.S. government agencies and instrumentalities issue debt securities.
These agencies generally are created by Congress to fulfill a specific need,
such as providing credit to home buyers or farmers. Among these agencies are the
Federal Home Loan Banks, the Federal Farm Credit Banks, and the Resolution
Funding Corporation.
Some
U.S. government securities are supported by the direct full faith and credit
pledge of the U.S. government; others are supported by the right of the issuer
to borrow from the U.S. Treasury; others, such as securities issued by the
Federal National Mortgage Association (FNMA), are supported by the discretionary
authority of the U.S. government to purchase the agencies’ obligations; and
others are supported only by the credit of the issuing or guaranteeing
instrumentality. There is no assurance that the U.S. government will provide
financial support to an instrumentality it sponsors when it is not obligated by
law to do so. Occasionally, Congressional negotiations regarding increasing the
U.S. statutory debt ceiling cause uncertainty in the market. Uncertainty, or a
default on U.S. government debt, could cause the credit rating of the U.S.
government to be downgraded, increase volatility in debt and equity markets,
result in higher interest rates, reduce prices of U.S. Treasury securities, or
increase the costs of certain kinds of debt.
Variable-
and Floating-Rate Securities
Interest
rates on securities may be fixed for the term of the investment (fixed-rate
securities) or tied to prevailing interest rates. Floating-rate instruments have
interest rates that change whenever there is a change in a designated base rate;
variable-rate instruments provide for specified periodic interest rate
adjustments; auction-rate instruments have interest rates that are redetermined
pursuant to an auction on specified dates.
Floating-rate
securities frequently have caps limiting the extent to which coupon rates can be
raised. The price of a floating-rate security may decline if its capped coupon
rate is lower than prevailing market interest rates. Fixed- and floating-rate
securities may be issued with a call date (which permits redemption before the
maturity date). The exercise of a call may reduce an obligation’s yield to
maturity.
Interest
rate resets on floating-rate U.S. government agency securities generally occur
at intervals of one year or less in response to changes in a predetermined
interest rate index. There are two main categories of indices: those based on
U.S. Treasury securities and those derived from a calculated measure, such as a
cost-of-funds index. Commonly used indices include the three-month, six-month
and one-year Treasury bill rates; the two-year Treasury note yield; and the
Eleventh District Federal Home Loan Bank Cost of Funds Index (EDCOFI).
Fluctuations in the prices of floating-rate U.S. government agency securities
are typically attributed to differences between the coupon rates on these
securities and prevailing market interest rates between interest rate reset
dates.
Variable
- and floating - rate securities may be combined with a put or demand feature
that permits the fund to demand payment of principal plus accrued interest from
the issuer or a financial institution. Examples of VRDOs include variable-rate
demand notes (VRDN) and variable-rate demand preferreds (VRDP). VRDNs combine a
demand feature with an interest rate reset mechanism designed to result in a
market value for the security that approximates par. VRDNs are generally
designed to meet the requirements of money market fund Rule 2a-7. VRDPs are
issued by a closed-end fund that in turn invests primarily in portfolios of
bonds. They feature a floating rate dividend set via a weekly remarketing and
have a fixed term, mandatory redemption, and an unconditional par put option.
When-Issued
and Forward Commitment Agreements
The
funds may sometimes purchase new issues of securities on a when-issued or
forward commitment basis in which the transaction price and yield are each fixed
at the time the commitment is made, but payment and delivery occur at a future
date.
For
example, a fund may sell a security and at the same time make a commitment to
purchase the same or a comparable security at a future date and specified price.
Conversely, a fund may purchase a security and at the same time make a
commitment to sell the same or a comparable security at a future date and
specified price. These types of transactions are executed simultaneously in what
are known as dollar-rolls, buy/sell back transactions, cash and carry, or
financing transactions. For example, a broker-dealer may seek to purchase a
particular security that a fund owns. The fund will sell that security to the
broker-dealer and simultaneously enter into a forward commitment agreement to
buy it back at a future date. This type of transaction generates income for the
fund if the dealer is willing to execute the transaction at a favorable price in
order to acquire a specific security.
When
purchasing securities on a when-issued or forward commitment basis, a fund
assumes the rights and risks of ownership, including the risks of price and
yield fluctuations. Market rates of interest on debt securities at the time of
delivery may be higher or lower than those contracted for on the when-issued
security. Accordingly, the value of that security may decline prior to delivery,
which could result in a loss to the fund. While the fund will make commitments
to purchase or sell securities with the intention of actually receiving or
delivering them, it may sell the securities before the settlement date if doing
so is deemed advisable as a matter of investment strategy.
To
the extent a fund remains fully invested or almost fully invested at the same
time it has purchased securities on a when-issued basis, there will be greater
fluctuations in its net asset value than if it solely set aside cash to pay for
when-issued securities. When the time comes to pay for the when-issued
securities, the fund will meet its obligations with available cash, through the
sale of securities, or, although it would not normally expect to do so, by
selling the when-issued securities themselves (which may have a market value
greater
or less than the fund’s payment obligation). Selling securities to meet
when-issued or forward commitment obligations may generate taxable capital gains
or losses.
Generally,
the funds intend to physically settle when-issued and forward commitments within
35 days of their trade dates. If such a transaction cannot be physically settled
in this time, it will be treated as a derivatives transaction for purposes of
the fund’s derivative risk management program. The derivative risk management
program is described in greater detail in the Derivative
Instruments
section.
Zero-Coupon,
Step-Coupon and Pay-In-Kind Securities
Zero-coupon,
step-coupon and pay-in-kind securities are debt securities that do not make
regular cash interest payments. Zero-coupon and step-coupon securities are sold
at a deep discount to their face value. Pay-in-kind securities pay interest
through the issuance of additional securities. Because such securities do not
pay current cash income, the price of these securities can be volatile when
interest rates fluctuate. While these securities do not pay current cash income,
federal income tax law requires the holders of zero-coupon, step-coupon and
pay-in-kind securities to include in income each year the portion of the
original issue discount and other noncash income on such securities accrued
during that year. In order to continue to qualify for treatment as a regulated
investment company under the Internal Revenue Code and avoid certain excise tax,
the funds are required to make distributions of income accrued for each year.
Accordingly, the funds may be required to dispose of other portfolio securities,
which may occur in periods of adverse market prices, in order to generate cash
to meet these distribution requirements.
Unless
otherwise indicated, with the exception of the percentage limitations on
borrowing, the policies described below apply at the time a fund enters into a
transaction. Accordingly, any later increase or decrease beyond the specified
limitation resulting from a change in a fund’s assets will not be considered in
determining whether it has complied with its investment
policies.
Fundamental
Investment Policies
The
funds’ fundamental investment policies are set forth below. These investment
policies, a fund’s status as diversified, and, except for One Choice 2060
Portfolio, One Choice 2065 Portfolio, and the One Choice Blend+ Portfolios, a
fund’s investment objective set forth in its prospectus may not be changed
without approval of a majority of the outstanding votes of shareholders of a
fund. Under the Investment Company Act, the vote of a majority of the
outstanding votes of shareholders means, the vote of (A) 67 percent or more of
the voting securities present at a shareholder meeting, if the holders of more
than 50 percent of the outstanding voting securities are present or represented
by proxy; or (B) more than 50 percent of the outstanding voting securities,
whichever is less.
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| Subject |
Policy |
| Senior
Securities |
A
fund may not issue senior securities, except as permitted under the
Investment Company Act. |
| Borrowing |
A
fund may not borrow money, except that a fund may borrow for temporary or
emergency purposes (not for leveraging or investment) in an amount not
exceeding 33⅓% of the fund’s total assets (including the amount borrowed)
less liabilities (other than borrowings). |
| Lending |
A
fund may not lend any security or make any other loan if, as a result,
more than 33⅓% of the fund’s total assets would be lent to other parties,
except (i) through the purchase of debt securities in accordance with its
investment objective, policies and limitations or (ii) by engaging in
repurchase agreements with respect to portfolio securities. |
| Real
Estate |
A
fund may not purchase or sell real estate unless acquired as a result of
ownership of securities or other instruments. This policy shall not
prevent a fund from investing in securities or other instruments backed by
real estate or securities of companies that deal in real estate or are
engaged in the real estate business. |
| Concentration |
A
fund may not concentrate its investments in securities of issuers in a
particular industry (other than securities issued or guaranteed by the
U.S. government or any of its agencies or instrumentalities, except that
the funds will invest substantially all of their assets in investment
companies that are members of the American Century Investments family of
funds). |
| Underwriting |
A
fund may not act as an underwriter of securities issued by others, except
to the extent that the fund may be considered an underwriter within the
meaning of the Securities Act of 1933 in the disposition of restricted
securities. |
| Commodities |
A
fund may not purchase or sell physical commodities unless acquired as a
result of ownership of securities or other instruments, provided that this
limitation shall not prohibit the fund from purchasing or selling options
and futures contracts or from investing in securities or other instruments
backed by physical commodities. |
| Control |
A
fund may not invest for purposes of exercising control over
management. |
For
purposes of the investment policy relating to senior securities, a fund may
borrow from any bank provided that immediately after any such borrowing there is
asset coverage of at least 300% for all borrowings of such fund. In the event
that such asset coverage falls below 300%, the fund shall, within three days
thereafter (not including Sundays and holidays) or such longer period as the SEC
may
prescribe
by rules and regulations, reduce the amount of its borrowings to an extent that
the asset coverage of such borrowings is at least 300%.
For
purposes of the investment policy relating to concentration, a fund shall not
purchase any securities that would cause 25% or more of the value of the fund’s
net assets at the time of purchase to be invested in the securities of one or
more issuers conducting their principal business activities in the same
industry, provided that:
(a)there
is no limitation with respect to investments in mutual funds,
(b)there
is no limitation with respect to obligations issued or guaranteed by the U.S.
government, any state, territory or possession of the United States, the
District of Columbia or any of their authorities, agencies, instrumentalities or
political subdivisions and repurchase agreements secured by such obligations
(except that an Industrial Development Bond backed only by the assets and
revenues of a non-governmental user will be deemed to be an investment in the
industry represented by such user),
(c)wholly
owned finance companies will be considered to be in the industries of their
parents if their activities are primarily related to financing the activities of
their parents,
(d)utilities
will be divided according to their services, for example, gas, gas transmission,
electric and gas, electric, and telephone will each be considered a separate
industry, and
(e)personal
credit and business credit businesses will be considered separate
industries.
The
funds consider the industries of the holdings of the other American Century
funds (affiliated funds) in which they invest to assess industry
concentration.
Nonfundamental
Investment Policies
In
addition, the funds are subject to the following investment policies that are
not fundamental. These policies, along with the investment objective of the One
Choice 2060 Portfolio, One Choice 2065 Portfolio, and the One Choice Blend+
Portfolios, as set forth in their prospectus, may be changed by the Board of
Directors.
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| Subject |
Policy |
| Leveraging |
A
fund may not purchase additional investment securities at any time during
which outstanding borrowings exceed 5% of the total assets of the
fund. |
| Liquidity |
A
fund may not purchase any security or enter into a repurchase agreement
if, as a result, more than 15% of its net assets would be invested in
illiquid securities. Illiquid securities include repurchase agreements not
entitling the holder to payment of principal and interest within seven
days, and securities that are illiquid by virtue of legal or contractual
restrictions on resale or the absence of a readily available
market. |
| Margin |
A
fund may not purchase securities on margin, except to obtain such
short-term credits as are necessary for the clearance of transactions, and
provided that margin payments and other deposits in connection with
transactions involving futures, options (puts, calls, etc.), swaps, short
sales, forward contracts, commitment agreements, and other similar
investment techniques shall not be deemed to constitute purchasing
securities on margin. |
Futures
&
Options |
A
fund may enter into futures contracts, and write and buy put and call
options relating to futures contracts. A fund may not, however, enter into
leveraged futures transactions if it would be possible for the fund to
lose more than the notional value of the investment. |
Issuers
with
Limited
Operating
Histories |
A
fund may invest up to 5% of its assets in the equity securities of issuers
with limited operating histories. An issuer is considered to have a
limited operating history if that issuer has a record of less than three
years of continuous operation. Periods of capital formation, incubation,
consolidations, and research and development may be considered in
determining whether a particular issuer has a record of three years of
continuous operation. For purposes of this limitation, “issuers” refers to
operating companies that issue securities for the purpose of issuing debt
or raising capital as a means of financing their ongoing
operations. |
The
Investment Company Act imposes certain additional restrictions upon the funds’
ability to acquire securities issued by insurance companies, broker-dealers,
underwriters or investment advisors, and upon transactions with affiliated
persons as defined by the Act. It also defines and forbids the creation of cross
and circular ownership.
The
portfolio turnover rate of each fund for its most recent fiscal year is included
in the Fund
Summary
section of that fund’s prospectus. The portfolio turnover rate for each fund’s
last five fiscal years (or a shorter period if the fund is less than five years
old) is shown in the Financial
Highlights
tables in the prospectus.
Variations
in a fund’s portfolio turnover rate from year to year may be due to a
fluctuating volume of shareholder purchase and redemption activity, varying
market conditions and/or changes in the managers’ investment
outlook.
The
funds will, under most circumstances, be essentially fully invested in other
American Century Investments mutual funds within the allocation framework set
forth in the prospectuses. The portfolio managers may sell shares of the
underlying funds without regard
to
the length of time they have been held. A high level of turnover is not
anticipated beyond that necessary to accommodate purchases and sales of each
fund’s shares and to implement periodic asset rebalancings and reallocations.
Details about the underlying funds’ portfolio turnover rates appear in those
funds’ prospectuses and statements of additional information.
The
advisor (ACIM) has adopted policies and procedures with respect to the
disclosure of fund portfolio holdings and characteristics, which are described
below.
Distribution
to the Public
The
funds invest substantially all of their assets in other American Century
Investments mutual funds. These holdings, as described in the funds’
prospectuses, are available at any time with no lag period. In addition, full
portfolio holdings for each fund are disclosed in the annual and semiannual
shareholder reports and the quarter-end portfolio disclosures on Form N-PORT.
Such disclosures are filed with the Securities and Exchange Commission within 60
days of each fiscal quarter end and also posted on americancentury.com at
approximately the same time the filings are made.
The
advisor makes no distinction among different categories of recipients, such as
individual investors, institutional investors, intermediaries that distribute
the funds’ shares, third-party service providers, rating and ranking
organizations, and fund affiliates. Because this information is publicly
available and widely disseminated, the advisor places no conditions or
restrictions on, and does not monitor, its use. Nor does the advisor require
special authorization for its disclosure.
Neither
the advisor nor the funds receive any compensation from any party for the
distribution of portfolio holdings information.
The
advisor reserves the right to change its policies and procedures with respect to
the distribution of portfolio holdings information at any time. There is no
guarantee that these policies and procedures will protect the funds from the
potential misuse of holdings information by individuals or firms in possession
of such information.
The
individuals listed below serve as directors of the funds. Each director will
continue to serve in this capacity until death, retirement, resignation or
removal from office. The board has adopted a mandatory retirement age for
directors who are not “interested persons,” as that term is defined in the
Investment Company Act (independent directors). Independent directors shall
retire on December 31 of the year in which they reach their 75th
birthday.
Jonathan
S. Thomas is an “interested person” because he currently serves as President and
Chief Executive Officer of American Century Companies, Inc. (ACC), the parent
company of American Century Investment Management, Inc. (ACIM or the advisor).
The other directors (more than three-fourths of the total number) are
independent. They are not employees, directors or officers of, and have no
financial interest in, ACC or any of its wholly owned, direct or indirect,
subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS)
and American Century Services, LLC (ACS), and they do not have any other
affiliations, positions or relationships that would cause them to be considered
“interested persons” under the Investment Company Act. The directors serve in
this capacity for seven (in the case of Jonathan S. Thomas, 16; and Thomas W.
Bunn, 8) registered investment companies in the American Century Investments
family of funds.
The
following table presents additional information about the directors. The mailing
address for each director is 4500 Main Street, Kansas City, Missouri
64111.
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Name
(Year of Birth)
|
Position(s)
Held
with
Funds
|
Length
of
Time
Served
|
Principal
Occupation(s) During Past 5 Years
|
Number
of
American
Century
Portfolios
Overseen
by
Director
|
Other
Directorships
Held
During Past
5
Years
|
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Independent
Directors
|
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Brian
Bulatao
(1964) |
Director |
Since
2022 |
Chief
Administrative Officer, Activision
Blizzard, Inc.
(2021 to 2024); Under Secretary of State for Management,
U.S. Department of State
(2018 to 2021) |
56 |
None |
| Thomas
W. Bunn (1953) |
Director |
Since
2017 |
Retired |
112 |
None |
|
Chris
H. Cheesman
(1962) |
Director |
Since
2019 |
Retired |
56 |
Alleghany
Corporation
(2021
to 2022) |
Barry
Fink
(1955) |
Director |
Since
2012 (independent since 2016) |
Retired |
56 |
None |
|
Rajesh
K. Gupta (1960) |
Director |
Since
2019 |
Partner
Emeritus, SeaCrest
Investment Management
and SeaCrest
Wealth Management
(2019 to present) |
56 |
None |
|
Lynn
M. Jenkins (1963) |
Director |
Since
2019 |
Senior
Policy Advisor, Capital
Hill Policy Group (2020
to present); Consultant, LJ
Strategies (2019
to 2023) |
56 |
MGP
Ingredients, Inc. (2019 to 2021) |
Jan
M. Lewis
(1957) |
Director
and Board Chair |
Since
2011 (Board Chair since 2022) |
Retired |
56 |
None |
Gary
C. Meltzer
(1963) |
Director |
Since
2022 |
Advisor,
Pontoro
(2021 to present); Executive Advisor, Consultant and Investor,
Harris
Ariel Advisory LLC
(2020 to present); Managing Partner, PricewaterhouseCoopers
LLP
(1985 to 2020) |
56 |
SoFi
Technologies, Inc.; Apollo Realty Income Solutions, Inc.;
ExcelFin
Acquisition Corp. (2021 to 2024) |
|
Interested
Director
|
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| |
Jonathan
S. Thomas
(1963) |
Director
|
Since
2007 |
President
and Chief Executive Officer, ACC
(2007 to present). Also serves as Director, ACC
and other ACC
subsidiaries |
142 |
None |
Qualifications
of Directors
Generally,
no one factor was decisive in the selection of the directors to the board.
Qualifications considered by the board to be important to the selection and
retention of directors include the following: (i) the individual’s business and
professional experience and accomplishments; (ii) the individual’s educational
background and accomplishments; (iii) the individual’s experience and expertise
performing senior policy-making functions in business, government, education,
accounting, law and/or administration; (iv) how the individual’s expertise and
experience would contribute to the mix of relevant skills and experience on the
board; (v) the individual’s ability to work effectively with the other members
of the board; and (vi) the individual’s ability and willingness to make the time
commitment necessary to serve as an effective director. In addition, the
individuals’ ability to review and critically evaluate information, their
ability to evaluate fund service providers, their ability to exercise good
business judgment on behalf of fund shareholders, their prior service on the
board, and their familiarity with the funds are considered important
assets.
When
assessing potential new directors, the board has a policy of considering
individuals from various and diverse backgrounds. Such diverse backgrounds may
include differences in professional experience, education, individual skill sets
and other individual attributes. Additional information about each director’s
individual educational and professional experience (supplementing the
information provided in the table above) follows and was considered as part of
his or her nomination to, or retention on, the board.
Brian
Bulatao:
BS in Engineering Management, United States Military Academy at West Point; MBA
from Harvard Business School; formerly, Chief Operating Officer, Central
Intelligence Agency, former military service followed by experience at McKinsey
& Co. (global management consulting) and in the private equity industry;
experience in senior management positions in government and the private
sector
Thomas
W. Bunn:
BS in Business Administration, Wake Forest University; MBA in Finance,
University of North Carolina at Chapel Hill; formerly Vice Chairman and
President, KeyCorp (banking services); 31 years of experience in investment,
commercial and corporate banking; managing directorship roles with Bank of
America
Chris
H. Cheesman:
BS in Business Administration (Accounting), Hofstra University; 32 years of
experience in global financial services at AllianceBernstein; formerly, auditor
with Price Waterhouse; Certified Public Accountant
Barry
Fink:
BA in English and History, Binghamton University; Juris Doctorate, University of
Michigan; formerly held leadership roles including chief operating officer with
American Century Investments; formerly held leadership roles during a 20-year
career with Morgan Stanley Investment Management; formerly asset management and
securities law attorney at Seward & Kissel; serves on the Board of Directors
of ICI Mutual Insurance Company
Rajesh
K. Gupta: BS
in Quantitative Analysis, New York University, Stern School of Business; MBA in
Finance, New York University, Stern School of Business; formerly, Chief
Executive Officer and Chief Investment Officer, SeaCrest Investment Management;
formerly, Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth
Management; formerly held leadership roles during 19-year career with Morgan
Stanley Investment Management
Lynn
M. Jenkins: BS
in Accounting, Weber State University; AA in Business, Kansas State University;
formerly, United States Representative;
formerly,
Kansas State Treasurer, Kansas State Senator and Kansas State Representative; 20
years of experience in finance and accounting, including as a certified public
accountant
Jan
M. Lewis:
BS in Civil Engineering, University of Nebraska and MBA, Rockhurst College;
Graduate Certificate in Financial Markets and Institutions, Boston University;
formerly, President and Chief Executive Officer, Catholic Charities of Northeast
Kansas (human services organization); formerly, President, BUCON, Inc.
(full-service design-build construction company); 20 years of experience with
Butler Manufacturing Company (metal buildings producer) and its
subsidiaries
Gary
C. Meltzer:
BS in Accounting, Binghamton University; Certified Public Accountant; formerly
held a variety of roles during 35 years of experience as business advisor and
independent auditor providing high quality audits and value-added services with
PricewaterhouseCoopers LLP
Jonathan
S. Thomas:
BA in Economics, University of Massachusetts; MBA, Boston College; formerly held
senior leadership roles with Fidelity Investments, Boston Financial Services,
Bank of America and Morgan Stanley; serves on the Board of Governors of the
Investment Company Institute
Responsibilities
of the Board
The
board is responsible for overseeing the advisor’s management and operations of
the funds pursuant to the management agreements. Directors also have significant
responsibilities under the federal securities laws. Among other things,
they:
•oversee
the performance of the funds;
•oversee
the quality of the advisory and shareholder services provided by the advisor and
other service providers to the funds;
•review
annually the fees paid to the advisor for its services;
•monitor
potential conflicts of interest between the funds and their affiliates,
including the advisor;
•oversee
custody of assets and the valuation of securities; and
•oversee
the funds’ compliance program.
In
performing their duties, board members receive detailed information about the
funds, the advisor and other service providers to the funds regularly throughout
the year, and meet at least quarterly with management of the advisor to review
reports about fund operations. The directors’ role is to provide oversight and
not to provide day-to-day management.
The
board has all powers necessary or convenient to carry out its responsibilities.
Consequently, the board may adopt bylaws providing for the regulation and
management of the affairs of the funds and may amend and repeal them to the
extent that such bylaws do not reserve that right to the funds’ shareholders.
They may increase or reduce the number of board members and may, subject to the
Investment Company Act, fill board vacancies. Board members also may elect and
remove such officers and appoint and terminate such agents as they consider
appropriate. They may establish and terminate committees consisting of two or
more directors who may exercise the powers and authority of the board as
determined by the directors. They may, in general, delegate such authority as
they
consider
desirable to any officer of the funds, to any board committee and to any agent
or employee of the funds or to any custodian, transfer agent, investor servicing
agent, principal underwriter or other service provider for a
fund.
To
communicate with the board, or a member of the board, a shareholder should send
a written communication addressed to the attention of the corporate secretary
(the “Corporate Secretary”) at American Century funds, P.O. Box 418210, Kansas
City, Missouri 64141-9210. Shareholders who prefer to communicate by email may
send their comments to [email protected]. The Corporate
Secretary will forward all such communications to each member of the Compliance
and Shareholder Services Committee, or if applicable, the individual director(s)
and/or committee chair named in the correspondence. However, if a shareholder
communication is addressed exclusively to the funds’ independent directors, the
Corporate Secretary will forward the communication to the Compliance and
Shareholder Services Committee chair, who will determine the appropriate
action.
Board
Leadership Structure and Standing Board Committees
Jan
M. Lewis currently serves as the independent board chair and has served in such
capacity since 2022. All of the board’s members except for Jonathan S. Thomas
are independent directors. The independent directors meet separately, as needed
and at least in conjunction with each quarterly meeting of the board, to
consider a variety of matters that are scheduled to come before the board and
meet periodically with the funds’ Chief Compliance Officer and fund auditors.
They are advised by independent legal counsel. No independent director may serve
as an officer or employee of a fund. The board has also established several
committees, as described below. The board believes that the current leadership
structure, with independent directors filling all but one position on the board,
with an independent director serving as board chair, and with the board
committees comprised only of independent directors is appropriate and allows for
independent oversight of the funds.
The
board has an Audit Committee that approves the funds’ (or corporation’s)
engagement of the independent registered public accounting firm and recommends
approval of such engagement to the independent directors. The committee also
oversees the activities of the accounting firm, receives regular reports
regarding fund accounting, oversees securities valuation (approving the funds’
valuation policy and receiving reports regarding instances of fair valuation
thereunder) and receives regular reports from the advisor’s internal audit
department. The committee currently consists of Chris H. Cheesman (chair), Barry
Fink, Lynn Jenkins and Gary C. Meltzer. The committee met four times during the
funds’ previous fiscal year ended July 31, 2024.
The
board has a Governance Committee that is responsible for reviewing board
procedures and committee structures. The committee also considers and recommends
individuals for nomination as directors, and may recommend the creation of new
committees. The names of potential director candidates may be drawn from a
number of sources, including members of the board, management and shareholders.
Shareholders may submit director nominations at any time to the Corporate
Secretary, American Century funds, P.O. Box 418210, Kansas City, MO 64141-9210.
When submitting nominations, shareholders should include the name, age and
address of the candidate, as well as a detailed resume of the candidate’s
qualifications and a signed statement from the candidate of his/her willingness
to serve on the board. Shareholders submitting nominations should also include
information concerning the number of fund shares and length of time held by the
shareholder, and if applicable, similar information for the potential candidate.
All nominations submitted by shareholders will be forwarded to the chair of the
Governance Committee for consideration. The Corporate Secretary will maintain
copies of such materials for future reference by the committee when filling
board positions.
If
this process yields more than one desirable candidate, the committee will rank
them by order of preference depending on their qualifications and the funds’
needs. The candidate(s) may then be contacted to evaluate their interest and be
interviewed by the full committee. Based upon its evaluation and any appropriate
background checks, the committee will decide whether to recommend a candidate’s
nomination to the board.
The
Governance Committee also may recommend the creation of new committees, evaluate
the membership structure of new and existing committees, consider the frequency
and duration of board and committee meetings and otherwise evaluate the
responsibilities, processes, resources, performance and compensation of the
board. The committee currently consists of Barry Fink (chair), Brian Bulatao,
Lynn Jenkins, Jan M. Lewis and Gary C. Meltzer. The committee met three times
during the funds’ previous fiscal year ended July 31, 2024.
The
board also has a Compliance and Shareholder Services Committee, which reviews
the results of the funds’ compliance testing program, meets regularly with the
funds’ Chief Compliance Officer, reviews shareholder communications, reviews
quarterly reports regarding the quality of shareholder service provided by the
advisor, and monitors implementation of the funds’ Code of Ethics. The committee
currently consists of Thomas W. Bunn (chair), Brian Bulatao, Rajesh K. Gupta and
Jan M. Lewis. The committee met four times during the funds’ previous fiscal
year ended July 31, 2024.
The
board has a Fund Performance Review Committee that meets quarterly to review the
investment activities and strategies used to manage fund assets and monitor
investment performance. The committee regularly receives reports from the
advisor’s chief investment officer, portfolio managers and other investment
personnel concerning the funds’ efforts to achieve their investment objectives.
The committee also receives information regarding fund trading activities and
monitors derivative usage. The committee does not review individual security
selections. The committee currently consists of Rajesh K. Gupta (chair), Brian
Bulatao, Thomas
W.
Bunn, Chris H. Cheesman, Barry Fink, Lynn Jenkins, Jan M. Lewis and Gary C.
Meltzer. The committee met four times during the funds’ previous fiscal year
ended July 31, 2024.
Risk
Oversight by the Board
As
previously disclosed, the board oversees the advisor’s management of the funds
and meets at least quarterly with management of the advisor to review reports
and receive information regarding fund operations. Risk oversight relating to
the funds is one component of the board’s oversight and is undertaken in
connection with the duties of the board. As described above, the board’s
committees assist the board in overseeing various types of risks relating to the
funds, including, but not limited to, investment risk, operational risk and
enterprise risk. The board receives regular reports from each committee
regarding the committee’s areas of oversight responsibility and, through those
reports and its regular interactions with management of the advisor during and
between meetings, provides oversight of the advisor’s risk management processes.
In addition, the board receives information regarding, and has discussions with
senior management of the advisor about, the advisor’s enterprise risk management
systems and strategies, including an annual review of the advisor’s risk
management practices. There can be no assurance that all elements of risk, or
even all elements of material risk, will be disclosed to or identified by the
board, or that the advisor’s risk management systems and strategies, and the
board’s oversight thereof, will mitigate all elements of risk, or even all
elements of material risk to the funds.
Board
Compensation
Each
independent director receives compensation for service as a member of the board.
Under the terms of each management agreement with the advisor, the funds are
responsible for paying such fees and expenses. None of the interested directors
or officers of the funds receive compensation from the funds. For the fiscal
year ended July 31, 2024, each independent director received the following
compensation for his or her service to the funds and the American Century
Investments family of funds.
|
|
|
|
|
|
|
|
| |
|
Name
of Director |
Total
Compensation for Service as Director of the Funds1 |
Total
Compensation for Service as Directors for the American
Century
Investments Family of Funds2 |
| Independent
Directors |
| |
| Brian
Bulatao |
$48,661 |
$331,500 |
| Thomas
W. Bunn |
$51,352 |
$479,738 |
| Chris
H. Cheesman |
$51,352 |
$349,500 |
| Barry
Fink |
$51,352 |
$349,500 |
| Rajesh
K. Gupta |
$51,352 |
$349,500 |
| Lynn
Jenkins |
$48,661 |
$331,500 |
| Jan
M. Lewis |
$59,874 |
$406,500 |
| Gary
C. Meltzer |
$48,661 |
$331,500 |
|
Stephen
E. Yates3 |
$20,553 |
$204,125 |
1 Includes
compensation paid to the directors for the fiscal year ended July 31, 2024, and
also includes amounts deferred at the election of the directors under the
American Century Mutual Funds’ Independent Directors’ Deferred Compensation
Plan.
2 Includes
compensation paid to each director for his or her service as director/trustee
for seven (in the case of Mr. Bunn, eight) investment companies in the American
Century Investments family of funds. The total amount of deferred compensation
included in the table is as follows: Mr. Bunn, $115,106; and Ms. Jenkins,
$132,600.
3
Mr. Yates retired from the board on December 31, 2023.
None
of the funds currently provides any pension or retirement benefits to the
directors except pursuant to the American Century Mutual Funds’ Independent
Directors’ Deferred Compensation Plan adopted by the corporation. Under the
plan, the independent directors may defer receipt of all or any part of the fees
to be paid to them for serving as directors of the funds. All deferred fees are
credited to accounts established in the names of the directors. The amounts
credited to each account then increase or decrease, as the case may be, in
accordance with the performance of one or more American Century funds selected
by the directors. The account balance continues to fluctuate in accordance with
the performance of the selected fund or funds until final payment of all amounts
credited to the account. Directors are allowed to change their designation of
funds from time to time.
Generally,
deferred fees are not payable to a director until the distribution date elected
by the director in accordance with the terms of the plan. Such distribution date
may be a date on or after the director’s retirement date, but may be an earlier
date if the director agrees not to make any additional deferrals after such
distribution date. Distributions may commence prior to the elected payment date
for certain reasons specified in the plan, such as unforeseeable emergencies,
death or disability. Directors may receive deferred fee account balances either
in a lump sum payment or in substantially equal installment payments to be made
over a period not to exceed 10 years. Upon the death of a director, all
remaining deferred fee account balances are paid to the director’s beneficiary
or, if none, to the director’s estate.
The
plan is an unfunded plan and, accordingly, the funds have no obligation to
segregate assets to secure or fund the deferred fees. To date, the funds have
met all payment obligations under the plan. The rights of directors to receive
their deferred fee account balances are the same as the rights of a general
unsecured creditor of the funds. The plan may be terminated at any time by the
administrative committee of the plan. If terminated, all deferred fee account
balances will be paid in a lump sum.
Ownership
of Fund Shares
The
directors owned shares in the funds as of December 31, 2023, as shown in the
table below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| |
Name
of Director |
| |
Jonathan
S.
Thomas |
Brian
Bulatao |
Thomas
Bunn |
Chris
Cheesman |
Barry
Fink |
| Dollar
Range of Equity Securities in the Funds: |
|
| |
|
|
| One
Choice In Retirement Portfolio |
E |
A |
A |
E |
A |
| One
Choice 2025 Portfolio |
E |
A |
D |
A |
A |
| One
Choice 2030 Portfolio |
E |
A |
A |
A |
A |
| One
Choice 2035 Portfolio |
D |
A |
A |
A |
A |
| One
Choice 2040 Portfolio |
E |
A |
A |
A |
A |
| One
Choice 2045 Portfolio |
D |
A |
A |
A |
A |
| One
Choice 2050 Portfolio |
A |
A |
A |
A |
A |
| One
Choice 2055 Portfolio |
A |
A |
A |
A |
A |
| One
Choice 2060 Portfolio |
A |
A |
A |
A |
A |
| One
Choice 2065 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2015 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2020 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2025 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2030 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2035 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2040 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2045 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2050 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2055 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2060 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2065 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Portfolio: Very Conservative |
A |
A |
A |
A |
A |
| One
Choice Portfolio: Conservative |
A |
A |
A |
A |
A |
| One
Choice Portfolio: Moderate |
A |
A |
A |
A |
A |
| One
Choice Portfolio: Aggressive |
A |
A |
A |
A |
A |
| One
Choice Portfolio: Very Aggressive |
A |
A |
A |
A |
A |
| Aggregate
Dollar Range of Equity Securities in all Registered Investment Companies
Overseen by Director in Family of Investment Companies |
E |
A |
E |
E |
E |
Ranges:
A—none, B—$1-$10,000, C—$10,001-$50,000, D—$50,001-$100,000, E—More than
$100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| |
Name
of Director |
| |
Rajesh
Gupta |
Lynn
Jenkins |
Jan
M.
Lewis |
Gary
C. Meltzer |
| Dollar
Range of Equity Securities in the Funds: |
|
|
| |
| One
Choice In Retirement Portfolio |
A |
A |
E |
A |
| One
Choice 2025 Portfolio |
A |
A |
A |
A |
| One
Choice 2030 Portfolio |
E |
A |
A |
A |
| One
Choice 2035 Portfolio |
A |
A |
A |
A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| |
Name
of Director |
| |
Rajesh
Gupta |
Lynn
Jenkins |
Jan
M.
Lewis |
Gary
C. Meltzer |
| One
Choice 2040 Portfolio |
A |
A |
A |
A |
| One
Choice 2045 Portfolio |
A |
A |
A |
A |
| One
Choice 2050 Portfolio |
A |
A |
A |
A |
| One
Choice 2055 Portfolio |
A |
A |
A |
A |
| One
Choice 2060 Portfolio |
A |
A |
A |
A |
| One
Choice 2065 Portfolio |
A |
A |
A |
A |
| One
Choice Blend+ 2015 Portfolio |
A |
A |
A |
A |
| One
Choice Blend+ 2020 Portfolio |
A |
A |
A |
A |
| One
Choice Blend+ 2025 Portfolio |
A |
A |
A |
A |
| One
Choice Blend+ 2030 Portfolio |
A |
A |
A |
A |
| One
Choice Blend+ 2035 Portfolio |
A |
A |
A |
A |
| One
Choice Blend+ 2040 Portfolio |
A |
A |
A |
A |
| One
Choice Blend+ 2045 Portfolio |
A |
A |
A |
A |
| One
Choice Blend+ 2050 Portfolio |
A |
A |
A |
A |
| One
Choice Blend+ 2055 Portfolio |
A |
A |
A |
A |
| One
Choice Blend+ 2060 Portfolio |
A |
A |
A |
A |
| One
Choice Blend+ 2065 Portfolio |
A |
A |
A |
A |
| One
Choice Portfolio: Very Conservative |
A |
A |
A |
A |
| One
Choice Portfolio: Conservative |
A |
A |
A |
A |
| One
Choice Portfolio: Moderate |
A |
A |
A |
A |
| One
Choice Portfolio: Aggressive |
A |
A |
A |
A |
| One
Choice Portfolio: Very Aggressive |
A |
A |
A |
A |
| Aggregate
Dollar Range of Equity Securities in all Registered Investment Companies
Overseen by Director in Family of Investment Companies |
E |
E |
E |
A |
Ranges:
A—none, B—$1-$10,000, C—$10,001-$50,000, D—$50,001-$100,000, E—More than
$100,000
Beneficial
Ownership of Affiliates by Independent Directors
No
independent director or his or her immediate family members beneficially owned
shares of the advisor, the funds’ principal underwriter or any other person
directly or indirectly controlling, controlled by, or under common control with
the advisor or the funds’ principal underwriter as of December 31,
2023.
The
following table presents certain information about the executive officers of the
funds. Each officer serves as an officer for 16 investment companies in the
American Century family of funds. No officer is compensated for his or her
service as an officer of the funds. The listed officers are interested persons
of the funds and are appointed or re-appointed on an annual basis. The mailing
address for each officer listed below is 4500 Main Street, Kansas City, Missouri
64111.
|
|
|
|
|
|
|
|
| |
|
Name
(Year
of
Birth)
|
Offices
with
the
Funds
|
Principal
Occupation(s) During the Past Five Years
|
Patrick
Bannigan
(1965)
|
President
since 2019 |
Executive
Vice President and Director, ACC
(2012 to present); Chief Financial Officer, Chief Accounting Officer and
Treasurer, ACC
(2015 to present). Also serves as President, ACS;
Vice President, ACIM;
Chief Financial Officer, Chief Accounting Officer and/or Director,
ACIM,
ACS
and other ACC
subsidiaries |
| R.
Wes Campbell (1974) |
Chief
Financial Officer and Treasurer since 2018; Vice President since
2023 |
Vice
President, ACS,
(2020 to present); Investment Operations and Investment Accounting,
ACS
(2000 to present) |
Amy
D. Shelton
(1964) |
Chief
Compliance
Officer and Vice President since 2014 |
Chief
Compliance Officer, American Century funds,
(2014
to present); Chief Compliance Officer, ACIM
(2014 to present); Chief Compliance Officer, ACIS
(2009 to present). Also serves as Vice President, ACIS |
John
Pak
(1968) |
General
Counsel and
Senior Vice President since 2021 |
General
Counsel and Senior Vice President, ACC
(2021 to present); Also serves as General Counsel and Senior Vice
President, ACIM,
ACS and ACIS.
Chief Legal Officer of Investment and Wealth Management, The
Bank of New York Mellon
(2014 to 2021) |
Cihan
Kasikara
(1974) |
Vice
President since 2023 |
Senior
Vice President, ACS
(2022 to present); Treasurer, ACS
(2023 to present); Vice President, ACS
(2020 to 2022); Vice President, Franklin
Templeton
( 2015 to 2020) |
| Kathleen
Gunja Nelson (1976) |
Vice
President since 2023 |
Vice
President, ACS
(2017 to present) |
Ward
D.
Stauffer
(1960) |
Secretary
since
2005 |
Attorney,
ACC
(2003 to present) |
The
funds, their investment advisor and principal underwriter have adopted codes of
ethics under Rule 17j-1 of the Investment Company Act. They permit personnel
subject to the codes to invest in securities, including securities that may be
purchased or held by the underlying funds, provided that they first obtain
approval from the compliance department before making such
investments.
The
advisor is responsible for exercising the voting rights associated with the
securities purchased and/or held by the funds. The funds’ Board of Directors has
approved the advisor’s proxy voting policies to govern the advisor’s proxy
voting activities.
A
copy of the advisor’s proxy voting policies is attached hereto as Appendix
D.
Information regarding how the advisor voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30, is available at
americancentury.com/docs or may be requested free of charge by calling toll-free
at 1-800-345-2021. The advisor’s proxy voting record also is available on the
SEC’s website at sec.gov.
A
list of the funds’ principal shareholders appears in Appendix
A.
The
funds have no employees. To conduct the funds’ day-to-day activities, the
corporation has hired a number of service providers. Each service provider has a
specific function to fill on behalf of the funds that is described
below.
ACIM,
ACS and ACIS are wholly owned, directly or indirectly, by ACC. The Stowers
Institute for Medical Research (SIMR) controls ACC by virtue of its beneficial
ownership of more than 25% of the voting securities of ACC. SIMR is part of a
not-for-profit biomedical research organization dedicated to finding the keys to
the causes, treatments and prevention of disease.
American
Century Investment Management, Inc. (ACIM) serves as the investment advisor for
each of the funds. A description of the responsibilities of the advisor appears
in each prospectus under the heading Management.
The
advisor does not receive a unified management fee for services
provided to the following funds: One Choice Portfolio: Very Conservative, One
Choice Portfolio: Conservative, One Choice Portfolio: Moderate, One Choice
Portfolio: Aggressive and One Choice Portfolio: Very Aggressive.
Each
class of each fund and underlying fund is subject to a contractual unified
management fee based on a percentage of the daily net assets of such class. For
more information about the unified management fee, see The
Investment Advisor under
the heading Management in
each fund’s prospectus. The amount of the fee is calculated daily and paid
monthly in arrears.
The
management fee rates for the funds as of the date of this statement of
additional information appear below.
|
|
|
|
|
|
|
|
| |
| Fund |
Class |
Management
Fee1 |
| One
Choice In Retirement Portfolio |
Investor,
A, C and R |
0.78% |
| |
I |
0.60% |
|
| R6 |
0.49% |
| One
Choice 2025 Portfolio |
Investor,
A, C and R |
0.78% |
| |
I |
0.60% |
|
| R6 |
0.49% |
| One
Choice 2030 Portfolio |
Investor,
A, C and R |
0.80% |
| |
I |
0.62% |
|
| R6 |
0.50% |
| One
Choice 2035 Portfolio |
Investor,
A, C and R |
0.83% |
| |
I |
0.64% |
|
| R6 |
0.52% |
| One
Choice 2040 Portfolio |
Investor,
A, C and R |
0.86% |
| |
I |
0.66% |
|
| R6 |
0.55% |
| One
Choice 2045 Portfolio |
Investor,
A, C and R |
0.88% |
| |
I |
0.69% |
|
| R6 |
0.56% |
| One
Choice 2050 Portfolio |
Investor,
A, C and R |
0.90% |
| |
I |
0.71% |
|
| R6 |
0.58% |
|
|
|
|
|
|
|
|
| |
| Fund |
Class |
Management
Fee1 |
| One
Choice 2055 Portfolio |
Investor,
A, C and R |
0.92% |
| |
I |
0.72% |
|
| R6 |
0.59% |
| One
Choice 2060 Portfolio |
Investor,
A, C and R |
0.93% |
| |
I |
0.73% |
|
| R6 |
0.60% |
| One
Choice 2065 Portfolio |
Investor,
A, C and R |
0.94% |
|
| I |
0.74% |
|
| R6 |
0.60% |
1 Each
year, the Board of Directors will approve a new management fee rate. The fee
rate will be based on the most conservative (i.e., least expensive) neutral mix
of the underlying funds estimated by the portfolio managers for the upcoming
year, and adjusted for each class to reflect such class’s separate arrangements
for shareholder services. Because the fee rates are based on the neutral mix, it
is possible for them to increase from one year to the next.
|
|
|
|
|
|
|
|
| |
| Fund |
Class |
Management
Fee |
| One
Choice Blend+ 2015 Portfolio |
Investor,
A, and R |
0.58% |
|
| I |
0.38% |
|
| R6 |
0.23% |
| One
Choice Blend+ 2020 Portfolio |
Investor,
A, and R |
0.58% |
|
| I |
0.38% |
| |
R6 |
0.23% |
| One
Choice Blend+ 2025 Portfolio |
Investor,
A, and R |
0.58% |
| |
I |
0.38% |
|
| R6 |
0.23% |
| One
Choice Blend+ 2030 Portfolio |
Investor,
A, and R |
0.58% |
| |
I |
0.38% |
|
| R6 |
0.23% |
| One
Choice Blend+ 2035 Portfolio |
Investor,
A, and R |
0.58% |
| |
I |
0.38% |
|
| R6 |
0.23% |
| One
Choice Blend+ 2040 Portfolio |
Investor,
A, and R |
0.58% |
| |
I |
0.38% |
|
| R6 |
0.23% |
| One
Choice Blend+ 2045 Portfolio |
Investor,
A, and R |
0.58% |
| |
I |
0.38% |
|
| R6 |
0.23% |
| One
Choice Blend+ 2050 Portfolio |
Investor,
A, and R |
0.58% |
| |
I |
0.38% |
|
| R6 |
0.23% |
| One
Choice Blend+ 2055 Portfolio |
Investor,
A, and R |
0.58% |
| |
I |
0.38% |
|
| R6 |
0.23% |
|
|
|
|
|
|
|
|
| |
| Fund |
Class |
Management
Fee |
| One
Choice Blend+ 2060 Portfolio |
Investor,
A, and R |
0.58% |
| |
I |
0.38% |
|
| R6 |
0.23% |
| One
Choice Blend+ 2065 Portfolio |
Investor,
A, and R |
0.58% |
|
| I |
0.38% |
|
| R6 |
0.23% |
On
each calendar day, each class of each fund accrues a management fee that is
equal to the class’s management fee rate times the net assets of the class
divided by 365 (366 in leap years). On the first business day of each month, the
funds pay a management fee to the advisor for the previous month. The fee for
the previous month is the sum of the calculated daily fees for each class of a
fund during the previous month.
The
management agreement between the corporation and the advisor shall continue in
effect for a period of two years from its effective date (unless sooner
terminated in accordance with its terms) and shall continue in effect from year
to year thereafter for each fund so long as such continuance is approved at
least annually by:
(1)either
the funds’ Board of Directors, or a majority of the outstanding voting
securities of such fund (as defined in the Investment Company Act)
and
(2)the
vote of a majority of the directors of the funds who are not parties to the
agreement or interested persons of the advisor, cast in person at a meeting
called for the purpose of voting on such approval.
The
management agreement states that the funds’ Board of Directors or a majority of
the outstanding voting securities of each class of such fund may terminate the
management agreement at any time without payment of any penalty on 60 days’
written notice to the advisor. The management agreement shall be automatically
terminated if it is assigned.
The
management agreement states that the advisor shall not be liable to the funds or
their shareholders for anything other than willful misfeasance, bad faith, gross
negligence or reckless disregard of its obligations and duties.
The
management agreement also provides that the advisor and its officers, directors
and employees may engage in other business, render services to others, and
devote time and attention to any other business whether of a similar or
dissimilar nature.
Certain
investments may be appropriate for the funds and also for other clients advised
by the advisor. Investment decisions for the funds and other clients are made
with a view to achieving their respective investment objectives after
consideration of such factors as their current holdings, availability of cash
for investment and the size of their investment generally. A particular security
may be bought or sold for only one client or fund, or in different amounts and
at different times for more than one but less than all clients or funds. A
particular security may be bought for one client or fund on the same day it is
sold for another client or fund, and a client or fund may hold a short position
in a particular security at the same time another client or fund holds a long
position. In addition, purchases or sales of the same security may be made for
two or more clients or funds on the same date. The advisor has adopted
procedures designed to ensure such transactions will be allocated among clients
and funds in a manner believed by the advisor to be equitable to each. In some
cases this procedure could have an adverse effect on the price or amount of the
securities purchased or sold by a fund.
Unified
management fees incurred by each fund for the fiscal periods ended July 31,
2024, 2023 and 2022 are indicated in the following table.
|
|
|
|
|
|
|
|
|
|
|
| |
|
Unified
Management Fees
|
|
| |
|
Fund
|
2024 |
2023 |
2022 |
| One
Choice In Retirement Portfolio |
$11,277,0731 |
$11,815,12916 |
$14,678,11231 |
| One
Choice 2025 Portfolio |
$10,675,0392 |
$11,504,63017 |
$14,393,38432 |
| One
Choice 2030 Portfolio |
$10,685,4833 |
$10,677,14818 |
$12,653,72633 |
| One
Choice 2035 Portfolio |
$13,077,9214 |
$13,164,29919 |
$15,556,63334 |
| One
Choice 2040 Portfolio |
$9,855,7285 |
$9,498,02220 |
$11,160,72535 |
| One
Choice 2045 Portfolio |
$11,019,3286 |
$10,560,37921 |
$12,459,61136 |
| One
Choice 2050 Portfolio |
$8,550,4277 |
$7,785,33722 |
$8,782,02337 |
| One
Choice 2055 Portfolio |
$6,051,2528 |
$5,305,14223 |
$5,837,81338 |
| One
Choice 2060 Portfolio |
$3,187,0839 |
$2,462,38324 |
$2,333,28239 |
| One
Choice 2065 Portfolio |
$515,74010 |
$269,62225 |
$125,60840 |
|
|
|
|
|
|
|
|
|
|
|
| |
|
Unified
Management Fees
|
|
| |
|
Fund
|
2024 |
2023 |
2022 |
| One
Choice Blend+ 2015 Portfolio |
$12,56011 |
$10,67826 |
$5,12441 |
| One
Choice Blend+ 2020 Portfolio |
$38,17512 |
$28,05127 |
$13,52442 |
| One
Choice Blend+ 2025 Portfolio |
$91,23413 |
$67,01028 |
$31,42643 |
| One
Choice Blend+ 2030 Portfolio |
$122,20614 |
$76,17829 |
$36,96244 |
| One
Choice Blend+ 2035 Portfolio |
$114,10415 |
$71,66530 |
$36,03745 |
| One
Choice Blend+ 2040 Portfolio |
$105,363 |
$64,664 |
$25,379 |
| One
Choice Blend+ 2045 Portfolio |
$119,282 |
$70,466 |
$26,577 |
| One
Choice Blend+ 2050 Portfolio |
$93,555 |
$51,507 |
$20,203 |
| One
Choice Blend+ 2055 Portfolio |
$58,732 |
$30,199 |
$13,038 |
| One
Choice Blend+ 2060 Portfolio |
$40,772 |
$19,901 |
$6,293 |
| One
Choice Blend+ 2065 Portfolio |
$25,593 |
$11,778 |
$6,387 |
1Amount
shown reflects waiver by advisor of $1,055,703 in management fees.
2Amount
shown reflects waiver by advisor of 766,838 in management fees.
3Amount
shown reflects waiver by advisor of $818,311 in management fees.
4Amount
shown reflects waiver by advisor of $828,123 in management fees.
5Amount
shown reflects waiver by advisor of $734,227 in management fees.
6Amount
shown reflects waiver by advisor of $604,640 in management fees.
7Amount
shown reflects waiver by advisor of $461,156 in management fees.
8Amount
shown reflects waiver by advisor of $449,264 in management fees.
9Amount
shown reflects waiver by advisor of $276,492 in management fees.
10Amount
shown reflects waiver by advisor of $49,451 in management fees.
11Amount
shown reflects waiver by advisor of $647 in management fees.
12Amount
shown reflects waiver by advisor of $2,173 in management fees.
13Amount
shown reflects waiver by advisor of $3,790 in management fees.
14Amount
shown reflects waiver by advisor of $3,743 in management fees.
15Amount
shown reflects waiver by advisor of $1,647 in management fees.
16Amount
shown reflects waiver by advisor of $1,017,202 in management fees.
17Amount
shown reflects waiver by advisor of $834,093 in management fees.
18Amount
shown reflects waiver by advisor of $848,327 in management fees.
19Amount
shown reflects waiver by advisor of $882,181 in management fees.
20Amount
shown reflects waiver by advisor of $694,216 in management fees.
21Amount
shown reflects waiver by advisor of $612,846 in management fees.
22Amount
shown reflects waiver by advisor of $404,230 in management fees.
23Amount
shown reflects waiver by advisor of $363,926 in management fees.
24Amount
shown reflects waiver by advisor of $196,721 in management fees.
25Amount
shown reflects waiver by advisor of $24,476 in management fees.
26Amount
shown reflects waiver by advisor of $557 in management fees.
27Amount
shown reflects waiver by advisor of $1,334 in management fees.
28Amount
shown reflects waiver by advisor of $2,462 in management fees.
29Amount
shown reflects waiver by advisor of $1,972 in management fees.
30Amount
shown reflects waiver by advisor of $780 in management fees.
31Amount
shown reflects waiver by advisor of $1,105,395 in management fees.
32Amount
shown reflects waiver by advisor of $941,064 in management fees.
33Amount
shown reflects waiver by advisor of $1,030,653 in management fees.
34Amount
shown reflects waiver by advisor of $1,114,192 in management fees.
35Amount
shown reflects waiver by advisor of $861,293 in management fees.
36Amount
shown reflects waiver by advisor of $772,700 in management fees.
37Amount
shown reflects waiver by advisor of $494,586 in management fees.
38Amount
shown reflects waiver by advisor of $406,970 in management fees.
39Amount
shown reflects waiver by advisor of $192,585 in management fees.
40Amount
shown reflects waiver by advisor of $11,220 in management fees.
41Amount
shown reflects waiver by advisor of $252 in management fees.
42Amount
shown reflects waiver by advisor of $567 in management fees.
43Amount
shown reflects waiver by advisor of $1,000 in management fees.
44Amount
shown reflects waiver by advisor of $771 in management fees.
45Amount
shown reflects waiver by advisor of $273 in management fees.
Accounts
Managed
The
portfolio managers are responsible for the day-to-day management of various
accounts, as indicated by the following table. None of these accounts has an
advisory fee based on the performance of the account.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
| Accounts
Managed (As of July 31, 2024) |
| |
|
Registered
Investment
Companies
(e.g.,
American
Century
Investments
funds and
American
Century
Investments
-
subadvised
funds)
|
Other
Pooled
Investment
Vehicles
(e.g.,
commingled
trusts
and
529 education
savings
plans)
|
Other
Accounts
(e.g.,
separate
accounts
and
corporate
accounts
including
incubation
strategies
and
corporate
money)
|
| Radu
Gabudean |
Number
of Accounts |
30 |
96 |
14 |
| Assets |
$19.5
billion1 |
$27.2
billion |
$7.4
million |
| Brian
L. Garbe |
Number
of Accounts |
29 |
30 |
14 |
| Assets |
$19.3
billion1 |
$15.5
billion |
$7.4
million |
| Vidya
Rajappa |
Number
of Accounts |
30 |
96 |
14 |
| Assets |
$19.5
billion1 |
$27.2
billion |
$7.4
million |
| Richard
Weiss |
Number
of Accounts |
30 |
97 |
14 |
| Assets |
$19.5
billion1 |
$27.4
billion |
$7.4
million |
| Scott
Wilson |
Number
of Accounts |
29 |
96 |
14 |
| Assets |
$19.3
billion1 |
$27.2
billion |
$7.4
million |
1 Includes
$1.7 billion in One Choice In Retirement Portfolio; $1.6 billion in One Choice
2025 Portfolio; $1.7 billion in One Choice 2030 Portfolio; $1.9 billion in One
Choice 2035 Portfolio; $1.5 billion in One Choice 2040 Portfolio; $1.6 billion
in One Choice 2045 Portfolio; $1.2 billion in One Choice 2050 Portfolio; $880.5
million in One Choice 2055 Portfolio; $484.1 million in One Choice 2060
Portfolio; $95.4 million in One Choice 2065 Portfolio; $3.6 million in One
Choice Blend+ 2015 Portfolio; $16.0 million in One Choice Blend+ 2020 Portfolio;
$31.7 million in One Choice Blend+ 2025 Portfolio; $51.6 million in One Choice
Blend+ 2030 Portfolio; $46.8 million in One Choice Blend+ 2035 Portfolio; $42.5
million in One Choice Blend+ 2040 Portfolio; $49.3 million in One Choice Blend+
2045 Portfolio; $41.9 million in One Choice Blend+ 2050 Portfolio; $26.8 million
in One Choice Blend+ 2055 Portfolio; $17.8 million in One Choice Blend+ 2060
Portfolio; $8.6 million in One Choice Blend+ 2065 Portfolio; $390.0 million in
One Choice Portfolio: Very Conservative; $1.1 billion in One Choice Portfolio:
Conservative; $1.8 billion in One Choice Portfolio: Moderate; $902.4 million in
One Choice Portfolio: Aggressive; and $353.3 million in One Choice Portfolio:
Very Aggressive.
Potential
Conflicts of Interest
Certain
conflicts of interest may arise in connection with the management of multiple
portfolios. Potential conflicts include, for example, conflicts among investment
strategies, such as one portfolio buying or selling a security while another
portfolio has a differing, potentially opposite position in such security. This
may include one portfolio taking a short position in the security of an issuer
that is held long in another portfolio (or vice versa). Other potential
conflicts may arise with respect to the allocation of investment opportunities,
which are discussed in more detail below. American Century Investments has
adopted policies and procedures that are designed to minimize the effects of
these conflicts.
Responsibility
for managing American Century Investments client portfolios is organized
according to investment discipline. Investment disciplines include, for example,
disciplined equity, global growth equity, global value equity, global fixed
income, and multi-asset strategies, exchange traded funds, and Avantis Investors
funds. Within each discipline are one or more portfolio teams responsible for
managing specific client portfolios. Generally, client portfolios with similar
strategies are managed by the same team
using
the same objective, approach, and philosophy. Accordingly, portfolio holdings,
position sizes, and industry and sector exposures tend to be similar across
similar portfolios, which minimizes the potential for conflicts of interest. In
addition, American Century Investments maintains an ethical wall that restricts
real time access to information regarding any portfolio’s transaction activities
and positions to team members that have responsibility for a given portfolio or
are within the same equity investment discipline. The ethical wall is intended
to aid in preventing the misuse of portfolio holdings information and trading
activity in the other disciplines.
For
each investment strategy, one portfolio is generally designated as the “policy
portfolio.” Other portfolios with similar investment objectives, guidelines and
restrictions, if any, are referred to as “tracking portfolios.” When managing
policy and tracking portfolios, a portfolio team typically purchases and sells
securities across all portfolios that the team manages. American Century
Investments’ trading systems include various order entry programs that assist in
the management of multiple portfolios, such as the ability to purchase or sell
the same relative amount of one security across several funds. In some cases a
tracking portfolio may have additional restrictions or limitations that cause it
to be managed separately from the policy portfolio. Portfolio managers make
purchase and sale decisions for such portfolios alongside the policy portfolio
to the extent the overlap is appropriate, and separately, if the overlap is
not.
American
Century Investments may aggregate orders to purchase or sell the same security
for multiple portfolios when it believes such aggregation is consistent with its
duty to seek best execution on behalf of its clients. Orders of certain client
portfolios may, by investment restriction or otherwise, be determined not
available for aggregation. American Century Investments has adopted policies and
procedures to minimize the risk that a client portfolio could be systematically
advantaged or disadvantaged in connection with the aggregation of orders. To the
extent equity trades are aggregated, shares purchased or sold are generally
allocated to the participating portfolios pro rata based on order size. Because
initial public offerings (IPOs) are usually available in limited supply and in
amounts too small to permit across-the-board pro rata allocations, American
Century Investments has adopted special procedures designed to promote a fair
and equitable allocation of IPO securities among clients over time. A
centralized trading desk executes all fixed income securities transactions for
Avantis ETFs and mutual funds. For all other funds in the American Century
complex, portfolio teams are responsible for executing fixed income trades with
broker/dealers in a predominantly dealer marketplace. Trade allocation decisions
are made by the portfolio manager at the time of trade execution and orders
entered on the fixed-income order management system. There is an ethical wall
between the Avantis trading desk and all other American Century traders. The
Advisor’s Global Head of Trading monitors all trading activity for best
execution and to make sure no set of clients is being systematically
disadvantaged.
Finally,
investment of American Century Investments’ corporate assets in proprietary
accounts may raise additional conflicts of interest. To mitigate these potential
conflicts of interest, American Century Investments has adopted policies and
procedures intended to provide that trading in proprietary accounts is performed
in a manner that does not give improper advantage to American Century
Investments to the detriment of client portfolios.
Compensation
American
Century Investments portfolio manager compensation is structured to align the
interests of portfolio managers with those of the shareholders whose assets they
manage. As of July 31, 2024, it includes the components described below, each of
which is determined with reference to a number of factors such as overall
performance, market competition, and internal equity.
Base
Salary
Portfolio
managers receive base pay in the form of a fixed annual salary.
Bonus
A
significant portion of portfolio manager compensation takes the form of an
annual incentive bonus which is determined by a combination of factors. One
factor is investment performance. The mutual funds’ investment performance is
generally measured by a combination of one-, three- and five-year pre-tax
performance relative to various benchmarks and/or internally-customized peer
groups, as indicated below. Each fund constructs its custom peer group using all
the funds in the category indicated below as a starting point. Funds are then
eliminated from the peer group based on a standardized methodology designed to
result in a final peer group that is both more stable (i.e., has less peer
turnover) over the long term and that more closely represents the fund’s true
peers based on internal investment mandates.
The
performance comparison periods may be adjusted based on a fund’s inception date
or a portfolio manager’s tenure on the fund.
|
|
|
|
|
|
|
|
| |
| Funds |
Benchmark |
Peer
Group
|
| One
Choice In Retirement Portfolio |
S&P
Target Date Retirement Income Index |
Morningstar
Target-Date Retirement, Target-Date 2020 |
| One
Choice 2025 Portfolio |
S&P
Target Date To 2025 Index |
Morningstar
Target-Date 2025 |
| One
Choice 2030 Portfolio |
S&P
Target Date To 2030 Index |
Morningstar
Target-Date 2030 |
| One
Choice 2035 Portfolio |
S&P
Target Date To 2035 Index |
Morningstar
Target-Date 2035 |
| One
Choice 2040 Portfolio |
S&P
Target Date To 2040 Index |
Morningstar
Target-Date 2040 |
| One
Choice 2045 Portfolio |
S&P
Target Date To 2045 Index |
Morningstar
Target-Date 2045 |
| One
Choice 2050 Portfolio |
S&P
Target Date To 2050 Index |
Morningstar
Target-Date 2050 |
| One
Choice 2055 Portfolio |
S&P
Target Date To 2055 Index |
Morningstar
Target-Date 2055 |
| One
Choice 2060 Portfolio |
S&P
Target Date To 2060 Index1 |
Morningstar
Target-Date 2060 |
| One
Choice 2065 Portfolio |
S&P
Target Date To 2065+ Index2 |
Morningstar
Target-Date 2065+ |
| One
Choice Blend+ 2015 Portfolio |
S&P
Target Date 2015 Index |
Morningstar
Target-Date 2015 |
| One
Choice Blend+ 2020 Portfolio |
S&P
Target Date To 2020 Index |
Morningstar
Target-Date 2020 |
| One
Choice Blend+ 2025 Portfolio |
S&P
Target Date To 2025 Index |
Morningstar
Target-Date 2025 |
| One
Choice Blend+ 2030 Portfolio |
S&P
Target Date To 2030 Index |
Morningstar
Target-Date 2030 |
| One
Choice Blend+ 2035 Portfolio |
S&P
Target Date To 2035 Index |
Morningstar
Target-Date 2035 |
| One
Choice Blend+ 2040 Portfolio |
S&P
Target Date To 2040 Index |
Morningstar
Target-Date 2040 |
| One
Choice Blend+ 2045 Portfolio |
S&P
Target Date To 2045 Index |
Morningstar
Target-Date 2045 |
| One
Choice Blend+ 2050 Portfolio |
S&P
Target Date To 2050 Index |
Morningstar
Target-Date 2050 |
| One
Choice Blend+ 2055 Portfolio |
S&P
Target Date To 2055 Index |
Morningstar
Target-Date 2055 |
| One
Choice Blend+ 2060 Portfolio |
S&P
Target Date To 2060 Index |
Morningstar
Target-Date 2060 |
| One
Choice Blend+ 2065 Portfolio |
S&P
Target Date To 2065+ Index2 |
Morningstar
Target-Date 2065+ |
| One
Choice Portfolio: Very Conservative |
Custom3 |
Morningstar
Allocation - 15% to 30% Equity |
| One
Choice Portfolio: Conservative |
Custom3 |
Morningstar
Allocation - 30% to 50% Equity |
| One
Choice Portfolio: Moderate |
Custom3 |
Morningstar
Allocation - 50% to 70% Equity |
| One
Choice Portfolio: Aggressive |
Custom3 |
Morningstar
Allocation - 70% to 85% Equity |
| One
Choice Portfolio: Very Aggressive |
Custom3 |
Morningstar
Allocation - 85%+ Equity |
1 Effective
January 1, 2018, the fund’s benchmark was changed from S&P Target Date To
2055+.
2
Effective
October 1, 2021, the fund’s benchmark was changed from S&P Target Date To
2060+.
3 The
fund’s benchmark is a custom benchmark comprised of the various benchmarks of
the underlying funds (weighted according to such fund’s asset mix).
Portfolio
managers may have responsibility for multiple American Century Investments
mutual funds. In such cases, the performance of each is assigned a percentage
weight appropriate for the portfolio manager’s relative levels of
responsibility. Portfolio managers also may have responsibility for other types
of managed portfolios or ETFs. If the performance of a managed account or ETF is
considered for purposes of compensation, it is generally measured via the same
criteria as an American Century Investments mutual fund (i.e., relative to the
performance of a benchmark and/or peer group).
A
second factor in the bonus calculation relates to the performance of a number of
American Century Investments mutual funds managed according to one of the
following investment disciplines: global growth equity, global value equity,
disciplined equity, global fixed-income, and multi-asset strategies. The
performance of American Century ETFs may also be included for certain investment
disciplines. Performance is measured for each product individually as described
above and then combined to create an overall composite for the product group.
These composites may measure one-year performance (equal weighted) or a
combination of one-, three- and five-year performance (equal or asset weighted)
depending on the portfolio manager’s responsibilities and products managed and
the composite for certain portfolio managers may include multiple disciplines.
This feature is designed to encourage effective teamwork among portfolio
management teams in achieving long-term investment success for similarly styled
portfolios.
A
portion of portfolio managers’ bonuses may be discretionary and may be tied to
factors such as profitability or individual performance goals, such as research
projects and/or the development of new products.
Restricted
Stock Plans
Portfolio
managers are eligible for grants of restricted stock of ACC. These grants are
discretionary, and eligibility and availability can vary from year to year. The
size of an individual’s grant is determined by individual and product
performance as well as other product-specific considerations such as
profitability. Grants can appreciate/depreciate in value based on the
performance of the ACC stock during the restriction period (generally three to
four years).
Deferred
Compensation Plans
Portfolio
managers are eligible for grants of deferred compensation. These grants are used
in very limited situations, primarily for retention purposes. Grants are fixed
and can appreciate/depreciate in value based on the performance of the American
Century Investments mutual funds in which the portfolio manager chooses to
invest them.
Ownership
of Securities
The
following table indicates the dollar range of securities of each fund
beneficially owned by the fund’s portfolio managers as of July 31, 2024, the
fund’s most recent fiscal year end. Certain portfolio managers serve on teams
that oversee a number of funds in the same broad investment strategy and are not
expected to invest in each fund.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Ownership
of Securities |
|
|
|
| |
|
|
Radu
Gabudean |
Brian
L. Garbe |
Vidya
Rajappa |
Richard
Weiss |
Scott
Wilson |
| One
Choice In Retirement Portfolio |
A |
A |
A |
G |
A |
| One
Choice 2025 Portfolio |
A |
A |
A |
A |
A |
| One
Choice 2030 Portfolio |
A1 |
A1 |
A1 |
A |
A |
| One
Choice 2035 Portfolio |
A |
A |
A |
A |
A |
| One
Choice 2040 Portfolio |
A |
A |
A |
A |
A |
| One
Choice 2045 Portfolio |
A |
A |
A |
A |
A |
| One
Choice 2050 Portfolio |
A |
A |
A |
A |
A |
| One
Choice 2055 Portfolio |
A |
A |
A |
A |
A |
| One
Choice 2060 Portfolio |
A2 |
A |
A |
A |
A |
| One
Choice 2065 Portfolio |
A3 |
A |
A |
A |
A |
| One
Choice Blend+ 2015 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2020 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2025 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2030 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2035 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2040 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2045 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2050 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2055 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2060 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Blend+ 2065 Portfolio |
A |
A |
A |
A |
A |
| One
Choice Portfolio: Very Conservative |
A |
A |
A |
A |
A |
| One
Choice Portfolio: Conservative |
A |
A |
A |
A |
A |
| One
Choice Portfolio: Moderate |
A |
A |
A |
A |
A |
| One
Choice Portfolio: Aggressive |
A |
A |
A |
A |
A |
| One
Choice Portfolio: Very Aggressive |
A |
A |
E |
A |
A |
Ranges:
A - none; B - $1-$10,000; C - $10,001-$50,000; D - $50,001-$100,000; E -
$100,001-$500,000; F - $500,001-$1,000,000;
G - More than
$1,000,000.
1 This
figure excludes 401(k) investments in a collective trust vehicle that is managed
substantially the same as One Choice 2030 Portfolio. Inclusion of such 401(k)
investments would result in the amount categorized in the table as a B for Radu
Gabudean, an E for Brian Garbe and an E for Vidya Rajappa.
2 This
figure excludes 401(k) investments in a collective trust vehicle that is managed
substantially the same as One Choice 2060 Portfolio. Inclusion of such 401(k)
investments would result in the amount categorized in the table as an E for Radu
Gabudean.
3 This
figure excludes 401(k) investments in a collective trust vehicle that is managed
substantially the same as One Choice 2065 Portfolio. Inclusion of such 401(k)
investments would result in the amount categorized in the table as an E for Radu
Gabudean.
American
Century Services, LLC (ACS), 4500 Main Street, Kansas City, Missouri 64111,
serves as transfer agent and dividend-paying agent for the funds. It provides
physical facilities, computer hardware and software and personnel for the
day-to-day administration of the funds and the advisor, including the
maintenance of the funds’ underlying fund shares in its book entry transfer
agency system. The advisor pays ACS’s costs for serving as transfer agent and
dividend-paying agent for the funds out of the advisor’s fees. For a description
of these fees and the terms of payment, see the discussion under the caption
Investment
Advisor,
on page 34.
Proceeds
from purchases of fund shares may pass through accounts maintained by the
transfer agent at Commerce Bank, N.A. or UMB Bank, n.a. before being held at the
fund’s custodian. Redemption proceeds also may pass from the custodian to the
shareholder through such bank accounts.
From
time to time, special services may be offered to shareholders who maintain
higher share balances in our family of funds. These services may include the
waiver of minimum investment requirements, expedited confirmation of shareholder
transactions, newsletters and a team of personal representatives. Any expenses
associated with these special services will be paid by the advisor.
The
advisor has entered into an Administration Agreement with State Street Bank and
Trust Company (SSB) to provide certain fund accounting, fund financial
reporting, tax and treasury/tax compliance services for the funds, including
striking the daily net asset value for each fund. The advisor pays SSB a monthly
fee as compensation for these services that is based on the total net assets of
accounts in the American Century complex serviced by SSB. ACS does pay SSB for
some additional services on a per fund basis. While ACS continues to serve as
the administrator of the funds, SSB provides sub-administrative services that
were previously undertaken by ACS.
The
funds’ shares are distributed by American Century Investment Services, Inc.
(ACIS), a registered broker-dealer. The distributor is a wholly owned subsidiary
of ACC and its principal business address is 4500 Main Street, Kansas City,
Missouri 64111.
The
distributor is the principal underwriter of the funds’ shares. The distributor
makes a continuous, best-efforts underwriting of the funds’ shares. This means
the distributor has no liability for unsold shares. The advisor pays ACIS’s
costs for serving as principal underwriter of the funds’ shares out of the
advisor’s fees. For a description of these fees and the terms of payment, see
the discussion under the caption Investment
Advisor,
on page 34. ACIS does not earn commissions for distributing the funds’
shares.
Certain
financial intermediaries unaffiliated with the distributor or the funds may
perform various administrative and shareholder services for their clients who
are invested in the funds. These services may include assisting with fund
purchases, redemptions and exchanges, distributing information about the funds
and their performance, preparing and distributing client account statements, and
other administrative and shareholder services that would otherwise be provided
by the distributor or its affiliates. The distributor may pay fees out of its
own resources to such financial intermediaries for providing these
services.
State
Street Bank and Trust Company (SSB), One Congress Street, Suite 1, Boston,
Massachusetts 02114-2016 serves as custodian of the funds’ cash and securities
under a Master Custodian Agreement with the corporation. The custodian takes no
part in determining the investment policies of the funds or in deciding which
securities are purchased or sold by the funds. The underlying funds, however,
may invest in certain obligations of the custodian and may purchase or sell
certain securities from or to the custodian.
Deloitte
& Touche LLP is the independent registered public accounting firm of the
funds. The address of Deloitte & Touche LLP is 1100 Walnut Street, Kansas
City, Missouri 64106. As the independent registered public accounting firm of
the funds, Deloitte & Touche LLP provides services including auditing the
annual financial statements and financial highlights for each fund.
The
funds generally will purchase and sell their portfolio securities (i.e., shares
of the underlying American Century Investments mutual funds) by dealing directly
with the issuers, the underlying funds. As a result, the funds are not expected
to incur brokerage costs directly other than transaction costs associated with
purchasing exchange-traded funds (applicable to the One Choice Blend+
Portfolios).
In
the fiscal years ended July 31, 2024, 2023 and 2022, the funds paid the
following brokerage commissions including, as applicable, futures
commissions.
|
|
|
|
|
|
|
|
|
|
|
| |
| Fund |
2024 |
2023 |
2022 |
| One
Choice Blend+ 2015 |
$63 |
$33 |
$88 |
| One
Choice Blend+ 2020 |
$236 |
$121 |
$153 |
| One
Choice Blend+ 2025 |
$376 |
$163 |
$338 |
| One
Choice Blend+ 2030 |
$324 |
$125 |
$222 |
| One
Choice Blend+ 2035 |
$113 |
$76 |
$72 |
Details
about brokerage commissions paid by the underlying funds appear in those funds’
statements of additional information.
Each
of the funds named on the front of this statement of additional information is a
series of shares issued by the corporation, and shares of each fund have equal
voting rights. In addition, each series (or fund) may be divided into separate
classes. See Multiple
Class Structure,
which follows. Additional funds and classes may be added without a shareholder
vote.
Each
fund votes separately on matters affecting that fund exclusively. Voting rights
are not cumulative, so investors holding more than 50% of the corporation’s (all
funds’) outstanding shares may be able to elect a Board of Directors. The
corporation undertakes dollar-based voting, meaning that the number of votes a
shareholder is entitled to is based upon the dollar amount of the shareholder’s
investment. The election of directors is determined by the votes received from
all of the corporation’s shareholders without regard to whether a majority of
shares of any one fund voted in favor of a particular nominee or all nominees as
a group.
The
assets belonging to each series are held separately by the custodian and the
shares of each series or class represent a beneficial interest in the principal,
earnings and profit (or losses) of investments and other assets held for each
series or class. Within their respective series or class, all shares have equal
redemption rights. Each share, when issued, is fully paid and
non-assessable.
Each
shareholder has rights to dividends and distributions declared by the fund he or
she owns and to the net assets of such fund upon its liquidation or dissolution
proportionate to his or her share ownership interest in the fund.
The
corporation’s Board of Directors has adopted a multiple class plan pursuant to
Rule 18f-3 under the Investment Company Act. The plan is described in the
prospectus of any fund that offers more than one class. Pursuant to such plan,
the funds may issue the following classes of shares: Investor Class, I Class, A
Class, C Class, R Class and R6 Class. Not all funds offer all
classes.
The
Investor Class is made available to investors directly from American Century
Investments and/or through some financial intermediaries. Additional
information regarding eligibility for Investor Class shares may be found in the
funds’ prospectuses. The I Class is made available to institutional shareholders
or through financial intermediaries that provide various shareholder and
administrative services. The A and C Classes also are made available through
financial intermediaries, for purchase by individual investors who receive
advisory and personal services from the intermediary. The R Class is made
available through financial intermediaries and is generally used in 401(k) and
other retirement plans. The R6 Class is generally available only to participants
in employer-sponsored retirement plans where a financial intermediary provides
recordkeeping services to plan participants. The classes have different
unified management fees as a result of their separate arrangements for
shareholder services. In addition, the A, C and R Class shares each are
subject to a separate Master Distribution and Individual Shareholder Services
Plan (the A Class Plan, C Class Plan and R Class Plan, respectively, and
collectively, the plans) described below. The plans have been adopted by the
funds’ Board of Directors in accordance with Rule 12b-1 adopted by the SEC under
the Investment Company Act.
Rule
12b-1
Rule
12b-1 permits an investment company to pay expenses associated with the
distribution of its shares in accordance with a plan adopted by its Board of
Directors and approved by its shareholders. Pursuant to such rule, the Board of
Directors of the funds’ A, C and R Classes have approved and entered into the A
Class Plan, C Class Plan and R Class Plan, respectively. The plans are described
below.
In
adopting the plans, the Board of Directors (including a majority of directors
who are not interested persons of the funds, as defined in the Investment
Company Act, hereafter referred to as the independent directors) determined that
there was a reasonable likelihood that the plans would benefit the funds and the
shareholders of the affected class. Some of the anticipated benefits include
improved name recognition of the funds generally and growing assets in existing
funds, which helps retain and attract investment management talent and provides
a better environment for improving fund performance. Pursuant to Rule 12b-1,
information about revenues and expenses under the plans is presented to the
Board of Directors quarterly. Continuance of the plans must be approved by the
Board of Directors, including a majority of the independent directors, annually.
The plans may be amended by a vote of the Board of Directors, including a
majority of the independent directors, except that the plans may not be amended
to materially increase the amount to be spent for distribution without majority
approval of the shareholders of the affected class. The plans terminate
automatically in the event of an assignment and may be terminated upon a vote of
a majority of the independent directors or by vote of a majority of the
outstanding voting securities of the affected class.
All
fees paid under the plans will be made in accordance with Section 2830 of the
Conduct Rules of the Financial Industry Regulatory Authority
(FINRA).
The
Share Class Plans
As
described in the prospectuses, the A, C and R Class shares of the funds are made
available to participants in employer-sponsored retirement plans and to persons
purchasing through broker-dealers, banks, insurance companies and other
financial intermediaries that provide various administrative, shareholder and
distribution services. The funds’ distributor enters into contracts with various
banks, broker-dealers, insurance companies and other financial intermediaries,
with respect to the sale of the funds’ shares and/or the use of the funds’
shares in various investment products or in connection with various financial
services.
Certain
recordkeeping and administrative services that would otherwise be performed by
the funds’ transfer agent may be performed by a plan sponsor (or its agents) or
by a financial intermediary for A, C and R Class investors. In addition to such
services, the financial intermediaries provide various individual shareholder
and distribution services.
To
enable the funds’ shares to be made available through such plans and financial
intermediaries, and to compensate them for such services, the funds’ Board of
Directors has adopted the A Class, C Class and R Class Plans. Pursuant to the
plans, the following fees are paid and described further below.
A
Class
The
A Class pays the funds’ distributor 0.25% annually of the average daily net
asset value of the A Class shares. The distributor may use these fees to pay for
certain ongoing shareholder and administrative services and for distribution
services, including past distribution services. This payment is fixed at 0.25%
and is not based on expenses incurred by the distributor.
C
Class
The
C Class pays the funds’ distributor 1.00% annually of the average daily net
asset value of the funds’ C Class shares, 0.25% of which is paid for certain
ongoing individual shareholder and administrative services and 0.75% of which is
paid for distribution services, including past distribution services. This
payment is fixed at 1.00% and is not based on expenses incurred by the
distributor.
R
Class
The
R Class pays the funds’ distributor 0.50% annually of the average daily net
asset value of the R Class shares. The distributor may use these fees to pay for
certain ongoing shareholder and administrative services and for distribution
services, including past distribution services. This payment is fixed at 0.50%
and is not based on expenses incurred by the distributor.
During
the fiscal year ended July 31, 2024, the aggregate amount of fees paid under
each class plan are indicated in the following table.
|
|
|
|
|
|
|
|
|
|
|
| |
| |
A
Class |
C Class |
R
Class |
| One
Choice In Retirement Portfolio |
$505,630 |
$16,229 |
$1,108,860 |
| One
Choice 2025 Portfolio |
$421,285 |
$17,489 |
$1,178,164 |
| One
Choice 2030 Portfolio |
$427,472 |
$18,080 |
$1,628,024 |
| One
Choice 2035 Portfolio |
$503,402 |
$11,680 |
$1,769,393 |
| One
Choice 2040 Portfolio |
$372,118 |
$10,564 |
$1,635,287 |
| One
Choice 2045 Portfolio |
$359,396 |
$10,647 |
$1,606,475 |
| One
Choice 2050 Portfolio |
$299,354 |
$11,532 |
$1,328,236 |
| One
Choice 2055 Portfolio |
$211,732 |
$8,497 |
$989,539 |
| One
Choice 2060 Portfolio |
$100,352 |
$3,401 |
$620,835 |
|
|
|
|
|
|
|
|
|
|
|
| |
| |
A
Class |
C Class |
R
Class |
| One
Choice 2065 Portfolio |
$13,887 |
$1,312 |
$120,226 |
| One
Choice Blend+ 2015 Portfolio |
$12 |
N/A |
$34 |
| One
Choice Blend+ 2020 Portfolio |
$25 |
N/A |
$71 |
| One
Choice Blend+ 2025 Portfolio |
$33 |
N/A |
$246 |
| One
Choice Blend+ 2030 Portfolio |
$25 |
N/A |
$1,169 |
| One
Choice Blend+ 2035 Portfolio |
$277 |
N/A |
$1,241 |
| One
Choice Blend+ 2040 Portfolio |
$222 |
N/A |
$1,612 |
| One
Choice Blend+ 2045 Portfolio |
$28 |
N/A |
$1,743 |
| One
Choice Blend+ 2050 Portfolio |
$156 |
N/A |
$1,386 |
| One
Choice Blend+ 2055 Portfolio |
$52 |
N/A |
$1,328 |
| One
Choice Blend+ 2060 Portfolio |
$52 |
N/A |
$800 |
| One
Choice Blend+ 2065 Portfolio |
$226 |
N/A |
$2,242 |
| One
Choice Portfolio: Very Conservative |
N/A |
N/A |
$8,558 |
| One
Choice Portfolio: Conservative |
N/A |
N/A |
$8,232 |
| One
Choice Portfolio: Moderate |
N/A |
N/A |
$34,536 |
| One
Choice Portfolio: Aggressive |
N/A |
N/A |
$22,105 |
| One
Choice Portfolio: Very Aggressive |
N/A |
N/A |
$30,909 |
The
distributor then makes these payments to the financial intermediaries (including
underwriters and broker-dealers, who may use some of the proceeds to compensate
sales personnel) who offer the A, C and R Class shares for the services
described below. No portion of these payments is used by the distributor to pay
for advertising, printing costs or interest expenses.
Payments
may be made for a variety of individual shareholder services, including, but not
limited to:
(a)providing
individualized and customized investment advisory services, including the
consideration of shareholder profiles and specific goals;
(b)creating
investment models and asset allocation models for use by shareholders in
selecting appropriate funds;
(c)conducting
proprietary research about investment choices and the market in
general;
(d)periodic
rebalancing of shareholder accounts to ensure compliance with the selected asset
allocation;
(e)consolidating
shareholder accounts in one place;
(f)paying
service fees for providing personal, continuing services to investors, as
contemplated by the Conduct Rules of FINRA; and
(g)other
individual services.
Individual
shareholder services do not include those activities and expenses that are
primarily intended to result in the sale of additional shares of the
funds.
Distribution
services include any activity undertaken or expense incurred that is primarily
intended to result in the sale of A, C and R Class shares, which services may
include but are not limited to:
(a)paying
sales commissions, on-going commissions and other payments to brokers, dealers,
financial institutions or others who sell A, C and R Class shares pursuant to
selling agreements;
(b)compensating
registered representatives or other employees of the distributor who engage in
or support distribution of the funds’ A, C and R Class shares;
(c)paying
and compensating expenses (including overhead and telephone expenses) of the
distributor;
(d)printing
prospectuses, statements of additional information and reports for
other-than-existing shareholders;
(e)preparing,
printing and distributing sales literature and advertising materials provided to
the funds’ shareholders and prospective shareholders;
(f)receiving
and answering correspondence from prospective shareholders, including
distributing prospectuses, statements of additional information, and shareholder
reports;
(g)providing
facilities to answer questions from prospective shareholders about fund
shares;
(h)complying
with federal and state securities laws pertaining to the sale of fund
shares;
(i)assisting
shareholders in completing application forms and selecting dividend and other
account options;
(j)providing
other reasonable assistance in connection with the distribution of fund
shares;
(k)organizing
and conducting sales seminars and payments in the form of transactional and
compensation or promotional incentives;
(l)profit
on the foregoing; and
(m)such
other distribution and services activities as the advisor determines may be paid
for by the funds pursuant to the terms of the agreement between the corporation
and the funds’ distributor and in accordance with Rule 12b-1 of the Investment
Company Act.
The
net asset value (NAV) of each class of each fund is calculated by adding the
value of all portfolio securities and other assets attributable to the class,
deducting liabilities, and dividing the result by the number of shares of the
class outstanding. Expenses and interest earned on portfolio securities are
accrued daily.
All
classes of the funds except the A Class are offered at their NAV. The A Class of
the funds is offered at its public offering price, which is the NAV plus the
appropriate sales charge. This calculation may be expressed as a
formula:
Offering
Price = NAV/(1 – Sales Charge as a % of Offering Price)
For
example, if the NAV of a fund’s A Class shares is $5.00, the public offering
price would be $5/(1-5.75%) = $5.31.
Each
fund’s NAV is calculated as of the close of trading on the New York Stock
Exchange (NYSE) each day the NYSE is open for business. The NYSE usually closes
at 4 p.m. Eastern time. The NYSE typically observes the following holidays: New
Year’s Day, Martin Luther King Jr. Day, Presidents’ Day, Good Friday, Memorial
Day, Juneteenth National Independence Day, Independence Day, Labor Day,
Thanksgiving Day and Christmas Day. Although the funds expect the same holidays
to be observed in the future, the NYSE may modify its holiday schedule at any
time.
With
respect to the portion of each fund’s assets that are invested in underlying
mutual funds, the fund’s NAV is calculated based upon the NAVs of such
underlying mutual funds. The prospectuses for the underlying funds explain the
methods used to value underlying mutual fund shares.
Portfolio
securities for which market quotations are readily available are valued at their
market price. If the fund invests in ETFs, such ETFs are valued at the last
reported official closing price or sale price at the time the NAV is determined.
If,
during any 90-day period, you redeem fund shares worth more than $250,000 (or 1%
of the value of a fund’s assets if that amount is less than $250,000), we
reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable securities instead of in cash. To the extent
practicable, these securities will represent your pro rata share of the fund’s
securities.
We
will value these securities in the same manner as we do in computing the fund’s
net asset value. We may provide these securities in lieu of cash without prior
notice. Also, if payment is made in securities, you may have to pay brokerage or
other transaction costs to convert the securities to cash. These securities
remain subject to market risk until sold, and you may incur capital gains and/or
losses when you sell the securities.
If
your redemption would exceed this limit and you would like to avoid being paid
in securities, please provide us with an unconditional instruction to redeem at
least 15 days prior to the date on which the redemption transaction is to occur.
The instruction must specify the dollar amount or number of shares to be
redeemed and the date of the transaction. This minimizes the effect of the
redemption on a fund and its remaining investors.
Each
fund intends to qualify annually as a regulated investment company (RIC) under
Subchapter M of the Internal Revenue Code of 1986, as amended (the Code). RICs
generally are not subject to federal and state income taxes. To qualify as a RIC
a fund must, among other requirements, distribute substantially all of its net
investment income and net realized capital gains (if any) to investors each
year. If a fund were not eligible to be treated as a RIC, it would be liable for
taxes at the fund level on all its income, significantly reducing its
distributions to investors and eliminating investors’ ability to treat
distributions received from the fund in the same manner in which they were
realized by the fund. Under certain circumstances, the Code allows funds to cure
deficiencies that would otherwise result in the loss of RIC status including by
paying a fund-level tax.
To
qualify as a RIC, a fund must meet certain requirements of the Code, among which
are requirements relating to sources of its income and diversification of its
assets. A fund is also required to distribute 90% of its investment company
taxable income each year. Additionally, a fund must declare dividends by
December 31 of each year equal to at least 98% of ordinary income (as of
December 31) and 98.2% of capital gains (as of October 31) to avoid the
nondeductible 4% federal excise tax on any undistributed amounts.
If
more than 50% of the value of a fund’s total assets at the end of its fiscal
year consists of securities of foreign corporations or if more than 50% of the
value of a fund’s assets consists of other RICs at the end of its fiscal
quarters (and such other RICs have passed
through
foreign tax credits to their shareholders), the fund may make an election with
the Internal Revenue Service (IRS) with respect to such fiscal year so that fund
shareholders may be able to claim a foreign tax credit for foreign taxes paid by
the fund or passed through to the fund from other RICs. If such an election is
made, the eligible foreign taxes will be treated as income received by you. In
order for you to utilize the foreign tax credit, you must have held your shares
for 16 days or more during the 31-day period beginning 15 days prior to the
ex-dividend date for the mutual fund shares. The mutual fund must meet a similar
holding period requirement with respect to securities to which a dividend is
attributable. Any foreign taxes withheld on payments made “in lieu of” dividends
or interest with respect to loaned securities will not qualify for the
pass-through foreign tax credit to shareholders. Any portion of the foreign tax
credit that is ineligible will be deducted in computing net investment
income.
A
fund’s investment in underlying mutual funds could affect the amount, timing and
character of distributions from the funds, and therefore may increase the amount
of taxes payable by shareholders.
As
of July 31, 2024, the funds in the table below had the following capital loss
carryovers. When a fund has a capital loss carryover, it does not make capital
gains distributions until the loss has been offset. The Regulated Investment
Company Modernization Act of 2010 allows the funds to carry forward capital
losses incurred in future taxable years for an unlimited period.
|
|
|
|
|
| |
|
Fund |
Unlimited |
|
One
Choice Portfolio: Very Conservative |
$(9,365,161) |
| One
Choice Portfolio: Conservative |
$(13,120,703) |
| One
Choice Portfolio: Moderate |
$(5,924,171) |
| One
Choice Blend+ 2015 Portfolio |
$(72,928) |
| One
Choice Blend+ 2020 Portfolio |
$(152,035) |
| One
Choice Blend+ 2030 Portfolio |
$(14,804) |
| One
Choice Blend+ 2035 Portfolio |
$(72,034) |
| One
Choice Blend+ 2065 Portfolio |
$(114,556) |
If
you have not complied with certain provisions of the Internal Revenue Code and
Regulations, either American Century Investments or your financial intermediary
is required by federal law to withhold and remit to the IRS the applicable
federal withholding rate of reportable payments (which may include dividends,
capital gains distributions and redemption proceeds). Those regulations require
you to certify that the Social Security number or tax identification number you
provide is correct and that you are not subject to withholding for previous
under-reporting to the IRS. You will be asked to make the appropriate
certification on your account application. Payments reported by us to the IRS
that omit your Social Security number or tax identification number will subject
us to a non-refundable penalty of $50, which will be charged against your
account if you fail to provide the certification by the time the report is
filed.
If
fund shares are purchased through taxable accounts, distributions of either cash
or additional shares of net investment income and net short-term capital gains
are taxable to you as ordinary income, unless they are designated as qualified
dividend income and you meet a minimum required holding period with respect to
your shares of a fund, in which case such distributions are taxed at the same
rates as long-term capital gains. Qualified dividend income is a dividend
received by a fund from the stock of a domestic or qualifying foreign
corporation, provided that the fund has held the stock for a required holding
period and the stock was not on loan at the time of the dividend. The required
holding period for qualified dividend income is met if the underlying shares are
held more than 60 days in the 121-day period beginning 60 days prior to the
ex-dividend date. Dividends received by the funds on shares of stock of domestic
corporations (excluding Real Estate Investment Trusts) may qualify for the 70%
dividends-received deduction when distributed to corporate shareholders to the
extent that the fund held those shares for more than 45 days.
Distributions
from gains on assets held by the funds longer than 12 months are taxable as
long-term gains regardless of the length of time you have held your shares in
the fund. If you purchase shares in the fund and sell them at a loss within six
months, your loss on the sale of those shares will be treated as a long-term
capital loss to the extent of any long-term capital gains dividend you received
on those shares.
Each
fund may use the “equalization method” of accounting to allocate a portion of
its earnings and profits to redemption proceeds. Although using this method
generally will not affect a fund’s total returns, it may reduce the amount that
a fund would otherwise distribute to continuing shareholders by reducing the
effect of redemptions of fund shares on fund distributions to
shareholders.
A
redemption of shares of a fund (including a redemption made in an exchange
transaction) will be a taxable transaction for federal income tax purposes and
you generally will recognize gain or loss in an amount equal to the difference
between the basis of the shares and the amount received. If a loss is realized
on the redemption of fund shares, the reinvestment in additional fund shares
within 30 days before or after the redemption may be subject to the “wash sale”
rules of the Code, postponing the recognition of such loss for federal income
tax purposes.
A
3.8% Medicare contribution tax is imposed on net investment income, including
interest, dividends and capital gains, provided you meet specified income
levels.
Distributions
by the funds also may be subject to state and local taxes, even if all or a
substantial part of those distributions are derived from interest on U.S.
government obligations which, if you received such interest directly, would be
exempt from state income tax. However, most, but not all, states allow this tax
exemption to pass through to fund shareholders when a fund pays distributions to
its shareholders. You should consult your tax advisor about the tax status of
such distributions in your own state.
The
information above is only a summary of some of the tax considerations affecting
the funds and their U.S. shareholders. No attempt has been made to discuss
individual tax consequences. A prospective investor should consult with his or
her tax advisors or state or local tax authorities to determine whether the
funds are suitable investments.
Each
of the funds’ financial statements and financial highlights for the fiscal year
ended July 31, 2024 have been audited by Deloitte & Touche LLP, independent
registered public accounting firm. Their Reports of Independent Registered
Public Accounting Firm and the financial statements included in the funds’
Form
N-CSR
for the fiscal year ended July 31, 2024 are incorporated herein by
reference.
As
of October 31, 2024, the following shareholders owned more than 5% of the
outstanding shares of a class of a fund. The table shows shares owned of record
unless otherwise noted.
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| One
Choice In Retirement Portfolio |
| Investor
Class |
| |
National
Financial Services LLC
Jersey City, New Jersey |
10% |
|
| Charles
Schwab & Co., Inc.
San Francisco, California |
6% |
|
| Pershing
LLC
Jersey City, New Jersey |
5% |
| I
Class |
| |
National
Financial Services LLC
Jersey City, New Jersey |
74% |
| A
Class |
|
| State
Street BK/TR as TTEE and/or CUST FBO ADP Access Product
Boston,
Massachusetts |
17% |
|
|
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
5.04% registered for the benefit of AUL American Unit Trust Separate
Account |
8% |
| C
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
32% |
|
| American
Enterprise Inv Svcs
Minneapolis, Minnesota |
30% |
| |
Matrix
Trust Company
Denver, Colorado |
21% |
|
| Pershing
LLC
Jersey City, New Jersey |
7% |
| R
Class |
|
| State
Street BK/TR as TTEE and/or CUST FBO ADP Access Product
Boston,
Massachusetts |
35% |
| |
National
Financial Services LLC
Jersey City, New Jersey |
22% |
| R6
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
18% |
|
| John
Hancock Life Ins. Co.
Boston, Massachusetts |
12% |
|
|
Empower
Trust
Greenwood
Village, Colorado
Includes
5.81% registered for the benefit of Employee Benefits Client
401k |
12% |
|
| John
Hancock Trust Co. LLC
Boston, Massachusetts |
9% |
|
|
State
St BK/TR as TTEE and/or Cust
Boston,
Massachusetts
Includes
6.80% registered for the benefit of ADP Access Product |
8% |
|
| DCGT
Trustee &/or Custodian FBO PLIC Various Retirement Plans
Omnibus
Des Moines, Iowa |
6% |
| One
Choice 2025 Portfolio |
| Investor Class |
|
|
| National
Financial Services LLC
Jersey City, New Jersey |
11% |
|
| Charles
Schwab & Co., Inc.
San Francisco, California |
9% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| I
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
72% |
| A
Class |
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
20% |
| |
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
5.79% registered for the benefit of AUL American Unit Trust Separate
Account |
9% |
| C
Class |
|
| Pershing
LLC
Jersey City, New Jersey |
46% |
|
| LPL
Financial
San Diego, California |
14% |
|
| Matrix
Trust Company Cust. FBO Concordia, L.L.C.
Denver, Colorado |
10% |
|
| American
Enterprise Inv Svcs
Minneapolis, Minnesota |
7% |
| |
Empower
Trust FBO Symbolic Displays Inc.
Greenwood Village, Colorado |
6% |
| R
Class |
|
|
| State
St BK/TR as TTEE and/or Cust FBO Access Product
Boston,
Massachusetts |
44% |
|
| National
Financial Services LLC
Jersey City, New Jersey |
10% |
| R6
Class |
|
|
| National
Financial Services LLC
Jersey City, New Jersey |
21% |
|
| John
Hancock Life Insurance Co
Boston, Massachusetts |
12% |
|
|
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
5.13% registered for the benefit of AUL American Unit Trust Separate
Account |
8% |
|
|
State
St BK/TR as TTEE and/or Cust
Boston,
Massachusetts
Includes
6.73% registered for the benefit of ADP Access Product |
8% |
|
| DCGT
Trustee &/or Custodian FBO PLIC Various Retirement Plans
Omnibus
Des Moines, Iowa |
7% |
|
| John
Hancock Trust Co LLC
Boston, Massachusetts |
6% |
|
| MLPF&S
Jacksonville,
Florida |
5% |
| One
Choice 2030 Portfolio |
| Investor
Class |
| |
National
Financial Services LLC
Jersey City, New Jersey |
13% |
| I
Class |
|
| |
National
Financial Services LLC
Jersey City, New Jersey |
74% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| A
Class |
|
|
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
22% |
|
|
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
6.45% registered for the benefit of AUL American Unit Trust Separate
Account and 5.10% registered for the benefit of Group Retirement Annuity
Sep Acct II |
12% |
|
| MLPF&S
Jacksonville,
Florida |
7% |
| C
Class |
|
|
|
| Pershing
LLC
Jersey City, New Jersey |
26% |
| |
American
Enterprise Inv Svcs
Minneapolis, Minnesota |
15% |
|
| Ascensus
Trust Co FBO Rocky Mountain Spice Company Inc
Fargo, North Dakota
|
11% |
|
| SSB&T
Cust Lone Jack Fireworks LLC Simple IRA Ann Cooke
Lee’s Summit,
Missouri |
7% |
|
| RBC
Capital Markets LLC
Minneapolis, Minnesota |
6% |
|
| Wells
Fargo Clearing Services LLC
St. Louis, Missouri |
6% |
| R
Class |
|
|
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
38% |
|
| National
Financial Services LLC
Jersey City, New Jersey |
7% |
| R6
Class |
|
|
| National
Financial Services LLC
Jersey City, New Jersey |
21% |
|
| John
Hancock Life Insurance Co
Boston, Massachusetts |
17% |
|
|
AUL
American Unit Trust Separate Account
Indianapolis,
Indiana
Includes
5.51% registered for Separate Accounts |
8% |
|
|
State
St BK/TR as TTEE and/or Cust
Boston,
Massachusetts
Includes
5.88% registered for the benefit of ADP Access Product |
7% |
|
| DCGT
Trustee &/or Custodian FBO PLIC Various Retirement Plans
Omnibus
Des Moines, Iowa |
6% |
|
| John
Hancock Trust Co LLC
Boston, Massachusetts |
5% |
| One
Choice 2035 Portfolio |
| Investor
Class |
| |
National
Financial Services LLC
Jersey City, New Jersey |
14% |
| |
Charles
Schwab & Co., Inc.
San Francisco, California |
10% |
| I
Class |
| |
National
Financial Services LLC
Jersey City, New Jersey |
76% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| A
Class |
| |
State
St BK/TR as TTEE and/or Cust for the benefit of ADP Access
Product
Boston,
Massachusetts |
22% |
| |
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
5.57% registered for the benefit of Group Retirement Annuity Sep Acct II
and 5.45% registered for the benefit of AUL American Unit Trust Separate
Account |
11% |
| C
Class |
|
| Matrix
Trust Company as Agent for Advisor Trust Inc John Copple 403B
Denver,
Colorado |
17% |
|
| American
Enterprise Investment Svcs
Minneapolis, Minnesota |
17% |
|
| SSB&T
Cust Bowtie Engineering LLC Simple IRA John F. Welch
Gainesville,
Georgia |
9% |
|
| LPL
Financial
San Diego, California |
8% |
|
| SSB&T
Cust Total Tree Care IRA Simple Seth Bihun
Iowa City, Iowa |
8% |
|
| Pershing
LLC
Jersey City, New Jersey |
7% |
|
| Millennium
Trust Co LLC FBO Various Beneficiaries
Oak Brook, Illinois |
6% |
|
| Wells
Fargo Clearing Services LLC
St. Louis, Missouri |
6% |
|
| Raymond
James
St. Petersburg, Florida |
6% |
| R
Class |
|
|
| |
State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
40% |
| |
National
Financial Services LLC
Jersey City, New Jersey |
6% |
| R6
Class |
|
|
| National
Financial Services LLC
Jersey City, New Jersey |
18% |
|
| John
Hancock Life Insurance Co
Boston, Massachusetts |
15% |
|
| DCGT
Trustee and/or Cust FBO PLIC Various Retirement Plans Omnibus
Des
Moines, Iowa |
8% |
|
| MLPF&S
Jacksonville, Florida |
6% |
| One
Choice 2040 Portfolio |
| Investor
Class |
| |
National
Financial Services LLC
Jersey City, New Jersey |
19% |
| I
Class |
| |
National
Financial Services LLC
Jersey City, New Jersey |
72% |
| A
Class |
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
25% |
| |
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
6.11% registered for the benefit of AUL American Unit Trust Separate
Account and 5.31% registered for the benefit of Group Retirement Annuity
Sep Acct II |
11% |
| |
MLPF&S
Jacksonville, Florida |
6% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| C
Class |
|
| American
Enterprise Investment Svcs
Minneapolis, Minnesota |
32% |
|
| SSB&T
Cust Julie Coover Insurance Agent
Overland Park, Kansas |
14% |
|
| Wells
Fargo Clearing Services LLC
St. Louis, Missouri |
8% |
|
| SSB&T
Cust Winco Fireworks Intl LLC Simple IRA Meghan K. Throckmorton
Kansas
City, Missouri |
7% |
| |
SSB&T
Cust for the IRA of Yunuen Bustamante-Trejo
Olathe, Kansas |
6% |
|
| LPL
Financial
San Diego, California |
5% |
| R
Class |
|
| |
State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
38% |
|
| National
Financial Services LLC
Jersey City, New Jersey |
6% |
| R6
Class |
|
|
| National
Financial Services LLC
Jersey City, New Jersey |
20% |
|
| John
Hancock Life Insurance Co
Boston, Massachusetts |
14% |
|
|
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
5.75% registered for the benefit of AUL American Unit Trust Separate
Account
|
8% |
|
| DCGT
Trustee and/or Cust FBO PLIC Various Retirement Plans Omnibus
Des
Moines, Iowa |
7% |
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
6% |
| One
Choice 2045 Portfolio |
| Investor
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
21% |
| |
Charles
Schwab & Co., Inc.
San Francisco, California |
16% |
| I
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
72% |
| A
Class |
|
|
| |
State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
23% |
| |
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
5.61% registered for the benefit of AUL American Unit Trust Separate
Account
and 5.13%
registered for the benefit of Group Retirement Annuity Sep Acct II
|
11% |
|
| MLPF&S
Jacksonville,
Florida |
6% |
|
| Augustar
Life Insurance Co
Cincinnati, Ohio |
5% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| C
Class |
|
|
|
Matrix
Trust Company
Denver,
Colorado
Includes
12.43% registered for the benefit of Concordia, LLC
|
17% |
|
| LPL
Financial
San Diego, California |
14% |
|
| Pershing
LLC
Jersey City, New Jersey |
11% |
|
| American
Enterprise Inv Svcs
Minneapolis, Minnesota |
9% |
|
| Raymond
James
St. Petersburg, Florida |
7% |
|
| SSB&T
Cust for the IRA Roth of Brittany C Velazquez
Elmsford, New
York |
6% |
|
| SSB&T
Cust Jolly Jacs LLC Simple IRA Benjamin E Laws
Blue Springs,
MO |
6% |
|
| Ascensus
Trust Co FBO Rocky Mountain Spice Company Inc
Fargo, North
Dakota |
5% |
| R
Class |
| |
State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
38% |
| R6
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
17% |
|
| John
Hancock Life Insurance Co
Boston, Massachusetts |
13% |
|
|
Empower
Trust
Greenwood
Village, Colorado
Includes
5.02% registered for the benefit of Empower Benefit Plans |
11% |
|
| Voya
Retirement Insurance and Annuity Company
Windsor, Connecticut |
9% |
|
|
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
5.75% registered for the benefit of AUL American Unit Trust Separate
Account
|
8% |
|
| DCGT
Trustee & OR Custodian FBO PLIC Various Retirement Plans
Omnibus
Des Moines, Iowa |
7% |
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
7% |
|
| MLPF&S
Jacksonville,
Florida |
7% |
| One
Choice 2050 Portfolio |
| Investor
Class |
| |
National
Financial Services LLC
Jersey City, New Jersey |
22% |
| |
Charles
Schwab & Co., Inc.
San Francisco, California |
7% |
| I
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
75% |
|
| Charles
Schwab & Co., Inc.
San Francisco, California |
5% |
| |
Nationwide
Trust Company FSB
Columbus, Ohio |
5% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| A
Class |
|
|
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
24% |
| |
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
5.57% registered for the benefit of Group Retirement Annuity Sep Acct
|
10% |
| |
MLPF&S
Jacksonville,
Florida |
9% |
| C
Class |
|
| American
Enterprise Investment Svcs
Minneapolis, Minnesota |
33% |
|
| Ascensus
Trust Co FBO Rocky Mountain Spice Company Inc
Fargo, North
Dakota |
25% |
| |
Pershing
LLC
Jersey City, New Jersey |
8% |
| R
Class |
|
|
| |
State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
38% |
| R6
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
19% |
|
| John
Hancock Life Insurance Co
Boston, Massachusetts |
15% |
|
|
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
6.27% registered for the benefit of AUL American Unit Trust Separate
Account
|
9% |
|
| DCGT
Trustee & OR Custodian FBO PLIC Various Retirement Plans
Omnibus
Des Moines, Iowa |
8% |
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
7% |
|
| MLPF&S
Jacksonville,
Florida |
5% |
| One
Choice 2055 Portfolio |
| Investor
Class |
|
|
| National
Financial Services LLC
Jersey City, New Jersey |
18% |
| I
Class |
|
|
| National
Financial Services LLC
Jersey City, New Jersey |
72% |
|
| Nationwide
Trust Co FSB C/O IPO Portfolio Accounting
Columbus, Ohio |
6% |
| A
Class |
|
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
30% |
| |
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
6.47% registered for the benefit of Group Retirement Annuity Sep Acct II
|
10% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| C
Class |
|
|
| Wells
Fargo Clearing Services LLC
St. Louis, Missouri |
32% |
|
| SSB&T
Cust for the IRA Roth of Meagan Kusel
Whisper Pines, North
Carolina |
13% |
|
| American
Enterprise Inv Svcs
Minneapolis, Minnesota |
12% |
|
| SSB&T
Cust for Bowtie Engineering LLC Simple IRA Corey B. Brown
Cartersville,
Georgia |
12% |
|
| SSB&T
Cust for the IRA Roth of Bradley Kusel
Whisper Pines, North
Carolina |
9% |
| R
Class |
|
| |
State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
41% |
| R6
Class |
|
|
| John
Hancock Life Insurance Co
Boston, Massachusetts |
15% |
|
| National
Financial Services LLC
Jersey City, New Jersey |
15% |
|
|
Empower
Trust
Greenwood
Village, Colorado
Includes
6.73% registered for the benefit of Empower Benefit Plans |
13% |
|
|
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
5.77% registered for the benefit of AUL American Unit Trust Separate
Account
|
8% |
|
| DCGT
Trustee & OR Custodian FBO PLIC Various Retirement Plans
Omnibus
Des Moines, Iowa |
7% |
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
7% |
|
| MLPF&S
Jacksonville,
Florida |
6% |
|
| John
Hancock Trust Co LLC
Boston, Massachusetts |
5% |
| One
Choice 2060 Portfolio |
| Investor
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
14% |
|
| Voya
Institutional Trust Company
Windsor, Connecticut |
5% |
| I
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
79% |
|
| Nationwide
Trust Co FSB
Columbus, Ohio |
6% |
| A
Class |
|
|
American
United Life
Indianapolis,
Indiana
Includes
5.37% registered for the benefit of Group Retirement Annuity II and 5.02%
registered for the benefit of Amer United Life Ins Co Unit Investment
Trust |
10% |
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
7% |
|
|
Empower
Trust
Greenwood
Village, Colorado
Includes
5.19% registered for the benefit of Empower Benefit Plans |
6% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| C
Class |
|
|
Mary
Sue Miller Trustee U/W Sandra K. Gilmore Estate
fbo
Keyana K. Rose Irrevocable Trust
Sun
Prairie, Wisconsin
Shares
owned of record and beneficially
|
22% |
|
|
Mary
Sue Miller Trustee U/W Sandra K. Gilmore Estate
fbo
Kristiana K. Rose Irrevocable Trust
Sun
Prairie, Wisconsin
Shares
owned of record and beneficially
|
22% |
|
| SSB&T
Cust Nude Inc Simple IRA Ricki D. Kouryakus
West Bloomfield,
Michigan |
16% |
|
| SSB&T
Cust for the IRA Roth of Deborah Mohnssen
Mt. Pleasant, South Carolina
|
12% |
|
|
Mary
Sue Miller Trustee U/W Sandra K. Gilmore Estate
fbo
Isaiah L. Gilmore Irrevocable Trust
Sun
Prairie, Wisconsin
Shares
owned of record and beneficially
|
11% |
| R
Class |
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
45% |
| R6
Class |
|
| John
Hancock Life Ins Co USA
Boston, Massachusetts |
18% |
|
| National
Financial Services LLC
Jersey City, New Jersey |
16% |
|
|
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
5.19% registered for the benefit of AUL American Unit Trust Separate
Account |
8% |
|
| John
Hancock Trust Co LLC
Boston, Massachusetts |
8% |
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
6% |
|
| DCGT
Trustee & OR Custodian FBO PLIC Various Retirement Plans
Omnibus
Des Moines, Iowa |
5% |
| One
Choice 2065 Portfolio |
| Investor
Class |
|
| Voya
Institutional Trust Company
Windsor, Connecticut |
8% |
|
|
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
5.07% registered for the benefit of AUL American Unit Trust Separate
Account
|
7% |
| I
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
93% |
| A
Class |
|
|
Amer
United Life Ins Co
Indianapolis,
Indiana
Includes
5.02% registered for the benefit of Group Retirement Annuity II
|
8% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| C
Class |
|
| Pershing
LLC
Jersey City, New Jersey |
28% |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
25% |
|
| Matrix
Trust Co as Agent for Advisor Trust Inc Benjamin Copple 403B
Denver,
Colorado |
16% |
|
| LPL
Financial
San Diego, California |
10% |
|
| SSB&T
Cust Nude Inc Simple IRA of Ellen T Horwath
Ferndale,
Michigan |
9% |
|
| SSB&T
Cust Nude Inc Simple IRA of Selena M Merfert
Clawson,
Michigan |
6% |
| R
Class |
|
| None |
|
| R6
Class |
|
| John
Hancock Life Ins Co USA
Boston, Massachusetts |
27% |
|
| John
Hancock Trust Co LLC
Boston, Massachusetts |
18% |
|
|
Empower
Trust
Greenwood
Village, Colorado
Includes
8.28% registered for the benefit of Empower Benefit Plans |
10% |
|
| National
Financial Services LLC
Jersey City, New Jersey |
10% |
|
| DCGT
Trustee & OR Custodian FBO PLIC Various Retirement Plans
Des
Moines, Iowa |
9% |
| One
Choice Blend+ 2015 Portfolio |
| Investor
Class |
|
| SSB&T
Cust Educational Svc Dist 112 403B Plan Gavin D. Hottman
Hermiston,
Oregon |
40% |
|
| SSB&T
Cust White Bear Lake-ISD #624 403B Plan Barb Banerdt
Saint Paul,
Minnesota |
22% |
|
| SSB&T
Cust for the IRA Rollover of Thomas M De Vincentis
Sturgeon,
Missouri |
14% |
|
| SSB&T
Cust for the IRA Rollover of Jerold T Cooke
Elk Grove,
California |
7% |
|
| SSB&T
Cust for the IRA Rollover of Susan R Steagall
Belmont, North
Carolina |
5% |
| I
Class |
|
| Charles
Schwab & Co., Inc.
San Francisco, California |
98% |
| A
Class |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
100% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| R
Class |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
74% |
|
| SSB&T
Cust The Hawk Firm LLC Contance Parks
Alpharetta, Georgia |
13% |
|
| SSB&T
Cust Breck Leach DMD PLLC Morgan Leach
Jamestown, North
Dakota |
6% |
| R6
Class |
|
|
John
Hancock Trust Co LLC
Boston,
Massachusetts |
38% |
|
| National
Financial Services LLC
Jersey City, New Jersey |
36% |
|
|
Matrix
Trust Company
Phoenix,
Arizona
Includes
13.77% registered for the benefit of ALJSCO Management LLC 401(K)
Profit |
18% |
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
6% |
| One
Choice Blend+ 2020 Portfolio |
| Investor
Class |
|
| Priya
Jakatdar TR Priya Jakatdar Living Trust
Cincinnati, Ohio |
33% |
|
| Steven
G. Mosseau
Denville, New Jersey |
20% |
|
| SSB&T
Cust for the IRA of Vickie Kaye Davis
Colombia, Missouri |
8% |
|
| SSB&T
Cust for the IRA of Mark B Cumming
Mapleton, Minnesota |
8% |
|
| SSB&T
Cust American Mgmt Systems IRA SEP Plan Jon R Dalmas
Baltimore,
Maryland |
7% |
|
| SSB&T
Cust for the IRA of Michael Ray Sigsbee
Lake Lotawana,
Missouri |
7% |
| I
Class |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
91% |
|
| Charles
Schwab & Co., Inc.
San Francisco, California |
9% |
| A
Class |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
100% |
| R
Class |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
78% |
|
| SSB&T
Cust Compassionate Heart Counseling Kimally Samuels
Bay Point,
California |
8% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| R6
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
38% |
|
| Amer
United Life Ins Co
Indianapolis, Indiana |
27% |
|
| Voya
Institutional Trust Company
Windsor, Connecticut |
18% |
|
|
Matrix
Trust Company
Phoenix,
Arizona
Includes
5.65% registered for the benefit of ALJSCO Management LLC 401(K)
Profit |
10% |
| One
Choice Blend+ 2025 Portfolio |
| Investor
Class |
|
| SSB&T
Cust for the IRA Rollover of Melinda Helton Sahli
Lexington,
Kentucky |
8% |
|
| SSB&T
Cust for the IRA of Thomas J. Young
Southampton, Pennsylvania |
8% |
|
| SSB&T
Cust for the IRA of Lisa E. Jarema
Pittsgrove, New Jersey |
7% |
| I
Class |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
100% |
| A
Class |
|
| SSB&T
Cust for the IRA of Jeanne L Westin
Elk Point, South Dakota |
82% |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
18% |
| R
Class |
|
| SSB&T
Cust Mr God Wrench LLC Broadus Ellison
Maineville, Ohio |
45% |
|
| SSB&T
Cust Riviera Restaurant Poonnapa Yoonood
Santa Rosa,
California |
12% |
|
| SSB&T
Cust Siztech LLC Iosif Shklyar
Northbrook, Illinois |
10% |
|
| SSB&T
Cust Warfield & Darrah PC Paula J Darrah
Linthicum,
Maryland |
10% |
|
| SSB&T
Cust Superior Trawl LLC Patrick Lawless
West Kingston, Rhode
Island |
7% |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
5% |
|
| SSB&T
Cust Leaf and Line LLC Nancy Brockmeyer
Colleyville, Texas |
5% |
| R6
Class |
|
| Amer
United Life Ins Co Group
Indianapolis, Indiana |
30% |
|
| National
Financial Services LLC
Jersey City, New Jersey |
26% |
|
|
Matrix
Trust Company
Phoenix,
Arizona
Includes
12.44% registered for the benefit of ALJSCO Management LLC 401(K)
Profit |
15% |
|
| Voya
Institutional Trust Company
Windsor, Connecticut |
9% |
|
| John
Hancock Trust Co LLC
Boston, Massachusetts |
9% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| One
Choice Blend+ 2030 Portfolio |
| Investor
Class |
|
| SSB&T
Cust for the IRA of William K Stroozas Jr
Duluth, Minnesota |
6% |
| I
Class |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
100% |
| A
Class |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
40% |
|
| SSB&T
Cust Ludwig Blair & Bush PLLC NDFI Shelly D Zonker
Paris,
Kentucky |
37% |
|
| SSB&T
Cust Lighthouse Coffee Company James New
Wilmer, Alabama |
23% |
| R
Class |
|
| SSB&T
Cust Iluvpix Thomas Apeland
The Villages, Florida |
13% |
|
| SSB&T
Cust AMB Consulting Services Inc Murtyraju Alluri
Frisco,
Texas |
13% |
|
| SSB&T
Cust Kevin L Kelly PC Kevin L. Kelly
Portland, Oregon |
11% |
|
| SSB&T
Cust The Home Doctor Inc. Randy Borel
Overland Park, Kansas |
10% |
|
| SSB&T
Cust Dunlap & Kucmierz PLLC Rod Dunlap
Canton, Michigan |
6% |
| R6
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
27% |
|
| AUL
American Unit Trust Separate Account
Indianapolis, Indiana |
26% |
|
| John
Hancock Trust Co LLC
Boston, Massachusetts |
12% |
|
| Empower
Trust
Greenwood Village, Colorado |
11% |
|
| Voya
Institutional Trust Company
Windsor, Connecticut |
9% |
|
|
Matrix
Trust Company
Phoenix,
Arizona
Includes
5.43% registered for the benefit of ALJSCO Management LLC 401(K)
Profit |
9% |
| One
Choice Blend+ 2035 Portfolio |
| Investor
Class |
|
| SSB&T
Cust for the IRA Rollover of Mary M Foote
Stillwell, Kansas |
7% |
|
| SSB&T
Cust for the IRA of Anurag D Tiwary
New Port Richey, Florida |
5% |
|
| SSB&T
Cust for the IRA Rollover of Joseph S Bachman
New Philadelphia,
Ohio |
5% |
|
| SSB&T
Cust Sutton Law Office P.A. IRA Simple Nathan M Sutton
Overland Park,
Kansas |
5% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| I
Class |
|
| Pershing
LLC
Jersey City, New Jersey |
74% |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
16% |
|
| Charles
Schwab & Co Inc
San Francisco, California |
10% |
| A
Class |
|
| SSB&T
Cust Acute Home Healthcare of MN Bryant Sloss
Chaska,
Minnesota |
28% |
|
| SSB&T
Cust MRM Restaurant LLC Motoi Nakanishi
Westford,
Massachusetts |
17% |
|
| SSB&T
Cust Whitehat Education Technology, LLC Robin Jones
Lexington, South
Carolina |
15% |
|
| SSB&T
Cust Erickson Demel & Associates PLLC Deanna Schryver
Austin,
Texas |
11% |
|
| SSB&T
Cust Chaney Technology Services Simple Thad Chaney
Pekin,
Illinois |
11% |
|
| SSB&T
Cust Pawsteps Veterinary Center Inc Sean Sawyer
Whitinsville,
Massachusetts |
8% |
| R
Class |
|
| SSB&T
Cust KMAK Consulting, Inc.Julie Makrygiannis
Palos Verdes Estates,
California |
12% |
|
| SSB&T
Cust Mapoca Trading LLC Maria Porter
Santa Maria, California |
11% |
|
| SSB&T
Cust EAW Management Group LLC Elvis Willie
Dix Hills, New
York |
9% |
|
| SSB&T
Cust Peterson Ridge Corp Zone Ning
Chicago, Illinois |
6% |
|
| SSB&T
Cust JLPZ LLC Cynthia Herzog
Ellington, Connecticut |
6% |
|
| SSB&T
Cust Thirty Nine Management LLC Jose Canto
Miami, Florida |
5% |
|
| SSB&T
Cust No Problem Inc Ilona Rakauskiene
Burbank, California |
5% |
| R6
Class |
|
| AUL
American Unit Trust Separate Account
Indianapolis, Indiana |
27% |
|
| National
Financial Services LLC
Jersey City, New Jersey |
24% |
|
| Voya
Institutional Trust Company
Windsor, Connecticut |
15% |
|
| John
Hancock Trust Co LLC
Boston, Massachusetts |
13% |
|
|
Matrix
Trust Company
Phoenix,
Arizona
Includes
7.56% registered for the benefit of First Urology P S C 401(K)
Profit |
11% |
|
| Empower
Trust
Greenwood Village, Colorado |
6% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| One
Choice Blend+ 2040 Portfolio |
| Investor
Class |
|
| Charles
Schwab & Co., Inc.
San Francisco, California |
12% |
|
|
SSB&T
Cust Valley Bible Church 403B Plan Gerard C Andersen
Lancaster,
California |
11% |
|
| SSB&T
Cust for the IRA Rollover of Jennifer Yong-Luna
Bellevue,
Washington |
11% |
|
|
SSB&T
Cust for the IRA Rollover of Alice L. Gunderson
Fort
Myers, Florida |
9% |
| I
Class |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
70% |
|
| Charles
Schwab & Co Inc
San Francisco, California |
30% |
| A
Class |
|
|
SSB&T
Cust the Honor Roll LLC Barbara Donaho
Austin,
Texas |
49% |
|
|
SSB&T
Cust for the IRA Rollover of Marc E. Hibbert
N
Tonawanda, New York |
23% |
|
|
SSB&T
Cust Rinehart Family Care PC Todd Berrian
Alburtis,
Pennsylvania |
8% |
|
|
SSB&T
Cust Taylor & Pond Corporate Comm Jacqueline Johnson
Oceanside,
California |
6% |
| R
Class |
| |
|
| SSB&T
Cust Robbie Samuels LLC Robbie Samuels
North Wales,
Pennsylvania |
14% |
|
| SSB&T
Cust Affordable Living For The Aging Candice Scott
Mount Pleasant,
South Carolina |
8% |
|
| SSB&T
Cust Rushing Law Firm PLLC Susan Rushing
Santa Rosa Beach,
Florida |
7% |
|
| SSB&T
Cust SPPCC Cheryl Miller
Rockingham, Virginia |
6% |
|
| SSB&T
Cust KMAK Consulting, Inc. Julie Makrygiannis
Palos Verdes Estates,
California |
5% |
| R6
Class |
|
| AUL
American Unit Trust Separate Account
Indianapolis, Indiana |
36% |
|
| National
Financial Services LLC
Jersey City, New Jersey |
20% |
|
| Voya
Institutional Trust Company LLC
Windsor, Connecticut |
15% |
|
| John
Hancock Trust Co LLC
Boston, Massachusetts |
13% |
| One
Choice Blend+ 2045 Portfolio |
| Investor
Class |
|
|
SSB&T
Cust Lewisville ISD 403B Plan Jackeline Rios
Flower
Mound, Texas |
7% |
|
| SSB&T
Cust for the IRA Rollover of Corey Mammolito
Massapequa Park, New
York |
7% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| I
Class |
|
| Charles
Schwab & Co., Inc.
San Francisco, California |
65% |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
35% |
| A
Class |
|
|
SSB&T
Cust MRM Restaurant LLC Akiko Nakanishi
Westford,
Massachusetts |
23% |
|
|
SSB&T
Cust Green Mountain Lion Corp Kristie Stern
South
Burlington, Vermont |
23% |
|
|
SSB&T
Cust In Touch Salon Spa LLC Jennifer Travaglini
Fort
Wayne, Indiana |
18% |
|
| SSB&T
Cust Spot On Print Services LLC Amanda Hardin
League City,
Texas |
13% |
|
| SSB&T
Cust Closets Etc LLC Jonathan Plouffe
Pompano Beach, Florida |
8% |
|
|
SSB&T
Cust Little Footprints Preschool Ocean Helen Tong
San
Francisco, California |
6% |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
5% |
| R
Class |
|
| SSB&T
Cust Formosa Market Inc Chia-HSIN Chen
Marlborough, Massachusetts
|
33% |
|
| SSB&T
Cust Volente Corporation Yasuto Khoo
Irvine, California |
9% |
|
| SSB&T
Cust Bains and Kaur A General Dentistry Rosalia Young
Davis,
California |
8% |
|
| SSB&T
Cust J&L Tax Inc Emmanuel Joseph
Cambria Heights, New
York |
7% |
|
| SSB&T
Cust Sea-Run Inc Anthony Colandrea
Easton, Pennsylvania |
6% |
|
| SSB&T
Cust Briannick 2.0, Inc Brian Wang
Boynton Beach, Florida |
6% |
|
| SSB&T
Cust Live Life Abundantly Nathan Philyaw
Wesley Chapel,
Florida |
6% |
| R6
Class |
|
| AUL
American Unit Trust Separate Account
Indianapolis, Indiana |
30% |
|
| National
Financial Services LLC
Jersey City, New Jersey |
22% |
|
| John
Hancock Trust Co LLC
Boston, Massachusetts |
13% |
|
| Voya
Institutional Trust Company LLC
Windsor, Connecticut |
13% |
|
| Empower
Trust
Greenwood Village, Colorado |
9% |
| One
Choice Blend+ 2050 Portfolio |
| Investor
Class |
|
| SSB&T
Cust for the IRA Rollover of Cheryl A. Deering
Orlando,
Florida |
8% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| I
Class |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
57% |
|
| Charles
Schwab & Co., Inc.
San Francisco, California |
43% |
| A
Class |
|
| SSB&T
Cust German School Brooklyn Tina Petereit
Brooklyn, New York |
28% |
|
| SSB&T
Cust K Heart Management LLC Jenna Bellardi Sadowski
Troy,
Michigan |
26% |
|
| SSB&T
Cust Closets Etc LLC Lisa Truitt Plouffe
Pompano Beach,
Florida |
22% |
|
| SSB&T
Cust Children’s Lighthouse Inc Anna Sherman
Weatherford,
Texas |
16% |
| R
Class |
|
| SSB&T
Cust Cahill Swift LLC George Gilpatrick
Boston, Massachusetts |
16% |
|
| SSB&T
Cust Besthouse Wealth Strategies Group LLC Jamie Lee
Clifton, New
Jersey |
13% |
|
| SSB&T
Cust Brit W Soccer Susanne Arvidsson
Valencia, California |
10% |
|
| SSB&T
Cust Rosenthal Consulting Services Inc Michelle Rosenthal
Newport
Beach, California |
9% |
|
| SSB&T
Cust Restaurant Management Group, Inc.Zinnatara Delawalla
Atlanta,
Georgia |
9% |
|
| SSB&T
Cust Joseph P Cardillo & Son Inc. William Tombarelli III
Pelham,
New Hampshire |
6% |
|
| SSB&T
Cust Bilt Industries Trent Lowry
Liberty, Missouri |
6% |
|
| SSB&T
Cust Justmatt Inc Kenneth Turing
Great Mills, Maryland |
5% |
|
| SSB&T
Cust Comet Informatics, LLC Michael Berger
Fairport, New York |
5% |
| R6
Class |
|
| AUL
American Unit Trust Separate Account
Indianapolis, Indiana |
32% |
|
| National
Financial Services LLC
Jersey City, New Jersey |
32% |
|
| Voya
Institutional Trust Company LLC
Windsor, Connecticut |
12% |
|
| John
Hancock Trust Co LLC
Boston, Massachusetts |
7% |
| One
Choice Blend+ 2055 Portfolio |
| Investor
Class |
|
| None |
|
| I
Class |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
100% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| A
Class |
|
| SSB&T
Cust Crowdcomfort Inc Elena C Stofle
Hayward, California |
30% |
|
| SSB&T
Cust David G Herro David Casper
Colgate, Wisconsin |
28% |
|
| SSB&T
Cust The Test Connection Inc Simple IRA Samuel Fortna
Westminster,
Maryland |
15% |
|
| SSB&T
Cust Orlando Heart & Vascular Institute Udit Joshi
Orlando,
Florida |
12% |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
9% |
| R
Class |
|
| SSB&T
Cust Karkour Plumbing LLC Jose G Karkour
Boca Raton, Florida |
21% |
|
| SSB&T
Cust Bit Solutions LLC Andrew Blackburn
Edgewater, Maryland |
11% |
|
| SSB&T
Cust Town and Country Veterinary Clinic Karie Redlich
Plymouth,
Wisconsin |
9% |
|
| SSB&T
Cust Rock Ventures LLC William Watson
Greenville, South
Carolina |
7% |
|
| SSB&T
Cust Backyard Gardens LLC Kathleen Sullivan
Bonita Springs,
Florida |
5% |
| R6
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
35% |
|
| AUL
American Unit Trust Separate Account
Indianapolis, Indiana |
28% |
|
| Voya
Institutional Trust Company LLC
Windsor, Connecticut |
12% |
|
|
Matrix
Trust Company
Phoenix,
Arizona
Includes
6.13% registered for the benefit of First Urology P S C 401(K)
Profit |
8% |
|
| John
Hancock Trust Co LLC
Boston, Massachusetts |
6% |
| One
Choice Blend+ 2060 Portfolio |
| Investor
Class |
|
| SSB&T
Cust for the IRA of David S Jeffery
Prattville, Alabama |
16% |
|
| SSB&T
Cust Pet Emergency Svcs Inc IRA Simple Mitchell L Barnett
Reading,
Pennsylvania |
7% |
| I
Class |
|
| Charles
Schwab & Co., Inc.
San Francisco, California |
57% |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
43% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| A
Class |
|
| SSB&T
Cust Hudson Valley Fresh Courtney N Roberts
Copake, New York |
31% |
|
| SSB&T
Cust J&T Health and Wellness LLC Madison Coriarty
Saint Petersburg,
Florida |
28% |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
18% |
|
| SSB&T
Cust Clevermade LLC Simple IRA Patrick Cox
Oceanside,
California |
8% |
|
| SSB&T
Cust for the IRA Roth of Michael R Bonebrake
Little Falls,
Minnesota |
5% |
| R
Class |
|
| SSB&T
Cust DeepBlue Wellness LLC Jessica Tiblier
Thibodaux, Louisiana
|
20% |
|
| SSB&T
Cust Hendrix-Smith & Jones, APC Danielle Perez
Benicia,
California |
14% |
|
| SSB&T
Cust 40 Bills LLC DBA KPODJ Thomas Cap
Hopatcong, New Jersey |
7% |
|
| SSB&T
Cust Hampton Roads Soccer Council Lauren Bland
Virginia Beach,
Virginia |
6% |
|
| SSB&T
Cust Aquatic Resource Center LLC Eric Thomas
Owensboro, Kentucky
|
6% |
|
| SSB&T
Cust Jason Danielson Agency Inc Jason E Danielson
Andover,
Minnesota |
5% |
|
| SSB&T
Leitner Dental Arts PA Rachel Elice
Morganville, New Jersey |
5% |
| R6
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
32% |
|
| AUL
American Unit Trust Separate Account
Indianapolis, Indiana |
30% |
|
| Voya
Institutional Trust Company LLC
Windsor, Connecticut |
18% |
|
| John
Hancock Trust Co LLC
Boston, Massachusetts |
6% |
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
5% |
| One
Choice Blend+ 2065 Portfolio |
| Investor
Class |
|
| None |
|
| I
Class |
|
|
American
Century Investment Management Inc.
Kansas
City, Missouri
Shares
owned of record and beneficially
|
64% |
|
| Charles
Schwab & Co., Inc.
San Francisco, California |
36% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| A
Class |
|
| SSB&T
Cust Galvin Technologies Inc Jennifer Stefero
Spring, Texas |
41% |
|
| SSB&T
Cust Shires Housing Inc Madison Kremer
Renton, Washington |
12% |
|
| SSB&T
Cust Nexo Solutions LLC Scott Williams
Austin, Texas |
11% |
|
| SSB&T
Cust Gamble Family Vineyards LLC James Close
Eugene, Oregon |
9% |
|
| SSB&T
Cust Total Performance Physical Therapy
Philadelphia,
Pennsylvania |
5% |
| R
Class |
|
| SSB&T
Cust SSA Real Estate Management Jennifer Chen
San Francisco,
California |
10% |
|
| SSB&T
Cust Stubbs Architecture Richard Stubbs
Deland, Florida |
9% |
|
| SSB&T
Cust Atmosphere Apps Inc Max Jones
Gainesville, Florida |
7% |
|
| SSB&T
Cust The Prop Shop of Eden Prairie Victoria Bomben
Eden Prairie,
Minnesota |
6% |
|
| SSB&T
Cust Scotts Flowers New York Christopher Palliser
Glen Cove, New
York |
5% |
| R6
Class |
|
| National
Financial Services LLC
Jersey City, New Jersey |
57% |
|
| Voya
Institutional Trust Company LLC
Windsor, Connecticut |
16% |
|
| AUL
American Unit Trust Separate Account
Indianapolis, Indiana |
13% |
| One
Choice Portfolio: Very Conservative |
| Investor
Class |
| |
Charles
Schwab & Co., Inc.
San Francisco, California
|
13% |
| R
Class |
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
12% |
|
| Matrix
Trust Company as Agent for Advisor Trust, Inc. State of Hawaii Dept of Edu
403(b)
Denver, Colorado |
10% |
|
| SSB&T
Cust Arklatex Financial Consultants LLC Donald B Wooley
Many,
Louisiana |
10% |
|
| Ascensus
Trust Company FBO Stiegler Chiropractic 401(K)
Fargo, North Dakota
|
10% |
| One
Choice Portfolio: Conservative |
| Investor
Class |
|
| Charles
Schwab & Co., Inc.
San Francisco, California |
5% |
| R
Class |
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
17% |
|
| SSB&T
Cust R G Drywall Construction Roberto Guerieri
Downey,
California |
9% |
|
| SSB&T
Cust Merlin Alltec Moldmaking Inc James A Van Kirk
Upland,
California |
6% |
|
|
|
|
|
|
|
|
| |
|
Fund/
Class
|
Shareholder |
Percentage
of Outstanding
Shares
Owned of Record
|
| One
Choice Portfolio: Moderate |
| Investor
Class |
| |
Charles
Schwab & Co., Inc.
San Francisco, California |
7% |
| R
Class |
|
| State
Street Bank Custodian FBO ADP Access Product
Boston,
Massachusetts |
76% |
| One
Choice Portfolio: Aggressive |
| Investor
Class |
| |
Charles
Schwab & Co., Inc.
San Francisco, California |
10% |
| R
Class |
|
| None |
|
| One
Choice Portfolio: Very Aggressive |
| Investor
Class |
|
| Charles
Schwab & Co., Inc.
San Francisco, California |
9% |
|
| National
Financial Services LLC
Jersey City, New Jersey |
8% |
| R
Class |
|
| State
St BK/TR as TTEE and/or Cust FBO ADP Access Product
Boston,
Massachusetts |
18% |
A
shareholder owning beneficially more than 25% of the corporation’s outstanding
shares may be considered a controlling person. The vote of any such person could
have a more significant effect on matters presented at a shareholders’ meeting
than votes of other shareholders. The funds are unaware of any shareholders,
beneficial or of record, who own more than 25% of the voting securities of the
corporation. As of [October 31, 2024], the officers and directors of the funds,
as a group, owned less than 1% of any class of a fund’s outstanding shares.
Sales
Charges
The
sales charges applicable to the A and C Classes of the funds are described in
the prospectuses for those classes in the section titled Investing
Through a Financial Intermediary.
Shares of the A Class are subject to an initial sales charge, which declines as
the amount of the purchase increases. Additional information regarding
reductions and waivers of the A Class sales charge may be found in the funds’
prospectuses.
Shares
of the A and C Classes are subject to a contingent deferred sales charge (CDSC)
upon redemption of the shares in certain circumstances. The specific charges and
when they apply are described in the relevant prospectuses. The CDSC may be
waived for certain redemptions by some shareholders, as described in the
prospectuses.
An
investor may terminate his relationship with an intermediary at any time. If the
investor does not establish a relationship with a new intermediary and transfer
any accounts to that new intermediary, such accounts may be exchanged to the
Investor Class of the fund, if such class is available. The investor will be the
shareholder of record of such accounts. In this situation, any applicable CDSCs
will be charged when the exchange is made.
The
aggregate CDSCs paid to the distributor for the A Class shares in the fiscal
year ended July 31, 2024 were:
|
|
|
|
|
| |
| One
Choice 2025 Portfolio |
$41 |
| One
Choice 2035 Portfolio |
$12 |
| One
Choice 2045 Portfolio |
$17 |
| One
Choice 2055 Portfolio |
$42 |
The
aggregate CDSCs paid to the distributor for the C Class shares in the fiscal
year ended July 31, 2024 were:
|
|
|
|
|
| |
| One
Choice 2030 Portfolio |
$227 |
| One
Choice 2040 Portfolio |
$182 |
| One
Choice 2050 Portfolio |
$22 |
| One
Choice 2060 Portfolio |
$24 |
| One
Choice 2055 Portfolio |
$29 |
| One
Choice 2025 Portfolio |
$95 |
| One
Choice 2035 Portfolio |
$39 |
| One
Choice 2045 Portfolio |
$97 |
| One
Choice Income Portfolio |
$39 |
Payments
to Dealers
The
funds’ distributor expects to pay dealer commissions to the financial
intermediaries who sell A and/or C Class shares of the funds at the time of such
sales. Payments for A Class shares will be as follows:
|
|
|
|
|
| |
| Purchase
Amount |
Dealer
Commission as a % of Offering Price |
| Less
than $50,000 |
5.00% |
| $50,000
- $99,999 |
4.00% |
| $100,000
- $249,999 |
3.25% |
| $250,000
- $499,999 |
2.00% |
| $500,000
- $999,999 |
1.75% |
| $1,000,000
- $3,999,999 |
1.00% |
| $4,000,000
- $9,999,999 |
0.50% |
| $10,000,000
or more |
0.25% |
No
dealer commission will be paid on purchases by employer-sponsored retirement
plans. For this purpose, employer-sponsored retirement plans do not include SEP
IRAs, SIMPLE IRAs or SARSEPs. Payments will equal 1.00% of the purchase price of
the C Class shares sold by the intermediary. The distributor will retain the
12b-1 fee paid by the C Class of funds for the first 12 months after the shares
are purchased. This fee is intended in part to permit the distributor to recoup
a portion of on-going sales commissions to dealers plus financing costs, if any.
Beginning with the first day of the 13th month, the distributor will make the C
Class distribution and individual shareholder services fee payments described
above to the financial intermediaries involved on a quarterly basis. In
addition, C Class purchases and A Class purchases greater than $1,000,000 are
subject to a CDSC as described in the prospectuses.
From
time to time, the distributor may make additional payments to dealers, including
but not limited to payment assistance for conferences and seminars, provision of
sales or training programs for dealer employees and/or the public (including, in
some cases, payment for travel expenses for registered representatives and other
dealer employees who participate), advertising and sales campaigns about a fund
or funds, and assistance in financing dealer-sponsored events. Other payments
may be offered as well, and all
such
payments will be consistent with applicable law, including the then-current
rules of the Financial Industry Regulatory Authority (FINRA). Such payments will
not change the price paid by investors for shares of the funds.
Information
about buying, selling, exchanging and, if applicable, converting fund shares is
contained in the funds’ prospectuses. The prospectuses are available to
investors without charge and may be obtained by calling us.
Employer-Sponsored
Retirement Plans
Certain
group employer-sponsored retirement plans that hold a single account for all
plan participants with the fund, or that are part of a retirement plan or
platform offered by banks, broker-dealers, financial advisors or insurance
companies, or serviced by retirement recordkeepers are eligible to purchase
Investor, I, A, C, R and R6 Class shares. A and C Class purchases are available
at net asset value with no dealer commission paid to the financial professional,
and do not incur a CDSC. A, C and R Class shares purchased in employer-sponsored
retirement plans are subject to applicable distribution and service (12b-1)
fees, which the financial intermediary begins receiving immediately at the time
of purchase. American Century does not impose minimum initial investment amount,
plan size or participant number requirements by class for employer-sponsored
retirement plans; however, financial intermediaries or plan recordkeepers may
require plans to meet different requirements.
Examples
of employer-sponsored retirement plans include the
following:
•401(a)
plans
•pension
plans
•profit
sharing plans
•401(k)
plans (including plans with a Roth 401(k) feature, SIMPLE 401(k) plans and Solo
401(k) plans)
•money
purchase plans
•target
benefit plans
•Taft-Hartley
multi-employer pension plans
•SERP
and “Top Hat” plans
•ERISA
trusts
•employee
benefit plans and trusts
•employer-sponsored
health plans
•457
plans
•KEOGH
or HR(10) plans
•employer-sponsored
403(b) plans (including plans with a Roth 403(b) feature)
•nonqualified
deferred compensation plans
•nonqualified
excess benefit plans
•nonqualified
retirement plans
Traditional
and Roth IRAs are not considered employer-sponsored retirement plans, and SIMPLE
IRAs, SEP IRAs and SARSEPs are collectively referred to as Business IRAs.
Business IRAs that (i) held shares of an A Class fund prior to March 1, 2009
that received sales charge waivers or (ii) held shares of an Advisor Class fund
that was renamed A Class on March 1, 2010, may permit additional purchases by
new and existing participants in A Class shares without an initial sales
charge.
R
Class IRA Accounts established prior to August 1, 2006 may make additional
purchases.
Waiver
of Minimum Initial Investment Amounts — I Class
A
financial intermediary, upon receiving prior approval from American Century
Investments, may waive applicable minimum initial investment amounts per
shareholder for I Class shares in the following situations:
•Broker-dealers,
banks, trust companies, registered investment advisors and other financial
intermediaries may make I Class shares available with no initial investment
minimum in fee based advisory programs or accounts where such program or account
is traded omnibus by the financial intermediary;
•Qualified
Tuition Programs under Section 529 that have entered into an agreement with the
distributor; and
•Certain
other situations deemed appropriate by American Century
Investments.
American
Century Investment Management, Inc. (the “Adviser”) is the investment manager
for a variety of advisory clients, including the American Century family of
funds. In such capacity, the Adviser has been delegated the authority to vote
proxies with respect to investments held in the accounts it manages. The
following is a statement of the proxy voting policies that have been adopted by
the Adviser. In the exercise of proxy voting authority which has been delegated
to it by particular clients, the Adviser will apply the following policies in
accordance with, and subject to, any specific policies that have been adopted by
the client and communicated to and accepted by the Adviser in
writing.
I. General
Principles
In
providing the service of voting client proxies, the Adviser is guided by general
fiduciary principles, must act prudently, solely in the interest of its clients,
and must not subordinate client interests to unrelated objectives. Except as
otherwise indicated in these Policies, the Adviser will vote all proxies with
respect to investments held in the client accounts it manages. The Adviser will
attempt to consider all factors of its vote that could affect the value of the
investment. Although in most instances the Adviser will vote proxies
consistently across all client accounts, the votes will be based on the best
interests of each client. As a result, accounts managed by the Adviser may at
times vote differently on the same proposals. Examples of when an account’s vote
might differ from other accounts managed by the Adviser include, but are not
limited to, proxy contests and proposed mergers. In short, the Adviser will vote
proxies in the manner that it believes will do the most to maximize shareholder
value.
II. Specific
Proxy Matters
A. Routine
Matters
1. Election
of Directors
a) Generally.
The
Adviser will generally support the election of directors that result in a board
made up of a majority of independent directors. In general, the Adviser will
vote in favor of management’s director nominees if they are running unopposed.
The Adviser believes that management is in the best possible position to
evaluate the qualifications of directors and the needs and dynamics of a
particular board. The Adviser of course maintains the ability to vote against
any candidate whom it feels is not qualified or if there are specific concerns
about the individual, such as allegations of criminal wrongdoing or breach of
fiduciary responsibilities. Additional information the Adviser may consider
concerning director nominees include, but is not limited to, whether (i) there
is an adequate explanation for repeated absences at board meetings, (ii) the
nominee receives non-board fee compensation, or (iii) there is a family
relationship between the nominee and the company’s chief executive officer or
controlling shareholder, and/or (iv) the nominee has sufficient time and
commitment to serve effectively in light of the nominee’s service on other
public company boards. When management’s nominees are opposed in a proxy
contest, the Adviser will evaluate which nominees’ publicly-announced management
policies and goals are most likely to maximize shareholder value, as well as the
past performance of the incumbents.
b) Committee
Service. The
Adviser will withhold votes for non-independent directors who serve on the audit
and/or compensation committees of the board.
c) Classification
of Boards. The
Adviser will support proposals that seek to declassify boards. Conversely, the
Adviser will oppose efforts to adopt classified board structures.
d) Majority
Independent Board. The
Adviser will support proposals calling for a majority of independent directors
on a board. The Adviser believes that a majority of independent directors can
help to facilitate objective decision making and enhances accountability to
shareholders.
e) Majority
Vote Standard for Director Elections.
The
Adviser will vote in favor of proposals calling for directors to be elected by
an affirmative majority of the votes cast in a board election, provided that the
proposal allows for a plurality voting standard in the case of contested
elections. The Adviser may consider voting against such shareholder proposals
where a company’s board has adopted an alternative measure, such as a director
resignation policy, that provides a meaningful alternative to the majority
voting standard and appropriately addresses situations where an incumbent
director fails to receive the support of the majority of the votes cast in an
uncontested election.
f) Withholding
Campaigns. The
Adviser will support proposals calling for shareholders to withhold votes for
directors where such actions will advance the principles set forth in paragraphs
(1)
through
(5) above.
2. Ratification
of Selection of Auditors
The
Adviser will generally rely on the judgment of the issuer’s audit committee in
selecting the independent auditors who will provide the best service to the
company. The Adviser believes that independence of the auditors is paramount and
will vote against auditors whose independence appears to be impaired. The
Adviser will vote against proposed auditors in those circumstances where (1) an
auditor has a financial interest in or association with the company, and is
therefore not independent; (2) non-audit fees comprise more than 50% of the
total fees paid by the company to the audit firm; or (3) there is reason to
believe that the independent auditor has previously rendered an opinion to the
issuer that is either inaccurate or not indicative of the company’s financial
position.
B. Compensation
Matters
1. Executive
Compensation
a) Advisory
Vote on Compensation. The
Adviser believes there are more effective ways to convey concerns about
compensation than through an advisory vote on compensation (such as voting
against specific excessive incentive plans or withholding votes from
compensation committee members). The Adviser will consider and vote on a
case-by-case basis on say-on-pay proposals and will generally support management
proposals unless there are inadequate risk-mitigation features or other specific
concerns exist, including if the Adviser concludes that executive compensation
is (i) misaligned with shareholder interests, (ii) unreasonable in amount, or
(iii) not in the aggregate meaningfully tied to the company’s
performance.
b) Frequency
of Advisory Votes on Compensation. The
Adviser generally supports the triennial option for the frequency of say-on-pay
proposals, but will consider management recommendations for an alternative
approach.
2. Equity
Based Compensation Plans
The
Adviser believes that equity-based incentive plans are economically significant
issues upon which shareholders are entitled to vote. The Adviser recognizes that
equity-based compensation plans can be useful in attracting and maintaining
desirable employees. The cost associated with such plans must be measured if
plans are to be used appropriately to maximize shareholder value. The Adviser
will conduct a case-by-case analysis of each stock option, stock bonus or
similar plan or amendment, and generally approve management’s recommendations
with respect to adoption of or amendments to a company’s equity-based
compensation plans, provided that the total number of shares reserved under all
of a company’s plans is reasonable and not excessively dilutive.
The
Adviser will review equity-based compensation plans or amendments thereto on a
case-by-case basis. Factors that will be considered in the determination include
the company’s overall capitalization, the performance of the company relative to
its peers, and the maturity of the company and its industry; for example,
technology companies often use options broadly throughout its employee base
which may justify somewhat greater dilution.
Amendments
which are proposed in order to bring a company’s plan within applicable legal
requirements will be reviewed by the Adviser’s legal counsel; amendments to
executive bonus plans to comply with IRS Section 162(m) disclosure requirements,
for example, are generally approved.
The
Adviser will generally vote against the adoption of plans or plan amendments
that:
•Provide
for immediate vesting of all stock options in the event of a change of control
of the company without reasonable safeguards against abuse (see “Anti-Takeover
Proposals” below);
•Reset
outstanding stock options at a lower strike price unless accompanied by a
corresponding and proportionate reduction in the number of shares designated.
The Adviser will generally oppose adoption of stock option plans that explicitly
or historically permit repricing of stock options, regardless of the number of
shares reserved for issuance, since their effect is impossible to
evaluate;
•Establish
restriction periods shorter than three years for restricted stock
grants;
•Do
not reasonably associate awards to performance of the company; or
•Are
excessively dilutive to the company.
C. Anti-Takeover
Proposals
In
general, the Adviser will vote against any proposal, whether made by management
or shareholders, which the Adviser believes would materially discourage a
potential acquisition or takeover. In most cases an acquisition or
takeover
of a particular company will increase share value. The adoption of anti-takeover
measures may prevent or frustrate a bid from being made, may prevent
consummation of the acquisition, and may have a negative effect on share price
when no acquisition proposal is pending. The items below discuss specific
anti-takeover proposals.
1. Cumulative
Voting
The
Adviser will vote in favor of any proposal to adopt cumulative voting and will
vote against any proposal to eliminate cumulative voting that is already in
place, except in cases where a company has a staggered board. Cumulative voting
gives minority shareholders a stronger voice in the company and a greater chance
for representation on the board. The Adviser believes that the elimination of
cumulative voting constitutes an anti-takeover measure.
2. Staggered
Board
If
a company has a “staggered board,” its directors are elected for terms of more
than one year and only a segment of the board stands for election in any year.
Therefore, a potential acquiror cannot replace the entire board in one year even
if it controls a majority of the votes. Although staggered boards may provide
some degree of continuity and stability of leadership and direction to the board
of directors, the Adviser believes that staggered boards are primarily an
anti-takeover device and will vote against establishing them and for eliminating
them. However, the Adviser does not necessarily vote against the re-election of
directors serving on staggered boards.
3. “Blank
Check” Preferred Stock
Blank
check preferred stock gives the board of directors the ability to issue
preferred stock, without further shareholder approval, with such rights,
preferences, privileges and restrictions as may be set by the board. In response
to a hostile takeover attempt, the board could issue such stock to a friendly
party or “white knight” or could establish conversion or other rights in the
preferred stock which would dilute the common stock and make an acquisition
impossible or less attractive. The argument in favor of blank check preferred
stock is that it gives the board flexibility in pursuing financing, acquisitions
or other proper corporate purposes without incurring the time or expense of a
shareholder vote. Generally, the Adviser will vote against blank check preferred
stock. However, the Adviser may vote in favor of blank check preferred if the
proxy statement discloses that such stock is limited to use for a specific,
proper corporate objective as a financing instrument.
4. Elimination
of Preemptive Rights
When
a company grants preemptive rights, existing shareholders are given an
opportunity to maintain their proportional ownership when new shares are issued.
A proposal to eliminate preemptive rights is a request from management to revoke
that right.
While
preemptive rights will protect the shareholder from having its equity diluted,
it may also decrease a company’s ability to raise capital through stock
offerings or use stock for acquisitions or other proper corporate purposes.
Preemptive rights may therefore result in a lower market value for the company’s
stock. In the long term, shareholders could be adversely affected by preemptive
rights. The Adviser generally votes against proposals to grant preemptive
rights, and for proposals to eliminate preemptive rights.
5. Non-targeted
Share Repurchase
A
non-targeted share repurchase is generally used by company management to prevent
the value of stock held by existing shareholders from deteriorating. A
non-targeted share repurchase may reflect management’s belief in the favorable
business prospects of the company. The Adviser finds no disadvantageous effects
of a non-targeted share repurchase and will generally vote for the approval of a
non-targeted share repurchase subject to analysis of the company’s financial
condition.
6. Increase
in Authorized Common Stock
The
issuance of new common stock can also be viewed as an anti-takeover measure,
although its effect on shareholder value would appear to be less significant
than the adoption of blank check preferred. The Adviser will evaluate the amount
of the proposed increase and the purpose or purposes for which the increase is
sought. If the increase is not excessive and is sought for proper corporate
purposes, the increase will be approved. Proper corporate purposes might
include, for example, the creation of additional stock to accommodate a stock
split or stock dividend, additional stock required for a proposed acquisition,
or additional stock required to be reserved upon exercise of employee stock
option plans or employee stock purchase plans. Generally, the Adviser will vote
in favor of an increase in authorized common stock of up to 100%; increases in
excess of 100% are evaluated on a case-by-case basis, and will be voted
affirmatively
if
management has provided sound justification for the increase.
7. “Supermajority”
Voting Provisions or Super Voting Share Classes
A
“supermajority” voting provision is a provision placed in a company’s charter
documents which would require a “supermajority” (ranging from 66 to 90%) of
shareholders and shareholder votes to approve any type of acquisition of the
company. A super voting share class grants one class of shareholders a greater
per-share vote than those of shareholders of other voting classes. The Adviser
believes that these are standard anti-takeover measures and will generally vote
against them. The supermajority provision makes an acquisition more
time-consuming and expensive for the acquiror. A super voting share class favors
one group of shareholders disproportionately to economic interest. Both are
often proposed in conjunction with other anti-takeover measures.
8. “Fair
Price” Amendments
This
is another type of charter amendment that would require an offeror to pay a
“fair” and uniform price to all shareholders in an acquisition. In general, fair
price amendments are designed to protect shareholders from coercive, two-tier
tender offers in which some shareholders may be merged out on disadvantageous
terms. Fair price amendments also have an anti-takeover impact, although their
adoption is generally believed to have less of a negative effect on stock price
than other anti-takeover measures. The Adviser will carefully examine all fair
price proposals. In general, the Adviser will vote against fair price proposals
unless the Adviser concludes that it is likely that the share price will not be
negatively affected and the proposal will not have the effect of discouraging
acquisition proposals.
9. Limiting
the Right to Call Special Shareholder Meetings.
The
corporation statutes of many states allow minority shareholders at a certain
threshold level of ownership (frequently 10%) to call a special meeting of
shareholders. This right can be eliminated (or the threshold increased) by
amendment to the company’s charter documents. The Adviser believes that the
right to call a special shareholder meeting is significant for minority
shareholders; the elimination of such right will be viewed as an anti-takeover
measure and the Adviser will generally vote against proposals attempting to
eliminate this right and for proposals attempting to restore it.
10. Poison
Pills or Shareholder Rights Plans
Many
companies have now adopted some version of a poison pill plan (also known as a
shareholder rights plan). Poison pill plans generally provide for the issuance
of additional equity securities or rights to purchase equity securities upon the
occurrence of certain hostile events, such as the acquisition of a large block
of stock.
The
basic argument against poison pills is that they depress share value, discourage
offers for the company and serve to “entrench” management. The basic argument in
favor of poison pills is that they give management more time and leverage to
deal with a takeover bid and, as a result, shareholders may receive a better
price. The Adviser believes that the potential benefits of a poison pill plan
are outweighed by the potential detriments. The Adviser will generally vote
against all forms of poison pills.
The
Adviser will, however, consider on a case-by-case basis poison pills that are
very limited in time and preclusive effect. The Adviser will generally vote in
favor of such a poison pill if it is linked to a business strategy that will -
in our view - likely result in greater value for shareholders, if the term is
less than three years, and if shareholder approval is required to reinstate the
expired plan or adopt a new plan at the end of this term.
11. Golden
Parachutes
Golden
parachute arrangements provide substantial compensation to executives who are
terminated as a result of a takeover or change in control of their company. The
existence of such plans in reasonable amounts probably has only a slight
anti-takeover effect. In voting, the Adviser will evaluate the specifics of the
plan presented.
12. Reincorporation
Reincorporation
in a new state is often proposed as one part of a package of anti-takeover
measures. Several states (such as Pennsylvania, Ohio and Indiana) now provide
some type of legislation that greatly discourages takeovers. Management believes
that Delaware in particular is beneficial as a corporate domicile because of the
well-developed body of statutes and case law dealing with corporate
acquisitions.
The
Adviser will examine reincorporation proposals on a case-by-case basis.
Generally, if the Adviser believes that the reincorporation will result in
greater protection from takeovers, the reincorporation
proposal
will be opposed. The Adviser will also oppose reincorporation proposals
involving jurisdictions that specify that directors can recognize
non-shareholder interests over those of shareholders. When reincorporation is
proposed for a legitimate business purpose and without the negative effects
identified above, the Adviser will generally vote affirmatively.
13. Confidential
Voting
Companies
that have not previously adopted a “confidential voting” policy allow management
to view the results of shareholder votes. This gives management the opportunity
to contact those shareholders voting against management in an effort to change
their votes.
Proponents
of secret ballots argue that confidential voting enables shareholders to vote on
all issues on the basis of merit without pressure from management to influence
their decision. Opponents argue that confidential voting is more expensive and
unnecessary; also, holding shares in a nominee name maintains shareholders’
confidentiality. The Adviser believes that the only way to insure anonymity of
votes is through confidential voting, and that the benefits of confidential
voting outweigh the incremental additional cost of administering a confidential
voting system. Therefore, the Adviser will generally vote in favor of any
proposal to adopt confidential voting.
14. Opting
In or Out of State Takeover Laws
State
takeover laws typically are designed to make it more difficult to acquire a
corporation organized in that state. The Adviser believes that the decision of
whether or not to accept or reject offers of merger or acquisition should be
made by the shareholders, without unreasonably restrictive state laws that may
impose ownership thresholds or waiting periods on potential acquirors.
Therefore, the Adviser will generally vote in favor of opting out of restrictive
state takeover laws.
D. Transaction
Related Proposals
The
Adviser will review transaction related proposals, such as mergers,
acquisitions, and corporate reorganizations, on a case-by-case basis, taking
into consideration the impact of the transaction on each client account. In some
instances, such as the approval of a proposed merger, a transaction may have a
differential impact on client accounts depending on the securities held in each
account. For example, whether a merger is in the best interest of a client
account may be influenced by whether an account holds, and in what proportion,
the stock of both the acquirer and the acquiror. In these circumstances, the
Adviser may determine that it is in the best interests of the accounts to vote
the accounts’ shares differently on proposals related to the same
transaction.
E. Other
Matters
1. Proposals
Involving Environmental, Social, and Governance (“ESG”) Matters
The
Adviser believes that certain ESG issues can potentially impact an issuer's
long-term financial performance and has developed an analytical framework, as
well as a proprietary assessment tool, to integrate risks and opportunities
stemming from ESG issues into our investment process. This ESG integration
process extends to our proxy voting practices in that our Sustainable Research
Team analyzes on a case-by-case basis the financial materiality and potential
risks or economic impact of the ESG issues underpinning proxy proposals and
makes voting recommendations based thereon for the Adviser's consideration. The
Sustainable Research Team evaluates ESG-related proposals based on a rational
linkage between the proposal, its potential economic impact, and its potential
to maximize long-term shareholder value.
Where
the economic effect of such proposals is unclear and there is not a specific
written client-mandate, the Adviser believes it is generally impossible to know
how to vote in a manner that would accurately reflect the views of the Adviser’s
clients, and, therefore, the Adviser will generally rely on management’s
assessment of the economic effect if the Adviser believes the assessment is not
unreasonable.
Shareholders
may also introduce proposals which are the subject of existing law or
regulation. Examples of such proposals would include a proposal to require
disclosure of a company’s contributions to political action committees or a
proposal to require a company to adopt a non-smoking workplace policy. The
Adviser believes that such proposals may be better addressed outside the
corporate arena and, absent a potential economic impact, will generally vote
with management’s recommendation. In addition, the Adviser will generally vote
against any proposal which would require a company to adopt practices or
procedures which go beyond the requirements of existing, directly applicable
law.
2. Anti-Greenmail
Proposals
“Anti-greenmail”
proposals generally limit the right of a corporation, without a shareholder
vote, to pay a premium or buy out a 5% or greater shareholder. Management often
argues that they should not be
restricted
from negotiating a deal to buy out a significant shareholder at a premium if
they believe it is in the best interest of the company. Institutional
shareholders generally believe that all shareholders should be able to vote on
such a significant use of corporate assets. The Adviser believes that any
repurchase by the company at a premium price of a large block of stock should be
subject to a shareholder vote. Accordingly, it will generally vote in favor of
anti-greenmail proposals.
3. Indemnification
The
Adviser will generally vote in favor of a corporation’s proposal to indemnify
its officers and directors in accordance with applicable state law.
Indemnification arrangements are often necessary in order to attract and retain
qualified directors. The adoption of such proposals appears to have little
effect on share value.
4. Non-Stock
Incentive Plans
Management
may propose a variety of cash-based incentive or bonus plans to stimulate
employee performance. In general, the cash or other corporate assets required
for most incentive plans is not material, and the Adviser will vote in favor of
such proposals, particularly when the proposal is recommended in order to comply
with IRC Section 162(m) regarding salary disclosure requirements. Case-by-case
determinations will be made of the appropriateness of the amount of shareholder
value transferred by proposed plans.
5. Director
Tenure
These
proposals ask that age and term restrictions be placed on the board of
directors. The Adviser believes that these types of blanket restrictions are not
necessarily in the best interests of shareholders and therefore will vote
against such proposals, unless they have been recommended by
management.
6. Directors’
Stock Options Plans
The
Adviser believes that stock options are an appropriate form of compensation for
directors, and the Adviser will generally vote for director stock option plans
which are reasonable and do not result in excessive shareholder dilution.
Analysis of such proposals will be made on a case-by-case basis, and will take
into account total board compensation and the company’s total exposure to stock
option plan dilution.
7. Director
Share Ownership
The
Adviser will generally vote against shareholder proposals which would require
directors to hold a minimum number of the company’s shares to serve on the Board
of Directors, in the belief that such ownership should be at the discretion of
Board members.
8. Non-U.S.
Proxies
The
Adviser will generally evaluate non-U.S. proxies in the context of the voting
policies expressed herein but will also, where feasible, take into consideration
differing laws, regulations, and practices in the relevant foreign market in
determining if and how to vote. There may also be circumstances when
practicalities and costs involved with non-U.S. investing make it
disadvantageous to vote shares. For instance, the Adviser generally does not
vote proxies in circumstances where share blocking restrictions apply, when
meeting attendance is required in person, or when current share ownership
disclosure is required.
III. Use
of Proxy Advisory Services
The
Adviser may retain proxy advisory firms to provide services in connection with
voting proxies, including, without limitation, to provide information on
shareholder meeting dates and proxy materials, translate proxy materials printed
in a foreign language, provide research on proxy proposals and voting
recommendations in accordance with the voting policies expressed herein, provide
systems to assist with casting the proxy votes, and provide reports and assist
with preparation of filings concerning the proxies voted.
Prior
to the selection of a proxy advisory firm and periodically thereafter, the
Adviser will consider whether the proxy advisory firm has the capacity and
competency to adequately analyze proxy issues and the ability to make
recommendations based on material accurate information in an impartial manner.
Such considerations may include some or all of the following (i) periodic
sampling of votes cast through the firm’s systems to determine that votes are in
accordance with the Adviser’s policies and its clients best interests, (ii)
onsite visits to the proxy advisory firm’s office and/or discussions with the
firm to determine whether the firm continues to have the resources (e.g.,
staffing, personnel, technology, etc.) capacity and competency to carry out its
obligations to the Adviser, (iii) a review of the firm’s policies and
procedures, with a focus on those relating to identifying and addressing
conflicts of interest and monitoring that current and accurate information is
used
in
creating recommendations, (iv) requesting that the firm notify the Adviser if
there is a change in the firm’s material policies and procedures, particularly
with respect to conflicts, or material business practices (e.g., entering or
exiting new lines of business), and reviewing any such change, and (v) in case
of an error made by the firm, discussing the error with the firm and determining
whether appropriate corrective and preventative action is being taken. In the
event the Adviser discovers an error in the research or voting recommendations
provided by the firm, it will take reasonable steps to investigate the error and
seek to determine whether the firm is taking reasonable steps to reduce similar
errors in the future.
While
the Adviser takes into account information from many different sources,
including independent proxy advisory services, the decision on how to vote
proxies will be made in accordance with these policies.
IV.
Monitoring Potential Conflicts of Interest
Corporate
management has a strong interest in the outcome of proposals submitted to
shareholders. As a consequence, management often seeks to influence large
shareholders to vote with their recommendations on particularly controversial
matters. In the vast majority of cases, these communications with large
shareholders amount to little more than advocacy for management’s positions and
give the Adviser’s staff the opportunity to ask additional questions about the
matter being presented. Companies with which the Adviser has direct business
relationships could theoretically use these relationships to attempt to unduly
influence the manner in which the Adviser votes on matters for its clients. To
ensure that such a conflict of interest does not affect proxy votes cast for the
Adviser’s clients, our proxy voting personnel regularly catalog companies with
whom the Adviser has significant business relationships; all discretionary
(including case-by-case) voting for these companies will be voted by the client
or an appropriate fiduciary responsible for the client (e.g., a committee of the
independent directors of a fund or the trustee of a retirement
plan).
In
addition, to avoid any potential conflict of interest that may arise when one
American Century fund owns shares of another American Century fund, the Adviser
will “echo vote” such shares, if possible. Echo voting means the Adviser will
vote the shares in the same proportion as the vote of all of the other holders
of the fund’s shares. So, for example, if shareholders of a fund cast 80% of
their votes in favor of a proposal and 20% against the proposal, any American
Century fund that owns shares of such fund will cast 80% of its shares in favor
of the proposal and 20% against. When this is not possible where American
Century funds are the only shareholders, the shares of the underlying fund will
be voted in the same proportion as the vote of the shareholders of a
corresponding American Century policy portfolio for proposals common to both
funds. In the case where there is no policy portfolio or the policy portfolio
does not have a common proposal, shares will be voted in consultation with a
committee of the independent directors.
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The
voting policies expressed above are of course subject to modification in certain
circumstances and will be reexamined from time to time. With respect to matters
that do not fit in the categories stated above, the Adviser will exercise its
best judgment as a fiduciary to vote in the manner which will most enhance
shareholder value.
Case-by-case
determinations will be made by the Adviser’s staff, which is overseen by the
General Counsel of the Adviser, in consultation with equity managers. Electronic
records will be kept of all votes made.
Notes
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American
Century Investments
americancentury.com
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Retail
Investors
P.O. Box 419200
Kansas City,
Missouri 64141-6200
1-800-345-2021 or 816-531-5575 |
Financial
Professionals
P.O. Box 419385
Kansas City, Missouri
64141-6385
1-800-345-6488 |
Investment
Company Act File No. 811-21591
CL-SAI-92608
2412
