UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-6247 --------------------------------------------- American Century World Mutual Fund, Inc. - ------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 4500 Main Street, Kansas City, Missouri 64111 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) David C. Tucker, Esq., 4500 Main Street, 9th Floor, Kansas City, Missouri 64111 - ------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 816-531-5575 ---------------------------- Date of fiscal year end: November 30, 2003 -------------------------------------------------------- Date of reporting period: November 30, 2003 -------------------------------------------------------
ITEM 1. REPORTS TO STOCKHOLDERS. [front cover] November 30, 2003 American Century Annual Report [graphic of market line chart] [graphic of starfish] [graphic of side-by-side bridges] International Growth [american century logo and text logo (reg.sm)] [inside front cover] Table of Contents Our Message to You........................................................ 1 INTERNATIONAL GROWTH Performance............................................................... 2 Portfolio Commentary...................................................... 4 Top Ten Holdings....................................................... 4 Types of Investments in Portfolio...................................... 4 Top Five Sectors....................................................... 5 Investments by Country................................................. 5 Schedule of Investments................................................... 6 FINANCIAL STATEMENTS Statement of Assets and Liabilities....................................... 9 Statement of Operations................................................... 11 Statement of Changes in Net Assets........................................ 12 Notes to Financial Statements............................................. 13 Financial Highlights...................................................... 20 Independent Auditors' Report.............................................. 27 OTHER INFORMATION Management................................................................ 28 Share Class Information................................................... 31 Additional Information.................................................... 33 Index Definition.......................................................... 34 The opinions expressed in the Portfolio Commentary reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. [photo of James E. Stowers III with James E. Stowers, Jr.] James E. Stowers III with James E. Stowers, Jr. Our Message to You We are pleased to provide you with the annual report for the American Century International Growth fund for the year ended November 30, 2003. The report includes comparative performance figures, commentary, summary tables, a full list of portfolio holdings and financial statements and highlights. We hope you find this information helpful in monitoring your investment. Many of you have called or written to express your concern about allegations of wrongdoing by other mutual fund investment management firms. We share your concern--fund companies must put investors first and do everything possible to maintain investor trust. Through the Investment Company Institute, the mutual fund trade association, American Century has advocated industry-wide proposals that strengthen protections for fund investors. We believe that decisive action is needed to show that we are committed, as an industry, to the interests of the 95 million investors we serve. As information about alleged trading abuses in the mutual fund industry has come to light, we have posted messages and commentary about these issues on www.americancentury.com. Beyond what's currently in the headlines, American Century has been a champion of many important investor and industry issues, which are outlined in a document titled Putting Investors First. We invite you to visit our Web site and read about how our values have influenced these positions. As always, we deeply appreciate your investment with American Century. Sincerely, /s/James E. Stowers, Jr. James E. Stowers, Jr. Founder and Chairman /s/James E. Stowers III James E. Stowers III Co-Chairman of the Board - ------ 1 International Growth - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2003 ---------------------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 13.70% 0.57% 6.50% 8.53% 5/9/1991 - -------------------------------------------------------------------------------- MSCI EAFE INDEX 24.22% -0.78% 4.41% 4.44%(1) -- - -------------------------------------------------------------------------------- Institutional Class 13.89% 0.77% -- 3.24% 11/20/1997 - -------------------------------------------------------------------------------- Advisor Class 13.62% 0.32% -- 5.32% 10/2/1996 - -------------------------------------------------------------------------------- A Class 1/31/2003 No sales charge* -- -- -- 23.44%(2) With sales charge* -- -- -- 16.38%(2) - -------------------------------------------------------------------------------- B Class 1/31/2003 No sales charge* -- -- -- 22.62%(2) With sales charge* -- -- -- 17.62%(2) - -------------------------------------------------------------------------------- C Class 12.88% -- -- -7.96% 6/4/2001 - -------------------------------------------------------------------------------- R Class -- -- -- 7.26%(2) 8/29/2003 - -------------------------------------------------------------------------------- * Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. (A Class shares have an initial sales charge and CDSC; B and C Class shares have CDSCs. Please see the Share Class Information pages for more about the applicable sales charges for each share class.) The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. (1) Since 4/30/91, the date nearest the Investor Class's inception for which data are available. (2) Returns for periods less than one year are not annualized. (continued) - ------ 2 International Growth - Performance GROWTH OF $10,000 OVER 10 YEARS $10,000 investment made November 30, 1993
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ONE-YEAR RETURNS OVER 10 YEARS Periods ended November 30 - -------------------------------------------------------------------------------- 1994 1995 1996 1997 1998 - -------------------------------------------------------------------------------- Investor Class 7.28% 5.93% 16.35% 18.12% 16.74% - -------------------------------------------------------------------------------- MSCI EAFE Index 14.84% 7.57% 11.76% -0.40% 16.45% - -------------------------------------------------------------------------------- Periods ended November 30 - -------------------------------------------------------------------------------- 1999 2000 2001 2002 2003 - -------------------------------------------------------------------------------- Investor Class 43.22% -2.47% -24.18% -14.54% 13.70% - -------------------------------------------------------------------------------- MSCI EAFE Index 21.10% -9.67% -19.13% -12.50% 24.22% - -------------------------------------------------------------------------------- The charts on the performance pages give historical return data for the fund. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. Unless otherwise indicated, the charts are based on Investor Class shares; performance for other classes will vary due to differences in fee structures (see the Total Returns table on the previous page). Past performance does not guarantee future results. None of these charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. - ------ 3 International Growth - Portfolio Commentary [photo of Keith Creveling, Mark Kopinski, and Henrik Strabo] A portfolio commentary from Keith Creveling, Mark Kopinski, and Henrik Strabo, portfolio managers on the International Growth investment team. International Growth advanced 13.70%* during the fiscal year ending November, 30, 2003, while its benchmark, the Morgan Stanley Capital International EAFE Index, returned 24.22%. The portfolio's gains came during a period marked by the anticipation and onset of war in Iraq, concern about the spread of a potentially fatal virus and Korean nuclear tensions, all of which restrained many of the world's markets during the early part of the period. But with the end of major combat in Iraq, the outbreak of SARS under control, and encouraging economic data from numerous nations, markets in the U.S. and abroad rebounded beginning in April. However, the U.S. dollar continued to weaken against other currencies during the period. Against this backdrop, International Growth's complement of financial holdings posted the period's largest contribution to the portfolio. The financial sector, International Growth's biggest stake at period's end, advanced mostly on the strength of banks, which represented the portfolio's heaviest average industry weighting. France's Societe Generale, a top-10 holding at the end of the period, topped the list of banks contributing to International Growth. The financial sector, however, also detracted most from our performance against the EAFE Index. The disappointments came on several fronts, but during the second half of the period, the portfolio's lack of Japanese banks proved especially damaging. Japan has some of the world's largest banks by assets, but many of them carry billions of dollars in bad debt. We had an underweight position in many of those companies, and our portfolio's lighter position detracted from International Growth's relative performance when their share prices advanced during the last six months of the period. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Siemens AG 2.4% -- - -------------------------------------------------------------------------------- Societe Generale Cl A 2.4% 1.8% - -------------------------------------------------------------------------------- Nissan Motor Co., Ltd. 2.3% 1.6% - -------------------------------------------------------------------------------- Credit Suisse Group 2.1% 1.1% - -------------------------------------------------------------------------------- Vodafone Group plc 2.0% 2.7% - -------------------------------------------------------------------------------- Abbey National plc 1.8% -- - -------------------------------------------------------------------------------- ING Groep N.V. 1.8% 0.7% - -------------------------------------------------------------------------------- GlaxoSmithKline plc 1.6% 1.8% - -------------------------------------------------------------------------------- Roche Holding AG 1.6% 2.0% - -------------------------------------------------------------------------------- BP plc 1.6% -- - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Foreign Stocks 98.6% 97.1% - -------------------------------------------------------------------------------- U.S. Stocks 0.9% 1.6% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 99.5% 98.7% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.5% 1.3% - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 4 International Growth - Portfolio Commentary To a lesser degree, the portfolio's health care companies also detracted from relative performance, although the sector contributed to International Growth's gains during the fiscal year. Pharmaceutical companies, which made up, on average, one of the portfolio's largest industry stakes, accounted for most of the underperformance. We have reduced our stake in health care, but the sector registered the second-worst performance against the index during the period. The performance in several other sectors was more encouraging. Telecommunications, for example, registered the period's second-best performance. The gains came as improving business conditions lifted companies that provide mobile-phone service. France Telecom and Vodafone Group were the top contributors among the portfolio's telecommunications holdings. Three sectors detracted from the portfolio's absolute returns, with the consumer services sector registering the period's worst absolute performance. Consumer services retreated partly on weakness among media companies, including Television Francaise, which led the decline. Industrials also detracted, with the industrial parts industry declining most. The basic materials sector also slipped, with the forest products and paper industry registering the sector's worst performance. On a brighter note, International Growth's technology stake advanced, led by holdings in the electrical equipment and semiconductor industries. Companies that make computer chips and integrated circuits benefited from increasing demand for chips used in digital consumer products. Taiwan Semiconductor Manufacturing Company, one of the world's largest suppliers of made-to-order chips, topped International Growth's list of contributors in the semiconductor industry, while Germany's Siemens made the largest contribution among electrical equipment holdings. In conclusion, we remain committed to our long-standing process of identifying companies demonstrating fundamental strength and sustainable improvement in their businesses. TOP FIVE SECTORS AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Financial 28.4% 23.6% - -------------------------------------------------------------------------------- Technology 13.9% 9.1% - -------------------------------------------------------------------------------- Consumer (Cyclical) 12.1% 7.1% - -------------------------------------------------------------------------------- Health Care 8.8% 12.7% - -------------------------------------------------------------------------------- Telecommunications 8.7% 15.4% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Japan 19.9% 12.4% - -------------------------------------------------------------------------------- United Kingdom 19.6% 18.0% - -------------------------------------------------------------------------------- France 13.7% 15.5% - -------------------------------------------------------------------------------- Germany 11.4% 7.3% - -------------------------------------------------------------------------------- Switzerland 9.4% 8.0% - -------------------------------------------------------------------------------- Sweden 3.2% 1.6% - -------------------------------------------------------------------------------- Ireland 3.1% 3.3% - -------------------------------------------------------------------------------- Netherlands 2.8% 4.1% - -------------------------------------------------------------------------------- South Korea 2.5% 1.0% - -------------------------------------------------------------------------------- People's Republic of China 2.0% 1.9% - -------------------------------------------------------------------------------- Other* 12.4% 26.9% - -------------------------------------------------------------------------------- * Includes Temporary Cash Investments. - ------ 5 International Growth - Schedule of Investments NOVEMBER 30, 2003 Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 99.0% AUSTRALIA -- 0.6% - -------------------------------------------------------------------------------- 2,060,275 BHP Billiton Limited $ 16,824 - -------------------------------------------------------------------------------- AUSTRIA -- 1.0% - -------------------------------------------------------------------------------- 262,941 Erste Bank der Oesterreichischen Sparkassen AG 30,051 - -------------------------------------------------------------------------------- DENMARK -- 0.4% - -------------------------------------------------------------------------------- 1,821 AP Moller - Maersk AS 13,064 - -------------------------------------------------------------------------------- FINLAND -- 0.9% - -------------------------------------------------------------------------------- 1,504,850 Nokia Oyj ADR 27,057 - -------------------------------------------------------------------------------- FRANCE -- 13.7% - -------------------------------------------------------------------------------- 858,416 Accor SA 36,031 - -------------------------------------------------------------------------------- 1,793,330 Alcatel SA(1) 23,421 - -------------------------------------------------------------------------------- 2,385,159 Axa 45,852 - -------------------------------------------------------------------------------- 2,191,473 Credit Agricole SA(1) 47,832 - -------------------------------------------------------------------------------- 1,261,142 France Telecom SA(1) 32,517 - -------------------------------------------------------------------------------- 215,710 Groupe Danone 33,630 - -------------------------------------------------------------------------------- 525,077 LVMH Moet Hennessy Louis Vuitton SA 36,176 - -------------------------------------------------------------------------------- 571,890 Publicis Groupe 18,072 - -------------------------------------------------------------------------------- 402,270 Renault SA(1) 26,750 - -------------------------------------------------------------------------------- 224,010 Sanofi-Synthelabo SA 15,178 - -------------------------------------------------------------------------------- 903,950 Societe Generale Cl A 72,416 - -------------------------------------------------------------------------------- 519,963 STMicroelectronics N.V. New York Shares 14,491 - -------------------------------------------------------------------------------- 2,317,169 Wanadoo(1) 17,813 - -------------------------------------------------------------------------------- 420,179 - -------------------------------------------------------------------------------- GERMANY -- 10.9% - -------------------------------------------------------------------------------- 197,360 BASF AG 9,766 - -------------------------------------------------------------------------------- 884,400 Commerzbank AG 17,118 - -------------------------------------------------------------------------------- 630,240 Deutsche Boerse AG 31,752 - -------------------------------------------------------------------------------- 2,078,592 Deutsche Telekom(1) 34,525 - -------------------------------------------------------------------------------- 330,321 E.On AG 18,737 - -------------------------------------------------------------------------------- 291,370 Linde AG 14,099 - -------------------------------------------------------------------------------- 813,322 Metro AG 34,870 - -------------------------------------------------------------------------------- 116,354 Muenchener Rueckversicherungs- Gesellschaft AG 13,232 - -------------------------------------------------------------------------------- 105,480 Puma AG Rudolf Dassler Sport 16,634 - -------------------------------------------------------------------------------- 263,100 SAP AG 40,450 - -------------------------------------------------------------------------------- 998,640 Siemens AG 72,887 - -------------------------------------------------------------------------------- 2,278,726 T-Online International AG(1) 28,475 - -------------------------------------------------------------------------------- 332,545 - -------------------------------------------------------------------------------- GREECE -- 0.4% - -------------------------------------------------------------------------------- 360,550 Alpha Bank A.E. 9,504 - -------------------------------------------------------------------------------- 81,910 Public Power Corporation 1,859 - -------------------------------------------------------------------------------- 11,363 - -------------------------------------------------------------------------------- Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- HONG KONG -- 0.9% - -------------------------------------------------------------------------------- 1,960,000 Cheung Kong (Holdings) Ltd. $ 15,457 - -------------------------------------------------------------------------------- 1,559,000 Sun Hung Kai Properties Ltd. 12,545 - -------------------------------------------------------------------------------- 28,002 - -------------------------------------------------------------------------------- HUNGARY -- 0.6% - -------------------------------------------------------------------------------- 79,240 Gedeon Richter Rt. 8,455 - -------------------------------------------------------------------------------- 691,500 OTP Bank Rt.(1) 8,481 - -------------------------------------------------------------------------------- 16,936 - -------------------------------------------------------------------------------- INDIA -- 0.3% - -------------------------------------------------------------------------------- 369,400 Dr. Reddy's Laboratories Ltd. 10,263 - -------------------------------------------------------------------------------- IRELAND -- 3.1% - -------------------------------------------------------------------------------- 1,391,058 Anglo Irish Bank Corporation 18,851 - -------------------------------------------------------------------------------- 1,353,983 CRH plc 25,331 - -------------------------------------------------------------------------------- 256,100 Depfa Bank plc 29,393 - -------------------------------------------------------------------------------- 468,000 Ryanair Holdings plc ADR(1) 21,921 - -------------------------------------------------------------------------------- 95,496 - -------------------------------------------------------------------------------- ISRAEL -- 1.3% - -------------------------------------------------------------------------------- 642,264 Teva Pharmaceutical Industries Ltd. ADR 38,687 - -------------------------------------------------------------------------------- ITALY -- 0.7% - -------------------------------------------------------------------------------- 1,368,000 Banco Popolare di Verona e Novara Scrl 22,574 - -------------------------------------------------------------------------------- JAPAN -- 19.9% - -------------------------------------------------------------------------------- 2,944,000 Bank of Yokohama Ltd. (The) 12,470 - -------------------------------------------------------------------------------- 426,000 Canon, Inc. 19,679 - -------------------------------------------------------------------------------- 687,000 Chugai Pharmaceutical Co. Ltd. 9,282 - -------------------------------------------------------------------------------- 928,000 Denso Corporation 17,325 - -------------------------------------------------------------------------------- 1,977 Dentsu Inc. 8,392 - -------------------------------------------------------------------------------- 637,800 Fanuc Ltd. 37,497 - -------------------------------------------------------------------------------- 204,900 Fast Retailing Company Limited 12,084 - -------------------------------------------------------------------------------- 424,500 Hoya Corp. 37,203 - -------------------------------------------------------------------------------- 366,000 JSR Corp. 7,935 - -------------------------------------------------------------------------------- 3,026 KDDI Corp. 15,774 - -------------------------------------------------------------------------------- 137,500 Keyence Corp. 30,891 - -------------------------------------------------------------------------------- 975,500 Konica Minolta Holdings Inc. 11,541 - -------------------------------------------------------------------------------- 2,162,400 Marui Co., Ltd. 26,551 - -------------------------------------------------------------------------------- 5,136,000 Mitsubishi Corporation 47,121 - -------------------------------------------------------------------------------- 1,604,000 Mitsui Fudosan Co., Ltd. 13,984 - -------------------------------------------------------------------------------- 249,600 Murata Manufacturing Co., Ltd. 14,105 - -------------------------------------------------------------------------------- 2,590,000 NEC Corp.(1) 18,774 - -------------------------------------------------------------------------------- 6,050,000 Nissan Motor Co., Ltd. 69,149 - -------------------------------------------------------------------------------- 549,900 Nitto Denko Corp. 27,761 - -------------------------------------------------------------------------------- 165,000 NOK Corporation 6,055 - -------------------------------------------------------------------------------- 5,133 NTT DoCoMo, Inc. 11,059 - -------------------------------------------------------------------------------- 293,500 ORIX Corporation 21,515 - -------------------------------------------------------------------------------- 382,600 Pioneer Corp. 9,780 - -------------------------------------------------------------------------------- 2,010,000 Sharp Corp. 30,075 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 6 International Growth - Schedule of Investments NOVEMBER 30, 2003 Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- 4,460 Sumitomo Mitsui Financial Group Inc. $ 21,783 - -------------------------------------------------------------------------------- 339,200 Tokyo Electron Ltd. 23,998 - -------------------------------------------------------------------------------- 3,634,000 Tokyu Corporation 16,886 - -------------------------------------------------------------------------------- 508,000 Trend Micro Inc.(1) 12,846 - -------------------------------------------------------------------------------- 1,359 Yahoo Japan Corporation(1) 17,866 - -------------------------------------------------------------------------------- 609,381 - -------------------------------------------------------------------------------- MEXICO -- 0.6% - -------------------------------------------------------------------------------- 732,400 America Movil SA de CV Series L ADR 18,779 - -------------------------------------------------------------------------------- NETHERLANDS -- 2.8% - -------------------------------------------------------------------------------- 2,585,700 ING Groep N.V. 55,413 - -------------------------------------------------------------------------------- 1,105,172 Koninklijke Royal Philips Electronics N.V. New York Shares 31,409 - -------------------------------------------------------------------------------- 86,822 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 2.0% - -------------------------------------------------------------------------------- 5,630,000 CNOOC Ltd. 11,598 - -------------------------------------------------------------------------------- 12,452,000 Huaneng Power International, Inc. 18,357 - -------------------------------------------------------------------------------- 42,763,000 PetroChina Company Limited 15,829 - -------------------------------------------------------------------------------- 45,954,000 Sinopec Shanghai Petrochemical Company Limited Cl H 14,940 - -------------------------------------------------------------------------------- 60,724 - -------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 1.0% - -------------------------------------------------------------------------------- 203,724 Mobile Telesystems ADR 16,807 - -------------------------------------------------------------------------------- 1,312,233 YUKOS 14,907 - -------------------------------------------------------------------------------- 31,714 - -------------------------------------------------------------------------------- SOUTH AFRICA -- 0.3% - -------------------------------------------------------------------------------- 2,470,150 MTN Group Limited(1) 10,061 - -------------------------------------------------------------------------------- SOUTH KOREA -- 2.5% - -------------------------------------------------------------------------------- 505,660 Kookmin Bank 17,863 - -------------------------------------------------------------------------------- 397,050 LG Electronics Inc. 19,637 - -------------------------------------------------------------------------------- 100,350 Samsung Electronics 38,787 - -------------------------------------------------------------------------------- 76,287 - -------------------------------------------------------------------------------- SPAIN -- 0.7% - -------------------------------------------------------------------------------- 1,712,788 Telefonica SA 22,184 - -------------------------------------------------------------------------------- SWEDEN -- 3.2% - -------------------------------------------------------------------------------- 584,460 Atlas Copco AB Cl B 20,897 - -------------------------------------------------------------------------------- 502,560 ForeningsSparbanken AB 8,685 - -------------------------------------------------------------------------------- 2,732,650 Skandia Forsakrings AB 9,227 - -------------------------------------------------------------------------------- 388,494 Tele2 AB(1) 19,832 - -------------------------------------------------------------------------------- 6,468,800 Telefonaktiebolaget LM Ericsson B Shares(1) 10,451 - -------------------------------------------------------------------------------- 970,310 Volvo AB Cl B 28,074 - -------------------------------------------------------------------------------- 97,166 - -------------------------------------------------------------------------------- Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- SWITZERLAND -- 9.4% - -------------------------------------------------------------------------------- 4,252,822 ABB Limited(1) $ 20,876 - -------------------------------------------------------------------------------- 660,005 Adecco SA 40,982 - -------------------------------------------------------------------------------- 651,191 Clariant AG(1) 9,201 - -------------------------------------------------------------------------------- 635,360 Compagnie Financiere Richemont AG 15,741 - -------------------------------------------------------------------------------- 1,971,600 Credit Suisse Group 65,486 - -------------------------------------------------------------------------------- 43,600 Julius Baer Holding AG 13,874 - -------------------------------------------------------------------------------- 553,905 Roche Holding AG 49,962 - -------------------------------------------------------------------------------- 220,004 Swiss Life Holding(1) 40,029 - -------------------------------------------------------------------------------- 480,986 UBS AG 31,002 - -------------------------------------------------------------------------------- 287,153 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 1.3% - -------------------------------------------------------------------------------- 5,197,000 AU Optronics Corp. 6,224 - -------------------------------------------------------------------------------- 596,760 China Steel Corporation GDR(1) 9,459 - -------------------------------------------------------------------------------- 13,177,160 Taiwan Semiconductor Manufacturing Co. Ltd.(1) 24,502 - -------------------------------------------------------------------------------- 40,185 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 19.6% - -------------------------------------------------------------------------------- 1,626,100 3i Group plc 17,051 - -------------------------------------------------------------------------------- 6,151,847 Abbey National plc 56,537 - -------------------------------------------------------------------------------- 1,774,379 Alliance & Leicester plc 26,946 - -------------------------------------------------------------------------------- 627,951 AstraZeneca plc 28,533 - -------------------------------------------------------------------------------- 7,136,570 BP plc 49,858 - -------------------------------------------------------------------------------- 2,600,240 British Sky Broadcasting plc(1) 30,175 - -------------------------------------------------------------------------------- 1,641,470 Exel plc 21,522 - -------------------------------------------------------------------------------- 2,233,240 GlaxoSmithKline plc 50,411 - -------------------------------------------------------------------------------- 9,891,950 Hays plc 21,631 - -------------------------------------------------------------------------------- 1,055,232 HBOS plc 13,263 - -------------------------------------------------------------------------------- 3,034,440 HSBC Holdings plc 46,030 - -------------------------------------------------------------------------------- 1,002,134 Man Group plc 24,623 - -------------------------------------------------------------------------------- 16,615,077 mmO2 plc(1) 21,527 - -------------------------------------------------------------------------------- 941,160 Next plc 18,069 - -------------------------------------------------------------------------------- 2,142,832 Reckitt Benckiser plc 46,820 - -------------------------------------------------------------------------------- 1,451,500 Smith & Nephew plc 11,159 - -------------------------------------------------------------------------------- 2,164,730 Tesco plc 9,271 - -------------------------------------------------------------------------------- 1,933,090 United Business Media plc 16,684 - -------------------------------------------------------------------------------- 26,878,911 Vodafone Group plc 61,783 - -------------------------------------------------------------------------------- 2,760,882 WPP Group plc 26,478 - -------------------------------------------------------------------------------- 598,371 - -------------------------------------------------------------------------------- UNITED STATES -- 0.9% - -------------------------------------------------------------------------------- 168,680 Alcon, Inc. 9,812 - -------------------------------------------------------------------------------- 848,802 Comverse Technology, Inc.(1) 16,322 - -------------------------------------------------------------------------------- 26,134 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $2,508,569) 3,028,002 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 7 International Growth - Schedule of Investments NOVEMBER 30, 2003 Shares/Principal Amount ($ In Thousands) Value - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 0.5% GERMANY -- 0.5% - -------------------------------------------------------------------------------- 29,270 Porsche AG $ 15,131 (Cost $13,108) - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 0.5% $15,600 FNMA Discount Notes, 0.97%, 12/1/03(2) 15,600 (Cost $15,600) - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 100.0% (Cost $2,537,277) $3,058,733 ================================================================================ COLLATERAL RECEIVED FOR SECURITIES LENDING(3) REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, Barclays Bank plc, (U.S. Government Agency obligations), 1.08%, dated 11/28/03, due 12/1/03 (Delivery value $125,011) $125,000 - -------------------------------------------------------------------------------- Repurchase Agreement, BNP Paribas, (U.S. Government Agency obligations), 1.08%, dated 11/28/03, due 12/1/03 (Delivery value $97,264) 97,255 - -------------------------------------------------------------------------------- 222,255 - -------------------------------------------------------------------------------- SHORT-TERM DEBT - -------------------------------------------------------------------------------- $24,978 Bayerische Landesbank Girozentrale, VRN, 1.13%, 12/1/03, resets daily off the Federal Funds rate plus 0.06% with no caps 24,978 - -------------------------------------------------------------------------------- 7,000 Capital One Multi-Asset Execution Trust, Series 2003 A2, Class A2, VRN, 1.27%, 12/15/03, resets monthly off the 1-month LIBOR plus 0.11% with no caps 7,000 - -------------------------------------------------------------------------------- 24,999 Dorada Finance Inc., VRN, 1.25%, 12/1/03, resets daily off the Prime rate minus 2.92% with no caps 24,999 - -------------------------------------------------------------------------------- 25,012 Ford Credit Floorplan Master Owner Trust, Series 2001-1, Class A, VRN, 1.14%, 12/15/03, resets monthly off the 1-month LIBOR plus 0.09% with no caps 25,012 - -------------------------------------------------------------------------------- 50,000 Morgan Stanley, VRN, 1.24%, 12/1/03 50,001 - -------------------------------------------------------------------------------- 25,000 RACERS(reg.sm), Series 2000-7, Class A3, VRN, 1.37%, 12/1/03, resets monthly off the 1-month LIBOR plus 0.20% with no caps 25,000 - -------------------------------------------------------------------------------- 15,000 Security Benefit Life Insurance Co., VRN, 1.28%, 12/9/03 15,000 - -------------------------------------------------------------------------------- Principal Amount ($ In Thousands) Value - -------------------------------------------------------------------------------- $28,000 SPARCS 2003-3, VRN, 1.47%, 2/23/04, resets quarterly off the 3-month LIBOR plus 0.30% with no caps $ 28,000 - -------------------------------------------------------------------------------- 20,000 Wachovia Bank N.A. Bank Note, VRN, 1.19%, 12/1/03, resets daily off the Federal Funds rate plus 0.19% with no caps 20,000 - -------------------------------------------------------------------------------- 219,990 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $442,245) $442,245 ================================================================================ MARKET SECTOR DIVERSIFICATION (UNAUDITED) Basic Materials 4.1% - -------------------------------------------------------------------------------- Commercial Services 7.3% - -------------------------------------------------------------------------------- Consumer Services 3.6% - -------------------------------------------------------------------------------- Consumer (Cyclical) 12.1% - -------------------------------------------------------------------------------- Consumer (Non-Cyclical) 2.6% - -------------------------------------------------------------------------------- Energy 3.6% - -------------------------------------------------------------------------------- Financial 28.4% - -------------------------------------------------------------------------------- Health Care 8.8% - -------------------------------------------------------------------------------- Industrials 3.4% - -------------------------------------------------------------------------------- Technology 13.9% - -------------------------------------------------------------------------------- Telecommunications 8.7% - -------------------------------------------------------------------------------- Transport 1.7% - -------------------------------------------------------------------------------- Utility 1.3% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.5% - -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt GDR = Global Depositary Receipt LIBOR = London Interbank Offered Rate RACERS(reg.sm) = Restructured Asset Certificates Enhanced Returns resets = The frequency with which a security's coupon changes, based on current market conditions or an underlying index. The more frequently a security resets, the less risk the investor is taking that the coupon will vary significantly from current market rates. SPARCS = Structured Product Asset Return Certificate Trusts VRN = Variable Rate Note. Interest reset date is indicated. Rate shown is effective November 30, 2003. (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. (3) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. (See Note 5 in Notes to Financial Statements.) See Notes to Financial Statements. - ------ 8 Statement of Assets and Liabilities NOVEMBER 30, 2003 (Amounts In Thousands Except Per-Share Amounts) - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $2,537,277) -- including securities on loan valued at $424,135 $3,058,733 - --------------------------------------------------------------- Collateral received on securities loaned, at value (cost of $442,245) 442,245 - --------------------------------------------------------------- Foreign currency holdings, at value (cost of $2,894) 2,899 - --------------------------------------------------------------- Receivable for investments sold 63,391 - --------------------------------------------------------------- Receivable for capital shares sold 271 - --------------------------------------------------------------- Dividends and interest receivable 4,304 - -------------------------------------------------------------------------------- 3,571,843 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payable for collateral received on securities loaned 442,245 - --------------------------------------------------------------- Disbursements in excess of demand deposit cash 5,255 - --------------------------------------------------------------- Payable for investments purchased 67,407 - --------------------------------------------------------------- Accrued management fees 3,050 - --------------------------------------------------------------- Distribution fees payable 50 - --------------------------------------------------------------- Service fees payable 51 - -------------------------------------------------------------------------------- 518,058 - -------------------------------------------------------------------------------- NET ASSETS $3,053,785 ================================================================================ See Notes to Financial Statements. (continued) - ------ 9 Statement of Assets and Liabilities NOVEMBER 30, 2003 (Amounts In Thousands Except Per-Share Amounts) - -------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $ 4,100,242 - --------------------------------------------------------------- Undistributed net investment income 20,145 - --------------------------------------------------------------- Accumulated net realized loss on investment and foreign currency transactions (1,588,362) - --------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 521,760 - -------------------------------------------------------------------------------- $ 3,053,785 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $2,502,830,806 - --------------------------------------------------------------- Shares outstanding 331,813,005 - --------------------------------------------------------------- Net asset value per share $7.54 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $301,854,338 - --------------------------------------------------------------- Shares outstanding 39,911,676 - --------------------------------------------------------------- Net asset value per share $7.56 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $239,255,706 - --------------------------------------------------------------- Shares outstanding 31,827,241 - --------------------------------------------------------------- Net asset value per share $7.52 - -------------------------------------------------------------------------------- A CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $7,395,459 - --------------------------------------------------------------- Shares outstanding 982,362 - --------------------------------------------------------------- Net asset value per share $7.53 - --------------------------------------------------------------- Maximum offering price (net asset value divided by 0.9425) $7.99 - -------------------------------------------------------------------------------- B CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $513,122 - --------------------------------------------------------------- Shares outstanding 68,570 - --------------------------------------------------------------- Net asset value per share $7.48 - -------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $1,933,159 - --------------------------------------------------------------- Shares outstanding 259,639 - --------------------------------------------------------------- Net asset value per share $7.45 - -------------------------------------------------------------------------------- R CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $2,682 - --------------------------------------------------------------- Shares outstanding 356 - --------------------------------------------------------------- Net asset value per share $7.53 - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 10 Statement of Operations YEAR ENDED NOVEMBER 30, 2003 (Amounts In Thousands) - -------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------- INCOME: - --------------------------------------------------------------- Dividends (net of foreign taxes withheld of $7,298) $ 55,702 - --------------------------------------------------------------- Interest and other income 396 - --------------------------------------------------------------- Securities lending 3,664 - -------------------------------------------------------------------------------- 59,762 - -------------------------------------------------------------------------------- EXPENSES: - --------------------------------------------------------------- Management fees 34,961 - --------------------------------------------------------------- Distribution fees: - --------------------------------------------------------------- Advisor Class 523 - --------------------------------------------------------------- B Class 1 - --------------------------------------------------------------- C Class 9 - --------------------------------------------------------------- Service fees: - --------------------------------------------------------------- Advisor Class 523 - --------------------------------------------------------------- B Class -- - --------------------------------------------------------------- C Class 3 - --------------------------------------------------------------- Service and distribution fees: - --------------------------------------------------------------- A Class 6 - --------------------------------------------------------------- R Class -- - --------------------------------------------------------------- Directors' fees and expenses 45 - --------------------------------------------------------------- Other expenses 104 - -------------------------------------------------------------------------------- 36,175 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 23,587 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - --------------------------------------------------------------- Investment transactions (245,888) - --------------------------------------------------------------- Foreign currency transactions 261,903 - -------------------------------------------------------------------------------- 16,015 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION ON: - --------------------------------------------------------------- Investments 264,715 - --------------------------------------------------------------- Translation of assets and liabilities in foreign currencies 79,249 - -------------------------------------------------------------------------------- 343,964 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN 359,979 - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 383,566 ================================================================================ See Notes to Financial Statements. - ------ 11 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2003 AND NOVEMBER 30, 2002 (Amounts In Thousands) - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2003 2002 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income $ 23,587 $ 26,164 - ------------------------------------------------- Net realized gain (loss) 16,015 (611,007) - ------------------------------------------------- Change in net unrealized appreciation 343,964 93,995 - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 383,566 (490,848) - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------- From net investment income: - ------------------------------------------------- Investor Class (20,175) (12,811) - ------------------------------------------------- Institutional Class (2,772) (2,126) - ------------------------------------------------- Advisor Class (1,186) (301) - -------------------------------------------------------------------------------- Decrease in net assets from distributions (24,133) (15,238) - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Net decrease in net assets from capital share transactions (184,230) (465,220) - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 175,203 (971,306) NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 2,878,582 3,849,888 - -------------------------------------------------------------------------------- End of period $3,053,785 $2,878,582 ================================================================================ Undistributed net investment income $20,145 $23,805 ================================================================================ See Notes to Financial Statements. - ------ 12 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. International Growth Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified under the 1940 Act. The fund's investment objective is to seek capital growth. The fund pursues its objective by investing primarily in equity securities of foreign companies in developed countries. The following is a summary of the fund's significant accounting policies. MULTIPLE CLASS -- The fund is authorized to issue the Investor Class, the Institutional Class, the Advisor Class, the A Class, the B Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and shareholder servicing and distribution expenses and arrangements. All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets. Sale of the A Class and B Class commenced on January 31, 2003, at which time the Investor Class was no longer available to new investors. Sale of the R Class commenced on August 29, 2003. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes are valued through a commercial pricing service. When valuations are not readily available, securities are valued at fair value as determined in accordance with procedures adopted by the Board of Directors. If an event were to occur after the close of the foreign exchange on which a portfolio security principally trades, but before the net asset value per-share of the fund was determined that was likely to materially affect the net asset value of a fund, then that security would be valued at fair value as determined in accordance with procedures adopted by the Board of Directors. SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. Certain countries impose taxes on realized gains on the sale of securities registered in their country. The fund records the foreign tax expense, if any, on an accrual basis. The realized and unrealized tax provision reduces the net realized gain (loss) on investment transactions and net unrealized appreciation (depreciation) on investments, respectively. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. SECURITIES ON LOAN -- The fund may lend portfolio securities through its lending agent to certain approved borrowers in order to earn additional income. The fund continues to recognize any gain or loss in the market price of the securities loaned and records any interest earned or dividends declared. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on foreign currency transactions and unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The fund records the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. (continued) - ------ 13 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The fund may enter into forward foreign currency exchange contracts to facilitate transactions of securities denominated in a foreign currency or to hedge the fund's exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the fund and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. The fund bears the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses may arise if the counterparties do not perform under the contract terms. REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with institutions that the fund's investment manager, American Century Investment Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria adopted by the Board of Directors. Each repurchase agreement is recorded at cost. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement. JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with other registered investment companies having management agreements with ACIM, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. INCOME TAX STATUS -- It is the fund's policy to distribute all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income are expected to be declared and paid annually. Distributions from net realized gains, if any, are generally declared and paid twice a year. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. (continued) - ------ 14 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee per class. The Agreement provides that all expenses of the fund, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed daily and paid monthly in arrears based on each class's pro rata share of the fund's average daily closing net assets during the previous month. The annual management fee schedule for each class of the fund is as follows: - -------------------------------------------------------------------------------- INVESTOR, A, B, C, AND R INSTITUTIONAL ADVISOR CLASSES CLASS CLASS - -------------------------------------------------------------------------------- FUND AVERAGE NET ASSETS - -------------------------------------------------------------------------------- First $1 billion 1.50% 1.30% 1.25% - -------------------------------------------------------------------------------- Next $1 billion 1.20% 1.00% 0.95% - -------------------------------------------------------------------------------- Over $2 billion 1.10% 0.90% 0.85% - -------------------------------------------------------------------------------- The effective annual management fee for the year ended November 30, 2003 for the Investor, Institutional, Advisor, A, B, C and R Classes was 1.28%, 1.08%, 1.03%, 1.28%, 1.28%, 1.28% and 1.28%, respectively. DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master Distribution and Shareholder Services Plan for the Advisor Class (the Advisor Class plan) and a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively with the Advisor Class Plan, the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the Advisor Class, B Class and C Class will pay American Century Investment Services, Inc. (ACIS) the following annual distribution and service fees: - -------------------------------------------------------------------------------- ADVISOR B C - -------------------------------------------------------------------------------- Distribution Fee 0.25% 0.75% 0.75% - -------------------------------------------------------------------------------- Service Fee 0.25% 0.25% 0.25% - -------------------------------------------------------------------------------- The plans provide that the A Class and the R Class will pay ACIS an annual distribution and service fee of 0.25% and 0.50%, respectively. The fees are computed daily and paid monthly in arrears based on each class's average daily closing net assets during the previous month. The distribution fee provides compensation for expenses incurred in connection with distributing shares of the classes including, but not limited to, payments to brokers, dealers, and financial institutions that have entered into sales agreements with respect to shares of the fund. The service fee provides compensation for shareholder and administrative services rendered by ACIS, its affiliates or independent third party providers for Advisor Class shares and for individual shareholder services rendered by broker/dealers or other independent financial intermediaries for A, B, C and R Class shares. All or a portion of the fees may have been voluntarily waived during the year ended November 30, 2003. Fees incurred under the plans during the year ended November 30, 2003, are detailed in the Statement of Operations. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment manager, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services Corporation. During the year ended November 30, 2003, the fund invested in a money market fund for temporary purposes, which was managed by J.P. Morgan Investment Management, Inc. (JPMIM). JPMIM is a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. The fund has a bank line of credit agreement with JPMorgan Chase Bank (JPMCB). The fund has a securities lending agreement with JPMCB. JPMCB is a wholly owned subsidiary of JPM. (continued) - ------ 15 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands) 3. INVESTMENT TRANSACTIONS Purchases and sales of investment securities, excluding short-term investments, for the year ended November 30, 2003, were $4,688,377 and $4,845,127, respectively. 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 1,000,000 ================================================================================ Sold 209,534 $ 1,377,669 - ------------------------------------------------- Issued in reinvestment of distributions 2,710 17,260 - ------------------------------------------------- Redeemed (240,811) (1,590,675) - -------------------------------------------------------------------------------- Net decrease (28,567) $ (195,746) ================================================================================ YEAR ENDED NOVEMBER 30, 2002 SHARES AUTHORIZED 1,000,000 ================================================================================ Sold 513,726 $ 3,783,196 - ------------------------------------------------- Issued in reinvestment of distributions 1,335 10,348 - ------------------------------------------------- Redeemed (573,378) (4,242,434) - -------------------------------------------------------------------------------- Net decrease (58,317) $ (448,890) ================================================================================ INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 150,000 ================================================================================ Sold 72,913 $ 481,412 - ------------------------------------------------- Issued in reinvestment of distributions 397 2,535 - ------------------------------------------------- Redeemed (73,664) (492,505) - -------------------------------------------------------------------------------- Net decrease (354) $ (8,558) ================================================================================ YEAR ENDED NOVEMBER 30, 2002 SHARES AUTHORIZED 150,000 ================================================================================ Sold 69,870 $ 502,481 - ------------------------------------------------- Issued in reinvestment of distributions 241 1,869 - ------------------------------------------------- Redeemed (74,690) (540,428) - -------------------------------------------------------------------------------- Net decrease (4,579) $ (36,078) ================================================================================ (continued) - ------ 16 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 100,000 ================================================================================ Sold 57,343 $ 377,144 - ------------------------------------------------- Issued in reinvestment of distributions 177 1,127 - ------------------------------------------------- Redeemed (55,245) (366,224) - -------------------------------------------------------------------------------- Net increase 2,275 $ 12,047 ================================================================================ YEAR ENDED NOVEMBER 30, 2002 SHARES AUTHORIZED 100,000 ================================================================================ Sold 89,618 $ 649,836 - ------------------------------------------------- Issued in reinvestment of distributions 37 281 - ------------------------------------------------- Redeemed (86,331) (631,278) - -------------------------------------------------------------------------------- Net increase 3,324 $ 18,839 ================================================================================ A CLASS - -------------------------------------------------------------------------------- PERIOD ENDED NOVEMBER 30, 2003(1) SHARES AUTHORIZED 25,000 ================================================================================ Sold 1,879 $12,853 - ------------------------------------------------- Redeemed (897) (6,113) - -------------------------------------------------------------------------------- Net increase 982 $ 6,740 ================================================================================ B CLASS - -------------------------------------------------------------------------------- PERIOD ENDED NOVEMBER 30, 2003(1) SHARES AUTHORIZED 25,000 ================================================================================ Sold 69 $471 - ------------------------------------------------- Redeemed -- (3) - -------------------------------------------------------------------------------- Net increase 69 $468 ================================================================================ C CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 25,000 ================================================================================ Sold 305 $ 2,054 - ------------------------------------------------- Redeemed (183) (1,237) - -------------------------------------------------------------------------------- Net increase 122 $ 817 ================================================================================ YEAR ENDED NOVEMBER 30, 2002 SHARES AUTHORIZED 50,000 ================================================================================ Sold 137 $1,024 - ------------------------------------------------- Redeemed (17) (115) - -------------------------------------------------------------------------------- Net increase 120 $ 909 ================================================================================ R CLASS - -------------------------------------------------------------------------------- PERIOD ENDED NOVEMBER 30, 2003(2) SHARES AUTHORIZED 50,000 ================================================================================ Sold -- $2 ================================================================================ (1) January 31, 2003 (commencement of sale) through November 30, 2003. (2) August 29, 2003 (commencement of sale) through November 30, 2003. (continued) - ------ 17 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands Except Per-Share Amounts) 5. SECURITIES LENDING As of November 30, 2003, securities in International Growth valued at $424,135 were on loan through the lending agent, JPMCB, to certain approved borrowers. JPMCB receives and maintains collateral in the form of cash, and/or acceptable securities as approved by ACIM. Cash collateral is invested in authorized investments by the lending agent in a pooled account. The value of cash collateral received at period end is disclosed in the Statement of Assets and Liabilities and investments made with the cash by the lending agent are listed in the Schedule of Investments. Any deficiencies or excess of collateral must be delivered or transferred by the member firms no later than the close of business on the next business day. The total value of all collateral received, at this date, was $442,245. The fund's risks in securities lending are that the borrower may not provide additional collateral when required or return the securities when due. If the borrower defaults, receipt of the collateral by the fund may be delayed or limited. 6. BANK LINE OF CREDIT The fund, along with certain other funds managed by ACIM, has a $620 million unsecured bank line of credit agreement with JPMCB, which was renewed to $650 million effective December 17, 2003. The fund may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The fund did not borrow from the line during the year ended November 30, 2003. 7. GEOGRAPHIC RISK FACTORS There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political and economic developments and the possible imposition of currency exchange restrictions or other foreign laws or restrictions. 8. FEDERAL TAX INFORMATION On December 19, 2003, International Growth declared and paid the following per-share distribution to shareholders of record on December 18, 2003. - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR CLASS CLASS CLASS A CLASS B CLASS C CLASS R CLASS - -------------------------------------------------------------------------------- $0.0575 $0.0732 $0.0383 $0.0415 $-- $-- $0.0475 - -------------------------------------------------------------------------------- The tax character of distributions paid during the years ended November 30, 2003 and November 30, 2002 were as follows: - -------------------------------------------------------------------------------- 2003 2002 - -------------------------------------------------------------------------------- DISTRIBUTIONS PAID FROM - -------------------------------------------------------------------------------- Ordinary income $24,133 $15,238 - -------------------------------------------------------------------------------- Long-term capital gain -- -- - -------------------------------------------------------------------------------- The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. (continued) - ------ 18 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands) 8. FEDERAL TAX INFORMATION (CONTINUED) As of November 30, 2003, the components of distributable earnings on a tax-basis and the federal tax cost of investments were as follows: - -------------------------------------------------------------------------------- COMPONENTS OF DISTRIBUTABLE EARNINGS AND TAX COST - -------------------------------------------------------------------------------- Federal tax cost of investments $2,550,493 ================================================================================ Gross tax appreciation of investments $526,171 - ---------------------------------------------------------------- Gross tax depreciation of investments (17,931) - -------------------------------------------------------------------------------- Net tax appreciation of investments $508,240 ================================================================================ Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies $ 253 - -------------------------------------------------------------------------------- Net tax appreciation $508,493 ================================================================================ Undistributed ordinary income $21,344 - ---------------------------------------------------------------- Accumulated capital losses $(1,575,719) - ---------------------------------------------------------------- Currency loss deferral $(575) - -------------------------------------------------------------------------------- The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains on certain forward foreign currency contracts, and on investments in passive foreign investment companies. The accumulated capital losses listed above represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers expire in 2009 through 2011. The currency loss deferrals represent net foreign currency losses incurred in the one-month period ended November 30, 2003. The fund has elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. 9. OTHER TAX INFORMATION (UNAUDITED) $ IN FULL The following information is provided pursuant to provisions of the Internal Revenue Code. For corporate taxpayers, 0.00% of the ordinary income distributions paid during the fiscal year ended November 30, 2003, qualify for the corporate dividends received deduction. As of November 30, 2003, the fund designates $8,472,837 as a foreign tax credit, which represents taxes paid on income derived from sources within foreign countries or possessions of the United States. - ------ 19 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ---------------------------------------------------------------------------------------------------------- INVESTOR CLASS - ---------------------------------------------------------------------------------------------------------- 2003 2002 2001 2000 1999 - ---------------------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.69 $7.86 $12.05 $13.02 $9.25 - ---------------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(1) 0.06 0.06 0.04 (0.02) (0.01) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 0.85 (1.20) (2.50) (0.22) 3.95 - ---------------------------------------------------------------------------------------------------------- Total From Investment Operations 0.91 (1.14) (2.46) (0.24) 3.94 - ---------------------------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Investment Income (0.06) (0.03) -- (0.01) (0.02) - ------------------------------------------ From Net Realized Gains -- -- (1.73) (0.72) (0.15) - ---------------------------------------------------------------------------------------------------------- Total Distributions (0.06) (0.03) (1.73) (0.73) (0.17) - ---------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $7.54 $6.69 $7.86 $12.05 $13.02 ========================================================================================================== TOTAL RETURN(2) 13.70% (14.54)% (24.18)% (2.47)% 43.22% - ---------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.28% 1.25% 1.21% 1.20% 1.27% - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.84% 0.76% 0.48% (0.16)% (0.06)% - ------------------------------------------ Portfolio Turnover Rate 169% 215% 178% 116% 117% - ------------------------------------------ Net Assets, End of Period (in thousands) $2,502,831 $2,410,600 $3,290,867 $4,455,433 $3,701,903 - ---------------------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 20 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------------- 2003 2002 2001 2000 1999 - ------------------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.71 $7.88 $12.07 $13.05 $9.28 - ------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income(1) 0.07 0.07 0.06 0.01 --(2) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 0.85 (1.19) (2.50) (0.24) 3.96 - ------------------------------------------------------------------------------------------------- Total From Investment Operations 0.92 (1.12) (2.44) (0.23) 3.96 - ------------------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Investment Income (0.07) (0.05) -- (0.03) (0.04) - ------------------------------------------ From Net Realized Gains -- -- (1.75) (0.72) (0.15) - ------------------------------------------------------------------------------------------------- Total Distributions (0.07) (0.05) (1.75) (0.75) (0.19) - ------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $7.56 $6.71 $7.88 $12.07 $13.05 ================================================================================================= TOTAL RETURN(3) 13.89% (14.33)% (23.96)% (2.35)% 43.40% - ------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.08% 1.05% 1.01% 1.00% 1.07% - ------------------------------------------ Ratio of Net Investment Income to Average Net Assets 1.04% 0.96% 0.68% 0.04% 0.14% - ------------------------------------------ Portfolio Turnover Rate 169% 215% 178% 116% 117% - ------------------------------------------ Net Assets, End of Period (in thousands) $301,854 $270,121 $353,399 $371,255 $132,031 - ------------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 21 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - --------------------------------------------------------------------------------------------------- ADVISOR CLASS - --------------------------------------------------------------------------------------------------- 2003 2002 2001 2000 1999 - --------------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.66 $7.83 $12.02 $12.99 $9.24 - --------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(1) 0.03 0.04 0.02 (0.05) (0.04) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 0.87 (1.20) (2.51) (0.23) 3.94 - --------------------------------------------------------------------------------------------------- Total From Investment Operations 0.90 (1.16) (2.49) (0.28) 3.90 - --------------------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Investment Income (0.04) (0.01) -- --(2) --(2) - ------------------------------------------ From Net Realized Gains -- -- (1.70) (0.69) (0.15) - --------------------------------------------------------------------------------------------------- Total Distributions (0.04) (0.01) (1.70) (0.69) (0.15) - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $7.52 $6.66 $7.83 $12.02 $12.99 =================================================================================================== TOTAL RETURN(3) 13.62% (14.81)% (24.45)% (2.72)% 42.86% - --------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.53% 1.50% 1.46% 1.45% 1.52% - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.59% 0.51% 0.23% (0.41)% (0.31)% - ------------------------------------------ Portfolio Turnover Rate 169% 215% 178% 116% 117% - ------------------------------------------ Net Assets, End of Period (in thousands) $239,256 $196,949 $205,483 $181,263 $61,317 - --------------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 22 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- A CLASS - -------------------------------------------------------------------------------- 2003(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.10 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------------------- Net Investment Loss(2) (0.02) - ------------------------------------------------------------------- Net Realized and Unrealized Gain 1.45 - -------------------------------------------------------------------------------- Total From Investment Operations 1.43 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $7.53 ================================================================================ TOTAL RETURN(3) 23.44% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.53%(4) - ------------------------------------------------------------------- Ratio of Net Investment Loss to Average Net Assets (0.40)%(4) - ------------------------------------------------------------------- Portfolio Turnover Rate 169%(5) - ------------------------------------------------------------------- Net Assets, End of Period (in thousands) $7,395 - -------------------------------------------------------------------------------- (1) January 31, 2003 (commencement of sale) through November 30, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 23 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- B CLASS - -------------------------------------------------------------------------------- 2003(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.10 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------------------- Net Investment Loss(2) (0.03) - ------------------------------------------------------------------- Net Realized and Unrealized Gain 1.41 - -------------------------------------------------------------------------------- Total From Investment Operations 1.38 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $7.48 ================================================================================ TOTAL RETURN(3) 22.62% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.28%(4) - ------------------------------------------------------------------- Ratio of Net Investment Loss to Average Net Assets (0.51)%(4) - ------------------------------------------------------------------- Portfolio Turnover Rate 169%(5) - ------------------------------------------------------------------- Net Assets, End of Period (in thousands) $513 - -------------------------------------------------------------------------------- (1) January 31, 2003 (commencement of sale) through November 30, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 24 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2003 2002 2001(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------- Net Asset Value, Beginning of Period $6.60 $7.82 $9.16 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------------------- Net Investment Loss(2) (0.01) --(3) (0.04) - --------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.86 (1.22) (1.30) - -------------------------------------------------------------------------------- Total From Investment Operations 0.85 (1.22) (1.34) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $7.45 $6.60 $7.82 ================================================================================ TOTAL RETURN(4) 12.88% (15.60)% (14.63)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.28% 2.25% 2.23%(5) - --------------------------------------------- Ratio of Net Investment Loss to Average Net Assets (0.16)% (0.24)% (0.99)%(5) - --------------------------------------------- Portfolio Turnover Rate 169% 215% 178%(6) - --------------------------------------------- Net Assets, End of Period (in thousands) $1,933 $912 $138 - -------------------------------------------------------------------------------- (1) June 4, 2001 (commencement of sale) through November 30, 2001. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount is less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2001. See Notes to Financial Statements. - ------ 25 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2003(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.02 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------------------- Net Investment Loss(2) (0.01) - ------------------------------------------------------------------- Net Realized and Unrealized Gain 0.52 - -------------------------------------------------------------------------------- Total From Investment Operations 0.51 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $7.53 ================================================================================ TOTAL RETURN(3) 7.26% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.78%(4) - ------------------------------------------------------------------- Ratio of Net Investment Loss to Average Net Assets (0.74)%(4) - ------------------------------------------------------------------- Portfolio Turnover Rate 169%(5) - ------------------------------------------------------------------- Net Assets, End of Period (in thousands) $3 - -------------------------------------------------------------------------------- (1) August 29, 2003 (commencement of sale) through November 30, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 26 Independent Auditors' Report The Board of Directors and Shareholders, American Century World Mutual Funds, Inc: We have audited the accompanying statements of assets and liabilities, including the schedule of investments, of International Growth Fund, one of the funds comprising American Century World Mutual Funds, Inc., as of November 30, 2003, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned at November 30, 2003 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of International Growth Fund as of November 30, 2003, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Kansas City, Missouri January 14, 2004 - ------ 27 Management The individuals listed below serve as directors or officers of the fund. Each director serves until his or her successor is duly elected and qualified or until he or she retires. Mandatory retirement age for independent directors is 75, although the remaining independent directors may temporarily waive this requirement on a case-by-case basis. Those listed as interested directors are "interested" primarily by virtue of their engagement as officers of American Century Companies, Inc. (ACC) or its wholly-owned subsidiaries, including the fund's investment advisor, American Century Investment Management, Inc. (ACIM); the fund's principal underwriter, American Century Investment Services, Inc. (ACIS); and the fund's transfer agent, American Century Services Corporation (ACSC). The other directors (more than two-thirds of the total number) are independent; that is, they are not employees or officers of, and have no financial interest in, ACC or any of its wholly-owned subsidiaries, including ACIM, ACIS, and ACSC. All persons named as officers of the fund also serve in similar capacities for other funds advised by ACIM. Only officers with policy-making functions are listed. No officer is compensated for his or her service as an officer of the fund. The listed officers are interested persons of the fund and are appointed or re-appointed on an annual basis. INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- THOMAS A. BROWN (63), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 22 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Strategic Account Implementation Manager, Applied Industrial Technologies, Inc., a corporation engaged in the sale of bearings and power transmission products NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ROBERT W. DOERING, M.D. (71), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director Emeritus(1) LENGTH OF TIME SERVED (YEARS): 1 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly a general surgeon NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ANDREA C. HALL, PH.D. (58), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 5 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, Midwest Research Institute NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Midwest Research Institute - -------------------------------------------------------------------------------- (1) Dr. Robert Doering resigned as full-time director, effective November 5, 2001, after serving in such capacity for 33 years. Dr. Doering continues to serve the board in an advisory capacity. His position as Director Emeritus is an advisory position and involves attendance at one board meeting per year to review prior year-end results for the funds. He receives all regular board communications, including monthly mailings, industry newsletters, email communications, and company information, but not quarterly board and committee materials relating to meetings that he does not attend. Dr. Doering is not a director or a member of the board and has no voting power relating to any matters relating to fund operations. He is not an interested person of the funds or ACIM. He receives an annual stipend of $2,500 for his services. (continued) - ------ 28 Management INDEPENDENT DIRECTORS (CONTINUED) - -------------------------------------------------------------------------------- D.D. (DEL) HOCK (68), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 6 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Chairman, Public Service Company of Colorado NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Allied Motion Technologies, Inc. and J.D. Edwards & Company - -------------------------------------------------------------------------------- DONALD H. PRATT (65), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director, Vice Chairman of the Board LENGTH OF TIME SERVED (YEARS): 7 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Western Investments, Inc.; Retired Chairman of the Board, Butler Manufacturing Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Atlas-Copco, North America Inc. - -------------------------------------------------------------------------------- GALE E. SAYERS (60), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 2 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Chief Executive Officer, and Founder, Sayers Computer Source NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- M. JEANNINE STRANDJORD (57), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 8 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President and Chief Integration Officer, Sprint Corporation (September 2003 to present); Senior Vice President - Financial Services, Sprint Corporation (January 2003 to September 2003); Senior Vice President, Finance - Global Markets Group, Sprint Corporation (November 1998 to January 2003) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, DST Systems, Inc.; Director, Euronet Worldwide - -------------------------------------------------------------------------------- TIMOTHY S. WEBSTER (42), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 1 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President and Chief Executive Officer, American Italian Pasta Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- INTERESTED DIRECTORS - -------------------------------------------------------------------------------- JAMES E. STOWERS, JR. (79)(1), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director, Chairman of the Board LENGTH OF TIME SERVED (YEARS): 44 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Director, and controlling shareholder, ACC; Chairman, ACSC and other ACC subsidiaries; Director, ACIM, ACSC, and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- JAMES E. STOWERS III (44)(1), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 12 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Co-Chairman, ACC (September 2000 to present); Chief Executive Officer, ACC (June 1996 to September 2000); Director, ACC, ACIM, ACSC, and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (1) James E. Stowers, Jr. is the father of James E. Stowers III. (continued) - ------ 29 Management OFFICERS - -------------------------------------------------------------------------------- WILLIAM M. LYONS (48), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: President LENGTH OF TIME SERVED (YEARS): 2 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC and other ACC subsidiaries (September 2000 to present); President, ACC (June 1997 to present); President, ACIM (September 2002 to present); President, ACIS (July 2003 to present); Chief Operating Officer, ACC (June 1996 to September 2000); Also serves as: Executive Vice President, ACSC and other ACC subsidiaries - -------------------------------------------------------------------------------- ROBERT T. JACKSON (57), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Executive Vice President LENGTH OF TIME SERVED (YEARS): 2 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC (August 1997 to present); Chief Financial Officer, ACC (May 1995 to October 2002); President, ACSC (January 1999 to present); Executive Vice President, ACC (May 1995 to present); Also serves as: Executive Vice President and Chief Financial Officer, ACIM, ACIS, and other ACC subsidiaries; and Treasurer, ACIM - -------------------------------------------------------------------------------- MARYANNE ROEPKE, CPA (47), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Senior Vice President, Treasurer, and Chief Accounting Officer LENGTH OF TIME SERVED (YEARS): 2 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President (April 1998 to present) and Assistant Treasurer (September 1985 to present), ACSC - -------------------------------------------------------------------------------- DAVID C. TUCKER (45), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel LENGTH OF TIME SERVED (YEARS): 4 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, ACIM, ACIS, ACSC, and other ACC subsidiaries (June 1998 to present); General Counsel, ACC, ACIM, ACIS, ACSC, and other ACC subsidiaries (June 1998 to present) - -------------------------------------------------------------------------------- ROBERT LEACH (37), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Controller LENGTH OF TIME SERVED (YEARS): 6 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACSC (February 2000 to present); Controller-Fund Accounting, ACSC (June 1997 to present) - -------------------------------------------------------------------------------- JON ZINDEL (36), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Tax Officer LENGTH OF TIME SERVED (YEARS): 5 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, Corporate Tax, ACSC (April 1998 to present); Vice President, ACIM, ACIS, and other ACC subsidiaries (April 1999 to present); President, American Century Employee Benefit Services, Inc. (January 2000 to December 2000); Treasurer, American Century Employee Benefit Services, Inc. (December 2000 to present); Treasurer, American Century Ventures, Inc. (December 1999 to January 2001) - -------------------------------------------------------------------------------- The SAI has additional information about the fund's directors and is available without charge upon request by calling 1-800-345-2021. - ------ 30 Share Class Information Seven classes of shares are authorized for sale by International Growth: Investor Class, Institutional Class, Advisor Class, A Class, B Class, C Class, and R Class. The total expense ratios of Advisor, A, B, C, and R Class shares are higher than that of Investor Class shares. The total expense ratio of Institutional Class shares is lower. ON JANUARY 31, 2003, INVESTOR CLASS SHARES BECAME UNAVAILABLE TO NEW INVESTORS. INVESTOR CLASS shares are available for purchase BY EXISTING SHAREHOLDERS in two ways: 1) directly from American Century without any commissions or other fees; or 2) through a broker-dealer, which may require payment of a transaction fee to the broker. INSTITUTIONAL CLASS shares are available to large investors such as endowments, foundations, and retirement plans, and to financial intermediaries serving these investors. This class recognizes the relatively lower cost of serving institutional customers and others who invest at least $5 million ($3 million for endowments and foundations) in an American Century fund or at least $10 million in multiple funds. In recognition of the larger investments and account balances and comparatively lower transaction costs, the total expense ratio of Institutional Class shares is 0.20% less than the total expense ratio of Investor Class shares. ADVISOR CLASS shares are sold primarily through institutions such as investment advisors, banks, broker-dealers, insurance companies, and financial advisors. Advisor Class shares are subject to a 0.50% annual Rule 12b-1 service and distribution fee. The total expense ratio of Advisor Class shares is 0.25% higher than the total expense ratio of Investor Class shares. A CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. A Class shares are sold at their offering price, which is net asset value plus an initial sales charge that ranges from 4.50% to 0.00% for fixed-income funds and 5.75% to 0.00% for equity funds, depending on the amount invested. The initial sales charge is deducted from the purchase amount before it is invested. A Class shares may be subject to a contingent deferred sales charge (CDSC). There is no CDSC on shares acquired through reinvestment of dividends or capital gains. The prospectus contains information regarding reductions and waivers of sales charges for A Class shares. A Class shares also are subject to a 0.25% annual Rule 12b-1 service and distribution fee. (continued) - ------ 31 Share Class Information B CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. There is no CDSC on shares acquired through reinvestment of dividends or capital gains. B Class shares also are subject to a 1.00% annual Rule 12b-1 service and distribution fee. B Class shares automatically convert to A Class shares (with lower expenses) eight years after their purchase date. C CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. C Class shares redeemed within 12 months of purchase are subject to a CDSC of 1.00%. There is no CDSC on shares acquired through reinvestment of dividends or capital gains. C Class shares also are subject to a Rule 12b-1 service and distribution fee of 1.00%. R CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. R Class shares are subject to a 0.50% annual Rule 12b-1 service and distribution fee. All classes of shares represent a pro rata interest in the fund and generally have the same rights and preferences. - ------ 32 Additional Information RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld. If you don't want us to withhold on this amount, you must notify us to not withhold the federal income tax. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the fund's manager, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the manager uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century's Web site at www.americancentury.com and on the Securities and Exchange Commission's Web site at www.sec.gov. - ------ 33 Index Definition The following index is used to illustrate investment market, sector, or style performance or to serve as a fund performance comparison. It is not an investment product available for purchase. Morgan Stanley Capital International (MSCI) has developed several indices that measure the performance of foreign stock markets. The MSCI EAFE(reg.sm) INDEX (Europe, Australasia, Far East) is designed to measure developed market equity performance, excluding the U.S. and Canada. - ------ 34 Notes - ------ 35 Notes - ------ 36 [back cover] CONTACT US WWW.AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR RELATIONS: 1-800-345-2021 or 816-531-5575 INVESTORS USING ADVISORS: 1-800-378-9878 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL ADVISORS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY WORLD MUTUAL FUNDS, INC. INVESTMENT MANAGER: American Century Investment Management, Inc. Kansas City, Missouri THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. American Century Investments PRSRT STD P.O. Box 419200 U.S. POSTAGE PAID Kansas City, MO 64141-6200 AMERICAN CENTURY COMPANIES 0401 American Century Investment Services, Inc. SH-ANN-36705S (c)2004 American Century Services Corporation
[front cover] November 30, 2003 American Century Annual Report [graphic of market line chart] [graphic of starfish] [graphic of bridge] International Discovery Emerging Markets Global Growth International Opportunities [american century logo and text logo (reg. sm)] [inside front cover] Table of Contents Our Message to You........................................................ 1 INTERNATIONAL DISCOVERY Performance............................................................... 2 Portfolio Commentary...................................................... 3 Types of Investments in Portfolio and Investments by Country........... 3 Top Ten Holdings and Top Five Sectors.................................. 4 Schedule of Investments................................................... 5 EMERGING MARKETS Performance............................................................... 8 Portfolio Commentary...................................................... 9 Types of Investments in Portfolio and Investments by Country........... 9 Top Ten Holdings and Top Five Sectors.................................. 10 Schedule of Investments................................................... 11 GLOBAL GROWTH Performance............................................................... 14 Portfolio Commentary...................................................... 15 Types of Investments in Portfolio and Investments by Country........... 15 Top Ten Holdings and Top Five Sectors.................................. 16 Schedule of Investments................................................... 17 INTERNATIONAL OPPORTUNITIES Performance............................................................... 20 Portfolio Commentary...................................................... 21 Types of Investments in Portfolio and Investments by Country........... 21 Top Ten Holdings and Top Five Sectors.................................. 22 Schedule of Investments................................................... 23 FINANCIAL STATEMENTS Statement of Assets and Liabilities....................................... 25 Statement of Operations................................................... 27 Statement of Changes in Net Assets........................................ 28 Notes to Financial Statements............................................. 30 Financial Highlights...................................................... 39 Independent Auditors' Report.............................................. 52 OTHER INFORMATION Management................................................................ 53 Share Class Information................................................... 56 Additional Information.................................................... 57 Index Definitions......................................................... 58 The opinions expressed in the Portfolio Commentary reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] James E. Stowers III with James E. Stowers, Jr. We are pleased to provide you with the annual report for the American Century International Discovery, Emerging Markets, Global Growth, and International Opportunities funds for the year ended November 30, 2003. The report includes comparative performance figures, commentary, summary tables, a full list of portfolio holdings and financial statements and highlights. We hope you find this information helpful in monitoring your investment. Many of you have called or written to express your concern about allegations of wrongdoing by other mutual fund investment management firms. We share your concern--fund companies must put investors first and do everything possible to maintain investor trust. Through the Investment Company Institute, the mutual fund trade association, American Century has advocated industry-wide proposals that strengthen protections for fund investors. We believe that decisive action is needed to show that we are committed, as an industry, to the interests of the 95 million investors we serve. As information about alleged trading abuses in the mutual fund industry has come to light, we have posted messages and commentary about these issues on www.americancentury.com. Beyond what's currently in the headlines, American Century has been a champion of many important investor and industry issues, which are outlined in a document titled Putting Investors First. We invite you to visit our Web site and read about how our values have influenced these positions. As always, we deeply appreciate your investment with American Century. Sincerely, /s/James E. Stowers, Jr. James E. Stowers, Jr. Founder and Chairman /s/ James E. Stowers III James E. Stowers III Co-Chairman of the Board - ------ 1 International Discovery - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 37.05% 10.42% 13.48% 4/1/1994 - -------------------------------------------------------------------------------- CITIGROUP EMI GROWTH WORLD EX-US(1) 38.79% 1.52% 2.20%(2) -- - -------------------------------------------------------------------------------- MSCI EAFE INDEX 24.22% -0.78% 3.45%(2) -- - -------------------------------------------------------------------------------- Institutional Class 37.25% 10.63% 11.22% 1/2/1998 - -------------------------------------------------------------------------------- Advisor Class 36.84% 10.18% 7.29% 4/28/1998 - -------------------------------------------------------------------------------- (1) Formerly Salomon Smith Barney Extended Market Index Growth World ex-US. (2) Since 3/31/94, the date nearest the Investor Class's inception for which data are available. GROWTH OF $10,000 OVER LIFE OF CLASS - -------------------------------------------------------------------------------- $10,000 investment made April 1, 1994
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- -------------------------------------------------------------------------------- ONE-YEAR RETURNS OVER LIFE OF CLASS - -------------------------------------------------------------------------------- Periods ended November 30 - -------------------------------------------------------------------------------- 1994* 1995 1996 1997 1998 - -------------------------------------------------------------------------------- Investor Class 7.80% 5.75% 34.06% 17.76% 14.79% - -------------------------------------------------------------------------------- Citigroup EMI Growth World ex-US -2.24% 4.41% 14.67% -8.85% 7.30% - -------------------------------------------------------------------------------- MSCI EAFE Index 3.49% 7.57% 11.76% -0.40% 16.45% - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 1999 2000 2001 2002 2003 - -------------------------------------------------------------------------------- Investor Class 65.12% -1.27% -20.17% -8.00% 37.05% - -------------------------------------------------------------------------------- Citigroup EMI Growth World ex-US 27.50% -14.20% -20.23% -10.96% 38.79% - -------------------------------------------------------------------------------- MSCI EAFE Index 21.10% -9.67% -19.13% -12.50% 24.22% - -------------------------------------------------------------------------------- * From 4/1/94, the Investor Class's inception date. Index data from 3/31/94, the date nearest the Investor Class's inception for which data are available. Not annualized. The charts on the performance page give historical return data for the fund. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. Unless otherwise indicated, the charts are based on Investor Class shares; performance for other classes will vary due to differences in fee structures. Past performance does not guarantee future results. None of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. - ------ 2 International Discovery - Portfolio Commentary [photo of Brian Brady, Trevor Gurwich, and Mark Kopinski] A portfolio commentary from Brian Brady, Trevor Gurwich, and Mark Kopinski, portfolio managers on the International Discovery investment team. International Discovery gained 37.05%* during the 12 months ended November 30, 2003, while its benchmark, the Citigroup Extended Market Index (EMI) Growth World ex-US, returned 38.79%. The period began with uncertainty about whether American and British forces would invade Iraq. Shortly before the war began, many major market indices in Europe and Asia slumped. But once war commenced in March, and Baghdad was toppled in April, global sentiment improved and several international markets rebounded. The world's largest markets recorded eight consecutive months of gains, as measured by the Morgan Stanley Capital International World Free Index. Within that revived economic climate, all but one of International Discovery's sectors contributed to the portfolio. Health care stocks contributed the most to performance, with every industry in the sector advancing, led by International Discovery's effective selection of drugmakers. Taro Pharmaceuticals, an Israeli manufacturer of generic drugs, made the sector's largest contribution. The telecommunications sector made the portfolio's second-largest contribution. Most of the gains came from wireless companies as many benefited from rapid subscription growth and growing demand for cell phones. Among the portfolio's top contributors were Vimpel-Communications, which provides wireless service to Russia, and Uniden Corp., a Japanese maker of cordless phones and pagers. TYPES OF INVESTMENTS IN PORTFOLIO - ------------------------------------------------------------------------------- AS OF AS OF 11/30/03 5/31/03 - ------------------------------------------------------------------------------- Common Stocks 95.5% 98.1% - ------------------------------------------------------------------------------- Preferred Stocks 2.1% -- - ------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 97.6% 98.1% - ------------------------------------------------------------------------------- Temporary Cash Investments 2.4% 1.9% - ------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2003 - ------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - ------------------------------------------------------------------------------- Japan 21.9% 9.8% - ------------------------------------------------------------------------------- United Kingdom 9.9% 11.8% - ------------------------------------------------------------------------------- Taiwan (Republic of China) 7.1% 3.4% - ------------------------------------------------------------------------------- India 5.2% 1.2% - ------------------------------------------------------------------------------- Hong Kong 5.0% 1.5% - ------------------------------------------------------------------------------- United States(+) 4.6% 7.0% - ------------------------------------------------------------------------------- Germany 4.4% 5.5% - ------------------------------------------------------------------------------- Italy 3.8% 4.3% - ------------------------------------------------------------------------------- Australia 3.6% 7.4% - ------------------------------------------------------------------------------- Canada 3.2% 6.0% - ------------------------------------------------------------------------------- South Korea 3.2% 2.3% - ------------------------------------------------------------------------------- France 3.2% 3.7% - ------------------------------------------------------------------------------- Sweden 3.2% 3.6% - ------------------------------------------------------------------------------- Other 21.7% 32.5% - ------------------------------------------------------------------------------- (+) Includes temporary cash investments. *All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 3 International Discovery - Portfolio Commentary Similarly, select companies that manufacture materials used for telephones advanced, helping boost the basic materials sector. The portfolio's top contributing holding was NOK Corporation, which produces electronic equipment used for mobile phones and personal computers. The portfolio's second-largest contributor was another Japanese manufacturer, JSR Corp., which makes materials used for liquid crystal displays. Growing confidence in the economy helped investments in consumer cyclicals. German sporting goods manufacturer Puma advanced as it raised its earnings forecast three times during the period based on increasing footwear sales. The company made the largest contribution in the sector. Financial stocks advanced as the lowest interest rates in four decades led to strong demand for mortgages and other loans. That boosted banks, such as Anglo Irish Bank, which reported increased revenues and good credit quality. Technology, International Discovery's largest sector concentration on average, was boosted by photocopier and printer manufacturer Minolta, which merged with Konica during the period. But the sector was restrained by videoconferencing equipment maker Tandberg. The Norwegian manufacturer was the portfolio's biggest detractor. Consumer services advanced as well, led by media holdings. German television and marketing company ProSieben SAT.1 Media contributed the most within this sector. Industrial stocks were the portfolio's only detracting sector. Despite gains by some industrial parts manufacturers, the sector was dragged down by heavy machinery stocks, the portfolio's largest detracting industry group. Tomra Systems, a Norwegian maker of machines that collect cans and bottles for recycling, was one of the portfolio's biggest detractors. As the world economy shows signs of recovery, we believe investment opportunities abound and we plan to follow our time-tested investment process, focusing on companies that we believe are demonstrating sustainable, accelerating growth. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2003 - ------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - ------------------------------------------------------------------------------- JSR Corp. 2.8% 1.4% - ------------------------------------------------------------------------------- Uniden Corp. 2.4% 0.5% - ------------------------------------------------------------------------------- Taro Pharmaceuticals Industries Ltd. 2.3% 1.7% - ------------------------------------------------------------------------------- NOK Corporation 2.3% 0.9% - ------------------------------------------------------------------------------- ProSieben SAT.1 Media AG 2.1% -- - ------------------------------------------------------------------------------- Research In Motion Ltd. 2.0% 0.9% - ------------------------------------------------------------------------------- Anglo Irish Bank Corporation 1.8% 1.5% - ------------------------------------------------------------------------------- Mitsubishi Securities Co. Ltd. 1.7% -- - ------------------------------------------------------------------------------- Puma AG Rudolf Dassler Sport 1.7% 1.5% - ------------------------------------------------------------------------------- Gedeon Richter Rt. 1.6% 1.3% - ------------------------------------------------------------------------------- TOP FIVE SECTORS AS OF NOVEMBER 30, 2003 - ------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - ------------------------------------------------------------------------------- Technology 18.6% 13.4% - ------------------------------------------------------------------------------- Financial 14.9% 12.9% - ------------------------------------------------------------------------------- Basic Materials 11.7% 8.6% - ------------------------------------------------------------------------------- Consumer (Cyclical) 10.3% 11.4% - ------------------------------------------------------------------------------- Telecommunications 8.9% 7.4% - ------------------------------------------------------------------------------- - ------ 4 International Discovery - Schedule of Investments NOVEMBER 30, 2003 Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 95.5% AUSTRALIA -- 3.6% - -------------------------------------------------------------------------------- 3,081,020 BHP Steel Limited $ 11,139 - -------------------------------------------------------------------------------- 3,752,690 Computershare Ltd. 8,782 - -------------------------------------------------------------------------------- 4,578,570 Lihir Gold Limited 5,208 - -------------------------------------------------------------------------------- 652,420 Macquarie Bank Limited 16,063 - -------------------------------------------------------------------------------- 41,192 - -------------------------------------------------------------------------------- BELGIUM -- 1.0% - -------------------------------------------------------------------------------- 122,280 Colruyt SA 11,490 - -------------------------------------------------------------------------------- BERMUDA -- 0.4% - -------------------------------------------------------------------------------- 368,301 Golar LNG Ltd.(1) 4,402 - -------------------------------------------------------------------------------- CANADA -- 3.2% - -------------------------------------------------------------------------------- 318,550 Bennett Environmental Inc.(1) 5,565 - -------------------------------------------------------------------------------- 547,660 QLT Inc.(1) 8,948 - -------------------------------------------------------------------------------- 514,280 Research In Motion Ltd.(1) 23,456 - -------------------------------------------------------------------------------- 37,969 - -------------------------------------------------------------------------------- DENMARK -- 1.7% - -------------------------------------------------------------------------------- 1,478,140 GN Store Nord(1) 9,389 - -------------------------------------------------------------------------------- 170,000 Novozymes A/S Cl B 5,947 - -------------------------------------------------------------------------------- 85,780 Topdanmark A/S(1) 4,342 - -------------------------------------------------------------------------------- 19,678 - -------------------------------------------------------------------------------- FINLAND -- 0.6% - -------------------------------------------------------------------------------- 122,350 Kone OYJ 6,598 - -------------------------------------------------------------------------------- FRANCE -- 3.2% - -------------------------------------------------------------------------------- 154,170 Atos Origin(1) 10,169 - -------------------------------------------------------------------------------- 398,188 Business Objects SA ADR(1) 13,579 - -------------------------------------------------------------------------------- 24,470 Imerys SA 4,842 - -------------------------------------------------------------------------------- 115,390 Neopost SA 5,812 - -------------------------------------------------------------------------------- 25,000 SEB SA 3,052 - -------------------------------------------------------------------------------- 37,454 - -------------------------------------------------------------------------------- GERMANY -- 2.3% - -------------------------------------------------------------------------------- 212,030 Continental AG 7,392 - -------------------------------------------------------------------------------- 123,881 Puma AG Rudolf Dassler Sport 19,536 - -------------------------------------------------------------------------------- 26,928 - -------------------------------------------------------------------------------- GREECE -- 0.7% - -------------------------------------------------------------------------------- 310,500 Alpha Bank A.E. 8,185 - -------------------------------------------------------------------------------- HONG KONG -- 5.0% - -------------------------------------------------------------------------------- 4,337,000 Cosco Pacific Limited 5,724 - -------------------------------------------------------------------------------- 1,381,200 DAH Sing Financial 10,225 - -------------------------------------------------------------------------------- 5,062,000 Espirit Holdings Limited 16,163 - -------------------------------------------------------------------------------- 6,298,000 Hang Lung Properties Ltd. 7,785 - -------------------------------------------------------------------------------- 17,626,000 Sino Land Co. 9,191 - -------------------------------------------------------------------------------- 3,098,000 Techtronic Industries Company Limited 8,496 - -------------------------------------------------------------------------------- 712,000 Wheelock & Co. Ltd. 834 - -------------------------------------------------------------------------------- 58,418 - -------------------------------------------------------------------------------- Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- HUNGARY -- 2.6% - -------------------------------------------------------------------------------- 176,953 Gedeon Richter Rt. $ 18,882 - -------------------------------------------------------------------------------- 411,000 Mol Magyar Olaj-es Gazipari Rt. 11,575 - -------------------------------------------------------------------------------- 30,457 - -------------------------------------------------------------------------------- INDIA -- 5.2% - -------------------------------------------------------------------------------- 641,351 Bharat Heavy Electricals Limited 6,251 - -------------------------------------------------------------------------------- 306,300 Dr. Reddy's Laboratories Ltd. 8,510 - -------------------------------------------------------------------------------- 302,500 Housing Development Finance Corp. 3,651 - -------------------------------------------------------------------------------- 1,458,600 Mahindra & Mahindra Ltd. 11,249 - -------------------------------------------------------------------------------- 452,280 Ranbaxy Laboratories Ltd. 10,100 - -------------------------------------------------------------------------------- 932,600 Satyam Computer Services Ltd. 6,725 - -------------------------------------------------------------------------------- 778,000 Tata Iron & Steel Co. Ltd. 6,137 - -------------------------------------------------------------------------------- 970,000 Tata Motors Ltd. 8,666 - -------------------------------------------------------------------------------- 61,289 - -------------------------------------------------------------------------------- IRELAND -- 3.1% - -------------------------------------------------------------------------------- 1,554,140 Anglo Irish Bank Corporation 21,061 - -------------------------------------------------------------------------------- 136,060 Depfa Bank plc 15,615 - -------------------------------------------------------------------------------- 36,676 - -------------------------------------------------------------------------------- ISRAEL -- 2.3% - -------------------------------------------------------------------------------- 393,336 Taro Pharmaceuticals Industries(1) 27,116 - -------------------------------------------------------------------------------- ITALY -- 3.8% - -------------------------------------------------------------------------------- 1,107,530 Bulgari SpA 10,240 - -------------------------------------------------------------------------------- 204,210 e.Biscom(1) 13,469 - -------------------------------------------------------------------------------- 7,566,580 FinecoGroup SpA(1) 5,953 - -------------------------------------------------------------------------------- 2,401,403 Gruppo Editoriale L'Espresso 14,399 - -------------------------------------------------------------------------------- 44,061 - -------------------------------------------------------------------------------- JAPAN -- 21.9% - -------------------------------------------------------------------------------- 333,600 Aoyama Trading Co. Ltd. 6,380 - -------------------------------------------------------------------------------- 215,400 Arisawa Manufacturing Company Limited 8,141 - -------------------------------------------------------------------------------- 290,000 Fuji Soft ABC Inc. 8,048 - -------------------------------------------------------------------------------- 2,427 Goodwill Group, Inc. (The) 5,849 - -------------------------------------------------------------------------------- 220,000 Hitachi Construction Machinery Co. Ltd. 2,802 - -------------------------------------------------------------------------------- 1,513,000 JSR Corp. 32,805 - -------------------------------------------------------------------------------- 2,391,000 Kawasaki Kisen Kaisha Ltd. 9,276 - -------------------------------------------------------------------------------- 493,500 Konica Minolta Holdings Inc. 5,839 - -------------------------------------------------------------------------------- 1,906,000 Mitsubishi Securities Co. Ltd. 20,270 - -------------------------------------------------------------------------------- 459,000 Nippon Electric Glass Co. Ltd. 8,590 - -------------------------------------------------------------------------------- 1,082,000 Nissan Chemical Industries Ltd. 9,275 - -------------------------------------------------------------------------------- 137,000 Nitori Co. Ltd. 8,617 - -------------------------------------------------------------------------------- 722,000 NOK Corporation 26,497 - -------------------------------------------------------------------------------- 4,897,000 Oki Electric Industry Co. Ltd.(1) 18,508 - -------------------------------------------------------------------------------- 632,000 Sanken Electric Co. Ltd. 8,649 - -------------------------------------------------------------------------------- 2,437,000 Shimizu Corp. 8,387 - -------------------------------------------------------------------------------- 2,359,000 Sumitomo Realty & Development Co. Ltd. 18,391 - -------------------------------------------------------------------------------- 740,000 Toto Ltd. 5,715 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 5 International Discovery - Schedule of Investments NOVEMBER 30, 2003 Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- 1,533,000 Uniden Corp. $ 27,668 - -------------------------------------------------------------------------------- 2,082,000 Yaskawa Electric Corp.(1) 13,172 - -------------------------------------------------------------------------------- 377,000 Yokogawa Electric Corp. 4,915 - -------------------------------------------------------------------------------- 257,794 - -------------------------------------------------------------------------------- NETHERLANDS -- 1.3% - -------------------------------------------------------------------------------- 1,189,371 James Hardie Industries N.V. Chess Depositary Interest 6,179 - -------------------------------------------------------------------------------- 4,566,320 Versatel Telecom International N.V.(1) 9,309 - -------------------------------------------------------------------------------- 15,488 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 1.0% - -------------------------------------------------------------------------------- 14,388,000 Aluminum Corp. of China Ltd. 7,456 - -------------------------------------------------------------------------------- 6,726,000 Beijing Datang Power Generation Company Ltd. 4,200 - -------------------------------------------------------------------------------- 11,656 - -------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 2.5% - -------------------------------------------------------------------------------- 3,500,000 Central Telecommunications Company 1,064 - -------------------------------------------------------------------------------- 85,899 Mobile Telesystems ADR 7,087 - -------------------------------------------------------------------------------- 63,000,000 Uralsvyazinform 2,003 - -------------------------------------------------------------------------------- 254,547 Vimpel-Communications ADR(1) 17,686 - -------------------------------------------------------------------------------- 575,000 VolgaTelecom 1,343 - -------------------------------------------------------------------------------- 29,183 - -------------------------------------------------------------------------------- SINGAPORE -- 1.0% - -------------------------------------------------------------------------------- 6,344,000 Neptune Orient Lines(1) 7,802 - -------------------------------------------------------------------------------- 314,000 Venture Corp. Ltd. 3,443 - -------------------------------------------------------------------------------- 11,245 - -------------------------------------------------------------------------------- SOUTH AFRICA -- 0.8% - -------------------------------------------------------------------------------- 2,174,800 MTN Group Limited(1) 8,858 - -------------------------------------------------------------------------------- SOUTH KOREA -- 3.2% - -------------------------------------------------------------------------------- 270,090 Daibeck Advanced Materials Co. Ltd.(1) 4,636 - -------------------------------------------------------------------------------- 331,040 Interflex Co. Ltd.(1) 7,925 - -------------------------------------------------------------------------------- 270,000 KorAm Bank 3,142 - -------------------------------------------------------------------------------- 31,840 Nong Shim Co. Ltd. 5,928 - -------------------------------------------------------------------------------- 214,626 Power Logics Co., Ltd.(1) 5,834 - -------------------------------------------------------------------------------- 100,900 Samsung SDI Co. Ltd. 10,232 - -------------------------------------------------------------------------------- 37,697 - -------------------------------------------------------------------------------- SWEDEN -- 3.2% - -------------------------------------------------------------------------------- 132,390 Autoliv Inc. 4,435 - -------------------------------------------------------------------------------- 512,309 Modern Times Group AB Cl B(1) 10,278 - -------------------------------------------------------------------------------- 1,355,000 Swedish Match AB 12,202 - -------------------------------------------------------------------------------- 197,165 Tele2 AB(1) 10,065 - -------------------------------------------------------------------------------- 36,980 - -------------------------------------------------------------------------------- Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- SWITZERLAND -- 2.7% - -------------------------------------------------------------------------------- 388,354 Phonak Holding AG $ 8,509 - -------------------------------------------------------------------------------- 22,784 SGS Societe Generale de Surveillance Holdings SA 13,389 - -------------------------------------------------------------------------------- 36,520 Sulzer AG 9,147 - -------------------------------------------------------------------------------- 31,045 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 7.1% - -------------------------------------------------------------------------------- 4,387,748 Acer Inc. 6,270 - -------------------------------------------------------------------------------- 4,533,000 Chi Mei Optoelectronics Corp.(1) 5,137 - -------------------------------------------------------------------------------- 6,854,000 HannStar Display Corp.(1) 2,820 - -------------------------------------------------------------------------------- 12,276,000 King Yuan Electronics Company Limited(1) 12,258 - -------------------------------------------------------------------------------- 2,969,300 Novatek Microelectronics Corp., Ltd. 8,782 - -------------------------------------------------------------------------------- 4,294,000 Optimax Technology Corporation 12,008 - -------------------------------------------------------------------------------- 2,395,000 Oriental Union Chemical 2,749 - -------------------------------------------------------------------------------- 11,799,000 Powerchip Semiconductor Corp.(1) 5,113 - -------------------------------------------------------------------------------- 4,580,000 Powertech Technology Inc.(1) 6,840 - -------------------------------------------------------------------------------- 3,681,000 President Chain Store Corp. 5,875 - -------------------------------------------------------------------------------- 11,227,000 Sinopac Holdings Co. 6,082 - -------------------------------------------------------------------------------- 9,300,000 Yang Ming Marine Transport 8,606 - -------------------------------------------------------------------------------- 82,540 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 9.9% - -------------------------------------------------------------------------------- 21,551,010 Cookson Group plc(1) 13,544 - -------------------------------------------------------------------------------- 727,500 Enterprise Inns plc 11,717 - -------------------------------------------------------------------------------- 839,911 Galen Holdings plc 10,557 - -------------------------------------------------------------------------------- 624,691 ICAP plc 14,521 - -------------------------------------------------------------------------------- 666,450 Inchcape plc 14,413 - -------------------------------------------------------------------------------- 2,439,506 Lastminute.com plc(1) 11,342 - -------------------------------------------------------------------------------- 1,857,210 LogicaCMG plc 8,778 - -------------------------------------------------------------------------------- 559,540 RMC Group plc 5,901 - -------------------------------------------------------------------------------- 1,912,000 United Business Media plc 16,502 - -------------------------------------------------------------------------------- 282,590 Whitbread plc 3,511 - -------------------------------------------------------------------------------- 879,900 William Hill plc 5,924 - -------------------------------------------------------------------------------- 116,710 - -------------------------------------------------------------------------------- UNITED STATES -- 2.2% - -------------------------------------------------------------------------------- 729,287 Comverse Technology, Inc.(1) 14,024 - -------------------------------------------------------------------------------- 247,670 DSP Group, Inc.(1) 5,966 - -------------------------------------------------------------------------------- 80,600 NII Holdings Inc. Cl B(1) 6,122 - -------------------------------------------------------------------------------- 26,112 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $829,346) 1,117,221 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 6 International Discovery - Schedule of Investments NOVEMBER 30, 2003 Shares/Principal Amount ($ In Thousands) Value - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 2.1% - -------------------------------------------------------------------------------- GERMANY -- 2.1% - -------------------------------------------------------------------------------- 1,494,270 ProSieben SAT.1 Media AG (Cost $14,786) $ 24,461 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 2.4% - -------------------------------------------------------------------------------- $27,800 FNMA Discount Notes, 0.97%, 12/1/03(2) (Cost $27,800) 27,800 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 100.0% (Cost $871,932) $1,169,482 ================================================================================ COLLATERAL RECEIVED FOR SECURITIES LENDING(3) REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, Barclays Bank plc, (U.S. Government Agency obligations), 1.08%, dated 11/28/03, due 12/1/03 (Delivery value $55,005) $ 55,000 - -------------------------------------------------------------------------------- Repurchase Agreement, BNP Paribas Securities Corp., (U.S. Government Agency obligations), 1.08%, dated 11/28/03, due 12/1/03 (Delivery value $58,072) 58,067 - -------------------------------------------------------------------------------- 113,067 - -------------------------------------------------------------------------------- SHORT-TERM DEBT - -------------------------------------------------------------------------------- $20,000 Banco Espanol de Credito, SA Time Deposit, 1.14%, 2/12/04 20,000 - -------------------------------------------------------------------------------- 24,956 Dakota Commercial Paper Notes, (Citibank Credit Card), 1.07%, 12/22/03 24,956 - -------------------------------------------------------------------------------- 24,012 Ford Credit Floorplan Master Owner Trust, Series 2001-1, Class A, VRN, 1.14%, 12/15/03, resets monthly off the 1-month LIBOR plus 0.09% with no caps 24,012 - -------------------------------------------------------------------------------- 25,000 RACERS(SM), Series 2000-7, Class A3, VRN, 1.32%, 12/1/03, resets monthly off the 1-month LIBOR plus 0.20% with no caps 25,000 - -------------------------------------------------------------------------------- 5,000 Wachovia Bank N.A. Bank Note, VRN, 1.19%, 12/1/03, resets daily off the Federal Funds rate plus 0.19% with no caps 5,000 - -------------------------------------------------------------------------------- 98,968 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $212,035) $212,035 ================================================================================ MARKET SECTOR DIVERSIFICATION (UNAUDITED) - -------------------------------------------------------------------------------- Basic Materials 11.7% - -------------------------------------------------------------------------------- Commercial Services 6.2% - -------------------------------------------------------------------------------- Consumer (Cyclical) 10.3% - -------------------------------------------------------------------------------- Consumer (Non-Cyclical) 1.6% - -------------------------------------------------------------------------------- Consumer Services 7.4% - -------------------------------------------------------------------------------- Energy 1.0% - -------------------------------------------------------------------------------- Financial 14.9% - -------------------------------------------------------------------------------- Health Care 8.7% - -------------------------------------------------------------------------------- Industrials 3.6% - -------------------------------------------------------------------------------- Multi-Industry 1.1% - -------------------------------------------------------------------------------- Technology 18.6% - -------------------------------------------------------------------------------- Telecommunications 8.9% - -------------------------------------------------------------------------------- Transport 3.1% - -------------------------------------------------------------------------------- Utility 0.5% - -------------------------------------------------------------------------------- Temporary Cash Investments 2.4% - -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt FNMA = Federal National Mortgage Association LIBOR = London Interbank Offered Rate RACERS(SM) = Restructured Asset Certificates with Enhanced Returns. resets = The frequency with which a security's coupon changes, based on current market conditions or an underlying index. The more frequently a security resets, the less risk the investor is taking that the coupon will vary significantly from current market rates. VRN = Variable Rate Note. Interest reset date is indicated, unless otherwise noted. Rate shown is effective November 30, 2003. (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. (3) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. (See Note 5 in Notes to Financial Statements.) See Notes to Financial Statements. - ------ 7 Emerging Markets - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 46.26% 9.43% 1.48% 9/30/1997 - -------------------------------------------------------------------------------- MSCI EMF INDEX 40.87% 8.76% -0.81% -- - -------------------------------------------------------------------------------- Institutional Class 46.43% -- 10.64% 1/28/1999 - -------------------------------------------------------------------------------- Advisor Class 45.81% -- 4.45% 5/12/1999 - -------------------------------------------------------------------------------- C Class 44.97% -- 10.92% 12/18/2001 - -------------------------------------------------------------------------------- GROWTH OF $10,000 OVER LIFE OF CLASS - -------------------------------------------------------------------------------- $10,000 investment made September 30, 1997
![](https://capedge.com/proxy/N-CSR/0000872825-04-000003/growthemerg0311.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS - -------------------------------------------------------------------------------- Periods ended November 30 - -------------------------------------------------------------------------------- 1997* 1998 1999 2000 2001 2002 2003 - -------------------------------------------------------------------------------- Investor Class -17.00% -15.90% 61.03% -16.73% -10.28% -10.86% 46.26% - -------------------------------------------------------------------------------- MSCI EMF Index -19.46% -22.42% 45.49% -23.63% -7.37% 4.95% 40.87% - -------------------------------------------------------------------------------- * From 9/30/97, the Investor Class's inception date. Not annualized. The charts on the performance page give historical return data for the fund. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. Unless otherwise indicated, the charts are based on Investor Class shares; performance for other classes will vary due to differences in fee structures. Past performance does not guarantee future results. None of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. - ------ 8 Emerging Markets - Portfolio Commentary [photo of Raymond Kong and Michael Donnelly] A portfolio commentary from Raymond Kong and Michael Donnelly, portfolio managers on the Emerging Markets investment team. Emerging Markets advanced 46.26%* during the 12 months ended November 30, 2003. Its benchmark, the Morgan Stanley Capital Emerging Markets Free Index, returned 40.87%. The 182 emerging markets funds tracked by Lipper Inc. rose an average of 40.02% during the fiscal year. Although the period opened amidst an uncertain backdrop that included an armed conflict in Iraq and a struggling U.S. economy, stocks ended the period on a decidedly positive note. As the year unfolded, emerging market stocks benefited from strengthening commodity prices and rising world equity markets. In the six months since our report on May 31, 2003, the stock markets in the world's developed countries, as measured by the World Free Index, gained 14.66%. Brazil proved to be Emerging Markets' richest source of absolute performance during the year. A newly installed government has brought increased fiscal stability to this previously struggling region. Lower interest rates, favorable fiscal policies and a stable currency during the period hastened progress for fund holdings Unibanco, a particularly strong contributor earlier in the year, and oil and gas giant Petrol Brasileiros, whose profit growth surged dramatically throughout the period. Brazilian steelmakers Companhia Siderurgica de Tubarao and Usinas Siderurgicas de Minas Gerais also contributed, closing the period among the portfolio's best contributors. Emerging Markets' stake in Mexican firms also lifted returns. Prospects for accelerating economic expansion and lower interest rates have driven Mexican TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Common Stocks 89.7% 87.3% - -------------------------------------------------------------------------------- Preferred Stocks 7.0% 6.6% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 96.7% 93.9% - -------------------------------------------------------------------------------- Temporary Cash Investments 3.3% 6.1% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- South Korea 17.3% 16.3% - -------------------------------------------------------------------------------- Taiwan (Republic of China) 12.2% 7.3% - -------------------------------------------------------------------------------- Brazil 10.4% 13.7% - -------------------------------------------------------------------------------- South Africa 10.3% 7.0% - -------------------------------------------------------------------------------- Mexico 7.7% 9.7% - -------------------------------------------------------------------------------- India 7.4% 2.4% - -------------------------------------------------------------------------------- People's Republic of China 7.0% 4.9% - -------------------------------------------------------------------------------- Turkey 3.7% 2.3% - -------------------------------------------------------------------------------- Malaysia 3.3% 1.1% - -------------------------------------------------------------------------------- United States(+) 3.3% 7.3% - -------------------------------------------------------------------------------- Other 17.4% 28.0% - -------------------------------------------------------------------------------- (+) Includes temporary cash investments. *All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 9 Emerging Markets - Portfolio Commentary stocks steadily higher, including those of construction firm Corporacion GEO, Mexico's largest builder of low-income housing, and TV Azteca, a production and broadcasting company. Both holdings were among our top contributors during the period. In our semiannual report we highlighted top-performing Russian telecommunications firm Uralsvyazinform, which continued to boost portfolio returns in the second half, as did a Russian wireless provider, Mobile Telesystems. Norilsk Nickel, a leading Russia-based producer of high-demand nickel, added to returns as well. Other standout performers included Thailand's Italian Thai Development, a construction firm that oversees large-scale development and construction projects in Southeast Asia, and Total Access Communications, which provides cellular and mobile telephone services throughout Thailand. Energy holdings yielded mixed results. The portfolio's oil services providers and energy reserves and production firms contributed in absolute terms. However, as oil production increased and the macroeconomic picture improved during the second half of the year, the portfolio's underweight stake in both industries was a liability. Although the portfolio received absolute contribution from most of the industries to which it was exposed, its limited exposure to semiconductor firms that boosted the index led to relative underperformance. The greatest detractor on a relative basis was ASE Test Limited, which we had in the portfolio, but was not in the index. Decliners in the electrical equipment industry included Intelligent Digital, a South Korean maker of digital security devices, and You Eal Electronics, which supplies keypads for wireless telecommunications equipment. We have eliminated our position in each of these names. In closing, we remain committed to searching for businesses demonstrating accelerating growth that we believe will generate solid results over time. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Samsung Electronics Co., Ltd. 2.7% 2.2% - -------------------------------------------------------------------------------- TV Azteca SA de CV ADR 2.0% 2.2% - -------------------------------------------------------------------------------- Hughes Software Systems 1.9% -- - -------------------------------------------------------------------------------- JD Group Ltd. 1.9% -- - -------------------------------------------------------------------------------- Companhia Siderurgica de Tubarao 1.7% 0.5% - -------------------------------------------------------------------------------- Centrais Eletricas Brasileiras SA 1.6% -- - -------------------------------------------------------------------------------- Iscor Ltd. 1.6% -- - -------------------------------------------------------------------------------- Kumba Resources Limited 1.6% 1.5% - -------------------------------------------------------------------------------- Telkom SA Limited 1.6% 0.2% - -------------------------------------------------------------------------------- Korea Electric Power Corp. 1.6% -- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- TOP FIVE SECTORS AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Basic Materials 19.6% 12.3% - -------------------------------------------------------------------------------- Telecommunications 14.2% 9.5% - -------------------------------------------------------------------------------- Technology 14.2% 20.0% - -------------------------------------------------------------------------------- Utility 8.7% 6.5% - -------------------------------------------------------------------------------- Financial 8.0% 12.0% - -------------------------------------------------------------------------------- - ------ 10 Emerging Markets - Schedule of Investments NOVEMBER 30, 2003 Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 89.7% - -------------------------------------------------------------------------------- ARGENTINA -- 0.5% - -------------------------------------------------------------------------------- 103,219 Telecom Argentina SA ADR(1) $ 810 - -------------------------------------------------------------------------------- BRAZIL -- 3.6% - -------------------------------------------------------------------------------- 186,643,300 Banco do Brasil SA 1,557 - -------------------------------------------------------------------------------- 25,245,607 Companhia de Saneamento Basico do Estado de Sao Paulo 1,248 - -------------------------------------------------------------------------------- 16,533 Petroleo Brasileiro SA - Petrobras ADR 398 - -------------------------------------------------------------------------------- 51,164 Tele Norte Leste Participacoes SA ADR 723 - -------------------------------------------------------------------------------- 88,974 Unibanco-Uniao de Bancos Brasileiros SA GDR 2,056 - -------------------------------------------------------------------------------- 5,982 - -------------------------------------------------------------------------------- CHILE -- 1.7% - -------------------------------------------------------------------------------- 321,315,361 CorpBanca SA(1) 1,650 - -------------------------------------------------------------------------------- 171,949 Enersis SA ADR 1,107 - -------------------------------------------------------------------------------- 2,757 - -------------------------------------------------------------------------------- EGYPT -- 1.2% - -------------------------------------------------------------------------------- 109,761 Misr International Bank SAE 525 - -------------------------------------------------------------------------------- 34,324 Orascom Construction Industries 396 - -------------------------------------------------------------------------------- 106,717 Orascom Telecom Holding SAE(1) 1,117 - -------------------------------------------------------------------------------- 2,038 - -------------------------------------------------------------------------------- HUNGARY -- 2.4% - -------------------------------------------------------------------------------- 21,749 Gedeon Richter Rt. 2,321 - -------------------------------------------------------------------------------- 61,022 Mol Magyar Olaj-es Gazipari Rt. 1,719 - -------------------------------------------------------------------------------- 4,040 - -------------------------------------------------------------------------------- INDIA -- 7.4% - -------------------------------------------------------------------------------- 26,900 Bharat Forge Ltd.(1) 368 - -------------------------------------------------------------------------------- 838,818 Bharti Televentures(1) 1,555 - -------------------------------------------------------------------------------- 278,000 HCL Technologies Ltd. 1,637 - -------------------------------------------------------------------------------- 292,200 Hughes Software Systems 3,136 - -------------------------------------------------------------------------------- 11,800 Infosys Technologies Limited 1,270 - -------------------------------------------------------------------------------- 157,200 Mahindra & Mahindra Ltd. 1,212 - -------------------------------------------------------------------------------- 121,100 Reliance Industries Ltd. 1,291 - -------------------------------------------------------------------------------- 646,451 ZEE Telefilms Ltd. 1,830 - -------------------------------------------------------------------------------- 12,299 - -------------------------------------------------------------------------------- INDONESIA -- 2.2% - -------------------------------------------------------------------------------- 5,076,000 Bank Rakyat Indonesia(1) 627 - -------------------------------------------------------------------------------- 2,152,400 Jakarta International Hotel & Development Tbk PT(1) 164 - -------------------------------------------------------------------------------- 1,040,000 PT Bank Central Asia Tbk(1) 404 - -------------------------------------------------------------------------------- 920,000 PT Indonesian Satellite Corp Tbk 1,244 - -------------------------------------------------------------------------------- 1,597,000 PT Telekomunikasi Indonesia 1,155 - -------------------------------------------------------------------------------- 3,594 - -------------------------------------------------------------------------------- Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- ISRAEL -- 2.0% - -------------------------------------------------------------------------------- 126,432 Alvarion Ltd.(1) $ 1,245 - -------------------------------------------------------------------------------- 56,017 Nice Systems Ltd. ADR(1) 1,331 - -------------------------------------------------------------------------------- 113,563 Partner Communications(1) 779 - -------------------------------------------------------------------------------- 3,355 - -------------------------------------------------------------------------------- MALAYSIA -- 3.3% - -------------------------------------------------------------------------------- 144,900 Astro All Asia Networks plc(1) 170 - -------------------------------------------------------------------------------- 966,000 IOI Corp. BHD 1,856 - -------------------------------------------------------------------------------- 403,400 Malaysian Pacific Industries 1,805 - -------------------------------------------------------------------------------- 2,041,000 MK Land Holdings BHD 1,241 - -------------------------------------------------------------------------------- 254,100 PSC Industries BHD 445 - -------------------------------------------------------------------------------- 5,517 - -------------------------------------------------------------------------------- MEXICO -- 7.7% - -------------------------------------------------------------------------------- 268,342 Alfa SA de CV 811 - -------------------------------------------------------------------------------- 41,429 America Movil SA de CV Series L ADR 1,062 - -------------------------------------------------------------------------------- 32,271 Cemex SA de CV ADR 815 - -------------------------------------------------------------------------------- 1,990,207 Controladora Comercial Mexicana SA de CV 1,837 - -------------------------------------------------------------------------------- 1,358,481 Grupo Mexico SA de CV(1) 2,446 - -------------------------------------------------------------------------------- 60,597 Grupo Televisa SA ADR 2,475 - -------------------------------------------------------------------------------- 378,700 TV Azteca SA de CV ADR 3,294 - -------------------------------------------------------------------------------- 12,740 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 7.0% - -------------------------------------------------------------------------------- 2,352,000 Beijing Datang Power Generation Company Ltd. 1,469 - -------------------------------------------------------------------------------- 3,235,547 China Resources Power Holdings Co.(1) 1,208 - -------------------------------------------------------------------------------- 21,957 China Telecom Corp. Ltd. ADR 708 - -------------------------------------------------------------------------------- 4,344,000 Jiangxi Copper Co. Ltd. 1,636 - -------------------------------------------------------------------------------- 2,833,682 Shandong Chenming Paper Holdings Ltd. 2,331 - -------------------------------------------------------------------------------- 5,448,000 Sinopec Shanghai Petrochemical Company Limited Cl H 1,771 - -------------------------------------------------------------------------------- 1,922,000 Tianjin Development Holdings 909 - -------------------------------------------------------------------------------- 3,054,000 Xinao Gas Holdings Ltd.(1) 1,632 - -------------------------------------------------------------------------------- 11,664 - -------------------------------------------------------------------------------- POLAND -- 1.3% - -------------------------------------------------------------------------------- 374,414 KGHM Polska Miedz SA(1) 2,173 - -------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 2.8% - -------------------------------------------------------------------------------- 13,616 MMC Norilsk Nickel ADR 788 - -------------------------------------------------------------------------------- 67,035,619 Uralsvyazinform 2,132 - -------------------------------------------------------------------------------- 735,372 VolgaTelecom 1,717 - -------------------------------------------------------------------------------- 4,637 - -------------------------------------------------------------------------------- SINGAPORE -- 1.5% - -------------------------------------------------------------------------------- 1,975,000 Neptune Orient Lines(1) 2,429 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 11 Emerging Markets - Schedule of Investments NOVEMBER 30, 2003 Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- SOUTH AFRICA -- 10.3% - -------------------------------------------------------------------------------- 95,638 Anglo American plc $ 2,042 - -------------------------------------------------------------------------------- 280,069 Foschini Limited 812 - -------------------------------------------------------------------------------- 731,575 Iscor Ltd. 2,677 - -------------------------------------------------------------------------------- 497,260 JD Group Ltd. 3,113 - -------------------------------------------------------------------------------- 456,527 Kumba Resources Limited 2,646 - -------------------------------------------------------------------------------- 574,682 MTN Group Limited(1) 2,341 - -------------------------------------------------------------------------------- 780,000 Steinhoff International Holdings Ltd. 830 - -------------------------------------------------------------------------------- 258,424 Telkom SA Limited(1) 2,645 - -------------------------------------------------------------------------------- 17,106 - -------------------------------------------------------------------------------- SOUTH KOREA -- 17.3% - -------------------------------------------------------------------------------- 299,300 Daewoo Heavy Industries & Machinery Ltd.(1) 2,403 - -------------------------------------------------------------------------------- 144,100 Hanjin Shipping 2,432 - -------------------------------------------------------------------------------- 316,340 Hyundai Merchant Marine(1) 2,306 - -------------------------------------------------------------------------------- 87,680 Interflex Co. Ltd.(1) 2,099 - -------------------------------------------------------------------------------- 51,797 KH Vatec Co., Ltd. 2,166 - -------------------------------------------------------------------------------- 122,760 Korea Electric Power Corp. 2,587 - -------------------------------------------------------------------------------- 95,500 Korea Zinc Co. Ltd. 2,064 - -------------------------------------------------------------------------------- 17,710 POSCO 2,105 - -------------------------------------------------------------------------------- 11,770 Samsung Electronics 4,549 - -------------------------------------------------------------------------------- 380,600 Samsung Heavy Industries 2,183 - -------------------------------------------------------------------------------- 33,090 Sekonix Co., Ltd.(1) 723 - -------------------------------------------------------------------------------- 966,320 Seyang Shipping Co.(1) 1,639 - -------------------------------------------------------------------------------- 76,060 STX Shipbuilding Co. Ltd.(1) 1,157 - -------------------------------------------------------------------------------- 28,413 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 12.2% - -------------------------------------------------------------------------------- 338,000 AU Optronics Corp. 405 - -------------------------------------------------------------------------------- 1,578,300 Career Technology Company Limited(1) 2,052 - -------------------------------------------------------------------------------- 4,018,000 China Manmade Fibers(1) 1,894 - -------------------------------------------------------------------------------- 71,309 China Steel Corporation GDR(1) 1,130 - -------------------------------------------------------------------------------- 4,828,872 Chung HWA Pulp 2,333 - -------------------------------------------------------------------------------- 845,000 King Yuan Electronics Company Limited(1) 844 - -------------------------------------------------------------------------------- 2,535,000 Mega Financial Holding Co. Ltd. 1,485 - -------------------------------------------------------------------------------- 534,300 Novatek Microelectronics Corp., Ltd. 1,580 - -------------------------------------------------------------------------------- 848,000 O-TA Precision Industry Co Ltd. 1,677 - -------------------------------------------------------------------------------- 264,000 Optimax Technology Corporation 738 - -------------------------------------------------------------------------------- 651,800 Quanta Computer Inc. 1,536 - -------------------------------------------------------------------------------- 2,153,000 Taishin Financial Holdings Co. Ltd. 1,564 - -------------------------------------------------------------------------------- 972,200 Taiwan Semiconductor Manufacturing Co. Ltd.(1) 1,808 - -------------------------------------------------------------------------------- 1,226,000 United Microelectronics Corp.(1) 1,077 - -------------------------------------------------------------------------------- 20,123 - -------------------------------------------------------------------------------- Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- THAILAND -- 1.6% - -------------------------------------------------------------------------------- 401,500 Italian-Thai Development PCL(1) $ 1,026 - -------------------------------------------------------------------------------- 2,400,000 Lalin Property Public Company Limited 721 - -------------------------------------------------------------------------------- 569,600 Mida Assets PCL(1) 432 - -------------------------------------------------------------------------------- 6,095,900 Millennium Steel PCL(1) 434 - -------------------------------------------------------------------------------- 2,613 - -------------------------------------------------------------------------------- TURKEY -- 3.7% - -------------------------------------------------------------------------------- 536,223,498 Dogan Yayin Holding(1) 1,476 - -------------------------------------------------------------------------------- 55,950,314 Eregli Demir ve Celik Fabrikalari TAS(1) 1,062 - -------------------------------------------------------------------------------- 983,507,418 Tofas Turk Otomobil Fabrik(1) 1,479 - -------------------------------------------------------------------------------- 254,720,062 Trakya CAM Sanayii(1) 684 - -------------------------------------------------------------------------------- 280,879,458 Turkiye IS Bankasi(1) 1,383 - -------------------------------------------------------------------------------- 6,084 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $120,765) 148,374 - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 7.0% - -------------------------------------------------------------------------------- BRAZIL -- 6.8% - -------------------------------------------------------------------------------- 190,387,360 Centrais Eletricas Brasileiras SA 2,688 - -------------------------------------------------------------------------------- 44,855,806 Companhia de Gas de Sao Paulo Cl A(1) 2,272 - -------------------------------------------------------------------------------- 102,533,329 Companhia Siderurgica de Tubarao 2,760 - -------------------------------------------------------------------------------- 91,474,311 Eletropaulo Metropolitana de Sao Paulo SA(1) 1,879 - -------------------------------------------------------------------------------- 961,187,532 Telemig Celular Participacoes SA 1,670 - -------------------------------------------------------------------------------- 11,269 - -------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 0.2% - -------------------------------------------------------------------------------- 15,400,000 Sibirtelecom 316 - -------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost $8,141) 11,585 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 3.3% - -------------------------------------------------------------------------------- Repurchase Agreement, Morgan Stanley Group, Inc., (U.S. Treasury obligations), in a joint trading account at 1.00%, dated 11/28/2003, due 12/1/03 (Delivery value $5,500) (Cost $5,500) 5,500 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 100.0% (Cost $134,406) $165,459 ================================================================================ COLLATERAL RECEIVED FOR SECURITIES LENDING(2) REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, BNP Paribas Securities Corp., (U.S. Government Agency obligations), 1.08%, dated 11/28/03, due 12/1/03 (Delivery value $5,127) (Cost $5,127) $5,127 ================================================================================ See Notes to Financial Statements. (continued) - ------ 12 Emerging Markets - Schedule of Investments NOVEMBER 30, 2003 MARKET SECTOR DIVERSIFICATION (UNAUDITED) - -------------------------------------------------------------------------------- Basic Materials 19.6% - -------------------------------------------------------------------------------- Commercial Services 2.9% - -------------------------------------------------------------------------------- Consumer (Cyclical) 7.2% - -------------------------------------------------------------------------------- Consumer (Non-Cyclical) 1.4% - -------------------------------------------------------------------------------- Consumer Services 5.7% - -------------------------------------------------------------------------------- Energy 3.7% - -------------------------------------------------------------------------------- Financial 8.0% - -------------------------------------------------------------------------------- Health Care 1.4% - -------------------------------------------------------------------------------- Industrials 3.4% - -------------------------------------------------------------------------------- Multi-Industry 1.0% - -------------------------------------------------------------------------------- Technology 14.2% - -------------------------------------------------------------------------------- Telecommunications 14.2% - -------------------------------------------------------------------------------- Transport 5.3% - -------------------------------------------------------------------------------- Utility 8.7% - -------------------------------------------------------------------------------- Temporary Cash Investments 3.3% - -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt GDR = Global Depositary Receipt (1) Non-income producing. (2) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. (See Note 5 in Notes to Financial Statements.) See Notes to Financial Statements. - ------ 13 Global Growth - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2003 - ------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS - ------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR INCEPTION DATE - ------------------------------------------------------------------------------- INVESTOR CLASS 20.22% 7.75% 12/1/1998 - ------------------------------------------------------------------------------- MSCI WORLD FREE INDEX 19.17% -1.05%(1) -- - ------------------------------------------------------------------------------- Institutional Class 20.52% -9.27% 8/1/2000 - ------------------------------------------------------------------------------- Advisor Class 19.96% 5.36% 2/5/1999 - ------------------------------------------------------------------------------- C Class 19.07% 2.12% 3/1/2002 - ------------------------------------------------------------------------------- (1) Since 11/30/98, the date nearest the Investor Class's inception for which data are available. GROWTH OF $10,000 OVER LIFE OF CLASS - -------------------------------------------------------------------------------- $10,000 investment made December 1, 1998
![](https://capedge.com/proxy/N-CSR/0000872825-04-000003/growthglobal0311.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS - -------------------------------------------------------------------------------- Periods ended November 30 - -------------------------------------------------------------------------------- 1999* 2000 2001 2002 2003 - -------------------------------------------------------------------------------- Investor Class 66.60% 8.81% -23.62% -12.78% 20.22% - -------------------------------------------------------------------------------- MSCI World Free Index 21.11% -7.64% -16.01% -15.27% 19.17% - -------------------------------------------------------------------------------- * From 12/1/98, the Investor Class's inception date. Index data from 11/30/98, the date nearest the Investor Class's inception for which data are available. Not annualized. The charts on the performance page give historical return data for the fund. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. Unless otherwise indicated, the charts are based on Investor Class shares; performance for other classes will vary due to differences in fee structures. Past performance does not guarantee future results. None of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. - ------ 14 Global Growth - Portfolio Commentary [photo of Matt Hudson and Henrik Strabo] A portfolio commentary from Matt Hudson and Henrik Strabo, portfolio managers on the Global Growth investment team. Global Growth advanced 20.22%* during the year ending November 30, 2003, outperforming its benchmark, the Morgan Stanley Capital International World Free Index, which returned 19.17%. Many markets around the world advanced during the period as evidence of economic recovery in the United States, Europe and Asia lifted business and consumer confidence. The signs included expanding manufacturing activity in the U.S., and improving industrial production in Europe and Asia. Demand for services in the world's major economies also showed strength, with Europe's service industry expanding at the fastest pace in more than a year. Against this backdrop, all but one of Global Growth's sectors advanced, with technology holdings making the largest contribution to the portfolio. The portfolio's complement of Internet companies led tech's advance, with E*Trade Financial Corp. topping the list of contributors. E*Trade, the online discount brokerage, benefited from increased trading activity in the equity markets. Elsewhere in the technology sector, the portfolio's holdings in the semiconductor industry advanced as companies that make computer chips benefited from strong demand for chips used in digital consumer products. The industry also provided the stock that made the largest contribution to the portfolio during the fiscal year, U.S. chipmaker Intel Corp. The next biggest boost to the portfolio came from the telecommunications sector, where wireless companies--Global Growth's second-largest industry stake--led the way. Nextel Communications in the U.S. and TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- U.S. Common Stocks 42.8% 52.3% - -------------------------------------------------------------------------------- Foreign Common Stocks 54.7% 46.6% - -------------------------------------------------------------------------------- Preferred Stocks 2.0% -- - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 99.5% 98.9% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.5% 1.1% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- United States(+) 43.3% 53.4% - -------------------------------------------------------------------------------- Japan 12.5% 7.3% - -------------------------------------------------------------------------------- United Kingdom 7.5% 5.4% - -------------------------------------------------------------------------------- Germany 6.2% 3.1% - -------------------------------------------------------------------------------- France 5.1% 4.8% - -------------------------------------------------------------------------------- Switzerland 3.6% 1.5% - -------------------------------------------------------------------------------- Australia 2.9% 3.8% - -------------------------------------------------------------------------------- Other 18.9% 20.7% - -------------------------------------------------------------------------------- (+) Includes temporary cash investments. *All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 15 Global Growth - Portfolio Commentary Russia's Vimpel-Communications made the largest contributions. Nextel advanced on rising demand for its push-to-talk service, and an increasing number of subscribers. The company also benefited from high revenue per user. Vimpel, Russia's second-largest mobile-phone company by subscribers, benefited from a boost in demand for mobile phones. Holdings among wireless firms delivered the portfolio's best performance by an industry during the fiscal year. Companies that make medical products and supplies also registered healthy returns, with two landing on Global Growth's list of top-10 contributing securities during the fiscal year. The first, Boston Scientific Corp., a top-10 holding at period's end, accounted for the industry's greatest contribution. The second, eResearch Technology Inc., provides monitoring of patients involved in drug companies' clinical trials. Overall, health care holdings made the third-largest contribution to the portfolio. In the financial sector, Global Growth also fared well. Banks, which represented the portfolio's largest industry stake on average during the fiscal year, turned in the financial sector's best performance. The most contribution came from France's Societe Generale, a top-10 holding at period's end, followed by the Halifax Bank of Scotland. The financial services industry also advanced, with Australia's Macquarie Bank leading the list of contributors. Only one sector, consumer cyclical, detracted from performance during the fiscal year. The department store industry led the retreat, with Game Group, a video-game retailer in the United Kingdom, detracting most. We eliminated the position. In conclusion, we remain committed to our long-standing process of identifying companies demonstrating fundamental strength and sustainable improvement in their businesses. The Global Growth team is focused on finding the best investment opportunities for our portfolio. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Cisco Systems Inc. 1.8% 1.0% - -------------------------------------------------------------------------------- Nextel Communications, Inc. 1.7% 1.0% - -------------------------------------------------------------------------------- Intel Corporation 1.6% 1.3% - -------------------------------------------------------------------------------- EMC Corporation 1.6% 1.4% - -------------------------------------------------------------------------------- Citigroup Inc. 1.5% 1.5% - -------------------------------------------------------------------------------- Procter & Gamble Co. (The) 1.5% 0.9% - -------------------------------------------------------------------------------- Pfizer, Inc. 1.5% 0.7% - -------------------------------------------------------------------------------- Societe Generale Cl A 1.4% 0.6% - -------------------------------------------------------------------------------- Boston Scientific Corp. 1.4% 1.3% - -------------------------------------------------------------------------------- JSR Corp. 1.3% 0.8% - -------------------------------------------------------------------------------- TOP FIVE SECTORS AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Financial 23.4% 24.6% - -------------------------------------------------------------------------------- Technology 20.5% 16.2% - -------------------------------------------------------------------------------- Health Care 14.5% 14.4% - -------------------------------------------------------------------------------- Consumer (Cyclical) 6.9% 3.4% - -------------------------------------------------------------------------------- Telecommunications 6.3% 10.5% - -------------------------------------------------------------------------------- - ------ 16 Global Growth - Schedule of Investments NOVEMBER 30, 2003 Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 97.5% - -------------------------------------------------------------------------------- AUSTRALIA -- 2.9% - -------------------------------------------------------------------------------- 171,295 BHP Billiton Limited $ 1,399 - -------------------------------------------------------------------------------- 1,852,482 Lihir Gold Limited 2,107 - -------------------------------------------------------------------------------- 101,600 Macquarie Bank Limited 2,501 - -------------------------------------------------------------------------------- 570,000 Qantas Airways Limited 1,375 - -------------------------------------------------------------------------------- 7,382 - -------------------------------------------------------------------------------- BELGIUM -- 0.5% - -------------------------------------------------------------------------------- 27,000 Mobistar SA(1) 1,412 - -------------------------------------------------------------------------------- BERMUDA -- 0.5% - -------------------------------------------------------------------------------- 47,228 Axis Capital Holdings Limited 1,348 - -------------------------------------------------------------------------------- CANADA -- 1.7% - -------------------------------------------------------------------------------- 66,600 EnCana Corp. 2,444 - -------------------------------------------------------------------------------- 116,800 QLT Inc.(1) 1,908 - -------------------------------------------------------------------------------- 4,352 - -------------------------------------------------------------------------------- CAYMAN ISLANDS -- 0.5% - -------------------------------------------------------------------------------- 65,000 Seagate Technology 1,284 - -------------------------------------------------------------------------------- ESTONIA -- 0.5% - -------------------------------------------------------------------------------- 58,300 Hansabank Ltd. 1,331 - -------------------------------------------------------------------------------- FINLAND -- 0.6% - -------------------------------------------------------------------------------- 164,000 Fortum Oyj 1,643 - -------------------------------------------------------------------------------- FRANCE -- 5.1% - -------------------------------------------------------------------------------- 115,000 Alcatel SA(1) 1,502 - -------------------------------------------------------------------------------- 91,171 Axa 1,753 - -------------------------------------------------------------------------------- 76,076 France Telecom SA(1) 1,962 - -------------------------------------------------------------------------------- 68,500 Publicis Groupe 2,165 - -------------------------------------------------------------------------------- 9,880 Sanofi-Synthelabo SA 669 - -------------------------------------------------------------------------------- 45,300 Societe Generale Cl A 3,629 - -------------------------------------------------------------------------------- 211,266 Wanadoo(1) 1,624 - -------------------------------------------------------------------------------- 13,304 - -------------------------------------------------------------------------------- GERMANY -- 5.2% - -------------------------------------------------------------------------------- 66,600 Commerzbank AG 1,289 - -------------------------------------------------------------------------------- 25,400 Deutsche Boerse AG 1,280 - -------------------------------------------------------------------------------- 124,298 Deutsche Telekom(1) 2,064 - -------------------------------------------------------------------------------- 24,500 Linde AG 1,186 - -------------------------------------------------------------------------------- 13,340 Puma AG Rudolf Dassler Sport 2,104 - -------------------------------------------------------------------------------- 10,800 SAP AG 1,660 - -------------------------------------------------------------------------------- 26,950 Siemens AG 1,967 - -------------------------------------------------------------------------------- 159,837 T-Online International AG(1) 1,997 - -------------------------------------------------------------------------------- 13,547 - -------------------------------------------------------------------------------- HUNGARY -- 0.6% - -------------------------------------------------------------------------------- 15,500 Gedeon Richter Rt. 1,654 - -------------------------------------------------------------------------------- Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- INDIA -- 1.0% - -------------------------------------------------------------------------------- 45,900 Dr. Reddy's Laboratories Ltd. $ 1,275 - -------------------------------------------------------------------------------- 54,300 Housing Development Finance Corp. 655 - -------------------------------------------------------------------------------- 70,500 Maruti Udyog Ltd.(1) 531 - -------------------------------------------------------------------------------- 2,461 - -------------------------------------------------------------------------------- IRELAND -- 0.8% - -------------------------------------------------------------------------------- 18,390 Depfa Bank plc 2,111 - -------------------------------------------------------------------------------- ISRAEL -- 1.0% - -------------------------------------------------------------------------------- 44,428 Teva Pharmaceutical Industries Ltd. ADR 2,676 - -------------------------------------------------------------------------------- ITALY -- 0.6% - -------------------------------------------------------------------------------- 99,500 Banco Popolare di Verona e Novara Scrl 1,642 - -------------------------------------------------------------------------------- JAPAN -- 12.5% - -------------------------------------------------------------------------------- 29,000 Canon, Inc. 1,340 - -------------------------------------------------------------------------------- 94,000 Chugai Pharmaceutical Co. Ltd. 1,270 - -------------------------------------------------------------------------------- 496 Dentsu Inc. 2,105 - -------------------------------------------------------------------------------- 31,600 Fanuc Ltd. 1,858 - -------------------------------------------------------------------------------- 48,400 Fast Retailing Company Limited 2,855 - -------------------------------------------------------------------------------- 22,100 Hoya Corp. 1,937 - -------------------------------------------------------------------------------- 158,000 JSR Corp. 3,426 - -------------------------------------------------------------------------------- 37,353 NEC Electronics Corp.(1) 2,595 - -------------------------------------------------------------------------------- 13,800 Nidec Corporation 1,369 - -------------------------------------------------------------------------------- 175,000 Nissan Motor Co., Ltd. 2,000 - -------------------------------------------------------------------------------- 607 NTT DoCoMo, Inc. 1,308 - -------------------------------------------------------------------------------- 22,400 ORIX Corporation 1,642 - -------------------------------------------------------------------------------- 79,400 Pioneer Corp. 2,030 - -------------------------------------------------------------------------------- 131,000 Sharp Corp. 1,960 - -------------------------------------------------------------------------------- 285 Sumitomo Mitsui Financial Group Inc. 1,392 - -------------------------------------------------------------------------------- 26,100 Tokyo Electron Ltd. 1,847 - -------------------------------------------------------------------------------- 80 Yahoo Japan Corporation(1) 1,052 - -------------------------------------------------------------------------------- 31,986 - -------------------------------------------------------------------------------- NETHERLANDS -- 1.7% - -------------------------------------------------------------------------------- 130,400 ING Groep N.V. 2,795 - -------------------------------------------------------------------------------- 297,100 James Hardie Industries N.V. Chess Depositary Interest 1,543 - -------------------------------------------------------------------------------- 4,338 - -------------------------------------------------------------------------------- NORWAY -- 0.7% - -------------------------------------------------------------------------------- 103,000 Schibsted ASA 1,752 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 0.5% - -------------------------------------------------------------------------------- 3,850,000 China Telecom Corporation Limited 1,239 - -------------------------------------------------------------------------------- PUERTO RICO -- 0.5% - -------------------------------------------------------------------------------- 27,600 Doral Financial Corp. 1,396 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 17 Global Growth - Schedule of Investments NOVEMBER 30, 2003 Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 1.6% - -------------------------------------------------------------------------------- 2,954,950 Central Telecommunications Company $ 898 - -------------------------------------------------------------------------------- 11,140 Mobile Telesystems ADR 919 - -------------------------------------------------------------------------------- 11,500,000 Sibirtelecom 354 - -------------------------------------------------------------------------------- 29,500,000 Uralsvyazinform 938 - -------------------------------------------------------------------------------- 101,471 YUKOS 1,153 - -------------------------------------------------------------------------------- 4,262 - -------------------------------------------------------------------------------- SOUTH KOREA -- 2.0% - -------------------------------------------------------------------------------- 179,360 Daewoo Heavy Industries & Machinery Ltd.(1) 1,440 - -------------------------------------------------------------------------------- 35,000 Kookmin Bank 1,236 - -------------------------------------------------------------------------------- 6,560 Samsung Electronics 2,536 - -------------------------------------------------------------------------------- 5,212 - -------------------------------------------------------------------------------- SWEDEN -- 0.5% - -------------------------------------------------------------------------------- 45,000 Volvo AB Cl B 1,302 - -------------------------------------------------------------------------------- SWITZERLAND -- 3.6% - -------------------------------------------------------------------------------- 374,306 ABB Limited(1) 1,837 - -------------------------------------------------------------------------------- 54,620 Compagnie Financiere Richemont AG 1,353 - -------------------------------------------------------------------------------- 3,630 Julius Baer Holding AG 1,155 - -------------------------------------------------------------------------------- 22,000 Novartis AG 930 - -------------------------------------------------------------------------------- 14,000 Roche Holding AG 1,263 - -------------------------------------------------------------------------------- 41,922 UBS AG 2,701 - -------------------------------------------------------------------------------- 9,239 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 2.1% - -------------------------------------------------------------------------------- 673,500 Novatek Microelectronics Corp., Ltd. 1,992 - -------------------------------------------------------------------------------- 416,000 Optimax Technology Corporation 1,163 - -------------------------------------------------------------------------------- 1,278,000 Taiwan Semiconductor Manufacturing Co. Ltd.(1) 2,376 - -------------------------------------------------------------------------------- 5,531 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 7.5% - -------------------------------------------------------------------------------- 225,270 Abbey National plc 2,070 - -------------------------------------------------------------------------------- 83,500 BOC Group plc 1,165 - -------------------------------------------------------------------------------- 359,400 BP plc 2,511 - -------------------------------------------------------------------------------- 170,000 British Sky Broadcasting plc(1) 1,973 - -------------------------------------------------------------------------------- 58,670 GlaxoSmithKline plc 1,324 - -------------------------------------------------------------------------------- 90,924 HBOS plc 1,143 - -------------------------------------------------------------------------------- 120,640 Reckitt Benckiser plc 2,636 - -------------------------------------------------------------------------------- 137,300 Standard Chartered plc 2,168 - -------------------------------------------------------------------------------- 840,818 Vodafone Group plc 1,933 - -------------------------------------------------------------------------------- 247,849 WPP Group plc 2,377 - -------------------------------------------------------------------------------- 19,300 - -------------------------------------------------------------------------------- UNITED STATES -- 42.8% - -------------------------------------------------------------------------------- 37,000 3M Co. 2,924 - ----------------------------------------------------------------------------------- 52,080 Amdocs Ltd.(1) 1,303 - ----------------------------------------------------------------------------------- 58,200 American Express Co. 2,660 - ----------------------------------------------------------------------------------- 30,400 American International Group, Inc. 1,762 - ----------------------------------------------------------------------------------- 45,500 Amgen Inc.(1) 2,617 - ----------------------------------------------------------------------------------- Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- 17,000 Bank of America Corp. $ 1,282 - -------------------------------------------------------------------------------- 98,000 Boston Scientific Corp.(1) 3,517 - -------------------------------------------------------------------------------- 53,300 Broadcom Corp.(1) 1,942 - -------------------------------------------------------------------------------- 47,900 Celgene Corp.(1) 2,190 - -------------------------------------------------------------------------------- 15,200 Chicago Mercantile Exchange 1,041 - -------------------------------------------------------------------------------- 203,300 Cisco Systems Inc.(1) 4,607 - -------------------------------------------------------------------------------- 83,900 Citigroup Inc. 3,947 - -------------------------------------------------------------------------------- 37,400 Clorox Company 1,755 - -------------------------------------------------------------------------------- 35,800 Corinthian Colleges, Inc.(1) 2,289 - -------------------------------------------------------------------------------- 36,000 Corporate Executive Board Co. (The)(1) 1,750 - -------------------------------------------------------------------------------- 25,200 Danaher Corp. 2,097 - -------------------------------------------------------------------------------- 74,000 Dell Inc.(1) 2,553 - -------------------------------------------------------------------------------- 55,610 Digital River Inc.(1) 1,280 - -------------------------------------------------------------------------------- 190,700 E*TRADE Group Inc.(1) 2,065 - -------------------------------------------------------------------------------- 298,900 EMC Corp.(1) 4,107 - -------------------------------------------------------------------------------- 66,000 Exxon Mobil Corp. 2,387 - -------------------------------------------------------------------------------- 90,300 General Electric Co. 2,589 - -------------------------------------------------------------------------------- 33,500 Gilead Sciences, Inc.(1) 1,966 - -------------------------------------------------------------------------------- 27,700 Harrah's Entertainment, Inc. 1,326 - -------------------------------------------------------------------------------- 34,300 Ingersoll-Rand Company 2,138 - -------------------------------------------------------------------------------- 126,800 Intel Corp. 4,238 - -------------------------------------------------------------------------------- 101,200 InterActiveCorp(1) 3,325 - -------------------------------------------------------------------------------- 36,000 Intuit Inc.(1) 1,811 - -------------------------------------------------------------------------------- 22,280 Invitrogen Corp.(1) 1,519 - -------------------------------------------------------------------------------- 37,500 Kohl's Corp.(1) 1,812 - -------------------------------------------------------------------------------- 50,300 Leapfrog Enterprises Inc.(1) 1,579 - -------------------------------------------------------------------------------- 35,400 Lehman Brothers Holdings Inc. 2,556 - -------------------------------------------------------------------------------- 34,550 Lowe's Companies, Inc. 2,014 - -------------------------------------------------------------------------------- 40,000 Manor Care, Inc. 1,413 - -------------------------------------------------------------------------------- 31,800 Nabors Industries Ltd.(1) 1,180 - -------------------------------------------------------------------------------- 42,361 National Financial Partners Corp.(1) 1,072 - -------------------------------------------------------------------------------- 64,414 Netgear Inc.(1) 869 - -------------------------------------------------------------------------------- 169,470 Nextel Communications, Inc.(1) 4,292 - -------------------------------------------------------------------------------- 39,100 Omnicare, Inc. 1,561 - -------------------------------------------------------------------------------- 113,250 Pfizer, Inc. 3,800 - -------------------------------------------------------------------------------- 40,100 Procter & Gamble Co. (The) 3,859 - -------------------------------------------------------------------------------- 52,656 Prudential Financial Inc. 2,059 - -------------------------------------------------------------------------------- 38,300 ResMed Inc.(1) 1,494 - -------------------------------------------------------------------------------- 88,300 Sovereign Bancorp Inc. 2,001 - -------------------------------------------------------------------------------- 26,300 Tiffany & Co. 1,193 - -------------------------------------------------------------------------------- 28,000 United Parcel Service, Inc. Cl B 2,038 - -------------------------------------------------------------------------------- 47,500 UnitedHealth Group Incorporated 2,560 - -------------------------------------------------------------------------------- 32,800 Viacom, Inc. Cl B 1,290 - -------------------------------------------------------------------------------- 25,000 Wells Fargo & Co. 1,433 - -------------------------------------------------------------------------------- 31,650 Yahoo! Inc.(1) 1,360 - -------------------------------------------------------------------------------- 110,422 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $196,238) 252,126 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 18 Global Growth - Schedule of Investments NOVEMBER 30, 2003 Shares/Principal Amount ($ In Thousands) Value - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 2.0% - -------------------------------------------------------------------------------- BRAZIL -- 1.0% - -------------------------------------------------------------------------------- 31,795,040 Banco Itau Holding Financeira SA $ 2,626 - -------------------------------------------------------------------------------- GERMANY -- 1.0% - -------------------------------------------------------------------------------- 150,900 ProSieben SAT.1 Media AG 2,470 - -------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost $4,101) 5,096 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 0.5% - -------------------------------------------------------------------------------- $1,400 FNMA Discount Notes, 0.97%, 12/1/03(2) (Cost $1,400) 1,400 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 100.0% (Cost $201,739) $258,622 ================================================================================ COLLATERAL RECEIVED FOR SECURITIES LENDING(3) - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, BNP Paribas Securities Corp., (U.S. Government Agency obligations), 1.08%, dated 11/28/03, due 12/1/03 (Delivery value $18,009) (Cost $18,007) $18,007 ================================================================================ MARKET SECTOR DIVERSIFICATION (UNAUDITED) - -------------------------------------------------------------------------------- Basic Materials 4.8% - -------------------------------------------------------------------------------- Commercial Services 5.0% - -------------------------------------------------------------------------------- Consumer (Cyclical) 6.9% - -------------------------------------------------------------------------------- Consumer (Non-Cyclical) 3.2% - -------------------------------------------------------------------------------- Consumer Services 4.9% - -------------------------------------------------------------------------------- Energy 4.3% - -------------------------------------------------------------------------------- Financial 23.4% - -------------------------------------------------------------------------------- Health Care 14.5% - -------------------------------------------------------------------------------- Industrials 3.4% - -------------------------------------------------------------------------------- Technology 20.5% - -------------------------------------------------------------------------------- Telecommunications 6.3% - -------------------------------------------------------------------------------- Transport 1.3% - -------------------------------------------------------------------------------- Utility 1.0% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.5% - -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt FNMA = Federal National Mortgage Association (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. (3) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. (See Note 5 in Notes to Financial Statements.) See Notes to Financial Statements. - ------ 19 International Opportunities - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2003 - ------------------------------------------------------------------------------- AVERAGE ANNUAL RETURNS - ------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR INCEPTION DATE - ------------------------------------------------------------------------------- INVESTOR CLASS 61.54% 18.54% 6/1/2001 - ------------------------------------------------------------------------------- CITIGROUP EMI GROWTH WORLD EX-US(1) 38.79% 2.23%(2) -- - ------------------------------------------------------------------------------- Institutional Class -- 58.96%(3) 1/9/2003 - ------------------------------------------------------------------------------- (1) Formerly Salomon Smith Barney Extended Market Index Growth World ex-US. (2) Since 5/31/01, the date nearest the Investor Class's inception for which data are available. (3) Returns less than one year are not annualized. GROWTH OF $10,000 OVER LIFE OF CLASS - -------------------------------------------------------------------------------- $10,000 investment made June 1, 2001
![](https://capedge.com/proxy/N-CSR/0000872825-04-000003/growthintlopps0311.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS - -------------------------------------------------------------------------------- Periods ended November 30 - -------------------------------------------------------------------------------- 2001* 2002 2003 - -------------------------------------------------------------------------------- Investor Class -2.60% -2.87% 61.54% - -------------------------------------------------------------------------------- Citigroup EMI Growth World ex-US -14.51% -10.96% 38.79% - -------------------------------------------------------------------------------- * From 6/1/01, the Investor Class's inception date. Index data from 5/31/01, the date nearest the Investor Class's inception for which data are available. Not annualized. The charts on the performance page give historical return data for the fund. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. Unless otherwise indicated, the charts are based on Investor Class shares; performance for other classes will vary due to differences in fee structures. Past performance does not guarantee future results. None of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. - ------ 20 International Opportunities - Portfolio Commentary [photo of Lynette Schroeder and Henrik Strabo] A portfolio commentary from Lynette Schroeder, portfolio manager, and Henrik Strabo, CIO International Equities, on the International Opportunities investment team. International Opportunities climbed 61.54%* during the 12 months ended November 30, 2003, far outdistancing its benchmark, the Citigroup Extended Market Index (EMI) Growth World ex- US, which returned 38.79%. The portfolio's performance compares favorably to that of its peers: The 99 small-cap international growth funds tracked by Lipper Inc. rose an average of 43.77%. World markets advanced during the period covered by this report, as evidence of global economic recovery emerged. The fall of the Iraqi regime and the abatement of the SARS epidemic relieved uncertainty, and as the period progressed, positive economic data from nations around the globe increasingly bolstered sentiment and encouraged investors to participate in the equity markets. Those developments set a positive tone, and against that backdrop, International Opportunities received positive contribution from every sector stake during the fiscal year. Our overweight position in the telecommunications sector delivered the biggest contribution both to absolute results and performance against the benchmark. The bulk of absolute returns came from the wireless industry, where most of the telecom stake was focused over the period. Several positions, including Thailand's Total Access and Russia's Uralsvyasinform, were among the portfolio's top contributing stocks for the year. Exposure to traditional telephone companies yielded another top stock, the Netherlands' Versatel Telecom, TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Common Stocks 93.2% 94.3% - -------------------------------------------------------------------------------- Preferred Stocks 3.6% 2.8% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 96.8% 97.1% - -------------------------------------------------------------------------------- Temporary Cash Investments 3.2% 2.9% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Japan 27.2% 16.8% - -------------------------------------------------------------------------------- Canada 7.1% 7.8% - -------------------------------------------------------------------------------- Taiwan (Republic of China) 7.1% 1.4% - -------------------------------------------------------------------------------- Germany 6.0% 10.6% - -------------------------------------------------------------------------------- Singapore 5.9% 1.3% - -------------------------------------------------------------------------------- Brazil 5.1% 1.6% - -------------------------------------------------------------------------------- India 4.4% -- - -------------------------------------------------------------------------------- United States(+) 3.2% 3.4% - -------------------------------------------------------------------------------- Australia 3.1% 5.4% - -------------------------------------------------------------------------------- Norway 2.8% -- - -------------------------------------------------------------------------------- People's Republic of China 2.5% 4.8% - -------------------------------------------------------------------------------- Denmark 2.4% 5.0% - -------------------------------------------------------------------------------- United Kingdom 2.0% 7.5% - -------------------------------------------------------------------------------- Other 21.2% 34.4% - -------------------------------------------------------------------------------- (+) Includes temporary cash investments. *All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 21 International Opportunities - Portfolio Commentary one of our largest positions on average during the period. The company announced during the year that it would show improving profits in 2003. The basic materials sector, the portfolio's second-largest stake, delivered solid positive contribution. Mining and metals companies were the strongest performers, especially during the second half of the period, and both Brazil's Usinas Siderurgicas de Minas Gerais and Australia's Jubilee Mines bolstered results. Elsewhere in the sector, Hong Kong's Anhui Conch Cement also advanced. International Opportunities' exposure to the consumer cyclicals sector -- the portfolio's largest average weighting overall -- provided substantial lift to performance. Stock selection among consumer durables companies was especially advantageous, and this group delivered the best finish in the sector, with Hong Kong's Techtronic Industries among the year's top contributors. The portfolio's positions in the technology, transportation and industrials sectors, all of which had dampened returns in the first six months of the year, reversed course and provided positive contribution during the second half. Of these, our technology stake made the most progress during that time. Semiconductor firms, which detracted early in the period, helped the tech turnaround and contributed in the second half, including Canada's Cinram International, a DVD manufacturer. One of the portfolio's Internet holdings, Germany's Freenet.de -- a top contributor in the first half -- again made a strong showing in the second. However, there were some disappointments in this otherwise positive environment. Computer hardware companies detracted for the period. Norway's Tandberg, not to be confused with top-10 holding Tandberg Television, led declines among the portfolio's holdings in the industry. We eliminated the position. While we can never predict the courses of the global economy and international markets, we plan to stand by our discipline of seeking small, international companies demonstrating acceleration in earnings because we believe they offer our investors the potential for handsome reward over time. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Tamron Co., Ltd. 2.3% 0.8% - -------------------------------------------------------------------------------- Peyto Energy Trust 2.0% -- - -------------------------------------------------------------------------------- First Engineering Limited 1.9% -- - -------------------------------------------------------------------------------- SEZ Holding AG 1.9% -- - -------------------------------------------------------------------------------- Usinas Siderurgicas de Minas Gerais SA Cl A 1.8% 1.5% - -------------------------------------------------------------------------------- Techtronic Industries Company Limited 1.8% 2.2% - -------------------------------------------------------------------------------- Tandberg Television ASA 1.8% -- - -------------------------------------------------------------------------------- IPSOS 1.7% -- - -------------------------------------------------------------------------------- Sadia SA 1.7% -- - -------------------------------------------------------------------------------- Hughes Software Systems 1.7% -- - -------------------------------------------------------------------------------- TOP FIVE SECTORS AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Technology 14.5% 9.9% - -------------------------------------------------------------------------------- Basic Materials 12.7% 12.7% - -------------------------------------------------------------------------------- Consumer (Cyclical) 12.5% 17.6% - -------------------------------------------------------------------------------- Industrials 12.3% 2.5% - -------------------------------------------------------------------------------- Telecommunications 10.1% 9.4% - -------------------------------------------------------------------------------- - ------ 22 International Opportunities - Schedule of Investments NOVEMBER 30, 2003 Shares ($ In Thousands) Value - ------------------------------------------------------------------------------- COMMON STOCKS -- 93.2% - -------------------------------------------------------------------------------- AUSTRALIA -- 3.1% - -------------------------------------------------------------------------------- 448,993 Jubilee Mines NL $ 1,307 - -------------------------------------------------------------------------------- 1,056,086 Portman Limited 1,148 - -------------------------------------------------------------------------------- 2,455 - -------------------------------------------------------------------------------- BRAZIL -- 1.5% - -------------------------------------------------------------------------------- 34,942 Telemig Celular Participacoes SA ADR 1,210 - -------------------------------------------------------------------------------- CANADA -- 7.1% - -------------------------------------------------------------------------------- 68,426 Bennett Environmental Inc.(1) 1,195 - -------------------------------------------------------------------------------- 55,229 Cinram International Inc. 1,162 - -------------------------------------------------------------------------------- 60,915 Extendicare Inc.(1) 592 - -------------------------------------------------------------------------------- 222,369 HIP Interactive Corporation(1) 574 - -------------------------------------------------------------------------------- 27,853 Home Capital Group Inc. 626 - -------------------------------------------------------------------------------- 85,058 Peyto Energy Trust 1,586 - -------------------------------------------------------------------------------- 5,735 - -------------------------------------------------------------------------------- DENMARK -- 2.4% - -------------------------------------------------------------------------------- 116,429 GN Store Nord(1) 740 - -------------------------------------------------------------------------------- 22,636 Topdanmark A/S(1) 1,146 - -------------------------------------------------------------------------------- 1,886 - -------------------------------------------------------------------------------- FINLAND -- 1.0% - -------------------------------------------------------------------------------- 10,588 Nokian Renkaat OYJ(1) 829 - -------------------------------------------------------------------------------- FRANCE -- 1.7% - -------------------------------------------------------------------------------- 15,288 IPSOS 1,384 - -------------------------------------------------------------------------------- GERMANY -- 6.0% - -------------------------------------------------------------------------------- 40,324 AWD Holding AG 1,226 - -------------------------------------------------------------------------------- 103,123 DAB Bank AG(1) 785 - -------------------------------------------------------------------------------- 24,608 Funkwerk AG 744 - -------------------------------------------------------------------------------- 32,108 GfK AG 905 - -------------------------------------------------------------------------------- 48,558 United Internet AG 1,136 - -------------------------------------------------------------------------------- 4,796 - -------------------------------------------------------------------------------- GREECE -- 1.6% - -------------------------------------------------------------------------------- 53,817 Germanos SA 1,275 - -------------------------------------------------------------------------------- HONG KONG -- 1.8% - -------------------------------------------------------------------------------- 518,000 Techtronic Industries Company Limited 1,421 - -------------------------------------------------------------------------------- INDIA -- 4.4% - -------------------------------------------------------------------------------- 122,800 Hughes Software Systems 1,318 - -------------------------------------------------------------------------------- 61,531 Lupin Ltd.(1) 917 - -------------------------------------------------------------------------------- 160,000 Mahindra & Mahindra Ltd. 1,234 - -------------------------------------------------------------------------------- 3,469 - -------------------------------------------------------------------------------- ISRAEL -- 1.5% - -------------------------------------------------------------------------------- 60,445 M-Systems Flash Disk Pioneers(1) 1,173 - -------------------------------------------------------------------------------- Shares ($ In Thousands) Value - ------------------------------------------------------------------------------- JAPAN -- 27.2% - -------------------------------------------------------------------------------- 163,000 Chiyoda Corporation(1) $ 923 - -------------------------------------------------------------------------------- 323 Cyber Agent Limited(1) 546 - -------------------------------------------------------------------------------- 33,000 Geomatec Company Limited 810 - -------------------------------------------------------------------------------- 23,000 Glory Limited 708 - -------------------------------------------------------------------------------- 28,400 Goldcrest Company Limited 1,159 - -------------------------------------------------------------------------------- 121 Index Corporation 728 - -------------------------------------------------------------------------------- 109,000 Japan Aviation Electronics Industry Limited 1,135 - -------------------------------------------------------------------------------- 230 Kennedy-Wilson Japan(1) 693 - -------------------------------------------------------------------------------- 27,300 Koha Company Limited(1) 955 - -------------------------------------------------------------------------------- 98,300 Komatsu Electronic Metals Co., Ltd.(1) 870 - -------------------------------------------------------------------------------- 220,000 Makino Milling Machine Company Limited 1,038 - -------------------------------------------------------------------------------- 169,000 Nippon Thompson Co., Ltd. 1,120 - -------------------------------------------------------------------------------- 351 Niws Co. Ltd. 756 - -------------------------------------------------------------------------------- 196 Okinawa Cellular Telephone Co. 1,192 - -------------------------------------------------------------------------------- 133,000 Okura Industrial Company Limited 969 - -------------------------------------------------------------------------------- 189 Pasona Inc.(1) 1,282 - -------------------------------------------------------------------------------- 5 Quin Land Co., Ltd.(1) 51 - -------------------------------------------------------------------------------- 456 Round One Corp. 824 - -------------------------------------------------------------------------------- 20,480 Sanei-International Co. Ltd.(1) 546 - -------------------------------------------------------------------------------- 371,000 Sankyo Aluminum Industry Company Limited 1,304 - -------------------------------------------------------------------------------- 24 Take And Give Needs Co., Ltd.(1) 854 - -------------------------------------------------------------------------------- 37,000 Tamron Co., Ltd. 1,824 - -------------------------------------------------------------------------------- 18,200 Tecmo Ltd. 187 - -------------------------------------------------------------------------------- 65,000 Uniden Corp. 1,173 - -------------------------------------------------------------------------------- 21,647 - -------------------------------------------------------------------------------- LUXEMBOURG -- 1.6% - -------------------------------------------------------------------------------- 37,439 SBS Broadcasting SA(1) 1,263 - -------------------------------------------------------------------------------- MEXICO -- 1.5% - -------------------------------------------------------------------------------- 231,147 Corporacion GEO, SA de CV, Series B(1) 1,184 - -------------------------------------------------------------------------------- NETHERLANDS -- 1.6% - -------------------------------------------------------------------------------- 604,285 Versatel Telecom International N.V.(1) 1,232 - -------------------------------------------------------------------------------- NORWAY -- 2.8% - -------------------------------------------------------------------------------- 45,649 Ekornes ASA 790 - -------------------------------------------------------------------------------- 334,027 Tandberg Television ASA(1) 1,396 - -------------------------------------------------------------------------------- 2,186 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 2.5% - -------------------------------------------------------------------------------- 992,000 Anhui Conch Cement Company Limited 1,162 - -------------------------------------------------------------------------------- 2,613,000 Dongfang Electrical Machinery Company Limited(1) 791 - -------------------------------------------------------------------------------- 1,953 - -------------------------------------------------------------------------------- PORTUGAL -- 1.5% - -------------------------------------------------------------------------------- 278,805 Impresa SGPS(1) 1,164 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 23 International Opportunities - Schedule of Investments NOVEMBER 30, 2003 Shares ($ In Thousands) Value - -------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 1.5% - -------------------------------------------------------------------------------- 37,705,515 Uralsvyazinform $ 1,199 - -------------------------------------------------------------------------------- SINGAPORE -- 5.9% - -------------------------------------------------------------------------------- 2,755,000 Accord Customer Care Solutions Limited(1) 1,031 - -------------------------------------------------------------------------------- 3,106,900 Cosco Investment Singapore Limited 1,072 - -------------------------------------------------------------------------------- 2,721,300 First Engineering Limited 1,507 - -------------------------------------------------------------------------------- 882,600 Neptune Orient Lines(1) 1,085 - -------------------------------------------------------------------------------- 4,695 - -------------------------------------------------------------------------------- SOUTH KOREA -- 1.4% - -------------------------------------------------------------------------------- 104,188 Osung LST Company Limited(1) 767 - -------------------------------------------------------------------------------- 17,370 Sekonix Co., Ltd.(1) 380 - -------------------------------------------------------------------------------- 1,147 - -------------------------------------------------------------------------------- SWEDEN -- 1.5% - -------------------------------------------------------------------------------- 39,479 Lindex AB 1,192 - -------------------------------------------------------------------------------- SWITZERLAND -- 1.9% - -------------------------------------------------------------------------------- 42,607 SEZ Holding AG(1) 1,471 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 7.1% - -------------------------------------------------------------------------------- 847,500 Career Technology Company Limited(1) 1,102 - -------------------------------------------------------------------------------- 573,000 FLEXium Interconnect Inc.(1) 701 - -------------------------------------------------------------------------------- 1,190,000 King Yuan Electronics Company Limited(1) 1,189 - -------------------------------------------------------------------------------- 236,750 Novatek Microelectronics Corp., Ltd. 700 - -------------------------------------------------------------------------------- 412,000 Optimax Technology Corporation 1,153 - -------------------------------------------------------------------------------- 509,000 Powertech Technology Inc.(1) 760 - -------------------------------------------------------------------------------- 5,605 - -------------------------------------------------------------------------------- THAILAND -- 0.4% - -------------------------------------------------------------------------------- 53,600 Aeon Thana Sinsap Thailand plc(1) 249 - -------------------------------------------------------------------------------- 11,100 Aeon Thana Sinsap Thailand plc NVDR(1) 51 - -------------------------------------------------------------------------------- 300 - -------------------------------------------------------------------------------- TURKEY -- 0.7% - -------------------------------------------------------------------------------- 95,517,824 Dogan Yayin Holding(1) 263 - -------------------------------------------------------------------------------- 15,490,400 Eregli Demir ve Celik Fabrikalari TAS(1) 294 - -------------------------------------------------------------------------------- 557 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 2.0% - -------------------------------------------------------------------------------- 118,616 Bloomsbury Publishing plc 534 - -------------------------------------------------------------------------------- 24,125 French Connection Group plc 699 - -------------------------------------------------------------------------------- 67,541 Wolfson Microelectronics plc(1) 325 - -------------------------------------------------------------------------------- 1,558 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $60,075) 73,986 - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 3.6% - -------------------------------------------------------------------------------- BRAZIL -- 3.6% - -------------------------------------------------------------------------------- 1,122,956 Sadia SA $ 1,353 - -------------------------------------------------------------------------------- 155,503 Usinas Siderurgicas de Minas Gerais SA Cl A 1,463 - -------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost $1,139) 2,816 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 3.2% - -------------------------------------------------------------------------------- $2,500 FNMA Discount Notes, 0.97%, 12/1/03(2) (Cost $2,500) 2,500 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 100.0% (Cost $63,714) $79,302 ================================================================================ COLLATERAL RECEIVED FOR SECURITIES LENDING(3) REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, BNP Paribas Securities Corp., (U.S. Government Agency obligations), 1.08%, dated 11/28/03, due 12/1/03 (Delivery value $7,686) (Cost $7,685) $7,685 ================================================================================ MARKET SECTOR DIVERSIFICATION (UNAUDITED) - -------------------------------------------------------------------------------- Basic Materials 12.7% - -------------------------------------------------------------------------------- Commercial Services 9.8% - -------------------------------------------------------------------------------- Consumer (Cyclical) 12.5% - -------------------------------------------------------------------------------- Consumer (Non-Cyclical) 3.1% - -------------------------------------------------------------------------------- Consumer Services 6.5% - -------------------------------------------------------------------------------- Energy 2.0% - -------------------------------------------------------------------------------- Financial 9.2% - -------------------------------------------------------------------------------- Health Care 0.9% - -------------------------------------------------------------------------------- Industrials 12.3% - -------------------------------------------------------------------------------- Technology 14.5% - -------------------------------------------------------------------------------- Telecommunications 10.1% - -------------------------------------------------------------------------------- Transport 2.2% - -------------------------------------------------------------------------------- Utility 1.0% - -------------------------------------------------------------------------------- Temporary Cash Investments 3.2% - -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt FNMA = Federal National Mortgage Association NVDR = Non-voting Depositary Receipt (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. (3) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. (See Note 5 in Notes to Financial Statements.) See Notes to Financial Statements. - ------ 24 Statement of Assets and Liabilities NOVEMBER 30, 2003 - ---------------------------------------------------------------------------------------------------------- INTERNATIONAL EMERGING GLOBAL INTERNATIONAL (Amounts In Thousands Except Per-Share Amounts) DISCOVERY MARKETS GROWTH OPPORTUNITIES - ---------------------------------------------------------------------------------------------------------- ASSETS Investment securities, at value (cost of $871,932, $134,406, $201,739 and $63,714, respectively) -- including $203,270, $5,268, $17,405 and $7,341, respectively, of securities loaned $1,169,482 $165,459 $258,622 $79,302 - ------------------------------------------------ Collateral received on securities loaned, at value (cost of $212,035, $5,127, $18,007 and $7,685, respectively) 212,035 5,127 18,007 7,685 - ------------------------------------------------ Cash collateral received on securities loaned 399 -- -- -- - ------------------------------------------------ Cash -- 2,199 -- 504 - ------------------------------------------------ Foreign currency holdings, at value (cost of $5,785, $1,281, $296, and $548, respectively) 5,793 1,277 295 547 - ------------------------------------------------ Receivable for investments sold 15,534 3,157 3,833 600 - ------------------------------------------------ Receivable for capital shares sold -- 54 2 -- - ------------------------------------------------ Dividends and interest receivable 1,437 68 283 53 - ---------------------------------------------------------------------------------------------------------- 1,404,680 177,341 281,042 88,691 - ---------------------------------------------------------------------------------------------------------- LIABILITIES Payable for collateral received on securities loaned 212,434 5,127 18,007 7,685 - ------------------------------------------------ Disbursements in excess of demand deposit cash 1,134 -- 146 -- - ------------------------------------------------ Payable for investments purchased 13,045 4,088 3,308 346 - ------------------------------------------------ Accrued management fees 1,440 258 274 129 - ------------------------------------------------ 228,053 9,473 21,735 8,160 - ---------------------------------------------------------------------------------------------------------- NET ASSETS $1,176,627 $167,868 $259,307 $80,531 ========================================================================================================== See Notes to Financial Statements. (continued) - ------ 25 Statement of Assets and Liabilities NOVEMBER 30, 2003 - -------------------------------------------------------------------------------------------------------------- INTERNATIONAL EMERGING GLOBAL INTERNATIONAL (Amounts In Thousands Except Per-Share Amounts) DISCOVERY MARKETS GROWTH OPPORTUNITIES - -------------------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $ 930,872 $153,157 $311,922 $61,983 - ----------------------------------------------- Accumulated undistributed net investment income (loss) 2,336 (115) -- -- - ----------------------------------------------- Accumulated undistributed net realized income (loss) on investment and foreign currency transactions (52,976) (16,218) (109,513) 3,149 - ----------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 296,395 31,044 56,898 15,399 - -------------------------------------------------------------------------------------------------------------- $1,176,627 $167,868 $259,307 $80,531 ============================================================================================================== INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------------------- Net assets $1,028,934,332 $103,736,807 $250,305,621 $72,007,918 - ----------------------------------------------- Shares outstanding 80,685,224 19,649,291 38,649,021 9,455,438 - ----------------------------------------------- Net asset value per share $12.75 $5.28 $6.48 $7.62 - -------------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------------------- Net assets $147,531,269 $63,242,396 $7,900,794 $8,522,715 - ----------------------------------------------- Shares outstanding 11,493,109 11,867,974 1,211,711 1,117,152 - ----------------------------------------------- Net asset value per share $12.84 $5.33 $6.52 $7.63 - -------------------------------------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------------------- Net assets $161,465 $597,255 $1,043,825 N/A - ----------------------------------------------- Shares outstanding 12,788 114,501 162,395 N/A - ----------------------------------------------- Net asset value per share $12.63 $5.22 $6.43 N/A - -------------------------------------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------------------- Net assets N/A $291,065 $56,334 N/A - ----------------------------------------------- Shares outstanding N/A 56,045 8,838 N/A - ----------------------------------------------- Net asset value per share N/A $5.19 $6.37 N/A - -------------------------------------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 26 Statement of Operations YEAR ENDED NOVEMBER 30, 2003 - ------------------------------------------------------------------------------------------------------------ INTERNATIONAL EMERGING GLOBAL INTERNATIONAL (Amounts In Thousands) DISCOVERY MARKETS GROWTH OPPORTUNITIES - ------------------------------------------------------------------------------------------------------------ INVESTMENT INCOME (LOSS) INCOME: - --------------------------------------------- Dividends (net of foreign taxes withheld of $2,016, $270, $237, and $88, respectively) $ 16,920 $ 2,262 $ 2,792 $ 713 - --------------------------------------------- Interest 307 54 39 17 - --------------------------------------------- Securities lending 1,172 55 138 39 - ------------------------------------------------------------------------------------------------------------ 18,399 2,371 2,969 769 - ------------------------------------------------------------------------------------------------------------ EXPENSES: - --------------------------------------------- Management fees 15,363 2,254 2,932 822 - --------------------------------------------- Distribution fees: - --------------------------------------------- Advisor Class -- 2 2 -- - --------------------------------------------- C Class -- 1 -- -- - --------------------------------------------- Service fees - Advisor Class -- 2 2 -- - --------------------------------------------- Directors' fees and expenses 14 2 3 1 - --------------------------------------------- Other expenses 15 10 13 1 - ------------------------------------------------------------------------------------------------------------ 15,392 2,271 2,952 824 - ------------------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME (LOSS) 3,007 100 17 (55) - ------------------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) NET REALIZED GAIN (LOSS) ON: - --------------------------------------------- Investment transactions 39,281 21,267 (2,545) 4,765 - --------------------------------------------- Foreign currency transactions 94,717 3,701 8,391 2,549 - ------------------------------------------------------------------------------------------------------------ 133,998 24,968 5,846 7,314 - ------------------------------------------------------------------------------------------------------------ CHANGE IN NET UNREALIZED APPRECIATION ON: - --------------------------------------------- Investments (net of foreign taxes accrued of $1,183, $-, $-, and $190, respectively) 176,461 21,661 34,985 12,929 - --------------------------------------------- Translation of assets and liabilities in foreign currencies 14,564 847 5,230 1,140 - ------------------------------------------------------------------------------------------------------------ 191,025 22,508 40,215 14,069 - ------------------------------------------------------------------------------------------------------------ NET REALIZED AND UNREALIZED GAIN 325,023 47,476 46,061 21,383 - ------------------------------------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $328,030 $47,576 $46,078 $21,328 ============================================================================================================ See Notes to Financial Statements. - ----- 27 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2003 AND NOVEMBER 30, 2002 - -------------------------------------------------------------------------------------------- (Amounts In Thousands) INTERNATIONAL DISCOVERY EMERGING MARKETS - -------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2003 2002 2003 2002 - -------------------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------------------- Net investment income (loss) $ 3,007 $ 4,273 $ 100 $ (407) - ------------------------------------------ Net realized gain (loss) 133,998 (33,579) 24,968 (14,275) - ------------------------------------------ Change in net unrealized appreciation 191,025 (55,442) 22,508 (1,326) - -------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 328,030 (84,748) 47,576 (16,008) - -------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------------------- From net investment income: - ------------------------------------------ Investor Class (1,417) -- -- -- - ------------------------------------------ Institutional Class (486) -- -- -- - -------------------------------------------------------------------------------------------- Decrease in net assets from distributions (1,903) -- -- -- - -------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (128,717) (149,498) 18,259 18,202 - -------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 197,410 (234,246) 65,835 2,194 - -------------------------------------------------------------------------------------------- NET ASSETS - -------------------------------------------------------------------------------------------- Beginning of period 979,217 1,213,463 102,033 99,839 - -------------------------------------------------------------------------------------------- End of period $1,176,627 $ 979,217 $167,868 $102,033 ============================================================================================ Accumulated undistributed net investment income (loss) $2,336 $1,713 $(115) -- ============================================================================================ See Notes to Financial Statements. (continued) - ------ 28 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2003 AND NOVEMBER 30, 2002 - ------------------------------------------------------------------------------------------- (Amounts In Thousands) GLOBAL GROWTH INTERNATIONAL OPPORTUNITIES - ------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------- OPERATIONS Net investment income (loss) $ 17 $ 314 $ (55) $ 52 - ------------------------------------------ Net realized gain (loss) 5,846 (30,380) 7,314 (3,135) - ------------------------------------------ Change in net unrealized appreciation 40,215 (1,827) 14,069 407 - ------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 46,078 (31,893) 21,328 (2,676) - ------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------- From net investment income: - ------------------------------------------ Investor Class -- -- (61) -- - ------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - ------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (3,936) (27,874) 37,287 18,084 - ------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 42,142 (59,767) 58,554 15,408 =========================================================================================== NET ASSETS - ------------------------------------------------------------------------------------------- Beginning of period 217,165 276,932 21,977 6,569 - ------------------------------------------------------------------------------------------- End of period $259,307 $217,165 $80,531 $21,977 =========================================================================================== Undistributed net investment income -- -- -- $41 =========================================================================================== See Notes to Financial Statements. - ------ 29 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - -------------------------------------------------------------------------------- ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. International Discovery Fund (International Discovery), Emerging Markets Fund (Emerging Markets), Global Growth Fund (Global Growth) and International Opportunities Fund (International Opportunities) (collectively, the funds) are four funds in a series issued by the corporation. The funds are diversified under the 1940 Act. The funds' investment objectives are to seek capital growth. The funds do this by investing primarily in equity securities of foreign companies with the exception of Global Growth, which invests in both U.S. and foreign companies. International Discovery invests in securities of issuers in developed or emerging market countries that are small- to medium-sized companies at the time of purchase. Emerging Markets invests in securities of issuers in emerging market countries. Global Growth invests in securities of issuers in developed countries. International Opportunities invests in securities of issuers in developed or emerging market countries that are small-sized companies at the time of purchase. The following is a summary of the funds' significant accounting policies. MULTIPLE CLASS -- International Discovery is authorized to issue the Investor Class, the Institutional Class and the Advisor Class. Emerging Markets and Global Growth are authorized to issue the Investor Class, the Institutional Class, the Advisor Class and the C Class. International Opportunities is authorized to issue the Investor Class and the Institutional Class. The C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and shareholder servicing and distribution expenses and arrangements. All shares of each fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the funds are allocated to each class of shares based on their relative net assets. Sale of the Institutional Class for International Opportunities commenced on January 9, 2003. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes are valued through a commercial pricing service. When valuations are not readily available, securities are valued at fair value as determined in accordance with procedures adopted by the Board of Directors. If an event were to occur after the close of the foreign exchange on which a portfolio security principally trades, but before the net asset value per-share of a fund was determined that was likely to materially affect the net asset value of the fund, then that security would be valued at fair value as determined in accordance with procedures adopted by the Board of Directors. SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. Certain countries impose taxes on realized gains on the sale of securities registered in their country. The funds record the foreign tax expense, if any, on an accrual basis. The realized and unrealized tax provision reduces the net realized gain (loss) on investment transactions and net unrealized appreciation (depreciation) on investments, respectively. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. SECURITIES ON LOAN -- The funds may lend portfolio securities through their lending agent to certain approved borrowers in order to earn additional income. The funds continue to recognize any gain or loss in the market price of the securities loaned and record any interest earned or dividends declared. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on foreign currency transactions and unrealized appreciation (depreciation) on translation of assets and liabilities in foreign currencies, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts (continued) - ------ 30 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) - -------------------------------------------------------------------------------- in their currency. The funds record the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS-- The funds may enter into forward foreign currency exchange contracts to facilitate transactions of securities denominated in a foreign currency or to hedge the funds' exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the funds and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. The funds bear the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses may arise if the counterparties do not perform under the contract terms. REPURCHASE AGREEMENTS -- The funds may enter into repurchase agreements with institutions that the funds' investment manager, American Century Investment Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria adopted by the Board of Directors. Each repurchase agreement is recorded at cost. Each fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable each fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to each fund under each repurchase agreement. JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, each fund, along with other registered investment companies having management agreements with ACIM, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. INCOME TAX STATUS -- It is each fund's policy to distribute all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income, if any, are generally declared and paid annually. Distributions from net realized gains, if any, are generally declared and paid twice per year. REDEMPTION -- International Discovery, Emerging Markets and International Opportunities may impose a 2% redemption fee on shares held less than 180 days. The fee may not be applicable to all classes. These redemption fees are recorded as a reduction in the cost of shares redeemed. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. 2. FEES AND TRANSACTIONS WITH RELATED PARTIES - -------------------------------------------------------------------------------- MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the funds with investment advisory and management services in exchange for a single, unified management fee per class. The Agreement provides that all expenses of the funds, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed daily and paid monthly in arrears based on each class's pro rata share of each funds' average daily closing net assets during the previous month. The annual management fee for the Investor Class and Institutional Class of International Opportunities is 2.00% and 1.80%, respectively. Following are the annual management fee schedules for the remaining funds: The annual management fee schedule for each class of International Discovery is as follows: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR CLASS CLASS CLASS - -------------------------------------------------------------------------------- FUND AVERAGE NET ASSETS - -------------------------------------------------------------------------------- First $500 million 1.75% 1.55% 1.50% - -------------------------------------------------------------------------------- Next $500 million 1.40% 1.20% 1.15% - -------------------------------------------------------------------------------- Over $1 billion 1.20% 1.00% 0.95% - -------------------------------------------------------------------------------- (continued) - ------ 31 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) - -------------------------------------------------------------------------------- The annual management fee schedule for each class of Emerging Markets is as follows: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR C CLASS CLASS CLASS CLASS - -------------------------------------------------------------------------------- FUND AVERAGE NET ASSETS - -------------------------------------------------------------------------------- First $500 million 2.00% 1.80% 1.75% 2.00% - -------------------------------------------------------------------------------- Next $500 million 1.50% 1.30% 1.25% 1.50% - -------------------------------------------------------------------------------- Over $1 billion 1.25% 1.05% 1.00% 1.25% - -------------------------------------------------------------------------------- The annual management fee schedule for each class of Global Growth is as follows: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR C CLASS CLASS CLASS CLASS - -------------------------------------------------------------------------------- FUND AVERAGE NET ASSETS - -------------------------------------------------------------------------------- First $1 billion 1.30% 1.10% 1.05% 1.30% - -------------------------------------------------------------------------------- Next $1 billion 1.15% 0.95% 0.90% 1.15% - -------------------------------------------------------------------------------- Over $2 billion 1.05% 0.85% 0.80% 1.05% - -------------------------------------------------------------------------------- The effective annual management fees for the year ended November 30, 2003, were as follows: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR C CLASS CLASS CLASS CLASS - -------------------------------------------------------------------------------- International Discovery 1.57% 1.37% 1.32% N/A - -------------------------------------------------------------------------------- Emerging Markets 2.00% 1.80% 1.75% 2.00% - -------------------------------------------------------------------------------- Global Growth 1.30% 1.10% 1.05% 1.30% - -------------------------------------------------------------------------------- DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master Distribution and Shareholder Services Plan for the Advisor Class and a Master Distribution and Individual Shareholder Services Plan for the C Class (collectively, the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the Advisor Class and C Class will pay American Century Investment Services, Inc. (ACIS) the following annual distribution and service fees: - -------------------------------------------------------------------------------- ADVISOR C - -------------------------------------------------------------------------------- Distribution Fee 0.25% 0.75% - -------------------------------------------------------------------------------- Service Fee 0.25% 0.25% - -------------------------------------------------------------------------------- The fees are computed daily and paid monthly in arrears based on each class's average daily closing net assets during the previous month. The distribution fee provides compensation for expenses incurred by financial intermediaries in connection with distributing shares of the classes including, but not limited to, payments to brokers, dealers, and financial institutions that have entered into sales agreements with respect to shares of the funds. The service fee provides compensation for shareholder and administrative services rendered by ACIS, its affiliates or independent third party providers for Advisor Class shares and for individual shareholder services rendered by broker/dealers or other independent financial intermediaries for C Class shares. Fees incurred under the plan during the year ended November 30, 2003, are detailed in the Statement of Operations. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment manager, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services Corporation. During the year ended November 30, 2003, the funds invested in a money market fund for temporary purposes, which was managed by J.P. Morgan Investment Management, Inc. (JPMIM). JPMIM is a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. The funds have a bank line of credit agreement and securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a wholly owned subsidiary of JPM. (continued) - ------ 32 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands) 3. INVESTMENT TRANSACTIONS - -------------------------------------------------------------------------------- Investment transactions, excluding short-term investments, for the year ended November 30, 2003, were as follows: - -------------------------------------------------------------------------------- INTERNATIONAL EMERGING GLOBAL INTERNATIONAL DISCOVERY MARKETS GROWTH OPPORTUNITIES - -------------------------------------------------------------------------------- Purchases $2,089,266 $327,440 $338,298 $121,817 - -------------------------------------------------------------------------------- Proceeds from sales $2,223,869 $316,283 $341,841 $87,900 - -------------------------------------------------------------------------------- 4. CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Transactions in shares of the funds were as follows: - ----------------------------------------------------------------------------------------------- INTERNATIONAL DISCOVERY EMERGING MARKETS - ----------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------- INVESTOR CLASS - ----------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 400,000 100,000 =============================================================================================== Sold 4,196 $ 43,886 12,412 $ 49,776 - ----------------------------------------- Issued in reinvestment of distributions 148 1,317 -- -- - ----------------------------------------- Redeemed (13,961) (140,675)(1) (15,399) (59,289)(1) - ----------------------------------------------------------------------------------------------- Net decrease (9,617) $ (95,472) (2,987) $ (9,513) =============================================================================================== YEAR ENDED NOVEMBER 30, 2002 SHARES AUTHORIZED 400,000 100,000 =============================================================================================== Sold 6,444 $ 66,383 107,771 $ 468,610 - ----------------------------------------- Redeemed (16,964) (171,191)(2) (104,968) (454,975) - ----------------------------------------------------------------------------------------------- Net increase (decrease) (10,520) $ (104,808) 2,803 $ 13,635 =============================================================================================== INSTITUTIONAL CLASS - ----------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 75,000 50,000 =============================================================================================== Sold 3,996 $ 40,338 13,527 $57,324 - ----------------------------------------- Issued in reinvestment of distributions 40 359 -- -- - ----------------------------------------- Redeemed (7,176) (73,912) (6,870) (28,925) - ----------------------------------------------------------------------------------------------- Net increase (decrease) (3,140) $(33,215) 6,657 $28,399 =============================================================================================== YEAR ENDED NOVEMBER 30, 2002 SHARES AUTHORIZED 75,000 12,500 =============================================================================================== Sold 9,355 $ 95,730 5,904 $26,133 - ----------------------------------------- Redeemed (13,600) (140,349)(2) (5,255) (22,215) - ----------------------------------------------------------------------------------------------- Net increase (decrease) (4,245) $ (44,619) 649 $ 3,918 =============================================================================================== (1) Net of redemption fees of $21 and $219 for International Discovery and Emerging Markets, respectively. (2) Net of redemption fees of $22 and $2 for International Discovery's Investor and Institutional classes, respectively. (continued) - ------ 33 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ---------------------------------------------------------------------------------------- INTERNATIONAL DISCOVERY EMERGING MARKETS - ---------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ---------------------------------------------------------------------------------------- ADVISOR CLASS - ---------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 5,000 5,000 ======================================================================================== Sold 3 $ 38 580 $2,132 - ----------------------------------------- Redeemed (7) (68) (816) (2,907)(1) - ---------------------------------------------------------------------------------------- Net decrease (4) $(30) (236) $ (775) ======================================================================================== YEAR ENDED NOVEMBER 30, 2002 SHARES AUTHORIZED 5,000 5,000 ======================================================================================== Sold 6 $ 59 2,320 $10,194 - ----------------------------------------- Redeemed (13) (130) (2,172) (9,613) - ---------------------------------------------------------------------------------------- Net increase (decrease) (7) $ (71) 148 $ 581 ======================================================================================== C CLASS - ---------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED N/A 10,000 ======================================================================================== Sold 187 $710 - ----------------------------------------- Redeemed (146) (562) - ---------------------------------------------------------------------------------------- Net increase 41 $148 ======================================================================================== PERIOD ENDED NOVEMBER 30, 2002(2) SHARES AUTHORIZED N/A 10,000 ======================================================================================== Sold 24 $101 - ----------------------------------------- Redeemed (9) (33) - ---------------------------------------------------------------------------------------- Net increase 15 $ 68 ======================================================================================== (1) Net of redemption fees of $12. (2) December 18, 2001 (commencement of sale) through November 30, 2002 for Emerging Markets. (continued) - ------ 34 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ---------------------------------------------------------------------------------------- INTERNATIONAL GLOBAL GROWTH OPPORTUNITIES - ---------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ---------------------------------------------------------------------------------------- INVESTOR CLASS - ---------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 150,000 100,000 ======================================================================================== Sold 36,811 $ 198,398 6,641 $41,742 - ----------------------------------------- Issued in reinvestment of distributions -- -- 12 59 - ----------------------------------------- Redeemed (37,759) (205,457) (1,841) (10,070)(1) - ---------------------------------------------------------------------------------------- Net increase (decrease) (948) $ (7,059) 4,812 $31,731 ======================================================================================== YEAR ENDED NOVEMBER 30, 2002 SHARES AUTHORIZED 150,000 200,000 ======================================================================================== Sold 76,175 $ 464,281 4,721 $24,986 - ----------------------------------------- Redeemed (80,677) (492,089) (1,428) (6,902)(1) - ---------------------------------------------------------------------------------------- Net increase (decrease) (4,502) $ (27,808) 3,293 $18,084 ======================================================================================== INSTITUTIONAL CLASS - ---------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003(2) SHARES AUTHORIZED 5,000 25,000 ======================================================================================== Sold 819 $ 4,162 1,117 $5,556 - ----------------------------------------- Redeemed (214) (1,215) -- -- - ---------------------------------------------------------------------------------------- Net increase 605 $ 2,947 1,117 $5,556 ======================================================================================== YEAR ENDED NOVEMBER 30, 2002 SHARES AUTHORIZED 5,000 25,000 ======================================================================================== Sold 255 $ 1,482 -- -- - ----------------------------------------- Redeemed (279) (1,645) -- -- - ---------------------------------------------------------------------------------------- Net decrease (24) $ (163) -- -- ======================================================================================== ADVISOR CLASS - ---------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 5,000 N/A ======================================================================================== Sold 2,190 $ 12,130 - ----------------------------------------- Redeemed (2,128) (11,977) - ---------------------------------------------------------------------------------------- Net increase 62 $ 153 ======================================================================================== YEAR ENDED NOVEMBER 30, 2002 SHARES AUTHORIZED 5,000 N/A ======================================================================================== Sold 293 $ 1,811 - ----------------------------------------- Redeemed (294) (1,743) - ---------------------------------------------------------------------------------------- Net increase (decrease) (1) $ 68 ======================================================================================== (1) Net of redemption fees of $52 and $114 for the years ended November 30, 2003 and November 30, 2002, respectively. (2) January 9, 2003 (commencement of sale) through November 30, 2003 for International Opportunities. (continued) - ------ 35 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- INTERNATIONAL GLOBAL GROWTH OPPORTUNITIES - ------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------- C CLASS - ------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 10,000 N/A =============================================================================== Sold 97 $ 536 - --------------------------------- Redeemed (93) (513) - ------------------------------------------------------------------------------- Net increase 4 $ 23 =============================================================================== YEAR ENDED NOVEMBER 30, 2002 SHARES AUTHORIZED 10,000 N/A =============================================================================== Sold 5 $29 =============================================================================== 5. SECURITIES LENDING As of November 30, 2003, securities in International Discovery, Emerging Markets, Global Growth and International Opportunities valued at $203,270, $5,268, $17,405, and $7,341, respectively, were on loan through the lending agent, JPMCB, to certain approved borrowers. JPMCB receives and maintains collateral in the form of cash, and/or acceptable securities as approved by ACIM. Cash collateral is invested in authorized investments by the lending agent in a pooled account. The value of cash collateral received at period end is disclosed in the Statement of Assets and Liabilities and investments made with the cash by the lending agent are listed in the Schedule of Investments. Any deficiencies or excess of collateral must be delivered or transferred by the member firms no later than the close of business on the next business day. The total value of all collateral received, at this date, was $212,999, $5,330, $18,007, and $7,685, respectively. The funds' risks in securities lending are that the borrower may not provide additional collateral when required or return the securities when due. If the borrower defaults, receipt of the collateral by the funds may be delayed or limited. 6. BANK LINE OF CREDIT The funds, along with certain other funds managed by ACIM, have a $620 million unsecured bank line of credit agreement with JPMCB, which was renewed to $650 million effective December 17, 2003. The funds may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The funds did not borrow from the line during the year ended November 30, 2003. (continued) - ------ 36 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands Except Per-Share Amounts) 7. GEOGRAPHIC RISK FACTORS There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political and economic developments and the possible imposition of currency exchange restrictions or other foreign laws or restrictions. 8. FEDERAL TAX INFORMATION On December 19, 2003, International Discovery and International Opportunities declared and paid the following per-share distributions to shareholders of record on December 18, 2003. - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL CLASS CLASS - -------------------------------------------------------------------------------- International Discovery $0.0269 $0.0532 - -------------------------------------------------------------------------------- International Opportunities $0.2364 $0.2518 - -------------------------------------------------------------------------------- The tax character of distributions paid during the years ended November 30, 2003 and November 30, 2002 were as follows: - -------------------------------------------------------------------------------- INTERNATIONAL DISCOVERY INTERNATIONAL OPPORTUNITIES - -------------------------------------------------------------------------------- 2003 2002 2003 2002 - -------------------------------------------------------------------------------- DISTRIBUTIONS PAID FROM - -------------------------------------------------------------------------------- Ordinary income $1,903 -- $61 -- - -------------------------------------------------------------------------------- Long-term capital gains -- -- -- -- - -------------------------------------------------------------------------------- The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. There were no distributions paid by Emerging Markets and Global Growth during the years ended November 30, 2003 and November 30, 2002. (continued) - ------ 37 Notes to Financial Statements NOVEMBER 30, 2003 (Amounts In Thousands) 8. FEDERAL TAX INFORMATION (CONTINUED) As of November 30, 2003, the components of distributable earnings on a tax-basis and the federal tax cost of investments were as follows: - --------------------------------------------------------------------------------------------------- INTERNATIONAL EMERGING GLOBAL INTERNATIONAL DISCOVERY MARKETS GROWTH OPPORTUNITIES - --------------------------------------------------------------------------------------------------- COMPONENTS OF DISTRIBUTABLE EARNINGS AND TAX COST - --------------------------------------------------------------------------------------------------- Federal tax cost of investments $876,303 $134,780 $201,800 $63,714 =================================================================================================== Gross tax appreciation of investments $305,744 $31,795 $58,149 $16,574 - -------------------------------------------------- Gross tax depreciation of investments (12,565) (1,116) (1,327) (986) - --------------------------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $293,179 $30,679 $56,822 $15,588 =================================================================================================== Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies (1,193) (10) 17 (188) - --------------------------------------------------------------------------------------------------- Net tax appreciation (depreciation) $291,986 $30,669 $56,839 $15,400 =================================================================================================== Undistributed ordinary income $2,628 -- -- $2,030 - -------------------------------------------------- Accumulated long-term gains -- -- -- $1,118 - -------------------------------------------------- Accumulated capital losses $(48,605) $(15,844) $(109,454) -- - -------------------------------------------------- Currency loss deferral $(254) $(114) -- -- - --------------------------------------------------------------------------------------------------- The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains on certain forward foreign currency contracts, and on investments in passive foreign investment companies. The accumulated capital losses listed above represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers expire in 2009 through 2010, for International Discovery and Emerging Markets, and in 2009 through 2011 for Global Growth. The currency loss deferrals represent net foreign currency losses incurred in the one-month period ended November 30, 2003. The funds have elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. 9. OTHER TAX INFORMATION (UNAUDITED) ($ IN FULL) - -------------------------------------------------------------------------------- The following information is provided pursuant to provisions of the Internal Revenue Code. For corporate taxpayers, 0.00% of the ordinary income distributions paid by both International Discovery and International Opportunities during the fiscal year ended November 30, 2003, qualify for the corporate dividends received deduction As of November 30, 2003, International Discovery and International Opportunities designate $2,000,942, and $49,344, respectively, as a foreign tax credit, which represents taxes paid on income derived from sources within foreign countries or possessions of the United States. (continued) - ------ 38 International Discovery - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - --------------------------------------------------------------------------------------------------- INVESTOR CLASS - --------------------------------------------------------------------------------------------------- 2003 2002 2001 2000 1999 - --------------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.32 $10.13 $14.23 $15.20 $9.24 - --------------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(1) 0.03 0.03 0.01 (0.12) (0.07) - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 3.42 (0.84) (2.54) 0.03 6.06 - --------------------------------------------------------------------------------------------------- Total From Investment Operations 3.45 (0.81) (2.53) (0.09) 5.99 - --------------------------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Investment Income (0.02) -- -- -- -- - ----------------------------------------- From Net Realized Gains -- -- (1.57) (0.88) (0.03) - --------------------------------------------------------------------------------------------------- Total Distributions (0.02) -- (1.57) (0.88) (0.03) - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $12.75 $9.32 $10.13 $14.23 $15.20 =================================================================================================== TOTAL RETURN(2) 37.05% (8.00)% (20.17)% (1.27)% 65.12% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.57% 1.53% 1.45% 1.36% 1.55% - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.27% 0.35% 0.10% (0.64)% (0.65)% - ----------------------------------------- Portfolio Turnover Rate 215% 224% 180% 113% 110% - ----------------------------------------- Net Assets, End of Period (in thousands) $1,028,934 $841,706 $1,021,063 $1,568,872 $1,408,624 - --------------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 39 International Discovery - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - --------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------------------- 2003 2002 2001 2000 1999 - -------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.39 $10.18 $14.26 $15.24 $9.25 - -------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(1) 0.05 0.06 0.04 (0.08) (0.04) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 3.43 (0.85) (2.55) 0.01 6.06 - -------------------------------------------------------------------------------------------- Total From Investment Operations 3.48 (0.79) (2.51) (0.07) 6.02 - -------------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Investment Income (0.03) -- -- -- -- - ------------------------------------------ From Net Realized Gains -- -- (1.57) (0.91) (0.03) - -------------------------------------------------------------------------------------------- Total Distributions (0.03) -- (1.57) (0.91) (0.03) - -------------------------------------------------------------------------------------------- Net Asset Value, End of Period $12.84 $9.39 $10.18 $14.26 $15.24 ============================================================================================ TOTAL RETURN(2) 37.25% (7.76)% (19.97)% (1.13)% 65.37% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.37% 1.33% 1.25% 1.16% 1.35% - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.47% 0.55% 0.30% (0.44)% (0.45)% - ------------------------------------------ Portfolio Turnover Rate 215% 224% 180% 113% 110% - ------------------------------------------ Net Assets, End of Period (in thousands) $147,531 $137,358 $192,155 $250,930 $182,222 - -------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 40 International Discovery - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------------------- 2003 2002 2001 2000 1999 - -------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.23 $10.05 $14.17 $15.14 $9.22 - -------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------- Net Investment Income (Loss)(1) 0.01 0.01 --(2) (0.12) (0.07) - ------------------------------------------- Net Realized and Unrealized Gain (Loss) 3.39 (0.83) (2.55) (0.01) 6.02 - -------------------------------------------------------------------------------------------- Total From Investment Operations 3.40 (0.82) (2.55) (0.13) 5.95 - -------------------------------------------------------------------------------------------- Distributions - ------------------------------------------- From Net Realized Gains -- -- (1.57) (0.84) (0.03) - -------------------------------------------------------------------------------------------- Net Asset Value, End of Period $12.63 $9.23 $10.05 $14.17 $15.14 ============================================================================================ TOTAL RETURN(3) 36.84% (8.16)% (20.43)% (1.53)% 64.82% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.82% 1.78% 1.70% 1.61% 1.80% - ------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.02% 0.10% (0.15)% (0.87)% (0.90)% - ------------------------------------------- Portfolio Turnover Rate 215% 224% 180% 113% 110% - ------------------------------------------- Net Assets, End of Period (in thousands) $161 $153 $244 $509 $57 - -------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 41 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------- 2003 2002 2001 2000 1999 - -------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $3.61 $4.06 $4.68 $5.62 $3.49 - -------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(1) --(2) (0.02) (0.02) (0.06) (0.01) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 1.67 (0.43) (0.43) (0.88) 2.14 - -------------------------------------------------------------------------------------------- Total From Investment Operations 1.67 (0.45) (0.45) (0.94) 2.13 - -------------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Realized Gains -- -- (0.17) -- -- - -------------------------------------------------------------------------------------------- Net Asset Value, End of Period $5.28 $3.61 $4.06 $4.68 $5.62 ============================================================================================ TOTAL RETURN(3) 46.26% (10.86)% (10.28)% (16.73)% 61.03% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.01% 2.05% 2.00% 2.00% 2.00% - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.03% (0.37)% (0.27)% (0.88)% (0.33)% - ------------------------------------------ Portfolio Turnover Rate 286% 387% 326% 196% 168% - ------------------------------------------ Net Assets, End of Period (in thousands) $103,737 $81,756 $80,422 $77,279 $82,359 - -------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 42 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - --------------------------------------------------------------------------------------------- 2003 2002 2001 2000 1999(1) - -------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $3.64 $4.08 $4.70 $5.63 $3.39 - -------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(2) 0.01 --(3) (0.01) (0.05) --(3) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 1.68 (0.44) (0.44) (0.88) 2.24 - -------------------------------------------------------------------------------------------- Total From Investment Operations 1.69 (0.44) (0.45) (0.93) 2.24 - -------------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Realized Gains -- -- (0.17) -- -- - -------------------------------------------------------------------------------------------- Net Asset Value, End of Period $5.33 $3.64 $4.08 $4.70 $5.63 ============================================================================================ TOTAL RETURN(4) 46.43% (10.78)% (10.01)% (16.52)% 66.08% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.81% 1.85% 1.80% 1.80% 1.80%(5) - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.23% (0.17)% (0.07)% (0.68)% (0.05)%(5) - ------------------------------------------ Portfolio Turnover Rate 286% 387% 326% 196% 168%(6) - ------------------------------------------ Net Assets, End of Period (in thousands) $63,242 $18,969 $18,602 $21,330 $16,507 - -------------------------------------------------------------------------------------------- (1) January 28, 1999 (commencement of sale) through November 30, 1999. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 1999. See Notes to Financial Statements. - ------ 43 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------------------- 2003 2002 2001 2000 1999(1) - -------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $3.58 $4.03 $4.66 $5.61 $4.44 - -------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(2) --(3) (0.01) (0.04) (0.08) --(3) - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 1.64 (0.44) (0.42) (0.87) 1.17 - -------------------------------------------------------------------------------------------- Total From Investment Operations 1.64 (0.45) (0.46) (0.95) 1.17 - -------------------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Realized Gains -- -- (0.17) -- -- - -------------------------------------------------------------------------------------------- Net Asset Value, End of Period $5.22 $3.58 $4.03 $4.66 $5.61 ============================================================================================ TOTAL RETURN(4) 45.81% (11.17)% (10.32)% (16.93)% 26.35% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.26% 2.30% 2.25% 2.25% 2.25%(5) - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.22)% (0.62)% (0.52)% (1.13)% 0.02%(5) - ----------------------------------------- Portfolio Turnover Rate 286% 387% 326% 196% 168%(6) - ----------------------------------------- Net Assets, End of Period (in thousands) $597 $1,254 $815 $212 $143 - -------------------------------------------------------------------------------------------- (1) May 12, 1999 (commencement of sale) through November 30, 1999. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 1999. See Notes to Financial Statements. - ------ 44 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2003 2002(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $3.58 $4.24 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------------- Net Investment Loss(2) (0.04) (0.04) - -------------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.65 (0.62) - -------------------------------------------------------------------------------- Total From Investment Operations 1.61 (0.66) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $5.19 $3.58 ================================================================================ TOTAL RETURN(3) 44.97% (15.57)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 3.01% 3.05%(4) - -------------------------------------------------- Ratio of Net Investment Loss to Average Net Assets (0.97)% (1.10)%(4) - -------------------------------------------------- Portfolio Turnover Rate 286% 387%(5) - -------------------------------------------------- Net Assets, End of Period (in thousands) $291 $54 - -------------------------------------------------------------------------------- (1) December 18, 2001 (commencement of sale) through November 30, 2002. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2002. See Notes to Financial Statements. - ------ 45 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ----------------------------------------------------------------------------------------------- INVESTOR CLASS - ---------------------------------------------------------------------------------------------- 2003 2002 2001 2000 1999(1) - --------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.39 $6.18 $8.73 $8.33 $5.00 - --------------------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------------- Net Investment Income (Loss)(2) --(3) 0.01 --(3) (0.05) (0.01) - --------------------------------------- Net Realized and Unrealized Gain (Loss) 1.09 (0.80) (1.90) 0.81 3.34 - --------------------------------------------------------------------------------------------- Total From Investment Operations 1.09 (0.79) (1.90) 0.76 3.33 - --------------------------------------------------------------------------------------------- Distributions - --------------------------------------- From Net Realized Gains -- -- (0.65) (0.36) -- - --------------------------------------------------------------------------------------------- Net Asset Value, End of Period $6.48 $5.39 $6.18 $8.73 $8.33 ============================================================================================= TOTAL RETURN(4) 20.22% (12.78)% (23.62)% 8.81% 66.60% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.31% 1.32% 1.30% 1.30% 1.30%(5) - --------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.00% 0.13% (0.06)% (0.48)% (0.20)%(5) - --------------------------------------- Portfolio Turnover Rate 152% 278% 232% 123% 133% - --------------------------------------- Net Assets, End of Period (in thousands) $250,306 $213,314 $272,402 $412,631 $233,823 - --------------------------------------------------------------------------------------------- (1) December 1, 1998 (inception) through November 30, 1999. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 46 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2003 2002 2001 2000(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.41 $6.19 $8.74 $9.73 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(2) 0.01 0.02 0.01 (0.01) - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 1.10 (0.80) (1.90) (0.98) - -------------------------------------------------------------------------------- Total From Investment Operations 1.11 (0.78) (1.89) (0.99) - -------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Realized Gains -- -- (0.66) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $6.52 $5.41 $6.19 $8.74 ================================================================================ TOTAL RETURN(3) 20.52% (12.60)% (23.53)% (10.17)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.11% 1.12% 1.10% 1.10%(4) - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.20% 0.33% 0.14% (0.43)%(4) - ----------------------------------------- Portfolio Turnover Rate 152% 278% 232% 123%(5) - ----------------------------------------- Net Assets, End of Period (in thousands) $7,901 $3,288 $3,907 $5,090 - -------------------------------------------------------------------------------- (1) August 1, 2000 (commencement of sale) through November 30, 2000. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2000. See Notes to Financial Statements. - ------ 47 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------------------- 2003 2002 2001 2000 1999(1) - -------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.36 $6.16 $8.72 $8.31 $5.58 - -------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Loss(2) (0.02) (0.01) --(3) (0.06) (0.03) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 1.09 (0.79) (1.93) 0.82 2.76 - -------------------------------------------------------------------------------------------- Total From Investment Operations 1.07 (0.80) (1.93) 0.76 2.73 - -------------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Realized Gains -- -- (0.63) (0.35) -- - -------------------------------------------------------------------------------------------- Net Asset Value, End of Period $6.43 $5.36 $6.16 $8.72 $8.31 ============================================================================================ TOTAL RETURN(4) 19.96% (12.99)% (23.97)% 8.79% 48.92% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.56% 1.57% 1.55% 1.55% 1.55%(5) - ------------------------------------------ Ratio of Net Investment Loss to Average Net Assets (0.25)% (0.12)% (0.31)% (0.73)% (0.40)%(5) - ------------------------------------------ Portfolio Turnover Rate 152% 278% 232% 123% 133%(6) - ------------------------------------------ Net Assets, End of Period (in thousands) $1,044 $537 $623 $301 $112 - -------------------------------------------------------------------------------------------- (1) February 5, 1999 (commencement of sale) through November 30, 1999. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 1999. See Notes to Financial Statements. - ------ 48 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2003 2002(1) - -------------------------------------------------------------------------------- PER-SHARE DATA Net Asset Value, Beginning of Period $5.35 $6.14 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------------------------- Net Investment Loss(2) (0.05) (0.03) - --------------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.07 (0.76) - -------------------------------------------------------------------------------- Total From Investment Operations 1.02 (0.79) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $6.37 $5.35 ================================================================================ TOTAL RETURN(3) 19.07% (12.87)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 2.31% 2.32%(4) - --------------------------------------------------- Ratio of Net Investment Loss to Average Net Assets (1.00)% (0.60)%(4) - --------------------------------------------------- Portfolio Turnover Rate 152% 278%(5) - --------------------------------------------------- Net Assets, End of Period (in thousands) $56 $25 - -------------------------------------------------------------------------------- (1) March 1, 2002 (commencement of sale) through November 30, 2002. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2002. See Notes to Financial Statements. - ------ 49 International Opportunities - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------- 2003 2002 2001(1) PER-SHARE DATA - -------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $4.73 $4.87 $5.00 - -------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------- Net Investment Income (Loss)(2) (0.01) 0.02 (0.02) - -------------------------------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 2.91 (0.16) (0.11) - -------------------------------------------------------------------------------------------- Total From Investment Operations 2.90 (0.14) (0.13) - -------------------------------------------------------------------------------------------- Distributions - ----------------------------------------------------- From Net Investment Income (0.01) -- -- - -------------------------------------------------------------------------------------------- Net Asset Value, End of Period $7.62 $4.73 $4.87 ============================================================================================ TOTAL RETURN(3) 61.54% (2.87)% (2.60)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------- Ratio of Ratio of Operating Expenses to Average Net Assets 2.00% 2.01% 2.00%(4) - ------------------------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.16)% 0.30% (0.75)%(4) - ------------------------------------------------------------ Portfolio Turnover Rate 219% 257% 147% - ------------------------------------------------------------ Net Assets, End of Period (in thousands) $72,008 $21,977 $6,569 - -------------------------------------------------------------------------------------------- (1) June 1, 2001 (inception) through November 30, 2001. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 50 International Opportunities - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - ------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ------------------------------------------------------------------------------- 2003(1) - ------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $4.80 - ------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------- Net Investment Income(2) 0.01 - ----------------------------------------------------- Net Realized and Unrealized Gain 2.82 - ------------------------------------------------------------------------------- Total From Investment Operations 2.83 - ------------------------------------------------------------------------------- Net Asset Value, End of Period $7.63 =============================================================================== TOTAL RETURN(3) 58.96% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.80%(4) - ----------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 0.25%(4) - ----------------------------------------------------- Portfolio Turnover Rate 219%(5) - ----------------------------------------------------- Net Assets, End of Period (in thousands) $8,523 - ------------------------------------------------------------------------------- (1) January 9, 2003 (commencement of sale) through November 30, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 51 Independent Auditors' Report The Board of Directors and Shareholders, American Century World Mutual Funds, Inc: We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of International Discovery Fund, Emerging Markets Fund, Global Growth Fund, and International Opportunities Fund, (collectively the "Funds"), four of the funds comprising American Century World Mutual Funds, Inc., as of November 30, 2003, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned at November 30, 2003 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of International Discovery Fund, Emerging Markets Fund, Global Growth Fund, and International Opportunities Fund as of November 30, 2003, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Kansas City, Missouri January 14, 2004 - ------ 52 Management The individuals listed below serve as directors or officers of the funds. Each director serves until his or her successor is duly elected and qualified or until he or she retires. Mandatory retirement age for independent directors is 75, although the remaining independent directors may temporarily waive this requirement on a case-by-case basis. Those listed as interested directors are "interested" primarily by virtue of their engagement as officers of American Century Companies, Inc. (ACC) or its wholly-owned subsidiaries, including the fund's investment advisor, American Century Investment Management, Inc. (ACIM); the fund's principal underwriter, American Century Investment Services, Inc. (ACIS); and the fund's transfer agent, American Century Services Corporation (ACSC). The other directors (more than two-thirds of the total number) are independent; that is, they are not employees or officers of, and have no financial interest in, ACC or any of its wholly-owned subsidiaries, including ACIM, ACIS, and ACSC. All persons named as officers of the funds also serve in similar capacities for other funds advised by ACIM. Only officers with policy-making functions are listed. 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. INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- THOMAS A. BROWN (63), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 22 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Strategic Account Implementation Manager, Applied Industrial Technologies, Inc., a corporation engaged in the sale of bearings and power transmission products NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ROBERT W. DOERING, M.D. (71), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director Emeritus(1) LENGTH OF TIME SERVED (YEARS): 1 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly a general surgeon NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ANDREA C. HALL, PH.D. (58), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 5 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, Midwest Research Institute NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Midwest Research Institute - -------------------------------------------------------------------------------- (1) Dr. Robert Doering resigned as full-time director, effective November 5, 2001, after serving in such capacity for 33 years. Dr. Doering continues to serve the board in an advisory capacity. His position as Director Emeritus is an advisory position and involves attendance at one board meeting per year to review prior year-end results for the funds. He receives all regular board communications, including monthly mailings, industry newsletters, email communications, and company information, but not quarterly board and committee materials relating to meetings that he does not attend. Dr. Doering is not a director or a member of the board and has no voting power relating to any matters relating to fund operations. He is not an interested person of the funds or ACIM. He receives an annual stipend of $2,500 for his services. (continued) - ------ 53 Management INDEPENDENT DIRECTORS (CONTINUED) - -------------------------------------------------------------------------------- D.D. (DEL) HOCK (68), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 6 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Chairman, Public Service Company of Colorado NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Allied Motion Technologies, Inc. and J.D. Edwards & Company - -------------------------------------------------------------------------------- DONALD H. PRATT (65), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director, Vice Chairman of the Board LENGTH OF TIME SERVED (YEARS): 7 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Western Investments, Inc.; Retired Chairman of the Board, Butler Manufacturing Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Atlas-Copco, North America Inc. - -------------------------------------------------------------------------------- GALE E. SAYERS (60), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 2 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Chief Executive Officer, and Founder, Sayers Computer Source NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- M. JEANNINE STRANDJORD (57), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 8 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President and Chief Integration Officer, Sprint Corporation (September 2003 to present); Senior Vice President - Financial Services, Sprint Corporation (January 2003 to September 2003); Senior Vice President, Finance - Global Markets Group, Sprint Corporation (November 1998 to January 2003) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, DST Systems, Inc.; Director, Euronet Worldwide - -------------------------------------------------------------------------------- TIMOTHY S. WEBSTER (42), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 1 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President and Chief Executive Officer, American Italian Pasta Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- INTERESTED DIRECTORS - -------------------------------------------------------------------------------- JAMES E. STOWERS, JR. (79)(1), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director, Chairman of the Board L ENGTH OF TIME SERVED (YEARS): 44 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Director, and controlling shareholder, ACC; Chairman, ACSC and other ACC subsidiaries; Director, ACIM, ACSC, and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- JAMES E. STOWERS III (44)(1), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 12 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Co-Chairman, ACC (September 2000 to present); Chief Executive Officer, ACC (June 1996 to September 2000); Director, ACC, ACIM, ACSC, and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (1) James E. Stowers, Jr. is the father of James E. Stowers III. (continued) - ------ 54 Management OFFICERS - -------------------------------------------------------------------------------- WILLIAM M. LYONS (48), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: President LENGTH OF TIME SERVED (YEARS): 2 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC and other ACC subsidiaries (September 2000 to present); President, ACC (June 1997 to present); President, ACIM (September 2002 to present); President, ACIS (July 2003 to present); Chief Operating Officer, ACC (June 1996 to September 2000); Also serves as: Executive Vice President, ACSC and other ACC subsidiaries - -------------------------------------------------------------------------------- ROBERT T. JACKSON (57), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Executive Vice President LENGTH OF TIME SERVED (YEARS): 2 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC (August 1997 to present); Chief Financial Officer, ACC (May 1995 to October 2002); President, ACSC (January 1999 to present); Executive Vice President, ACC (May 1995 to present); Also serves as: Executive Vice President and Chief Financial Officer, ACIM, ACIS, and other ACC subsidiaries; and Treasurer, ACIM - -------------------------------------------------------------------------------- MARYANNE ROEPKE, CPA (47), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Senior Vice President, Treasurer, and Chief Accounting Officer LENGTH OF TIME SERVED (YEARS): 2 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President (April 1998 to present) and Assistant Treasurer (September 1985 to present), ACSC - -------------------------------------------------------------------------------- DAVID C. TUCKER (45), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel LENGTH OF TIME SERVED (YEARS): 4 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, ACIM, ACIS, ACSC, and other ACC subsidiaries (June 1998 to present); General Counsel, ACC, ACIM, ACIS, ACSC, and other ACC subsidiaries (June 1998 to present) - -------------------------------------------------------------------------------- ROBERT LEACH (37), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Controller LENGTH OF TIME SERVED (YEARS): 6 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACSC (February 2000 to present); Controller-Fund Accounting, ACSC (June 1997 to present) - -------------------------------------------------------------------------------- JON ZINDEL (36), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Tax Officer LENGTH OF TIME SERVED (YEARS): 5 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, Corporate Tax, ACSC (April 1998 to present); Vice President, ACIM, ACIS, and other ACC subsidiaries (April 1999 to present); President, American Century Employee Benefit Services, Inc. (January 2000 to December 2000); Treasurer, American Century Employee Benefit Services, Inc. (December 2000 to present); Treasurer, American Century Ventures, Inc. (December 1999 to January 2001) - -------------------------------------------------------------------------------- The SAI has additional information about the funds' directors and is available without charge upon request by calling 1-800-345-2021. - ------ 55 Share Class Information Three classes of shares are authorized for sale by International Discovery: Investor Class, Institutional Class, and Advisor Class. Four classes of shares are authorized for sale by Emerging Markets and Global Growth: Investor Class, Institutional Class, Advisor Class, and C Class. Two classes of shares are authorized for sale by International Opportunities: Investor Class and Institutional Class. The total expense ratios of Advisor and C Class shares are higher than that of Investor Class. The total expense ratio of Institutional Class is lower. INVESTOR CLASS shares are available for purchase in two ways: 1) directly from American Century without any commissions or other fees; or 2) through a broker-dealer, which may require payment of a transaction fee to the broker. INSTITUTIONAL CLASS shares are available to large investors such as endowments, foundations, and retirement plans, and to financial intermediaries serving these investors. This class recognizes the relatively lower cost of serving institutional customers and others who invest at least $5 million ($3 million for endowments and foundations) in an American Century fund or at least $10 million in multiple funds. In recognition of the larger investments and account balances and comparatively lower transaction costs, the total expense ratio of Institutional Class shares is 0.20% less than the total expense ratio of Investor Class shares. ADVISOR CLASS shares are sold primarily through institutions such as investment advisors, banks, broker-dealers, insurance companies, and financial advisors. Advisor Class shares are subject to a 0.50% annual Rule 12b-1 service and distribution fee. The total expense ratio of Advisor Class shares is 0.25% higher than the total expense ratio of Investor Class shares. C CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. C Class shares redeemed within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1.00%. There is no CDSC on shares acquired through reinvestment of dividends or capital gains. C Class shares also are subject to a Rule 12b-1 service and distribution fee of 1.00%. All classes of shares represent a pro rata interest in the funds and generally have the same rights and preferences. - ------ 56 Additional Information RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA, or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld. If you don't want us to withhold on this amount, you must notify us to not withhold the federal income tax. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the fund's manager, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the manager uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century's Web site at www.americancentury.com and on the Securities and Exchange Commission's Web site at www.sec.gov. - ------ 57 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The CITIGROUP EMI (EXTENDED MARKET INDEX) GROWTH WORLD EX-US represents the smaller-cap universe of stocks of growth companies in developed country markets outside the United States. Morgan Stanley Capital International (MSCI) has developed several indices that measure the performance of foreign stock markets. The MSCI EAFE(reg.tm) INDEX (Europe, Australasia, Far East) is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EMF (Emerging Markets Free) INDEX(R) represents the performance of stocks in global emerging market countries. The MSCI WORLD FREE INDEX represents the performance of stocks in developed countries (including the United States) that are available for purchase by global investors. - ------ 58 Notes - ------ 59 Notes - ------ 60 [inside back cover] [back cover] CONTACT US WWW.AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR RELATIONS: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL ADVISORS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY WORLD MUTUAL FUNDS, INC. INVESTMENT MANAGER: American Century Investment Management, Inc. Kansas City, Missouri THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. PRSRT STD U.S. POSTAGE PAID AMERICAN CENTURY COMPANIES American Century Investments P.O. Box 419200 Kansas City, MO 64141-6200 0401 American Century Investment Services, Inc. SH-ANN-36704S (c)2004 American Century Services Corporation
[front cover] November 30, 2003 American Century Annual Report [graphic of market line chart] [graphic of starfish] [graphic of two bridges] Life Sciences Technology [american century logo and text logo (reg. sm)] [inside front cover] Table of Contents Our Message to You........................................................ 1 LIFE SCIENCES Performance............................................................... 2 Portfolio Commentary...................................................... 3 Top Ten Holdings....................................................... 3 Top Industries......................................................... 4 Types of Investments in Portfolio...................................... 4 Schedule of Investments................................................... 5 TECHNOLOGY Performance............................................................... 7 Portfolio Commentary...................................................... 8 Top Ten Holdings....................................................... 8 Top Five Industries.................................................... 9 Types of Investments in Portfolio...................................... 9 Schedule of Investments................................................... 10 FINANCIAL STATEMENTS Statement of Assets and Liabilities....................................... 12 Statement of Operations................................................... 13 Statement of Changes in Net Assets........................................ 14 Notes to Financial Statements............................................. 15 Financial Highlights...................................................... 21 Independent Auditors' Report.............................................. 28 OTHER INFORMATION Management................................................................ 29 Share Class Information................................................... 32 Additional Information.................................................... 33 Index Definitions......................................................... 34 The opinions expressed in the Portfolio Commentary reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] James E. Stowers III with James E. Stowers, Jr. We are pleased to provide you with the annual report for the American Century Life Sciences and Technology funds for the year ended November 30, 2003. The report includes comparative performance figures, commentary, summary tables, a full list of portfolio holdings and financial statements and highlights. We hope you find this information helpful in monitoring your investment. Many of you have called or written to express your concern about allegations of wrongdoing by other mutual fund investment management firms. We share your concern--fund companies must put investors first and do everything possible to maintain investor trust. Through the Investment Company Institute, the mutual fund trade association, American Century has advocated industry-wide proposals that strengthen protections for fund investors. We believe that decisive action is needed to show that we are committed, as an industry, to the interests of the 95 million investors we serve. As information about alleged trading abuses in the mutual fund industry has come to light, we have posted messages and commentary about these issues on www.americancentury.com. Beyond what's currently in the headlines, American Century has been a champion of many important investor and industry issues, which are outlined in a document titled Putting Investors First. We invite you to visit our Web site and read about how our values have influenced these positions. As always, we deeply appreciate your investment with American Century. Sincerely, [signuature of James E.Stowers, Jr.] James E. Stowers, Jr. Founder and Chairman [signuature of James E. Stowers III] James E. Stowers III Co-Chairman of the Board - ------ 1 Life Sciences - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- -------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 23.16% -3.20% 6/30/2000 - -------------------------------------------------------------------------------- S&P SUPERCOMPOSITE 1500 HEALTH CARE INDEX 8.06% -3.44% -- - -------------------------------------------------------------------------------- S&P 500 INDEX 15.09% -7.50% -- - -------------------------------------------------------------------------------- Institutional Class 23.60% -4.43% 7/17/2000 - -------------------------------------------------------------------------------- Advisor Class 23.36% -6.67% 11/14/2000 - -------------------------------------------------------------------------------- C Class 22.64% -6.24% 11/29/2001 - -------------------------------------------------------------------------------- GROWTH OF $10,000 OVER LIFE OF CLASS - -------------------------------------------------------------------------------- $10,000 investment made June 30, 2000
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ONE-YEAR RETURNS OVER LIFE OF CLASS - -------------------------------------------------------------------------------- Periods ended November 30 - -------------------------------------------------------------------------------- 2000* 2001 2002 2003 - -------------------------------------------------------------------------------- Investor Class 5.60% -5.35% -27.31% 23.16% - -------------------------------------------------------------------------------- S&P SuperComposite 1500 Health Care Index 7.11% -6.10% -18.37% 8.06% - -------------------------------------------------------------------------------- S&P 500 Index -9.16% -12.22% -16.51% 15.09% - -------------------------------------------------------------------------------- * From 6/30/00, the Investor Class's inception date. Not annualized. The charts on the performance page give historical return data for the fund. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. Unless otherwise indicated, the charts are based on Investor Class shares; performance for other classes will vary due to differences in fee structures. Past performance does not guarantee future results. None of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. - ------ 2 Life Sciences - Portfolio Commentary [photo of Arnold Douville and Christy Turner] A portfolio commentary from Arnold Douville and Christy Turner, portfolio managers on the Life Sciences investment team. For the year ended November 30, 2003, Life Sciences gained 23.16%*, far outperforming its benchmark, the S&P SuperComposite 1500 Health Care Index, which returned 8.06%. The S&P 500 Index, representing the broader market, rose 15.09%. Life Sciences' performance compares favorably to that of its peers: The 191 health/biotechnology funds tracked by Lipper Inc. rose an average of 21.09%. The past 12 months were occasionally challenging but ultimately rewarding for equity investors. Early in the period, the stock market climbed out of its October 2002 trough, only to fall to new lows on March 11. However, that trend soon reversed course. The collapse of the Iraqi regime helped relieve uncertainty, and a steady stream of positive economic data, combined with some surprisingly strong earnings reports along the way, strengthened sentiment. The improving business and economic outlooks gave investors reason to return to the stock market, and they registered their conviction with buying that eventually gave the major indices double-digit gains by the end of the fiscal year. In this environment, medical products and supplies companies achieved solid gains during the period, and Life Sciences' overweight stake in this industry delivered the biggest contribution to performance. Boston Scientific, one of the period's top-contributing stocks, makes a drug-eluting stent, which treats heart disease by propping open arteries while delivering a steady supply of medicine to promote arterial healing. The stock rose after the company reported strong earnings, especially in the third quarter, driven by overseas sales, where its TAXUS(reg.tm) stent is already on the market. The announcement late in the period that the FDA advisory panel recommended approval of the device for U.S. sale supported the stock's upward momentum. Strong sales of its sleep therapy products and hospital ventilation systems lifted Respironics, a respiratory devices firm, and the stock was a top contributor for the year. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Pfizer, Inc. 7.6% 5.4% - -------------------------------------------------------------------------------- Wyeth 4.8% 3.3% - -------------------------------------------------------------------------------- Boston Scientific Corp. 4.3% 3.3% - -------------------------------------------------------------------------------- Amgen Inc. 3.5% 4.1% - -------------------------------------------------------------------------------- Fisher Scientific International 2.9% 3.4% - -------------------------------------------------------------------------------- Eli Lilly and Company 2.9% -- - -------------------------------------------------------------------------------- Abbott Laboratories 2.5% -- - -------------------------------------------------------------------------------- Health Management Associates, Inc. Cl A 2.5% 2.0% - -------------------------------------------------------------------------------- GlaxoSmithKline plc ADR 2.5% 1.2% - -------------------------------------------------------------------------------- AETNA Inc. 2.2% 0.5% - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 3 Life Sciences - Portfolio Commentary Fisher Scientific International, a laboratory supply company, was another standout from this group and a top contributor for the period. The company reported record earnings in the third quarter following an acquisition that broadened its stable of products. Investments in the drug industry--on average the largest industry weighting--provided significant contribution to results while delivering the best performance against our benchmark. Generic drug makers were among the strongest performers, with Mylan Laboratories, Barr Laboratories, and Teva Pharmaceutical Industries topping the list of contributors. Specialty drug companies also gave the portfolio a lift. Salix Pharmaceuticals, which makes drugs to treat gastrointestinal disease, reported a pronounced climb in revenue during the period generated by sales of its lead drug for ulcerative colitis. Major pharmaceutical firms such as Pfizer, Novartis, and GlaxoSmithKline also posted gains and contributed to the fund's bottom line. Life Sciences' exposure to medical service providers added value after overcoming difficulty earlier in the year that restrained performance. Since our last annual report to you, we eliminated hospital positions such as LifePoint Hospitals, Triad Hospital, HCA Inc., and Province Healthcare, all of which detracted. One notable exception to that weakness was Health Management Associates, a hospital that advanced during the period. Elsewhere in the industry, Omnicare, a health-benefits company, and Manor Care, which owns and operates long-term care facilities nationwide, also contributed to stronger second-half performance. Holdings in the biotechnology industry were additional sources of strength. Amgen, the world's largest biotech company, was among the top stocks, as was SuperGen Inc., which rose sharply in the second half of the year. While the direction of the markets and the sustainability of the recovery remain uncertain, we will remain committed to our discipline of seeking health care companies demonstrating earnings acceleration because we believe they offer our investors the potential for reward over time. TOP INDUSTRIES AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Drugs 32.9% 26.5% - -------------------------------------------------------------------------------- Medical Providers & Services 22.4% 25.6% - -------------------------------------------------------------------------------- Biotechnology 21.7% 6.9% - -------------------------------------------------------------------------------- Medical Products & Supplies 17.4% 31.9% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- U.S. Common Stocks & Options 87.6% 85.1% - -------------------------------------------------------------------------------- Foreign Common Stocks 8.3% 7.7% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 95.9% 92.8% - -------------------------------------------------------------------------------- Temporary Cash Investments 4.1% 7.2% - -------------------------------------------------------------------------------- - ------ 4 Life Sciences - Schedule of Investments NOVEMBER 30, 2003 Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS - 95.9% - -------------------------------------------------------------------------------- BIOTECHNOLOGY - 21.7% - -------------------------------------------------------------------------------- 100,000 Amgen Inc.(1) $ 5,750,999 - -------------------------------------------------------------------------------- 87,500 Biogen Idec Inc.(1) 3,340,750 - -------------------------------------------------------------------------------- 61,000 Chiron Corp.(1) 3,270,820 - -------------------------------------------------------------------------------- 50,000 Connetics Corporation(1) 882,500 - -------------------------------------------------------------------------------- 37,000 Genzyme Corp.(1) 1,729,380 - -------------------------------------------------------------------------------- 15,000 Gilead Sciences, Inc.(1) 880,200 - -------------------------------------------------------------------------------- 237,691 Guilford Pharmaceuticals Inc.(1) 1,623,430 - -------------------------------------------------------------------------------- 165,000 Inkine Pharmaceutical Co.(1) 862,950 - -------------------------------------------------------------------------------- 90,000 Inspire Pharmaceuticals Inc.(1) 1,557,000 - -------------------------------------------------------------------------------- 66,200 MGI Pharma Inc.(1) 2,540,094 - -------------------------------------------------------------------------------- 100,000 OraSure Technologies Inc.(1) 834,000 - -------------------------------------------------------------------------------- 50,000 Progenics Pharmaceuticals Inc.(1) 877,000 - -------------------------------------------------------------------------------- 96,265 QLT Inc.(1) 1,567,194 - -------------------------------------------------------------------------------- 98,000 Serologicals Corp.(1) 1,690,500 - -------------------------------------------------------------------------------- 60,929 SICOR Inc.(1) 1,684,078 - -------------------------------------------------------------------------------- 200,000 SuperGen Inc.(1) 2,114,000 - -------------------------------------------------------------------------------- 132,000 Transkaryotic Therapies Inc.(1) 1,714,680 - -------------------------------------------------------------------------------- 87,000 United Therapeutics Corp.(1) 1,637,340 - -------------------------------------------------------------------------------- 89,500 Vicuron Pharmaceuticals Inc.(1) 1,624,425 - -------------------------------------------------------------------------------- 36,181,340 - -------------------------------------------------------------------------------- COMPUTER SOFTWARE - 1.0% - -------------------------------------------------------------------------------- 36,500 Cerner Corporation(1) 1,628,995 - -------------------------------------------------------------------------------- DRUGS - 32.9% - -------------------------------------------------------------------------------- 96,000 Abbott Laboratories 4,243,200 - -------------------------------------------------------------------------------- 96,849 Andrx Corp.(1) 2,126,804 - -------------------------------------------------------------------------------- 52,000 Atrix Laboratories, Inc.(1) 1,053,520 - -------------------------------------------------------------------------------- 20,295 Barr Laboratories, Inc.(1) 1,675,149 - -------------------------------------------------------------------------------- 125,000 Bristol-Myers Squibb Co. 3,293,750 - -------------------------------------------------------------------------------- 70,000 Eli Lilly and Company 4,799,200 - -------------------------------------------------------------------------------- 27,000 Forest Laboratories, Inc. Cl A(1) 1,475,280 - -------------------------------------------------------------------------------- 91,245 GlaxoSmithKline plc ADR 4,186,321 - -------------------------------------------------------------------------------- 10,797 Icon plc ADR(1) 454,457 - -------------------------------------------------------------------------------- 118,970 Impax Laboratories Inc.(1) 1,677,477 - -------------------------------------------------------------------------------- 80,000 IVAX Corp.(1) 1,716,000 - -------------------------------------------------------------------------------- 85,000 Novartis AG ORD 3,593,218 - -------------------------------------------------------------------------------- 375,000 Pfizer, Inc. 12,581,249 - -------------------------------------------------------------------------------- 120,231 Salix Pharmaceuticals Ltd.(1) 2,287,996 - -------------------------------------------------------------------------------- 228,430 Smith & Nephew plc ORD 1,756,133 - -------------------------------------------------------------------------------- 202,189 Wyeth 7,966,247 - -------------------------------------------------------------------------------- 54,886,001 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT - 0.5% - -------------------------------------------------------------------------------- 19,927 Varian Inc.(1) $ 808,239 - -------------------------------------------------------------------------------- MEDICAL PRODUCTS & SUPPLIES - 17.4% - -------------------------------------------------------------------------------- 21,661 Bard (C.R.), Inc. 1,637,572 - -------------------------------------------------------------------------------- 60,000 Baxter International, Inc. 1,669,200 - -------------------------------------------------------------------------------- 31,739 Beckman Coulter Inc. 1,623,450 - -------------------------------------------------------------------------------- 78,000 Becton Dickinson & Co. 3,122,340 - -------------------------------------------------------------------------------- 200,000 Boston Scientific Corp.(1) 7,177,999 - -------------------------------------------------------------------------------- 33,301 Dade Behring Holdings Inc.(1) 1,125,574 - -------------------------------------------------------------------------------- 60,000 Edwards Lifesciences Corporation(1) 1,807,200 - -------------------------------------------------------------------------------- 121,000 Fisher Scientific International(1) 4,872,670 - -------------------------------------------------------------------------------- 57,553 Hologic Inc.(1) 865,597 - -------------------------------------------------------------------------------- 68,500 Interpore International(1) 834,330 - -------------------------------------------------------------------------------- 18,000 Respironics, Inc.(1) 819,000 - -------------------------------------------------------------------------------- 40,000 St. Jude Medical, Inc.(1) 2,533,600 - -------------------------------------------------------------------------------- 37,000 Thermo Electron Corp.(1) 884,300 - -------------------------------------------------------------------------------- 28,972,832 - -------------------------------------------------------------------------------- MEDICAL PROVIDERS & SERVICES - 22.4% - -------------------------------------------------------------------------------- 56,500 AETNA Inc. 3,637,470 - -------------------------------------------------------------------------------- 23,000 Anthem, Inc.(1) 1,658,760 - -------------------------------------------------------------------------------- 215,000 Beverly Enterprises Inc.(1) 1,683,450 - -------------------------------------------------------------------------------- 92,995 DaVita Inc.(1) 3,550,549 - -------------------------------------------------------------------------------- 47,000 Hanger Orthopedic Group, Inc.(1) 794,300 - -------------------------------------------------------------------------------- 165,000 Health Management Associates, Inc. Cl A 4,240,500 - -------------------------------------------------------------------------------- 150,000 Humana Inc.(1) 3,349,500 - -------------------------------------------------------------------------------- 16,000 Kindred Healthcare Inc.(1) 825,440 - -------------------------------------------------------------------------------- 75,400 Manor Care, Inc. 2,663,128 - -------------------------------------------------------------------------------- 93,000 McKesson Corp. 2,715,600 - -------------------------------------------------------------------------------- 44,000 Medco Health Solutions Inc.(1) 1,602,920 - -------------------------------------------------------------------------------- 83,000 Omnicare, Inc. 3,313,360 - -------------------------------------------------------------------------------- 57,457 Select Medical Corporation(1) 2,059,833 - -------------------------------------------------------------------------------- 33,000 Universal Health Services, Inc. Cl B 1,774,410 - -------------------------------------------------------------------------------- 38,235 VCA Antech Inc.(1) 1,194,844 - -------------------------------------------------------------------------------- 65,996 WellChoice Inc.(1) 2,245,844 - -------------------------------------------------------------------------------- 37,309,908 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $134,732,022) 159,787,315 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 5 Life Sciences - Schedule of Investments NOVEMBER 30, 2003 Principal Amount Value - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS - 4.1% - -------------------------------------------------------------------------------- $6,800,000 FNMA Discount Notes, 0.97%, 12/1/03(2) (Cost $6,800,000) $ 6,800,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 100.0% (Cost $141,532,022) $166,587,315 ================================================================================ Value - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) - -------------------------------------------------------------------------------- Repurchase Agreement, BNP Paribas Securities Corp., (U.S. Government Agency obligations), 1.08%, dated 11/28/03, due 12/1/03 (Delivery value $16,534,438) (Cost $16,532,950) $16,532,950 ================================================================================ FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS* - -------------------------------------------------------------------------------- Contracts to Sell Settlement Date Value Unrealized Loss - -------------------------------------------------------------------------------- 2,335,375 CHF 12/31/03 $1,809,595 $(35,196) - -------------------------------------------------------------------------------- 1,795,139 GBP 12/31/03 3,084,163 (44,293) - -------------------------------------------------------------------------------- $4,893,758 $(79,489) ==================================== (Value on Settlement Date $4,814,269) *FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's foreign investments against declines in foreign currencies (also known as hedging). The contracts are called "forward" because they allow the fund to exchange a foreign currency for U.S. dollars on a specific date in the future - and at a prearranged exchange rate. NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt CHF = Swiss Franc FNMA = Federal National Mortgage Association GBP = British Pound ORD = Foreign Ordinary Share (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. (3) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. (See Note 5 in Notes to Financial Statements.) See Notes to Financial Statements. - ------ 6 Technology - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- -------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 35.97% -24.01% 6/30/2000 - -------------------------------------------------------------------------------- S&P SUPERCOMPOSITE 1500 TECHNOLOGY INDEX 24.02% -22.37% -- - -------------------------------------------------------------------------------- S&P 500 INDEX 15.09% -7.50% -- - -------------------------------------------------------------------------------- Institutional Class 36.14% -26.34% 7/14/2000 - -------------------------------------------------------------------------------- Advisor Class 35.45% -24.25% 6/30/2000 - -------------------------------------------------------------------------------- GROWTH OF $10,000 OVER LIFE OF CLASS - -------------------------------------------------------------------------------- $10,000 investment made June 30, 2000
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ONE-YEAR RETURNS OVER LIFE OF CLASS - -------------------------------------------------------------------------------- Periods ended November 30 - -------------------------------------------------------------------------------- 2000* 2001 2002 2003 - -------------------------------------------------------------------------------- Investor Class -36.20% -34.48% -31.10% 35.97% - -------------------------------------------------------------------------------- S&P SuperComposite 1500 Technology Index -33.66% -29.22% -27.70% 24.02% - -------------------------------------------------------------------------------- S&P 500 Index -9.16% -12.22% -16.51% 15.09% - -------------------------------------------------------------------------------- * From 6/30/00, the Investor Class's inception date. Not annualized. The charts on the performance page give historical return data for the fund. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. Unless otherwise indicated, the charts are based on Investor Class shares; performance for other classes will vary due to differences in fee structures. Past performance does not guarantee future results. None of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. - ------ 7 Technology - Portfolio Commentary [photo of Jeff Schuller and Tom Telford] A portfolio commentary from Jeff Schuller and Tom Telford, portfolio managers on the Technology investment team. Technology gained 35.97%* during the year ended November 30, 2003, beating its benchmark, the S&P SuperComposite 1500 Technology Index, which advanced 24.02%. Technology also outperformed the 33.71% average gain of its peers in Lipper Inc.'s science and technology fund universe. During the last three years, the portfolio fell an average of 15.64% compared to declines of 14.07% for the benchmark and 18.42% for the peer group. The fund's performance also compared favorably with another closely followed technology barometer, the Goldman Sachs Technology Industry Index, which gained 29.71% on a one-year basis and fell an average of 16.04% during the last three years. After three years of negative returns, the domestic stock market rallied during the period covered by this report. The broad market, as measured by the S&P 500, fell to a 12-month low on March 11, just days before the U.S.-led invasion of Iraq. From that point through November 30 stock prices rose as corporate profits grew and the economy gained strength. Technology issues played a pivotal role in the rally as companies across the sector benefited from a recovery in tech spending by corporations and consumers. Investments in the semiconductor industry performed well in this environment, gaining on the strength of improving sales and predictions for continued growth in 2004. Among the top performers was International Rectifier, which was buoyed by revenue growth from the sale of power chips used in personal computers. Other contributors included Vitesse and Broadcom, manufacturers of semiconductors used in networking and communications gear. Not all of the results from this industry were positive, however, and notable detractors that were eliminated from the portfolio included Microchip Technology, Monolithic System Technology, and Skyworks Solutions. Technology also was helped by companies that benefited from strong sales of consumer electronics. A good example TOP TEN HOLDINGS AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Sanmina-SCI Corp. 3.2% 1.4% - -------------------------------------------------------------------------------- Flextronics International Ltd. 3.0% 1.6% - -------------------------------------------------------------------------------- Intel Corp. 2.9% 1.4% - -------------------------------------------------------------------------------- International Rectifier Corp. 2.8% 1.8% - -------------------------------------------------------------------------------- Taiwan Semiconductor Manufacturing Co. Ltd. ADR 2.7% 1.5% - -------------------------------------------------------------------------------- Cisco Systems Inc. 2.4% 1.7% - -------------------------------------------------------------------------------- Harman International Industries Inc. 2.2% 1.5% - -------------------------------------------------------------------------------- Vitesse Semiconductor Corp. 2.1% 1.0% - -------------------------------------------------------------------------------- Netopia Inc. 2.1% -- - -------------------------------------------------------------------------------- Autodesk, Inc. 2.0% -- - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 8 Technology - Portfolio Commentary was OmniVision Technologies, which makes semiconductors used in digital cameras and camera phones. Camera-phone sales were projected to triple in 2003, and providing chips for this expanding market has been an important revenue driver for OmniVision. Consumers also drove better-than-expected results for Harman International, a manufacturer of "infotainment" systems that integrate audio, navigation, Internet and climate control capabilities in luxury cars. Amdocs led a rise in Technology's software stake. The company generated earnings growth from the sale of billing and customer care software to the telecommunications industry. However, we sold our position in Amdocs due to concerns about changes in the company's business model and an SEC investigation into its revenue forecasts. On the downside, software giant Microsoft lagged its smaller, lesser-known brethren and was one of our top detractors during the last 12 months. Investments in manufacturers of electronic equipment also boosted Technology's returns. A top contributor was contract manufacturer Sanmina-SCI, which saw its share price rise more than 150% amid growing demand for outsourced electronics production. UTStarcom and Netopia were the other standouts from this industry. Detractors included Celestica, which was sold. Elsewhere in the portfolio, Research in Motion provided the biggest lift for Technology's computer hardware stake. The company has enjoyed strong sales of its wireless products, particularly Blackberry, a device used to manage wireless email. The portfolio's holdings in networking equipment manufacturers Cisco and Foundry Networks also boosted results. The period also saw changes on the portfolio's management team. Jeff Schuller, who previously served as an analyst, was promoted in February and now co-manages Technology with Tom Telford. Former portfolio manager Chris Boyd left American Century in June to pursue another opportunity. The Technology team is encouraged by indications that information technology spending is rebounding and is hopeful that this improvement will lead to attractive investment opportunities for the portfolio. In the months ahead, we will continue to search for companies benefiting from this and other positive developments in the technology realm. TOP FIVE INDUSTRIES AS OF NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- Semiconductor 31.9% 26.2% - -------------------------------------------------------------------------------- Electronic Equipment 24.2% 10.1% - -------------------------------------------------------------------------------- Computer Software 18.1% 26.0% - -------------------------------------------------------------------------------- Computer Hardware & Business Machines 17.7% 10.9% - -------------------------------------------------------------------------------- Information Services 3.5% 11.8% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- AS OF AS OF 11/30/03 5/31/03 - -------------------------------------------------------------------------------- U.S. Common Stocks 84.1% 84.9% - -------------------------------------------------------------------------------- Foreign Common Stocks 15.1% 12.0% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 99.2% 96.9% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.8% 3.1% - -------------------------------------------------------------------------------- - ------ 9 Technology - Schedule of Investments NOVEMBER 30, 2003 Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS - 99.2% - -------------------------------------------------------------------------------- COMPUTER HARDWARE & BUSINESS MACHINES - 17.7% - -------------------------------------------------------------------------------- 121,300 Advanced Digital Information Corp.(1) $ 1,840,121 - -------------------------------------------------------------------------------- 120,800 American Power Conversion Corp. 2,640,688 - -------------------------------------------------------------------------------- 238,500 Avaya Inc.(1) 3,243,600 - -------------------------------------------------------------------------------- 70,900 Avocent Corp.(1) 2,714,761 - -------------------------------------------------------------------------------- 228,800 Cisco Systems Inc.(1) 5,184,608 - -------------------------------------------------------------------------------- 199,400 Cray, Inc.(1) 2,087,718 - -------------------------------------------------------------------------------- 110,200 Dell Inc.(1) 3,801,900 - -------------------------------------------------------------------------------- 120,000 Electronics for Imaging, Inc.(1) 3,312,000 - -------------------------------------------------------------------------------- 270,200 EMC Corp.(1) 3,712,548 - -------------------------------------------------------------------------------- 106,900 Foundry Networks, Inc.(1) 2,817,884 - -------------------------------------------------------------------------------- 212,100 Maxtor Corporation(1) 2,367,036 - -------------------------------------------------------------------------------- 53,200 Research In Motion Ltd.(1) 2,426,452 - -------------------------------------------------------------------------------- 193,600 SonicWALL Inc.(1) 1,546,864 - -------------------------------------------------------------------------------- 37,696,180 - -------------------------------------------------------------------------------- COMPUTER SOFTWARE - 18.1% - -------------------------------------------------------------------------------- 279,300 Aspect Communications Corporation(1) 4,111,296 - -------------------------------------------------------------------------------- 184,100 Autodesk, Inc. 4,274,801 - -------------------------------------------------------------------------------- 27,400 Avid Technology, Inc.(1) 1,448,912 - -------------------------------------------------------------------------------- 37,576 Callidus Software Inc.(1) 635,410 - -------------------------------------------------------------------------------- 117,100 Check Point Software Technologies(1) 2,067,986 - -------------------------------------------------------------------------------- 89,100 Cognos, Inc.(1) 2,988,414 - -------------------------------------------------------------------------------- 225,600 E.piphany Inc.(1) 1,782,240 - -------------------------------------------------------------------------------- 324,000 Epicor Software Corporation(1) 4,014,360 - -------------------------------------------------------------------------------- 48,216 Kronos Inc.(1) 1,888,621 - -------------------------------------------------------------------------------- 15,000 Mercury Interactive Corp.(1) 702,000 - -------------------------------------------------------------------------------- 158,200 Microsoft Corporation 4,065,740 - -------------------------------------------------------------------------------- 326,800 Novell, Inc.(1) 3,104,600 - -------------------------------------------------------------------------------- 117,000 Opsware Inc.(1) 900,900 - -------------------------------------------------------------------------------- 47,500 Progress Software Corp.(1) 995,600 - -------------------------------------------------------------------------------- 58,200 SAP AG ADR 2,243,610 - -------------------------------------------------------------------------------- 82,600 Veritas Software Corp.(1) 3,140,535 - -------------------------------------------------------------------------------- 38,365,025 - -------------------------------------------------------------------------------- CONSUMER DURABLES - 2.2% - -------------------------------------------------------------------------------- 34,000 Harman International Industries Inc. 4,633,180 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT - 24.2% - -------------------------------------------------------------------------------- 80,600 Advanced Fibre Communication(1) $ 1,801,410 - -------------------------------------------------------------------------------- 225,200 Aeroflex Inc.(1) 2,857,788 - -------------------------------------------------------------------------------- 41,000 Amphenol Corp. Cl A(1) 2,481,320 - -------------------------------------------------------------------------------- 141,800 C-COR.net Corporation(1) 1,673,240 - -------------------------------------------------------------------------------- 65,700 Comtech Telecommunications(1) 2,190,307 - -------------------------------------------------------------------------------- 27,600 Comverse Technology, Inc.(1) 530,748 - -------------------------------------------------------------------------------- 213,500 Corning Inc.(1) 2,446,710 - -------------------------------------------------------------------------------- 298,800 Finisar Corporation(1) 1,195,200 - -------------------------------------------------------------------------------- 395,800 Flextronics International Ltd.(1) 6,344,674 - -------------------------------------------------------------------------------- 204,201 Harmonic Inc.(1) 1,774,507 - -------------------------------------------------------------------------------- 97,100 Jabil Circuit, Inc.(1) 2,671,221 - -------------------------------------------------------------------------------- 55,300 Juniper Networks, Inc.(1) 1,043,511 - -------------------------------------------------------------------------------- 288,200 Netopia Inc.(1) 4,409,460 - -------------------------------------------------------------------------------- 142,800 Nokia Oyj ADR 2,567,544 - -------------------------------------------------------------------------------- 438,200 Nortel Networks Corp.(1) 1,976,282 - -------------------------------------------------------------------------------- 100,500 Polycom Inc.(1) 1,991,910 - -------------------------------------------------------------------------------- 563,500 Sanmina-SCI Corp.(1) 6,869,064 - -------------------------------------------------------------------------------- 175,700 Sonus Networks, Inc.(1) 1,605,898 - -------------------------------------------------------------------------------- 68,600 UTStarcom Inc.(1) 2,598,568 - -------------------------------------------------------------------------------- 109,000 Viasat Inc.(1) 2,318,430 - -------------------------------------------------------------------------------- 51,347,792 - -------------------------------------------------------------------------------- INFORMATION SERVICES - 3.5% - -------------------------------------------------------------------------------- 57,499 Corporate Executive Board Co. (The)(1) 2,794,451 - -------------------------------------------------------------------------------- 62,600 Paychex, Inc. 2,408,222 - -------------------------------------------------------------------------------- 388,300 Sapient Corporation(1) 2,182,246 - -------------------------------------------------------------------------------- 7,384,919 - -------------------------------------------------------------------------------- MEDIA - 0.5% - -------------------------------------------------------------------------------- 140,000 Imax Corp.(1) 1,108,800 - -------------------------------------------------------------------------------- SEMICONDUCTOR - 31.9% - -------------------------------------------------------------------------------- 106,500 ASML Holding N.V. New York Shares(1) 2,004,330 - -------------------------------------------------------------------------------- 138,300 August Technology Corporation(1) 2,766,000 - -------------------------------------------------------------------------------- 116,200 Broadcom Corp.(1) 4,233,166 - -------------------------------------------------------------------------------- 50,000 Catalyst Semiconductor Inc.(1) 406,000 - -------------------------------------------------------------------------------- 216,600 Credence Systems Corp.(1) 2,807,136 - -------------------------------------------------------------------------------- 137,700 Cypress Semiconductor Corporation(1) 3,081,726 - -------------------------------------------------------------------------------- 60,144 Formfactor Inc.(1) 1,533,672 - -------------------------------------------------------------------------------- 32,300 Integrated Circuit Systems, Inc.(1) 960,925 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 10 Technology - Schedule of Investments NOVEMBER 30, 2003 Shares Value - -------------------------------------------------------------------------------- 186,100 Intel Corp. $ 6,221,324 - -------------------------------------------------------------------------------- 107,200 International Rectifier Corp.(1) 5,855,264 - -------------------------------------------------------------------------------- 35,600 Intersil Corporation Cl A 940,196 - -------------------------------------------------------------------------------- 84,600 Lam Research Corp.(1) 2,707,200 - -------------------------------------------------------------------------------- 148,700 LSI Logic Corp.(1) 1,393,319 - -------------------------------------------------------------------------------- 42,100 Marvell Technology Group Ltd.(1) 1,662,529 - -------------------------------------------------------------------------------- 153,300 Microsemi Corporation(1) 3,714,459 - -------------------------------------------------------------------------------- 108,600 O2Micro International Ltd.(1) 2,606,400 - -------------------------------------------------------------------------------- 31,800 OmniVision Technologies, Inc.(1) 2,072,088 - -------------------------------------------------------------------------------- 126,600 Photronics Inc.(1) 2,338,302 - -------------------------------------------------------------------------------- 52,800 Power Integrations, Inc.(1) 1,912,944 - -------------------------------------------------------------------------------- 42,100 Semtech Corp.(1) 1,023,030 - -------------------------------------------------------------------------------- 536,483 Taiwan Semiconductor Manufacturing Co. Ltd. ADR(1) 5,831,570 - -------------------------------------------------------------------------------- 69,300 Texas Instruments Inc. 2,062,368 - -------------------------------------------------------------------------------- 31,800 Ultratech, Inc.(1) 963,540 - -------------------------------------------------------------------------------- 199,400 Vishay Intertechnology, Inc.(1) 4,189,394 - -------------------------------------------------------------------------------- 619,400 Vitesse Semiconductor Corp.(1) 4,521,620 - -------------------------------------------------------------------------------- 67,808,502 - -------------------------------------------------------------------------------- TELEPHONE - 0.4% - -------------------------------------------------------------------------------- 229,800 Covad Communications Group Inc.(1) 919,200 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATIONS - 0.7% - -------------------------------------------------------------------------------- 102,400 Wireless Facilities, Inc.(1) 1,487,872 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $155,869,257) 210,751,470 - -------------------------------------------------------------------------------- Principal Amount Value - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS - 0.8% - -------------------------------------------------------------------------------- Repurchase Agreement, Deutsche Bank Securities, Inc., (U.S. Treasury obligations), in a joint trading account at 1.02%, dated 11/28/03, due 12/1/03 (Delivery value $1,700,144) (Cost $1,700,000) $ 1,700,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 100.0% (Cost $157,569,257) $212,451,470 ================================================================================ COLLATERAL RECEIVED FOR SECURITIES LENDING(2) - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, Deutsche Bank AG, (U.S. Government Agency obligations), 1.03%, dated 11/28/03, due 12/1/03 (Delivery value $22,850,291) $22,848,330 - -------------------------------------------------------------------------------- SHORT-TERM DEBT - -------------------------------------------------------------------------------- $5,000,000 Banco Espanol de Credito, SA Time Deposit, 1.14%, 2/12/04 5,000,000 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $27,848,330) $27,848,330 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt (1) Non-income producing. (2) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. (See Note 5 in Notes to Financial Statements.) See Notes to Financial Statements. - ------ 11 Statement of Assets and Liabilities NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $141,532,022 and $157,569,257, respectively) - including securities on loan valued at $16,245,094 and $27,651,993, respectively $166,587,315 $212,451,470 - ------------------------------------------- Collateral received on securities loaned, at value (cost of $16,532,950 and $27,848,330, respectively) 16,532,950 27,848,330 - ------------------------------------------- Cash -- 390,192 - ------------------------------------------- Receivable for investments sold -- 2,807,143 - ------------------------------------------- Receivable for capital shares sold 180 100 - ------------------------------------------- Dividends and interest receivable 171,122 13,043 - -------------------------------------------------------------------------------- 183,291,567 243,510,278 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payable for collateral received on securities loaned 16,532,950 27,848,330 - ------------------------------------------- Disbursements in excess of demand deposit cash 68,799 -- - ------------------------------------------- Payable for investments purchased 2,150,552 2,314,762 - ------------------------------------------- Payable for forward foreign currency exchange contracts 79,489 -- - ------------------------------------------- Accrued management fees 197,329 253,944 - ------------------------------------------- Distribution fees payable 15 3 - ------------------------------------------- Service fees payable 11 3 - -------------------------------------------------------------------------------- 19,029,145 30,417,042 - -------------------------------------------------------------------------------- NET ASSETS $164,262,422 $213,093,236 ================================================================================ NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $203,362,757 $419,472,601 - ------------------------------------------- Accumulated net investment loss (38,649) -- - ------------------------------------------- Accumulated net realized loss on investment and foreign currency transactions (64,038,083) (261,261,578) - ------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 24,976,397 54,882,213 - -------------------------------------------------------------------------------- $164,262,422 $213,093,236 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $160,187,422 $202,883,922 - ------------------------------------------- Shares outstanding 36,706,519 10,361,725 - ------------------------------------------- Net asset value per share $4.36 $19.58 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $4,018,539 $10,191,242 - ------------------------------------------- Shares outstanding 914,120 516,330 - ------------------------------------------- Net asset value per share $4.40 $19.74 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $46,337 $18,072 - ------------------------------------------- Shares outstanding 10,707 933 - ------------------------------------------- Net asset value per share $4.33 $19.37 - -------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $10,124 -- - ------------------------------------------- Shares outstanding 2,367 -- - ------------------------------------------- Net asset value per share $4.28 -- - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 12 Statement of Operations YEAR ENDED NOVEMBER 30, 2003 - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY INVESTMENT LOSS - -------------------------------------------------------------------------------- INCOME: - ------------------------------------------- Dividends (net of foreign taxes withheld of $17,915 and $11,394, respectively) $ 802,682 $ 259,009 - ------------------------------------------- Interest 89,802 52,635 - ------------------------------------------- Securities lending 37,970 66,270 - -------------------------------------------------------------------------------- 930,454 377,914 - -------------------------------------------------------------------------------- EXPENSES: - ------------------------------------------- Management fees 2,289,295 2,285,135 - ------------------------------------------- Distribution fees: - ------------------------------------------- Advisor Class 87 67 - -------------------------------------------------------------------------------- C Class 60 -- - -------------------------------------------------------------------------------- Service fees: - ------------------------------------------- Advisor Class 87 67 - -------------------------------------------------------------------------------- C Class 20 -- - -------------------------------------------------------------------------------- Directors' fees and expenses 2,175 2,083 - -------------------------------------------------------------------------------- Other expenses 1,573 1,675 - -------------------------------------------------------------------------------- 2,293,297 2,289,027 - -------------------------------------------------------------------------------- NET INVESTMENT LOSS (1,362,843) (1,911,113) - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - ------------------------------------------- Investment transactions 3,274,054 17,797,976 - ------------------------------------------- Foreign currency transactions (647,531) -- - -------------------------------------------------------------------------------- 2,626,523 17,797,976 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION ON: - ------------------------------------------- Investments 31,631,195 37,716,935 - ------------------------------------------- Translation of assets and liabilities in foreign currencies (78,599) -- - -------------------------------------------------------------------------------- 31,552,596 37,716,935 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN 34,179,119 55,514,911 - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $32,816,276 $53,603,798 ================================================================================ See Notes to Financial Statements. - ------ 13 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2003 AND NOVEMBER 30, 2002 - ----------------------------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - ---------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2003 2002 2003 2002 OPERATIONS - ---------------------------------------------------------------------------------------------------- Net investment loss $ (1,362,843) $ (1,734,779) $ (1,911,113) $ (1,806,788) - --------------------------------------- Net realized gain (loss) 2,626,523 (33,228,910) 17,797,976 (51,689,977) - --------------------------------------- Change in net unrealized appreciation 31,552,596 (25,294,869) 37,716,935 (6,224,919) - ---------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 32,816,276 (60,258,558) 53,603,798 (59,721,684) - ---------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - ---------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (18,274,746) (21,725,721) 23,224,232 12,910,500 - ---------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 14,541,530 (81,984,279) 76,828,030 (46,811,184) NET ASSETS - ---------------------------------------------------------------------------------------------------- Beginning of period 149,720,892 231,705,171 136,265,206 183,076,390 - ---------------------------------------------------------------------------------------------------- End of period $164,262,422 $149,720,892 $213,093,236 $136,265,206 ==================================================================================================== Accumulated net investment loss $(38,649) -- -- -- ==================================================================================================== See Notes to Financial Statements. - ------ 14 Notes to Financial Statements NOVEMBER 30, 2003 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - -------------------------------------------------------------------------------- ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Life Sciences Fund (Life) and Technology Fund (Technology) (collectively, the funds) are two funds in a series issued by the corporation. The funds are non-diversified under the 1940 Act. The funds' investment objectives are to seek long-term capital growth. The funds pursue their objectives by investing primarily in equity securities. Life generally invests in companies that engage in the business of providing products and services that help promote personal health and wellness. Technology invests in companies with business operations in the technology and telecommunications-related sectors. The following is a summary of the funds' significant accounting policies. MULTIPLE CLASS -- The funds are authorized to issue the Investor Class, the Institutional Class, the Advisor Class and the C Class. The C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and shareholder servicing and distribution expenses and arrangements. All shares of each fund represent an equal pro rata interest in the assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets. Sale of the C Class for Technology had not commenced as of November 30, 2003. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes are valued through a commercial pricing service. When valuations are not readily available, securities are valued at fair value as determined in accordance with procedures adopted by the Board of Directors. If an event were to occur after the close of the foreign exchange on which a portfolio security principally trades, but before the net asset value per-share of a fund was determined that was likely to materially affect the net asset value of the fund, then that security would be valued at fair value as determined in accordance with procedures adopted by the Board of Directors. SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. SECURITIES ON LOAN -- The funds may lend portfolio securities through their lending agent to certain approved borrowers in order to earn additional income. The funds continue to recognize any gain or loss in the market price of the securities loaned and record any interest earned or dividends declared. FUTURES AND OPTIONS CONTRACTS -- The funds may enter into futures contracts and purchase put options in order to manage the funds' exposure to changes in market conditions. One of the risks of entering into futures contracts and options is the possibility that the change in value of the contract may not correlate with the changes in value of the underlying securities. Options purchased by the funds are accounted for in the same manner as marketable portfolio securities. The proceeds from securities sold through the exercise of put options are decreased by the premium paid to purchase the put options. Upon entering into a futures contract, the funds are required to deposit either cash or securities in an amount equal to a certain percentage of the contract value (initial margin). Subsequent payments (variation margin) are made or received daily, in cash, by the funds. The variation margin is equal to the daily change in the contract value and is recorded as unrealized gains and losses. The funds recognize a realized gain or loss when the contract is closed or expires. Net realized and unrealized gains or losses occurring during the holding period of futures contracts are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective (continued) - ------ 15 Notes to Financial Statements NOVEMBER 30, 2003 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) - -------------------------------------------------------------------------------- dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The funds record the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The funds may enter into forward foreign currency exchange contracts to facilitate transactions of securities denominated in a foreign currency or to hedge the funds' exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the funds and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. The funds bear the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses may arise if the counterparties do not perform under the contract terms. REPURCHASE AGREEMENTS -- The funds may enter into repurchase agreements with institutions that the funds' investment manager, American Century Investment Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria adopted by the Board of Directors. Each repurchase agreement is recorded at cost. Each fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable each fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to each fund under each repurchase agreement. JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, each fund, along with other registered investment companies having management agreements with ACIM, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. INCOME TAX STATUS -- It is each fund's policy to distribute all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income, if any, are generally declared and paid annually. Distributions from net realized gains, if any, are generally declared and paid twice per year. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. 2. FEES AND TRANSACTIONS WITH RELATED PARTIES - -------------------------------------------------------------------------------- MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM, under which ACIM provides the funds with investment advisory and management services in exchange for a single, unified management fee per class. The Agreement provides that all expenses of the funds, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is computed daily and paid monthly in arrears based on each class's pro rata share of each funds' average daily closing net assets during the previous month. (continued) - ------ 16 Notes to Financial Statements NOVEMBER 30, 2003 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) - -------------------------------------------------------------------------------- The annual management fee schedule for each class of the funds is as follows: INVESTOR INSTITUTIONAL ADVISOR C CLASS CLASS CLASS CLASS - -------------------------------------------------------------------------------- FUND AVERAGE NET ASSETS - -------------------------------------------------------------------------------- First $1 billion 1.50% 1.30% 1.25% 1.50% - -------------------------------------------------------------------------------- Over $1 billion 1.30% 1.10% 1.05% 1.30% - -------------------------------------------------------------------------------- The effective annual management fee for the year ended November 30, 2003 for each class of the funds was 1.50%, 1.30%, 1.25% and 1.50% for the Investor, Institutional, Advisor and C Classes, respectively, as applicable. DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master Distribution and Shareholder Services Plan for the Advisor Class and a Master Distribution and Individual Shareholder Services Plan for the C Class (collectively, the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the Advisor Class and C Class will pay American Century Investment Services, Inc. (ACIS) the following annual distribution and service fees: - -------------------------------------------------------------------------------- ADVISOR C - -------------------------------------------------------------------------------- Distribution Fee 0.25% 0.75% - -------------------------------------------------------------------------------- Service Fee 0.25% 0.25% - -------------------------------------------------------------------------------- The fees are computed daily and paid monthly in arrears based on each class's average daily closing net assets during the previous month. The distribution fee provides compensation for expenses incurred in connection with distributing shares of the classes including, but not limited to, payments to brokers, dealers, and financial institutions that have entered into sales agreements with respect to shares of the funds. The service fee provides compensation for shareholder and administrative services rendered by ACIS, its affiliates or independent third party providers for Advisor Class shares and for individual shareholder services rendered by broker/dealers or other independent financial intermediaries for C Class shares. Fees incurred under the plans during the year ended November 30, 2003, are detailed in the Statement of Operations. RELATED PARTIES -- Certain officers and directors of the corporation are also officers and/or directors, and, as a group, controlling stockholders of American Century Companies, Inc. (ACC), the parent of the corporation's investment manager, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services Corporation. During the year ended November 30, 2003, the funds invested in a money market fund for temporary purposes, which was managed by J.P. Morgan Investment Management, Inc. (JPMIM). JPMIM is a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. The funds have a bank line of credit agreement and securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a wholly owned subsidiary of JPM. 3. INVESTMENT TRANSACTIONS - -------------------------------------------------------------------------------- Investment transactions, excluding short-term investments, for the year ended November 30, 2003, were as follows: - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- Purchases $201,523,348 $346,565,950 - -------------------------------------------------------------------------------- Proceeds from sales $219,646,995 $325,798,645 - -------------------------------------------------------------------------------- (continued) - ------ 17 Notes to Financial Statements NOVEMBER 30, 2003 4. CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Capital share transactions that occurred in the Technology classes on or prior to May 16, 2003 have been restated to reflect a 1-for-10 reverse share split that occurred after the close of business on that date. See Note 8. Transactions in shares of the funds were as follows: LIFE SCIENCES TECHNOLOGY - ------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------- INVESTOR CLASS - ------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 200,000,000 300,000,000 =========================================================================================== Sold 4,462,447 $ 17,195,665 5,945,407 $ 92,027,187 - ------------------------------- Redeemed (9,130,905) (35,250,197) (4,461,646) (67,262,458) - ------------------------------------------------------------------------------------------- Net increase (decrease) (4,668,458) $(18,054,532) 1,483,761 $ 24,764,729 =========================================================================================== YEAR ENDED NOVEMBER 30, 2002 SHARES AUTHORIZED 200,000,000 300,000,000 =========================================================================================== Sold 10,804,587 $ 47,083,635 4,396,413 $ 71,750,086 - ------------------------------- Redeemed (16,090,674) (69,030,203) (3,842,872) (61,470,938) - ------------------------------------------------------------------------------------------- Net increase (decrease) (5,286,087) $(21,946,568) 553,541 $ 10,279,148 =========================================================================================== INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 5,000,000 15,000,000 =========================================================================================== Sold 542,023 $ 2,037,492 454,224 $ 6,528,752 - ------------------------------- Redeemed (574,061) (2,273,015) (521,021) (8,031,710) - ------------------------------------------------------------------------------------------- Net decrease (32,038) $ (235,523) (66,797) $(1,502,958) =========================================================================================== YEAR ENDED NOVEMBER 30, 2002 SHARES AUTHORIZED 5,000,000 15,000,000 =========================================================================================== Sold 588,328 $ 2,553,934 725,704 $11,779,856 - ------------------------------- Redeemed (532,110) (2,358,946) (581,510) (9,207,171) - ------------------------------------------------------------------------------------------- Net increase 56,218 $ 194,988 144,194 $ 2,572,685 =========================================================================================== ADVISOR CLASS - ------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 5,000,000 5,000,000 =========================================================================================== Sold 8,972 $ 32,058 1,604 $ 30,528 - ------------------------------- Redeemed (5,491) (19,066) (4,455) (68,067) - ------------------------------------------------------------------------------------------- Net increase (decrease) 3,481 $ 12,992 (2,851) $(37,539) =========================================================================================== YEAR ENDED NOVEMBER 30, 2002 SHARES AUTHORIZED 5,000,000 5,000,000 =========================================================================================== Sold 4,771 $21,334 3,814 $60,484 - ------------------------------- Redeemed (264) (1,097) (87) (1,817) - ------------------------------------------------------------------------------------------- Net increase 4,507 $20,237 3,727 $58,667 =========================================================================================== (continued) - ------ 18 Notes to Financial Statements NOVEMBER 30, 2003 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 10,000,000 7,500,000 ================================================================================ Sold 669 $2,357 -- -- - ------------------------------ Redeemed (10) (40) -- -- - -------------------------------------------------------------------------------- Net increase 659 $2,317 -- -- ================================================================================ YEAR ENDED NOVEMBER 30, 2002 SHARES AUTHORIZED 10,000,000 7,500,000 ================================================================================ Sold 1,195 $5,622 -- -- ================================================================================ 5. SECURITIES LENDING - ------------------------------------------------------------------------------- As of November 30, 2003, securities in Life Sciences and Technology valued at $16,245,094, and $27,651,993, respectively, were on loan through the lending agent, JPMCB, to certain approved borrowers. JPMCB receives and maintains collateral in the form of cash, and/or acceptable securities as approved by ACIM. Cash collateral is invested in authorized investments by the lending agent in a pooled account. The value of cash collateral received at period end is disclosed in the Statement of Assets and Liabilities and investments made with the cash by the lending agent are listed in the Schedule of Investments. Any deficiencies or excess of collateral must be delivered or transferred by the member firms no later than the close of business on the next business day. The total value of all collateral received, at this date, was $16,532,950, and $27,848,330, respectively. The funds' risks in securities lending are that the borrower may not provide additional collateral when required or return the securities when due. If the borrower defaults, receipt of the collateral by the funds may be delayed or limited. 6. BANK LINE OF CREDIT - -------------------------------------------------------------------------------- The funds, along with certain other funds managed by ACIM, have a $620,000,000 unsecured bank line of credit agreement with JPMCB, which was renewed to $650,000,000 effective December 17, 2003. The funds may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The funds did not borrow from the line during the year ended November 30, 2003. 7. FEDERAL TAX INFORMATION - -------------------------------------------------------------------------------- The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. There were no distributions paid by the funds during the years ended November 30, 2003 and November 30, 2002. (continued) - ------ 19 Notes to Financial Statements NOVEMBER 30, 2003 7. FEDERAL TAX INFORMATION (CONTINUED) - -------------------------------------------------------------------------------- As of November 30, 2003, the components of distributable earnings on a tax-basis and the federal tax cost of investments were as follows: LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- COMPONENTS OF DISTRIBUTABLE EARNINGS AND TAX COST - -------------------------------------------------------------------------------- Federal tax cost of investments $141,712,208 $158,062,126 ================================================================================ Gross tax appreciation of investments $26,029,705 $55,919,810 - --------------------------------------------- Gross tax depreciation of investments (1,154,598) (1,530,466) - -------------------------------------------------------------------------------- Net tax appreciation of investments $24,875,107 $54,389,344 ================================================================================ Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies 594 -- - -------------------------------------------------------------------------------- Net tax appreciation $24,875,701 $54,389,344 ================================================================================ Undistributed ordinary income -- -- - --------------------------------------------- Accumulated capital losses $(63,857,897) $(260,768,709) - --------------------------------------------- Currency loss deferral $(118,139) -- - -------------------------------------------------------------------------------- The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains on certain forward foreign currency contracts. The accumulated capital losses listed above represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers expire in 2009 through 2010, and 2008 through 2010, for Life Sciences and Technology, respectively. The currency loss deferrals represent net foreign currency losses incurred in the one-month period ended November 30, 2003. The funds have elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. 8. TECHNOLOGY REVERSE SHARE SPLIT - -------------------------------------------------------------------------------- Effective after the close of business on May 16, 2003, the Technology Investor Class, Institutional Class, and Advisor Class shares underwent a 1-for-10 reverse split. The effect of this transaction was to divide the number of outstanding shares for each class by ten, while multiplying the net asset value per share by ten. The net asset value per share prior to the reverse split was $1.46, $1.47, and $1.44 for the Investor Class, Institutional Class, and the Advisor Class, respectively. The net asset value per share after the reverse split was $14.60, $14.70, and $14.40 for the Investor Class, Institutional Class, and the Advisor Class, respectively. There was no change in the aggregate market value of the outstanding shares as a result of these transactions. The per-share information contained within each of the classes' Financial Highlights has also been restated to reflect the reverse split. - ------ 20 Life Sciences - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2003 2002 2001 2000(1) PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $3.54 $4.87 $5.28 $5.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Loss(2) (0.03) (0.04) (0.03) (0.02) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 0.85 (1.29) (0.25) 0.30 - -------------------------------------------------------------------------------- Total From Investment Operations 0.82 (1.33) (0.28) 0.28 - -------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Realized Gains -- -- (0.13) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $4.36 $3.54 $4.87 $5.28 ================================================================================ TOTAL RETURN(3) 23.16% (27.31)% (5.35)% 5.60% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50% 1.50% 1.50% 1.50%(4) - ------------------------------------- Ratio of Net Investment Loss to Average Net Assets (0.89)% (0.88)% (0.61)% (0.95)%(4) - ------------------------------------- Portfolio Turnover Rate 138% 272% 206% 64% - ------------------------------------- Net Assets, End of Period (in thousands) $160,187 $146,324 $227,341 $233,785 - -------------------------------------------------------------------------------- (1) June 30, 2000 (inception) through November 30, 2000. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 21 Life Sciences - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2003 2002 2001 2000(1) PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $3.56 $4.89 $5.28 $5.26 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Loss(2) (0.03) (0.03) (0.02) (0.02) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 0.87 (1.30) (0.24) 0.04 - -------------------------------------------------------------------------------- Total From Investment Operations 0.84 (1.33) (0.26) 0.02 - -------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Realized Gains -- -- (0.13) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $4.40 $3.56 $4.89 $5.28 ================================================================================ TOTAL RETURN(3) 23.60% (27.20)% (4.97)% 0.38% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.30% 1.30% 1.30% 1.30%(4) - ------------------------------------- Ratio of Net Investment Loss to Average Net Assets (0.69)% (0.68)% (0.41)% (0.80)%(4) - ------------------------------------- Portfolio Turnover Rate 138% 272% 206% 64%(5) - ------------------------------------- Net Assets, End of Period (in thousands) $4,019 $3,365 $4,348 $3,363 - -------------------------------------------------------------------------------- (1) July 17, 2000 (commencement of sale) through November 30, 2000. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the period June 30, 2000 (inception of fund) through November 30, 2000. See Notes to Financial Statements. - ------ 22 Life Sciences - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted - ------------------------------------------------------------------------------ ADVISOR CLASS - ------------------------------------------------------------------------------ 2003 2002 2001 2000(1) PER-SHARE DATA - ------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $3.51 $4.86 $5.28 $5.48 - ------------------------------------------------------------------------------ Income From Investment Operations - ------------------------------------- Net Investment Loss(2) (0.04) (0.05) (0.04) --(3) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 0.86 (1.30) (0.25) (0.20) - ------------------------------------------------------------------------------ Total From Investment Operations 0.82 (1.35) (0.29) (0.20) - ------------------------------------------------------------------------------ Distributions - ------------------------------------- From Net Realized Gains -- -- (0.13) -- - ------------------------------------------------------------------------------ Net Asset Value, End of Period $4.33 $3.51 $4.86 $5.28 ============================================================================== TOTAL RETURN(4) 23.36% (27.78)% (5.55)% (3.65)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 1.75% 1.75% 1.75% 1.75%(5) - ------------------------------------- Ratio of Net Investment Loss to Average Net Assets (1.14)% (1.13)% (0.86)% (0.99)%(5) - ------------------------------------- Portfolio Turnover Rate 138% 272% 206% 64%(6) - ------------------------------------- Net Assets, End of Period (in thousands) $46 $25 $13 $11 - ------------------------------------------------------------------------------ (1) November 14, 2000 (commencement of sale) through November 30, 2000. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the period June 30, 2000 (inception of fund) through November 30, 2000. See Notes to Financial Statements. - ------ 23 Life Sciences - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted - ------------------------------------------------------------------------------ C CLASS - ------------------------------------------------------------------------------ 2003 2002 2001(1) PER-SHARE DATA - ------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $3.49 $4.87 $4.87 - ------------------------------------------------------------------------------ Income From Investment Operations - -------------------------------------------- Net Investment Loss(2) (0.07) (0.08) --(3) - -------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.86 (1.30) --(3) - ------------------------------------------------------------------------------ Total From Investment Operations 0.79 (1.38) --(3) - ------------------------------------------------------------------------------ Net Asset Value, End of Period $4.28 $3.49 $4.87 ============================================================================== TOTAL RETURN(4) 22.64% (28.34)% 0.00% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 2.50% 2.50% 2.50%(5) - -------------------------------------------- Ratio of Net Investment Loss to Average Net Assets (1.89)% (1.88)% (1.46)%(5) - -------------------------------------------- Portfolio Turnover Rate 138% 272% 206%(6) - -------------------------------------------- Net Assets, End of Period (in thousands) $10 $6 $3 - ------------------------------------------------------------------------------ (1) November 29, 2001 (commencement of sale) through November 30, 2001. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not include applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2001. See Notes to Financial Statements. - ------ 24 Technology - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2003(1) 2002(1) 2001(1) 2000(1)(2) PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $14.40 $20.90 $31.90 $50.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Loss(3) (0.19) (0.20) (0.20) (0.20) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 5.37 (6.30) (10.80) (17.90) - -------------------------------------------------------------------------------- Total From Investment Operations 5.18 (6.50) (11.00) (18.10) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $19.58 $14.40 $20.90 $31.90 ================================================================================ TOTAL RETURN(4) 35.97% (31.10)% (34.48)% (36.20)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50% 1.50% 1.50% 1.50%(5) - ------------------------------------- Ratio of Net Investment Loss to Average Net Assets (1.25)% (1.20)% (0.79)% (0.83)%(5) - ------------------------------------- Portfolio Turnover Rate 218% 251% 356% 125% - ------------------------------------- Net Assets, End of Period (in thousands) $202,884 $127,767 $173,877 $195,776 - -------------------------------------------------------------------------------- (1) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (2) June 30, 2000 (inception) through November 30, 2000. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 25 Technology - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted - ------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ------------------------------------------------------------------------------- 2003(1) 2002(1) 2001(1) 2000(1)(2) PER-SHARE DATA - ------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $14.50 $21.00 $31.90 $55.40 - ------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Loss(3) (0.16) (0.20) (0.20) (0.10) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 5.40 (6.30) (10.70) (23.40) - ------------------------------------------------------------------------------- Total From Investment Operations 5.24 (6.50) (10.90) (23.50) - ------------------------------------------------------------------------------- Net Asset Value, End of Period $19.74 $14.50 $21.00 $31.90 =============================================================================== TOTAL RETURN(4) 36.14% (30.95)% (34.17)% (42.42)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.30% 1.30% 1.30% 1.30%(5) - ------------------------------------- Ratio of Net Investment Loss to Average Net Assets (1.05)% (1.00)% (0.59)% (0.70)%(5) - ------------------------------------- Portfolio Turnover Rate 218% 251% 356% 125%(6) - ------------------------------------- Net Assets, End of Period (in thousands) $10,191 $8,444 $9,198 $7,995 - ------------------------------------------------------------------------------- (1) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (2) July 14, 2000 (commencement of sale) through November 30, 2000. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the period June 30, 2000 (inception of fund) through November 30, 2000. See Notes to Financial Statements. - ------ 26 Technology - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted - ------------------------------------------------------------------------------- ADVISOR CLASS - ------------------------------------------------------------------------------- 2003(1) 2002(1) 2001(1) 2000(1)(2) PER-SHARE DATA - ------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $14.30 $20.80 $31.90 $50.00 - ------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------- Net Investment Loss(3) (0.20) (0.20) (0.20) (0.20) - -------------------------------------- Net Realized and Unrealized Gain (Loss) 5.27 (6.30) (10.90) (17.90) - ------------------------------------------------------------------------------- Total From Investment Operations 5.07 (6.50) (11.10) (18.10) - ------------------------------------------------------------------------------- Net Asset Value, End of Period $19.37 $14.30 $20.80 $31.90 =============================================================================== TOTAL RETURN(4) 35.45% (31.25)% (34.80)% (36.20)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.75% 1.75% 1.75% 1.75%(5) - -------------------------------------- Ratio of Net Investment Loss to Average Net Assets (1.50)% (1.45)% (1.04)% (1.08)%(5) - -------------------------------------- Portfolio Turnover Rate 218% 251% 356% 125% - -------------------------------------- Net Assets, End of Period (in thousands) $18 $54 $1 $43 - ------------------------------------------------------------------------------- (1) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (2) June 30, 2000 (commencement of sale) through November 30, 2000. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 27 Independent Auditors' Report The Board of Directors and Shareholders, American Century World Mutual Funds, Inc: We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Life Sciences Fund and Technology Fund, (collectively the "Funds"), two of the funds comprising American Century World Mutual Funds, Inc., as of November 30, 2003, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned at November 30, 2003 by correspondence with the custodian and brokers. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Life Sciences Fund and Technology Fund as of November 30, 2003, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for the respective stated periods, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Kansas City, Missouri January 14, 2004 - ------ 28 Management The individuals listed below serve as directors or officers of the funds. Each director serves until his or her successor is duly elected and qualified or until he or she retires. Mandatory retirement age for independent directors is 75, although the remaining independent directors may temporarily waive this requirement on a case-by-case basis. Those listed as interested directors are "interested" primarily by virtue of their engagement as officers of American Century Companies, Inc. (ACC) or its wholly-owned subsidiaries, including the fund's investment advisor, American Century Investment Management, Inc. (ACIM); the fund's principal underwriter, American Century Investment Services, Inc. (ACIS); and the fund's transfer agent, American Century Services Corporation (ACSC). The other directors (more than two-thirds of the total number) are independent; that is, they are not employees or officers of, and have no financial interest in, ACC or any of its wholly-owned subsidiaries, including ACIM, ACIS, and ACSC. All persons named as officers of the funds also serve in similar capacities for other funds advised by ACIM. Only officers with policy-making functions are listed. 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. INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- THOMAS A. BROWN (63), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 22 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Strategic Account Implementation Manager, Applied Industrial Technologies, Inc., a corporation engaged in the sale of bearings and power transmission products NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ROBERT W. DOERING, M.D. (71), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director Emeritus(1) LENGTH OF TIME SERVED (YEARS): 1 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly a general surgeon NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ANDREA C. HALL, PH.D. (58), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 5 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, Midwest Research Institute NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Midwest Research Institute - -------------------------------------------------------------------------------- (1) Dr. Robert Doering resigned as full-time director, effective November 5, 2001, after serving in such capacity for 33 years. Dr. Doering continues to serve the board in an advisory capacity. His position as Director Emeritus is an advisory position and involves attendance at one board meeting per year to review prior year-end results for the funds. He receives all regular board communications, including monthly mailings, industry newsletters, email communications, and company information, but not quarterly board and committee materials relating to meetings that he does not attend. Dr. Doering is not a director or a member of the board and has no voting power relating to any matters relating to fund operations. He is not an interested person of the funds or ACIM. He receives an annual stipend of $2,500 for his services. (continued) - ------ 29 Management INDEPENDENT DIRECTORS (CONTINUED) - -------------------------------------------------------------------------------- D.D. (DEL) HOCK (68), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 6 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Chairman, Public Service Company of Colorado NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Allied Motion Technologies, Inc. and J.D. Edwards & Company - -------------------------------------------------------------------------------- DONALD H. PRATT (65), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director, Vice Chairman of the Board LENGTH OF TIME SERVED (YEARS): 7 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Western Investments, Inc.; Retired Chairman of the Board, Butler Manufacturing Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Atlas-Copco, North America Inc. - -------------------------------------------------------------------------------- GALE E. SAYERS (60), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 2 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Chief Executive Officer, and Founder, Sayers Computer Source NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- M. JEANNINE STRANDJORD (57), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 8 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President and Chief Integration Officer, Sprint Corporation (September 2003 to present); Senior Vice President - Financial Services, Sprint Corporation (January 2003 to September 2003); Senior Vice President, Finance - Global Markets Group, Sprint Corporation (November 1998 to January 2003) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, DST Systems, Inc.; Director, Euronet Worldwide - -------------------------------------------------------------------------------- TIMOTHY S. WEBSTER (42), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 1 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President and Chief Executive Officer, American Italian Pasta Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- INTERESTED DIRECTORS - -------------------------------------------------------------------------------- JAMES E. STOWERS, JR. (79)(1), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director, Chairman of the Board LENGTH OF TIME SERVED (YEARS): 44 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Director, and controlling shareholder, ACC; Chairman, ACSC and other ACC subsidiaries; Director, ACIM, ACSC, and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- JAMES E. STOWERS III (44)(1), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 12 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Co-Chairman, ACC (September 2000 to present); Chief Executive Officer, ACC (June 1996 to September 2000); Director, ACC, ACIM, ACSC, and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 39 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (1) James E. Stowers, Jr. is the father of James E. Stowers III. (continued) - ------ 30 Management OFFICERS - -------------------------------------------------------------------------------- WILLIAM M. LYONS (48), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: President LENGTH OF TIME SERVED (YEARS): 2 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC and other ACC subsidiaries (September 2000 to present); President, ACC (June 1997 to present); President, ACIM (September 2002 to present); President, ACIS (July 2003 to present); Chief Operating Officer, ACC (June 1996 to September 2000); Also serves as: Executive Vice President, ACSC and other ACC subsidiaries - -------------------------------------------------------------------------------- ROBERT T. JACKSON (57), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Executive Vice President LENGTH OF TIME SERVED (YEARS): 2 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC (August 1997 to present); Chief Financial Officer, ACC (May 1995 to October 2002); President, ACSC (January 1999 to present); Executive Vice President, ACC (May 1995 to present); Also serves as: Executive Vice President and Chief Financial Officer, ACIM, ACIS, and other ACC subsidiaries; and Treasurer, ACIM - -------------------------------------------------------------------------------- MARYANNE ROEPKE, CPA (47), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Senior Vice President, Treasurer, and Chief Accounting Officer LENGTH OF TIME SERVED (YEARS): 2 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President (April 1998 to present) and Assistant Treasurer (September 1985 to present), ACSC - -------------------------------------------------------------------------------- DAVID C. TUCKER (45), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel LENGTH OF TIME SERVED (YEARS): 4 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, ACIM, ACIS, ACSC, and other ACC subsidiaries (June 1998 to present); General Counsel, ACC, ACIM, ACIS, ACSC, and other ACC subsidiaries (June 1998 to present) - -------------------------------------------------------------------------------- ROBERT LEACH (37), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Controller LENGTH OF TIME SERVED (YEARS): 6 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACSC (February 2000 to present); Controller-Fund Accounting, ACSC (June 1997 to present) - -------------------------------------------------------------------------------- JON ZINDEL (36), 4500 Main Street, Kansas City, MO 64111 POSITION(S) HELD WITH FUND: Tax Officer LENGTH OF TIME SERVED (YEARS): 5 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, Corporate Tax, ACSC (April 1998 to present); Vice President, ACIM, ACIS, and other ACC subsidiaries (April 1999 to present); President,American Century Employee Benefit Services, Inc. (January 2000 to December 2000); Treasurer, American Century Employee Benefit Services, Inc. (December 2000 to present); Treasurer, American Century Ventures, Inc. (December 1999 to January 2001) - -------------------------------------------------------------------------------- The SAI has additional information about the funds' directors and is available without charge upon request by calling 1-800-345-2021. - ------ 31 Share Class Information Four classes of shares are authorized for sale by the funds: Investor Class, Institutional Class, Advisor Class, and C Class. The total expense ratios of Advisor and C Class shares are higher than that of Investor Class shares. The total expense ratio of Institutional Class shares is lower. INVESTOR CLASS shares are available for purchase in two ways: 1) directly from American Century without any commissions or other fees; or 2) through a broker-dealer, which may require payment of a transaction fee to the broker. INSTITUTIONAL CLASS shares are available to large investors such as endowments, foundations, and retirement plans, and to financial intermediaries serving these investors. This class recognizes the relatively lower cost of serving institutional customers and others who invest at least $5 million ($3 million for endowments and foundations) in an American Century fund or at least $10 million in multiple funds. In recognition of the larger investments and account balances and comparatively lower transaction costs, the total expense ratio of Institutional Class shares is 0.20% less than the total expense ratio of Investor Class shares. ADVISOR CLASS shares are sold primarily through institutions such as investment advisors, banks, broker-dealers, insurance companies, and financial advisors. Advisor Class shares are subject to a 0.50% annual Rule 12b-1 service and distribution fee. The total expense ratio of Advisor Class shares is 0.25% higher than the total expense ratio of Investor Class shares. C CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. C Class shares redeemed within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1.00%. There is no CDSC on shares acquired through reinvestment of dividends or capital gains. C Class shares also are subject to a Rule 12b-1 service and distribution fee of 1.00%. All classes of shares represent a pro rata interest in the funds and generally have the same rights and preferences. - ------ 32 Additional Information RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld. If you don't want us to withhold on this amount, you must notify us to not withhold the federal income tax. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc., the fund's manager, is responsible for exercising the voting rights associated with the securities purchased and/or held by the fund. A description of the policies and procedures the manager uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century's Web site at www.americancentury.com and on the Securities and Exchange Commission's Web site at www.sec.gov. - ------ 33 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The S&P SUPERCOMPOSITE 1500 INDEX combines the S&P 500, MidCap 400 and SmallCap 600 indices. The S&P SUPERCOMPOSITE 1500 HEALTH CARE INDEX represents those S&P SuperComposite 1500 companies in two main industry groups: Health care equipment and supplies companies or companies that provide health care related services, and companies that provide research, development, production and marketing of pharmaceuticals and biotechnology products. The S&P SUPERCOMPOSITE 1500 TECHNOLOGY INDEX represents those S&P SuperComposite 1500 companies in two main industry groups: Technology software and services companies, and technology hardware and equipment companies. The S&P 500 INDEX is a market-value weighted index of the stocks of 500 publicly traded U.S. companies chosen for market size, liquidity, and industry group representation that are considered to be leading firms in dominant industries. Each stock's weight in the index is proportionate to its market value. Created by Standard & Poor's, it is considered to be a broad measure of U.S. stock market performance. The GOLDMAN SACHS TECHNOLOGY INDUSTRY COMPOSITE INDEX is a modified capitalization-weighted index of selected technology stocks. The index is designed to represent the broadest measure of technology share price performance. - ------ 34 Notes - ------ 35 Notes - ------ 36 [inside back cover - blank page] [back cover] CONTACT US WWW.AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR RELATIONS: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL ADVISORS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY WORLD MUTUAL FUNDS, INC. INVESTMENT MANAGER: American Century Investment Management, Inc. Kansas City, Missouri THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. American Century Investments PRSRT STD P.O. Box 419200 U.S. POSTAGE PAID Kansas City, MO 64141-6200 AMERICAN CENTURY COMPANIES 0401 American Century Investment Services, Inc. SH-ANN-36707S (c)2004 American Century Services Corporation
ITEM 2. CODE OF ETHICS. (a) The registrant has adopted a Code of Ethics for Senior Financial Officers that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. (b) No response required. (c) None. (d) None. (e) Not applicable. (f) The registrant's Code of Ethics for Senior Financial Officers was filed as Exhibit 10(a) to American Century Mutual Fund, Inc.'s Annual Certified Shareholder Report on Form N-CSR, File No. 811-0816, on December 23, 2003, and is incorporated herein by reference. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1) The registrant's board has determined that the registrant has at least one audit committee financial expert serving on its audit committee. (a)(2) D. D. (Del) Hock, Donald H. Pratt and M. Jeannine Strandjord are the registrant's designated audit committee financial experts. They are "independent" as defined in Item 3 of Form N-CSR. (a)(3) Not applicable. (b) No response required. (c) No response required. (d) No response required. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable prior to annual filings for fiscal years ending after December 15, 2003. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable prior to the first reporting period ending after January 1, 2004. ITEM 10. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant's last fiscal half-year that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 11. EXHIBITS. (a)(1) Registrant's Code of Ethics for Senior Financial Officers, which is the subject of the disclosure required by Item 2 of Form N-CSR, was filed as Exhibit 10(a) to American Century Mutual Fund, Inc.'s Certified Shareholder Report on Form N-CSR, File No. 811-3706, on December 23, 2003. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as Exhibit 99.302CERT. (a)(3) Not applicable. (b) A certification by the registrant's chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is furnished and attached hereto as Exhibit 99.906CERT.SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: American Century World Mutual Funds, Inc. By: /s/ William M. Lyons ------------------------------------------- Name: William M. Lyons Title: President Date: January 29, 2004 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ William M. Lyons -------------------------------------------- Name: William M. Lyons Title: President (principal executive officer) Date: January 29, 2004 By: /s/ Maryanne L. Roepke --------------------------------------------- Name: Maryanne L. Roepke Title: Sr. Vice President, Treasurer, and Chief Accounting Officer (principal financial officer) Date: January 29, 2004