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 FUNDS, INC.
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(Exact name of registrant as specified in charter)
4500 MAIN STREET, KANSAS CITY, MISSOURI 64111
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(Address of principal executive offices) (Zip code)
DAVID C. TUCKER, ESQ., 4500 MAIN STREET, 9TH FLOOR, KANSAS CITY, MISSOURI 64111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 816-531-5575
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Date of fiscal year end: NOVEMBER 30, 2003
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Date of reporting period: MAY 31, 2004
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ITEM 1. REPORTS TO STOCKHOLDERS.
[front cover]
MAY 31, 2004
American Century Investments
Semiannual Report
[graphic of market line chart]
[graphic of starfish]
[graphic of side-by-side bridges]
International Growth Fund
[american century logo and text logo]
Table of Contents
Our Message to You .........................................................1
INTERNATIONAL GROWTH
Performance ................................................................2
Portfolio Commentary .......................................................4
Types of Investments in Portfolio .......................................4
Top Ten Holdings ........................................................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
OTHER INFORMATION
Share Class Information ...................................................27
Additional Information ....................................................29
Index Definition ..........................................................30
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 semiannual report for the International
Growth Fund for the six months ended May 31, 2004.
This report contains information that can help you monitor your investment.
You'll find details about your fund's return and holdings as well as data and
analysis that provide insight into the market conditions affecting the fund's
performance.
Through our Web site, americancentury.com, we provide quarterly commentaries on
all American Century portfolios, the views of our senior investment officers,
and other communications about investments, portfolio strategy, and the markets.
We also have many informative resources available in the Education & Planning
section of our site to help you with your investment strategy.
Your next shareholder report for this fund will be the annual report dated
November 30, 2004, available in approximately six months.
As always, we deeply appreciate your investment with American Century
Investments.
Sincerely,
/signature/James E. Stowers, Jr.
James E. Stowers, Jr.
FOUNDER AND CHAIRMAN
/signature/James E. Stowers III
James E. Stowers III
CO-CHAIRMAN OF THE BOARD
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1
International Growth - Performance
TOTAL RETURNS AS OF MAY 31, 2004
--------------------------------
AVERAGE ANNUAL RETURNS
- ------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
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INVESTOR CLASS 22.36% 0.65% 6.26% 8.79% 5/9/91
- ------------------------------------------------------------------------------
MSCI EAFE INDEX 32.66% 0.39% 3.98% 5.05%(1) --
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Institutional Class 22.39% 0.86% -- 4.14% 11/20/97
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Advisor Class 21.94% 0.38% -- 5.92% 10/2/96
- ------------------------------------------------------------------------------
A Class 1/31/03
No sales charge* 21.95% -- -- 23.48%
With sales charge* 15.00% -- -- 18.13%
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B Class 1/31/03
No sales charge* 21.21% -- -- 22.64%
With sales charge* 17.21% -- -- 19.81%
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C Class 21.34% -- -- -4.59% 6/4/01
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R Class -- -- -- 14.95%(2) 8/29/03
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*Sales charges include initial sales charges and contingent deferred sales
charges (CDSCs), as applicable. A Class shares have a maximum 5.75% initial
sales charge for equity funds and 4.50% maximum initial sales charge for fixed
income funds and may be subject to a maximum CDSC of 1.00%. 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. C Class shares redeemed within 12 months of purchase are subject to a
maximum CDSC of 1.00%. 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.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. 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.
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2
International Growth - Performance
GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made May 31, 1994
ONE-YEAR RETURNS OVER 10 YEARS
Periods ended May 31
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1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
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Investor
Class -2.89% 17.13% 23.36% 30.30% -2.85% 48.27% -22.48% -13.34% -15.25% 22.36%
- -----------------------------------------------------------------------------------------------
MSCI EAFE
Index 4.93% 10.67% 7.54% 11.11% 4.36% 17.14% -17.23% -9.60% -12.30% 32.66%
- -----------------------------------------------------------------------------------------------
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. 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.
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3
International Growth - Portfolio Commentary
[photo of Henrik Strabo and Keith Creveling]
A PORTFOLIO COMMENTARY FROM HENRIK STRABO AND KEITH CREVELING, PORTFOLIO
MANAGERS ON THE INTERNATIONAL GROWTH INVESTMENT TEAM.
International Growth advanced 7.43%* during the six months ending May 31, 2004,
while its benchmark, the Morgan Stanley Capital International EAFE Index,
returned 10.32%. The portfolio slightly outperformed the average 7.39% return
of its 216 peers in Morningstar's foreign large growth category.
Many equity markets in developed nations gained during the period, with the
EAFE Index advancing in each of the six months except April as countries
continued to report good news on the economic front and investors remained
confident of rising corporate profits.
Against that backdrop, all 10 sectors in which we were invested advanced, with
our complement of financial holdings posting the largest contribution. But a
variety of sectors--notably industrials, energy and consumer
discretionary--underperformed the index, ultimately causing the portfolio to lag
the benchmark. The movement of the dollar versus other currencies positively
impacted the fund's performance.
The financial sector, International Growth's biggest stake at the period's end,
advanced mostly on the strength of commercial banks, which on average
represented the portfolio's heaviest industry weighting. Banks weren't alone
in lifting the portfolio. Indeed, each financial sector industry in which the
fund was invested contributed, and the sector as a whole also outperformed
the index.
Japan's Sumitomo Mitsui Financial Group, a top-10 holding at the end of the
period, not only topped the list of banks contributing to International Growth,
but made the largest contribution to the portfolio. Sumitomo, one of Japan's
largest banks, benefited from a diminishing number of bad loans as the nation's
economy showed signs of gradual recovery. Two French banks that were among our
10-largest positions on
TYPES OF INVESTMENTS IN PORTFOLIO
- ------------------------------------------------------------
AS OF AS OF
5/31/04 11/30/03
- ------------------------------------------------------------
Common Stocks 99.0% 99.0%
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Preferred Stocks 0.9% 0.5%
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TOTAL EQUITY EXPOSURE 99.9% 99.5%
- ------------------------------------------------------------
Temporary Cash Investments 0.1% 0.5%
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TOP TEN HOLDINGS AS OF MAY 31, 2004
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% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- ------------------------------------------------------------
Total SA Cl B 2.6% --
- ------------------------------------------------------------
Roche Holding AG 2.5% 1.6%
- ------------------------------------------------------------
Sumitomo Mitsui
Financial Group Inc. 2.1% 0.7%
- ------------------------------------------------------------
Samsung Electronics 2.1% 1.3%
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Smith & Nephew plc 2.1% 0.4%
- ------------------------------------------------------------
Novartis AG 2.0% --
- ------------------------------------------------------------
Reckitt Benckiser plc 1.9% 1.5%
- ------------------------------------------------------------
Vodafone Group plc 1.7% 2.0%
- ------------------------------------------------------------
Canon, Inc. 1.6% 0.6%
- ------------------------------------------------------------
Hoya Corp. 1.6% 1.2%
- ------------------------------------------------------------
*All fund returns referenced in this commentary are for Investor Class shares.
(continued)
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4
International Growth - Portfolio Commentary
average during the period, Societe Generale and Credit Agricole, also
contributed to our return.
Elsewhere in the sector, a variety of companies benefited from a high level of
activity in the equity markets. Japan's Orix Corp. topped contributors in the
consumer finance industry, while the United Kingdom's Man Group and Credit
Suisse, a top-10 position on average throughout the period, made the largest
contributions to the capital markets industry.
Our overweight stake in the telecommunications services sector made the
second-largest contribution to performance. The sector also registered the
period's best relative performance, outperforming EAFE on the strength of its
wireless holdings. Mobile Telesystems, a mobile-phone company in Russia, and
mmo2, a wireless company in the United Kingdom, were among the winners.
We benefited in absolute terms from companies that make consumer goods, ranging
from sports cars to sporting goods. Consumer spending remained relatively strong
during the period, lifting German sportswear company Puma AG Rudolf Dassler
Sport, United Kingdom retailer Next, Germany's Porsche and a variety of other
companies in our consumer discretionary sector. But the sector lagged relative
to the index, with our selections in the automobile industry--Porsche aside--
doing much of the damage.
Although all sectors made positive contributions, several slowed our
performance against the EAFE Index, including industrials, energy and, as
mentioned above, consumer discretionary. Industrials registered the worst
performance against the index, due mostly to Switzerland's Adecco, the
world's largest provider of temporary workers. Adecco came under
investigation during the period for potential accounting irregularities. We
eliminated the position, but it was among the period's top detractors.
International Growth's energy sector delivered the second-worst performance
against the benchmark. In the oil and gas industry, the portfolio owned several
declining businesses that were not in the index.
In conclusion, we remain committed to our long-standing process of identifying
companies demonstrating fundamental strength and sustainable improvement in
their business.
TOP FIVE SECTORS AS OF MAY 31, 2004
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- --------------------------------------------------------------------------------
Financials 20.0% 28.4%
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Consumer Discretionary 18.4% 15.9%
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Industrials 11.5% 11.9%
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Health Care 11.2% 7.6%
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Consumer Staples 9.3% 4.1%
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INVESTMENTS BY COUNTRY
AS OF MAY 31, 2004
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% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
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United Kingdom 19.0% 19.6%
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Japan 19.0% 19.9%
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France 13.1% 13.7%
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Switzerland 11.3% 9.7%
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Germany 6.2% 11.4%
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Spain 4.5% 0.7%
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South Korea 3.2% 2.5%
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Australia 2.8% 0.6%
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Sweden 2.6% 3.2%
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Other* 18.3% 18.7%
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*Includes Temporary Cash Investments.
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5
International Growth - Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 99.0%
AUSTRALIA -- 2.8%
- --------------------------------------------------------------------------------
3,418,355 BHP Billiton Limited $ 29,381
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969,420 Commonwealth Bank of Australia 22,735
- --------------------------------------------------------------------------------
3,533,380 QBE Insurance Group Limited 31,502
- --------------------------------------------------------------------------------
83,618
- --------------------------------------------------------------------------------
AUSTRIA -- 1.4%
- --------------------------------------------------------------------------------
267,081 Erste Bank der Oesterreichischen
Sparkassen AG 41,261
- --------------------------------------------------------------------------------
BERMUDA -- 2.0%
- --------------------------------------------------------------------------------
581,250 Nabors Industries Ltd.(1) 24,064
- --------------------------------------------------------------------------------
1,196,110 Tyco International Ltd. 36,828
- --------------------------------------------------------------------------------
60,892
- --------------------------------------------------------------------------------
CHANNEL ISLANDS -- 0.6%
- --------------------------------------------------------------------------------
693,460 Amdocs Ltd.(1) 17,115
- --------------------------------------------------------------------------------
BRAZIL -- 0.3%
- --------------------------------------------------------------------------------
718,960 Tele Norte Leste
Participacoes SA ADR 8,139
- --------------------------------------------------------------------------------
FRANCE -- 13.1%
- --------------------------------------------------------------------------------
560,246 Accor SA 23,235
- --------------------------------------------------------------------------------
1,752,349 Axa(2) 35,953
- --------------------------------------------------------------------------------
269,000 Cie Generale D'Optique Essilor
International SA 16,689
- --------------------------------------------------------------------------------
1,545,623 Credit Agricole SA(2) 37,997
- --------------------------------------------------------------------------------
249,100 Lafarge SA 21,508
- --------------------------------------------------------------------------------
345,087 LVMH Moet Hennessy
Louis Vuitton SA 24,654
- --------------------------------------------------------------------------------
209,790 Pernod-Ricard SA 26,261
- --------------------------------------------------------------------------------
440,180 Schneider SA 29,620
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397,290 Societe Generale Cl A(2) 33,672
- --------------------------------------------------------------------------------
413,150 Total SA Cl B(2) 77,551
- --------------------------------------------------------------------------------
242,050 Vinci SA 23,264
- --------------------------------------------------------------------------------
1,522,410 Vivendi Universal SA(1) 38,802
- --------------------------------------------------------------------------------
389,206
- --------------------------------------------------------------------------------
GERMANY -- 5.3%
- --------------------------------------------------------------------------------
404,740 Continental AG 18,165
- --------------------------------------------------------------------------------
476,640 Metro AG(1) 23,074
- --------------------------------------------------------------------------------
150,100 Puma AG Rudolf Dassler Sport 36,640
- --------------------------------------------------------------------------------
263,100 SAP AG 42,474
- --------------------------------------------------------------------------------
545,340 Siemens AG(2) 38,388
- --------------------------------------------------------------------------------
158,741
- --------------------------------------------------------------------------------
GREECE -- 1.5%
- --------------------------------------------------------------------------------
686,126 Alpha Bank A.E. 17,948
- --------------------------------------------------------------------------------
788,250 Greek Organization
of Football Prognostics 15,152
- --------------------------------------------------------------------------------
410,510 Public Power Corporation 10,257
- --------------------------------------------------------------------------------
43,357
- --------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
HONG KONG -- 1.2%
- --------------------------------------------------------------------------------
3,748,000 Espirit Holdings Limited $ 16,352
- --------------------------------------------------------------------------------
8,460,000 Li & Fung Limited 12,538
- --------------------------------------------------------------------------------
913,000 Sun Hung Kai Properties Ltd. 7,761
- --------------------------------------------------------------------------------
36,651
- --------------------------------------------------------------------------------
INDIA -- 0.7%
- --------------------------------------------------------------------------------
2,053,500 Reliance Industries Ltd. 19,499
- --------------------------------------------------------------------------------
IRELAND -- 1.4%
- --------------------------------------------------------------------------------
1,675,680 Anglo Irish Bank Corporation 26,604
- --------------------------------------------------------------------------------
771,143 CRH plc 16,311
- --------------------------------------------------------------------------------
42,915
- --------------------------------------------------------------------------------
ISRAEL -- 1.2%
- --------------------------------------------------------------------------------
546,234 Teva Pharmaceutical
Industries Ltd. ADR 36,144
- --------------------------------------------------------------------------------
ITALY -- 0.5%
- --------------------------------------------------------------------------------
1,582,100 Saipem SpA 14,414
- --------------------------------------------------------------------------------
JAPAN -- 19.0%
- --------------------------------------------------------------------------------
2,944,000 Bank of Yokohama Ltd. (The)(2) 16,824
- --------------------------------------------------------------------------------
978,000 Canon, Inc. 48,350
- --------------------------------------------------------------------------------
1,501,580 Chugai Pharmaceutical Co. Ltd. 22,815
- --------------------------------------------------------------------------------
360,000 Fast Retailing Company Limited 25,831
- --------------------------------------------------------------------------------
463,700 Hoya Corp. 47,994
- --------------------------------------------------------------------------------
670,000 Ito-Yokado Co., Ltd. 27,289
- --------------------------------------------------------------------------------
562,000 JSR Corp. 11,980
- --------------------------------------------------------------------------------
1,597,100 Marui Co., Ltd. 21,311
- --------------------------------------------------------------------------------
2,726,000 Matsushita Electric
Industrial Co., Ltd. 37,735
- --------------------------------------------------------------------------------
2,420 Mitsubishi Tokyo
Financial Group, Inc. 20,854
- --------------------------------------------------------------------------------
2,474,000 Mitsui & Co. Ltd. 18,896
- --------------------------------------------------------------------------------
731,000 Omron Corp. 16,080
- --------------------------------------------------------------------------------
229,400 ORIX Corporation 23,327
- --------------------------------------------------------------------------------
2,801,000 Sharp Corp. 47,539
- --------------------------------------------------------------------------------
8,860 Sumitomo Mitsui
Financial Group Inc.(2) 63,654
- --------------------------------------------------------------------------------
2,555,000 Toppan Printing Co. Ltd. 31,173
- --------------------------------------------------------------------------------
5,876,000 Toray Industries Inc. 27,077
- --------------------------------------------------------------------------------
864,100 Toyota Motor Corp. 31,353
- --------------------------------------------------------------------------------
830,000 Yamaha Motor Co. Ltd. 11,934
- --------------------------------------------------------------------------------
1,108,000 Yamato Transport Co. Ltd. 15,780
- --------------------------------------------------------------------------------
567,796
- --------------------------------------------------------------------------------
MEXICO -- 0.9%
- --------------------------------------------------------------------------------
732,400 America Movil SA
de CV Series L ADR 25,671
- --------------------------------------------------------------------------------
NETHERLANDS -- 1.6%
- --------------------------------------------------------------------------------
1,294,479 ING Groep N.V. 29,215
- --------------------------------------------------------------------------------
560,730 Royal Numico N.V.(1) 17,825
- --------------------------------------------------------------------------------
47,040
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
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6
International Growth - Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
NORWAY -- 1.5%
- --------------------------------------------------------------------------------
451,890 Norsk Hydro ASA $ 27,988
- --------------------------------------------------------------------------------
2,459,100 Telenor ASA 17,626
- --------------------------------------------------------------------------------
45,614
- --------------------------------------------------------------------------------
PEOPLE'S REPUBLIC OF CHINA -- 0.7%
- --------------------------------------------------------------------------------
20,984,000 Huaneng Power
International, Inc.(2) 19,522
- --------------------------------------------------------------------------------
RUSSIAN FEDERATION -- 1.8%
- --------------------------------------------------------------------------------
314,824 Mobile Telesystems ADR 36,960
- --------------------------------------------------------------------------------
191,470 Vimpel-Communications ADR(1) 17,663
- --------------------------------------------------------------------------------
54,623
- --------------------------------------------------------------------------------
SOUTH AFRICA -- 0.6%
- --------------------------------------------------------------------------------
3,630,860 MTN Group Limited(1) 16,410
- --------------------------------------------------------------------------------
SOUTH KOREA -- 3.2%
- --------------------------------------------------------------------------------
825,820 Hana Bank 18,344
- --------------------------------------------------------------------------------
398,490 Hyundai Motor Co. Ltd. 15,277
- --------------------------------------------------------------------------------
141,260 Samsung Electronics 62,997
- --------------------------------------------------------------------------------
96,618
- --------------------------------------------------------------------------------
SPAIN -- 4.5%
- --------------------------------------------------------------------------------
863,430 Abertis Infraestructuras SA 14,562
- --------------------------------------------------------------------------------
351,447 ACS, Actividades de
Construccion y Servicios, SA 17,164
- --------------------------------------------------------------------------------
178,537 Gamesa 8,006
- --------------------------------------------------------------------------------
485,350 Grupo Ferrovial SA 19,104
- --------------------------------------------------------------------------------
1,860,550 Repsol YPF SA(2) 39,445
- --------------------------------------------------------------------------------
2,406,278 Telefonica SA(2) 34,911
- --------------------------------------------------------------------------------
133,192
- --------------------------------------------------------------------------------
SWEDEN -- 2.6%
- --------------------------------------------------------------------------------
79,434 Ainax AB(1) 2,451
- --------------------------------------------------------------------------------
12,980,450 Telefonaktiebolaget LM
Ericsson B Shares(1) 36,218
- --------------------------------------------------------------------------------
1,231,230 Volvo AB Cl B(2) 39,886
- --------------------------------------------------------------------------------
78,555
- --------------------------------------------------------------------------------
SWITZERLAND -- 11.3%
- --------------------------------------------------------------------------------
6,469,082 ABB Limited(1)(2) 36,137
- --------------------------------------------------------------------------------
112,320 Alcon, Inc. 8,813
- --------------------------------------------------------------------------------
907,330 Compagnie Financiere
Richemont AG Cl A 23,387
- --------------------------------------------------------------------------------
1,065,490 Credit Suisse Group(1) 36,605
- --------------------------------------------------------------------------------
123,140 Nestle SA 32,035
- --------------------------------------------------------------------------------
1,303,930 Novartis AG 58,480
- --------------------------------------------------------------------------------
698,295 Roche Holding AG(2) 73,557
- --------------------------------------------------------------------------------
195,700 Synthes, Inc. 23,035
- --------------------------------------------------------------------------------
608,946 UBS AG 43,687
- --------------------------------------------------------------------------------
335,736
- --------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
THAILAND -- 0.3%
- --------------------------------------------------------------------------------
1,825,776 Siam Cement Public
Company Limited (The) $ 9,634
- --------------------------------------------------------------------------------
UNITED KINGDOM -- 19.0%
- --------------------------------------------------------------------------------
675,551 AstraZeneca plc 31,437
- --------------------------------------------------------------------------------
3,958,080 BP plc 34,631
- --------------------------------------------------------------------------------
2,569,320 British Sky Broadcasting plc 28,868
- --------------------------------------------------------------------------------
3,038,270 Cadbury Schweppes plc 25,874
- --------------------------------------------------------------------------------
1,797,910 Diageo plc 23,839
- --------------------------------------------------------------------------------
1,693,795 EMI Group plc 6,793
- --------------------------------------------------------------------------------
2,098,670 Enterprise Inns plc 23,619
- --------------------------------------------------------------------------------
1,399,334 Man Group plc 41,875
- --------------------------------------------------------------------------------
8,705,087 mmO2 plc(1) 15,544
- --------------------------------------------------------------------------------
1,041,010 Next plc 26,424
- --------------------------------------------------------------------------------
1,827,530 Pearson plc 22,257
- --------------------------------------------------------------------------------
2,142,832 Reckitt Benckiser plc 58,003
- --------------------------------------------------------------------------------
950,964 Royal Bank of Scotland Group plc 28,684
- --------------------------------------------------------------------------------
5,907,680 Smith & Nephew plc 61,887
- --------------------------------------------------------------------------------
944,540 Standard Chartered plc 15,577
- --------------------------------------------------------------------------------
9,420,320 Tesco plc 42,958
- --------------------------------------------------------------------------------
1,933,090 United Business Media plc 15,648
- --------------------------------------------------------------------------------
21,876,851 Vodafone Group plc 51,384
- --------------------------------------------------------------------------------
1,030,510 Wolseley plc 15,495
- --------------------------------------------------------------------------------
570,797
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $2,554,003) 2,953,160
- --------------------------------------------------------------------------------
PREFERRED STOCKS -- 0.9%
GERMANY -- 0.9%
- --------------------------------------------------------------------------------
38,210 Porsche AG 25,805
(Cost $18,217)
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 0.1%
Repurchase Agreement, Morgan Stanley
Group, Inc., (U.S. Treasury obligations),
in a joint trading account at 0.94%,
dated 5/28/04, due 6/1/04
(Delivery value $2,100)
(Cost $2,100) 2,100
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 100.0%
(Cost $2,574,320) $2,981,065
================================================================================
See Notes to Financial Statements. (continued)
- ------
7
International Growth - Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COLLATERAL RECEIVED
FOR SECURITIES LENDING(3)
REPURCHASE AGREEMENTS
- --------------------------------------------------------------------------------
Repurchase Agreement, Deutsche Bank AG,
(U.S. Treasury obligations), 1.04%, dated 5/28/04,
due 6/1/04 (Delivery value $16,908) $ 16,906
- --------------------------------------------------------------------------------
SHORT-TERM DEBT
- --------------------------------------------------------------------------------
$11,998 Bayerische Landesbank
Girozentrale, VRN, 1.08%, 6/1/04,
resets daily off the Federal Funds
rate plus 0.06% with no caps 11,992
- --------------------------------------------------------------------------------
12,000 Capital One Multi-Asset Execution
Trust, Series 2003 A2, Class A2,
VRN, 1.21%, 6/15/04, resets
monthly off the 1-month LIBOR
plus 0.11% with no caps 12,000
- --------------------------------------------------------------------------------
20,000 Citigroup Global Markets
Holding Inc., VRN, 1.16%, 6/14/04,
resets quarterly off the 3-month
LIBOR plus 0.05% with no caps 20,000
- --------------------------------------------------------------------------------
12,000 Credit Agricole Indosuez SA, VRN,
1.03%, 6/11/04, resets monthly
off the 1-month LIBOR
minus 0.08% and no caps 11,990
- --------------------------------------------------------------------------------
17,000 Ford Credit Floorplan Master
Owner Trust, Series 2001-1,
Class A, VRN, 1.19%, 6/15/04,
resets monthly off the 1-month
LIBOR plus 0.09% with no caps 17,002
- --------------------------------------------------------------------------------
5,110 John Hancock Global Funding II,
VRN, 1.34%, 6/1/04, resets daily
off the Federal Funds Rate
plus 0.34% 5,123
- --------------------------------------------------------------------------------
20,000 RACERS(sm), Series 2000-7,
Class A3, VRN, 1.30%, 6/15/04,
resets monthly off the 1-month
LIBOR plus 0.20% with no caps
(Acquired 5/17/04, Cost $20,000)(4) 20,000
- --------------------------------------------------------------------------------
28,000 SPARCS 2003-3, VRN, 1.47%,
8/25/04, resets quarterly off
the 3-month LIBOR plus 0.30%
with no caps (Acquired 5/24/04,
Cost $28,000)(4) 28,000
- --------------------------------------------------------------------------------
126,107
- --------------------------------------------------------------------------------
TOTAL COLLATERAL
RECEIVED
FOR SECURITIES LENDING
(Cost $143,013) $143,013
================================================================================
MARKET SECTOR DIVERSIFICATION
Consumer Discretionary 18.4%
- --------------------------------------------------------------------------------
Consumer Staples 9.3%
- --------------------------------------------------------------------------------
Energy 8.0%
- --------------------------------------------------------------------------------
Financials 20.0%
- --------------------------------------------------------------------------------
Health Care 11.2%
- --------------------------------------------------------------------------------
Industrials 11.5%
- --------------------------------------------------------------------------------
Information Technology 9.1%
- --------------------------------------------------------------------------------
Materials 3.9%
- --------------------------------------------------------------------------------
Telecommunication Services 7.5%
- --------------------------------------------------------------------------------
Utilities 1.0%
- --------------------------------------------------------------------------------
Temporary Cash Investments 0.1%
- --------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
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.
SPARCS = Structured Product Asset Return Certificates
VRN = Variable Rate Note. Interest reset date is indicated, unless otherwise
noted. Rate shown is effective May 31, 2004.
(1) Non-income producing.
(2) Security, or a portion thereof, was on loan as of May 31, 2004.
(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.)
(4) Security was purchased under Rule 144A of the Securities Act of 1933
or is a private placement and, unless registered under the Act or exempted
from registration, may only be sold to qualified institutional investors.
The aggregate value of restricted securities purchased by the lending agent
with cash collateral received for securities lending at May 31, 2004, was
$48,000 (in thousands), which represented 1.6% of net assets.
See Notes to Financial Statements.
- ------
8
Statement of Assets and Liabilities
MAY 31, 2004 (UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investment securities, at value
(cost of $2,574,320) -- including
$135,200 of securities loaned $2,981,065
- ---------------------------------------------------
Investments made with cash
collateral received for
securities on loan, at value
(cost of $143,013) 143,013
- --------------------------------------------------------------------------------
Total investment securities,
at value (cost of $2,717,333) 3,124,078
- ---------------------------------------------------
Cash 2,078
- ---------------------------------------------------
Foreign currency holdings,
at value (cost of $23,416) 23,272
- ---------------------------------------------------
Receivable for investments sold 47,806
- ---------------------------------------------------
Receivable for capital shares sold 313
- ---------------------------------------------------
Dividends and interest receivable 12,285
- --------------------------------------------------------------------------------
3,209,832
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payable for collateral received
on securities loaned 143,013
- ---------------------------------------------------
Payable for investments purchased 65,088
- ---------------------------------------------------
Accrued management fees 3,061
- ---------------------------------------------------
Distribution fees payable 57
- ---------------------------------------------------
Service fees and service and
distribution fees payable 57
- --------------------------------------------------------------------------------
211,276
- --------------------------------------------------------------------------------
NET ASSETS $2,998,556
================================================================================
See Notes to Financial Statements. (continued)
- ------
9
Statement of Assets and Liabilities
MAY 31, 2004 (UNAUDITED)
(AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS)
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Capital (par value and paid-in surplus) $ 3,840,219
- ------------------------------------------------------------
Undistributed net investment income 13,302
- ------------------------------------------------------------
Accumulated net realized loss on investment
and foreign currency transactions (1,261,628)
- ------------------------------------------------------------
Net unrealized appreciation on investments
and translation of assets and
liabilities in foreign currencies 406,663
- --------------------------------------------------------------------------------
$ 2,998,556
================================================================================
INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- --------------------------------------------------------------------------------
Net assets $2,407,748,247
- ------------------------------------------------------------
Shares outstanding 299,443,924
- ------------------------------------------------------------
Net asset value per share $8.04
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- --------------------------------------------------------------------------------
Net assets $313,100,704
- ------------------------------------------------------------
Shares outstanding 38,875,253
- ------------------------------------------------------------
Net asset value per share $8.05
- --------------------------------------------------------------------------------
ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- --------------------------------------------------------------------------------
Net assets $262,125,024
- ------------------------------------------------------------
Shares outstanding 32,670,509
- ------------------------------------------------------------
Net asset value per share $8.02
- --------------------------------------------------------------------------------
A CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- --------------------------------------------------------------------------------
Net assets $10,576,438
- ------------------------------------------------------------
Shares outstanding 1,316,893
- ------------------------------------------------------------
Net asset value per share $8.03
- ------------------------------------------------------------
Maximum offering price
(net asset value divided by 0.9425) $8.52
- --------------------------------------------------------------------------------
B CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- --------------------------------------------------------------------------------
Net assets $1,012,501
- ------------------------------------------------------------
Shares outstanding 126,614
- ------------------------------------------------------------
Net asset value per share $8.00
- --------------------------------------------------------------------------------
C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- --------------------------------------------------------------------------------
Net assets $3,712,316
- ------------------------------------------------------------
Shares outstanding 466,574
- ------------------------------------------------------------
Net asset value per share $7.96
- --------------------------------------------------------------------------------
R CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- --------------------------------------------------------------------------------
Net assets $281,450
- ------------------------------------------------------------
Shares outstanding 35,091
- ------------------------------------------------------------
Net asset value per share $8.02
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- ------
10
Statement of Operations
FOR THE SIX MONTHS ENDED MAY 31, 2004 (UNAUDITED)
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
INCOME:
- -------------------------------------------------------
Dividends (net of foreign taxes withheld of $4,597) $ 35,476
- -------------------------------------------------------
Securities lending 684
- -------------------------------------------------------
Interest and other income 108
- --------------------------------------------------------------------------------
36,268
- --------------------------------------------------------------------------------
EXPENSES:
- -------------------------------------------------------
Management fees 19,223
- -------------------------------------------------------
Distribution fees:
- -------------------------------------------------------
Advisor Class 326
- -------------------------------------------------------
B Class 3
- -------------------------------------------------------
C Class 11
- -------------------------------------------------------
Service fees:
- -------------------------------------------------------
Advisor Class 326
- -------------------------------------------------------
B Class 1
- -------------------------------------------------------
C Class 4
- -------------------------------------------------------
Service and distribution fees:
- -------------------------------------------------------
A Class 15
- -------------------------------------------------------
R Class 1
- -------------------------------------------------------
Directors' fees and expenses 24
- -------------------------------------------------------
Other expenses 84
- --------------------------------------------------------------------------------
20,018
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 16,250
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
NET REALIZED GAIN ON:
- -------------------------------------------------------
Investment transactions 190,155
- -------------------------------------------------------
Foreign currency transactions 136,579
- --------------------------------------------------------------------------------
326,734
- --------------------------------------------------------------------------------
CHANGE IN NET UNREALIZED APPRECIATION ON:
- -------------------------------------------------------
Investments (41,657)
- -------------------------------------------------------
Translation of assets and liabilities in foreign currencies (73,440)
- --------------------------------------------------------------------------------
(115,097)
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN 211,637
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 227,887
================================================================================
See Notes to Financial Statements.
- ------
11
Statement of Changes in Net Assets
SIX MONTHS ENDED MAY 31, 2004 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2003
(AMOUNTS IN THOUSANDS)
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS 2004 2003
- --------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------
Net investment income $ 16,250 $ 23,587
- --------------------------------------------------
Net realized gain 326,734 16,015
- --------------------------------------------------
Change in net unrealized appreciation (115,097) 343,964
- --------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 227,887 383,566
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------
From net investment income:
- --------------------------------------------------
Investor Class (18,919) (20,175)
- --------------------------------------------------
Institutional Class (2,929) (2,772)
- --------------------------------------------------
Advisor Class (1,198) (1,186)
- --------------------------------------------------
A Class (47) --
- --------------------------------------------------
R Class -- --
- --------------------------------------------------------------------------------
Decrease in net assets from distributions (23,093) (24,133)
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------
Net decrease in net assets
from capital share transactions (260,023) (184,230)
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (55,229) 175,203
- --------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of period 3,053,785 2,878,582
- --------------------------------------------------------------------------------
End of period $2,998,556 $3,053,785
================================================================================
Undistributed net investment income $13,302 $20,145
================================================================================
See Notes to Financial Statements.
- ------
12
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED) (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 this 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 may be valued through a
commercial pricing service or at amortized cost, which approximates fair value.
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
such fair value determination would materially impact a fund's net asset value.
Valuations may not be readily available if, for example: an event occurred after
the close of the exchange on which a portfolio security principally trades (but
before the close of the New York Stock Exchange) that was likely to have changed
the value of the security; a security has been declared in default; trading in a
security has been halted during the trading day; or the demand for the security
(as reflected by its trading volume) is insufficient for quoted prices to be
reliable.
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
MAY 31, 2004 (UNAUDITED) (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 substantially 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 -- The fund may impose a 2% redemption fee on shares held less than
60 days. The fee may not be applicable to all classes. The redemption fee is
recorded as a reduction in the cost of shares redeemed. The redemption fee is
retained by the fund and helps cover transaction costs that long-term investors
may bear when the fund sells securities to meet investor redemptions. The fund
adopted the redemption fee policy effective March 1, 2004.
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
MAY 31, 2004 (UNAUDITED) (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 & 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 six months ended May 31, 2004 for
the Investor (A, B, C, and R), Institutional and Advisor Classes was 1.26%,
1.06% and 1.01%, 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 CLASSES
- --------------------------------------------------------------------------------
Distribution Fee 0.25% 0.75%
- --------------------------------------------------------------------------------
Service Fee 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. Fees incurred under the plans during the six months
ended May 31, 2004, 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 six months ended May 31, 2004, 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 and securities lending agreement with JPMorgan Chase
Bank (JPMCB). JPMCB is a wholly owned subsidiary of JPM.
(continued)
- ------
15
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED) (AMOUNTS IN THOUSANDS)
3. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, excluding short-term investments,
for the six months ended May 31, 2004, were $2,325,458 and $2,600,932,
respectively.
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the fund were as follows:
SHARES AMOUNT
- --------------------------------------------------------------------------------
INVESTOR CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 1,000,000
================================================================================
Sold 49,475 $ 401,762
- --------------------------------------------------
Issued in reinvestment of distributions 2,136 16,449
- --------------------------------------------------
Redeemed(1) (83,980) (682,411)
- --------------------------------------------------------------------------------
Net decrease (32,369) $(264,200)
================================================================================
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)
================================================================================
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 150,000
================================================================================
Sold 8,478 $ 68,487
- --------------------------------------------------
Issued in reinvestment of distributions 333 2,564
- --------------------------------------------------
Redeemed(2) (9,848) (79,644)
- --------------------------------------------------------------------------------
Net decrease (1,037) $ (8,593)
================================================================================
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)
================================================================================
(1) Net of redemption fees of $6.
(2) Net of redemption fees of $2.
(continued)
- ------
16
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED) (AMOUNTS IN THOUSANDS)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
SHARES AMOUNT
- --------------------------------------------------------------------------------
ADVISOR CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 100,000
================================================================================
Sold 12,258 $100,186
- --------------------------------------------------
Issued in reinvestment of distributions 149 1,147
- --------------------------------------------------
Redeemed(1) (11,563) (93,938)
- --------------------------------------------------------------------------------
Net increase 844 $ 7,395
================================================================================
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
================================================================================
A CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 25,000
================================================================================
Sold 1,159 $ 9,377
- --------------------------------------------------
Issued in reinvestment of distributions 6 46
- --------------------------------------------------
Redeemed (830) (6,467)
- --------------------------------------------------------------------------------
Net increase 335 $ 2,956
================================================================================
PERIOD ENDED NOVEMBER 30, 2003(2)
SHARES AUTHORIZED 25,000
================================================================================
Sold 1,879 $12,853
- --------------------------------------------------
Redeemed (897) (6,113)
- --------------------------------------------------------------------------------
Net increase 982 $ 6,740
================================================================================
B CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 25,000
================================================================================
Sold 58 $471
- --------------------------------------------------
Redeemed -- (2)
- --------------------------------------------------------------------------------
Net increase 58 $469
================================================================================
PERIOD ENDED NOVEMBER 30, 2003(2)
SHARES AUTHORIZED 25,000
================================================================================
Sold 69 $471
- --------------------------------------------------
Redeemed -- (3)
- --------------------------------------------------------------------------------
Net increase 69 $468
================================================================================
(1) Net of redemption fees of $6.
(2) January 31, 2003 (commencement of sale) through November 30, 2003.
(continued)
- ------
17
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED) (AMOUNTS IN THOUSANDS)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
SHARES AMOUNT
- --------------------------------------------------------------------------------
C CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 25,000
================================================================================
Sold 242 $1,946
- --------------------------------------------------
Redeemed (35) (282)
- --------------------------------------------------------------------------------
Net increase 207 $1,664
================================================================================
YEAR ENDED NOVEMBER 30, 2003
SHARES AUTHORIZED 25,000
================================================================================
Sold 305 $ 2,054
- --------------------------------------------------
Redeemed (183) (1,237)
- --------------------------------------------------------------------------------
Net increase 122 $ 817
================================================================================
R CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 50,000
================================================================================
Sold 176 $ 1,481
- --------------------------------------------------
Redeemed (141) (1,195)
- --------------------------------------------------------------------------------
Net increase 35 $ 286
================================================================================
PERIOD ENDED NOVEMBER 30, 2003(1)
SHARES AUTHORIZED 50,000
================================================================================
Sold -- $2
================================================================================
(1) August 29, 2003 (commencement of sale) through November 30, 2003.
5. SECURITIES LENDING
As of May 31, 2004, securities in the fund valued at $135,200 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
$143,013. 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 $650 million
unsecured bank line of credit agreement with JPMCB. 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 six months ended May 31, 2004.
(continued)
- ------
18
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED) (AMOUNTS IN THOUSANDS)
7. RISK FACTORS
There are certain risks involved in investing in foreign securities. These risks
include those resulting from future adverse political, social, and economic
developments, fluctuations in currency exchange rates, the possible imposition
of exchange controls, and other foreign laws or restrictions.
8. 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.
As of May 31, 2004, the components of investments for federal income tax
purposes were as follows:
Federal tax cost of investments $2,730,548
================================================================================
Gross tax appreciation of investments $433,147
- --------------------------------------------------------------------
Gross tax depreciation of investments (39,617)
- --------------------------------------------------------------------------------
Net tax appreciation of investments $393,530
================================================================================
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.
As of November 30, 2003, the fund had net capital loss carryovers of $880,802,
$637,151, and $57,766, expiring in 2009, 2010, and 2011, respectively, that
may be used to offset future realized capital gains for federal income tax
purposes.
As of November 30, 2003 the fund had currency loss deferrals of $575, which
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.
- ------
19
International Growth - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
- -----------------------------------------------------------------------------------------------------------------
INVESTOR CLASS
- -----------------------------------------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------
PER-SHARE DATA
- -----------------------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $7.54 $6.69 $7.86 $12.05 $13.02 $9.25
- -----------------------------------------------------------------------------------------------------------------
Income From
Investment Operations
- -------------------------------
Net Investment
Income (Loss)(2) 0.04 0.06 0.06 0.04 (0.02) (0.01)
- -------------------------------
Net Realized and
Unrealized Gain (Loss) 0.52 0.85 (1.20) (2.50) (0.22) 3.95
- -----------------------------------------------------------------------------------------------------------------
Total From
Investment Operations 0.56 0.91 (1.14) (2.46) (0.24) 3.94
- -----------------------------------------------------------------------------------------------------------------
Distributions
- -------------------------------
From Net
Investment Income (0.06) (0.06) (0.03) -- (0.01) (0.02)
- -------------------------------
From Net
Realized Gains -- -- -- (1.73) (0.72) (0.15)
- -----------------------------------------------------------------------------------------------------------------
Total Distributions (0.06) (0.06) (0.03) (1.73) (0.73) (0.17)
- -----------------------------------------------------------------------------------------------------------------
Redemption Fees(3) --(4) -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $8.04 $7.54 $6.69 $7.86 $12.05 $13.02
=================================================================================================================
TOTAL RETURN(5) 7.43% 13.70% (14.54)% (24.18)% (2.47)% 43.22%
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.27%(6) 1.28% 1.25% 1.21% 1.20% 1.27%
- -------------------------------
Ratio of Net Investment
Income (Loss) to
Average Net Assets 1.02%(6) 0.84% 0.76% 0.48% (0.16)% (0.06)%
- -------------------------------
Portfolio Turnover Rate 74% 169% 215% 178% 116% 117%
- -------------------------------
Net Assets, End of Period
(in thousands) $2,407,748 $2,502,831 $2,410,600 $3,290,867 $4,455,433 $3,701,903
- -----------------------------------------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) The fund adopted its redemption fee policy effective March 1, 2004.
No redemption fees were incurred in the periods prior to the six months
ended May 31, 2004. Computed using average shares outstanding throughout
the period.
(4) Per-share amount was less than $0.005.
(5) 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.
(6) Annualized.
See Notes to Financial Statements.
- ------
20
International Growth - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
- -----------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- -----------------------------------------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000 1999
- -----------------------------------------------------------------------------------------------------------------
PER-SHARE DATA
- -----------------------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $7.56 $6.71 $7.88 $12.07 $13.05 $9.28
- -----------------------------------------------------------------------------------------------------------------
Income From
Investment Operations
- ---------------------------------
Net Investment Income(2) 0.05 0.07 0.07 0.06 0.01 --(3)
- ---------------------------------
Net Realized and
Unrealized Gain (Loss) 0.51 0.85 (1.19) (2.50) (0.24) 3.96
- -----------------------------------------------------------------------------------------------------------------
Total From
Investment Operations 0.56 0.92 (1.12) (2.44) (0.23) 3.96
- -----------------------------------------------------------------------------------------------------------------
Distributions
- --------------------------
From Net
Investment Income (0.07) (0.07) (0.05) -- (0.03) (0.04)
- ---------------------------------
From Net Realized Gains -- -- -- (1.75) (0.72) (0.15)
- -----------------------------------------------------------------------------------------------------------------
Total Distributions (0.07) (0.07) (0.05) (1.75) (0.75) (0.19)
- -----------------------------------------------------------------------------------------------------------------
Redemption Fees(4) --(3) -- -- -- -- --
- -----------------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $8.05 $7.56 $6.71 $7.88 $12.07 $13.05
=================================================================================================================
TOTAL RETURN(5) 7.49% 13.89% (14.33)% (23.96)% (2.35)% 43.40%
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
To Average Net Assets 1.07%(6) 1.08% 1.05% 1.01% 1.00% 1.07%
- ---------------------------------
Ratio of Net Investment
Income to Average Net Assets 1.22%(6) 1.04% 0.96% 0.68% 0.04% 0.14%
- ---------------------------------
Portfolio Turnover Rate 74% 169% 215% 178% 116% 117%
- ---------------------------------
Net Assets, End of Period
(in thousands) $313,101 $301,854 $270,121 $353,399 $371,255 $132,031
- -----------------------------------------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount was less than $0.005.
(4) The fund adopted its redemption fee policy effective March 1, 2004. No
redemption fees were incurred in the periods prior to the six months
ended May 31, 2004. Computed using average shares outstanding
throughout the period.
(5) 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.
(6) Annualized.
See Notes to Financial Statements.
- ------
21
International Growth - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
- ---------------------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- ---------------------------------------------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000 1999
- ---------------------------------------------------------------------------------------------------------------------
PER-SHARE DATA
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $7.52 $6.66 $7.83 $12.02 $12.99 $9.24
- ---------------------------------------------------------------------------------------------------------------------
Income From
Investment Operations
- -----------------------------
Net Investment
Income (Loss)(2) 0.03 0.03 0.04 0.02 (0.05) (0.04)
- -----------------------------
Net Realized and
Unrealized Gain (Loss) 0.51 0.87 (1.20) (2.51) (0.23) 3.94
- ---------------------------------------------------------------------------------------------------------------------
Total From
Investment Operations 0.54 0.90 (1.16) (2.49) (0.28) 3.90
- ---------------------------------------------------------------------------------------------------------------------
Distributions
- -----------------------------
From Net Investment Income (0.04) (0.04) (0.01) -- --(3) --(3)
- -----------------------------
From Net Realized Gains -- -- -- (1.70) (0.69) (0.15)
- ---------------------------------------------------------------------------------------------------------------------
Total Distributions (0.04) (0.04) (0.01) (1.70) (0.69) (0.15)
- ---------------------------------------------------------------------------------------------------------------------
Redemption Fees(4) --(3) -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $8.02 $7.52 $6.66 $7.83 $12.02 $12.99
=====================================================================================================================
TOTAL RETURN(5) 7.18% 13.62% (14.81)% (24.45)% (2.72)% 42.86%
- ---------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to
Average Net Assets 1.52%(6) 1.53% 1.50% 1.46% 1.45% 1.52%
- -----------------------------
Ratio of Net
Investment Income (Loss)
to Average Net Assets 0.77%(6) 0.59% 0.51% 0.23% (0.41)% (0.31)%
- -----------------------------
Portfolio Turnover Rate 74% 169% 215% 178% 116% 117%
- -----------------------------
Net Assets, End of Period
(in thousands) $262,125 $239,256 $196,949 $205,483 $181,263 $61,317
- ---------------------------------------------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount was less than $0.005.
(4) The fund adopted its redemption fee policy effective March 1, 2004. No
redemption fees were incurred in the periods prior to the six months
ended May 31, 2004. Computed using average shares outstanding
throughout the period.
(5) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less 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.
(6) Annualized.
See Notes to Financial Statements.
- ------
22
International Growth - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED
- --------------------------------------------------------------------------------
A CLASS
- --------------------------------------------------------------------------------
2004(1) 2003(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.53 $6.10
- --------------------------------------------------------------------------------
Income From Investment Operations
- ----------------------------------------------------
Net Investment Income (Loss)(3) 0.04 (0.02)
- ----------------------------------------------------
Net Realized and Unrealized Gain 0.50 1.45
- --------------------------------------------------------------------------------
Total From Investment Operations 0.54 1.43
- --------------------------------------------------------------------------------
Distributions
- ----------------------------------------------------
From Net Investment Income (0.04) --
- --------------------------------------------------------------------------------
Redemption Fees(4) -- --
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $8.03 $7.53
================================================================================
TOTAL RETURN(5) 7.21% 23.44%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.52%(6) 1.53%(6)
- ----------------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.77%(6) (0.40)%(6)
- ----------------------------------------------------
Portfolio Turnover Rate 74% 169%(7)
- ----------------------------------------------------
Net Assets, End of Period (in thousands) $10,576 $7,395
- --------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) January 31, 2003 (commencement of sale) through November 30, 2003.
(3) Computed using average shares outstanding throughout the period.
(4) The fund adopted its redemption fee policy effective March 1, 2004. No
redemption fees were incurred in the period prior to the six months ended
May 31, 2004. Computed using average shares outstanding throughout the
period.
(5) 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.
(6) Annualized.
(7) 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 PERIODS INDICATED
- --------------------------------------------------------------------------------
B CLASS
- --------------------------------------------------------------------------------
2004(1) 2003(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.48 $6.10
- --------------------------------------------------------------------------------
Income From Investment Operations
- ----------------------------------------------
Net Investment Income (Loss)(3) 0.02 (0.03)
- ----------------------------------------------
Net Realized and Unrealized Gain 0.50 1.41
- --------------------------------------------------------------------------------
Total From Investment Operations 0.52 1.38
- --------------------------------------------------------------------------------
Redemption Fees(4) -- --
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $8.00 $7.48
================================================================================
TOTAL RETURN(5) 6.95% 22.62%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses to
Average Net Assets 2.27%(6) 2.28%(6)
- ----------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.02%(6)
(0.51)%(6)
- ----------------------------------------------
Portfolio Turnover Rate 74% 169%(7)
- ----------------------------------------------
Net Assets, End of Period (in thousands) $1,013 $513
- --------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) January 31, 2003 (commencement of sale) through November 30, 2003.
(3) Computed using average shares outstanding throughout the period.
(4) The fund adopted its redemption fee policy effective March 1, 2004. No
redemption fees were incurred in the period prior to the six months ended
May 31, 2004. Computed using average shares outstanding throughout the
period.
(5) 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.
(6) Annualized.
(7) 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
- ------------------------------------------------------------------------------
2004(1) 2003 2002 2001(2)
- ------------------------------------------------------------------------------
PER-SHARE DATA
- ------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $7.45 $6.60 $7.82 $9.16
- ------------------------------------------------------------------------------
Income From
Investment Operations
- ------------------------------
Net Investment
Income (Loss)(3) 0.02 (0.01) --(4) (0.04)
- ------------------------------
Net Realized and
Unrealized Gain (Loss) 0.49 0.86 (1.22) (1.30)
- ------------------------------------------------------------------------------
Total From
Investment Operations 0.51 0.85 (1.22) (1.34)
- ------------------------------------------------------------------------------
Redemption Fees(5) -- -- -- --
- ------------------------------------------------------------------------------
Net Asset Value,
End of Period $7.96 $7.45 $6.60 $7.82
==============================================================================
TOTAL RETURN(6) 6.85% 12.88% (15.60)% (14.63)%
- ------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------
Ratio of Operating
Expenses to
Average Net Assets 2.27%(7) 2.28% 2.25% 2.23%(7)
- ------------------------------
Ratio of Net Investment
Income (Loss) to
Average Net Assets 0.02%(7) (0.16)% (0.24)% (0.99)%(7)
- ------------------------------
Portfolio Turnover Rate 74% 169% 215% 178%(8)
- ------------------------------
Net Assets, End of Period
(in thousands) $3,712 $1,933 $912 $138
- ------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) June 4, 2001 (commencement of sale) through November 30, 2001.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount is less than $0.005.
(5) The fund adopted its redemption fee policy effective March 1, 2004. No
redemption fees were incurred in the periods prior to the six months
ended May 31, 2004. Computed using average shares outstanding
throughout the period.
(6) 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.
(7) Annualized.
(8) 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 PERIODS INDICATED
- --------------------------------------------------------------------------------
R CLASS
- --------------------------------------------------------------------------------
2004(1) 2003(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.53 $7.02
- --------------------------------------------------------------------------------
Income From Investment Operations
- ------------------------------------------
Net Investment Loss(3) 0.05 (0.01)
- ------------------------------------------
Net Realized and Unrealized Gain 0.49 0.52
- --------------------------------------------------------------------------------
Total From Investment Operations 0.54 0.51
- --------------------------------------------------------------------------------
Distributions
- ------------------------------------------
From Net Investment Income (0.05) --
- --------------------------------------------------------------------------------
Redemption Fees(4) -- --
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $8.02 $7.53
================================================================================
TOTAL RETURN(5) 7.17% 7.26%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.77%(6) 1.78%(6)
- ------------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.52%(6)
(0.74)%(6)
- ------------------------------------------
Portfolio Turnover Rate 74% 169%(7)
- ------------------------------------------
Net Assets, End of Period (in thousands) $281 $3
- --------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) August 29, 2003 (commencement of sale) through November 30, 2003.
(3) Computed using average shares outstanding throughout the period.
(4) The fund adopted its redemption fee policy effective March 1, 2004.
No redemption fees were incurred in the period prior to the six months
ended May 31, 2004. Computed using average shares outstanding throughout
the period.
(5) 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.
(6) Annualized.
(7) 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
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 ratio of Institutional Class shares is lower than
that of Investor Class shares. The total expense ratios of Advisor, A, B, C, and
R Class shares are higher than that of Investor Class shares.
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)
- ------
27
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.
- ------
28
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
americancentury.com and on the Securities and Exchange Commission's Web site at
sec.gov.
RISK FACTORS
There are certain risks involved in investing in foreign securities. These risks
include those resulting from future adverse political, social, and economic
developments, fluctuations in currency exchange rates, the possible imposition
of exchange controls, and other foreign laws or restrictions.
- ------
29
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.tm) INDEX
(Europe, Australasia, Far East) is designed to measure developed market equity
performance, excluding the U.S. and Canada.
- ------
30
Notes
- ------
31
Notes
- ------
32
CONTACT US
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
The American Century logo, American Century and
American Century Investments are service marks
of American Century Services Corporation.
0407 American Century Investment Services, Inc.
SH-SAN-38586S (c)2004 American Century Services Corporation
MAY 31, 2004
American Century Investments
Semiannual Report
[graphic of market line chart]
[graphic of starfish]
[graphic of bridges]
International Discovery Fund
Emerging Markets Fund
Global Growth Fund
International Opportunities Fund
[american century logo and text logo]
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 .......................................26
Statement of Operations ...................................................28
Statement of Changes in Net Assets ........................................29
Notes to Financial Statements .............................................31
Financial Highlights ......................................................40
OTHER INFORMATION
Share Class Information ...................................................53
Additional Information ....................................................54
Index Definitions .........................................................55
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.
The American Century logo, American Century and American Century Investments
are service marks of American Century Services Corporation.
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 semiannual report for the International
Discovery, Emerging Markets, Global Growth and International Opportunities funds
for the six months ended May 31, 2004.
This report contains information that can help you monitor your investment.
You'll find details about your fund's return and holdings as well as data and
analysis that provide insight into the market conditions affecting the fund's
performance.
Through our Web site, americancentury.com, we provide quarterly commentaries on
all American Century portfolios, the views of our senior investment officers,
and other communications about investments, portfolio strategy, and the markets.
We also have many informative resources available in the Education & Planning
section of our site to help you with your investment strategy.
Your next shareholder report for these funds will be the annual report dated
November 30, 2004, available in approximately six months.
As always, we deeply appreciate your investment with American Century
Investments.
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 MAY 31, 2004
- -----------------------------------------------------------------------------------------------
-------------------------------
AVERAGE ANNUAL RETURNS
- -----------------------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
- -----------------------------------------------------------------------------------------------
INVESTOR CLASS 40.25% 9.00% 12.91% 13.75% 4/1/94
- -----------------------------------------------------------------------------------------------
CITIGROUP EMI GROWTH WORLD EX-US(1)(2) 42.23% 2.55% 3.27% 3.33%(3) --
- -----------------------------------------------------------------------------------------------
MSCI EAFE INDEX(2) 32.66% 0.39% 3.98% 4.28%(3) --
- -----------------------------------------------------------------------------------------------
Institutional Class 40.39% 9.20% -- 11.80% 1/2/98
- -----------------------------------------------------------------------------------------------
Advisor Class 39.92% 8.73% -- 8.16% 4/28/98
- -----------------------------------------------------------------------------------------------
(1) Formerly Salomon Smith Barney Extended Market Index Growth World ex-US.
(2) The fund's benchmark changed from MSCI EAFE Index to Citigroup EMI Growth
World ex-US on 5/22/03. The fund's advisor believes this index better
represents the fund's portfolio composition.
(3) Since 3/31/94, the date nearest the Investor Class's inception for which
data are available.
GROWTH OF $10,000 OVER 10 YEARS
- --------------------------------------------------------------------------------
$10,000 investment made May 31, 1994
ONE-YEAR RETURNS OVER 10 YEARS
- --------------------------------------------------------------------------------------------------
Periods ended May 31
- ---------------------------------------------------------------------------------------------------
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
- ---------------------------------------------------------------------------------------------------
Investor Class -2.37% 33.00% 23.42% 36.97% -0.37% 63.12% -20.05% -7.80% -8.75% 40.25%
- ---------------------------------------------------------------------------------------------------
Citigroup EMI
Growth World
ex-US -0.97% 17.38% 0.40% 6.18% -1.85% 21.21% -21.65% -8.01% -8.73% 42.23%
- ---------------------------------------------------------------------------------------------------
MSCI EAFE Index 4.93% 10.67% 7.54% 11.11% 4.36% 17.14% -17.23% -9.60% -12.30% 32.66%
- ---------------------------------------------------------------------------------------------------
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. 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.
- ------
2
International Discovery -
Portfolio Commentary
[photo of Brian Brady and Mark Kopinski]
A PORTFOLIO COMMENTARY FROM BRIAN BRADY AND MARK KOPINSKI, PORTFOLIO MANAGERS ON
THE INTERNATIONAL DISCOVERY INVESTMENT TEAM.
International Discovery gained 9.01%* for the six months ended May 31, 2004,
trailing its benchmark, the Citigroup EMI (Extended Market Index) Growth World
ex-US, which returned 13.01%.
The period began with a broad-based world equity market rally, boosted by a
broadening global recovery, a rebound in global trade, and expectations of low
inflation. However, the rally slowed from March through May, due to increased
geopolitical uncertainty, exemplified by the Madrid train station bombings, and
a tightening worldwide petroleum supply.
Most major European and Asian market indices rose during the six months, though
many retreated after the March 11 attack in Madrid, and the portfolio's
benchmark saw increases in five of the six months. International Discovery saw
contributions from nine of its ten sector stakes. However, selection among
financial, health care and industrial equities, including some stocks not
included in the benchmark, led the portfolio to trail the benchmark's
performance.
LIFT FROM PUBS, CARS
Consumer discretionary stocks contributed the most to performance. Four of the
portfolio's top-10 contributors came from this group. Among the leaders were
British hotel and restaurant firm Enterprise Inns, the nation's largest pub
owner, and luxury car importer Inchcape, which reported better-than-expected
business in Greece and Belgium. German footwear manufacturer Puma and Hong Kong
specialty retailer Esprit Holdings contributed as well.
TYPES OF INVESTMENTS IN PORTFOLIO
- -------------------------------------------------------------------------------
AS OF AS OF
5/31/04 11/30/03
- -------------------------------------------------------------------------------
Common Stocks,
Rights & Warrants 97.2% 95.5%
- -------------------------------------------------------------------------------
Preferred Stocks 0.4% 2.1%
- -------------------------------------------------------------------------------
TOTAL EQUITY EXPOSURE 97.6% 97.6%
- -------------------------------------------------------------------------------
Temporary Cash
Investments 2.4% 2.4%
- -------------------------------------------------------------------------------
INVESTMENTS BY COUNTRY
AS OF MAY 31, 2004
- -------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- -------------------------------------------------------------------------------
Japan 22.7% 21.9%
- -------------------------------------------------------------------------------
United Kingdom 11.8% 9.9%
- -------------------------------------------------------------------------------
Canada 7.5% 3.2%
- -------------------------------------------------------------------------------
Germany 6.0% 4.4%
- -------------------------------------------------------------------------------
Taiwan
(Republic of China) 5.6% 7.1%
- -------------------------------------------------------------------------------
Ireland 4.8% 3.1%
- -------------------------------------------------------------------------------
Hong Kong 4.7% 5.0%
- -------------------------------------------------------------------------------
South Korea 4.0% 3.2%
- -------------------------------------------------------------------------------
Sweden 3.5% 3.2%
- -------------------------------------------------------------------------------
United States(+) 3.2% 4.6%
- -------------------------------------------------------------------------------
Russian Federation 2.8% 2.5%
- -------------------------------------------------------------------------------
Spain 2.6% --
- -------------------------------------------------------------------------------
Other 20.8% 31.9%
- -------------------------------------------------------------------------------
(+) Includes temporary cash investments.
* All fund returns referenced in this commentary are
for Investor Class shares. (continued)
- ------
3
International Discovery -
Portfolio Commentary
Information technology stocks had strong performances, led by the portfolio's
top two contributors, Canadian firm Research In Motion, and Taiwanese chipmaker
Powerchip Semiconductor. The Canadian maker of the BlackBerry handheld
communications device increased its profit forecasts for two consecutive
quarters after reporting revenue gains and accelerating growth in subscribers.
Powerchip rose after forecasting that sales for the year may double based on
improving manufacturing efficiencies.
Telecommunication services contributed, led by Russian wireless companies,
spurred by continued sales and subscriber growth.
DECLINES AMONG BULLDOZERS, DEVELOPERS
Though some of International Discovery's financial stocks contributed, the
portfolio fell behind the benchmark due to detracting real estate, capital
markets and diversified financial services companies. The portfolio's biggest
detractor was New World Development, a Hong Kong real estate developer.
Health care holdings advanced, but the portfolio's stake in the sector fell
short of the index. Taro Pharmaceutical, an Israeli drugmaker which dropped
after reporting lower-than-expected earnings, accounted for much of the
underperformance.
Industrials also contributed to returns but underperformed the benchmark, with
Asian machinery and electrical equipment firms slowing our relative performance.
One of the portfolio's biggest detractors was Hitachi Construction, a
manufacturer of hydraulic excavators, bulldozers and other construction
equipment. The stock price slumped on growing concerns that the slowdown in
China's economic boom would result in a concurrent decline in heavy equipment
sales.
We remain confident that our time-tested investment process - searching for
companies that demonstrate sustainable accelerating growth - will enable us to
generate solid results over time.
TOP TEN HOLDINGS
AS OF MAY 31, 2004
- -------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- -------------------------------------------------------------------------------
Research In Motion Ltd. 3.0% 2.0%
- -------------------------------------------------------------------------------
JSR Corp. 2.1% 2.8%
- -------------------------------------------------------------------------------
Vimpel-Communications
ADR 1.8% 1.5%
- -------------------------------------------------------------------------------
Inchcape plc 1.8% 1.2%
- -------------------------------------------------------------------------------
Puma AG Rudolf
Dassler Sport 1.6% 1.7%
- -------------------------------------------------------------------------------
Optimax Technology
Corporation 1.6% 1.0%
- -------------------------------------------------------------------------------
Anglo Irish Bank
Corporation 1.6% 1.8%
- -------------------------------------------------------------------------------
Ushio Inc. 1.6% --
- -------------------------------------------------------------------------------
EMI Group plc 1.5% --
- -------------------------------------------------------------------------------
Enterprise Inns plc 1.5% 1.0%
- -------------------------------------------------------------------------------
TOP FIVE SECTORS
AS OF MAY 31, 2004
- -------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- -------------------------------------------------------------------------------
Consumer Discretionary 25.4% 19.8%
- -------------------------------------------------------------------------------
Information Technology 20.0% 22.6%
- -------------------------------------------------------------------------------
Telecommunication
Services 8.7% 6.6%
- -------------------------------------------------------------------------------
Financials 8.6% 17.1%
- -------------------------------------------------------------------------------
Industrials 7.8% 9.3%
- -------------------------------------------------------------------------------
- ------
4
International Discovery --
Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COMMON STOCKS, RIGHTS
AND WARRANTS -- 97.2%
- --------------------------------------------------------------------------------
AUSTRALIA -- 1.0%
- --------------------------------------------------------------------------------
755,000 CSL Ltd. $ 12,386
- --------------------------------------------------------------------------------
AUSTRIA -- 1.0%
- --------------------------------------------------------------------------------
354,000 Weinerberger AG Rights(1) --
- --------------------------------------------------------------------------------
354,000 Wienerberger AG 11,984
- --------------------------------------------------------------------------------
BELGIUM -- 0.7%
- --------------------------------------------------------------------------------
84,300 Colruyt SA 9,194
- --------------------------------------------------------------------------------
CANADA -- 7.5%
- --------------------------------------------------------------------------------
308,000 Agnico-Eagle Mines Ltd. 4,300
- --------------------------------------------------------------------------------
325,000 Axcan Pharma Inc.(1) 6,250
- --------------------------------------------------------------------------------
188,100 Coolbrands International, Inc.(1) 3,310
- --------------------------------------------------------------------------------
285,000 Cott Corporation(1) 8,891
- --------------------------------------------------------------------------------
330,000 Meridian Gold Inc.
New York Shares(1) 4,290
- --------------------------------------------------------------------------------
333,500 PetroKazakhstan Inc. Cl A
New York Shares 8,894
- --------------------------------------------------------------------------------
352,400 QLT Inc.(1) 8,141
- --------------------------------------------------------------------------------
306,100 Research In Motion Ltd.(1) 36,732
- --------------------------------------------------------------------------------
534,000 RONA Inc.(1) 11,530
- --------------------------------------------------------------------------------
92,338
- --------------------------------------------------------------------------------
CAYMAN ISLANDS -- 0.9%
- --------------------------------------------------------------------------------
46,548,000 Solomon Systech
International Ltd.(1) 10,930
- --------------------------------------------------------------------------------
DENMARK -- 2.2%
- --------------------------------------------------------------------------------
1,478,140 GN Store Nord A/S 11,094
- --------------------------------------------------------------------------------
327,000 Group 4 Falck A/S 7,572
- --------------------------------------------------------------------------------
185,000 Novozymes A/S Cl B 8,097
- --------------------------------------------------------------------------------
26,763
- --------------------------------------------------------------------------------
FINLAND -- 0.7%
- --------------------------------------------------------------------------------
677,750 Elisa Corp.(1) 8,459
- --------------------------------------------------------------------------------
FRANCE -- 1.3%
- --------------------------------------------------------------------------------
32,000 Galeries Lafayette SA 6,202
- --------------------------------------------------------------------------------
72,700 Technip SA 9,802
- --------------------------------------------------------------------------------
16,004
- --------------------------------------------------------------------------------
GERMANY -- 5.6%
- --------------------------------------------------------------------------------
212,030 Continental AG 9,516
- --------------------------------------------------------------------------------
123,200 Freenet.de AG(1) 11,360
- --------------------------------------------------------------------------------
130,000 Heidelberger Druckmaschinen AG(1) 4,112
- --------------------------------------------------------------------------------
166,000 Hypo Real Estate Holding AG(1) 4,667
- --------------------------------------------------------------------------------
269,000 IKB Deutsche Industriebank AG 6,242
- --------------------------------------------------------------------------------
643,000 Mobilcom AG 13,130
- --------------------------------------------------------------------------------
81,900 Puma AG Rudolf Dassler Sport 19,992
- --------------------------------------------------------------------------------
69,019
- --------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
GREECE -- 1.0%
- --------------------------------------------------------------------------------
265,000 Commercial Bank of Greece $ 7,010
- --------------------------------------------------------------------------------
500,000 Piraeus Bank SA(1) 5,825
- --------------------------------------------------------------------------------
12,835
- --------------------------------------------------------------------------------
HONG KONG -- 4.7%
- --------------------------------------------------------------------------------
10,250,000 Chaoda Modern
Agriculture Limited 3,157
- --------------------------------------------------------------------------------
3,057,000 Cosco Pacific Limited 4,236
- --------------------------------------------------------------------------------
3,952,000 Esprit Holdings Limited 17,241
- --------------------------------------------------------------------------------
16,100,000 Giordano International Ltd. 9,865
- --------------------------------------------------------------------------------
5,600,000 Global Bio-Chem Technology
Group Co. Ltd. 4,132
- --------------------------------------------------------------------------------
700,000 Global Bio-Chem Technology
Group Co. Ltd. Warrants(1) --
- --------------------------------------------------------------------------------
9,676,000 Shangri-La Asia Ltd.(2) 9,498
- --------------------------------------------------------------------------------
6,416,000 Techtronic Industries
Company Limited 9,674
- --------------------------------------------------------------------------------
57,803
- --------------------------------------------------------------------------------
INDIA -- 2.5%
- --------------------------------------------------------------------------------
481,400 Bharat Heavy Electricals Limited 4,908
- --------------------------------------------------------------------------------
373,900 Biocon Ltd.(1) 4,202
- --------------------------------------------------------------------------------
1,084,000 Mahindra & Mahindra Ltd. 10,250
- --------------------------------------------------------------------------------
505,000 Reliance Energy Ltd. 5,537
- --------------------------------------------------------------------------------
735,000 Tata Motors Ltd. 6,262
- --------------------------------------------------------------------------------
31,159
- --------------------------------------------------------------------------------
INDONESIA -- 0.5%
- --------------------------------------------------------------------------------
13,779,500 PT Indonesian Satellite Corp. Tbk 5,906
- --------------------------------------------------------------------------------
IRELAND -- 4.8%
- --------------------------------------------------------------------------------
1,209,100 Anglo Irish Bank Corporation 19,196
- --------------------------------------------------------------------------------
947,600 Depfa Bank plc 14,176
- --------------------------------------------------------------------------------
8,779,000 Eircom Group plc(1) 15,117
- --------------------------------------------------------------------------------
430,000 Elan Corp. plc ADR(1) 10,101
- --------------------------------------------------------------------------------
58,590
- --------------------------------------------------------------------------------
ITALY -- 1.6%
- --------------------------------------------------------------------------------
1,980,000 ASM Brescia SpA 5,187
- --------------------------------------------------------------------------------
76,100 e.Biscom(1)(2) 4,425
- --------------------------------------------------------------------------------
441,981 Lottomatica SpA 10,148
- --------------------------------------------------------------------------------
19,760
- --------------------------------------------------------------------------------
JAPAN -- 22.7%
- --------------------------------------------------------------------------------
184,000 Alfresa Holdings Corp. 8,880
- --------------------------------------------------------------------------------
583,000 Aoyama Trading Co. Ltd. 13,751
- --------------------------------------------------------------------------------
286,000 Arisawa Manufacturing
Company Limited 12,842
- --------------------------------------------------------------------------------
347,700 Coca-Cola West Japan Co. Ltd. 8,405
- --------------------------------------------------------------------------------
500 Cyber Agent Limited(1) 3,384
- --------------------------------------------------------------------------------
89,000 Don Quijote Co. Ltd. 5,894
- --------------------------------------------------------------------------------
2,400 eAccess Ltd.(1) 12,322
- --------------------------------------------------------------------------------
3,577,000 Haseko Corp.(1) 9,702
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
5
International Discovery -
Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
207,000 Hitachi Construction
Machinery Co. Ltd. $ 2,473
- --------------------------------------------------------------------------------
1,241,000 JSR Corp. 26,454
- --------------------------------------------------------------------------------
2,700 NET One Systems Co. Ltd. 10,899
- --------------------------------------------------------------------------------
520,000 NHK Spring Co., Ltd. 3,009
- --------------------------------------------------------------------------------
763,000 Nippon Electric Glass Co. Ltd.(2) 16,438
- --------------------------------------------------------------------------------
358,000 NOK Corporation 12,827
- --------------------------------------------------------------------------------
735,000 Onward Kashiyama Co. Ltd. 11,894
- --------------------------------------------------------------------------------
566,000 Sumitomo Realty & Development
Co. Ltd. 6,125
- --------------------------------------------------------------------------------
1,510,000 Sumitomo Rubber Industries Inc. 12,574
- --------------------------------------------------------------------------------
300,000 Taiyo Yuden Co. Ltd. 4,332
- --------------------------------------------------------------------------------
1,180,000 The Bank of Fukuoka, Ltd. 6,133
- --------------------------------------------------------------------------------
360,000 THK Co. Ltd. 6,404
- --------------------------------------------------------------------------------
117,500 TIS Inc. 4,679
- --------------------------------------------------------------------------------
1,499,000 Tokyo Tatemono Co. Ltd. 7,275
- --------------------------------------------------------------------------------
3,414,000 Tosoh Corp. 11,830
- --------------------------------------------------------------------------------
2,120,000 Toyo INK MFG Co. Ltd.(2) 8,596
- --------------------------------------------------------------------------------
177,000 Uniden Corp. 3,112
- --------------------------------------------------------------------------------
1,010,000 Ushio Inc. 19,149
- --------------------------------------------------------------------------------
400,000 Victor Company of Japan, Limited 4,717
- --------------------------------------------------------------------------------
1,178,000 Yaskawa Electric Corp. 7,587
- --------------------------------------------------------------------------------
835,000 Yokogawa Electric Corp. 10,824
- --------------------------------------------------------------------------------
2,160,000 Yokohama Rubber Co. Ltd. (The) 7,955
- --------------------------------------------------------------------------------
280,466
- --------------------------------------------------------------------------------
NETHERLANDS -- 1.4%
- --------------------------------------------------------------------------------
894,700 Koninklijke Wessanen N.V. 13,276
- --------------------------------------------------------------------------------
317,000 Trader Classified Media N.V. 3,523
- --------------------------------------------------------------------------------
16,799
- --------------------------------------------------------------------------------
NORWAY -- 1.4%
- --------------------------------------------------------------------------------
1,722,000 Tandberg ASA 17,285
- --------------------------------------------------------------------------------
PEOPLE'S REPUBLIC OF CHINA -- 0.9%
- --------------------------------------------------------------------------------
8,564,669 China Eastern Airlines
Corp. Ltd. Cl H(1) 1,681
- --------------------------------------------------------------------------------
9,000,000 People's Food Holdings Ltd. 7,153
- --------------------------------------------------------------------------------
929,000 Wumart Stores Inc. Cl H(1) 1,818
- --------------------------------------------------------------------------------
10,652
- --------------------------------------------------------------------------------
PHILIPPINES -- 1.3%
- --------------------------------------------------------------------------------
816,100 Philippine Long Distance
Telephone Company ADR(1)(2) 15,897
- --------------------------------------------------------------------------------
RUSSIAN FEDERATION -- 2.8%
- --------------------------------------------------------------------------------
85,899 Mobile Telesystems ADR 10,084
- --------------------------------------------------------------------------------
25,258,800 Uralsvyazinform 975
- --------------------------------------------------------------------------------
242,500 Vimpel-Communications ADR(1) 22,370
- --------------------------------------------------------------------------------
301,500 VolgaTelecom 911
- --------------------------------------------------------------------------------
34,340
- --------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
SOUTH KOREA -- 4.0%
- --------------------------------------------------------------------------------
128,070 Daeduck Electronics Co. $ 1,002
- --------------------------------------------------------------------------------
192,040 Daewoo Heavy Industries
& Machinery Ltd.(1) 1,291
- --------------------------------------------------------------------------------
184,900 MtekVision Co. Ltd.(1) 6,010
- --------------------------------------------------------------------------------
100,077 NHN Corporation 9,270
- --------------------------------------------------------------------------------
315,000 Samsung Electro-Mechanics
Co. Ltd.(1) 9,860
- --------------------------------------------------------------------------------
281,000 Samsung Securities Co. Ltd. 5,001
- --------------------------------------------------------------------------------
320,100 SODIFF Advanced Materials Co., Ltd. 5,161
- --------------------------------------------------------------------------------
300,000 Top Engineering Co., Ltd.(1) 3,589
- --------------------------------------------------------------------------------
264,299 You Eal Electronics Co. Ltd. 7,548
- --------------------------------------------------------------------------------
48,732
- --------------------------------------------------------------------------------
SPAIN -- 2.6%
- --------------------------------------------------------------------------------
1,573,000 Enagas 17,654
- --------------------------------------------------------------------------------
604,800 Fadesa Inmobiliaria SA(1) 8,575
- --------------------------------------------------------------------------------
370,000 Red Electrica de Espana 6,132
- --------------------------------------------------------------------------------
32,361
- --------------------------------------------------------------------------------
SWEDEN -- 3.5%
- --------------------------------------------------------------------------------
400,700 Alfa Laval AB 6,181
- --------------------------------------------------------------------------------
132,390 Autoliv, Inc. SDR 5,443
- --------------------------------------------------------------------------------
1,263,586 Lundin Petroleum AB(1) 7,221
- --------------------------------------------------------------------------------
257,000 Oriflame Cosmetics SA(1) 8,084
- --------------------------------------------------------------------------------
1,580,000 Swedish Match AB 16,690
- --------------------------------------------------------------------------------
43,619
- --------------------------------------------------------------------------------
SWITZERLAND -- 2.4%
- --------------------------------------------------------------------------------
78,000 Actelion N.V.(1) 8,559
- --------------------------------------------------------------------------------
11,400 Geberit AG 7,323
- --------------------------------------------------------------------------------
465,400 Phonak Holding AG(2) 13,889
- --------------------------------------------------------------------------------
29,771
- --------------------------------------------------------------------------------
TAIWAN (REPUBLIC OF CHINA) -- 5.6%
- --------------------------------------------------------------------------------
3,033,000 Chi Mei Optoelectronics Corp.(1) 6,552
- --------------------------------------------------------------------------------
12,226,000 Coretronic Corp. 17,240
- --------------------------------------------------------------------------------
11,125,000 HannStar Display Corp.(1) 6,108
- --------------------------------------------------------------------------------
5,337,000 King Yuan Electronics
Company Limited(1) 5,284
- --------------------------------------------------------------------------------
1,753,000 Novatek Microelectronics Corp., Ltd. 7,048
- --------------------------------------------------------------------------------
4,786,879 Optimax Technology Corporation 19,390
- --------------------------------------------------------------------------------
1,662,000 Powertech Technology Inc.(1) 3,266
- --------------------------------------------------------------------------------
2,800,000 Tripod Technology Corp.(1) 4,066
- --------------------------------------------------------------------------------
68,954
- --------------------------------------------------------------------------------
UNITED KINGDOM -- 11.8%
- --------------------------------------------------------------------------------
533,000 AWG plc(1) 5,993
- --------------------------------------------------------------------------------
686,800 Cairn Energy plc(1) 13,270
- --------------------------------------------------------------------------------
11,351,000 Cookson Group plc(1) 8,992
- --------------------------------------------------------------------------------
4,715,500 EMI Group plc 18,913
- --------------------------------------------------------------------------------
1,606,000 Enterprise Inns plc 18,073
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
6
International Discovery -
Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Shares/Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
484,911 Galen Holdings plc $ 6,434
- --------------------------------------------------------------------------------
2,050,000 HMV Group plc 8,842
- --------------------------------------------------------------------------------
750,200 Inchcape plc 21,640
- --------------------------------------------------------------------------------
1,080,000 Kesa Electricals plc 5,627
- --------------------------------------------------------------------------------
2,200,000 Northumbrian Water Group plc(1) 5,228
- --------------------------------------------------------------------------------
440,000 Pennon Group plc(1) 5,935
- --------------------------------------------------------------------------------
810,000 Punch Taverns plc 7,610
- --------------------------------------------------------------------------------
540,000 RAC plc 6,557
- --------------------------------------------------------------------------------
1,229,900 William Hill plc 12,186
- --------------------------------------------------------------------------------
145,300
- --------------------------------------------------------------------------------
UNITED STATES -- 0.8%
- --------------------------------------------------------------------------------
281,000 NII Holdings Inc. Cl B(1) 10,164
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS, RIGHTS
AND WARRANTS
(Cost $984,076) 1,197,470
- --------------------------------------------------------------------------------
PREFERRED STOCKS -- 0.4%
- --------------------------------------------------------------------------------
GERMANY -- 0.4%
- --------------------------------------------------------------------------------
309,400 ProSieben SAT.1 Media AG(2)
(Cost $2,499) 4,912
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 2.4%
- --------------------------------------------------------------------------------
Repurchase Agreement, Morgan Stanley
Group, Inc., (U.S. Treasury obligations),
in a joint trading account at 0.94%,
dated 5/28/04, due 6/1/04
(Delivery value $30,103)
(Cost $30,100) 30,100
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 100.0%
(Cost $1,016,675) $1,232,482
================================================================================
COLLATERAL RECEIVED FOR
SECURITIES LENDING(3)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
Repurchase Agreement, Deutsche Bank AG,
(U.S. Treasury obligations), 1.04%,
dated 5/28/04, due 6/1/04
(Delivery value $2,461) $ 2,460
- --------------------------------------------------------------------------------
SHORT-TERM DEBT
$15,000 Westdeutsche Landesbank AG,
VRN, 1.18%, 6/1/04, resets daily
off the Federal Funds rate plus
0.16% with no caps 14,991
- --------------------------------------------------------------------------------
TOTAL COLLATERAL RECEIVED FOR
SECURITIES LENDING
(Cost $17,451) $17,451
================================================================================
MARKET SECTOR DIVERSIFICATION
- --------------------------------------------------------------------------------
Consumer Discretionary 25.4%
- --------------------------------------------------------------------------------
Consumer Staples 6.5%
- --------------------------------------------------------------------------------
Energy 3.2%
- --------------------------------------------------------------------------------
Financials 8.6%
- --------------------------------------------------------------------------------
Health Care 7.6%
- --------------------------------------------------------------------------------
Industrials 7.8%
- --------------------------------------------------------------------------------
Information Technology 20.0%
- --------------------------------------------------------------------------------
Materials 5.6%
- --------------------------------------------------------------------------------
Telecommunication Services 8.7%
- --------------------------------------------------------------------------------
Utilities 4.2%
- --------------------------------------------------------------------------------
Temporary Cash Investments 2.4%
- --------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
ADR = American Depositary Receipt
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.
SDR = Swedish Depositary Receipts
VRN = Variable Rate Note. Interest reset date is indicated, unless otherwise
noted. Rate shown is effective May 31, 2004.
(1) Non-income producing.
(2) Security, or a portion thereof, was on loan as of May 31, 2004.
(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 MAY 31, 2004
- --------------------------------------------------------------------------------
------------------------
AVERAGE ANNUAL RETURNS
- --------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------
INVESTOR CLASS 41.04% 5.39% 1.80% 9/30/97
- --------------------------------------------------------------------------------
MSCI EM INDEX 40.48% 5.42% 0.11% --
- --------------------------------------------------------------------------------
Institutional Class 41.13% 5.62% 10.21% 1/28/99
- --------------------------------------------------------------------------------
Advisor Class 40.68% 5.12% 4.55% 5/12/99
- --------------------------------------------------------------------------------
C Class 40.00% -- 9.71% 12/18/01
- --------------------------------------------------------------------------------
GROWTH OF $10,000 LIFE OF CLASS
- --------------------------------------------------------------------------------
$10,000 investment made September 30, 1997
ONE-YEAR RETURNS OVER LIFE OF CLASS
- --------------------------------------------------------------------------------
Periods ended May 31
- --------------------------------------------------------------------------------
1998* 1999 2000 2001 2002 2003 2004
- --------------------------------------------------------------------------------
Investor Class -15.00% 1.88% 44.57% -22.82% -0.43% -17.03% 41.04%
- --------------------------------------------------------------------------------
MSCI EM Index -25.24% 3.46% 17.75% -21.60% 7.28% -6.40% 40.48%
- --------------------------------------------------------------------------------
* From 9/30/97, the Investor Class's inception date. Not annualized.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. 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.
- ------
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 2.84%* during the six months ended May 31, 2004. The
fund's benchmark, the Morgan Stanley Capital International Emerging Markets
Index, returned 5.93%.
AN UPBEAT ENVIRONMENT
The six months covered by this report opened on a positive note, as upbeat
economic conditions in the United States and a burgeoning global recovery
underscored business and consumer confidence. As the period progressed, however,
growing concerns about terrorism, soaring energy prices and the specter of
higher interest rates in the U.S. combined to slow economic growth. Although
equities ultimately erased some of their earlier gains, the major international
indices posted solid results for the period.
THE GREATEST GAINS
China was Emerging Markets' richest source of performance during the six months.
China's economy, Asia's second largest after Japan, grew 9.1% in 2003, its
quickest pace in seven years, and expanded at a faster-than-expected 9.8% in the
first quarter of 2004. Although the pace of growth appears to now be slowing a
bit in response to the Chinese government's efforts to fend off inflation, the
region nonetheless produced several of the fund's best names. Top contributors
included Jiangxi Copper Co., whose recent success has been spurred by higher
metal prices and increasing demand, and Sinopec Shanghei
TYPES OF INVESTMENTS IN PORTFOLIO
- -------------------------------------------------------------------------------
AS OF AS OF
5/31/04 11/30/03
- -------------------------------------------------------------------------------
Common Stocks 97.0% 89.7%
- -------------------------------------------------------------------------------
Preferred Stocks 2.4% 7.0%
- -------------------------------------------------------------------------------
TOTAL EQUITY EXPOSURE 99.4% 96.7%
- -------------------------------------------------------------------------------
Temporary Cash
Investments 0.6% 3.3%
- -------------------------------------------------------------------------------
INVESTMENTS BY COUNTRY
AS OF MAY 31, 2004
- -------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- -------------------------------------------------------------------------------
South Korea 19.6% 17.3%
- -------------------------------------------------------------------------------
Taiwan
(Republic of China) 12.2% 12.2%
- -------------------------------------------------------------------------------
South Africa 11.7% 10.3%
- -------------------------------------------------------------------------------
People's Republic
of China 7.6% 7.0%
- -------------------------------------------------------------------------------
Mexico 7.3% 7.7%
- -------------------------------------------------------------------------------
Russian Federation 6.0% 3.0%
- -------------------------------------------------------------------------------
India 6.0% 7.4%
- -------------------------------------------------------------------------------
Malaysia 5.2% 3.3%
- -------------------------------------------------------------------------------
Canada 3.6% --
- -------------------------------------------------------------------------------
Brazil 2.6% 10.4%
- -------------------------------------------------------------------------------
Sweden 2.3% --
- -------------------------------------------------------------------------------
Poland 2.3% 1.3%
- -------------------------------------------------------------------------------
Indonesia 2.3% 2.2%
- -------------------------------------------------------------------------------
Other(+) 11.3% 17.9%
- -------------------------------------------------------------------------------
(+) Includes temporary cash investments.
* All fund returns referenced in this commentary are
for Investor Class shares. (continued)
- ------
9
Emerging Markets - Portfolio Commentary
Petrochemical, China's largest ethylene maker, which benefited from higher
product prices.
Emerging Markets' stake in Mexico also added to results. Lower domestic interest
rates buoyed consumption and investment spending, while stronger industrial
growth in the United States boosted selected Mexican exporters. Grupo Mexico,
the world's fifth-largest copper miner, also was helped by rising copper prices,
while America Movil, Latin America's largest mobile phone company, benefited
from gaining market share from long-distance companies.
Investments in South Africa also helped. Standout performers included steelmaker
Iscor, whose share price moved higher with surging steel prices, and Telkom SA,
Africa's biggest phone company, whose success is being driven by growing demand
for telecom services and good cost control.
ROUGH TERRAIN
The pace of global recovery was less pronounced in South Korea, Emerging
Markets' largest country weighting on average and the source of most of our
underperformance versus the index. Significant detractors included Samsung SDI,
a maker of plasma screens that has been embroiled in a bitter dispute with rival
Fujitsu Ltd., and exporters Daewoo Heavy Industries & Machinery and Samsung
Electronics.
Emerging Markets also was restrained by its exposure to selected Malaysian
firms, and by the performance of its stake in Hungary relative to that of its
benchmark index.
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 MAY 31, 2004
- -------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- -------------------------------------------------------------------------------
Samsung Electronics 4.0% 2.7%
- -------------------------------------------------------------------------------
LUKOIL 3.1% --
- -------------------------------------------------------------------------------
Telkom SA Limited 3.0% 1.6%
- -------------------------------------------------------------------------------
Shinhan Financial
Group Co., Ltd. 2.9% --
- -------------------------------------------------------------------------------
Commerce Asset
Holdings Bhd 2.8% --
- -------------------------------------------------------------------------------
PetroKazakhstan Inc. Cl A
New York Shares 2.7% --
- -------------------------------------------------------------------------------
Taishin Financial
Holdings Co. Ltd. 2.6% 0.9%
- -------------------------------------------------------------------------------
Oriflame Cosmetics SA 2.3% --
- -------------------------------------------------------------------------------
Nedcor Ltd. 2.3% --
- -------------------------------------------------------------------------------
LG Micron Ltd. 2.0% --
- -------------------------------------------------------------------------------
TOP FIVE SECTORS
AS OF MAY 31, 2004
- -------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- -------------------------------------------------------------------------------
Financials 20.3% 10.7%
- -------------------------------------------------------------------------------
Information Technology 17.1% 15.1%
- -------------------------------------------------------------------------------
Materials 14.4% 20.0%
- -------------------------------------------------------------------------------
Consumer Staples 12.8% 1.9%
- -------------------------------------------------------------------------------
Telecommunication
Services 12.4% 12.1%
- -------------------------------------------------------------------------------
- ------
10
Emerging Markets -
Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 97.0%
- --------------------------------------------------------------------------------
ARGENTINA -- 1.4%
- --------------------------------------------------------------------------------
338,405 Telecom Argentina SA ADR(1) $ 2,866
- --------------------------------------------------------------------------------
BRAZIL -- 1.4%
- --------------------------------------------------------------------------------
149,698 Cia de Concessoes Rodoviarias(1) 1,272
- --------------------------------------------------------------------------------
53,500 Natura Cosmeticos SA(1) 747
- --------------------------------------------------------------------------------
28,566 Votorantim Celulose e Papel SA ADR 893
- --------------------------------------------------------------------------------
2,912
- --------------------------------------------------------------------------------
CANADA -- 3.6%
- --------------------------------------------------------------------------------
206,779 PetroKazakhstan Inc. Cl A
New York Shares 5,515
- --------------------------------------------------------------------------------
3,177 PetroKazakhstan Inc. Cl A 85
- --------------------------------------------------------------------------------
219,617 Telesystem International
Wireless Inc.(1) 1,882
- --------------------------------------------------------------------------------
7,482
- --------------------------------------------------------------------------------
CHILE -- 1.0%
- --------------------------------------------------------------------------------
393,029 Cia Cervecerias Unidas SA 1,563
- --------------------------------------------------------------------------------
5,682,688 Colbun SA 503
- --------------------------------------------------------------------------------
2,066
- --------------------------------------------------------------------------------
EGYPT -- 1.5%
- --------------------------------------------------------------------------------
41,996 MobiNil - Egyptian Company
Mobile Services 505
- --------------------------------------------------------------------------------
154,883 Orascom Telecom Holding SAE(1) 2,678
- --------------------------------------------------------------------------------
3,183
- --------------------------------------------------------------------------------
HONG KONG -- 1.1%
- --------------------------------------------------------------------------------
846,000 Cosco Pacific Limited 1,172
- --------------------------------------------------------------------------------
1,035,000 Lifestyle International Holdings Ltd.(1) 1,155
- --------------------------------------------------------------------------------
2,327
- --------------------------------------------------------------------------------
INDIA -- 6.0%
- --------------------------------------------------------------------------------
532,271 Bharti Televentures Limited(1) 1,729
- --------------------------------------------------------------------------------
53,000 Corporation Bank 340
- --------------------------------------------------------------------------------
669,250 Hindustan Lever Ltd. 2,023
- --------------------------------------------------------------------------------
109,100 Hughes Software Systems Limited 1,171
- --------------------------------------------------------------------------------
19,790 Infosys Technologies Ltd. ADR 1,642
- --------------------------------------------------------------------------------
75,700 Reliance Energy Ltd. 830
- --------------------------------------------------------------------------------
150,700 Reliance Industries Ltd. 1,431
- --------------------------------------------------------------------------------
2,485,600 Union Bank of India Limited(1) 3,080
- --------------------------------------------------------------------------------
12,246
- --------------------------------------------------------------------------------
INDONESIA -- 2.3%
- --------------------------------------------------------------------------------
11,403,000 PT Bank Rakyat Indonesia(1) 2,090
- --------------------------------------------------------------------------------
6,108,500 PT Indonesian Satellite Corp. Tbk 2,618
- --------------------------------------------------------------------------------
4,708
- --------------------------------------------------------------------------------
ISRAEL -- 1.4%
- --------------------------------------------------------------------------------
1,063,625 Israel Discount Bank Ltd. Cl A(1) 1,127
- --------------------------------------------------------------------------------
63,917 Orbotech, Ltd.(1) 1,239
- --------------------------------------------------------------------------------
7,850 Teva Pharmaceutical
Industries Ltd. ADR 519
- --------------------------------------------------------------------------------
2,885
- --------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
LUXEMBOURG -- 0.4%
- --------------------------------------------------------------------------------
44,490 Quilmes Industrial SA ADR(1) $ 727
- --------------------------------------------------------------------------------
MALAYSIA -- 5.2%
- --------------------------------------------------------------------------------
1,079,900 AMMB Holdings Bhd 983
- --------------------------------------------------------------------------------
4,549,000 Commerce Asset Holdings Bhd 5,842
- --------------------------------------------------------------------------------
421,000 Digi.Com Bhd(1) 518
- --------------------------------------------------------------------------------
7,772,600 E&O Property Development
Bhd Cl B(1) 1,391
- --------------------------------------------------------------------------------
555,860 E&O Property Development Bhd(1) 42
- --------------------------------------------------------------------------------
2,405,000 MK Land Holdings Bhd 1,810
- --------------------------------------------------------------------------------
129,200 WTK Holdings Bhd 201
- --------------------------------------------------------------------------------
10,787
- --------------------------------------------------------------------------------
MEXICO -- 7.3%
- --------------------------------------------------------------------------------
52,449 Cemex SA de CV ADR 1,539
- --------------------------------------------------------------------------------
1,607,525 Controladora Comercial
Mexicana SA de CV 1,910
- --------------------------------------------------------------------------------
1,703,531 Empresas ICA Sociedad
Controladora SA de CV(1) 526
- --------------------------------------------------------------------------------
851,546 Grupo Mexico SA de CV(1) 2,538
- --------------------------------------------------------------------------------
18,767 Grupo Televisa SA ADR 793
- --------------------------------------------------------------------------------
1,023,208 Organizacion Soriana
SA de CV Cl B 3,220
- --------------------------------------------------------------------------------
512,000 Urbi Desarrollos Urbanos SA de CV(1) 1,558
- --------------------------------------------------------------------------------
965,542 Wal-Mart de Mexico SA de CV,
Series V 2,895
- --------------------------------------------------------------------------------
14,979
- --------------------------------------------------------------------------------
PANAMA -- 0.5%
- --------------------------------------------------------------------------------
61,137 Banco Latinoamericano
de Exportaciones SA 960
- --------------------------------------------------------------------------------
PEOPLE'S REPUBLIC OF CHINA -- 7.6%
- --------------------------------------------------------------------------------
4,740,000 Datang International Power
Generation Company Ltd.(2) 3,954
- --------------------------------------------------------------------------------
4,298,000 Jiangxi Copper Co. Ltd. 1,848
- --------------------------------------------------------------------------------
2,819,000 People's Food Holdings Ltd. 2,240
- --------------------------------------------------------------------------------
9,154,000 Sinopec Shanghai Petrochemical
Company Limited Cl H 2,878
- --------------------------------------------------------------------------------
2,210,000 Sinopec Zhenhai Refining
& Chemical Co. Ltd. Cl H 1,872
- --------------------------------------------------------------------------------
1,411,000 Wumart Stores Inc. Cl H(1) 2,761
- --------------------------------------------------------------------------------
15,553
- --------------------------------------------------------------------------------
POLAND -- 2.3%
- --------------------------------------------------------------------------------
512,351 Elektrim SA(1) 1,323
- --------------------------------------------------------------------------------
481,213 KGHM Polska Miedz SA(1) 3,399
- --------------------------------------------------------------------------------
4,722
- --------------------------------------------------------------------------------
RUSSIAN FEDERATION -- 6.0%
- --------------------------------------------------------------------------------
228,071 LUKOIL 6,283
- --------------------------------------------------------------------------------
18,442 MMC Norilsk Nickel ADR 1,014
- --------------------------------------------------------------------------------
9,109 Mobile Telesystems ADR 1,069
- --------------------------------------------------------------------------------
23,164,471 Uralsvyazinform 894
- --------------------------------------------------------------------------------
1,051,728 VolgaTelecom 3,176
- --------------------------------------------------------------------------------
12,436
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
11
Emerging Markets -
Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
SOUTH AFRICA -- 11.7%
- --------------------------------------------------------------------------------
338,076 Aeci Ltd. $ 1,653
- --------------------------------------------------------------------------------
31,198 Edgars Consolidated Stores Ltd. 671
- --------------------------------------------------------------------------------
323,528 Iscor Ltd. 1,691
- --------------------------------------------------------------------------------
360,018 Kumba Resources Limited 1,992
- --------------------------------------------------------------------------------
356,374 Naspers Ltd. 2,515
- --------------------------------------------------------------------------------
484,628 Nedcor Ltd. 4,656
- --------------------------------------------------------------------------------
210,562 SABMiller plc 2,541
- --------------------------------------------------------------------------------
145,579 Sappi Ltd. 2,034
- --------------------------------------------------------------------------------
516,261 Telkom SA Limited 6,271
- --------------------------------------------------------------------------------
24,024
- --------------------------------------------------------------------------------
SOUTH KOREA -- 19.6%
- --------------------------------------------------------------------------------
290,970 Daewoo Heavy Industries
& Machinery Ltd.(1) 1,957
- --------------------------------------------------------------------------------
154,840 Hana Bank 3,439
- --------------------------------------------------------------------------------
65,500 Honam Petrochemical Corporation 2,264
- --------------------------------------------------------------------------------
279,280 Hynix Semiconductor Inc.(1) 2,599
- --------------------------------------------------------------------------------
71,130 LG Micron Ltd. 4,063
- --------------------------------------------------------------------------------
14,368 NHN Corporation 1,331
- --------------------------------------------------------------------------------
17,710 POSCO 2,187
- --------------------------------------------------------------------------------
47,840 Samsung Electro-Mechanics
Co. Ltd.(1) 1,498
- --------------------------------------------------------------------------------
18,520 Samsung Electronics 8,258
- --------------------------------------------------------------------------------
28,100 Samsung SDI Co. Ltd. 3,097
- --------------------------------------------------------------------------------
370,990 Shinhan Financial Group Co., Ltd. 5,998
- --------------------------------------------------------------------------------
81,000 SK Corp. 3,473
- --------------------------------------------------------------------------------
40,164
- --------------------------------------------------------------------------------
SWEDEN -- 2.3%
- --------------------------------------------------------------------------------
151,105 Oriflame Cosmetics SA(1) 4,754
- --------------------------------------------------------------------------------
TAIWAN (REPUBLIC OF CHINA) -- 12.2%
- --------------------------------------------------------------------------------
708,300 Career Technology Company Limited(1) 1,318
- --------------------------------------------------------------------------------
57,359 China Steel Corporation GDR(1) 1,023
- --------------------------------------------------------------------------------
2,143,872 Chung Hwa Pulp Corporation 1,164
- --------------------------------------------------------------------------------
1,067,000 Coretronic Corp. 1,505
- --------------------------------------------------------------------------------
703,000 Gemtek Technology Corp.(1) 1,592
- --------------------------------------------------------------------------------
1,016,000 King Yuan Electronics
Company Limited(1) 1,006
- --------------------------------------------------------------------------------
2,145,000 Lian Hwa Food Corp.(1) 673
- --------------------------------------------------------------------------------
1,203,000 O-TA Precision Industry Co Ltd. 2,815
- --------------------------------------------------------------------------------
291,581 Optimax Technology Corporation 1,181
- --------------------------------------------------------------------------------
1,526,000 Powertech Technology Inc.(1) 2,999
- --------------------------------------------------------------------------------
5,822,000 Taishin Financial Holdings Co. Ltd. 5,275
- --------------------------------------------------------------------------------
1,661,000 Tripod Technology Corp.(1) 2,412
- --------------------------------------------------------------------------------
1,228,000 United Microelectronics Corp.(1) 1,068
- --------------------------------------------------------------------------------
1,277,000 Wan Hai Lines Limited 1,050
- --------------------------------------------------------------------------------
25,081
- --------------------------------------------------------------------------------
Shares/Principal Amount ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
THAILAND -- 1.8%
- --------------------------------------------------------------------------------
1,042,200 Bangkok Bank Public
Company Limited(1) $ 2,377
- --------------------------------------------------------------------------------
7,746,200 Siam Industrial Credit Public
Company Limited 1,347
- --------------------------------------------------------------------------------
3,724
- --------------------------------------------------------------------------------
TURKEY -- 0.4%
- --------------------------------------------------------------------------------
202,541,780 Otokar Otobus Karoseri Sanayi AS(1) 762
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $187,886) 199,348
- --------------------------------------------------------------------------------
PREFERRED STOCKS -- 2.4%
- --------------------------------------------------------------------------------
BRAZIL -- 1.2%
- --------------------------------------------------------------------------------
910,787,532 Telemig Celular Participacoes SA 1,298
- --------------------------------------------------------------------------------
138,900 Usinas Siderurgicas
de Minas Gerais SA Cl A 1,337
- --------------------------------------------------------------------------------
2,635
- --------------------------------------------------------------------------------
CHILE -- 1.2%
- --------------------------------------------------------------------------------
1,280,668 Embotelladora Andina SA 2,369
- --------------------------------------------------------------------------------
TOTAL PREFERRED STOCKS
(Cost $5,793) 5,004
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 0.6%
- --------------------------------------------------------------------------------
Repurchase Agreement, Credit Suisse
First Boston Corp., (U.S. Treasury obligations),
in a joint trading account at 0.94%,
dated 5/28/04, due 6/1/04
(Delivery value $1,300)
(Cost $1,300) 1,300
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 100.0%
(Cost $194,979) $205,652
================================================================================
COLLATERAL RECEIVED FOR
SECURITIES LENDING(3)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
- --------------------------------------------------------------------------------
Repurchase Agreement, Deutsche Bank AG,
(U.S. Treasury obligations), 1.04%,
dated 5/28/04, due 6/1/04
(Delivery value $393) $ 393
- --------------------------------------------------------------------------------
SHORT-TERM DEBT
- --------------------------------------------------------------------------------
$1,000 John Hancock Global Funding II,
VRN, 1.34%, 6/1/04,
resets daily off the Federal
Funds Rate plus 0.34% 1,002
- --------------------------------------------------------------------------------
TOTAL COLLATERAL RECEIVED FOR
SECURITIES LENDING
(Cost $1,395) $1,395
================================================================================
See Notes to Financial Statements. (continued)
- ------
12
Emerging Markets - Schedule of Investments
MAY 31, 2004 (UNAUDITED)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS*
- --------------------------------------------------------------------------------
($ IN THOUSANDS)
Contracts to Sell Settlement Date Value Unrealized Gain
- --------------------------------------------------------------------------------
8,197,239 ZAR 10/01/04 $ 1,231 $18
=================================
(Value on Settlement Date $1,249)
*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.
MARKET SECTOR DIVERSIFICATION
- --------------------------------------------------------------------------------
Consumer Discretionary 6.2%
- --------------------------------------------------------------------------------
Consumer Staples 12.8%
- --------------------------------------------------------------------------------
Energy 9.1%
- --------------------------------------------------------------------------------
Financials 20.3%
- --------------------------------------------------------------------------------
Health Care 0.3%
- --------------------------------------------------------------------------------
Industrials 4.2%
- --------------------------------------------------------------------------------
Information Technology 17.1%
- --------------------------------------------------------------------------------
Materials 14.4%
- --------------------------------------------------------------------------------
Telecommunication Services 12.4%
- --------------------------------------------------------------------------------
Utilities 2.6%
- --------------------------------------------------------------------------------
Temporary Cash Investments 0.6%
- --------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
ADR = American Depositary Receipt
GDR = Global Depositary Receipt
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 May 31, 2004.
ZAR = South African Rand
(1) Non-income producing.
(2) Security, or a portion thereof, was on loan as of May 31, 2004.
(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.
- ------
13
Global Growth - Performance
TOTAL RETURNS AS OF MAY 31, 2004
- --------------------------------------------------------------------------------
------------------------
AVERAGE ANNUAL RETURNS
- --------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR 5 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------
INVESTOR CLASS 26.69% 5.54% 8.35% 12/1/98
- --------------------------------------------------------------------------------
MSCI WORLD FREE INDEX 23.60% -1.21% 0.41%(1) --
- --------------------------------------------------------------------------------
Institutional Class 26.68% -- -6.46% 8/1/00
- --------------------------------------------------------------------------------
Advisor Class 26.29% 5.27% 6.17% 2/5/99
- --------------------------------------------------------------------------------
C Class 25.32% -- 4.51% 3/1/02
- --------------------------------------------------------------------------------
(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
ONE-YEAR RETURNS OVER LIFE OF CLASS
- --------------------------------------------------------------------------------
Periods ended May 31
- --------------------------------------------------------------------------------
1999* 2000 2001 2002 2003 2004
- --------------------------------------------------------------------------------
Investor Class 18.60% 61.77% -15.57% -12.17% -13.86% 26.69%
- --------------------------------------------------------------------------------
MSCI World Free Index 8.68% 13.56% -14.95% -12.56% -9.86% 23.60%
- --------------------------------------------------------------------------------
* 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.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. 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.
- ------
14
Global Growth - Portfolio Commentary
[photo of Matt Hudson, Trevor Gurwich and Henrik Strabo]
A PORTFOLIO COMMENTARY FROM (LEFT TO RIGHT) MATT HUDSON, TREVOR GURWICH AND
HENRIK STRABO, PORTFOLIO MANAGERS ON THE GLOBAL GROWTH INVESTMENT TEAM.
Global Growth advanced 6.94%* during the six months ended May 31, 2004, while
its benchmark, the Morgan Stanley Capital International World Free Index,
returned 7.79%.
Markets in the world's developed nations gained during the period, with the
World Free Index advancing as countries continued to report good news on the
economic front and investors remained confident of strength among corporations.
The gains were strongest late in 2003 and early 2004, but toward the end of the
period, concern about the possibility of higher U.S. interest rates, rising oil
prices and heightened violence in Iraq took a toll on markets. The threat of
slowing demand from China also negatively affected international markets,
especially those in Asia, and led to declines among some companies in the
portfolio from that region.
Against that backdrop, eight of 10 sectors in which we were invested advanced,
with our complement of financial holdings posting the largest contribution and
outperforming the index. But several sectors--notably energy and
materials--underperformed the index, causing the portfolio to lag the benchmark.
BOOST FROM BANKS
The financials sector, Global Growth's biggest stake at the period's end,
advanced mostly on the strength of commercial banks, which on average
represented the portfolio's heaviest industry weighting.
Japan's Sumitomo Mitsui Financial Group not only topped the list of banks
contributing to Global Growth, but made one of the largest contributions to the
portfolio. Sumitomo, one of Japan's largest banks, benefited from a diminishing
number of bad loans as the nation's economy showed signs of gradual recovery.
TYPES OF INVESTMENTS IN PORTFOLIO
- -------------------------------------------------------------------------------
AS OF AS OF
5/31/04 11/30/03
- -------------------------------------------------------------------------------
Common Stocks 98.3% 97.5%
- -------------------------------------------------------------------------------
Preferred Stocks 0.5% 2.0%
- -------------------------------------------------------------------------------
TOTAL EQUITY EXPOSURE 98.8% 99.5%
- -------------------------------------------------------------------------------
Temporary Cash
Investments 1.2% 0.5%
- -------------------------------------------------------------------------------
INVESTMENTS BY COUNTRY
AS OF MAY 31, 2004
- -------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- -------------------------------------------------------------------------------
United States(+) 46.2% 42.2%
- -------------------------------------------------------------------------------
Japan 10.7% 12.5%
- -------------------------------------------------------------------------------
Switzerland 6.4% 3.6%
- -------------------------------------------------------------------------------
United Kingdom 5.9% 7.5%
- -------------------------------------------------------------------------------
Germany 3.7% 6.2%
- -------------------------------------------------------------------------------
France 3.6% 5.1%
- -------------------------------------------------------------------------------
Bermuda 3.0% 1.0%
- -------------------------------------------------------------------------------
South Korea 2.8% 2.0%
- -------------------------------------------------------------------------------
Other 17.7% 19.9%
- -------------------------------------------------------------------------------
(+) Includes temporary cash investments.
* All fund returns referenced in this commentary are
for Investor Class shares. (continued)
- ------
15
Global Growth - Portfolio Commentary
Banks weren't alone in lifting the portfolio. The insurance industry also
contributed to Global Growth, led by our stake in American International Group,
the world's largest insurer. AIG reported during the period that first-quarter
profit increased 36%, due partly to higher premiums for property and casualty
insurance.
HEALTH CARE RISES
The portfolio's health care holdings also boosted performance, led by makers of
health care equipment and supplies. Boston Scientific, a top-10 holding on
average during the period, provided the biggest lift. Boston Scientific received
approval during the period to sell its Taxus drug-coated stent in the U.S., and
the company reported strong initial sales.
Pfizer, also among our 10 largest positions on average, led the rise in Global
Growth's pharmaceutical stake. The U.S. company reported two consecutive
quarters of revenue and earnings growth and reaffirmed its profit forecast for
2004. Switzerland's Roche Holding, the world's largest maker of cancer drugs,
also contributed.
ON THE DOWNSIDE
Although most sectors made positive contributions, several slowed our
performance against the World Free Index, including energy and materials. Global
Growth's underweight energy sector delivered the worst performance against the
benchmark. The retreat was most notable in the oil and gas industry, where we
had a lighter stake in the United Kingdom's BP, one of the world's largest oil
companies, which advanced partly on the strength of rising oil prices.
Our stake in the materials sector lagged the index on weakness among our
holdings in the metals and mining industry, some of which were affected by
declining gold prices.
In conclusion, we remain committed to our long-standing process of identifying
companies demonstrating fundamental strength and sustainable improvement in
their business.
TOP TEN HOLDINGS
AS OF MAY 31, 2004
- -------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- -------------------------------------------------------------------------------
Exxon Mobil Corp. 1.7% 0.9%
- -------------------------------------------------------------------------------
General Electric Co. 1.5% 1.0%
- -------------------------------------------------------------------------------
Procter & Gamble
Co. (The) 1.5% 1.5%
- -------------------------------------------------------------------------------
Citigroup Inc. 1.5% 1.5%
- -------------------------------------------------------------------------------
Medtronic, Inc. 1.4% --
- -------------------------------------------------------------------------------
Samsung Electronics 1.3% 1.0%
- -------------------------------------------------------------------------------
Cisco Systems Inc. 1.3% 1.8%
- -------------------------------------------------------------------------------
Tyco International Ltd. 1.3% --
- -------------------------------------------------------------------------------
Genentech, Inc. 1.3% --
- -------------------------------------------------------------------------------
American Express Co. 1.3% 1.0%
- -------------------------------------------------------------------------------
TOP FIVE SECTORS
AS OF MAY 31, 2004
- -------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- -------------------------------------------------------------------------------
Financials 19.4% 23.1%
- -------------------------------------------------------------------------------
Health Care 16.1% 13.8%
- -------------------------------------------------------------------------------
Information Technology 15.0% 19.5%
- -------------------------------------------------------------------------------
Industrials 13.8% 11.2%
- -------------------------------------------------------------------------------
Consumer Discretionary 12.3% 13.5%
- -------------------------------------------------------------------------------
- ------
16
Global Growth - Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 98.3%
- --------------------------------------------------------------------------------
AUSTRALIA -- 1.2%
- --------------------------------------------------------------------------------
393,295 BHP Billiton Limited $ 3,380
- --------------------------------------------------------------------------------
BELGIUM -- 0.6%
- --------------------------------------------------------------------------------
27,000 Mobistar SA(1) 1,688
- --------------------------------------------------------------------------------
BERMUDA -- 3.0%
- --------------------------------------------------------------------------------
78,228 Axis Capital Holdings Limited 2,186
- --------------------------------------------------------------------------------
63,700 Nabors Industries Ltd.(1) 2,637
- --------------------------------------------------------------------------------
117,000 Tyco International Ltd. 3,602
- --------------------------------------------------------------------------------
8,425
- --------------------------------------------------------------------------------
CANADA -- 1.9%
- --------------------------------------------------------------------------------
83,100 EnCana Corp. 3,260
- --------------------------------------------------------------------------------
91,600 QLT Inc.(1) 2,116
- --------------------------------------------------------------------------------
5,376
- --------------------------------------------------------------------------------
CHANNEL ISLANDS -- 0.6%
- --------------------------------------------------------------------------------
71,710 Amdocs Ltd.(1) 1,770
- --------------------------------------------------------------------------------
ESTONIA -- 0.6%
- --------------------------------------------------------------------------------
233,200 Hansabank Ltd. 1,814
- --------------------------------------------------------------------------------
FRANCE -- 3.6%
- --------------------------------------------------------------------------------
115,000 Alcatel SA(1)(2) 1,653
- --------------------------------------------------------------------------------
107,171 Axa 2,199
- --------------------------------------------------------------------------------
78,000 JC Decaux SA(1) 1,665
- --------------------------------------------------------------------------------
27,130 Schneider SA 1,826
- --------------------------------------------------------------------------------
33,400 Societe Generale Cl A 2,831
- --------------------------------------------------------------------------------
10,174
- --------------------------------------------------------------------------------
GERMANY -- 3.2%
- --------------------------------------------------------------------------------
41,290 Continental AG 1,853
- --------------------------------------------------------------------------------
13,340 Puma AG Rudolf Dassler Sport 3,257
- --------------------------------------------------------------------------------
10,800 SAP AG 1,744
- --------------------------------------------------------------------------------
32,950 Siemens AG 2,319
- --------------------------------------------------------------------------------
9,173
- --------------------------------------------------------------------------------
GREECE -- 1.4%
- --------------------------------------------------------------------------------
79,700 EFG Eurobank Ergasias SA 1,775
- --------------------------------------------------------------------------------
119,000 Greek Organization of
Football Prognostics SA 2,287
- --------------------------------------------------------------------------------
4,062
- --------------------------------------------------------------------------------
HONG KONG -- 0.5%
- --------------------------------------------------------------------------------
150,000 Sun Hung Kai Properties Ltd. 1,275
- --------------------------------------------------------------------------------
INDIA -- 1.0%
- --------------------------------------------------------------------------------
100,000 Housing Development Finance Corp. 1,253
- --------------------------------------------------------------------------------
70,500 Maruti Udyog Ltd.(1) 628
- --------------------------------------------------------------------------------
72,300 Oil & Natural Gas Corp. Ltd. 1,035
- --------------------------------------------------------------------------------
2,916
- --------------------------------------------------------------------------------
ISRAEL -- 1.0%
- --------------------------------------------------------------------------------
44,428 Teva Pharmaceutical
Industries Ltd. ADR 2,940
- --------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
ITALY -- 0.6%
- --------------------------------------------------------------------------------
27,000 e.Biscom(1) $ 1,570
- --------------------------------------------------------------------------------
JAPAN -- 10.7%
- --------------------------------------------------------------------------------
42,000 Canon, Inc. 2,076
- --------------------------------------------------------------------------------
140,500 Chugai Pharmaceutical Co. Ltd. 2,135
- --------------------------------------------------------------------------------
35,300 Fast Retailing Company Limited 2,534
- --------------------------------------------------------------------------------
22,100 Hoya Corp. 2,287
- --------------------------------------------------------------------------------
55,000 Ito-Yokado Co., Ltd. 2,240
- --------------------------------------------------------------------------------
139,000 JSR Corp. 2,963
- --------------------------------------------------------------------------------
580 NET One Systems Co. Ltd. 2,341
- --------------------------------------------------------------------------------
13,800 Nidec Corporation(2) 1,515
- --------------------------------------------------------------------------------
24,900 ORIX Corporation 2,532
- --------------------------------------------------------------------------------
73,400 Pioneer Corp. 1,894
- --------------------------------------------------------------------------------
197,000 Sharp Corp. 3,344
- --------------------------------------------------------------------------------
238,000 Shinsei Bank Ltd. 1,611
- --------------------------------------------------------------------------------
395 Sumitomo Mitsui Financial
Group Inc.(2) 2,838
- --------------------------------------------------------------------------------
30,310
- --------------------------------------------------------------------------------
NETHERLANDS -- 1.8%
- --------------------------------------------------------------------------------
130,400 ING Groep N.V. 2,943
- --------------------------------------------------------------------------------
78,000 Randstad Holdings N.V. 2,049
- --------------------------------------------------------------------------------
4,992
- --------------------------------------------------------------------------------
RUSSIAN FEDERATION -- 1.3%
- --------------------------------------------------------------------------------
2,954,950 Central Telecommunications Company 1,064
- --------------------------------------------------------------------------------
14,140 Mobile Telesystems ADR 1,660
- --------------------------------------------------------------------------------
26,500,000 Uralsvyazinform 1,023
- --------------------------------------------------------------------------------
3,747
- --------------------------------------------------------------------------------
SOUTH AFRICA -- 0.6%
- --------------------------------------------------------------------------------
229,560 Naspers Ltd. 1,620
- --------------------------------------------------------------------------------
SOUTH KOREA -- 2.8%
- --------------------------------------------------------------------------------
43,000 Hyundai Motor Co. Ltd. 1,648
- --------------------------------------------------------------------------------
35,000 Kookmin Bank(1) 1,216
- --------------------------------------------------------------------------------
8,410 Samsung Electronics 3,750
- --------------------------------------------------------------------------------
71,000 Samsung Securities Co. Ltd. 1,264
- --------------------------------------------------------------------------------
7,878
- --------------------------------------------------------------------------------
SPAIN -- 0.9%
- --------------------------------------------------------------------------------
117,000 Repsol YPF SA 2,481
- --------------------------------------------------------------------------------
SWEDEN -- 2.1%
- --------------------------------------------------------------------------------
3,716 Ainax AB(1) 115
- --------------------------------------------------------------------------------
56,923 Oriflame Cosmetics SA(1) 1,791
- --------------------------------------------------------------------------------
755,360 Telefonaktiebolaget LM
Ericsson B Shares(1) 2,108
- --------------------------------------------------------------------------------
57,600 Volvo AB Cl B 1,866
- --------------------------------------------------------------------------------
5,880
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
17
Global Growth - Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
SWITZERLAND -- 6.4%
- --------------------------------------------------------------------------------
394,306 ABB Limited(1) $ 2,203
- --------------------------------------------------------------------------------
54,620 Compagnie Financiere
Richemont AG Cl A 1,408
- --------------------------------------------------------------------------------
8,100 Nestle SA 2,107
- --------------------------------------------------------------------------------
15,650 Nobel Biocare Holding AG 2,323
- --------------------------------------------------------------------------------
45,000 Novartis AG 2,018
- --------------------------------------------------------------------------------
26,400 Roche Holding AG 2,781
- --------------------------------------------------------------------------------
16,130 Swatch Group AG(2) 2,246
- --------------------------------------------------------------------------------
41,922 UBS AG 3,008
- --------------------------------------------------------------------------------
18,094
- --------------------------------------------------------------------------------
TAIWAN (REPUBLIC OF CHINA) -- 1.6%
- --------------------------------------------------------------------------------
350,500 Novatek Microelectronics Corp., Ltd. 1,409
- --------------------------------------------------------------------------------
445,590 Optimax Technology Corporation 1,805
- --------------------------------------------------------------------------------
771,000 Taiwan Semiconductor
Manufacturing Co. Ltd.(1) 1,342
- --------------------------------------------------------------------------------
4,556
- --------------------------------------------------------------------------------
UNITED KINGDOM -- 5.9%
- --------------------------------------------------------------------------------
203,500 British Sky Broadcasting plc 2,286
- --------------------------------------------------------------------------------
489,950 EMI Group plc 1,965
- --------------------------------------------------------------------------------
46,690 Man Group plc 1,397
- --------------------------------------------------------------------------------
120,640 Reckitt Benckiser plc 3,265
- --------------------------------------------------------------------------------
284,509 Smith & Nephew plc 2,980
- --------------------------------------------------------------------------------
473,000 Tesco plc 2,157
- --------------------------------------------------------------------------------
1,160,818 Vodafone Group plc 2,726
- --------------------------------------------------------------------------------
16,776
- --------------------------------------------------------------------------------
UNITED STATES -- 45.0%
- --------------------------------------------------------------------------------
34,500 3M Co. 2,917
- --------------------------------------------------------------------------------
26,000 Aetna Inc. 2,111
- --------------------------------------------------------------------------------
70,200 American Express Co. 3,559
- --------------------------------------------------------------------------------
41,400 American International Group, Inc. 3,035
- --------------------------------------------------------------------------------
253,000 American Tower Corp. Cl A(1) 3,499
- --------------------------------------------------------------------------------
78,000 Boston Scientific Corp.(1) 3,455
- --------------------------------------------------------------------------------
35,300 Broadcom Corp.(1) 1,490
- --------------------------------------------------------------------------------
164,300 Cisco Systems Inc.(1) 3,639
- --------------------------------------------------------------------------------
92,150 Citigroup Inc. 4,278
- --------------------------------------------------------------------------------
44,000 Clorox Company 2,304
- --------------------------------------------------------------------------------
71,600 Corinthian Colleges, Inc.(1) 2,034
- --------------------------------------------------------------------------------
191,000 Corning Inc.(1) 2,366
- --------------------------------------------------------------------------------
36,000 Corporate Executive Board Co. (The) 1,968
- --------------------------------------------------------------------------------
61,700 Danaher Corp. 2,902
- --------------------------------------------------------------------------------
70,610 Digital River Inc.(1)(2) 2,218
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
125,700 E*TRADE Group Inc.(1) $ 1,434
- --------------------------------------------------------------------------------
35,640 eBay Inc.(1) 3,165
- --------------------------------------------------------------------------------
184,400 EMC Corp.(1) 2,073
- --------------------------------------------------------------------------------
112,500 Exxon Mobil Corp. 4,865
- --------------------------------------------------------------------------------
59,840 Genentech, Inc.(1) 3,579
- --------------------------------------------------------------------------------
140,800 General Electric Co. 4,382
- --------------------------------------------------------------------------------
39,500 Gilead Sciences, Inc.(1) 2,586
- --------------------------------------------------------------------------------
50,000 Gillette Company 2,155
- --------------------------------------------------------------------------------
29,200 Goldman Sachs Group, Inc. (The) 2,742
- --------------------------------------------------------------------------------
39,700 Harrah's Entertainment, Inc. 2,041
- --------------------------------------------------------------------------------
89,200 InterActiveCorp(1) 2,788
- --------------------------------------------------------------------------------
31,280 Invitrogen Corp.(1) 2,172
- --------------------------------------------------------------------------------
48,000 Kohl's Corp.(1) 2,283
- --------------------------------------------------------------------------------
53,750 Medicis Pharmaceutical Corp. Cl A 2,275
- --------------------------------------------------------------------------------
84,510 Medtronic, Inc. 4,048
- --------------------------------------------------------------------------------
108,786 Monster Worldwide Inc.(1) 2,753
- --------------------------------------------------------------------------------
111,000 Motorola, Inc. 2,194
- --------------------------------------------------------------------------------
49,361 National Financial Partners Corp. 1,728
- --------------------------------------------------------------------------------
118,000 Network Associates Inc.(1) 1,965
- --------------------------------------------------------------------------------
144,470 Nextel Communications, Inc.(1) 3,342
- --------------------------------------------------------------------------------
58,500 Noble Corp.(1) 2,016
- --------------------------------------------------------------------------------
142,180 PerkinElmer, Inc. 2,774
- --------------------------------------------------------------------------------
97,100 Pfizer, Inc. 3,432
- --------------------------------------------------------------------------------
40,100 Procter & Gamble Co. (The) 4,323
- --------------------------------------------------------------------------------
52,656 Prudential Financial Inc. 2,333
- --------------------------------------------------------------------------------
42,300 ResMed Inc.(1) 2,149
- --------------------------------------------------------------------------------
31,330 United Parcel Service, Inc. Cl B 2,247
- --------------------------------------------------------------------------------
36,500 UnitedHealth Group Incorporated 2,382
- --------------------------------------------------------------------------------
18,850 Viacom, Inc. Cl B 695
- --------------------------------------------------------------------------------
63,000 Wachovia Corp. 2,974
- --------------------------------------------------------------------------------
130,875 XTO Energy Inc. 3,304
- --------------------------------------------------------------------------------
75,800 Yahoo! Inc.(1) 2,324
- --------------------------------------------------------------------------------
127,298
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $230,108) 278,195
- --------------------------------------------------------------------------------
PREFERRED STOCKS -- 0.5%
- --------------------------------------------------------------------------------
GERMANY -- 0.5%
- --------------------------------------------------------------------------------
84,762 ProSieben SAT.1 Media AG
(Cost $929) 1,346
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
18
Global Growth - Schedule of Investments
MAY 31, 2004 (UNAUDITED)
($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 1.2%
- --------------------------------------------------------------------------------
Repurchase Agreement, Morgan Stanley
Group, Inc., (U.S. Treasury obligations),
in a joint trading account at 0.94%,
dated 5/28/04, due 6/1/04
(Delivery value $3,300)
(Cost $3,300) $ 3,300
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 100.0%
(Cost $234,337) $ 282,841
================================================================================
COLLATERAL RECEIVED FOR
SECURITIES LENDING(3)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
- --------------------------------------------------------------------------------
Repurchase Agreement, Deutsche Bank AG,
(U.S. Treasury obligations), 1.04%,
dated 5/28/04, due 6/1/04
(Delivery value $6,761)
(Cost $6,760) $6,760
================================================================================
MARKET SECTOR DIVERSIFICATION
- --------------------------------------------------------------------------------
Consumer Discretionary 12.3%
- --------------------------------------------------------------------------------
Consumer Staples 7.2%
- --------------------------------------------------------------------------------
Energy 6.9%
- --------------------------------------------------------------------------------
Financials 19.4%
- --------------------------------------------------------------------------------
Health Care 16.1%
- --------------------------------------------------------------------------------
Industrials 13.8%
- --------------------------------------------------------------------------------
Information Technology 15.0%
- --------------------------------------------------------------------------------
Materials 2.2%
- --------------------------------------------------------------------------------
Telecommunication Services 5.9%
- --------------------------------------------------------------------------------
Temporary Cash Investments 1.2%
- --------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
ADR = American Depositary Receipt
(1) Non-income producing.
(2) Security, or a portion thereof, was on loan as of May 31, 2004.
(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 MAY 31, 2004
- --------------------------------------------------------------------------------
----------------
AVERAGE ANNUAL
RETURNS
- --------------------------------------------------------------------------------
SINCE INCEPTION
1 YEAR INCEPTION DATE
- --------------------------------------------------------------------------------
INVESTOR CLASS 62.50% 20.96% 6/1/01
- --------------------------------------------------------------------------------
CITIGROUP EMI GROWTH WORLD EX-US(1) 42.23% 6.09%(2) --
- --------------------------------------------------------------------------------
Institutional Class 62.82% 55.43% 1/9/03
- --------------------------------------------------------------------------------
(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.
GROWTH OF $10,000 OVER LIFE OF CLASS
- --------------------------------------------------------------------------------
$10,000 investment made June 1, 2001
ONE-YEAR RETURNS OVER LIFE OF CLASS
- --------------------------------------------------------------------------------
Periods ended May 31
- -------------------------------------------------------------------------------
2002* 2003 2004
- -------------------------------------------------------------------------------
Investor Class 15.00% -5.48% 62.50%
- -------------------------------------------------------------------------------
Citigroup EMI Growth World ex-US -8.01% -8.73% 42.23%
- -------------------------------------------------------------------------------
* 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.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. 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.
- ------
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 15.58%(1) during the six months ended May
31, 2004, outperforming its benchmark, the Citigroup EMI (Extended Market Index)
Growth World ex-US, which rose 13.01%. The portfolio's performance compares
favorably to that of its peers: The 100 small-cap international funds tracked
by Lipper Inc. rose an average of 11.75%.
International Opportunities has delivered superior long-term performance. Since
its June 1, 2001, inception, the fund posted average annual returns of 20.96%,
outpacing the 6.09% average for its benchmark.(2)
CONFIDENCE FUELS RALLIES
World equity markets enjoyed continued vitality during the period covered by
this report. Increased global demand helped support economic expansion in many
nations around the world, providing a beneficial backdrop for profit growth.
Confidence flourished, and investors put their money to work in overseas stock
markets, launching rallies that sent major indices in Asia and Europe to levels
not seen in several years.
Though stocks later came off those highs amid challenges--renewed terrorism
threats, increased hostilities in Iraq, and ramping energy prices among
them--the major international indices posted gains for the period. In that
environment, International Opportunities received positive contributions from
every sector in which it was invested.
TYPES OF INVESTMENTS IN PORTFOLIO
- ------------------------------------------------------------------------------
AS OF AS OF
5/31/04 11/30/03
- ------------------------------------------------------------------------------
Common Stocks 98.3% 93.2%
- ------------------------------------------------------------------------------
Preferred Stocks -- 3.6%
- ------------------------------------------------------------------------------
TOTAL EQUITY EXPOSURE 98.3% 96.8%
- ------------------------------------------------------------------------------
Temporary Cash
Investments 1.7% 3.2%
- ------------------------------------------------------------------------------
INVESTMENTS BY COUNTRY
AS OF MAY 31, 2004
- ------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- ------------------------------------------------------------------------------
Japan 28.9% 27.2%
- ------------------------------------------------------------------------------
United Kingdom 8.5% 2.0%
- ------------------------------------------------------------------------------
Taiwan
(Republic of China) 7.9% 7.1%
- ------------------------------------------------------------------------------
Germany 7.1% 6.0%
- ------------------------------------------------------------------------------
Canada 6.8% 7.1%
- ------------------------------------------------------------------------------
Singapore 4.0% 5.9%
- ------------------------------------------------------------------------------
Norway 3.7% 2.8%
- ------------------------------------------------------------------------------
Switzerland 3.3% 1.9%
- ------------------------------------------------------------------------------
Sweden 2.6% 1.5%
- ------------------------------------------------------------------------------
Finland 2.0% 1.0%
- ------------------------------------------------------------------------------
France 2.0% 1.7%
- ------------------------------------------------------------------------------
Other 23.2% 35.8%
- ------------------------------------------------------------------------------
(1) All fund returns referenced in this commentary are for Investor Class
shares.
(2) Benchmark information since May 31, 2001, the date
nearest the Investor Class's inception for
which data are available. (continued)
- ------
21
International Opportunities -
Portfolio Commentary
CONSUMER AND FINANCIAL STOCKS SHINE
The search for small-sized foreign companies demonstrating earnings
acceleration, the foundation of our discipline, led us to select holdings in the
consumer discretionary sector, particularly in Japan. Our overweight position
in that country was the greatest source of absolute contribution and an area of
significant strength versus our benchmark. Media firms there delivered the bulk
of performance and yielded one of the period's top-contributing stocks, Internet
advertising agency Cyber Agent. Companies in the textiles, apparel and luxury
goods industry also bolstered results. One noteworthy name from that group was
Japan's Sanei-International, a clothing manufacturer.
Investments in the financials sector provided significant lift. All but one of
our holdings in this arena added value, and we outdistanced our benchmark.
Exposure to the real estate industry proved especially rewarding--two Japanese
companies, Goldcrest Company Limited and Arealink Co., Ltd., ranked high on the
list of contributors.
INDUSTRIALS: MIXED PERFORMANCE
The industrials sector held both success and disappointment. Commercial services
and supplies firms, the top industry in this group, produced Japan's Take And
Give Needs Co., one of the period's top stocks. In the marine industry,
Singapore's Cosco, a bulk carrier and ship-repair unit of China's biggest
shipping company, was another standout. The company reported increased revenues
from ship repair and freight rates that drove 2003 profits higher. Elsewhere,
though, some of our holdings fell short. One was Canada's Bennett Environmental,
which specializes in high-temperature treatment of contaminated soil. Investors
punished the stock after the company reduced its profit forecast because of
delayed soil shipments by its two largest customers.
In our search for compelling investment opportunities, we will remain committed
to our discipline. That means seeking small-sized foreign companies
demonstrating sustainable earnings acceleration, which we believe offer our
investors the potential for long-term reward.
TOP TEN HOLDINGS
AS OF MAY 31, 2004
- -------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- -------------------------------------------------------------------------------
Tandberg Television ASA 2.4% 1.8%
- -------------------------------------------------------------------------------
Q-Med AB 2.3% --
- -------------------------------------------------------------------------------
Sierra Wireless 2.0% --
- -------------------------------------------------------------------------------
Extendicare Inc. 1.9% 0.7%
- -------------------------------------------------------------------------------
SEZ Holding AG 1.9% 1.9%
- -------------------------------------------------------------------------------
Accord Customer Care
Solutions Limited 1.8% 1.3%
- -------------------------------------------------------------------------------
Point Inc. 1.8% --
- -------------------------------------------------------------------------------
Okinawa Cellular
Telephone Co. 1.8% 1.5%
- -------------------------------------------------------------------------------
Sanei-International
Co. Ltd. 1.7% 0.7%
- -------------------------------------------------------------------------------
Germanos SA 1.7% 1.6%
- -------------------------------------------------------------------------------
TOP FIVE SECTORS
AS OF MAY 31, 2004
- -------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- -------------------------------------------------------------------------------
Information Technology 29.5% 23.0%
- -------------------------------------------------------------------------------
Consumer Discretionary 24.9% 23.8%
- -------------------------------------------------------------------------------
Financials 15.2% 10.1%
- -------------------------------------------------------------------------------
Industrials 13.9% 19.2%
- -------------------------------------------------------------------------------
Health Care 6.8% 1.7%
- -------------------------------------------------------------------------------
- ------
22
International Opportunities -
Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
COMMON STOCKS -- 98.3%
- --------------------------------------------------------------------------------
BELGIUM -- 1.6%
- --------------------------------------------------------------------------------
36,049 Icos Vision Systems N.V.(1) $ 1,035
- --------------------------------------------------------------------------------
53,156 Option International(1) 1,217
- --------------------------------------------------------------------------------
2,252
- --------------------------------------------------------------------------------
CANADA -- 6.8%
- --------------------------------------------------------------------------------
238,556 Extendicare Inc.(1) 2,624
- --------------------------------------------------------------------------------
108,803 Home Capital Group Inc. 1,740
- --------------------------------------------------------------------------------
105,134 Peyto Energy Trust 2,357
- --------------------------------------------------------------------------------
96,605 Sierra Wireless(1) 2,695
- --------------------------------------------------------------------------------
9,416
- --------------------------------------------------------------------------------
DENMARK -- 1.5%
- --------------------------------------------------------------------------------
10,424 Bryggerigruppen A/S 685
- --------------------------------------------------------------------------------
22,636 Topdanmark A/S(1) 1,368
- --------------------------------------------------------------------------------
2,053
- --------------------------------------------------------------------------------
FINLAND -- 2.0%
- --------------------------------------------------------------------------------
22,437 Nokian Renkaat Oyj 2,076
- --------------------------------------------------------------------------------
71,244 Perlos Oyj 696
- --------------------------------------------------------------------------------
2,772
- --------------------------------------------------------------------------------
FRANCE -- 2.0%
- --------------------------------------------------------------------------------
9,757 Gifi 750
- --------------------------------------------------------------------------------
18,423 Ipsos 1,967
- --------------------------------------------------------------------------------
2,717
- --------------------------------------------------------------------------------
GERMANY -- 7.1%
- --------------------------------------------------------------------------------
37,990 AWD Holding AG 1,267
- --------------------------------------------------------------------------------
117,902 Balda AG 1,022
- --------------------------------------------------------------------------------
83,541 DAB Bank AG(1)(2) 626
- --------------------------------------------------------------------------------
45,459 DIS Deutscher Industrie Service AG 1,194
- --------------------------------------------------------------------------------
32,915 GfK AG 1,105
- --------------------------------------------------------------------------------
41,150 Grenkeleasing AG 1,608
- --------------------------------------------------------------------------------
30,821 MPC Muenchmeyer Petersen
Capital AG(1) 1,694
- --------------------------------------------------------------------------------
53,573 Techem AG(1) 1,246
- --------------------------------------------------------------------------------
9,762
- --------------------------------------------------------------------------------
GREECE -- 1.7%
- --------------------------------------------------------------------------------
89,740 Germanos SA 2,402
- --------------------------------------------------------------------------------
HONG KONG -- 1.1%
- --------------------------------------------------------------------------------
1,036,000 Techtronic Industries
Company Limited 1,562
- --------------------------------------------------------------------------------
INDIA -- 1.5%
- --------------------------------------------------------------------------------
533,565 Industrial Development
Bank of India Limited 477
- --------------------------------------------------------------------------------
11,211 Lupin Ltd.(1) 185
- --------------------------------------------------------------------------------
33,300 Mahindra & Mahindra Ltd. 315
- --------------------------------------------------------------------------------
161,400 Wockhardt Ltd. 1,031
- --------------------------------------------------------------------------------
2,008
- --------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
IRELAND -- 0.8%
- --------------------------------------------------------------------------------
97,785 Paddy Power plc $ 1,134
- --------------------------------------------------------------------------------
JAPAN -- 28.9%
- --------------------------------------------------------------------------------
156 Arealink Co., Ltd. 502
- --------------------------------------------------------------------------------
468 Arealink Co., Ltd. -- new shares 1,286
- --------------------------------------------------------------------------------
185 Cyber Agent Limited(1) 1,252
- --------------------------------------------------------------------------------
582 Cybernet Systems Co. Ltd. 1,679
- --------------------------------------------------------------------------------
39,400 Diamond City Co. Ltd. 1,440
- --------------------------------------------------------------------------------
351 en-japan Inc.(1) 1,111
- --------------------------------------------------------------------------------
486 EPS Co. Ltd.(1) 1,808
- --------------------------------------------------------------------------------
28,974 First Juken Co., Ltd. 731
- --------------------------------------------------------------------------------
23,074 First Juken Co., Ltd. -- new shares 481
- --------------------------------------------------------------------------------
438 GEO Co., Ltd. 1,323
- --------------------------------------------------------------------------------
50,000 Geomatec Company Limited 1,710
- --------------------------------------------------------------------------------
17,700 Goldcrest Company Limited 1,023
- --------------------------------------------------------------------------------
128 Index Corporation 632
- --------------------------------------------------------------------------------
203 Kennedy-Wilson Japan(1) 958
- --------------------------------------------------------------------------------
73,700 Komatsu Electronic Metals Co., Ltd. 912
- --------------------------------------------------------------------------------
47,500 Nihon Dempa Kogyo Co. Ltd. 1,038
- --------------------------------------------------------------------------------
787 Niws Co. Ltd. 2,307
- --------------------------------------------------------------------------------
276 Okinawa Cellular Telephone Co. 2,429
- --------------------------------------------------------------------------------
31,600 Phoenix Electric Co. Ltd. 1,247
- --------------------------------------------------------------------------------
74,000 Point Inc. 2,470
- --------------------------------------------------------------------------------
57,780 Sanei-International Co. Ltd.(1) 2,406
- --------------------------------------------------------------------------------
62,400 Showa Shinku Co. Ltd. 1,092
- --------------------------------------------------------------------------------
8,400 SHUEI YOBIKO Co. Ltd.(1) 305
- --------------------------------------------------------------------------------
191 SK-Electronics Ltd.(1) 2,149
- --------------------------------------------------------------------------------
80,000 Sysmex Corp. 2,329
- --------------------------------------------------------------------------------
39 Take And Give Needs Co., Ltd.(1) 481
- --------------------------------------------------------------------------------
180 Take And Give Needs
Co., Ltd. -- new shares(1) 2,221
- --------------------------------------------------------------------------------
52,200 Tamron Co., Ltd. 2,287
- --------------------------------------------------------------------------------
39,609
- --------------------------------------------------------------------------------
LUXEMBOURG -- 1.5%
- --------------------------------------------------------------------------------
67,837 SBS Broadcasting SA(1) 2,127
- --------------------------------------------------------------------------------
MEXICO -- 1.0%
- --------------------------------------------------------------------------------
484,485 Corporacion GEO,
SA de CV, Series B(1) 637
- --------------------------------------------------------------------------------
37,062 Grupo Aeroportuario del Sureste
SA de CV ADR(1) 699
- --------------------------------------------------------------------------------
1,336
- --------------------------------------------------------------------------------
NETHERLANDS -- 1.7%
- --------------------------------------------------------------------------------
181,142 Ordina N.V. 1,902
- --------------------------------------------------------------------------------
44,702 Trader Classified Media N.V. 497
- --------------------------------------------------------------------------------
2,399
- --------------------------------------------------------------------------------
NORWAY -- 3.7%
- --------------------------------------------------------------------------------
94,671 Ekornes ASA 1,830
- --------------------------------------------------------------------------------
522,049 Tandberg Television ASA(1) 3,284
- --------------------------------------------------------------------------------
5,114
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
23
International Opportunities -
Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
PEOPLE'S REPUBLIC OF CHINA -- 1.9%
- --------------------------------------------------------------------------------
1,016,000 Anhui Conch Cement
Company Limited $ 1,304
- --------------------------------------------------------------------------------
4,442,000 Sinopec Beijing Yanhua
Petrochemical Co., Ltd. 1,268
- --------------------------------------------------------------------------------
2,572
- --------------------------------------------------------------------------------
PORTUGAL -- 1.4%
- --------------------------------------------------------------------------------
413,297 Impresa SGPS(1) 1,923
- --------------------------------------------------------------------------------
RUSSIAN FEDERATION -- 1.9%
- --------------------------------------------------------------------------------
45,346,757 Uralsvyazinform 1,750
- --------------------------------------------------------------------------------
296,123 VolgaTelecom 894
- --------------------------------------------------------------------------------
2,644
- --------------------------------------------------------------------------------
SINGAPORE -- 4.0%
- --------------------------------------------------------------------------------
7,154,500 Accord Customer Care
Solutions Limited(1) 2,506
- --------------------------------------------------------------------------------
4,773,680 Cosco Investment Singapore Limited 2,206
- --------------------------------------------------------------------------------
1,141,000 MFS Technology Ltd. 772
- --------------------------------------------------------------------------------
5,484
- --------------------------------------------------------------------------------
SOUTH KOREA -- 1.6%
- --------------------------------------------------------------------------------
48,100 Kumho Electric Inc. 2,162
- --------------------------------------------------------------------------------
SPAIN -- 1.1%
- --------------------------------------------------------------------------------
53,730 Aldeasa, SA 1,506
- --------------------------------------------------------------------------------
SWEDEN -- 2.6%
- --------------------------------------------------------------------------------
114,478 Q-Med AB 3,141
- --------------------------------------------------------------------------------
92,223 Transcom WorldWide SA(1) 370
- --------------------------------------------------------------------------------
3,511
- --------------------------------------------------------------------------------
SWITZERLAND -- 3.3%
- --------------------------------------------------------------------------------
3,862 PubliGroupe SA 1,204
- --------------------------------------------------------------------------------
81,272 SEZ Holding AG(1) 2,591
- --------------------------------------------------------------------------------
87,898 Temenos Group AG(1) 800
- --------------------------------------------------------------------------------
4,595
- --------------------------------------------------------------------------------
TAIWAN (REPUBLIC OF CHINA) -- 7.9%
- --------------------------------------------------------------------------------
1,155,500 Career Technology
Company Limited(1) 2,149
- --------------------------------------------------------------------------------
359,000 Chicony Electronics Co. Ltd. 673
- --------------------------------------------------------------------------------
2,101,000 King Yuan Electronics
Company Limited(1) 2,080
- --------------------------------------------------------------------------------
371,800 MIN AIK Technology Co., Ltd. 742
- --------------------------------------------------------------------------------
236,750 Novatek Microelectronics Corp., Ltd. 952
- --------------------------------------------------------------------------------
567,908 Optimax Technology Corporation 2,301
- --------------------------------------------------------------------------------
974,000 Powertech Technology Inc.(1) 1,914
- --------------------------------------------------------------------------------
10,811
- --------------------------------------------------------------------------------
Shares ($ IN THOUSANDS) Value
- --------------------------------------------------------------------------------
TURKEY -- 1.2%
- --------------------------------------------------------------------------------
227,171,624 Dogan Yayin Holding(1) $ 673
- --------------------------------------------------------------------------------
14,957,831 Eregli Demir ve Celik
Fabrikalari TAS(1) 381
- --------------------------------------------------------------------------------
163,478,168 Otokar Otobus Karoseri
Sanayi AS(1) 615
- --------------------------------------------------------------------------------
1,669
- --------------------------------------------------------------------------------
UNITED KINGDOM -- 8.5%
- --------------------------------------------------------------------------------
3,151,518 Ashtead Group plc(1) 1,414
- --------------------------------------------------------------------------------
375,669 CSR plc(1) 2,201
- --------------------------------------------------------------------------------
214,256 French Connection Group plc 1,704
- --------------------------------------------------------------------------------
249,382 Mothercare plc(1) 1,553
- --------------------------------------------------------------------------------
180,153 Savills plc 1,463
- --------------------------------------------------------------------------------
324,491 Whatman plc 1,239
- --------------------------------------------------------------------------------
473,196 Wolfson Microelectronics plc(1) 2,102
- --------------------------------------------------------------------------------
11,676
- --------------------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $115,164) 135,216
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 1.7%
- --------------------------------------------------------------------------------
Repurchase Agreement, Morgan Stanley
Group, Inc., (U.S. Treasury obligations),
in a joint trading account at 0.94%,
dated 5/28/04, due 6/1/04
(Delivery value $2,300)
(Cost $2,300) 2,300
- --------------------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 100.0%
(Cost $117,464) $137,516
================================================================================
COLLATERAL RECEIVED FOR
SECURITIES LENDING(3)
- --------------------------------------------------------------------------------
REPURCHASE AGREEMENTS
- --------------------------------------------------------------------------------
Repurchase Agreement, Deutsche Bank AG,
(U.S. Treasury obligations), 1.04%,
dated 5/28/04, due 6/1/04
(Delivery value $24)
(Cost $24) $24
================================================================================
See Notes to Financial Statements. (continued)
- ----
24
International Opportunities -
Schedule of Investments
MAY 31, 2004 (UNAUDITED)
MARKET SECTOR DIVERSIFICATION
- --------------------------------------------------------------------------------
Consumer Discretionary 24.9%
- --------------------------------------------------------------------------------
Consumer Staples 0.5%
- --------------------------------------------------------------------------------
Energy 1.7%
- --------------------------------------------------------------------------------
Financials 15.2%
- --------------------------------------------------------------------------------
Health Care 6.8%
- --------------------------------------------------------------------------------
Industrials 13.9%
- --------------------------------------------------------------------------------
Information Technology 29.5%
- --------------------------------------------------------------------------------
Materials 2.1%
- --------------------------------------------------------------------------------
Telecommunication Services 3.7%
- --------------------------------------------------------------------------------
Temporary Cash Investments 1.7%
- --------------------------------------------------------------------------------
NOTES TO SCHEDULE OF INVESTMENTS
- --------------------------------------------------------------------------------
ADR = American Depositary Receipt
(1) Non-income producing.
(2) Security, or a portion thereof, was on loan as of May 31, 2004.
(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.
- ------
25
Statement of Assets and Liabilities
MAY 31, 2004 (UNAUDITED)
- -------------------------------------------------------------------------------------------------------
INTERNATIONAL EMERGING GLOBAL INTERNATIONAL
(AMOUNTS IN THOUSANDS) DISCOVERY MARKETS GROWTH OPPORTUNITIES
- -------------------------------------------------------------------------------------------------------
ASSETS
- -------------------------------------------------------------------------------------------------------
Investment securities, at value
(cost of $1,016,675, $194,979, $234,337
and $117,464, respectively) --
including $16,557, $1,293,
$6,411, and $23 of
securities loaned, respectively $1,232,482 $205,652 $282,841 $137,516
- ------------------------------------------
Investments made with cash collateral
received for securities on loan,
at value (cost of $17,451, $1,395,
$6,760 and $24, respectively) 17,451 1,395 6,760 24
- -------------------------------------------------------------------------------------------------------
Total investment securities, at value
(cost of $1,034,126, $196,374, $241,097
and $117,488, respectively) 1,249,933 207,047 289,601 137,540
- ------------------------------------------
Cash 438 174 -- --
- ------------------------------------------
Foreign currency holdings,
at value (cost of $30,270, $4,870,
$1,551, and $6,992, respectively) 30,130 4,858 1,541 6,916
- ------------------------------------------
Receivable for investments sold 20,078 5,798 5,147 290
- ------------------------------------------
Receivable for forward foreign currency
exchange contracts -- 18 -- --
- ------------------------------------------
Receivable for capital shares sold -- 47 19 --
- ------------------------------------------
Dividends and interest receivable 2,393 667 704 161
- -----------------------------------------------------------------------------------------------------
1,302,972 218,609 297,012 144,907
- -----------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------
Payable for collateral received
for securities on loan 17,451 1,395 6,760 24
- ------------------------------------------
Disbursements in excess of
demand deposit cash -- -- 29 173
- ------------------------------------------
Payable for investments purchased 43,020 6,769 7,769 1,184
- ------------------------------------------
Accrued management fees 1,526 340 305 240
- -----------------------------------------------------------------------------------------------------
61,997 8,504 14,863 1,621
- -----------------------------------------------------------------------------------------------------
NET ASSETS $1,240,975 $210,105 $282,149 $143,286
=====================================================================================================
See Notes to Financial Statements. (continued)
- ------
26
Statement of Assets and Liabilities
MAY 31, 2004 (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------
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) $ 893,386 $196,126 $316,873 $115,623
- ----------------------------------------
Accumulated undistributed net
investment income (loss) 403 (44) 158 150
- ----------------------------------------
Accumulated undistributed
net realized gain (loss)
on investment and foreign
currency transactions 131,625 3,383 (83,368) 7,552
- ----------------------------------------
Net unrealized appreciation
on investments and translation
of assets and liabilities in
foreign currencies 215,561 10,640 48,486 19,961
- -------------------------------------------------------------------------------------------------------------
$1,240,975 $210,105 $282,149 $143,286
=============================================================================================================
INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- -------------------------------------------------------------------------------------------------------------
Net assets $1,074,783,198 $127,707,439 $273,987,712 $133,425,387
- ----------------------------------------
Shares outstanding 77,512,610 23,501,820 39,551,718 15,707,242
- ----------------------------------------
Net asset value per share $13.87 $5.43 $6.93 $8.49
- -------------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- -------------------------------------------------------------------------------------------------------------
Net assets $166,013,281 $80,956,339 $6,350,676 $9,860,129
- ----------------------------------------
Shares outstanding 11,906,575 14,745,911 909,667 1,159,879
- ----------------------------------------
Net asset value per share $13.94 $5.49 $6.98 $8.50
- -------------------------------------------------------------------------------------------------------------
ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- -------------------------------------------------------------------------------------------------------------
Net assets $178,111 $1,036,456 $1,726,178 N/A
- ----------------------------------------
Shares outstanding 12,963 193,296 251,384 N/A
- ----------------------------------------
Net asset value per share $13.74 $5.36 $6.87 N/A
- -------------------------------------------------------------------------------------------------------------
C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL)
- -------------------------------------------------------------------------------------------------------------
Net assets N/A $405,064 $84,551 N/A
- ----------------------------------------
Shares outstanding N/A 76,158 12,463 N/A
- ----------------------------------------
Net asset value per share N/A $5.32 $6.78 N/A
- -------------------------------------------------------------------------------------------------------------
See Notes to Financial Statements.
- ------
27
Statement of Operations
FOR THE SIX MONTHS ENDED MAY 31, 2004 (UNAUDITED)
- ------------------------------------------------------------------------------------------------------
INTERNATIONAL EMERGING GLOBAL INTERNATIONAL
(AMOUNTS IN THOUSANDS) DISCOVERY MARKETS GROWTH OPPORTUNITIES
- ------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- ------------------------------------------------------------------------------------------------------
INCOME:
- ------------------------------------------
Dividends (net of foreign
taxes withheld of $763, $272,
$182 and $155, respectively) $ 9,449 $2,134 $ 1,957 $ 1,288
- ------------------------------------------
Interest 138 47 13 28
- ------------------------------------------
Securities lending 647 22 21 22
- ------------------------------------------------------------------------------------------------------
10,234 2,203 1,991 1,338
- ------------------------------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------
Management fees 9,369 2,123 1,824 1,186
- ------------------------------------------
Distribution fees:
- ------------------------------------------
Advisor Class -- 1 2 --
- ------------------------------------------
C Class -- 2 -- --
- ------------------------------------------
Service fees:
- ------------------------------------------
Advisor Class -- 1 2 --
- ------------------------------------------
C Class -- 1 -- --
- ------------------------------------------
Directors' fees and expenses 8 1 2 1
- ------------------------------------------
Other expenses 18 3 3 1
- ------------------------------------------------------------------------------------------------------
9,395 2,132 1,833 1,188
- ------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 839 71 158 150
- ------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- ------------------------------------------------------------------------------------------------------
NET REALIZED GAIN ON:
- ------------------------------------------
Investment transactions
(net of foreign taxes
withheld of $--, $--, $--
and $163, respectively) 152,759 18,641 20,111 6,369
- ------------------------------------------
Foreign currency transactions 31,842 960 6,034 1,188
- ------------------------------------------------------------------------------------------------------
184,601 19,601 26,145 7,557
- ------------------------------------------------------------------------------------------------------
CHANGE IN NET UNREALIZED APPRECIATION ON:
- ------------------------------------------
Investments (including foreign
tax liability reduction of $1,022,
$--, $-- and $177, respectively) (60,719) (19,189) (4,762) 5,816
- ------------------------------------------
Translation of assets and liabilities
in foreign currencies (20,115) (1,215) (3,650) (1,254)
- ------------------------------------------------------------------------------------------------------
(80,834) (20,404) (8,412) 4,562
- ------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) 103,767 (803) 17,733 12,119
- ------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $104,606 $ (732) $17,891 $12,269
======================================================================================================
See Notes to Financial Statements.
- ------
28
Statement of Changes in Net Assets
SIX MONTHS ENDED MAY 31, 2004 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2003
- -------------------------------------------------------------------------------------------------------
(AMOUNTS IN THOUSANDS) INTERNATIONAL DISCOVERY EMERGING MARKETS
- -------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS 2004 2003 2004 2003
- -------------------------------------------------------------------------------------------------------
OPERATIONS
- -------------------------------------------------------------------------------------------------------
Net investment income $ 839 $ 3,007 $ 71 $ 100
- ----------------------------------------
Net realized gain 184,601 133,998 19,601 24,968
- ----------------------------------------
Change in net unrealized appreciation (80,834) 191,025 (20,404) 22,508
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations 104,606 328,030 (732) 47,576
- -------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------
From net investment income:
- ----------------------------------------
Investor Class (2,160) (1,417) -- --
- ----------------------------------------
Institutional Class (612) (486) -- --
- -------------------------------------------------------------------------------------------------------
Decrease in net assets
from distributions (2,772) (1,903) -- --
- -------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital share transactions (37,486) (128,717) 42,969 18,259
- -------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 64,348 197,410 42,237 65,835
NET ASSETS
- -------------------------------------------------------------------------------------------------------
Beginning of period 1,176,627 979,217 167,868 102,033
- -------------------------------------------------------------------------------------------------------
End of period $1,240,975 $1,176,627 $210,105 $167,868
=======================================================================================================
Accumulated undistributed
net investment income (loss) $403 $2,336 $(44) $(115)
=======================================================================================================
See Notes to Financial Statements. (continued)
- ------
29
Statement of Changes in Net Assets
SIX MONTHS ENDED MAY 31, 2004 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2003
- -------------------------------------------------------------------------------------------------------
(AMOUNTS IN THOUSANDS) GLOBAL GROWTH INTERNATIONAL OPPORTUNITIES
- -------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS 2004 2003 2004 2003
- -------------------------------------------------------------------------------------------------------
OPERATIONS
- -------------------------------------------------------------------------------------------------------
Net investment income (loss) $ 158 $ 17 $ 150 $ (55)
- ----------------------------------------
Net realized gain 26,145 5,846 7,557 7,314
- ----------------------------------------
Change in net unrealized appreciation (8,412) 40,215 4,562 14,069
- -------------------------------------------------------------------------------------------------------
Net increase in net assets
resulting from operations 17,891 46,078 12,269 21,328
- -------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- -------------------------------------------------------------------------------------------------------
From net investment income:
- ----------------------------------------
Investor Class -- -- -- (61)
- ----------------------------------------
From net realized gains:
- ----------------------------------------
Investor Class -- -- (2,829) --
- ----------------------------------------
Institutional Class -- -- (325) --
- -------------------------------------------------------------------------------------------------------
Decrease in net assets from distributions -- -- (3,154) (61)
- -------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- -------------------------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from capital share transactions 4,951 (3,936) 53,640 37,287
- -------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 22,842 42,142 62,755 58,554
NET ASSETS
- -------------------------------------------------------------------------------------------------------
Beginning of period 259,307 217,165 80,531 21,977
- -------------------------------------------------------------------------------------------------------
End of period $282,149 $259,307 $143,286 $80,531
=======================================================================================================
Undistributed net investment income $158 -- $150 --
=======================================================================================================
See Notes to Financial Statements.
- ------
30
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED) (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 31, 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 may be valued through a
commercial pricing service or at amortized cost, which approximates fair value.
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
such fair value determination would materially impact a fund's net asset value.
Valuations may not be readily available if, for example: an event occurred after
the close of the exchange on which a portfolio security principally trades (but
before the close of the New York Stock Exchange) that was likely to have changed
the value of the security; a security has been declared in default; trading in a
security has been halted during the trading day; or the demand for the security
(as reflected by its trading volume) is insufficient for quoted prices to be
reliable.
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
(continued)
- ------
31
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED) (AMOUNTS IN THOUSANDS)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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. 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 substantially 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.
Global Growth may impose a 2% redemption fee on shares held less than 60 days.
These fees may not be applicable to all classes. These redemption fees are
recorded as a reduction in the cost of shares redeemed. These redemption fees
are retained by the funds and help cover transaction costs that long-term
investors may bear when a fund sells securities to meet investor redemptions.
Global Growth adopted the redemption fee policy effective March 1, 2004.
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)
- ------
32
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED) (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 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
fund's 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%
- ---------------------------------------------------------------------
The annual management fee schedule for each class of Emerging Markets is
as follows:
- ---------------------------------------------------------------------
INVESTOR & C INSTITUTIONAL ADVISOR
CLASSES CLASS CLASS
- ---------------------------------------------------------------------
FUND AVERAGE NET ASSETS
- ---------------------------------------------------------------------
First $500 million 2.00% 1.80% 1.75%
- ---------------------------------------------------------------------
Next $500 million 1.50% 1.30% 1.25%
- ---------------------------------------------------------------------
Over $1 billion 1.25% 1.05% 1.00%
- ---------------------------------------------------------------------
The annual management fee schedule for each class of Global Growth is
as follows:
- ---------------------------------------------------------------------
INVESTOR & C INSTITUTIONAL ADVISOR
CLASSES CLASS CLASS
- ---------------------------------------------------------------------
FUND AVERAGE NET ASSETS
- ---------------------------------------------------------------------
First $1 billion 1.30% 1.10% 1.05%
- ---------------------------------------------------------------------
Next $1 billion 1.15% 0.95% 0.90%
- ---------------------------------------------------------------------
Over $2 billion 1.05% 0.85% 0.80%
- ---------------------------------------------------------------------
The effective annual management fees for the six months ended May 31, 2004, were
as follows:
- --------------------------------------------------------------------------------
INVESTOR INSTITUTIONAL ADVISOR C
CLASS CLASS CLASS CLASS
- --------------------------------------------------------------------------------
International Discovery 1.50% 1.30% 1.25% N/A
- --------------------------------------------------------------------------------
Emerging Markets 2.00% 1.80% 1.75% 2.00%
- --------------------------------------------------------------------------------
Global Growth 1.30% 1.10% 1.05% 1.30%
- --------------------------------------------------------------------------------
(continued)
- ------
33
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED) (AMOUNTS IN THOUSANDS)
2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
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 plans during the six months ended May 31, 2004, 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 six months ended May 31, 2004, 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 six months
ended May 31, 2004, were as follows:
- -------------------------------------------------------------------------------
INTERNATIONAL EMERGING GLOBAL INTERNATIONAL
DISCOVERY MARKETS GROWTH OPPORTUNITIES
- -------------------------------------------------------------------------------
Purchases $1,172,802 $285,827 $137,901 $132,368
- -------------------------------------------------------------------------------
Proceeds from sales $1,216,462 $240,968 $133,388 $86,199
- -------------------------------------------------------------------------------
(continued)
- ------
34
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED) (AMOUNTS IN THOUSANDS)
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the funds were as follows:
- --------------------------------------------------------------------------------------------------------
INTERNATIONAL DISCOVERY EMERGING MARKETS
- --------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
INVESTOR CLASS
- --------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 400,000 100,000
========================================================================================================
Sold 2,796 $ 39,637 10,062 $ 60,886
- ------------------------------------------
Issued in reinvestment of distributions 157 2,016 -- --
- ------------------------------------------
Redeemed (6,125) (85,192)(1) (6,209) (36,687)(1)
- --------------------------------------------------------------------------------------------------------
Net increase (decrease) (3,172) $(43,539) 3,853 $ 24,199
========================================================================================================
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)(2) (15,399) (59,289)(2)
- --------------------------------------------------------------------------------------------------------
Net decrease (9,617) $ (95,472) (2,987) $ (9,513)
========================================================================================================
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 75,000 50,000
========================================================================================================
Sold 1,415 $ 20,091 6,644 $ 40,024
- ------------------------------------------
Issued in reinvestment of distributions 44 566 -- --
- ------------------------------------------
Redeemed (1,045) (14,605) (3,766) (21,866)
- --------------------------------------------------------------------------------------------------------
Net increase 414 $ 6,052 2,878 $ 18,158
========================================================================================================
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
========================================================================================================
(1) Net of redemption fees of $27 and $149 for International Discovery and
Emerging Markets, respectively.
(2) Net of redemption fees of $21 and $219 for International Discovery and
Emerging Markets, respectively.
continued)
- ------
35
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED) (AMOUNTS IN THOUSANDS)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
- --------------------------------------------------------------------------------------------------------
INTERNATIONAL DISCOVERY EMERGING MARKETS
- --------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- --------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- --------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 5,000 5,000
========================================================================================================
Sold 5 $ 70 204 $1,228
- ------------------------------------------
Redeemed (5) (69) (126) (740)
- --------------------------------------------------------------------------------------------------------
Net increase -- $ 1 78 $ 488
========================================================================================================
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)
========================================================================================================
C CLASS
- --------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED N/A 10,000
========================================================================================================
Sold 40 $ 241
- ------------------------------------------
Redeemed (20) (117)
- --------------------------------------------------------------------------------------------------------
Net increase 20 $ 124
========================================================================================================
YEAR ENDED NOVEMBER 30, 2003
SHARES AUTHORIZED N/A 10,000
========================================================================================================
Sold 187 $ 710
- ------------------------------------------
Redeemed (146) (562)
- --------------------------------------------------------------------------------------------------------
Net increase 41 $ 148
========================================================================================================
(1) Net of redemption fees of $12 for Emerging Markets.
(continued)
- ------
36
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED) (AMOUNTS IN THOUSANDS)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------
GLOBAL GROWTH INTERNATIONAL OPPORTUNITIES
- ---------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
INVESTOR CLASS
- ---------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 150,000 100,000
=========================================================================================================
Sold 5,695 $ 39,793 8,161 $ 69,168
- ------------------------------------------
Issued in reinvestment of distributions -- -- 364 2,787
- ------------------------------------------
Redeemed (4,792) (33,308)(1) (2,273) (18,650)(1)
- ---------------------------------------------------------------------------------------------------------
Net increase 903 $ 6,485 6,252 $ 53,305
=========================================================================================================
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)(2)
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) (948) $ (7,059) 4,812 $ 31,731
=========================================================================================================
INSTITUTIONAL CLASS
- ---------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 5,000 25,000
=========================================================================================================
Sold 106 $ 749 -- $ 10
- ------------------------------------------
Issued in reinvestment of distributions -- -- 43 325
- ------------------------------------------
Redeemed (408) (2,926) -- --
- ---------------------------------------------------------------------------------------------------------
Net increase (decrease) (302) $(2,177) 43 $335
=========================================================================================================
YEAR ENDED NOVEMBER 30, 2003(3)
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
=========================================================================================================
(1) Net of redemption fees of $18 and $130 for Global Growth and
International Opportunities, respectively.
(2) Net of redemption fees of $52 for International Opportunities.
(3) January 9, 2003 (commencement of sale) through November 30, 2003 for
International Opportunities.
(continued)
- ------
37
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED) (AMOUNTS IN THOUSANDS)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
- ---------------------------------------------------------------------------------------------------------
GLOBAL GROWTH INTERNATIONAL OPPORTUNITIES
- ---------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ---------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- ---------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 5,000 N/A
=========================================================================================================
Sold 120 $ 833
- ------------------------------------------
Redeemed (31) (215)
- ---------------------------------------------------------------------------------------------------------
Net increase 89 $ 618
=========================================================================================================
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
=========================================================================================================
C CLASS
- ---------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 10,000 N/A
=========================================================================================================
Sold 3 $25
=========================================================================================================
YEAR ENDED NOVEMBER 30, 2003
SHARES AUTHORIZED 10,000 N/A
=========================================================================================================
Sold 97 $ 536
- ------------------------------------------
Redeemed (93) (513)
- ---------------------------------------------------------------------------------------------------------
Net increase 4 $ 23
=========================================================================================================
5. SECURITIES LENDING
As of May 31, 2004, securities in International Discovery, Emerging Markets,
Global Growth and International Opportunities valued at $16,557, $1,293, $6,411,
and $23, 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 $17,451, $1,395, $6,760, and $24, 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 $650 million
unsecured bank line of credit agreement with JPMCB. 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 six months ended May 31, 2004.
(continued)
- ------
38
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED) (AMOUNTS IN THOUSANDS)
7. RISK FACTORS
There are certain risks involved in investing in foreign securities. These risks
include those resulting from future adverse political, social, and economic
developments, fluctuations in currency exchange rates, the possible imposition
of exchange controls, and other foreign laws or restrictions. Investing in
emerging markets may accentuate these risks.
8. 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.
As of May 31, 2004, the components of investments for federal income tax
purposes were as follows:
- ----------------------------------------------------------------------------------------------------
INTERNATIONAL EMERGING GLOBAL INTERNATIONAL
DISCOVERY MARKETS GROWTH OPPORTUNITIES
- ----------------------------------------------------------------------------------------------------
Federal tax cost of investments $1,038,497 $196,748 $241,158 $117,488
====================================================================================================
Gross tax appreciation of investments $243,478 $20,955 $51,734 $23,418
- ---------------------------------------
Gross tax depreciation of investments (32,042) (10,656) (3,291) (3,366)
- ----------------------------------------------------------------------------------------------------
Net tax appreciation of investments $211,436 $10,299 $48,443 $20,052
====================================================================================================
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 investments in
passive foreign investment companies.
Following are the capital loss carryovers and capital loss deferral amounts as
of November 30, 2003:
- ----------------------------------------------------------------------------------------------------
INTERNATIONAL EMERGING GLOBAL INTERNATIONAL
DISCOVERY MARKETS GROWTH OPPORTUNITIES
- ----------------------------------------------------------------------------------------------------
Accumulated capital losses $(48,605) $(15,844) $(109,454) --
- ---------------------------------------
Currency loss deferral $(254) $(114) -- --
- ----------------------------------------------------------------------------------------------------
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 as follows:
- --------------------------------------------------------------------------------------
2009 2010 2011
- --------------------------------------------------------------------------------------
International Discovery $(26,887) $(21,718) --
- --------------------------------------------------------------------------------------
Emerging Markets $ (5,184) $(10,660) --
- --------------------------------------------------------------------------------------
Global Growth $(80,278) $(28,717) $(459)
- --------------------------------------------------------------------------------------
The currency loss deferrals represent net foreign currency losses incurred in
the one-month period ended November 30, 2003. International Discovery and
Emerging Markets have elected to treat such losses as having been incurred
in the following fiscal year for federal income tax purposes.
- ------
39
International Discovery -
Financial Highlights
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
- ----------------------------------------------------------------------------------------------------------
INVESTOR CLASS
- ----------------------------------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------------
PER-SHARE DATA
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $12.75 $9.32 $10.13 $14.23 $15.20 $9.24
- ----------------------------------------------------------------------------------------------------------
Income From Investment Operations
- ------------------------------------
Net Investment Income (Loss)(2) 0.01 0.03 0.03 0.01 (0.12) (0.07)
- ------------------------------------
Net Realized and Unrealized
Gain (Loss) 1.14 3.42 (0.84) (2.54) 0.03 6.06
- ----------------------------------------------------------------------------------------------------------
Total From Investment Operations 1.15 3.45 (0.81) (2.53) (0.09) 5.99
- ----------------------------------------------------------------------------------------------------------
Distributions
- ------------------------------------
From Net Investment Income (0.03) (0.02) -- -- -- --
- ------------------------------------
From Net Realized Gains -- -- -- ( 1.57) (0.88) (0.03)
- ----------------------------------------------------------------------------------------------------------
Total Distributions (0.03) (0.02) -- (1.57) (0.88) (0.03)
- ----------------------------------------------------------------------------------------------------------
Redemption Fees(3) --(4) --(4) --(4) -- -- --
- ----------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.87 $12.75 $9.32 $10.13 $14.23 $15.20
==========================================================================================================
TOTAL RETURN(5) 9.01% 37.05% (8.00)% (20.17)% (1.27)% 65.12%
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.50%(6) 1.57% 1.53% 1.45% 1.36% 1.55%
- ------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.10%(6) 0.27% 0.35% 0.10% (0.64)% (0.65)%
- ------------------------------------
Portfolio Turnover Rate 94% 215% 224% 180% 113% 110%
- ------------------------------------
Net Assets, End of Period
(in thousands) $1,074,783 $1,028,934 $841,706 $1,021,063 $1,568,872 $1,408,624
- ----------------------------------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) The fund adopted the provisions of the revised AICPA Audit and Accounting
Guide for Investment Companies which requires the disclosure of the
per-share effect of redemption fees. Periods prior to December 1, 2001,
have not been restated to reflect this change. Amounts computed using
average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) 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.
(6) Annualized.
See Notes to Financial Statements.
- ------
40
International Discovery -
Financial Highlights
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
- ----------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- ----------------------------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000 1999
- ----------------------------------------------------------------------------------------------------
PER-SHARE DATA
- ----------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $12.84 $9.39 $10.18 $14.26 $15.24 $9.25
- ----------------------------------------------------------------------------------------------------
Income From Investment Operations
- -------------------------------------
Net Investment Income (Loss)(2) 0.02 0.05 0.06 0.04 (0.08) (0.04)
- -------------------------------------
Net Realized and Unrealized
Gain (Loss) 1.13 3.43 (0.85) (2.55) 0.01 6.06
- ----------------------------------------------------------------------------------------------------
Total From Investment Operations 1.15 3.48 (0.79) (2.51) (0.07) 6.02
- ----------------------------------------------------------------------------------------------------
Distributions
- -------------------------------------
From Net Investment Income (0.05) (0.03) -- -- -- --
- -------------------------------------
From Net Realized Gains -- -- -- (1.57) (0.91) (0.03)
- ----------------------------------------------------------------------------------------------------
Total Distributions (0.05) (0.03) -- (1.57) (0.91) (0.03)
- ----------------------------------------------------------------------------------------------------
Redemption Fees(3) --(4) --(4) --(4) -- -- --
- ----------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.94 $12.84 $9.39 $10.18 $14.26 $15.24
====================================================================================================
TOTAL RETURN(5) 9.01% 37.25% (7.76)% (19.97)% (1.13)% 65.37%
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.30%(6) 1.37% 1.33% 1.25% 1.16% 1.35%
- -------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.30%(6) 0.47% 0.55% 0.30% (0.44)% (0.45)%
- -------------------------------------
Portfolio Turnover Rate 94% 215% 224% 180% 113% 110%
- -------------------------------------
Net Assets, End of Period
(in thousands) $166,013 $147,531 $137,358 $192,155 $250,930 $182,222
- ----------------------------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) The fund adopted the provisions of the revised AICPA Audit and Accounting
Guide for Investment Companies which requires the disclosure of the
per-share effect of redemption fees. Periods prior to December 1, 2001,
have not been restated to reflect this change. Amounts computed using
average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) 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.
(6) Annualized.
See Notes to Financial Statements.
- ------
41
International Discovery -
Financial Highlights
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
- -------------------------------------------------------------------------------------------------
ADVISOR CLASS
- -------------------------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------
PER-SHARE DATA
- -------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $12.63 $9.23 $10.05 $14.17 $15.14 $9.22
- -------------------------------------------------------------------------------------------------
Income From Investment Operations
- -------------------------------------
Net Investment Income (Loss)(2) (0.02) 0.01 0.01 --(3) (0.12) (0.07)
- -------------------------------------
Net Realized and Unrealized
Gain (Loss) 1.13 3.39 (0.83) (2.55) (0.01) 6.02
- -------------------------------------------------------------------------------------------------
Total From Investment Operations 1.11 3.40 (0.82) (2.55) (0.13) 5.95
- -------------------------------------------------------------------------------------------------
Distributions
- -------------------------------------
From Net Realized Gains -- -- -- (1.57) (0.84) (0.03)
- -------------------------------------------------------------------------------------------------
Redemption Fees(4) --(3) --(3) --(3) -- -- --
- -------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $13.74 $12.63 $9.23 $10.05 $14.17 $15.14
=================================================================================================
TOTAL RETURN(5) 8.79% 36.84% (8.16)% (20.43)% (1.53)% 64.82%
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.75%(6) 1.82% 1.78% 1.70% 1.61% 1.80%
- -------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets (0.15)%(6) 0.02% 0.10% (0.15)% (0.87)% (0.90)%
- -------------------------------------
Portfolio Turnover Rate 94% 215% 224% 180% 113% 110%
- -------------------------------------
Net Assets, End of Period
(in thousands) $178 $161 $153 $244 $509 $57
- -------------------------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount was less than $0.005.
(4) The fund adopted the provisions of the revised AICPA Audit and Accounting
Guide for Investment Companies which requires the disclosure of the
per-share effect of redemption fees. Periods prior to December 1, 2001,
have not been restated to reflect this change. Amounts computed using
average shares outstanding throughout the period.
(5) 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.
(6) Annualized.
See Notes to Financial Statements.
- ------
42
Emerging Markets - Financial Highlights
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
- -------------------------------------------------------------------------------------------------------
INVESTOR CLASS
- -------------------------------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000 1999
- -------------------------------------------------------------------------------------------------------
PER-SHARE DATA
- -------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $5.28 $3.61 $4.06 $4.68 $5.62 $3.49
- -------------------------------------------------------------------------------------------------------
Income From Investment Operations
- -------------------------------------
Net Investment Income (Loss)(2) --(3) --(3) (0.02) (0.02) (0.06) (0.01)
- -------------------------------------
Net Realized and Unrealized Gain (Loss) 0.15 1.66 (0.43) (0.43) (0.88) 2.14
- -------------------------------------------------------------------------------------------------------
Total From Investment Operations 0.15 1.66 (0.45) (0.45) (0.94) 2.13
- -------------------------------------------------------------------------------------------------------
Distributions
- -------------------------------------
From Net Realized Gains -- -- -- (0.17) -- --
- -------------------------------------------------------------------------------------------------------
Redemption Fees(4) --(3) 0.01 -- -- -- --
- -------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $5.43 $5.28 $3.61 $4.06 $4.68 $5.62
=======================================================================================================
TOTAL RETURN(5) 2.84% 46.26% (10.86)% (10.28)% (16.73)% 61.03%
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.00%(6) 2.01% 2.05% 2.00% 2.00% 2.00%
- -------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets (0.01)%(6) 0.03% (0.37)% (0.27)% (0.88)% (0.33)%
- -------------------------------------
Portfolio Turnover Rate 115% 286% 387% 326% 196% 168%
- -------------------------------------
Net Assets, End of Period
(in thousands) $127,707 $103,737 $81,756 $80,422 $77,279 $82,359
- -------------------------------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount was less than $0.005.
(4) The fund adopted the provisions of the revised AICPA Audit and Accounting
Guide for Investment Companies which requires the disclosure of the
per-share effect of redemption fees. Periods prior to December 1, 2001,
have not been restated to reflect this change. Amounts computed using
average shares outstanding throughout the period.
(5) 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.
(6) Annualized.
See Notes to Financial Statements.
- ------
43
Emerging Markets - Financial Highlights
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
- --------------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000 1999(2)
- --------------------------------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $5.33 $3.64 $4.08 $4.70 $5.63 $3.39
- --------------------------------------------------------------------------------------------------------
Income From Investment Operations
- -------------------------------------
Net Investment Income (Loss)(3) --(4) 0.01 --(4) (0.01) (0.05) --(4)
- -------------------------------------
Net Realized and Unrealized
Gain (Loss) 0.16 1.67 (0.44) (0.44) (0.88) 2.24
- --------------------------------------------------------------------------------------------------------
Total From Investment Operations 0.16 1.68 (0.44) (0.45) (0.93) 2.24
- --------------------------------------------------------------------------------------------------------
Distributions
- -------------------------------------
From Net Realized Gains -- -- -- (0.17) -- --
- --------------------------------------------------------------------------------------------------------
Redemption Fees(5) --(4) 0.01 -- -- -- --
- --------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $5.49 $5.33 $3.64 $4.08 $4.70 $5.63
========================================================================================================
TOTAL RETURN(6) 3.00% 46.43% (10.78)% (10.01)% (16.52)% 66.08%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.80%(7) 1.81% 1.85% 1.80% 1.80% 1.80%(7)
- -------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.19%(7) 0.23% (0.17)% (0.07)% (0.68)% (0.05)%(7)
- -------------------------------------
Portfolio Turnover Rate 115% 286% 387% 326% 196% 168%(8)
- -------------------------------------
Net Assets, End of Period
(in thousands) $80,956 $63,242 $18,969 $18,602 $21,330 $16,507
- --------------------------------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) January 28, 1999 (commencement of sale) through November 30, 1999.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) The fund adopted the provisions of the revised AICPA Audit and Accounting
Guide for Investment Companies which requires the disclosure of the
per-share effect of redemption fees. Periods prior to December 1, 2001,
have not been restated to reflect this change. Amounts computed using
average shares outstanding throughout the period.
(6) 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.
(7) Annualized.
(8) 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)
- --------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- --------------------------------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000 1999(2)
- --------------------------------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $5.22 $3.58 $4.03 $4.66 $5.61 $4.44
- --------------------------------------------------------------------------------------------------------
Income From Investment Operations
- -----------------------------------------
Net Investment Income (Loss)(3) (0.01) --(4) (0.01) (0.04) (0.08) --(4)
- -----------------------------------------
Net Realized and Unrealized Gain (Loss) 0.15 1.63 (0.44) (0.42) (0.87) 1.17
- --------------------------------------------------------------------------------------------------------
Total From Investment Operations 0.14 1.63 (0.45) (0.46) (0.95) 1.17
- --------------------------------------------------------------------------------------------------------
Distributions
- -----------------------------------------
From Net Realized Gains -- -- -- (0.17) -- --
- --------------------------------------------------------------------------------------------------------
Redemption Fees(5) --(4) 0.01 -- -- -- --
- --------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $5.36 $5.22 $3.58 $4.03 $4.66 $5.61
========================================================================================================
TOTAL RETURN(6) 2.68% 45.81% (11.17)% (10.32)% (16.93)% 26.35%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.25%(7) 2.26% 2.30% 2.25% 2.25% 2.25%(7)
- -----------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets (0.26)%(7) (0.22)% (0.62)% (0.52)% (1.13)% 0.02%(7)
- -----------------------------------------
Portfolio Turnover Rate 115% 286% 387% 326% 196% 168%(8)
- -----------------------------------------
Net Assets, End of Period
(in thousands) $1,036 $597 $1,254 $815 $212 $143
- --------------------------------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) May 12, 1999 (commencement of sale) through November 30, 1999.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) The fund adopted the provisions of the revised AICPA Audit and Accounting
Guide for Investment Companies which requires the disclosure of the
per-share effect of redemption fees. Periods prior to December 1, 2001,
have not been restated to reflect this change. Amounts computed using
average shares outstanding throughout the period.
(6) 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.
(7) Annualized.
(8) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended November 30, 1999.
See Notes to Financial Statements.
- ------
45
Emerging Markets - Financial Highlights
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
- --------------------------------------------------------------------------------
C CLASS
- --------------------------------------------------------------------------------
2004(1) 2003 2002(2)
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $5.19 $3.58 $4.24
- --------------------------------------------------------------------------------
Income From Investment Operations
- --------------------------------------------
Net Investment Loss(3) (0.03) (0.04) (0.04)
- --------------------------------------------
Net Realized and Unrealized Gain (Loss) 0.16 1.64 (0.62)
- --------------------------------------------------------------------------------
Total From Investment Operations 0.13 1.60 (0.66)
- --------------------------------------------------------------------------------
Redemption Fees(4) --(5) 0.01 --
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $5.32 $5.19 $3.58
================================================================================
TOTAL RETURN(6) 2.50% 44.97% (15.57)%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 3.00%(7) 3.01% 3.05%(7)
- --------------------------------------------
Ratio of Net Investment Loss
to Average Net Assets (1.01)%(7) (0.97)% (1.10)%(7)
- --------------------------------------------
Portfolio Turnover Rate 115% 286% 387%(8)
- --------------------------------------------
Net Assets, End of Period (in thousands) $405 $291 $54
- --------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) December 18, 2001 (commencement of sale) through November 30, 2002.
(3) Computed using average shares outstanding throughout the period.
(4) The fund adopted the provisions of the revised AICPA Audit and Accounting
Guide for Investment Companies which requires the disclosure of the
per-share effect of redemption fees. Amounts computed using average shares
outstanding throughout the period.
(5) Per-share amount was less than $0.005.
(6) 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.
(7) Annualized.
(8) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended November 30, 2002.
See Notes to Financial Statements.
- ------
46
Global Growth - Financial Highlights
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
- --------------------------------------------------------------------------------------------------------
INVESTOR CLASS
- --------------------------------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000 1999(2)
- --------------------------------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $6.48 $5.39 $6.18 $8.73 $8.33 $5.00
- --------------------------------------------------------------------------------------------------------
Income From Investment Operations
- -----------------------------------------
Net Investment Income (Loss)(3) --(4) --(4) 0.01 --(4) (0.05) (0.01)
- -----------------------------------------
Net Realized and Unrealized Gain (Loss) 0.45 1.09 (0.80) (1.90) 0.81 3.34
- --------------------------------------------------------------------------------------------------------
Total From Investment Operations 0.45 1.09 (0.79) (1.90) 0.76 3.33
- --------------------------------------------------------------------------------------------------------
Distributions
- -----------------------------------------
From Net Realized Gains -- -- -- (0.65) (0.36) --
- --------------------------------------------------------------------------------------------------------
Redemption Fees(5) --(4) -- -- -- -- --
- --------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $6.93 $6.48 $5.39 $6.18 $8.73 $8.33
========================================================================================================
TOTAL RETURN(6) 6.94% 20.22% (12.78)% (23.62)% 8.81% 66.60%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.30%(7) 1.31% 1.32% 1.30% 1.30% 1.30%(7)
- -----------------------------------------
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.10%(7) 0.00% 0.13% (0.06)% (0.48)% (0.20)%(7)
- -----------------------------------------
Portfolio Turnover Rate 48% 152% 278% 232% 123% 133%
- -----------------------------------------
Net Assets, End of Period
(in thousands) $273,988 $250,306 $213,314 $272,402 $412,631 $233,823
- --------------------------------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) December 1, 1998 (inception) through November 30, 1999.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) The fund adopted its redemption fee policy effective March 1, 2004. No
redemption fees were incurred in the periods prior to the six months ended
May 31, 2004. Computed using the average shares outstanding throughout the
period.
(6) 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.
(7) Annualized.
See Notes to Financial Statements.
- ------
47
Global Growth - Financial Highlights
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
- --------------------------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000(2)
- --------------------------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $6.52 $5.41 $6.19 $8.74 $9.73
- --------------------------------------------------------------------------------------------------
Income From Investment Operations
- -------------------------------------------
Net Investment Income (Loss)(3) 0.01 0.01 0.02 0.01 (0.01)
- -------------------------------------------
Net Realized and Unrealized Gain (Loss) 0.45 1.10 (0.80) (1.90) (0.98)
- --------------------------------------------------------------------------------------------------
Total From Investment Operations 0.46 1.11 (0.78) (1.89) (0.99)
- --------------------------------------------------------------------------------------------------
Distributions
- -------------------------------------------
From Net Realized Gains -- -- -- (0.66) --
- --------------------------------------------------------------------------------------------------
Redemption Fees(4) --(5) -- -- -- --
- --------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $6.98 $6.52 $5.41 $6.19 $8.74
==================================================================================================
TOTAL RETURN(6) 7.06% 20.52% (12.60)% (23.53)% (10.17)%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------
Ratio of Operating Expenses to
Average Net Assets 1.10%(7) 1.11% 1.12% 1.10% 1.10%(7)
- -------------------------------------------
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.30%(7) 0.20% 0.33% 0.14% (0.43)%(7)
- -------------------------------------------
Portfolio Turnover Rate 48% 152% 278% 232% 123%(8)
- -------------------------------------------
Net Assets, End of Period (in thousands) $6,351 $7,901 $3,288 $3,907 $5,090
- --------------------------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) August 1, 2000 (commencement of sale) through November 30, 2000.
(3) Computed using average shares outstanding throughout the period.
(4) The fund adopted its redemption fee policy effective March 1, 2004. No
redemption fees were incurred in the periods prior to the six months ended
May 31, 2004. Computed using the average shares outstanding throughout the
period.
(5) Per-share amount was less than $0.005.
(6) 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.
(7) Annualized.
(8) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended November 30, 2000.
See Notes to Financial Statements.
- ------
48
Global Growth - Financial Highlights
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
- --------------------------------------------------------------------------------------------------------
ADVISOR CLASS
- --------------------------------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000 1999(2)
- --------------------------------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $6.43 $5.36 $6.16 $8.72 $8.31 $5.58
- --------------------------------------------------------------------------------------------------------
Income From Investment Operations
- -----------------------------------------
Net Investment Loss(3) --(4) (0.02) (0.01) --(4) (0.06) (0.03)
- -----------------------------------------
Net Realized and Unrealized Gain (Loss) 0.44 1.09 (0.79) (1.93) 0.82 2.76
- --------------------------------------------------------------------------------------------------------
Total From Investment Operations 0.44 1.07 (0.80) (1.93) 0.76 2.73
- --------------------------------------------------------------------------------------------------------
Distributions
- -----------------------------------------
From Net Realized Gains -- -- -- (0.63) (0.35) --
- --------------------------------------------------------------------------------------------------------
Redemption Fees(5) --(4) -- -- -- -- --
- --------------------------------------------------------------------------------------------------------
Net Asset Value, End of Period $6.87 $6.43 $5.36 $6.16 $8.72 $8.31
========================================================================================================
TOTAL RETURN(6) 6.84% 19.96% (12.99)% (23.97)% 8.79% 48.92%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.55%(7) 1.56% 1.57% 1.55% 1.55% 1.55%(7)
- -----------------------------------------
Ratio of Net Investment Loss
to Average Net Assets (0.15)%(7) (0.25)% (0.12)% (0.31)% (0.73)% (0.40)%(7)
- -----------------------------------------
Portfolio Turnover Rate 48% 152% 278% 232% 123% 133%(8)
- -----------------------------------------
Net Assets, End of Period
(in thousands) $1,726 $1,044 $537 $623 $301 $112
- --------------------------------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) February 5, 1999 (commencement of sale) through November 30, 1999.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) The fund adopted its redemption fee policy effective March 1, 2004. No
redemption fees were incurred in the periods prior to the six months ended
May 31, 2004. Computed using the average shares outstanding throughout the
period.
(6) 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.
(7) Annualized.
(8) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended November 30, 1999.
See Notes to Financial Statements.
- ------
49
Global Growth - Financial Highlights
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
- --------------------------------------------------------------------------------
C CLASS
- --------------------------------------------------------------------------------
2004(1) 2003 2002(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $6.37 $5.35 $6.14
- --------------------------------------------------------------------------------
Income From Investment Operations
- ------------------------------------------
Net Investment Loss(3) (0.03) (0.05) (0.03)
- ------------------------------------------
Net Realized and Unrealized Gain (Loss) 0.44 1.07 (0.76)
- --------------------------------------------------------------------------------
Total From Investment Operations 0.41 1.02 (0.79)
- --------------------------------------------------------------------------------
Redemption Fees(4) --(5) -- --
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $6.78 $6.37 $5.35
================================================================================
TOTAL RETURN(6) 6.44% 19.07% (12.87)%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.30%(7) 2.31% 2.32%(7)
- ------------------------------------------
Ratio of Net Investment Loss
to Average Net Assets (0.90)%(7) (1.00)% (0.60)%(7)
- ------------------------------------------
Portfolio Turnover Rate 48% 152% 278%(8)
- ------------------------------------------
Net Assets, End of Period (in thousands) $85 $56 $25
- --------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) March 1, 2002 (commencement of sale) through November 30, 2002.
(3) Computed using average shares outstanding throughout the period.
(4) The fund adopted its redemption fee policy effective March 1, 2004. No
redemption fees were incurred in the periods prior to the six months ended
May 31, 2004. Computed using the average shares outstanding throughout the
period.
(5) Per-share amount was less than $0.005.
(6) 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.
(7) Annualized.
(8) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended November 30, 2002.
See Notes to Financial Statements.
- ------
50
International Opportunities -
Financial Highlights
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
- -------------------------------------------------------------------------------------------
INVESTOR CLASS
- -------------------------------------------------------------------------------------------
2004(1) 2003 2002 2001(2)
- -------------------------------------------------------------------------------------------
PER-SHARE DATA
- -------------------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.62 $4.73 $4.87 $5.00
- -------------------------------------------------------------------------------------------
Income From Investment Operations
- --------------------------------------------
Net Investment Income (Loss)(3) 0.01 (0.01) 0.02 (0.02)
- --------------------------------------------
Net Realized and Unrealized Gain (Loss) 1.12 2.90 (0.19) (0.11)
- -------------------------------------------------------------------------------------------
Total From Investment Operations 1.13 2.89 (0.17) (0.13)
- -------------------------------------------------------------------------------------------
Distributions
- --------------------------------------------
From Net Investment Income -- (0.01) -- --
- --------------------------------------------
From Net Realized Gains (0.27) -- -- --
- -------------------------------------------------------------------------------------------
Total Distributions (0.27) (0.01) -- --
- -------------------------------------------------------------------------------------------
Redemption Fees(3) 0.01 0.01 0.03 --
- -------------------------------------------------------------------------------------------
Net Asset Value, End of Period $8.49 $7.62 $4.73 $4.87
===========================================================================================
TOTAL RETURN(4) 15.58% 61.54% (2.87)% (2.60)%
RATIOS/SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.00%(5) 2.00% 2.01% 2.00%(5)
- --------------------------------------------
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.24%(5) (0.16)% 0.30% (0.75)%(5)
- --------------------------------------------
Portfolio Turnover Rate 76% 219% 257% 147%
- --------------------------------------------
Net Assets, End of Period (in thousands) $133,425 $72,008 $21,977 $6,569
- -------------------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) June 1, 2001 (inception) through November 30, 2001.
(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.
- ------
51
See Notes to Financial Statements.
International Opportunities -
Financial Highlights
For a Share Outstanding Throughout the Periods Indicated
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
2004(1) 2003(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $7.63 $4.80
- --------------------------------------------------------------------------------
Income From Investment Operations
- ---------------------------------------
Net Investment Income(3) 0.01 0.01
- ---------------------------------------
Net Realized and Unrealized Gain 1.14 2.81
- --------------------------------------------------------------------------------
Total From Investment Operations 1.15 2.82
- --------------------------------------------------------------------------------
Distributions
- ---------------------------------------
From Net Realized Gains (0.29) --
- --------------------------------------------------------------------------------
Redemption Fees(3) 0.01 0.01
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $8.50 $7.63
================================================================================
TOTAL RETURN(4) 15.66% 58.96%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.80%(5) 1.80%(5)
- ---------------------------------------
Ratio of Net Investment Income
to Average Net Assets 0.44%(5) 0.25%(5)
- ---------------------------------------
Portfolio Turnover Rate 76% 219%(6)
- ---------------------------------------
Net Assets, End of Period (in thousands) $9,860 $8,523
- --------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) January 9, 2003 (commencement of sale) through November 30, 2003.
(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 year ended November 30, 2003.
See Notes to Financial Statements.
- ------
52
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 ratio of Institutional Class shares is
lower than that of Investor Class shares. The total expense ratios of Advisor
and C Class shares are higher than that of Investor Class shares.
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.
- ------
53
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 funds' manager, is
responsible for exercising the voting rights associated with the securities
purchased and/or held by the funds. 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 americancentury.com and on the Securities and Exchange
Commission's Web site at sec.gov.
RISK FACTORS
There are certain risks involved in investing in foreign securities. These risks
include those resulting from future adverse political, social, and economic
developments, fluctuations in currency exchange rates, the possible imposition
of exchange controls, and other foreign laws or restrictions. Investing in
emerging markets may accentuate these risks.
- ------
54
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) (Europe, Australasia, Far East) INDEX is designed to
measure developed market equity performance, excluding the U.S. and Canada.
The MSCI EM (Emerging Markets) INDEX(reg.sm) 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.
- ------
55
Notes
- ------
56
CONTACT US
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.
PRSRT STD
U.S. POSTAGE PAID
AMERICAN CENTURY
COMPANIES
American Century Investments
P.O. Box 419200
Kansas City, MO 64141-6200
0407 American Century Investment Services, Inc.
SH-SAN-38585S (c)2004 American Century Services Corporation
[front cover]
MAY 31, 2004
American Century Investments
Semiannual Report
[graphic of market line chart]
[graphic of starfish]
[graphic of side-by-side bridges]
Life Sciences Fund
Technology Fund
[american century logo and text logo]
Table of Contents
Our Message to You .........................................................1
LIFE SCIENCES
Performance ................................................................2
Portfolio Commentary .......................................................3
Top Ten Holdings ........................................................3
Top Five 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
OTHER INFORMATION
Share Class Information ...................................................28
Additional Information ....................................................29
Index Definitions .........................................................30
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 semiannual report for the American
Century Life Sciences and Technology funds for the six months ended May 31,
2004.
This report contains information that can help you monitor your investment.
You'll find details about your fund's return and holdings as well as data and
analysis that provide insight into the market conditions affecting the fund's
performance.
Through our Web site, americancentury.com, we provide quarterly commentaries on
all American Century portfolios, the views of our senior investment officers,
and other communications about investments, portfolio strategy, and the markets.
We also have many informative resources available in the Education & Planning
section of our site to help you with your investment strategy.
Your next shareholder report for these funds will be the annual report dated
November 30, 2004, available in approximately six months.
As always, we deeply appreciate your investment with American Century
Investments.
Sincerely,
/signature/James E. Stowers
James E. Stowers, Jr.
FOUNDER AND CHAIRMAN
/signature/James E. Stowers III
James E. Stowers III
CO-CHAIRMAN OF THE BOARD
- ------
1
Life Sciences - Performance
TOTAL RETURNS AS OF MAY 31, 2004
-----------------
AVERAGE ANNUAL
RETURNS
- -----------------------------------------------------------------------
SINCE INCEPTION
1 YEAR INCEPTION DATE
- -----------------------------------------------------------------------
INVESTOR CLASS 24.74% -0.70% 6/30/00
- -----------------------------------------------------------------------
S&P SUPERCOMPOSITE 1500
HEALTH CARE INDEX 12.59% -0.98% --
- -----------------------------------------------------------------------
S&P 500 INDEX 18.33% -5.00% --
- -----------------------------------------------------------------------
Institutional Class 24.54% -1.85% 7/17/00
- -----------------------------------------------------------------------
Advisor Class 24.07% -3.61% 11/14/00
- -----------------------------------------------------------------------
C Class 23.53% -2.08% 11/29/01
- -----------------------------------------------------------------------
GROWTH OF $10,000 OVER LIFE OF CLASS
$10,000 investment made June 30, 2000
ONE-YEAR RETURNS OVER LIFE OF CLASS
Periods ended May 31
- -----------------------------------------------------------------------------
2001* 2002 2003 2004
- -----------------------------------------------------------------------------
Investor Class 2.62% -6.60% -18.63% 24.74%
- -----------------------------------------------------------------------------
S&P SuperComposite
1500 Health Care Index -1.85% -8.21% -5.16% 12.59%
- -----------------------------------------------------------------------------
S&P 500 Index -12.71% -13.85% -8.06% 18.33%
- -----------------------------------------------------------------------------
* From 6/30/00, the Investor Class's inception date. Not annualized.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. 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.
- ------
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.
Life Sciences advanced 8.72%* during the six months ended May 31, 2004, better
than the 8.43% return of the S&P SuperComposite 1500 Health Care Index, and
ahead of the S&P 500 Index, the broad market proxy, which returned 6.79%.
During the six months covered by this report, the stock market continued its
ascent, which began early in 2003 with broad-based advances ahead of the start
of war in Iraq. The moderate pace of economic expansion alongside record-low
interest rates and mild inflation provided a beneficial backdrop for profit
growth.
Confidence rose, and investors put their money to work in the stock market with
rallies that ultimately sent the Dow Jones Industrial Average to its highest
level in 32 months, the Nasdaq Composite Index to its highest point since July
2001 and the broader S&P 500 to a 23-month high. Though stocks later retreated
amid challenges including rising energy prices and renewed terrorism, the major
U.S. stock indices recorded gains for the period. In that environment, Life
Sciences received positive absolute contributions from each of its four industry
stakes in the health care sector.
In our search for health care companies demonstrating earnings acceleration, the
foundation of our discipline, we found ample opportunity in the health care
equipment and supplies industry, which delivered both the greatest absolute
contribution to performance and the best results against the S&P SuperComposite
1500 Health Care Index. One standout from this group was Boston Scientific
Corp., which makes the TAXUS(tm) Express2(tm) stent, an intravascular,
drug-coated device used to treat heart disease. The company recently reported
robust initial sales figures for its new technology, a development for which
investors rewarded the stock.
Biotechnology companies also added value. Biogen Idec Inc. has two blockbuster
drugs on the market and more products in the pipeline. Reports that the company
sought FDA approval of its
TOP TEN HOLDINGS
AS OF MAY 31, 2004
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- --------------------------------------------------------------------------------
Pfizer, Inc. 7.8% 7.6%
- --------------------------------------------------------------------------------
Boston Scientific Corp. 3.4% 4.3%
- --------------------------------------------------------------------------------
Medtronic, Inc. 3.1% --
- --------------------------------------------------------------------------------
Aetna Inc. 3.0% 2.2%
- --------------------------------------------------------------------------------
Eli Lilly and Company 3.0% 2.9%
- --------------------------------------------------------------------------------
Gilead Sciences, Inc. 2.6% 0.5%
- --------------------------------------------------------------------------------
Genetech, Inc. 2.5% --
- --------------------------------------------------------------------------------
Teva Pharmaceutical
Industries Ltd. ADR 2.5% --
- --------------------------------------------------------------------------------
OSI Pharmaceuticals Inc. 2.3% --
- --------------------------------------------------------------------------------
IVAX Corp. 2.3% 1.0%
- --------------------------------------------------------------------------------
*All fund returns referenced in this commentary are for Investor Class shares.
(continued)
- ------
3
Life Sciences - Portfolio Commentary
new MS drug Antegren(reg.tm) a year sooner than expected helped support the
stock's climb. In addition, certain well-performing holdings such as ImClone
Systems Inc., which were represented in the portfolio but not the index, helped
us outdistance the S&P SuperComposite 1500 Health Care Index.
Investments in the pharmaceutical industry, our largest industry stake,
substantially augmented results. Our discipline led us to contributor MGI Pharma
Inc., an oncology-dedicated biopharmaceutical firm that recently added Aloxi, a
treatment for chemotherapy-induced nausea and vomiting, to its stable of drugs.
The launch of the medicine in September 2003 was the catalyst behind the
earnings acceleration that captured our interest--Aloxi sales drove a 321%
increase in revenue for the first quarter of 2004 compared to a year earlier.
However, not all of our positions in this group advanced. One setback was Barr
Pharmaceuticals Inc., a specialty generic drug maker whose stock declined late
in the period after the FDA rejected its bid to release its emergency
contraceptive, Plan B, for over-the-counter sales.
Similarly, health care providers and services companies bolstered returns
overall, though some holdings declined, and performance relative to the S&P
SuperComposite 1500 Health Care Index fell short. Aetna Inc. and DaVita Inc.
ranked among the contributors, while Select Medical Corp. and Universal Health
Services Inc. weighed on results.
The Life Sciences team remains committed to finding the most compelling
investment opportunities in the health care sector. That means that we will
continue to follow our long-held strategy of seeking companies demonstrating
sustainable improvement in their businesses.
TOP FIVE INDUSTRIES
AS OF MAY 31, 2004
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- --------------------------------------------------------------------------------
Pharmaceuticals 34.4% 36.6%
- --------------------------------------------------------------------------------
Health Care Providers
& Services 21.6% 24.9%
- --------------------------------------------------------------------------------
Health Care Equipment
& Supplies 20.7% 17.9%
- --------------------------------------------------------------------------------
Biotechnology 18.2% 15.5%
- --------------------------------------------------------------------------------
Electronic Equipment
& Instruments 0.5% 1.0%
- --------------------------------------------------------------------------------
TYPES OF INVESTMENTS IN PORTFOLIO
- --------------------------------------------------------------------------------
AS OF AS OF
5/31/04 11/30/03
- --------------------------------------------------------------------------------
Common Stocks 95.4% 95.9%
- --------------------------------------------------------------------------------
Temporary Cash
Investments 4.6% 4.1%
- --------------------------------------------------------------------------------
- ------
4
Life Sciences - Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Shares Value
- ----------------------------------------------------------------------
COMMON STOCKS -- 95.4%
BIOTECHNOLOGY -- 18.2%
- ----------------------------------------------------------------------
64,217 Amgen Inc.(1) $ 3,512,670
- ----------------------------------------------------------------------
85,000 Array Biopharma Inc.(1) 805,800
- ----------------------------------------------------------------------
29,588 Biogen Idec Inc.(1) 1,838,894
- ----------------------------------------------------------------------
73,739 Genentech, Inc.(1) 4,410,330
- ----------------------------------------------------------------------
69,958 Gilead Sciences, Inc.(1) 4,579,451
- ----------------------------------------------------------------------
27,500 ImClone Systems Inc.(1) 2,035,000
- ----------------------------------------------------------------------
142,760 Ligand Pharmaceuticals Inc.(1) 2,918,014
- ----------------------------------------------------------------------
50,000 OSI Pharmaceuticals Inc.(1) 4,098,000
- ----------------------------------------------------------------------
85,000 Progenics Pharmaceuticals Inc.(1) 1,491,750
- ----------------------------------------------------------------------
73,513 QLT Inc.(1) 1,698,150
- ----------------------------------------------------------------------
112,000 Serologicals Corp.(1) 1,918,560
- ----------------------------------------------------------------------
75,000 United Therapeutics Corp.(1) 1,774,500
- ----------------------------------------------------------------------
100,000 Vicuron Pharmaceuticals Inc.(1) 1,390,000
- ----------------------------------------------------------------------
32,471,119
- ----------------------------------------------------------------------
ELECTRONIC EQUIPMENT
& INSTRUMENTS -- 0.5%
- ----------------------------------------------------------------------
19,167 Waters Corp.(1) 883,215
- ----------------------------------------------------------------------
HEALTH CARE EQUIPMENT
& SUPPLIES -- 20.7%
- ----------------------------------------------------------------------
51,969 Animas Corp.(1) 1,015,994
- ----------------------------------------------------------------------
31,739 Beckman Coulter Inc. 1,920,210
- ----------------------------------------------------------------------
37,204 Becton Dickinson & Co. 1,872,105
- ----------------------------------------------------------------------
43,500 Biomet Inc. 1,745,220
- ----------------------------------------------------------------------
136,000 Boston Scientific Corp.(1) 6,024,799
- ----------------------------------------------------------------------
200,000 Cardiodynamics
International Corp.(1) 1,316,000
- ----------------------------------------------------------------------
17,000 Conmed Corp.(1) 432,650
- ----------------------------------------------------------------------
61,021 DJ Orthopedics Inc.(1) 1,423,620
- ----------------------------------------------------------------------
115,000 Medtronic, Inc. 5,508,500
- ----------------------------------------------------------------------
27,184 Mentor Corp. 871,247
- ----------------------------------------------------------------------
40,500 Millipore Corp.(1) 2,227,095
- ----------------------------------------------------------------------
31,234 Possis Medical, Inc.(1) 890,794
- ----------------------------------------------------------------------
371,973 Smith & Nephew plc ORD 3,896,643
- ----------------------------------------------------------------------
146,126 Sonic Innovations Inc.(1) 1,497,792
- ----------------------------------------------------------------------
23,500 St. Jude Medical, Inc.(1) 1,792,110
- ----------------------------------------------------------------------
76,000 Urologix Inc.(1) 1,067,800
- ----------------------------------------------------------------------
49,845 Varian Inc.(1) 2,218,103
- ----------------------------------------------------------------------
100,000 Vascular Solutions Inc.(1) 1,080,000
- ----------------------------------------------------------------------
36,800,682
- ----------------------------------------------------------------------
HEALTH CARE PROVIDERS
& SERVICES -- 21.6%
- ----------------------------------------------------------------------
66,500 Aetna Inc. 5,399,800
- ----------------------------------------------------------------------
140,000 Andrx Corp.(1) 3,847,200
- ----------------------------------------------------------------------
Shares Value
- ----------------------------------------------------------------------
40,000 Anthem, Inc.(1) $ 3,541,200
- ----------------------------------------------------------------------
32,337 Cardinal Health, Inc. 2,189,538
- ----------------------------------------------------------------------
24,302 Covance Inc.(1) 880,218
- ----------------------------------------------------------------------
41,000 Coventry Health Care Inc.(1) 1,889,280
- ----------------------------------------------------------------------
71,700 DaVita Inc.(1) 3,328,314
- ----------------------------------------------------------------------
4,000 Fresenius Medical Care AG ADR 99,000
- ----------------------------------------------------------------------
15,100 Fresenius Medical Care AG ORD 1,114,198
- ----------------------------------------------------------------------
85,131 Hanger Orthopedic Group, Inc.(1) 1,404,662
- ----------------------------------------------------------------------
90,000 Inveresk Research Group Inc.(1) 2,707,200
- ----------------------------------------------------------------------
44,000 Omnicare, Inc. 1,892,000
- ----------------------------------------------------------------------
17,000 Oxford Health Plans, Inc. 965,090
- ----------------------------------------------------------------------
45,000 PacifiCare Health Systems, Inc.(1) 1,661,850
- ----------------------------------------------------------------------
40,036 Renal Care Group Inc.(1) 1,311,980
- ----------------------------------------------------------------------
142,000 Select Medical Corporation 1,904,220
- ----------------------------------------------------------------------
21,000 WellChoice Inc.(1) 864,780
- ----------------------------------------------------------------------
31,500 Wellpoint Health Networks Inc.(1) 3,513,510
- ----------------------------------------------------------------------
38,514,040
- ----------------------------------------------------------------------
PHARMACEUTICALS -- 34.4%
- ----------------------------------------------------------------------
46,000 Able Laboratories Inc.(1) 855,600
- ----------------------------------------------------------------------
82,788 AstraZeneca plc ADR 3,882,757
- ----------------------------------------------------------------------
57,000 Atrix Laboratories, Inc.(1)(2) 1,555,530
- ----------------------------------------------------------------------
50,558 Aventis SA ADR 4,005,710
- ----------------------------------------------------------------------
67,500 Barr Pharmaceuticals Inc.(1) 2,944,350
- ----------------------------------------------------------------------
71,461 Eli Lilly and Company 5,264,533
- ----------------------------------------------------------------------
23,456 Eon Labs Inc.(1) 1,771,632
- ----------------------------------------------------------------------
50,000 First Horizon
Pharmaceutical Corporation(1) 886,250
- ----------------------------------------------------------------------
12,767 Forest Laboratories, Inc. Cl A(1) 809,300
- ----------------------------------------------------------------------
80,034 Impax Laboratories Inc.(1) 1,772,753
- ----------------------------------------------------------------------
290,000 Inkine Pharmaceutical Co.(1)(2) 1,191,900
- ----------------------------------------------------------------------
166,500 IVAX Corp.(1) 4,054,275
- ----------------------------------------------------------------------
73,154 Medicis Pharmaceutical
Corp. Cl A 3,095,877
- ----------------------------------------------------------------------
14,000 MGI Pharma Inc.(1) 900,340
- ----------------------------------------------------------------------
38,285 Mylan Laboratories Inc. 854,138
- ----------------------------------------------------------------------
85,000 Novartis AG ORD 3,812,146
- ----------------------------------------------------------------------
390,766 Pfizer, Inc. 13,809,671
- ----------------------------------------------------------------------
28,000 Salix Pharmaceuticals Ltd.(1) 844,760
- ----------------------------------------------------------------------
62,000 Shire Pharmaceuticals plc ADR(1) 1,711,200
- ----------------------------------------------------------------------
125,000 SuperGen Inc.(1) 946,250
- ----------------------------------------------------------------------
66,626 Teva Pharmaceutical
Industries Ltd. ADR 4,408,642
- ----------------------------------------------------------------------
48,500 Watson Pharmaceuticals, Inc.(1) 1,811,475
- ----------------------------------------------------------------------
61,189,089
- ----------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $148,704,407) 169,858,145
- ----------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
5
Life Sciences - Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Value
- ----------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 4.6%
Repurchase Agreement, Morgan
Stanley Group, Inc., (U.S. Treasury
obligations), in a joint trading account
at 0.94%, dated 5/28/04, due 6/1/04
(Delivery value $8,100,846)
(Cost $8,100,000) $ 8,100,000
- ----------------------------------------------------------------------
TOTAL INVESTMENT
SECURITIES -- 100.0%
(Cost $156,804,407) $177,958,145
======================================================================
Value
- ----------------------------------------------------------------------
COLLATERAL RECEIVED FOR
SECURITIES LENDING(3)
Repurchase Agreement, Deutsche
Bank AG, (U.S. Treasury obligations),
1.04%, dated 5/28/04, due 6/1/04
(Delivery value $413,823)
(Cost $413,775) $413,775
======================================================================
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS*
Contracts to Sell Settlement Date Value Unrealized Loss
- ------------------------------------------------------------------------------
2,411,875 CHF 6/30/04 $1,926,054 $ (26,939)
- ------------------------------------------------------------------------------
604,070 Euro 6/30/04 737,156 (6,474)
- ------------------------------------------------------------------------------
945,369 Euro 6/30/04 1,153,650 (10,528)
- ------------------------------------------------------------------------------
590,805 Euro 6/30/04 720,969 (5,537)
- ------------------------------------------------------------------------------
1,065,832 GBP 6/30/04 1,946,956 (20,870)
- ------------------------------------------------------------------------------
1,538,787 GBP 6/30/04 2,810,903 (27,068)
- ------------------------------------------------------------------------------
$9,295,688 $ (97,416)
=====================================
(Value on Settlement Date $9,198,272)
*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
GBP = British Pound
ORD = Foreign Ordinary Share
(1) Non-income producing.
(2) Security, or a portion thereof, was on loan as of May 31, 2004.
(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 MAY 31, 2004
----------------
AVERAGE ANNUAL
RETURNS
- ------------------------------------------------------------------
SINCE INCEPTION
1 YEAR INCEPTION DATE
- ----------------------------------------------------------------
INVESTOR CLASS 19.44% -22.72% 6/30/00
- ----------------------------------------------------------------
S&P SUPERCOMPOSITE 1500
TECHNOLOGY INDEX 22.54% -19.88% --
- ----------------------------------------------------------------
S&P 500 INDEX 18.33% -5.00% --
- ----------------------------------------------------------------
Institutional Class 19.62% -24.77% 7/14/00
- ----------------------------------------------------------------
Advisor Class 19.25% -22.96% 6/30/00
- ----------------------------------------------------------------
GROWTH OF $10,000 OVER LIFE OF CLASS
$10,000 investment made June 30, 2000
ONE-YEAR RETURNS OVER LIFE OF CLASS
Periods ended May 31
- ---------------------------------------------------------------------------
2001* 2002 2003 2004
- ---------------------------------------------------------------------------
Investor Class -50.80% -30.49% -10.64% 19.44%
- ---------------------------------------------------------------------------
S&P SuperComposite 1500
Technology Index -49.39% -27.13% -7.11% 22.54%
- ---------------------------------------------------------------------------
S&P 500 Index -12.71% -13.85% -8.06% 18.33%
- ---------------------------------------------------------------------------
* From 6/30/00, the Investor Class's inception date. Not annualized.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. 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.
- ------
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 declined 6.79%* during the six months ended May 31, 2004,
underperforming the S&P SuperComposite 1500 Technology Index (the Composite),
which fell 0.28%. During the last year, the portfolio gained 19.44%, compared to
22.54% for the Composite.
The stock market began the period with the wind at its back as the upswing in
economic growth, corporate profits and stock returns in late 2003 carried into
the new year. Technology issues played a pivotal role in the rally as companies
across the sector benefited from an increase in corporate and consumer spending.
The rally lost momentum, however, when investors questioned the sustainability
of the economic expansion given weak job growth, rising oil prices, the prospect
of higher interest rates and the threat of terrorism.
Looking at the Composite, it's important to understand that it is a
capitalization-weighted index dominated by larger companies. Large-cap
technology stocks outperformed small- and mid-cap issues during the period, and
the relatively poor performance of the Technology fund versus the Composite was
partly attributable to the portfolio's greater concentration in small- and
mid-cap technology issues: At the end of the period, the weighted average market
cap of the Composite was $96.4 billion compared to Technology's $10.2 billion.
Although the team identified fundamental strength and earnings and revenue
acceleration in many small- and mid-cap holdings, the market's rotation to
large-cap issues worked against the portfolio.
Stock selection in the semiconductor industry, the portfolio's largest industry
position, also contributed to Technology's underperformance. Semiconductor
stocks enjoyed a strong year in 2003, as seen in the 76% annual return of the
Philadelphia Semiconductor Index (SOX), but in 2004 they followed the broader
market's decline. Shares of Intel took a notable hit. The world's largest chip
company, whose spending serves as a bellwether for the broader tech sector,
slightly lowered its capital-expenditure budget,
TOP TEN HOLDINGS
AS OF MAY 31, 2004
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- --------------------------------------------------------------------------------
Flextronics
International Ltd. 3.8% 3.0%
- --------------------------------------------------------------------------------
Research in Motion Ltd. 3.7% 1.1%
- --------------------------------------------------------------------------------
Harman International
Industries Inc. 3.6% 2.2%
- --------------------------------------------------------------------------------
Broadcom Corp. 3.6% 2.0%
- --------------------------------------------------------------------------------
Avaya Inc. 3.4% 1.5%
- --------------------------------------------------------------------------------
NCR Corp. 2.8% --
- --------------------------------------------------------------------------------
Kronos Inc. 2.4% 0.9%
- --------------------------------------------------------------------------------
Akamai Technologies Inc. 2.4% --
- --------------------------------------------------------------------------------
Marvell Technology
Group Ltd. 2.4% 0.8%
- --------------------------------------------------------------------------------
CDW Corp. 2.2% --
- --------------------------------------------------------------------------------
*All fund returns referenced in this commentary are for Investor Class shares.
(continued)
- ------
8
Technology - Portfolio Commentary
and its first-quarter sales projections were flat.
Although the SOX ended the six-month period with a 7.51% decline, there were a
number of stocks in the portfolio that bucked that trend. For example, Marvell
Technology Group, which sells the chips used in small hard drives such as
Apple's iPod, posted its tenth consecutive quarter of double-digit sales.
Marvell's so-called "systems on a chip" combines the functions of several
specialized chips into one that is smaller, cheaper and less of a power drain.
For many technology companies, strong demand at the end of last year turned out
to be typical "budget flush" -- corporations spending the last of their 2003
budgets. When those purchases did not continue at the same rate into the first
quarter, some investors worried about the buildup in inventories. International
Rectifier, a manufacturer of semiconductors that improve the power efficiency of
electronic devices, suffered in this environment.
Electronic equipment and instrument companies, which make products for original
equipment manufacturers such as Cisco, also hampered Technology's relative
returns. RadiSys was one such stock. However, Flextronics, which makes items
such as cell phones for Motorola and Xbox videogame machines for Microsoft, was
a leading contributor. Its margins inched higher as companies outsourced more
work to Flextronics' overseas plants.
In the communications equipment industry, Nortel weighed on results. In April,
the telecommunications-equipment supplier announced that it fired three top
executives and would slash its 2003 reported profit due to improper accounting.
On the positive side, Research in Motion was the portfolio's top contributor.
The company's profits climbed as revenue more than doubled in the fourth quarter
amid broadening popularity of its BlackBerry(reg.tm) wireless e-mail device.
The Technology team is encouraged by indications that information technology
spending continues to rebound and 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 MAY 31, 2004
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
5/31/04 11/30/03
- --------------------------------------------------------------------------------
Semiconductors & Semiconductor
Equipment 25.2% 30.0%
- --------------------------------------------------------------------------------
Electronic Equipment
& Instruments 16.7% 12.0%
- --------------------------------------------------------------------------------
Software 16.0% 15.0%
- --------------------------------------------------------------------------------
Communications
Equipment 14.2% 23.8%
- --------------------------------------------------------------------------------
Internet Software
& Services 8.2% 1.2%
- --------------------------------------------------------------------------------
TYPES OF INVESTMENTS IN PORTFOLIO
- --------------------------------------------------------------------------------
AS OF AS OF
5/31/04 11/30/03
- --------------------------------------------------------------------------------
Common Stocks 98.4% 99.2%
- --------------------------------------------------------------------------------
Temporary Cash
Investments 1.6% 0.8%
- --------------------------------------------------------------------------------
- ------
9
Technology - Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Shares Value
- ----------------------------------------------------------------------
COMMON STOCKS -- 98.4%
COMMERCIAL SERVICES & SUPPLIES -- 3.1%
- ----------------------------------------------------------------------
46,399 Corporate Executive
Board Co. (The) $ 2,536,169
- ----------------------------------------------------------------------
142,300 Monster Worldwide Inc.(1) 3,601,613
- ----------------------------------------------------------------------
6,137,782
- ----------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT -- 14.2%
- ----------------------------------------------------------------------
264,400 Airspan Networks Inc.(1) 1,467,420
- ----------------------------------------------------------------------
123,200 Alvarion Ltd.(1) 1,403,248
- ----------------------------------------------------------------------
415,300 Avaya Inc.(1) 6,574,199
- ----------------------------------------------------------------------
194,400 Corning Inc.(1) 2,408,616
- ----------------------------------------------------------------------
47,600 F5 Networks, Inc.(1) 1,413,244
- ----------------------------------------------------------------------
31,000 Harris Corp. 1,433,440
- ----------------------------------------------------------------------
189,600 Motorola, Inc. 3,748,392
- ----------------------------------------------------------------------
248,600 Nortel Networks Corp.(1) 952,138
- ----------------------------------------------------------------------
59,900 Research In Motion Ltd. (1) 7,188,000
- ----------------------------------------------------------------------
142,700 Symmetricom Inc.(1)(2) 1,127,330
- ----------------------------------------------------------------------
27,716,027
- ----------------------------------------------------------------------
COMPUTERS & PERIPHERALS -- 4.0%
- ----------------------------------------------------------------------
90,500 Electronics for Imaging, Inc.(1) 2,512,280
- ----------------------------------------------------------------------
112,100 NCR Corp.(1) 5,407,704
- ----------------------------------------------------------------------
7,919,984
- ----------------------------------------------------------------------
ELECTRICAL EQUIPMENT -- 0.7%
- ----------------------------------------------------------------------
157,000 Artesyn Technologies Inc.(1) 1,434,980
- ----------------------------------------------------------------------
ELECTRONIC EQUIPMENT &
INSTRUMENTS -- 16.7%
- ----------------------------------------------------------------------
182,200 Aeroflex Inc.(1) 2,324,872
- ----------------------------------------------------------------------
76,900 Amphenol Corp. Cl A(1) 2,506,940
- ----------------------------------------------------------------------
162,500 AVX Corp. 2,574,000
- ----------------------------------------------------------------------
62,600 CDW Corp. 4,398,276
- ----------------------------------------------------------------------
148,800 Celestica Inc.(1) 2,797,440
- ----------------------------------------------------------------------
127,400 Cognex Corp. 4,222,036
- ----------------------------------------------------------------------
425,800 Flextronics International Ltd.(1) 7,477,048
- ----------------------------------------------------------------------
70,500 Flir Systems Inc.(1) 3,468,600
- ----------------------------------------------------------------------
153,500 Vishay Intertechnology, Inc.(1)(2) 2,896,545
- ----------------------------------------------------------------------
32,665,757
- ----------------------------------------------------------------------
HEALTH CARE EQUIPMENT
& SUPPLIES -- 1.4%
- ----------------------------------------------------------------------
61,100 Analogic Corporation 2,818,543
- ----------------------------------------------------------------------
HOUSEHOLD DURABLES -- 3.6%
- ----------------------------------------------------------------------
88,600 Harman International
Industries Inc. 7,100,404
- ----------------------------------------------------------------------
INTERNET & CATALOG RETAIL -- 0.8%
- ----------------------------------------------------------------------
17,700 eBay Inc.(1) 1,571,760
- ----------------------------------------------------------------------
INTERNET SOFTWARE & SERVICES -- 8.2%
- ----------------------------------------------------------------------
316,100 Akamai Technologies Inc.(1) 4,697,246
- ----------------------------------------------------------------------
75,600 Digital River Inc.(1) 2,374,596
- ----------------------------------------------------------------------
Shares Value
- ----------------------------------------------------------------------
92,300 Infospace Inc.(1) $ 3,376,334
- ----------------------------------------------------------------------
234,800 Opsware Inc.(1)(2) 1,894,836
- ----------------------------------------------------------------------
123,500 Yahoo! Inc.(1) 3,786,510
- ----------------------------------------------------------------------
16,129,522
- ----------------------------------------------------------------------
IT SERVICES -- 4.5%
- ----------------------------------------------------------------------
152,700 Accenture Ltd. Cl A(1) 3,757,947
- ----------------------------------------------------------------------
97,600 Sabre Holdings Corp. 2,488,800
- ----------------------------------------------------------------------
420,500 Sapient Corporation(1) 2,523,000
- ----------------------------------------------------------------------
8,769,747
- ----------------------------------------------------------------------
SEMICONDUCTORS &
SEMICONDUCTOR EQUIPMENT -- 25.2%
- ----------------------------------------------------------------------
139,800 Asyst Technologies Inc.(1) 1,430,154
- ----------------------------------------------------------------------
240,900 ATI Technologies Inc. (1) 3,967,623
- ----------------------------------------------------------------------
197,000 Axcelis Technologies Inc.(1) 2,373,850
- ----------------------------------------------------------------------
166,400 Broadcom Corp.(1) 7,023,744
- ----------------------------------------------------------------------
71,900 Brooks Automation, Inc.(1) 1,485,454
- ----------------------------------------------------------------------
69,200 International Rectifier Corp.(1) 3,063,484
- ----------------------------------------------------------------------
98,200 Marvell Technology Group Ltd.(1) 4,671,374
- ----------------------------------------------------------------------
73,500 Maxim Integrated Products, Inc. 3,736,005
- ----------------------------------------------------------------------
123,800 Microchip Technology Inc. 3,925,698
- ----------------------------------------------------------------------
123,900 Microsemi Corporation(1) 1,516,536
- ----------------------------------------------------------------------
191,000 National Semiconductor Corp.(1) 4,138,970
- ----------------------------------------------------------------------
94,900 Semtech Corp.(1) 2,383,888
- ----------------------------------------------------------------------
121,500 Silicon Image Inc.(1) 1,445,850
- ----------------------------------------------------------------------
80,600 Silicon Laboratories Inc.(1) 4,206,514
- ----------------------------------------------------------------------
83,300 Teradyne, Inc.(1) 1,856,757
- ----------------------------------------------------------------------
336,300 Vitesse Semiconductor Corp.(1) 1,836,198
- ----------------------------------------------------------------------
49,062,099
- ----------------------------------------------------------------------
SOFTWARE -- 16.0%
- ----------------------------------------------------------------------
138,700 Check Point Software
Technologies(1) 3,298,286
- ----------------------------------------------------------------------
140,168 Embarcadero Technologies Inc.(1) 1,588,103
- ----------------------------------------------------------------------
90,900 Epicor Software Corporation(1)(2) 1,217,151
- ----------------------------------------------------------------------
41,600 FileNet Corp.(1) 1,137,760
- ----------------------------------------------------------------------
113,400 Kronos Inc.(1) 4,703,832
- ----------------------------------------------------------------------
57,800 Macromedia, Inc.(1) 1,502,800
- ----------------------------------------------------------------------
19,000 Macrovision Corp.(1) 442,510
- ----------------------------------------------------------------------
88,900 Manhattan Associates Inc.(1) 2,533,650
- ----------------------------------------------------------------------
69,600 Mercury Interactive Corp.(1) 3,336,624
- ----------------------------------------------------------------------
91,300 Microsoft Corporation 2,405,755
- ----------------------------------------------------------------------
157,800 Novell, Inc.(1) 1,437,558
- ----------------------------------------------------------------------
133,700 Serena Software, Inc.(1) 2,839,788
- ----------------------------------------------------------------------
51,100 Symantec Corp.(1) 2,340,380
- ----------------------------------------------------------------------
68,100 Verint Systems Inc.(1) 2,095,437
- ----------------------------------------------------------------------
163,500 Viewpoint Corp.(1) 452,879
- ----------------------------------------------------------------------
31,332,513
- ----------------------------------------------------------------------
TOTAL COMMON STOCKS
(Cost $166,847,378) 192,659,118
- ----------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
10
Technology - Schedule of Investments
MAY 31, 2004 (UNAUDITED)
Principal Amount Value
- ----------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 1.6%
Repurchase Agreement, Merrill
Lynch & Co., Inc. (U.S. Treasury
obligations), in a joint trading
account at 0.90%, dated 5/28/04,
due 6/1/04 (Delivery value $2,800,280) $ 2,800,000
- ----------------------------------------------------------------------
Repurchase Agreement, State Street
Corp., (U.S. Treasury obligations),
in a joint trading account at 0.92%,
dated 5/28/04, due 6/1/04
(Delivery value $300,031) 300,000
- ----------------------------------------------------------------------
TOTAL TEMPORARY CASH INVESTMENTS
(Cost $3,100,000) 3,100,000
- ----------------------------------------------------------------------
TOTAL INVESTMENT SECURITIES -- 100.0%
(Cost $169,947,378) $195,759,118
======================================================================
COLLATERAL RECEIVED FOR
SECURITIES LENDING(3)
REPURCHASE AGREEMENTS
- ----------------------------------------------------------------------
Repurchase Agreement, Deutsche
Bank AG, (U.S. Treasury obligations),
1.04%, dated 5/28/04, due 6/1/04
(Delivery value $2,231,549) $2,231,291
- ----------------------------------------------------------------------
SHORT-TERM DEBT
- ----------------------------------------------------------------------
$4,000,009 Allstate Financial Global Funding,
VRN, 1.34%, 6/1/04, resets daily
off the Federal Funds rate
plus 0.34% with no caps (Acquired
5/28/04, Cost $4,009,559)(4) 4,009,559
- ----------------------------------------------------------------------
TOTAL COLLATERAL RECEIVED
FOR SECURITIES LENDING
(Cost $6,240,850) $6,240,850
=======================================================================
NOTES TO SCHEDULE OF INVESTMENTS
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 May 31, 2004.
(1) Non-income producing.
(2) Security, or a portion thereof, was on loan as of May 31, 2004.
(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.)
(4) Security was purchased under Rule 144A of the Securities Act of 1933 or is
a private placement and, unless registered under the Act or exempted from
registration, may only be sold to qualified institutional investors. The
aggregate value of restricted securities purchased by the lending agent
with cash collateral received for securities lending at May 31, 2004 was
$4,009,559, which represented 2.1% of net assets.
- ------
11
See Notes to Financial Statements.
Statement of Assets and Liabilities
MAY 31, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
LIFE SCIENCES TECHNOLOGY
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investment securities, at value
(cost of $156,804,407 and $169,947,378,
respectively) -- including securities
on loan valued at $449,034
and $6,050,449, respectively $177,958,145 $195,759,118
- ------------------------------------------
Investments made with cash
collateral received for securities
on loan, at value (cost of $413,775
and $6,240,850, respectively) 413,775 6,240,850
- --------------------------------------------------------------------------------
Total investment securities,
at value (cost of $157,218,182
and $176,188,228, respectively) 178,371,920 201,999,968
- ------------------------------------------
Cash collateral received for
securities on loan 41,875 --
- ------------------------------------------
Cash -- 323,775
- ------------------------------------------
Receivable for investments sold 6,258,886 5,523,366
- ------------------------------------------
Receivable for capital shares sold 2,266 5,550
- ------------------------------------------
Dividends and interest receivable 128,138 12,909
- --------------------------------------------------------------------------------
184,803,085 207,865,568
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payable for collateral received for
securities on loan, at value 455,650 6,240,850
- ------------------------------------------
Disbursements in excess
of demand deposit cash 135,736 --
- ------------------------------------------
Payable for investments purchased 7,573,082 8,674,375
- ------------------------------------------
Payable for forward foreign
currency exchange contracts 97,416 --
- ------------------------------------------
Accrued management fees 222,521 231,992
- ------------------------------------------
Distribution fees payable 27 9
- ------------------------------------------
Service fees payable 22 9
- --------------------------------------------------------------------------------
8,484,454 15,147,235
- --------------------------------------------------------------------------------
NET ASSETS $176,318,631 $192,718,333
================================================================================
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Capital (par value and
paid-in surplus) $201,582,768 $ 415,514,300
- ------------------------------------------
Accumulated net investment loss (715,572) (1,460,608)
- ------------------------------------------
Accumulated net realized loss
on investment and foreign
currency transactions (45,605,976) (247,147,099)
- ------------------------------------------
Net unrealized appreciation on
investments and translation of
assets and liabilities
in foreign currencies 21,057,411 25,811,740
- --------------------------------------------------------------------------------
$176,318,631 $ 192,718,333
================================================================================
INVESTOR CLASS, $0.01 PAR VALUE
- --------------------------------------------------------------------------------
Net assets $171,812,966 $184,173,505
- ------------------------------------------
Shares outstanding 36,287,044 10,094,912
- ------------------------------------------
Net asset value per share $4.73 $18.24
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS, $0.01 PAR VALUE
- --------------------------------------------------------------------------------
Net assets $4,399,626 $8,498,710
- ------------------------------------------
Shares outstanding 921,507 461,650
- ------------------------------------------
Net asset value per share $4.77 $18.41
- --------------------------------------------------------------------------------
ADVISOR CLASS, $0.01 PAR VALUE
- --------------------------------------------------------------------------------
Net assets $95,717 $46,118
- ------------------------------------------
Shares outstanding 20,410 2,558
- ------------------------------------------
Net asset value per share $4.69 $18.03
- --------------------------------------------------------------------------------
C CLASS, $0.01 PAR VALUE
- --------------------------------------------------------------------------------
Net assets $10,322 --
- ------------------------------------------
Shares outstanding 2,235 --
- ------------------------------------------
Net asset value per share $4.62 --
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- ------
12
Statement of Operations
FOR THE SIX MONTHS ENDED MAY 31, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
LIFE SCIENCES TECHNOLOGY
- --------------------------------------------------------------------------------
INVESTMENT LOSS
- --------------------------------------------------------------------------------
INCOME:
- ------------------------------------------
Dividends (net of foreign
Taxes withheld of $17,173
and $ -, respectively) $ 569,946 $
68,954
- ------------------------------------------
Interest 29,841 26,552
- ------------------------------------------
Securities lending 33,527 23,461
- --------------------------------------------------------------------------------
633,314 118,967
- --------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------
Management fees 1,308,194 1,576,433
- ------------------------------------------
Distribution fees:
- ------------------------------------------
Advisor Class 83 59
- ------------------------------------------
C Class 45 --
- ------------------------------------------
Service fees:
- ------------------------------------------
Advisor Class 83 59
- ------------------------------------------
C Class 15 --
- ------------------------------------------
Directors' fees and expenses 1,099 1,370
- ------------------------------------------
Other expenses 718 1,654
- --------------------------------------------------------------------------------
1,310,237 1,579,575
- --------------------------------------------------------------------------------
Net investment loss (676,923) (1,460,608)
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN ON:
- ------------------------------------------
Investment transactions 18,662,140 14,114,479
- ------------------------------------------
Foreign currency transactions (230,033) --
- --------------------------------------------------------------------------------
18,432,107 14,114,479
- --------------------------------------------------------------------------------
CHANGE IN NET UNREALIZED APPRECIATION ON:
- ------------------------------------------
Investments (3,901,555) (29,070,473)
- ------------------------------------------
Translation of assets and
liabilities in foreign currencies (17,431) --
- --------------------------------------------------------------------------------
(3,918,986) (29,070,473)
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) 14,513,121 (14,955,994)
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS RESULTING FROM OPERATIONS $13,836,198 $(16,416,602)
================================================================================
See Notes to Financial Statements.
- ------
13
Statement of Changes in Net Assets
SIX MONTHS ENDED MAY 31, 2004 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2003
- ------------------------------------------------------------------------------------------------------------
LIFE SCIENCES TECHNOLOGY
- ------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS 2004 2003 2004 2003
- ------------------------------------------------------------------------------------------------------------
OPERATIONS
- ------------------------------------------------------------------------------------------------------------
Net investment loss $ (676,923) $ (1,362,843) $ (1,460,608) $ (1,911,113)
- ----------------------------
Net realized gain 18,432,107 2,626,523 14,114,479 17,797,976
- ----------------------------
Change in net unrealized
appreciation (depreciation) (3,918,986) 31,552,596 (29,070,473) 37,716,935
- ------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 13,836,198 32,816,276 (16,416,602) 53,603,798
- ------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- ------------------------------------------------------------------------------------------------------------
Net increase (decrease)
in net assets from capital
share transactions (1,779,989) (18,274,746) (3,958,301) 23,224,232
- ------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS 12,056,209 14,541,530 (20,374,903) 76,828,030
- ------------------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------------------
Beginning of period 164,262,422 149,720,892 213,093,236 136,265,206
- ------------------------------------------------------------------------------------------------------------
End of period $176,318,631 $164,262,422 $192,718,333 $213,093,236
============================================================================================================
Accumulated net
investment loss $(715,572) $(38,649) $(1,460,608) --
============================================================================================================
See Notes to Financial Statements.
- ------
14
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED)
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 Sciences) 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
Sciences generally invests in companies that engage in the business of providing
products and services that help promote personal health and wellness. Technology
generally 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 May 31, 2004.
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 may be valued through a
commercial pricing service or at amortized cost, which approximates fair value.
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
such fair value determination would materially impact a fund's net asset value.
Valuations may not be readily available if, for example: an event occurred after
the close of the exchange on which a portfolio security principally trades (but
before the close of the New York Stock Exchange) that was likely to have changed
the value of the security; a security has been declared in default; trading in a
security has been halted during the trading day; or the demand for the security
(as reflected by its trading volume) is insufficient for quoted prices to be
reliable.
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.
(continued)
- ------
15
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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. 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 substantially 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
MAY 31, 2004 (UNAUDITED)
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 six months ended May 31, 2004 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 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 six months ended May 31, 2004, 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 six months ended May 31, 2004, 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 six months
ended May 31, 2004, were as follows:
- --------------------------------------------------------------------------------
LIFE SCIENCES TECHNOLOGY
- --------------------------------------------------------------------------------
Purchases $140,250,358 $268,888,499
- --------------------------------------------------------------------------------
Proceeds from sales $144,940,113 $272,024,856
- --------------------------------------------------------------------------------
(continued)
- ------
17
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED)
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 9.
Transactions in shares of the funds were as follows:
- ----------------------------------------------------------------------------------------------------------
LIFE SCIENCES TECHNOLOGY
- ----------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
INVESTOR CLASS
- ----------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 200,000,000 300,000,000
==========================================================================================================
Sold 3,605,465 $ 16,988,530 2,263,440 $ 44,933,857
- ---------------------------------
Redeemed (4,024,940) (18,856,635) (2,530,253) (48,000,430)
- ----------------------------------------------------------------------------------------------------------
Net decrease (419,475) $ (1,868,105) (266,813) $ (3,066,573)
==========================================================================================================
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
==========================================================================================================
INSTITUTIONAL CLASS
- ----------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 5,000,000 15,000,000
==========================================================================================================
Sold 182,281 $ 862,141 75,408 $ 1,567,282
- ---------------------------------
Redeemed (174,894) (820,147) (130,088) (2,489,442)
- ----------------------------------------------------------------------------------------------------------
Net increase (decrease) 7,387 $ 41,994 (54,680) $ (922,160)
==========================================================================================================
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)
==========================================================================================================
ADVISOR CLASS
- ----------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 5,000,000 5,000,000
==========================================================================================================
Sold 10,619 $50,603 1,779 $33,178
- ---------------------------------
Redeemed (916) (4,212) (154) (2,746)
- ----------------------------------------------------------------------------------------------------------
Net increase 9,703 $46,391 1,625 $30,432
==========================================================================================================
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)
==========================================================================================================
(continued)
- ------
18
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------
LIFE SCIENCES TECHNOLOGY
- ----------------------------------------------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
- ----------------------------------------------------------------------------------------------------------
C CLASS
- ----------------------------------------------------------------------------------------------------------
SIX MONTHS ENDED MAY 31, 2004
SHARES AUTHORIZED 10,000,000 7,500,000
==========================================================================================================
Sold 1,582 $ 7,501
- ---------------------------------
Redeemed (1,714) (7,770)
- ----------------------------------------------------------------------------------------------------------
Net decrease (132) $ (269)
==========================================================================================================
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
==========================================================================================================
5. SECURITIES LENDING
As of May 31, 2004, securities in Life Sciences and Technology valued at
$449,034 and $6,050,449, 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 $455,650 and $6,240,850,
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 $650,000,000
unsecured bank line of credit agreement with JPMCB. 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 six months ended May 31, 2004.
7. RISK FACTORS
The funds concentrate their investments in a narrow segment of the total market.
Because of this, the funds may be subject to greater risks and market
fluctuations than a portfolio representing a broader range of industries.
(continued)
- ------
19
Notes to Financial Statements
MAY 31, 2004 (UNAUDITED)
8. 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.
As of May 31, 2004, the components of investments for federal income tax
purposes were as follows:
- --------------------------------------------------------------------------------
LIFE SCIENCES TECHNOLOGY
- --------------------------------------------------------------------------------
Federal tax cost of investments $157,398,368
$176,681,097
================================================================================
Gross tax appreciation of investments $23,474,674 $27,154,811
- -------------------------------------------
Gross tax depreciation of investments (2,501,122) (1,835,940)
- --------------------------------------------------------------------------------
Net tax appreciation of investments $20,973,552 $25,318,871
================================================================================
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.
Following are the capital loss carryovers and capital loss deferral amounts as
of November 30, 2003:
- --------------------------------------------------------------------------------
LIFE SCIENCES TECHNOLOGY
- --------------------------------------------------------------------------------
Accumulated capital losses $(63,857,897) $(260,768,709)
- --------------------------------------------------------------------------------
Currency loss deferral $(118,139) --
- --------------------------------------------------------------------------------
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 as follows:
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.
2008 2009 2010
- --------------------------------------------------------------------------------
Life Sciences $ -- $ (32,131,058) $(31,726,839)
- --------------------------------------------------------------------------------
Technology $(19,358,858) $(188,675,022) $(52,734,829)
- --------------------------------------------------------------------------------
9. 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 class's 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
- --------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $4.36 $3.54 $4.87 $5.28 $5.00
- --------------------------------------------------------------------------------
Income From
Investment Operations
- -------------------------
Net Investment Loss(3) (0.02) (0.03) (0.04) (0.03) (0.02)
- -------------------------
Net Realized and
Unrealized Gain (Loss) 0.39 0.85 (1.29) (0.25) 0.30
- --------------------------------------------------------------------------------
Total From
Investment Operations 0.37 0.82 (1.33) (0.28) 0.28
- --------------------------------------------------------------------------------
Distributions
- -------------------------
From Net Realized Gains -- -- -- (0.13) --
- --------------------------------------------------------------------------------
Net Asset Value,
End of Period $4.73 $4.36 $3.54 $4.87 $5.28
================================================================================
TOTAL RETURN(4) 8.72% 23.16% (27.31)% (5.35)% 5.60%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 1.50%(5) 1.50% 1.50% 1.50% 1.50%(5)
- -------------------------
Ratio of Net
Investment Loss to
Average Net Assets (0.78)%(5) (0.89)% (0.88)% (0.61)% (0.95)%(5)
- -------------------------
Portfolio
Turnover Rate 83% 138% 272% 206% 64%
- -------------------------
Net Assets,
End of Period
(in thousands) $171,813 $160,187 $146,324 $227,341 $233,785
- --------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(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.
- ------
21
Life Sciences - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $4.40 $3.56 $4.89 $5.28 $5.26
- --------------------------------------------------------------------------------
Income From
Investment Operations
- ---------------------------
Net Investment Loss(3) (0.01) (0.03) (0.03) (0.02) (0.02)
- ---------------------------
Net Realized and
Unrealized Gain (Loss) 0.38 0.87 (1.30) (0.24) 0.04
- --------------------------------------------------------------------------------
Total From
Investment Operations 0.37 0.84 (1.33) (0.26) 0.02
- --------------------------------------------------------------------------------
Distributions
- ---------------------------
From Net Realized Gains -- -- -- (0.13) --
- --------------------------------------------------------------------------------
Net Asset Value,
End of Period $4.77 $4.40 $3.56 $4.89 $5.28
================================================================================
TOTAL RETURN(4) 8.41% 23.60% (27.20)% (4.97)% 0.38%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to Average
Net Assets 1.30%(5) 1.30% 1.30% 1.30% 1.30%(5)
- ---------------------------
Ratio of Net
Investment Loss
to Average Net Assets (0.58)%(5) (0.69)% (0.68)% (0.41)% (0.80)%(5)
- ---------------------------
Portfolio Turnover Rate 83% 138% 272% 206% 64%(6)
- ---------------------------
Net Assets, End of Period
(in thousands) $4,400 $4,019 $3,365 $4,348 $3,363
- --------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) July 17, 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.
- ------
22
Life Sciences - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED
- --------------------------------------------------------------------------------
ADVISOR CLASS
- --------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $4.33 $3.51 $4.86 $5.28 $5.48
- --------------------------------------------------------------------------------
Income From
Investment Operations
- ----------------------------
Net Investment Loss(3) (0.03) (0.04) (0.05) (0.04) --(4)
- ----------------------------
Net Realized and
Unrealized Gain (Loss) 0.39 0.86 (1.30) (0.25) (0.20)
- --------------------------------------------------------------------------------
Total From
Investment Operations 0.36 0.82 (1.35) (0.29) (0.20)
- --------------------------------------------------------------------------------
Distributions
- ----------------------------
From Net Realized Gains -- -- -- (0.13) --
- --------------------------------------------------------------------------------
Net Asset Value,
End of Period $4.69 $4.33 $3.51 $4.86 $5.28
================================================================================
TOTAL RETURN(5) 8.31% 23.36% (27.78)% (5.55)% (3.65)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 1.75%(6) 1.75% 1.75% 1.75% 1.75%(6)
- ----------------------------
Ratio of Net Investment
Loss to Average Net Assets (1.03)%(6) (1.14)% (1.13)% (0.86)% (0.99)%(6)
- ----------------------------
Portfolio Turnover Rate 83% 138% 272% 206% 64%(7)
- ----------------------------
Net Assets, End of Period
(in thousands) $96 $46 $25 $13 $11
- --------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) November 14, 2000 (commencement of sale) through November 30, 2000.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) 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.
(6) Annualized.
(7) 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
- --------------------------------------------------------------------------------
2004(1) 2003 2002 2001(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $4.28 $3.49 $4.87 $4.87
- --------------------------------------------------------------------------------
Income From
Investment Operations
- ----------------------------
Net Investment Loss(3) (0.04) (0.07) (0.08) --(4)
- ----------------------------
Net Realized and
Unrealized Gain (Loss) 0.38 0.86 (1.30) --(4)
- --------------------------------------------------------------------------------
Total From
Investment Operations 0.34 0.79 (1.38) --(4)
- --------------------------------------------------------------------------------
Net Asset Value,
End of Period $4.62 $4.28 $3.49 $4.87
================================================================================
TOTAL RETURN(5) 7.94% 22.64% (28.34)% 0.00%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses
to Average Net Assets 2.50%(6) 2.50% 2.50% 2.50%(6)
- ----------------------------
Ratio of Net Investment
Loss to Average Net Assets (1.78)%(6) (1.89)% (1.88)% (1.46)%(6)
- ----------------------------
Portfolio Turnover Rate 83% 138% 272% 206%(7)
- ----------------------------
Net Assets, End of Period
(in thousands) $10 $10 $6 $3
- --------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) November 29, 2001 (commencement of sale) through November 30, 2001.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) 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.
(6) Annualized.
(7) 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
- --------------------------------------------------------------------------------
2004(1) 2003(2) 2002(2) 2001(2) 2000(2)(3)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $19.58 $14.40 $20.90 $31.90 $50.00
- --------------------------------------------------------------------------------
Income From
Investment Operations
- -------------------------
Net Investment Loss(4) (0.13) (0.19) (0.20) (0.20) (0.20)
- -------------------------
Net Realized and
Unrealized Gain (Loss) (1.21) 5.37 (6.30) (10.80) (17.90)
- --------------------------------------------------------------------------------
Total From
Investment Operations (1.34) 5.18 (6.50) (11.00) (18.10)
- --------------------------------------------------------------------------------
Net Asset Value,
End of Period $18.24 $19.58 $14.40 $20.90 $31.90
================================================================================
TOTAL RETURN(5) (6.79)% 35.97% (31.10)% (34.48)% (36.20)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 1.50%(6) 1.50% 1.50% 1.50% 1.50%(6)
- -------------------------
Ratio of Net
Investment Loss to
Average Net Assets (1.39)%(6) (1.25)% (1.20)% (0.79)% (0.83)%(6)
- -------------------------
Portfolio
Turnover Rate 130% 218% 251% 356% 125%
- -------------------------
Net Assets,
End of Period
(in thousands) $184,174 $202,884 $127,767 $173,877 $195,776
- --------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) 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.
(3) June 30, 2000 (inception) through November 30, 2000.
(4) Computed using average shares outstanding throughout the period.
(5) 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.
(6) 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
- --------------------------------------------------------------------------------
2004(1) 2003(2) 2002(2) 2001(2) 2000(2)(3)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $19.74 $14.50 $21.00 $31.90 $55.40
- --------------------------------------------------------------------------------
Income From
Investment Operations
- ------------------------
Net Investment Loss(4) (0.12) (0.16) (0.20) (0.20) (0.10)
- ------------------------
Net Realized and
Unrealized Gain (Loss) (1.21) 5.40 (6.30) (10.70) (23.40)
- --------------------------------------------------------------------------------
Total From
Investment Operations (1.33) 5.24 (6.50) (10.90) (23.50)
- --------------------------------------------------------------------------------
Net Asset Value,
End of Period $18.41 $19.74 $14.50 $21.00 $31.90
================================================================================
TOTAL RETURN(5) (6.74)% 36.14% (30.95)% (34.17)% (42.42)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of
Operating Expenses
to Average Net Assets 1.30%(6) 1.30% 1.30% 1.30% 1.30%(6)
- ------------------------
Ratio of Net
Investment Loss to
Average Net Assets (1.19)%(6) (1.05)% (1.00)% (0.59)% (0.70)%(6)
- ------------------------
Portfolio
Turnover Rate 130% 218% 251% 356% 125%(7)
- ------------------------
Net Assets,
End of Period
(in thousands) $8,499 $10,191 $8,444 $9,198 $7,995
- --------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) 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.
(3) July 14, 2000 (commencement of sale) through November 30, 2000.
(4) Computed using average shares outstanding throughout the period.
(5) 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.
(6) Annualized.
(7) 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
- --------------------------------------------------------------------------------
2004(1) 2003(2) 2002(2) 2001(2) 2000(2)(3)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $19.37 $14.30 $20.80 $31.90 $50.00
- --------------------------------------------------------------------------------
Income From
Investment Operations
- ------------------------
Net Investment Loss(4) (0.16) (0.20) (0.20) (0.20) (0.20)
- ------------------------
Net Realized and
Unrealized Gain (Loss) (1.18) 5.27 (6.30) (10.90) (17.90)
- --------------------------------------------------------------------------------
Total From
Investment Operations (1.34) 5.07 (6.50) (11.10) (18.10)
- --------------------------------------------------------------------------------
Net Asset Value,
End of Period $18.03 $19.37 $14.30 $20.80 $31.90
================================================================================
TOTAL RETURN(5) (6.92)% 35.45% (31.25)% (34.80)% (36.20)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating
Expenses to
Average Net Assets 1.75%(6) 1.75% 1.75% 1.75% 1.75%(6)
- ------------------------
Ratio of Net
Investment Loss to
Average Net Assets (1.64)%(6) (1.50)% (1.45)% (1.04)% (1.08)%(6)
- ------------------------
Portfolio
Turnover Rate 130% 218% 251% 356% 125%
- ------------------------
Net Assets,
End of Period
(in thousands) $46 $18 $54 $1 $43
- --------------------------------------------------------------------------------
(1) Six months ended May 31, 2004 (unaudited).
(2) 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.
(3) June 30, 2000 (commencement of sale) through November 30, 2000.
(4) Computed using average shares outstanding throughout the period.
(5) 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.
(6) Annualized.
See Notes to Financial Statements.
- ------
27
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 ratio of
Institutional Class shares is lower than that of Investor Class shares. The
total expense ratios of Advisor and C Class shares are higher than that of
Investor Class shares.
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.
- ------
28
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
americancentury.com and on the Securities and Exchange Commission's Web site at
sec.gov.
RISK FACTORS
The funds concentrate their investments in a narrow segment of the total market.
Because of this, the funds may be subject to greater risks and market
fluctuations than a portfolio representing a broader range of industries.
- ------
29
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 DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30
actively traded blue chip stocks, primarily industrials but including
service-oriented firms. Prepared and published by Dow Jones & Co., it is the
oldest and most widely quoted of all the market indicators.
The NASDAQ COMPOSITE INDEX is a market-value weighted index of all domestic and
international common stocks listed on the Nasdaq stock market.
The PHILADELPHIA SEMICONDUCTOR INDEX is a price-weighted index comprised of
companies primarily involved in the design, distribution, manufacture, and sale
of semiconductors.
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30
Notes
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31
Notes
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32
CONTACT US
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
The American Century logo, American Century and
American Century Investments are service marks
of American Century Services Corporation.
0407 American Century Investment Services, Inc.
SH-SAN-38588S (c)2004 American Century Services Corporation
ITEM 2. CODE OF ETHICS.
Not applicable for semiannual report filings.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semiannual report filings.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semiannual report filings.
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.
The registrant does not currently have in place procedures by which
shareholders may recommend nominees to the registrant's board.
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) Not applicable for semiannual report filings.
(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.
/s/ William M. Lyons
By: ------------------------------------
Name: William M. Lyons
Title: President
Date: August 6, 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.
/s/ William M. Lyons
By: ------------------------------------
Name: William M. Lyons
Title: President
(principal executive officer)
Date: August 6, 2004
/s/ Maryanne L. Roepke
By: ------------------------------------
Name: Maryanne L. Roepke
Title: Sr. Vice President, Treasurer, and
Chief Accounting Officer
(principal financial officer)
Date: August 6, 2004
