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. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 4500 Main Street, Kansas City, Missouri 64111 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) David C. Tucker, Esq., 4500 Main Street, 9th Floor, Kansas City, Missouri 64111 ------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 816-531-5575 -------------------------------- Date of fiscal year end: 11-30 ------------------------------------------------------- Date of reporting period: November 30, 2004 ------------------------------------------------------- ITEM 1. REPORTS TO STOCKHOLDERS. [front cover] NOVEMBER 30, 2004 American Century Investments Annual Report [photo of market line chart] [photo of starfish] [photo of bridge] International Growth Fund [american century investments logo and text logo] Table of Contents Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 INTERNATIONAL GROWTH Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Top Five Sectors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Types of Investments in Portfolio. . . . . . . . . . . . . . . . . . . . 5 Investments by Country . . . . . . . . . . . . . . . . . . . . . . . . . 5 Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 8 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .11 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .13 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . .14 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .15 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . .23 Report of Independent Registered Public Accounting Firm . . . . . . . . . .30 OTHER INFORMATION Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31 Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .34 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .36 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 The opinions expressed in the Portfolio Commentary reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the annual report for the International Growth Fund for the 12 months ended November 30, 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 semiannual report dated May 31, 2005, 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 WITH JAMES E. STOWERS, JR. - ------ 1 International Growth - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2004 --------------------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 17.45% -3.34% 7.46% 9.16% 5/9/91 - -------------------------------------------------------------------------------- MSCI EAFE INDEX 24.19% -0.28% 5.23% 5.78%(1) -- - -------------------------------------------------------------------------------- MSCI EAFE GROWTH INDEX 19.06% -4.81% 2.82% 3.29%(1) -- - -------------------------------------------------------------------------------- Institutional Class 17.78% -3.12% -- 5.19% 11/20/97 - -------------------------------------------------------------------------------- Advisor Class 17.07% -3.59% -- 6.69% 10/2/96 - -------------------------------------------------------------------------------- A Class 1/31/03 No sales charge* 17.10% -- -- 22.30% With sales charge* 10.35% -- -- 18.43% - -------------------------------------------------------------------------------- B Class 1/31/03 No sales charge* 16.31% -- -- 21.41% With sales charge* 12.31% -- -- 19.54% - -------------------------------------------------------------------------------- C Class 16.24% -- -- -1.60% 6/4/01 - -------------------------------------------------------------------------------- R Class 16.92% -- -- 19.78% 8/29/03 - -------------------------------------------------------------------------------- *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 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. 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. International investing involves certain risks, such as political instability and currency fluctuations. 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. (continued) - ------ 2 International Growth - Performance GROWTH OF $10,000 OVER 10 YEARS $10,000 investment made November 30, 1994
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ONE-YEAR RETURNS OVER 10 YEARS Periods ended November 30 - -------------------------------------------------------------------------------------------- 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 - -------------------------------------------------------------------------------------------- Investor Class 5.93% 16.35% 18.12% 16.74% 43.22% -2.47% -24.18% -14.54% 13.70% 17.45% - -------------------------------------------------------------------------------------------- MSCI EAFE Index 7.57% 11.76% -0.40% 16.45% 21.10% -9.67% -19.13% -12.50% 24.22% 24.19% - -------------------------------------------------------------------------------------------- MSCI EAFE Growth Index 9.42% 8.74% -1.47% 16.91% 23.32% -17.65% -23.59% -13.52% 20.63% 19.06% - -------------------------------------------------------------------------------------------- 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. International investing involves certain risks, such as political instability and currency fluctuations. 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. - ------ 3 International Growth - Portfolio Commentary [photo of investment team] PORTFOLIO MANAGERS ON THE INTERNATIONAL GROWTH INVESTMENT TEAM: HENRIK STRABO, KEITH CREVELING, AND MICHAEL PERELSTEIN. International Growth gained 17.45%* during the 12 months ended November 30, 2004, while its benchmark, the Morgan Stanley Capital International EAFE Index, returned 24.19%. Many of the world's equity markets advanced during the period as the global economy demonstrated its strength and resiliency, especially in the first quarter of 2004. Returns moderated during a subsequent "soft patch" as record-high oil prices and rising interest rates sparked concern about corporate earnings and global economic growth. Violence in Iraq, uncertainty over the U.S. presidential election and the threat of terrorism also affected markets, but the EAFE Index and other international equity benchmarks turned up later in the period and continued to rise as the price of oil declined, and the U.S. election ended without the confusion that followed the 2000 vote. Against that backdrop, all sectors in which we were invested advanced, and each of the portfolio's top-10 holdings as of period's end contributed to International Growth's return. Our complement of financial holdings made the greatest contribution to our absolute performance. 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. Each financial sector industry in which the fund was invested contributed to International Growth. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Total SA Cl B 3.0% 2.6% - -------------------------------------------------------------------------------- BP plc 2.8% 1.2% - -------------------------------------------------------------------------------- BHP Billiton Limited 2.6% 1.0% - -------------------------------------------------------------------------------- Novartis AG 2.1% 2.0% - -------------------------------------------------------------------------------- Erste Bank der Oesterreichischen Sparkassen AG 2.0% 1.4% - -------------------------------------------------------------------------------- Roche Holding AG 2.0% 2.5% - -------------------------------------------------------------------------------- Tesco plc 2.0% 1.4% - -------------------------------------------------------------------------------- Telefonica SA 1.8% 1.2% - -------------------------------------------------------------------------------- ING Groep N.V. 1.8% 1.0% - -------------------------------------------------------------------------------- Reckitt Benckiser plc 1.7% 1.9% - -------------------------------------------------------------------------------- TOP FIVE SECTORS AS OF NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Financials 26.5% 19.9% - -------------------------------------------------------------------------------- Consumer Discretionary 13.3% 18.3% - -------------------------------------------------------------------------------- Industrials 10.7% 11.5% - -------------------------------------------------------------------------------- Energy 9.2% 7.9% - -------------------------------------------------------------------------------- Consumer Staples 8.3% 9.2% - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 4 International Growth - Portfolio Commentary Austria's Erste Bank, a top-10 holding at the end of the period, topped the list of banks contributing to International Growth, and made the largest contribution to the portfolio. Erste Bank, one of Austria's largest lenders, has been expanding into Eastern Europe, and reported a 58% increase in third-quarter earnings on higher sales in that region. Banks from around the world contributed to our return, including Societe Generale in France, the Anglo Irish Bank and Japan's Sumitomo Mitsui Financial Group. Our 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. America Movil, Latin America's biggest mobile-telephone company, and Mobile Telesystems, a mobile-phone company in Russia, were among the winners. The energy sector also boosted the portfolio and provided our two largest positions at the end of the period--France's Total, Europe's largest oil refiner, and the United Kingdom's BP, the world's second-largest publicly traded oil company. BP benefited from high oil prices and increased oil and gas production. Total reported profit climbed 38% in the third quarter of 2004. After Erste Bank, they were the top contributors to the portfolio's return. Although all sectors made positive contributions, several slowed our performance against the EAFE Index. Industrials registered the worst performance against the index, due mostly to Switzerland's Adecco, the world's largest provider of temporary workers. Adecco declined after disclosing a material weakness in internal controls. We eliminated the position, but it was among the period's top detractors. The health care sector also detracted from relative performance. OUR COMMITMENT We remain committed to looking for stocks of growing foreign companies. The investment strategy of this fund is based on the belief that, over the long term, stocks of companies with earnings and revenue growth have a greater-than-average chance to increase in value. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Common Stocks 88.3% 94.5% - -------------------------------------------------------------------------------- Preferred Stocks -- 0.8% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 88.3% 95.3% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.5% 0.1% - -------------------------------------------------------------------------------- Collateral Received for Securities Lending 10.2% 4.6% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Japan 15.0% 18.2% - -------------------------------------------------------------------------------- United Kingdom 14.9% 18.3% - -------------------------------------------------------------------------------- France 13.4% 12.5% - -------------------------------------------------------------------------------- Germany 7.5% 5.9% - -------------------------------------------------------------------------------- Switzerland 6.3% 10.8% - -------------------------------------------------------------------------------- Australia 5.0% 2.7% - -------------------------------------------------------------------------------- Spain 3.2% 4.3% - -------------------------------------------------------------------------------- Netherlands 3.0% 1.5% - -------------------------------------------------------------------------------- Sweden 2.3% 2.5% - -------------------------------------------------------------------------------- Other Countries 17.7% 18.7% - -------------------------------------------------------------------------------- Cash and Equivalents* 11.7% 4.6% - -------------------------------------------------------------------------------- *Includes temporary cash investments and collateral received for securities lending. - ------ 5 Shareholder Fee Example (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2004 to November 30, 2004. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century account (i.e., not a financial intermediary or retirement plan account), American Century may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. (continued) - ------ 6 Shareholder Fee Example (Unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 6/1/04 - EXPENSE 6/1/04 11/30/04 11/30/04 RATIO* - -------------------------------------------------------------------------------- INTERNATIONAL GROWTH SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL: - -------------------------------------------------------------------------------- Investor Class $1,000 $1,093.30 $6.49 1.24% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,095.70 $5.45 1.04% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,092.30 $7.79 1.49% - -------------------------------------------------------------------------------- A Class $1,000 $1,092.20 $7.79 1.49% - -------------------------------------------------------------------------------- B Class $1,000 $1,087.50 $11.69 2.24% - -------------------------------------------------------------------------------- C Class $1,000 $1,087.90 $11.69 2.24% - -------------------------------------------------------------------------------- R Class $1,000 $1,091.00 $9.10 1.74% - -------------------------------------------------------------------------------- HYPOTHETICAL: - -------------------------------------------------------------------------------- Investor Class $1,000 $1,018.80 $6.26 1.24% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,019.80 $5.25 1.04% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,017.55 $7.52 1.49% - -------------------------------------------------------------------------------- A Class $1,000 $1,017.55 $7.52 1.49% - -------------------------------------------------------------------------------- B Class $1,000 $1,013.80 $11.28 2.24% - -------------------------------------------------------------------------------- C Class $1,000 $1,013.80 $11.28 2.24% - -------------------------------------------------------------------------------- R Class $1,000 $1,016.30 $8.77 1.74% - -------------------------------------------------------------------------------- *Expenses are equal to the fund's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. - ------ 7 International Growth - Schedule of Investments NOVEMBER 30, 2004 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 98.5% AUSTRALIA -- 5.6% - -------------------------------------------------------------------------------- 5,017,884 Amcor Limited(1) $ 28,718 - -------------------------------------------------------------------------------- 6,400,025 BHP Billiton Limited 76,369 - -------------------------------------------------------------------------------- 1,440,330 Commonwealth Bank of Australia(1) 34,942 - -------------------------------------------------------------------------------- 2,453,080 QBE Insurance Group Limited(1) 26,430 - -------------------------------------------------------------------------------- 166,459 - -------------------------------------------------------------------------------- AUSTRIA -- 2.0% - -------------------------------------------------------------------------------- 1,181,484 Erste Bank der Oesterreichischen Sparkassen AG 60,127 - -------------------------------------------------------------------------------- BELGIUM -- 0.6% - -------------------------------------------------------------------------------- 243,810 KBC Bancassurance Holding 18,163 - -------------------------------------------------------------------------------- BERMUDA -- 2.0% - -------------------------------------------------------------------------------- 676,790 Accenture Ltd. Cl A(2) 17,556 - -------------------------------------------------------------------------------- 1,196,110 Tyco International Ltd.(1) 40,632 - -------------------------------------------------------------------------------- 58,188 - -------------------------------------------------------------------------------- CANADA -- 2.5% - -------------------------------------------------------------------------------- 818,470 EnCana Corp. 46,776 - -------------------------------------------------------------------------------- 854,115 Shoppers Drug Mart Corporation(2) 26,833 - -------------------------------------------------------------------------------- 73,609 - -------------------------------------------------------------------------------- CHANNEL ISLANDS -- 0.6% - -------------------------------------------------------------------------------- 693,460 Amdocs Ltd.(2) 17,926 - -------------------------------------------------------------------------------- DENMARK -- 0.6% - -------------------------------------------------------------------------------- 2,170 AP Moller - Maersk AS 17,741 - -------------------------------------------------------------------------------- FRANCE -- 14.9% - -------------------------------------------------------------------------------- 1,016,520 Arcelor 22,387 - -------------------------------------------------------------------------------- 2,014,979 Axa 47,188 - -------------------------------------------------------------------------------- 1,545,623 Credit Agricole SA(1) 45,770 - -------------------------------------------------------------------------------- 269,000 Essilor International SA Cie Generale D'Optique 18,377 - -------------------------------------------------------------------------------- 392,250 Lafarge SA 36,833 - -------------------------------------------------------------------------------- 209,790 Pernod-Ricard SA(1) 31,313 - -------------------------------------------------------------------------------- 440,180 Schneider SA(1) 30,569 - -------------------------------------------------------------------------------- 397,290 Societe Generale Cl A(1) 38,362 - -------------------------------------------------------------------------------- 413,150 Total SA Cl B(1) 90,440 - -------------------------------------------------------------------------------- 307,741 Vinci SA(1) 38,100 - -------------------------------------------------------------------------------- 1,523,610 Vivendi Universal SA(2) 44,956 - -------------------------------------------------------------------------------- 444,295 - -------------------------------------------------------------------------------- GERMANY -- 8.3% - -------------------------------------------------------------------------------- 111,720 Adidas-Salomon AG 17,513 - -------------------------------------------------------------------------------- 401,790 BASF AG 27,043 - -------------------------------------------------------------------------------- 549,650 Continental AG 33,495 - -------------------------------------------------------------------------------- 874,810 Deutsche Telekom(2) 18,580 - -------------------------------------------------------------------------------- 347,090 E.On AG 29,215 - -------------------------------------------------------------------------------- 227,890 Fresenius Medical Care AG 17,780 - -------------------------------------------------------------------------------- 476,640 Metro AG 23,972 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 108,180 Puma AG Rudolf Dassler Sport $ 29,807 - -------------------------------------------------------------------------------- 282,040 SAP AG 50,400 - -------------------------------------------------------------------------------- 247,805 - -------------------------------------------------------------------------------- GREECE -- 1.6% - -------------------------------------------------------------------------------- 831,226 Alpha Bank A.E. 26,117 - -------------------------------------------------------------------------------- 788,250 Greek Organization of Football Prognostics SA 20,534 - -------------------------------------------------------------------------------- 46,651 - -------------------------------------------------------------------------------- HONG KONG -- 0.8% - -------------------------------------------------------------------------------- 4,536,000 Esprit Holdings Limited 24,971 - -------------------------------------------------------------------------------- INDIA -- 0.9% - -------------------------------------------------------------------------------- 948,510 Tata Consultancy Services Ltd. 27,176 - -------------------------------------------------------------------------------- IRELAND -- 1.8% - -------------------------------------------------------------------------------- 1,675,680 Anglo Irish Bank Corporation 37,973 - -------------------------------------------------------------------------------- 1,007,140 Bank of Ireland 15,394 - -------------------------------------------------------------------------------- 53,367 - -------------------------------------------------------------------------------- ITALY -- 2.4% - -------------------------------------------------------------------------------- 1,631,550 ENI SpA 40,052 - -------------------------------------------------------------------------------- 12,482,102 Terna SpA(1) 32,765 - -------------------------------------------------------------------------------- 72,817 - -------------------------------------------------------------------------------- JAPAN -- 16.8% - -------------------------------------------------------------------------------- 71,800 Aeon Credit Service Co. Ltd. 5,146 - -------------------------------------------------------------------------------- 219,500 Aiful Corp. 24,942 - -------------------------------------------------------------------------------- 4,138,000 Bank of Yokohama Ltd. (The) 26,122 - -------------------------------------------------------------------------------- 1,501,580 Chugai Pharmaceutical Co. Ltd. 23,552 - -------------------------------------------------------------------------------- 540,000 Daikin Industries Ltd. 14,265 - -------------------------------------------------------------------------------- 177,800 Fast Retailing Company Limited 13,383 - -------------------------------------------------------------------------------- 398,600 Hoya Corp. 41,500 - -------------------------------------------------------------------------------- 2,604,000 Komatsu Ltd. 17,728 - -------------------------------------------------------------------------------- 1,192,000 Matsushita Electric Industrial Co., Ltd. 17,724 - -------------------------------------------------------------------------------- 3,140 Mitsubishi Tokyo Financial Group, Inc. 29,733 - -------------------------------------------------------------------------------- 4,166,000 Mitsui & Co. Ltd. 36,090 - -------------------------------------------------------------------------------- 56,100 Nintendo Co., Ltd. 6,745 - -------------------------------------------------------------------------------- 455,200 Omron Corp. 10,411 - -------------------------------------------------------------------------------- 371,300 ORIX Corporation 47,240 - -------------------------------------------------------------------------------- 1,140 Rakuten Inc.(1) 9,400 - -------------------------------------------------------------------------------- 898,000 Sharp Corp.(1) 14,416 - -------------------------------------------------------------------------------- 377,000 Shin-Etsu Chemical Co., Ltd. 14,609 - -------------------------------------------------------------------------------- 2,031,000 Sumitomo Metal Mining Co. Ltd. 15,228 - -------------------------------------------------------------------------------- 3,260 Sumitomo Mitsui Financial Group Inc.(1) 22,638 - -------------------------------------------------------------------------------- 5,876,000 Toray Industries Inc. 25,852 - -------------------------------------------------------------------------------- 1,416,000 Toto Ltd.(1) 12,638 - -------------------------------------------------------------------------------- 1,098,700 Toyota Motor Corp. 41,188 - -------------------------------------------------------------------------------- 301,500 Trend Micro Inc. 15,812 - -------------------------------------------------------------------------------- 780,300 Yamaha Motor Co. Ltd.(1) 11,421 - -------------------------------------------------------------------------------- 497,783 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 8 International Growth - Schedule of Investments NOVEMBER 30, 2004 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- MEXICO -- 1.3% - -------------------------------------------------------------------------------- 801,070 America Movil SA de CV Series L ADR(1) $ 37,418 - -------------------------------------------------------------------------------- NETHERLANDS -- 3.4% - -------------------------------------------------------------------------------- 1,924,090 ING Groep N.V. 52,936 - -------------------------------------------------------------------------------- 893,850 Royal Numico N.V.(2) 31,839 - -------------------------------------------------------------------------------- 206,040 Schlumberger Ltd. 13,522 - -------------------------------------------------------------------------------- 98,297 - -------------------------------------------------------------------------------- NORWAY -- 1.4% - -------------------------------------------------------------------------------- 2,208,240 DNB NOR ASA 20,799 - -------------------------------------------------------------------------------- 2,459,100 Telenor ASA 21,658 - -------------------------------------------------------------------------------- 42,457 - -------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 0.5% - -------------------------------------------------------------------------------- 113,934 Mobile Telesystems ADR(1) 15,804 - -------------------------------------------------------------------------------- SOUTH KOREA -- 0.7% - -------------------------------------------------------------------------------- 425,310 Hyundai Motor Co. Ltd. 20,921 - -------------------------------------------------------------------------------- SPAIN -- 3.6% - -------------------------------------------------------------------------------- 1,122,891 ACS, Actividades de Construccion y Servicios, SA(1) 23,580 - -------------------------------------------------------------------------------- 581,360 Grupo Ferrovial SA(1) 28,049 - -------------------------------------------------------------------------------- 3,101,888 Telefonica SA 54,502 - -------------------------------------------------------------------------------- 106,131 - -------------------------------------------------------------------------------- SWEDEN -- 2.6% - -------------------------------------------------------------------------------- 396,703 Autoliv Inc. SDR 18,631 - -------------------------------------------------------------------------------- 7,973,990 Telefonaktiebolaget LM Ericsson B Shares(2) 26,588 - -------------------------------------------------------------------------------- 762,470 Volvo AB Cl B(1) 31,155 - -------------------------------------------------------------------------------- 76,374 - -------------------------------------------------------------------------------- SWITZERLAND -- 7.0% - -------------------------------------------------------------------------------- 673,460 Compagnie Financiere Richemont AG A Shares 20,479 - -------------------------------------------------------------------------------- 1,275,860 Novartis AG 61,134 - -------------------------------------------------------------------------------- 552,605 Roche Holding AG 58,194 - -------------------------------------------------------------------------------- 195,700 Synthes, Inc. 21,193 - -------------------------------------------------------------------------------- 600,826 UBS AG 48,562 - -------------------------------------------------------------------------------- 209,562 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 16.6% - -------------------------------------------------------------------------------- 8,098,290 BP plc 82,643 - -------------------------------------------------------------------------------- 1,938,000 HSBC Holdings plc 32,999 - -------------------------------------------------------------------------------- 18,281,620 Legal & General Group plc 37,121 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 1,236,100 Next plc $ 37,890 - -------------------------------------------------------------------------------- 2,310,880 Pearson plc 27,116 - -------------------------------------------------------------------------------- 1,726,922 Reckitt Benckiser plc 50,922 - -------------------------------------------------------------------------------- 1,475,274 Royal Bank of Scotland Group plc 45,335 - -------------------------------------------------------------------------------- 3,271,630 Smith & Nephew plc 33,356 - -------------------------------------------------------------------------------- 10,076,310 Tesco plc 58,057 - -------------------------------------------------------------------------------- 17,553,460 Vodafone Group plc 47,635 - -------------------------------------------------------------------------------- 5,641,800 William Morrison Supermarkets plc 24,259 - -------------------------------------------------------------------------------- 1,030,510 Wolseley plc 17,744 - -------------------------------------------------------------------------------- 495,077 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $2,314,070) 2,929,119 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 1.7% Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 5.25% - 6.75%, 8/15/26 - 2/15/29, valued at $50,587), in a joint trading account at 1.92%, dated 11/30/04, due 12/1/04 (Delivery value $49,703) (Cost $49,700) 49,700 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 11.3% REPURCHASE AGREEMENT - -------------------------------------------------------------------------------- Repurchase Agreement, Barclays Bank plc, (collateralized by various U.S. Government Agency obligations), 2.08%, dated 11/30/04, due 12/1/04 (Delivery value $67,369) 67,365 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations), 2.06% dated 11/30/04, due 12/1/04 (Delivery value $270,016) 270,000 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $337,365) 337,365 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 111.5% (Cost $2,701,135) 3,316,184 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (11.5)% (341,687) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $2,974,497 ================================================================================ See Notes to Financial Statements. (continued) - ------ 9 International Growth - Schedule of Investments NOVEMBER 30, 2004 MARKET SECTOR DIVERSIFICATION (UNAUDITED) Financials 26.5% - -------------------------------------------------------------------------------- Consumer Discretionary 13.3% - -------------------------------------------------------------------------------- Industrials 10.7% - -------------------------------------------------------------------------------- Energy 9.2% - -------------------------------------------------------------------------------- Consumer Staples 8.3% - -------------------------------------------------------------------------------- Materials 8.3% - -------------------------------------------------------------------------------- Health Care 7.8% - -------------------------------------------------------------------------------- Telecommunication Services 6.6% - -------------------------------------------------------------------------------- Information Technology 5.7% - -------------------------------------------------------------------------------- Utilities 2.1% - -------------------------------------------------------------------------------- Cash and Equivalents* 1.5% - -------------------------------------------------------------------------------- *Includes temporary cash investments, collateral received for securities lending and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt SDR = Swedish Depositary Receipt (1) Security, or a portion thereof, was on loan as of November 30, 2004. (2) Non-income producing. (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. - ------ 10 Statement of Assets and Liabilities NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $2,363,770) -- including $320,562 of securities on loan $2,978,819 - -------------------------------------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $337,365) 337,365 - -------------------------------------------------------------------------------- Total investment securities, at value (cost of $2,701,135) 3,316,184 - -------------------------------------------------------------- Foreign currency holdings, at value (cost of $70) 71 - -------------------------------------------------------------- Receivable for investments sold 34,694 - -------------------------------------------------------------- Receivable for capital shares sold 200 - -------------------------------------------------------------- Dividends and interest receivable 6,408 - -------------------------------------------------------------------------------- 3,357,557 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payable for collateral received on securities on loan 337,365 - -------------------------------------------------------------- Disbursements in excess of demand deposit cash 11,075 - -------------------------------------------------------------- Payable for investments purchased 31,652 - -------------------------------------------------------------- Payable for capital shares redeemed 16 - -------------------------------------------------------------- Accrued management fees 2,834 - -------------------------------------------------------------- Distribution fees payable 59 - -------------------------------------------------------------- Service fees (and distribution fees -- A Class) payable 59 - -------------------------------------------------------------------------------- 383,060 - -------------------------------------------------------------------------------- NET ASSETS $2,974,497 ================================================================================ See Notes to Financial Statements. (continued) - ------ 11 Statement of Assets and Liabilities NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS) - -------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $ 3,567,614 - -------------------------------------------------------------- Undistributed net investment income 15,469 - -------------------------------------------------------------- Accumulated net realized loss on investment and foreign currency transactions (1,223,997) - -------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 615,411 - -------------------------------------------------------------------------------- $ 2,974,497 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $2,395,249,077 - -------------------------------------------------------------- Shares outstanding 272,436,064 - -------------------------------------------------------------- Net asset value per share $8.79 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $283,329,763 - -------------------------------------------------------------- Shares outstanding 32,140,801 - -------------------------------------------------------------- Net asset value per share $8.82 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $275,195,264 - -------------------------------------------------------------- Shares outstanding 31,409,210 - -------------------------------------------------------------- Net asset value per share $8.76 - -------------------------------------------------------------------------------- A CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $14,170,052 - -------------------------------------------------------------- Shares outstanding 1,615,677 - -------------------------------------------------------------- Net asset value per share $8.77 - -------------------------------------------------------------- Maximum offering price (net asset value divided by 0.9425) $9.31 - -------------------------------------------------------------------------------- B CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $1,107,060 - -------------------------------------------------------------- Shares outstanding 127,259 - -------------------------------------------------------------- Net asset value per share $8.70 - -------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $5,070,216 - -------------------------------------------------------------- Shares outstanding 585,774 - -------------------------------------------------------------- Net asset value per share $8.66 - -------------------------------------------------------------------------------- R CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $375,658 - -------------------------------------------------------------- Shares outstanding 42,945 - -------------------------------------------------------------- Net asset value per share $8.75 - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 12 Statement of Operations YEAR ENDED NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------- INCOME: - -------------------------------------------------------------- Dividends (net of foreign taxes withheld of $5,972) $ 53,875 - -------------------------------------------------------------- Securities lending 882 - -------------------------------------------------------------- Interest 237 - -------------------------------------------------------------------------------- 54,994 - -------------------------------------------------------------------------------- EXPENSES: - -------------------------------------------------------------- Management fees 36,303 - -------------------------------------------------------------- Distribution fees: - -------------------------------------------------------------- Advisor Class 646 - -------------------------------------------------------------- B Class 7 - -------------------------------------------------------------- C Class 27 - -------------------------------------------------------------- Service fees: - -------------------------------------------------------------- Advisor Class 646 - -------------------------------------------------------------- B Class 2 - -------------------------------------------------------------- C Class 9 - -------------------------------------------------------------- Service and distribution fees: - -------------------------------------------------------------- A Class 29 - -------------------------------------------------------------- R Class -- - -------------------------------------------------------------- Directors' fees and expenses 50 - -------------------------------------------------------------- Other expenses 153 - -------------------------------------------------------------------------------- 37,872 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 17,122 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN - -------------------------------------------------------------------------------- NET REALIZED GAIN ON: - -------------------------------------------------------------- Investment transactions 201,498 - -------------------------------------------------------------- Foreign currency transactions 169,862 - -------------------------------------------------------------------------------- 371,360 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION ON: - -------------------------------------------------------------- Investments 27,967 - -------------------------------------------------------------- Translation of assets and liabilities in foreign currencies 65,684 - -------------------------------------------------------------------------------- 93,651 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN 465,011 - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $482,133 ================================================================================ See Notes to Financial Statements. - ------ 13 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2004 AND NOVEMBER 30, 2003 (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2004 2003 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income $ 17,122 $ 23,587 - ---------------------------------------------------- Net realized gain 371,360 16,015 - ---------------------------------------------------- Change in net unrealized appreciation 93,651 343,964 - -------------------------------------------------------------------------------- Net increase in net assets resulting from operations 482,133 383,566 - -------------------------------------------------------------------------------- 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 (538,328) (184,230) - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS (79,288) 175,203 NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 3,053,785 2,878,582 - -------------------------------------------------------------------------------- End of period $2,974,497 $3,053,785 ================================================================================ Undistributed net investment income $15,469 $20,145 ================================================================================ See Notes to Financial Statements. - ------ 14 Notes to Financial Statements NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. International Growth Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified under the 1940 Act. The fund's investment objective is to seek capital growth. The fund pursues its objective by investing primarily in equity securities of foreign companies in developed countries. The following is a summary of the fund's significant accounting policies. MULTIPLE CLASS -- The fund is authorized to issue the Investor Class, the Institutional Class, the Advisor Class, the A Class, the B Class, the C Class and the R Class. The A Class may incur an initial sales charge. The A Class, B Class and C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and shareholder servicing and distribution expenses and arrangements. All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets. Sale of the A Class and B Class commenced on January 31, 2003, at which time the Investor Class was no longer available to new investors. Sale of the R Class commenced on August 29, 2003. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Discount notes are valued through a commercial pricing service. If the fund determines that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued at its fair value as determined by, or in accordance with procedures adopted by, the Board of Directors or its designee if such fair value determination would materially impact a fund's net asset value. Circumstances that may cause the fund to fair value a security include: 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; or trading in a security has been halted during the trading day. 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) - ------ 15 Notes to Financial Statements NOVEMBER 30, 2004 (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 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 2.00% redemption fee on shares held less than sixty days. The redemption 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 a 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) - ------ 16 Notes to Financial Statements NOVEMBER 30, 2004 (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 (the 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 and accrued daily based on the daily net assets of each specific class of shares of the fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment manager's assets under management in the fund's investment strategy (strategy assets) to calculate the appropriate fee rate for the fund. The strategy assets include the fund's assets and the assets of other clients of the investment manager that are not in the American Century family of funds, but that have the same investment team and investment strategy. The annual management fee schedule for each class of the fund is as follows: - -------------------------------------------------------------------------------- INVESTOR, A, B, C & R INSTITUTIONAL ADVISOR - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $1 billion 1.50% 1.30% 1.25% - -------------------------------------------------------------------------------- Next $1 billion 1.20% 1.00% 0.95% - -------------------------------------------------------------------------------- Over $2 billon 1.10% 0.90% 0.85% - -------------------------------------------------------------------------------- The effective annual management fee for each class of the fund for the year ended November 30, 2004 was 1.25% for the Investor Class, A Class, B Class, C Class, and R Class, and 1.05% and 1.00% for the Institutional Class and Advisor Class, respectively. DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master Distribution and Shareholder Services Plan for the Advisor Class (the Advisor Class plan) and a separate Master Distribution and Individual Shareholder Services Plan for each of the A Class, B Class, C Class and R Class (collectively with the Advisor Class Plan, the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the Advisor Class, B Class and C Class will pay American Century Investment Services, Inc. (ACIS) the following annual distribution and service fees: - -------------------------------------------------------------------------------- ADVISOR B & C - -------------------------------------------------------------------------------- Distribution Fee 0.25% 0.75% - -------------------------------------------------------------------------------- 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 and accrued daily based on each class's daily net assets, and paid monthly in arrears. 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 year ended November 30, 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 year ended November 30, 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 custodian of the fund and a wholly owned subsidiary of JPM. (continued) - ------ 17 Notes to Financial Statements NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) 3. INVESTMENT TRANSACTIONS Purchases and sales of investment securities, excluding short-term investments, for the year ended November 30, 2004, were $3,523,481 and $4,101,947, respectively. 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 1,000,000 ================================================================================ Sold 67,991 $ 551,385 - ------------------------------------------------ Issued in reinvestment of distributions 2,136 16,449 - ------------------------------------------------ Redeemed (129,504) (1,048,825)(1) - -------------------------------------------------------------------------------- Net decrease (59,377) $ (480,991) ================================================================================ 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 - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 150,000 ================================================================================ Sold 12,504 $ 101,103 - ------------------------------------------------ Issued in reinvestment of distributions 333 2,564 - ------------------------------------------------ Redeemed (20,608) (166,960)(1) - -------------------------------------------------------------------------------- Net decrease (7,771) $ (63,293) ================================================================================ 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 $17 and $4 for the Investor Class and Institutional Class, respectively. (continued) - ------ 18 Notes to Financial Statements NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 100,000 ================================================================================ Sold 17,569 $ 143,087 - ------------------------------------------------ Issued in reinvestment of distributions 149 1,147 - ------------------------------------------------ Redeemed (18,136) (147,093)(1) - -------------------------------------------------------------------------------- Net decrease (418) $ (2,859) ================================================================================ 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 - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 25,000 ================================================================================ Sold 1,695 $13,723 - ------------------------------------------------ Issued in reinvestment of distributions 6 46 - ------------------------------------------------ Redeemed (1,067) (8,381) - -------------------------------------------------------------------------------- Net increase 634 $ 5,388 ================================================================================ 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 - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 25,000 ================================================================================ Sold 72 $ 583 - ------------------------------------------------ Redeemed (14) (112) - -------------------------------------------------------------------------------- Net increase 58 $ 471 ================================================================================ 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 $4. (2) January 31, 2003 (commencement of sale) through November 30, 2003. (continued) - ------ 19 Notes to Financial Statements NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 25,000 ================================================================================ Sold 389 $3,119 - ------------------------------------------------ Redeemed (63) (505) - -------------------------------------------------------------------------------- Net increase 326 $2,614 ================================================================================ YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 25,000 ================================================================================ Sold 305 $ 2,054 - ------------------------------------------------ Redeemed (183) (1,237) - -------------------------------------------------------------------------------- Net increase 122 $ 817 ================================================================================ R CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 50,000 ================================================================================ Sold 328 $ 2,709 - ------------------------------------------------ Redeemed (285) (2,367) - -------------------------------------------------------------------------------- Net increase 43 $ 342 ================================================================================ 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 November 30, 2004, securities in the fund valued at $320,562 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 $337,365. 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, which was renewed to $575 million effective December 15, 2004. The fund may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The fund did not borrow from the line during the year ended November 30, 2004. (continued) - ------ 20 Notes to Financial Statements NOVEMBER 30, 2004 (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 On December 14, 2004, each class of the fund declared and paid the following per-share ordinary income distribution to shareholders of record on December 13, 2004. - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR & A B & C R - -------------------------------------------------------------------------------- $0.0922 $0.1098 $0.0700 $0.0042 $0.0477 - -------------------------------------------------------------------------------- The tax character of distributions paid during the years ended November 30, 2004 and November 30, 2003 were as follows: - -------------------------------------------------------------------------------- 2004 2003 - -------------------------------------------------------------------------------- DISTRIBUTIONS PAID FROM - -------------------------------------------------------------------------------- Ordinary income $23,093 $24,133 - -------------------------------------------------------------------------------- Long-term capital gain $-- $-- - -------------------------------------------------------------------------------- The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of November 30, 2004, the components of distributable earnings on a tax-basis and the federal tax cost of investments were as follows: - -------------------------------------------------------------------------------- COMPONENTS OF DISTRIBUTABLE EARNINGS AND TAX COST - -------------------------------------------------------------------------------- Federal tax cost of investments $2,707,896 ================================================================================ Gross tax appreciation of investments $614,736 - ---------------------------------------------------------------- Gross tax depreciation of investments (6,448) - -------------------------------------------------------------------------------- Net tax appreciation of investments $608,288 ================================================================================ Net tax appreciation on derivatives and translation of assets and liabilities in foreign currencies $ (15,035) - -------------------------------------------------------------------------------- Net tax appreciation $593,253 ================================================================================ Undistributed ordinary income $30,865 - ---------------------------------------------------------------- Accumulated long-term gains $-- - ---------------------------------------------------------------- Accumulated capital losses $(1,217,235) - -------------------------------------------------------------------------------- (continued) - ------ 21 Notes to Financial Statements NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) 8. FEDERAL TAX INFORMATION (CONTINUED) The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains on certain forward foreign currency contracts, and on investments in passive foreign investment companies. The accumulated capital losses listed above represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Capital loss carryovers of $522,319, $637,150, and $57,766 expire in 2009, 2010, and 2011, respectively. 9. SUBSEQUENT EVENTS Effective January 1, 2005, American Century Global Investment Management, Inc. (ACGIM) will replace ACIM as the investment manager of the fund. ACGIM has entered into a Subadvisory Agreement with ACIM who will serve as the subadvisor for the cash management of the fund. All existing resources and investment strategies will remain in place. The change of investment manager is a result of the corporate restructuring of ACIM, in which ACGIM was incorporated as a subsidiary of ACIM. In addition, American Century Services Corporation's name will change to American Century Services, LLC. 10. OTHER TAX INFORMATION (UNAUDITED) ($ IN FULL) The following information is provided pursuant to provisions of the Internal Revenue Code. The fund hereby designates $23,092,948 of qualified dividend income for the fiscal year ended November 30, 2004. As of November 30, 2004, International Growth designates $5,776,222 as a foreign tax credit, which represents taxes paid on income derived from sources within foreign countries or possessions of the United States. - ------ 22 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2004 2003 2002 2001 2000 - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.54 $6.69 $7.86 $12.05 $13.02 - -------------------------------------------------------------------------------- Income From Investment Operations - ---------------- Net Investment Income (Loss)(1) 0.05 0.06 0.06 0.04 (0.02) - ---------------- Net Realized and Unrealized Gain (Loss) 1.26 0.85 (1.20) (2.50) (0.22) - -------------------------------------------------------------------------------- Total From Investment Operations 1.31 0.91 (1.14) (2.46) (0.24) - -------------------------------------------------------------------------------- Distributions - ---------------- From Net Investment Income (0.06) (0.06) (0.03) -- (0.01) - ---------------- From Net Realized Gains -- -- -- (1.73) (0.72) - -------------------------------------------------------------------------------- Total Distributions (0.06) (0.06) (0.03) (1.73) (0.73) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $8.79 $7.54 $6.69 $7.86 $12.05 ================================================================================ TOTAL RETURN(2) 17.45% 13.70% (14.54)% (24.18)% (2.47)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.26% 1.28% 1.25% 1.21% 1.20% - ---------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.57% 0.84% 0.76% 0.48% (0.16)% - ---------------- Portfolio Turnover Rate 118% 169% 215% 178% 116% - ---------------- Net Assets, End of Period (in thousands) $2,395,249 $2,502,831 $2,410,600 $3,290,867 $4,455,433 - -------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 23 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2004 2003 2002 2001 2000 - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.56 $6.71 $7.88 $12.07 $13.05 - -------------------------------------------------------------------------------- Income From Investment Operations - ---------------- Net Investment Income(1) 0.06 0.07 0.07 0.06 0.01 - ---------------- Net Realized and Unrealized Gain (Loss) 1.27 0.85 (1.19) (2.50) (0.24) - -------------------------------------------------------------------------------- Total From Investment Operations 1.33 0.92 (1.12) (2.44) (0.23) - -------------------------------------------------------------------------------- Distributions - ---------------- From Net Investment Income (0.07) (0.07) (0.05) -- (0.03) - ---------------- From Net Realized Gains -- -- -- (1.75) (0.72) - -------------------------------------------------------------------------------- Total Distributions (0.07) (0.07) (0.05) (1.75) (0.75) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $8.82 $7.56 $6.71 $7.88 $12.07 ================================================================================ TOTAL RETURN(2) 17.78% 13.89% (14.33)% (23.96)% (2.35)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.06% 1.08% 1.05% 1.01% 1.00% - ---------------- Ratio of Net Investment Income to Average Net Assets 0.77% 1.04% 0.96% 0.68% 0.04% - ---------------- Portfolio Turnover Rate 118% 169% 215% 178% 116% - ---------------- Net Assets, End of Period (in thousands) $283,330 $301,854 $270,121 $353,399 $371,255 - -------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 24 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- 2004 2003 2002 2001 2000 - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.52 $6.66 $7.83 $12.02 $12.99 - -------------------------------------------------------------------------------- Income From Investment Operations - ---------------- Net Investment Income (Loss)(1) 0.03 0.03 0.04 0.02 (0.05) - ---------------- Net Realized and Unrealized Gain (Loss) 1.25 0.87 (1.20) (2.51) (0.23) - -------------------------------------------------------------------------------- Total From Investment Operations 1.28 0.90 (1.16) (2.49) (0.28) - -------------------------------------------------------------------------------- Distributions - -------------------------------------------------------------------------------- From Net Investment Income (0.04) (0.04) (0.01) -- --(2) - ---------------- From Net Realized Gains -- -- -- (1.70) (0.69) - -------------------------------------------------------------------------------- Total Distributions (0.04) (0.04) (0.01) (1.70) (0.69) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $8.76 $7.52 $6.66 $7.83 $12.02 ================================================================================ TOTAL RETURN(3) 17.07% 13.62% (14.81)% (24.45)% (2.72)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.51% 1.53% 1.50% 1.46% 1.45% - ---------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.32% 0.59% 0.51% 0.23% (0.41)% - ---------------- Portfolio Turnover Rate 118% 169% 215% 178% 116% - ---------------- Net Assets, End of Period (in thousands) $275,195 $239,256 $196,949 $205,483 $181,263 - -------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 25 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- A CLASS - -------------------------------------------------------------------------------- 2004 2003(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.53 $6.10 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------------------- Net Investment Income (Loss)(2) 0.03 (0.02) - -------------------------------------------------------- Net Realized and Unrealized Gain 1.25 1.45 - -------------------------------------------------------------------------------- Total From Investment Operations 1.28 1.43 - -------------------------------------------------------------------------------- Distributions - -------------------------------------------------------- From Net Investment Income (0.04) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $8.77 $7.53 ================================================================================ TOTAL RETURN(3) 17.10% 23.44% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.51% 1.53%(4) - -------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.32% (0.40)%(4) - -------------------------------------------------------- Portfolio Turnover Rate 118% 169%(5) - -------------------------------------------------------- Net Assets, End of Period (in thousands) $14,170 $7,395 - -------------------------------------------------------------------------------- (1) January 31, 2003 (commencement of sale) through November 30, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 26 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- B CLASS - -------------------------------------------------------------------------------- 2004 2003(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.48 $6.10 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------------------- Net Investment Loss(2) (0.03) (0.03) - -------------------------------------------------------- Net Realized and Unrealized Gain 1.25 1.41 - -------------------------------------------------------------------------------- Total From Investment Operations 1.22 1.38 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $8.70 $7.48 ================================================================================ TOTAL RETURN(3) 16.31% 22.62% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.26% 2.28%(4) - -------------------------------------------------------- Ratio of Net Investment Loss to Average Net Assets (0.43)% (0.51)%(4) - -------------------------------------------------------- Portfolio Turnover Rate 118% 169%(5) - -------------------------------------------------------- Net Assets, End of Period (in thousands) $1,107 $513 - -------------------------------------------------------------------------------- (1) January 31, 2003 (commencement of sale) through November 30, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 27 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2004 2003 2002 2001(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.45 $6.60 $7.82 $9.16 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------- Net Investment Loss(2) (0.03) (0.01) --(3) (0.04) - ----------------------------- Net Realized and Unrealized Gain (Loss) 1.24 0.86 (1.22) (1.30) - -------------------------------------------------------------------------------- Total From Investment Operations 1.21 0.85 (1.22) (1.34) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $8.66 $7.45 $6.60 $7.82 ================================================================================ TOTAL RETURN(4) 16.24% 12.88% (15.60)% (14.63)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.26% 2.28% 2.25% 2.23%(5) - ----------------------------- Ratio of Net Investment Loss to Average Net Assets (0.43)% (0.16)% (0.24)% (0.99)%(5) - ----------------------------- Portfolio Turnover Rate 118% 169% 215% 178%(6) - ----------------------------- Net Assets, End of Period (in thousands) $5,070 $1,933 $912 $138 - -------------------------------------------------------------------------------- (1) June 4, 2001 (commencement of sale) through November 30, 2001. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount is less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2001. See Notes to Financial Statements. - ------ 28 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2004 2003(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.53 $7.02 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------------------- Net Investment Income (Loss)(2) 0.02 (0.01) - -------------------------------------------------------- Net Realized and Unrealized Gain 1.25 0.52 - -------------------------------------------------------------------------------- Total From Investment Operations 1.27 0.51 - -------------------------------------------------------------------------------- Distributions - -------------------------------------------------------- From Net Investment Income (0.05) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $8.75 $7.53 ================================================================================ TOTAL RETURN(3) 16.92% 7.26% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.76% 1.78%(4) - -------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.07% (0.74)%(4) - -------------------------------------------------------- Portfolio Turnover Rate 118% 169%(5) - -------------------------------------------------------- Net Assets, End of Period (in thousands) $376 $3 - -------------------------------------------------------------------------------- (1) August 29, 2003 (commencement of sale) through November 30, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 29 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders American Century World Mutual Funds, Inc.: We have audited the accompanying statements of assets and liabilities, including the schedule of investments, of International Growth Fund, one of the funds comprising American Century World Mutual Funds, Inc., as of November 30, 2004, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of November 30, 2004, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of International Growth Fund as of November 30, 2004, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and its financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Kansas City, Missouri January 14, 2005 - ------ 30 Management The individuals listed below serve as directors or officers of the fund. Each director serves until his or her successor is duly elected and qualified or until he or she retires. Mandatory retirement age for independent directors is 72. Those listed as interested directors are "interested" primarily by virtue of their engagement as officers of American Century Companies, Inc. (ACC) or its wholly-owned subsidiaries, including the fund's investment advisor, American Century Investment Management, Inc. (ACIM); the fund's principal underwriter, American Century Investment Services, Inc. (ACIS); and the fund's transfer agent, American Century Services Corporation (ACSC). The other directors (more than three-fourths of the total numbers) are independent; that is, they have never been employees or officers of, and have no financial interest in, ACC or any of its wholly-owned subsidiaries, including ACIM, ACIS, and ACSC. The directors serve in this capacity for six registered investment companies in the American Century family of funds. All persons named as officers of the fund also serve in a similar capacity for the other 13 investment companies advised by ACIM, unless otherwise noted. Only officers with policy-making functions are listed. No officer is compensated for his or her service as an officer of the fund. The listed officers are interested persons of the fund and are appointed or re-appointed on an annual basis. INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- THOMAS A. BROWN, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1940 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 23 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Formerly Chief Executive Officer/Treasurer, Associated Bearings Company, a corporation engaged in the sale of bearings and power transmission products NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ANDREA C. HALL, PH.D., 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 6 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, Midwest Research Institute NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Midwest Research Institute - -------------------------------------------------------------------------------- D.D. (DEL) HOCK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1935 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 7 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Chairman, Public Service Company of Colorado NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Allied Motion Technologies, Inc. - -------------------------------------------------------------------------------- (continued) - ------ 31 Management INDEPENDENT DIRECTORS (CONTINUED) - -------------------------------------------------------------------------------- DONALD H. PRATT, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1937 POSITION(S) HELD WITH FUND: Director, Vice Chairman of the Board LENGTH OF TIME SERVED (YEARS): 8 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Western Investments, Inc.; Retired Chairman of the Board, Butler Manufacturing Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Atlas-Copco, North America Inc. - -------------------------------------------------------------------------------- GALE E. SAYERS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1943 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 3 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Chief Executive Officer, and Founder, Sayers 40, Inc. NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Triad Hospitals, Inc. - -------------------------------------------------------------------------------- M. JEANNINE STRANDJORD, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 9 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President and Chief Integration Officer, Sprint Corporation (September 2003 to present); Senior Vice President - Financial Services, Sprint Corporation (January 2003 to September 2003); Senior Vice President, Finance - Global Markets Group, Sprint Corporation (December 1998 to January 2003) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, DST Systems, Inc.; Director, Euronet Worldwide, Inc. - -------------------------------------------------------------------------------- TIMOTHY S. WEBSTER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1961 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 2 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President and Chief Executive Officer, American Italian Pasta Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, American Italian Pasta Company - -------------------------------------------------------------------------------- INTERESTED DIRECTORS - -------------------------------------------------------------------------------- JAMES E. STOWERS, JR.(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1924 POSITION(S) HELD WITH FUND: Director, Chairman of the Board LENGTH OF TIME SERVED (YEARS): 45 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Director, and controlling shareholder, ACC; Chairman, ACSC and other ACC subsidiaries; Director, ACIM, ACSC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- JAMES E. STOWERS III(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1959 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 13 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Co-Chairman, ACC (September 2000 to present); Chief Executive Officer, ACC (June 1996 to September 2000); Director, ACC, ACIM, ACSC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (1) James E. Stowers, Jr. is the father of James E. Stowers III. (continued) - ------ 32 Management OFFICERS - -------------------------------------------------------------------------------- WILLIAM M. LYONS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1955 POSITION(S) HELD WITH FUND: President LENGTH OF TIME SERVED (YEARS): 3 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC and other ACC subsidiaries (September 2000 to present); President, ACC (June 1997 to present); President, ACIM (September 2002 to present); President, ACIS (July 2003 to present); Chief Operating Officer, ACC (June 1996 to September 2000); Also serves as: Executive Vice President, ACSC and other ACC subsidiaries - -------------------------------------------------------------------------------- ROBERT T. JACKSON, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1946 POSITION(S) HELD WITH FUND: Executive Vice President LENGTH OF TIME SERVED (YEARS): 8 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC (August 1997 to present); Chief Financial Officer, ACC (May 1995 to October 2002); President, ACSC (January 1999 to present); Executive Vice President, ACC (May 1995 to present); Also serves as: Executive Vice President and Chief Financial Officer, ACIM, ACIS and other ACC subsidiaries; and Treasurer, ACIM - -------------------------------------------------------------------------------- MARYANNE ROEPKE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1956 POSITION(S) HELD WITH FUND: Senior Vice President, Treasurer, and Chief Accounting Officer LENGTH OF TIME SERVED (YEARS): 3 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President (April 1998 to present) and Assistant Treasurer, ACSC (September 1985 to present) - -------------------------------------------------------------------------------- DAVID C. TUCKER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1958 POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel LENGTH OF TIME SERVED (YEARS): 3 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President and General Counsel, ACIM, ACIS, ACSC and other ACC subsidiaries (June 1998 to present); Vice President and General Counsel, ACC (June 1998 to present) - -------------------------------------------------------------------------------- DAVID H. REINMILLER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1963 POSITION(S) HELD WITH FUND: Vice President and Chief Compliance Officer LENGTH OF TIME SERVED (YEARS): 3 and less than 1 year PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Compliance Officer, ACSC and ACIM (March 2001 to present); Vice President, ACSC (March 2000 to present); Vice President, ACIM (March 2002 to present); Vice President, ACIS (March 2003 to present); Assistant General Counsel, ACSC (December 1996 to January 2001); Associate General Counsel, ACSC (July 2001 to present) - -------------------------------------------------------------------------------- ROBERT LEACH, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1966 POSITION(S) HELD WITH FUND: Controller LENGTH OF TIME SERVED (YEARS): 6 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACSC (February 2000 to present); Controller-Fund Accounting, ACSC (June 1997 to present) - -------------------------------------------------------------------------------- JON ZINDEL, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Tax Officer LENGTH OF TIME SERVED (YEARS): 6 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, Corporate Tax, ACSC (April 1998 to present); Vice President, ACIM, ACIS, and other ACC subsidiaries (April 1999 to present); President, American Century Employee Benefit Services, Inc. (January 2000 to December 2000); Director, American Century Employee Benefit Services, Inc. (February 2000 to December 2003); Treasurer, American Century Employee Benefit Services, Inc. (December 2000 to December 2003); Treasurer, American Century Ventures, Inc. (December 1999 to April 2001) - -------------------------------------------------------------------------------- The SAI has additional information about the fund's directors and is available without charge upon request by calling 1-800-345-2021. - ------ 33 Share Class Information Seven classes of shares are authorized for sale by International Growth: Investor Class, Institutional Class, Advisor Class, A Class, B Class, C Class, and R Class. The total expense ratios of Advisor, A, B, C, and R Class shares are higher than that of Investor Class shares. The total expense ratio of Institutional Class shares is lower than that of Investor Class shares. ON JANUARY 31, 2003, INVESTOR CLASS SHARES BECAME UNAVAILABLE TO NEW INVESTORS. INVESTOR CLASS shares are available for purchase BY EXISTING SHAREHOLDERS in two ways: 1) directly from American Century without any commissions or other fees; or 2) through a broker-dealer, which may require payment of a transaction fee to the broker. INSTITUTIONAL CLASS shares are available to large investors such as endowments, foundations, and retirement plans, and to financial intermediaries serving these investors. This class recognizes the relatively lower cost of serving institutional customers and others who invest at least $5 million ($3 million for endowments and foundations) in an American Century fund or at least $10 million in multiple funds. In recognition of the larger investments and account balances and comparatively lower transaction costs, the total expense ratio of Institutional Class shares is 0.20% less than the total expense ratio of Investor Class shares. ADVISOR CLASS shares are sold primarily through institutions such as investment advisors, banks, broker-dealers, insurance companies, and financial advisors. Advisor Class shares are subject to a 0.50% annual Rule 12b-1 service and distribution fee. The total expense ratio of Advisor Class shares is 0.25% higher than the total expense ratio of Investor Class shares. A CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. A Class shares are sold at their offering price, which is net asset value plus an initial sales charge that ranges from 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. 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. (continued) - ------ 34 Share Class Information 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. - ------ 35 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 investment 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. Information regarding how the investment manager voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund's Form N-Q is available on the SEC's Web site at sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its Web site at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 36 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as a fund performance comparison. They are not investment products 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) (Europe, Australasia, Far East) INDEX is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EAFE GROWTH INDEX is a capitalization weighted index that monitors the performance of growth stocks from Europe, Australasia, and the Far East. - ------ 37 Notes - ------ 38 Notes - ------ 39 Notes - ------ 40 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 Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. 0501 American Century Investment Services, Inc. SH-ANN-41363S (c)2005 American Century Proprietary Holdings, Inc. All rights reserved.
NOVEMBER 30, 2004 American Century Investments Annual Report [photo of market line chart] [photo of starfish] [photo of bridge] International Discovery Fund Emerging Markets Fund Global Growth Fund International Opportunities Fund [american century investments logo and text logo] Table of Contents Our Message to You . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 INTERNATIONAL DISCOVERY Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Types of Investments in Portfolio and Investments by Country. . . . . . 4 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 6 EMERGING MARKETS Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Types of Investments in Portfolio and Investments by Country. . . . . . 10 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 12 GLOBAL GROWTH Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Types of Investments in Portfolio and Investments by Country. . . . . . 17 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 19 INTERNATIONAL OPPORTUNITIES Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Types of Investments in Portfolio and Investments by Country. . . . . . 23 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 25 Shareholder Fee Examples . . . . . . . . . . . . . . . . . . . . . . . . . 28 FINANCIAL STATEMENTS Statement of Assets and Liabilities. . . . . . . . . . . . . . . . . . . . 31 Statement of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . 33 Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . 34 Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 36 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 Report of Independent Registered Public Accounting Firm. . . . . . . . . . 60 OTHER INFORMATION Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 Share Class Information. . . . . . . . . . . . . . . . . . . . . . . . . . 64 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Index Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67 The opinions expressed in the Portfolio Commentary reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the annual report for the International Discovery, Emerging Markets, Global Growth and International Opportunities funds for the 12 months ended November 30, 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 semiannual report dated May 31, 2005, 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 WITH JAMES E. STOWERS, JR. - ------ 1 International Discovery - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2004 ----------------------------------- AVERAGE ANNUAL RETURNS - ------------------------------------------------------------------------------------ SINCE INCEPTION 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - ------------------------------------------------------------------------------------ INVESTOR CLASS 18.76% 3.37% 14.08% 13.95% 4/1/94 - ------------------------------------------------------------------------------------ S&P/CITIGROUP EMI GROWTH WORLD EX-US(1)(2) 27.58% 1.54% 4.88% 4.35%(3) -- - ------------------------------------------------------------------------------------ Institutional Class 18.94% 3.57% -- 12.29% 1/2/98 - ------------------------------------------------------------------------------------ Advisor Class 18.37% 3.11% -- 8.89% 4/28/98 - ------------------------------------------------------------------------------------ (1) Formerly Salomon Smith Barney Extended Market Index Growth World ex-US. Formerly Citigroup EMI 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 investment manager 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. 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. International investing involves special risks, such as political instability and currency fluctuations. 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. (continued) - ------ 2 International Discovery - Performance GROWTH OF $10,000 OVER 10 YEARS $10,000 investment made November 30, 1994
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ONE-YEAR RETURNS OVER 10 YEARS Periods ended November 30 - --------------------------------------------------------------------------------------------------- 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 - --------------------------------------------------------------------------------------------------- Investor Class 5.75% 34.06% 17.76% 14.79% 65.12% -1.27% -20.17% -8.00% 37.05% 18.76% - --------------------------------------------------------------------------------------------------- S&P/Citigroup EMI Growth World ex-US 4.41% 14.67% -8.85% 7.30% 27.50% -14.20% -20.23% -10.96% 38.79% 27.58% - --------------------------------------------------------------------------------------------------- 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. International investing involves special risks, such as political instability and currency fluctuations. 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. - ------ 3 International Discovery - Portfolio Commentary [photo of investment team] PORTFOLIO MANAGERS ON THE INTERNATIONAL DISCOVERY INVESTMENT TEAM: BRIAN BRADY AND MARK KOPINSKI. International Discovery gained 18.76%* during the 12 months ended November 30, 2004, while its benchmark, the S&P/Citigroup EMI (Extended Market Index) Growth World ex-US, returned 27.58%. Many of the world's equity markets advanced during the period as the global economy demonstrated its strength and resiliency, especially in the first quarter of 2004. Returns moderated during a subsequent "soft patch" as record-high oil prices and rising interest rates sparked concern about corporate earnings and global economic growth. The violence in Iraq, uncertainty over the U.S. presidential election and the threat of terrorism also affected markets, but the S&P/Citigroup EMI Growth World ex-US and other international equity benchmarks turned up later in the period and continued to rise as the price of oil declined, and the U.S. election ended without confusion. Against these backdrops, nearly all of Discovery's sector stakes contributed to results. Our performance was also positively impacted by the weakness of the U.S. dollar against other currencies during the period. SUCCESS IN APPAREL, RETAIL Consumer discretionary businesses contributed most to performance. Three of the portfolio's top-10 contributors came from this group, led by German footwear manufacturer Puma AG, TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Common Stocks, Rights & Warrants 86.1% 95.8% - -------------------------------------------------------------------------------- Preferred Stocks 0.8% 0.4% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 86.9% 96.2% - -------------------------------------------------------------------------------- Temporary Cash Investments 2.8% 2.4% - -------------------------------------------------------------------------------- Collateral Received for Securities Lending 10.3% 1.4% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Japan 13.3% 22.4% - -------------------------------------------------------------------------------- Canada 11.2% 7.4% - -------------------------------------------------------------------------------- United Kingdom 8.4% 11.6% - -------------------------------------------------------------------------------- Australia 8.4% 1.0% - -------------------------------------------------------------------------------- France 4.0% 1.3% - -------------------------------------------------------------------------------- Germany 3.7% 5.9% - -------------------------------------------------------------------------------- Hong Kong 3.7% 4.6% - -------------------------------------------------------------------------------- Italy 3.5% 1.6% - -------------------------------------------------------------------------------- Spain 3.3% 2.6% - -------------------------------------------------------------------------------- South Africa 3.3% -- - -------------------------------------------------------------------------------- Other Countries 24.1% 37.8% - -------------------------------------------------------------------------------- Cash and Equivalents(+) 13.1% 3.8% - -------------------------------------------------------------------------------- (+) Includes temporary cash investments and collateral received for securities lending * All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 4 International Discovery - Portfolio Commentary whose second-quarter profit rose 48%, helped by demand for products such as Asti leather sneakers. Esprit Holdings Limited, a Hong Kong-based clothing chain, posted record annual profits during the period, while Edgars Consolidated Stores Ltd., South Africa's biggest clothing retailer by market value, saw its sales rise sharply, spurred by the lowest interest rates in 23 years. Materials stocks also turned in strong results. Nova Chemicals Corp., Canada's largest chemical maker, saw record demand for plastic. South Korea's Dongkuk Steel Mill Company nearly doubled its third-quarter profit on rising demand for steel plates used in ship construction. But the materials sector also held our largest detractor, Japan's JSR Corp., which supplies chemicals to manufacturers of liquid crystal displays (LCDs). The company retreated on slowing demand by makers of electronic products that use LCDs. The information technology sector held International Discovery's top-contributing security, Research in Motion Ltd. The Canadian maker of the popular Blackberry e-mail pager saw sales surge as mobile-phone service providers signed up to sell the service. DECLINES IN INDUSTRIALS, FINANCIALS While positive contributors, International Discovery's industrial stocks underperformed the benchmark. Japan's Hitachi Construction Machinery Co. fell in part on concerns that a cooling Chinese economy would reduce demand there for construction machinery. Ushio Inc., a Japanese manufacturer of industrial and commercial light sources, was another large detractor. In financials, shares of New World Development Company dropped sharply after the Hong Kong real estate developer announced it was setting aside money to cover a legal dispute. South Korea's Samsung Securities Company weighed on results when its second-quarter profit fell almost 90%. OUR COMMITMENT We remain committed to looking for stocks of growing foreign companies. The investment strategy of this fund is based on the belief that, over the long term, stocks of companies with earnings and revenue growth have a greater-than-average chance to increase in value. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Research in Motion Ltd. 2.9% 3.0% - -------------------------------------------------------------------------------- Nova Chemicals Corp. 2.0% -- - -------------------------------------------------------------------------------- PetroKazakhstan Inc. Cl A New York Shares 1.8% 0.7% - -------------------------------------------------------------------------------- Esprit Holdings Limited 1.7% 1.4% - -------------------------------------------------------------------------------- Anglo Irish Bank Corporation 1.7% 1.5% - -------------------------------------------------------------------------------- CSL Ltd. 1.6% 1.0% - -------------------------------------------------------------------------------- Storebrand ASA 1.6% -- - -------------------------------------------------------------------------------- Edgars Consolidated Stores Ltd. 1.4% -- - -------------------------------------------------------------------------------- Spirent plc 1.3% -- - -------------------------------------------------------------------------------- Neopost SA 1.3% -- - -------------------------------------------------------------------------------- - ------ 5 International Discovery - Schedule of Investments NOVEMBER 30, 2004 Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- COMMON STOCKS -- 95.2% AUSTRALIA -- 9.3% - ------------------------------------------------------------------------------- 1,203,000 Alinta Ltd.(1) $ 7,136 - ------------------------------------------------------------------------------- 1,400,000 Ansell Ltd. 9,894 - ------------------------------------------------------------------------------- 3,800,000 Baycorp Advantage Ltd.(2) 9,157 - ------------------------------------------------------------------------------- 1,120,000 Billabong International Ltd. 9,862 - ------------------------------------------------------------------------------- 1,500,000 Computershare Ltd. 6,198 - ------------------------------------------------------------------------------- 1,019,800 CSL Ltd. 20,952 - ------------------------------------------------------------------------------- 8,115,337 Hardman Resources Ltd.(1)(2) 11,220 - ------------------------------------------------------------------------------- 2,965,000 John Fairfax Holdings Limited 9,755 - ------------------------------------------------------------------------------- 2,080,000 Lion Nathan Ltd. 12,772 - ------------------------------------------------------------------------------- 9,700,000 Oxiana Ltd.(1)(2) 7,866 - ------------------------------------------------------------------------------- 731,000 Toll Holdings Ltd. 6,798 - ------------------------------------------------------------------------------- 1,485,000 Transurban Group 7,363 - ------------------------------------------------------------------------------- 118,973 - ------------------------------------------------------------------------------- AUSTRIA -- 1.2% - ------------------------------------------------------------------------------- 351,300 Wienerberger AG(1) 15,595 - ------------------------------------------------------------------------------- BELGIUM -- 1.6% - ------------------------------------------------------------------------------- 84,300 Colruyt SA 13,377 - ------------------------------------------------------------------------------- 73,000 Umicore 6,598 - ------------------------------------------------------------------------------- 19,975 - ------------------------------------------------------------------------------- BRITISH VIRGIN ISLANDS -- 0.7% - ------------------------------------------------------------------------------- 132,400 UTI Worldwide Inc.(2) 9,126 - ------------------------------------------------------------------------------- CANADA -- 12.4% - ------------------------------------------------------------------------------- 173,000 Agnico-Eagle Mines Ltd. 2,728 - ------------------------------------------------------------------------------- 360,000 Alimentation Couche Tard Inc. Cl B(2) 9,847 - ------------------------------------------------------------------------------- 197,100 Finning International Inc. 5,566 - ------------------------------------------------------------------------------- 198,500 Fording Canadian Coal Trust 14,807 - ------------------------------------------------------------------------------- 1,150,000 Ivanhoe Mines Ltd.(2) 8,240 - ------------------------------------------------------------------------------- 1,074,600 Lions Gate Entertainment Corp.(1)(2) 11,552 - ------------------------------------------------------------------------------- 470,000 Meridian Gold Inc. New York Shares(1)(2) 9,198 - ------------------------------------------------------------------------------- 567,300 Methanex Corp. 9,985 - ------------------------------------------------------------------------------- 564,800 Nova Chemicals Corp. 26,184 - ------------------------------------------------------------------------------- 560,500 PetroKazakhstan Inc. Cl A New York Shares 23,541 - ------------------------------------------------------------------------------- 416,900 Research In Motion Ltd.(2) 37,092 - ------------------------------------------------------------------------------- 158,740 - ------------------------------------------------------------------------------- DENMARK -- 1.4% - ------------------------------------------------------------------------------- 1,208,100 GN Store Nord AS 12,481 - ------------------------------------------------------------------------------- 115,000 William Demant Holding(1)(2) 5,102 - ------------------------------------------------------------------------------- 17,583 - ------------------------------------------------------------------------------- EGYPT -- 0.2% - ------------------------------------------------------------------------------- 280,000 Vodafone Egypt Telecommunications SAE(2) 2,384 - ------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- FINLAND -- 0.5% - ------------------------------------------------------------------------------- 419,000 Orion OYJ Cl B $ 6,644 - ------------------------------------------------------------------------------- FRANCE -- 4.4% - ------------------------------------------------------------------------------- 525,000 Altran Technologies SA(1)(2) 5,436 - ------------------------------------------------------------------------------- 67,888 Eiffage(1) 6,763 - ------------------------------------------------------------------------------- 225,000 Neopost SA 16,193 - ------------------------------------------------------------------------------- 5,489,558 Rhodia SA(1)(2) 11,674 - ------------------------------------------------------------------------------- 38,700 Technip SA(1) 6,507 - ------------------------------------------------------------------------------- 231,000 Zodiac SA(1) 9,514 - ------------------------------------------------------------------------------- 56,087 - ------------------------------------------------------------------------------- GERMANY -- 4.1% - ------------------------------------------------------------------------------- 212,030 Continental AG 12,921 - ------------------------------------------------------------------------------- 166,000 Hypo Real Estate Holding AG(2) 6,429 - ------------------------------------------------------------------------------- 250,000 K+S AG 12,600 - ------------------------------------------------------------------------------- 40,900 Puma AG Rudolf Dassler Sport 11,269 - ------------------------------------------------------------------------------- 227,000 Schwarz Pharma AG(1) 9,413 - ------------------------------------------------------------------------------- 52,632 - ------------------------------------------------------------------------------- HONG KONG -- 4.0% - ------------------------------------------------------------------------------- 3,952,000 Esprit Holdings Limited 21,756 - ------------------------------------------------------------------------------- 2,865,500 Lifestyle International Holdings Ltd.(1) 4,460 - ------------------------------------------------------------------------------- 2,408,000 Orient Overseas International Ltd.(1) 9,183 - ------------------------------------------------------------------------------- 5,976,000 Shangri-La Asia Ltd.(1) 7,648 - ------------------------------------------------------------------------------- 739,000 Techtronic Industries Company Limited(1) 1,483 - ------------------------------------------------------------------------------- 1,012,000 Wing Hang Bank Ltd. 7,192 - ------------------------------------------------------------------------------- 51,722 - ------------------------------------------------------------------------------- HUNGARY -- 1.6% - ------------------------------------------------------------------------------- 630,700 BorsodChem Rt. 6,415 - ------------------------------------------------------------------------------- 110,400 Gedeon Richter Rt. 13,596 - ------------------------------------------------------------------------------- 20,011 - ------------------------------------------------------------------------------- INDIA -- 1.4% - ------------------------------------------------------------------------------- 296,700 Biocon Ltd. 3,437 - ------------------------------------------------------------------------------- 1,485,000 Satyam Computer Services Ltd. 14,456 - ------------------------------------------------------------------------------- 17,893 - ------------------------------------------------------------------------------- INDONESIA -- 1.4% - ------------------------------------------------------------------------------- 66,614,000 PT Bumi Resources Tbk(2) 5,903 - ------------------------------------------------------------------------------- 19,279,500 PT Indonesian Satellite Corp. Tbk 12,279 - ------------------------------------------------------------------------------- 18,182 - ------------------------------------------------------------------------------- IRELAND -- 1.9% - ------------------------------------------------------------------------------- 949,100 Anglo Irish Bank Corporation 21,508 - ------------------------------------------------------------------------------- 155,899 DCC plc 3,263 - ------------------------------------------------------------------------------- 24,771 - ------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 6 International Discovery - Schedule of Investments NOVEMBER 30, 2004 Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- ITALY -- 3.9% - ------------------------------------------------------------------------------- 1,980,000 ASM Brescia SpA $ 6,368 - ------------------------------------------------------------------------------- 300,000 Autostrada Torino-Milano SpA 6,838 - ------------------------------------------------------------------------------- 480,000 Bulgari SpA(1) 5,487 - ------------------------------------------------------------------------------- 463,805 Geox SpA(2) 2,836 - ------------------------------------------------------------------------------- 1,500,000 Hera SpA 4,127 - ------------------------------------------------------------------------------- 349,300 Lottomatica SpA(1) 10,955 - ------------------------------------------------------------------------------- 70,000 Pirelli & C Real Estate SpA 3,338 - ------------------------------------------------------------------------------- 1,800,000 RCS MediaGroup SpA 9,450 - ------------------------------------------------------------------------------- 49,399 - ------------------------------------------------------------------------------- JAPAN -- 14.7% - ------------------------------------------------------------------------------- 1,257,000 Bank of Kyoto Ltd. (The)(1) 10,536 - ------------------------------------------------------------------------------- 598,000 Chiyoda Corporation(2) 4,216 - ------------------------------------------------------------------------------- 1,097,000 Daihatsu Motor Co., Ltd.(1) 8,438 - ------------------------------------------------------------------------------- 1,577,000 Dowa Mining Co. Ltd. 10,277 - ------------------------------------------------------------------------------- 12,273 eAccess Ltd.(1)(2) 11,824 - ------------------------------------------------------------------------------- 175,300 Elpida Memory Inc.(1)(2) 6,299 - ------------------------------------------------------------------------------- 2,251,000 Furukawa Electric Co. Ltd.(2) 11,172 - ------------------------------------------------------------------------------- 2,015,000 Kitz Corp.(1) 11,116 - ------------------------------------------------------------------------------- 739,000 Koito Manufacturing Co. Ltd. 6,101 - ------------------------------------------------------------------------------- 143,200 Kose Corp.(1) 5,619 - ------------------------------------------------------------------------------- 750,000 Kyowa Exeo Corp.(1) 6,621 - ------------------------------------------------------------------------------- 520,000 NEOMAX Co. Ltd. 8,828 - ------------------------------------------------------------------------------- 755,000 NGK Insulators Ltd. 6,284 - ------------------------------------------------------------------------------- 2,232,000 NHK Spring Co., Ltd.(1) 14,783 - ------------------------------------------------------------------------------- 197,000 Nippon Electric Glass Co. Ltd.(1) 5,128 - ------------------------------------------------------------------------------- 4,010,000 Nissin Co., Ltd.(1) 9,074 - ------------------------------------------------------------------------------- 1,066,000 OMC Card Inc.(1)(2) 12,496 - ------------------------------------------------------------------------------- 1,148,000 SMBC Friend Securities Co. Ltd.(1) 7,972 - ------------------------------------------------------------------------------- 240,000 TIS Inc.(1) 10,163 - ------------------------------------------------------------------------------- 56,000 Tokai Rika Co. Ltd.(1) 878 - ------------------------------------------------------------------------------- 2,285,000 Tosoh Corp. 10,009 - ------------------------------------------------------------------------------- 119,600 USS Co., Ltd.(1) 10,675 - ------------------------------------------------------------------------------- 188,509 - ------------------------------------------------------------------------------- NETHERLANDS -- 1.3% - ------------------------------------------------------------------------------- 65,556 Fugro N.V. 5,720 - ------------------------------------------------------------------------------- 130,000 Royal P&O Nedlloyd N.V. 6,595 - ------------------------------------------------------------------------------- 317,000 Trader Classified Media N.V. 3,885 - ------------------------------------------------------------------------------- 16,200 - ------------------------------------------------------------------------------- NORWAY -- 1.7% - ------------------------------------------------------------------------------- 63,800 Smedvig ASA 960 - ------------------------------------------------------------------------------- 2,347,400 Storebrand ASA 20,865 - ------------------------------------------------------------------------------- 21,825 - ------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 1.8% - ------------------------------------------------------------------------------- 6,978,000 China Shipping Development Company Limited Cl H $ 6,642 - ------------------------------------------------------------------------------- 16,000,000 China Travel International Investment Hong Kong Limited 4,836 - ------------------------------------------------------------------------------- 46,000,000 Semiconductor Manufacturing International Corp.(1)(2) 11,123 - ------------------------------------------------------------------------------- 22,601 - ------------------------------------------------------------------------------- PHILIPPINES -- 0.5% - ------------------------------------------------------------------------------- 268,700 Philippine Long Distance Telephone ADR(1)(2) 6,589 - ------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 0.6% - ------------------------------------------------------------------------------- 57,700 Mobile Telesystems ADR 8,004 - ------------------------------------------------------------------------------- SINGAPORE -- 0.4% - ------------------------------------------------------------------------------- 4,871,000 Hi-P International Ltd.(2) 5,116 - ------------------------------------------------------------------------------- SOUTH AFRICA -- 3.6% - ------------------------------------------------------------------------------- 2,570,000 African Bank Investments Ltd. 7,600 - ------------------------------------------------------------------------------- 351,000 Edgars Consolidated Stores Ltd. 17,501 - ------------------------------------------------------------------------------- 825,000 JD Group Ltd. 9,220 - ------------------------------------------------------------------------------- 1,040,000 Naspers Ltd. 11,962 - ------------------------------------------------------------------------------- 46,283 - ------------------------------------------------------------------------------- SOUTH KOREA -- 2.9% - ------------------------------------------------------------------------------- 701,660 Dongkuk Steel Mill Co., Ltd. 12,910 - ------------------------------------------------------------------------------- 991,900 Hankook Tire Co. Ltd. 10,023 - ------------------------------------------------------------------------------- 800,000 Hanwha Chem Corp. 7,817 - ------------------------------------------------------------------------------- 140,000 Honam Petrochemical Corporation 6,726 - ------------------------------------------------------------------------------- 37,476 - ------------------------------------------------------------------------------- SPAIN -- 3.7% - ------------------------------------------------------------------------------- 766,500 Enagas(1) 10,503 - ------------------------------------------------------------------------------- 2,000,000 Iberia Lineas Aereas de Espana(1) 6,513 - ------------------------------------------------------------------------------- 480,000 Indra Sistemas SA 7,534 - ------------------------------------------------------------------------------- 487,000 Red Electrica de Espana(1) 9,418 - ------------------------------------------------------------------------------- 1,609,000 Telefonica Publicidad e Informacion SA(1) 13,131 - ------------------------------------------------------------------------------- 47,099 - ------------------------------------------------------------------------------- SWEDEN -- 0.5% - ------------------------------------------------------------------------------- 615,000 Eniro AB 6,042 - ------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 2.1% - ------------------------------------------------------------------------------- 8,504,000 E.Sun Financial Holding Co. Ltd. 6,284 - ------------------------------------------------------------------------------- 2,045,000 High Tech Computer Corp. 8,254 - ------------------------------------------------------------------------------- 2,000,000 Novatek Microelectronics Corp., Ltd. 5,899 - ------------------------------------------------------------------------------- 2,800,000 Optimax Technology Corporation 6,302 - ------------------------------------------------------------------------------- 26,739 - ------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 7 International Discovery - Schedule of Investments NOVEMBER 30, 2004 Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- THAILAND -- 0.8% - ------------------------------------------------------------------------------- 1,650,000 Banpu Public Company Limited $ 6,489 - ------------------------------------------------------------------------------- 1,800,000 Thai Olefins PCL(2) 3,242 - ------------------------------------------------------------------------------- 9,731 - ------------------------------------------------------------------------------- UNITED KINGDOM -- 9.3% - ------------------------------------------------------------------------------- 561,000 Arriva plc 5,253 - ------------------------------------------------------------------------------- 1,497,663 Burren Energy plc(2) 11,871 - ------------------------------------------------------------------------------- 333,800 Cairn Energy plc(2) 9,569 - ------------------------------------------------------------------------------- 3,050,000 Carphone Warehouse Group plc 9,646 - ------------------------------------------------------------------------------- 4,679,000 Eircom Group plc(2) 10,572 - ------------------------------------------------------------------------------- 488,000 Enterprise Inns plc 6,370 - ------------------------------------------------------------------------------- 1,200,000 Firstgroup plc 7,751 - ------------------------------------------------------------------------------- 3,410,000 International Power plc(2) 9,873 - ------------------------------------------------------------------------------- 763,900 Intertek Group plc 10,292 - ------------------------------------------------------------------------------- 2,314,100 Kidde plc 6,722 - ------------------------------------------------------------------------------- 12,254,507 Spirent plc(2) 16,745 - ------------------------------------------------------------------------------- 5,240,000 Tullow Oil plc 14,719 - ------------------------------------------------------------------------------- 119,383 - ------------------------------------------------------------------------------- UNITED STATES -- 1.3% - ------------------------------------------------------------------------------- 217,000 NII Holdings Inc. Cl B(1)(2) 9,387 - ------------------------------------------------------------------------------- 357,300 UTStarcom Inc.(1)(2) 6,982 - ------------------------------------------------------------------------------- 16,369 - ------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $956,539) 1,217,683 - ------------------------------------------------------------------------------- PREFERRED STOCKS -- 0.9% BRAZIL -- 0.9% - ------------------------------------------------------------------------------- 589,000 Usinas Siderurgicas de Minas Gerais SA Cl A (Cost $9,221) 11,893 - ------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 3.1% Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 5.25% - 6.75%, 8/15/26 - 2/15/29, valued at $24,123), in a joint trading account at 1.92%, dated 11/30/04, due 12/1/04 (Delivery value $23,701) 23,700 - ------------------------------------------------------------------------------- Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 3.00%, 7/15/12, valued at $16,117), in a joint trading account at 1.92%, dated 11/30/04, due 12/1/04 (Delivery value $15,801) 15,800 - ------------------------------------------------------------------------------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $39,500) 39,500 - ------------------------------------------------------------------------------- ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING -- 11.4%(3) Repurchase Agreement, Barclays Bank plc, (collateralized by various U.S. Government Agency obligations), 2.08%, dated 11/30/04, due 12/1/04 (Delivery value $35,599) $ 35,597 - ------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations), 2.063% dated 11/30/04, due 12/1/04 (Delivery value $110,006) 110,000 - ------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $145,597) 145,597 - ------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 110.6% (Cost $1,150,857) 1,414,673 - ------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (10.6)% (136,002) - ------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $1,278,671 =============================================================================== MARKET SECTOR DIVERSIFICATION (UNAUDITED) Consumer Discretionary 19.4% - ------------------------------------------------------------------------------- Materials 15.0% - ------------------------------------------------------------------------------- Industrials 14.3% - ------------------------------------------------------------------------------- Financials 13.0% - ------------------------------------------------------------------------------- Information Technology 10.3% - ------------------------------------------------------------------------------- Energy 6.6% - ------------------------------------------------------------------------------- Health Care 6.4% - ------------------------------------------------------------------------------- Telecommunication Services 3.8% - ------------------------------------------------------------------------------- Utilities 3.7% - ------------------------------------------------------------------------------- Consumer Staples 3.6% - ------------------------------------------------------------------------------- Cash and Equivalents* 3.9% - ------------------------------------------------------------------------------- * Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt (1) Security, or a portion thereof, was on loan as of November 30, 2004. (2) Non-income producing. (3) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. (See Note 5 in Notes to Financial Statements.) See Notes to Financial Statements. - ------ 8 Emerging Markets - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2004 -------------------------- AVERAGE ANNUAL RETURNS - ------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS INCEPTION DATE - ------------------------------------------------------------------------------- INVESTOR CLASS 18.94% 2.99% 3.75% 9/30/97 - ------------------------------------------------------------------------------- MSCI EM INDEX 28.88% 6.15% 2.88% -- - ------------------------------------------------------------------------------- Institutional Class 19.14% 3.18% 12.04% 1/28/99 - ------------------------------------------------------------------------------- Advisor Class 18.58% 2.73% 6.86% 5/12/99 - ------------------------------------------------------------------------------- C Class 17.92% -- 13.24% 12/18/01 - ------------------------------------------------------------------------------- GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made September 30, 1997
![](https://capedge.com/proxy/N-CSR/0000872825-05-000005/growthemergingmkts0501.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - ----------------------------------------------------------------------------------- 1997* 1998 1999 2000 2001 2002 2003 2004 - ----------------------------------------------------------------------------------- Investor Class -17.00% -15.90% 61.03% -16.73% -10.28% -10.86% 46.26% 18.94% - ----------------------------------------------------------------------------------- MSCI EM Index -19.46% -22.42% 45.49% -23.63% -7.37% 4.95% 40.87% 28.88% - ----------------------------------------------------------------------------------- * 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. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. 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. - ------ 9 Emerging Markets - Portfolio Commentary [photo of investment team] PORTFOLIO MANAGERS ON THE EMERGING MARKETS INVESTMENT TEAM: RAYMOND KONG AND MICHAEL DONNELLY. Emerging Markets climbed 18.94%* during the 12 months ended November 30, 2004, lagging its benchmark, the Morgan Stanley Capital International Emerging Markets Index, which rose 28.88%. WORLD MARKETS DEMONSTRATE STRENGTH Many of the world's equity markets advanced during the period as the global economy demonstrated its strength and resiliency, especially in the first quarter of 2004. Returns moderated during a subsequent "soft patch" as record-high oil prices and rising interest rates sparked concern about corporate earnings and global economic growth. The violence in Iraq, uncertainty over the U.S. presidential election and the threat of terrorism also affected markets, but the Morgan Stanley Capital International Emerging Markets Index and other international equity benchmarks turned up later in the period and continued to rise as the price of oil declined, and the U.S. election ended without the confusion that followed the 2000 vote. Against that backdrop, Emerging Markets finished with positive absolute contributions from most of its country exposures, with South Korea and Taiwan among the decliners. The movement of the dollar versus other currencies also positively impacted the fund's performance. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Common Stocks 90.9% 96.3% - -------------------------------------------------------------------------------- Preferred Stocks 0.8% 2.4% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 91.7% 98.7% - -------------------------------------------------------------------------------- Temporary Cash Investments 4.1% 0.6% - -------------------------------------------------------------------------------- Collateral Received for Securities Lending 4.2% 0.7% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- South Korea 14.1% 19.4% - -------------------------------------------------------------------------------- Mexico 7.9% 7.2% - -------------------------------------------------------------------------------- Brazil 7.8% 2.7% - -------------------------------------------------------------------------------- South Africa 7.7% 11.6% - -------------------------------------------------------------------------------- Taiwan (Republic of China) 7.3% 12.1% - -------------------------------------------------------------------------------- India 5.6% 5.9% - -------------------------------------------------------------------------------- Russian Federation 4.4% 6.0% - -------------------------------------------------------------------------------- Hong Kong 4.1% 1.1% - -------------------------------------------------------------------------------- Poland 3.7% 2.3% - -------------------------------------------------------------------------------- Malaysia 3.6% 5.2% - -------------------------------------------------------------------------------- Indonesia 3.0% 2.3% - -------------------------------------------------------------------------------- People's Republic of China 3.0% 7.5% - -------------------------------------------------------------------------------- Other Countries 19.5% 15.4% - -------------------------------------------------------------------------------- Cash and Equivalents(+) 8.3% 1.3% - -------------------------------------------------------------------------------- (+) Includes temporary cash investments and collateral received for securities lending * All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 10 Emerging Markets - Portfolio Commentary THE STRONGEST PERFORMERS Our overweight position in Mexico made the greatest contribution to performance during the fiscal year. The country benefited from economic expansion and from solid demand in the United States, destination for 85% of Mexico's exports. Grupo Mexico, the world's third-largest copper producer, reported improved profits in line with rising commodity prices, and the stock ranked among the portfolio's top contributors. Homebuilder Urbi Desarrollos Urbanos, another standout performer from Mexico, advanced in part on the strength of rapidly rising mortgage lending by commercial firms and government agencies and on increased home sales in the high middle-income market. Emerging Markets' exposure to Brazil also proved beneficial. Top contributors included Pao De Acucar, Brazil's largest retailer, and steel producer Usinas Siderurgicas de Minas Gerais, which rose in line with climbing commodity prices and ramping demand, both domestically and from economically vibrant nations such as China. Indonesia was another source of strength. Diversified telecommunications firm PT Indonesian Satellite Corp., the country's second-largest phone company, was one success. The number of subscribers rose and operating costs declined, driving margins sharply higher--the company's profits quadrupled in the third quarter of 2004 versus third quarter 2003. ON THE DOWNSIDE Emerging Markets' position in South Korea, the portfolio's largest single country stake on average, weighed the most on absolute results and on performance against our benchmark. Technology companies generated the greatest drag, and LG Mircon, which makes parts for computer monitors, finished among the top detracting stocks. Samsung SDI, the world's largest maker of plasma screens, also detracted after suffering setbacks related to patent disputes with a larger rival. OUR COMMITMENT We remain committed to looking for stocks of growing foreign companies. The investment strategy of this fund is based on the belief that, over the long term, stocks of companies with earnings and revenue growth have a greater-than-average chance to increase in value. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Cia Brasileira de Distribuicao Grupo Pao de Acucar ADR 3.0% -- - -------------------------------------------------------------------------------- Zentiva N.V. 2.9% -- - -------------------------------------------------------------------------------- LUKOIL 2.5% 3.0% - -------------------------------------------------------------------------------- Tele Norte Leste Participacoes SA ADR 2.4% -- - -------------------------------------------------------------------------------- PetroKazakhstan Inc. Cl A New York Shares 2.3% 2.6% - -------------------------------------------------------------------------------- Gemtek Technology Corp. 2.3% 0.8% - -------------------------------------------------------------------------------- Hana Bank 2.2% 1.6% - -------------------------------------------------------------------------------- Cosco Pacific Limited 2.0% 0.6% - -------------------------------------------------------------------------------- Urbi Desarrollos Urbanos SA de CV 2.0% 0.7% - -------------------------------------------------------------------------------- KGHM Polska Miedz SA 1.9% 1.6% - -------------------------------------------------------------------------------- - ------ 11 Emerging Markets - Schedule of Investments NOVEMBER 30, 2004 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 94.1% ARGENTINA -- 0.5% - -------------------------------------------------------------------------------- 22,480 Tenaris SA ADR(1) $ 1,134 - ------------------------------------------------------------------------------- BRAZIL -- 7.2% - ------------------------------------------------------------------------------- 287,337 Cia Brasileira de Distribuicao Grupo Pao de Acucar ADR(1)(2) 6,988 - ------------------------------------------------------------------------------- 138,243 Diagnosticos da America SA(2) 1,142 - ------------------------------------------------------------------------------- 365,739 Tele Norte Leste Participacoes SA ADR(1) 5,595 - ------------------------------------------------------------------------------- 102,741 Unibanco-Uniao de Bancos Brasileiros SA GDR(1) 2,874 - ------------------------------------------------------------------------------- 16,599 - ------------------------------------------------------------------------------- CANADA -- 2.3% - ------------------------------------------------------------------------------- 126,172 PetroKazakhstan Inc. Cl A New York Shares 5,299 - ------------------------------------------------------------------------------- CHILE -- 1.7% - ------------------------------------------------------------------------------- 30,268,958 Colbun SA 3,979 - ------------------------------------------------------------------------------- CZECH REPUBLIC -- 2.9% - ------------------------------------------------------------------------------- 225,411 Zentiva N.V.(2) 6,555 - ------------------------------------------------------------------------------- EGYPT -- 2.2% - ------------------------------------------------------------------------------- 173,198 MobiNil - Egyptian Company Mobile Services 3,256 - ------------------------------------------------------------------------------- 52,449 Orascom Telecom Holding Sae(2) 1,796 - ------------------------------------------------------------------------------- 5,052 - ------------------------------------------------------------------------------- HONG KONG -- 4.2% - ------------------------------------------------------------------------------- 1,948,000 China Mengniu Dairy Co. Ltd.(1)(2) 1,503 - ------------------------------------------------------------------------------- 585,000 China Netcom Group Corp. Hong Kong Ltd.(2) 704 - ------------------------------------------------------------------------------- 2,554,000 Cosco Pacific Limited 4,583 - ------------------------------------------------------------------------------- 1,850,000 Lifestyle International Holdings Ltd. 2,880 - ------------------------------------------------------------------------------- 9,670 - ------------------------------------------------------------------------------- HUNGARY -- 0.9% - ------------------------------------------------------------------------------- 41,600 BorsodChem Rt. 423 - ------------------------------------------------------------------------------- 12,631 Gedeon Richter Rt. 1,556 - ------------------------------------------------------------------------------- 1,979 - ------------------------------------------------------------------------------- INDIA -- 5.8% - ------------------------------------------------------------------------------- 184,200 Reliance Energy Ltd. 2,321 - ------------------------------------------------------------------------------- 225,400 Reliance Industries Ltd. 2,617 - ------------------------------------------------------------------------------- 145,996 Tata Consultancy Services Ltd. 4,184 - ------------------------------------------------------------------------------- 1,961,400 Union Bank of India Limited 4,178 - ------------------------------------------------------------------------------- 13,300 - ------------------------------------------------------------------------------- INDONESIA -- 3.2% - ------------------------------------------------------------------------------- 12,813,500 PT Bank Rakyat Indonesia 3,442 - ------------------------------------------------------------------------------- 11,850,300 PT Indocement Tunggal Prakarsa Tbk(2) 3,807 - ------------------------------------------------------------------------------- 7,249 - ------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- ISRAEL -- 2.0% - ------------------------------------------------------------------------------- 69,837 ECI Telecom Ltd.(2) $ 580 - ------------------------------------------------------------------------------- 10,669 Lipman Electronic Engineering Ltd. 304 - ------------------------------------------------------------------------------- 149,034 RADWARE Limited(2) 3,787 - ------------------------------------------------------------------------------- 4,671 - ------------------------------------------------------------------------------- MALAYSIA -- 3.8% - ------------------------------------------------------------------------------- 2,806,000 Commerce Asset Holdings Bhd 3,589 - ------------------------------------------------------------------------------- 1,182,500 Digi.Com Bhd(2) 1,696 - ------------------------------------------------------------------------------- 6,712,600 E&O Property Development Bhd Cl B(2) 1,227 - ------------------------------------------------------------------------------- 541,100 Tenaga Nasional Bhd 1,609 - ------------------------------------------------------------------------------- 267,000 Transmile Group Bhd 559 - ------------------------------------------------------------------------------- 8,680 - ------------------------------------------------------------------------------- MEXICO -- 8.2% - ------------------------------------------------------------------------------- 71,811 Desarrolladora Homex SA de CV ADR(1)(2) 1,429 - ------------------------------------------------------------------------------- 7,688,275 Empresas ICA Sociedad Controladora SA de CV(2) 2,749 - ------------------------------------------------------------------------------- 510,500 Grupo Mexico SA de CV(2) 2,464 - ------------------------------------------------------------------------------- 1,060,554 Kimberly-Clark de Mexico SA de CV Cl A 3,538 - ------------------------------------------------------------------------------- 1,109,916 Urbi Desarrollos Urbanos SA de CV(2) 4,492 - ------------------------------------------------------------------------------- 1,223,759 Wal-Mart de Mexico SA de CV, Series V 4,197 - ------------------------------------------------------------------------------- 18,869 - ------------------------------------------------------------------------------- NETHERLANDS -- 1.2% - ------------------------------------------------------------------------------- 93,732 Efes Breweries International N.V. GDR (Acquired 10/15/04 - 11/22/04, Cost $2,603)(2)(3) 2,826 - ------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 3.1% - ------------------------------------------------------------------------------- 9,300,000 China Travel International Investment Hong Kong Limited(1) 2,811 - ------------------------------------------------------------------------------- 729,000 Jiangxi Copper Co. Ltd.(1) 448 - ------------------------------------------------------------------------------- 5,732,000 Sinopec Shanghai Petrochemical Company Limited Cl H(1) 2,138 - ------------------------------------------------------------------------------- 1,676,000 Sinopec Zhenhai Refining & Chemical Co. Ltd. Cl H(1) 1,746 - ------------------------------------------------------------------------------- 7,143 - ------------------------------------------------------------------------------- PERU -- 0.5% - ------------------------------------------------------------------------------- 46,979 Compania de Minas Buenaventura SAu ADR 1,104 - ------------------------------------------------------------------------------- PHILIPPINES -- 0.8% - ------------------------------------------------------------------------------- 77,860 Philippine Long Distance Telephone(2) 1,892 - ------------------------------------------------------------------------------- POLAND -- 3.9% - ------------------------------------------------------------------------------- 102,447 Agora SA(2) 1,684 - ------------------------------------------------------------------------------- 791,444 Elektrim SA(2) 1,381 - ------------------------------------------------------------------------------- 436,994 KGHM Polska Miedz SA(2) 4,437 - ------------------------------------------------------------------------------- 175,254 Powszechna Kasa Oszczednosci Bank Polski SA(2) 1,390 - ------------------------------------------------------------------------------- 8,892 - ------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 12 Emerging Markets - Schedule of Investments NOVEMBER 30, 2004 Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 4.6% - ------------------------------------------------------------------------------- 185,454 LUKOIL $ 5,787 - ------------------------------------------------------------------------------- 13,237 Mobile Telesystems ADR 1,836 - ------------------------------------------------------------------------------- 961,009 VolgaTelecom 2,941 - ------------------------------------------------------------------------------- 10,564 - ------------------------------------------------------------------------------- SINGAPORE -- 0.3% - ------------------------------------------------------------------------------- 1,358,000 Petra Foods Ltd.(2) 663 - -------------------------------------------------------------------------------- SOUTH AFRICA -- 8.0% - ------------------------------------------------------------------------------- 842,627 African Bank Investments Ltd. 2,492 - ------------------------------------------------------------------------------- 168,627 Anglo American plc 4,015 - ------------------------------------------------------------------------------- 192,408 Gold Fields Limited 2,719 - ------------------------------------------------------------------------------- 34,302 Impala Platinum Holdings Limited 2,925 - ------------------------------------------------------------------------------- 177,179 Ispat Iscor Limited 1,986 - ------------------------------------------------------------------------------- 252,033 SABMiller plc 4,160 - ------------------------------------------------------------------------------- 18,297 - ------------------------------------------------------------------------------- SOUTH KOREA -- 14.5% - ------------------------------------------------------------------------------- 266,690 Daewoo Heavy Industries & Machinery Ltd.(2) 2,278 - ------------------------------------------------------------------------------- 80,200 Dongkuk Steel Mill Co., Ltd. 1,476 - ------------------------------------------------------------------------------- 187,820 Hana Bank 4,995 - ------------------------------------------------------------------------------- 79,430 Hanmi Pharm Co. Ltd. 4,202 - ------------------------------------------------------------------------------- 51,100 Honam Petrochemical Corporation 2,454 - ------------------------------------------------------------------------------- 333,210 Hynix Semiconductor Inc.(2) 3,288 - ------------------------------------------------------------------------------- 223,300 Hyundai Engineering & Construction Co., Ltd.(2) 2,980 - ------------------------------------------------------------------------------- 255,340 Hyundai Merchant Marine(2) 3,919 - ------------------------------------------------------------------------------- 27,616 Phoenix PDE Co. Ltd.(2) 1,098 - ------------------------------------------------------------------------------- 13,060 POSCO 2,434 - ------------------------------------------------------------------------------- 7,980 Samsung Electronics 3,305 - ------------------------------------------------------------------------------- 55,820 Shinhan Financial Group Co., Ltd. 1,168 - ------------------------------------------------------------------------------- 33,597 - ------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 7.6% - ------------------------------------------------------------------------------- 216,000 Asia Optical Co. Inc. 1,120 - ------------------------------------------------------------------------------- 62,125 China Steel Corp. GDR 1,360 - ------------------------------------------------------------------------------- 619,000 Formosa Petrochemical Corp. 1,105 - ------------------------------------------------------------------------------- 2,265,990 Gemtek Technology Corp. 5,206 - ------------------------------------------------------------------------------- 505,000 High Tech Computer Corp. 2,038 - ------------------------------------------------------------------------------- 388,000 Lian Hwa Food Corp. 108 - ------------------------------------------------------------------------------- 256,000 Novatek Microelectronics Corp., Ltd. 755 - ------------------------------------------------------------------------------- 257,150 O-TA Precision Industry Co Ltd. 515 - ------------------------------------------------------------------------------- 812,130 Powertech Technology Inc. 1,639 - ------------------------------------------------------------------------------- 3,014,550 Wan Hai Lines Limited 2,995 - ------------------------------------------------------------------------------- 678,000 Yung Shin Pharmaceutical Industries Co., Ltd. 575 - ------------------------------------------------------------------------------- 17,416 - ------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- THAILAND -- 1.3% - ------------------------------------------------------------------------------- 701,600 Banpu Public Company Limited $ 2,759 - ------------------------------------------------------------------------------- 212,800 Thai Oil plc(2) 238 - ------------------------------------------------------------------------------- 2,997 - ------------------------------------------------------------------------------- TURKEY -- 1.5% - ------------------------------------------------------------------------------- 842,814,771 Denizbank AS(2) 1,601 - ------------------------------------------------------------------------------- 637,680,088 Dogan Sirketler Grubu Holdings(2) 1,105 - ------------------------------------------------------------------------------- 202,541,780 Otokar Otobus Karoseri Sanayi AS(2) 799 - ------------------------------------------------------------------------------- 3,505 - ------------------------------------------------------------------------------- UNITED KINGDOM -- 1.9% - ------------------------------------------------------------------------------- 194,993 Antofagasta plc 4,267 - ------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $174,412) 216,199 - ------------------------------------------------------------------------------- PREFERRED STOCKS -- 0.9% BRAZIL -- 0.9% - ------------------------------------------------------------------------------- 100,100 Usinas Siderurgicas de Minas Gerais SA Cl A (Cost $1,099) 2,021 - ------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 4.2% Repurchase Agreement, Merrill Lynch & Co, Inc., (collateralized by various U.S. Treasury obligations, 6.125% - 8.750%, 11/15/16 - 11/15/27, valued at $9,918), in a joint trading account at 1.94%, dated 11/30/04, due 12/1/04 (Delivery value $9,701) (Cost $9,700) 9,700 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING -- 4.3%(4) Repurchase Agreement, Barclays Bank plc, (collateralized by U.S. Government Agency obligations), 2.08%, dated 11/30/04, due 12/1/04 (Delivery value $9,891) (Cost $9,890) 9,890 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 103.5% (Cost $195,101) 237,810 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (3.5)% (8,082) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $229,728 ================================================================================ See Notes to Financial Statements. (continued) - ------ 13 Emerging Markets - Schedule of Investments NOVEMBER 30, 2004 MARKET SECTOR DIVERSIFICATION (UNAUDITED) Materials 18.8% - -------------------------------------------------------------------------------- Financials 13.0% - -------------------------------------------------------------------------------- Consumer Staples 11.7% - -------------------------------------------------------------------------------- Industrials 10.4% - -------------------------------------------------------------------------------- Information Technology 9.6% - -------------------------------------------------------------------------------- Telecommunication Services 8.6% - -------------------------------------------------------------------------------- Energy 7.8% - -------------------------------------------------------------------------------- Health Care 6.1% - -------------------------------------------------------------------------------- Consumer Discretionary 5.6% - -------------------------------------------------------------------------------- Utilities 3.4% - -------------------------------------------------------------------------------- Cash and Equivalents* 5.0% - -------------------------------------------------------------------------------- * Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt GDR = Global Depositary Receipt (1) Security, or a portion thereof, was on loan as of November 30, 2004. (2) Non-income producing. (3) 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 at November 30, 2004, was $2,826, which represented 1.2% of net assets. (4) 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. - ------ 14 Global Growth - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2004 ------------------------ AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 15.59% 0.15% 9.02% 12/1/98 - -------------------------------------------------------------------------------- MSCI WORLD FREE INDEX 17.43% -1.66% 1.81%(1) -- - -------------------------------------------------------------------------------- Institutional Class 15.80% -- -4.00% 8/1/00 - -------------------------------------------------------------------------------- Advisor Class 15.24% -0.10% 6.99% 2/5/99 - -------------------------------------------------------------------------------- C Class 14.44% -- 6.44% 3/1/02 - -------------------------------------------------------------------------------- (1) Since 11/30/98, the date nearest the Investor Class's inception for which data are available. 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. International investing involves special risks, such as political instability and currency fluctuations. 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. (continued) - ------ 15 Global Growth - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made December 1, 1998
![](https://capedge.com/proxy/N-CSR/0000872825-05-000005/growthglobalgrowth0501.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - -------------------------------------------------------------------------------- 1999* 2000 2001 2002 2003 2004 - -------------------------------------------------------------------------------- Investor Class 66.60% 8.81% -23.62% -12.78% 20.22% 15.59% - -------------------------------------------------------------------------------- MSCI World Free Index 21.11% -7.64% -16.01% -15.27% 19.17% 17.43% - -------------------------------------------------------------------------------- * 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. International investing involves special risks, such as political instability and currency fluctuations. 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. - ------ 16 Global Growth - Portfolio Commentary [photo of investment team] PORTFOLIO MANAGERS ON THE GLOBAL GROWTH INVESTMENT TEAM: MATT HUDSON, TREVOR GURWICH AND HENRIK STRABO. Global Growth gained 15.59%* during the 12 months ended November 30, 2004, while its benchmark, the Morgan Stanley Capital International World Free Index, returned 17.43%. Many of the world's equity markets advanced during the period as the global economy demonstrated its strength and resiliency, especially in the first quarter of 2004. Returns moderated during a subsequent "soft patch" as record-high oil prices and rising interest rates sparked concern about corporate earnings and global economic growth. The violence in Iraq, uncertainty over the U.S. presidential election and the threat of terrorism also affected markets, but the World Free Index turned up later in the period and continued to rise as the price of oil declined, and the U.S. election ended without the confusion that followed the 2000 vote. Against that backdrop, all but one sector in which we were invested advanced, and each of the portfolio's top-10 holdings contributed to Global Growth's return. Our complement of financial holdings, the portfolio's largest stake, posted the greatest contribution to absolute return and outperformed the index. The movement of the dollar versus other currencies positively impacted the fund's performance. The financials sector advanced mostly due to a strong collection of commercial banks, which on average represented the portfolio's heaviest industry weighting. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- U.S. Common Stocks 40.7% 44.0% - -------------------------------------------------------------------------------- Foreign Common Stocks 47.9% 52.1% - -------------------------------------------------------------------------------- Preferred Stocks -- 0.5% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 88.6% 96.6% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.8% 1.1% - -------------------------------------------------------------------------------- Collateral Received for Securities Lending 9.6% 2.3% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- United States 40.7% 44.0% - -------------------------------------------------------------------------------- Japan 7.4% 10.5% - -------------------------------------------------------------------------------- Switzerland 5.4% 6.2% - -------------------------------------------------------------------------------- France 5.0% 3.5% - -------------------------------------------------------------------------------- Netherlands 3.5% 1.7% - -------------------------------------------------------------------------------- United Kingdom 3.4% 5.8% - -------------------------------------------------------------------------------- Germany 3.0% 3.6% - -------------------------------------------------------------------------------- Bermuda 2.4% 2.9% - -------------------------------------------------------------------------------- Greece 2.1% 1.4% - -------------------------------------------------------------------------------- Other Countries 15.7% 17.0% - -------------------------------------------------------------------------------- Cash and Equivalents(+) 11.4% 3.4% - -------------------------------------------------------------------------------- (+) Includes temporary cash investments and collateral received for securities lending * All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 17 Global Growth - Portfolio Commentary Estonia's Hansabank, one of the biggest lenders in the Baltic region, topped the list of banks contributing to Global Growth. The company reported record income of $62 million during the third quarter of 2004 on the strength of lending, interest income and card fees throughout the region. Commercial banks weren't alone in lifting the financials sector. The consumer finance industry also contributed to Global Growth, led by our stake in Japan's ORIX Corp., a global financial services company. Energy holdings also contributed to the portfolio's absolute performance, led by XTO Energy Inc., a U.S. natural gas and oil producer and a top-10 position in the portfolio. The company said third-quarter profit jumped 37% to $140.8 million as it benefited from high oil prices and increased oil and gas production. Several other securities in the sector contributed to the portfolio, including Global Growth's largest holding, Exxon Mobil Corp., and EnCana Corp., a Canadian oil and gas company and a top-10 position. Another of our heaviest holdings, American Tower Corp., made the largest contribution to Global Growth's return during the period. American Tower, which owns and operates communications towers, reported that revenue from tower rentals and management increased 11% to $174.9 million during the third quarter of 2004. Although many sectors made positive contributions, several slowed our performance against the World Free Index, including materials and utilities. Global Growth's materials sector delivered the worst performance against the benchmark. The retreat was most notable in the chemicals industry, where we had an overweight stake in Japan's JSR Corp. Our stake in the utilities sector also lagged the index due largely to our lack of exposure to electric utilities that advanced. OUR COMMITMENT We remain committed to looking for stocks of growing companies in the U.S. and abroad. The investment strategy of this fund is based on the belief that, over the long term, stocks of companies with earnings and revenue growth have a greater-than average chance to increase in value. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Exxon Mobil Corp. 2.0% 1.7% - -------------------------------------------------------------------------------- General Electric Co. 2.0% 1.6% - -------------------------------------------------------------------------------- BHP Billiton Limited 1.8% 1.2% - -------------------------------------------------------------------------------- EnCana Corp. 1.8% 1.2% - -------------------------------------------------------------------------------- XTO Energy Inc. 1.8% 1.2% - -------------------------------------------------------------------------------- American Tower Corp. Cl A 1.6% 1.2% - -------------------------------------------------------------------------------- Tyco International Ltd. 1.5% 1.3% - -------------------------------------------------------------------------------- Danaher Corp. 1.5% 1.0% - -------------------------------------------------------------------------------- Total SA Cl B 1.5% -- - -------------------------------------------------------------------------------- Tesco plc 1.4% 0.8% - -------------------------------------------------------------------------------- - ------ 18 Global Growth - Schedule of Investments NOVEMBER 30, 2004 Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- COMMON STOCKS -- 97.4% AUSTRALIA -- 1.8% - ------------------------------------------------------------------------------- 471,185 BHP Billiton Limited $ 5,623 - ------------------------------------------------------------------------------- AUSTRIA -- 1.1% - ------------------------------------------------------------------------------- 65,000 Erste Bank der Oesterreichischen Sparkassen AG 3,308 - ------------------------------------------------------------------------------- BELGIUM -- 0.7% - ------------------------------------------------------------------------------- 27,000 Mobistar SA(1) 2,261 - ------------------------------------------------------------------------------- BERMUDA -- 2.6% - ------------------------------------------------------------------------------- 63,700 Nabors Industries Ltd.(1)(2) 3,312 - ------------------------------------------------------------------------------- 140,500 Tyco International Ltd. 4,773 - ------------------------------------------------------------------------------- 8,085 - ------------------------------------------------------------------------------- CANADA -- 1.8% - ------------------------------------------------------------------------------- 95,100 EnCana Corp. 5,435 - ------------------------------------------------------------------------------- CHANNEL ISLANDS -- 0.7% - ------------------------------------------------------------------------------- 86,710 Amdocs Ltd.(1) 2,241 - ------------------------------------------------------------------------------- CZECH REPUBLIC -- 0.7% - ------------------------------------------------------------------------------- 75,044 Zentiva N.V.(1) 2,182 - ------------------------------------------------------------------------------- DENMARK -- 0.7% - ------------------------------------------------------------------------------- 50,494 William Demant Holding(1) 2,240 - ------------------------------------------------------------------------------- ESTONIA -- 0.9% - ------------------------------------------------------------------------------- 233,200 Hansabank Ltd. 2,743 - ------------------------------------------------------------------------------- FRANCE -- 5.5% - ------------------------------------------------------------------------------- 107,171 Axa 2,509 - ------------------------------------------------------------------------------- 99,500 JC Decaux SA(1) 2,642 - ------------------------------------------------------------------------------- 35,630 Schneider SA(2) 2,475 - ------------------------------------------------------------------------------- 25,400 Societe Generale Cl A(2) 2,453 - ------------------------------------------------------------------------------- 20,800 Total SA Cl B(2) 4,553 - ------------------------------------------------------------------------------- 19,000 Vinci SA(2) 2,352 - ------------------------------------------------------------------------------- 16,984 - ------------------------------------------------------------------------------- GERMANY -- 3.3% - ------------------------------------------------------------------------------- 47,290 Continental AG 2,882 - ------------------------------------------------------------------------------- 11,190 Puma AG Rudolf Dassler Sport 3,084 - ------------------------------------------------------------------------------- 14,300 SAP AG 2,555 - ------------------------------------------------------------------------------- 59,000 Stada Arzneimittel AG 1,552 - ------------------------------------------------------------------------------- 10,073 - ------------------------------------------------------------------------------- GREECE -- 2.3% - ------------------------------------------------------------------------------- 141,080 EFG Eurobank Ergasias SA 4,110 - ------------------------------------------------------------------------------- 119,000 Greek Organization of Football Prognostics SA 3,100 - ------------------------------------------------------------------------------- 7,210 - ------------------------------------------------------------------------------- INDIA -- 1.0% - ------------------------------------------------------------------------------- 112,361 Tata Consultancy Services Ltd. 3,219 - ------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- ISRAEL -- 0.5% - ------------------------------------------------------------------------------- 61,216 Teva Pharmaceutical Industries Ltd. ADR $ 1,670 - ------------------------------------------------------------------------------- ITALY -- 1.3% - ------------------------------------------------------------------------------- 782,670 RCS MediaGroup SpA(2) 4,109 - ------------------------------------------------------------------------------- JAPAN -- 8.2% - ------------------------------------------------------------------------------- 31,000 Canon, Inc. 1,554 - ------------------------------------------------------------------------------- 140,500 Chugai Pharmaceutical Co. Ltd. 2,204 - ------------------------------------------------------------------------------- 30,300 Fast Retailing Company Limited 2,281 - ------------------------------------------------------------------------------- 22,100 Hoya Corp. 2,301 - ------------------------------------------------------------------------------- 127,000 JSR Corp.(2) 2,633 - ------------------------------------------------------------------------------- 630 NET One Systems Co. Ltd. 2,576 - ------------------------------------------------------------------------------- 33,600 ORIX Corporation 4,275 - ------------------------------------------------------------------------------- 164,000 Sharp Corp. 2,632 - ------------------------------------------------------------------------------- 333,000 Shinsei Bank Ltd.(2) 2,225 - ------------------------------------------------------------------------------- 375 Sumitomo Mitsui Financial Group Inc.(2) 2,604 - ------------------------------------------------------------------------------- 25,285 - ------------------------------------------------------------------------------- MEXICO -- 0.6% - ------------------------------------------------------------------------------- 42,500 America Movil SA de CV Series L ADR 1,985 - ------------------------------------------------------------------------------- NETHERLANDS -- 3.9% - ------------------------------------------------------------------------------- 53,271 Efes Breweries International N.V. GDR (Acquired 10/15/04 - 11/9/04, Cost $1,341)(1)(3) 1,606 - ------------------------------------------------------------------------------- 141,924 ING Groep N.V. 3,905 - ------------------------------------------------------------------------------- 95,600 Randstad Holdings N.V. 3,672 - ------------------------------------------------------------------------------- 43,500 Schlumberger Ltd. 2,855 - ------------------------------------------------------------------------------- 12,038 - ------------------------------------------------------------------------------- POLAND -- 0.5% - ------------------------------------------------------------------------------- 202,270 Powszechna Kasa Oszczednosci Bank Polski SA(1) 1,605 - ------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 0.6% - ------------------------------------------------------------------------------- 12,140 Mobile Telesystems ADR 1,684 - ------------------------------------------------------------------------------- SOUTH AFRICA -- 0.9% - ------------------------------------------------------------------------------- 229,560 Naspers Ltd. 2,640 - ------------------------------------------------------------------------------- SOUTH KOREA -- 1.2% - ------------------------------------------------------------------------------- 43,250 Hyundai Motor Co. Ltd. 2,127 - ------------------------------------------------------------------------------- 3,960 Samsung Electronics 1,640 - ------------------------------------------------------------------------------- 3,767 - ------------------------------------------------------------------------------- SPAIN -- 0.7% - ------------------------------------------------------------------------------- 97,000 Banco Sabadell SA(2) 2,176 - ------------------------------------------------------------------------------- SWEDEN -- 1.5% - ------------------------------------------------------------------------------- 821,270 Telefonaktiebolaget LM Ericsson B Shares(1) 2,738 - ------------------------------------------------------------------------------- 43,600 Volvo AB Cl B 1,782 - ------------------------------------------------------------------------------- 4,520 - ------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 19 Global Growth - Schedule of Investments NOVEMBER 30, 2004 Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- SWITZERLAND -- 5.9% - ------------------------------------------------------------------------------- 75,620 Compagnie Financiere Richemont AG A Shares $ 2,299 - ------------------------------------------------------------------------------- 19,150 Nobel Biocare Holding AG 3,443 - ------------------------------------------------------------------------------- 73,500 Novartis AG 3,523 - ------------------------------------------------------------------------------- 28,500 Roche Holding AG 3,001 - ------------------------------------------------------------------------------- 20,930 Swatch Group AG 2,886 - ------------------------------------------------------------------------------- 39,422 UBS AG 3,186 - ------------------------------------------------------------------------------- 18,338 - ------------------------------------------------------------------------------- UNITED KINGDOM -- 3.7% - ------------------------------------------------------------------------------- 116,568 Man Group plc 3,319 - ------------------------------------------------------------------------------- 133,765 Reckitt Benckiser plc 3,944 - ------------------------------------------------------------------------------- 743,000 Tesco plc 4,282 - ------------------------------------------------------------------------------- 11,545 - ------------------------------------------------------------------------------- UNITED STATES -- 44.8% - ------------------------------------------------------------------------------- 31,000 Aetna Inc. 3,674 - ------------------------------------------------------------------------------- 70,200 American Express Co. 3,912 - ------------------------------------------------------------------------------- 26,400 American International Group, Inc. 1,672 - ------------------------------------------------------------------------------- 273,000 American Tower Corp. Cl A(1)(2) 4,949 - ------------------------------------------------------------------------------- 64,150 Citigroup Inc. 2,871 - ------------------------------------------------------------------------------- 39,000 Clorox Company 2,150 - ------------------------------------------------------------------------------- 86,000 Comcast Corporation(1) 2,583 - ------------------------------------------------------------------------------- 266,000 Corning Inc.(1) 3,346 - ------------------------------------------------------------------------------- 36,000 Corporate Executive Board Co. (The)(2) 2,415 - ------------------------------------------------------------------------------- 80,200 Danaher Corp. 4,562 - ------------------------------------------------------------------------------- 79,610 Digital River Inc.(1) 3,337 - ------------------------------------------------------------------------------- 28,140 eBay Inc.(1) 3,164 - ------------------------------------------------------------------------------- 119,400 EMC Corp.(1) 1,602 - ------------------------------------------------------------------------------- 120,500 Exxon Mobil Corp. 6,175 - ------------------------------------------------------------------------------- 81,610 Genentech, Inc.(1) 3,937 - ------------------------------------------------------------------------------- 171,800 General Electric Co. 6,075 - ------------------------------------------------------------------------------- 87,000 Gilead Sciences, Inc.(1) 2,998 - ------------------------------------------------------------------------------- 80,500 Gillette Company 3,500 - ------------------------------------------------------------------------------- 14,620 Goldman Sachs Group, Inc. (The) 1,532 - ------------------------------------------------------------------------------- 45,200 Harrah's Entertainment, Inc. 2,775 - ------------------------------------------------------------------------------- 79,000 Honeywell International Inc. 2,791 - ------------------------------------------------------------------------------- 61,000 Kohl's Corp.(1) 2,817 - ------------------------------------------------------------------------------- 139,000 McAfee Inc.(1)(2) 4,018 - ------------------------------------------------------------------------------- 37,750 Medicis Pharmaceutical Corp. Cl A 1,389 - ------------------------------------------------------------------------------- 84,510 Medtronic, Inc. 4,060 - ------------------------------------------------------------------------------- 34,000 Monsanto Co. 1,565 - ------------------------------------------------------------------------------- 128,786 Monster Worldwide Inc.(1) 3,630 - ------------------------------------------------------------------------------- 172,110 Motorola, Inc. 3,315 - ------------------------------------------------------------------------------- 59,361 National Financial Partners Corp. 2,062 - ------------------------------------------------------------------------------- 144,470 Nextel Communications, Inc.(1) 4,112 - ------------------------------------------------------------------------------- 72,500 Noble Corp.(1) 3,513 - ------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- 42,700 Procter & Gamble Co. (The) $ 2,284 - ------------------------------------------------------------------------------- 64,156 Prudential Financial Inc. 3,140 - ------------------------------------------------------------------------------- 42,300 ResMed Inc.(1)(2) 2,118 - ------------------------------------------------------------------------------- 52,500 SLM Corporation 2,686 - ------------------------------------------------------------------------------- 45,250 Textron Inc. 3,286 - ------------------------------------------------------------------------------- 37,830 United Parcel Service, Inc. Cl B 3,183 - ------------------------------------------------------------------------------- 37,500 UnitedHealth Group Incorporated 3,107 - ------------------------------------------------------------------------------- 75,630 Verizon Communications 3,118 - ------------------------------------------------------------------------------- 63,000 Wachovia Corp. 3,261 - ------------------------------------------------------------------------------- 148,875 XTO Energy Inc. 5,412 - ------------------------------------------------------------------------------- 75,800 Yahoo! Inc.(1) 2,852 - ------------------------------------------------------------------------------- 41,700 Zimmer Holdings Inc.(1) 3,403 - ------------------------------------------------------------------------------- 138,351 - ------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $229,106) 301,317 - ------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 2.0% Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 3%, 7/15/12, valued at $6,223), in a joint trading account at 1.92%, dated 11/30/04, due 12/1/04 (Delivery value $6,100) (Cost $6,100) 6,100 - ------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING -- 10.5%(4) Repurchase Agreement, Barclays Bank plc, (collateralized by U.S. Agency obligations), 2.08%, dated 11/30/04, due 12/1/04 (Delivery value $27,579) 27,577 - ------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations), 2.063%, dated 11/30/04, due 12/1/04 (Delivery value $5,000) 5,000 - ------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $32,577) 32,577 - ------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 109.9% (Cost $267,783) 339,994 - ------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (9.9)% (30,754) - ------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $309,240 =============================================================================== See Notes to Financial Statements. (continued) - ------ 20 Global Growth - Schedule of Investments NOVEMBER 30, 2004 MARKET SECTOR DIVERSIFICATION (UNAUDITED) Financials 21.1% - -------------------------------------------------------------------------------- Health Care 14.4% - -------------------------------------------------------------------------------- Industrials 14.3% - -------------------------------------------------------------------------------- Consumer Discretionary 12.6% - -------------------------------------------------------------------------------- Information Technology 10.2% - -------------------------------------------------------------------------------- Energy 10.1% - -------------------------------------------------------------------------------- Telecommunication Services 5.8% - -------------------------------------------------------------------------------- Consumer Staples 5.7% - -------------------------------------------------------------------------------- Materials 3.2% - -------------------------------------------------------------------------------- Cash and Equivalents* 2.6% - -------------------------------------------------------------------------------- * Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt GDR = Global Depositary Receipt (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of November 30, 2004. (3) 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 at November 30, 2004, was $1,606, which represented 0.5% of net assets. (4) 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. - ------ 21 International Opportunities - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2004 -------------- AVERAGE ANNUAL RETURNS - ------------------------------------------------------------------------------ SINCE INCEPTION 1 YEAR INCEPTION DATE - ------------------------------------------------------------------------------ INVESTOR CLASS 27.14% 20.91% 6/1/01 - ------------------------------------------------------------------------------ S&P/CITIGROUP EMI GROWTH WORLD EX-US(1) 27.58% 8.91%(2) -- - ------------------------------------------------------------------------------ Institutional Class 27.50% 45.31% 1/9/03 - ------------------------------------------------------------------------------ (1) Formerly Salomon Smith Barney Extended Market Index Growth World ex-US. Formerly Citigroup EMI 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 LIFE OF CLASS $10,000 investment made June 1, 2001
![](https://capedge.com/proxy/N-CSR/0000872825-05-000005/growthintlopps0501.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - -------------------------------------------------------------------------------- 2001* 2002 2003 2004 - -------------------------------------------------------------------------------- Investor Class -2.60% -2.87% 61.54% 27.14% - -------------------------------------------------------------------------------- S&P/Citigroup EMI Growth World ex-US -14.51% -10.96% 38.79% 27.58% - -------------------------------------------------------------------------------- * 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. International investing involves special risks, such as political instability and currency fluctuations. 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. - ------ 22 International Opportunities - Portfolio Commentary [photo of investment team] THE INTERNATIONAL OPPORTUNITIES INVESTMENT TEAM: INVESTMENT ANALYST BRIAN BRADY, PORTFOLIO MANAGERS LYNETTE SCHROEDER AND FEDERICO LAFFAN, AND INVESTMENT ANALYST DAVID FUJISAKI. International Opportunities climbed 27.14%* during the 12 months ended November 30, 2004, underperforming its benchmark, the S&P/Citigroup EMI (Extended Market Index) Growth World ex-US, which rose 27.58%. The portfolio's performance compares favorably to that of its peers: The 75 international small/mid growth funds tracked by Lipper Inc. rose an average of 26.28%. WORLD MARKETS DEMONSTRATE STRENGTH Many of the world's equity markets advanced during the period as the global economy demonstrated its strength and resiliency, especially in the first quarter of 2004. Returns moderated during a subsequent "soft patch" as record-high oil prices and rising interest rates sparked concern about corporate earnings and global economic growth. The violence in Iraq, uncertainty over the U.S. presidential election and the threat of terrorism also affected markets, but the S&P/Citigroup EMI World Growth ex-US and other international equity benchmarks turned up later in the period and continued to rise as the price of oil declined, and the U.S. election ended without the confusion that followed the 2000 vote. Against that backdrop, International Opportunities received positive absolute contributions from each of the TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Common Stocks 88.8% 98.3% - -------------------------------------------------------------------------------- Preferred Stocks 0.6% -- - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 89.4% 98.3% - -------------------------------------------------------------------------------- Temporary Cash Investments 2.3% 1.7% - -------------------------------------------------------------------------------- Collateral Received for Securities Lending 8.3% -- - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- % OF FUND % OF FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Japan 20.0% 28.8% - -------------------------------------------------------------------------------- Germany 6.5% 7.1% - -------------------------------------------------------------------------------- Canada 6.2% 6.8% - -------------------------------------------------------------------------------- Norway 5.5% 3.7% - -------------------------------------------------------------------------------- United Kingdom 5.3% 8.5% - -------------------------------------------------------------------------------- Singapore 4.5% 4.0% - -------------------------------------------------------------------------------- Australia 4.3% -- - ------------------------------------------------------------------------------- France 4.1% 2.0% - -------------------------------------------------------------------------------- Denmark 3.5% 1.5% - -------------------------------------------------------------------------------- South Africa 2.5% -- - -------------------------------------------------------------------------------- Sweden 2.3% 2.6% - -------------------------------------------------------------------------------- Finland 2.2% 2.0% - -------------------------------------------------------------------------------- Turkey 2.2% 1.2% - -------------------------------------------------------------------------------- Other Countries 20.3% 30.1% - -------------------------------------------------------------------------------- Cash and Equivalents(+) 10.6% 1.7% - -------------------------------------------------------------------------------- (+) Includes temporary cash investments and collateral received for securities lending * All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 23 International Opportunities - Portfolio Commentary sectors in which it was invested. The movement of the dollar versus other currencies also positively impacted the fund's performance. SOURCES OF STRENGTH: CONSUMER STOCKS Investments in the consumer discretionary sector, on average our largest single stake, delivered the best contribution to performance and represented the greatest source of strength versus our benchmark. Media firms delivered the best finish, led by Japan's Cyber Agent, an Internet advertising agency. Portugal's Impresa, which operates the country's leading television stations, was another standout performer. Increased advertising growth amid Portugal's recovery from a 2003 recession contributed to Impresa's improved 2004 earnings. Elsewhere in the sector, Corporacion Geo SA, a leading Mexican homebuilder, advanced against the backdrop of falling mortgage interest rates and increased lending from mortgage companies and government agencies. INDUSTRIALS: ANOTHER BRIGHT SPOT Our position in the industrials sector advanced and outperformed the benchmark. Japan's Take and Give Needs, a wedding planner, was among the best performers, as was Cosco Investment Singapore Limited, a bulk carrier unit of China's largest shipping company, which benefited from higher charter rates driven by China's growing economy and increased demand for commodities. POCKETS OF WEAKNESS Despite overall positive contributions from each of our sector positions, we still encountered some challenges. The information technology sector, the greatest source of weakness versus our benchmark, produced the top-detracting stock. Late in the period, the United Kingdom's Wolfson Microelectronics, which makes chips for consumer electronics, fell to a record low after reducing its sales forecast, citing slack demand. South Korea's Kumho Electric, from the electrical equipment industry, also slowed performance. OUR COMMITMENT We remain committed to looking for stocks of growing foreign companies. The investment strategy of this fund is based on the belief that, over the long term, stocks of companies with earnings and revenue growth have a greater-than-average chance to increase in value. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Cosco Investment Singapore Limited 2.0% 1.5% - -------------------------------------------------------------------------------- Corporacion GEO, SA de CV, Series B 1.7% 0.4% - -------------------------------------------------------------------------------- Sinopec Beijing Yanhua Petrochemical Co., Ltd. 1.7% 0.9% - -------------------------------------------------------------------------------- Tandberg Television ASA 1.7% 2.3% - -------------------------------------------------------------------------------- MPC Muenchmeyer Petersen Capital AG 1.6% 1.2% - -------------------------------------------------------------------------------- Ashtead Group plc 1.6% 1.0% - -------------------------------------------------------------------------------- Transat AT Inc. 1.5% -- - -------------------------------------------------------------------------------- Foschini Limited 1.5% -- - -------------------------------------------------------------------------------- Sysmex Corp. 1.5% 1.6% - -------------------------------------------------------------------------------- Stolt Offshore SA 1.4% -- - -------------------------------------------------------------------------------- - ------ 24 International Opportunities - Schedule of Investments NOVEMBER 30, 2004 Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- COMMON STOCKS -- 97.1% AUSTRALIA -- 4.7% - ------------------------------------------------------------------------------- 356,614 Bradken Ltd.(1) $ 873 - ------------------------------------------------------------------------------- 440,121 Excel Coal Ltd.(1) 1,798 - ------------------------------------------------------------------------------- 920,855 Just Group Ltd. 2,148 - ------------------------------------------------------------------------------- 315,337 MacArthur Coal Ltd.(1) 1,035 - ------------------------------------------------------------------------------- 437,726 Portman Limited 1,021 - ------------------------------------------------------------------------------- 304,034 West Australian Newspapers Holdings Ltd. 1,998 - ------------------------------------------------------------------------------- 8,873 - ------------------------------------------------------------------------------- AUSTRIA -- 0.9% - ------------------------------------------------------------------------------- 23,539 Andritz AG 1,651 - ------------------------------------------------------------------------------- BAHAMAS -- 0.9% - ------------------------------------------------------------------------------- 60,629 Steiner Leisure Ltd.(1) 1,632 - ------------------------------------------------------------------------------- BELGIUM -- 0.9% - ------------------------------------------------------------------------------- 4,343 EVS Broadcast Equipment SA(1) 458 - ------------------------------------------------------------------------------- 35,976 Option International(1) 1,250 - ------------------------------------------------------------------------------- 1,708 - ------------------------------------------------------------------------------- CANADA -- 6.7% - ------------------------------------------------------------------------------- 105,123 Algoma Steel Inc.(1) 2,632 - ------------------------------------------------------------------------------- 41,113 CHC Helicopter Corp. 1,708 - ------------------------------------------------------------------------------- 128,444 Extendicare Inc.(1) 1,732 - ------------------------------------------------------------------------------- 47,264 Home Capital Group Inc. 1,178 - ------------------------------------------------------------------------------- 72,376 Peyto Energy Trust 2,600 - ------------------------------------------------------------------------------- 139,695 Transat AT Inc.(1) 2,897 - ------------------------------------------------------------------------------- 12,747 - ------------------------------------------------------------------------------- DENMARK -- 3.9% - ------------------------------------------------------------------------------- 29,264 Bang & Olufsen AS 1,851 - ------------------------------------------------------------------------------- 14,541 Bavarian Nordic A/S(1)(2) 1,519 - ------------------------------------------------------------------------------- 8,933 Kobenhavns Lufthavne 1,638 - ------------------------------------------------------------------------------- 29,450 Topdanmark A/S(1) 2,223 - ------------------------------------------------------------------------------- 7,231 - ------------------------------------------------------------------------------- FINLAND -- 2.5% - ------------------------------------------------------------------------------- 17,699 Alma Media Corp.(1) 216 - ------------------------------------------------------------------------------- 18,683 Nokian Renkaat Oyj 2,685 - ------------------------------------------------------------------------------- 100,300 Perlos Oyj 1,698 - ------------------------------------------------------------------------------- 4,599 - ------------------------------------------------------------------------------- FRANCE -- 4.4% - ------------------------------------------------------------------------------- 42,708 Alten(1)(2) 965 - ------------------------------------------------------------------------------- 26,454 April Group 612 - ------------------------------------------------------------------------------- 108,217 Axalto Holding N.V.(1) 2,616 - ------------------------------------------------------------------------------- 69,271 Generale de Sante 1,368 - ------------------------------------------------------------------------------- 4,053 Spir Communication 769 - ------------------------------------------------------------------------------- 78,425 SR Teleperformance 1,968 - ------------------------------------------------------------------------------- 8,298 - ------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- GERMANY -- 6.5% - ------------------------------------------------------------------------------- 47,836 Balda AG $ 554 - ------------------------------------------------------------------------------- 4,107 Bijou Brigitte AG 460 - ------------------------------------------------------------------------------- 13,297 DIS Deutscher Industrie Service AG 460 - ------------------------------------------------------------------------------- 20,523 Funkwerk AG 873 - ------------------------------------------------------------------------------- 27,724 GfK AG 1,016 - ------------------------------------------------------------------------------- 12,383 Grenkeleasing AG 534 - ------------------------------------------------------------------------------- 10,061 Krones AG 1,030 - ------------------------------------------------------------------------------- 39,394 MPC Muenchmeyer Petersen Capital AG 3,042 - ------------------------------------------------------------------------------- 43,992 Norddeutsche Affinerie AG(1) 719 - ------------------------------------------------------------------------------- 2,381 Rational AG 219 - ------------------------------------------------------------------------------- 47,901 Software AG(1) 1,458 - ------------------------------------------------------------------------------- 36,033 Techem AG(1) 1,212 - ------------------------------------------------------------------------------- 6,694 Wincor Nixdorf AG(1) 511 - ------------------------------------------------------------------------------- 12,088 - ------------------------------------------------------------------------------- GREECE -- 0.2% - ------------------------------------------------------------------------------- 67,548 Fourlis SA(1) 427 - ------------------------------------------------------------------------------- HONG KONG -- 2.2% - ------------------------------------------------------------------------------- 4,072,000 Pacific Basin Shipping Ltd.(1) 1,990 - ------------------------------------------------------------------------------- 1,036,000 Techtronic Industries Company Limited(2) 2,079 - ------------------------------------------------------------------------------- 4,069 - ------------------------------------------------------------------------------- HUNGARY -- 0.4% - ------------------------------------------------------------------------------- 75,327 BorsodChem Rt. 766 - ------------------------------------------------------------------------------- INDIA -- 0.8% - ------------------------------------------------------------------------------- 130,700 Mahindra & Mahindra Ltd. 1,438 - ------------------------------------------------------------------------------- IRELAND -- 1.1% - ------------------------------------------------------------------------------- 69,991 Paddy Power plc 1,009 - ------------------------------------------------------------------------------- 245,240 United Drug plc 1,121 - ------------------------------------------------------------------------------- 2,130 - ------------------------------------------------------------------------------- ISRAEL -- 0.4% - ------------------------------------------------------------------------------- 81,202 ECI Telecom Ltd.(1) 674 - ------------------------------------------------------------------------------- ITALY -- 0.9% - ------------------------------------------------------------------------------- 6,056 Amplifon SpA(2) 279 - ------------------------------------------------------------------------------- 68,510 Geox SpA(1) 419 - ------------------------------------------------------------------------------- 57,487 Marzotto SpA 1,024 - ------------------------------------------------------------------------------- 1,722 - ------------------------------------------------------------------------------- JAPAN -- 21.7% - ------------------------------------------------------------------------------- 125,000 Aica Kogyo Company, Ltd. 1,442 - ------------------------------------------------------------------------------- 32,213 Arbeit-Times Co., Ltd.(1) 942 - ------------------------------------------------------------------------------- 554 Arealink Co., Ltd. 1,404 - ------------------------------------------------------------------------------- 168 Cyber Agent Limited 538 - ------------------------------------------------------------------------------- 301 Cybernet Systems Co. Ltd. 1,029 - ------------------------------------------------------------------------------- 49,400 Diamond City Co., Ltd.(2) 1,283 - ------------------------------------------------------------------------------- 387 en-japan Inc. 1,034 - ------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 25 International Opportunities - Schedule of Investments NOVEMBER 30, 2004 Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- 63,500 Exedy Corp. $ 1,116 - ------------------------------------------------------------------------------- 25,274 First Juken Co., Ltd. 443 - ------------------------------------------------------------------------------- 192 Global One Real Estate Investment Corp. 1,570 - ------------------------------------------------------------------------------- 13,800 Goldcrest Company Limited 942 - ------------------------------------------------------------------------------- 147,000 Hitachi Koki Co., Ltd. 1,166 - ------------------------------------------------------------------------------- 156,000 Hodogaya Chemical Company, Ltd.(1) 741 - ------------------------------------------------------------------------------- 336,000 J-Oil Mills Inc.(2) 1,188 - ------------------------------------------------------------------------------- 347 Kennedy-Wilson Japan(1)(2) 1,730 - ------------------------------------------------------------------------------- 11,800 Musashino Bank Ltd. (The) 472 - ------------------------------------------------------------------------------- 53,000 Nishimatsuya Chain Co. Ltd. 1,946 - ------------------------------------------------------------------------------- 899 Niws Co. Ltd.(2) 2,184 - ------------------------------------------------------------------------------- 544 Okinawa Cellular Telephone Co.(2) 2,124 - ------------------------------------------------------------------------------- 364,000 Pacific Metals Company, Ltd.(1) 1,591 - ------------------------------------------------------------------------------- 57,600 Phoenix Electric Co. Ltd.(2) 962 - ------------------------------------------------------------------------------- 78,100 Point Inc. 2,260 - ------------------------------------------------------------------------------- 21,500 Roland DG Corp. 1,040 - ------------------------------------------------------------------------------- 68,000 Sysmex Corp. 2,715 - ------------------------------------------------------------------------------- 1,584 Take And Give Needs Co., Ltd.(1) 1,677 - ------------------------------------------------------------------------------- 451,000 Toagosei Co. Ltd. 1,437 - ------------------------------------------------------------------------------- 277,000 Toho Tenax Co. Ltd.(1) 812 - ------------------------------------------------------------------------------- 760,000 Toyo Tire & Rubber Co. Ltd. 2,348 - ------------------------------------------------------------------------------- 24,800 Urban Corp. 1,216 - ------------------------------------------------------------------------------- 20,000 Watabe Wedding Corp. 438 - ------------------------------------------------------------------------------- 220,000 Yodogawa Steel Works, Ltd. 1,043 - ------------------------------------------------------------------------------- 40,833 - ------------------------------------------------------------------------------- LUXEMBOURG -- 1.2% - ------------------------------------------------------------------------------- 63,913 SBS Broadcasting SA(1)(2) 2,201 - ------------------------------------------------------------------------------- MEXICO -- 2.3% - ------------------------------------------------------------------------------- 1,740,848 Corporacion GEO, SA de CV, Series B(1)(2) 3,252 - ------------------------------------------------------------------------------- 35,230 Grupo Aeroportuario del Sureste SA de CV ADR 977 - ------------------------------------------------------------------------------- 4,229 - ------------------------------------------------------------------------------- NETHERLANDS -- 2.3% - ------------------------------------------------------------------------------- 33,611 Aalberts Industries N.V. 1,378 - ------------------------------------------------------------------------------- 31,945 Efes Breweries International N.V. GDR (Acquired 10/15/04-11/10/04, Cost $818)(1)(3) 963 - ------------------------------------------------------------------------------- 42,208 Stork N.V. 1,352 - ------------------------------------------------------------------------------- 44,702 Trader Classified Media N.V. 548 - ------------------------------------------------------------------------------- 4,241 - ------------------------------------------------------------------------------- NORWAY -- 6.0% - ------------------------------------------------------------------------------- 130,610 Aktiv Kapital ASA 2,684 - ------------------------------------------------------------------------------- 55,898 Ekornes ASA 1,304 - ------------------------------------------------------------------------------- 138,432 Fred Olsen Energy ASA(1)(2) 1,767 - ------------------------------------------------------------------------------- 410,752 Tandberg Television ASA(1)(2) 3,155 - ------------------------------------------------------------------------------- 100,592 TGS Nopec Geophysical Company ASA(1) 2,321 - ------------------------------------------------------------------------------- 11,231 - ------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 2.2% - ------------------------------------------------------------------------------- 3,366,000 China Travel International Investment Hong Kong Limited(2) $ 1,017 - ------------------------------------------------------------------------------- 8,248,000 Sinopec Beijing Yanhua Petrochemical Co., Ltd.(2) 3,156 - ------------------------------------------------------------------------------- 4,173 - ------------------------------------------------------------------------------- PORTUGAL -- 1.3% - ------------------------------------------------------------------------------- 149,230 Impresa SGPS(1)(2) 1,025 - ------------------------------------------------------------------------------- 292,501 SonaeCom, SGPS, SA(1) 1,372 - ------------------------------------------------------------------------------- 2,397 - ------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 0.5% - ------------------------------------------------------------------------------- 296,123 VolgaTelecom 906 - ------------------------------------------------------------------------------- SINGAPORE -- 4.9% - ------------------------------------------------------------------------------- 4,446,500 Accord Customer Care Solutions Limited(1) 2,171 - ------------------------------------------------------------------------------- 5,222,680 Cosco Investment Singapore Limited(2) 3,730 - ------------------------------------------------------------------------------- 553,000 Hyflux Limited 912 - ------------------------------------------------------------------------------- 2,602,000 Jaya Holdings Ltd. 1,621 - ------------------------------------------------------------------------------- 1,552,000 Sunningdale Precision Industries Ltd.(1) 692 - ------------------------------------------------------------------------------- 9,126 - ------------------------------------------------------------------------------- SOUTH AFRICA -- 2.8% - ------------------------------------------------------------------------------- 96,570 Ellerine Holdings Ltd. 863 - ------------------------------------------------------------------------------- 462,225 Foschini Limited 2,841 - ------------------------------------------------------------------------------- 167,598 Massmart Holdings Ltd. 1,481 - ------------------------------------------------------------------------------- 5,185 - ------------------------------------------------------------------------------- SPAIN -- 2.1% - ------------------------------------------------------------------------------- 49,361 Aldeasa, SA(2) 1,663 - ------------------------------------------------------------------------------- 160,847 Cortefiel SA 2,281 - ------------------------------------------------------------------------------- 732 Miquel y Costas & Miquel, SA 46 - ------------------------------------------------------------------------------- 3,990 - ------------------------------------------------------------------------------- SWEDEN -- 2.6% - ------------------------------------------------------------------------------- 80,287 Elekta AB Cl B(1) 2,199 - ------------------------------------------------------------------------------- 178,964 HIQ International AB 498 - ------------------------------------------------------------------------------- 18,337 Q-Med AB 474 - ------------------------------------------------------------------------------- 690,431 Telelogic AB(1) 1,624 - ------------------------------------------------------------------------------- 4,795 - ------------------------------------------------------------------------------- SWITZERLAND -- 1.5% - ------------------------------------------------------------------------------- 3,589 Galenica Holding AG 655 - ------------------------------------------------------------------------------- 5,732 Leica Geosystems AG(1) 1,691 - ------------------------------------------------------------------------------- 696 Saia-Burgess Electronics 420 - ------------------------------------------------------------------------------- 2,766 - ------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 26 International Opportunities - Schedule of Investments NOVEMBER 30, 2004 Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- TURKEY -- 2.5% - ------------------------------------------------------------------------------- 750,618,466 Boyner Buyuk Magazacilik(1) $ 876 - ------------------------------------------------------------------------------- 126,480,535 Dogan Yayin Holding(1) 486 - ------------------------------------------------------------------------------- 294,626,509 Eregli Demir ve Celik Fabrikalari TAS 1,225 - ------------------------------------------------------------------------------- 177,817,877 Migros Turk TAS 1,149 - ------------------------------------------------------------------------------- 217,971,961 Otokar Otobus Karoseri Sanayi AS(1) 860 - ------------------------------------------------------------------------------- 4,596 - ------------------------------------------------------------------------------- UNITED KINGDOM -- 5.8% - ------------------------------------------------------------------------------- 179,918 Abbot Group plc 739 - ------------------------------------------------------------------------------- 1,975,073 Ashtead Group plc(1) 3,029 - ------------------------------------------------------------------------------- 138,778 CSR plc(1) 932 - ------------------------------------------------------------------------------- 41,252 Domino Printing Sciences 193 - ------------------------------------------------------------------------------- 49,172 SIG plc 491 - ------------------------------------------------------------------------------- 461,353 Stolt Offshore SA(1)(2) 2,695 - ------------------------------------------------------------------------------- 245,291 Stolt Offshore SA ADR(1)(2) 1,437 - ------------------------------------------------------------------------------- 65,138 Ultra Electronics Holdings plc 832 - ------------------------------------------------------------------------------- 99,634 Whatman plc 486 - ------------------------------------------------------------------------------- 10,834 - ------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $141,075) 181,556 - ------------------------------------------------------------------------------- PREFERRED STOCKS -- 0.6% GERMANY -- 0.6% - ------------------------------------------------------------------------------- 39,460 Hugo Boss AG (Cost $1,140) 1,193 - ------------------------------------------------------------------------------- ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 2.6% Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 5.25% - 6.75%, 8/15/26 - 2/15/29, valued at $4,886), in a joint trading account at 1.92%, dated 11/30/04, due 12/1/04 (Delivery value $4,800) (Cost $4,800) $ 4,800 - ------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING -- 9.1%(4) Repurchase Agreement, Barclays Bank plc, (collateralized by various U.S. Government Agency obligations), 2.08%, dated 11/30/04, due 12/1/04 (Delivery value $7,034) 7,033 - ------------------------------------------------------------------------------- Repurchase Agreement, Credit Suisse First Boston Corp., (collateralized by U.S. Agency obligations), 2.0725%, dated 11/30/04, due 12/1/04 (Delivery value $10,001) 10,000 - ------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $17,033) 17,033 - ------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 109.4% (Cost $164,048) 204,582 - ------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (9.4)% (17,614) - ------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $186,968 =============================================================================== MARKET SECTOR DIVERSIFICATION (UNAUDITED) Consumer Discretionary 28.6% - ------------------------------------------------------------------------------- Industrials 19.3% - ------------------------------------------------------------------------------- Financials 11.5% - ------------------------------------------------------------------------------- Information Technology 10.2% - ------------------------------------------------------------------------------- Materials 9.6% - ------------------------------------------------------------------------------- Energy 7.1% - ------------------------------------------------------------------------------- Health Care 6.5% - ------------------------------------------------------------------------------- Consumer Staples 2.5% - ------------------------------------------------------------------------------- Telecommunication Services 2.4% - ------------------------------------------------------------------------------- Cash and Equivalents* 2.3% - ------------------------------------------------------------------------------- * Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt GDR = Global Depositary Receipt (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of November 30, 2004. (3) 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 at November 30, 2004, was $963, which represented 0.5% of net assets. (4) 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. - ------ 27 Shareholder Fee Examples (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2004 to November 30, 2004. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century account (i.e., not a financial intermediary or retirement plan account), American Century may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of (continued) - ------ 28 Shareholder Fee Examples (Unaudited) investing in your fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - ------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 6/1/04 - EXPENSE 6/1/04 11/30/04 11/30/04 RATIO* - ------------------------------------------------------------------------------- INTERNATIONAL DISCOVERY SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------- ACTUAL: - ------------------------------------------------------------------------------- Investor Class $1,000 $1,089.40 $7.78 1.49% - ------------------------------------------------------------------------------- Institutional Class $1,000 $1,091.10 $6.74 1.29% - ------------------------------------------------------------------------------- Advisor Class $1,000 $1,088.10 $9.08 1.74% - ------------------------------------------------------------------------------- HYPOTHETICAL: - ------------------------------------------------------------------------------- Investor Class $1,000 $1,017.55 $7.52 1.49% - ------------------------------------------------------------------------------- Institutional Class $1,000 $1,018.55 $6.51 1.29% - ------------------------------------------------------------------------------- Advisor Class $1,000 $1,016.30 $8.77 1.74% - ------------------------------------------------------------------------------- EMERGING MARKETS SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------- ACTUAL: - ------------------------------------------------------------------------------- Investor Class $1,000 $1,156.50 $10.78 2.00% - ------------------------------------------------------------------------------- Institutional Class $1,000 $1,156.60 $9.70 1.80% - ------------------------------------------------------------------------------- Advisor Class $1,000 $1,154.90 $12.12 2.25% - ------------------------------------------------------------------------------- C Class $1,000 $1,150.40 $16.13 3.00% - ------------------------------------------------------------------------------- HYPOTHETICAL: - ------------------------------------------------------------------------------- Investor Class $1,000 $1,015.00 $10.08 2.00% - ------------------------------------------------------------------------------- Institutional Class $1,000 $1,016.00 $9.07 1.80% - ------------------------------------------------------------------------------- Advisor Class $1,000 $1,013.75 $11.33 2.25% - ------------------------------------------------------------------------------- C Class $1,000 $1,010.00 $15.08 3.00% - ------------------------------------------------------------------------------- * Expenses are equal to the fund's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. (continued) - ------ 29 Shareholder Fee Examples (Unaudited) - ------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 6/1/04 - EXPENSE 6/1/04 11/30/04 11/30/04 RATIO* - ------------------------------------------------------------------------------- GLOBAL GROWTH SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------- ACTUAL: - ------------------------------------------------------------------------------- Investor Class $1,000 $1,080.80 $6.76 1.30% - ------------------------------------------------------------------------------- Institutional Class $1,000 $1,081.70 $5.72 1.10% - ------------------------------------------------------------------------------- Advisor Class $1,000 $1,078.60 $8.05 1.55% - ------------------------------------------------------------------------------- C Class $1,000 $1,075.20 $11.93 2.30% - ------------------------------------------------------------------------------- HYPOTHETICAL: - ------------------------------------------------------------------------------- Investor Class $1,000 $1,018.50 $6.56 1.30% - ------------------------------------------------------------------------------- Institutional Class $1,000 $1,019.50 $5.55 1.10% - ------------------------------------------------------------------------------- Advisor Class $1,000 $1,017.25 $7.82 1.55% - ------------------------------------------------------------------------------- C Class $1,000 $1,013.50 $11.58 2.30% - ------------------------------------------------------------------------------- INTERNATIONAL OPPORTUNITIES SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------- ACTUAL: - ------------------------------------------------------------------------------- Investor Class $1,000 $1,100.00 $10.24 1.95% - ------------------------------------------------------------------------------- Institutional Class $1,000 $1,102.40 $9.20 1.75% - ------------------------------------------------------------------------------- HYPOTHETICAL: - ------------------------------------------------------------------------------- Investor Class $1,000 $1,015.25 $9.82 1.95% - ------------------------------------------------------------------------------- Institutional Class $1,000 $1,016.25 $8.82 1.75% - ------------------------------------------------------------------------------- * Expenses are equal to the fund's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 366, to reflect the one-half year period. - ------ 30 Statement of Assets and Liabilities NOVEMBER 30, 2004 - --------------------------------------------------------------------------------------------- INTERNATIONAL EMERGING GLOBAL INTERNATIONAL (AMOUNTS IN THOUSANDS) DISCOVERY MARKETS GROWTH OPPORTUNITIES - --------------------------------------------------------------------------------------------- ASSETS - --------------------------------------------------------------------------------------------- Investment securities, at value (cost of $1,005,260, $185,211, $235,206 and $147,015, respectively) - including $141,167, $9,333, $31,230, and $16,166 of securities on loan, respectively $1,269,076 $227,920 $307,417 $187,549 - ---------------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $145,597, $9,890, $32,577 and $17,033, respectively) 145,597 9,890 32,577 17,033 - --------------------------------------------------------------------------------------------- Total investment securities, at value (cost of $1,150,857, $195,101, $267,783 and $164,048, respectively) 1,414,673 237,810 339,994 204,582 - ---------------------------------------- Cash 852 -- -- -- - ---------------------------------------- Foreign currency holdings, at value (cost of $1,198, $560, $267, and $389, respectively) 1,199 565 280 408 - ---------------------------------------- Receivable for investments sold 15,550 3,934 2,767 817 - ---------------------------------------- Receivable for capital shares sold -- 38 21 -- - ---------------------------------------- Dividends and interest receivable 1,250 70 407 137 - --------------------------------------------------------------------------------------------- 1,433,524 242,417 343,469 205,944 - --------------------------------------------------------------------------------------------- LIABILITIES - --------------------------------------------------------------------------------------------- Payable for collateral received for securities on loan 145,597 9,890 32,577 17,033 - ---------------------------------------- Disbursements in excess of demand deposit cash -- 356 14 322 - ---------------------------------------- Payable for investments purchased 7,790 2,094 1,315 1,336 - ---------------------------------------- Accrued management fees 1,466 348 321 285 - ---------------------------------------- Distribution fees payable -- 1 1 -- - ---------------------------------------- Service fees payable -- -- 1 -- - --------------------------------------------------------------------------------------------- 154,853 12,689 34,229 18,976 - --------------------------------------------------------------------------------------------- NET ASSETS $1,278,671 $229,728 $309,240 $186,968 ============================================================================================= See Notes to Financial Statements. (continued) - ------ 31 Statement of Assets and Liabilities NOVEMBER 30, 2004 - -------------------------------------------------------------------------------------------------------- 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) $ 826,675 $184,535 $321,099 $141,272 - --------------------------------------- Accumulated net investment loss (239) (208) (463) (178) - --------------------------------------- Accumulated undistributed net realized gain (loss) on investment and foreign currency transactions 188,498 2,776 (83,638) 5,319 - --------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 263,737 42,625 72,242 40,555 - -------------------------------------------------------------------------------------------------------- $1,278,671 $229,728 $309,240 $186,968 ======================================================================================================== INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------------- Net assets $1,112,869,513 $135,355,456 $299,807,199 $176,099,643 - --------------------------------------- Shares outstanding 73,666,309 21,542,012 40,047,291 18,826,186 - --------------------------------------- Net asset value per share $15.11 $6.28 $7.49 $9.35 - -------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------------- Net assets $165,600,468 $92,673,133 $6,774,066 $10,867,991 - --------------------------------------- Shares outstanding 10,890,271 14,583,477 896,958 1,159,879 - --------------------------------------- Net asset value per share $15.21 $6.35 $7.55 $9.37 - -------------------------------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------------- Net assets $201,098 $1,177,717 $2,475,192 N/A - --------------------------------------- Shares outstanding 13,450 190,191 333,971 N/A - --------------------------------------- Net asset value per share $14.95 $6.19 $7.41 N/A - -------------------------------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------------- Net assets N/A $521,315 $183,899 N/A - --------------------------------------- Shares outstanding N/A 85,199 25,211 N/A - --------------------------------------- Net asset value per share N/A $6.12 $7.29 N/A - -------------------------------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 32 Statement of Operations YEAR ENDED NOVEMBER 30, 2004 - ----------------------------------------------------------------------------------------------- INTERNATIONAL EMERGING GLOBAL INTERNATIONAL (AMOUNTS IN THOUSANDS) DISCOVERY MARKETS GROWTH OPPORTUNITIES - ----------------------------------------------------------------------------------------------- INVESTMENT LOSS - ----------------------------------------------------------------------------------------------- INCOME: - --------------------------------------- Dividends (net of foreign taxes withheld of $1,671, $530, $277, and $283, respectively) $ 16,436 $ 3,647 $ 3,257 $ 1,900 - --------------------------------------- Interest 530 87 61 90 - --------------------------------------- Securities lending 760 41 26 33 - ----------------------------------------------------------------------------------------------- 17,726 3,775 3,344 2,023 - ----------------------------------------------------------------------------------------------- EXPENSES: - --------------------------------------- Management fees 18,101 4,076 3,660 2,752 - --------------------------------------- Distribution fees: - --------------------------------------- Advisor Class -- 3 4 -- - --------------------------------------- C Class -- 3 1 -- - --------------------------------------- Service fees: - --------------------------------------- Advisor Class -- 3 4 -- - --------------------------------------- C Class -- 1 -- -- - --------------------------------------- Directors fees and expenses 18 3 4 2 - --------------------------------------- Other expenses 26 5 6 2 - ----------------------------------------------------------------------------------------------- 18,145 4,094 3,679 2,756 - ----------------------------------------------------------------------------------------------- NET INVESTMENT LOSS (419) (319) (335) (733) - ----------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) NET REALIZED GAIN ON: - --------------------------------------- Investment transactions (net of foreign taxes withheld of $416, $-, $-, and $113, respectively) 190,881 16,510 18,382 2,703 - --------------------------------------- Foreign currency transactions (net of foreign taxes withheld of $-, $2, $-, and $-, respectively) 51,208 1,667 7,365 2,272 - ----------------------------------------------------------------------------------------------- 242,089 18,177 25,747 4,975 - ----------------------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION ON: - --------------------------------------- Investments (including foreign tax liability reduction (increase) of $1,085, $(88), $-, and $186, respectively) (56,568) 5,405 11,484 18,411 - --------------------------------------- Translation of assets and liabilities in foreign currencies 23,911 6,177 3,860 6,745 - ----------------------------------------------------------------------------------------------- (32,657) 11,582 15,344 25,156 - ----------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN 209,432 29,759 41,091 30,131 - ----------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $209,013 $29,440 $40,756 $29,398 =============================================================================================== See Notes to Financial Statements. - ------ 33 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2004 AND NOVEMBER 30, 2003 - ------------------------------------------------------------------------------------------ (AMOUNTS IN THOUSANDS) INTERNATIONAL DISCOVERY EMERGING MARKETS - ------------------------------------------------------------------------------------------ INCREASE IN NET ASSETS 2004 2003 2004 2003 - ------------------------------------------------------------------------------------------ OPERATIONS - ------------------------------------------------------------------------------------------ Net investment income (loss) $ (419) $ 3,007 $ (319) $ 100 - --------------------------------------- Net realized gain 242,089 133,998 18,177 24,968 - --------------------------------------- Change in net unrealized appreciation (32,657) 191,025 11,582 22,508 - ------------------------------------------------------------------------------------------ Net increase in net assets resulting from operations 209,013 328,030 29,440 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 (104,197) (128,717) 32,420 18,259 - ------------------------------------------------------------------------------------------ NET INCREASE IN NET ASSETS 102,044 197,410 61,860 65,835 - ------------------------------------------------------------------------------------------ NET ASSETS - ------------------------------------------------------------------------------------------ Beginning of period 1,176,627 979,217 167,868 102,033 - ------------------------------------------------------------------------------------------ End of period $1,278,671 $1,176,627 $229,728 $167,868 ========================================================================================== Accumulated undistributed net investment income (loss) $(239) $2,336 $(208) $(115) ========================================================================================== See Notes to Financial Statements. (continued) - ------ 34 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2004 AND NOVEMBER 30, 2003 - ------------------------------------------------------------------------------------------- (AMOUNTS IN THOUSANDS) GLOBAL GROWTH INTERNATIONAL OPPORTUNITIES - ------------------------------------------------------------------------------------------- INCREASE IN NET ASSETS 2004 2003 2004 2003 - ------------------------------------------------------------------------------------------- OPERATIONS - ------------------------------------------------------------------------------------------- Net investment income (loss) $ (335) $ 17 $ (733) $ (86) - ------------------------------------- Net realized gain 25,747 5,846 4,975 7,314 - ------------------------------------- Change in net unrealized appreciation 15,344 40,215 25,156 14,100 - ------------------------------------------------------------------------------------------- Net increase in net assets resulting from operations 40,756 46,078 29,398 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 9,177 (3,936) 80,193 37,287 - ------------------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS 49,933 42,142 106,437 58,554 - ------------------------------------------------------------------------------------------- NET ASSETS - ------------------------------------------------------------------------------------------- Beginning of period 259,307 217,165 80,531 21,977 - ------------------------------------------------------------------------------------------- End of period $309,240 $259,307 $186,968 $80,531 =========================================================================================== Accumulated net investment loss $(463) -- $(178) -- =========================================================================================== See Notes to Financial Statements. - ------ 35 Notes to Financial Statements NOVEMBER 30, 2004 (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 pursue their objectives by investing primarily in equity securities of foreign companies with the exception of Global Growth, which invests in both U.S. and foreign companies. International Discovery invests in securities of issuers in developed or emerging market countries that are small- to medium-sized companies at the time of purchase. Emerging Markets invests in securities of issuers in emerging market countries. Global Growth invests in securities of issuers in developed countries. International Opportunities invests in securities of issuers in developed or emerging market countries that are small-sized companies at the time of purchase. The following is a summary of the funds' significant accounting policies. MULTIPLE CLASS -- International Discovery is authorized to issue the Investor Class, the Institutional Class and the Advisor Class. Emerging Markets and Global Growth are authorized to issue the Investor Class, the Institutional Class, the Advisor Class and the C Class. International Opportunities is authorized to issue the Investor Class and the Institutional Class. The C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and shareholder servicing and distribution expenses and arrangements. All shares of each fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the funds are allocated to each class of shares based on their relative net assets. Sale of the Institutional Class for International Opportunities commenced on January 9, 2003. SECURITY VALUATIONS -- Securities traded primarily on a principal securities exchange are valued at the last reported sales price, or at the mean of the latest bid and asked prices where no last sales price is available. Depending on local convention or regulation, securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official close price. Debt securities not traded on a principal securities exchange are valued through a commercial pricing service or at the mean of the most recent bid and asked prices. Discount notes may be valued through a commercial pricing service or at amortized cost, which approximates fair value. If the funds determine that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued at its fair value as determined by, or in accordance with procedures adopted by the Board of Directors or its designee if such fair value determination would materially impact a fund's net asset value. Circumstances that may cause the funds to fair value a security include: 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; or trading in a security has been halted during the trading day. 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund estimates the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. 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. (continued) - ------ 36 Notes to Financial Statements NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) 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. 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 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 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. RECLASSIFICATION -- Certain amounts in the Statement of Changes and Financial Highlights of prior years have been reclassed to conform to current year presentation. 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) - ------ 37 Notes to Financial Statements NOVEMBER 30, 2004 (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 (the 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 and accrued daily based on the daily net assets of each specific class of shares of each fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment manager's assets under management in each fund's investment strategy (strategy assets) to calculate the appropriate fee rate for each fund. The strategy assets include each fund's assets and the assets of other clients of the investment manager that are not in the American Century family of funds, but that have the same investment team and investment strategy. The annual management fee schedule for each class of International Discovery is as follows: - ------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR - ------------------------------------------------------------------------------- STRATEGY 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 - ------------------------------------------------------------------------------- STRATEGY ASSETS - ------------------------------------------------------------------------------- First $250 million 2.00% 1.80% 1.75% - ------------------------------------------------------------------------------- Next $250 million 1.80% 1.60% 1.55% - ------------------------------------------------------------------------------- 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 - ------------------------------------------------------------------------------- STRATEGY 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 annual management fee schedule for each class of International Opportunities is as follows: - -------------------------------------------------------------- INVESTOR INSTITUTIONAL - -------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------- First $250 million 2.00% 1.80% - -------------------------------------------------------------- Next $250 million 1.80% 1.60% - -------------------------------------------------------------- Over $500 million 1.60% 1.40% - -------------------------------------------------------------- (continued) - ------ 38 Notes to Financial Statements NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) The effective annual management fees for the year ended November 30, 2004, were as follows: - ------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR C - ------------------------------------------------------------------------------- International Discovery 1.49% 1.29% 1.24% N/A - ------------------------------------------------------------------------------- Emerging Markets 2.00% 1.80% 1.75% 2.00% - ------------------------------------------------------------------------------- Global Growth 1.30% 1.10% 1.05% 1.30% - ------------------------------------------------------------------------------- International Opportunities 1.97% 1.77% N/A N/A - ------------------------------------------------------------------------------- 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 and accrued daily based on each class's average daily net assets, and paid monthly in arrears. 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 year ended November 30, 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 year ended November 30, 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 custodian of the funds and a wholly owned subsidiary of JPM. 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the year ended November 30, 2004, were as follows: - ------------------------------------------------------------------------------- INTERNATIONAL EMERGING GLOBAL INTERNATIONAL DISCOVERY MARKETS GROWTH OPPORTUNITIES - ------------------------------------------------------------------------------- Purchases $2,400,169 $446,171 $221,905 $260,689 - ------------------------------------------------------------------------------- Proceeds from sales $2,523,425 $418,474 $219,016 $184,876 - ------------------------------------------------------------------------------- (continued) - ------ 39 Notes to Financial Statements NOVEMBER 30, 2004 (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 - -------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 400,000 100,000 ================================================================================================== Sold 4,518 $ 63,524 12,109 $ 72,523 - ---------------------------------------- Issued in reinvestment of distributions 157 2,016 -- -- - ---------------------------------------- Redeemed (11,694) (161,915)(1) (10,216) (58,582)(1) - -------------------------------------------------------------------------------------------------- Net increase (decrease) (7,019) $ (96,375) 1,893 $ 13,941 ================================================================================================== 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 - -------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 75,000 50,000 ================================================================================================== Sold 1,997 $ 28,274 9,037 $ 53,801 - ---------------------------------------- Issued in reinvestment of distributions 44 566 -- -- - ---------------------------------------- Redeemed (2,644) (36,669) (6,322) (35,967) - -------------------------------------------------------------------------------------------------- Net increase (decrease) (603) $ (7,829) 2,715 $ 17,834 ================================================================================================== 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 $36 and $228 for International Discovery and Emerging Markets, respectively. (2) Net of redemption fees of $21 and $219 for International Discovery and Emerging Markets, respectively. (continued) - ------ 40 Notes to Financial Statements NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------------- INTERNATIONAL DISCOVERY EMERGING MARKETS - -------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 5,000 5,000 ====================================================================================== Sold 6 $ 84 256 $ 1,512 - -------------------------------- Redeemed (6) (77) (181) (1,039) - -------------------------------------------------------------------------------------- Net increase -- $ 7 75 $ 473 ====================================================================================== 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 - -------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED N/A 10,000 ====================================================================================== Sold 63 $ 364 - -------------------------------- Redeemed (34) (192) - -------------------------------------------------------------------------------------- Net increase 29 $ 172 ====================================================================================== 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. (continued) - ------ 41 Notes to Financial Statements NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ----------------------------------------------------------------------------------------------- GLOBAL GROWTH INTERNATIONAL OPPORTUNITIES - ----------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------- INVESTOR CLASS - ----------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 150,000 100,000 =============================================================================================== Sold 9,549 $ 66,429 14,408 $122,194 - ---------------------------------------- Issued in reinvestment of distributions -- -- 365 2,789 - ---------------------------------------- Redeemed (8,151) (56,282)(1) (5,402) (45,115)(1) - ----------------------------------------------------------------------------------------------- Net increase 1,398 $ 10,147 9,371 $ 79,868 =============================================================================================== 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 - ----------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 5,000 25,000 =============================================================================================== Sold 158 $ 1,114 -- -- - ---------------------------------------- Issued in reinvestment of distributions -- -- 43 $325 - ---------------------------------------- Redeemed (473) (3,366) -- -- - ----------------------------------------------------------------------------------------------- Net increase (decrease) (315) $(2,252) 43 $325 =============================================================================================== 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 $24 and $276 for Global Growth and International Opportunities, respectively. (2) Net of redemption fees of $52. (3) January 9, 2003 (commencement of sale) through November 30, 2003 for International Opportunities. continued) - ------ 42 Notes to Financial Statements NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ---------------------------------------------------------------------------------------- GLOBAL GROWTH INTERNATIONAL OPPORTUNITIES - ---------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ---------------------------------------------------------------------------------------- ADVISOR CLASS - ---------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 5,000 N/A ======================================================================================== Sold 262 $1,784 - ------------------------------- Redeemed (90) (612) - ---------------------------------------------------------------------------------------- Net increase 172 $1,172 ======================================================================================== 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 - ---------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 10,000 N/A ======================================================================================== Sold 17 $115 - ------------------------------- Redeemed (1) (5) - ---------------------------------------------------------------------------------------- Net increase 16 $110 ======================================================================================== 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 November 30, 2004, securities in International Discovery, Emerging Markets, Global Growth, and International Opportunities, valued at $141,167, $9,333, $31,230, and $16,166, 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 $148,205, $9,890, $32,577, and $17,033, 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. (continued) - ------ 43 Notes to Financial Statements NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) 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, which was renewed to $575 million effective December 15, 2004. The funds may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The funds did not borrow from the line during the year ended November 30, 2004. 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 On December 14, 2004, International Discovery and Global Growth declared and paid the following per-share distributions from net investment income to shareholders of record on December 13, 2004: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR C - -------------------------------------------------------------------------------- International Discovery $0.1875 $0.2187 $0.1513 N/A - -------------------------------------------------------------------------------- Global Growth $0.0138 $0.0293 $-- $-- - -------------------------------------------------------------------------------- Also on December 14, 2004, the funds declared and paid the following per-share distributions from realized gains to shareholders of record on December 13, 2004: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR C - -------------------------------------------------------------------------------- International Discovery $1.8987 $1.8987 $1.8987 N/A - -------------------------------------------------------------------------------- Emerging Markets $0.0488 $0.0488 $0.0488 $0.0488 - -------------------------------------------------------------------------------- Global Growth $-- $-- $-- $-- - -------------------------------------------------------------------------------- International Opportunities $0.2150 $0.2150 N/A N/A - -------------------------------------------------------------------------------- The tax character of distributions paid during the years ended November 30, 2004 and November 30, 2003 were as follows: INTERNATIONAL DISCOVERY INTERNATIONAL OPPORTUNITIES - -------------------------------------------------------------------------------- 2004 2003 2004 2003 - -------------------------------------------------------------------------------- DISTRIBUTIONS PAID FROM - -------------------------------------------------------------------------------- Ordinary income $2,772 $1,903 $2,030 $61 - -------------------------------------------------------------------------------- Long-term capital gains -- -- $1,124 -- - -------------------------------------------------------------------------------- (continued) - ------ 44 Notes to Financial Statements NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) 8. FEDERAL TAX INFORMATION (CONTINUED) The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. There were no distributions paid by Emerging Markets and Global Growth during the years ended November 30, 2004 and November 30, 2003. As of November 30, 2004, the components of distributable earnings on a tax-basis and the federal tax cost of investments were as follows: - --------------------------------------------------------------------------------------------- INTERNATIONAL EMERGING GLOBAL INTERNATIONAL DISCOVERY MARKETS GROWTH OPPORTUNITIES - --------------------------------------------------------------------------------------------- COMPONENTS OF DISTRIBUTABLE EARNINGS AND TAX COST - --------------------------------------------------------------------------------------------- Federal tax cost of investments $1,153,465 $195,528 $269,070 $164,392 ============================================================================================= Gross tax appreciation of investments $264,704 $44,084 $72,353 $41,040 - -------------------------------------- Gross tax depreciation of investments (3,496) (1,802) (1,429) (850) - --------------------------------------------------------------------------------------------- Net tax appreciation of investments $261,208 $42,282 $70,924 $40,190 ============================================================================================= Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies (133) (83) 31 (122) - --------------------------------------------------------------------------------------------- Net tax appreciation $261,075 $42,199 $70,955 $40,068 ============================================================================================= Undistributed ordinary income $23,365 -- $829 -- - -------------------------------------- Accumulated long-term gains $167,723 $3,042 -- $5,662 - -------------------------------------- Accumulated capital losses -- -- $(83,638) -- - -------------------------------------- Currency loss deferral $(167) $(48) $(5) $(34) - --------------------------------------------------------------------------------------------- The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains on certain forward foreign currency contracts, and on investments in passive foreign investment companies. The accumulated capital losses listed above represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers in Global Growth of $54,462, $28,717 and $459 expire in 2009, 2010 and 2011, respectively. The capital and currency loss deferrals represent net capital and foreign currency losses incurred in the one-month period ended November 30, 2004. The funds have elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. (continued) - ------ 45 Notes to Financial Statements NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) 9. SUBSEQUENT EVENTS Effective January 1, 2005, American Century Global Investment Management, Inc. (ACGIM) will replace ACIM as the investment manager of the funds. ACGIM has entered into a Subadvisory Agreement with ACIM who will serve as the subadvisor for the cash management of the funds. All existing resources and investment strategies will remain in place. The change of investment manager is a result of the corporate restructuring of ACIM, in which ACGIM was incorporated as a subsidiary of ACIM. In addition, American Century Services Corporation's name will change to American Century Services, LLC. 10. OTHER TAX INFORMATION (UNAUDITED) ($ IN FULL) The following information is provided pursuant to provisions of the Internal Revenue Code. International Discovery and International Opportunities hereby designate $2,771,893 and $621,693, respectively, of qualified dividend income for the fiscal year ended November 30, 2004. International Opportunities hereby designates $1,123,995 of capital gain dividends for the fiscal year ended November 30, 2004. For corporate taxpayers, 0.00% of the ordinary income distributions paid by both International Discovery and International Opportunities during the fiscal year ended November 30, 2004, qualify for the corporate dividends received deduction. As of November 30, 2004, International Discovery designates $1,456,481 as a foreign tax credit, which represents taxes paid on income derived from sources within foreign countries or possessions of the United States. - ------ 46 International Discovery - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ---------------------------------------------------------------------------------------------------- INVESTOR CLASS - ---------------------------------------------------------------------------------------------------- 2004 2003 2002 2001 2000 - ---------------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $12.75 $9.32 $10.13 $14.23 $15.20 - ---------------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(1) (0.01) 0.03 0.03 0.01 (0.12) - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 2.40 3.42 (0.84) (2.54) 0.03 - ---------------------------------------------------------------------------------------------------- Total From Investment Operations 2.39 3.45 (0.81) (2.53) (0.09) - ---------------------------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Investment Income (0.03) (0.02) -- -- -- - ----------------------------------------- From Net Realized Gains -- -- -- (1.57) (0.88) - ---------------------------------------------------------------------------------------------------- Total Distributions (0.03) (0.02) -- (1.57) (0.88) - ---------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $15.11 $12.75 $9.32 $10.13 $14.23 ==================================================================================================== TOTAL RETURN(2) 18.76% 37.05% (8.00)% (20.17)% (1.27)% - ---------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.49% 1.57% 1.53% 1.45% 1.36% - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.06)% 0.27% 0.35% 0.10% (0.64)% - ----------------------------------------- Portfolio Turnover Rate 201% 215% 224% 180% 113% - ----------------------------------------- Net Assets, End of Period (in thousands) $1,112,870 $1,028,934 $841,706 $1,021,063 $1,568,872 - ---------------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 47 International Discovery - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - --------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - --------------------------------------------------------------------------------------------- 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $12.84 $9.39 $10.18 $14.26 $15.24 - --------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(1) 0.02 0.05 0.06 0.04 (0.08) - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 2.40 3.43 (0.85) (2.55) 0.01 - --------------------------------------------------------------------------------------------- Total From Investment Operations 2.42 3.48 (0.79) (2.51) (0.07) - --------------------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Investment Income (0.05) (0.03) -- -- -- - ----------------------------------------- From Net Realized Gains -- -- -- (1.57) (0.91) - --------------------------------------------------------------------------------------------- Total Distributions (0.05) (0.03) -- (1.57) (0.91) - --------------------------------------------------------------------------------------------- Net Asset Value, End of Period $15.21 $12.84 $9.39 $10.18 $14.26 ============================================================================================= TOTAL RETURN(2) 18.94% 37.25% (7.76)% (19.97)% (1.13)% - --------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.29% 1.37% 1.33% 1.25% 1.16% - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.14% 0.47% 0.55% 0.30% (0.44)% - ----------------------------------------- Portfolio Turnover Rate 201% 215% 224% 180% 113% - ----------------------------------------- Net Assets, End of Period (in thousands) $165,600 $147,531 $137,358 $192,155 $250,930 - --------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 48 International Discovery - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------------------- 2004 2003 2002 2001 2000 - -------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $12.63 $9.23 $10.05 $14.17 $15.14 - -------------------------------------------------------------------------------------------- Income From Investment Operations - ---------------------------------------- Net Investment Income (Loss)(1) (0.05) 0.01 0.01 --(2) (0.12) - ---------------------------------------- Net Realized and Unrealized Gain (Loss) 2.37 3.39 (0.83) (2.55) (0.01) - -------------------------------------------------------------------------------------------- Total From Investment Operations 2.32 3.40 (0.82) (2.55) (0.13) - -------------------------------------------------------------------------------------------- Distributions - ---------------------------------------- From Net Realized Gains -- -- -- (1.57) (0.84) - -------------------------------------------------------------------------------------------- Net Asset Value, End of Period $14.95 $12.63 $9.23 $10.05 $14.17 ============================================================================================ TOTAL RETURN(3) 18.37% 36.84% (8.16)% (20.43)% (1.53)% - -------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.74% 1.82% 1.78% 1.70% 1.61% - ---------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.31)% 0.02% 0.10% (0.15)% (0.87)% - ---------------------------------------- Portfolio Turnover Rate 201% 215% 224% 180% 113% - ---------------------------------------- Net Assets, End of Period (in thousands) $201 $161 $153 $244 $509 - -------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 49 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------- 2004 2003 2002 2001 2000 - -------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.28 $3.61 $4.06 $4.68 $5.62 - -------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(1) (0.01) --(2) (0.02) (0.02) (0.06) - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 1.00 1.66 (0.43) (0.43) (0.88) - -------------------------------------------------------------------------------------------- Total From Investment Operations 0.99 1.66 (0.45) (0.45) (0.94) - -------------------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Realized Gains -- -- -- (0.17) -- - -------------------------------------------------------------------------------------------- Redemption Fees(3) 0.01 0.01 -- -- -- - -------------------------------------------------------------------------------------------- Net Asset Value, End of Period $6.28 $5.28 $3.61 $4.06 $4.68 ============================================================================================ TOTAL RETURN(4) 18.94% 46.26% (10.86)% (10.28)% (16.73)% - -------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.00% 2.01% 2.05% 2.00% 2.00% - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.22)% 0.03% (0.37)% (0.27)% (0.88)% - ----------------------------------------- Portfolio Turnover Rate 208% 286% 387% 326% 196% - ----------------------------------------- Net Assets, End of Period (in thousands) $135,355 $103,737 $81,756 $80,422 $77,279 - -------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (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) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 50 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ---------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ---------------------------------------------------------------------------------------------- 2004 2003 2002 2001 2000 - ---------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.33 $3.64 $4.08 $4.70 $5.63 - ---------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(1) --(2) 0.01 --(2) (0.01) (0.05) - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 1.01 1.67 (0.44) (0.44) (0.88) - ---------------------------------------------------------------------------------------------- Total From Investment Operations 1.01 1.68 (0.44) (0.45) (0.93) - ---------------------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Realized Gains -- -- -- (0.17) -- - ---------------------------------------------------------------------------------------------- Redemption Fees(3) 0.01 0.01 -- -- -- - ---------------------------------------------------------------------------------------------- Net Asset Value, End of Period $6.35 $5.33 $3.64 $4.08 $4.70 ============================================================================================== TOTAL RETURN(4) 19.14% 46.43% (10.78)% (10.01)% (16.52)% - ---------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.80% 1.81% 1.85% 1.80% 1.80% - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.02)% 0.23% (0.17)% (0.07)% (0.68)% - ----------------------------------------- Portfolio Turnover Rate 208% 286% 387% 326% 196% - ----------------------------------------- Net Assets, End of Period (in thousands) $92,673 $63,242 $18,969 $18,602 $21,330 - ---------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (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) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 51 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------------------- 2004 2003 2002 2001 2000 - -------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.22 $3.58 $4.03 $4.66 $5.61 - -------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Loss(1) (0.03) --(2) (0.01) (0.04) (0.08) - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 0.99 1.63 (0.44) (0.42) (0.87) - -------------------------------------------------------------------------------------------- Total From Investment Operations 0.96 1.63 (0.45) (0.46) (0.95) - -------------------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Realized Gains -- -- -- (0.17) -- - -------------------------------------------------------------------------------------------- Redemption Fees(3) 0.01 0.01 -- -- -- - -------------------------------------------------------------------------------------------- Net Asset Value, End of Period $6.19 $5.22 $3.58 $4.03 $4.66 ============================================================================================ TOTAL RETURN(4) 18.58% 45.81% (11.17)% (10.32)% (16.93)% - -------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.25% 2.26% 2.30% 2.25% 2.25% - ----------------------------------------- Ratio of Net Investment Loss to Average Net Assets (0.47)% (0.22)% (0.62)% (0.52)% (1.13)% - ----------------------------------------- Portfolio Turnover Rate 208% 286% 387% 326% 196% - ----------------------------------------- Net Assets, End of Period (in thousands) $1,178 $597 $1,254 $815 $212 - -------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (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) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 52 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2004 2003 2002(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.19 $3.58 $4.24 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Loss(2) (0.07) (0.04) (0.04) - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 0.99 1.64 (0.62) - -------------------------------------------------------------------------------- Total From Investment Operations 0.92 1.60 (0.66) - -------------------------------------------------------------------------------- Redemption Fees(3) 0.01 0.01 -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $6.12 $5.19 $3.58 ================================================================================ TOTAL RETURN(4) 17.92% 44.97% (15.57)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 3.00% 3.01% 3.05%(5) - ----------------------------------------- Ratio of Net Investment Loss to Average Net Assets (1.22)% (0.97)% (1.10)%(5) - ----------------------------------------- Portfolio Turnover Rate 208% 286% 387%(6) - ----------------------------------------- Net Assets, End of Period (in thousands) $521 $291 $54 - -------------------------------------------------------------------------------- (1) December 18, 2001 (commencement of sale) through November 30, 2002. (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. Amounts computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2002. See Notes to Financial Statements. - ------ 53 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------------- 2004 2003 2002 2001 2000 - -------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.48 $5.39 $6.18 $8.73 $8.33 - -------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(1) (0.01) --(2) 0.01 --(2) (0.05) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 1.02 1.09 (0.80) (1.90) 0.81 - -------------------------------------------------------------------------------------------------- Total From Investment Operations 1.01 1.09 (0.79) (1.90) 0.76 - -------------------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Realized Gains -- -- -- (0.65) (0.36) - -------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $7.49 $6.48 $5.39 $6.18 $8.73 ================================================================================================== TOTAL RETURN(3) 15.59% 20.22% (12.78)% (23.62)% 8.81% - -------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.30% 1.31% 1.32% 1.30% 1.30% - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.12)% 0.00% 0.13% (0.06)% (0.48)% - ------------------------------------------ Portfolio Turnover Rate 79% 152% 278% 232% 123% - ------------------------------------------ Net Assets, End of Period (in thousands) $299,807 $250,306 $213,314 $272,402 $412,631 - -------------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 54 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ----------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ----------------------------------------------------------------------------------------------- 2004 2003 2002 2001 2000(1) - ----------------------------------------------------------------------------------------------- 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)(2) --(3) 0.01 0.02 0.01 (0.01) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 1.03 1.10 (0.80) (1.90) (0.98) - ----------------------------------------------------------------------------------------------- Total From Investment Operations 1.03 1.11 (0.78) (1.89) (0.99) - ----------------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Realized Gains -- -- -- (0.66) -- - ----------------------------------------------------------------------------------------------- Net Asset Value, End of Period $7.55 $6.52 $5.41 $6.19 $8.74 =============================================================================================== TOTAL RETURN(4) 15.80% 20.52% (12.60)% (23.53)% (10.17)% - ----------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.10% 1.11% 1.12% 1.10% 1.10%(5) - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.08% 0.20% 0.33% 0.14% (0.43)%(5) - ------------------------------------------ Portfolio Turnover Rate 79% 152% 278% 232% 123%(6) - ------------------------------------------ Net Assets, End of Period (in thousands) $6,774 $7,901 $3,288 $3,907 $5,090 - ----------------------------------------------------------------------------------------------- (1) August 1, 2000 (commencement of sale) through November 30, 2000. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2000. See Notes to Financial Statements. - ------ 55 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - --------------------------------------------------------------------------------------------- ADVISOR CLASS - --------------------------------------------------------------------------------------------- 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.43 $5.36 $6.16 $8.72 $8.31 - --------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------- Net Investment Loss(1) (0.02) (0.02) (0.01) --(2) (0.06) - ------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.00 1.09 (0.79) (1.93) 0.82 - --------------------------------------------------------------------------------------------- Total From Investment Operations 0.98 1.07 (0.80) (1.93) 0.76 - --------------------------------------------------------------------------------------------- Distributions - ------------------------------------------- From Net Realized Gains -- -- -- (0.63) (0.35) - --------------------------------------------------------------------------------------------- Net Asset Value, End of Period $7.41 $6.43 $5.36 $6.16 $8.72 ============================================================================================= TOTAL RETURN(3) 15.24% 19.96% (12.99)% (23.97)% 8.79% - --------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.55% 1.56% 1.57% 1.55% 1.55% - ------------------------------------------- Ratio of Net Investment Loss to Average Net Assets (0.37)% (0.25)% (0.12)% (0.31)% (0.73)% - ------------------------------------------- Portfolio Turnover Rate 79% 152% 278% 232% 123% - ------------------------------------------- Net Assets, End of Period (in thousands) $2,475 $1,044 $537 $623 $301 - --------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 56 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2004 2003 2002(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.37 $5.35 $6.14 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------------------------- Net Investment Loss(2) (0.08) (0.05) (0.03) - --------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.00 1.07 (0.76) - -------------------------------------------------------------------------------- Total From Investment Operations 0.92 1.02 (0.79) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $7.29 $6.37 $5.35 ================================================================================ TOTAL RETURN(3) 14.44% 19.07% (12.87)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.30% 2.31% 2.32%(4) - --------------------------------------------- Ratio of Net Investment Loss to Average Net Assets (1.12)% (1.00)% (0.60)%(4) - --------------------------------------------- Portfolio Turnover Rate 79% 152% 278%(5) - --------------------------------------------- Net Assets, End of Period (in thousands) $184 $56 $25 - -------------------------------------------------------------------------------- (1) March 1, 2002 (commencement of sale) through November 30, 2002. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2002. See Notes to Financial Statements. - ------ 57 International Opportunities - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ------------------------------------------------------------------------------------------ INVESTOR CLASS - ------------------------------------------------------------------------------------------ 2004 2003 2002 2001(1) - ------------------------------------------------------------------------------------------ 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)(2) (0.05) (0.01) 0.02 (0.02) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 2.03 2.90 (0.19) (0.11) - ------------------------------------------------------------------------------------------ Total From Investment Operations 1.98 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) 0.02 0.01 0.03 -- - ------------------------------------------------------------------------------------------ Net Asset Value, End of Period $9.35 $7.62 $4.73 $4.87 ========================================================================================== TOTAL RETURN(4) 27.14% 61.54% (2.87)% (2.60)% - ------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 1.97% 2.00% 2.01% 2.00%(5) - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.63)% (0.23)% 0.30% (0.75)%(5) - ------------------------------------------ Portfolio Turnover Rate 139% 219% 257% 147% - ------------------------------------------ Net Assets, End of Period (in thousands) $176,100 $72,008 $21,977 $6,569 - ------------------------------------------------------------------------------------------ (1) June 1, 2001 (inception) through November 30, 2001. (2) Computed using average shares outstanding throughout the period. (3) 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 the 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. - ------ 58 International Opportunities - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2004 2003(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.63 $4.80 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(2) (0.03) 0.01 - ------------------------------------------ Net Realized and Unrealized Gain 2.04 2.81 - -------------------------------------------------------------------------------- Total From Investment Operations 2.01 2.82 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Realized Gains (0.29) -- - -------------------------------------------------------------------------------- Redemption Fees(3) 0.02 0.01 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $9.37 $7.63 ================================================================================ TOTAL RETURN(4) 27.50% 58.96% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.77% 1.80%(5) - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.43)% 0.18%(5) - ------------------------------------------ Portfolio Turnover Rate 139% 219%(6) - ------------------------------------------ Net Assets, End of Period (in thousands) $10,868 $8,523 - -------------------------------------------------------------------------------- (1) January 9, 2003 (commencement of sale) through November 30, 2003. (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 the 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. - ------ 59 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders American Century World Mutual Funds, Inc.: We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of International Discovery Fund, Emerging Markets Fund, Global Growth Fund and International Opportunities Fund, (collectively, the "Funds"), four of the funds comprising American Century World Mutual Funds, Inc., as of November 30, 2004, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of November 30, 2004, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of International Discovery Fund, Emerging Markets Fund, Global Growth Fund and International Opportunities Fund as of November 30, 2004, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Kansas City, Missouri January 14, 2005 - ------ 60 Management The individuals listed below serve as directors or officers of the funds. Each director serves until his or her successor is duly elected and qualified or until he or she retires. Mandatory retirement age for independent directors is 72. Those listed as interested directors are "interested" primarily by virtue of their engagement as officers of American Century Companies, Inc. (ACC) or its wholly-owned subsidiaries, including the funds' investment advisor, American Century Investment Management, Inc. (ACIM); the funds' principal underwriter, American Century Investment Services, Inc. (ACIS); and the funds' transfer agent, American Century Services Corporation (ACSC). The other directors (more than three-fourths of the total numbers) are independent; that is, they have never been employees or officers of, and have no financial interest in, ACC or any of its wholly-owned subsidiaries, including ACIM, ACIS, and ACSC. The directors serve in this capacity for six registered investment companies in the American Century family of funds. All persons named as officers of the funds also serve in a similar capacity for the other 13 investment companies advised by ACIM, unless otherwise noted. Only officers with policy-making functions are listed. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- THOMAS A. BROWN, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1940 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 23 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Formerly Chief Executive Officer/Treasurer, Associated Bearings Company, a corporation engaged in the sale of bearings and power transmission products NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ANDREA C. HALL, PH.D., 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 6 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, Midwest Research Institute NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Midwest Research Institute - -------------------------------------------------------------------------------- D.D. (DEL) HOCK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1935 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 7 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Chairman, Public Service Company of Colorado NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Allied Motion Technologies, Inc. - -------------------------------------------------------------------------------- (continued) - ------ 61 Management INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- DONALD H. PRATT, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1937 POSITION(S) HELD WITH FUND: Director, Vice Chairman of the Board LENGTH OF TIME SERVED (YEARS): 8 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Western Investments, Inc.; Retired Chairman of the Board, Butler Manufacturing Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Atlas-Copco, North America Inc. - -------------------------------------------------------------------------------- GALE E. SAYERS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1943 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 3 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Chief Executive Officer, and Founder, Sayers 40, Inc. NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Triad Hospitals, Inc. - -------------------------------------------------------------------------------- M. JEANNINE STRANDJORD, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 9 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President and Chief Integration Officer, Sprint Corporation (September 2003 to present); Senior Vice President - Financial Services, Sprint Corporation (January 2003 to September 2003); Senior Vice President, Finance - Global Markets Group, Sprint Corporation (December 1998 to January 2003) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, DST Systems, Inc.; Director, Euronet Worldwide, Inc. - -------------------------------------------------------------------------------- TIMOTHY S. WEBSTER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1961 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 2 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President and Chief Executive Officer, American Italian Pasta Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, American Italian Pasta Company - -------------------------------------------------------------------------------- INTERESTED DIRECTORS - -------------------------------------------------------------------------------- JAMES E. STOWERS, JR(.(1)), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1924 POSITION(S) HELD WITH FUND: Director, Chairman of the Board LENGTH OF TIME SERVED (YEARS): 45 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Director, and controlling shareholder, ACC; Chairman, ACSC and other ACC subsidiaries; Director, ACIM, ACSC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- JAMES E. STOWERS III(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1959 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 13 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Co-Chairman, ACC (September 2000 to present); Chief Executive Officer, ACC (June 1996 to September 2000); Director, ACC, ACIM, ACSC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (1) James E. Stowers, Jr. is the father of James E. Stowers III. (continued) - ------ 62 Management OFFICERS - -------------------------------------------------------------------------------- WILLIAM M. LYONS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1955 POSITION(S) HELD WITH FUND: President LENGTH OF TIME SERVED (YEARS): 3 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC and other ACC subsidiaries (September 2000 to present); President, ACC (June 1997 to present); President, ACIM (September 2002 to present); President, ACIS (July 2003 to present); Chief Operating Officer, ACC (June 1996 to September 2000); Also serves as: Executive Vice President, ACSC and other ACC subsidiaries - -------------------------------------------------------------------------------- ROBERT T. JACKSON, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1946 POSITION(S) HELD WITH FUND: Executive Vice President LENGTH OF TIME SERVED (YEARS): 8 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC (August 1997 to present); Chief Financial Officer, ACC (May 1995 to October 2002); President, ACSC (January 1999 to present); Executive Vice President, ACC (May 1995 to present); Also serves as: Executive Vice President and Chief Financial Officer, ACIM, ACIS and other ACC subsidiaries; and Treasurer, ACIM - -------------------------------------------------------------------------------- MARYANNE ROEPKE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1956 POSITION(S) HELD WITH FUND: Senior Vice President, Treasurer, and Chief Accounting Officer LENGTH OF TIME SERVED (YEARS): 3 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President (April 1998 to present) and Assistant Treasurer, ACSC (September 1985 to present) - -------------------------------------------------------------------------------- DAVID C. TUCKER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1958 POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel LENGTH OF TIME SERVED (YEARS): 3 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President and General Counsel, ACIM, ACIS, ACSC and other ACC subsidiaries (June 1998 to present); Vice President and General Counsel, ACC (June 1998 to present) - -------------------------------------------------------------------------------- DAVID H. REINMILLER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1963 POSITION(S) HELD WITH FUND: Vice President and Chief Compliance Officer LENGTH OF TIME SERVED (YEARS): 3 and less than 1 year PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Compliance Officer, ACSC and ACIM (March 2001 to present); Vice President, ACSC (March 2000 to present); Vice President, ACIM (March 2002 to present); Vice President, ACIS (March 2003 to present); Assistant General Counsel, ACSC (December 1996 to January 2001); Associate General Counsel, ACSC (July 2001 to present) - -------------------------------------------------------------------------------- ROBERT LEACH, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1966 POSITION(S) HELD WITH FUND: Controller LENGTH OF TIME SERVED (YEARS): 6 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACSC (February 2000 to present); Controller-Fund Accounting, ACSC (June 1997 to present) - -------------------------------------------------------------------------------- JON ZINDEL, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Tax Officer LENGTH OF TIME SERVED (YEARS): 6 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, Corporate Tax, ACSC (April 1998 to present); Vice President, ACIM, ACIS, and other ACC subsidiaries (April 1999 to present); President, American Century Employee Benefit Services, Inc. (January 2000 to December 2000); Director, American Century Employee Benefit Services, Inc. (February 2000 to December 2003); Treasurer, American Century Employee Benefit Services, Inc. (December 2000 to December 2003); Treasurer, American Century Ventures, Inc. (December 1999 to April 2001) - -------------------------------------------------------------------------------- The SAI has additional information about the funds' directors and is available without charge upon request by calling 1-800-345-2021. - ------ 63 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. AS OF JANUARY 28, 2000, THE INTERNATIONAL DISCOVERY FUND WAS CLOSED TO NEW INVESTORS AND NEW ACCOUNTS. AS OF OCTOBER 15, 2004, INVESTMENTS ARE NO LONGER ACCEPTED INTO THE INTERNATIONAL OPPORTUNITIES FUND. 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. - ------ 64 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' investment 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. Information regarding how the investment manager voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. (continued) - ------ 65 Additional Information QUARTERLY PORTFOLIO DISCLOSURE The funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The funds' Forms N-Q are available on the SEC's Web site at sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The funds also make their complete schedule of portfolio holdings for the most recent quarter of their fiscal year available on their Web site at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 66 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/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, Australia, Far East) INDEX is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EM (Emerging Markets) INDEX(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. - ------ 67 Notes - ------ 68 American Century Investments P.O. Box 419200 Kansas City, MO 64141-6200 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. PRSRT STD U.S. POSTAGE PAID AMERICAN CENTURY COMPANIES The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. 0501 American Century Investment Services, Inc. SH-ANN-41362S (c)2005 American Century Proprietary Holdings, Inc. All rights reserved.
NOVEMBER 30, 2004 [photo of market line chart] [photo of starfish] [photo of bridge] American Century Investments Annual Report Life Sciences Fund Technology Fund [graphic of logo and text logo] Table of Contents Our Message to You..........................................................1 LIFE SCIENCES Performance.................................................................2 Portfolio Commentary........................................................4 Top Ten Holdings.........................................................4 Top Five Industries......................................................5 Types of Investments in Portfolio........................................5 Schedule of Investments.....................................................6 TECHNOLOGY Performance.................................................................8 Portfolio Commentary.......................................................10 Top Ten Holdings........................................................10 Top Five Industries.....................................................11 Types of Investments in Portfolio.......................................11 Schedule of Investments....................................................12 Shareholder Fee Examples...................................................14 FINANCIAL STATEMENTS Statement of Assets and Liabilities........................................16 Statement of Operations....................................................17 Statement of Changes in Net Assets.........................................18 Notes to Financial Statements..............................................19 Financial Highlights.......................................................26 Report of Independent Registered Public Accounting Firm....................33 OTHER INFORMATION Management.................................................................34 Share Class Information....................................................37 Additional Information.....................................................38 Index Definitions..........................................................39 The opinions expressed in each of the Portfolio Commentaries reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the annual report for the Life Sciences and Technology funds for the 12 months ended November 30, 2004. This report contains information that can help you monitor your investment. You'll find details about your fund's returns 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 semiannual report dated May 31, 2005, 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 Life Sciences - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2004 -------------- AVERAGE ANNUAL RETURNS - --------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR INCEPTION DATE - --------------------------------------------------------------------------------- INVESTOR CLASS 7.57% -0.86% 6/30/00 - --------------------------------------------------------------------------------- S&P COMPOSITE 1500 HEALTH CARE INDEX 2.91% -2.04% -- - --------------------------------------------------------------------------------- S&P 500 INDEX 12.86% -3.24% -- - --------------------------------------------------------------------------------- Institutional Class 7.73% -1.77% 7/17/00 - --------------------------------------------------------------------------------- Advisor Class 7.16% -3.42% 11/14/00 - --------------------------------------------------------------------------------- C Class 6.54% -2.17% 11/29/01 - --------------------------------------------------------------------------------- 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. The fund concentrates its investments in a narrow segment of the total market. Because of this, the fund may be subject to greater risks and market fluctuations than a portfolio representing a broader range of industries. 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. (continued) - ------ 2 Life Sciences - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made June 30, 2000
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ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - ---------------------------------------------------------------------------------- 2000* 2001 2002 2003 2004 - ---------------------------------------------------------------------------------- Investor Class 5.60% -5.35% -27.31% 23.16% 7.57% - ---------------------------------------------------------------------------------- S&P Composite 1500 Health Care Index 7.11% -6.10% -18.37% 8.06% 2.91% - ---------------------------------------------------------------------------------- S&P 500 Index -9.16% -12.22% -16.51% 15.09% 12.86% - ---------------------------------------------------------------------------------- * 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. The fund concentrates its investments in a narrow segment of the total market. Because of this, the fund may be subject to greater risks and market fluctuations than a portfolio representing a broader range of industries. 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. - ------ 3 Life Sciences - Portfolio Commentary [photo of investment team] PORTFOLIO MANAGERS ON THE LIFE SCIENCES INVESTMENT TEAM: ARNOLD DOUVILLE AND CHRISTY TURNER. Life Sciences advanced 7.57%* during the 12 months ended November 30, 2004, outdistancing the 2.91% return of the S&P Composite 1500 Health Care Index (the Composite). Life Sciences' performance compares favorably to that of its peers: The 194 health/biotechnology funds tracked by Lipper Inc. rose an average of 6.60% during the period. STOCK MARKET DEMONSTRATES STRENGTH The stock market recorded solid gains during the fiscal year ended November 30, 2004, despite some formidable challenges along the way. Early on, the major indices were boosted by corporate earnings that reached record highs as the government reported strong economic growth and tame inflation. Those early gains eroded, however, as oil prices jumped 64%, interest rates climbed, and the real rate of economic growth slipped from 7.4% in the third quarter of 2003 to 3.3% and 4.0% in the second and third quarters of 2004. As the period drew to a close, oil prices came off record highs, helping stocks to rally back. In that environment, Life Sciences booked gains in three of the four health care industries to which it was exposed. TOP CONTRIBUTORS: HEALTH CARE PROVIDERS Health care providers and services companies made the greatest contributions to absolute performance during the fiscal year. The search for health care companies demonstrating earnings acceleration, the cornerstone of our strategy, led us to build significant exposure here. This position represented, on average, our second-largest industry stake and a substantial source of strength versus the lighter-weighted Composite. Insurer Aetna finished as the portfolio's top-contributing stock. UnitedHealth Group, a diversified health care benefits and services company, was another standout performer as the company reported robust earnings, which soared to record levels in the second and third quarters of 2004. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- UnitedHealth Group Incorporated 5.0% -- - -------------------------------------------------------------------------------- Anthem, Inc. 4.1% 2.0% - -------------------------------------------------------------------------------- Novartis AG 3.4% 2.2% - -------------------------------------------------------------------------------- PacifiCare Health Systems, Inc. 3.3% 0.9% - -------------------------------------------------------------------------------- Aetna Inc. 3.3% 3.1% - -------------------------------------------------------------------------------- Johnson & Johnson 3.3% -- - -------------------------------------------------------------------------------- Covance Inc. 3.2% 0.5% - -------------------------------------------------------------------------------- Charles River Laboratories 3.2% -- - -------------------------------------------------------------------------------- Bard (C.R.), Inc. 3.0% -- - -------------------------------------------------------------------------------- Gilead Sciences, Inc. 3.0% 2.6% - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 4 Life Sciences - Portfolio Commentary ADDITIONAL AREAS OF STRENGTH Investments in the health care equipment and supplies industry also provided lift. St. Jude Medical, which produces implantable devices, led the advance. The company announced strong earnings in the third quarter of 2004, driven primarily by demand for its newly approved cardiac resynchronization therapy, which treats heart failure by stimulating the heart's chambers to beat simultaneously and thus more efficiently. The biotechnology industry bolstered results and helped us outperform the Composite. United Therapeutics Corp., which makes treatments for chronic and life-threatening illnesses, ranked among the period's top stocks. The success of its drug Remodulin(reg.tm), which is designed to treat pulmonary arterial hypertension, a rare and potentially fatal disorder, fueled three consecutive quarters of double-digit revenue increases during the period. Biogen Idec, Inc. and Gilead Sciences, each a sizeable holding on average, also contributed. ON THE DOWNSIDE Our exposure to pharmaceutical companies, on average our largest industry stake but a relative underweight nonetheless, slowed performance. Drug companies, as measured by the AMEX Pharmaceutical Index, declined 2.61% for the year amid various concerns, including uncertainty about the presidential election and its implications for the drug industry. Company-specific developments also proved influential. On the final day of the third quarter, pharmaceutical giant Merck & Co., the period's top-detracting stock, took its blockbuster arthritis drug Vioxx off the market after clinical studies indicated significantly increased risk of heart attack or stroke for users. Many holdings in this group, including Teva Pharmaceutical Industries and Barr Pharmaceuticals, also declined. Still, our significantly lighter stake in this embattled industry helped us outdistance the Composite. OUR COMMITMENT We remain committed to seeking the stocks of growing U.S. and foreign companies that engage in the business of providing products and services that help promote personal health and wellness. That strategy is based on the belief that, over time, the stocks of these growing companies have a greater-than-average chance to increase in value. TOP FIVE INDUSTRIES AS OF NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Health Care Equipment & Supplies 31.6% 20.9% - -------------------------------------------------------------------------------- Health Care Providers & Services 30.0% 21.8% - -------------------------------------------------------------------------------- Biotechnology 14.9% 18.4% - -------------------------------------------------------------------------------- Pharmaceuticals 13.7% 34.7% - -------------------------------------------------------------------------------- Real Estate 5.5% -- - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF FUND FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Common Stocks 83.5% 95.2% - -------------------------------------------------------------------------------- Temporary Cash Investments 6.3% 4.6% - -------------------------------------------------------------------------------- Collateral Received for Securities Lending 10.2% 0.2% - -------------------------------------------------------------------------------- - ------ 5 Life Sciences - Schedule of Investments NOVEMBER 30, 2004 Shares Value - ------------------------------------------------------------------------------ COMMON STOCKS - 98.4% BIOTECHNOLOGY - 14.9% - ------------------------------------------------------------------------------ 53,435 Amgen Inc.(1) $ 3,208,237 - ------------------------------------------------------------------------------ 105,355 Cambridge Antibody Technology Group plc ORD(1) 1,206,019 - ------------------------------------------------------------------------------ 107,646 Charles River Laboratories(1) 5,032,451 - ------------------------------------------------------------------------------ 79,000 CV Therapeutics, Inc.(1)(2) 1,712,720 - ------------------------------------------------------------------------------ 36,600 Eyetech Pharmaceuticals Inc.(1)(2) 1,475,712 - ------------------------------------------------------------------------------ 41,000 Gen-Probe Incorporated(1) 1,635,900 - ------------------------------------------------------------------------------ 138,630 Gilead Sciences, Inc.(1) 4,777,190 - ----------------------------------------------------------------------------- 23,694 Incyte Corp.(1) 243,337 - ------------------------------------------------------------------------------ 26,000 Invitrogen Corp.(1) 1,573,000 - ------------------------------------------------------------------------------ 36,000 Transkaryotic Therapies Inc.(1) 821,160 - ------------------------------------------------------------------------------ 44,708 United Therapeutics Corp.(1)(2) 1,967,599 - ------------------------------------------------------------------------------ 23,653,325 - ------------------------------------------------------------------------------ DIVERSIFIED - 2.2% - ------------------------------------------------------------------------------ 50,000 iShares Nasdaq Biotechnology Index Fund(1)(2) 3,532,500 - ------------------------------------------------------------------------------ FOOD PRODUCTS - 0.5% - ------------------------------------------------------------------------------ 44,500 Hain Celestial Group, Inc. (The)(1)(2) 864,635 - ------------------------------------------------------------------------------ HEALTH CARE EQUIPMENT & SUPPLIES - 31.6% - ------------------------------------------------------------------------------ 40,000 Advanced Medical Optics Inc.(1)(2) 1,663,200 - ------------------------------------------------------------------------------ 22,085 American Medical Systems Holdings, Inc.(1) 842,764 - ------------------------------------------------------------------------------ 80,140 Bard (C.R.), Inc. 4,801,187 - ------------------------------------------------------------------------------ 62,000 Beckman Coulter Inc. 4,058,520 - ------------------------------------------------------------------------------ 84,485 Biomet Inc. 4,044,297 - ------------------------------------------------------------------------------ 52,092 Cooper Companies, Inc. (The)(2) 3,621,957 - ------------------------------------------------------------------------------ 135,000 Cytyc Corp.(1) 3,623,400 - ------------------------------------------------------------------------------ 33,000 Diagnostic Products Corp. 1,597,200 - ------------------------------------------------------------------------------ 113,200 Edwards Lifesciences Corporation(1)(2) 4,257,452 - ------------------------------------------------------------------------------ 72,904 Guidant Corp. 4,726,366 - ------------------------------------------------------------------------------ 32,550 Kinetic Concepts Inc.(1) 2,064,321 - ------------------------------------------------------------------------------ 32,567 Medtronic, Inc. 1,564,844 - ------------------------------------------------------------------------------ 47,064 Mentor Corp. 1,452,395 - ------------------------------------------------------------------------------ 50,025 Mine Safety Appliances Company 2,371,185 - ------------------------------------------------------------------------------ 65,000 Molecular Devices Corporation(1)(2) 1,366,950 - ------------------------------------------------------------------------------ 32,000 ResMed Inc.(1) 1,601,920 - ------------------------------------------------------------------------------ 114,800 St. Jude Medical, Inc.(1) 4,378,472 - ------------------------------------------------------------------------------ 79,500 Thermo Electron Corp.(1) 2,404,875 - ------------------------------------------------------------------------------ 50,441,305 - ------------------------------------------------------------------------------ Shares Value - ------------------------------------------------------------------------------ HEALTH CARE PROVIDERS & SERVICES - 30.0% - ------------------------------------------------------------------------------ 44,000 Aetna Inc. $ 5,214,440 - ------------------------------------------------------------------------------ 64,514 Anthem, Inc.(1) 6,537,204 - ------------------------------------------------------------------------------ 56,156 Community Health Systems Inc.(1) 1,552,713 - ------------------------------------------------------------------------------ 130,000 Covance Inc.(1) 5,129,800 - ------------------------------------------------------------------------------ 65,400 Eclipsys Corporation(1)(2) 1,272,030 - ------------------------------------------------------------------------------ 26,500 Fresenius Medical Care AG ORD 2,067,482 - ------------------------------------------------------------------------------ 88,000 Owens & Minor Inc. 2,442,000 - ------------------------------------------------------------------------------ 110,000 PacifiCare Health Systems, Inc.(1) 5,324,000 - ------------------------------------------------------------------------------ 86,000 Patterson Companies, Inc.(1) 3,513,960 - ------------------------------------------------------------------------------ 121,987 Renal Care Group Inc.(1)(2) 4,062,167 - ------------------------------------------------------------------------------ 66,000 SFBC International, Inc.(1)(2) 2,562,780 - ------------------------------------------------------------------------------ 96,573 UnitedHealth Group Incorporated 8,001,073 - ------------------------------------------------------------------------------ 47,679,649 - ------------------------------------------------------------------------------ PHARMACEUTICALS - 13.7% - ------------------------------------------------------------------------------ 79,312 Abbott Laboratories 3,327,932 - ------------------------------------------------------------------------------ 79,150 Able Laboratories Inc.(1)(2) 1,721,513 - ------------------------------------------------------------------------------ 86,000 Johnson & Johnson 5,187,520 - ------------------------------------------------------------------------------ 112,500 Novartis AG ORD 5,390,521 - ------------------------------------------------------------------------------ 85,031 Sanofi-Aventis ADR 3,210,771 - ------------------------------------------------------------------------------ 75,000 Theravance Inc.(1) 1,320,000 - ------------------------------------------------------------------------------ 39,440 Wyeth 1,572,473 - ------------------------------------------------------------------------------ 21,730,730 - ------------------------------------------------------------------------------ REAL ESTATE - 5.5% - ------------------------------------------------------------------------------ 113,185 Healthcare Realty Trust Inc.(2) 4,606,629 - ------------------------------------------------------------------------------ 135,000 Senior Housing Properties Trust(2) 2,656,800 - ------------------------------------------------------------------------------ 55,385 Ventas Inc.(2) 1,500,934 - ------------------------------------------------------------------------------ 8,764,363 - ------------------------------------------------------------------------------ TOTAL COMMON STOCKS (Cost $140,535,932) 156,666,507 - ------------------------------------------------------------------------------ TEMPORARY CASH INVESTMENTS - 7.4% Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 5.12%, 8/15/19, valued at $3,980,329), in a joint trading account at 1.90%, dated 11/30/04, due 12/1/04 (Delivery value $3,900,206) 3,900,000 - -------------------------------------------------------------------------------- Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 5.25% - 6.75%, 8/15/26 - 2/15/29, valued at $8,041,045), in a joint trading account at 1.92%, dated 11/30/04, due 12/1/04 (Delivery value $7,900,421) 7,900,000 - -------------------------------------------------------------------------------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $11,800,000) 11,800,000 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 6 Life Sciences - Schedule of Investments NOVEMBER 30, 2004 Value - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) - 12.1% REPURCHASE AGREEMENTS - 12.1% - -------------------------------------------------------------------------------- Repurchase Agreement, Barclays Bank plc, (collateralized by various U.S. Government Agency obligations), 2.08%, dated 11/30/04, due 12/1/04 (Delivery value $4,222,655) $ 4,222,411 - -------------------------------------------------------------------------------- Repurchase Agreement, Credit Suisse First Boston Corp., (collateralized by various U.S. Government Agency obligations), 2.07%, dated 11/30/04, due 12/1/04 (Delivery value $10,000,575) 10,000,000 - -------------------------------------------------------------------------------- Value - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations), 2.06%, dated 11/30/04, due 12/1/04 (Delivery value $5,000,286) $ 5,000,000 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $19,222,411) 19,222,411 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 117.9% (Cost $171,558,343) 187,688,918 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - (17.9)% (28,516,964) - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $159,171,954 ================================================================================ FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS* Contracts to Sell Settlement Date Value Unrealized Gain(Loss) - -------------------------------------------------------------------------------------- 3,119,062 CHF for USD 1/31/05 $2,744,953 $ 217 - -------------------------------------------------------------------------------------- 200,998 Euro for USD 1/31/05 267,216 (694) - -------------------------------------------------------------------------------------- 273,667 Euro for USD 1/31/05 363,826 (699) - -------------------------------------------------------------------------------------- 308,941 Euro for USD 1/31/05 410,720 47 - -------------------------------------------------------------------------------------- 134,164 GBP for USD 1/31/05 255,332 (2,487) - -------------------------------------------------------------------------------------- 178,476 GBP for USD 1/31/05 339,665 (3,128) - -------------------------------------------------------------------------------------- $4,381,712 $(6,744) ============================================= (Value on Settlement Date $4,374,968) *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 USD = United States Dollar (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of November 30, 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 Technology - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2004 -------------- AVERAGE ANNUAL RETURNS - ----------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR INCEPTION DATE - ----------------------------------------------------------------------------------- INVESTOR CLASS -7.05% -20.44% 6/30/00 - ----------------------------------------------------------------------------------- S&P COMPOSITE 1500 TECHNOLOGY INDEX 1.48% -17.51% -- - ----------------------------------------------------------------------------------- S&P 500 INDEX 12.86% -3.24% -- - ----------------------------------------------------------------------------------- Institutional Class -6.89% -22.26% 7/14/00 - ----------------------------------------------------------------------------------- Advisor Class -7.28% -20.68% 6/30/00 - ----------------------------------------------------------------------------------- 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. The fund concentrates its investments in a narrow segment of the total market. Because of this, the fund may be subject to greater risks and market fluctuations than a portfolio representing a broader range of industries. 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. (continued) - ------ 8 Technology - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made June 30, 2000
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ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - -------------------------------------------------------------------------------- 2000* 2001 2002 2003 2004 - -------------------------------------------------------------------------------- Investor Class -36.20% -34.48% -31.10% 35.97% -7.05% - -------------------------------------------------------------------------------- S&P Composite 1500 Technology Index -33.66% -29.22% -27.70% 24.02% 1.48% - -------------------------------------------------------------------------------- S&P 500 Index -9.16% -12.22% -16.51% 15.09% 12.86% - -------------------------------------------------------------------------------- * 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. The fund concentrates its investments in a narrow segment of the total market. Because of this, the fund may be subject to greater risks and market fluctuations than a portfolio representing a broader range of industries. 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. - ------ 9 Technology - Portfolio Commentary [photo of investment team] PORTFOLIO MANAGERS ON THE TECHNOLOGY INVESTMENT TEAM: HAROLD BRADLEY AND TOM TELFORD. Technology declined 7.05%* during the 12 months ended November 30, 2004. The S&P Composite 1500 Technology Index (the Composite) rose 1.48%. During the year, Technology's management team changed. Portfolio manager Jeff Schuller left American Century in August. Harold Bradley, Chief Investment Officer, U.S. Growth Equity, Small/Mid/Sector strategies, now co-manages Technology with Tom Telford. MARKET REVIEW Corporate earnings reached record highs in the fourth quarter of 2003 amid strong economic growth and low inflation. The broad market, as measured by the S&P 500 Index, rose during the first few months of the fiscal year, but stock market gains eroded over the summer. The price of crude oil jumped, short-term interest rates rose, and the annual real rate of economic growth slowed from its recent peak 7.4% rate in the third quarter of 2003 to 4.0% by the third quarter of 2004. In this environment, the value discipline was favored over growth, and the technology space significantly underperformed the broader market. Within technology, large-cap issues outperformed the small- and mid-cap issues the fund is more concentrated in. At the end of the period, the weighted average market cap of the Composite was $92 billion compared to Technology's $9 billion. The market's preference for large-cap issues worked against the portfolio. For instance, Microsoft, one of the world's biggest stocks in terms of market cap, gained ground during the period and an underweight position hurt Technology's returns relative to the Composite. CHIPS & HARDWARE DOWN Information technology firms that had placed ambitious orders for components found themselves sitting on inventory when demand failed to accelerate as anticipated. Cisco System's CEO added to negative sentiment when he said that corporate executives were becoming more cautious on the economy and therefore putting the brakes on spending. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Brocade Communications System 3.8% -- - -------------------------------------------------------------------------------- McData Corporation Cl A 3.2% -- - -------------------------------------------------------------------------------- Juniper Networks, Inc. 3.2% -- - -------------------------------------------------------------------------------- Apple Computer, Inc. 2.9% -- - -------------------------------------------------------------------------------- Internet Security Systems 2.6% -- - -------------------------------------------------------------------------------- Microsemi Corporation 2.6% 0.8% - -------------------------------------------------------------------------------- TIBCO Software Inc. 2.5% -- - -------------------------------------------------------------------------------- Google Inc. Cl A 2.5% -- - -------------------------------------------------------------------------------- Kronos Inc. 2.3% 2.4% - -------------------------------------------------------------------------------- Lucent Tehcnologies Inc. 2.2% -- - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 10 Technology - Portfolio Commentary Celestica, which makes electronic components for original equipment manufacturers such as Cisco, was one company that cut its outlook, citing a reduction in orders. The stock was a leading detractor during the period. Excess inventories were particularly harmful to semiconductor stocks, and many semiconductor makers cut sales and revenue estimates. An overweight position in the semiconductor industry early in the calendar year dragged on results. International Rectifier and Vitesse Semiconductor were among the detractors in the portfolio. Although the Philadelphia Semiconductor Index ended the 12-month period with a nearly 20% decline, there were a number of stocks in the portfolio that bucked that trend. For example, Cree, Inc. experienced strong demand for its light-emitting diode (LED) chips, which are used for back lighting in cell phones and automotive dashboards. The chipmaker also upped its sales forecast, based on continued growth and lower costs associated with its LED product line. COMMUNICATIONS EQUIPMENT MIXED In the communications equipment industry, Nortel Networks weighed on results. In April, the telecommunications-equipment supplier announced that it fired three top executives and would cut 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 amid broadening popularity of its BlackBerry(reg.tm) wireless e-mail device. OUR COMMITMENT We remain committed to our investment strategy of identifying technology companies that appear able to sustain accelerating growth in earnings and revenues, a strategy based on our belief that these companies have a greater than average chance to increase in value over time. TOP FIVE INDUSTRIES AS OF NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Software 23.2% 16.3% - -------------------------------------------------------------------------------- Communications Equipment 17.4% 14.4% - -------------------------------------------------------------------------------- Computers & Peripherals 16.2% 4.1% - -------------------------------------------------------------------------------- Internet Software & Services 12.1% 8.4% - -------------------------------------------------------------------------------- Semiconductors & Semiconductor Equipment 10.9% 25.5% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF FUND FUND INVESTMENTS INVESTMENTS AS OF AS OF 11/30/04 5/31/04 - -------------------------------------------------------------------------------- Common Stocks 78.3% 95.4% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.4% 1.5% - -------------------------------------------------------------------------------- Collateral Received for Securities Lending 21.3% 3.1% - -------------------------------------------------------------------------------- - ------ 11 Technology - Schedule of Investments NOVEMBER 30, 2004 Shares Value - ----------------------------------------------------------------------------- COMMON STOCKS - 99.6% COMMUNICATIONS EQUIPMENT - 17.4% - ----------------------------------------------------------------------------- 206,900 Airspan Networks Inc.(1)(2) $ 1,135,881 - ----------------------------------------------------------------------------- 97,600 AudioCodes Ltd.(1)(2) 1,434,720 - ----------------------------------------------------------------------------- 129,700 Comverse Technology, Inc.(1)(2) 2,758,719 - ----------------------------------------------------------------------------- 334,400 ECI Telecom Ltd.(1) 2,775,520 - ----------------------------------------------------------------------------- 82,900 F5 Networks, Inc.(1) 3,568,845 - ----------------------------------------------------------------------------- 303,900 Harmonic Inc.(1)(2) 2,361,303 - ----------------------------------------------------------------------------- 95,000 Inter-Tel, Inc. 2,690,400 - ----------------------------------------------------------------------------- 200,600 Juniper Networks, Inc.(1) 5,522,518 - ----------------------------------------------------------------------------- 985,500 Lucent Technologies Inc.(1)(2) 3,873,015 - ----------------------------------------------------------------------------- 366,000 MRV Communications Inc.(1)(2) 1,412,394 - ----------------------------------------------------------------------------- 67,000 QUALCOMM Inc. 2,788,540 - ----------------------------------------------------------------------------- 30,321,855 - ----------------------------------------------------------------------------- COMPUTERS & PERIPHERALS - 16.2% - ----------------------------------------------------------------------------- 75,101 Apple Computer, Inc.(1) 5,035,522 - ----------------------------------------------------------------------------- 950,200 Brocade Communications System(1)(2) 6,584,886 - ----------------------------------------------------------------------------- 996,300 McData Corporation Cl A(1)(2) 5,629,095 - ----------------------------------------------------------------------------- 103,100 Network Appliance, Inc.(1) 3,109,496 - ----------------------------------------------------------------------------- 128,900 Novatel Wireless Inc.(1)(2) 2,714,634 - ----------------------------------------------------------------------------- 77,200 QLogic Corp.(1) 2,654,908 - ----------------------------------------------------------------------------- 177,500 Seagate Technology 2,658,950 - ----------------------------------------------------------------------------- 28,387,491 - ----------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES - 3.0% - ----------------------------------------------------------------------------- 146,000 AT&T Corp. 2,671,800 - ----------------------------------------------------------------------------- 62,100 Verizon Communications 2,560,383 - ----------------------------------------------------------------------------- 5,232,183 - ----------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 4.6% - ----------------------------------------------------------------------------- 78,400 Amphenol Corp. Cl A(1) 2,752,624 - ----------------------------------------------------------------------------- 80,900 Benchmark Electronics Inc.(1)(2) 2,835,545 - ----------------------------------------------------------------------------- 37,500 Scansource Inc.(1) 2,426,250 - ----------------------------------------------------------------------------- 8,014,419 - ----------------------------------------------------------------------------- HOUSEHOLD DURABLES - 2.0% - ----------------------------------------------------------------------------- 61,000 Garmin Ltd.(2) 3,551,420 - ----------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES - 12.1% - ----------------------------------------------------------------------------- 23,700 Google Inc. Cl A(1)(2) 4,337,100 - ----------------------------------------------------------------------------- 67,200 Infospace Inc.(1)(2) 2,976,960 - ----------------------------------------------------------------------------- 279,400 Interwoven Inc.(1)(2) 2,710,180 - ----------------------------------------------------------------------------- 224,600 Openwave Systems Inc.(1)(2) 2,960,228 - ----------------------------------------------------------------------------- 351,700 webMethods, Inc.(1)(2) 2,159,438 - ----------------------------------------------------------------------------- 65,900 Websense Inc.(1) 3,167,154 - ----------------------------------------------------------------------------- 73,800 Yahoo! Inc.(1) 2,776,356 - ----------------------------------------------------------------------------- 21,087,416 - ------------------------------------------------------------------------------ Shares Value - ----------------------------------------------------------------------------- IT SERVICES - 6.7% - ----------------------------------------------------------------------------- 47,200 CACI International Inc.(1) $ 2,932,536 - ----------------------------------------------------------------------------- 91,400 Cognizant Technology Solutions Corporation(1) 3,485,082 - ----------------------------------------------------------------------------- 53,500 Computer Sciences Corp.(1) 2,894,350 - ----------------------------------------------------------------------------- 160,674 Keane Inc.(1)(2) 2,490,447 - ----------------------------------------------------------------------------- 11,802,415 - ----------------------------------------------------------------------------- MEDIA - 1.6% - ----------------------------------------------------------------------------- 31,800 Pixar(1)(2) 2,883,306 - ----------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 10.9% - ----------------------------------------------------------------------------- 153,900 ATI Technologies Inc.(1) 2,985,660 - ----------------------------------------------------------------------------- 66,900 Cabot Microelectronics Corporation(1)(2) 2,471,955 - ----------------------------------------------------------------------------- 107,100 Cree, Inc.(1)(2) 3,832,038 - ----------------------------------------------------------------------------- 257,400 Microsemi Corporation(1) 4,581,720 - ----------------------------------------------------------------------------- 145,700 NVIDIA Corp.(1) 2,787,241 - ----------------------------------------------------------------------------- 139,400 Ultratech, Inc.(1)(2) 2,401,862 - ----------------------------------------------------------------------------- 19,060,476 - ----------------------------------------------------------------------------- SOFTWARE - 23.2% - ----------------------------------------------------------------------------- 53,200 Adobe Systems Inc. 3,221,792 - ----------------------------------------------------------------------------- 243,600 Borland Software Corp.(1) 2,847,684 - ----------------------------------------------------------------------------- 160,100 Citrix Systems, Inc.(1) 3,779,961 - ----------------------------------------------------------------------------- 176,300 Epicor Software Corporation(1) 2,780,251 - ----------------------------------------------------------------------------- 190,900 Internet Security Systems(1) 4,621,689 - ----------------------------------------------------------------------------- 217,000 InterVoice, Inc.(1) 2,821,000 - ----------------------------------------------------------------------------- 78,900 Kronos Inc.(1) 3,987,606 - ----------------------------------------------------------------------------- 63,999 NAVTEQ Corp.(1) 2,761,557 - ----------------------------------------------------------------------------- 116,700 RADWARE Ltd.(1) 2,965,347 - ----------------------------------------------------------------------------- 44,900 Symantec Corp.(1) 2,865,069 - ----------------------------------------------------------------------------- 384,000 TIBCO Software Inc.(1) 4,416,000 - ----------------------------------------------------------------------------- 82,900 Verint Systems Inc.(1)(2) 3,410,506 - ----------------------------------------------------------------------------- 40,478,462 - ----------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES - 1.9% - ----------------------------------------------------------------------------- 304,900 Alamosa Holdings Inc.(1)(2) 3,323,410 - ----------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $146,067,394) 174,142,853 - ----------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 12 Technology - Schedule of Investments NOVEMBER 30, 2004 Value - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS - 0.6% Repurchase Agreement, Morgan Stanley Group, Inc., (collateralized by various U.S. Treasury obligations, 3.375%, 9/15/09, valued at $1,018,550), in a joint trading account at 1.89%, dated 11/30/04, due 12/1/04 (Delivery value $1,000,053) (Cost $1,000,000) $ 1,000,000 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) - 27.1% REPURCHASE AGREEMENTS - 27.1% - -------------------------------------------------------------------------------- Repurchase Agreement, Barclays Bank plc, (collateralized by various U.S. Government Agency obligations), 2.08%, dated 11/30/04, due 12/1/04 (Delivery value $2,405,469) 2,405,330 - -------------------------------------------------------------------------------- Repurchase Agreement, Credit Suisse First Boston Corp., (collateralized by various U.S. Government Agency obligations), 2.07%, dated 11/30/04, due 12/1/04 (Delivery value $10,000,575) 10,000,000 - -------------------------------------------------------------------------------- Value - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations), 2.06%, dated 11/30/04, due 12/1/04 (Delivery value $35,002,003) $ 35,000,000 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $47,405,330) 47,405,330 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 127.3% (Cost $194,472,724) 222,548,183 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - (27.3)% (47,678,618) - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $174,869,565 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of November 30, 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 Shareholder Fee Examples (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2004 to November 30, 2004. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century account (i.e., not a financial intermediary or retirement plan account), American Century may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical (continued) - ------ 14 Shareholder Fee Examples (Unaudited) example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - ---------------------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 6/1/04 - EXPENSE 6/1/04 11/30/04 11/30/04 RATIO* - ---------------------------------------------------------------------------------------------- LIFE SCIENCES SHAREHOLDER FEE EXAMPLE - ---------------------------------------------------------------------------------------------- ACTUAL - ---------------------------------------------------------------------------------------------- Investor Class $1,000 $989.50 $7.46 1.50% - ---------------------------------------------------------------------------------------------- Institutional Class $1,000 $993.70 $6.48 1.30% - ---------------------------------------------------------------------------------------------- Advisor Class $1,000 $989.30 $8.70 1.75% - ---------------------------------------------------------------------------------------------- C Class $1,000 $987.00 $12.42 2.50% - ---------------------------------------------------------------------------------------------- HYPOTHETICAL - ---------------------------------------------------------------------------------------------- Investor Class $1,000 $1,017.50 $7.57 1.50% - ---------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,018.50 $6.56 1.30% - ---------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,016.25 $8.82 1.75% - ---------------------------------------------------------------------------------------------- C Class $1,000 $1,012.50 $12.58 2.50% - ---------------------------------------------------------------------------------------------- TECHNOLOGY SHAREHOLDER FEE EXAMPLE - ---------------------------------------------------------------------------------------------- ACTUAL - ---------------------------------------------------------------------------------------------- Investor Class $1,000 $997.30 $7.49 1.50% - ---------------------------------------------------------------------------------------------- Institutional Class $1,000 $998.40 $6.49 1.30% - ---------------------------------------------------------------------------------------------- Advisor Class $1,000 $996.10 $8.73 1.75% - ---------------------------------------------------------------------------------------------- HYPOTHETICAL - ---------------------------------------------------------------------------------------------- Investor Class $1,000 $1,017.50 $7.57 1.50% - ---------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,018.50 $6.56 1.30% - ---------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,016.25 $8.82 1.75% - ---------------------------------------------------------------------------------------------- *Expenses are equal to the fund's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183 the number of days in the most recent fiscal half-year divided by 366 (to reflect the one-half year period.) - ------ 15 Statement of Assets and Liabilities NOVEMBER 30, 2004 - ---------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY ASSETS - ---------------------------------------------------------------------------------- Investment securities, at value (cost of $152,335,932 and $147,067,394, respectively) -- including $19,037,214 and $46,064,734 of securities on loan, respectively $168,466,507 $175,142,853 - ---------------------------------------------------------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $19,222,411 and $47,405,330, respectively) 19,222,411 47,405,330 - ---------------------------------------------------------------------------------- Total Investment securities, at value (cost of $171,558,343 and $194,472,724, respectively) 187,688,918 222,548,183 - ------------------------------------------------ Cash collateral received for securities on loan -- 106,650 - ------------------------------------------------ Receivable for investments sold 1,239,243 2,856,916 - ------------------------------------------------ Receivable for forward foreign currency exchange contracts 264 -- - ------------------------------------------------ Receivable for capital shares sold 700 5,000 - ------------------------------------------------ Dividends and interest receivable 148,481 30,552 - ---------------------------------------------------------------------------------- 189,077,606 225,547,301 - ---------------------------------------------------------------------------------- LIABILITIES - ---------------------------------------------------------------------------------- Payable for collateral received for securities on loan 19,222,411 47,511,980 - ------------------------------------------------ Disbursements in excess of demand deposit cash 472,856 303,312 - ------------------------------------------------ Payable for investments purchased 10,009,227 2,650,075 - ------------------------------------------------ Payable for forward foreign currency exchange contracts 7,008 -- - ------------------------------------------------ Accrued management fees 194,086 212,339 - ------------------------------------------------ Distribution fees payable 37 15 - ------------------------------------------------ Service fees payable 27 15 - ---------------------------------------------------------------------------------- 29,905,652 50,677,736 - ---------------------------------------------------------------------------------- NET ASSETS $159,171,954 $174,869,565 ================================================================================== NET ASSETS CONSIST OF: - ---------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $184,601,066 $397,097,279 - ------------------------------------------------ Accumulated net investment loss (243,196) -- - ------------------------------------------------ Accumulated net realized loss on investment and foreign currency transactions (41,313,577) (250,303,173) - ------------------------------------------------ Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 16,127,661 28,075,459 - ---------------------------------------------------------------------------------- $159,171,954 $174,869,565 ================================================================================== INVESTOR CLASS, $0.01 PAR VALUE - ---------------------------------------------------------------------------------- Net assets $155,529,590 $166,986,246 - ------------------------------------------------ Shares outstanding 33,132,174 9,175,344 - ------------------------------------------------ Net asset value per share $4.69 $18.20 - ---------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE - ---------------------------------------------------------------------------------- Net assets $3,510,337 $7,805,052 - ------------------------------------------------ Shares outstanding 740,854 424,581 - ------------------------------------------------ Net asset value per share $4.74 $18.38 - ---------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE - ---------------------------------------------------------------------------------- Net assets $106,696 $78,267 - ------------------------------------------------ Shares outstanding 22,977 4,357 - ------------------------------------------------ Net asset value per share $4.64 $17.96 - ---------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE - ---------------------------------------------------------------------------------- Net assets $25,331 -- - ------------------------------------------------ Shares outstanding 5,561 -- - ------------------------------------------------ Net asset value per share $4.56 -- - ---------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 16 Statement of Operations YEAR ENDED NOVEMBER 30, 2004 - ----------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY INVESTMENT LOSS INCOME: - ---------------------------------------------- Dividends (net of foreign taxes withheld of $31,928 and $-, respectively) $ 977,712 $ 296,801 - ---------------------------------------------- Interest 76,980 45,131 - ---------------------------------------------- Securities lending 37,742 48,785 - ----------------------------------------------------------------------------------- 1,092,434 390,717 - ----------------------------------------------------------------------------------- EXPENSES: - ---------------------------------------------- Management fees 2,505,110 2,848,149 - ---------------------------------------------- Distribution fees: - ---------------------------------------------- Advisor Class 213 121 - ----------------------------------------------------------------------------------- C Class 127 -- - ----------------------------------------------------------------------------------- Service fees: - ---------------------------------------------- Advisor Class 213 121 - ----------------------------------------------------------------------------------- C Class 42 -- - ----------------------------------------------------------------------------------- Directors' fees and expenses 2,395 2,725 - ----------------------------------------------------------------------------------- Other expenses 1,406 2,423 - ----------------------------------------------------------------------------------- 2,509,506 2,853,539 - ----------------------------------------------------------------------------------- NET INVESTMENT LOSS (1,417,072) (2,462,822) - ----------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) NET REALIZED GAIN (LOSS) ON: - ---------------------------------------------- Investment transactions 22,724,506 10,958,405 - ---------------------------------------------- Foreign currency transactions (836,712) -- - ----------------------------------------------------------------------------------- 21,887,794 10,958,405 - ----------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION ON: - ---------------------------------------------- Investments (8,924,718) (26,806,754) - ---------------------------------------------- Translation of assets and liabilities in foreign currencies 75,982 -- - ----------------------------------------------------------------------------------- (8,848,736) (26,806,754) - ----------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 13,039,058 (15,848,349) - ----------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $11,621,986 $(18,311,171) =================================================================================== See Notes to Financial Statements. - ------ 17 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2004 AND NOVEMBER 30, 2003 - ------------------------------------------------------------------------ LIFE SCIENCES - ------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS 2004 2003 OPERATIONS Net investment loss $ (1,417,072) $ (1,362,843) - ------------------------------------ Net realized gain 21,887,794 2,626,523 - ------------------------------------ Change in net unrealized appreciation (8,848,736) 31,552,596 - ------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations 11,621,986 32,816,276 - ------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions (16,712,454) (18,274,746) - ------------------------------------------------------------------------ NET INCREASE (DECREASE) IN NET ASSETS (5,090,468) 14,541,530 NET ASSETS Beginning of period 164,262,422 149,720,892 - ------------------------------------------------------------------------ End of period $159,171,954 $164,262,422 ======================================================================== Accumulated net investment loss $(243,196) $(38,649) ======================================================================== YEARS ENDED NOVEMBER 30, 2004 AND NOVEMBER 30, 2003 - ------------------------------------------------------------------------ TECHNOLOGY - ------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS 2004 2003 OPERATIONS Net investment loss $ (2,462,822) $ (1,911,113) - ------------------------------------ Net realized gain 10,958,405 17,797,976 - ------------------------------------ Change in net unrealized appreciation (26,806,754) 37,716,935 - ------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations (18,311,171) 53,603,798 - ------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions (19,912,500) 23,224,232 - ------------------------------------------------------------------------ NET INCREASE (DECREASE) IN NET ASSETS (38,223,671) 76,828,030 NET ASSETS Beginning of period 213,093,236 136,265,206 - ------------------------------------------------------------------------ End of period $174,869,565 $213,093,236 ======================================================================== Accumulated net investment loss -- -- ======================================================================== - ------ 18 See Notes to Financial Statements. Notes to Financial Statements NOVEMBER 30, 2004 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 capital growth. Life Sciences and Technology pursue their objectives by investing primarily in stocks of growing companies in the life sciences and in the technology and telecommunications-related sectors, respectively. Life Sciences invests at least 80% of its assets in companies that engage in the business of providing products and services that help promote health and wellness. Technology invests at least 80% of its assets in companies primarily engaged in offering, using or developing products, processes or services that provide or will benefit significantly from technological advancements or improvements. 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 funds are allocated to each class of shares based on their relative net assets. Sale of Technology's C Class had not commenced as of November 30, 2004. Effective March 31, 2005, Technology's C Class will no longer be available for sale. 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. Discount notes are valued through a commercial pricing service. If the funds determine that the market price of a portfolio security is not readily available, or that the valuation methods mentioned above do not reflect the security's fair value, such security is valued at its fair value as determined by, or in accordance with procedures adopted by, the Board of Directors or its designee if such fair value determination would materially impact a fund's net asset value. Circumstances that may cause the funds to fair value a security include: 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; or trading in a security has been halted during the trading day. 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. Distributions received on securities that represent a return of capital or capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The funds estimate the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. SECURITIES ON LOAN -- The funds may lend portfolio securities through their lending agent to certain approved borrowers in order to earn additional income. The funds continue to recognize any gain or loss in the market price of the securities loaned and record any interest earned or dividends declared. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. 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 (continued) - ------ 19 Notes to Financial Statements NOVEMBER 30, 2004 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 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 (the 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 and accrued daily based on the daily net assets of each specific class of shares of each fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment manager's assets under management in each fund's investment strategy (strategy assets) to calculate the appropriate fee rate for each fund. The strategy assets include each fund's assets and the assets of other clients of the investment manager that are not in the American Century family of funds, but that have the same investment team and investment strategy. (continued) - ------ 20 Notes to Financial Statements NOVEMBER 30, 2004 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) The annual management fee schedule for each class of Life Sciences is as follows: - --------------------------------------------------------------------------------- INVESTOR & C INSTITUTIONAL ADVISOR - --------------------------------------------------------------------------------- STRATEGY ASSETS - --------------------------------------------------------------------------------- First $250 million 1.50% 1.30% 1.25% - --------------------------------------------------------------------------------- Next $250 million 1.40% 1.20% 1.15% - --------------------------------------------------------------------------------- Over $500 millon 1.30% 1.10% 1.05% - --------------------------------------------------------------------------------- The annual management fee schedule for each class of Technology is as follows: - --------------------------------------------------------------------------------- INVESTOR & C INSTITUTIONAL ADVISOR - --------------------------------------------------------------------------------- STRATEGY ASSETS - --------------------------------------------------------------------------------- First $500 million 1.50% 1.30% 1.25% - --------------------------------------------------------------------------------- Next $250 million 1.40% 1.20% 1.15% - --------------------------------------------------------------------------------- Next $250 million 1.30% 1.10% 1.05% - --------------------------------------------------------------------------------- Over $1 billon 1.20% 1.00% 0.95% - --------------------------------------------------------------------------------- The effective annual management fee for each class of the funds for the year ended November 30, 2004 was 1.50%, 1.30%, 1.25%, and 1.50% for the Investor Class, Institutional Class, Advisor Class and C Class, 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 and accrued daily based on each class's daily net assets and paid monthly in arrears. 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 year ended November 30, 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 year ended November 30, 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 custodian of the funds and a wholly owned subsidiary of JPM. (continued) - ------ 21 Notes to Financial Statements NOVEMBER 30, 2004 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the year ended November 30, 2004, were as follows: - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- Purchases $347,170,070 $522,187,447 - -------------------------------------------------------------------------------- Proceeds from sales $364,019,526 $542,939,419 - -------------------------------------------------------------------------------- 4. CAPITAL SHARE TRANSACTIONS Capital share transactions that occurred in the Technology classes on or prior to May 16, 2003 have been restated to reflect a 1-for-10 reverse share split that occurred after the close of business on that date. See Note 8. Transactions in shares of the funds were as follows: - ------------------------------------------------------------------------------- LIFE SCIENCES - ------------------------------------------------------------------------------- SHARES AMOUNT - ------------------------------------------------------------------------------- INVESTOR CLASS - ------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 200,000,000 =============================================================================== Sold 4,682,262 $ 21,845,836 - ------------------------------- Redeemed (8,256,607) (37,835,256) - ------------------------------------------------------------------------------- Net decrease (3,574,345) $(15,989,420) =============================================================================== YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 200,000,000 =============================================================================== Sold 4,462,447 $ 17,195,665 - ------------------------------- Redeemed (9,130,905) (35,250,197) - ------------------------------------------------------------------------------- Net increase (decrease) (4,668,458) $(18,054,532) =============================================================================== INSTITUTIONAL CLASS - ------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 5,000,000 =============================================================================== Sold 216,829 $ 1,021,168 - ------------------------------- Redeemed (390,095) (1,817,348) - ------------------------------------------------------------------------------- Net decrease (173,266) $ (796,180) =============================================================================== YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 5,000,000 =============================================================================== Sold 542,023 $ 2,037,492 - ------------------------------- Redeemed (574,061) (2,273,015) - ------------------------------------------------------------------------------- Net decrease (32,038) $ (235,523) =============================================================================== - ------------------------------------------------------------------------------- TECHNOLOGY - ------------------------------------------------------------------------------- SHARES AMOUNT - ------------------------------------------------------------------------------- INVESTOR CLASS - ------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 300,000,000 =============================================================================== Sold 3,341,359 $ 63,088,939 - ------------------------------- Redeemed (4,527,740) (81,535,533) - ------------------------------------------------------------------------------- Net decrease (1,186,381) $(18,446,594) =============================================================================== YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 300,000,000 =============================================================================== Sold 5,945,407 $ 92,027,187 - ------------------------------- Redeemed (4,461,646) (67,262,458) - ------------------------------------------------------------------------------- Net increase (decrease) 1,483,761 $ 24,764,729 =============================================================================== INSTITUTIONAL CLASS - ------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 15,000,000 =============================================================================== Sold 107,175 $ 2,121,461 - ------------------------------- Redeemed (198,924) (3,647,932) - ------------------------------------------------------------------------------- Net decrease (91,749) $(1,526,471) =============================================================================== YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 15,000,000 =============================================================================== Sold 454,224 $ 6,528,752 - ------------------------------- Redeemed (521,021) (8,031,710) - ------------------------------------------------------------------------------- Net decrease (66,797) $(1,502,958) =============================================================================== (continued) - ------ 22 Notes to Financial Statements NOVEMBER 30, 2004 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - --------------------------------------------------------------------------- LIFE SCIENCES - --------------------------------------------------------------------------- SHARES AMOUNT - --------------------------------------------------------------------------- ADVISOR CLASS - --------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 5,000,000 =========================================================================== Sold 15,648 $ 73,369 - ---------------------------------- Redeemed (3,378) (14,968) - --------------------------------------------------------------------------- Net increase 12,270 $ 58,401 =========================================================================== YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 5,000,000 =========================================================================== Sold 8,972 $ 32,058 - ---------------------------------- Redeemed (5,491) (19,066) - --------------------------------------------------------------------------- Net increase (decrease) 3,481 $ 12,992 =========================================================================== C CLASS - ---------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 10,000,000 =========================================================================== Sold 4,908 $ 22,515 - ---------------------------------- Redeemed (1,714) (7,770) - --------------------------------------------------------------------------- Net increase 3,194 $ 14,745 =========================================================================== YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 10,000,000 =========================================================================== Sold 669 $2,357 - ---------------------------------- Redeemed (10) (40) - --------------------------------------------------------------------------- Net increase 659 $2,317 =========================================================================== - --------------------------------------------------------------------------- TECHNOLOGY - --------------------------------------------------------------------------- SHARES AMOUNT - --------------------------------------------------------------------------- ADVISOR CLASS - --------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 5,000,000 =========================================================================== Sold 3,757 $66,253 - ---------------------------------- Redeemed (333) (5,688) - --------------------------------------------------------------------------- Net increase 3,424 $60,565 =========================================================================== YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 5,000,000 =========================================================================== Sold 1,604 $ 30,528 - ---------------------------------- Redeemed (4,455) (68,067) - --------------------------------------------------------------------------- Net increase (decrease) (2,851) $(37,539) =========================================================================== C CLASS - ---------------------------------- YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 7,500,000 =========================================================================== Sold -- -- - ---------------------------------- Redeemed -- -- - --------------------------------------------------------------------------- Net increase -- -- =========================================================================== YEAR ENDED NOVEMBER 30, 2003 SHARES AUTHORIZED 7,500,000 =========================================================================== Sold -- -- - ---------------------------------- Redeemed -- -- - --------------------------------------------------------------------------- Net increase -- -- =========================================================================== 5. SECURITIES LENDING As of November 30, 2004, securities in Life Sciences and Technology valued at $19,037,214, and $46,064,734, 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 $19,222,411, and $47,535,834, 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, which was renewed to $575,000,000 effective December 15, 2004. The funds may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The funds did not borrow from the line during the year ended November 30, 2004. (continued) - ------ 23 Notes to Financial Statements NOVEMBER 30, 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. 8. TECHNOLOGY REVERSE SHARE SPLIT Effective after the close of business on May 16, 2003, the Technology Investor Class, Institutional Class, and Advisor Class shares underwent a 1-for-10 reverse split. The effect of this transaction was to divide the number of outstanding shares for each class by ten, while multiplying the net asset value per share by ten. The net asset value per-share prior to the reverse split was $1.46, $1.47, and $1.44 for the Investor Class, Institutional Class, and the Advisor Class, respectively. The net asset value per-share after the reverse split was $14.60, $14.70, and $14.40 for the Investor Class, Institutional Class, and the Advisor Class, respectively. There was no change in the aggregate market value of the outstanding shares as a result of these transactions. The per-share information contained within each class's Financial Highlights has also been restated to reflect the reverse split. 9. FEDERAL TAX INFORMATION The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. There were no distributions paid by the funds during the years ended November 30, 2004 and November 30, 2003. As of November 30, 2004, the components of distributable earnings on a tax-basis and the federal tax cost of investments were as follows: LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- COMPONENTS OF DISTRIBUTABLE EARNINGS AND TAX COST - -------------------------------------------------------------------------------- Federal tax cost of investments $171,610,494 $194,966,766 ================================================================================ Gross tax appreciation of investments $16,669,906 $28,529,937 - ----------------------------------------------- Gross tax depreciation of investments (591,482) (948,520) - -------------------------------------------------------------------------------- Net tax appreciation of investments $16,078,424 $27,581,417 ================================================================================ Net tax depreciation on derivatives and translation of assets and liabilities in foreign currencies $ 3,830 $ -- - -------------------------------------------------------------------------------- Net tax appreciation $16,082,254 $27,581,417 ================================================================================ Undistributed ordinary income -- -- - ----------------------------------------------- Accumulated capital losses $(41,261,426) $(249,809,131) - ----------------------------------------------- Currency loss deferral $(249,940) -- - -------------------------------------------------------------------------------- (continued) - ------ 24 Notes to Financial Statements NOVEMBER 30, 2004 9. FEDERAL TAX INFORMATION (CONTINUED) The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains on certain forward foreign currency contracts. The accumulated capital losses listed on the previous page 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: - ------------------------------------------------------------------------------ 2008 2009 2010 - ------------------------------------------------------------------------------ Life Sciences -- $9,534,587 $31,726,839 - ------------------------------------------------------------------------------ Technology $8,399,280 $188,675,022 $52,734,829 - ------------------------------------------------------------------------------ The currency loss deferrals represent net foreign currency losses incurred in the one-month period ended November 30, 2004. Life Sciences has elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. 10. SUBSEQUENT EVENTS Effective January 1, 2005, American Century Global Investment Management, Inc. (ACGIM) will replace ACIM as the investment manager of Life Sciences. ACGIM has entered into a Subadvisory Agreement with ACIM who will serve as the subadvisor for the cash management of Life Sciences. All existing resources and investment strategies will remain in place. The change of investment manager is a result of the corporate restructuring of ACIM, in which ACGIM was incorporated as a subsidiary of ACIM. In addition, American Century Services Corporation's name will change to American Century Services, LLC. - ------ 25 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ------------------------------------------------------------------------------------------ INVESTOR CLASS - ------------------------------------------------------------------------------------------ 2004 2003 2002 2001 2000(1) 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(2) (0.04) (0.03) (0.04) (0.03) (0.02) - ----------------------------- Net Realized and Unrealized Gain (Loss) 0.37 0.85 (1.29) (0.25) 0.30 - ------------------------------------------------------------------------------------------ Total From Investment Operations 0.33 0.82 (1.33) (0.28) 0.28 - ------------------------------------------------------------------------------------------ Distributions - ----------------------------- From Net Realized Gains -- -- -- (0.13) -- - ------------------------------------------------------------------------------------------ Net Asset Value, End of Period $4.69 $4.36 $3.54 $4.87 $5.28 ========================================================================================== TOTAL RETURN(3) 7.57% 23.16% (27.31)% (5.35)% 5.60% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.50% 1.50% 1.50% 1.50% 1.50%(4) - ----------------------------- Ratio of Net Investment Loss to Average Net Assets (0.85)% (0.89)% (0.88)% (0.61)% (0.95)%(4) - ----------------------------- Portfolio Turnover Rate 215% 138% 272% 206% 64% - ----------------------------- Net Assets, End of Period (in thousands) $155,530 $160,187 $146,324 $227,341 $233,785 - ------------------------------------------------------------------------------------------ (1) June 30, 2000 (inception) through November 30, 2000. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 26 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ----------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ----------------------------------------------------------------------------------------------------- 2004 2003 2002 2001 2000(1) 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(2) (0.03) (0.03) (0.03) (0.02) (0.02) - ----------------------------- Net Realized and Unrealized Gain (Loss) 0.37 0.87 (1.30) (0.24) 0.04 - ----------------------------------------------------------------------------------------------------- Total From Investment Operations 0.34 0.84 (1.33) (0.26) 0.02 - ----------------------------------------------------------------------------------------------------- Distributions - ----------------------------- From Net Realized Gains -- -- -- (0.13) -- - ----------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $4.74 $4.40 $3.56 $4.89 $5.28 ===================================================================================================== TOTAL RETURN(3) 7.73% 23.60% (27.20)% (4.97)% 0.38% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.30% 1.30% 1.30% 1.30% 1.30%(4) - ----------------------------- Ratio of Net Investment Loss to Average Net Assets (0.65)% (0.69)% (0.68)% (0.41)% (0.80)%(4) - ----------------------------- Portfolio Turnover Rate 215% 138% 272% 206% 64%(5) - ----------------------------- Net Assets, End of Period (in thousands) $3,510 $4,019 $3,365 $4,348 $3,363 - ----------------------------------------------------------------------------------------------------- (1) July 17, 2000 (commencement of sale) through November 30, 2000. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the period June 30, 2000 (inception of fund) through November 30, 2000. See Notes to Financial Statements. - ------ 27 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED - ---------------------------------------------------------------------------------------------------- ADVISOR CLASS - ---------------------------------------------------------------------------------------------------- 2004 2003 2002 2001 2000(1) 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(2) (0.05) (0.04) (0.05) (0.04) --(3) - --------------------------- Net Realized and Unrealized Gain (Loss) 0.36 0.86 (1.30) (0.25) (0.20) - ---------------------------------------------------------------------------------------------------- Total From Investment Operations 0.31 0.82 (1.35) (0.29) (0.20) - ---------------------------------------------------------------------------------------------------- Distributions - --------------------------- From Net Realized Gains -- -- -- (0.13) -- - ---------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $4.64 $4.33 $3.51 $4.86 $5.28 ==================================================================================================== TOTAL RETURN(4) 7.16% 23.36% (27.78)% (5.55)% (3.65)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.75% 1.75% 1.75% 1.75% 1.75%(5) - --------------------------- Ratio of Net Investment Loss to Average Net Assets (1.10)% (1.14)% (1.13)% (0.86)% (0.99)%(5) - --------------------------- Portfolio Turnover Rate 215% 138% 272% 206% 64%(6) - --------------------------- Net Assets, End of Period (in thousands) $107 $46 $25 $13 $11 - ---------------------------------------------------------------------------------------------------- (1) November 14, 2000 (commencement of sale) through November 30, 2000. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the period June 30, 2000 (inception of fund) through November 30, 2000. See Notes to Financial Statements. - ------ 28 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ---------------------------------------------------------------------------------------- C CLASS - ---------------------------------------------------------------------------------------- 2004 2003 2002 2001(1) PER-SHARE DATA Net Asset Value, Beginning of Period $4.28 $3.49 $4.87 $4.87 - ---------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------- Net Investment Loss(2) (0.08) (0.07) (0.08) --(3) - ----------------------------- Net Realized and Unrealized Gain (Loss) 0.36 0.86 (1.30) --(3) - ---------------------------------------------------------------------------------------- Total From Investment Operations 0.28 0.79 (1.38) --(3) - ---------------------------------------------------------------------------------------- Net Asset Value, End of Period $4.56 $4.28 $3.49 $4.87 ======================================================================================== TOTAL RETURN(4) 6.54% 22.64% (28.34)% 0.00% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 2.50% 2.50% 2.50% 2.50%(5) - ----------------------------- Ratio of Net Investment Loss to Average Net Assets (1.85)% (1.89)% (1.88)% (1.46)%(5) - ----------------------------- Portfolio Turnover Rate 215% 138% 272% 206%(6) - ----------------------------- Net Assets, End of Period (in thousands) $25 $10 $6 $3 - ---------------------------------------------------------------------------------------- (1) November 29, 2001 (commencement of sale) through November 30, 2001. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not include applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2001. See Notes to Financial Statements. - ------ 29 Technology - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------- INVESTOR CLASS - --------------------------------------------------------------------------------------------------- 2004 2003(1) 2002(1) 2001(1) 2000(1)(2) 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(3) (0.24) (0.19) (0.20) (0.20) (0.20) - --------------------------- Net Realized and Unrealized Gain (Loss) (1.14) 5.37 (6.30) (10.80) (17.90) - --------------------------------------------------------------------------------------------------- Total From Investment Operations (1.38) 5.18 (6.50) (11.00) (18.10) - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $18.20 $19.58 $14.40 $20.90 $31.90 =================================================================================================== TOTAL RETURN(4) (7.05)% 35.97% (31.10)% (34.48)% (36.20)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.50% 1.50% 1.50% 1.50% 1.50%(5) - --------------------------- Ratio of Net Investment Loss to Average Net Assets (1.30)% (1.25)% (1.20)% (0.79)% (0.83)%(5) - --------------------------- Portfolio Turnover Rate 279% 218% 251% 356% 125% - --------------------------- Net Assets, End of Period (in thousands) $166,986 $202,884 $127,767 $173,877 $195,776 - --------------------------------------------------------------------------------------------------- (1) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (2) June 30, 2000 (inception) through November 30, 2000. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 30 Technology - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------------------- 2004 2003(1) 2002(1) 2001(1) 2000(1)(2) 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(3) (0.20) (0.16) (0.20) (0.20) (0.10) - ----------------------------- Net Realized and Unrealized Gain (Loss) (1.16) 5.40 (6.30) (10.70) (23.40) - ------------------------------------------------------------------------------------------------------- Total From Investment Operations (1.36) 5.24 (6.50) (10.90) (23.50) - ------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $18.38 $19.74 $14.50 $21.00 $31.90 ======================================================================================================= TOTAL RETURN(4) (6.89)% 36.14% (30.95)% (34.17)% (42.42)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.30% 1.30% 1.30% 1.30% 1.30%(5) - ----------------------------- Ratio of Net Investment Loss to Average Net Assets (1.10)% (1.05)% (1.00)% (0.59)% (0.70)%(5) - ----------------------------- Portfolio Turnover Rate 279% 218% 251% 356% 125%(6) - ----------------------------- Net Assets, End of Period (in thousands) $7,805 $10,191 $8,444 $9,198 $7,995 - ------------------------------------------------------------------------------------------------------- (1) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (2) July 14, 2000 (commencement of sale) through November 30, 2000. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the period June 30, 2000 (inception of fund) through November 30, 2000. See Notes to Financial Statements. - ------ 31 Technology - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------------------------------- 2004 2003(1) 2002(1) 2001(1) 2000(1)(2) 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(3) (0.27) (0.20) (0.20) (0.20) (0.20) - ----------------------------- Net Realized and Unrealized Gain (Loss) (1.14) 5.27 (6.30) (10.90) (17.90) - -------------------------------------------------------------------------------------------------------- Total From Investment Operations (1.41) 5.07 (6.50) (11.10) (18.10) - -------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $17.96 $19.37 $14.30 $20.80 $31.90 ======================================================================================================== TOTAL RETURN(4) (7.28)% 35.45% (31.25)% (34.80)% (36.20)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.75% 1.75% 1.75% 1.75% 1.75%(5) - ----------------------------- Ratio of Net Investment Loss to Average Net Assets (1.55)% (1.50)% (1.45)% (1.04)% (1.08)%(5) - ----------------------------- Portfolio Turnover Rate 279% 218% 251% 356% 125% - ----------------------------- Net Assets, End of Period (in thousands) $78 $18 $54 $1 $43 - -------------------------------------------------------------------------------------------------------- (1) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (2) June 30, 2000 (commencement of sale) through November 30, 2000. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 32 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders American Century World Mutual Funds, Inc.: We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Life Sciences Fund and Technology Fund, (collectively, the "Funds"), two of the funds comprising American Century World Mutual Funds, Inc., as of November 30, 2004, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of November 30, 2004, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial positions of Life Sciences Fund and Technology Fund as of November 30, 2004, the results of their operations for the year then ended, the changes in their net assets for each of the two years in the period then ended, and their financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Kansas City, Missouri January 14, 2005 - ------ 33 Management The individuals listed below serve as directors or officers of the funds. Each director serves until his or her successor is duly elected and qualified or until he or she retires. Mandatory retirement age for independent directors is 72. Those listed as interested directors are "interested" primarily by virtue of their engagement as officers of American Century Companies, Inc. (ACC) or its wholly-owned subsidiaries, including the funds' investment advisor, American Century Investment Management, Inc. (ACIM); the funds' principal underwriter, American Century Investment Services, Inc. (ACIS); and the funds' transfer agent, American Century Services Corporation (ACSC). The other directors (more than three-fourths of the total numbers) are independent; that is, they have never been employees or officers of, and have no financial interest in, ACC or any of its wholly-owned subsidiaries, including ACIM, ACIS, and ACSC. The directors serve in this capacity for six registered investment companies in the American Century family of funds. All persons named as officers of the funds also serve in a similar capacity for the other 13 investment companies advised by ACIM, unless otherwise noted. Only officers with policy-making functions are listed. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- THOMAS A. BROWN, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1940 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 23 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Formerly Chief Executive Officer/Treasurer, Associated Bearings Company, a corporation engaged in the sale of bearings and power transmission products NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ANDREA C. HALL, PH.D., 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 6 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, Midwest Research Institute NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Midwest Research Institute - -------------------------------------------------------------------------------- D.D. (DEL) HOCK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1935 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 7 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Chairman, Public Service Company of Colorado NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Allied Motion Technologies, Inc. - -------------------------------------------------------------------------------- (continued) - ------ 34 Management INDEPENDENT DIRECTORS (CONTINUED) - -------------------------------------------------------------------------------- DONALD H. PRATT, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1937 POSITION(S) HELD WITH FUND: Director, Vice Chairman of the Board LENGTH OF TIME SERVED (YEARS): 8 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Western Investments, Inc.; Retired Chairman of the Board, Butler Manufacturing Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Atlas-Copco, North America Inc. - -------------------------------------------------------------------------------- GALE E. SAYERS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1943 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 3 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Chief Executive Officer, and Founder, Sayers 40, Inc. NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Triad Hospitals, Inc. - -------------------------------------------------------------------------------- M. JEANNINE STRANDJORD, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 9 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President and Chief Integration Officer, Sprint Corporation (September 2003 to present); Senior Vice President - Financial Services, Sprint Corporation (January 2003 to September 2003); Senior Vice President, Finance - Global Markets Group, Sprint Corporation (December 1998 to January 2003) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, DST Systems, Inc.; Director, Euronet Worldwide, Inc. - -------------------------------------------------------------------------------- TIMOTHY S. WEBSTER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1961 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 2 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President and Chief Executive Officer, American Italian Pasta Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, American Italian Pasta Company - -------------------------------------------------------------------------------- INTERESTED DIRECTORS - -------------------------------------------------------------------------------- JAMES E. STOWERS, JR.,(1) 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1924 POSITION(S) HELD WITH FUND: Director, Chairman of the Board LENGTH OF TIME SERVED (YEARS): 45 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Director, and controlling shareholder, ACC; Chairman, ACSC and other ACC subsidiaries; Director, ACIM, ACSC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- JAMES E. STOWERS III,(1) 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1959 POSITION(S) HELD WITH FUND: Director LENGTH OF TIME SERVED (YEARS): 13 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Co-Chairman, ACC (September 2000 to present); Chief Executive Officer, ACC (June 1996 to September 2000); Director, ACC, ACIM, ACSC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 52 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (1) James E. Stowers, Jr. is the father of James E. Stowers III. (continued) - ------ 35 Management OFFICERS - -------------------------------------------------------------------------------- WILLIAM M. LYONS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1955 POSITION(S) HELD WITH FUND: President LENGTH OF TIME SERVED (YEARS): 3 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC and other ACC subsidiaries (September 2000 to present); President, ACC (June 1997 to present); President, ACIM (September 2002 to present); President, ACIS (July 2003 to present); Chief Operating Officer, ACC (June 1996 to September 2000); Also serves as: Executive Vice President, ACSC and other ACC subsidiaries - -------------------------------------------------------------------------------- ROBERT T. JACKSON, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1946 POSITION(S) HELD WITH FUND: Executive Vice President LENGTH OF TIME SERVED (YEARS): 8 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC (August 1997 to present); Chief Financial Officer, ACC (May 1995 to October 2002); President, ACSC (January 1999 to present); Executive Vice President, ACC (May 1995 to present); Also serves as: Executive Vice President and Chief Financial Officer, ACIM, ACIS and other ACC subsidiaries; and Treasurer, ACIM - -------------------------------------------------------------------------------- MARYANNE ROEPKE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1956 POSITION(S) HELD WITH FUND: Senior Vice President, Treasurer, and Chief Accounting Officer LENGTH OF TIME SERVED (YEARS): 3 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President (April 1998 to present) and Assistant Treasurer, ACSC (September 1985 to present) - -------------------------------------------------------------------------------- DAVID C. TUCKER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1958 POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel LENGTH OF TIME SERVED (YEARS): 3 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President and General Counsel, ACIM, ACIS, ACSC and other ACC subsidiaries (June 1998 to present); Vice President and General Counsel, ACC (June 1998 to present) - -------------------------------------------------------------------------------- DAVID H. REINMILLER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1963 POSITION(S) HELD WITH FUND: Vice President and Chief Compliance Officer LENGTH OF TIME SERVED (YEARS): 3 and less than 1 year PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Compliance Officer, ACSC and ACIM (March 2001 to present); Vice President, ACSC (March 2000 to present); Vice President, ACIM (March 2002 to present); Vice President, ACIS (March 2003 to present); Assistant General Counsel, ACSC (December 1996 to January 2001); Associate General Counsel, ACSC (July 2001 to present) - -------------------------------------------------------------------------------- ROBERT LEACH, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1966 POSITION(S) HELD WITH FUND: Controller LENGTH OF TIME SERVED (YEARS): 6 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACSC (February 2000 to present); Controller-Fund Accounting, ACSC (June 1997 to present) - -------------------------------------------------------------------------------- JON ZINDEL 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Tax Officer LENGTH OF TIME SERVED (YEARS): 6 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, Corporate Tax, ACSC (April 1998 to present); Vice President, ACIM, ACIS, and other ACC subsidiaries (April 1999 to present); President, American Century Employee Benefit Services, Inc. (January 2000 to December 2000); Director, American Century Employee Benefit Services, Inc. (February 2000 to December 2003); Treasurer, American Century Employee Benefit Services, Inc. (December 2000 to December 2003); Treasurer, American Century Ventures, Inc. (December 1999 to April 2001) - -------------------------------------------------------------------------------- The SAI has additional information about the funds' directors and is available without charge upon request by calling 1-800-345-2021. - ------ 36 Share Class Information Four classes of shares are authorized for sale by the funds: Investor Class, Institutional Class, Advisor Class, and C Class. The total expense ratios of Advisor and C Class shares are higher than that of Investor Class shares. The total expense ratio of Institutional Class shares is lower 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. - ------ 37 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' investment 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. Information regarding how the investment manager voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 is available on the "About Us" page at americancentury.com. It is also available at sec.gov. QUARTERLY PORTFOLIO DISCLOSURE The funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The funds' Forms N-Q are available on the SEC's Web site at sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The funds also make their complete schedule of portfolio holdings for the most recent quarter of their fiscal year available on their Web site at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 38 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 COMPOSITE 1500 INDEX combines the S&P 500, MidCap 400 and SmallCap 600 indices. The S&P COMPOSITE 1500 HEALTH CARE INDEX represents those S&P Composite 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 COMPOSITE 1500 TECHNOLOGY INDEX represents those S&P Composite 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 AMEX PHARMACEUTICAL INDEX is a market capitalization-weighted index designed to represent a cross section of widely held, highly capitalized companies involved in various phases of the pharmaceutical industry. The PHILADELPHIA SEMICONDUCTOR INDEX is a price-weighted index comprised of companies primarily involved in the design, distribution, manufacture, and sale of semiconductors. - ------ 39 Notes - ------ 40 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 P.O. Box 419200 Kansas City, MO 64141-6200 PRSRT STD U.S. POSTAGE PAID AMERICAN CENTURY COMPANIES The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. 0501 American Century Investment Services, Inc. SH-ANN-41365S (c)2005 American Century Proprietary Holdings, Inc. All rights reserved.
ITEM 2. CODE OF ETHICS. a. The registrant has adopted a Code of Ethics for Senior Financial Officers that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. b. No response required. c. None. d. None. e. Not applicable. f. The registrant's Code of Ethics for Senior Financial Officers was filed as Exhibit 10(a) to American Century Mutual Fund, Inc.'s Annual Certified Shareholder Report on Form N-CSR, File No. 811-0816, on December 23, 2003, and is incorporated herein by reference. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1) The registrant's board has determined that the registrant has at least one audit committee financial expert serving on its audit committee. (a)(2) D.D. (Del) Hock, Donald H. Pratt, M. Jeannine Strandjord and Timothy Webster are the registrant's designated audit committee financial experts. They are "independent" as defined in Item 3 of Form N-CSR. (a)(3) Not applicable. (b) No response required. (c) No response required. (d) No response required. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Audit Fees. The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were as follows: FY 2003: $127,480 FY 2004: $135,491 (b) Audit-Related Fees. The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item were as follows: For services rendered to the registrant: FY 2003: $0 FY 2004: $0 Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant's investment adviser and its affiliates): FY 2003: $0 FY 2004: $0 (c) Tax Fees. The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were as follows: For services rendered to the registrant: FY 2003: $19,829 FY 2004: $22,102 These services included review of federal and state income tax forms and federal excise tax forms. Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant's investment adviser and its affiliates): FY 2003: $0 FY 2004: $0 (d) All Other Fees. The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item were as follows: For services rendered to the registrant: FY 2003: $0 FY 2004: $0 Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant's investment adviser and its affiliates): FY 2003: $0 FY 2004: $0 (e)(1) In accordance with paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X, before the accountant is engaged by the registrant to render audit or non-audit services, the engagement is approved by the registrant's audit committee. Pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, the registrant's audit committee also pre-approves its accountant's engagements for non-audit services with the registrant's investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant. (e)(2) All services described in each of paragraphs (b) through (d) of this Item were pre-approved before the engagement by the registrant's audit committee pursuant to paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X. Consequently, none of such services were required to be approved by the audit committee pursuant to paragraph (c)(7)(i)(C). (f) The percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was less than 50%. (g) The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant were as follows: FY 2003: $488,281 FY 2004: $439,207 (h) The registrant's investment adviser and accountant have notified the registrant's audit committee of all non-audit services that were rendered by the registrant's accountant to the registrant's investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides services to the registrant, which services were not required to be pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The notification provided to the registrant's audit committee included sufficient details regarding such services to allow the registrant's audit committee to consider the continuing independence of its principal accountant. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. As of the end of the reporting period, the registrant did not have in place procedures by which shareholders may recommend nominees to the registrant's board. ITEM 11. 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 second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Registrant's Code of Ethics for Senior Financial Officers, which is the subject of the disclosure required by Item 2 of Form N-CSR, was filed as Exhibit 10(a) to American Century Mutual Fund, Inc.'s Certified Shareholder Report on Form N-CSR, File No. 811-3706, on December 23, 2003. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as Exhibit 99.302CERT. (a)(3) Not applicable. (b) A certification by the registrant's chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is furnished and attached hereto as Exhibit 99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: AMERICAN CENTURY WORLD MUTUAL FUNDS, INC. By: /s/ William M. Lyons ------------------------------------------------------- Name: William M. Lyons Title: President Date: January 28, 2005 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ William M. Lyons ------------------------------------------------------- Name: William M. Lyons Title: President (principal executive officer) Date: January 28, 2005 By: /s/ Maryanne L. Roepke ------------------------------------------------------- Name: Maryanne L. Roepke Title: Sr. Vice President, Treasurer, and Chief Accounting Officer (principal financial officer) Date: January 28, 2005