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: NOVEMBER 30 ------------------------------------------------------- Date of reporting period: MAY 31, 2005 ------------------------------------------------------- ITEM 1. REPORTS TO STOCKHOLDERS. [front cover] American Century Investments SEMIANNUAL REPORT [photo of man and woman] MAY 31, 2005 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 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. . . . . . . . . . . . . . . . . . . . . . . . . . . .22 OTHER INFORMATION Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .29 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .31 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 The opinions expressed in the Portfolio Commentary reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the semiannual report for the International Growth fund for the six months ended May 31, 2005. The report includes comparative performance figures, portfolio and market commentary, summary tables, a full list of portfolio holdings, and financial statements and highlights. We hope you find this information helpful in monitoring your investment. 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. Your next shareholder report for this fund will be the annual report dated November 30, 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 AMERICAN CENTURY COMPANIES, INC. /s/James E. Stowers III James E. Stowers III CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. - ------ 1 International Growth - Performance TOTAL RETURNS AS OF MAY 31, 2005 --------------------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 10.36% -5.12% 7.62% 8.89% 5/9/91 - -------------------------------------------------------------------------------- MSCI EAFE INDEX 14.62% -0.04% 4.90% 5.71%(1) -- - -------------------------------------------------------------------------------- MSCI EAFE GROWTH INDEX 11.89% -4.27% 2.31% 3.29%(1) -- - -------------------------------------------------------------------------------- Institutional Class 10.69% -4.92% -- 4.98% 11/20/97 - -------------------------------------------------------------------------------- Advisor Class 10.10% -5.36% -- 6.39% 10/2/96 - -------------------------------------------------------------------------------- A Class 1/31/03 No sales charge* 10.09% -- -- 17.54% With sales charge* 3.76% -- -- 14.61% - -------------------------------------------------------------------------------- B Class 1/31/03 No sales charge* 9.18% -- -- 16.67% With sales charge* 5.18% -- -- 15.61% - -------------------------------------------------------------------------------- C Class 9.22% -- -- -1.30% 6/4/01 - -------------------------------------------------------------------------------- R Class(2) 9.95% -- -- 14.29% 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. (2) Class returns would have been lower if the class had not received partial reimbursements of distribution and service fees during the period ended May 31, 2005. 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 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 May 31, 1995
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ONE-YEAR RETURNS OVER 10 YEARS Periods ended May 31 - ----------------------------------------------------------------------------------------------------- 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 - ----------------------------------------------------------------------------------------------------- Investor Class 17.13% 23.36% 30.30% -2.85% 48.27% -22.48% -13.34% -15.25% 22.36% 10.36% - ----------------------------------------------------------------------------------------------------- MSCI EAFE Index 10.67% 7.54% 11.11% 4.36% 17.14% -17.23% -9.60% -12.30% 32.66% 14.62% - ----------------------------------------------------------------------------------------------------- MSCI EAFE Growth Index 9.01% 4.93% 9.87% 2.97% 20.82% -27.37% -11.56% -11.91% 27.00% 11.89% - ----------------------------------------------------------------------------------------------------- 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 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: KEITH CREVELING AND MICHAEL PERELSTEIN. International Growth advanced 0.94%* during the six months ended May 31, 2005, while its benchmark, the Morgan Stanley Capital International (MSCI) EAFE Index, returned 1.81%. The period began with the world's equity markets rallying in December as oil prices declined from record highs. But many developed markets were mostly restrained during the first five months of 2005 as high prices for commodities, especially oil, raised fears that inflation might accelerate, leading to slower economic growth and lower corporate profits. Despite such uncertainty in the investment landscape, most of the sectors in which we were invested advanced, and seven of the portfolio's top-10 holdings on average contributed to International Growth's return. Currency played a role during the period, as the movement of the dollar versus other currencies reduced the portfolio's return. BOOST FROM INDUSTRIALS, FINANCIALS The industrial sector contributed most to our return, led by construction and engineering companies in France and Spain. The portfolio benefited most from Vinci SA, a French construction company with global reach. Vinci reported during the period that profit increased to $633 million during the second half of 2004, a 39% increase from the same period the previous year. The company benefited from concessions that manage parking lots, toll-road operations, and numerous construction projects in France and elsewhere. Another holding in the industry, Grupo Ferrovial SA, one of Spain's largest construction companies, made the second-largest contribution to the portfolio during the period. International Growth's stake in the industrial sector also outperformed the MSCI EAFE Index, the portfolio's benchmark for its relative performance. Our complement of financial holdings, the portfolio's largest sector stake on average during the period, also contributed to absolute performance. The advance came mostly on the strength of insurance companies, led by Axa SA, Europe's second-largest insurer. Axa benefited from increased sales of life TOP TEN HOLDINGS AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- Total SA 2.8% 3.0% - -------------------------------------------------------------------------------- GlaxoSmithKline plc 2.8% -- - -------------------------------------------------------------------------------- BP plc 2.8% 2.8% - -------------------------------------------------------------------------------- Novartis AG 2.4% 2.1% - -------------------------------------------------------------------------------- Vodafone Group plc 2.3% 1.6% - -------------------------------------------------------------------------------- Nestle SA 1.9% -- - -------------------------------------------------------------------------------- AstraZeneca plc 1.7% -- - -------------------------------------------------------------------------------- Reckitt Benckiser plc 1.6% 1.7% - -------------------------------------------------------------------------------- Tesco plc 1.6% 2.0% - -------------------------------------------------------------------------------- Diageo plc 1.5% -- - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. Returns for periods less than one year are not annualized. (continued) - ------ 4 International Growth - Portfolio Commentary and saving plans in Belgium, France and Southern Europe. Commercial banks, which represented the portfolio's heaviest average industry weighting, also lifted the sector. The Commonwealth Bank of Australia led contributors among banks. The portfolio's position in the financial sector also outperformed the index. HEALTH CARE CONTRIBUTES Our stake in the health care sector was made up mostly of pharmaceutical companies, and many of them contributed to the portfolio's return. Switzerland's Roche Holding AG, the world's biggest maker of cancer medicines and diagnostic tests, led the advance. The company reported during the period that sales during the first quarter of 2005 increased 14%, boosted by demand for the blood-cancer treatment Mabthera and colon-cancer drug Avastin. Drugmakers GlaxoSmithKline, Novartis, AstraZeneca and Sanofi-Aventis also contributed to International Growth. MATERIALS, TECHNOLOGY LAG Although most sectors contributed to the portfolio, several detracted from International Growth's return and slowed our performance against the MSCI EAFE Index. Regarding relative performance, the materials sector detracted most. The portfolio's holdings in the containers and packaging industry led the retreat, with our stake in Australia's Amcor Limited detracting most. Amcor, one of the world's largest packaging companies, declined partly because of an investigation into anti-competitive behavior that led to a change in management. The information technology sector detracted most from our absolute return, mostly due to weakness among our holdings in the software industry. The technology sector also lagged the index. OUR COMMITMENT We remain committed to looking for stocks of growing foreign companies. Management of the fund is based on the belief that, over the long term, stock price movements follow growth in earnings, revenues and/or cash flow. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- Common Stocks 96.4% 98.5% - -------------------------------------------------------------------------------- Temporary Cash Investments 4.0% 1.7% - -------------------------------------------------------------------------------- Other Assets and Liabilities* -0.4% -0.2% - -------------------------------------------------------------------------------- *Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- United Kingdom 24.9% 16.6% - -------------------------------------------------------------------------------- Japan 16.7% 16.8% - -------------------------------------------------------------------------------- France 13.7% 14.9% - -------------------------------------------------------------------------------- Switzerland 7.5% 7.0% - -------------------------------------------------------------------------------- Germany 5.5% 8.3% - -------------------------------------------------------------------------------- Australia 5.5% 5.6% - -------------------------------------------------------------------------------- Spain 3.6% 3.6% - -------------------------------------------------------------------------------- Ireland 2.8% 1.8% - -------------------------------------------------------------------------------- Italy 2.6% 2.4% - -------------------------------------------------------------------------------- Other Countries 13.6% 21.5% - -------------------------------------------------------------------------------- Cash and Equivalents(+) 3.6% 1.5% - -------------------------------------------------------------------------------- (+)Includes temporary cash investments, collateral received for securities lending and other assets and liabilities. - ------ 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 December 1, 2004 to May 31, 2005. 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(1) ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 12/1/04 -- EXPENSE 12/1/04 5/31/05 5/31/05 RATIO(1) - -------------------------------------------------------------------------------- INTERNATIONAL GROWTH SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,009.40 $6.11 1.22% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,010.30 $5.11 1.02% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,008.00 $7.36 1.47% - -------------------------------------------------------------------------------- A Class $1,000 $1,008.00 $7.36 1.47% - -------------------------------------------------------------------------------- B Class $1,000 $1,003.90 $11.09 2.22% - -------------------------------------------------------------------------------- C Class $1,000 $1,004.00 $11.09 2.22% - -------------------------------------------------------------------------------- R Class (after reimbursement)(2) $1,000 $1,007.80 $7.91 1.58% - -------------------------------------------------------------------------------- R Class (before reimbursement) $1,000 $1,007.80(3) $8.61 1.72% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,018.85 $6.14 1.22% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,019.85 $5.14 1.02% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,017.60 $7.39 1.47% - -------------------------------------------------------------------------------- A Class $1,000 $1,017.60 $7.39 1.47% - -------------------------------------------------------------------------------- B Class $1,000 $1,013.86 $11.15 2.22% - -------------------------------------------------------------------------------- C Class $1,000 $1,013.86 $11.15 2.22% - -------------------------------------------------------------------------------- R Class (after reimbursement)(2) $1,000 $1,017.05 $7.95 1.58% - -------------------------------------------------------------------------------- R Class (before reimbursement) $1,000 $1,016.36 $8.65 1.72% - -------------------------------------------------------------------------------- (1) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (2) During the six months ended May 31, 2005, the class received a partial reimbursement of its service and distribution fee. Had fees not been reimbursed, the annualized ratio of operating expenses to average net assets would have been 1.72%. (3) Ending account value assumes the return earned after reimbursement. The return would have been lower had the fee not been reimbursed and would have resulted in a lower ending account value. - ------ 7 International Growth - Schedule of Investments MAY 31, 2005 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS* -- 96.4% AUSTRALIA -- 5.5% - -------------------------------------------------------------------------------- 5,315,704 Amcor Limited $ 27,236 - -------------------------------------------------------------------------------- 3,149,355 BHP Billiton Limited 39,698 - -------------------------------------------------------------------------------- 1,081,440 Commonwealth Bank of Australia 30,279 - -------------------------------------------------------------------------------- 10,375,420 Macquarie Infrastructure Group 30,500 - -------------------------------------------------------------------------------- 2,197,700 QBE Insurance Group Limited(1) 24,364 - -------------------------------------------------------------------------------- 152,077 - -------------------------------------------------------------------------------- AUSTRIA -- 0.9% - -------------------------------------------------------------------------------- 534,464 Erste Bank der Oesterreichischen Sparkassen AG(1) 26,283 - -------------------------------------------------------------------------------- BELGIUM -- 1.1% - -------------------------------------------------------------------------------- 368,630 KBC Groupe 29,889 - -------------------------------------------------------------------------------- CANADA -- 1.9% - -------------------------------------------------------------------------------- 186,228 EnCana Corp. 6,461 - -------------------------------------------------------------------------------- 854,115 Shoppers Drug Mart Corporation 28,032 - -------------------------------------------------------------------------------- 525,400 Thomson Corp.(1) 17,730 - -------------------------------------------------------------------------------- 52,223 - -------------------------------------------------------------------------------- DENMARK -- 0.7% - -------------------------------------------------------------------------------- 382,230 Novo Nordisk AS Cl B 19,654 - -------------------------------------------------------------------------------- FRANCE -- 13.7% - -------------------------------------------------------------------------------- 427,910 Accor SA(1) 19,738 - -------------------------------------------------------------------------------- 1,099,249 Axa SA(1) 26,792 - -------------------------------------------------------------------------------- 341,960 Essilor International SA Cie Generale D'Optique(1) 23,455 - -------------------------------------------------------------------------------- 144,730 France Telecom SA(2) 4,144 - -------------------------------------------------------------------------------- 351,960 Groupe Danone(1) 32,370 - -------------------------------------------------------------------------------- 315,180 Lafarge SA(1) 28,638 - -------------------------------------------------------------------------------- 127,320 Pernod-Ricard SA(1) 19,659 - -------------------------------------------------------------------------------- 137,800 Pinault-Printemps-Redoute(1) 13,648 - -------------------------------------------------------------------------------- 212,360 Sanofi-Aventis(1) 19,152 - -------------------------------------------------------------------------------- 310,020 Schneider Electric SA(1) 22,810 - -------------------------------------------------------------------------------- 345,870 Societe Generale Cl A(1) 33,980 - -------------------------------------------------------------------------------- 358,900 Total SA(1) 79,262 - -------------------------------------------------------------------------------- 405,782 Vinci SA(1) 30,379 - -------------------------------------------------------------------------------- 939,670 Vivendi Universal SA(1) 28,625 - -------------------------------------------------------------------------------- 382,652 - -------------------------------------------------------------------------------- GERMANY -- 5.5% - -------------------------------------------------------------------------------- 84,290 Adidas-Salomon AG(1) 14,006 - -------------------------------------------------------------------------------- 240,010 BASF AG(1) 15,919 - -------------------------------------------------------------------------------- 416,940 Continental AG(1) 29,532 - -------------------------------------------------------------------------------- 1,922,880 Deutsche Telekom(1) 35,724 - -------------------------------------------------------------------------------- 250,870 E.On AG(1) 21,720 - -------------------------------------------------------------------------------- 284,751 Fresenius Medical Care AG(1) 22,366 - -------------------------------------------------------------------------------- 285,560 Metro AG(1) 14,229 - -------------------------------------------------------------------------------- 153,496 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- GREECE -- 2.0% - -------------------------------------------------------------------------------- 191,215 Alpha Bank A.E. $ 5,265 - -------------------------------------------------------------------------------- 788,250 Greek Organization of Football Prognostics SA 21,511 - -------------------------------------------------------------------------------- 837,560 National Bank of Greece SA 28,277 - -------------------------------------------------------------------------------- 55,053 - -------------------------------------------------------------------------------- HONG KONG -- 1.0% - -------------------------------------------------------------------------------- 4,725,500 CLP Holdings Ltd. 27,030 - -------------------------------------------------------------------------------- INDIA -- 0.4% - -------------------------------------------------------------------------------- 346,300 Tata Consultancy Services Ltd. 10,567 - -------------------------------------------------------------------------------- IRELAND -- 2.8% - -------------------------------------------------------------------------------- 2,713,720 Anglo Irish Bank Corporation 31,719 - -------------------------------------------------------------------------------- 1,869,330 Bank of Ireland 28,565 - -------------------------------------------------------------------------------- 410,150 Ryanair Holdings plc ADR(1)(2) 18,740 - -------------------------------------------------------------------------------- 79,024 - -------------------------------------------------------------------------------- ITALY -- 2.6% - -------------------------------------------------------------------------------- 1,492,100 Banco Popolare di Verona e Novara Scrl(1) 27,023 - -------------------------------------------------------------------------------- 1,111,600 ENI SpA(1) 28,392 - -------------------------------------------------------------------------------- 1,348,420 Saipem SpA(1) 17,022 - -------------------------------------------------------------------------------- 72,437 - -------------------------------------------------------------------------------- JAPAN -- 16.7% - -------------------------------------------------------------------------------- 1,748,000 Ajinomoto Co. Inc. 19,383 - -------------------------------------------------------------------------------- 955,200 Astellas Pharma Inc. 34,161 - -------------------------------------------------------------------------------- 2,651,000 Bank of Yokohama Ltd. (The) 15,248 - -------------------------------------------------------------------------------- 991,500 Daikin Industries Ltd. 24,264 - -------------------------------------------------------------------------------- 5,340 East Japan Railway Company 26,530 - -------------------------------------------------------------------------------- 632,600 Eisai Co. Ltd.(1) 21,458 - -------------------------------------------------------------------------------- 826,100 Fuji Photo Film Co. Ltd. 25,737 - -------------------------------------------------------------------------------- 443,100 Honda Motor Co., Ltd. 21,810 - -------------------------------------------------------------------------------- 115,700 Hoya Corp. 12,936 - -------------------------------------------------------------------------------- 511,000 Kao Corp. 11,846 - -------------------------------------------------------------------------------- 3,380 KDDI Corp. 15,515 - -------------------------------------------------------------------------------- 1,122,000 Komatsu Ltd.(1) 8,429 - -------------------------------------------------------------------------------- 1,991,000 Matsushita Electric Industrial Co., Ltd.(1) 29,767 - -------------------------------------------------------------------------------- 1,490 Mitsubishi Tokyo Financial Group, Inc.(1) 12,429 - -------------------------------------------------------------------------------- 778,000 Omron Corp. 17,139 - -------------------------------------------------------------------------------- 203,100 ORIX Corporation 29,335 - -------------------------------------------------------------------------------- 8,768,000 Osaka Gas Co. Ltd. 27,155 - -------------------------------------------------------------------------------- 301,700 Shin-Etsu Chemical Co., Ltd. 11,179 - -------------------------------------------------------------------------------- 445,000 Shiseido Co., Ltd. 5,361 - -------------------------------------------------------------------------------- 1,090,000 Sumitomo Metal Mining Co. Ltd.(1) 7,023 - -------------------------------------------------------------------------------- 5,686,000 Taisei Corp. 18,920 - -------------------------------------------------------------------------------- 276,860 Takefuji Corp. 17,200 - -------------------------------------------------------------------------------- 2,832,000 Toray Industries Inc.(1) 12,608 - -------------------------------------------------------------------------------- 309,900 Toyota Motor Corp. 11,026 - -------------------------------------------------------------------------------- 529,600 Yamada Denki Co Ltd.(1) 28,899 - -------------------------------------------------------------------------------- 465,358 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 8 International Growth - Schedule of Investments MAY 31, 2005 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- MEXICO -- 0.7% - -------------------------------------------------------------------------------- 363,010 America Movil SA de CV Series L ADR $ 20,575 - -------------------------------------------------------------------------------- MULTI-NATIONAL -- 0.4% - -------------------------------------------------------------------------------- 72,000 iShares MSCI EAFE Index Fund 11,149 - -------------------------------------------------------------------------------- NETHERLANDS -- 2.3% - -------------------------------------------------------------------------------- 1,174,150 ING Groep N.V.(1) 32,475 - -------------------------------------------------------------------------------- 828,120 Royal Numico N.V.(2) 33,022 - -------------------------------------------------------------------------------- 65,497 - -------------------------------------------------------------------------------- NORWAY -- 1.6% - -------------------------------------------------------------------------------- 2,794,750 DnB NOR ASA(1) 27,079 - -------------------------------------------------------------------------------- 2,156,410 Telenor ASA(1) 17,217 - -------------------------------------------------------------------------------- 44,296 - -------------------------------------------------------------------------------- SPAIN -- 3.6% - -------------------------------------------------------------------------------- 465,300 Banco Popular Espanol SA 27,702 - -------------------------------------------------------------------------------- 1,351,816 Cintra Concesiones de Infraestructuras de Transporte SA(1) 14,736 - -------------------------------------------------------------------------------- 478,537 Grupo Ferrovial SA(1) 29,468 - -------------------------------------------------------------------------------- 1,619,418 Telefonica SA(1) 27,117 - -------------------------------------------------------------------------------- 99,023 - -------------------------------------------------------------------------------- SWEDEN -- 0.6% - -------------------------------------------------------------------------------- 389,120 Volvo AB Cl B(1) 15,853 - -------------------------------------------------------------------------------- SWITZERLAND -- 7.5% - -------------------------------------------------------------------------------- 673,460 Compagnie Financiere Richemont AG A Shares 20,499 - -------------------------------------------------------------------------------- 200,460 Nestle SA(1) 52,748 - -------------------------------------------------------------------------------- 1,381,840 Novartis AG(1) 67,465 - -------------------------------------------------------------------------------- 278,355 Roche Holding AG(1) 35,095 - -------------------------------------------------------------------------------- 412,406 UBS AG 31,796 - -------------------------------------------------------------------------------- 207,603 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 24.9% - -------------------------------------------------------------------------------- 1,091,360 AstraZeneca plc 46,323 - -------------------------------------------------------------------------------- 2,594,680 BAA plc 29,361 - -------------------------------------------------------------------------------- 2,553,600 BG Group plc 19,345 - -------------------------------------------------------------------------------- 7,809,110 BP plc 78,217 - -------------------------------------------------------------------------------- 2,972,950 Diageo plc 42,720 - -------------------------------------------------------------------------------- 3,200,580 GlaxoSmithKline plc 79,126 - -------------------------------------------------------------------------------- 376,050 HSBC Holdings plc 5,934 - -------------------------------------------------------------------------------- 9,466,490 Legal & General Group plc 18,671 - -------------------------------------------------------------------------------- 697,660 Man Group plc 16,715 - -------------------------------------------------------------------------------- 2,667,900 National Grid Transco plc 26,067 - -------------------------------------------------------------------------------- 936,910 Next plc 24,525 - -------------------------------------------------------------------------------- 1,473,782 Reckitt Benckiser plc 45,008 - -------------------------------------------------------------------------------- 3,465,650 Reed Elsevier plc 33,074 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 1,376,704 Royal Bank of Scotland Group plc $ 40,442 - -------------------------------------------------------------------------------- 2,954,200 Smith & Nephew plc 29,187 - -------------------------------------------------------------------------------- 7,702,620 Tesco plc 43,826 - -------------------------------------------------------------------------------- 3,271,120 Unilever plc 31,902 - -------------------------------------------------------------------------------- 25,335,700 Vodafone Group plc 63,902 - -------------------------------------------------------------------------------- 900,180 Wolseley plc 18,442 - -------------------------------------------------------------------------------- 692,787 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $2,321,696) 2,682,526 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 4.0% Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 4.59% - 4.64%, 11/15/21 - 8/15/25, valued at $115,275), in a joint trading account at 2.91%, dated 5/31/05, due 6/1/05 (Delivery value $111,609) 111,600 - -------------------------------------------------------------------------------- Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.625% - 7.50%, 11/15/24 - 2/15/27, valued at $714), in a joint trading account at 2.93%, dated 5/31/05, due 6/1/05 (Delivery value $700) 700 - -------------------------------------------------------------------------------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $112,300) 112,300 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 30.9% REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 3.05%, dated 5/31/05, due 6/1/05 (Delivery value $137,747) 137,735 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 3.06%, dated 5/31/05, due 6/1/05 (Delivery value $721,061) 721,000 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $858,735) 858,735 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 131.3% (Cost $3,292,731) 3,653,561 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (31.3)% (870,826) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $2,782,735 ================================================================================ See Notes to Financial Statements. (continued) - ------ 9 International Growth - Schedule of Investments MAY 31, 2005 (UNAUDITED) MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 20.8% - -------------------------------------------------------------------------------- Health Care 14.3% - -------------------------------------------------------------------------------- Consumer Staples 13.7% - -------------------------------------------------------------------------------- Consumer Discretionary 12.2% - -------------------------------------------------------------------------------- Industrials 10.4% - -------------------------------------------------------------------------------- Energy 8.2% - -------------------------------------------------------------------------------- Telecommunication Services 6.6% - -------------------------------------------------------------------------------- Materials 5.1% - -------------------------------------------------------------------------------- Utilities 3.7% - -------------------------------------------------------------------------------- Information Technology 1.0% - -------------------------------------------------------------------------------- Diversified 0.4% - -------------------------------------------------------------------------------- Cash and Equivalents(+) 3.6% - -------------------------------------------------------------------------------- (+)Includes temporary cash investments, collateral received for securities lending and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt EAFE = Europe, Australasia, and Far East MSCI = Morgan Stanley Capital International *The securities are listed under their country of incorporation which may differ from the country where they have their greatest economic exposure. (1) Security, or a portion thereof, was on loan as of May 31, 2005. (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 MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $2,433,996) - including $807,752 of securities on loan $2,794,826 - -------------------------------------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $858,735) 858,735 - -------------------------------------------------------------------------------- Total investment securities, at value (cost of $3,292,731) 3,653,561 - -------------------------------------------------------------- Foreign currency holdings, at value (cost of $69) 72 - -------------------------------------------------------------- Receivable for investments sold 25,434 - -------------------------------------------------------------- Receivable for capital shares sold 148 - -------------------------------------------------------------- Dividends and interest receivable 12,672 - -------------------------------------------------------------------------------- 3,691,887 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payable for collateral received on securities on loan 858,735 - -------------------------------------------------------------- Disbursements in excess of demand deposit cash 21,678 - -------------------------------------------------------------- Payable for investments purchased 25,767 - -------------------------------------------------------------- Accrued management fees 2,842 - -------------------------------------------------------------- Distribution fees payable 65 - -------------------------------------------------------------- Service fees (and distribution fees -- A Class) payable 65 - -------------------------------------------------------------------------------- 909,152 - -------------------------------------------------------------------------------- NET ASSETS $2,782,735 ================================================================================ See Notes to Financial Statements. (continued) - ------ 11 Statement of Assets and Liabilities MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS) - -------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $3,375,261 - -------------------------------------------------------------- Undistributed net investment income 5,325 - -------------------------------------------------------------- Accumulated net realized loss on investment and foreign currency transactions (958,679) - -------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 360,828 - -------------------------------------------------------------------------------- $2,782,735 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $2,206,161,093 - -------------------------------------------------------------- Shares outstanding 251,203,438 - -------------------------------------------------------------- Net asset value per share $8.78 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $271,641,648 - -------------------------------------------------------------- Shares outstanding 30,878,699 - -------------------------------------------------------------- Net asset value per share $8.80 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $279,622,703 - -------------------------------------------------------------- Shares outstanding 31,909,519 - -------------------------------------------------------------- Net asset value per share $8.76 - -------------------------------------------------------------------------------- A CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $17,830,511 - -------------------------------------------------------------- Shares outstanding 2,032,667 - -------------------------------------------------------------- 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 $1,353,288 - -------------------------------------------------------------- Shares outstanding 154,959 - -------------------------------------------------------------- Net asset value per share $8.73 - -------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $5,127,492 - -------------------------------------------------------------- Shares outstanding 590,102 - -------------------------------------------------------------- Net asset value per share $8.69 - -------------------------------------------------------------------------------- R CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $998,258 - -------------------------------------------------------------- Shares outstanding 113,841 - -------------------------------------------------------------- Net asset value per share $8.77 - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 12 Statement of Operations FOR THE SIX MONTHS ENDED MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- INVESTMENT INCOME - -------------------------------------------------------------------------------- INCOME: - -------------------------------------------------------------- Dividends (net of foreign taxes withheld of $4,168) $ 36,814 - -------------------------------------------------------------- Securities lending 1,164 - -------------------------------------------------------------- Interest 899 - -------------------------------------------------------------------------------- 38,877 - -------------------------------------------------------------------------------- EXPENSES: - -------------------------------------------------------------- Management fees 17,300 - -------------------------------------------------------------- Distribution fees: - -------------------------------------------------------------- Advisor Class 357 - -------------------------------------------------------------- B Class 5 - -------------------------------------------------------------- C Class 20 - -------------------------------------------------------------- Service fees: - -------------------------------------------------------------- Advisor Class 357 - -------------------------------------------------------------- B Class 2 - -------------------------------------------------------------- C Class 7 - -------------------------------------------------------------- Service and distribution fees: - -------------------------------------------------------------- A Class 20 - -------------------------------------------------------------- R Class 2 - -------------------------------------------------------------- Directors' fees and expenses 23 - -------------------------------------------------------------- Other expenses 30 - -------------------------------------------------------------------------------- 18,123 - -------------------------------------------------------------------------------- Amount reimbursed (1) - -------------------------------------------------------------------------------- 18,122 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 20,755 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- NET REALIZED GAIN ON: - -------------------------------------------------------------- Investment transactions 204,486 - -------------------------------------------------------------- Foreign currency transactions 60,832 - -------------------------------------------------------------------------------- 265,318 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION ON: - -------------------------------------------------------------- Investments (42,757) - -------------------------------------------------------------- Translation of assets and liabilities in foreign currencies (211,826) - -------------------------------------------------------------------------------- (254,583) - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN 10,735 - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 31,490 ================================================================================ See Notes to Financial Statements. - ------ 13 Statement of Changes in Net Assets SIX MONTHS ENDED MAY 31, 2005 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- DECREASE IN NET ASSETS 2005 2004 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income $ 20,755 $ 17,122 - ---------------------------------------------------- Net realized gain 265,318 371,360 - ---------------------------------------------------- Change in net unrealized appreciation (254,583) 93,651 - -------------------------------------------------------------------------------- Net increase in net assets resulting from operations 31,490 482,133 - -------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------- From net investment income: - ---------------------------------------------------- Investor Class (25,087) (18,919) - ---------------------------------------------------- Institutional Class (3,484) (2,929) - ---------------------------------------------------- Advisor Class (2,209) (1,198) - ---------------------------------------------------- A Class (114) (47) - ---------------------------------------------------- B Class (1) -- - ---------------------------------------------------- C Class (2) -- - ---------------------------------------------------- R Class (2) -- - -------------------------------------------------------------------------------- Decrease in net assets from distributions (30,899) (23,093) - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Net decrease in net assets from capital share transactions (192,353) (538,328) - -------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS (191,762) (79,288) NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 2,974,497 3,053,785 - -------------------------------------------------------------------------------- End of period $2,782,735 $2,974,497 ================================================================================ Undistributed net investment income $5,325 $15,469 ================================================================================ See Notes to Financial Statements. - ------ 14 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. International Growth Fund (the fund) is one fund in a series issued by the corporation. The fund is diversified under the 1940 Act. The fund's investment objective is to seek capital growth. The fund pursues 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. 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 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 MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 or American Century Global Investment Management, Inc. (ACGIM), may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. INCOME TAX STATUS -- It is the fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income, if any, are generally declared and paid annually. Distributions from net realized gains, if any, are generally declared and paid twice per year. REDEMPTION -- The fund may impose a 2% redemption fee on shares held less than 60 days. The fee may not be applicable to all classes. The redemption fee is recorded as a reduction in the cost of shares redeemed. The redemption fee is retained by the fund and helps cover transaction costs that long-term investors may bear when a fund sells securities to meet investor redemptions. INDEMNIFICATIONS -- Under the corporation organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The fund's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the fund. The risk of material loss from such claims is considered by management to be remote. 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 MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACGIM (the investment advisor), under which ACGIM 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 ACGIM. The fee is computed and accrued daily based on the daily net assets of the 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 advisor'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 advisor 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 the fund for the six months ended May 31, 2005 was 1.22% for the Investor Class, A Class, B Class, C Class, and R Class, and 1.02% and 0.97% for the Institutional Class and Advisor Class, respectively. ACGIM has entered into a Subadvisory Agreement with ACIM (the investment subadvisor) on behalf of the fund. The subadvisor makes investment decisions for the cash portion of the fund in accordance with the fund's investments objectives, policies and restrictions under the supervision of ACGIM and the Board of Directors. ACGIM pays all costs associated with retaining ACIM as the subadvisor of the fund. 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 service and distribution 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. (continued) - ------ 17 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) During the six months ended May 31, 2005, the Advisor Class, A Class, C Class and R Class received reimbursement of distribution and service fees as follows: - --------------------------------------------------------------------------------- $ IN FULL ADVISOR A C R - --------------------------------------------------------------------------------- Distribution fee $91 N/A $7 N/A - --------------------------------------------------------------------------------- Service fee -- N/A $3 N/A - --------------------------------------------------------------------------------- Service and Distribution fee N/A $1 N/A $459 - --------------------------------------------------------------------------------- The reimbursements for the Advisor Class, A Class and C Class had no impact on the annualized ratios of operating expenses and net investment income to average net assets. Fees incurred under the plans during the six months ended May 31, 2005, 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 advisor, ACGIM, the corporation's investment subadvisor, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services, LLC (formerly American Century Services Corporation). The fund has a bank line of credit agreement and a securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the fund and a wholly owned subsidiary of J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. 3. INVESTMENT TRANSACTIONS Purchases and sales of investment transactions, excluding short-term investments, for the six months ended May 31, 2005, were $1,352,238 and $1,610,585, respectively. 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED 1,000,000 ================================================================================ Sold 23,400 $ 209,333 - ------------------------------------------------- Issued in reinvestment of distributions 2,522 22,020 - ------------------------------------------------- Redeemed (47,155) (421,845)(1) - -------------------------------------------------------------------------------- Net decrease (21,233) $(190,492) ================================================================================ 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)(2) - -------------------------------------------------------------------------------- Net decrease (59,377) $ (480,991) ================================================================================ (1) Net of redemption fees of $31. (2) Net of redemption fees of $17. (continued) - ------ 18 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED 150,000 ================================================================================ Sold 5,578 $ 50,229 - ------------------------------------------------- Issued in reinvestment of distributions 363 3,171 - ------------------------------------------------- Redeemed (7,203) (64,484)(1) - -------------------------------------------------------------------------------- Net decrease (1,262) $(11,084) ================================================================================ 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)(2) - -------------------------------------------------------------------------------- Net decrease (7,771) $ (63,293) ================================================================================ ADVISOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED 100,000 ================================================================================ Sold 7,454 $ 66,684 - ------------------------------------------------- Issued in reinvestment of distributions 240 2,089 - ------------------------------------------------- Redeemed (7,193) (64,195)(1) - -------------------------------------------------------------------------------- Net increase 501 $ 4,578 ================================================================================ 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)(2) - -------------------------------------------------------------------------------- Net decrease (418) $ (2,859) ================================================================================ A CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED 25,000 ================================================================================ Sold 608 $ 5,448 - ------------------------------------------------- Issued in reinvestment of distributions 13 110 - ------------------------------------------------- Redeemed (204) (1,829) - -------------------------------------------------------------------------------- Net increase 417 $ 3,729 ================================================================================ 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 ================================================================================ (1) Net of redemption fees of $1 and $7 for the Institutional Class and Advisor Class, respectively. (2) Net of redemption fees of $4 and $4 for the Institutional Class and Advisor Class, respectively. (continued) - ------ 19 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- B CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED 25,000 ================================================================================ Sold 32 $280 - ------------------------------------------------- Redeemed (4) (33) - -------------------------------------------------------------------------------- Net increase 28 $247 ================================================================================ YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 25,000 ================================================================================ Sold 72 $ 583 - ------------------------------------------------- Redeemed (14) (112) - -------------------------------------------------------------------------------- Net increase 58 $ 471 ================================================================================ C CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED 25,000 ================================================================================ Sold 100 $ 884 - ------------------------------------------------- Issued in reinvestment of distributions -- 2 - ------------------------------------------------- Redeemed (96) (848) - -------------------------------------------------------------------------------- Net increase 4 $ 38 ================================================================================ YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 25,000 ================================================================================ Sold 389 $3,119 - ------------------------------------------------- Redeemed (63) (505) - -------------------------------------------------------------------------------- Net increase 326 $2,614 ================================================================================ R CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED 5,000 ================================================================================ Sold 76 $677 - ------------------------------------------------- Issued in reinvestment of distributions -- 2 - ------------------------------------------------- Redeemed (5) (48) - -------------------------------------------------------------------------------- Net increase 71 $631 ================================================================================ YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 50,000 ================================================================================ Sold 328 $ 2,709 - ------------------------------------------------- Redeemed (285) (2,367) - -------------------------------------------------------------------------------- Net increase 43 $ 342 ================================================================================ (continued) - ------ 20 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 5. SECURITIES LENDING As of May 31, 2005, securities in the fund valued at $807,752 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 or ACGIM. 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 $858,735. 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 or ACGIM, has a $575 million unsecured bank line of credit agreement with JPMCB, which was renewed from $650 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 six months ended May 31, 2005. 7. RISK FACTORS There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions. Investing in emerging markets may accentuate these risks. 8. FEDERAL TAX INFORMATION The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of May 31, 2005, the components of investments for federal income tax purposes were as follows: - -------------------------------------------------------------------------------- Federal tax cost of investments $3,297,751 ================================================================================ Gross tax appreciation of investments $399,299 - ------------------------------------------------------- Gross tax depreciation of investments (43,489) - -------------------------------------------------------------------------------- Net tax appreciation of investments $355,810 ================================================================================ The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. As of November 30, 2004, the fund had capital loss carryovers of $1,217,235 that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers of $522,319, $637,150, and $57,766 expire in 2009, 2010, and 2011, respectively. - ------ 21 International Growth - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted) - ---------------------------------------------------------------------------------------------- INVESTOR CLASS - ---------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001 2000 - ---------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.79 $7.54 $6.69 $7.86 $12.05 $13.02 - ---------------------------------------------------------------------------------------------- Income From Investment Operations - ---------------- Net Investment Income (Loss)(2) 0.06 0.05 0.06 0.06 0.04 (0.02) - ---------------- Net Realized and Unrealized Gain (Loss) 0.02 1.26 0.85 (1.20) (2.50) (0.22) - ---------------------------------------------------------------------------------------------- Total From Investment Operations 0.08 1.31 0.91 (1.14) (2.46) (0.24) - ---------------------------------------------------------------------------------------------- Distributions - ---------------- From Net Investment Income (0.09) (0.06) (0.06) (0.03) -- (0.01) - ---------------- From Net Realized Gains -- -- -- -- (1.73) (0.72) - ---------------------------------------------------------------------------------------------- Total Distributions (0.09) (0.06) (0.06) (0.03) (1.73) (0.73) - ---------------------------------------------------------------------------------------------- Net Asset Value, End of Period $8.78 $8.79 $7.54 $6.69 $7.86 $12.05 ============================================================================================== TOTAL RETURN(3) 0.94% 17.45% 13.70% (14.54)% (24.18)% (2.47)% - ---------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.22%(4) 1.26% 1.28% 1.25% 1.21% 1.20% - ---------------- Ratio of Net Investment Income (Loss) to Average Net Assets 1.42%(4) 0.57% 0.84% 0.76% 0.48% (0.16)% - ---------------- Portfolio Turnover Rate 47% 118% 169% 215% 178% 116% - ---------------- Net Assets, End of Period (in thousands) $2,206,161 $2,395,249 $2,502,831 $2,410,600 $3,290,867 $4,455,433 - ---------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (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. - ------ 22 International Growth - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted) - ---------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ---------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001 2000 - ---------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.82 $7.56 $6.71 $7.88 $12.07 $13.05 - ---------------------------------------------------------------------------------------------- Income From Investment Operations - ---------------- Net Investment Income(2) 0.07 0.06 0.07 0.07 0.06 0.01 - ---------------- Net Realized and Unrealized Gain (Loss) 0.02 1.27 0.85 (1.19) (2.50) (0.24) - ---------------------------------------------------------------------------------------------- Total From Investment Operations 0.09 1.33 0.92 (1.12) (2.44) (0.23) - ---------------------------------------------------------------------------------------------- Distributions - ---------------- From Net Investment Income (0.11) (0.07) (0.07) (0.05) -- (0.03) - ---------------- From Net Realized Gains -- -- -- -- (1.75) (0.72) - ---------------------------------------------------------------------------------------------- Total Distributions (0.11) (0.07) (0.07) (0.05) (1.75) (0.75) - ---------------------------------------------------------------------------------------------- Net Asset Value, End of Period $8.80 $8.82 $7.56 $6.71 $7.88 $12.07 ============================================================================================== TOTAL RETURN(3) 1.03% 17.78% 13.89% (14.33)% (23.96)% (2.35)% - ---------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.02%(4) 1.06% 1.08% 1.05% 1.01% 1.00% - ---------------- Ratio of Net Investment Income to Average Net Assets 1.62%(4) 0.77% 1.04% 0.96% 0.68% 0.04% - ---------------- Portfolio Turnover Rate 47% 118% 169% 215% 178% 116% - ---------------- Net Assets, End of Period (in thousands) $271,642 $283,330 $301,854 $270,121 $353,399 $371,255 - ---------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (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. - ------ 23 International Growth - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted) - ---------------------------------------------------------------------------------------------- ADVISOR CLASS - ---------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001 2000 - ---------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.76 $7.52 $6.66 $7.83 $12.02 $12.99 - ---------------------------------------------------------------------------------------------- Income From Investment Operations - ---------------- Net Investment Income (Loss)(2) 0.05 0.03 0.03 0.04 0.02 (0.05) - ---------------- Net Realized and Unrealized Gain (Loss) 0.02 1.25 0.87 (1.20) (2.51) (0.23) - ---------------------------------------------------------------------------------------------- Total From Investment Operations 0.07 1.28 0.90 (1.16) (2.49) (0.28) - ---------------------------------------------------------------------------------------------- Distributions - ---------------- From Net Investment Income (0.07) (0.04) (0.04) (0.01) -- --(3) - ---------------- From Net Realized Gains -- -- -- -- (1.70) (0.69) - ---------------------------------------------------------------------------------------------- Total Distributions (0.07) (0.04) (0.04) (0.01) (1.70) (0.69) - ---------------------------------------------------------------------------------------------- Net Asset Value, End of Period $8.76 $8.76 $7.52 $6.66 $7.83 $12.02 ============================================================================================== TOTAL RETURN(4) 0.80% 17.07% 13.62% (14.81)% (24.45)% (2.72)% - ---------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.47%(5) 1.51% 1.53% 1.50% 1.46% 1.45% - ---------------- Ratio of Net Investment Income (Loss) to Average Net Assets 1.17%(5) 0.32% 0.59% 0.51% 0.23% (0.41)% - ---------------- Portfolio Turnover Rate 47% 118% 169% 215% 178% 116% - ---------------- Net Assets, End of Period (in thousands) $279,623 $275,195 $239,256 $196,949 $205,483 $181,263 - ---------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (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 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. - ------ 24 International Growth - Financial Highlights For a Share Outstanding Throughout the Year Ended November 30 (except as noted) - -------------------------------------------------------------------------------- A CLASS - -------------------------------------------------------------------------------- 2005(1) 2004 2003(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------- Net Asset Value, Beginning of Period $8.77 $7.53 $6.10 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(3) 0.06 0.03 (0.02) - ----------------------------------------- Net Realized and Unrealized Gain 0.01 1.25 1.45 - -------------------------------------------------------------------------------- Total From Investment Operations 0.07 1.28 1.43 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Investment Income (0.07) (0.04) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $8.77 $8.77 $7.53 ================================================================================ TOTAL RETURN(4) 0.80% 17.10% 23.44% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.47%(5) 1.51% 1.53%(5) - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 1.17%(5) 0.32% (0.40)%(5) - ----------------------------------------- Portfolio Turnover Rate 47% 118% 169%(6) - ----------------------------------------- Net Assets, End of Period (in thousands) $17,831 $14,170 $7,395 - -------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) January 31, 2003 (commencement of sale) through November 30, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, 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, 2003. See Notes to Financial Statements. - ------ 25 International Growth - Financial Highlights For a Share Outstanding Throughout the Year Ended November 30 (except as noted) - -------------------------------------------------------------------------------- B CLASS - -------------------------------------------------------------------------------- 2005(1) 2004 2003(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------- Net Asset Value, Beginning of Period $8.70 $7.48 $6.10 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(3) 0.03 (0.03) (0.03) - ----------------------------------------- Net Realized and Unrealized Gain --(4) 1.25 1.41 - -------------------------------------------------------------------------------- Total From Investment Operations 0.03 1.22 1.38 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Investment Income --(4) -- -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $8.73 $8.70 $7.48 ================================================================================ TOTAL RETURN(5) 0.39% 16.31% 22.62% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.22%(6) 2.26% 2.28%(6) - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.42%(6) (0.43)% (0.51)%(6) - ----------------------------------------- Portfolio Turnover Rate 47% 118% 169%(7) - ----------------------------------------- Net Assets, End of Period (in thousands) $1,353 $1,107 $513 - -------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) January 31, 2003 (commencement of sale) through November 30, 2003. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount is less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 26 International Growth - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted) - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.66 $7.45 $6.60 $7.82 $9.16 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------- Net Investment Income (Loss)(3) 0.02 (0.03) (0.01) --(4) (0.04) - ------------------------- Net Realized and Unrealized Gain (Loss) 0.01 1.24 0.86 (1.22) (1.30) - -------------------------------------------------------------------------------- Total From Investment Operations 0.03 1.21 0.85 (1.22) (1.34) - -------------------------------------------------------------------------------- Distributions - ------------------------- From Net Investment Income --(4) -- -- -- -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $8.69 $8.66 $7.45 $6.60 $7.82 ================================================================================ TOTAL RETURN(5) 0.40% 16.24% 12.88% (15.60)% (14.63)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.22%(6) 2.26% 2.28% 2.25% 2.23%(6) - ------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.42%(6) (0.43)% (0.16)% (0.24)% (0.99)%(6) - ------------------------- Portfolio Turnover Rate 47% 118% 169% 215% 178%(7) - ------------------------- Net Assets, End of Period (in thousands) $5,127 $5,070 $1,933 $912 $138 - -------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) June 4, 2001 (commencement of sale) through November 30, 2001. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount is less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2001. See Notes to Financial Statements. - ------ 27 International Growth - Financial Highlights For a Share Outstanding Throughout the Year Ended November 30 (except as noted) - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2005(1) 2004 2003(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------- Net Asset Value, Beginning of Period $8.75 $7.53 $7.02 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(3) 0.07 0.02 (0.01) - ----------------------------------------- Net Realized and Unrealized Gain --(4) 1.25 0.52 - -------------------------------------------------------------------------------- Total From Investment Operations 0.07 1.27 0.51 - -------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Investment Income (0.05) (0.05) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $8.77 $8.75 $7.53 ================================================================================ TOTAL RETURN(5) 0.78% 16.92% 7.26% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.58%(6)(7) 1.76% 1.78%(7) - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 1.06%(6)(7) 0.07% (0.74)%(7) - ----------------------------------------- Portfolio Turnover Rate 47% 118% 169%(8) - ----------------------------------------- Net Assets, End of Period (in thousands) $998 $376 $3 - -------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) August 29, 2003 (commencement of sale) through November 30, 2003. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount is less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) During the six months ended May 31, 2005, the class received a partial reimbursement of its service and distribution fee. Had fees not been reimbursed, the annualized ratio of operating expenses to average net assets and the annualized ratio of net investment income to average net assets would have been 1.72% and 0.92%, respectively. (7) Annualized. (8) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 28 Share Class Information Seven classes of shares are authorized for sale by International Growth: Investor Class, Institutional Class, Advisor Class, A Class, B Class, C Class, and R Class. The total expense ratio of Institutional Class shares is lower than that of the Investor Class. The total expense ratios of Advisor, A, B, C, and R Class shares are higher than that of Investor Class shares. ON JANUARY 30, 2003, INVESTOR CLASS SHARES BECAME UNAVAILABLE TO NEW SELF-DIRECTED RETAIL INVESTORS. INVESTOR CLASS shares are available for purchase in two ways: 1) by existing shareholders, 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% after the sixth year. 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) - ------ 29 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. - ------ 30 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 Global Investment Management, Inc., the fund's investment advisor, 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 advisor 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 advisor 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. - ------ 31 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. Morgan Stanley Capital International (MSCI) has developed several indices that measure the performance of foreign stock markets. The MSCI EAFE(reg.sm) (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. - ------ 32 CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 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 ADVISOR: American Century Global Investment Management, Inc. New York, New York 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. American Century Investment Services, Inc., Distributor (c)2005 American Century Proprietary Holdings, Inc. All rights reserved. 0507 SH-SAN-44206S
American Century Investments SEMIANNUAL REPORT [photo of man and woman] MAY 31, 2005 International Stock Fund 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 STOCK Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Types of Investments in Portfolio and Investments by Country. . . . . . 3 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 5 INTERNATIONAL DISCOVERY Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Types of Investments in Portfolio and Investments by Country. . . . . . 9 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 11 EMERGING MARKETS Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Types of Investments in Portfolio and Investments by Country. . . . . . 16 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 18 GLOBAL GROWTH Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Types of Investments in Portfolio and Investments by Country. . . . . . 23 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 25 INTERNATIONAL OPPORTUNITIES Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Types of Investments in Portfolio and Investments by Country. . . . . . 30 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 32 Shareholder Fee Examples . . . . . . . . . . . . . . . . . . . . . . . . . 35 FINANCIAL STATEMENTS Statement of Assets and Liabilities. . . . . . . . . . . . . . . . . . . . 38 Statement of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . 42 Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . 44 Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 47 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 OTHER INFORMATION Share Class Information. . . . . . . . . . . . . . . . . . . . . . . . . . 71 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . 72 Index Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74 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 semi-annual report for the International Stock, International Discovery, Emerging Markets, Global Growth and International Opportunities funds for the six months ended May 31, 2005. The report includes comparative performance figures, portfolio and market commentary, summary tables, a full list of portfolio holdings, and financial statements and highlights. We hope you find this information helpful in monitoring your investment. 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. Your next shareholder report for these funds will be the annual report dated November 30, 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 AMERICAN CENTURY COMPANIES, INC. /s/James E. Stowers III James E. Stowers III CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. - ------ 1 International Stock - Performance TOTAL RETURNS AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- SINCE INCEPTION INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS -2.10%* 3/31/05 - -------------------------------------------------------------------------------- MSCI EAFE INDEX -2.30%* -- - -------------------------------------------------------------------------------- * Returns for periods less than one year are not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. 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. - ------ 2 International Stock - Portfolio Commentary [photo of investment team] PORTFOLIO MANAGERS ON THE INTERNATIONAL STOCK INVESTMENT TEAM: KEITH CREVELING AND MICHAEL PERELSTEIN. International Stock declined 2.10%(1) from its inception March 31, 2005, through May 31, 2005, while its benchmark, the Morgan Stanley Capital International (MSCI) EAFE Index, fell 2.30%. Many of the world's equity markets were restrained during April and May 2005 as high prices for commodities, especially oil, raised fears that inflation might accelerate, leading to slower economic growth and lower corporate profits. Against this backdrop, investments in the health care sector contributed most to the portfolio's return, while our complement of financial holdings detracted most. The movement of the dollar versus other currencies reduced the portfolio's return. HEALTH CARE, INDUSTRIALS LIFT PORTFOLIO Holdings in the health care sector made the largest contribution to the portfolio's total return during the period. The sector also outperformed the index. The portfolio's overweight position in the pharmaceutical industry led the advance on both relative and absolute terms, with the United Kingdom's GlaxoSmithKline and AstraZeneca among the companies making the largest contributions. They were both top-10 holdings on average, and both reported first-quarter profit increases during April, compared with the same period in 2004. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF NET ASSETS AS OF 5/31/05 - -------------------------------------------------------------------------------- Common Stocks 96.5% - -------------------------------------------------------------------------------- Temporary Cash Investments 6.6% - -------------------------------------------------------------------------------- Other Assets and Liabilities -3.1% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- % OF NET ASSETS AS OF 5/31/05 - -------------------------------------------------------------------------------- United Kingdom 24.5% - -------------------------------------------------------------------------------- Japan 16.8% - -------------------------------------------------------------------------------- France 13.5% - -------------------------------------------------------------------------------- Switzerland 7.5% - -------------------------------------------------------------------------------- Germany 5.4% - -------------------------------------------------------------------------------- Australia 5.3% - -------------------------------------------------------------------------------- Spain 3.4% - -------------------------------------------------------------------------------- Ireland 2.8% - -------------------------------------------------------------------------------- Multi-National 2.5% - -------------------------------------------------------------------------------- Italy 2.4% - -------------------------------------------------------------------------------- Netherlands 2.3% - -------------------------------------------------------------------------------- Other Countries 10.1% - -------------------------------------------------------------------------------- Cash and Equivalents(2) 3.5% - -------------------------------------------------------------------------------- (2) Includes temporary cash investments and other assets and liabilities. (1) Returns for periods less than one year are not annualized. (continued) - ------ 3 International Stock - Portfolio Commentary Our complement of holdings in the industrials sector made the second-largest contribution to return. Companies in two industries -- transportation infrastructure, and construction and engineering -- led the advance. Pacing the gains within those groups were Australia's Macquarie Infrastructure Group, which owns toll roads and other infrastructure in Australia, North America and Europe, and Grupo Ferrovial SA, one of Spain's largest construction companies. The industrials sector also delivered the period's best relative performance, outperforming the index partly on the strength of our overweight positions in Grupo Ferrovial and Macquarie. FINANCIALS DETRACT The portfolio's financial holdings detracted most from absolute performance. Commercial banks paced the retreat, with Royal Bank of Scotland Group and Anglo Irish Bank, slowing the portfolio most. Royal Bank of Scotland Group retreated partly because a slowing economy in the United Kingdom hindered its performance. Our stake in the insurance and capital markets industries also detracted from total return. Despite the sector's negative impact on return, financials outperformed the index and included one of the period's top-contributing securities in both absolute and relative terms, ORIX Corporation, an integrated financial services group. Japan's ORIX announced during the period that net income increased 69% in the year ended March 31, 2005. The consumer discretionary sector also slowed the portfolio's performance, with holdings in the leisure equipment and products industry producing the period's largest detractor from our return, Japan's Fuji Photo Film Co. One of the world's biggest makers of products used in digital imaging, Fuji retreated when it reported that fiscal fourth-quarter operating profit fell on slowing demand for digital cameras. OUR COMMITMENT We remain committed to looking for stocks of growing foreign companies. Management of the fund is based on the belief that, over the long term, stock price movements follow growth in earnings, revenues and/or cash flow. TOP TEN HOLDINGS AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- % OF NET ASSETS AS OF 5/31/05 - -------------------------------------------------------------------------------- Total SA 2.9% - -------------------------------------------------------------------------------- GlaxoSmithKline plc 2.9% - -------------------------------------------------------------------------------- BP plc 2.8% - -------------------------------------------------------------------------------- iShares MSCI EAFE Index Fund 2.5% - -------------------------------------------------------------------------------- Novartis AG 2.5% - -------------------------------------------------------------------------------- Vodafone Group plc 2.2% - -------------------------------------------------------------------------------- Nestle SA 2.0% - -------------------------------------------------------------------------------- AstraZeneca plc 1.8% - -------------------------------------------------------------------------------- Reckitt Benckiser plc 1.6% - -------------------------------------------------------------------------------- Tesco plc 1.6% - -------------------------------------------------------------------------------- - ------ 4 International Stock - Schedule of Investments MAY 31, 2005 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 96.5%* AUSTRALIA -- 5.3% - -------------------------------------------------------------------------------- 16,952 Amcor Limited $ 87 - -------------------------------------------------------------------------------- 10,043 BHP Billiton Limited 126 - -------------------------------------------------------------------------------- 3,449 Commonwealth Bank of Australia 97 - -------------------------------------------------------------------------------- 31,575 Macquarie Infrastructure Group 93 - -------------------------------------------------------------------------------- 7,008 QBE Insurance Group Limited 78 - -------------------------------------------------------------------------------- 481 - -------------------------------------------------------------------------------- AUSTRIA -- 0.9% - -------------------------------------------------------------------------------- 1,704 Erste Bank der Oesterreichischen Sparkassen AG 84 - -------------------------------------------------------------------------------- BELGIUM -- 1.0% - -------------------------------------------------------------------------------- 1,175 KBC Groupe 95 - -------------------------------------------------------------------------------- CANADA -- 1.8% - -------------------------------------------------------------------------------- 532 EnCana Corp. 18 - -------------------------------------------------------------------------------- 2,724 Shoppers Drug Mart Corporation 89 - -------------------------------------------------------------------------------- 1,675 Thomson Corp. 57 - -------------------------------------------------------------------------------- 164 - -------------------------------------------------------------------------------- DENMARK -- 0.7% - -------------------------------------------------------------------------------- 1,219 Novo Nordisk AS Cl B 63 - -------------------------------------------------------------------------------- FRANCE -- 13.5% - -------------------------------------------------------------------------------- 1,302 Accor SA 60 - -------------------------------------------------------------------------------- 3,506 Axa SA 85 - -------------------------------------------------------------------------------- 1,123 Essilor International SA Cie Generale D'Optique 77 - -------------------------------------------------------------------------------- 466 France Telecom SA(1) 13 - -------------------------------------------------------------------------------- 1,122 Groupe Danone 103 - -------------------------------------------------------------------------------- 1,005 Lafarge SA 91 - -------------------------------------------------------------------------------- 406 Pernod-Ricard SA 63 - -------------------------------------------------------------------------------- 420 Pinault-Printemps-Redoute 42 - -------------------------------------------------------------------------------- 678 Sanofi-Aventis 61 - -------------------------------------------------------------------------------- 943 Schneider Electric SA 69 - -------------------------------------------------------------------------------- 1,188 Societe Generale Cl A 117 - -------------------------------------------------------------------------------- 1,202 Total SA 266 - -------------------------------------------------------------------------------- 1,294 Vinci SA 96 - -------------------------------------------------------------------------------- 2,997 Vivendi Universal SA 91 - -------------------------------------------------------------------------------- 1,234 - -------------------------------------------------------------------------------- GERMANY -- 5.4% - -------------------------------------------------------------------------------- 268 Adidas-Salomon AG 45 - -------------------------------------------------------------------------------- 730 BASF AG 49 - -------------------------------------------------------------------------------- 1,330 Continental AG 94 - -------------------------------------------------------------------------------- 6,463 Deutsche Telekom 121 - -------------------------------------------------------------------------------- 800 E.On AG 69 - -------------------------------------------------------------------------------- 908 Fresenius Medical Care AG 71 - -------------------------------------------------------------------------------- 869 Metro AG 43 - -------------------------------------------------------------------------------- 492 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- GREECE -- 1.9% - -------------------------------------------------------------------------------- 555 Alpha Bank A.E. $ 15 - -------------------------------------------------------------------------------- 2,513 Greek Organization of Football Prognostics SA 69 - -------------------------------------------------------------------------------- 2,671 National Bank of Greece SA 90 - -------------------------------------------------------------------------------- 174 - -------------------------------------------------------------------------------- HONG KONG -- 0.9% - -------------------------------------------------------------------------------- 15,000 CLP Holdings Ltd. 86 - -------------------------------------------------------------------------------- INDIA -- 0.2% - -------------------------------------------------------------------------------- 250 Infosys Technologies Ltd. ADR 18 - -------------------------------------------------------------------------------- IRELAND -- 2.8% - -------------------------------------------------------------------------------- 8,654 Anglo Irish Bank Corporation 101 - -------------------------------------------------------------------------------- 5,962 Bank of Ireland 91 - -------------------------------------------------------------------------------- 1,308 Ryanair Holdings plc ADR(1) 60 - -------------------------------------------------------------------------------- 252 - -------------------------------------------------------------------------------- ITALY -- 2.4% - -------------------------------------------------------------------------------- 4,808 Banco Popolare di Verona e Novara Scrl 87 - -------------------------------------------------------------------------------- 3,229 ENI SpA 82 - -------------------------------------------------------------------------------- 4,103 Saipem SpA 52 - -------------------------------------------------------------------------------- 221 - -------------------------------------------------------------------------------- JAPAN -- 16.8% - -------------------------------------------------------------------------------- 7,000 Ajinomoto Co. Inc. 78 - -------------------------------------------------------------------------------- 3,100 Astellas Pharma Inc. 111 - -------------------------------------------------------------------------------- 8,000 Bank of Yokohama Ltd. (The) 46 - -------------------------------------------------------------------------------- 3,100 Daikin Industries Ltd. 76 - -------------------------------------------------------------------------------- 17 East Japan Railway Company 84 - -------------------------------------------------------------------------------- 2,000 Eisai Co. Ltd. 68 - -------------------------------------------------------------------------------- 2,600 Fuji Photo Film Co. Ltd. 81 - -------------------------------------------------------------------------------- 1,400 Honda Motor Co., Ltd. 68 - -------------------------------------------------------------------------------- 400 Hoya Corp. 45 - -------------------------------------------------------------------------------- 3,000 Kao Corp. 70 - -------------------------------------------------------------------------------- 10 KDDI Corp. 46 - -------------------------------------------------------------------------------- 3,000 Komatsu Ltd. 23 - -------------------------------------------------------------------------------- 7,000 Matsushita Electric Industrial Co., Ltd. 105 - -------------------------------------------------------------------------------- 5 Mitsubishi Tokyo Financial Group, Inc. 42 - -------------------------------------------------------------------------------- 2,200 Omron Corp. 48 - -------------------------------------------------------------------------------- 600 ORIX Corporation 87 - -------------------------------------------------------------------------------- 28,000 Osaka Gas Co. Ltd. 87 - -------------------------------------------------------------------------------- 1,000 Shin-Etsu Chemical Co., Ltd. 37 - -------------------------------------------------------------------------------- 3,000 Shiseido Co., Ltd. 36 - -------------------------------------------------------------------------------- 4,000 Sumitomo Metal Mining Co. Ltd. 26 - -------------------------------------------------------------------------------- 18,000 Taisei Corp. 60 - -------------------------------------------------------------------------------- 900 Takefuji Corp. 56 - -------------------------------------------------------------------------------- 9,000 Toray Industries Inc. 40 - -------------------------------------------------------------------------------- 1,000 Toyota Motor Corp. 36 - -------------------------------------------------------------------------------- 1,500 Yamada Denki Co Ltd. 82 - -------------------------------------------------------------------------------- 1,538 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 5 International Stock - Schedule of Investments MAY 31, 2005 (UNAUDITED) Shares ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- MEXICO -- 0.7% - -------------------------------------------------------------------------------- 1,158 America Movil SA de CV Series L ADR $ 66 - -------------------------------------------------------------------------------- MULTI-NATIONAL -- 2.5% - -------------------------------------------------------------------------------- 1,500 iShares MSCI EAFE Index Fund 232 - -------------------------------------------------------------------------------- NETHERLANDS -- 2.3% - -------------------------------------------------------------------------------- 3,744 ING Groep N.V. 104 - -------------------------------------------------------------------------------- 2,641 Royal Numico N.V.(1) 105 - -------------------------------------------------------------------------------- 209 - -------------------------------------------------------------------------------- NORWAY -- 1.5% - -------------------------------------------------------------------------------- 9,053 DnB NOR ASA 88 - -------------------------------------------------------------------------------- 6,562 Telenor ASA 52 - -------------------------------------------------------------------------------- 140 - -------------------------------------------------------------------------------- SPAIN -- 3.4% - -------------------------------------------------------------------------------- 1,508 Banco Popular Espanol SA 90 - -------------------------------------------------------------------------------- 4,114 Cintra Concesiones de Infraestructuras de Transporte SA 45 - -------------------------------------------------------------------------------- 1,456 Grupo Ferrovial SA 90 - -------------------------------------------------------------------------------- 5,165 Telefonica SA 86 - -------------------------------------------------------------------------------- 311 - -------------------------------------------------------------------------------- SWEDEN -- 0.5% - -------------------------------------------------------------------------------- 1,130 Volvo AB Cl B 46 - -------------------------------------------------------------------------------- SWITZERLAND -- 7.5% - -------------------------------------------------------------------------------- 2,147 Compagnie Financiere Richemont AG A Shares 65 - -------------------------------------------------------------------------------- 691 Nestle SA 182 - -------------------------------------------------------------------------------- 4,642 Novartis AG 227 - -------------------------------------------------------------------------------- 917 Roche Holding AG 116 - -------------------------------------------------------------------------------- 1,315 UBS AG 101 - -------------------------------------------------------------------------------- 691 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 24.5% - -------------------------------------------------------------------------------- 3,801 AstraZeneca plc 161 - -------------------------------------------------------------------------------- 8,274 BAA plc 93 - -------------------------------------------------------------------------------- 7,771 BG Group plc 59 - -------------------------------------------------------------------------------- 25,716 BP plc 258 - -------------------------------------------------------------------------------- 9,913 Diageo plc 142 - -------------------------------------------------------------------------------- 10,682 GlaxoSmithKline plc 264 - -------------------------------------------------------------------------------- 1,145 HSBC Holdings plc 18 - -------------------------------------------------------------------------------- 30,188 Legal & General Group plc 60 - -------------------------------------------------------------------------------- 2,124 Man Group plc 51 - -------------------------------------------------------------------------------- 8,508 National Grid Transco plc 83 - -------------------------------------------------------------------------------- 2,987 Next plc 78 - -------------------------------------------------------------------------------- 4,941 Reckitt Benckiser plc 150 - -------------------------------------------------------------------------------- 11,052 Reed Elsevier plc 105 - -------------------------------------------------------------------------------- 4,390 Royal Bank of Scotland Group plc 129 - -------------------------------------------------------------------------------- 9,421 Smith & Nephew plc 93 - -------------------------------------------------------------------------------- Shares/Principal Amount ($ IN THOUSANDS) Value - ------------------------------------------------------------------------------- 25,607 Tesco plc $ 146 - -------------------------------------------------------------------------------- 10,432 Unilever plc 102 - -------------------------------------------------------------------------------- 78,227 Vodafone Group plc 197 - -------------------------------------------------------------------------------- 2,740 Wolseley plc 56 - -------------------------------------------------------------------------------- 2,245 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $9,018) 8,842 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 6.6% $600 FHLB Discount Notes, 3.00%, 6/1/05(2) (Cost $600) 600 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 103.1% (Cost $9,618) 9,442 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (3.1)% (283) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $9,159 ================================================================================ MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 20.0% - -------------------------------------------------------------------------------- Health Care 14.3% - -------------------------------------------------------------------------------- Consumer Staples 14.3% - -------------------------------------------------------------------------------- Consumer Discretionary 11.8% - -------------------------------------------------------------------------------- Industrials 9.8% - -------------------------------------------------------------------------------- Energy 8.0% - -------------------------------------------------------------------------------- Telecommunication Services 6.3% - -------------------------------------------------------------------------------- Materials 5.0% - -------------------------------------------------------------------------------- Utilities 3.5% - -------------------------------------------------------------------------------- Diversified 2.5% - -------------------------------------------------------------------------------- Information Technology 1.0% - -------------------------------------------------------------------------------- Cash and cash equivalents(+) 3.5% - -------------------------------------------------------------------------------- (+) Includes temporary cash investments and other assets and liabilities NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt EAFE = Europe, Australasia, and Far East FHLB = Federal Home Loan Bank MSCI = Morgan Stanley Capital International * The securities are listed under their country of incorporation which may differ from the country where they have their greatest economic exposure. (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. See Notes to Financial Statements. - ------ 6 International Discovery - Performance TOTAL RETURNS AS OF MAY 31, 2005 ------------------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 9.25% 0.61% 14.18% 13.31% 4/1/94 - -------------------------------------------------------------------------------- S&P/CITIGROUP EMI GROWTH WORLD EX-US 18.57% 2.10% 5.14% 4.61%(1) -- - -------------------------------------------------------------------------------- Institutional Class 9.51% 0.79% -- 11.48% 1/2/98 - -------------------------------------------------------------------------------- Advisor Class 8.97% 0.35% -- 8.27% 4/28/98 - -------------------------------------------------------------------------------- (1) 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) - ------ 7 International Discovery - Performance GROWTH OF $10,000 OVER 10 YEARS $10,000 investment made May 31, 1995
![](https://capedge.com/proxy/N-CSRS/0000872825-05-000023/growthintldiscovery0507.gif)
ONE-YEAR RETURNS OVER 10 YEARS Periods ended May 31 - ---------------------------------------------------------------------------------------------------- 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 - ---------------------------------------------------------------------------------------------------- Investor Class 33.00% 23.42% 36.97% -0.37% 63.12% -20.05% -7.80% -8.75% 40.25% 9.25% - ---------------------------------------------------------------------------------------------------- S&P/Citigroup EMI Growth World ex-US 17.38% 0.40% 6.18% -1.85% 21.21% -21.65% -8.01% -8.73% 42.23% 18.57% - ---------------------------------------------------------------------------------------------------- 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. - ------ 8 International Discovery - Portfolio Commentary [photo of investment team] PORTFOLIO MANAGERS ON THE INTERNATIONAL DISCOVERY INVESTMENT TEAM: BRIAN BRADY AND MARK KOPINSKI. International Discovery gained 0.28%(1) during the six months ended May 31, 2005, while its benchmark, the S&P/Citigroup EMI (Extended Market Index) Growth World ex-US, returned 5.04%. Although international equities rallied in December as oil prices temporarily declined, and stocks advanced again in February, many world markets experienced pullbacks during the last half of our semiannual period as investors weighed the possibilities that high oil and commodity prices might cause a pick-up in inflation, leading to higher interest rates, slower economic growth and lower corporate profits. Against this backdrop, the majority of International Discovery's sector stakes contributed to results. However, selection among financial, material and industrial equities contributed to our underperformance against the benchmark. A strengthening U.S. dollar during the period also dampened our performance. SUCCESS IN MEDIA, APPAREL Consumer discretionary businesses--companies involved in pursuits such as media and publishing, specialty retail, apparel, hotels and restaurants and leisure products--contributed the most to results over the period. Within the sector, media companies paced performance, particularly Telefonica Publicidad e Informacion SA, the publisher of Spain's Yellow Pages, which TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- Common Stocks 97.5% 95.2% - -------------------------------------------------------------------------------- Preferred Stocks -- 0.9% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 97.5% 96.1% - -------------------------------------------------------------------------------- Temporary Cash Investments 2.1% 3.1% - -------------------------------------------------------------------------------- Other Assets and Liabilities(2) 0.4% 0.8% - -------------------------------------------------------------------------------- (2) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- Japan 16.5% 14.7% - -------------------------------------------------------------------------------- United Kingdom 11.9% 9.3% - -------------------------------------------------------------------------------- Norway 6.5% 1.7% - -------------------------------------------------------------------------------- Canada 6.1% 12.4% - -------------------------------------------------------------------------------- Taiwan (Republic of China) 5.9% 2.1% - -------------------------------------------------------------------------------- France 5.9% 4.4% - -------------------------------------------------------------------------------- Switzerland 5.7% -- - -------------------------------------------------------------------------------- Australia 5.3% 9.3% - -------------------------------------------------------------------------------- Germany 5.2% 4.1% - -------------------------------------------------------------------------------- Netherlands 4.0% 1.3% - -------------------------------------------------------------------------------- Spain 3.1% 3.7% - -------------------------------------------------------------------------------- Italy 2.7% 3.9% - -------------------------------------------------------------------------------- Other Countries 18.7% 29.2% - -------------------------------------------------------------------------------- Cash and Equivalents(3) 2.5% 3.9% - -------------------------------------------------------------------------------- (3) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. (1) All fund returns referenced in this commentary are for Investor Class shares. Returns for periods less than one year are not annualized. (continued) - ------ 9 International Discovery - Portfolio Commentary benefited from higher advertising revenues and increased sales of phone information services. RCS MediaGroup SpA, publisher of Italy's second-largest daily newspaper, was another strong contributor. In apparel, Gildan Activewear Inc., Canada's biggest maker of T-shirts, recorded strong results as supply shortages led to higher prices. Other top contributors from the consumer discretionary sector included Esprit Holdings Limited, a Hong Kong-based clothing retailer, and Lottomatica SpA, the manager of Italy's national lottery. GAINS, LOSSES IN TECHNOLOGY On a country basis, Taiwan was International Discovery's richest source of performance, as several Taiwanese technology businesses lifted the portfolio. They included our top contributor, High Tech Computer Corp., a maker of advanced mobile phones that combine hand-held computing and Internet access, which is preparing to release the first handsets to use an operating system from Microsoft Corp. Other Taiwanese tech standouts included semiconductor companies Novatek Microelectronics Corp., Ltd. and King Yuan Electronics Co. Ltd. Elsewhere, shares of France's Neopost SA, the world's second-largest maker of mailing equipment, rose to a record as the company lowered costs, introduced new equipment, and announced a new dividend. The information technology sector also accounted for two of International Discovery's largest detractors, UTStarcom Inc. and Research In Motion Ltd. UTStarcom, the largest supplier of wireless telephone systems in China, fell sharply in May as demand dropped more than expected. Research In Motion, maker of the popular Blackberry email device, has seen sales slow amid increasing competition. CHEMICALS, FINANCIALS DECLINE Canada's Nova Chemicals Corp. was the portfolio's largest detractor, falling on speculation that slowing economic activity might end a period of peak earnings for makers of commodity chemicals like polyethylene. In financials, our progress was slowed by Nissin Co., Ltd., a Japanese specialty finance company. Nissin's costs increased as the company changed its focus from consumer loans to financial services for businesses. OUR COMMITMENT We remain committed to looking for stocks of growing foreign companies. Management of the fund is based on the belief that, over the long term, stock price movements follow growth in earnings, revenues and/or cash flow. TOP TEN HOLDINGS AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- CSL Ltd. 2.5% 1.6% - -------------------------------------------------------------------------------- Aker Kvaerner ASA 2.5% -- - -------------------------------------------------------------------------------- Neopost SA 2.4% 1.3% - -------------------------------------------------------------------------------- Actelion N.V. 2.2% -- - -------------------------------------------------------------------------------- Nova Chemicals Corp. 2.1% 2.0% - -------------------------------------------------------------------------------- Zodiac SA 1.9% 0.7% - -------------------------------------------------------------------------------- Marubeni Corp. 1.9% -- - -------------------------------------------------------------------------------- Gildan Activewear Inc. 1.7% -- - -------------------------------------------------------------------------------- Nissin Co., Ltd. 1.6% 0.7% - -------------------------------------------------------------------------------- Anglo Irish Bank Corporation 1.6% 1.7% - -------------------------------------------------------------------------------- - ------ 10 International Discovery - Schedule of Investments MAY 31, 2005 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 97.5%* AUSTRALIA -- 5.3% - -------------------------------------------------------------------------------- 360,000 Cochlear Ltd.(1) $ 8,787 - -------------------------------------------------------------------------------- 4,048,500 Computershare Ltd.(1) 18,050 - -------------------------------------------------------------------------------- 1,296,800 CSL Ltd. 28,322 - -------------------------------------------------------------------------------- 1,065,000 Transurban Group(1) 5,851 - -------------------------------------------------------------------------------- 61,010 - -------------------------------------------------------------------------------- AUSTRIA -- 1.2% - -------------------------------------------------------------------------------- 109,938 Raiffeisen International Bank Holding AG(2) 6,560 - -------------------------------------------------------------------------------- 151,170 Wienerberger AG(1) 6,701 - -------------------------------------------------------------------------------- 13,261 - -------------------------------------------------------------------------------- BELGIUM -- 0.5% - -------------------------------------------------------------------------------- 79,767 Bekaert SA(1) 5,918 - -------------------------------------------------------------------------------- BRITISH VIRGIN ISLANDS -- 0.8% - -------------------------------------------------------------------------------- 123,200 UTI Worldwide Inc.(1) 9,086 - -------------------------------------------------------------------------------- CANADA -- 6.1% - -------------------------------------------------------------------------------- 503,700 Alimentation Couche Tard Inc. Cl B(2) 7,271 - -------------------------------------------------------------------------------- 325,000 Axcan Pharma Inc.(1)(2) 5,109 - -------------------------------------------------------------------------------- 750,400 Gildan Activewear Inc.(2) 19,152 - -------------------------------------------------------------------------------- 753,600 Nova Chemicals Corp. 24,042 - -------------------------------------------------------------------------------- 220,400 Precision Drilling Corp.(2) 8,666 - -------------------------------------------------------------------------------- 70,500 Research In Motion Ltd.(1)(2) 5,839 - -------------------------------------------------------------------------------- 70,079 - -------------------------------------------------------------------------------- DENMARK -- 1.6% - -------------------------------------------------------------------------------- 75,600 Chr. Hansen Holding AS Cl B(1)(2) 11,187 - -------------------------------------------------------------------------------- 94,200 Topdanmark AS(2) 6,759 - -------------------------------------------------------------------------------- 17,946 - -------------------------------------------------------------------------------- EGYPT -- 0.5% - -------------------------------------------------------------------------------- 424,200 Vodafone Egypt Telecommunications SAE 5,710 - -------------------------------------------------------------------------------- FINLAND -- 1.5% - -------------------------------------------------------------------------------- 161,800 Kone Oyj(1) 13,368 - -------------------------------------------------------------------------------- 196,551 Neste Oil Oyj(2) 4,389 - -------------------------------------------------------------------------------- 17,757 - -------------------------------------------------------------------------------- FRANCE -- 5.9% - -------------------------------------------------------------------------------- 142,950 Eiffage(1) 11,397 - -------------------------------------------------------------------------------- 66,000 Klepierre(1) 6,212 - -------------------------------------------------------------------------------- 312,000 Neopost SA(1) 27,850 - -------------------------------------------------------------------------------- 453,200 Zodiac SA(1) 21,997 - -------------------------------------------------------------------------------- 67,456 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- GERMANY -- 5.2% - -------------------------------------------------------------------------------- 166,000 Hypo Real Estate Holding AG(1) $ 6,552 - -------------------------------------------------------------------------------- 662,000 MLP AG(1) 10,857 - -------------------------------------------------------------------------------- 345,000 Schwarz Pharma AG(1) 15,132 - -------------------------------------------------------------------------------- 44,700 Solarworld AG(1) 5,967 - -------------------------------------------------------------------------------- 455,200 Stada Arzneimittel AG(1) 14,013 - -------------------------------------------------------------------------------- 278,500 United Internet AG(1) 7,216 - -------------------------------------------------------------------------------- 59,737 - -------------------------------------------------------------------------------- GREECE -- 0.8% - -------------------------------------------------------------------------------- 502,000 Piraeus Bank SA 8,980 - -------------------------------------------------------------------------------- HONG KONG -- 2.1% - -------------------------------------------------------------------------------- 2,566,000 Esprit Holdings Limited(1) 18,388 - -------------------------------------------------------------------------------- 6,020,000 Hutchison Telecommunications International Ltd.(1)(2) 5,687 - -------------------------------------------------------------------------------- 24,075 - -------------------------------------------------------------------------------- INDIA -- 0.7% - -------------------------------------------------------------------------------- 353,400 Larsen & Toubro Ltd. 8,454 - -------------------------------------------------------------------------------- IRELAND -- 2.0% - -------------------------------------------------------------------------------- 1,573,200 Anglo Irish Bank Corporation 18,389 - -------------------------------------------------------------------------------- 398,000 Kingspan Group plc 4,627 - -------------------------------------------------------------------------------- 23,016 - -------------------------------------------------------------------------------- ISRAEL -- 0.7% - -------------------------------------------------------------------------------- 2,650,000 Bank Leumi Le-Israel BM 7,508 - -------------------------------------------------------------------------------- ITALY -- 2.7% - -------------------------------------------------------------------------------- 393,700 Autostrada Torino-Milano SpA(1) 8,603 - -------------------------------------------------------------------------------- 546,500 Geox SpA(1) 4,478 - -------------------------------------------------------------------------------- 2,455,000 Hera SpA(1) 6,902 - -------------------------------------------------------------------------------- 210,300 Pirelli & C. Real Estate SpA 11,126 - -------------------------------------------------------------------------------- 31,109 - -------------------------------------------------------------------------------- JAPAN -- 16.5% - -------------------------------------------------------------------------------- 291,400 AEON Mall Co., Ltd.(1) 9,804 - -------------------------------------------------------------------------------- 1,313,000 Bank of Kyoto Ltd. (The)(1) 11,062 - -------------------------------------------------------------------------------- 256,000 Ibiden Co. Ltd.(1) 6,631 - -------------------------------------------------------------------------------- 1,889,000 Joyo Bank Ltd. 9,629 - -------------------------------------------------------------------------------- 390,000 Kuraray Co. Ltd.(1) 3,469 - -------------------------------------------------------------------------------- 1,307,000 Kyowa Exeo Corp.(1) 10,746 - -------------------------------------------------------------------------------- 6,799,000 Marubeni Corp. 21,621 - -------------------------------------------------------------------------------- 2,500 Monex Beans Holdings Inc.(1) 2,996 - -------------------------------------------------------------------------------- 489,000 NEOMAX Co., Ltd.(1) 11,043 - -------------------------------------------------------------------------------- 799,000 NGK Insulators Ltd.(1) 8,366 - -------------------------------------------------------------------------------- 719,000 Nippon Electric Glass Co., Ltd.(1) 11,160 - -------------------------------------------------------------------------------- 668,000 Nissan Chemical Industries, Ltd.(1) 6,878 - -------------------------------------------------------------------------------- 10,125,999 Nissin Co., Ltd.(1) 18,854 - -------------------------------------------------------------------------------- 493,000 OMC Card Inc.(1) 5,907 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 11 International Discovery - Schedule of Investments MAY 31, 2005 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 1,371,000 Senshu Bank Ltd. (The) $ 3,513 - -------------------------------------------------------------------------------- 1,202,000 Shionogi & Co. Ltd. 16,553 - -------------------------------------------------------------------------------- 2,033,000 Tokuyama Corp.(1) 15,067 - ------------------------------------------------------------------------------- 1,531,000 Tokyo Tatemono Co. Ltd.(1) 10,640 - -------------------------------------------------------------------------------- 693,000 Zeon Corp. 6,043 - -------------------------------------------------------------------------------- 189,982 - -------------------------------------------------------------------------------- NETHERLANDS -- 4.0% - -------------------------------------------------------------------------------- 300,000 Chicago Bridge & Iron Company New York Shares 6,480 - -------------------------------------------------------------------------------- 74,500 Fugro N.V.(1) 6,705 - -------------------------------------------------------------------------------- 290,500 Koninklijke BAM Groep N.V. 18,318 - -------------------------------------------------------------------------------- 153,000 TomTom(2) 3,505 - -------------------------------------------------------------------------------- 337,000 Trader Classified Media N.V. Cl A(1) 4,747 - -------------------------------------------------------------------------------- 426,500 Vedior N.V. 6,050 - -------------------------------------------------------------------------------- 45,805 - -------------------------------------------------------------------------------- NORWAY -- 6.5% - -------------------------------------------------------------------------------- 747,300 Aker Kvaerner ASA(1)(2) 28,269 - -------------------------------------------------------------------------------- 510,000 Fred Olsen Energy ASA(1)(2) 10,278 - -------------------------------------------------------------------------------- 647,000 Smedvig ASA(1) 11,359 - -------------------------------------------------------------------------------- 1,329,400 Storebrand ASA(1) 11,078 - -------------------------------------------------------------------------------- 1,226,000 Tandberg Television ASA(1)(2) 14,065 - -------------------------------------------------------------------------------- 75,049 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 1.1% - -------------------------------------------------------------------------------- 18,510,273 Foxconn International Holdings Ltd.(2) 12,134 - -------------------------------------------------------------------------------- SINGAPORE -- 0.7% - -------------------------------------------------------------------------------- 6,808,000 Cosco Investment Singapore Limited(1)(2) 7,477 - -------------------------------------------------------------------------------- SOUTH AFRICA -- 0.6% - -------------------------------------------------------------------------------- 598,104 Naspers Ltd. 7,324 - -------------------------------------------------------------------------------- SOUTH KOREA -- 1.9% - -------------------------------------------------------------------------------- 546,000 Humax Co. Ltd. 6,879 - -------------------------------------------------------------------------------- 195,100 Hyundai Department Store Co. Ltd. 9,242 - -------------------------------------------------------------------------------- 263,488 SODIFF Advanced Materials Co. Ltd. 5,306 - -------------------------------------------------------------------------------- 21,427 - -------------------------------------------------------------------------------- SPAIN -- 3.1% - -------------------------------------------------------------------------------- 871,700 Enagas(1) 13,878 - -------------------------------------------------------------------------------- 684,300 Indra Sistemas SA(1) 12,503 - -------------------------------------------------------------------------------- 369,200 Red Electrica de Espana(1) 9,144 - -------------------------------------------------------------------------------- 35,525 - -------------------------------------------------------------------------------- SWEDEN -- 1.8% - -------------------------------------------------------------------------------- 1,077,000 Eniro AB(1) 12,274 - -------------------------------------------------------------------------------- 645,000 Gambro AB(1) 8,543 - -------------------------------------------------------------------------------- 20,817 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- SWITZERLAND -- 5.7% - -------------------------------------------------------------------------------- 246,100 Actelion N.V.(1)(2) $ 24,937 - -------------------------------------------------------------------------------- 3,556 Lindt & Spruengli AG 5,554 - -------------------------------------------------------------------------------- 190,100 Logitech International SA(2) 11,291 - -------------------------------------------------------------------------------- 287,400 Lonza Group AG(1) 17,542 - -------------------------------------------------------------------------------- 15,900 Sulzer AG 6,604 - -------------------------------------------------------------------------------- 65,928 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 5.9% - -------------------------------------------------------------------------------- 5,811,000 Acer Inc. 11,024 - -------------------------------------------------------------------------------- 1,471,000 High Tech Computer Corp. 13,014 - -------------------------------------------------------------------------------- 17,775,000 King Yuan Electronics Co. Ltd. 16,209 - -------------------------------------------------------------------------------- 1,074,000 Motech Industries Inc.(2) 16,060 - -------------------------------------------------------------------------------- 2,545,000 Novatek Microelectronics Corp., Ltd. 12,049 - -------------------------------------------------------------------------------- 68,356 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 11.9% - -------------------------------------------------------------------------------- 1,175,000 Balfour Beatty plc 6,904 - -------------------------------------------------------------------------------- 436,200 BPB plc 4,068 - -------------------------------------------------------------------------------- 1,097,700 Burren Energy plc(2) 10,586 - -------------------------------------------------------------------------------- 1,570,000 Capita Group plc 10,938 - -------------------------------------------------------------------------------- 4,797,000 Carphone Warehouse Group plc 14,344 - -------------------------------------------------------------------------------- 4,620,000 International Power plc 16,250 - -------------------------------------------------------------------------------- 435,900 Intertek Group plc 5,986 - -------------------------------------------------------------------------------- 154,000,000 MyTravel Group plc(2) 13,912 - -------------------------------------------------------------------------------- 619,800 NETeller plc(2) 6,180 - -------------------------------------------------------------------------------- 2,440,200 Photo-Me International plc 3,992 - -------------------------------------------------------------------------------- 816,100 Punch Taverns plc 10,118 - -------------------------------------------------------------------------------- 1,247,000 Sportingbet plc(2) 6,506 - -------------------------------------------------------------------------------- 4,740,000 Tullow Oil plc 14,389 - -------------------------------------------------------------------------------- 1,581,500 Vedanta Resources plc 12,240 - -------------------------------------------------------------------------------- 136,413 - -------------------------------------------------------------------------------- UNITED STATES -- 0.2% - -------------------------------------------------------------------------------- 47,500 NII Holdings, Inc.(1)(2) 2,831 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $993,886) 1,120,170 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 2.1% Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.625% -- 7.50%, 11/15/24 -- 2/15/27, valued at $24,583), in a joint trading account at 2.93%, dated 5/31/05, due 6/1/05 (Delivery value $24,102) (Cost $24,100) 24,100 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 12 International Discovery - Schedule of Investments MAY 31, 2005 (UNAUDITED) ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 23.5% Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 3.05%, dated 5/31/05, due 6/1/05 (Delivery value $20,119) $ 20,117 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 3.06%, dated 5/31/05, due 6/1/05 (Delivery value $250,021) 250,000 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $270,117) 270,117 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 123.1% (Cost $1,288,103) 1,414,387 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (23.1)% (265,393) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $1,148,994 ================================================================================ MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Industrials 21.3% - -------------------------------------------------------------------------------- Financials 17.7% - -------------------------------------------------------------------------------- Information Technology 13.2% - -------------------------------------------------------------------------------- Health Care 11.5% - -------------------------------------------------------------------------------- Consumer Discretionary 11.4% - -------------------------------------------------------------------------------- Energy 8.2% - -------------------------------------------------------------------------------- Materials 7.9% - -------------------------------------------------------------------------------- Utilities 4.0% - -------------------------------------------------------------------------------- Telecommunication Services 1.2% - -------------------------------------------------------------------------------- Consumer Staples 1.1% - -------------------------------------------------------------------------------- Cash and cash equivalents(+) 2.5% - -------------------------------------------------------------------------------- (+) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities NOTES TO SCHEDULE OF INVESTMENTS * The securities are listed under their country of incorporation which may differ from the country where they have their greatest economic exposure. (1) Security, or a portion thereof, was on loan as of May 31, 2005. (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. - ------ 13 Emerging Markets - Performance TOTAL RETURNS AS OF MAY 31, 2005 -------------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 23.34% 2.09% 4.38% 9/30/97 - -------------------------------------------------------------------------------- MSCI EM INDEX 30.99% 7.69% 3.68% -- - -------------------------------------------------------------------------------- Institutional Class 23.45% 2.30% 12.19% 1/28/99 - -------------------------------------------------------------------------------- Advisor Class 23.08% 1.86% 7.40% 5/12/99 - -------------------------------------------------------------------------------- C Class 21.91% -- 13.11% 12/18/01 - -------------------------------------------------------------------------------- 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. 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. (continued) - ------ 14 Emerging Markets - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made September 30, 1997
![](https://capedge.com/proxy/N-CSRS/0000872825-05-000023/growthemergingmkts0507.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended May 31 - ------------------------------------------------------------------------------------- 1998* 1999 2000 2001 2002 2003 2004 2005 - ------------------------------------------------------------------------------------- Investor Class -15.00% 1.88% 44.57% -22.82% -0.43% -17.03% 41.04% 23.34% - ------------------------------------------------------------------------------------- MSCI EM Index -25.24% 3.46% 17.75% -21.60% 7.28% -6.40% 40.48% 30.99% - ------------------------------------------------------------------------------------- * 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. - ------ 15 Emerging Markets - Portfolio Commentary [photo of investment team] PORTFOLIO MANAGERS ON THE EMERGING MARKETS INVESTMENT TEAM: RAYMOND KONG AND MICHAEL DONNELLY. Emerging Markets climbed 6.64%(1) during the six months ended May 31, 2005, trailing its benchmark, the Morgan Stanley Capital International (MSCI) EM (Emerging Markets) Index, which rose 7.66%. Since the portfolio's inception on September 30, 1997, it has posted an average annual return of 4.38%, outperforming the 3.68% return of its benchmark. INTERNATIONAL EQUITIES SECURE MODEST GAINS The period began with the world's equity markets rallying in December as oil prices declined from record highs. But many developed markets were mostly restrained during the first five months of 2005 as high prices for commodities, especially oil, raised fears that inflation might accelerate, leading to slower economic growth and lower corporate profits. Even against this challenging backdrop, Emerging Markets achieved positive absolute contributions from most of its country exposures, while eight of its top-ten holdings on average advanced -- gains accomplished despite the fact that the movement of the dollar versus other currencies slightly restrained the fund's performance. SOUTH KOREA LEADS GAINS Emerging Markets' investments in South Korea, on average our largest country exposure, made the greatest TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- Common Stocks 92.4% 94.1% - -------------------------------------------------------------------------------- Preferred Stocks 2.9% 0.9% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 95.3% 95.0% - -------------------------------------------------------------------------------- Temporary Cash Investments 3.2% 4.2% - -------------------------------------------------------------------------------- Other Assets and Liabilities(2) 1.5% 0.8% - -------------------------------------------------------------------------------- (2) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- South Korea 12.8% 14.5% - -------------------------------------------------------------------------------- Taiwan (Republic of China) 11.0% 7.6% - -------------------------------------------------------------------------------- Mexico 10.2% 8.2% - -------------------------------------------------------------------------------- Brazil 7.0% 8.1% - -------------------------------------------------------------------------------- South Africa 6.6% 8.0% - -------------------------------------------------------------------------------- People's Republic of China 5.6% 3.1% - -------------------------------------------------------------------------------- Russian Federation 5.4% 4.6% - -------------------------------------------------------------------------------- Israel 5.3% 2.0% - -------------------------------------------------------------------------------- Hong Kong 4.5% 4.2% - -------------------------------------------------------------------------------- Malaysia 3.7% 3.8% - -------------------------------------------------------------------------------- India 3.6% 5.8% - -------------------------------------------------------------------------------- Poland 2.8% 3.9% - -------------------------------------------------------------------------------- Other Countries 16.8% 21.2% - -------------------------------------------------------------------------------- Cash and Equivalents(3) 4.7% 5.0% - -------------------------------------------------------------------------------- (3) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. (1) All fund returns referenced in this commentary are for Investor Class shares. Returns for periods less than one year are not annualized. (continued) - ------ 16 Emerging Markets - Portfolio Commentary contributions to absolute performance, and our investment strategy led us to a top-contributing stock that was not represented in the index. Hynix Semiconductor announced in its 2005 annual report that the company had registered record profits in 2004 driven by lower costs, the introduction of new technologies and an agreement to build a new plant in China, where economic growth remains vibrant. EGYPT AND MEXICO ADD VALUE We also found opportunity in Egypt, a small but rewarding stake that yielded another top contributor in MobiNil, a wireless-telecom services company. During the period, MobiNil twice announced improved earnings and increased market share, with active subscribers reaching an industry-leading 4.4 million. Mexico represented another bright spot, and all holdings but one contributed. Homebuilder Urbi Desarrollos Urbanos benefited both from rising mortgage-lending activity and from improved sales of homes in the middle- to higher-income range. SUCCESS IN TAIWAN Our interest in Taiwan further boosted results, and one holding, High Tech Computer, which produces mobile computing and communications solutions, was the portfolio's top-contributing stock. Reports that income in 2004 demonstrated triple-digit growth and reached record highs in first-quarter 2005 helped support the stock's climb. SOME DIFFICULTIES On the downside, Emerging Markets' position in South Africa proved the most damaging to performance. Though some of our holdings in this country posted gains, many more declined, including Gold Fields, one of the world's largest producers of precious metals. Elsewhere, integrated energy firm PetroKazakhstan Inc. was the portfolio's top-detracting stock. Despite reporting a 58% increase in earnings for 2004 versus 2003, the company's lengthy dispute with its partner in a joint business venture contributed to the stock's fall. We eliminated the position. OUR COMMITMENT We remain committed to looking for foreign companies whose earnings and revenues are growing at an improving rate. This strategy is based on the belief that, over the long term, stock price movements follow growth in earnings, revenue and/or cash flow. TOP TEN HOLDINGS AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- Wal-Mart de Mexico SA de CV, Series V 3.2% 1.8% - -------------------------------------------------------------------------------- Shinsegae Co. Ltd. 2.8% -- - -------------------------------------------------------------------------------- Ctrip.com International, Ltd. ADR 2.3% -- - -------------------------------------------------------------------------------- Wintek Corp. 2.2% -- - -------------------------------------------------------------------------------- Urbi Desarrollos Urbanos SA de CV 2.0% 2.0% - -------------------------------------------------------------------------------- Phoenix PDE Co. Ltd. 2.0% 0.5% - -------------------------------------------------------------------------------- Kimberly-Clark de Mexico SA de CV Cl A 1.9% 1.5% - -------------------------------------------------------------------------------- Shinhan Financial Group Co., Ltd. 1.9% 0.5% - -------------------------------------------------------------------------------- Empresas ICA Sociedad Controladora SA de CV 1.8% 1.2% - -------------------------------------------------------------------------------- Banpu Public Company Limited 1.8% 1.2% - -------------------------------------------------------------------------------- - ------ 17 Emerging Markets - Schedule of Investments MAY 31, 2005 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 92.4%* BRAZIL -- 4.1% - -------------------------------------------------------------------------------- 133,152 Cia Brasileira de Distribuicao Grupo Pao de Acucar ADR(1) $ 2,889 - -------------------------------------------------------------------------------- 190,734 Diagnosticos da America SA(2) 2,313 - -------------------------------------------------------------------------------- 85,300 Localiza Rent a Car SA(2) 393 - -------------------------------------------------------------------------------- 102,741 Unibanco-Uniao de Bancos Brasileiros SA GDR(1) 3,688 - -------------------------------------------------------------------------------- 9,283 - -------------------------------------------------------------------------------- CHILE -- 0.8% - -------------------------------------------------------------------------------- 911,024 Empresa Nacional de Electricidad SA 699 - -------------------------------------------------------------------------------- 42,412 Empresa Nacional de Electricidad SA ADR(1) 976 - -------------------------------------------------------------------------------- 1,675 - -------------------------------------------------------------------------------- CZECH REPUBLIC -- 1.7% - -------------------------------------------------------------------------------- 114,172 Zentiva N.V.(2) 3,817 - -------------------------------------------------------------------------------- EGYPT -- 1.8% - -------------------------------------------------------------------------------- 23,630 Orascom Telecom Holding SAE 2,084 - -------------------------------------------------------------------------------- 139,745 Vodafone Egypt Telecommunications SAE 1,881 - -------------------------------------------------------------------------------- 3,965 - -------------------------------------------------------------------------------- HONG KONG -- 4.5% - -------------------------------------------------------------------------------- 584,000 Cathay Pacific Airways Ltd. 1,058 - -------------------------------------------------------------------------------- 1,662,000 Cosco Pacific Limited(1) 3,226 - -------------------------------------------------------------------------------- 7,974,000 I.T Ltd.(2) 2,050 - -------------------------------------------------------------------------------- 1,850,000 Lifestyle International Holdings Ltd.(1) 2,818 - -------------------------------------------------------------------------------- 11,908,000 Regal Hotels International Holdings Ltd.(2) 1,041 - -------------------------------------------------------------------------------- 10,193 - -------------------------------------------------------------------------------- HUNGARY -- 0.7% - -------------------------------------------------------------------------------- 12,631 Gedeon Richter Rt. 1,650 - -------------------------------------------------------------------------------- INDIA -- 3.6% - -------------------------------------------------------------------------------- 88,300 Bajaj Auto Ltd. 2,477 - -------------------------------------------------------------------------------- 36,500 Jet Airways India Ltd.(2) 1,118 - -------------------------------------------------------------------------------- 225,400 Reliance Industries Ltd. 2,757 - -------------------------------------------------------------------------------- 130,200 Tata TEA Ltd. 1,706 - -------------------------------------------------------------------------------- 8,058 - -------------------------------------------------------------------------------- INDONESIA -- 1.8% - -------------------------------------------------------------------------------- 11,483,000 PT Bank Rakyat Indonesia 3,500 - -------------------------------------------------------------------------------- 6,818,500 PT Bumi Resources Tbk(2) 595 - -------------------------------------------------------------------------------- 4,095 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- ISRAEL -- 5.3% - -------------------------------------------------------------------------------- 436,047 Bank Hapoalim Ltd. $ 1,531 - -------------------------------------------------------------------------------- 638,054 Bank Leumi Le-Israel BM 1,807 - -------------------------------------------------------------------------------- 112,597 Frutarom Industries Ltd. GDR 900 - -------------------------------------------------------------------------------- 71,739 Lipman Electronic Engineering Ltd. 2,298 - -------------------------------------------------------------------------------- 96,040 RADWARE Ltd.(2) 2,146 - -------------------------------------------------------------------------------- 89,926 Taro Pharmaceutical Industries Ltd.(1)(2) 2,941 - -------------------------------------------------------------------------------- 45,072 United Mizrahi Bank Ltd.(2) 214 - -------------------------------------------------------------------------------- 11,837 - -------------------------------------------------------------------------------- MALAYSIA -- 3.7% - -------------------------------------------------------------------------------- 2,739,000 Commerce Asset Holdings Bhd 3,359 - -------------------------------------------------------------------------------- 1,182,500 Digi.Com Bhd(2) 1,618 - -------------------------------------------------------------------------------- 1,079,900 Telekom Malaysia Bhd 2,785 - -------------------------------------------------------------------------------- 219,000 Transmile Group Bhd 565 - -------------------------------------------------------------------------------- 8,327 - -------------------------------------------------------------------------------- MEXICO -- 10.2% - -------------------------------------------------------------------------------- 33,218 Desarrolladora Homex SA de CV ADR(2) 840 - -------------------------------------------------------------------------------- 10,296,139 Empresas ICA Sociedad Controladora SA de CV(1)(2) 4,072 - -------------------------------------------------------------------------------- 457,978 Grupo Mexico SA de CV 2,165 - -------------------------------------------------------------------------------- 1,344,070 Kimberly-Clark de Mexico SA de CV Cl A 4,283 - -------------------------------------------------------------------------------- 836,821 Urbi Desarrollos Urbanos SA de CV(2) 4,579 - -------------------------------------------------------------------------------- 1,890,687 Wal-Mart de Mexico SA de CV, Series V 7,172 - -------------------------------------------------------------------------------- 23,111 - -------------------------------------------------------------------------------- MOROCCO -- 0.5% - -------------------------------------------------------------------------------- 114,329 Maroc Telecom 1,097 - -------------------------------------------------------------------------------- NETHERLANDS -- 2.2% - -------------------------------------------------------------------------------- 67,637 Efes Breweries International N.V. GDR(2) 2,063 - -------------------------------------------------------------------------------- 214,350 Pyaterochka Holding N.V. GDR(2) 2,894 - -------------------------------------------------------------------------------- 4,957 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 5.6% - -------------------------------------------------------------------------------- 100,517 Ctrip.com International, Ltd. ADR(2) 5,106 - -------------------------------------------------------------------------------- 2,274,000 Denway Motors Ltd. 804 - -------------------------------------------------------------------------------- 4,414,000 Foxconn International Holdings Ltd.(2) 2,894 - -------------------------------------------------------------------------------- 5,244,000 Shanghai Electric Group Corp. Cl H(2) 1,126 - -------------------------------------------------------------------------------- 2,862,000 Sinopec Zhenhai Refining & Chemical Co. Ltd. Cl H 2,759 - -------------------------------------------------------------------------------- 12,689 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 18 Emerging Markets - Schedule of Investments MAY 31, 2005 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- PERU -- 1.5% - -------------------------------------------------------------------------------- 158,270 Compania de Minas Buenaventura SAu ADR(1) $ 3,384 - -------------------------------------------------------------------------------- POLAND -- 2.8% - -------------------------------------------------------------------------------- 64,906 Agora SA(2) 1,316 - -------------------------------------------------------------------------------- 45,859 BRE Bank SA(2) 1,691 - -------------------------------------------------------------------------------- 120,023 KGHM Polska Miedz SA(2) 1,041 - -------------------------------------------------------------------------------- 63,675 Powszechna Kasa Oszczednosci Bank Polski SA(2) 498 - -------------------------------------------------------------------------------- 131,017 TVN SA(2) 1,766 - -------------------------------------------------------------------------------- 6,312 - -------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 5.4% - -------------------------------------------------------------------------------- 35,757 AFK Sistema GDR(2) 586 - -------------------------------------------------------------------------------- 78,447 LUKOIL 2,742 - -------------------------------------------------------------------------------- 83,295 Mobile TeleSystems ADR(1) 2,924 - -------------------------------------------------------------------------------- 4,178 Sberbank RF 2,745 - -------------------------------------------------------------------------------- 866,762 VolgaTelecom 3,251 - -------------------------------------------------------------------------------- 12,248 - -------------------------------------------------------------------------------- SINGAPORE -- 0.5% - -------------------------------------------------------------------------------- 1,777,000 Petra Foods Ltd. 1,194 - -------------------------------------------------------------------------------- SOUTH AFRICA -- 6.6% - -------------------------------------------------------------------------------- 67,756 Anglo American Platinum Corp. Ltd. 2,902 - -------------------------------------------------------------------------------- 146,484 Anglo American plc 3,463 - -------------------------------------------------------------------------------- 140,700 Ellerine Holdings Ltd. 1,032 - -------------------------------------------------------------------------------- 40,616 Impala Platinum Holdings Limited 3,396 - -------------------------------------------------------------------------------- 27,209 Investec Ltd. 778 - -------------------------------------------------------------------------------- 206,753 Telkom SA Ltd. 3,367 - -------------------------------------------------------------------------------- 14,938 - -------------------------------------------------------------------------------- SOUTH KOREA -- 12.8% - -------------------------------------------------------------------------------- 10,369 Hanmi Pharm Co. Ltd. 597 - -------------------------------------------------------------------------------- 46,899 Humax Co. Ltd. 591 - -------------------------------------------------------------------------------- 184,200 Hynix Semiconductor Inc.(2) 2,906 - -------------------------------------------------------------------------------- 229,650 Hyundai Merchant Marine(2) 3,656 - -------------------------------------------------------------------------------- 18,200 Orion Corp. 2,637 - -------------------------------------------------------------------------------- 674,328 Phoenix PDE Co. Ltd. 4,508 - -------------------------------------------------------------------------------- 6,290 POSCO 1,123 - -------------------------------------------------------------------------------- 4,820 Samsung Electronics 2,338 - -------------------------------------------------------------------------------- 164,080 Shinhan Financial Group Co., Ltd. 4,201 - -------------------------------------------------------------------------------- 18,640 Shinsegae Co. Ltd. 6,334 - -------------------------------------------------------------------------------- 28,891 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 11.0% - -------------------------------------------------------------------------------- 1,733,000 Chi Mei Optoelectronics Corp. $ 2,732 - -------------------------------------------------------------------------------- 1,256,000 Compal Communications Inc.(2) 3,431 - -------------------------------------------------------------------------------- 399,000 High Tech Computer Corp. 3,530 - -------------------------------------------------------------------------------- 4,457,000 King Yuan Electronics Co. Ltd. 4,064 - -------------------------------------------------------------------------------- 2,180,000 Taiwan Semiconductor Manufacturing Co. Ltd. 3,955 - -------------------------------------------------------------------------------- 1,147,550 Wan Hai Lines Limited 1,087 - -------------------------------------------------------------------------------- 3,678,000 Wintek Corp. 4,954 - -------------------------------------------------------------------------------- 1,500,000 Wistron Corp.(2) 1,057 - -------------------------------------------------------------------------------- 24,810 - -------------------------------------------------------------------------------- THAILAND -- 2.5% - -------------------------------------------------------------------------------- 5,913,300 Amata Corp. plc 1,659 - -------------------------------------------------------------------------------- 1,095,100 Banpu Public Company Limited 4,069 - -------------------------------------------------------------------------------- 5,728 - -------------------------------------------------------------------------------- TURKEY -- 1.8% - -------------------------------------------------------------------------------- 918,667 Denizbank AS(2) 3,010 - -------------------------------------------------------------------------------- 70,549 Turkcell Iletisim Hizmet ADR(1) 1,133 - -------------------------------------------------------------------------------- 4,143 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 1.0% - -------------------------------------------------------------------------------- 108,948 Antofagasta plc 2,289 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $177,303) 208,691 - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 2.9% BRAZIL -- 2.9% - -------------------------------------------------------------------------------- 77,704 Bradespar SA 1,316 - -------------------------------------------------------------------------------- 94,800,000 Cia Energetica de Minas Gerais 2,874 - -------------------------------------------------------------------------------- 147,475 Tim Participacoes SA ADR(1) 2,323 - -------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost $6,031) 6,513 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 3.2% Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury securities, 2.00%, 1/15/14, valued at $7,348), in a joint trading account at 2.94%, dated 5/31/05, due 6/1/05 (Delivery value $7,201) (Cost $7,200) 7,200 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 19 Emerging Markets - Schedule of Investments MAY 31, 2005 (UNAUDITED) ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 7.5% Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 3.05%, dated 5/31/05, due 6/1/05 (Delivery value $1,871) $ 1,871 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 3.06%, dated 5/31/05, due 6/1/05 (Delivery value $15,001) 15,000 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $16,871) 16,871 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 106.0% (Cost $207,405) 239,275 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (6.0)% (13,488) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $225,787 ================================================================================ MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Information Technology 18.1% - -------------------------------------------------------------------------------- Consumer Staples 14.2% - -------------------------------------------------------------------------------- Financials 13.3% - -------------------------------------------------------------------------------- Consumer Discretionary 11.0% - -------------------------------------------------------------------------------- Telecommunication Services 10.2% - -------------------------------------------------------------------------------- Materials 8.8% - -------------------------------------------------------------------------------- Industrials 7.0% - -------------------------------------------------------------------------------- Energy 5.7% - -------------------------------------------------------------------------------- Health Care 5.0% - -------------------------------------------------------------------------------- Utilities 2.0% - -------------------------------------------------------------------------------- Cash and cash equivalents(+) 4.7% - -------------------------------------------------------------------------------- (+) 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 * The securities are listed under their country of incorporation which may differ from the country where they have their greatest economic exposure. (1) Security, or a portion thereof, was on loan as of May 31, 2005. (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. - ------ 20 Global Growth - Performance TOTAL RETURNS AS OF MAY 31, 2005 ------------------------ AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 12.61% -1.84% 8.98% 12/1/98 - -------------------------------------------------------------------------------- MSCI WORLD FREE INDEX 11.35% -1.60% 2.02%(1) -- - -------------------------------------------------------------------------------- Institutional Class 12.90% -- -2.74% 8/1/00 - -------------------------------------------------------------------------------- Advisor Class 12.37% -2.08% 7.12% 2/5/99 - -------------------------------------------------------------------------------- C Class 11.65% -- 6.66% 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) - ------ 21 Global Growth - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made December 1, 1998
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ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended May 31 - ---------------------------------------------------------------------------------- 1999* 2000 2001 2002 2003 2004 2005 - ---------------------------------------------------------------------------------- Investor Class 18.60% 61.77% -15.57% -12.17% -13.86% 26.69% 12.61% - ---------------------------------------------------------------------------------- MSCI World Free Index 8.68% 13.56% -14.95% -12.56% -9.86% 23.60% 11.35% - ---------------------------------------------------------------------------------- * 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. - ------ 22 Global Growth - Portfolio Commentary [photo of investment team] PORTFOLIO MANAGERS ON THE GLOBAL GROWTH INVESTMENT TEAM: MATT HUDSON AND TREVOR GURWICH. Global Growth advanced 4.19%(1) during the six months ended May 31, 2005, outperforming its benchmark, the Morgan Stanley Capital International (MSCI) World Free Index, which returned 2.21%. The period began with the world's equity markets rallying late in 2004 as the U.S. presidential election ended without confusion and oil prices retreated from record highs. But many developed markets were mostly restrained during the first five months of 2005 as high prices for commodities, especially oil, raised fears that inflation might accelerate, leading to higher interest rates, slower economic growth and lower corporate profits. Despite such uncertainty in the investment landscape, all but one of the sectors in which we were invested advanced, and eight of the portfolio's top-10 holdings on average contributed to Global Growth's return. Currency played a role during the period, as the movement of the dollar versus other currencies reduced the portfolio's return. HEALTH CARE BOOSTS PORTFOLIO Global Growth's overweight complement of health care companies contributed most to the portfolio's total return. Holdings in the biotechnology industry led the advance, with California-based Genentech, Inc. making the largest contribution to the portfolio during the period. Genentech, a top-10 holding, reported a number of positive developments regarding drugs used to treat various types of cancer. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- U.S. Common Stocks 48.3% 44.8% - -------------------------------------------------------------------------------- Foreign Common Stocks 49.4% 52.6% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 97.7% 97.4% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.8% 2.0% - -------------------------------------------------------------------------------- Other Assets and Liabilities(2) 0.5% 0.6% - -------------------------------------------------------------------------------- (2) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- United States 48.3% 44.8% - -------------------------------------------------------------------------------- Japan 8.4% 8.2% - -------------------------------------------------------------------------------- Switzerland 5.4% 5.9% - -------------------------------------------------------------------------------- France 5.4% 5.5% - -------------------------------------------------------------------------------- United Kingdom 4.3% 3.7% - -------------------------------------------------------------------------------- Netherlands 3.4% 3.9% - -------------------------------------------------------------------------------- Germany 3.1% 3.3% - -------------------------------------------------------------------------------- Greece 2.4% 2.3% - -------------------------------------------------------------------------------- Bermuda 2.3% 2.6% - -------------------------------------------------------------------------------- Other Countries 14.7% 17.2% - -------------------------------------------------------------------------------- Cash and Equivalents(3) 2.3% 2.6% - -------------------------------------------------------------------------------- (3) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. (1) All fund returns referenced in this commentary are for Investor Class shares. Returns for periods less than one year are not annualized. (continued) - ------ 23 Global Growth - Portfolio Commentary Several other holdings in the health care sector were among the period's top contributors. Aetna Inc., one of the largest health-insurance providers in the U.S., reported profit increased 16% during the first quarter, boosted by premium revenue from new customers. Switzerland's Roche Holding AG, the world's biggest maker of cancer medicines and diagnostic tests, led the advance among the portfolio's pharmaceutical holdings. Roche's gain is partly attributable to its majority ownership stake in Genentech. Our investments in the health care sector also outperformed the MSCI World Free Index, contributing most to the portfolio's relative performance. ENERGY AND FINANCIALS CONTRIBUTE Global Growth's stake in the energy sector made the second-largest contribution to the portfolio's absolute performance. The gains were led by the portfolio's oil and gas companies, including EnCana Corp., Canada's largest producer of natural gas and oil,and Exxon Mobil Corp. Exxon, the world's largest publicly owned oil company and a top-10 holding, reported a 44% increase in first-quarter net income to $7.86 billion. Our energy sector also outperformed the index. The financials sector, our largest sector stake on average during the period, also lifted the portfolio. The gains came mostly on the strength of commercial banks, led by Hansapank, the Baltic region's largest lender. During the period, Sweden's Swedbank, which owned part of Hansapank, acquired nearly all the remaining shares, driving up the stock's price. Global Growth's position among the insurance, diversified financial services and consumer finance industries also contributed to the portfolio's return. The sector also outperformed the MSCI World Free Index. TECHNOLOGY LAGS Only the information technology sector detracted from the portfolio's return. The Internet software and services industry detracted most, as a broad range of companies that develop anti-virus programs declined on news that Microsoft, the world's largest software company, had entered the field by acquiring an anti-virus maker. Digital River was among the companies caught in the downdraft, and detracted most from the portfolio during the period. Our technology holdings, however, still outperformed the benchmark. OUR COMMITMENT We remain committed to looking for stocks of growing foreign companies. Management of the fund is based on the belief that, over the long term, stock price movements follow growth in earnings, revenues and/or cash flow. TOP TEN HOLDINGS AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- General Electric Co. 2.0% 2.0% - -------------------------------------------------------------------------------- Genentech, Inc. 1.8% 1.3% - -------------------------------------------------------------------------------- American Tower Corp. Cl A 1.6% 1.6% - -------------------------------------------------------------------------------- ORIX Corporation 1.5% 1.4% - -------------------------------------------------------------------------------- BHP Billiton Limited 1.5% 1.8% - -------------------------------------------------------------------------------- Exxon Mobil Corp. 1.4% 2.0% - -------------------------------------------------------------------------------- Medtronic, Inc. 1.4% 1.3% - -------------------------------------------------------------------------------- Danaher Corp. 1.4% 1.5% - -------------------------------------------------------------------------------- EFG Eurobank Ergasias SA 1.4% 1.3% - -------------------------------------------------------------------------------- Tesco plc 1.3% 1.4% - -------------------------------------------------------------------------------- - ------ 24 Global Growth - Schedule of Investments MAY 31, 2005 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 97.7%* AUSTRALIA -- 1.5% - -------------------------------------------------------------------------------- 5,685 BHP Billiton Limited $ 4,609 - -------------------------------------------------------------------------------- AUSTRIA -- 1.6% - -------------------------------------------------------------------------------- 65,000 Erste Bank der Oesterreichischen Sparkassen AG(1) 3,197 - -------------------------------------------------------------------------------- 29,101 Raiffeisen International Bank Holding AG(2) 1,737 - -------------------------------------------------------------------------------- 4,934 - -------------------------------------------------------------------------------- BELGIUM -- 0.7% - -------------------------------------------------------------------------------- 28,300 KBC Groupe 2,295 - -------------------------------------------------------------------------------- BERMUDA -- 2.3% - -------------------------------------------------------------------------------- 57,200 Nabors Industries Ltd.(2) 3,152 - -------------------------------------------------------------------------------- 140,500 Tyco International Ltd. 4,065 - -------------------------------------------------------------------------------- 7,217 - -------------------------------------------------------------------------------- CANADA -- 1.0% - -------------------------------------------------------------------------------- 95,700 EnCana Corp. 3,320 - -------------------------------------------------------------------------------- CHANNEL ISLANDS -- 0.8% - -------------------------------------------------------------------------------- 93,210 Amdocs Ltd.(2) 2,540 - -------------------------------------------------------------------------------- DENMARK -- 0.8% - -------------------------------------------------------------------------------- 50,494 William Demant Holding(1)(2) 2,417 - -------------------------------------------------------------------------------- FRANCE -- 5.4% - -------------------------------------------------------------------------------- 128,171 Axa SA(1) 3,124 - -------------------------------------------------------------------------------- 79,500 JC Decaux SA(1)(2) 1,927 - -------------------------------------------------------------------------------- 35,630 Schneider Electric SA(1) 2,621 - -------------------------------------------------------------------------------- 25,400 Societe Generale Cl A(1) 2,495 - -------------------------------------------------------------------------------- 18,650 Total SA(1) 4,119 - -------------------------------------------------------------------------------- 38,000 Vinci SA(1) 2,845 - -------------------------------------------------------------------------------- 17,131 - -------------------------------------------------------------------------------- GERMANY -- 3.1% - -------------------------------------------------------------------------------- 42,290 Continental AG(1) 2,995 - -------------------------------------------------------------------------------- 6,840 Puma AG Rudolf Dassler Sport 1,732 - -------------------------------------------------------------------------------- 15,500 SAP AG(1) 2,555 - -------------------------------------------------------------------------------- 79,750 Stada Arzneimittel AG 2,455 - -------------------------------------------------------------------------------- 9,737 - -------------------------------------------------------------------------------- GREECE -- 2.4% - -------------------------------------------------------------------------------- 141,080 EFG Eurobank Ergasias SA 4,350 - -------------------------------------------------------------------------------- 119,000 Greek Organization of Football Prognostics SA 3,247 - -------------------------------------------------------------------------------- 7,597 - -------------------------------------------------------------------------------- INDIA -- 1.1% - ------------------------------------------------------------------------------- 112,361 Tata Consultancy Services Ltd. 3,429 - -------------------------------------------------------------------------------- ITALY -- 1.1% - -------------------------------------------------------------------------------- 70,500 Assicurazioni Generali SpA(1) 2,142 - -------------------------------------------------------------------------------- 209,746 RCS MediaGroup SpA(1) 1,489 - -------------------------------------------------------------------------------- 3,631 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- JAPAN -- 8.4% - -------------------------------------------------------------------------------- 31,000 Canon, Inc. $ 1,686 - -------------------------------------------------------------------------------- 155,500 Chugai Pharmaceutical Co. Ltd. 2,303 - -------------------------------------------------------------------------------- 22,100 Hoya Corp. 2,471 - -------------------------------------------------------------------------------- 127,000 JSR Corp.(1) 2,681 - -------------------------------------------------------------------------------- 33,600 ORIX Corporation 4,853 - -------------------------------------------------------------------------------- 192,000 Sharp Corp. 2,984 - -------------------------------------------------------------------------------- 430,000 Shinsei Bank Ltd.(1) 2,184 - -------------------------------------------------------------------------------- 591,000 Sumitomo Chemical Company, Limited 2,777 - -------------------------------------------------------------------------------- 375 Sumitomo Mitsui Financial Group Inc. 2,437 - -------------------------------------------------------------------------------- 202,000 Sumitomo Realty & Development Co. Ltd. 2,188 - -------------------------------------------------------------------------------- 26,564 - -------------------------------------------------------------------------------- MEXICO -- 0.8% - -------------------------------------------------------------------------------- 47,000 America Movil SA de CV Series L ADR 2,664 - -------------------------------------------------------------------------------- NETHERLANDS -- 3.4% - -------------------------------------------------------------------------------- 141,924 ING Groep N.V.(1) 3,925 - -------------------------------------------------------------------------------- 88,900 Randstad Holdings N.V. 3,179 - -------------------------------------------------------------------------------- 56,000 Schlumberger Ltd. 3,829 - -------------------------------------------------------------------------------- 10,933 - -------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 0.5% - -------------------------------------------------------------------------------- 48,560 Mobile TeleSystems ADR(1) 1,704 - -------------------------------------------------------------------------------- SOUTH AFRICA -- 0.7% - -------------------------------------------------------------------------------- 188,560 Naspers Ltd. 2,309 - -------------------------------------------------------------------------------- SOUTH KOREA -- 1.5% - -------------------------------------------------------------------------------- 43,250 Hyundai Motor Company 2,433 - -------------------------------------------------------------------------------- 4,980 Samsung Electronics 2,416 - -------------------------------------------------------------------------------- 4,849 - -------------------------------------------------------------------------------- SPAIN -- 1.8% - -------------------------------------------------------------------------------- 123,000 Banco Sabadell SA(1) 3,223 - -------------------------------------------------------------------------------- 225,771 Cintra Concesiones de Infraestructuras de Transporte SA 2,461 - -------------------------------------------------------------------------------- 5,684 - -------------------------------------------------------------------------------- SWEDEN -- 0.8% - -------------------------------------------------------------------------------- 821,270 Telefonaktiebolaget LM Ericsson B Shares 2,584 - -------------------------------------------------------------------------------- SWITZERLAND -- 5.4% - -------------------------------------------------------------------------------- 101,620 Compagnie Financiere Richemont AG A Shares 3,094 - -------------------------------------------------------------------------------- 19,150 Nobel Biocare Holding AG 3,818 - -------------------------------------------------------------------------------- 73,500 Novartis AG(1) 3,588 - -------------------------------------------------------------------------------- 28,500 Roche Holding AG(1) 3,594 - -------------------------------------------------------------------------------- 39,422 UBS AG 3,039 - -------------------------------------------------------------------------------- 17,133 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 25 Global Growth - Schedule of Investments MAY 31, 2005 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- UNITED KINGDOM -- 4.3% - -------------------------------------------------------------------------------- 134,568 Man Group plc $ 3,224 - -------------------------------------------------------------------------------- 133,765 Reckitt Benckiser plc 4,085 - -------------------------------------------------------------------------------- 71,840 Royal Bank of Scotland Group plc 2,110 - -------------------------------------------------------------------------------- 743,000 Tesco plc 4,227 - -------------------------------------------------------------------------------- 13,646 - -------------------------------------------------------------------------------- UNITED STATES -- 48.3% - -------------------------------------------------------------------------------- 41,700 Aetna Inc. 3,253 - -------------------------------------------------------------------------------- 70,200 American Express Co. 3,780 - -------------------------------------------------------------------------------- 46,900 American International Group, Inc. 2,605 - -------------------------------------------------------------------------------- 273,000 American Tower Corp. Cl A(1)(2) 4,926 - -------------------------------------------------------------------------------- 60,000 Boeing Co. 3,834 - -------------------------------------------------------------------------------- 21,000 Caterpillar Inc. 1,976 - -------------------------------------------------------------------------------- 64,150 Citigroup Inc. 3,022 - -------------------------------------------------------------------------------- 110,500 Comcast Corporation(2) 3,558 - -------------------------------------------------------------------------------- 118,000 Constellation Brands Inc.(2) 3,282 - -------------------------------------------------------------------------------- 266,000 Corning Inc.(2) 4,170 - -------------------------------------------------------------------------------- 36,000 Corporate Executive Board Co. (The) 2,512 - -------------------------------------------------------------------------------- 80,200 Danaher Corp. 4,422 - -------------------------------------------------------------------------------- 97,610 Digital River Inc.(1)(2) 2,686 - -------------------------------------------------------------------------------- 90,900 eBay Inc.(2) 3,455 - -------------------------------------------------------------------------------- 191,400 EMC Corp.(2) 2,691 - -------------------------------------------------------------------------------- 81,200 Exxon Mobil Corp. 4,564 - -------------------------------------------------------------------------------- 70,110 Genentech, Inc.(2) 5,556 - -------------------------------------------------------------------------------- 171,800 General Electric Co. 6,267 - -------------------------------------------------------------------------------- 87,000 Gilead Sciences, Inc.(2) 3,550 - -------------------------------------------------------------------------------- 75,500 Gillette Company 3,982 - -------------------------------------------------------------------------------- 23,470 Goldman Sachs Group, Inc. (The) 2,289 - -------------------------------------------------------------------------------- 45,200 Harrah's Entertainment, Inc. 3,246 - -------------------------------------------------------------------------------- 87,500 Honeywell International Inc. 3,170 - -------------------------------------------------------------------------------- 46,700 Johnson & Johnson 3,134 - -------------------------------------------------------------------------------- 61,000 Kohl's Corp.(2) 2,970 - -------------------------------------------------------------------------------- 82,733 Las Vegas Sands Corp.(1)(2) 3,000 - -------------------------------------------------------------------------------- 139,000 McAfee Inc.(2) 3,987 - -------------------------------------------------------------------------------- 84,510 Medtronic, Inc. 4,543 - -------------------------------------------------------------------------------- 44,500 Monsanto Co. 2,537 - -------------------------------------------------------------------------------- 114,906 Monster Worldwide Inc.(2) 3,031 - -------------------------------------------------------------------------------- 172,110 Motorola, Inc. 2,990 - -------------------------------------------------------------------------------- 59,361 National Financial Partners Corp. 2,270 - -------------------------------------------------------------------------------- 129,970 Nextel Communications, Inc.(2) 3,922 - -------------------------------------------------------------------------------- 57,500 Noble Corp. 3,256 - -------------------------------------------------------------------------------- 42,700 Procter & Gamble Co. (The) 2,355 - -------------------------------------------------------------------------------- 53,656 Prudential Financial Inc. 3,398 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 42,300 ResMed Inc.(1)(2) $ 2,642 - -------------------------------------------------------------------------------- 71,200 SLM Corporation 3,437 - -------------------------------------------------------------------------------- 45,250 Textron Inc. 3,497 - -------------------------------------------------------------------------------- 66,000 UnitedHealth Group Incorporated 3,206 - -------------------------------------------------------------------------------- 57,000 Wachovia Corp. 2,893 - -------------------------------------------------------------------------------- 103,408 XM Satellite Radio Holdings Inc. Cl A(1)(2) 3,320 - -------------------------------------------------------------------------------- 98,566 XTO Energy Inc. 3,067 - -------------------------------------------------------------------------------- 98,300 Yahoo! Inc.(2) 3,657 - -------------------------------------------------------------------------------- 41,700 Zimmer Holdings Inc.(2) 3,193 - -------------------------------------------------------------------------------- 153,101 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $239,422) 310,028 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 1.8% Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 6.625% -- 7.50%, 11/15/24 -- 2/15/27, valued at $5,712), in a joint trading account at 2.93%, dated 5/31/05, due 6/1/05 (Delivery value $5,600) (Cost $5,600) 5,600 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 17.0% Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 3.05%, dated 5/31/05, due 6/1/05 (Delivery value $13,906) 13,905 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 3.06%, dated 5/31/05, due 6/1/05 (Delivery value $40,003) 40,000 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $53,905) 53,905 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 116.5% (Cost $298,927) 369,533 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (16.5)% (52,272) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $317,261 ================================================================================ See Notes to Financial Statements. (continued) - ------ 26 Global Growth - Schedule of Investments MAY 31, 2005 (UNAUDITED) MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 23.3% - -------------------------------------------------------------------------------- Health Care 14.9% - -------------------------------------------------------------------------------- Industrials 14.8% - -------------------------------------------------------------------------------- Consumer Discretionary 12.1% - -------------------------------------------------------------------------------- Information Technology 10.9% - -------------------------------------------------------------------------------- Energy 7.9% - -------------------------------------------------------------------------------- Consumer Staples 5.6% - -------------------------------------------------------------------------------- Telecommunications Services 4.2% - -------------------------------------------------------------------------------- Materials 4.0% - -------------------------------------------------------------------------------- Cash and cash 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 * The securities are listed under their country of incorporation which may differ from the country where they have their greatest economic exposure. (1) Security, or a portion thereof, was on loan as of May 31, 2005. (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. - ------ 27 International Opportunities - Performance TOTAL RETURNS AS OF MAY 31, 2005 ---------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 22.00% 21.18% 6/1/01 - -------------------------------------------------------------------------------- S&P/CITIGROUP EMI GROWTH WORLD EX-US 18.57% 9.08%(1) -- - -------------------------------------------------------------------------------- Institutional Class 22.24% 40.35% 1/9/03 - -------------------------------------------------------------------------------- (1) Since 5/31/01, 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) - ------ 28 International Opportunities - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made June 1, 2001
![](https://capedge.com/proxy/N-CSRS/0000872825-05-000023/growthintlopps0507.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended May 31 - -------------------------------------------------------------------------------- 2002* 2003 2004 2005 - -------------------------------------------------------------------------------- Investor Class 15.00% -5.48% 62.50% 22.00% - -------------------------------------------------------------------------------- S&P/Citigroup EMI Growth World ex-US -8.01% -8.73% 42.23% 18.57% - -------------------------------------------------------------------------------- * 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. - ------ 29 International Opportunities - Portfolio Commentary [photo of investment manager] PORTFOLIO MANAGER ON THE INTERNATIONAL OPPORTUNITIES TEAM: FEDERICO LAFFAN International Opportunities rose 10.91%(1) during the six months ended May 31, 2005, significantly outperforming its benchmark, the S&P/Citigroup EMI (Extended Market Index) World Growth ex-US, which returned 5.04%. INTERNATIONAL EQUITIES SECURE MODEST GAINS The period began with the world's equity markets rallying in December as oil prices declined from record highs. But many developed markets were mostly restrained during the first five months of 2005 as high prices for commodities, especially oil, raised fears that inflation might accelerate, leading to slower economic growth and lower corporate profits. Even in this difficult environment, International Opportunities received positive absolute contributions from all of its top-ten holdings on average and all but one of the sectors in which it was invested--gains accomplished despite the fact that the movement of the dollar versus other currencies restrained the fund's performance. THE LEADERS: CONSUMER DISCRETIONARY STOCKS International Opportunities' position in the consumer discretionary sector, on average our largest single stake, provided the greatest contributions to both TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- Common Stocks 94.6% 97.1% - -------------------------------------------------------------------------------- Preferred Stocks 0.6% 0.6% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 95.2% 97.7% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.8% 2.6% - -------------------------------------------------------------------------------- Other Assets and Liabilities(2) 4.0% -0.3% - -------------------------------------------------------------------------------- (2) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- Japan 16.5% 21.7% - -------------------------------------------------------------------------------- United Kingdom 9.2% 5.8% - -------------------------------------------------------------------------------- France 8.5% 4.4% - -------------------------------------------------------------------------------- Germany 8.1% 7.1% - -------------------------------------------------------------------------------- Netherlands 7.2% 2.3% - -------------------------------------------------------------------------------- Norway 6.1% 6.0% - -------------------------------------------------------------------------------- Sweden 5.4% 2.6% - -------------------------------------------------------------------------------- Italy 3.9% 0.9% - -------------------------------------------------------------------------------- Singapore 3.7% 4.9% - -------------------------------------------------------------------------------- Canada 3.1% 6.7% - -------------------------------------------------------------------------------- Spain 2.9% 2.1% - -------------------------------------------------------------------------------- Greece 2.3% 0.2% - -------------------------------------------------------------------------------- Other Countries 18.3% 33.0% - -------------------------------------------------------------------------------- Cash and Equivalents(3) 4.8% 2.3% - -------------------------------------------------------------------------------- (3) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. (1) All fund returns referenced in this commentary are for Investor Class shares. Returns for periods less than one year are not annualized. (continued) - ------ 30 International Opportunities - Portfolio Commentary absolute returns and to performance against our benchmark, outcomes attributable to effective stock selection. Specialty retailers were the strongest performers, and our investment strategy led us to Spain's Cortefiel SA, a multi-line fashion retailer. During the period, the company twice reported higher profits, citing increased consumer spending and low-cost Asian textile producers as critical factors. SUCCESS IN INDUSTRIALS AND ENERGY Investments in the industrials sector, our second-largest position on average, provided ample contribution to performance, led by Cosco Investment Singapore Limited, a long-time holding and the portfolio's top-contributing stock. Cosco, a bulk carrier unit of China's largest shipping company, continued to enjoy soaring charter rates driven by China's growing economy and increased demand for commodities, the catalysts behind the earnings growth that drew our interest. The energy sector also generated meaningful lift. Effective stock selection among energy equipment and services companies, which represented the majority of our stake in this area, added considerable value. Norway's Fred Olsen Energy, a service provider to offshore exploration and production companies, was one success. The company benefited during the period from the announcements of several drilling contracts. MINOR SETBACKS Occasionally, security selection yields disappointment in an otherwise positive environment. One holding that stumbled was Singapore-based Accord Customer Care Solutions, a leading provider of servicing for mobile communication and electronic devices in the Asia Pacific region. The stock declined sharply following investigations of accounting irregularities, finishing as the period's top detractor. Finland's Perlos Oyj, the world's largest producer of plastic cell-phone components, also hindered performance. The stock tumbled early in the year after the firm reduced its profit outlook based on weakening demand. We eliminated both positions. OUR COMMITMENT In February 2005, Lynette Schroeder departed American Century. Portfolio manager Federico Laffan remains on board and at the helm, and the investment team remains committed to seeking the stocks of small, foreign companies whose earnings and revenues are growing at an improving rate. That strategy is based on the belief that, over the long term, stock price movements follow growth in earnings, revenues and/or cash flow. TOP TEN HOLDINGS AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- Cosco Investment Singapore Limited 2.2% 2.0% - -------------------------------------------------------------------------------- Stork N.V. 2.0% 0.7% - -------------------------------------------------------------------------------- Urban Corp. 1.8% 0.7% - -------------------------------------------------------------------------------- Sysmex Corp. 1.8% 1.5% - -------------------------------------------------------------------------------- Nokian Renkaat Oyj 1.7% 1.4% - -------------------------------------------------------------------------------- Elekta AB Cl B 1.7% 1.2% - -------------------------------------------------------------------------------- SR Teleperformance 1.6% 1.1% - -------------------------------------------------------------------------------- en-japan Inc. 1.5% 0.6% - -------------------------------------------------------------------------------- SOITEC 1.4% -- - -------------------------------------------------------------------------------- Nexity 1.4% -- - -------------------------------------------------------------------------------- - ------ 31 International Opportunities - Schedule of Investments MAY 31, 2005 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 94.6%* AUSTRALIA -- 2.1% - -------------------------------------------------------------------------------- 310,237 MacArthur Coal Ltd.(1) $ 1,622 - -------------------------------------------------------------------------------- 264,039 SFE Corp. Ltd.(1) 2,011 - -------------------------------------------------------------------------------- 3,633 - -------------------------------------------------------------------------------- AUSTRIA -- 0.8% - -------------------------------------------------------------------------------- 16,464 Andritz AG 1,434 - -------------------------------------------------------------------------------- BAHAMAS -- 1.0% - -------------------------------------------------------------------------------- 49,139 Steiner Leisure Ltd.(1)(2) 1,670 - -------------------------------------------------------------------------------- BELGIUM -- 0.9% - -------------------------------------------------------------------------------- 18,210 EVS Broadcast Equipment SA 446 - -------------------------------------------------------------------------------- 32,148 Option N.V.(1)(2) 1,046 - -------------------------------------------------------------------------------- 1,492 - -------------------------------------------------------------------------------- CANADA -- 3.1% - ------------------------------------------------------------------------------- 58,482 Extendicare Inc. Cl A 839 - -------------------------------------------------------------------------------- 40,764 Home Capital Group Inc. 1,097 - -------------------------------------------------------------------------------- 59,968 Peyto Energy Trust 1,257 - -------------------------------------------------------------------------------- 99,661 Rothmans Inc.(1) 2,091 - -------------------------------------------------------------------------------- 5,284 - ------------------------------------------------------------------------------- DENMARK -- 2.1% - ------------------------------------------------------------------------------- 47,000 Genmab AS(2) 870 - ------------------------------------------------------------------------------- 3,789 Kobenhavns Lufthavne AS 839 - ------------------------------------------------------------------------------- 25,855 Topdanmark AS(2) 1,856 - ------------------------------------------------------------------------------- 3,565 - ------------------------------------------------------------------------------- FINLAND -- 1.7% - ------------------------------------------------------------------------------- 164,230 Nokian Renkaat Oyj(1) 2,930 - ------------------------------------------------------------------------------- FRANCE -- 8.5% - ------------------------------------------------------------------------------- 42,708 Alten(2) 1,082 - ------------------------------------------------------------------------------- 26,454 April Group 885 - ------------------------------------------------------------------------------- 77,593 Axalto Holding N.V.(2) 2,253 - ------------------------------------------------------------------------------- 1,072,640 Bull SA(2) 871 - ------------------------------------------------------------------------------- 8,591 IPSOS 850 - ------------------------------------------------------------------------------- 58,240 Nexity(2) 2,336 - ------------------------------------------------------------------------------- 211,006 SOITEC(1)(2) 2,373 - ------------------------------------------------------------------------------- 7,024 Spir Communication(1) 1,331 - ------------------------------------------------------------------------------- 91,903 SR Teleperformance(1) 2,706 - ------------------------------------------------------------------------------- 14,687 - ------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- GERMANY -- 7.5% - -------------------------------------------------------------------------------- 8,557 Bijou Brigitte AG $ 1,359 - -------------------------------------------------------------------------------- 24,648 Deutsche Euroshop AG(1) 1,296 - -------------------------------------------------------------------------------- 11,047 DIS Deutscher Industrie Service AG 466 - -------------------------------------------------------------------------------- 13,796 Funkwerk AG(1) 545 - -------------------------------------------------------------------------------- 8,456 Krones AG 905 - -------------------------------------------------------------------------------- 64,735 Pfleiderer AG(2) 1,012 - -------------------------------------------------------------------------------- 6,987 Rational AG 774 - -------------------------------------------------------------------------------- 51,301 Software AG(1) 1,964 - -------------------------------------------------------------------------------- 43,778 Techem AG(2) 1,788 - -------------------------------------------------------------------------------- 68,400 Vivacon AG(2) 1,178 - -------------------------------------------------------------------------------- 19,831 Wincor Nixdorf AG 1,686 - -------------------------------------------------------------------------------- 12,973 - -------------------------------------------------------------------------------- GREECE -- 2.3% - -------------------------------------------------------------------------------- 67,548 Fourlis SA(2) 578 - -------------------------------------------------------------------------------- 165,790 Hellenic Exchanges SA 1,379 - -------------------------------------------------------------------------------- 69,155 Intralot SA-Integrated Lottery Systems & Services 2,066 - -------------------------------------------------------------------------------- 4,023 - -------------------------------------------------------------------------------- HONG KONG -- 1.7% - -------------------------------------------------------------------------------- 1,224,000 Pacific Basin Shipping Ltd. 555 - -------------------------------------------------------------------------------- 928,000 Singamas Container Holdings Ltd. 722 - -------------------------------------------------------------------------------- 772,000 Techtronic Industries Company Limited 1,727 - -------------------------------------------------------------------------------- 3,004 - -------------------------------------------------------------------------------- INDIA -- 0.6% - -------------------------------------------------------------------------------- 124,500 Associated Cement Co. Ltd. 1,072 - -------------------------------------------------------------------------------- IRELAND -- 1.2% - -------------------------------------------------------------------------------- 62,991 Paddy Power plc 1,083 - -------------------------------------------------------------------------------- 224,034 United Drug plc 937 - -------------------------------------------------------------------------------- 2,020 - -------------------------------------------------------------------------------- ISRAEL -- 0.8% - -------------------------------------------------------------------------------- 285,100 United Mizrahi Bank Ltd.(2) 1,352 - -------------------------------------------------------------------------------- ITALY -- 3.9% - -------------------------------------------------------------------------------- 19,737 Amplifon SpA 1,265 - -------------------------------------------------------------------------------- 77,612 Marzotto SpA 1,708 - -------------------------------------------------------------------------------- 337,110 Recordati SpA 2,301 - -------------------------------------------------------------------------------- 28,006 Tod's SpA 1,406 - -------------------------------------------------------------------------------- 6,680 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 32 International Opportunities - Schedule of Investments MAY 31, 2005 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- JAPAN -- 16.5% - -------------------------------------------------------------------------------- 114,000 Amano Corp.(1) $ 1,187 - -------------------------------------------------------------------------------- 92,013 Arbeit-Times Co., Ltd.(1) 1,138 - -------------------------------------------------------------------------------- 588 en-japan Inc.(1) 2,558 - -------------------------------------------------------------------------------- 189,000 Hitachi Koki Co., Ltd. 1,768 - -------------------------------------------------------------------------------- 332,000 J-Oil Mills, Inc.(1) 1,346 - -------------------------------------------------------------------------------- 878 Kenedix, Inc.(1) 2,306 - -------------------------------------------------------------------------------- 1,589 Niws Co. Ltd.(1) 2,139 - -------------------------------------------------------------------------------- 48,500 Point Inc.(1) 1,895 - -------------------------------------------------------------------------------- 23,900 Roland DG Corp.(1) 509 - -------------------------------------------------------------------------------- 49,900 Sysmex Corp.(1) 3,142 - -------------------------------------------------------------------------------- 527,000 Toagosei Co. Ltd. 2,166 - -------------------------------------------------------------------------------- 289,000 Toho Tenax Co. Ltd.(1)(2) 1,223 - -------------------------------------------------------------------------------- 467,000 Toyo Tire & Rubber Co. Ltd.(1) 1,885 - -------------------------------------------------------------------------------- 88,000 Tsumura & Co. 1,540 - -------------------------------------------------------------------------------- 86,200 Urban Corp.(1) 3,187 - -------------------------------------------------------------------------------- 269 Zephyr Co. Ltd. 439 - -------------------------------------------------------------------------------- 28,428 - -------------------------------------------------------------------------------- LUXEMBOURG -- 1.2% - -------------------------------------------------------------------------------- 46,689 SBS Broadcasting SA(2) 2,064 - -------------------------------------------------------------------------------- NETHERLANDS -- 7.2% - -------------------------------------------------------------------------------- 34,510 Aalberts Industries N.V. 1,520 - -------------------------------------------------------------------------------- 178,236 AM N.V. 1,864 - -------------------------------------------------------------------------------- 50,500 Heijmans N.V. 2,157 - -------------------------------------------------------------------------------- 86,612 Stork N.V. 3,440 - -------------------------------------------------------------------------------- 12,250 Ten Cate N.V. 1,032 - -------------------------------------------------------------------------------- 51,402 Trader Classified Media N.V. Cl A 724 - -------------------------------------------------------------------------------- 54,541 United Services Group N.V. 1,617 - -------------------------------------------------------------------------------- 12,354 - -------------------------------------------------------------------------------- NORWAY -- 6.1% - -------------------------------------------------------------------------------- 1,059,581 Acta Holding ASA 1,971 - -------------------------------------------------------------------------------- 91,994 Fred Olsen Energy ASA(1)(2) 1,854 - -------------------------------------------------------------------------------- 20,280 Petroleum Geo-Services ASA(2) 1,377 - -------------------------------------------------------------------------------- 278,481 Siem Offshore AS(2) 1,852 - -------------------------------------------------------------------------------- 177,066 Tandberg Television ASA(2) 2,031 - -------------------------------------------------------------------------------- 52,732 TGS Nopec Geophysical Company ASA(2) 1,455 - -------------------------------------------------------------------------------- 10,540 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 0.4% - -------------------------------------------------------------------------------- 2,692,000 China Travel International Investment Hong Kong Limited 744 - -------------------------------------------------------------------------------- PORTUGAL -- 0.4% - -------------------------------------------------------------------------------- 106,380 Impresa SGPS(1)(2) 720 - -------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 0.5% - -------------------------------------------------------------------------------- 220,725 VolgaTelecom 828 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- SINGAPORE -- 3.7% - -------------------------------------------------------------------------------- 3,492,680 Cosco Investment Singapore Limited(1)(2) $ 3,835 - -------------------------------------------------------------------------------- 747,000 Hyflux Limited 1,722 - -------------------------------------------------------------------------------- 1,343,000 Jaya Holdings Ltd. 830 - -------------------------------------------------------------------------------- 6,387 - -------------------------------------------------------------------------------- SOUTH AFRICA -- 1.0% - -------------------------------------------------------------------------------- 41,975 Investec Ltd. 1,200 - -------------------------------------------------------------------------------- 125,305 Spar Group Ltd. (The) 434 - -------------------------------------------------------------------------------- 1,634 - -------------------------------------------------------------------------------- SOUTH KOREA -- 0.4% - -------------------------------------------------------------------------------- 22,300 Entergisul Co. Ltd.(2) 602 - -------------------------------------------------------------------------------- SPAIN -- 2.9% - -------------------------------------------------------------------------------- 83,008 Prosegur Cia de Seguridad SA 1,741 - -------------------------------------------------------------------------------- 604,356 Tubacex SA(1) 2,038 - -------------------------------------------------------------------------------- 249,532 Uralita SA(2) 1,243 - -------------------------------------------------------------------------------- 5,022 - -------------------------------------------------------------------------------- SWEDEN -- 5.4% - -------------------------------------------------------------------------------- 75,827 Elekta AB Cl B(2) 2,865 - -------------------------------------------------------------------------------- 217,964 HiQ International AB 923 - -------------------------------------------------------------------------------- 63,579 JM AB(1) 2,184 - -------------------------------------------------------------------------------- 46,519 Lindex AB 2,065 - -------------------------------------------------------------------------------- 15,600 Unibet Group plc SDR 1,321 - -------------------------------------------------------------------------------- 9,358 - -------------------------------------------------------------------------------- SWITZERLAND -- 1.5% - -------------------------------------------------------------------------------- 4,050 Georg Fischer AG(2) 1,200 - -------------------------------------------------------------------------------- 4,797 Leica Geosystems AG(2) 1,430 - -------------------------------------------------------------------------------- 2,630 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 9.2% - -------------------------------------------------------------------------------- 357,438 Aggreko plc 1,262 - -------------------------------------------------------------------------------- 93,645 Amino Technologies plc(2) 357 - -------------------------------------------------------------------------------- 349,076 Ark Therapeutics Group plc(2) 708 - -------------------------------------------------------------------------------- 970,574 Ashtead Group plc(2) 1,579 - -------------------------------------------------------------------------------- 152,849 DX Services plc 960 - -------------------------------------------------------------------------------- 507,269 First Choice Holidays plc 1,667 - -------------------------------------------------------------------------------- 63,326 Homeserve plc 1,065 - -------------------------------------------------------------------------------- 582,108 IG Group Holdings plc(2) 1,270 - -------------------------------------------------------------------------------- 138,075 Micro Focus International plc(2) 380 - -------------------------------------------------------------------------------- 296,075 Morgan Crucible Co.(2) 973 - -------------------------------------------------------------------------------- 141,733 NETeller plc(2) 1,413 - -------------------------------------------------------------------------------- 41,455 Northgate plc 671 - -------------------------------------------------------------------------------- 101,669 Rotork plc 916 - -------------------------------------------------------------------------------- 41,072 SIG plc 429 - -------------------------------------------------------------------------------- 169,631 Stolt Offshore SA(2) 1,299 - -------------------------------------------------------------------------------- 64,213 Ultra Electronics Holdings plc 928 - -------------------------------------------------------------------------------- 15,877 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $131,234) 163,007 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 33 International Opportunities - Schedule of Investments MAY 31, 2005 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 0.6% GERMANY -- 0.6% - -------------------------------------------------------------------------------- 36,727 Hugo Boss AG(1) (Cost $1,071) $ 1,115 - ------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 0.8% Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 4.59% -- 4.64%, 11/15/21 -- 8/15/25, valued at $1,343), in a joint trading account at 2.91%, dated 5/31/05, due 6/1/05 (Delivery value $1,300) (Cost $1,300) 1,300 - ------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 18.2% Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 3.05%, dated 5/31/05, due 6/1/05 (Delivery value $11,459) 11,458 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 3.06%, dated 5/31/05, due 6/1/05 (Delivery value $20,002) 20,000 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $31,458) 31,458 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 114.2% (Cost $165,063) 196,880 - ------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (14.2)% (24,529) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $172,351 ================================================================================ MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Consumer Discretionary 23.7% - -------------------------------------------------------------------------------- Industrials 23.0% - -------------------------------------------------------------------------------- Financials 16.8% - -------------------------------------------------------------------------------- Information Technology 10.2% - -------------------------------------------------------------------------------- Health Care 8.4% - -------------------------------------------------------------------------------- Energy 5.3% - -------------------------------------------------------------------------------- Materials 5.1% - -------------------------------------------------------------------------------- Consumer Staples 2.2% - -------------------------------------------------------------------------------- Telecommunication Services 0.5% - -------------------------------------------------------------------------------- Cash and cash equivalents(+) 4.8% - -------------------------------------------------------------------------------- (+) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities NOTES TO SCHEDULE OF INVESTMENTS SDR = Swedish Depositary Receipt * The securities are listed under their country of incorporation which may differ from the country where they have their greatest economic exposure. (1) Security, or a portion thereof, was on loan as of May 31, 2005. (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. - ------ 34 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 December 1, 2004 to May 31, 2005 (except as noted). 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. (continued) - ------ 35 Shareholder Fee Examples (Unaudited) 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(1) ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 12/1/04 - EXPENSE 12/1/04 5/31/05 5/31/05 RATIO(1) - -------------------------------------------------------------------------------- INTERNATIONAL STOCK SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL: - -------------------------------------------------------------------------------- Investor Class $1,000 $979.00(2) $2.48(3) 1.50% - -------------------------------------------------------------------------------- HYPOTHETICAL: - -------------------------------------------------------------------------------- Investor Class $1,000 $1,017.45(4) $7.54(4) 1.50% - -------------------------------------------------------------------------------- INTERNATIONAL DISCOVERY SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL: - -------------------------------------------------------------------------------- Investor Class $1,000 $1,002.80 $7.34 1.47% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,003.60 $6.34 1.27% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,001.50 $8.58 1.72% - -------------------------------------------------------------------------------- HYPOTHETICAL: - -------------------------------------------------------------------------------- Investor Class $1,000 $1,017.60 $7.39 1.47% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,018.60 $6.39 1.27% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,016.36 $8.65 1.72% - -------------------------------------------------------------------------------- (1) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (2) Ending account value based on actual returns from March 31, 2005 (fund inception) through May 31, 2005. (3) Expenses are equal to the annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 61, the number of days in the period from March 31, 2005 (fund inception) through May 31, 2005, divided by 365, to reflect the period. Had the class been available for the full period, the expenses paid during the period would have been higher. (4) Ending account value and expenses paid during the period assume the class had been available throughout the entire period and are calculated using the class's annualized expense ratio listed in the table above. (continued) - ------ 36 Shareholder Fee Examples (Unaudited) EXPENSES PAID BEGINNING ENDING DURING PERIOD(1) ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 12/1/04 - EXPENSE 12/1/04 5/31/05 5/31/05 RATIO(1) - -------------------------------------------------------------------------------- EMERGING MARKETS SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL: - -------------------------------------------------------------------------------- Investor Class $1,000 $1,066.40 $10.36 2.01% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,067.30 $9.33 1.81% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,065.80 $11.64 2.26% - -------------------------------------------------------------------------------- C Class $1,000 $1,059.70 $15.46 3.01% - -------------------------------------------------------------------------------- HYPOTHETICAL: - -------------------------------------------------------------------------------- Investor Class $1,000 $1,014.91 $10.10 2.01% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,015.91 $9.10 1.81% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,013.66 $11.35 2.26% - -------------------------------------------------------------------------------- C Class $1,000 $1,009.92 $15.08 3.01% - -------------------------------------------------------------------------------- GLOBAL GROWTH SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL: - -------------------------------------------------------------------------------- Investor Class $1,000 $1,041.90 $6.62 1.30% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,043.70 $5.60 1.10% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,041.80 $7.89 1.55% - -------------------------------------------------------------------------------- C Class $1,000 $1,038.40 $11.69 2.30% - -------------------------------------------------------------------------------- HYPOTHETICAL: - -------------------------------------------------------------------------------- Investor Class $1,000 $1,018.45 $6.54 1.30% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,019.45 $5.54 1.10% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,017.20 $7.80 1.55% - -------------------------------------------------------------------------------- C Class $1,000 $1,013.46 $11.55 2.30% - -------------------------------------------------------------------------------- INTERNATIONAL OPPORTUNITIES SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL: - -------------------------------------------------------------------------------- Investor Class $1,000 $1,109.10 $10.04 1.91% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,108.90 $8.99 1.71% - -------------------------------------------------------------------------------- HYPOTHETICAL: - -------------------------------------------------------------------------------- Investor Class $1,000 $1,015.41 $9.60 1.91% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,016.40 $8.60 1.71% - -------------------------------------------------------------------------------- (1) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 37 Statement of Assets and Liabilities MAY 31, 2005 (UNAUDITED) - ------------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING (AMOUNTS IN THOUSANDS) STOCK DISCOVERY MARKETS - ------------------------------------------------------------------------------------- ASSETS - ------------------------------------------------------------------------------------- Investment securities, at value (cost of $9,618, $1,017,986, and $190,534, respectively) -- including $--, $256,040, and $16,554 of securities on loan, respectively $9,442 $1,144,270 $222,404 - ----------------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $--, $270,117, and $16,871, respectively) -- 270,117 16,871 - ------------------------------------------------------------------------------------- Total investment securities, at value (cost of $9,618, $1,288,103, and $207,405, respectively) 9,442 1,414,387 239,275 - ----------------------------------------- Cash 171 176 3,442 - ----------------------------------------- Foreign currency holdings, at value (cost of $2, $5,358, and $804, respectively) 2 5,325 804 - ----------------------------------------- Receivable for investments sold 142 11,166 3,519 - ----------------------------------------- Receivable for capital shares sold -- -- 20 - ----------------------------------------- Dividends, interest and other receivable 15 2,308 695 - ------------------------------------------------------------------------------------- 9,772 1,433,362 247,755 - ------------------------------------------------------------------------------------- LIABILITIES - ------------------------------------------------------------------------------------- Payable for collateral received for securities on loan -- 270,117 16,871 - ----------------------------------------- Payable for investments purchased 603 12,826 4,732 - ----------------------------------------- Accrued management fees 10 1,425 364 - ----------------------------------------- Distribution fees payable -- -- 1 - ------------------------------------------------------------------------------------- 613 284,368 21,968 - ------------------------------------------------------------------------------------- NET ASSETS $9,159 $1,148,994 $225,787 ===================================================================================== See Notes to Financial Statements. (continued) - ------ 38 Statement of Assets and Liabilities MAY 31, 2005 (UNAUDITED) - ------------------------------------------------------------------------------------- (AMOUNTS IN THOUSANDS INTERNATIONAL INTERNATIONAL EMERGING EXCEPT PER-SHARE AMOUNTS) STOCK DISCOVERY MARKETS - ------------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - ---------------------------------------- Capital (par value and paid-in surplus) $9,317 $ 881,554 $170,009 - ---------------------------------------- Undistributed net investment income 39 5,317 153 - ---------------------------------------- Accumulated undistributed net realized gain (loss) on investment and foreign currency transactions (20) 135,913 23,815 - ---------------------------------------- Net unrealized appreciation (depreciation) on investments and translation of assets and liabilities in foreign currencies (177) 126,210 31,810 - ------------------------------------------------------------------------------------- $9,159 $1,148,994 $225,787 ===================================================================================== INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------- Net assets $9,159,154 $979,857,014 $146,275,920 - ---------------------------------------- Shares outstanding 935,457 76,203,467 22,127,653 - ---------------------------------------- Net asset value per share $9.79 $12.86 $6.61 - ------------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------- Net assets N/A $168,932,774 $77,844,459 - ---------------------------------------- Shares outstanding N/A 13,054,664 11,630,460 - ---------------------------------------- Net asset value per share N/A $12.94 $6.69 - ------------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------- Net assets N/A $204,611 $1,099,778 - ---------------------------------------- Shares outstanding N/A 16,082 169,058 - ---------------------------------------- Net asset value per share N/A $12.72 $6.51 - ------------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------- Net assets N/A N/A $567,294 - ---------------------------------------- Shares outstanding N/A N/A 88,597 - ---------------------------------------- Net asset value per share N/A N/A $6.40 - ------------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 39 Statement of Assets and Liabilities MAY 31, 2005 (UNAUDITED) - -------------------------------------------------------------------------------- GLOBAL INTERNATIONAL (AMOUNTS IN THOUSANDS) GROWTH OPPORTUNITIES - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $245,022 and $133,605, respectively) -- including $51,172 and $29,890 of securities on loan, respectively $315,628 $165,422 - ----------------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $53,905 and $31,458, respectively) 53,905 31,458 - -------------------------------------------------------------------------------- Total investment securities, at value (cost of $298,927 and $165,063, respectively) 369,533 196,880 - ----------------------------------------- Foreign currency holdings, at value (cost of $267 and $389, respectively) 288 419 - ----------------------------------------- Receivable for investments sold 1,134 6,670 - ----------------------------------------- Receivable for capital shares sold 2 -- - ----------------------------------------- Dividends, interest and other receivable 571 711 - -------------------------------------------------------------------------------- 371,528 204,680 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payable for collateral received for securities on loan 53,905 31,458 - --------------------------------------- Disbursements in excess of demand deposit cash 15 6 - --------------------------------------- Payable for investments purchased -- 571 - --------------------------------------- Accrued management fees 345 294 - --------------------------------------- Distribution fees payable 1 -- - --------------------------------------- Service fees payable 1 -- - -------------------------------------------------------------------------------- 54,267 32,329 - -------------------------------------------------------------------------------- NET ASSETS $317,261 $172,351 ================================================================================ See Notes to Financial Statements. (continued) - ------ 40 Statement of Assets and Liabilities MAY 31, 2005 (UNAUDITED) - -------------------------------------------------------------------------------- (AMOUNTS IN THOUSANDS) GLOBAL INTERNATIONAL EXCEPT PER-SHARE AMOUNTS) GROWTH OPPORTUNITIES - -------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - --------------------------------------- Capital (par value and paid-in surplus) $316,580 $112,488 - --------------------------------------- Accumulated undistributed net investment income (loss) (679) 525 - --------------------------------------- Accumulated undistributed net realized gain (loss) on investment and foreign currency transactions (69,265) 27,358 - --------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 70,625 31,980 - -------------------------------------------------------------------------------- $317,261 $172,351 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $307,451,079 $172,325,443 - --------------------------------------- Shares outstanding 39,450,037 17,137,896 - --------------------------------------- Net asset value per share $7.79 $10.06 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $7,023,544 $25,083 - --------------------------------------- Shares outstanding 894,244 2,488 - --------------------------------------- Net asset value per share $7.85 $10.08 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $2,529,467 N/A - --------------------------------------- Shares outstanding 327,664 N/A - --------------------------------------- Net asset value per share $7.72 N/A - -------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $256,865 N/A - --------------------------------------- Shares outstanding 33,934 N/A - --------------------------------------- Net asset value per share $7.57 N/A - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 41 Statement of Operations FOR THE SIX MONTHS ENDED MAY 31, 2005 (UNAUDITED) (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING (AMOUNTS IN THOUSANDS) STOCK(1) DISCOVERY MARKETS - --------------------------------------------------------------------------------------- INVESTMENT INCOME - --------------------------------------------------------------------------------------- INCOME: - ---------------------------------------- Dividends (net of foreign taxes withheld of $7, $1,542, and $232, respectively) $ 51 $ 13,255 $ 2,474 - ---------------------------------------- Interest 4 325 98 - ---------------------------------------- Securities lending -- 895 55 - --------------------------------------------------------------------------------------- 55 14,475 2,627 - --------------------------------------------------------------------------------------- EXPENSES: - ---------------------------------------- Management fees 16 8,841 2,189 - ---------------------------------------- Distribution fees: - ---------------------------------------- Advisor Class -- -- 1 - ---------------------------------------- C Class -- -- 2 - ---------------------------------------- Service fees: - ---------------------------------------- Advisor Class -- -- 1 - ---------------------------------------- C Class -- -- 1 - ---------------------------------------- Directors' fees and expenses -- 8 2 - ---------------------------------------- Other expenses -- 20 6 - --------------------------------------------------------------------------------------- 16 8,869 2,202 - --------------------------------------------------------------------------------------- NET INVESTMENT INCOME 39 5,606 425 - --------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - --------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - ---------------------------------------- Investment transactions (net of foreign taxes withheld of $--, $49, and $60, respectively) (22) 114,072 18,317 - ---------------------------------------- Foreign currency transactions (net of foreign taxes withheld of $--, $--, and $4, respectively) 2 24,396 5,707 - --------------------------------------------------------------------------------------- (20) 138,468 24,024 - --------------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: - ---------------------------------------- Investments (including foreign tax liability reduction (increase) of $-, $42, and $(65), respectively) 78 (61,694) (3,923) - ---------------------------------------- Translation of assets and liabilities in foreign currencies (255) (75,833) (6,892) - --------------------------------------------------------------------------------------- (177) (137,527) (10,815) - --------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) (197) 941 13,209 - --------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(158) $ 6,547 $13,634 ======================================================================================= (1) March 31, 2005 (fund inception) through May 31, 2005. See Notes to Financial Statements. (continued) - ------ 42 Statement of Operations FOR THE SIX MONTHS ENDED MAY 31, 2005 (UNAUDITED) - -------------------------------------------------------------------------------- GLOBAL INTERNATIONAL (AMOUNTS IN THOUSANDS) GROWTH OPPORTUNITIES - -------------------------------------------------------------------------------- INVESTMENT INCOME INCOME: - --------------------------------------------- Dividends (net of foreign taxes withheld of $209 and $173, respectively) $ 2,305 $ 2,300 - --------------------------------------------- Interest 49 50 - --------------------------------------------- Securities lending 59 163 - -------------------------------------------------------------------------------- 2,413 2,513 - -------------------------------------------------------------------------------- EXPENSES: - --------------------------------------------- Management fees 2,040 1,805 - --------------------------------------------- Distribution fees: - --------------------------------------------- Advisor Class 3 -- - --------------------------------------------- C Class 1 -- - --------------------------------------------- Service fees: - --------------------------------------------- Advisor Class 3 -- - --------------------------------------------- Directors' fees and expenses 2 1 - --------------------------------------------- Other expenses 2 4 - -------------------------------------------------------------------------------- 2,051 1,810 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME 362 703 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - --------------------------------------------- NET REALIZED GAIN ON: - --------------------------------------------- Investment transactions 12,763 24,336 - --------------------------------------------- Foreign currency transactions 1,610 3,370 - -------------------------------------------------------------------------------- 14,373 27,706 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION ON: - --------------------------------------------- Investments (including foreign tax liability reduction of $- and $4, respectively) 7,644 3,205 - --------------------------------------------- Translation of assets and liabilities in foreign currencies (9,261) (11,780) - -------------------------------------------------------------------------------- (1,617) (8,575) - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN 12,756 19,131 - -------------------------------------------------------------------------------- NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $13,118 $19,834 ================================================================================ See Notes to Financial Statements. - ------ 43 Statement of Changes in Net Assets SIX MONTHS ENDED MAY 31, 2005 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2004 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------- (AMOUNTS IN THOUSANDS) INTERNATIONAL STOCK INTERNATIONAL DISCOVERY - --------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2005(1) 2005 2004 - --------------------------------------------------------------------------------------------- OPERATIONS - --------------------------------------------------------------------------------------------- Net investment income (loss) $ 39 $ 5,606 $ (419) - ------------------------------------------- Net realized gain (loss) (20) 138,468 242,089 - ------------------------------------------- Change in net unrealized appreciation (depreciation) (177) (137,527) (32,657) - --------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (158) 6,547 209,013 - --------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - --------------------------------------------------------------------------------------------- From net investment income: - ------------------------------------------- Investor Class -- -- (2,160) - ------------------------------------------- Institutional Class -- -- (612) - ------------------------------------------- From net realized gains: - ------------------------------------------- Investor Class -- (165,843) -- - ------------------------------------------- Institutional Class -- (25,231) -- - ------------------------------------------- Advisor Class -- (29) -- - ------------------------------------------- Decrease in net assets from distributions -- (191,103) (2,772) - --------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - --------------------------------- Net increase (decrease) in net assets from capital share transactions 9,317 54,879 (104,197) - --------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 9,159 (129,677) 102,044 NET ASSETS - ------------------------------------------- Beginning of period -- 1,278,671 1,176,627 - --------------------------------------------------------------------------------------------- End of period $9,159 $1,148,994 $1,278,671 ============================================================================================= Accumulated undistributed net investment income (loss) $39 $5,317 $(239) ============================================================================================= (1) March 31, 2005 (fund inception) through May 31, 2005. See Notes to Financial Statements. (continued) - ------ 44 Statement of Changes in Net Assets SIX MONTHS ENDED MAY 31, 2005 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2004 - ------------------------------------------------------------------------------------------ (AMOUNTS IN THOUSANDS) EMERGING MARKETS GLOBAL GROWTH - ------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS 2005 2004 2005 2004 - ------------------------------------------------------------------------------------------ OPERATIONS - ------------------------------------------------------------------------------------------ Net investment income (loss) $ 425 $ (319) $ 362 $ (335) - ------------------------------------- Net realized gain 24,024 18,177 14,373 25,747 - ------------------------------------- Change in net unrealized appreciation (10,815) 11,582 (1,617) 15,344 - ------------------------------------------------------------------------------------------ Net increase in net assets resulting from operations 13,634 29,440 13,118 40,756 - ------------------------------------------------------------------------------------------ DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------ From net investment income: - ------------------------------------- Investor Class -- -- (552) -- - ------------------------------------- Institutional Class -- -- (26) -- - ------------------------------------- From net realized gains: - ------------------------------------- Investor Class (1,897) -- -- -- - ------------------------------------- Institutional Class (1,130) -- -- -- - ------------------------------------- Advisor Class (14) -- -- -- - ------------------------------------- C Class (8) -- -- -- - ------------------------------------------------------------------------------------------ Decrease in net assets from distributions (3,049) -- (578) -- - ------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS - ------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from capital share transactions (14,526) 32,420 (4,519) 9,177 - ------------------------------------------------------------------------------------------ NET INCREASE (DECREASE) IN NET ASSETS (3,941) 61,860 8,021 49,933 NET ASSETS - ------------------------------------------------------------------------------------------ Beginning of period 229,728 167,868 309,240 259,307 - ------------------------------------------------------------------------------------------ End of period $225,787 $229,728 $317,261 $309,240 ========================================================================================== Accumulated undistributed net investment income (loss) $153 $(208) $(679) $(463) ========================================================================================== See Notes to Financial Statements. (continued) - ------ 45 Statement of Changes in Net Assets SIX MONTHS ENDED MAY 31, 2005 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2004 - ------------------------------------------------------------------------------- (AMOUNTS IN THOUSANDS) INTERNATIONAL OPPORTUNITIES - ------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2005 2004 - ------------------------------------------------------------------------------- OPERATIONS - ------------------------------------------------------------------------------- Net investment income (loss) $ 703 $ (733) - ------------------------------------------- Net realized gain 27,706 4,975 - ------------------------------------------- Change in net unrealized appreciation (8,575) 25,156 - ------------------------------------------------------------------------------- Net increase in net assets resulting from operations 19,834 29,398 - ------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------- From net realized gains: - ------------------------------------------- Investor Class (5,331) (2,829) - ------------------------------------------- Institutional Class (336) (325) - ------------------------------------------------------------------------------- Decrease in net assets from distributions (5,667) (3,154) - ------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - ------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (28,784) 80,193 - ------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS (14,617) 106,437 NET ASSETS - ------------------------------------------------------------------------------- Beginning of period 186,968 80,531 - ------------------------------------------------------------------------------- End of period $172,351 $186,968 =============================================================================== Accumulated undistributed net investment income (loss) $525 $(178) =============================================================================== See Notes to Financial Statements. - ------ 46 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. International Stock Fund (International Stock), 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 five 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 Stock invests in securities of issuers in developed foreign countries that are large-sized 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 Stock is authorized to issue the Investor 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. International Stock's Investor Class incepted on March 31, 2005. 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. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. SECURITIES ON LOAN -- The funds, except for International Stock, 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) - ------ 47 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) (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 or American Century Global Investment Management, Inc. (ACGIM), 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. International Stock and 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. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business, the funds enter into contracts that provide general indemnifications. The funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. The risk of material loss from such claims is considered by management to be remote. 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) - ------ 48 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACGIM (the investment advisor), under which ACGIM 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 ACGIM. 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 advisor'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 advisor 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 Stock is as follows: - -------------------------------------------- INVESTOR - -------------------------------------------- STRATEGY ASSETS - -------------------------------------------- First $1 billion 1.50% - -------------------------------------------- Next $1 billion 1.20% - -------------------------------------------- Over $2 billion 1.10% - -------------------------------------------- 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% - ----------------------------------------------------------------------------- (continued) - ------ 49 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) 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% - -------------------------------------------------------------- The effective annual management fees for the funds for the six months ended May 31, 2005, were as follows: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR C - -------------------------------------------------------------------------------- International Stock 1.50% N/A N/A N/A - -------------------------------------------------------------------------------- International Discovery 1.47% 1.27% 1.22% N/A - -------------------------------------------------------------------------------- Emerging Markets 2.00% 1.80% 1.75% 2.00% - -------------------------------------------------------------------------------- Global Growth 1.30% 1.10% 1.05% 1.30% - -------------------------------------------------------------------------------- International Opportunities 1.91% 1.71% N/A N/A - -------------------------------------------------------------------------------- ACGIM has entered into a Subadvisory Agreement with ACIM (the investment subadvisor) on behalf of the funds. The subadvisor makes investment decisions for the cash portion of the funds in accordance with the funds' investments objectives, policies and restrictions under the supervision of ACGIM and the Board of Directors. ACGIM pays all costs associated with retaining ACIM as the subadvisor of the funds. 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 six months ended May 31, 2005, 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 advisor, ACGIM, the corporation's investment subadvisor, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services, LLC (formerly American Century Services Corporation). The funds, except for International Stock, 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 J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. (continued) - ------ 50 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the six months ended May 31, 2005 (except as noted), were as follows: INTERNATIONAL INTERNATIONAL EMERGING GLOBAL INTERNATIONAL STOCK(1) DISCOVERY MARKETS GROWTH OPPORTUNITIES - ------------------------------------------------------------------------------------ Purchases $10,776 $1,102,908 $138,702 $49,213 $107,916 - ------------------------------------------------------------------------------------ Proceeds from sales $1,733 $1,214,281 $155,124 $53,287 $145,732 - ------------------------------------------------------------------------------------ (1) March 31, 2005 (fund inception) through May 31, 2005. 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: - --------------------------------------------------------------------------------------------------------- INTERNATIONAL STOCK INTERNATIONAL DISCOVERY EMERGING MARKETS - --------------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT - --------------------------------------------------------------------------------------------------------- INVESTOR CLASS - --------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005(1) SHARES AUTHORIZED 425,000 400,000 100,000 ========================================================================================================= Sold 938 $9,343 2,074 $ 27,815 5,926 $ 39,706 - -------------------------------- Issued in reinvestment of distributions -- -- 12,055 156,489 232 1,506 - -------------------------------- Redeemed (3) (26)(2) (11,592) (157,570)(2) (5,572) (36,487)(2) - --------------------------------------------------------------------------------------------------------- Net increase 935 $9,317 2,537 $ 26,734 586 $ 4,725 ========================================================================================================= YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED N/A 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)(3) (10,216) (58,582)(3) - --------------------------------------------------------------------------------------------------------- Net increase (decrease) (7,019) $ (96,375) 1,893 $ 13,941 ========================================================================================================= INSTITUTIONAL CLASS - --------------------------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED N/A 75,000 50,000 ========================================================================================================= Sold 2,802 $ 37,712 3,994 $ 26,779 - -------------------------------- Issued in reinvestment of distributions 1,917 25,031 170 1,104 - -------------------------------- Redeemed (2,554) (34,630) (7,117) (47,046) - --------------------------------------------------------------------------------------------------------- Net increase (decrease) 2,165 $ 28,113 (2,953) $(19,163) ========================================================================================================= YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED N/A 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 ========================================================================================================= (1) March 31, 2005 (fund inception) through May 31, 2005 for International Stock. (2) Net of redemption fees of $1, $45 and $74 for International Stock, International Discovery and Emerging Markets, respectively. (3) Net of redemption fees of $36 and $228 for International Discovery and Emerging Markets, respectively. (continued) - ------ 51 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ----------------------------------------------------------------------------------------------- INTERNATIONAL STOCK INTERNATIONAL DISCOVERY EMERGING MARKETS - ----------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------- ADVISOR CLASS - ----------------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED N/A 5,000 5,000 =============================================================================================== Sold 2 $ 22 62 $ 413 - ------------------------------ Issued in reinvestment of distributions 2 29 2 13 - ------------------------------ Redeemed (1) (19) (85) (536) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 3 $ 32 (21) $(110) =============================================================================================== YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED N/A 5,000 5,000 =============================================================================================== Sold 6 $ 84 256 $ 1,512 - ------------------------------ Redeemed (6) (77) (181) (1,039) - ----------------------------------------------------------------------------------------------- Net increase -- $ 7 75 $ 473 =============================================================================================== C CLASS - ----------------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED N/A N/A 5,000 =============================================================================================== Sold 22 $138 - ------------------------------ Issued in reinvestment of distributions 1 7 - ------------------------------ Redeemed (19) (123) - ----------------------------------------------------------------------------------------------- Net increase 4 $22 =============================================================================================== YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED N/A N/A 10,000 =============================================================================================== Sold 63 $ 364 - ------------------------------ Redeemed (34) (192) - ----------------------------------------------------------------------------------------------- Net increase 29 $ 172 =============================================================================================== (continued) - ------ 52 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- GLOBAL GROWTH INTERNATIONAL OPPORTUNITIES - -------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED 150,000 100,000 ================================================================================ Sold 3,091 $ 23,819 91 $ 882 - ----------------------------- Issued in reinvestment of distributions 71 533 559 5,242 - ----------------------------- Redeemed (3,759) (28,872)(1) (2,338) (23,259)(1) - -------------------------------------------------------------------------------- Net decrease (597) $ (4,520) (1,688) $(17,135) ================================================================================ 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)(2) (5,402) (45,115)(2) - -------------------------------------------------------------------------------- Net increase 1,398 $ 10,147 9,371 $ 79,868 ================================================================================ INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED 5,000 10,000 ================================================================================ Sold 84 $ 647 2 $ 30 - ----------------------------- Issued in reinvestment of distributions 3 26 36 336 - ----------------------------- Redeemed (90) (697) (1,196) (12,015) - -------------------------------------------------------------------------------- Net decrease (3) $ (24) (1,158) $(11,649) ================================================================================ 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 ================================================================================ (1) Net of redemption fees of $11 and $24 for Global Growth and International Opportunities, respectively. (2) Net of redemption fees of $24 and $276 for Global Growth and International Opportunities, respectively. (continued) - ------ 53 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- GLOBAL GROWTH INTERNATIONAL OPPORTUNITIES - -------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED 5,000 N/A ================================================================================ Sold 70 $535 - -------------------------------- Redeemed (76) (575) - -------------------------------------------------------------------------------- Net decrease (6) $ (40) ================================================================================ YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 5,000 N/A ================================================================================ Sold 262 $1,784 - -------------------------------- Redeemed (90) (612) - -------------------------------------------------------------------------------- Net increase 172 $1,172 ================================================================================ C CLASS - -------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED 5,000 N/A ================================================================================ Sold 10 $72 - -------------------------------- Redeemed (1) (7) - -------------------------------------------------------------------------------- Net increase 9 $65 ================================================================================ YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 10,000 N/A ================================================================================ Sold 17 $115 - -------------------------------- Redeemed (1) (5) - -------------------------------------------------------------------------------- Net increase 16 $110 ================================================================================ (continued) - ------ 54 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 5. SECURITIES LENDING As of May 31, 2005, securities in International Discovery, Emerging Markets, Global Growth, and International Opportunities valued at $256,040, $16,554, $51,172, and $29,890, 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 or ACGIM. 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 $270,117, $16,871, $53,905, and $31,458, 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 International Discovery, Emerging Markets, Global Growth, and International Opportunities, along with certain other funds managed by ACIM or ACGIM, have a $575 million unsecured bank line of credit agreement with JPMCB, which was renewed from $650 million effective December 15, 2004. International Discovery, Emerging Markets, Global Growth, and International Opportunities 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%. International Discovery, Emerging Markets, Global Growth, and International Opportunities did not borrow from the line during the six months ended May 31, 2005. 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. (continued) - ------ 55 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) (AMOUNTS IN THOUSANDS) 8. FEDERAL TAX INFORMATION The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of May 31, 2005, the components of investments for federal income tax purposes were as follows: - ---------------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING STOCK DISCOVERY MARKETS - ---------------------------------------------------------------------------------------- Federal tax cost of investments $9,631 $1,290,466 $207,489 ======================================================================================== Gross tax appreciation of investments $ 75 $141,750 $34,722 - ---------------------------------------- Gross tax depreciation of investments (264) (17,829) (2,936) - ---------------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $(189) $123,921 $31,786 ======================================================================================== GLOBAL INTERNATIONAL GROWTH OPPORTUNITIES - ---------------------------------------------------------------------------------------- Federal tax cost of investments $298,927 $165,120 ======================================================================================== Gross tax appreciation of investments $74,564 $35,114 - ---------------------------------------- Gross tax depreciation of investments (3,958) (3,354) - ---------------------------------------------------------------------------------------- Net tax appreciation of investments $70,606 $31,760 ======================================================================================== The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. Following are the capital loss carryovers and currency loss deferral amounts as of November 30, 2004: - -------------------------------------------------------------------------------- INTERNATIONAL EMERGING GLOBAL INTERNATIONAL DISCOVERY MARKETS GROWTH OPPORTUNITIES - -------------------------------------------------------------------------------- Accumulated capital losses -- -- $(83,638) -- - --------------------------- Currency loss deferral $(167) $(48) $(5) $(34) - -------------------------------------------------------------------------------- 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 currency loss deferrals represent net 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. - ------ 56 International Stock - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------- Net Investment Income(2) 0.06 - ----------------------------------------------------- Net Realized and Unrealized Loss (0.27) - -------------------------------------------------------------------------------- Total From Investment Operations (0.21) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $9.79 ================================================================================ TOTAL RETURN(3) (2.10)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50%(4) - ----------------------------------------------------- Ratio of Net Investment Income to Average Net Assets 1.73%(4) - ----------------------------------------------------- Portfolio Turnover Rate 30% - ----------------------------------------------------- Net Assets, End of Period (in thousands) $9,159 - -------------------------------------------------------------------------------- (1) March 31, 2005 (fund inception) through May 31, 2005 (unaudited). (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. (4) Annualized. See Notes to Financial Statements. - ------ 57 International Discovery - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ---------------------------------------------------------------------------------------------------------- INVESTOR CLASS - ---------------------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001 2000 - ---------------------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $15.11 $12.75 $9.32 $10.13 $14.23 $15.20 - ---------------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------ Net Investment Income (Loss)(2) 0.06 (0.01) 0.03 0.03 0.01 (0.12) - ------------------------------------ Net Realized and Unrealized Gain (Loss) (0.03) 2.40 3.42 (0.84) (2.54) 0.03 - ---------------------------------------------------------------------------------------------------------- Total From Investment Operations 0.03 2.39 3.45 (0.81) (2.53) (0.09) - ---------------------------------------------------------------------------------------------------------- Distributions - ------------------------------------ From Net Investment Income -- (0.03) (0.02) -- -- -- - ------------------------------------ From Net Realized Gains (2.28) -- -- -- (1.57) (0.88) - ---------------------------------------------------------------------------------------------------------- Total Distributions (2.28) (0.03) (0.02) -- (1.57) (0.88) - ---------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $12.86 $15.11 $12.75 $9.32 $10.13 $14.23 ========================================================================================================== TOTAL RETURN(3) 0.28% 18.76% 37.05% (8.00)% (20.17)% (1.27)% RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.47%(4) 1.49% 1.57% 1.53% 1.45% 1.36% - ------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.88%(4) (0.06)% 0.27% 0.35% 0.10% (0.64)% - ------------------------------------ Portfolio Turnover Rate 92% 201% 215% 224% 180% 113% - ------------------------------------ Net Assets, End of Period (in thousands) $979,857 $1,112,870 $1,028,934 $841,706 $1,021,063 $1,568,872 - ---------------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (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. - ------ 58 International Discovery - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - --------------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $15.21 $12.84 $9.39 $10.18 $14.26 $15.24 - --------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------ Net Investment Income (Loss)(2) 0.07 0.02 0.05 0.06 0.04 (0.08) - ------------------------------------ Net Realized and Unrealized Gain (Loss) (0.03) 2.40 3.43 (0.85) (2.55) 0.01 - --------------------------------------------------------------------------------------------------- Total From Investment Operations 0.04 2.42 3.48 (0.79) (2.51) (0.07) - --------------------------------------------------------------------------------------------------- Distributions - ------------------------------------ From Net Investment Income -- (0.05) (0.03) -- -- -- - ------------------------------------ From Net Realized Gains (2.31) -- -- -- (1.57) (0.91) - --------------------------------------------------------------------------------------------------- Total Distributions (2.31) (0.05) (0.03) -- (1.57) (0.91) - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $12.94 $15.21 $12.84 $9.39 $10.18 $14.26 =================================================================================================== TOTAL RETURN(3) 0.36% 18.94% 37.25% (7.76)% (19.97)% (1.13)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.27%(4) 1.29% 1.37% 1.33% 1.25% 1.16% - ------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 1.08%(4) 0.14% 0.47% 0.55% 0.30% (0.44)% - ------------------------------------ Portfolio Turnover Rate 92% 201% 215% 224% 180% 113% - ------------------------------------ Net Assets, End of Period (in thousands) $168,933 $165,600 $147,531 $137,358 $192,155 $250,930 - --------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (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. - ------ 59 International Discovery - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ---------------------------------------------------------------------------------------------- ADVISOR CLASS - ---------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001 2000 - ---------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $14.95 $12.63 $9.23 $10.05 $14.17 $15.14 - ---------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------ Net Investment Income (Loss)(2) 0.04 (0.05) 0.01 0.01 --(3) (0.12) - ------------------------------------ Net Realized and Unrealized Gain (Loss) (0.02) 2.37 3.39 (0.83) (2.55) (0.01) - ---------------------------------------------------------------------------------------------- Total From Investment Operations 0.02 2.32 3.40 (0.82) (2.55) (0.13) - ---------------------------------------------------------------------------------------------- Distributions - ------------------------------------ From Net Realized Gains (2.25) -- -- -- (1.57) (0.84) - ---------------------------------------------------------------------------------------------- Net Asset Value, End of Period $12.72 $14.95 $12.63 $9.23 $10.05 $14.17 ============================================================================================== TOTAL RETURN(4) 0.15% 18.37% 36.84% (8.16)% (20.43)% (1.53)% RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.72%(5) 1.74% 1.82% 1.78% 1.70% 1.61% - ------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.63%(5) (0.31)% 0.02% 0.10% (0.15)% (0.87)% - ------------------------------------ Portfolio Turnover Rate 92% 201% 215% 224% 180% 113% - ------------------------------------ Net Assets, End of Period (in thousands) $205 $201 $161 $153 $244 $509 - ---------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (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. - ------ 60 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001 2000 - -------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.28 $5.28 $3.61 $4.06 $4.68 $5.62 - -------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(2) 0.01 (0.01) --(3) (0.02) (0.02) (0.06) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 0.41 1.00 1.66 (0.43) (0.43) (0.88) - -------------------------------------------------------------------------------------------------- Total From Investment Operations 0.42 0.99 1.66 (0.45) (0.45) (0.94) - -------------------------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Realized Gains (0.09) -- -- -- (0.17) -- - -------------------------------------------------------------------------------------------------- Redemption Fees(4) --(3) 0.01 0.01 -- -- -- - -------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $6.61 $6.28 $5.28 $3.61 $4.06 $4.68 ================================================================================================== TOTAL RETURN(5) 6.64% 18.94% 46.26% (10.86)% (10.28)% (16.73)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.01%(6) 2.00% 2.01% 2.05% 2.00% 2.00% - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.30%(6) (0.22)% 0.03% (0.37)% (0.27)% (0.88)% - ------------------------------------- Portfolio Turnover Rate 64% 208% 286% 387% 326% 196% - ------------------------------------- Net Assets, End of Period (in thousands) $146,276 $135,355 $103,737 $81,756 $80,422 $77,279 - -------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per-share effect of redemption fees. Periods prior to December 1, 2001, have not been restated to reflect this change. Amounts computed using average shares outstanding throughout the period. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. See Notes to Financial Statements. - ------ 61 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ----------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ----------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001 2000 - ----------------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.35 $5.33 $3.64 $4.08 $4.70 $5.63 - ----------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------ Net Investment Income (Loss)(2) 0.02 --(3) 0.01 --(3) (0.01) (0.05) - ------------------------------------ Net Realized and Unrealized Gain (Loss) 0.41 1.01 1.67 (0.44) (0.44) (0.88) - ----------------------------------------------------------------------------------------------- Total From Investment Operations 0.43 1.01 1.68 (0.44) (0.45) (0.93) - ----------------------------------------------------------------------------------------------- Distributions - ------------------------------------ From Net Realized Gains (0.09) -- -- -- (0.17) -- - ----------------------------------------------------------------------------------------------- Redemption Fees(4) --(3) 0.01 0.01 -- -- -- - ----------------------------------------------------------------------------------------------- Net Asset Value, End of Period $6.69 $6.35 $5.33 $3.64 $4.08 $4.70 =============================================================================================== TOTAL RETURN(5) 6.73% 19.14% 46.43% (10.78)% (10.01)% (16.52)% RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.81%(6) 1.80% 1.81% 1.85% 1.80% 1.80% - ------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.50%(6) (0.02)% 0.23% (0.17)% (0.07)% (0.68)% - ------------------------------------ Portfolio Turnover Rate 64% 208% 286% 387% 326% 196% - ------------------------------------ Net Assets, End of Period (in thousands) $77,844 $92,673 $63,242 $18,969 $18,602 $21,330 - ----------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per-share effect of redemption fees. Periods prior to December 1, 2001, have not been restated to reflect this change. Amounts computed using average shares outstanding throughout the period. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. See Notes to Financial Statements. - ------ 62 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ------------------------------------------------------------------------------------------------- ADVISOR CLASS - ------------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001 2000 - ------------------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.19 $5.22 $3.58 $4.03 $4.66 $5.61 - ------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(2) --(3) (0.03) --(3) (0.01) (0.04) (0.08) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 0.41 0.99 1.63 (0.44) (0.42) (0.87) - ------------------------------------------------------------------------------------------------- Total From Investment Operations 0.41 0.96 1.63 (0.45) (0.46) (0.95) - ------------------------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Realized Gains (0.09) -- -- -- (0.17) -- - ------------------------------------------------------------------------------------------------- Redemption Fees(4) --(3) 0.01 0.01 -- -- -- - ------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $6.51 $6.19 $5.22 $3.58 $4.03 $4.66 ================================================================================================= TOTAL RETURN(5) 6.58% 18.58% 45.81% (11.17)% (10.32)% (16.93)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.26%(6) 2.25% 2.26% 2.30% 2.25% 2.25% - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.05%(6) (0.47)% (0.22)% (0.62)% (0.52)% (1.13)% - ------------------------------------- Portfolio Turnover Rate 64% 208% 286% 387% 326% 196% - ------------------------------------- Net Assets, End of Period (in thousands) $1,100 $1,178 $597 $1,254 $815 $212 - ------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per-share effect of redemption fees. Periods prior to December 1, 2001, have not been restated to reflect this change. Amounts computed using average shares outstanding throughout the period. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. See Notes to Financial Statements. - ------ 63 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2005(1) 2004 2003 2002(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.12 $5.19 $3.58 $4.24 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Loss(3) (0.02) (0.07) (0.04) (0.04) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 0.39 0.99 1.64 (0.62) - -------------------------------------------------------------------------------- Total From Investment Operations 0.37 0.92 1.60 (0.66) - -------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Realized Gains (0.09) -- -- -- - -------------------------------------------------------------------------------- Redemption Fees(4) --(5) 0.01 0.01 -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $6.40 $6.12 $5.19 $3.58 ================================================================================ TOTAL RETURN(6) 5.97% 17.92% 44.97% (15.57)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 3.01%(7) 3.00% 3.01% 3.05%(7) - ------------------------------------- Ratio of Net Investment Loss to Average Net Assets (0.70)%(7) (1.22)% (0.97)% (1.10)%(7) - ------------------------------------- Portfolio Turnover Rate 64% 208% 286% 387%(8) - ------------------------------------- Net Assets, End of Period (in thousands) $567 $521 $291 $54 - -------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) December 18, 2001 (commencement of sale) through November 30, 2002. (3) Computed using average shares outstanding throughout the period. (4) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per-share effect of redemption fees. Amounts computed using average shares outstanding throughout the period. (5) Per-share amount was less than $0.005. (6) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (7) Annualized. (8) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2002. See Notes to Financial Statements. - ------ 64 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001 2000 - -------------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.49 $6.48 $5.39 $6.18 $8.73 $8.33 - -------------------------------------------------------------------------------------------------------- Income From Investment Operations - ---------------------------------------- Net Investment Income (Loss)(2) 0.01 (0.01) --(3) 0.01 --(3) (0.05) - ---------------------------------------- Net Realized and Unrealized Gain (Loss) 0.30 1.02 1.09 (0.80) (1.90) 0.81 - -------------------------------------------------------------------------------------------------------- Total From Investment Operations 0.31 1.01 1.09 (0.79) (1.90) 0.76 - -------------------------------------------------------------------------------------------------------- Distributions - ---------------------------------------- From Net Investment Income (0.01) -- -- -- -- -- - ---------------------------------------- From Net Realized Gains -- -- -- -- (0.65) (0.36) - -------------------------------------------------------------------------------------------------------- Total Distributions (0.01) -- -- -- (0.65) (0.36) - -------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $7.79 $7.49 $6.48 $5.39 $6.18 $8.73 ======================================================================================================== TOTAL RETURN(4) 4.19% 15.59% 20.22% (12.78)% (23.62)% 8.81% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.30%(5) 1.30% 1.31% 1.32% 1.30% 1.30% - ---------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.23%(5) (0.12)% 0.00% 0.13% (0.06)% (0.48)% - ---------------------------------------- Portfolio Turnover Rate 16% 79% 152% 278% 232% 123% - ---------------------------------------- Net Assets, End of Period (in thousands) $307,451 $299,807 $250,306 $213,314 $272,402 $412,631 - -------------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 65 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ----------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ----------------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001 2000(2) - ----------------------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.55 $6.52 $5.41 $6.19 $8.74 $9.73 - ----------------------------------------------------------------------------------------------------- Income From Investment Operations - ---------------------------------------- Net Investment Income (Loss)(3) 0.02 --(4) 0.01 0.02 0.01 (0.01) - ---------------------------------------- Net Realized and Unrealized Gain (Loss) 0.31 1.03 1.10 (0.80) (1.90) (0.98) - ----------------------------------------------------------------------------------------------------- Total From Investment Operations 0.33 1.03 1.11 (0.78) (1.89) (0.99) - ----------------------------------------------------------------------------------------------------- Distributions - -------------------------- From Net Investment Income (0.03) -- -- -- -- -- - ---------------------------------------- From Net Realized Gains -- -- -- -- (0.66) -- - ----------------------------------------------------------------------------------------------------- Total Distributions (0.03) -- -- -- (0.66) -- - ----------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $7.85 $7.55 $6.52 $5.41 $6.19 $8.74 ===================================================================================================== TOTAL RETURN(5) 4.37% 15.80% 20.52% (12.60)% (23.53)% (10.17)% RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.10%(6) 1.10% 1.11% 1.12% 1.10% 1.10%(6) - ---------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.43%(6) 0.08% 0.20% 0.33% 0.14% (0.43)%(6) - ---------------------------------------- Portfolio Turnover Rate 16% 79% 152% 278% 232% 123%(7) - ---------------------------------------- Net Assets, End of Period (in thousands) $7,024 $6,774 $7,901 $3,288 $3,907 $5,090 - ----------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) August 1, 2000 (commencement of sale) through November 30, 2000. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2000. See Notes to Financial Statements. - ------ 66 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------- ADVISOR CLASS - --------------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001 2000 - --------------------------------------------------------------------------------------------------- PER-SHARE DATA Net Asset Value, Beginning of Period $7.41 $6.43 $5.36 $6.16 $8.72 $8.31 - --------------------------------------------------------------------------------------------------- Income From Investment Operations - ---------------------------------------- Net Investment Loss(2) --(3) (0.02) (0.02) (0.01) --(3) (0.06) - ---------------------------------------- Net Realized and Unrealized Gain (Loss) 0.31 1.00 1.09 (0.79) (1.93) 0.82 - --------------------------------------------------------------------------------------------------- Total From Investment Operations 0.31 0.98 1.07 (0.80) (1.93) 0.76 - --------------------------------------------------------------------------------------------------- Distributions - ---------------------------------------- From Net Realized Gains -- -- -- -- (0.63) (0.35) - --------------------------------------------------------------------------------------------------- Total Distributions -- -- -- -- (0.63) (0.35) - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $7.72 $7.41 $6.43 $5.36 $6.16 $8.72 =================================================================================================== TOTAL RETURN(4) 4.18% 15.24% 19.96% (12.99)% (23.97)% 8.79% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.55%(5) 1.55% 1.56% 1.57% 1.55% 1.55% - ---------------------------------------- Ratio of Net Investment Loss to Average Net Assets (0.02)%(5) (0.37)% (0.25)% (0.12)% (0.31)% (0.73)% - ---------------------------------------- Portfolio Turnover Rate 16% 79% 152% 278% 232% 123% - ---------------------------------------- Net Assets, End of Period (in thousands) $2,529 $2,475 $1,044 $537 $623 $301 - --------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 67 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2005(1) 2004 2003 2002(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.29 $6.37 $5.35 $6.14 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Loss(3) (0.03) (0.08) (0.05) (0.03) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 0.31 1.00 1.07 (0.76) - -------------------------------------------------------------------------------- Total From Investment Operations 0.28 0.92 1.02 (0.79) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $7.57 $7.29 $6.37 $5.35 ================================================================================ TOTAL RETURN(4) 3.84% 14.44% 19.07% (12.87)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.30%(5) 2.30% 2.31% 2.32%(5) - ------------------------------------- Ratio of Net Investment Loss to Average Net Assets (0.77)%(5) (1.12)% (1.00)% (0.60)%(5) - ------------------------------------- Portfolio Turnover Rate 16% 79% 152% 278%(6) - ------------------------------------- Net Assets, End of Period (in thousands) $257 $184 $56 $25 - -------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) March 1, 2002 (commencement of sale) through November 30, 2002. (3) 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. - ------ 68 International Opportunities - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001(2) - -------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.35 $7.62 $4.73 $4.87 $5.00 - -------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(3) 0.04 (0.05) (0.01) 0.02 (0.02) - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 0.96 2.03 2.90 (0.19) (0.11) - -------------------------------------------------------------------------------------------- Total From Investment Operations 1.00 1.98 2.89 (0.17) (0.13) - -------------------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Investment Income -- -- (0.01) -- -- - ----------------------------------------- From Net Realized Gains (0.29) (0.27) -- -- -- - -------------------------------------------------------------------------------------------- Total Distributions (0.29) (0.27) (0.01) -- -- - -------------------------------------------------------------------------------------------- Redemption Fees(4) --(5) 0.02 0.01 0.03 -- - -------------------------------------------------------------------------------------------- Net Asset Value, End of Period $10.06 $9.35 $7.62 $4.73 $4.87 ============================================================================================ TOTAL RETURN(6) 10.91% 27.14% 61.54% (2.87)% (2.60)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.91%(7) 1.97% 2.00% 2.01% 2.00%(7) - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.73%(7) (0.63)% (0.23)% 0.30% (0.75)%(7) - ----------------------------------------- Portfolio Turnover Rate 58% 139% 219% 257% 147% - ----------------------------------------- Net Assets, End of Period (in thousands) $172,325 $176,100 $72,008 $21,977 $6,569 - -------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) June 1, 2001 (fund inception) through November 30, 2001. (3) Computed using average shares outstanding throughout the period. (4) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per-share effect of redemption fees. Periods prior to December 1, 2001, have not been restated to reflect this change. Amounts computed using the average shares outstanding throughout the period. (5) Per-share amount was less than $0.005. (6) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (7) Annualized. See Notes to Financial Statements. - ------ 69 International Opportunities - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2005(1) 2004 2003(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.37 $7.63 $4.80 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(3) 0.05 (0.03) 0.01 - ------------------------------------------ Net Realized and Unrealized Gain 0.95 2.04 2.81 - -------------------------------------------------------------------------------- Total From Investment Operations 1.00 2.01 2.82 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Realized Gains (0.29) (0.29) -- - -------------------------------------------------------------------------------- Redemption Fees(4) --(5) 0.02 0.01 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.08 $9.37 $7.63 ================================================================================ TOTAL RETURN(6) 10.89% 27.50% 58.96% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.71%(7) 1.77% 1.80%(7) - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.93%(7) (0.43)% 0.18%(7) - ------------------------------------------ Portfolio Turnover Rate 58% 139% 219%(8) - ------------------------------------------ Net Assets, End of Period (in thousands) $25 $10,868 $8,523 - -------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) January 9, 2003 (commencement of sale) through November 30, 2003. (3) Computed using average shares outstanding throughout the period. (4) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per-share effect of redemption fees. Periods prior to December 1, 2001, have not been restated to reflect this change. Amounts computed using the average shares outstanding throughout the period. (5) Per-share amount was less than $0.005. (6) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (7) Annualized. (8) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 70 Share Class Information One class of shares is authorized for sale by International Stock: Investor Class. 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. 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. - ------ 71 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 Global Investment Management, Inc., the funds' investment advisor, 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 advisor 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 advisor 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) - ------ 72 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. - ------ 73 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. 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. 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. - ------ 74 Notes - ------ 75 Notes - ------ 76 American Century Investments P.O. Box 419200 Kansas City, MO 64141-6200 CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 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 ADVISOR: American Century Global Investment Management, Inc. New York, New York 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. American Century Investment Services, Inc., Distributor 0507 SH-SAN-44205S (c)2005 American Century Proprietary Holdings, Inc. All rights reserved.
[front cover] American Century Investments SEMIANNUAL REPORT [photo of man and woman] MAY 31, 2005 Life Sciences Fund Technology Fund [american century investments logo and text logo] Table of Contents Our Message to You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 LIFE SCIENCES Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4 Top 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .25 OTHER INFORMATION Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .33 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 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 semiannual report for the Life Sciences and Technology funds for the six months ended May 31, 2005. The report includes comparative performance figures, portfolio and market commentary, summary tables, a full list of portfolio holdings, and financial statements and highlights. We hope you find this information helpful in monitoring your investment. 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. Your next shareholder report for these funds will be the annual report dated November 30, 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 AMERICAN CENTURY COMPANIES, INC. /s/James E. Stowers III James E. Stowers III CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. - ------ 1 Life Sciences - Performance TOTAL RETURNS AS OF MAY 31, 2005 -------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 7.17% 0.85% 6/30/00 - -------------------------------------------------------------------------------- S&P COMPOSITE 1500 HEALTH CARE INDEX 4.31% 0.07% -- - -------------------------------------------------------------------------------- S&P 500 INDEX(1) 8.24% -2.44% -- - -------------------------------------------------------------------------------- Institutional Class 7.76% 0.06% 7/17/00 - -------------------------------------------------------------------------------- Advisor Class 7.04% -1.35% 11/14/00 - -------------------------------------------------------------------------------- C Class 6.28% 0.23% 11/29/01 - -------------------------------------------------------------------------------- (1) (c)2005 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper Inc. - A Reuters Company and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. 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 and is therefore 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 May 31 - -------------------------------------------------------------------------------- 2001* 2002 2003 2004 2005 - -------------------------------------------------------------------------------- Investor Class 2.62% -6.60% -18.63% 24.74% 7.17% - -------------------------------------------------------------------------------- S&P Composite 1500 Health Care Index -1.85% -8.21% -5.16% 12.59% 4.31% - -------------------------------------------------------------------------------- S&P 500 Index -12.71% -13.85% -8.06% 18.33% 8.24% - -------------------------------------------------------------------------------- *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 and is therefore 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 Arnold Douville and Christy Turner] PORTFOLIO MANAGERS ON THE LIFE SCIENCES INVESTMENT TEAM: ARNOLD DOUVILLE AND CHRISTY TURNER. Life Sciences rose 8.32%* during the six months ended May 31, 2005, trailing the 9.90% return of the S&P Composite 1500 Health Care Index (the Composite). Since its June 30, 2000 inception, Life Sciences has posted an average annual return of 0.85%, outperforming the 0.07% return of the Composite. EQUITIES MANAGE GAINS During the six-month period covered by this report, U.S. economic growth moderated as oil prices flared to record levels, inflation increased and short-term interest rates rose, generating concern about the future of the economy and corporate profit growth. Though volatility prevailed, equities ultimately booked gains for the period, and Life Sciences received positive absolute contributions from each of its health-care industry positions and nine of its top-ten holdings on average. STRENGTH IN HEALTH CARE PROVIDERS The health care providers and services industry continued to generate interest and attract buyers during the six months covered by this report. The strength of the advance was evident in the 24.45% gain of the Morgan Stanley Healthcare Providers Index, which tracks the performance of hospitals, and the 24.54% rise of the Morgan Stanley Healthcare Payors Index, which measures the progress of HMOs. We found many investment opportunities in the health care services area, a distinct advantage at a time when these companies led the market. This group represented, on average, our largest single stake and the greatest source of contribution to absolute performance. Numerous holdings advanced, including Renal Care Group Inc., PacifiCare Health Systems, and WellPoint, a health maintenance organization and the portfolio's top-contributing stock. During the period, WellPoint announced that 2004 revenues had increased by 59%, driven by solid pricing, increased membership and the successful completion of its merger with Anthem, a deal valued at $16.5 billion. TOP TEN HOLDINGS AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- Johnson & Johnson 6.7% 3.3% - -------------------------------------------------------------------------------- Abbott Laboratories 4.2% 2.1% - -------------------------------------------------------------------------------- Aetna Inc. 4.2% 3.3% - -------------------------------------------------------------------------------- Wyeth 4.0% 1.0% - -------------------------------------------------------------------------------- Genentech, Inc. 3.8% -- - -------------------------------------------------------------------------------- Gilead Sciences, Inc. 3.7% 3.0% - -------------------------------------------------------------------------------- WellPoint Inc. 3.6% -- - -------------------------------------------------------------------------------- Bard (C.R.), Inc. 3.5% 3.0% - -------------------------------------------------------------------------------- UnitedHealth Group Incorporated 3.2% 5.0% - -------------------------------------------------------------------------------- Renal Care Group Inc. 3.0% 2.6% - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. Returns for periods less than one year are not annualized. (continued) - ------ 4 Life Sciences - Portfolio Commentary Despite overwhelmingly positive results in this area, some holdings stumbled nonetheless. One that did was Centene Corp., a Medicaid managed-care company that reported a 30% increase in 2004 revenues. However, fears of enrollment weakness in Medicaid accounts created concern that prompted investors to sell the stock. BIOTECH ADDS VALUE Our position in the biotechnology industry also significantly augmented returns. Company-specific developments drove gains for many individual firms, among them Genentech, a leading biotech company that topped our list of contributors. In March, the company announced that its lung-cancer drug Avastin had been effective in Phase III clinical trials in extending patient survival, news that sent the stock sharply higher. A report from the American Society of Clinical Oncology stating that the firm's breast-cancer drug Herceptin improved post-surgery survival further supported the advance. SUCCESSES AND SETBACKS Overall, investments in the pharmaceutical industry provided lift, as did holdings in the health care equipment area. In the former group, Johnson & Johnson paced gains, while in the latter, ResMed Inc., which makes devices to address sleep disorders, was the top name. Ultimately, though, variations in allocation alongside untimely stock selection in those industries slowed relative performance and accounted for most of our shortfall versus the Composite. One disappointment was orthopedic-products firm Biomet, which makes replacement joints. Though Biomet, the portfolio's top-detracting stock, fell amid various pricing pressures, we feel that the recent declines adequately reflect concerns about pricing. OUR COMMITMENT We remain committed to seeking the stocks of growing 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 the long term, stock price movements follow growth in earnings and revenues. TOP INDUSTRIES AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- Health Care Providers & Services 36.7% 30.0% - -------------------------------------------------------------------------------- Pharmaceuticals 26.1% 13.7% - -------------------------------------------------------------------------------- Health Care Equipment & Supplies 18.2% 31.6% - -------------------------------------------------------------------------------- Biotechnology 14.8% 14.9% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- Common Stocks 95.8% 98.4% - -------------------------------------------------------------------------------- Temporary Cash Investments 5.5% 7.4% - -------------------------------------------------------------------------------- Other Assets & Liabilities* (1.3)% (5.8)% - -------------------------------------------------------------------------------- *Includes collateral for securities lending and other assets and liabilities. - ------ 5 Life Sciences - Schedule of Investments MAY 31, 2005 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 95.8% BIOTECHNOLOGY -- 14.8% - -------------------------------------------------------------------------------- 51,755 Amgen Inc.(1) $ 3,238,828 - -------------------------------------------------------------------------------- 50,000 Charles River Laboratories(1) 2,404,500 - -------------------------------------------------------------------------------- 75,000 Genentech, Inc.(1) 5,943,750 - -------------------------------------------------------------------------------- 143,500 Gilead Sciences, Inc.(1) 5,854,800 - -------------------------------------------------------------------------------- 36,960 Invitrogen Corp.(1) 2,932,037 - -------------------------------------------------------------------------------- 129,242 QIAGEN N.V.(1)(2) 1,548,319 - -------------------------------------------------------------------------------- 30,000 United Therapeutics Corp.(1)(2) 1,498,800 - -------------------------------------------------------------------------------- 23,421,034 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 18.2% - -------------------------------------------------------------------------------- 80,140 Bard (C.R.), Inc. 5,469,555 - -------------------------------------------------------------------------------- 31,185 Bausch & Lomb Inc. Cl A 2,435,237 - -------------------------------------------------------------------------------- 86,000 Baxter International, Inc. 3,173,400 - -------------------------------------------------------------------------------- 23,308 Beckman Coulter Inc. 1,632,958 - -------------------------------------------------------------------------------- 83,500 Biomet Inc. 3,147,115 - -------------------------------------------------------------------------------- 30,000 Cooper Companies, Inc. (The)(2) 1,981,500 - -------------------------------------------------------------------------------- 29,000 E-Z-Em-Inc.(2) 426,880 - -------------------------------------------------------------------------------- 52,000 Fisher Scientific International(1) 3,247,920 - -------------------------------------------------------------------------------- 64,000 NuVasive, Inc.(1)(2) 1,004,800 - -------------------------------------------------------------------------------- 33,000 Respironics, Inc.(1) 2,205,720 - -------------------------------------------------------------------------------- 82,858 Stryker Corp. 4,031,042 - -------------------------------------------------------------------------------- 28,756,127 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 36.7% - -------------------------------------------------------------------------------- 85,000 Aetna Inc. 6,630,849 - -------------------------------------------------------------------------------- 99,000 Caremark Rx Inc.(1) 4,421,340 - -------------------------------------------------------------------------------- 41,000 CIGNA Corp. 3,987,250 - -------------------------------------------------------------------------------- 43,126 Community Health Systems Inc.(1) 1,568,493 - -------------------------------------------------------------------------------- 100,000 Covance Inc.(1) 4,366,000 - -------------------------------------------------------------------------------- 23,500 Coventry Health Care Inc.(1) 1,636,070 - -------------------------------------------------------------------------------- 37,500 DaVita Inc.(1) 1,727,250 - -------------------------------------------------------------------------------- 85,000 Henry Schein, Inc.(1)(2) 3,424,650 - -------------------------------------------------------------------------------- 36,148 LifePoint Hospitals Inc.(1) 1,625,937 - -------------------------------------------------------------------------------- 62,000 McKesson Corp. 2,496,740 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- 66,261 PacifiCare Health Systems, Inc.(1) $ 4,163,179 - -------------------------------------------------------------------------------- 150,000 PSS World Medical Inc.(1)(2) 1,761,000 - -------------------------------------------------------------------------------- 103,500 Renal Care Group Inc.(1) 4,785,840 - -------------------------------------------------------------------------------- 66,000 SFBC International, Inc.(1)(2) 2,310,660 - -------------------------------------------------------------------------------- 99,402 Symbion Inc.(1)(2) 2,345,887 - -------------------------------------------------------------------------------- 105,000 UnitedHealth Group Incorporated 5,100,900 - -------------------------------------------------------------------------------- 42,951 WellPoint Inc.(1) 5,712,483 - -------------------------------------------------------------------------------- 58,064,528 - -------------------------------------------------------------------------------- PHARMACEUTICALS -- 26.1% - -------------------------------------------------------------------------------- 138,361 Abbott Laboratories 6,674,535 - -------------------------------------------------------------------------------- 15,000 American Pharmaceutical Partners Inc.(1)(2) 658,800 - -------------------------------------------------------------------------------- 105,000 AstraZeneca plc ADR 4,464,600 - -------------------------------------------------------------------------------- 158,000 Johnson & Johnson 10,601,800 - -------------------------------------------------------------------------------- 170,000 Pfizer, Inc. 4,743,000 - -------------------------------------------------------------------------------- 90,000 Sanofi-Aventis ADR(2) 4,050,000 - -------------------------------------------------------------------------------- 200,000 Schering-Plough Corp. 3,900,000 - -------------------------------------------------------------------------------- 145,000 Wyeth 6,288,650 - -------------------------------------------------------------------------------- 41,381,385 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $130,978,108) 151,623,074 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 5.5% Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 4.59%-4.64%, 11/15/21-8/15/25, valued at $8,160,145), in a joint trading account at 2.91%, dated 5/31/05, due 6/1/05 (Delivery value $7,900,639) 7,900,000 - -------------------------------------------------------------------------------- Repurchase Agreement, Morgan Stanley Group, Inc., (collateralized by various U.S. Treasury obligations, 6.25%, 8/15/23, valued at $822,696), in a joint trading account at 2.90%, dated 5/31/05, due 6/1/05 (Delivery value $800,064) 800,000 - -------------------------------------------------------------------------------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $8,700,000) 8,700,000 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 6 Life Sciences - Schedule of Investments MAY 31, 2005 (UNAUDITED) Value - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 9.9% REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 3.05%, dated 5/31/05, due 6/1/05 (Delivery value $5,720,926) $ 5,720,441 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 3.06%, dated 5/31/05, due 6/1/05 (Delivery value $10,000,850) 10,000,000 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $15,720,441) 15,720,441 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 111.2% (Cost $155,398,549) 176,043,515 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (11.2)% (17,713,407) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $158,330,108 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of May 31, 2005. (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 MAY 31, 2005 -------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS -7.12% -19.75% 6/30/00 - -------------------------------------------------------------------------------- S&P COMPOSITE 1500 TECHNOLOGY INDEX 0.36% -16.12% -- - -------------------------------------------------------------------------------- S&P 500 INDEX(1) 8.24% -2.44% -- - -------------------------------------------------------------------------------- Institutional Class -6.90% -21.37% 7/14/00 - -------------------------------------------------------------------------------- Advisor Class -7.32% -19.98% 6/30/00 - -------------------------------------------------------------------------------- (1) (c)2005 Reuters. All rights reserved. Any copying, republication or redistribution of Lipper content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Lipper. Lipper shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. The data contained herein has been obtained from company reports, financial reporting services, periodicals and other resources believed to be reliable. Although carefully verified, data on compilations is not guaranteed by Lipper Inc. - A Reuters Company and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. 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 and is therefore 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
![](https://capedge.com/proxy/N-CSRS/0000872825-05-000023/growthtech0505.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended May 31 - -------------------------------------------------------------------------------- 2001* 2002 2003 2004 2005 - -------------------------------------------------------------------------------- Investor Class -50.80% -30.49% -10.64% 19.44% -7.12% - -------------------------------------------------------------------------------- S&P Composite 1500 Technology Index -49.39% -27.13% -7.11% 22.54% 0.36% - -------------------------------------------------------------------------------- S&P 500 Index -12.71% -13.85% -8.06% 18.33% 8.24% - -------------------------------------------------------------------------------- *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 and is therefore 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 Harold Bradley and Tom Telford] PORTFOLIO MANAGERS ON THE TECHNOLOGY INVESTMENT TEAM: HAROLD BRADLEY AND TOM TELFORD. Technology fell 6.87%* during the six months ended May 31, 2005, trailing the return of its benchmark, the S&P Composite 1500 Technology Index, which declined 1.39%. SMALL CAPS SLIDE The U.S. economy grew at a 3.8% annualized rate in the first quarter of 2005, remaining steady with a 3.8% annualized rate in the fourth-quarter of 2004, amid record-high oil prices, rising interest rates and a modest increase in inflation. Rising interest rates and general compression of price/earnings multiples as the six-month period progressed hampered markets, disproportionately affecting small-cap stocks. Markets as a whole rebounded as the period ended, though, as crude oil prices moderated, job growth improved and inflation concerns abated. Nevertheless, the Technology fund, tilted toward small-cap stocks, felt the pain that small caps endured. During the period, large-cap technology stocks in the S&P 500 Index fell 1.29%, whereas small-cap tech issues in the S&P SmallCap 600 Index fell 4.08%. Meanwhile, the technology sector as a whole struggled to shake off sluggish post-holiday demand for computers and related equipment. WELL-KNOWN STOCKS MAKE POSITIVE MARK An overweight position in the industrials sector, specifically in the aerospace & defense industry, boosted the Technology fund's relative performance in the period. A stake in Boeing, whose shares surged 19.28%, led the portfolio's selections in that industry. The company benefited during the period from several new jet orders. Two other well-known individual securities led the portfolio's list of relative and absolute contributors. Google's shares continued surging as online traffic to its search engines kept rising. In addition, shares in Seagate Technology rose considerably in the period's final month. The hard-disk drive maker, the second-largest average holding in the portfolio, topped Wall Street estimates with its TOP TEN HOLDINGS AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- Seagate Technology 5.3% 1.5% - -------------------------------------------------------------------------------- Google Inc. Cl A 4.8% 2.5% - -------------------------------------------------------------------------------- Intel Corp. 4.6% -- - -------------------------------------------------------------------------------- Jabil Circuit, Inc. 3.2% -- - -------------------------------------------------------------------------------- Boeing Co. 3.0% -- - -------------------------------------------------------------------------------- Cisco Systems Inc. 2.9% -- - -------------------------------------------------------------------------------- Microsoft Corporation 2.9% -- - -------------------------------------------------------------------------------- Western Digital Corp. 2.8% -- - -------------------------------------------------------------------------------- aQuantive, Inc. 2.6% -- - -------------------------------------------------------------------------------- Itron Inc. 2.5% -- - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. Returns for periods less than one year are not annualized. (continued) - ------ 10 Technology - Portfolio Commentary fiscal third-quarter 2005 earnings report and projected seasonally strong results in the months ahead. Itron, a technology solutions provider for the utilities industry and a maker of automated meter-reading equipment, also made a solid contribution to the portfolio's results. The company's stock almost doubled amid a solid increase in revenue and shipments. SOFTWARE BLUES The portfolio's performance suffered from an underweight stake in both the communications equipment industry and semiconductors and semiconductor equipment. In the latter industry, an underweight position in Intel, whose shares surged 20.49% in the period, made that stock the portfolio's second-biggest detractor on a relative basis. However, stock selection in the software industry made by far the most detrimental impact on the Technology fund's performance. TIBCO Software, a maker of business software, led all absolute and relative detractors. TIBCO's shares fell sharply in early March 2005 after the company warned investors of surprisingly weak earnings results. We liquidated our position in the stock. Stocks in other IT industries also hurt performance. Shares in QLogic, a maker of storage networking components and one of the portfolio's top five average holdings, slid in the latter portion of the period. That happened after a leading analyst downgraded the stock as investors worried about slowing growth in the storage network business. The portfolio also suffered from the performance of Merix Corp., which makes circuit boards for sophisticated electrical equipment. The company lost a third of its market value as investors disdained its planned acquisition of a Hong Kong-based rival. We sold our stake in the company. OUR COMMITMENT We remain committed to pursuing investments in growing companies with the opportunity to benefit significantly from improvements or advancements in technology. TOP FIVE INDUSTRIES AS OF MAY 31, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- Computers & Peripherals 18.0% 16.2% - -------------------------------------------------------------------------------- Semiconductors & Semiconductor Equipment 17.3% 10.9% - -------------------------------------------------------------------------------- Communications Equipment 16.6% 17.4% - -------------------------------------------------------------------------------- Electronic Equipment & Instruments 13.3% 4.6% - -------------------------------------------------------------------------------- Internet Software & Services 12.8% 12.1% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/05 11/30/04 - -------------------------------------------------------------------------------- Common Stocks 99.2% 99.6% - -------------------------------------------------------------------------------- Temporary Cash Investments -- 0.6% - -------------------------------------------------------------------------------- Other Assets & Liabilities* 0.8% (0.2)% - -------------------------------------------------------------------------------- *Includes collateral for securities lending and other assets and liabilities. - ------ 11 Technology - Schedule of Investments MAY 31, 2005 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 99.2% AEROSPACE & DEFENSE -- 7.3% - -------------------------------------------------------------------------------- 171,000 BE Aerospace, Inc.(1)(2) $ 2,474,370 - -------------------------------------------------------------------------------- 64,700 Boeing Co. 4,134,330 - -------------------------------------------------------------------------------- 54,800 Goodrich Corporation 2,293,928 - -------------------------------------------------------------------------------- 58,000 Hexcel Corp.(1) 947,720 - -------------------------------------------------------------------------------- 9,850,348 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES -- 0.7% - -------------------------------------------------------------------------------- 64,800 American Reprographics Co.(1)(2) 965,520 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT -- 16.6% - -------------------------------------------------------------------------------- 252,400 Arris Group Inc.(1) 2,185,784 - -------------------------------------------------------------------------------- 205,700 Cisco Systems Inc.(1) 3,986,466 - -------------------------------------------------------------------------------- 236,300 ECI Telecom Ltd.(1) 2,086,529 - -------------------------------------------------------------------------------- 79,800 Juniper Networks, Inc.(1) 2,046,072 - -------------------------------------------------------------------------------- 119,100 Motorola, Inc. 2,068,767 - -------------------------------------------------------------------------------- 57,000 Netgear, Inc.(1)(2) 1,121,190 - -------------------------------------------------------------------------------- 56,000 Nokia Oyj ADR 944,160 - -------------------------------------------------------------------------------- 92,700 Scientific-Atlanta, Inc. 3,086,910 - -------------------------------------------------------------------------------- 82,900 SiRF Technology Holdings, Inc.(1)(2) 1,173,864 - -------------------------------------------------------------------------------- 61,700 Telefonaktiebolaget LM Ericsson ADR 1,939,231 - -------------------------------------------------------------------------------- 245,400 Tellabs, Inc.(1) 2,017,188 - -------------------------------------------------------------------------------- 22,656,161 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS -- 18.0% - -------------------------------------------------------------------------------- 55,202 Apple Computer, Inc.(1) 2,192,071 - -------------------------------------------------------------------------------- 213,700 EMC Corp.(1) 3,004,622 - -------------------------------------------------------------------------------- 163,100 Emulex Corp.(1)(2) 3,082,590 - -------------------------------------------------------------------------------- 119,000 High Tech Computer Corp. ORD 1,052,846 - -------------------------------------------------------------------------------- 98,800 Neoware Systems Inc.(1)(2) 999,856 - -------------------------------------------------------------------------------- 37,600 palmOne, Inc.(1)(2) 1,068,592 - -------------------------------------------------------------------------------- 63,000 QLogic Corp.(1)(2) 2,017,260 - -------------------------------------------------------------------------------- 337,600 Seagate Technology 7,163,872 - -------------------------------------------------------------------------------- 258,400 Western Digital Corp.(1) 3,878,584 - -------------------------------------------------------------------------------- 24,460,293 - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT -- 0.3% - -------------------------------------------------------------------------------- 28,000 Motech Industries Inc. ORD(1) 418,683 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 13.3% - -------------------------------------------------------------------------------- 85,100 Agilent Technologies, Inc.(1) 2,043,251 - -------------------------------------------------------------------------------- 610,000 Chi Mei Optoelectronics Corp. ORD 961,725 - -------------------------------------------------------------------------------- 428,000 Hon Hai Precision Industry Co., Ltd. ORD 2,244,731 - -------------------------------------------------------------------------------- 82,700 Itron Inc.(1) 3,399,797 - -------------------------------------------------------------------------------- 148,900 Jabil Circuit, Inc.(1) 4,352,347 - -------------------------------------------------------------------------------- 131,900 NAM TAI Electronics Inc.(2) 2,847,721 - -------------------------------------------------------------------------------- 163,300 Plexus Corp.(1) 2,245,375 - -------------------------------------------------------------------------------- 18,094,947 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 1.6% - -------------------------------------------------------------------------------- 33,800 Cerner Corporation(1)(2) $ 2,208,830 - -------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL -- 0.8% - -------------------------------------------------------------------------------- 50,200 Stamps.com Inc.(1)(2) 1,122,472 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES -- 12.8% - -------------------------------------------------------------------------------- 227,400 aQuantive, Inc.(1)(2) 3,499,686 - -------------------------------------------------------------------------------- 23,700 Google Inc. Cl A(1) 6,598,080 - -------------------------------------------------------------------------------- 96,600 VeriSign, Inc.(1) 3,125,010 - -------------------------------------------------------------------------------- 82,900 WebEx Communications, Inc.(1)(2) 2,226,694 - -------------------------------------------------------------------------------- 54,100 Yahoo! Inc.(1) 2,012,520 - -------------------------------------------------------------------------------- 17,461,990 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 17.3% - -------------------------------------------------------------------------------- 46,000 Altera Corp.(1) 1,020,740 - -------------------------------------------------------------------------------- 26,400 Analog Devices, Inc. 978,912 - -------------------------------------------------------------------------------- 122,900 Applied Materials, Inc. 2,016,789 - -------------------------------------------------------------------------------- 153,500 Cypress Semiconductor Corp.(1)(2) 1,984,755 - -------------------------------------------------------------------------------- 76,600 DSP Group Inc.(1) 1,801,632 - -------------------------------------------------------------------------------- 120,100 Genesis Microchip Inc.(1)(2) 1,987,655 - -------------------------------------------------------------------------------- 48,400 Integrated Circuit Systems, Inc.(1) 1,025,596 - -------------------------------------------------------------------------------- 235,000 Intel Corp. 6,328,550 - -------------------------------------------------------------------------------- 22,500 International Rectifier Corp.(1) 1,075,050 - -------------------------------------------------------------------------------- 52,700 Intersil Corp. Cl A(2) 988,652 - -------------------------------------------------------------------------------- 101,200 Microsemi Corporation(1)(2) 2,087,756 - -------------------------------------------------------------------------------- 54,000 Trident Microsystems, Inc.(1)(2) 1,143,720 - -------------------------------------------------------------------------------- 1,719,000 Via Technologies, Inc. ORD 1,118,049 - -------------------------------------------------------------------------------- 23,557,856 - -------------------------------------------------------------------------------- SOFTWARE -- 10.1% - -------------------------------------------------------------------------------- 241,600 Informatica Corporation(1)(2) 2,072,928 - -------------------------------------------------------------------------------- 85,100 McAfee Inc.(1) 2,440,668 - -------------------------------------------------------------------------------- 22,500 Micros Systems, Inc.(1) 1,012,050 - -------------------------------------------------------------------------------- 154,100 Microsoft Corporation 3,975,780 - -------------------------------------------------------------------------------- 167,300 NetScout Systems, Inc.(1)(2) 1,030,568 - -------------------------------------------------------------------------------- 33,039 Phoenix Technologies Ltd.(1) 268,277 - -------------------------------------------------------------------------------- 48,000 SAP AG ADR 1,980,000 - -------------------------------------------------------------------------------- 44,600 Transaction Systems Architects, Inc.(1) 1,015,988 - -------------------------------------------------------------------------------- 13,796,259 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES -- 0.4% - -------------------------------------------------------------------------------- 47,500 China Mobile Hong Kong Ltd. ORD 173,704 - -------------------------------------------------------------------------------- 432,000 China Unicom Limited ORD 347,055 - -------------------------------------------------------------------------------- 520,759 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $118,728,564) 135,114,118 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 12 Technology - Schedule of Investments MAY 31, 2005 (UNAUDITED) Value - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 18.4% REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 3.05%, dated 5/31/05, due 6/1/05 (Delivery value $15,102,601) $ 15,101,322 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 3.06%, dated 5/31/05, due 6/1/05 (Delivery value $10,000,850) 10,000,000 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $25,101,322) 25,101,322 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 117.6% (Cost $143,829,886) 160,215,440 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (17.6)% (23,969,809) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $136,245,631 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt ORD = Foreign Ordinary Share (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of May 31, 2005. (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 December 1, 2004 to May 31, 2005. 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) - ------ 14 Shareholder Fee Examples (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 12/1/04 - EXPENSE 12/1/04 5/31/05 5/31/05 RATIO* - -------------------------------------------------------------------------------- LIFE SCIENCES SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,083.20 $7.79 1.50% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,084.40 $6.76 1.30% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,081.90 $9.08 1.75% - -------------------------------------------------------------------------------- C Class $1,000 $1,076.80 $12.94 2.50% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,017.45 $7.54 1.50% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,018.45 $6.54 1.30% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,016.21 $8.80 1.75% - -------------------------------------------------------------------------------- C Class $1,000 $1,012.47 $12.54 2.50% - -------------------------------------------------------------------------------- TECHNOLOGY SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $931.30 $7.22 1.50% - -------------------------------------------------------------------------------- Institutional Class $1,000 $932.50 $6.26 1.30% - -------------------------------------------------------------------------------- Advisor Class $1,000 $930.40 $8.42 1.75% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,017.45 $7.54 1.50% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,018.45 $6.54 1.30% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,016.21 $8.80 1.75% - -------------------------------------------------------------------------------- *Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 15 Statement of Assets and Liabilities MAY 31, 2005 (UNAUDITED) - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $139,678,108 and $118,728,564, respectively) -- including $15,317,016 and $25,156,505 of securities on loan, respectively $160,323,074 $135,114,118 - ----------------------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $15,720,441 and $25,101,322, respectively) 15,720,441 25,101,322 - -------------------------------------------------------------------------------- Total investment securities, at value (cost of $155,398,549 and $143,829,886, respectively) 176,043,515 160,215,440 - ----------------------------------------------- Cash collateral received for securities on loan -- 150 - ----------------------------------------------- Receivable for investments sold -- 1,585,597 - ----------------------------------------------- Receivable for capital shares sold 2,210 10,767 - ----------------------------------------------- Dividends and interest receivable 162,219 53,888 - -------------------------------------------------------------------------------- 176,207,944 161,865,842 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payable for collateral received for securities on loan 15,720,441 25,101,472 - ----------------------------------------------- Disbursements in excess of demand deposit cash 123,371 77,670 - ----------------------------------------------- Payable for investments purchased 1,833,379 275,989 - ----------------------------------------------- Accrued management fees 200,567 165,054 - ----------------------------------------------- Distribution fees payable 44 13 - ----------------------------------------------- Service fees payable 34 13 - -------------------------------------------------------------------------------- 17,877,836 25,620,211 - -------------------------------------------------------------------------------- NET ASSETS $158,330,108 $136,245,631 ================================================================================ NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $171,035,878 $ 369,707,128 - ----------------------------------------------- Accumulated net investment loss (914,380) (780,039) - ----------------------------------------------- Accumulated net realized loss on investment and foreign currency transactions (32,436,784) (249,067,028) - ----------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 20,645,394 16,385,570 - -------------------------------------------------------------------------------- $158,330,108 $ 136,245,631 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $154,129,223 $129,670,107 - ----------------------------------------------- Shares outstanding 30,318,045 7,649,543 - ----------------------------------------------- Net asset value per share $5.08 $16.95 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $4,040,871 $6,510,534 - ----------------------------------------------- Shares outstanding 786,684 379,856 - ----------------------------------------------- Net asset value per share $5.14 $17.14 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $135,306 $64,990 - ----------------------------------------------- Shares outstanding 26,939 3,890 - ----------------------------------------------- Net asset value per share $5.02 $16.71 - -------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $24,708 -- - ----------------------------------------------- Shares outstanding 5,034 -- - ----------------------------------------------- Net asset value per share $4.91 -- - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 16 Statement of Operations FOR THE SIX MONTHS ENDED MAY 31, 2005 (UNAUDITED) - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- INVESTMENT LOSS - -------------------------------------------------------------------------------- INCOME: - ----------------------------------------------- Dividends (net of foreign taxes withheld of $8,985 and $--, respectively) $ 414,378 $ 188,122 - ----------------------------------------------- Interest 81,934 74,482 - ----------------------------------------------- Securities lending 19,454 73,340 - -------------------------------------------------------------------------------- 515,766 335,944 - -------------------------------------------------------------------------------- EXPENSES: - ----------------------------------------------- Management fees 1,184,572 1,112,433 - ----------------------------------------------- Distribution fees: - ----------------------------------------------- Advisor Class 160 86 - ----------------------------------------------- C Class 94 -- - ----------------------------------------------- Service fees: - ----------------------------------------------- Advisor Class 160 86 - ----------------------------------------------- C Class 31 -- - ----------------------------------------------- Directors' fees and expenses 1,044 1,042 - ----------------------------------------------- Other expenses 889 2,336 - -------------------------------------------------------------------------------- 1,186,950 1,115,983 - -------------------------------------------------------------------------------- NET INVESTMENT LOSS (671,184) (780,039) - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- NET REALIZED GAIN ON: - ----------------------------------------------- Investment transactions 8,749,224 1,232,435 - ----------------------------------------------- Foreign currency transactions 127,569 3,710 - -------------------------------------------------------------------------------- 8,876,793 1,236,145 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION ON: - ----------------------------------------------- Investments 4,514,390 (11,689,905) - ----------------------------------------------- Translation of assets and liabilities in foreign currencies 3,343 16 - -------------------------------------------------------------------------------- 4,517,733 (11,689,889) - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 13,394,526 (10,453,744) - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $12,723,342 $(11,233,783) ================================================================================ See Notes to Financial Statements. - ------ 17 Statement of Changes in Net Assets SIX MONTHS ENDED MAY 31, 2005 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2004 - ----------------------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - ----------------------------------------------------------------------------------------------- DECREASE IN NET ASSETS 2005 2004 2005 2004 - ----------------------------------------------------------------------------------------------- OPERATIONS - ----------------------------------------------------------------------------------------------- Net investment loss $ (671,184) $ (1,417,072) $ (780,039) $ (2,462,822) - ------------------------------- Net realized gain 8,876,793 21,887,794 1,236,145 10,958,405 - ------------------------------- Change in net unrealized appreciation 4,517,733 (8,848,736) (11,689,889) (26,806,754) - ----------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 12,723,342 11,621,986 (11,233,783) (18,311,171) - ----------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - ----------------------------------------------------------------------------------------------- Net decrease in net assets from capital share transactions (13,565,188) (16,712,454) (27,390,151) (19,912,500) - ----------------------------------------------------------------------------------------------- NET DECREASE IN NET ASSETS (841,846) (5,090,468) (38,623,934) (38,223,671) NET ASSETS - ----------------------------------------------------------------------------------------------- Beginning of period 159,171,954 164,262,422 174,869,565 213,093,236 - ----------------------------------------------------------------------------------------------- End of period $158,330,108 $159,171,954 $136,245,631 $174,869,565 =============================================================================================== Accumulated net investment loss $(914,380) $(243,196) $(780,039) -- =============================================================================================== See Notes to Financial Statements. - ------ 18 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Life Sciences Fund (Life Sciences) and Technology Fund (Technology) (collectively, the funds) are two funds in a series issued by the corporation. The funds are nondiversified 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 principally 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 -- Life Sciences is authorized to issue the Investor Class, the Institutional Class, the Advisor Class and the C Class. Technology is authorized to issue the Investor Class, the Institutional Class and the Advisor 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. 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. 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 gains 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. (continued) - ------ 19 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The funds record the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The funds may enter into forward foreign currency exchange contracts to facilitate transactions of securities denominated in a foreign currency or to hedge the funds' exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the funds and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. The funds bear the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses may arise if the counterparties do not perform under the contract terms. REPURCHASE AGREEMENTS -- The funds may enter into repurchase agreements with institutions that 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 or American Century Global Investment Management, Inc. (ACGIM), 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. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business, the funds enter into contracts that provide general indemnifications. The funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. The risk of material loss from such claims is considered by management to be remote. 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 for Technology and ACGIM for Life Sciences (the investment advisor, respectively), under which the investment advisor 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 the investment advisor. 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 (continued) - ------ 20 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) investment advisor'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 advisor 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 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 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 six months ended May 31, 2005 was 1.50%, 1.30%, 1.25%, and 1.50% for the Investor Class, Institutional Class, Advisor Class and C Class, respectively, as applicable. ACGIM has entered into a Subadvisory Agreement with ACIM (the investment subadvisor) on behalf of Life Sciences. The subadvisor makes investment decisions for the cash portion of Life Sciences in accordance with Life Sciences' investment objectives, policies and restrictions under the supervision of ACGIM and the Board of Directors. ACGIM pays all costs associated with retaining ACIM as the subadvisor of Life Sciences. 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 six months ended May 31, 2005, 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 advisor, ACIM or ACGIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services, LLC (formerly American Century Services Corporation). 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 J.P. Morgan Chase & Co. (JPM). JPM is an equity investor in ACC. (continued) - ------ 21 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the six months ended May 31, 2005, were as follows: - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- Purchases $144,503,970 $240,862,632 - -------------------------------------------------------------------------------- Proceeds from sales $162,768,378 $269,386,632 - -------------------------------------------------------------------------------- 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: - ----------------------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - ----------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------- INVESTOR CLASS - ----------------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED 200,000,000 100,000,000 =============================================================================================== Sold 2,102,035 $ 10,317,008 711,622 $ 12,190,386 - ----------------------------- Redeemed (4,916,164) (24,134,908) (2,237,423) (38,753,289) - ----------------------------------------------------------------------------------------------- Net decrease (2,814,129) $(13,817,900) (1,525,801) $(26,562,903) =============================================================================================== YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 200,000,000 300,000,000 =============================================================================================== Sold 4,682,262 $ 21,845,836 3,341,359 $ 63,088,939 - ----------------------------- Redeemed (8,256,607) (37,835,256) (4,527,740) (81,535,533) - ----------------------------------------------------------------------------------------------- Net decrease (3,574,345) $(15,989,420) (1,186,381) $(18,446,594) =============================================================================================== INSTITUTIONAL CLASS - ----------------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED 5,000,000 5,000,000 =============================================================================================== Sold 217,243 $1,090,490 78,586 $ 1,333,502 - ----------------------------- Redeemed (171,413) (854,439) (123,311) (2,152,477) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 45,830 $ 236,051 (44,725) $ (818,975) =============================================================================================== YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 5,000,000 15,000,000 =============================================================================================== Sold 216,829 $ 1,021,168 107,175 $ 2,121,461 - ----------------------------- Redeemed (390,095) (1,817,348) (198,924) (3,647,932) - ----------------------------------------------------------------------------------------------- Net decrease (173,266) $ (796,180) (91,749) $(1,526,471) =============================================================================================== (continued) - ------ 22 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ----------------------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - ----------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------- ADVISOR CLASS - ----------------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED 5,000,000 5,000,000 =============================================================================================== Sold 8,794 $ 42,413 394 $ 6,656 - ----------------------------- Redeemed (4,832) (23,236) (861) (14,929) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 3,962 $ 19,177 (467) $ (8,273) =============================================================================================== YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 5,000,000 5,000,000 =============================================================================================== Sold 15,648 $ 73,369 3,757 $66,253 - ----------------------------- Redeemed (3,378) (14,968) (333) (5,688) - ----------------------------------------------------------------------------------------------- Net increase 12,270 $ 58,401 3,424 $60,565 =============================================================================================== C CLASS - ----------------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2005 SHARES AUTHORIZED 5,000,000 N/A =============================================================================================== Redeemed (527) $(2,516) =============================================================================================== YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 10,000,000 N/A =============================================================================================== Sold 4,908 $22,515 - ----------------------------- Redeemed (1,714) (7,770) - ----------------------------------------------------------------------------------------------- Net increase 3,194 $14,745 =============================================================================================== 5. SECURITIES LENDING As of May 31, 2005, securities in Life Sciences and Technology valued at $15,317,016 and $25,156,505, 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 or ACGIM. 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 $15,720,441 and $25,101,472, 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 or ACGIM, have a $575,000,000 unsecured bank line of credit agreement with JPMCB, which was renewed from $650,000,000 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 six months ended May 31, 2005. (continued) - ------ 23 Notes to Financial Statements MAY 31, 2005 (UNAUDITED) 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. FEDERAL TAX INFORMATION The character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of May 31, 2005, the components of investments for federal income tax purposes were as follows: - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- Federal tax cost of investments $155,426,578 $143,972,72 ================================================================================ Gross tax appreciation of investments $21,610,898 $17,378,289 - --------------------------------------------- Gross tax depreciation of investments (993,961) (1,135,578) - -------------------------------------------------------------------------------- Net tax appreciation of investments $20,616,937 $16,242,711 ================================================================================ The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. Following are the capital loss carryovers and currency loss deferral amounts as of November 30, 2004: - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- Accumulated capital losses $(41,261,426) $(249,809,131) - -------------------------------------------------------------------------------- Currency loss deferral $(249,940) -- - -------------------------------------------------------------------------------- The accumulated capital losses listed above represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers expire as follows: - -------------------------------------------------------------------------------- 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. The funds have elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. - ------ 24 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ---------------------------------------------------------------------------------------------------- INVESTOR CLASS - ---------------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001 2000(2) - ---------------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $4.69 $4.36 $3.54 $4.87 $5.28 $5.00 - ---------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------- Net Investment Loss(3) (0.02) (0.04) (0.03) (0.04) (0.03) (0.02) - ------------------------- Net Realized and Unrealized Gain (Loss) 0.41 0.37 0.85 (1.29) (0.25) 0.30 - ---------------------------------------------------------------------------------------------------- Total From Investment Operations 0.39 0.33 0.82 (1.33) (0.28) 0.28 - ---------------------------------------------------------------------------------------------------- Distributions - ------------------------- From Net Realized Gains -- -- -- -- (0.13) -- - ---------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $5.08 $4.69 $4.36 $3.54 $4.87 $5.28 ==================================================================================================== TOTAL RETURN(4) 8.32% 7.57% 23.16% (27.31)% (5.35)% 5.60% RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50%(5) 1.50% 1.50% 1.50% 1.50% 1.50%(5) - ------------------------- Ratio of Net Investment Loss to Average Net Assets (0.85)%(5) (0.85)% (0.89)% (0.88)% (0.61)% (0.95)%(5) - ------------------------- Portfolio Turnover Rate 95% 215% 138% 272% 206% 64% - ------------------------- Net Assets, End of Period (in thousands) $154,129 $155,530 $160,187 $146,324 $227,341 $233,785 - ---------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) June 30, 2000 (fund inception) through November 30, 2000. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 25 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ---------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ---------------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001 2000(2) - ---------------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $4.74 $4.40 $3.56 $4.89 $5.28 $5.26 - ---------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------- Net Investment Loss(3) (0.01) (0.03) (0.03) (0.03) (0.02) (0.02) - ------------------------- Net Realized and Unrealized Gain (Loss) 0.41 0.37 0.87 (1.30) (0.24) 0.04 - ---------------------------------------------------------------------------------------------------- Total From Investment Operations 0.40 0.34 0.84 (1.33) (0.26) 0.02 - ---------------------------------------------------------------------------------------------------- Distributions - ------------------------- From Net Realized Gains -- -- -- -- (0.13) -- - ---------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $5.14 $4.74 $4.40 $3.56 $4.89 $5.28 ==================================================================================================== TOTAL RETURN(4) 8.44% 7.73% 23.60% (27.20)% (4.97)% 0.38% RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.30%(5) 1.30% 1.30% 1.30% 1.30% 1.30%(5) - ------------------------- Ratio of Net Investment Loss to Average Net Assets (0.65)%(5) (0.65)% (0.69)% (0.68)% (0.41)% (0.80)%(5) - ------------------------- Portfolio Turnover Rate 95% 215% 138% 272% 206% 64%(6) - ------------------------- Net Assets, End of Period (in thousands) $4,041 $3,510 $4,019 $3,365 $4,348 $3,363 - ---------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) July 17, 2000 (commencement of sale) through November 30, 2000. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the period June 30, 2000 (fund inception) through November 30, 2000. See Notes to Financial Statements. - ------ 26 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ---------------------------------------------------------------------------------------------------- ADVISOR CLASS - ---------------------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001 2000(2) - ---------------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $4.64 $4.33 $3.51 $4.86 $5.28 $5.48 - ---------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------- Net Investment Loss(3) (0.02) (0.05) (0.04) (0.05) (0.04) --(4) - ------------------------- Net Realized and Unrealized Gain (Loss) 0.40 0.36 0.86 (1.30) (0.25) (0.20) - ---------------------------------------------------------------------------------------------------- Total From Investment Operations 0.38 0.31 0.82 (1.35) (0.29) (0.20) - ---------------------------------------------------------------------------------------------------- Distributions - ------------------------- From Net Realized Gains -- -- -- -- (0.13) -- - ---------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $5.02 $4.64 $4.33 $3.51 $4.86 $5.28 ==================================================================================================== TOTAL RETURN(5) 8.19% 7.16% 23.36% (27.78)% (5.55)% (3.65)% RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.75%(6) 1.75% 1.75% 1.75% 1.75% 1.75%(6) - ------------------------- Ratio of Net Investment Loss to Average Net Assets (1.10)%(6) (1.10)% (1.14)% (1.13)% (0.86)% (0.99)%(6) - ------------------------- Portfolio Turnover Rate 95% 215% 138% 272% 206% 64%(7) - ------------------------- Net Assets, End of Period (in thousands) $135 $107 $46 $25 $13 $11 - ---------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) November 14, 2000 (commencement of sale) through November 30, 2000. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the period June 30, 2000 (fund inception) 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) - --------------------------------------------------------------------------------------- C CLASS - --------------------------------------------------------------------------------------- 2005(1) 2004 2003 2002 2001(2) - --------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $4.56 $4.28 $3.49 $4.87 $4.87 - --------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------- Net Investment Loss(3) (0.04) (0.08) (0.07) (0.08) --(4) - ------------------------- Net Realized and Unrealized Gain (Loss) 0.39 0.36 0.86 (1.30) --(4) - --------------------------------------------------------------------------------------- Total From Investment Operations 0.35 0.28 0.79 (1.38) --(4) - --------------------------------------------------------------------------------------- Net Asset Value, End of Period $4.91 $4.56 $4.28 $3.49 $4.87 ======================================================================================= TOTAL RETURN(5) 7.68% 6.54% 22.64% (28.34)% 0.00% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.50%(6) 2.50% 2.50% 2.50% 2.50%(6) - ------------------------- Ratio of Net Investment Loss to Average Net Assets (1.85)%(6) (1.85)% (1.89)% (1.88)% (1.46)%(6) - ------------------------- Portfolio Turnover Rate 95% 215% 138% 272% 206%(7) - ------------------------- Net Assets, End of Period (in thousands) $25 $25 $10 $6 $3 - --------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) November 29, 2001 (commencement of sale) through November 30, 2001. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2001. See Notes to Financial Statements. - ------ 28 Technology - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ---------------------------------------------------------------------------------------------------- INVESTOR CLASS - ---------------------------------------------------------------------------------------------------- 2005(1) 2004 2003(2) 2002(2) 2001(2) 2000(2)(3) - ---------------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $18.20 $19.58 $14.40 $20.90 $31.90 $50.00 - ---------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------- Net Investment Loss(4) (0.09) (0.24) (0.19) (0.20) (0.20) (0.20) - ------------------------- Net Realized and Unrealized Gain (Loss) (1.16) (1.14) 5.37 (6.30) (10.80) (17.90) - ---------------------------------------------------------------------------------------------------- Total From Investment Operations (1.25) (1.38) 5.18 (6.50) (11.00) (18.10) - ---------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $16.95 $18.20 $19.58 $14.40 $20.90 $31.90 ==================================================================================================== TOTAL RETURN(5) (6.87)% (7.05)% 35.97% (31.10)% (34.48)% (36.20)% RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50%(6) 1.50% 1.50% 1.50% 1.50% 1.50%(6) - ------------------------- Ratio of Net Investment Loss to Average Net Assets (1.05)%(6) (1.30)% (1.25)% (1.20)% (0.79)% (0.83)%(6) - ------------------------- Portfolio Turnover Rate 165% 279% 218% 251% 356% 125% - ------------------------- Net Assets, End of Period (in thousands) $129,670 $166,986 $202,884 $127,767 $173,877 $195,776 - ---------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (3) June 30, 2000 (fund inception) through November 30, 2000. (4) Computed using average shares outstanding throughout the period. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. See Notes to Financial Statements. - ------ 29 Technology - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ---------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ---------------------------------------------------------------------------------------------------- 2005(1) 2004 2003(2) 2002(2) 2001(2) 2000(2)(3) - ---------------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $18.38 $19.74 $14.50 $21.00 $31.90 $55.40 - ---------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------- Net Investment Loss(4) (0.07) (0.20) (0.16) (0.20) (0.20) (0.10) - ------------------------- Net Realized and Unrealized Gain (Loss) (1.17) (1.16) 5.40 (6.30) (10.70) (23.40) - ---------------------------------------------------------------------------------------------------- Total From Investment Operations (1.24) (1.36) 5.24 (6.50) (10.90) (23.50) - ---------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $17.14 $18.38 $19.74 $14.50 $21.00 $31.90 ==================================================================================================== TOTAL RETURN(5) (6.75)% (6.89)% 36.14% (30.95)% (34.17)% (42.42)% RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.30%(6) 1.30% 1.30% 1.30% 1.30% 1.30%(6) - ------------------------- Ratio of Net Investment Loss to Average Net Assets (0.85)%(6) (1.10)% (1.05)% (1.00)% (0.59)% (0.70)%(6) - ------------------------- Portfolio Turnover Rate 165% 279% 218% 251% 356% 125%(7) - ------------------------- Net Assets, End of Period (in thousands) $6,511 $7,805 $10,191 $8,444 $9,198 $7,995 - ---------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (3) July 14, 2000 (commencement of sale) through November 30, 2000. (4) Computed using average shares outstanding throughout the period. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the period June 30, 2000 (fund inception) through November 30, 2000. See Notes to Financial Statements. - ------ 30 Technology - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ---------------------------------------------------------------------------------------------------- ADVISOR CLASS - ---------------------------------------------------------------------------------------------------- 2005(1) 2004 2003(2) 2002(2) 2001(2) 2000(2)(3) - ---------------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $17.96 $19.37 $14.30 $20.80 $31.90 $50.00 - ---------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------- Net Investment Loss(4) (0.11) (0.27) (0.20) (0.20) (0.20) (0.20) - ------------------------- Net Realized and Unrealized Gain (Loss) (1.14) (1.14) 5.27 (6.30) (10.90) (17.90) - ---------------------------------------------------------------------------------------------------- Total From Investment Operations (1.25) (1.41) 5.07 (6.50) (11.10) (18.10) - ---------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $16.71 $17.96 $19.37 $14.30 $20.80 $31.90 ==================================================================================================== TOTAL RETURN(5) (6.96)% (7.28)% 35.45% (31.25)% (34.80)% (36.20)% RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.75%(6) 1.75% 1.75% 1.75% 1.75% 1.75%(6) - ------------------------- Ratio of Net Investment Lossto Average Net Assets (1.30)%(6) (1.55)% (1.50)% (1.45)% (1.04)% (1.08)%(6) - ------------------------- Portfolio Turnover Rate 165% 279% 218% 251% 356% 125% - ------------------------- Net Assets, End of Period (in thousands) $65 $78 $18 $54 $1 $43 - ---------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2005 (unaudited). (2) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (3) June 30, 2000 (commencement of sale) through November 30, 2000. (4) Computed using average shares outstanding throughout the period. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. See Notes to Financial Statements. - ------ 31 Share Class Information Four classes of shares are authorized for sale by Life Sciences: Investor Class, Institutional Class, Advisor Class and C Class. Three classes of shares are authorized for sale by Technology: Investor Class, Institutional Class and Advisor Class. The total expense ratio of Institutional Class shares is lower than that of Investor Class shares. The total expense ratios of Advisor and C Class shares are higher than that of Investor Class shares. INVESTOR CLASS shares are available for purchase in two ways: 1) directly from American Century without any commissions or other fees; or 2) through a broker-dealer, which may require payment of a transaction fee to the broker. INSTITUTIONAL CLASS shares are available to large investors such as endowments, foundations, and retirement plans, and to financial intermediaries serving these investors. This class recognizes the relatively lower cost of serving institutional customers and others who invest at least $5 million ($3 million for endowments and foundations) in an American Century fund or at least $10 million in multiple funds. In recognition of the larger investments and account balances and comparatively lower transaction costs, the total expense ratio of Institutional Class shares is 0.20% less than the total expense ratio of Investor Class shares. ADVISOR CLASS shares are sold primarily through institutions such as investment advisors, banks, broker-dealers, insurance companies, and financial advisors. Advisor Class shares are subject to a 0.50% annual Rule 12b-1 service and distribution fee. The total expense ratio of Advisor Class shares is 0.25% higher than the total expense ratio of Investor Class shares. C CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. C Class shares redeemed within 12 months of purchase are subject to a contingent deferred sales charge (CDSC) of 1.00%. There is no CDSC on shares acquired through reinvestment of dividends or capital gains. C Class shares also are subject to a Rule 12b-1 service and distribution fee of 1.00%. All classes of shares represent a pro rata interest in the funds and generally have the same rights and preferences. - ------ 32 Additional Information RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld. If you don't want us to withhold on this amount, you must notify us to not withhold the federal income tax. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc. and American Century Global Investment Management, Inc., the funds' investment advisors, are 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 advisor 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 advisor 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. - ------ 33 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. The MORGAN STANLEY HEALTHCARE PAYOR INDEX is an equal dollar-weighted index designed to measure the performance of companies involved in the business of managing the health care dollar, including HMOs (health maintenance organizations) and PBMs (pharmaceutical benefit managers). The MORGAN STANLEY HEALTHCARE PROVIDERS INDEX is an equal dollar- weighted index designed to measure the performance of companies involved in the business of hospital management and medical/nursing services. 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 S&P MIDCAP 400 INDEX, a capitalization-weighted index consisting of 400 domestic stocks, measures the performance of the mid-size company segment of the U.S. market. The S&P SMALLCAP 600 INDEX, a capitalization-weighted index consisting of 600 domestic stocks, measures the small company segment of the U.S. market. - ------ 34 Notes - ------ 35 Notes - ------ 36 [inside back cover - blank [back cover] CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 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 ADVISORS: American Century Investment Management, Inc. Kansas City, Missouri American Century Global Investment Management, Inc. New York, New York 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. American Century Investment Services, Inc., Distributor 0507 (c)2005 American Century Proprietary Holdings, Inc. SH-SAN-44208S All rights reserved.
ITEM 2. CODE OF ETHICS. Not applicable for semiannual report filings. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semiannual report filings. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semiannual report filings. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. 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. The registrant's board has adopted procedures by which shareholders may recommend nominees to the board. The Governance Committee of the board is responsible for identifying, evaluating and recommending qualified candidates for election to the board. While the Governance Committee largely considers nominees from searches that it conducts, the Committee will consider candidates submitted by shareholders. Any shareholder wishing to submit a candidate for consideration should send the following information to the Corporate Secretary, American Century Funds, P. O. Box 41041, Kansas City, Missouri 64141: Shareholder's name, the fund name and number of fund shares owned and length of period held; Name, age and address of the candidate; A detailed resume describing among other things the candidate's educational background, occupation, employment history, financial knowledge and expertise and material outside commitments (e.g., memberships on other boards and committees, charitable foundations, etc.); Any other information relating to the candidate that is required to be disclosed in solicitations of proxies for election of directors in an election contest pursuant to Regulation 14A under the Securities Exchange Act of 1934; Number of fund shares owned by the candidate and length of time held; A supporting statement which (i) describes the candidate's reasons for seeking election to the Board of Directors and (ii) documents his/her ability to satisfy the director qualifications described in the board's policy; A signed statement from the candidate confirming his/her willingness to serve on the Board of Directors. The Corporate Secretary will promptly forward such materials to the Governance Committee chairman. The Corporate Secretary also will maintain copies of such materials for future reference by the Governance Committee when filling board positions. Shareholders may submit potential director candidates at any time pursuant to these procedures. The Governance Committee will consider such candidates if a vacancy arises or if the board decides to expand its membership, and at such other times as the Governance Committee deems necessary or appropriate. 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) Not applicable for semiannual report filings. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as Exhibit 99.302CERT. (a)(3) Not applicable. (b) A certification by the registrant's chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is furnished and attached hereto as Exhibit 99.906CERT. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: AMERICAN CENTURY WORLD MUTUAL FUNDS, INC. By: /s/ William M. Lyons ------------------------------------------- Name: William M. Lyons Title: President Date: July 29, 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: July 29, 2005 By: /s/ Maryanne L. Roepke ------------------------------------------- Name: Maryanne L. Roepke Title: Sr. Vice President, Treasurer, and Chief Accounting Officer (principal financial officer) Date: July 29, 2005