UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-CSR CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES Investment Company Act file number 811-6247 --------------------------------------------- AMERICAN CENTURY WORLD MUTUAL FUNDS, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in charter) 4500 MAIN STREET, KANSAS CITY, MISSOURI 64111 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip code) DAVID C. TUCKER, ESQ., 4500 MAIN STREET, 9TH FLOOR, KANSAS CITY, MISSOURI 64111 - -------------------------------------------------------------------------------- (Name and address of agent for service) Registrant's telephone number, including area code: 816-531-5575 ---------------------------- Date of fiscal year end: 11-30 ------------------------------------------------------ Date of reporting period: NOVEMBER 30, 2005 ------------------------------------------------------ ITEM 1. REPORTS TO STOCKHOLDERS. [front cover] American Century Investments ANNUAL REPORT [photo of man and woman] NOVEMBER 30, 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. . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Report of Independent Registered Public Accounting Firm . . . . . . . . . . 30 OTHER INFORMATION Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Approval of Management Agreement for International Growth . . . . . . . . . 34 Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 The opinions expressed in the Portfolio Commentary reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the annual report for the International Growth Fund for the year ended November 30, 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 semiannual report dated May 31, 2006, 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 NOVEMBER 30, 2005 -------------------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 12.09% -0.61% 8.07% 9.35% 5/9/91 - -------------------------------------------------------------------------------- MSCI EAFE INDEX 13.25% 4.33% 5.77% 6.28%(1) -- - -------------------------------------------------------------------------------- MSCI EAFE GROWTH INDEX 12.14% 1.25% 3.15% 3.93%(1) -- - -------------------------------------------------------------------------------- Institutional Class 12.28% -0.38% -- 6.05% 11/20/97 - -------------------------------------------------------------------------------- Advisor Class 11.85% -0.86% -- 7.24% 10/2/96 - -------------------------------------------------------------------------------- A Class 1/31/03 No sales charge* 11.84% -- -- 18.48%(2) With sales charge* 5.35% -- -- 16.05%(2) - -------------------------------------------------------------------------------- B Class 1/31/03 No sales charge* 10.97% -- -- 17.60%(2) With sales charge* 6.97% -- -- 16.82%(2) - -------------------------------------------------------------------------------- C Class 10.91% -- -- 1.06% 6/4/01 - -------------------------------------------------------------------------------- R Class(2) 11.58% -- -- 16.05% 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 periods. 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 November 30, 1995
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ONE-YEAR RETURNS OVER 10 YEARS Periods ended November 30 - ----------------------------------------------------------------------------------------------------------- 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 - ----------------------------------------------------------------------------------------------------------- Investor Class 16.35% 18.12% 16.74% 43.22% -2.47% -24.18% -14.54% 13.70% 17.45% 12.09% - ----------------------------------------------------------------------------------------------------------- MSCI EAFE Index 11.76% -0.40% 16.45% 21.10% -9.67% -19.13% -12.50% 24.22% 24.19% 13.25% - ----------------------------------------------------------------------------------------------------------- MSCI EAFE Growth Index 9.05% -1.03% 17.05% 23.18% -17.66% -23.61% -13.53% 20.63% 19.07% 12.14% - ----------------------------------------------------------------------------------------------------------- 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 gained 12.09%* during the 12 months ended November 30, 2005, while its benchmark, the Morgan Stanley Capital International (MSCI) EAFE Index, returned 13.25%. Many of the world's equity markets advanced during the past fiscal year, demonstrating resilience in the face of surging prices for oil and other commodities, a terrorist attack in London, destructive hurricanes and eight interest-rate increases by the U.S. Federal Reserve. In this environment, our investments in a wide variety of companies boosted total return during the fiscal year, with the portfolio benefiting from banks, construction companies, retailers and some of the world's largest oil companies. The gains came despite the movement of the dollar during the period, which reduced our return. Relative to the MSCI EAFE Index, International Growth's consumer discretionary sector contributed most. But several sectors, notably consumer staples, underperformed the index, ultimately causing the portfolio to lag the benchmark. FINANCIALS, INDUSTRIALS BOOST RETURN All of the sectors in which we were invested advanced, with financial holdings, the portfolio's heaviest sector stake on average, posting the largest contribution to absolute return. France's Societe Generale and Ireland's Anglo Irish Bank Company were among the companies contributing to total return. Elsewhere in the sector, we benefited from French insurance company Axa and Japan's ORIX Corp., a financial services company. International Growth's industrials sector made the second-largest contribution to return, and outperformed the MSCI EAFE Index. Two companies in the construction and engineering industry led the advance--Grupo Ferrovial SA, one of Spain's largest construction companies, and Vinci SA, a French construction company. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Total SA 2.8% 2.8% - -------------------------------------------------------------------------------- GlaxoSmithKline plc 2.7% 2.8% - -------------------------------------------------------------------------------- BP plc 2.7% 2.8% - -------------------------------------------------------------------------------- AstraZeneca plc 1.8% 1.7% - -------------------------------------------------------------------------------- National Bank of Greece SA 1.7% 1.0% - -------------------------------------------------------------------------------- Yamada Denki Co. Ltd. 1.7% 1.0% - -------------------------------------------------------------------------------- Roche Holding AG 1.7% 1.3% - -------------------------------------------------------------------------------- Novartis AG 1.6% 2.4% - -------------------------------------------------------------------------------- BHP Billiton Limited 1.6% 1.4% - -------------------------------------------------------------------------------- Nestle SA 1.6% 1.9% - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 4 International Growth - Portfolio Commentary MIXED RESULTS FROM CONSUMERS International Growth's holdings in the consumer discretionary sector outperformed the MSCI EAFE Index, making the largest contribution to our relative performance. The portfolio's overweight position in Japanese electronics retailer Yamada Denki led the sector's performance. Yamada Denki contributed more than any other security to relative performance, and also contributed most to absolute return. The consumer discretionary sector, however, also included the position that detracted more than any other security from the portfolio's relative performance, Next Plc. One of the largest clothing retailers in the United Kingdom, Next declined partly because of a slump in consumer spending in the U.K. That slowdown also impacted U.K. supermarket giant Tesco, which was among the biggest detractors in consumer staples, the sector that hurt our relative performance most. ENERGY ADVANCES, OUTPERFORMS International Growth's position in the energy sector also contributed to the portfolio's return, and outperformed the MSCI EAFE Index. Two of the portfolio's largest positions, France's Total and the United Kingdom's BP, both contributed to return during the period. The portfolio's relative performance also benefited from an overweight position in the energy equipment and services industry. OUTLOOK Although small companies continued to outperform large during the period, and value again topped growth, we believe changes are on the horizon. We are basing our outlook on a variety of fundamental factors and economic developments, including a rising interest-rate environment that historically has tended to favor large-growth corporations, the attractive valuations for growth compared to value, and the likely outperformance of large companies during the latter stages of an economic recovery. These signs suggest we are entering a period that may favor the large, growing companies in which International Growth invests. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Common Stocks 98.4% 96.4% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.6% 4.0% - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) --(2) (0.4)% - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilities. (2) Category is less than 0.05% of total net assets. INVESTMENTS BY COUNTRY - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Japan 23.0% 16.7% - -------------------------------------------------------------------------------- United Kingdom 17.1% 24.9% - -------------------------------------------------------------------------------- France 15.2% 13.7% - -------------------------------------------------------------------------------- Switzerland 10.2% 7.5% - -------------------------------------------------------------------------------- Germany 4.4% 5.5% - -------------------------------------------------------------------------------- Netherlands 4.2% 2.3% - -------------------------------------------------------------------------------- Greece 3.9% 2.0% - -------------------------------------------------------------------------------- Australia 3.7% 5.5% - -------------------------------------------------------------------------------- Spain 3.2% 3.6% - -------------------------------------------------------------------------------- Other Countries 13.5% 14.7% - -------------------------------------------------------------------------------- Cash and Equivalents* 1.6% 3.6% - -------------------------------------------------------------------------------- *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 June 1, 2005 to November 30, 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* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 6/1/05 - EXPENSE 6/1/05 11/30/05 11/30/05 RATIO* - --------------------------------------------------------------------------------------- INTERNATIONAL GROWTH SHAREHOLDER FEE EXAMPLE - --------------------------------------------------------------------------------------- ACTUAL - --------------------------------------------------------------------------------------- Investor Class $1,000 $1,110.50 $6.56 1.24% - --------------------------------------------------------------------------------------- Institutional Class $1,000 $1,111.40 $5.50 1.04% - --------------------------------------------------------------------------------------- Advisor Class $1,000 $1,109.60 $7.88 1.49% - --------------------------------------------------------------------------------------- A Class $1,000 $1,109.50 $7.88 1.49% - --------------------------------------------------------------------------------------- B Class $1,000 $1,105.40 $11.82 2.24% - --------------------------------------------------------------------------------------- C Class $1,000 $1,104.70 $11.82 2.24% - --------------------------------------------------------------------------------------- R Class $1,000 $1,107.20 $9.19 1.74% - --------------------------------------------------------------------------------------- HYPOTHETICAL - --------------------------------------------------------------------------------------- Investor Class $1,000 $1,018.85 $6.28 1.24% - --------------------------------------------------------------------------------------- Institutional Class $1,000 $1,019.85 $5.27 1.04% - --------------------------------------------------------------------------------------- Advisor Class $1,000 $1,017.60 $7.54 1.49% - --------------------------------------------------------------------------------------- A Class $1,000 $1,017.60 $7.54 1.49% - --------------------------------------------------------------------------------------- B Class $1,000 $1,013.84 $11.31 2.24% - --------------------------------------------------------------------------------------- C Class $1,000 $1,013.84 $11.31 2.24% - --------------------------------------------------------------------------------------- R Class $1,000 $1,016.34 $8.80 1.74% - --------------------------------------------------------------------------------------- *Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 7 International Growth - Schedule of Investments NOVEMBER 30, 2005 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 98.4% AUSTRALIA -- 3.7% - -------------------------------------------------------------------------------- 2,760,435 BHP Billiton Limited(1) $ 44,644 - -------------------------------------------------------------------------------- 6,944,000 Macquarie Infrastructure Group 18,076 - -------------------------------------------------------------------------------- 1,149,950 National Australia Bank Ltd. 27,604 - -------------------------------------------------------------------------------- 310,520 Rio Tinto Ltd.(1) 14,182 - -------------------------------------------------------------------------------- 104,506 - -------------------------------------------------------------------------------- AUSTRIA -- 1.1% - -------------------------------------------------------------------------------- 573,904 Erste Bank der Oesterreichischen Sparkassen AG(1) 30,590 - -------------------------------------------------------------------------------- BELGIUM -- 1.3% - -------------------------------------------------------------------------------- 414,030 KBC Groupe 36,008 - -------------------------------------------------------------------------------- CANADA -- 1.0% - -------------------------------------------------------------------------------- 181,040 Canadian Pacific Railway Ltd. 7,806 - -------------------------------------------------------------------------------- 516,420 Rogers Communications Inc. Cl B 19,803 - -------------------------------------------------------------------------------- 27,609 - -------------------------------------------------------------------------------- FRANCE -- 15.2% - -------------------------------------------------------------------------------- 542,100 Accor SA(1) 28,863 - -------------------------------------------------------------------------------- 1,428,699 Axa SA(1) 43,114 - -------------------------------------------------------------------------------- 339,190 Essilor International SA Cie Generale D'Optique 28,219 - -------------------------------------------------------------------------------- 127,470 Pernod-Ricard SA(1) 20,879 - -------------------------------------------------------------------------------- 204,280 PPR(1) 22,030 - -------------------------------------------------------------------------------- 353,500 Sanofi-Aventis(1) 28,597 - -------------------------------------------------------------------------------- 395,090 Schneider Electric SA(1) 34,128 - -------------------------------------------------------------------------------- 354,510 Societe Generale(1) 42,265 - -------------------------------------------------------------------------------- 307,800 Total SA(1) 77,095 - -------------------------------------------------------------------------------- 996,350 Veolia Environnement(1)(2) 42,709 - -------------------------------------------------------------------------------- 380,902 Vinci SA(1) 30,364 - -------------------------------------------------------------------------------- 882,080 Vivendi Universal SA 25,641 - -------------------------------------------------------------------------------- 423,904 - -------------------------------------------------------------------------------- GERMANY -- 4.4% - -------------------------------------------------------------------------------- 179,250 Adidas-Salomon AG 31,515 - -------------------------------------------------------------------------------- 305,840 BASF AG 22,595 - -------------------------------------------------------------------------------- 439,930 Continental AG(1) 37,306 - -------------------------------------------------------------------------------- 298,981 Fresenius Medical Care AG(1) 28,421 - -------------------------------------------------------------------------------- 81,190 Hypo Real Estate Holding AG 4,232 - -------------------------------------------------------------------------------- 124,069 - -------------------------------------------------------------------------------- GREECE -- 3.9% - -------------------------------------------------------------------------------- 945,970 Greek Organization of Football Prognostics SA 29,160 - -------------------------------------------------------------------------------- 1,441,960 Hellenic Telecommunications Organization SA(2) 30,914 - -------------------------------------------------------------------------------- 1,209,790 National Bank of Greece SA 47,365 - -------------------------------------------------------------------------------- 107,439 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- INDIA -- 0.3% - -------------------------------------------------------------------------------- 236,620 Tata Consultancy Services Ltd. $ 7,832 - -------------------------------------------------------------------------------- IRELAND -- 2.7% - -------------------------------------------------------------------------------- 1,547,930 Anglo Irish Bank Corporation 21,284 - -------------------------------------------------------------------------------- 1,561,490 Bank of Ireland 24,159 - -------------------------------------------------------------------------------- 627,780 Ryanair Holdings plc ADR(1)(2) 31,276 - -------------------------------------------------------------------------------- 76,719 - -------------------------------------------------------------------------------- ITALY -- 2.5% - -------------------------------------------------------------------------------- 1,582,080 Banco Popolare di Verona e Novara Scrl 30,728 - -------------------------------------------------------------------------------- 946,280 ENI SpA(1) 25,666 - -------------------------------------------------------------------------------- 873,920 Saipem SpA(1) 13,408 - -------------------------------------------------------------------------------- 69,802 - -------------------------------------------------------------------------------- JAPAN -- 23.0% - -------------------------------------------------------------------------------- 175,100 Advantest Corp.(1) 15,929 - -------------------------------------------------------------------------------- 606,000 Astellas Pharma Inc. 23,417 - -------------------------------------------------------------------------------- 3,318,000 Bank of Yokohama Ltd. (The) 24,784 - -------------------------------------------------------------------------------- 931,000 Daikin Industries Ltd.(1) 25,330 - -------------------------------------------------------------------------------- 5,560 East Japan Railway Company 34,988 - -------------------------------------------------------------------------------- 778,400 Eisai Co. Ltd.(1) 29,948 - -------------------------------------------------------------------------------- 540,200 Honda Motor Co., Ltd. 30,297 - -------------------------------------------------------------------------------- 819,400 Hoya Corp. 29,611 - -------------------------------------------------------------------------------- 4,720 KDDI Corp. 24,738 - -------------------------------------------------------------------------------- 94,400 Keyence Corp. 24,029 - -------------------------------------------------------------------------------- 1,056,000 Komatsu Ltd. 14,736 - -------------------------------------------------------------------------------- 2,020,000 Matsushita Electric Industrial Co., Ltd. 40,714 - -------------------------------------------------------------------------------- 3,240 Mitsubishi Tokyo Financial Group, Inc. 40,830 - -------------------------------------------------------------------------------- 262,600 Murata Manufacturing Co. Ltd. 14,991 - -------------------------------------------------------------------------------- 346,000 NGK Insulators Ltd. 5,345 - -------------------------------------------------------------------------------- 526,000 Nippon Express Co. Ltd. 2,818 - -------------------------------------------------------------------------------- 250,000 Nitto Denko Corp. 17,151 - -------------------------------------------------------------------------------- 188,400 ORIX Corporation 40,661 - -------------------------------------------------------------------------------- 5,360,000 Osaka Gas Co. Ltd. 17,580 - -------------------------------------------------------------------------------- 77,700 Sega Sammy Holdings Inc. 2,497 - -------------------------------------------------------------------------------- 571,500 Shin-Etsu Chemical Co., Ltd. 29,715 - -------------------------------------------------------------------------------- 2,123,000 Sumitomo Heavy Industries Ltd. 15,486 - -------------------------------------------------------------------------------- 7,770,000 Taisei Corp.(1) 33,202 - -------------------------------------------------------------------------------- 3,783,000 Toray Industries Inc. 25,889 - -------------------------------------------------------------------------------- 5,397,000 Toshiba Corp.(1) 28,377 - -------------------------------------------------------------------------------- 461,500 Yamada Denki Co Ltd.(1) 47,259 - -------------------------------------------------------------------------------- 640,322 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 8 International Growth - Schedule of Investments NOVEMBER 30, 2005 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- MEXICO -- 1.9% - -------------------------------------------------------------------------------- 1,316,380 America Movil SA de CV Series L ADR $ 37,807 - -------------------------------------------------------------------------------- 249,310 Cemex SA de CV ADR 14,036 - -------------------------------------------------------------------------------- 51,843 - -------------------------------------------------------------------------------- MULTI-NATIONAL -- 0.4% - -------------------------------------------------------------------------------- 174,850 iShares MSCI EAFE Index Fund 10,059 - -------------------------------------------------------------------------------- NETHERLANDS -- 4.2% - -------------------------------------------------------------------------------- 1,709,240 Aegon N.V. 27,171 - -------------------------------------------------------------------------------- 1,819,180 ASML Holding N.V.(1)(2) 34,861 - -------------------------------------------------------------------------------- 654,410 ING Groep N.V. 21,238 - -------------------------------------------------------------------------------- 814,730 Royal Numico N.V.(1)(2) 33,589 - -------------------------------------------------------------------------------- 116,859 - -------------------------------------------------------------------------------- NORWAY -- 1.1% - -------------------------------------------------------------------------------- 3,368,970 Telenor ASA 31,601 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 0.6% - -------------------------------------------------------------------------------- 50,818,891 China Construction Bank Cl H(2) 16,711 - -------------------------------------------------------------------------------- SOUTH KOREA -- 0.6% - -------------------------------------------------------------------------------- 29,860 Samsung Electronics 17,219 - -------------------------------------------------------------------------------- SPAIN -- 3.2% - -------------------------------------------------------------------------------- 2,453,700 Banco Popular Espanol SA(1) 29,659 - -------------------------------------------------------------------------------- 1,268,966 Cintra Concesiones de Infraestructuras de Transporte SA(1) 15,503 - -------------------------------------------------------------------------------- 369,947 Grupo Ferrovial SA(1) 25,783 - -------------------------------------------------------------------------------- 641,130 Inditex SA 18,864 - -------------------------------------------------------------------------------- 89,809 - -------------------------------------------------------------------------------- SWITZERLAND -- 10.2% - -------------------------------------------------------------------------------- 3,337,490 ABB Ltd.(2) 29,312 - -------------------------------------------------------------------------------- 860,180 Compagnie Financiere Richemont AG Cl A 34,012 - -------------------------------------------------------------------------------- 379,280 Credit Suisse Group 18,472 - -------------------------------------------------------------------------------- 353,540 Lonza Group AG 20,028 - -------------------------------------------------------------------------------- 148,770 Nestle SA 44,119 - -------------------------------------------------------------------------------- 876,380 Novartis AG 45,882 - -------------------------------------------------------------------------------- 313,925 Roche Holding AG 47,168 - -------------------------------------------------------------------------------- 130,850 Swiss Life Holding(1) 20,934 - -------------------------------------------------------------------------------- 275,216 UBS AG 25,385 - -------------------------------------------------------------------------------- 285,312 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 17.1% - -------------------------------------------------------------------------------- 1,083,350 AstraZeneca plc 49,963 - -------------------------------------------------------------------------------- 3,131,210 BG Group plc 29,255 - -------------------------------------------------------------------------------- 6,802,290 BP plc 74,549 - -------------------------------------------------------------------------------- 1,885,630 British American Tobacco plc 41,070 - -------------------------------------------------------------------------------- 1,351,820 Diageo plc 19,512 - -------------------------------------------------------------------------------- 3,019,610 GlaxoSmithKline plc 74,589 - -------------------------------------------------------------------------------- 1,050,860 Man Group plc 32,243 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 885,702 Reckitt Benckiser plc $ 27,405 - -------------------------------------------------------------------------------- 2,006,920 Reed Elsevier plc 17,866 - -------------------------------------------------------------------------------- 1,661,460 Standard Chartered plc 35,555 - -------------------------------------------------------------------------------- 2,644,710 Tesco plc 13,852 - -------------------------------------------------------------------------------- 3,051,460 Unilever plc 29,881 - -------------------------------------------------------------------------------- 15,057,630 Vodafone Group plc 32,471 - -------------------------------------------------------------------------------- 478,211 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $2,215,682) 2,746,424 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 1.6% Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 2.75% - 4.18%, 2/9/06 - 11/15/09, valued at $1,938), in a joint trading account at 3.93%, dated 11/30/05, due 12/1/05 (Delivery value $1,900) 1,900 - -------------------------------------------------------------------------------- Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 3.00%, 7/15/12, valued at $43,837), in a joint trading account at 3.92%, dated 11/30/05, due 12/1/05 (Delivery value $43,005) 43,000 - -------------------------------------------------------------------------------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $44,900) 44,900 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 19.4% Repurchase Agreement, Morgan Stanley Group, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.02%, dated 11/30/05, due 12/1/05 (Delivery value $35,196) 35,192 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.06%, dated 11/30/05, due 12/1/05 (Delivery value $507,357) 507,300 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $542,492) 542,492 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 119.4% (Cost $2,803,074) 3,333,816 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (19.4)% (543,734) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $2,790,082 ================================================================================ See Notes to Financial Statements. (continued) - ------ 9 International Growth - Schedule of Investments NOVEMBER 30, 2005 MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 23.0% - -------------------------------------------------------------------------------- Consumer Discretionary 13.1% - -------------------------------------------------------------------------------- Health Care 12.7% - -------------------------------------------------------------------------------- Industrials 11.6% - -------------------------------------------------------------------------------- Consumer Staples 8.2% - -------------------------------------------------------------------------------- Energy 7.9% - -------------------------------------------------------------------------------- Materials 6.7% - -------------------------------------------------------------------------------- Telecommunication Services 6.4% - -------------------------------------------------------------------------------- Information Technology 6.2% - -------------------------------------------------------------------------------- Utilities 2.2% - -------------------------------------------------------------------------------- Diversified 0.4% - -------------------------------------------------------------------------------- Cash and Equivalents+ 1.6% - -------------------------------------------------------------------------------- +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 (1) Security, or a portion thereof, was on loan as of November 30, 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 NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $2,260,582) - -- including $517,907 of securities on loan $2,791,324 - --------------------------------------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $542,492) 542,492 - -------------------------------------------------------------------------------- Total investment securities, at value (cost of $2,803,074) 3,333,816 - --------------------------------------------------------------- Foreign currency holdings, at value (cost of $69) 67 - --------------------------------------------------------------- Receivable for investments sold 4,336 - --------------------------------------------------------------- Receivable for capital shares sold 175 - --------------------------------------------------------------- Dividends and interest receivable 8,318 - -------------------------------------------------------------------------------- 3,346,712 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payable for collateral received for securities on loan 542,492 - --------------------------------------------------------------- Disbursements in excess of demand deposit cash 2,929 - --------------------------------------------------------------- Payable for investments purchased 8,335 - --------------------------------------------------------------- Payable for capital shares redeemed 7 - --------------------------------------------------------------- Accrued management fees 2,749 - --------------------------------------------------------------- Distribution fees payable 58 - --------------------------------------------------------------- Service fees (and distribution fees -- A Class) payable 60 - -------------------------------------------------------------------------------- 556,630 - -------------------------------------------------------------------------------- NET ASSETS $2,790,082 ================================================================================ See Notes to Financial Statements. (continued) - ------ 11 Statement of Assets and Liabilities NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS) - -------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $3,089,608 - -------------------------------------------------------------- Undistributed net investment income 22,462 - -------------------------------------------------------------- Accumulated net realized loss on investment and foreign currency transactions (852,706) - -------------------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 530,718 - -------------------------------------------------------------------------------- $2,790,082 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $2,249,429,596 - -------------------------------------------------------------- Shares outstanding 230,732,319 - -------------------------------------------------------------- Net asset value per share $9.75 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $247,076,856 - -------------------------------------------------------------- Shares outstanding 25,276,123 - -------------------------------------------------------------- Net asset value per share $9.78 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $259,650,501 - -------------------------------------------------------------- Shares outstanding 26,725,796 - -------------------------------------------------------------- Net asset value per share $9.72 - -------------------------------------------------------------------------------- A CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $25,193,366 - -------------------------------------------------------------- Shares outstanding 2,590,440 - -------------------------------------------------------------- Net asset value per share $9.73 - -------------------------------------------------------------- Maximum offering price (net asset value divided by 0.9425) $10.32 - -------------------------------------------------------------------------------- B CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $1,676,283 - -------------------------------------------------------------- Shares outstanding 173,777 - -------------------------------------------------------------- Net asset value per share $9.65 - -------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $5,246,107 - -------------------------------------------------------------- Shares outstanding 546,618 - -------------------------------------------------------------- Net asset value per share $9.60 - -------------------------------------------------------------------------------- R CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $1,808,970 - -------------------------------------------------------------- Shares outstanding 186,299 - -------------------------------------------------------------- Net asset value per share $9.71 - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 12 Statement of Operations YEAR ENDED NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - -------------------------------------------------------------- Dividends (net of foreign taxes withheld of $5,303) $ 65,900 - -------------------------------------------------------------- Securities lending 2,594 - -------------------------------------------------------------- Interest 1,816 - -------------------------------------------------------------------------------- 70,310 - -------------------------------------------------------------------------------- EXPENSES: - -------------------------------------------------------------- Management fees 34,027 - -------------------------------------------------------------- Distribution fees: - -------------------------------------------------------------- Advisor Class 688 - -------------------------------------------------------------- B Class 10 - -------------------------------------------------------------- C Class 40 - -------------------------------------------------------------- Service fees: - -------------------------------------------------------------- Advisor Class 688 - -------------------------------------------------------------- B Class 3 - -------------------------------------------------------------- C Class 13 - -------------------------------------------------------------- Service and distribution fees: - -------------------------------------------------------------- A Class 48 - -------------------------------------------------------------- R Class 5 - -------------------------------------------------------------- Directors' fees and expenses 53 - -------------------------------------------------------------- Other expenses 52 - -------------------------------------------------------------------------------- 35,627 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 34,683 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - -------------------------------------------------------------- Investment transactions 339,828 - -------------------------------------------------------------- Foreign currency transactions 34,672 - -------------------------------------------------------------------------------- 374,500 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: - -------------------------------------------------------------- Investments 212,347 - -------------------------------------------------------------- Translation of assets and liabilities in foreign currencies (297,040) - -------------------------------------------------------------------------------- (84,693) - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 289,807 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ 324,490 ================================================================================ See Notes to Financial Statements. - ------ 13 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2005 AND NOVEMBER 30, 2004 (AMOUNTS IN THOUSANDS) - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2005 2004 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income (loss) $ 34,683 $ 17,122 - ----------------------------------------------------- Net realized gain (loss) 374,500 371,360 - ----------------------------------------------------- Change in net unrealized appreciation (depreciation) (84,693) 93,651 - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 324,490 482,133 - -------------------------------------------------------------------------------- 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 increase (decrease) in net assets from capital share transactions (478,006) (538,328) - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS (184,415) (79,288) NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 2,974,497 3,053,785 - -------------------------------------------------------------------------------- End of period $2,790,082 $ 2,974,49 ================================================================================ Undistributed net investment income $22,462 $15,469 ================================================================================ See Notes to Financial Statements. - ------ 14 Notes to Financial Statements NOVEMBER 30, 2005 (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 NOVEMBER 30, 2005 (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's 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 NOVEMBER 30, 2005 (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 year ended November 30, 2005 was 1.23% for the Investor Class, A Class, B Class, C Class and R Class, and 1.03% and 0.98% 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 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 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 distribution and service fee of 0.25% and 0.50%, respectively. The fees are computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The distribution fee provides compensation for expenses incurred in connection with distributing shares of the classes including, but not limited to, payments to brokers, dealers, and financial institutions that have entered into sales agreements with respect to shares of the fund. The service fee provides compensation for shareholder and administrative services rendered by ACIS, its affiliates or independent third party providers for Advisor Class shares and for individual shareholder services rendered by broker/dealers or other independent financial intermediaries for A, B, C and R Class shares. During the year ended November 30, 2005, the R Class received reimbursements of its distribution and service fees of $459 ($ in full). Fees incurred under the plans during the year ended November 30, 2005, are detailed in the Statement of Operations. (continued) - ------ 17 Notes to Financial Statements NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) 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. 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 year ended November 30, 2005, were $2,492,530 and $2,966,616, respectively. 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 1,000,000 ================================================================================ Sold 37,805 $ 344,487 - ------------------------------------------------ Issued in reinvestment of distributions 2,522 22,020 - ------------------------------------------------ Redeemed (82,031) (747,794)(1) - -------------------------------------------------------------------------------- Net increase (decrease) (41,704) $(381,287) ================================================================================ 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 increase (decrease) (59,377) $ (480,991) ================================================================================ (1) Net of redemption fees of $55. (2) Net of redemption fees of $17. (continued) - ------ 18 Notes to Financial Statements NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 150,000 ================================================================================ Sold 7,751 $ 70,675 - --------------------------------------------------- Issued in reinvestment of distributions 363 3,171 - --------------------------------------------------- Redeemed (14,979) (137,041)(1) - -------------------------------------------------------------------------------- Net increase (decrease) (6,865) $ (63,195) ================================================================================ 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 increase (decrease) (7,771) $ (63,293) ================================================================================ ADVISOR CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 100,000 ================================================================================ Sold 11,746 $ 106,746 - --------------------------------------------------- Issued in reinvestment of distributions 240 2,089 - --------------------------------------------------- Redeemed (16,669) (152,585)(1) - -------------------------------------------------------------------------------- Net increase (decrease) (4,683) $ (43,750) ================================================================================ 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 increase (decrease) (418) $ (2,859) ================================================================================ A CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 25,000 ================================================================================ Sold 1,381 $12,642 - --------------------------------------------------- Issued in reinvestment of distributions 12 110 - --------------------------------------------------- Redeemed (419) (3,867) - -------------------------------------------------------------------------------- Net increase (decrease) 974 $ 8,885 ================================================================================ 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 (decrease) 634 $ 5,388 ================================================================================ (1) Net of redemption fees of $1 and $20 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 NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- B CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 25,000 ================================================================================ Sold 56 $507 - --------------------------------------------------------- Redeemed (9) (87) - -------------------------------------------------------------------------------- Net increase (decrease) 47 $420 ================================================================================ YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 25,000 ================================================================================ Sold 72 $ 583 - --------------------------------------------------------- Redeemed (14) (112) - -------------------------------------------------------------------------------- Net increase (decrease) 58 $ 471 ================================================================================ C CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 25,000 ================================================================================ Sold 155 $ 1,389 - --------------------------------------------------------- Issued in reinvestment of distributions -- 2 - --------------------------------------------------------- Redeemed (194) (1,765) - -------------------------------------------------------------------------------- Net increase (decrease) (39) $ (374) ================================================================================ YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 25,000 ================================================================================ Sold 389 $3,119 - --------------------------------------------------------- Redeemed (63) (505) - -------------------------------------------------------------------------------- Net increase (decrease) 326 $2,614 ================================================================================ R CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 5,000 ================================================================================ Sold 163 $1,474 - --------------------------------------------------------- Issued in reinvestment of distributions -- 2 - --------------------------------------------------------- Redeemed (20) (181) - -------------------------------------------------------------------------------- Net increase (decrease) 143 $1,295 ================================================================================ YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 50,000 ================================================================================ Sold 328 $ 2,709 - --------------------------------------------------------- Redeemed (285) (2,367) - -------------------------------------------------------------------------------- Net increase (decrease) 43 $ 342 ================================================================================ (continued) - ------ 20 Notes to Financial Statements NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS) 5. SECURITIES LENDING As of November 30, 2005, securities in the fund valued at $517,907 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 $544,718. 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 to $500 million effective December 14, 2005. The fund may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The fund did not borrow from the line during the year ended November 30, 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. 8. FEDERAL TAX INFORMATION On December 13, 2005, each class of the fund declared and paid the following per-share ordinary income distribution to shareholders of record on December 12, 2005. - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR & A B & C R - -------------------------------------------------------------------------------- $0.1768 $0.1962 $0.1505 $0.0759 $0.1257 - -------------------------------------------------------------------------------- The tax character of distributions paid during the years ended November 30, 2005 and November 30, 2004 were as follows: - -------------------------------------------------------------------------------- 2005 2004 - -------------------------------------------------------------------------------- DISTRIBUTIONS PAID FROM - -------------------------------------------------------------------------------- Ordinary income $30,899 $23,093 - -------------------------------------------------------------------------------- Long-term capital gains -- -- - -------------------------------------------------------------------------------- The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. (continued) - ------ 21 Notes to Financial Statements NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS) 8. FEDERAL TAX INFORMATION (CONTINUED) As of November 30, 2005, the components of distributable earnings on a tax-basis and the federal tax cost of investments were as follows: - -------------------------------------------------------------------------------- COMPONENTS OF DISTRIBUTABLE EARNINGS AND TAX COST - -------------------------------------------------------------------------------- Federal tax cost of investments $2,832,070 ================================================================================ Gross tax appreciation of investments $512,754 - ------------------------------------------------------------------ Gross tax depreciation of investments (11,008) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $501,746 ================================================================================ Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies (26) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) $501,720 ================================================================================ Undistributed ordinary income $46,625 - ------------------------------------------------------------------ Accumulated capital losses $(847,746) - ------------------------------------------------------------------ Currency loss deferral $(125) - -------------------------------------------------------------------------------- The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and on investments in passive foreign investment companies. The accumulated capital losses listed above represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Capital loss carryovers of $(152,830), $(637,150), and $(57,766) which expire in 2009, 2010, and 2011, respectively. The currency loss deferral represents net foreign currency losses incurred in the one-month period ended November 30, 2005. The fund has elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. 9. OTHER TAX INFORMATION (UNAUDITED) ($ IN FULL) The following information is provided pursuant to provisions of the Internal Revenue Code. The fund hereby designates $36,676,044 of qualified dividend income for the fiscal year ended November 30, 2005. As of November 30, 2005, International Growth designates $4,315,686 as a foreign tax credit, which represents taxes paid on income derived from sources within foreign countries or possessions of the United States. - ------ 22 International Growth - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 - ----------------------------------------------------------------------------------------------------------- INVESTOR CLASS - ----------------------------------------------------------------------------------------------------------- 2005 2004 2003 2002 2001 - ----------------------------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.79 $7.54 $6.69 $7.86 $12.05 - ----------------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------- Net Investment Income (Loss)(1) 0.11 0.05 0.06 0.06 0.04 - ------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.94 1.26 0.85 (1.20) (2.50) - ----------------------------------------------------------------------------------------------------------- Total From Investment Operations 1.05 1.31 0.91 (1.14) (2.46) - ----------------------------------------------------------------------------------------------------------- Distributions - ------------------------------------------- From Net Investment Income (0.09) (0.06) (0.06) (0.03) -- - ------------------------------------------- From Net Realized Gains -- -- -- -- (1.73) - ----------------------------------------------------------------------------------------------------------- Total Distributions (0.09) (0.06) (0.06) (0.03) (1.73) - ----------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $9.75 $8.79 $7.54 $6.69 $7.86 =========================================================================================================== TOTAL RETURN(2) 12.09% 17.45% 13.70% (14.54)% (24.18)% - ----------------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.23% 1.26% 1.28% 1.25% 1.21% - ------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 1.22% 0.57% 0.84% 0.76% 0.48% - ------------------------------------------- Portfolio Turnover Rate 89% 118% 169% 215% 178% - ------------------------------------------- Net Assets, End of Period (in thousands) $2,249,430 $2,395,249 $2,502,831 $2,410,600 $3,290,867 - ----------------------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 23 International Growth - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 - ------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------------- 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.82 $7.56 $6.71 $7.88 $12.07 - ------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------- Net Investment Income (Loss)(1) 0.13 0.06 0.07 0.07 0.06 - ------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.94 1.27 0.85 (1.19) (2.50) - ------------------------------------------------------------------------------------------------- Total From Investment Operations 1.07 1.33 0.92 (1.12) (2.44) - ------------------------------------------------------------------------------------------------- Distributions - ------------------------------------------- From Net Investment Income (0.11) (0.07) (0.07) (0.05) -- - ------------------------------------------- From Net Realized Gains -- -- -- -- (1.75) - ------------------------------------------------------------------------------------------------- Total Distributions (0.11) (0.07) (0.07) (0.05) (1.75) - ------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $9.78 $8.82 $7.56 $6.71 $7.88 ================================================================================================= TOTAL RETURN(2) 12.28% 17.78% 13.89% (14.33)% (23.96)% - ------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.03% 1.06% 1.08% 1.05% 1.01% - ------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 1.42% 0.77% 1.04% 0.96% 0.68% - ------------------------------------------- Portfolio Turnover Rate 89% 118% 169% 215% 178% - ------------------------------------------- Net Assets, End of Period (in thousands) $247,077 $283,330 $301,854 $270,121 $353,399 - ------------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 24 International Growth - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 - ------------------------------------------------------------------------------------------------- ADVISOR CLASS - ------------------------------------------------------------------------------------------------- 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.76 $7.52 $6.66 $7.83 $12.02 - ------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(1) 0.09 0.03 0.03 0.04 0.02 - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 0.94 1.25 0.87 (1.20) (2.51) - ------------------------------------------------------------------------------------------------- Total From Investment Operations 1.03 1.28 0.90 (1.16) (2.49) - ------------------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Investment Income (0.07) (0.04) (0.04) (0.01) -- - ------------------------------------------ From Net Realized Gains -- -- -- -- (1.70) - ------------------------------------------------------------------------------------------------- Total Distributions (0.07) (0.04) (0.04) (0.01) (1.70) - ------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $9.72 $8.76 $7.52 $6.66 $7.83 ================================================================================================= TOTAL RETURN(2) 11.85% 17.07% 13.62% (14.81)% (24.45)% - ------------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.48% 1.51% 1.53% 1.50% 1.46% - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.97% 0.32% 0.59% 0.51% 0.23% - ------------------------------------------ Portfolio Turnover Rate 89% 118% 169% 215% 178% - ------------------------------------------ Net Assets, End of Period (in thousands) $259,651 $275,195 $239,256 $196,949 $205,483 - ------------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 25 International Growth - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted) - -------------------------------------------------------------------------------- A CLASS - -------------------------------------------------------------------------------- 2005 2004 2003(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.77 $7.53 $6.10 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------- Net Investment Income (Loss)(2) 0.09 0.03 (0.02) - ------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.94 1.25 1.45 - -------------------------------------------------------------------------------- Total From Investment Operations 1.03 1.28 1.43 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------- From Net Investment Income (0.07) (0.04) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $9.73 $8.77 $7.53 ================================================================================ TOTAL RETURN(3) 11.84% 17.10% 23.44% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.48% 1.51% 1.53%(4) - ------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.97% 0.32% (0.40)%(4) - ------------------------------------------- Portfolio Turnover Rate 89% 118% 169%(5) - ------------------------------------------- Net Assets, End of Period (in thousands) $25,193 $14,170 $7,395 - -------------------------------------------------------------------------------- (1) January 31, 2003 (commencement of sale) through November 30, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 26 International Growth - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted) - -------------------------------------------------------------------------------- B CLASS - -------------------------------------------------------------------------------- 2005 2004 2003(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.70 $7.48 $6.10 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(2) 0.02 (0.03) (0.03) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 0.93 1.25 1.41 - -------------------------------------------------------------------------------- Total From Investment Operations 0.95 1.22 1.38 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Investment Income --(3) -- -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $9.65 $8.70 $7.48 ================================================================================ TOTAL RETURN(4) 10.97% 16.31% 22.62% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.23% 2.26% 2.28%(5) - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.22% (0.43)% (0.51)%(5) - ------------------------------------------ Portfolio Turnover Rate 89% 118% 169%(6) - ------------------------------------------ Net Assets, End of Period (in thousands) $1,676 $1,107 $513 - -------------------------------------------------------------------------------- (1) January 31, 2003 (commencement of sale) through November 30, 2003. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount is less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 27 International Growth - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted) - ---------------------------------------------------------------------------------------------- C CLASS - ---------------------------------------------------------------------------------------------- 2005 2004 2003 2002 2001(1) - ---------------------------------------------------------------------------------------------- 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)(2) 0.02 (0.03) (0.01) --(3) (0.04) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 0.92 1.24 0.86 (1.22) (1.30) - ---------------------------------------------------------------------------------------------- Total From Investment Operations 0.94 1.21 0.85 (1.22) (1.34) - ---------------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Investment Income --(3) -- -- -- -- - ---------------------------------------------------------------------------------------------- Net Asset Value, End of Period $9.60 $8.66 $7.45 $6.60 $7.82 ============================================================================================== TOTAL RETURN(4) 10.91% 16.24% 12.88% (15.60)% (14.63)% - ---------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.23% 2.26% 2.28% 2.25% 2.23%(5) - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.22% (0.43)% (0.16)% (0.24)% (0.99)%(5) - ------------------------------------------ Portfolio Turnover Rate 89% 118% 169% 215% 178%(6) - ------------------------------------------ Net Assets, End of Period (in thousands) $5,246 $5,070 $1,933 $912 $138 - ---------------------------------------------------------------------------------------------- (1) June 4, 2001 (commencement of sale) through November 30, 2001. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount is less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2001. See Notes to Financial Statements. - ------ 28 International Growth - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted) - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2005 2004 2003(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.75 $7.53 $7.02 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------- Net Investment Income (Loss)(2) 0.07 0.02 (0.01) - -------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.94 1.25 0.52 - -------------------------------------------------------------------------------- Total From Investment Operations 1.01 1.27 0.51 - -------------------------------------------------------------------------------- Distributions - -------------------------------------------- From Net Investment Income (0.05) (0.05) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $9.71 $8.75 $7.53 ================================================================================ TOTAL RETURN(3) 11.58% 16.92% 7.26% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.69%(4) 1.76% 1.78%(5) - -------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.76%(4) 0.07% (0.74)%(5) - -------------------------------------------- Portfolio Turnover Rate 89% 118% 169%(6) - -------------------------------------------- Net Assets, End of Period (in thousands) $1,809 $376 $3 - -------------------------------------------------------------------------------- (1) August 29, 2003 (commencement of sale) through November 30, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) During the year ended November 30, 2005, the class received a partial reimbursement of its distribution and service fees. Had fees not been reimbursed, the ratio of operating expenses to average net assets and the ratio of net investment income to average net assets would have been 1.73% and 0.72%, respectively. (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. - ------ 29 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders, American Century World Mutual Funds, Inc.: We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of International Growth Fund, (the "Fund"), one of the mutual funds comprising American Century World Mutual Funds, Inc., as of November 30, 2005, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2005, by correspondence with the custodian and brokers; where replies were not received from brokers. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of International Growth Fund as of November 30, 2005, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Kansas City, Missouri January 13, 2006 - ------ 30 Management The individuals listed below serve as directors or officers of the fund. Each director serves until his or her successor is duly elected and qualified or until he or she retires. Mandatory retirement age for independent directors is 72. Those listed as interested directors are "interested" primarily by virtue of their engagement as officers of American Century Companies, Inc. (ACC) or its wholly owned, direct or indirect, subsidiaries, including the fund's investment advisor, American Century Global Investment Management, Inc. (ACGIM) or American Century Investment Management, Inc. (ACIM); the fund's principal underwriter, American Century Investment Services, Inc. (ACIS); and the fund's transfer agent, American Century Services, LLC (ACS LLC). The other directors (more than three-fourths of the total number) are independent; that is, they have never been employees or officers of, and have no financial interest in, ACC or any of its wholly-owned subsidiaries, including ACGIM, ACIM, ACIS, and ACS LLC. The directors serve in this capacity for six registered investment companies in the American Century family of funds. All persons named as officers of the fund also serve in a similar capacity for the other 13 investment companies advised by ACIM or ACGIM, unless otherwise noted. Only officers with policy-making functions are listed. No officer is compensated for his or her service as an officer of the fund. The listed officers are interested persons of the fund and are appointed or re-appointed on an annual basis. The information below is provided as of December 15, 2005. INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- THOMAS A. BROWN, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1940 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1980 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Formerly Chief Executive Officer/Treasurer, Associated Bearings Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ANDREA C. HALL, PH.D., 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, Midwest Research Institute NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- D.D. (DEL) HOCK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1935 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1996 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Chairman, Public Service Company of Colorado NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Allied Motion Technologies, Inc. - -------------------------------------------------------------------------------- (continued) - ------ 31 Management INDEPENDENT DIRECTORS (CONTINUED) - -------------------------------------------------------------------------------- DONALD H. PRATT, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1937 POSITION(S) HELD WITH FUND: Director, Chairman of the Board FIRST YEAR OF SERVICE: 1995 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Western Investments, Inc.; Retired Chairman of the Board, Butler Manufacturing Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- GALE E. SAYERS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1943 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Chief Executive Officer and Founder, Sayers40, Inc., a technology products and service provider NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Triad Hospitals, Inc. - -------------------------------------------------------------------------------- M. JEANNINE STRANDJORD, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1994 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Senior Vice President, Sprint Corporation NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, DST Systems, Inc.; Director, Euronet Worldwide, Inc. - -------------------------------------------------------------------------------- TIMOTHY S. WEBSTER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1961 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 2001 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President and Chief Executive Officer, American Italian Pasta Company (1992 to December 2005) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- INTERESTED DIRECTORS - -------------------------------------------------------------------------------- JAMES E. STOWERS, JR.(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1924 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman FIRST YEAR OF SERVICE: 1958 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Founder, Director and Controlling Shareholder, ACC; Chairman, ACC (January 1995 to December 2004); Director, ACIM, ACGIM, ACS LLC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- JAMES E. STOWERS III(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1959 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman FIRST YEAR OF SERVICE: 1990 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, ACC (January 2005 to present); Co-Chairman, ACC (September 2000 to December 2004); Chairman, ACS LLC and other ACC subsidiaries; Director, ACC, ACIM, ACGIM, ACIS, ACS LLC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (1) James E. Stowers, Jr. is the father of James E. Stowers III. (continued) - ------ 32 Management OFFICERS - -------------------------------------------------------------------------------- WILLIAM M. LYONS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1955 POSITION(S) HELD WITH FUND: President FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC (September 2000 to present); President, ACC (June 1997 to present); Also serves as: Chief Executive Officer and President, ACIS, ACGIM, ACIM and other ACC subsidiaries; Executive Vice President, ACS LLC; Director, ACC, ACIS, ACIM, ACGIM, ACS LLC and other ACC subsidiaries - -------------------------------------------------------------------------------- ROBERT T. JACKSON, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1946 POSITION(S) HELD WITH FUND: Executive Vice President FIRST YEAR OF SERVICE: 1995 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC (August 1997 to present); Chief Financial Officer, ACC (May 1995 to October 2002); Executive Vice President, ACC (May 1995 to present); Also serves as: Chief Executive Officer, Chief Financial Officer and President, ACS LLC; Chief Financial Officer and Executive Vice President, ACGIM, ACIM, ACIS and other ACC subsidiaries; Treasurer, ACGIM, ACIM and other ACC subsidiaries; Director, ACC and other subsidiaries - -------------------------------------------------------------------------------- JONATHAN THOMAS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1963 POSITION(S) HELD WITH FUND: Executive Vice President FIRST YEAR OF SERVICE: 2005 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Executive Vice President, ACC (November 2005 to present); Managing Director, Morgan Stanley (March 2000 to November 2005) - -------------------------------------------------------------------------------- MARYANNE ROEPKE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1956 POSITION(S) HELD WITH FUND: Senior Vice President, Treasurer, and Chief Financial Officer FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Assistant Treasurer, ACC (January 1995 to present); Also serves as: Senior Vice President, ACS LLC; Assistant Treasurer, ACGIM, ACIM, ACIS, ACS LLC and other ACC subsidiaries - -------------------------------------------------------------------------------- DAVID C. TUCKER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1958 POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (February 2001 to present); General Counsel, ACC (June 1998 to present); Also serves as: Senior Vice President and General Counsel, ACGIM, ACIM, ACIS, ACS LLC and other ACC subsidiaries - -------------------------------------------------------------------------------- CHARLES C.S. PARK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Vice President and Chief Compliance Officer FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Compliance Officer, ACS LLC, ACIM and ACGIM (March 2005 to present); Vice President, ACS LLC (February 2000 to present); Assistant General Counsel, ACS LLC (January 1998 to March 2005) - -------------------------------------------------------------------------------- ROBERT LEACH, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1966 POSITION(S) HELD WITH FUND: Controller FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS LLC (February 2000 to present); Controller-Fund Accounting, ACS LLC (June 1997 to present) - -------------------------------------------------------------------------------- JON ZINDEL, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Tax Officer FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (October 2001 to present); Vice President, Corporate Tax, ACS LLC (April 1998 to present); Also serves as: Vice President, ACGIM, ACIM, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- The SAI has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021. - ------ 33 Approval of Management Agreement for International Growth Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated and approved by a majority of a fund's independent directors (the "Directors") each year. At American Century, this process -- referred to as the "15(c) Process" -- involves at least two board meetings spanning a 30 to 60 day period each year. In addition to this annual review, the board of directors oversees and evaluates on a continuous basis at its quarterly meetings the nature and quality of significant services the advisor performs on behalf of the fund. At these meetings the board reviews fund performance, shareholder services, audit and compliance information, and a variety of other reports from the advisor concerning fund operations. The board, or committees of the board, also hold special meetings, as needed. Under a new Securities and Exchange Commission rule, each fund is required to disclose in its annual or semiannual report, as appropriate, the material factors and conclusions that formed the basis for its board's approval or renewal of any advisory agreements within the fund's most recently completed fiscal half-year period. ANNUAL CONTRACT REVIEW PROCESS As part of the annual 15(c) Process undertaken during the most recent fiscal half-year, the Directors requested and received extensive data and information compiled by the advisor and certain independent providers of evaluative data (the "15(c) Providers") concerning the fund and the services provided to such fund under the management agreement. The information included, but was not limited to: * the nature, extent and quality of investment management, shareholder services and other services provided to the fund under the management agreement; * reports on the advisor's activities relating to the wide range of programs and services the advisor provides to the fund and its shareholders on a routine and non-routine basis; * data comparing the cost of owning the fund to the cost of owning similar funds; * data comparing the fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the fund to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. In keeping with its practice, the fund's board of directors held two regularly scheduled meetings and one special meeting to review and discuss the information provided by the advisor and to complete its negotiations with the advisor regarding the renewal of the management agreement, including the setting of the applicable advisory fee. In addition, the independent directors met on several occasions in private session to review and discuss the information provided and evaluate the advisor's performance as manager of the fund. (continued) - ------ 34 Approval of Management Agreement for International Growth FACTORS CONSIDERED The Directors considered all of the information provided by the advisor and the 15(c) Providers and evaluated such information for each fund managed by the advisor. The Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the agreement, the Directors' decision was based on the following factors. NATURE, EXTENT AND QUALITY OF SERVICES -- GENERALLY. Under the management agreement, the advisor is responsible for providing or arranging for all services necessary for the operation of the fund. The board noted that under the management agreement, the advisor provides or arranges at its own expense a wide variety of services including, but not limited to: * fund construction and design * portfolio security selection * initial capitalization/funding * securities trading * custody of fund assets * daily valuation of the fund's portfolio * shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping and communications * legal services * regulatory and portfolio compliance * financial reporting * marketing and distribution The Directors noted that many of these services have expanded over time both in terms of quantity and complexity in response to shareholder demands, competition in the industry and the regulatory environment. In performing their evaluation, the Directors considered information received in connection with the annual review, as well as information provided on an ongoing basis at their regularly scheduled board meetings. INVESTMENT MANAGEMENT SERVICES. The nature of the investment management services provided is quite complex and allows fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes, and liquidity. In evaluating investment performance, the board expects the advisor to manage the fund in accordance with its investment objective and approved strategies. In providing these services, the advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance and other systems to conduct their business. At each quarterly meeting the Directors review investment performance information for the fund, together with comparative information for appropriate benchmarks and a peer group of funds managed similarly to the fund. If performance concerns are identified, the Directors discuss with the advisor the reasons for such results (e.g., market conditions, stock selection) and any efforts being undertaken to improve performance. Annually, the Directors review detailed performance information, as provided by the 15(c) Providers, comparing the fund's performance with that of similar funds not managed by (continued) - ------ 35 Approval of Management Agreement for International Growth the advisor. The fund's performance was below the median of its peer groups for both the one and three year periods during the past year. The Directors discussed the fund's performance with the advisor and were satisfied with the efforts being undertaken by the advisor. The Directors will continue to monitor those efforts and the performance of the fund. SHAREHOLDER AND OTHER SERVICES. The advisor provides the fund with a comprehensive package of transfer agency, shareholder, and other services. The Directors review reports and evaluations of such services at its regular quarterly meetings, including the annual meeting concerning contract review. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the advisor. COSTS OF SERVICES PROVIDED AND PROFITABILITY TO THE ADVISOR. The advisor provides detailed information concerning its cost of providing various services to the fund, its profitability in managing the fund, its overall profitability, and its financial condition. The Directors have reviewed with the advisor the methodology used to prepare this financial information. This financial information regarding the advisor is considered in order to evaluate the advisor's financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. ETHICS OF THE ADVISOR. The Directors generally considered the advisor's commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the advisor's practices generally meet or exceed industry best practices and that the advisor was not implicated in the industry scandals of 2003 and 2004. ECONOMIES OF SCALE. The Directors reviewed reports provided by the advisor on economies of scale for the complex as a whole and the year-over-year changes in revenue, costs, and profitability. The Directors concluded that economies of scale are difficult to measure and predict overall, and particularly on a fund-by-fund basis. This analysis is also complicated by the additional services and content provided by the advisor and its reinvestment in its ability to provide and expand those services. Accordingly, the Directors seek to evaluate economies of scale by reviewing other information, such as year-over-year profitability of the advisor generally, the profitability of its management of the fund specifically, and the breakpoint fees of competitive funds not managed by the advisor over a range of asset sizes. The Directors believe the advisor is appropriately sharing any economies of scale through (continued) - ------ 36 Approval of Management Agreement for International Growth its competitive fee structure, fee breakpoints as the fund increases in size, and through reinvestment in its business to provide shareholders additional content and services. COMPARISON TO OTHER FUNDS' FEES. The fund pays the advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the fund, other than brokerage expenses, taxes, interest, extraordinary expenses, and the fees and expenses of the fund's independent directors (including their independent legal counsel). Under the unified fee structure, the advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other fund groups are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges and other expenses. Other than their investment advisory fees and Rule 12b-1 distribution fees, all other components of the total fees charged by these other fund groups may be increased without shareholder approval. The board believes the unified fee structure is a benefit to fund shareholders because it clearly discloses to shareholders the cost of owning fund shares, and, since the unified fee cannot be increased without a vote of fund shareholders, it shifts to the advisor the increased costs of operating the funds and the risk of administrative inefficiencies. Part of the Directors' analysis of fee levels involves comparing the fund's unified fee to the total expense ratio of other funds in a group of similar funds that was compiled by a 15(c) Provider independent of the advisor (the "Peer Group"). The unified fee charged to shareholders of the fund is below the median of the total expense ratios of its Peer Group. COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The Directors also requested and received information from the advisor concerning the nature of the services, fees, and profitability of its advisory services to advisory clients other than the fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the fund. The Directors analyzed this information and concluded that the fees charged and services provided to the fund were reasonable by comparison. COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information from the advisor concerning collateral benefits it receives as a result of its relationship with the fund. They concluded that the advisor's primary business is managing mutual funds and it generally does not use the fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Directors noted that the advisor receives proprietary research from broker dealers that execute fund portfolio transactions and concluded that this research is likely to benefit fund shareholders. The Directors also determined that the advisor is able to provide investment management services to clients other than the fund, (continued) - ------ 37 Approval of Management Agreement for International Growth at least in part, due to its existing infrastructure built to serve the fund complex. The Directors concluded, however, that the assets of those other clients are not material to the analysis and in any event are added to the assets of the funds within the fund complex that use substantially the same investment management team to determine whether the fund has reached breakpoints in its fee schedule. CONCLUSIONS OF THE DIRECTORS As a result of this process, the independent directors, in the absence of particular circumstances and assisted by the advice of legal counsel that is independent of the advisor, taking into account all of the factors discussed above and the information provided by the advisor, concluded that the investment management agreement between the fund and the advisor is fair and reasonable in light of the services provided and should be renewed. - ------ 38 Share Class Information Seven classes of shares are authorized for sale by International Growth: Investor Class, Institutional Class, Advisor Class, A Class, B Class, C Class, and R Class. The total expense ratio of Institutional Class shares is lower than that of Investor Class shares. The total expense ratios of Advisor, A, B, C, and R Class shares are higher than that of Investor Class shares. INVESTOR CLASS shares are available for purchase in two ways: 1) directly from American Century without any commissions or other fees; or 2) through certain financial intermediaries (such as banks, broker-dealers, insurance companies and investment advisors), which may require payment of a transaction fee to the financial intermediary. 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 unified management fee of Institutional Class shares is 0.20% less than the unified management fee 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. The unified management fee for A Class shares is the same as for Investor Class shares. A Class shares also are subject to a 0.25% annual Rule 12b-1 service and distribution fee. (continued) - ------ 39 Share Class Information B CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% after the sixth year. There is no CDSC on shares acquired through reinvestment of dividends or capital gains. The unified management fee for B Class shares is the same as for Investor Class shares. B Class shares also are subject to a 1.00% annual Rule 12b-1 service and distribution fee. B Class shares automatically convert to A Class shares (with lower expenses) eight years after their purchase date. C CLASS shares are sold primarily through employer-sponsored retirement plans and through institutions such as investment advisors, banks, broker-dealers, and insurance companies. C Class shares redeemed within 12 months of purchase are subject to a CDSC of 1.00%. There is no CDSC on shares acquired through reinvestment of dividends or capital gains. The unified management fee for C Class shares is the same as for Investor Class shares. 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. The unified management fee for R Class shares is the same as for Investor Class shares. 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. - ------ 40 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. - ------ 41 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. - ------ 42 Notes - ------ 43 Notes - ------ 44 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 PROFESSIONALS, 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. 0601 SH-ANN-47306S American Century Investment Services, Inc., Distributor (c)2006 American Century Proprietary Holdings, Inc. All rights reserved. American Century Investments ANNUAL REPORT [photo of man and woman] NOVEMBER 30, 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 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 5 INTERNATIONAL DISCOVERY Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 11 EMERGING MARKETS Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 18 GLOBAL GROWTH Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . 25 INTERNATIONAL OPPORTUNITIES Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Report of Independent Registered Public Accounting Firm. . . . . . . . . . 74 OTHER INFORMATION Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 Approval of Management Agreements for International Discovery, Emerging Markets, Global Growth and International Opportunities. . . . . 78 Share Class Information. . . . . . . . . . . . . . . . . . . . . . . . . . 83 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . 85 Index Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87 The opinions expressed in each of the Portfolio Commentaries reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the annual report for the International Stock, International Discovery, Emerging Markets, Global Growth and International Opportunities funds for the year ended November 30, 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 semiannual report dated May 31, 2006, 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 NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- SINCE INCEPTION INCEPTION* DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 8.40% 3/31/05 - -------------------------------------------------------------------------------- MSCI EAFE INDEX 8.67% -- - -------------------------------------------------------------------------------- * Total 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 gained 8.40%* since its inception March 31, 2005, through November 30, 2005, while its benchmark, the Morgan Stanley Capital International (MSCI) EAFE Index, returned 8.67%. Many of the world's equity markets advanced during the period, demonstrating resilience in the face of surging prices for commodities, especially oil, a terrorist attack in London, destructive hurricanes and numerous interest-rate increases by the U.S. Federal Reserve. In this environment, all of the sectors in which International Stock was invested contributed to total return. The gains came despite the movement of the dollar, which diminished our return. On a relative basis, International Stock's investments in a variety of sectors outperformed the MSCI EAFE Index, led by holdings in the consumer discretionary sector. Consumer staples detracted most from relative performance. BANKS BOOST RETURN The financials sector contributed most to absolute return, led by International Stock's stake in the commercial banks industry. France's Societe Generale and the National Bank of Greece were among the largest contributors. Societe Generale benefited from increased earnings in its corporate and investment banking division, while the National Bank of Greece reported during the period that net income rose 62% to $396.4 million during the first half of 2005 versus the same period a year earlier on strong demand for loans. Holdings in the insurance and consumer finance industries also benefited the portfolio, with French insurance company Axa and Japan's ORIX Corp., a global financial services company, among the securities making the largest contributions to the sector's return. The portfolio's financial holdings detracted slightly from our relative performance. MIXED RESULTS FROM CONSUMERS International Stock's holdings in the consumer discretionary sector outperformed the MSCI EAFE Index, making TOP TEN HOLDINGS AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Total SA 2.8% 2.9% - -------------------------------------------------------------------------------- BP plc 2.7% 2.8% - -------------------------------------------------------------------------------- GlaxoSmithKline plc 2.6% 2.9% - -------------------------------------------------------------------------------- AstraZeneca plc 1.8% 1.8% - -------------------------------------------------------------------------------- Novartis AG 1.6% 2.5% - -------------------------------------------------------------------------------- National Bank of Greece SA 1.6% 1.0% - -------------------------------------------------------------------------------- Roche Holding AG 1.6% 1.3% - -------------------------------------------------------------------------------- Yamada Denki Co. Ltd. 1.6% 0.9% - -------------------------------------------------------------------------------- BHP Billiton Limited 1.6% 1.4% - -------------------------------------------------------------------------------- Nestle SA 1.5% 2.0% - -------------------------------------------------------------------------------- * Returns for periods less than one year are not annualized. (continued) - ------ 3 International Stock - Portfolio Commentary the largest contribution to our relative performance. The portfolio's overweight position in Japanese electronics retailer Yamada Denki led the sector's performance. Yamada Denki, which benefited from strong sales of flat-panel televisions, contributed more than any other security to relative performance, and also contributed most to absolute return. The consumer discretionary sector, however, also included Next Plc, which detracted significantly from the portfolio's relative and absolute performance. One of the largest clothing retailers in the United Kingdom, Next declined partly because of a slump in consumer spending in the U.K. That slowdown also impacted U.K. supermarket giant Tesco, which was among the biggest detractors in consumer staples, the sector that hurt our relative performance most. LIFT FROM ENERGY International Stock's position in the energy sector also contributed to the portfolio's return, and outperformed the MSCI EAFE Index. Two of the portfolio's largest positions, France's Total and the United Kingdom's BP, both contributed to return. OUTLOOK Although small companies continued to outperform large during the period, and value again topped growth, we believe changes are on the horizon. We are basing our outlook on a variety of fundamental factors and economic developments, including a rising interest-rate environment that historically has tended to favor large-growth corporations, the attractive valuations for growth compared to value, and the likely outperformance of large companies during the latter stages of an economic recovery. These signs suggest we are entering a period that may favor the large, growing companies in which International Stock invests. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Common Stocks 97.5% 96.5% - -------------------------------------------------------------------------------- Temporary Cash Investments 3.0% 6.6% - -------------------------------------------------------------------------------- Other Assets and Liabilities (0.5)% (3.1)% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Japan 22.4% 16.8% - -------------------------------------------------------------------------------- United Kingdom 16.8% 24.5% - -------------------------------------------------------------------------------- France 15.2% 13.5% - -------------------------------------------------------------------------------- Switzerland 10.0% 7.5% - -------------------------------------------------------------------------------- Germany 4.6% 5.4% - -------------------------------------------------------------------------------- Netherlands 4.0% 2.3% - -------------------------------------------------------------------------------- Greece 3.7% 1.9% - -------------------------------------------------------------------------------- Australia 3.7% 5.3% - -------------------------------------------------------------------------------- Spain 3.1% 3.4% - -------------------------------------------------------------------------------- Ireland 2.6% 2.8% - -------------------------------------------------------------------------------- Italy 2.4% 2.4% - -------------------------------------------------------------------------------- Mexico 1.8% 0.7% - -------------------------------------------------------------------------------- Other Countries 7.2% 10.0% - -------------------------------------------------------------------------------- Cash and Equivalents(1) 2.5% 3.5% - -------------------------------------------------------------------------------- (1) Includes temporary cash investments and other assets and liabilities. - ------ 4 International Stock - Schedule of Investments NOVEMBER 30, 2005 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 97.5% - -------------------------------------------------------------------------------- AUSTRALIA -- 3.7% - -------------------------------------------------------------------------------- 20,141 BHP Billiton Limited $ 326 - -------------------------------------------------------------------------------- 50,667 Macquarie Infrastructure Group 132 - -------------------------------------------------------------------------------- 8,112 National Australia Bank Ltd. 195 - -------------------------------------------------------------------------------- 2,188 Rio Tinto Ltd. 100 - -------------------------------------------------------------------------------- 753 - -------------------------------------------------------------------------------- AUSTRIA -- 1.1% - -------------------------------------------------------------------------------- 4,188 Erste Bank der Oesterreichischen Sparkassen AG 223 - -------------------------------------------------------------------------------- BELGIUM -- 1.3% - -------------------------------------------------------------------------------- 3,021 KBC Groupe 263 - -------------------------------------------------------------------------------- CANADA -- 1.0% - -------------------------------------------------------------------------------- 1,321 Canadian Pacific Railway Ltd. 57 - -------------------------------------------------------------------------------- 3,687 Rogers Communications Inc. Cl B 141 - -------------------------------------------------------------------------------- 198 - -------------------------------------------------------------------------------- FRANCE -- 15.2% - -------------------------------------------------------------------------------- 3,955 Accor SA 211 - -------------------------------------------------------------------------------- 10,066 Axa SA 304 - -------------------------------------------------------------------------------- 2,390 Essilor International SA Cie Generale D'Optique 199 - -------------------------------------------------------------------------------- 898 Pernod-Ricard SA 147 - -------------------------------------------------------------------------------- 1,831 PPR 197 - -------------------------------------------------------------------------------- 2,579 Sanofi-Aventis 209 - -------------------------------------------------------------------------------- 2,784 Schneider Electric SA 240 - -------------------------------------------------------------------------------- 2,586 Societe Generale 308 - -------------------------------------------------------------------------------- 2,245 Total SA 562 - -------------------------------------------------------------------------------- 7,020 Veolia Environnement(1) 301 - -------------------------------------------------------------------------------- 2,779 Vinci SA 222 - -------------------------------------------------------------------------------- 6,436 Vivendi Universal SA 187 - -------------------------------------------------------------------------------- 3,087 - -------------------------------------------------------------------------------- GERMANY -- 4.6% - -------------------------------------------------------------------------------- 1,263 Adidas-Salomon AG 222 - -------------------------------------------------------------------------------- 2,765 BASF AG 204 - -------------------------------------------------------------------------------- 3,099 Continental AG 263 - -------------------------------------------------------------------------------- 2,182 Fresenius Medical Care AG 207 - -------------------------------------------------------------------------------- 587 Hypo Real Estate Holding AG 31 - -------------------------------------------------------------------------------- 927 - -------------------------------------------------------------------------------- GREECE -- 3.7% - -------------------------------------------------------------------------------- 6,665 Greek Organization of Football Prognostics SA 205 - -------------------------------------------------------------------------------- 10,161 Hellenic Telecommunications Organization SA(1) 218 - -------------------------------------------------------------------------------- 8,523 National Bank of Greece SA 334 - -------------------------------------------------------------------------------- 757 - -------------------------------------------------------------------------------- INDIA -- 0.4% - -------------------------------------------------------------------------------- 896 Infosys Technologies Ltd. ADR 65 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- IRELAND -- 2.6% - -------------------------------------------------------------------------------- 10,459 Anglo Irish Bank Corporation $ 144 - -------------------------------------------------------------------------------- 11,393 Bank of Ireland 176 - -------------------------------------------------------------------------------- 4,358 Ryanair Holdings plc ADR(1) 217 - -------------------------------------------------------------------------------- 537 - -------------------------------------------------------------------------------- ITALY -- 2.4% - -------------------------------------------------------------------------------- 10,921 Banco Popolare di Verona e Novara Scrl 212 - -------------------------------------------------------------------------------- 6,904 ENI SpA 187 - -------------------------------------------------------------------------------- 6,143 Saipem SpA 94 - -------------------------------------------------------------------------------- 493 - -------------------------------------------------------------------------------- JAPAN -- 22.4% - -------------------------------------------------------------------------------- 1,300 Advantest Corp. 118 - -------------------------------------------------------------------------------- 4,300 Astellas Pharma Inc. 166 - -------------------------------------------------------------------------------- 23,000 Bank of Yokohama Ltd. (The) 172 - -------------------------------------------------------------------------------- 6,700 Daikin Industries Ltd. 182 - -------------------------------------------------------------------------------- 41 East Japan Railway Company 258 - -------------------------------------------------------------------------------- 5,400 Eisai Co. Ltd. 208 - -------------------------------------------------------------------------------- 3,800 Honda Motor Co., Ltd. 213 - -------------------------------------------------------------------------------- 5,900 Hoya Corp. 214 - -------------------------------------------------------------------------------- 35 KDDI Corp. 183 - -------------------------------------------------------------------------------- 700 Keyence Corp. 178 - -------------------------------------------------------------------------------- 7,000 Komatsu Ltd. 98 - -------------------------------------------------------------------------------- 15,000 Matsushita Electric Industrial Co., Ltd. 302 - -------------------------------------------------------------------------------- 24 Mitsubishi Tokyo Financial Group, Inc. 302 - -------------------------------------------------------------------------------- 1,900 Murata Manufacturing Co. Ltd. 108 - -------------------------------------------------------------------------------- 2,000 NGK Insulators Ltd. 31 - -------------------------------------------------------------------------------- 3,000 Nippon Express Co. Ltd. 16 - -------------------------------------------------------------------------------- 1,700 Nitto Denko Corp. 117 - -------------------------------------------------------------------------------- 1,400 ORIX Corporation 302 - -------------------------------------------------------------------------------- 37,000 Osaka Gas Co. Ltd. 121 - -------------------------------------------------------------------------------- 500 Sega Sammy Holdings Inc. 16 - -------------------------------------------------------------------------------- 4,000 Shin-Etsu Chemical Co., Ltd. 208 - -------------------------------------------------------------------------------- 15,000 Sumitomo Heavy Industries Ltd. 109 - -------------------------------------------------------------------------------- 54,000 Taisei Corp. 230 - -------------------------------------------------------------------------------- 26,000 Toray Industries Inc. 178 - -------------------------------------------------------------------------------- 38,000 Toshiba Corp. 200 - -------------------------------------------------------------------------------- 3,200 Yamada Denki Co. Ltd. 328 - -------------------------------------------------------------------------------- 4,558 - -------------------------------------------------------------------------------- MEXICO -- 1.8% - -------------------------------------------------------------------------------- 9,288 America Movil SA de CV Series L ADR 268 - -------------------------------------------------------------------------------- 1,756 Cemex SA de CV ADR 99 - -------------------------------------------------------------------------------- 367 - -------------------------------------------------------------------------------- MULTI-NATIONAL -- 1.0% - -------------------------------------------------------------------------------- 3,500 iShares MSCI EAFE Index Fund 201 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 5 International Stock - Schedule of Investments NOVEMBER 30, 2005 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- NETHERLANDS -- 4.0% - -------------------------------------------------------------------------------- 12,471 Aegon N.V. $ 198 - -------------------------------------------------------------------------------- 12,817 ASML Holding N.V.(1) 246 - -------------------------------------------------------------------------------- 4,422 ING Groep N.V. 144 - -------------------------------------------------------------------------------- 5,707 Royal Numico N.V.(1) 235 - -------------------------------------------------------------------------------- 823 - -------------------------------------------------------------------------------- NORWAY -- 1.2% - -------------------------------------------------------------------------------- 24,582 Telenor ASA 230 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 0.6% - -------------------------------------------------------------------------------- 374,035 China Construction Bank Cl H(1) 123 - -------------------------------------------------------------------------------- SOUTH KOREA -- 0.6% - -------------------------------------------------------------------------------- 210 Samsung Electronics 121 - -------------------------------------------------------------------------------- SPAIN -- 3.1% - -------------------------------------------------------------------------------- 17,903 Banco Popular Espanol SA 216 - -------------------------------------------------------------------------------- 8,574 Cintra Concesiones de Infraestructuras de Transporte SA 105 - -------------------------------------------------------------------------------- 2,699 Grupo Ferrovial SA 188 - -------------------------------------------------------------------------------- 4,462 Inditex SA 131 - -------------------------------------------------------------------------------- 640 - -------------------------------------------------------------------------------- SWITZERLAND -- 10.0% - -------------------------------------------------------------------------------- 23,514 ABB Ltd.(1) 207 - -------------------------------------------------------------------------------- 6,060 Compagnie Financiere Richemont AG Cl A 240 - -------------------------------------------------------------------------------- 2,768 Credit Suisse Group 135 - -------------------------------------------------------------------------------- 2,579 Lonza Group AG 146 - -------------------------------------------------------------------------------- 1,048 Nestle SA 311 - -------------------------------------------------------------------------------- 6,394 Novartis AG 335 - -------------------------------------------------------------------------------- 2,212 Roche Holding AG 332 - -------------------------------------------------------------------------------- 947 Swiss Life Holding 152 - -------------------------------------------------------------------------------- 2,008 UBS AG 185 - -------------------------------------------------------------------------------- 2,043 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 16.8% - -------------------------------------------------------------------------------- 7,905 AstraZeneca plc 365 - -------------------------------------------------------------------------------- 22,060 BG Group plc 206 - -------------------------------------------------------------------------------- 49,633 BP plc 545 - -------------------------------------------------------------------------------- 13,285 British American Tobacco plc 289 - -------------------------------------------------------------------------------- 9,554 Diageo plc 138 - -------------------------------------------------------------------------------- 21,274 GlaxoSmithKline plc 525 - -------------------------------------------------------------------------------- 7,404 Man Group plc 227 - -------------------------------------------------------------------------------- 6,463 Reckitt Benckiser plc 200 - -------------------------------------------------------------------------------- 14,106 Reed Elsevier plc 126 - -------------------------------------------------------------------------------- 11,705 Standard Chartered plc 250 - -------------------------------------------------------------------------------- 18,948 Tesco plc 99 - -------------------------------------------------------------------------------- 22,265 Unilever plc 218 - -------------------------------------------------------------------------------- 109,868 Vodafone Group plc 237 - -------------------------------------------------------------------------------- 3,425 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $18,555) 19,834 - -------------------------------------------------------------------------------- ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 3.0% - -------------------------------------------------------------------------------- Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 3.00%, 7/15/12, valued at $612), in a joint trading account at 3.92%, dated 11/30/05, due 12/1/05 (Delivery value $600) (Cost $600) $ 600 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 100.5% (Cost $19,155) 20,434 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (0.5)% (92) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $20,342 ================================================================================ MARKET SECTOR DIVERSIFICATION - -------------------------------------------------------------------------------- (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 22.6% - -------------------------------------------------------------------------------- Consumer Discretionary 13.0% - -------------------------------------------------------------------------------- Health Care 12.5% - -------------------------------------------------------------------------------- Industrials 11.3% - -------------------------------------------------------------------------------- Consumer Staples 8.0% - -------------------------------------------------------------------------------- Energy 7.8% - -------------------------------------------------------------------------------- Materials 6.8% - -------------------------------------------------------------------------------- Telecommunication Services 6.3% - -------------------------------------------------------------------------------- Information Technology 6.1% - -------------------------------------------------------------------------------- Utilities 2.1% - -------------------------------------------------------------------------------- Diversified 1.0% - -------------------------------------------------------------------------------- Cash and cash equivalents(+) 2.5% - -------------------------------------------------------------------------------- (+) Includes temporary cash investments and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt EAFE = Europe, Australasia, and Far East MSCI = Morgan Stanley Capital International (1) Non-income producing. See Notes to Financial Statements. - ------ 6 International Discovery - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- ------------------------------ AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 24.30% 8.24% 15.93% 14.79% 4/1/94 - -------------------------------------------------------------------------------- S&P/CITIGROUP EMI GROWTH WORLD EX-US 19.21% 8.44% 6.28% 5.55%(1) -- - -------------------------------------------------------------------------------- Institutional Class 24.56% 8.46% -- 13.77% 1/2/98 - -------------------------------------------------------------------------------- Advisor Class 24.01% 7.97% -- 10.77% 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 November 30, 1995
![](https://capedge.com/proxy/N-CSR/0000872825-06-000012/growthintldiscovery0601.gif)
ONE-YEAR RETURNS OVER 10 YEARS Periods ended November 30 - ------------------------------------------------------------------------------------------------------- 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 - ------------------------------------------------------------------------------------------------------- Investor Class 34.06% 17.76% 14.79% 65.12% -1.27% -20.17% -8.00% 37.05% 18.76% 24.30% - ------------------------------------------------------------------------------------------------------- S&P/Citigroup EMI Growth World ex-US 14.67% -8.85% 7.30% 27.50% -14.20% -20.23% -10.96% 38.79% 27.58% 19.21% - ------------------------------------------------------------------------------------------------------- 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 24.30%* during the one-year period ended November 30, 2005, outperforming its benchmark, the S&P/Citigroup EMI (Extended Market Index) Growth World ex-US, which returned 19.21%. The portfolio's results also were ahead of the 22.80% average return for its Morningstar Foreign Small/Mid Growth peer group.** It's also worth noting that International Discovery provided this positive performance despite a strengthening dollar that lowered overseas returns for U.S. investors. Many of the world's equity markets advanced during the period, demonstrating their resilience in the face of surging oil and commodity prices, a terrorist attack in London, destructive hurricanes and eight interest-rate increases by the U.S. Federal Reserve. Against these backdrops, the majority of International Discovery's sector stakes provided double-digit returns, with industrials, information technology businesses and providers or sellers of consumer discretionary products our top contributors. Additionally, as the chart on page 10 indicates, we essentially doubled our weighting in Japan since our last report to you six months ago. From our perspective, a continuing economic recovery, coupled with years of corporate restructuring and cost-cutting, have changed the earnings picture there significantly. Many Japanese companies are reporting strong earnings, which has played to our strength as bottom-up growth investors. A case in point was one of our top contributors, Tokyo-based trading company Marubeni Corp. In October, Marubeni reported its first-half results--a 58% increase in net income from a year earlier. SUCCESS IN INDUSTRIALS Industrial stocks contributed the most to our results. Of note was Koninklijke BAM Groep N.V., the largest Dutch builder, and one of our ten largest positions. BAM benefited from rising property prices and increased earnings from developments. The company also announced plans to acquire a major Dutch real TOP TEN HOLDINGS AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Aker Kvaerner ASA 2.5% 2.5% - -------------------------------------------------------------------------------- CSL Ltd. 2.4% 2.5% - -------------------------------------------------------------------------------- Koninklijke BAM Groep N.V. 2.2% 1.6% - -------------------------------------------------------------------------------- Gildan Activewear Inc. 2.0% 1.7% - -------------------------------------------------------------------------------- Neopost SA 2.0% 2.4% - -------------------------------------------------------------------------------- Tokuyama Corp. 1.9% 1.3% - -------------------------------------------------------------------------------- Urban Corp. 1.8% -- - -------------------------------------------------------------------------------- NGK Insulators Ltd. 1.8% 0.7% - -------------------------------------------------------------------------------- Marubeni Corp. 1.8% 1.9% - -------------------------------------------------------------------------------- OMC Card Inc. 1.7% 0.5% - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares. ** The Morningstar Foreign Small/Mid Growth peer group returned 7.79% and 14.77% for the 5- and 10-year periods ended November 30, 2005, respectively (see page 7 for International Discovery performance data). (c) 2005 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. (continued) - ------ 9 International Discovery - Portfolio Commentary estate developer to increase its share of the Dutch homebuilding market. Elsewhere in the sector, our shares of Motech Industries, a Taiwanese maker of solar cells, performed well amid rising demand for solar panels from European countries. Germany, for example, provides subsidies to companies and consumers for using cleaner energy. GAINS IN TECHNOLOGY Our successes in the information technology sector included Taiwan's High Tech Computer Corp. The company is a leading maker of advanced mobile phones powered by Microsoft Corp. software, and exhibited the solid earnings acceleration we look for. Its shares were up more than four-fold during the period. Foxconn International Holdings, a leader in the contract manufacturing of mobile-phone handsets, was another tech standout. Handset pricing pressure and a continuous stream of new products have led handset vendors to increase their outsourcing. Foxconn's major customers are Motorola and Nokia, prestigious brands with substantial market share. DETRACTORS INCLUDED CHEMICAL, IT STOCKS On the downside, Nova Chemicals Corp., Canada's largest chemical maker, detracted the most from our performance. We sold our shares after the company reported net losses for the second and third quarters after wrestling with declining prices, power outages and plant closings. UTStarcom Inc. and Research In Motion Ltd. were two other disappointments. U.S.-based UTStarcom, the largest supplier of wireless telephone systems in China, has been challenged by a slowing market there. In March, UTStarcom announced that it would have to restate earlier results due to accounting problems. We sold our shares in April. In June, we moved out of Research In Motion, the Canadian maker of the popular Blackberry email device, as the company fought increasing competition. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Common Stocks 97.0% 97.5% - -------------------------------------------------------------------------------- Temporary Cash Investments 2.7% 2.1% - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) 0.3% 0.4% - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Japan 31.7% 16.5% - -------------------------------------------------------------------------------- United Kingdom 11.2% 11.9% - -------------------------------------------------------------------------------- Germany 7.0% 5.2% - -------------------------------------------------------------------------------- Norway 5.6% 6.5% - -------------------------------------------------------------------------------- France 5.3% 5.9% - -------------------------------------------------------------------------------- Australia 5.2% 5.3% - -------------------------------------------------------------------------------- Netherlands 3.4% 4.0% - -------------------------------------------------------------------------------- Spain 3.4% 3.1% - -------------------------------------------------------------------------------- Switzerland 3.0% 5.7% - -------------------------------------------------------------------------------- Canada 2.8% 6.1% - -------------------------------------------------------------------------------- Taiwan (Republic of China) 1.9% 5.9% - -------------------------------------------------------------------------------- South Korea 1.8% 1.9% - -------------------------------------------------------------------------------- Italy 1.7% 2.7% - -------------------------------------------------------------------------------- Other Countries 13.0% 16.8% - -------------------------------------------------------------------------------- Cash and Equivalents(2) 3.0% 2.5% - -------------------------------------------------------------------------------- (2) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. - ------ 10 International Discovery - Schedule of Investments NOVEMBER 30, 2005 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 97.0% - -------------------------------------------------------------------------------- AUSTRALIA -- 5.2% - -------------------------------------------------------------------------------- 768,000 Aristocrat Leisure Ltd.(1) $ 7,008 - -------------------------------------------------------------------------------- 3,361,200 Computershare Ltd.(1) 17,399 - -------------------------------------------------------------------------------- 1,088,300 CSL Ltd. 31,870 - -------------------------------------------------------------------------------- 1,116,400 James Hardie Industries 6,943 - -------------------------------------------------------------------------------- 1,432,500 Transurban Group(1) 7,172 - -------------------------------------------------------------------------------- 70,392 - -------------------------------------------------------------------------------- AUSTRIA -- 0.8% - -------------------------------------------------------------------------------- 670,000 Immoeast Immobilien Anlagen AG(2) 6,550 - -------------------------------------------------------------------------------- 214,000 Meinl European Land Ltd.(2) 3,742 - -------------------------------------------------------------------------------- 10,292 - -------------------------------------------------------------------------------- BELGIUM -- 0.5% - -------------------------------------------------------------------------------- 79,767 Bekaert SA 6,293 - -------------------------------------------------------------------------------- CANADA -- 2.8% - -------------------------------------------------------------------------------- 541,800 Alimentation Couche Tard Inc. Cl B 10,316 - -------------------------------------------------------------------------------- 713,400 Gildan Activewear Inc.(2) 27,161 - -------------------------------------------------------------------------------- 37,477 - -------------------------------------------------------------------------------- DENMARK -- 1.6% - -------------------------------------------------------------------------------- 110,400 Christian Hansen Holding AS Cl B 10,199 - -------------------------------------------------------------------------------- 133,500 Topdanmark AS(2) 10,897 - -------------------------------------------------------------------------------- 21,096 - -------------------------------------------------------------------------------- EGYPT -- 1.2% - -------------------------------------------------------------------------------- 160,000 Orascom Construction Industries 5,247 - -------------------------------------------------------------------------------- 696,200 Vodafone Egypt Telecommunications SAE 10,606 - -------------------------------------------------------------------------------- 15,853 - -------------------------------------------------------------------------------- FRANCE -- 5.3% - -------------------------------------------------------------------------------- 99,800 Eiffage(1) 8,250 - -------------------------------------------------------------------------------- 42,000 Klepierre 3,883 - -------------------------------------------------------------------------------- 282,000 Neopost SA 26,604 - -------------------------------------------------------------------------------- 35,400 Vallourec 16,907 - -------------------------------------------------------------------------------- 263,600 Zodiac SA(1) 15,854 - -------------------------------------------------------------------------------- 71,498 - -------------------------------------------------------------------------------- GERMANY -- 7.0% - -------------------------------------------------------------------------------- 166,000 Hypo Real Estate Holding AG 8,652 - -------------------------------------------------------------------------------- 1,165,000 MLP AG(1) 22,847 - -------------------------------------------------------------------------------- 222,500 MTU Aero Engines Holding AG(2) 6,953 - -------------------------------------------------------------------------------- 227,500 Premiere AG(2) 6,444 - -------------------------------------------------------------------------------- 93,600 Q-Cells AG(1)(2) 5,618 - -------------------------------------------------------------------------------- 100,000 Rheinmetall AG 5,884 - -------------------------------------------------------------------------------- 255,700 Schwarz Pharma AG(1) 13,886 - -------------------------------------------------------------------------------- 14,000 Solarworld AG(1) 1,946 - -------------------------------------------------------------------------------- 286,800 Tele Atlas N.V.(2) 6,511 - -------------------------------------------------------------------------------- 432,400 United Internet AG(1) 15,420 - -------------------------------------------------------------------------------- 94,161 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- GREECE -- 0.7% - -------------------------------------------------------------------------------- 502,000 Piraeus Bank SA $ 10,005 - -------------------------------------------------------------------------------- HONG KONG -- 1.0% - -------------------------------------------------------------------------------- 4,240,051 Link Real Estate Investment Trust (The)(2) 6,589 - -------------------------------------------------------------------------------- 6,684,000 Melco International Development 7,370 - -------------------------------------------------------------------------------- 13,959 - -------------------------------------------------------------------------------- HUNGARY -- 0.3% - -------------------------------------------------------------------------------- 26,000 Gedeon Richter Rt. 4,674 - -------------------------------------------------------------------------------- INDIA -- 0.6% - -------------------------------------------------------------------------------- 232,200 Larsen & Toubro Ltd. 8,564 - -------------------------------------------------------------------------------- IRELAND -- 1.2% - -------------------------------------------------------------------------------- 480,500 Anglo Irish Bank Corporation 6,607 - -------------------------------------------------------------------------------- 832,000 Kingspan Group plc 10,165 - -------------------------------------------------------------------------------- 16,772 - -------------------------------------------------------------------------------- ISRAEL -- 0.8% - -------------------------------------------------------------------------------- 226,900 Nice Systems Ltd. ADR(2) 10,176 - -------------------------------------------------------------------------------- ITALY -- 1.7% - -------------------------------------------------------------------------------- 93,700 Fastweb(2) 4,397 - -------------------------------------------------------------------------------- 3,905,000 Hera SpA(1) 10,488 - -------------------------------------------------------------------------------- 143,800 Pirelli & C. Real Estate SpA 8,051 - -------------------------------------------------------------------------------- 22,936 - -------------------------------------------------------------------------------- JAPAN -- 31.7% - -------------------------------------------------------------------------------- 1,089,000 Bank of Kyoto Ltd. (The)(1) 12,042 - -------------------------------------------------------------------------------- 770,000 Daifuku Co. Ltd.(1) 13,110 - -------------------------------------------------------------------------------- 101,500 Don Quijote Co. Ltd.(1) 7,514 - -------------------------------------------------------------------------------- 1,717,000 Fuji Fire & Marine Insurance Co. Ltd. (The) 6,291 - -------------------------------------------------------------------------------- 3,502,000 Furukawa Electric Co. Ltd.(1)(2) 21,073 - -------------------------------------------------------------------------------- 251,000 Ibiden Co. Ltd.(1) 13,491 - -------------------------------------------------------------------------------- 4,485,000 Japan Steel Works Ltd. (The)(1) 20,475 - -------------------------------------------------------------------------------- 716,000 Koyo Seiko Co. Ltd.(1) 12,549 - -------------------------------------------------------------------------------- 4,775,000 Marubeni Corp. 23,712 - -------------------------------------------------------------------------------- 314,000 Miraca Holdings Inc. 6,564 - -------------------------------------------------------------------------------- 240,100 MISUMI Group Inc.(1) 9,638 - -------------------------------------------------------------------------------- 245,000 NEOMAX Co., Ltd.(1) 7,197 - -------------------------------------------------------------------------------- 1,551,000 NGK Insulators Ltd.(1) 23,959 - -------------------------------------------------------------------------------- 745,000 Nippon Electric Glass Co., Ltd.(1) 15,108 - -------------------------------------------------------------------------------- 1,675,000 Nippon Shokubai Co. Ltd.(1) 17,698 - -------------------------------------------------------------------------------- 897,000 Nishi-Nippon City Bank Ltd. (The) 5,338 - -------------------------------------------------------------------------------- 1,080,000 Nissan Chemical Industries, Ltd.(1) 14,800 - -------------------------------------------------------------------------------- 9,570,900 Nissin Co., Ltd.(1) 15,496 - -------------------------------------------------------------------------------- 1,364,900 OMC Card Inc.(1) 23,410 - -------------------------------------------------------------------------------- 3,600 Round One Corp.(1) 13,460 - -------------------------------------------------------------------------------- 1,371,000 Senshu Bank Ltd. (The) 4,462 - -------------------------------------------------------------------------------- 191,000 Sumco Corp.(2) 7,365 - -------------------------------------------------------------------------------- 159,600 Sysmex Corp.(1) 5,648 - -------------------------------------------------------------------------------- 565,200 THK Co. Ltd.(1) 14,953 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 11 International Discovery - Schedule of Investments NOVEMBER 30, 2005 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 2,243,000 Tokuyama Corp.(1) $ 25,889 - -------------------------------------------------------------------------------- 2,017,000 Tokyo Tatemono Co. Ltd.(1) 16,935 - -------------------------------------------------------------------------------- 7,395,000 Ube Industries Ltd. 19,009 - -------------------------------------------------------------------------------- 705,000 Uniden Corp.(1) 13,356 - -------------------------------------------------------------------------------- 367,300 Urban Corp.(1) 24,524 - -------------------------------------------------------------------------------- 1,016,000 Zeon Corp.(1) 12,651 - -------------------------------------------------------------------------------- 427,717 - -------------------------------------------------------------------------------- NETHERLANDS -- 3.4% - -------------------------------------------------------------------------------- 404,900 Chicago Bridge & Iron Company New York Shares 10,483 - -------------------------------------------------------------------------------- 214,400 Fugro N.V. 6,321 - -------------------------------------------------------------------------------- 332,100 Koninklijke BAM Groep N.V. 29,744 - -------------------------------------------------------------------------------- 46,548 - -------------------------------------------------------------------------------- NORWAY -- 5.6% - -------------------------------------------------------------------------------- 631,500 Aker Kvaerner ASA(1)(2) 33,901 - -------------------------------------------------------------------------------- 231,900 Fred Olsen Energy ASA(1)(2) 6,827 - -------------------------------------------------------------------------------- 1,055,000 SeaDrill Ltd.(2) 6,868 - -------------------------------------------------------------------------------- 536,600 Smedvig ASA(1) 11,240 - -------------------------------------------------------------------------------- 437,100 Storebrand ASA(1) 4,019 - -------------------------------------------------------------------------------- 1,086,000 Tandberg Television ASA(1)(2) 13,287 - -------------------------------------------------------------------------------- 76,142 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA - 1.5% - -------------------------------------------------------------------------------- 15,610,273 Foxconn International Holdings Ltd.(1)(2) 20,333 - -------------------------------------------------------------------------------- SINGAPORE -- 0.7% - -------------------------------------------------------------------------------- 6,764,000 Cosco Investment Singapore Limited(1) 9,439 - -------------------------------------------------------------------------------- SOUTH AFRICA -- 0.4% - -------------------------------------------------------------------------------- 457,000 Harmony Gold Mining Co. Limited(1)(2) 5,646 - -------------------------------------------------------------------------------- SOUTH KOREA -- 1.8% - -------------------------------------------------------------------------------- 542,700 Humax Co. Ltd. 14,575 - -------------------------------------------------------------------------------- 113,730 LG Card Co. Ltd.(2) 5,560 - -------------------------------------------------------------------------------- 129,100 Samsung Electro-Mechanics Co. Ltd. 4,295 - -------------------------------------------------------------------------------- 24,430 - -------------------------------------------------------------------------------- SPAIN -- 3.4% - -------------------------------------------------------------------------------- 978,357 Enagas(1) 17,271 - -------------------------------------------------------------------------------- 176,000 Fadesa Inmobiliaria SA 5,641 - -------------------------------------------------------------------------------- 461,300 Indra Sistemas SA 9,112 - -------------------------------------------------------------------------------- 509,000 Red Electrica de Espana(1) 14,118 - -------------------------------------------------------------------------------- 46,142 - -------------------------------------------------------------------------------- SWEDEN -- 1.5% - -------------------------------------------------------------------------------- 341,300 Elekta AB Cl B 5,137 - -------------------------------------------------------------------------------- 703,200 Eniro AB(1) 7,666 - -------------------------------------------------------------------------------- 700,300 Gambro AB 6,919 - -------------------------------------------------------------------------------- 19,722 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- SWITZERLAND -- 3.0% - -------------------------------------------------------------------------------- 165,700 Actelion N.V.(1)(2) $ 16,191 - -------------------------------------------------------------------------------- 5,364 Lindt & Spruengli AG 9,034 - -------------------------------------------------------------------------------- 164,700 Logitech International SA(2) 7,539 - -------------------------------------------------------------------------------- 16,200 Sulzer AG 7,822 - -------------------------------------------------------------------------------- 40,586 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 1.9% - -------------------------------------------------------------------------------- 6,241,660 Acer Inc. 13,837 - -------------------------------------------------------------------------------- 785,400 High Tech Computer Corp. 11,670 - -------------------------------------------------------------------------------- 533 Motech Industries Inc. 6 - -------------------------------------------------------------------------------- 25,513 - -------------------------------------------------------------------------------- TURKEY -- 0.2% - -------------------------------------------------------------------------------- 657,766 Turkiye Vakiflar Bankasi Tao Cl D(2) 3,249 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 11.2% - -------------------------------------------------------------------------------- 1,570,000 Capita Group plc 10,638 - -------------------------------------------------------------------------------- 4,797,000 Carphone Warehouse Group plc 19,093 - -------------------------------------------------------------------------------- 375,500 CSR plc(2) 5,475 - -------------------------------------------------------------------------------- 4,520,000 International Power plc 19,162 - -------------------------------------------------------------------------------- 2,442,000 John Wood Group plc 8,611 - -------------------------------------------------------------------------------- 175,000 Lonmin plc 4,910 - -------------------------------------------------------------------------------- 4,618,000 Photo-Me International plc 9,739 - -------------------------------------------------------------------------------- 1,173,300 Punch Taverns plc 16,834 - -------------------------------------------------------------------------------- 1,203,100 RHM plc(2) 5,480 - -------------------------------------------------------------------------------- 4,831,400 Tullow Oil plc 22,048 - -------------------------------------------------------------------------------- 1,187,500 Vedanta Resources plc 14,492 - -------------------------------------------------------------------------------- 2,872,000 Wolfson Microelectronics plc(2) 14,348 - -------------------------------------------------------------------------------- 150,830 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $1,020,102) 1,310,445 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 2.7% - -------------------------------------------------------------------------------- Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 2.75% -- 4.18%, 2/9/06 -- 11/15/09, valued at $37,124), in a joint trading account at 3.93%, dated 11/30/05, due 12/1/05 (Delivery value $36,404) (Cost $36,400) 36,400 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 12 International Discovery - Schedule of Investments NOVEMBER 30, 2005 ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 18.7% - -------------------------------------------------------------------------------- Repurchase Agreement, Morgan Stanley Group, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.02%, dated 11/30/05, due 12/1/05 (Delivery value $17,176) $ 17,174 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.06%, dated 11/30/05, due 12/1/05 (Delivery value $235,382) 235,355 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $252,529) 252,529 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 118.4% (Cost $1,309,031) 1,599,374 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (18.4)% (248,275) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $1,351,099 ================================================================================ MARKET SECTOR DIVERSIFICATION - -------------------------------------------------------------------------------- (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Industrials 23.4% - -------------------------------------------------------------------------------- Information Technology 16.6% - -------------------------------------------------------------------------------- Financials 15.5% - -------------------------------------------------------------------------------- Consumer Discretionary 10.5% - -------------------------------------------------------------------------------- Materials 9.0% - -------------------------------------------------------------------------------- Health Care 7.5% - -------------------------------------------------------------------------------- Energy 7.1% - -------------------------------------------------------------------------------- Utilities 4.5% - -------------------------------------------------------------------------------- Consumer Staples 1.8% - -------------------------------------------------------------------------------- Telecommunication Services 1.1% - -------------------------------------------------------------------------------- Cash and cash equivalents(+) 3.0% - -------------------------------------------------------------------------------- (+) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt (1) Security, or a portion thereof, was on loan as of November 30, 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 NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- ------------------------ AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 33.10% 13.11% 6.96% 9/30/97 - -------------------------------------------------------------------------------- MSCI EM INDEX 33.13% 18.63% 6.18% -- - -------------------------------------------------------------------------------- Institutional Class 33.37% 13.30% 14.92% 1/28/99 - -------------------------------------------------------------------------------- Advisor Class 32.77% 12.82% 10.45% 5/12/99 - -------------------------------------------------------------------------------- C Class 31.67% -- 17.63% 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-CSR/0000872825-06-000012/growthemergingmkts0601.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - --------------------------------------------------------------------------------------------- 1997* 1998 1999 2000 2001 2002 2003 2004 2005 - --------------------------------------------------------------------------------------------- Investor Class -17.00% -15.90% 61.03% -16.73% -10.28% -10.86% 46.26% 18.94% 33.10% - --------------------------------------------------------------------------------------------- MSCI EM Index -19.46% -22.42% 45.49% -23.63% -7.37% 4.95% 40.87% 28.88% 33.13% - --------------------------------------------------------------------------------------------- * 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 MANAGER ON THE EMERGING MARKETS INVESTMENT TEAM: MICHAEL DONNELLY. Emerging Markets climbed 33.10%* during the 12 months ended November 30, 2005, in line with its benchmark, the Morgan Stanley Capital International (MSCI) EM (Emerging Markets) Index, which rose 33.13%. Emerging Markets performance during the fiscal year compares favorably to that of its peers. The fund topped the average 30.97% return of the diversified emerging markets funds tracked by Morningstar.** OVERSEAS MARKETS CLIMB Many of the world's equity markets advanced during the 12-month period, demonstrating their resilience in the face of surging prices for commodities, especially oil, a terrorist attack in London, destructive hurricanes and numerous interest-rate increases by the U.S. Federal Reserve. Emerging-markets countries in particular continued to generate interest, a trend evidenced by the 142% gain of the MSCI EM Index since the end of 2002. In that environment, Emerging Markets achieved positive absolute contributions from the majority of its country exposures -- gains achieved despite the fact that the movement of the dollar versus other currencies slightly slowed the fund's performance. SOUTH KOREA: THE TOP CONTRIBUTOR Emerging Markets' interest in South Korea, on average our largest country exposure, made the greatest contribution to absolute performance during the fiscal year. Three of the top-contributing stocks from this country, Hynix Semiconductor, Orion Corp., and Humax Co. Ltd., were represented in the portfolio but not the index. During the period, Hynix, the world's second-largest memory chipmaker, reported better-than-expected profits driven by demand and prices for its chips. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Harmony Gold Mining Co. Limited 2.7% -- - -------------------------------------------------------------------------------- Impala Platinum Holdings Limited 2.6% 1.5% - -------------------------------------------------------------------------------- Pyaterochka Holding N.V. GDR 2.4% 1.3% - -------------------------------------------------------------------------------- Hyundai Engineering & Construction 2.2% -- - -------------------------------------------------------------------------------- Foxconn International Holdings Ltd. 2.2% 1.3% - -------------------------------------------------------------------------------- Petroleo Brasileiro SA ADR 2.2% -- - -------------------------------------------------------------------------------- Samsung Electronics 2.2% 1.0% - -------------------------------------------------------------------------------- Anglo American plc 2.2% 1.5% - -------------------------------------------------------------------------------- Wistron NeWeb Corp. 2.0% -- - -------------------------------------------------------------------------------- Compal Communications Inc. 2.0% 1.5% - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares. ** The Morningstar Diversified Emerging Markets peer group returned 18.21% for the 5-year period ended November 30, 2005 (see page 14 for Emerging Markets performance data). (c) 2005 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. (continued) - ------ 16 Emerging Markets - Portfolio Commentary ADDITIONAL SOURCES OF STRENGTH We also found success in Mexico, the second-best contributor to absolute performance, led by homebuilder Urbi Desarrollos Urbanos. The company benefited from a favorable sales mix, with double-digit sales growth of higher-end homes, a trend supported by the firm's partnerships with large, retail banks. Wal-Mart de Mexico was another standout. During the period, the company announced that it had gained market share from competitors, a development that contributed to eight consecutive months of same-store sales growth. Elsewhere, our investment strategy led us to Turkey's DenizBank, the portfolio's top-contributing stock. Named one of the world's fastest-growing banks, DenizBank recorded a 60% surge in net profit for 2004 and a 61% jump in loans for the first half of 2005, results driven largely by increased lending to retail customers and small- to mid-sized businesses. INDIVIDUAL SETBACKS Despite these successes, we nevertheless experienced some disappointments along the way, one of which was integrated energy firm PetroKazakhstan Inc., the portfolio's top-detracting stock. Though the company reported substantial gains in 2004 earnings, the firm's lengthy dispute with its partner in a joint business venture contributed to the stock's decline. We eliminated the position. A FINAL NOTE In August 2005, Raymond Kong departed American Century. Senior portfolio manager Michael Donnelly, who has been a member of the Emerging Markets team since its 1997 inception, remains at the helm. The Emerging Markets team remains committed to looking for foreign companies whose earnings and revenues are growing at an improving rate, a strategy 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 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Common Stocks 95.1% 92.4% - -------------------------------------------------------------------------------- Preferred Stocks 2.6% 2.9% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 97.7% 95.3% - -------------------------------------------------------------------------------- Temporary Cash Investments 4.5% 3.2% - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) (2.2)% 1.5% - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- South Korea 16.2% 12.8% - -------------------------------------------------------------------------------- South Africa 12.6% 6.6% - -------------------------------------------------------------------------------- Taiwan (Republic of China) 10.1% 11.0% - -------------------------------------------------------------------------------- People's Republic of China 8.2% 5.6% - -------------------------------------------------------------------------------- Brazil 7.5% 7.0% - -------------------------------------------------------------------------------- Russian Federation 6.7% 5.4% - -------------------------------------------------------------------------------- Mexico 5.6% 10.2% - -------------------------------------------------------------------------------- Hong Kong 4.8% 4.5% - -------------------------------------------------------------------------------- Israel 4.5% 5.3% - -------------------------------------------------------------------------------- Chile 3.4% 0.8% - -------------------------------------------------------------------------------- Turkey 3.1% 1.8% - -------------------------------------------------------------------------------- India 2.2% 3.6% - -------------------------------------------------------------------------------- Other Countries 12.8% 20.7% - -------------------------------------------------------------------------------- Cash and Equivalents(2) 2.3% 4.7% - -------------------------------------------------------------------------------- (2) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. - ------ 17 Emerging Markets - Schedule of Investments NOVEMBER 30, 2005 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 95.1% - -------------------------------------------------------------------------------- ARGENTINA -- 1.3% - -------------------------------------------------------------------------------- 340,789 Telecom Argentina SA ADR(1)(2) $ 4,543 - -------------------------------------------------------------------------------- BRAZIL -- 4.9% - -------------------------------------------------------------------------------- 241,145 Banco Nossa Caixa SA(1) 3,848 - -------------------------------------------------------------------------------- 47,993 Cosan SA Industria e Comercio(1) 1,265 - -------------------------------------------------------------------------------- 88,880,000 Light Servicos de Eletricidade SA(1) 658 - -------------------------------------------------------------------------------- 105,312 Lojas Renner SA 3,522 - -------------------------------------------------------------------------------- 108,421 Petroleo Brasileiro SA ADR(2) 7,329 - -------------------------------------------------------------------------------- 16,622 - -------------------------------------------------------------------------------- CHILE -- 3.4% - -------------------------------------------------------------------------------- 2,078,476 Centros Comerciales Sudamericanos SA 4,204 - -------------------------------------------------------------------------------- 1,224,493 Comercial Siglo XXI SA(1) 3,460 - -------------------------------------------------------------------------------- 2,138,473 Distribucion y Servicio D&S SA 732 - -------------------------------------------------------------------------------- 1,751,500 Inversiones Aguas Metropolitanas SA(1) 1,579 - -------------------------------------------------------------------------------- 87,575 Inversiones Aguas Metropolitanas SA ADR(1)(3) 1,607 - -------------------------------------------------------------------------------- 11,582 - -------------------------------------------------------------------------------- CZECH REPUBLIC -- 0.3% - -------------------------------------------------------------------------------- 26,180 Zentiva N.V. 1,165 - -------------------------------------------------------------------------------- EGYPT -- 1.2% - -------------------------------------------------------------------------------- 171,450 Orascom Hotels & Development(1) 1,096 - -------------------------------------------------------------------------------- 188,683 Vodafone Egypt Telecommunications SAE 2,874 - -------------------------------------------------------------------------------- 3,970 - -------------------------------------------------------------------------------- HONG KONG -- 4.8% - -------------------------------------------------------------------------------- 2,674,873 AAC Acoustic Technology Holdings Inc.(1) 1,569 - -------------------------------------------------------------------------------- 5,059,000 China Yurun Food Group Ltd.(1) 2,593 - -------------------------------------------------------------------------------- 7,852,000 GST Holdings Ltd.(1) 1,357 - -------------------------------------------------------------------------------- 4,258,820 Kasen International Holdings Ltd.(1) 1,277 - -------------------------------------------------------------------------------- 1,791,500 Lifestyle International Holdings Ltd. 2,552 - -------------------------------------------------------------------------------- 407,695 Link Real Estate Investment Trust (The)(1) 634 - -------------------------------------------------------------------------------- 1,968,000 Parkson Retail Group Ltd.(1) 3,083 - -------------------------------------------------------------------------------- 26,266,000 Regal Hotels International Holdings Ltd. 1,795 - -------------------------------------------------------------------------------- 703,000 Wumart Stores Inc. Cl H 1,401 - -------------------------------------------------------------------------------- 16,261 - -------------------------------------------------------------------------------- INDIA -- 2.2% - -------------------------------------------------------------------------------- 532,262 Bharti Televentures(1) 4,147 - -------------------------------------------------------------------------------- 43,200 Reliance Industries Ltd. 784 - -------------------------------------------------------------------------------- 70,678 Tata Consultancy Services Ltd. 2,340 - -------------------------------------------------------------------------------- 7,271 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- INDONESIA -- 0.4% - -------------------------------------------------------------------------------- 4,833,000 PT Aneka Tambang Tbk $ 1,374 - --------------------------------------------------------------------------------- ISRAEL -- 4.5% - -------------------------------------------------------------------------------- 116,752 Frutarom Industries(1) 838 - -------------------------------------------------------------------------------- 51,628 M-Systems Flash Disk Pioneers(1)(2) 1,608 - -------------------------------------------------------------------------------- 57,953 Nice Systems Ltd. ADR(1) 2,599 - -------------------------------------------------------------------------------- 110,739 Orbotech Ltd.(1)(2) 2,568 - -------------------------------------------------------------------------------- 151,630 Teva Pharmaceutical Industries Ltd. ADR(2) 6,198 - -------------------------------------------------------------------------------- 275,170 United Mizrahi Bank Ltd.(1) 1,498 - -------------------------------------------------------------------------------- 15,309 - -------------------------------------------------------------------------------- JORDAN -- 0.4% - -------------------------------------------------------------------------------- 246,591 Hikma Pharmaceuticals plc(1) 1,337 - -------------------------------------------------------------------------------- KAZAKHSTAN -- 0.5% - -------------------------------------------------------------------------------- 162,347 Kazakhmys plc(1) 1,838 - -------------------------------------------------------------------------------- MALAYSIA -- 1.1% - -------------------------------------------------------------------------------- 3,608,000 AirAsia Bhd(1) 1,549 - -------------------------------------------------------------------------------- 682,500 Digi.Com Bhd(1) 1,365 - -------------------------------------------------------------------------------- 2,401,700 Scomi Group Berhad 655 - -------------------------------------------------------------------------------- 3,569 - -------------------------------------------------------------------------------- MEXICO -- 5.6% - -------------------------------------------------------------------------------- 87,799 Cemex SA de CV ADR 4,943 - -------------------------------------------------------------------------------- 472,505 Corporacion GEO SA de CV Series B(1) 1,619 - -------------------------------------------------------------------------------- 2,025,743 Empresas ICA Sociedad Controladora SA de CV(1) 844 - -------------------------------------------------------------------------------- 1,093,521 Grupo Mexico SA de CV 2,355 - -------------------------------------------------------------------------------- 761,965 Urbi Desarrollos Urbanos SA de CV(1) 5,448 - -------------------------------------------------------------------------------- 679,929 Wal-Mart de Mexico SA de CV, Series V 3,689 - -------------------------------------------------------------------------------- 18,898 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 8.2% - -------------------------------------------------------------------------------- 5,359,897 China Construction Bank Cl H(1)(2) 1,763 - -------------------------------------------------------------------------------- 207,547 China Mobile Hong Kong Ltd. ADR(2) 5,084 - -------------------------------------------------------------------------------- 12,470,000 China Petroleum & Chemical Corp. Cl H 5,588 - -------------------------------------------------------------------------------- 1,946,000 Dongfeng Motor Group Co. Ltd. Cl H(1) 402 - -------------------------------------------------------------------------------- 5,713,000 Foxconn International Holdings Ltd.(1)(2) 7,441 - -------------------------------------------------------------------------------- 4,754,000 Global Bio-Chem Technology Group Co. Ltd. 2,054 - -------------------------------------------------------------------------------- 4,166,000 Sinopec Zhenhai Refining & Chemical Co. Ltd. Cl H 5,480 - -------------------------------------------------------------------------------- 27,812 - -------------------------------------------------------------------------------- PERU -- 1.0% - -------------------------------------------------------------------------------- 119,683 Compania de Minas Buenaventura SAu ADR 3,354 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 18 Emerging Markets - Schedule of Investments NOVEMBER 30, 2005 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- POLAND -- 1.8% - -------------------------------------------------------------------------------- 318,120 Bank Millennium SA(1) $ 442 - -------------------------------------------------------------------------------- 57,945 BRE Bank SA(1) 2,796 - -------------------------------------------------------------------------------- 131,017 TVN SA(1) 2,805 - -------------------------------------------------------------------------------- 6,043 - -------------------------------------------------------------------------------- QATAR -- 0.3% - -------------------------------------------------------------------------------- 40,170 Qatar Real Estate Investment(1) 866 - -------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 6.7% - -------------------------------------------------------------------------------- 15,668 Efes Breweries International N.V. GDR(1) 497 - -------------------------------------------------------------------------------- 43,811 LUKOIL 2,497 - -------------------------------------------------------------------------------- 182,418 NovaTek OAO GDR 4,105 - -------------------------------------------------------------------------------- 13,647 OAO Gazprom ADR(1) 966 - -------------------------------------------------------------------------------- 350,221 Pyaterochka Holding N.V. GDR(1) 8,100 - -------------------------------------------------------------------------------- 3,751 Sberbank RF 4,160 - -------------------------------------------------------------------------------- 619,936 VolgaTelecom 2,269 - -------------------------------------------------------------------------------- 22,594 - -------------------------------------------------------------------------------- SOUTH AFRICA -- 12.6% - -------------------------------------------------------------------------------- 91,007 Anglo American Platinum Corp. Ltd. 6,027 - -------------------------------------------------------------------------------- 232,714 Anglo American plc 7,277 - -------------------------------------------------------------------------------- 730,240 Harmony Gold Mining Co. Limited(1)(2) 9,022 - -------------------------------------------------------------------------------- 67,434 Impala Platinum Holdings Limited 8,827 - -------------------------------------------------------------------------------- 306,852 Kumba Resources Ltd. 4,752 - -------------------------------------------------------------------------------- 52,441 Net 1 UEPS Technologies Inc.(1) 1,220 - -------------------------------------------------------------------------------- 40,494 Pretoria Portland Cement Co. Ltd. 1,942 - -------------------------------------------------------------------------------- 162,968 Telkom SA Ltd. 3,303 - -------------------------------------------------------------------------------- 42,370 - -------------------------------------------------------------------------------- SOUTH KOREA -- 16.2% - -------------------------------------------------------------------------------- 4,450 Amorepacific Corp. 1,446 - -------------------------------------------------------------------------------- 118,331 DK UIL Co. Ltd. 1,940 - -------------------------------------------------------------------------------- 102,030 Hana Bank 4,211 - -------------------------------------------------------------------------------- 96,866 Humax Co. Ltd. 2,601 - -------------------------------------------------------------------------------- 99,480 Hynix Semiconductor Inc.(1) 2,101 - -------------------------------------------------------------------------------- 189,200 Hyundai Engineering & Construction(1) 7,471 - -------------------------------------------------------------------------------- 95,386 Kookmin Bank ADR(1)(2) 6,295 - -------------------------------------------------------------------------------- 66,400 LG Card Co. Ltd.(1) 3,246 - -------------------------------------------------------------------------------- 112,230 Samsung Electro-Mechanics Co. Ltd. 3,734 - -------------------------------------------------------------------------------- 12,650 Samsung Electronics 7,295 - -------------------------------------------------------------------------------- 164,080 Shinhan Financial Group Co., Ltd. 6,328 - -------------------------------------------------------------------------------- 9,850 Shinsegae Co. Ltd. 4,061 - -------------------------------------------------------------------------------- 381,400 Ssangyong Motor Co.(1) 3,464 - -------------------------------------------------------------------------------- 54,193 - -------------------------------------------------------------------------------- SPAIN -- 1.7% - -------------------------------------------------------------------------------- 191,363 Repsol YPF, SA(2) 5,644 - -------------------------------------------------------------------------------- SWEDEN -- 1.3% - -------------------------------------------------------------------------------- 164,164 Oriflame Cosmetics SA 4,322 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 10.1% - -------------------------------------------------------------------------------- 3,633,102 Chi Mei Optoelectronics Corp. $ 4,417 - -------------------------------------------------------------------------------- 2,139,300 Compal Communications Inc. 6,575 - -------------------------------------------------------------------------------- 4,054,000 Compal Electronics Inc. 3,563 - -------------------------------------------------------------------------------- 89,000 Johnson Health Tech Co. Ltd.(1) 352 - -------------------------------------------------------------------------------- 6,608,288 King Yuan Electronics Co. Ltd. 4,890 - -------------------------------------------------------------------------------- 302,500 Largan Precision Co. Ltd. 3,750 - -------------------------------------------------------------------------------- 2,951,000 Test-Rite International Co. 1,937 - -------------------------------------------------------------------------------- 1,424,000 Wistron Corp.(1) 1,767 - -------------------------------------------------------------------------------- 3,151,000 Wistron NeWeb Corp.(1) 6,675 - -------------------------------------------------------------------------------- 33,926 - -------------------------------------------------------------------------------- THAILAND -- 1.5% - -------------------------------------------------------------------------------- 4,869,200 Amata Corp. plc 1,641 - -------------------------------------------------------------------------------- 14,728,700 Krung Thai Bank Public Co. Ltd. 3,554 - -------------------------------------------------------------------------------- 5,195 - -------------------------------------------------------------------------------- TURKEY -- 3.1% - -------------------------------------------------------------------------------- 628,448 Denizbank AS(1) 4,239 - -------------------------------------------------------------------------------- 357,183 Eczacibasi Ilac Sanayi 1,280 - -------------------------------------------------------------------------------- 171,371 Tupras Turkiye Petrol Rafine(1) 3,007 - -------------------------------------------------------------------------------- 404,219 Turkiye Vakiflar Bankasi Tao Cl D(1) 1,997 - -------------------------------------------------------------------------------- 10,523 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $264,652) 320,581 - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 2.6% - -------------------------------------------------------------------------------- BRAZIL -- 2.6% - -------------------------------------------------------------------------------- 87,109 Bradespar SA 2,362 - -------------------------------------------------------------------------------- 59,200,000 Cia Energetica de Minas Gerais 2,388 - -------------------------------------------------------------------------------- 174,600 Usinas Siderurgicas de Minas Gerais SA 4,079 - -------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost $6,795) 8,829 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 4.5% - -------------------------------------------------------------------------------- Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 2.75% -- 4.18%, 2/9/06 -- 11/15/09, valued at $15,298), in a joint trading account at 3.93%, dated 11/30/05, due 12/1/05 (Delivery value $15,002) (Cost $15,000) 15,000 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 19 Emerging Markets - Schedule of Investments NOVEMBER 30, 2005 ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(4) -- 7.6% - -------------------------------------------------------------------------------- Repurchase Agreement, Morgan Stanley Group, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.02%, dated 11/30/05, due 12/1/05 (Delivery value $4,424) $ 4,424 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.06%, dated 11/30/05, due 12/1/05 (Delivery value $21,227) 21,225 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $25,649) 25,649 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 109.8% (Cost $312,096) 370,059 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (9.8)% (33,068) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $336,991 ================================================================================ MARKET SECTOR DIVERSIFICATION - -------------------------------------------------------------------------------- (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Information Technology 18.9% - -------------------------------------------------------------------------------- Materials 16.6% - -------------------------------------------------------------------------------- Financials 14.8% - -------------------------------------------------------------------------------- Consumer Discretionary 11.6% - -------------------------------------------------------------------------------- Energy 10.7% - -------------------------------------------------------------------------------- Consumer Staples 10.4% - -------------------------------------------------------------------------------- Telecommunication Services 7.0% - -------------------------------------------------------------------------------- Health Care 3.0% - -------------------------------------------------------------------------------- Industrials 2.9% - -------------------------------------------------------------------------------- Utilities 1.8% - -------------------------------------------------------------------------------- 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 GDR = Global Depositary Receipt (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of November 30, 2005. (3) Security was purchased under Rule 144A of the Securities Act of 1933 or is a private placement and, unless registered under the Act or exempted from registration, may only be sold to qualified institutional investors. The aggregate value of restricted securities as of November 30, 2005, was $1,607 (in thousands) which represented 0.5% of total net assets. (4) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. (See Note 5 in Notes to Financial Statements.) A fair valued security is one which has not been valued utilizing an independent quote, but has been valued pursuant to guidelines established by the Board of Directors. The aggregate value of fair valued securities as of November 30, 2005, was $6,220 (in thousands), which represented 1.8% of total net assets. See Notes to Financial Statements. - ------ 20 Global Growth - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2005 - ----------------------------------------------------------------------------------- -------------------------- AVERAGE ANNUAL RETURNS - ----------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS INCEPTION DATE - ----------------------------------------------------------------------------------- INVESTOR CLASS 18.87% 1.93% 10.36% 12/1/98 - ----------------------------------------------------------------------------------- MSCI WORLD FREE INDEX 11.20% 2.06% 3.11%(1) -- - ----------------------------------------------------------------------------------- AVERAGE RETURN OF LIPPER'S GLOBAL LARGE-CAP GROWTH FUNDS(2) 10.59% -1.05% 3.69%(3) -- - ----------------------------------------------------------------------------------- Fund's Lipper Ranking as of 11/30/05(2) 3 of 61 9 of 46 1 of 31(3) -- - ----------------------------------------------------------------------------------- Fund's Lipper Ranking as of 12/31/05(2) 5 of 61 10 of 46 1 of 31(3) -- - ----------------------------------------------------------------------------------- Institutional Class 19.22% 2.14% -0.02% 8/1/00 - ----------------------------------------------------------------------------------- Advisor Class 18.62% 1.64% 8.62% 2/5/99 - ----------------------------------------------------------------------------------- C Class 17.83% -- 9.36% 3/1/02 - ----------------------------------------------------------------------------------- R Class -- -- 5.85%(4) 7/29/05 - ----------------------------------------------------------------------------------- (1) Since 11/30/98, the date nearest the Investor Class's inception for which data are available. (2) Data provided by Lipper Inc. - A Reuters Company. 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. Lipper Fund Performance - Performance data is total return, and is preliminary and subject to revision. Lipper Rankings -- Rankings are based only on the universe shown and are based on average annual total returns. This listing might not represent the complete universe of funds tracked by Lipper. 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 and may be incomplete. No offer or solicitations to buy or sell any of the securities herein is being made by Lipper. (3) Since 12/3/98, the date nearest the Investor Class's inception for which data are available. (4) Total 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. 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
![](https://capedge.com/proxy/N-CSR/0000872825-06-000012/growthglobalgrowth0601.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - -------------------------------------------------------------------------------- 1999* 2000 2001 2002 2003 2004 2005 - -------------------------------------------------------------------------------- Investor Class 66.60% 8.81% -23.62% -12.78% 20.22% 15.59% 18.87% - -------------------------------------------------------------------------------- MSCI World Free Index 21.11% -7.64% -16.01% -15.27% 19.17% 17.43% 11.20% - -------------------------------------------------------------------------------- * 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: KEITH CREVELING AND HELEN O'DONNELL. Global Growth gained 18.87%* during the 12 months ended November 30, 2005, outperforming its benchmark, the Morgan Stanley Capital International (MSCI) World Free Index, which returned 11.20%. PORTFOLIO OUTPERFORMS PEERS Global Growth also topped the average 10.59% return of the Global Large-Cap Growth Funds tracked by Lipper Inc., finishing in the 5th percentile, or third out 61 funds, for the fiscal year. For the three-year period, the portfolio returned an annual 18.21% versus the 13.87% average for the Lipper category, outperforming all but two of 53 funds to finish in the 6th percentile. For the five-year period, Global Growth returned 1.93%, compared with the Lipper average of negative 1.05%. outperforming all but eight of 46 funds and finishing in the 20th percentile. MARKETS RESILIENT During the period, many of the world's equity markets demonstrated resilience in the face of surging prices for oil and other commodities, a terrorist attack in London, destructive hurricanes and numerous interest-rate increases by the U.S. Federal Reserve. In this environment, all of the sectors in which Global Growth was invested contributed to total return. On a relative basis, Global Growth's investments in most sectors outperformed the MSCI World Free Index, with health care providing the most excess performance. The utilities sector detracted most from relative performance. FINANCIALS GAIN, OUTPERFORM Financials contributed most to absolute return. The largest contribution from a security in the sector came from Japan's ORIX Corp., a financial services company, which is benefiting from Japan's improving economy and loan demand. Prudential Financial Inc., one of the largest U.S. life insurers, topped the list of contributors in the insurance industry. The company benefited from strong sales of its expanded product offering in the annuity business. We also benefited from a transaction involving Hansapank, the Baltic region's largest lender. During the period, Sweden's Swedbank, which owned part of TOP TEN HOLDINGS AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- American Tower Corp. Cl A 2.0% 1.6% - -------------------------------------------------------------------------------- ORIX Corporation 1.7% 1.5% - -------------------------------------------------------------------------------- BHP Billiton Limited 1.7% 1.5% - -------------------------------------------------------------------------------- Procter & Gamble Co. (The) 1.6% 0.7% - -------------------------------------------------------------------------------- Microsoft Corporation 1.5% -- - -------------------------------------------------------------------------------- Genentech, Inc. 1.5% 1.8% - -------------------------------------------------------------------------------- Schlumberger Ltd. 1.5% 1.2% - -------------------------------------------------------------------------------- Suncor Energy Inc. 1.5% -- - -------------------------------------------------------------------------------- Corning Inc. 1.4% 1.3% - -------------------------------------------------------------------------------- General Electric Co. 1.3% 2.0% - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 23 Global Growth - Portfolio Commentary Hansapank, acquired nearly all of the balance it did not already own, increasing Hansapank's share price. HEALTH CARE BOOSTS PORTFOLIO Global Growth's health care companies made the second-largest contribution 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. Genentech, a top-10 holding, reported a number of positive developments regarding drugs used to treat various types of cancer. Several other holdings in the health care sector were among the period's top contributors, including Aetna Inc., one of the largest health-insurance providers in the U.S., and Switzerland's Roche Holding AG, the world's biggest maker of cancer medicines and diagnostic tests. Our investments in the health care sector also outperformed the MSCI World Free Index, making the largest contribution to the portfolio's relative performance. ENERGY LIFTS RETURN Global Growth's position in the energy sector made the third-largest contribution to the portfolio's return. Two producers of natural gas, Canada's Encana Corp., and XTO Energy Inc. in the U.S., topped the list of contributors as they benefited from expanded production and rising prices. Exxon Mobil Corp. and France's Total, both top-10 positions on average, also contributed to return. REGARDING OUR TEAM Global Growth is now co-managed by Keith Creveling, vice president, and Helen O'Donnell, who has served as a senior investment analyst on Global Growth since 2000. Creveling, who continues to co-manage our International Growth strategy, has been with American Century since 1999. Former manager Matt Hudson resigned in November. Despite the changes, we remain committed to looking for stocks of growing companies in the U.S. and abroad. The investment strategy of this fund is based on the belief that, over the long term, stock price movements follow growth in earnings, revenue and/or cash flow. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- U.S. Common Stocks 45.7% 48.3% - -------------------------------------------------------------------------------- Foreign Common Stocks 50.9% 49.4% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 96.6% 97.7% - -------------------------------------------------------------------------------- Temporary Cash Investments 3.8% 1.8% - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) (0.4)% 0.5% - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilties. INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- United States 45.7% 48.3% - -------------------------------------------------------------------------------- Japan 11.6% 8.4% - -------------------------------------------------------------------------------- Switzerland 5.6% 5.4% - -------------------------------------------------------------------------------- France 4.6% 5.4% - -------------------------------------------------------------------------------- United Kingdom 4.5% 4.3% - -------------------------------------------------------------------------------- Germany 2.8% 3.1% - -------------------------------------------------------------------------------- Netherlands 2.4% 3.4% - -------------------------------------------------------------------------------- Greece 2.2% 2.4% - -------------------------------------------------------------------------------- South Korea 2.0% 1.5% - -------------------------------------------------------------------------------- Other Countries 15.2% 15.5% - -------------------------------------------------------------------------------- Cash and Equivalents(2) 3.4% 2.3% - -------------------------------------------------------------------------------- (2) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilties. - ------ 24 Global Growth - Schedule of Investments NOVEMBER 30, 2005 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 96.6% - -------------------------------------------------------------------------------- AUSTRALIA -- 1.7% - -------------------------------------------------------------------------------- 410,685 BHP Billiton Limited $ 6,642 - -------------------------------------------------------------------------------- AUSTRIA -- 1.1% - -------------------------------------------------------------------------------- 82,000 Erste Bank der Oesterreichischen Sparkassen AG 4,371 - -------------------------------------------------------------------------------- BELGIUM -- 1.1% - -------------------------------------------------------------------------------- 51,600 KBC Groupe 4,488 - -------------------------------------------------------------------------------- CANADA -- 1.5% - -------------------------------------------------------------------------------- 101,021 Suncor Energy Inc. 5,751 - -------------------------------------------------------------------------------- CHANNEL ISLANDS -- 0.9% - -------------------------------------------------------------------------------- 127,710 Amdocs Ltd.(1) 3,375 - -------------------------------------------------------------------------------- FRANCE -- 4.6% - -------------------------------------------------------------------------------- 128,171 Axa SA 3,868 - -------------------------------------------------------------------------------- 29,630 Schneider Electric SA 2,559 - -------------------------------------------------------------------------------- 32,400 Societe Generale 3,863 - -------------------------------------------------------------------------------- 18,650 Total SA(2) 4,671 - -------------------------------------------------------------------------------- 38,000 Vinci SA(2) 3,029 - -------------------------------------------------------------------------------- 17,990 - -------------------------------------------------------------------------------- GERMANY -- 2.8% - -------------------------------------------------------------------------------- 47,290 Continental AG 4,010 - -------------------------------------------------------------------------------- 66,300 Hypo Real Estate Holding AG 3,456 - -------------------------------------------------------------------------------- 18,500 SAP AG 3,346 - -------------------------------------------------------------------------------- 10,812 - -------------------------------------------------------------------------------- GREECE -- 2.2% - -------------------------------------------------------------------------------- 141,080 EFG Eurobank Ergasias SA 4,485 - -------------------------------------------------------------------------------- 139,000 Greek Organization of Football Prognostics SA 4,285 - -------------------------------------------------------------------------------- 8,770 - -------------------------------------------------------------------------------- HONG KONG -- 0.4% - -------------------------------------------------------------------------------- 1,090,981 Link Real Estate Investment Trust (The)(1) 1,695 - -------------------------------------------------------------------------------- INDIA -- 0.9% - -------------------------------------------------------------------------------- 112,361 Tata Consultancy Services Ltd. 3,719 - -------------------------------------------------------------------------------- IRELAND -- 1.5% - -------------------------------------------------------------------------------- 255,000 Anglo Irish Bank Corporation 3,506 - -------------------------------------------------------------------------------- 45,000 Ryanair Holdings plc ADR(1) 2,242 - -------------------------------------------------------------------------------- 5,748 - -------------------------------------------------------------------------------- ITALY -- 0.6% - -------------------------------------------------------------------------------- 78,000 Assicurazioni Generali SpA 2,423 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- JAPAN -- 11.6% - -------------------------------------------------------------------------------- 71,700 AEON Mall Co., Ltd. $ 3,166 - -------------------------------------------------------------------------------- 113,000 Chugai Pharmaceutical Co. Ltd.(2) 2,551 - -------------------------------------------------------------------------------- 959 Dentsu Inc.(2) 2,585 - -------------------------------------------------------------------------------- 88,400 Hoya Corp. 3,195 - -------------------------------------------------------------------------------- 127,000 JSR Corp.(2) 3,095 - -------------------------------------------------------------------------------- 31,100 ORIX Corporation 6,712 - -------------------------------------------------------------------------------- 315,000 Sharp Corp.(2) 4,879 - -------------------------------------------------------------------------------- 602,000 Shinsei Bank Ltd. 3,376 - -------------------------------------------------------------------------------- 671,000 Sumitomo Chemical Company, Limited 4,184 - -------------------------------------------------------------------------------- 435 Sumitomo Mitsui Financial Group Inc. 4,103 - -------------------------------------------------------------------------------- 243,000 Sumitomo Realty & Development Co. Ltd. 4,052 - -------------------------------------------------------------------------------- 49,500 Tokyo Electron Ltd. 3,003 - -------------------------------------------------------------------------------- 44,901 - -------------------------------------------------------------------------------- MEXICO -- 0.9% - -------------------------------------------------------------------------------- 123,000 America Movil SA de CV Series L ADR 3,533 - -------------------------------------------------------------------------------- NETHERLANDS -- 2.4% - -------------------------------------------------------------------------------- 116,924 ING Groep N.V. 3,794 - -------------------------------------------------------------------------------- 60,500 Schlumberger Ltd. 5,792 - -------------------------------------------------------------------------------- 9,586 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 0.9% - -------------------------------------------------------------------------------- 10,323,589 China Construction Bank Cl H(1) 3,395 - -------------------------------------------------------------------------------- SOUTH KOREA -- 2.0% - -------------------------------------------------------------------------------- 43,250 Hyundai Motor Company 3,570 - -------------------------------------------------------------------------------- 7,590 Samsung Electronics 4,377 - -------------------------------------------------------------------------------- 7,947 - -------------------------------------------------------------------------------- SPAIN -- 1.2% - -------------------------------------------------------------------------------- 385,771 Cintra Concesiones de Infraestructuras de Transporte SA(2) 4,713 - -------------------------------------------------------------------------------- SWEDEN -- 1.7% - -------------------------------------------------------------------------------- 17,950 Nobel Biocare Holding AG 4,088 - -------------------------------------------------------------------------------- 821,270 Telefonaktiebolaget LM Ericsson B Shares 2,686 - -------------------------------------------------------------------------------- 6,774 - -------------------------------------------------------------------------------- SWITZERLAND -- 5.6% - -------------------------------------------------------------------------------- 493,250 ABB Ltd.(1) 4,332 - -------------------------------------------------------------------------------- 24,988 Actelion N.V.(1)(2) 2,442 - -------------------------------------------------------------------------------- 90,620 Compagnie Financiere Richemont AG Cl A 3,583 - -------------------------------------------------------------------------------- 73,500 Novartis AG 3,848 - -------------------------------------------------------------------------------- 28,500 Roche Holding AG 4,283 - -------------------------------------------------------------------------------- 39,422 UBS AG 3,636 - -------------------------------------------------------------------------------- 22,124 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 25 Global Growth - Schedule of Investments NOVEMBER 30, 2005 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 0.8% - -------------------------------------------------------------------------------- 4,595,033 Advanced Semiconductor Engineering Inc. $ 3,311 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 4.5% - -------------------------------------------------------------------------------- 500,000 Carphone Warehouse Group plc 1,990 - -------------------------------------------------------------------------------- 164,542 Man Group plc 5,049 - -------------------------------------------------------------------------------- 138,765 Reckitt Benckiser plc 4,294 - -------------------------------------------------------------------------------- 170,110 Standard Chartered plc 3,640 - -------------------------------------------------------------------------------- 506,920 Tesco plc 2,655 - -------------------------------------------------------------------------------- 17,628 - -------------------------------------------------------------------------------- UNITED STATES -- 45.7% - -------------------------------------------------------------------------------- 44,200 Aetna Inc. 4,088 - -------------------------------------------------------------------------------- 77,700 American Express Co. 3,995 - -------------------------------------------------------------------------------- 54,900 American International Group, Inc. 3,686 - -------------------------------------------------------------------------------- 283,000 American Tower Corp. Cl A(1) 7,723 - -------------------------------------------------------------------------------- 67,500 Boeing Co. 4,603 - -------------------------------------------------------------------------------- 79,350 Carnival Corporation 4,324 - -------------------------------------------------------------------------------- 48,000 Caterpillar Inc. 2,773 - -------------------------------------------------------------------------------- 58,350 Citigroup Inc. 2,833 - -------------------------------------------------------------------------------- 148,000 Comcast Corporation(1) 3,907 - -------------------------------------------------------------------------------- 138,500 Constellation Brands Inc.(1) 3,271 - -------------------------------------------------------------------------------- 266,000 Corning Inc.(1) 5,387 - -------------------------------------------------------------------------------- 25,000 Corporate Executive Board Co. (The)(2) 2,163 - -------------------------------------------------------------------------------- 80,200 Danaher Corp. 4,452 - -------------------------------------------------------------------------------- 103,400 eBay Inc.(1) 4,633 - -------------------------------------------------------------------------------- 273,400 EMC Corp.(1) 3,808 - -------------------------------------------------------------------------------- 81,200 Exxon Mobil Corp. 4,712 - -------------------------------------------------------------------------------- 51,000 Gen-Probe Inc.(1)(2) 2,355 - -------------------------------------------------------------------------------- 60,910 Genentech, Inc.(1) 5,824 - -------------------------------------------------------------------------------- 147,800 General Electric Co. 5,279 - -------------------------------------------------------------------------------- 23,470 Goldman Sachs Group, Inc. (The) 3,026 - -------------------------------------------------------------------------------- 51,200 Harrah's Entertainment, Inc. 3,486 - -------------------------------------------------------------------------------- 66,500 Johnson & Johnson 4,106 - -------------------------------------------------------------------------------- 52,000 Kohl's Corp.(1) 2,392 - -------------------------------------------------------------------------------- 103,233 Las Vegas Sands Corp.(1)(2) 4,306 - -------------------------------------------------------------------------------- 109,000 McAfee Inc.(1) 3,031 - -------------------------------------------------------------------------------- 84,510 Medtronic, Inc. 4,696 - -------------------------------------------------------------------------------- 211,000 Microsoft Corporation 5,847 - -------------------------------------------------------------------------------- 57,000 Monsanto Co. 4,176 - -------------------------------------------------------------------------------- 114,906 Monster Worldwide Inc.(1) 4,470 - -------------------------------------------------------------------------------- 209,110 Motorola, Inc. 5,037 - -------------------------------------------------------------------------------- 62,200 Nabors Industries Ltd.(1) 4,354 - -------------------------------------------------------------------------------- 53,361 National Financial Partners Corp.(2) 2,707 - -------------------------------------------------------------------------------- 57,500 Noble Corp. 4,144 - -------------------------------------------------------------------------------- 111,762 Procter & Gamble Co. (The) 6,391 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 48,156 Prudential Financial Inc. $ 3,727 - -------------------------------------------------------------------------------- 78,200 SLM Corporation 4,110 - -------------------------------------------------------------------------------- 174,597 Sprint Nextel Corp. 4,372 - -------------------------------------------------------------------------------- 52,750 Textron Inc. 4,162 - -------------------------------------------------------------------------------- 66,000 UnitedHealth Group Incorporated 3,951 - -------------------------------------------------------------------------------- 134,408 XM Satellite Radio Holdings Inc. Cl A(1)(2) 3,933 - -------------------------------------------------------------------------------- 102,566 XTO Energy Inc. 4,173 - -------------------------------------------------------------------------------- 126,300 Yahoo! Inc.(1) 5,081 - -------------------------------------------------------------------------------- 51,200 Zimmer Holdings Inc.(1) 3,210 - -------------------------------------------------------------------------------- 178,704 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $279,996) 378,400 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 3.8% - -------------------------------------------------------------------------------- Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 2.75% -- 4.18%, 2/9/06 -- 11/15/09, valued at $15,196), in a joint trading account at 3.93%, dated 11/30/05, due 12/1/05 (Delivery value $14,902) (Cost $14,900) 14,900 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 8.2% - -------------------------------------------------------------------------------- Repurchase Agreement, Morgan Stanley Group, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.02%, dated 11/30/05, due 12/1/05 (Delivery value $3,713) 3,713 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.06%, dated 11/30/05, due 12/1/05 (Delivery value $28,486) 28,483 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $32,196) 32,196 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 108.6% (Cost $327,092) 425,496 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (8.6)% (33,706) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $391,790 ================================================================================ See Notes to Financial Statements. (continued) - ------ 26 Global Growth - Schedule of Investments NOVEMBER 30, 2005 MARKET SECTOR DIVERSIFICATION - -------------------------------------------------------------------------------- (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 24.8% - --------------------------------------------------------------------------------- Information Technology 14.1% - --------------------------------------------------------------------------------- Consumer Discretionary 13.2% - --------------------------------------------------------------------------------- Health Care 11.6% - --------------------------------------------------------------------------------- Industrials 11.5% - --------------------------------------------------------------------------------- Energy 8.6% - --------------------------------------------------------------------------------- Materials 4.6% - --------------------------------------------------------------------------------- Consumer Staples 4.2% - --------------------------------------------------------------------------------- Telecommunication Services 4.0% - --------------------------------------------------------------------------------- Cash and cash equivalents(+) 3.4% - --------------------------------------------------------------------------------- (+) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of November 30, 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. - ------ 27 International Opportunities - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- --------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 35.28% 23.95% 6/1/01 - -------------------------------------------------------------------------------- S&P/CITIGROUP EMI GROWTH WORLD EX-US 19.21% 11.12%(1) -- - -------------------------------------------------------------------------------- Institutional Class 35.53% 41.80% 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-CSR/0000872825-06-000012/growthintlopportunities0601.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - -------------------------------------------------------------------------------- 2001* 2002 2003 2004 2005 - -------------------------------------------------------------------------------- Investor Class -2.60% -2.87% 61.54% 27.14% 35.28% - -------------------------------------------------------------------------------- S&P/Citigroup EMI Growth World ex-US -14.51% -10.96% 38.79% 27.58% 19.21% - -------------------------------------------------------------------------------- * 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 team] PORTFOLIO MANAGERS ON THE INTERNATIONAL OPPORTUNITIES INVESTMENT TEAM: FEDERICO LAFFAN AND TREVOR GURWICH. International Opportunities gained 35.28%* during the 12 months ended November 30, 2005, far outdistancing its benchmark, the S&P/Citigroup EMI (Extended Market Index) Growth World ex-US, which returned 19.21%. International Opportunities also outpaced the 22.80% return of Foreign Small/Mid-Growth peer group tracked by Morningstar.** OVERSEAS MARKETS CLIMB Many overseas equity markets advanced during the 12-month period, demonstrating their resilience in the face of surging prices for commodities, especially oil, a terrorist attack in London, destructive hurricanes and numerous interest-rate increases by the U.S. Federal Reserve. Against that backdrop, International Opportunities achieved positive absolute contributions from each of its sector positions and outdistanced its benchmark -- results attributable almost entirely to effective security selection. In addition, we accomplished those gains despite the fact that the movement of the dollar versus other currencies diminished the fund's return. CONSUMER STOCKS PACE GAINS The economically sensitive companies of the consumer discretionary sector, on average our largest single stake, made the greatest contributions to both absolute and relative performance. Our complement of household durables holdings registered the best finish, led by Japan's Hitachi Koki, which makes power tools. SUCCESS IN RETAIL, REAL ESTATE Investments among specialty retailers proved rewarding and produced one of the portfolio's top stocks, Japan's Point Inc. Late in the year, the clothing-store company reported double-digit growth in both same-store sales and in the number of customers visiting its stores, news that supported the stock's climb. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Daifuku Co. Ltd. 1.7% -- - -------------------------------------------------------------------------------- KK DaVinci Advisors 1.6% -- - -------------------------------------------------------------------------------- Hitachi Koki Co., Ltd. 1.6% 1.0% - -------------------------------------------------------------------------------- Urban Corp. 1.6% 1.8% - -------------------------------------------------------------------------------- Cosco Investment Singapore Limited 1.6% 2.2% - -------------------------------------------------------------------------------- Point Inc. 1.6% 1.1% - -------------------------------------------------------------------------------- Nabtesco Corp. 1.6% -- - -------------------------------------------------------------------------------- Tsumura & Co. 1.5% 0.9% - -------------------------------------------------------------------------------- Tomra Systems ASA 1.5% -- - -------------------------------------------------------------------------------- Elekta AB Cl B 1.4% 1.7% - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares. ** (c) 2005 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. (continued) - ------ 30 International Opportunities - Portfolio Commentary Elsewhere, we found opportunity in the real estate industry, led by Japan's Urban Corporation. In September, the firm, which specializes in the sale and management of condominiums, reported solid first-half earnings driven by continued growth in the real estate market and higher lease rates for quality properties. We believe the strength in both companies' performance reflects the abatement of Japan's long-standing deflation difficulty, which has in turn created a positive environment for firms such as these by affording them greater pricing power. INDUSTRIALS LEND STRENGTH Our stake in the industrials sector, on average our second-largest position, significantly augmented returns. Cosco Investment Singapore Limited, on average the largest of the portfolio's top-ten holdings, finished as the top-contributing stock. Cosco, a bulk carrier unit of China's largest shipping company, continued to enjoy soaring charter rates driven by China's vibrant economy. Cosco also benefited from increased demand for its ship-repair services, a growing portion of its business. Both factors were catalysts behind the earnings growth that drew our interest. Cosco repeatedly announced profits during the period that had reached new record highs. INDIVIDUAL SHORTFALLS Despite overwhelmingly positive results, we nevertheless experienced some disappointments. One was Singapore-based Accord Customer Care Solutions, a leading provider of servicing for mobile communication and electronic devices in the Asia-Pacific region. We owned the stock earlier in the year, and it declined sharply following investigations of accounting irregularities. Though we eliminated the position, it was not before incurring damage, and this was the year's top-detracting name. A FINAL NOTE In February 2005, Lynette Schroeder departed American Century. Portfolio manager Federico Laffan remains at the helm and was joined in August by portfolio manager Trevor Gurwich, who has been with American Century since 1998. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Common Stocks 95.5% 94.6% - -------------------------------------------------------------------------------- Preferred Stocks 0.7% 0.6% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 96.2% 95.2% - -------------------------------------------------------------------------------- Temporary Cash Investments 3.2% 0.8% - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) 0.6% 4.0% - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Japan 26.8% 16.5% - -------------------------------------------------------------------------------- Germany 10.5% 8.1% - -------------------------------------------------------------------------------- France 8.3% 8.5% - -------------------------------------------------------------------------------- United Kingdom 7.8% 9.2% - -------------------------------------------------------------------------------- Norway 6.2% 6.1% - -------------------------------------------------------------------------------- Sweden 6.0% 5.4% - -------------------------------------------------------------------------------- Netherlands 5.1% 7.2% - -------------------------------------------------------------------------------- Italy 4.4% 3.9% - -------------------------------------------------------------------------------- Canada 2.3% 3.1% - -------------------------------------------------------------------------------- Singapore 2.1% 3.7% - -------------------------------------------------------------------------------- Spain 2.0% 2.9% - -------------------------------------------------------------------------------- Other Countries 14.7% 20.6% - -------------------------------------------------------------------------------- Cash and Equivalents(2) 3.8% 4.8% - -------------------------------------------------------------------------------- (2) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. - ------ 31 International Opportunities - Schedule of Investments NOVEMBER 30, 2005 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 95.5% - -------------------------------------------------------------------------------- AUSTRALIA -- 0.9% - -------------------------------------------------------------------------------- 179,797 SFE Corp. Ltd.(1) $ 1,774 - -------------------------------------------------------------------------------- AUSTRIA -- 1.2% - -------------------------------------------------------------------------------- 24,353 Andritz AG 2,434 - -------------------------------------------------------------------------------- BELGIUM -- 1.5% - -------------------------------------------------------------------------------- 17,181 EVS Broadcast Equipment SA 579 - -------------------------------------------------------------------------------- 35,662 Option N.V.(1)(2) 2,458 - -------------------------------------------------------------------------------- 3,037 - -------------------------------------------------------------------------------- CANADA -- 2.3% - -------------------------------------------------------------------------------- 88,260 Extendicare Inc. Cl A 1,371 - -------------------------------------------------------------------------------- 19,191 Home Capital Group Inc. 594 - -------------------------------------------------------------------------------- 42,691 Peyto Energy Trust 956 - -------------------------------------------------------------------------------- 81,884 Rothmans Inc.(1) 1,696 - -------------------------------------------------------------------------------- 4,617 - -------------------------------------------------------------------------------- DENMARK -- 1.9% - -------------------------------------------------------------------------------- 25,423 Bang & Olufsen AS B Shares(1) 2,353 - -------------------------------------------------------------------------------- 68,750 Genmab AS(2) 1,397 - -------------------------------------------------------------------------------- 3,750 - -------------------------------------------------------------------------------- FRANCE -- 8.3% - -------------------------------------------------------------------------------- 35,408 Alten(2) 1,081 - -------------------------------------------------------------------------------- 30,996 April Group 1,133 - -------------------------------------------------------------------------------- 111,908 GameLoft(2) 772 - -------------------------------------------------------------------------------- 41,937 Groupe Steria SCA 2,155 - -------------------------------------------------------------------------------- 7,940 IPSOS(1) 973 - -------------------------------------------------------------------------------- 55,480 Nexity 2,603 - -------------------------------------------------------------------------------- 103,137 Pinguely-Haulotte 1,873 - -------------------------------------------------------------------------------- 158,088 SOITEC(1)(2) 2,795 - -------------------------------------------------------------------------------- 66,093 SR Teleperformance(1) 2,051 - -------------------------------------------------------------------------------- 73,227 Wavecom SA(2) 1,007 - -------------------------------------------------------------------------------- 16,443 - -------------------------------------------------------------------------------- GERMANY -- 9.8% - -------------------------------------------------------------------------------- 8,019 Bijou Brigitte AG 2,015 - -------------------------------------------------------------------------------- 45,082 CTS Eventim AG(2) 1,217 - -------------------------------------------------------------------------------- 29,273 Deutsche Euroshop AG 1,562 - -------------------------------------------------------------------------------- 9,047 DIS Deutscher Industrie Service AG 523 - -------------------------------------------------------------------------------- 10,847 Interhyp AG(2) 879 - -------------------------------------------------------------------------------- 20,012 MPC Muenchmeyer Petersen Capital AG(2) 1,519 - -------------------------------------------------------------------------------- 20,244 MTU Aero Engines Holding AG(2) 633 - -------------------------------------------------------------------------------- 6,432 Rational AG 717 - -------------------------------------------------------------------------------- 57,147 Software AG 2,774 - -------------------------------------------------------------------------------- 9,692 Solarworld AG 1,347 - -------------------------------------------------------------------------------- 21,626 Techem AG(2) 935 - -------------------------------------------------------------------------------- 31,989 Thielert AG(2) 536 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 80,222 Vivacon AG(2) $ 2,698 - -------------------------------------------------------------------------------- 20,848 Wincor Nixdorf AG 2,041 - -------------------------------------------------------------------------------- 19,396 - -------------------------------------------------------------------------------- GREECE -- 0.7% - -------------------------------------------------------------------------------- 85,800 Germanos SA(2) 1,386 - -------------------------------------------------------------------------------- HONG KONG -- 0.9% - -------------------------------------------------------------------------------- 594,466 China Paradise Electronics Retail Ltd.(2) 217 - -------------------------------------------------------------------------------- 94,000 Parkson Retail Group Ltd.(2) 147 - -------------------------------------------------------------------------------- 439,000 Vtech Holdings Ltd. 1,489 - -------------------------------------------------------------------------------- 1,853 - -------------------------------------------------------------------------------- HUNGARY -- 0.5% - -------------------------------------------------------------------------------- 9,244 Egis Rt. 950 - -------------------------------------------------------------------------------- INDIA -- 0.5% - -------------------------------------------------------------------------------- 91,700 Associated Cement Co. Ltd. 1,017 - -------------------------------------------------------------------------------- ISRAEL -- 0.7% - -------------------------------------------------------------------------------- 165,862 Partner Communications 1,339 - -------------------------------------------------------------------------------- ITALY -- 4.4% - -------------------------------------------------------------------------------- 12,882 Amplifon SpA 776 - -------------------------------------------------------------------------------- 13,432 Digital Multimedia Technologies SpA(2) 491 - -------------------------------------------------------------------------------- 668,800 Gemina SpA(2) 1,617 - -------------------------------------------------------------------------------- 274,412 Recordati SpA 1,925 - -------------------------------------------------------------------------------- 32,280 Tod's SpA(1) 2,029 - -------------------------------------------------------------------------------- 77,612 Valentino Fashion Group SpA(1)(2) 1,881 - -------------------------------------------------------------------------------- 8,719 - -------------------------------------------------------------------------------- JAPAN -- 26.8% - -------------------------------------------------------------------------------- 94,000 ABC-Mart Inc.(1) 2,401 - -------------------------------------------------------------------------------- 135,000 Amano Corp.(1) 2,167 - -------------------------------------------------------------------------------- 38,800 Bank of the Ryukyus Ltd. 1,379 - -------------------------------------------------------------------------------- 202,000 Daifuku Co. Ltd. 3,440 - -------------------------------------------------------------------------------- 204 en-japan Inc.(1) 977 - -------------------------------------------------------------------------------- 144,000 Fukui Bank Ltd. (The) 555 - -------------------------------------------------------------------------------- 202,000 Hitachi Koki Co., Ltd.(1) 3,209 - -------------------------------------------------------------------------------- 27,400 Hogy Medical Co. Ltd. 1,484 - -------------------------------------------------------------------------------- 365 Intelligence Ltd. 722 - -------------------------------------------------------------------------------- 218,000 J-Oil Mills, Inc.(1) 1,028 - -------------------------------------------------------------------------------- 576 KK DaVinci Advisors(2) 3,258 - -------------------------------------------------------------------------------- 682,000 Kyushu-Shinwa Holdings Inc.(2) 1,936 - -------------------------------------------------------------------------------- 156,000 Mie Bank Ltd. (The) 924 - -------------------------------------------------------------------------------- 275,798 Nabtesco Corp. 3,084 - -------------------------------------------------------------------------------- 71,000 Oita Bank Ltd. (The) 554 - -------------------------------------------------------------------------------- 25,400 Pal Co. Ltd. 1,764 - -------------------------------------------------------------------------------- 47,500 Point Inc. 3,128 - -------------------------------------------------------------------------------- 110,000 Shikoku Bank Ltd. (The) 530 - -------------------------------------------------------------------------------- 5,600 Stella Chemifa Corp. 174 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 32 International Opportunities - Schedule of Investments NOVEMBER 30, 2005 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 44,900 Sysmex Corp.(1) $ 1,589 - -------------------------------------------------------------------------------- 21,200 Takeuchi Manufacturing Co. Ltd(.(1)) 1,178 - -------------------------------------------------------------------------------- 388,000 Toagosei Co. Ltd. 2,024 - -------------------------------------------------------------------------------- 194,000 Toyo Tire & Rubber Co. Ltd.(1) 959 - -------------------------------------------------------------------------------- 356,000 Tsugami Corp. 2,576 - -------------------------------------------------------------------------------- 129,000 Tsumura & Co.(1) 2,923 - -------------------------------------------------------------------------------- 18,000 Tsuruha Holdings Inc. 715 - -------------------------------------------------------------------------------- 47,700 Urban Corp.(1) 3,185 - -------------------------------------------------------------------------------- 1,289 Yoshinoya D&C Co. Ltd.(1) 2,367 - -------------------------------------------------------------------------------- 893 Zephyr Co. Ltd.(1) 2,802 - -------------------------------------------------------------------------------- 53,032 - -------------------------------------------------------------------------------- NETHERLANDS -- 5.1% - -------------------------------------------------------------------------------- 15,618 Aalberts Industries N.V. 782 - -------------------------------------------------------------------------------- 132,036 AM N.V. 1,554 - -------------------------------------------------------------------------------- 45,374 Ballast Nedam N.V. CV(2) 1,886 - -------------------------------------------------------------------------------- 33,273 Heijmans N.V.(1) 1,482 - -------------------------------------------------------------------------------- 128,502 Ordina N.V. 2,184 - -------------------------------------------------------------------------------- 12,750 Ten Cate N.V. 1,290 - -------------------------------------------------------------------------------- 25,666 United Services Group N.V. 977 - -------------------------------------------------------------------------------- 10,155 - -------------------------------------------------------------------------------- NORWAY -- 6.2% - -------------------------------------------------------------------------------- 726,970 Acta Holding ASA 1,563 - -------------------------------------------------------------------------------- 50,299 Fred Olsen Energy ASA(1)(2) 1,480 - -------------------------------------------------------------------------------- 82,892 Norwegian Air Shuttle AS(2) 824 - -------------------------------------------------------------------------------- 276,407 Songa Offshore ASA(2) 1,435 - -------------------------------------------------------------------------------- 135,120 Subsea 7 Inc.(2) 1,363 - -------------------------------------------------------------------------------- 129,832 Tandberg Television ASA(1)(2) 1,588 - -------------------------------------------------------------------------------- 31,356 TGS Nopec Geophysical Company ASA(1)(2) 1,209 - -------------------------------------------------------------------------------- 412,295 Tomra Systems ASA(1) 2,898 - -------------------------------------------------------------------------------- 12,360 - -------------------------------------------------------------------------------- SINGAPORE -- 2.1% - -------------------------------------------------------------------------------- 2,250,680 Cosco Investment Singapore Limited(1) 3,140 - -------------------------------------------------------------------------------- 1,312,000 Jaya Holdings Ltd. 962 - -------------------------------------------------------------------------------- 4,102 - -------------------------------------------------------------------------------- SOUTH AFRICA -- 1.1% - -------------------------------------------------------------------------------- 29,975 Investec Ltd. 1,201 - -------------------------------------------------------------------------------- 337,835 Murray & Roberts Holdings Ltd. 988 - -------------------------------------------------------------------------------- 2,189 - -------------------------------------------------------------------------------- SOUTH KOREA -- 0.6% - -------------------------------------------------------------------------------- 133,500 Ssangyong Motor Co.(2) 1,213 - -------------------------------------------------------------------------------- SPAIN -- 2.0% - -------------------------------------------------------------------------------- 57,877 Prosegur Cia de Seguridad SA 1,404 - -------------------------------------------------------------------------------- 577,206 Tubacex SA 2,573 - -------------------------------------------------------------------------------- 3,977 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- SWEDEN -- 6.0% - -------------------------------------------------------------------------------- 111,864 Capio AB(2) $ 1,975 - -------------------------------------------------------------------------------- 189,234 Elekta AB Cl B(1) 2,848 - -------------------------------------------------------------------------------- 59,579 JM AB 2,601 - -------------------------------------------------------------------------------- 30,998 Lindex AB 1,613 - -------------------------------------------------------------------------------- 25,780 Unibet Group plc SDR(1) 469 - -------------------------------------------------------------------------------- 781,120 WM-data AB B shares 2,371 - -------------------------------------------------------------------------------- 11,877 - -------------------------------------------------------------------------------- SWITZERLAND -- 1.5% - -------------------------------------------------------------------------------- 12,450 Charles Voegele Holding AG 908 - -------------------------------------------------------------------------------- 2,509 Galenica Holding AG 458 - -------------------------------------------------------------------------------- 4,685 Georg Fischer AG 1,510 - -------------------------------------------------------------------------------- 2,876 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 1.6% - -------------------------------------------------------------------------------- 116,700 Largan Precision Co. Ltd. 1,447 - -------------------------------------------------------------------------------- 526,000 Wistron Corp.(2) 653 - -------------------------------------------------------------------------------- 486,000 Wistron NeWeb Corp.(2) 1,030 - -------------------------------------------------------------------------------- 3,130 - -------------------------------------------------------------------------------- TURKEY -- 1.1% - -------------------------------------------------------------------------------- 192,765 Akcansa Cimento AS 1,109 - -------------------------------------------------------------------------------- 66,834 Turk Ekonomi Bankasi AS 1,005 - -------------------------------------------------------------------------------- 2,114 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 7.8% - -------------------------------------------------------------------------------- 336,438 Aggreko plc 1,486 - -------------------------------------------------------------------------------- 349,076 Ark Therapeutics Group plc(2) 697 - -------------------------------------------------------------------------------- 744,789 Ashtead Group plc(2) 2,175 - -------------------------------------------------------------------------------- 133,400 Babcock International Group plc 506 - -------------------------------------------------------------------------------- 58,646 Homeserve plc 1,191 - -------------------------------------------------------------------------------- 748,470 IG Group Holdings plc(2) 2,313 - -------------------------------------------------------------------------------- 271,075 Morgan Crucible Co.(2) 1,075 - -------------------------------------------------------------------------------- 78,779 NETeller plc(2) 894 - -------------------------------------------------------------------------------- 106,669 Rotork plc 1,106 - -------------------------------------------------------------------------------- 82,085 SIG plc 1,015 - -------------------------------------------------------------------------------- 109,220 Stolt Offshore SA(1)(2) 1,138 - -------------------------------------------------------------------------------- 60,813 Ultra Electronics Holdings plc 957 - -------------------------------------------------------------------------------- 145,015 VT Group plc 964 - -------------------------------------------------------------------------------- 15,517 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $141,284) 189,257 - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 0.7% - -------------------------------------------------------------------------------- GERMANY -- 0.7% - -------------------------------------------------------------------------------- 42,527 Hugo Boss AG (Cost $1,261) 1,448 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 33 International Opportunities - Schedule of Investments NOVEMBER 30, 2005 ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 3.2% - -------------------------------------------------------------------------------- Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 3.00%, 7/15/12, valued at $6,525), in a joint trading account at 3.92%, dated 11/30/05, due 12/1/05 (Delivery value $6,401) (Cost $6,400) $ 6,400 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 20.0% - -------------------------------------------------------------------------------- Repurchase Agreement, Morgan Stanley Group, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.02%, dated 11/30/05, due 12/1/05 (Delivery value $3,301) 3,301 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.06%, dated 11/30/05, due 12/1/05 (Delivery value $36,310) 36,306 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $39,607) 39,607 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 119.4% (Cost $188,552) 236,712 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (19.4)% (38,484) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $198,228 ================================================================================ MARKET SECTOR DIVERSIFICATION - -------------------------------------------------------------------------------- (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Industrials 26.0% - -------------------------------------------------------------------------------- Consumer Discretionary 22.8% - -------------------------------------------------------------------------------- Financials 15.7% - -------------------------------------------------------------------------------- Information Technology 13.4% - -------------------------------------------------------------------------------- Health Care 9.3% - -------------------------------------------------------------------------------- Materials 3.5% - -------------------------------------------------------------------------------- Energy 3.1% - -------------------------------------------------------------------------------- Consumer Staples 1.7% - -------------------------------------------------------------------------------- Telecommunication Services 0.7% - -------------------------------------------------------------------------------- Cash and cash equivalents(+) 3.8% - -------------------------------------------------------------------------------- (+) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- SDR = Swedish Depositary Receipt (1) Security, or a portion thereof, was on loan as of November 30, 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 June 1, 2005 to November 30, 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. To do so, compare this 5% hypothetical example with the 5% hypothetical (continued) - ------ 35 Shareholder Fee Examples (Unaudited) examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - ------------------------------------------------------------------------------------------ EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 6/1/05 - EXPENSE 6/1/05 11/30/05 11/30/05 RATIO* - ------------------------------------------------------------------------------------------ INTERNATIONAL STOCK SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------ ACTUAL: - ------------------------------------------------------------------------------------------ Investor Class $1,000 $1,107.30 $7.92 1.50% - ------------------------------------------------------------------------------------------ HYPOTHETICAL: - ------------------------------------------------------------------------------------------ Investor Class $1,000 $1,017.55 $7.59 1.50% - ------------------------------------------------------------------------------------------ INTERNATIONAL DISCOVERY SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------ ACTUAL: - ------------------------------------------------------------------------------------------ Investor Class $1,000 $1,239.50 $8.25 1.47% - ------------------------------------------------------------------------------------------ Institutional Class $1,000 $1,241.10 $7.13 1.27% - ------------------------------------------------------------------------------------------ Advisor Class $1,000 $1,238.20 $9.65 1.72% - ------------------------------------------------------------------------------------------ HYPOTHETICAL: - ------------------------------------------------------------------------------------------ Investor Class $1,000 $1,017.70 $7.44 1.47% - ------------------------------------------------------------------------------------------ Institutional Class $1,000 $1,018.70 $6.43 1.27% - ------------------------------------------------------------------------------------------ Advisor Class $1,000 $1,016.44 $8.69 1.72% - ------------------------------------------------------------------------------------------ EMERGING MARKETS SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------ ACTUAL: - ------------------------------------------------------------------------------------------ Investor Class $1,000 $1,248.10 $10.65 1.89% - ------------------------------------------------------------------------------------------ Institutional Class $1,000 $1,249.60 $9.53 1.69% - ------------------------------------------------------------------------------------------ Advisor Class $1,000 $1,245.80 $12.05 2.14% - ------------------------------------------------------------------------------------------ C Class $1,000 $1,242.20 $16.24 2.89% - ------------------------------------------------------------------------------------------ HYPOTHETICAL: - ------------------------------------------------------------------------------------------ Investor Class $1,000 $1,015.59 $9.55 1.89% - ------------------------------------------------------------------------------------------ Institutional Class $1,000 $1,016.60 $8.54 1.69% - ------------------------------------------------------------------------------------------ Advisor Class $1,000 $1,014.34 $10.81 2.14% - ------------------------------------------------------------------------------------------ C Class $1,000 $1,010.58 $14.57 2.89% - ------------------------------------------------------------------------------------------ * 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 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (continued) - ------ 36 Shareholder Fee Examples (Unaudited) - ------------------------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD(1) ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 6/1/05 - EXPENSE 6/1/05 11/30/05 11/30/05 RATIO(1) - ------------------------------------------------------------------------------------------------- GLOBAL GROWTH SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------------- ACTUAL: - ------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,140.80 $6.98 1.30% - ------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,142.20 $5.91 1.10% - ------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,138.60 $8.31 1.55% - ------------------------------------------------------------------------------------------------- C Class $1,000 $1,134.70 $12.31 2.30% - ------------------------------------------------------------------------------------------------- R Class $1,000 $1,058.50(2) $6.29(3) 1.80% - ------------------------------------------------------------------------------------------------- HYPOTHETICAL: - ------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,018.55 $6.58 1.30% - ------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,019.55 $5.57 1.10% - ------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,017.30 $7.84 1.55% - ------------------------------------------------------------------------------------------------- C Class $1,000 $1,013.54 $11.61 2.30% - ------------------------------------------------------------------------------------------------- R Class $1,000 $1,016.04(4) $9.10(4) 1.80% - ------------------------------------------------------------------------------------------------- INTERNATIONAL OPPORTUNITIES SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------------- ACTUAL: - ------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,219.70 $10.57 1.90% - ------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,222.20 $9.47 1.70% - ------------------------------------------------------------------------------------------------- HYPOTHETICAL: - ------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,015.54 $9.60 1.90% - ------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,016.55 $8.59 1.70% - ------------------------------------------------------------------------------------------------- (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 183, 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 return from July 29, 2005 (class inception) through November 30, 2005. (3) 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 124, the number of days in the period from July 29, 2005 (class inception) through November 30, 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 period assumes the class had been available throughout the entire period and are calculated using the class's annualized expense ratio listed in the table above. - ------ 37 Statement of Assets and Liabilities NOVEMBER 30, 2005 - ----------------------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING (AMOUNTS IN THOUSANDS) STOCK DISCOVERY MARKETS - ----------------------------------------------------------------------------------------------- ASSETS - ----------------------------------------------------------------------------------------------- Investment securities, at value (cost of $19,155, $1,056,502, and $286,447, respectively) -- including $--, $239,419, and $24,711, of securities on loan, respectively $20,434 $1,346,845 $344,410 - --------------------------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $--, $252,529, and $25,649, respectively) -- 252,529 25,649 - ----------------------------------------------------------------------------------------------- Total investment securities, at value (cost of $19,155, $1,309,031, and $312,096, respectively) 20,434 1,599,374 370,059 - --------------------------------------------------- Cash 99 -- -- - --------------------------------------------------- Foreign currency holdings, at value (cost of $--, $13, and $649, respectively) -- 13 649 - --------------------------------------------------- Receivable for investments sold 25 11,713 4,171 - --------------------------------------------------- Receivable for capital shares sold -- -- 28 - --------------------------------------------------- Dividends and interest receivable 41 1,300 418 - ----------------------------------------------------------------------------------------------- 20,599 1,612,400 375,325 - ----------------------------------------------------------------------------------------------- LIABILITIES - ----------------------------------------------------------------------------------------------- Payable for collateral received for securities on loan -- 252,529 25,649 - --------------------------------------------------- Disbursements in excess of demand deposit cash -- 2,289 4,170 - --------------------------------------------------- Payable for investments purchased 233 4,946 8,051 - --------------------------------------------------- Accrued management fees 24 1,537 463 - --------------------------------------------------- Distribution fees payable -- -- 1 - ----------------------------------------------------------------------------------------------- 257 261,301 38,334 - ----------------------------------------------------------------------------------------------- NET ASSETS $20,342 $1,351,099 $336,991 =============================================================================================== See Notes to Financial Statements. (continued) - ------ 38 Statement of Assets and Liabilities NOVEMBER 30, 2005 - ----------------------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING (AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS) STOCK DISCOVERY MARKETS - ----------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - ----------------------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $19,228 $ 815,100 $221,382 - ---------------------------------------------- Accumulated undistributed net investment income (loss) 77 10,912 (278) - ---------------------------------------------- Accumulated undistributed net realized gain (loss) on investment and foreign currency transactions (242) 235,138 57,973 - ---------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 1,279 289,949 57,914 - ----------------------------------------------------------------------------------------------- $20,342 $1,351,099 $336,991 =============================================================================================== INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ----------------------------------------------------------------------------------------------- Net assets $20,341,586 $1,145,623,499 $220,719,582 - ---------------------------------------------- Shares outstanding 1,877,228 71,860,750 26,759,015 - ---------------------------------------------- Net asset value per share $10.84 $15.94 $8.25 - ----------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ----------------------------------------------------------------------------------------------- Net assets N/A $205,405,617 $113,765,273 - ---------------------------------------------- Shares outstanding N/A 12,789,796 13,607,658 - ---------------------------------------------- Net asset value per share N/A $16.06 $8.36 - ----------------------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ----------------------------------------------------------------------------------------------- Net assets N/A $69,542 $1,772,776 - ---------------------------------------------- Shares outstanding N/A 4,415 218,656 - ---------------------------------------------- Net asset value per share N/A $15.75 $8.11 - ----------------------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ----------------------------------------------------------------------------------------------- Net assets N/A N/A $732,927 - ---------------------------------------------- Shares outstanding N/A N/A 92,190 - ---------------------------------------------- Net asset value per share N/A N/A $7.95 - ----------------------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 39 Statement of Assets and Liabilities NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- GLOBAL INTERNATIONAL (AMOUNTS IN THOUSANDS) GROWTH OPPORTUNITIES - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $294,896 and $148,945, respectively) -- including $30,603 and $37,277 of securities on loan, respectively $393,300 $197,105 - ---------------------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $32,196 and $39,607, respectively) 32,196 39,607 - -------------------------------------------------------------------------------- Total investment securities, at value (cost of $327,092 and $188,552, respectively) 425,496 236,712 - ---------------------------------------------- Cash 3,056 -- - ---------------------------------------------- Foreign currency holdings, at value (cost of $269 and $364, respectively) 262 365 - ---------------------------------------------- Receivable for investments sold 1,587 2,265 - ---------------------------------------------- Receivable for capital shares sold 31 -- - ---------------------------------------------- Dividends and interest receivable 476 169 - -------------------------------------------------------------------------------- 430,908 239,511 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payable for collateral received for securities on loan 32,196 39,607 - ---------------------------------------------- Disbursements in excess of demand deposit cash -- 4 - ---------------------------------------------- Payable for investments purchased 6,522 1,371 - ---------------------------------------------- Payable for capital shares redeemed 10 -- - ---------------------------------------------- Accrued management fees 388 301 - ---------------------------------------------- Distribution fees payable 1 -- - ---------------------------------------------- Service fees payable 1 -- - -------------------------------------------------------------------------------- 39,118 41,283 - -------------------------------------------------------------------------------- NET ASSETS $391,790 $198,228 ================================================================================ See Notes to Financial Statements. (continued) - ------ 40 Statement of Assets and Liabilities NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- GLOBAL INTERNATIONAL (AMOUNTS IN THOUSANDS EXCEPT PER-SHARE AMOUNTS) GROWTH OPPORTUNITIES - -------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $346,965 $101,255 - ---------------------------------------------- Accumulated undistributed net investment income (loss) (1,193) 149 - ---------------------------------------------- Accumulated undistributed net realized gain (loss) on investment and foreign currency transactions (52,379) 48,678 - ---------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 98,397 48,146 - -------------------------------------------------------------------------------- $391,790 $198,228 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $378,976,109 $198,197,486 - ---------------------------------------------- Shares outstanding 42,685,617 16,147,913 - ---------------------------------------------- Net asset value per share $8.88 $12.27 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $8,669,456 $30,648 - ---------------------------------------------- Shares outstanding 968,944 2,488 - ---------------------------------------------- Net asset value per share $8.95 $12.32 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $3,664,214 N/A - ---------------------------------------------- Shares outstanding 416,841 N/A - ---------------------------------------------- Net asset value per share $8.79 N/A - -------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $453,688 N/A - ---------------------------------------------- Shares outstanding 52,832 N/A - ---------------------------------------------- Net asset value per share $8.59 N/A - -------------------------------------------------------------------------------- R CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $26,477 N/A - ---------------------------------------------- Shares outstanding 2,987 N/A - ---------------------------------------------- Net asset value per share $8.86 N/A - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 41 Statement of Operations YEAR ENDED NOVEMBER 30, 2005 (EXCEPT AS NOTED) - ------------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING (AMOUNTS IN THOUSANDS) STOCK(1) DISCOVERY MARKETS - ------------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - ------------------------------------------------------------------------------------- INCOME: - --------------------------------------- Dividends (net of foreign taxes withheld of $14, $3,834, and $649, respectively) $ 183 $ 28,178 $ 4,825 - --------------------------------------- Interest 13 795 352 - --------------------------------------- Securities lending -- 2,136 80 - ------------------------------------------------------------------------------------- 196 31,109 5,257 - ------------------------------------------------------------------------------------- EXPENSES: - --------------------------------------- Management fees 122 17,912 4,642 - --------------------------------------- Distribution fees: - --------------------------------------- Advisor Class -- -- 3 - --------------------------------------- C Class -- -- 5 - --------------------------------------- Service fees: - --------------------------------------- Advisor Class -- -- 3 - --------------------------------------- C Class -- -- 2 - --------------------------------------- Directors' fees and expenses -- 19 4 - --------------------------------------- Other expenses -- 70 14 - ------------------------------------------------------------------------------------- 122 18,001 4,673 - ------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 74 13,108 584 - ------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - ------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - --------------------------------------- Investment transactions (net of foreign taxes withheld of $--, $176, and $219, respectively) (54) 231,477 52,392 - --------------------------------------- Foreign currency transactions (net of foreign taxes withheld of $--, $--, and $24, respectively) (185) 4,309 5,200 - ------------------------------------------------------------------------------------- (239) 235,786 57,592 - ------------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: - --------------------------------------- Investments (including foreign tax liability reduction (increase) of $--, $(234), and $(54), respectively) 2,041 133,235 22,759 - --------------------------------------- Translation of assets and liabilities in foreign currencies (762) (107,023) (7,470) - ------------------------------------------------------------------------------------- 1,279 26,212 15,289 - ------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 1,040 261,998 72,881 - ------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $1,114 $275,106 $73,465 ===================================================================================== (1) March 31, 2005 (fund inception) through November 30, 2005. See Notes to Financial Statements. (continued) - ------ 42 Statement of Operations YEAR ENDED NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- GLOBAL INTERNATIONAL (AMOUNTS IN THOUSANDS) GROWTH OPPORTUNITIES - -------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - --------------------------------------------- Dividends (net of foreign taxes withheld of $279 and $281, respectively) $ 3,983 $ 3,494 - --------------------------------------------- Interest 128 133 - --------------------------------------------- Securities lending 117 403 - -------------------------------------------------------------------------------- 4,228 4,030 - -------------------------------------------------------------------------------- EXPENSES: - --------------------------------------------- Management fees 4,248 3,623 - --------------------------------------------- Distribution fees: - --------------------------------------------- Advisor Class 7 -- - --------------------------------------------- C Class 2 -- - --------------------------------------------- Service fees: - --------------------------------------------- Advisor Class 7 -- - --------------------------------------------- C Class 1 -- - --------------------------------------------- Directors' fees and expenses 5 3 - --------------------------------------------- Other expenses 3 5 - -------------------------------------------------------------------------------- 4,273 3,631 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) (45) 399 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - --------------------------------------------- Investment transactions 29,952 48,801 - --------------------------------------------- Foreign currency transactions 1,465 16 - -------------------------------------------------------------------------------- 31,417 48,817 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: - --------------------------------------------- Investments (including foreign tax liability reduction (increase) of $-- and $(7), respectively) 41,424 23,185 - --------------------------------------------- Translation of assets and liabilities in foreign currencies (15,269) (15,457) - -------------------------------------------------------------------------------- 26,155 7,728 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 57,572 56,545 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $57,527 $56,944 ================================================================================ See Notes to Financial Statements. - ------ 43 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2005 AND NOVEMBER 30, 2004 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL (AMOUNTS IN THOUSANDS) STOCK DISCOVERY - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2005(1) 2005 2004 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income (loss) $ 74 $ 13,108 $ (419) - -------------------------------------- Net realized gain (loss) (239) 235,786 242,089 - -------------------------------------- Change in net unrealized appreciation (depreciation) 1,279 26,212 (32,657) - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 1,114 275,106 209,013 - -------------------------------------------------------------------------------- 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 19,228 (11,575) (104,197) - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 20,342 72,428 102,044 NET ASSETS - -------------------------------------------------------------------------------- Beginning of period -- 1,278,671 1,176,627 - -------------------------------------------------------------------------------- End of period $20,342 $1,351,099 $1,278,671 ================================================================================ Accumulated undistributed net investment income (loss) $77 $10,912 $(239) ================================================================================ (1) March 31, 2005 (fund inception) through November 30, 2005. See Notes to Financial Statements. (continued) - ------ 44 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2005 AND NOVEMBER 30, 2004 - ------------------------------------------------------------------------------------------------ (AMOUNTS IN THOUSANDS) EMERGING MARKETS GLOBAL GROWTH - ------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS 2005 2004 2005 2004 - ------------------------------------------------------------------------------------------------ OPERATIONS - ------------------------------------------------------------------------------------------------ Net investment income (loss) $ 584 $ (319) $ (45) $ (335) - ------------------------------------------- Net realized gain (loss) 57,592 18,177 31,417 25,747 - ------------------------------------------- Change in net unrealized appreciation (depreciation) 15,289 11,582 26,155 15,344 - ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations 73,465 29,440 57,527 40,756 - ------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------ From net investment income: - --------------------------------- Investor Class -- -- (804) -- - ------------------------------------------- Institutional Class -- -- (39) -- - ------------------------------------------- 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) -- (843) -- - ------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS - ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from capital share transactions 36,847 32,420 25,866 9,177 - ------------------------------------------------------------------------------------------------ NET INCREASE (DECREASE) IN NET ASSETS 107,263 61,860 82,550 49,933 NET ASSETS - ------------------------------------------------------------------------------------------------ Beginning of period 229,728 167,868 309,240 259,307 - ------------------------------------------------------------------------------------------------ End of period $336,991 $229,728 $391,790 $309,240 ================================================================================================ Accumulated undistributed net investment loss $(278) $(208) $(1,193) $(463) ================================================================================================ See Notes to Financial Statements. (continued) - ------ 45 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2005 AND NOVEMBER 30, 2004 - -------------------------------------------------------------------------------- (AMOUNTS IN THOUSANDS) INTERNATIONAL OPPORTUNITIES - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2005 2004 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income (loss) $ 399 $ (733) - -------------------------------------------- Net realized gain (loss) 48,817 4,975 - -------------------------------------------- Change in net unrealized appreciation (depreciation) 7,728 25,156 - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 56,944 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 (40,017) 80,193 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 11,260 106,437 NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 186,968 80,531 - -------------------------------------------------------------------------------- End of period $198,228 $186,968 ================================================================================ Accumulated undistributed net investment income (loss) $149 $(178) ================================================================================ See Notes to Financial Statements. - ------ 46 Notes to Financial Statements NOVEMBER 30, 2005 (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 primarily 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 is authorized to issue the Investor Class, the Institutional Class, the Advisor Class and the C Class. Global Growth is authorized to issue the Investor Class, the Institutional Class, the Advisor Class, the C Class and the R Class. International Opportunities is authorized to issue the Investor Class and the Institutional Class. The C Class may be subject to a contingent deferred sales charge. The share classes differ principally in their respective sales charges and shareholder servicing and distribution expenses and arrangements. All shares of each fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the funds are allocated to each class of shares based on their relative net assets. Sale of International Stock's Investor Class commenced on March 31, 2005 (fund inception). Sale of Global Growth's R Class commenced July 29, 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 NOVEMBER 30, 2005 (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 NOVEMBER 30, 2005 (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. Effective July 29, 2005, Emerging Markets modified its management fee schedule, resulting in lower fee rates and breakpoints. There was a reduction of the effective annual management fee for the year ended November 30, 2005 resulting from this change. 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% - -------------------------------------------------------------------------------- Effective July 29, 2005, the annual management fee schedule for each class of Emerging Markets is as follows: - -------------------------------------------------------------------------------- INVESTOR & C INSTITUTIONAL ADVISOR - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $250 million 1.85% 1.65% 1.60% - -------------------------------------------------------------------------------- Next $250 million 1.75% 1.55% 1.50% - -------------------------------------------------------------------------------- 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 & R 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 NOVEMBER 30, 2005 (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 year ended November 30, 2005, were as follows: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR C R - -------------------------------------------------------------------------------- International Stock 1.50% N/A N/A N/A N/A - -------------------------------------------------------------------------------- International Discovery 1.46% 1.26% 1.21% N/A N/A - -------------------------------------------------------------------------------- Emerging Markets 1.93% 1.73% 1.68% 1.93% N/A - -------------------------------------------------------------------------------- Global Growth 1.30% 1.10% 1.05% 1.30% 1.30% - -------------------------------------------------------------------------------- International Opportunities 1.90% 1.70% N/A 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' 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 the funds. 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 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 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 plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. 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 and R Class shares. Fees incurred under the plans during the year ended November 30, 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. 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 NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS) 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the year ended November 30, 2005 (except as noted), were as follows: - ------------------------------------------------------------------------------------ INTERNATIONAL INTERNATIONAL EMERGING GLOBAL INTERNATIONAL STOCK(1) DISCOVERY MARKETS GROWTH OPPORTUNITIES - ------------------------------------------------------------------------------------ Purchases $31,480 $1,769,033 $399,584 $135,890 $207,516 - ------------------------------------------------------------------------------------ Proceeds from sales $12,685 $1,952,481 $361,882 $116,423 $256,313 - ------------------------------------------------------------------------------------ (1) March 31, 2005 (fund inception) through November 30, 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 - --------------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005(1) SHARES AUTHORIZED 325,000 400,000 100,000 ========================================================================================================= Sold 2,009 $20,604 3,599 $ 50,533 13,237 $95,244 - -------------------------------- Issued in reinvestment of distributions -- -- 12,055 156,490 231 1,506 - -------------------------------- Redeemed (132) (1,376)(2) (17,459) (241,922)(2) (8,251) (56,614)(2) - --------------------------------------------------------------------------------------------------------- Net increase (decrease) 1,877 $19,228 (1,805) $ (34,899) 5,217 $40,136 ========================================================================================================= 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 ========================================================================================================= (1) March 31, 2005 (fund inception) through November 30, 2005 for International Stock. (2) Net of redemption fees of $3, $34, $117 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 NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ----------------------------------------------------------------------------------------------- INTERNATIONAL DISCOVERY EMERGING MARKETS - ----------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ----------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 75,000 50,000 =============================================================================================== Sold 4,413 $62,162 6,983 $49,775 - ------------------------------------------ Issued in reinvestment of distributions 1,917 25,031 170 1,103 - ------------------------------------------ Redeemed (4,430) (63,742)(1) (8,128) (54,494)(1) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 1,900 $23,451 (975) $(3,616) =============================================================================================== YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 75,000 50,000 ============================================================================================== Sold 1,997 $ 28,274 9,037 $53,801 - ------------------------------------------ Issued in reinvestment of distributions 44 566 -- -- - ------------------------------------------ Redeemed (2,644) (36,669) (6,322) (35,967) - ----------------------------------------------------------------------------------------------- Net increase (decrease) (603) $ (7,829) 2,715 $17,834 =============================================================================================== ADVISOR CLASS - ----------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 5,000 5,000 =============================================================================================== Sold 2 $ 23 169 $1,207 - ------------------------------------------ Issued in reinvestment of distributions 2 29 2 13 - ------------------------------------------ Redeemed (13) (179) (142) (945)(2) - ----------------------------------------------------------------------------------------------- Net increase (decrease) (9) $(127) 29 $ 275 =============================================================================================== YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 5,000 5,000 =============================================================================================== Sold 6 $84 256 $1,512 - ------------------------------------------ Redeemed (6) (77) (181) (1,039) - ----------------------------------------------------------------------------------------------- Net increase (decrease) -- $ 7 75 $ 473 =============================================================================================== C CLASS - ----------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED N/A 5,000 =============================================================================================== Sold 40 $269 - ------------------------------------------ Issued in reinvestment of distributions 1 7 - ------------------------------------------ Redeemed (34) (224) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 7 $ 52 =============================================================================================== YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED N/A 10,000 =============================================================================================== Sold 63 $364 - ------------------------------------------ Redeemed (34) (192) - ----------------------------------------------------------------------------------------------- Net increase (decrease) 29 $172 =============================================================================================== (1) Net of redemption fees of $22 and $13 for International Discovery and Emerging Markets, respectively. (2) Net of redemption fees of $5. (continued) - ------ 52 Notes to Financial Statements NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ----------------------------------------------------------------------------------------------------- GLOBAL GROWTH INTERNATIONAL OPPORTUNITIES - ----------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ----------------------------------------------------------------------------------------------------- INVESTOR CLASS - ----------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 150,000 100,000 ===================================================================================================== Sold 9,174 $76,444 129 $ 1,320 - --------------------------------------------- Issued in reinvestment of distributions 101 777 559 5,242 - --------------------------------------------- Redeemed (6,636) (52,915)(1) (3,366) (34,929)(1) - ----------------------------------------------------------------------------------------------------- Net increase (decrease) 2,639 $24,306 (2,678) $(28,367) ===================================================================================================== 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 (decrease) 1,398 $10,147 9,371 $ 79,868 ===================================================================================================== INSTITUTIONAL CLASS - ----------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 5,000 10,000 ===================================================================================================== Sold 220 $1,812 2 $ 30 - --------------------------------------------- Issued in reinvestment of distributions 5 39 36 336 - --------------------------------------------- Redeemed (153) (1,243) (1,196) (12,016) - ----------------------------------------------------------------------------------------------------- Net increase (decrease) 72 $ 608 (1,158) $(11,650) ===================================================================================================== 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 $20 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 NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- GLOBAL GROWTH - -------------------------------------------------------------------------------- SHARES AMOUNT - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 5,000 ================================================================================ Sold 189 $1,530 - -------------------------------------------- Redeemed (106) (826) - -------------------------------------------------------------------------------- Net increase (decrease) 83 $ 704 ================================================================================ YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 5,000 ================================================================================ Sold 262 $1,784 - -------------------------------------------- Redeemed (90) (612) - -------------------------------------------------------------------------------- Net increase (decrease) 172 $1,172 ================================================================================ C CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 5,000 ================================================================================ Sold 31 $248 - -------------------------------------------- Redeemed (3) (25) - -------------------------------------------------------------------------------- Net increase (decrease) 28 $223 ================================================================================ YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 10,000 ================================================================================ Sold 17 $115 - -------------------------------------------- Redeemed (1) (5) - -------------------------------------------------------------------------------- Net increase (decrease) 16 $110 ================================================================================ R CLASS - -------------------------------------------------------------------------------- PERIOD ENDED NOVEMBER 30, 2005(1) SHARES AUTHORIZED 50,000 ================================================================================ Sold 3 $25 ================================================================================ (1) July 29, 2005 (commencement of sale) through November 30, 2005. (continued) - ------ 54 Notes to Financial Statements NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS) 5. SECURITIES LENDING As of November 30, 2005, securities in International Discovery, Emerging Markets, Global Growth and International Opportunities valued at $239,419, $24,711, $30,603 and $37,277, 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 $252,529, $25,649, $32,196 and $39,607, 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, except for International Stock, 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 to $500 million effective December 14, 2005. The funds, except for International Stock, may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The funds did not borrow from the line during the year ended November 30, 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 NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS) 8. FEDERAL TAX INFORMATION On December 13, 2005, the funds declared and paid the following per-share distributions from net investment income to shareholders of record on December 12, 2005. - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR C R - -------------------------------------------------------------------------------- International Stock $0.0792 N/A N/A N/A N/A - -------------------------------------------------------------------------------- International Discovery $0.1275 $0.1618 $0.0864 N/A N/A - -------------------------------------------------------------------------------- Emerging Markets $0.0497 $0.0665 $0.0283 -- N/A - -------------------------------------------------------------------------------- Global Growth $0.0637 $0.0825 $0.0412 -- 0.0480 - -------------------------------------------------------------------------------- International Opportunities $0.0134 $0.0390 N/A N/A N/A - -------------------------------------------------------------------------------- On December 13, 2005, the funds declared and paid the following per-share distributions from net realized gains to shareholders of record on December 12, 2005. - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR C R - -------------------------------------------------------------------------------- International Stock -- N/A N/A N/A N/A - -------------------------------------------------------------------------------- International Discovery $2.6229 $2.6229 $2.6229 N/A N/A - -------------------------------------------------------------------------------- Emerging Markets $1.2730 $1.2730 $1.2730 $1.2375 N/A - -------------------------------------------------------------------------------- Global Growth -- -- -- -- -- - -------------------------------------------------------------------------------- International Opportunities $2.6404 $2.6404 N/A N/A N/A - -------------------------------------------------------------------------------- The tax character of distributions paid during the years ended November 30, 2005 and November 30, 2004 were as follows: - -------------------------------------------------------------------------------- INTERNATIONAL DISCOVERY EMERGING MARKETS - -------------------------------------------------------------------------------- 2005 2004 2005 2004 - -------------------------------------------------------------------------------- DISTRIBUTIONS PAID FROM - -------------------------------------------------------------------------------- Ordinary income $23,372 $2,772 -- -- - -------------------------------------------------------------------------------- Long-term capital gains $167,731 -- $3,049 -- - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- GLOBAL GROWTH INTERNATIONAL OPPORTUNITIES - -------------------------------------------------------------------------------- 2005 2004 2005 2004 - -------------------------------------------------------------------------------- DISTRIBUTIONS PAID FROM - -------------------------------------------------------------------------------- Ordinary income $843 -- -- $2,030 - -------------------------------------------------------------------------------- Long-term capital gains -- -- $5,667 $1,124 - -------------------------------------------------------------------------------- The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. There were no distributions paid by International Stock during the period March 31, 2005 (fund inception) through November 30, 2005. (continued) - ------ 56 Notes to Financial Statements NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS) 8. FEDERAL TAX INFORMATION (CONTINUED) As of November 30, 2005, the components of distributable earnings on a tax-basis and the federal tax cost of investments were as follows: - ------------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING STOCK DISCOVERY MARKETS - ------------------------------------------------------------------------------------- Federal tax cost of investments $19,270 $1,310,260 $314,587 ===================================================================================== Gross tax appreciation of investments $1,315 $303,794 $59,725 - --------------------------------------- Gross tax depreciation of investments (151) (14,680) (4,253) - ------------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $1,164 $289,114 $55,472 ===================================================================================== Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies -- (423) (50) - ------------------------------------------------------------------------------------- Net tax appreciation (depreciation) $1,164 $288,691 $55,422 ===================================================================================== Undistributed ordinary income $152 $115,117 $38,172 - --------------------------------------- Accumulated long-term gains -- $132,380 $22,089 - --------------------------------------- Accumulated capital losses $(60) -- -- - --------------------------------------- Capital loss deferral $(140) -- -- - --------------------------------------- Currency loss deferral $(2) $(189) $(74) - ------------------------------------------------------------------------------------- - ------------------------------------------------------------------------------------- GLOBAL INTERNATIONAL GROWTH OPPORTUNITIES - ------------------------------------------------------------------------------------- Federal tax cost of investments $331,090 $188,619 ===================================================================================== Gross tax appreciation of investments $97,747 $49,929 - ------------------------------------------------------- Gross tax depreciation of investments (3,341) (1,836) - ------------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $94,406 $48,093 ===================================================================================== Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies (5) (14) - ------------------------------------------------------------------------------------- Net tax appreciation (depreciation) $94,401 $48,079 ===================================================================================== Undistributed ordinary income $2,803 $19,410 - ------------------------------------------------------- Accumulated long-term gains -- $29,523 - ------------------------------------------------------- Accumulated capital losses $(52,379) -- - ------------------------------------------------------- Capital loss deferral -- -- - ------------------------------------------------------- Currency loss deferral -- $(39) - ------------------------------------------------------------------------------------- (continued) - ------ 57 Notes to Financial Statements NOVEMBER 30, 2005 (AMOUNTS IN THOUSANDS) 8. FEDERAL TAX INFORMATION (CONTINUED) The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales, return of capital dividends, and on investments in passive foreign investment companies. The accumulated capital losses listed on the previous page represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers expire as follows: - -------------------------------------------------------------------------------- 2009 2010 2011 2012 2013 - -------------------------------------------------------------------------------- International Stock -- -- -- -- $(60) - -------------------------------------------------------------------------------- Global Growth $(23,203) $(28,717) $(459) -- -- - -------------------------------------------------------------------------------- The capital and currency loss deferrals listed on the previous page represent net capital and foreign currency losses incurred in the one-month period ended November 30, 2005. The funds have elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. 9. OTHER TAX INFORMATION (UNAUDITED) ($ IN FULL) The following information is provided pursuant to provisions of the Internal Revenue Code. International Discovery and Global Growth hereby designate $14,889,736 and $842,943, respectively, of qualified dividend income for the fiscal year ended November 30, 2005. For corporate taxpayers, $345,661 of the ordinary income distributions paid by Global Growth during the fiscal year ended November 30, 2005, qualify for the corporate dividends received deduction. The funds hereby designate capital gain dividends for the fiscal year ended November 30, 2005, as follows: - -------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING GLOBAL INTERNATIONAL STOCK DISCOVERY MARKETS GROWTH OPPORTUNITIES - -------------------------------------------------------------------------------- -- $167,731,009 $3,049,394 -- $5,666,604 - -------------------------------------------------------------------------------- As of November 30, 2005, the funds designate the following as a foreign tax credit, which represents taxes paid on income derived from sources within foreign countries or possessions of the United States: - -------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING GLOBAL INTERNATIONAL STOCK DISCOVERY MARKETS GROWTH OPPORTUNITIES - -------------------------------------------------------------------------------- $13,881 $3,218,171 $462,299 -- $280,933 - -------------------------------------------------------------------------------- - ------ 58 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 (Loss)(2) 0.06 - ------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.78 - -------------------------------------------------------------------------------- Total From Investment Operations 0.84 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.84 ================================================================================ TOTAL RETURN(3) 8.40% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50%(4) - ------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.91%(4) - ------------------------------------------------------------- Portfolio Turnover Rate 109% - ------------------------------------------------------------- Net Assets, End of Period (in thousands) $20,342 - -------------------------------------------------------------------------------- (1) March 31, 2005 (fund inception) through November 30, 2005. (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. - ------ 59 International Discovery - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ------------------------------------------------------------------------------------------------------ INVESTOR CLASS - ------------------------------------------------------------------------------------------------------ 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------------------ PER-SHARE DATA - ------------------------------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $15.11 $12.75 $9.32 $10.13 $14.23 - ------------------------------------------------------------------------------------------------------ Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(1) 0.14 (0.01) 0.03 0.03 0.01 - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 2.97 2.40 3.42 (0.84) (2.54) - ------------------------------------------------------------------------------------------------------ Total From Investment Operations 3.11 2.39 3.45 (0.81) (2.53) - ------------------------------------------------------------------------------------------------------ Distributions - ----------------------------------------- From Net Investment Income -- (0.03) (0.02) -- -- - ----------------------------------------- From Net Realized Gains (2.28) -- -- -- (1.57) - ------------------------------------------------------------------------------------------------------ Total Distributions (2.28) (0.03) (0.02) -- (1.57) - ------------------------------------------------------------------------------------------------------ Net Asset Value, End of Period $15.94 $15.11 $12.75 $9.32 $10.13 ====================================================================================================== TOTAL RETURN(2) 24.30% 18.76% 37.05% (8.00)% (20.17)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 1.47% 1.49% 1.57% 1.53% 1.45% - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 1.02% (0.06)% 0.27% 0.35% 0.10% - ----------------------------------------- Portfolio Turnover Rate 145% 201% 215% 224% 180% - ----------------------------------------- Net Assets, End of Period (in thousands) $1,145,623 $1,112,870 $1,028,934 $841,706 $1,021,063 - ------------------------------------------------------------------------------------------------------ (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 60 International Discovery - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ------------------------------------------------------------------------------------------------ INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------------ 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------------ PER-SHARE DATA - ------------------------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $15.21 $12.84 $9.39 $10.18 $14.26 - ------------------------------------------------------------------------------------------------ Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(1) 0.17 0.02 0.05 0.06 0.04 - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 2.99 2.40 3.43 (0.85) (2.55) - ------------------------------------------------------------------------------------------------ Total From Investment Operations 3.16 2.42 3.48 (0.79) (2.51) - ------------------------------------------------------------------------------------------------ Distributions - ------------------------------------------ From Net Investment Income -- (0.05) (0.03) -- -- - ------------------------------------------ From Net Realized Gains (2.31) -- -- -- (1.57) - ------------------------------------------------------------------------------------------------ Total Distributions (2.31) (0.05) (0.03) -- (1.57) - ------------------------------------------------------------------------------------------------ Net Asset Value, End of Period $16.06 $15.21 $12.84 $9.39 $10.18 ================================================================================================ TOTAL RETURN(2) 24.56% 18.94% 37.25% (7.76)% (19.97)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 1.27% 1.29% 1.37% 1.33% 1.25% - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 1.22% 0.14% 0.47% 0.55% 0.30% - ------------------------------------------ Portfolio Turnover Rate 145% 201% 215% 224% 180% - ------------------------------------------ Net Assets, End of Period (in thousands) $205,406 $165,600 $147,531 $137,358 $192,155 - ------------------------------------------------------------------------------------------------ (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 61 International Discovery - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ----------------------------------------------------------------------------------------- ADVISOR CLASS - ----------------------------------------------------------------------------------------- 2005 2004 2003 2002 2001 - ----------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $14.95 $12.63 $9.23 $10.05 $14.17 - ----------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------- Net Investment Income (Loss)(1) 0.10 (0.05) 0.01 0.01 --(2) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 2.95 2.37 3.39 (0.83) (2.55) - ----------------------------------------------------------------------------------------- Total From Investment Operations 3.05 2.32 3.40 (0.82) (2.55) - ----------------------------------------------------------------------------------------- Distributions - ------------------------------------------- From Net Realized Gains (2.25) -- -- -- (1.57) - ----------------------------------------------------------------------------------------- Net Asset Value, End of Period $15.75 $14.95 $12.63 $9.23 $10.05 ========================================================================================= TOTAL RETURN(3) 24.01% 18.37% 36.84% (8.16)% (20.43)% RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.72% 1.74% 1.82% 1.78% 1.70% - ------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.77% (0.31)% 0.02% 0.10% (0.15)% - ------------------------------------------- Portfolio Turnover Rate 145% 201% 215% 224% 180% - ------------------------------------------- Net Assets, End of Period (in thousands) $70 $201 $161 $153 $244 - ----------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 62 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - --------------------------------------------------------------------------------------------- INVESTOR CLASS - --------------------------------------------------------------------------------------------- 2005 2004 2003 2002 2001 - --------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.28 $5.28 $3.61 $4.06 $4.68 - --------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------- Net Investment Income (Loss)(1) 0.01 (0.01) --(2) (0.02) (0.02) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 2.05 1.00 1.66 (0.43) (0.43) - --------------------------------------------------------------------------------------------- Total From Investment Operations 2.06 0.99 1.66 (0.45) (0.45) - --------------------------------------------------------------------------------------------- Distributions - ----------------------------------- From Net Realized Gains (0.09) -- -- -- (0.17) - --------------------------------------------------------------------------------------------- Redemption Fees(3) --(2) 0.01 0.01 -- -- - --------------------------------------------------------------------------------------------- Net Asset Value, End of Period $8.25 $6.28 $5.28 $3.61 $4.06 ============================================================================================= TOTAL RETURN(4) 33.10% 18.94% 46.26% (10.86)% (10.28)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.94% 2.00% 2.01% 2.05% 2.00% - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.17% (0.22)% 0.03% (0.37)% (0.27)% - ------------------------------------------ Portfolio Turnover Rate 153% 208% 286% 387% 326% - ------------------------------------------ Net Assets, End of Period (in thousands) $220,720 $135,355 $103,737 $81,756 $80,422 - --------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per-share effect of redemption fees. Periods prior to December 1, 2001, have not been restated to reflect this change. Amounts computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 63 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------------------- 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.35 $5.33 $3.64 $4.08 $4.70 - -------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(1) 0.03 --(2) 0.01 --(2) (0.01) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 2.07 1.01 1.67 (0.44) (0.44) - -------------------------------------------------------------------------------------------- Total From Investment Operations 2.10 1.01 1.68 (0.44) (0.45) - -------------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Realized Gains (0.09) -- -- -- (0.17) - -------------------------------------------------------------------------------------------- Redemption Fees(3) --(2) 0.01 0.01 -- -- - -------------------------------------------------------------------------------------------- Net Asset Value, End of Period $8.36 $6.35 $5.33 $3.64 $4.08 ============================================================================================ TOTAL RETURN(4) 33.37% 19.14% 46.43% (10.78)% (10.01)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.74% 1.80% 1.81% 1.85% 1.80% - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.37% (0.02)% 0.23% (0.17)% (0.07)% - ------------------------------------------ Portfolio Turnover Rate 153% 208% 286% 387% 326% - ------------------------------------------ Net Assets, End of Period (in thousands) $113,765 $92,673 $63,242 $18,969 $18,602 - -------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per-share effect of redemption fees. Periods prior to December 1, 2001, have not been restated to reflect this change. Amounts computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 64 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ------------------------------------------------------------------------------------------- ADVISOR CLASS - ------------------------------------------------------------------------------------------- 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.19 $5.22 $3.58 $4.03 $4.66 - ------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(1) (0.01) (0.03) --(2) (0.01) (0.04) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 2.02 0.99 1.63 (0.44) (0.42) - ------------------------------------------------------------------------------------------- Total From Investment Operations 2.01 0.96 1.63 (0.45) (0.46) - ------------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Realized Gains (0.09) -- -- -- (0.17) - ------------------------------------------------------------------------------------------- Redemption Fees(3) --(2) 0.01 0.01 -- -- - ------------------------------------------------------------------------------------------- Net Asset Value, End of Period $8.11 $6.19 $5.22 $3.58 $4.03 =========================================================================================== TOTAL RETURN(4) 32.77% 18.58% 45.81% (11.17)% (10.32)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.19% 2.25% 2.26% 2.30% 2.25% - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.08)% (0.47)% (0.22)% (0.62)% (0.52)% - ------------------------------------------ Portfolio Turnover Rate 153% 208% 286% 387% 326% - ------------------------------------------ Net Assets, End of Period (in thousands) $1,773 $1,178 $597 $1,254 $815 - ------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per-share effect of redemption fees. Periods prior to December 1, 2001, have not been restated to reflect this change. Amounts computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 65 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------------- 2005 2004 2003 2002(1) - -------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $6.12 $5.19 $3.58 $4.24 - -------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(2) (0.05) (0.07) (0.04) (0.04) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 1.97 0.99 1.64 (0.62) - -------------------------------------------------------------------------------------- Total From Investment Operations 1.92 0.92 1.60 (0.66) - -------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Realized Gains (0.09) -- -- -- - -------------------------------------------------------------------------------------- Redemption Fees(3) --(4) 0.01 0.01 -- - -------------------------------------------------------------------------------------- Net Asset Value, End of Period $7.95 $6.12 $5.19 $3.58 ====================================================================================== TOTAL RETURN(5) 31.67% 17.92% 44.97% (15.57)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.94% 3.00% 3.01% 3.05%(6) - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.83)% (1.22)% (0.97)% (1.10)%(6) - ------------------------------------------ Portfolio Turnover Rate 153% 208% 286% 387%(7) - ------------------------------------------ Net Assets, End of Period (in thousands) $733 $521 $291 $54 - -------------------------------------------------------------------------------------- (1) December 18, 2001 (commencement of sale) through November 30, 2002. (2) Computed using average shares outstanding throughout the period. (3) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per-share effect of redemption fees. Amounts computed using average shares outstanding throughout the period. (4) 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, 2002. See Notes to Financial Statements. - ------ 66 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ---------------------------------------------------------------------------------------------- INVESTOR CLASS - ---------------------------------------------------------------------------------------------- 2005 2004 2003 2002 2001 - ---------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.49 $6.48 $5.39 $6.18 $8.73 - ---------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(1) --(2) (0.01) --(2) 0.01 --(2) - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 1.41 1.02 1.09 (0.80) (1.90) - ---------------------------------------------------------------------------------------------- Total From Investment Operations 1.41 1.01 1.09 (0.79) (1.90) - ---------------------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Investment Income (0.02) -- -- -- -- - ----------------------------------------- From Net Realized Gains -- -- -- -- (0.65) - ---------------------------------------------------------------------------------------------- Total Distributions (0.02) -- -- -- (0.65) - ---------------------------------------------------------------------------------------------- Net Asset Value, End of Period $8.88 $7.49 $6.48 $5.39 $6.18 ============================================================================================== TOTAL RETURN(3) 18.87% 15.59% 20.22% (12.78)% (23.62)% RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.30% 1.30% 1.31% 1.32% 1.30% - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.01)% (0.12)% 0.00% 0.13% (0.06)% - ----------------------------------------- Portfolio Turnover Rate 36% 79% 152% 278% 232% - ----------------------------------------- Net Assets, End of Period (in thousands) $378,976 $299,807 $250,306 $213,314 $272,402 - ---------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 67 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------- 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.55 $6.52 $5.41 $6.19 $8.74 - ------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(1) 0.01 --(2) 0.01 0.02 0.01 - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 1.43 1.03 1.10 (0.80) (1.90) - ------------------------------------------------------------------------------------------- Total From Investment Operations 1.44 1.03 1.11 (0.78) (1.89) - ------------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Investment Income (0.04) -- -- -- -- - ------------------------------------------ From Net Realized Gains -- -- -- -- (0.66) - ------------------------------------------------------------------------------------------- Total Distributions (0.04) -- -- -- (0.66) - ------------------------------------------------------------------------------------------- Net Asset Value, End of Period $8.95 $7.55 $6.52 $5.41 $6.19 =========================================================================================== TOTAL RETURN(3) 19.22% 15.80% 20.52% (12.60)% (23.53)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.10% 1.10% 1.11% 1.12% 1.10% - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.19% 0.08% 0.20% 0.33% 0.14% - ------------------------------------------ Portfolio Turnover Rate 36% 79% 152% 278% 232% - ------------------------------------------ Net Assets, End of Period (in thousands) $8,669 $6,774 $7,901 $3,288 $3,907 - ------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 68 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ------------------------------------------------------------------------------------------- ADVISOR CLASS - ------------------------------------------------------------------------------------------- 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.41 $6.43 $5.36 $6.16 $8.72 - ------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(1) (0.02) (0.02) (0.02) (0.01) --(2) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 1.40 1.00 1.09 (0.79) (1.93) - ------------------------------------------------------------------------------------------- Total From Investment Operations 1.38 0.98 1.07 (0.80) (1.93) - ------------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Realized Gains -- -- -- -- (0.63) - ------------------------------------------------------------------------------------------- Net Asset Value, End of Period $8.79 $7.41 $6.43 $5.36 $6.16 =========================================================================================== TOTAL RETURN(3) 18.62% 15.24% 19.96% (12.99)% (23.97)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.55% 1.55% 1.56% 1.57% 1.55% - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.26)% (0.37)% (0.25)% (0.12)% (0.31)% - ------------------------------------------ Portfolio Turnover Rate 36% 79% 152% 278% 232% - ------------------------------------------ Net Assets, End of Period (in thousands) $3,664 $2,475 $1,044 $537 $623 - ------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 69 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ------------------------------------------------------------------------------------- C CLASS - ------------------------------------------------------------------------------------- 2005 2004 2003 2002(1) - ------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.29 $6.37 $5.35 $6.14 - ------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------- Net Investment Income (Loss)(2) (0.08) (0.08) (0.05) (0.03) - ------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.38 1.00 1.07 (0.76) - ------------------------------------------------------------------------------------- Total From Investment Operations 1.30 0.92 1.02 (0.79) - ------------------------------------------------------------------------------------- Net Asset Value, End of Period $8.59 $7.29 $6.37 $5.35 ===================================================================================== TOTAL RETURN(3) 17.83% 14.44% 19.07% (12.87)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.30% 2.30% 2.31% 2.32%(4) - ------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.01)% (1.12)% (1.00)% (0.60)%(4) - ------------------------------------------- Portfolio Turnover Rate 36% 79% 152% 278%(5) - ------------------------------------------- Net Assets, End of Period (in thousands) $454 $184 $56 $25 - ------------------------------------------------------------------------------------- (1) March 1, 2002 (commencement of sale) through November 30, 2002. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2002. See Notes to Financial Statements. - ------ 70 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.37 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------------ Net Investment Income (Loss)(2) (0.02) - ------------------------------------------------------------ Net Realized and Unrealized Gain (Loss) 0.51 - -------------------------------------------------------------------------------- Total From Investment Operations 0.49 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $8.86 ================================================================================ TOTAL RETURN(3) 5.85% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.80%(4) - ------------------------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.71)%(4) - ------------------------------------------------------------ Portfolio Turnover Rate 36%(5) - ------------------------------------------------------------ Net Assets, End of Period (in thousands) $26 - -------------------------------------------------------------------------------- (1) July 29, 2005 (commencement of sale) through November 30, 2005. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2005. See Notes to Financial Statements. - ------ 71 International Opportunities - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------- 2005 2004 2003 2002 2001(1) - -------------------------------------------------------------------------------------------- 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)(2) 0.02 (0.05) (0.01) 0.02 (0.02) - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 3.19 2.03 2.90 (0.19) (0.11) - -------------------------------------------------------------------------------------------- Total From Investment Operations 3.21 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(3) --(4) 0.02 0.01 0.03 -- - -------------------------------------------------------------------------------------------- Net Asset Value, End of Period $12.27 $9.35 $7.62 $4.73 $4.87 ============================================================================================ TOTAL RETURN(5) 35.28% 27.14% 61.54% (2.87)% (2.60)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.91% 1.97% 2.00% 2.01% 2.00%(6) - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.20% (0.63)% (0.23)% 0.30% (0.75)%(6) - ----------------------------------------- Portfolio Turnover Rate 112% 139% 219% 257% 147% - ----------------------------------------- Net Assets, End of Period (in thousands) $198,197 $176,100 $72,008 $21,977 $6,569 - -------------------------------------------------------------------------------------------- (1) June 1, 2001 (fund inception) through November 30, 2001. (2) Computed using average shares outstanding throughout the period. (3) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per-share effect of redemption fees. Periods prior to December 1, 2001, have not been restated to reflect this change. Amounts computed using the average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. See Notes to Financial Statements. - ------ 72 International Opportunities - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2005 2004 2003(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.37 $7.63 $4.80 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------- Net Investment Income (Loss)(2) 0.10 (0.03) 0.01 - ------------------------------------------- Net Realized and Unrealized Gain (Loss) 3.14 2.04 2.81 - -------------------------------------------------------------------------------- Total From Investment Operations 3.24 2.01 2.82 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------- From Net Realized Gains (0.29) (0.29) -- - -------------------------------------------------------------------------------- Redemption Fees --(3) 0.02 0.01 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.32 $9.37 $7.63 ================================================================================ TOTAL RETURN(4) 35.53% 27.50% 58.96% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.71% 1.77% 1.80%(5) - ------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.40% (0.43)% 0.18%(5) - ------------------------------------------- Portfolio Turnover Rate 112% 139% 219%(6) - ------------------------------------------- Net Assets, End of Period (in thousands) $31 $10,868 $8,523 - -------------------------------------------------------------------------------- (1) January 9, 2003 (commencement of sale) through November 30, 2003. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 73 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders, American Century World Mutual Funds, Inc.: We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of International Stock Fund, International Discovery Fund, Emerging Markets Fund, Global Growth Fund and International Opportunities Fund (collectively the "Funds"), five of the mutual funds comprising American Century World Mutual Funds, Inc., as of November 30, 2005, and the related statements of operations for the periods then ended, the statements of changes in net assets for the periods presented, and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2005, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds comprising American Century World Mutual Funds, Inc., as of November 30, 2005, the results of their operations for the periods then ended, the changes in their net assets and their financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Kansas City, Missouri January 13, 2006 - ------ 74 Management The individuals listed below serve as directors or officers of the funds. Each director serves until his or her successor is duly elected and qualified or until he or she retires. Mandatory retirement age for independent directors is 72. Those listed as interested directors are "interested" primarily by virtue of their engagement as officers of American Century Companies, Inc. (ACC) or its wholly owned, direct or indirect, subsidiaries, including the funds' investment advisor, American Century Global Investment Management, Inc. (ACGIM) or American Century Investment Management, Inc. (ACIM); the funds' principal underwriter, American Century Investment Services, Inc. (ACIS); and the funds' transfer agent, American Century Services, LLC (ACS LLC). The other directors (more than three-fourths of the total number) are independent; that is, they have never been employees or officers of, and have no financial interest in, ACC or any of its wholly-owned subsidiaries, including ACGIM, ACIM, ACIS, and ACS LLC. The directors serve in this capacity for six registered investment companies in the American Century family of funds. All persons named as officers of the funds also serve in a similar capacity for the other 13 investment companies advised by ACIM or ACGIM, unless otherwise noted. Only officers with policy-making functions are listed. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The information below is provided as of December 15, 2005. INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- THOMAS A. BROWN, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1940 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1980 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Formerly Chief Executive Officer/Treasurer, Associated Bearings Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ANDREA C. HALL, PH.D., 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, Midwest Research Institute NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- D.D. (DEL) HOCK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1935 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1996 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Chairman, Public Service Company of Colorado NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Allied Motion Technologies, Inc. - -------------------------------------------------------------------------------- (continued) - ------ 75 Management INDEPENDENT DIRECTORS (CONTINUED) - -------------------------------------------------------------------------------- DONALD H. PRATT, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1937 POSITION(S) HELD WITH FUND: Director, Chairman of the Board FIRST YEAR OF SERVICE: 1995 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Western Investments, Inc.; Retired Chairman of the Board, Butler Manufacturing Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- GALE E. SAYERS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1943 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Chief Executive Officer and Founder, Sayers40, Inc., a technology products and service provider NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Triad Hospitals, Inc. - -------------------------------------------------------------------------------- M. JEANNINE STRANDJORD, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1994 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Senior Vice President, Sprint Corporation NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, DST Systems, Inc.; Director, Euronet Worldwide, Inc. - -------------------------------------------------------------------------------- TIMOTHY S. WEBSTER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1961 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 2001 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President and Chief Executive Officer, American Italian Pasta Company (1992 to December 2005) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- INTERESTED DIRECTORS - -------------------------------------------------------------------------------- JAMES E. STOWERS, JR.(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1924 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman FIRST YEAR OF SERVICE: 1958 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Founder, Director and Controlling Shareholder, ACC; Chairman, ACC (January 1995 to December 2004); Director, ACIM, ACGIM, ACS LLC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- JAMES E. STOWERS III(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1959 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman FIRST YEAR OF SERVICE: 1990 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, ACC (January 2005 to present); Co-Chairman, ACC (September 2000 to December 2004); Chairman, ACS LLC and other ACC subsidiaries; Director, ACC, ACIM, ACGIM, ACIS, ACS LLC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (1) James E. Stowers, Jr. is the father of James E. Stowers III. (continued) - ------ 76 Management OFFICERS - -------------------------------------------------------------------------------- WILLIAM M. LYONS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1955 POSITION(S) HELD WITH FUND: President FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC (September 2000 to present); President, ACC (June 1997 to present); Also serves as: Chief Executive Officer and President, ACIS, ACGIM, ACIM and other ACC subsidiaries; Executive Vice President, ACS LLC; Director, ACC, ACIS, ACIM, ACGIM, ACS LLC and other ACC subsidiaries - -------------------------------------------------------------------------------- ROBERT T. JACKSON, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1946 POSITION(S) HELD WITH FUND: Executive Vice President FIRST YEAR OF SERVICE: 1995 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC (August 1997 to present); Chief Financial Officer, ACC (May 1995 to October 2002); Executive Vice President, ACC (May 1995 to present); Also serves as: Chief Executive Officer, Chief Financial Officer and President, ACS LLC; Chief Financial Officer and Executive Vice President, ACGIM, ACIM, ACIS and other ACC subsidiaries; Treasurer, ACGIM, ACIM and other ACC subsidiaries; Director, ACC and other subsidiaries - -------------------------------------------------------------------------------- JONATHAN THOMAS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1963 POSITION(S) HELD WITH FUND: Executive Vice President FIRST YEAR OF SERVICE: 2005 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Executive Vice President, ACC (November 2005 to present); Managing Director, Morgan Stanley (March 2000 to November 2005) - -------------------------------------------------------------------------------- MARYANNE ROEPKE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1956 POSITION(S) HELD WITH FUND: Senior Vice President, Treasurer, and Chief Financial Officer FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Assistant Treasurer, ACC (January 1995 to present); Also serves as: Senior Vice President, ACS LLC; Assistant Treasurer, ACGIM, ACIM, ACIS, ACS LLC and other ACC subsidiaries - -------------------------------------------------------------------------------- DAVID C. TUCKER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1958 POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (February 2001 to present); General Counsel, ACC (June 1998 to present); Also serves as: Senior Vice President and General Counsel, ACGIM, ACIM, ACIS, ACS LLC and other ACC subsidiaries - -------------------------------------------------------------------------------- CHARLES C.S. PARK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Vice President and Chief Compliance Officer FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Compliance Officer, ACS LLC, ACIM and ACGIM (March 2005 to present); Vice President, ACS LLC (February 2000 to present); Assistant General Counsel, ACS LLC (January 1998 to March 2005) - -------------------------------------------------------------------------------- ROBERT LEACH, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1966 POSITION(S) HELD WITH FUND: Controller FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS LLC (February 2000 to present); Controller-Fund Accounting, ACS LLC (June 1997 to present) - -------------------------------------------------------------------------------- JON ZINDEL, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Tax Officer FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (October 2001 to present); Vice President, Corporate Tax, ACS LLC (April 1998 to present); Also serves as: Vice President, ACGIM, ACIM, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- The SAI has additional information about the funds' directors and is available without charge, upon request, by calling 1-800-345-2021. - ------ 77 Approval of Management Agreements for International Discovery, Emerging Markets, Global Growth and International Opportunities Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated and approved by a majority of a fund's independent directors (the "Directors") each year. At American Century, this process -- referred to as the "15(c) Process" -- involves at least two board meetings spanning a 30 to 60 day period each year. In addition to this annual review, the board of directors and its committees oversee and evaluate at quarterly meetings the nature and quality of significant services the advisor performs on behalf of the fund. At these meetings the board reviews fund performance, shareholder services and feedback, audit and compliance information, and a variety of other reports from the advisor concerning fund operations. The board, or committees of the board, also hold special meetings, as needed. Under a new Securities and Exchange Commission rule, each fund is required to disclose in its annual or semiannual report, as appropriate, the material factors and conclusions that formed the basis for its board's approval or renewal of any advisory agreements within the fund's most recently completed fiscal half-year period. ANNUAL CONTRACT REVIEW PROCESS As part of the annual 15(c) Process undertaken during the most recent fiscal half-year, the Directors requested and received extensive data and information compiled by the advisor and certain independent providers of evaluative data (the "Independent 15(c) Providers") concerning International Discovery, Emerging Markets, Global Growth and International Opportunities (collectively, the "funds") and the services provided to the funds under the management agreement. The information included, but was not limited to: * the nature, extent and quality of investment management, shareholder services and other services provided to the funds under the management agreement; * reports on the advisor's activities relating to the wide range of programs and services the advisor provides to the funds and its shareholders on a routine and non-routine basis; * data comparing the cost of owning the funds to the cost of owning similar funds; * data comparing the funds' performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the funds to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. In keeping with its practice, the funds' board of directors held two regularly scheduled meetings and two special meetings to review and discuss the information provided by the advisor and the Independent 15(c) Providers and to complete its negotiations with the advisor regarding the renewal of the management agreement, including the setting of the applicable advisory fee. In addition, the independent directors met (continued) - ------ 78 Approval of Management Agreements for International Discovery, Emerging Markets, Global Growth and International Opportunities on several occasions in private session to review and discuss the information provided and evaluate the advisor's performance as manager of the funds. FACTORS CONSIDERED The Directors considered all of the information provided by the advisor, the Independent 15(c) Providers, and its independent counsel and evaluated such information for each fund for which the board has responsibility. The Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the agreement under the terms ultimately determined by the board to be appropriate, the Directors' decision was based on the following factors. NATURE, EXTENT AND QUALITY OF SERVICES -- GENERALLY. Under the management agreement, the advisor is responsible for providing or arranging for all services necessary for the operation of the funds. The board noted that under the management agreement, the advisor provides or arranges at its own expense a wide variety of services including, but not limited to: * fund construction and design * portfolio security selection * initial capitalization/funding * securities trading * custody of fund assets * daily valuation of the funds' portfolios * shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping and communications * legal services * regulatory and portfolio compliance * financial reporting * marketing and distribution The Directors noted that many of these services have expanded over time both in terms of quantity and complexity in response to shareholder demands, competition in the industry and the changing regulatory environment. In performing their evaluation, the Directors considered information received in connection with the annual review, as well as information provided on an ongoing basis at their regularly scheduled board and committee meetings. INVESTMENT MANAGEMENT SERVICES. The nature of the investment management services provided is quite complex and allows fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes, and liquidity. In evaluating investment performance, the board expects the advisor to manage the funds in accordance with its investment objective and approved strategies. In providing these services, the advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance and other systems to conduct their business. At each quarterly meeting the Directors review investment performance information for the funds, together with comparative information for appropriate benchmarks and a peer group of funds (continued) - ------ 79 Approval of Management Agreements for International Discovery, Emerging Markets, Global Growth and International Opportunities managed similarly to the funds. If performance concerns are identified, the Directors discuss with the advisor and its portfolio managers the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. Annually, the Directors review detailed performance information, as provided by the Independent 15(c) Providers, comparing the funds' performance with that of similar funds not managed by the advisor. Global Growth's performance was above the median of its peer group for both one and three year periods during part of the past year. International Opportunities' performance was at the median of its peer group for the one year period and above the median for the three year period. International Discovery's performance fell below the median of its peer groups for both one and three year periods during the past year. Emerging Market's performance fell below the median of its peer groups for both one and three year periods during part of the past year. The Directors discussed the funds' performance with the advisor and were satisfied with the efforts being undertaken by the advisor. The Directors will continue to monitor those efforts and the performance of the funds. SHAREHOLDER AND OTHER SERVICES. The advisor provides the funds with a comprehensive package of transfer agency, shareholder, and other services. The Directors review reports and evaluations of such services at its regular quarterly meetings, including the annual meeting concerning contract review. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the advisor. COSTS OF SERVICES PROVIDED AND PROFITABILITY TO THE ADVISOR. The advisor provides detailed information concerning its cost of providing various services to the funds, its profitability in managing the funds, its overall profitability, and its financial condition. The Directors have reviewed with the advisor the methodology used to prepare this financial information. This financial information regarding the advisor is considered in order to evaluate the advisor's financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. ETHICS OF THE ADVISOR. The Directors generally considered the advisor's commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the advisor's practices generally meet or exceed industry best practices and that (continued) - ------ 80 Approval of Management Agreements for International Discovery, Emerging Markets, Global Growth and International Opportunities the advisor was not implicated in the industry scandals of 2003 and 2004. ECONOMIES OF SCALE. The Directors review reports provided by the advisor on economies of scale for the complex as a whole and the year-over-year changes in revenue, costs, and profitability. The Directors concluded that economies of scale are difficult to measure with precision, particularly on a fund-by-fund basis. This analysis is further complicated by the fact that the advisor is required to make a continuing reinvestment in the business to provide additional content and services for fund shareholders. Accordingly, the Directors also seek to evaluate economies of scale by reviewing other information, such as year-over-year profitability of the advisor generally, the profitability of its management of the funds specifically, the expenses incurred by the advisor in providing various services to the funds, and the breakpoint fees of competitive funds not managed by the advisor. The Directors believe the advisor is appropriately sharing any economies of scale through a competitive fee structure, through breakpoints that reduce fees as the fund increases in size, and through reinvestment in its business to provide shareholders additional content and services. COMPARISON TO OTHER FUNDS' FEES. The funds pay the advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the funds, other than brokerage expenses, taxes, interest, extraordinary expenses, and the fees and expenses of the funds' independent directors (including their independent legal counsel). Under the unified fee structure, the advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other fund groups are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges and other expenses. Other than their investment advisory fees and Rule 12b-1 distribution fees, all other components of the total fees charged by these other fund groups may be increased without shareholder approval. The board believes the unified fee structure is a benefit to fund shareholders because it clearly discloses to shareholders the cost of owning fund shares, and, since the unified fee cannot be increased without a vote of fund shareholders, it shifts to the advisor the increased costs of operating the funds and the risk of administrative inefficiencies. Part of the Directors' analysis of fee levels involves comparing the funds' unified fee to the total expense ratio of other funds in the funds' peer group. The unified fee charged to International Discovery's shareholders was below the median of the total expense ratios of its peer group. The unified fees charged to Emerging Market's and International Opportunities' shareholders were above the median of the total expense ratios of its peer group. The unified fee charged Global Growth's shareholders was at the median of the total expense ratios of its peer group. (continued) - ------ 81 Approval of Management Agreements for International Discovery, Emerging Markets, Global Growth and International Opportunities COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The Directors also requested and received information from the advisor concerning the nature of the services, fees, and profitability of its advisory services to advisory clients other than the funds. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the funds. The Directors analyzed this information and concluded that the fees charged and services provided to the funds were reasonable by comparison. COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information from the advisor concerning collateral benefits it receives as a result of its relationship with the funds. They concluded that the advisor's primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Directors noted that the advisor receives proprietary research from broker dealers that execute fund portfolio transactions and concluded that this research is likely to benefit fund shareholders. The Directors also determined that the advisor is able to provide investment management services to clients other than the funds, at least in part, due to its existing infrastructure built to serve the fund complex. The Directors concluded, however, that the assets of those other clients are not material to the analysis and in any event are added to the assets of the funds within the fund complex that use substantially the same investment management team to determine whether each fund has reached breakpoints in its fee schedule. CONCLUSIONS OF THE DIRECTORS As a result of this process, the Directors, assisted by the advice of legal counsel that is independent of the advisor, taking into account all of the factors discussed above and the information provided by the advisor and the Independent 15(c) Providers concluded (i) that the investment management agreement between International Discovery, Global Growth and International Opportunities and the advisor is fair and reasonable in light of the services provided and should be renewed and (ii) negotiated changes to the breakpoint schedule used to calculate the management fee of Emerging Markets. These changes were proposed by the Directors based on their review of the competitive changes in the mutual fund marketplace and their review of financial information provided by the advisor. The new schedule, effective July 29, 2005, will accelerate management fee reductions at lower asset levels than under the existing structure. Following these negotiations with the advisor, the Directors concluded that the investment management agreement between Emerging Markets and the advisor, amended as described above, is fair and reasonable in light of the services provided and should be renewed. - ------ 82 Share Class Information One class of shares is authorized 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: Investor Class, Institutional Class, Advisor Class, and C Class. Five classes of shares are authorized for sale by Global Growth: Investor Class, Institutional Class, Advisor Class, C Class, and R 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 Class, C Class and R Class shares are higher than that of Investor Class shares. International Discovery is closed to new investors. Shareholders who have open accounts may make additional investments and reinvest dividends and capital gains distributions as long as such accounts remain open. As of November 30, 2005, Global Growth was closed to new self-directed retail investors but is available through financial intermediaries. Self-directed retail investors with open accounts may make additional investments and reinvest dividends and capital gains distributions as long as such accounts remain open. International Opportunities is closed to all investments except reinvested dividends and capital gains distributions. INVESTOR CLASS shares are available for purchase in two ways: 1) directly from American Century without any commissions or other fees; or 2) through certain financial intermediaries (such as banks, broker-dealers, insurance companies and investment advisors), which may require payment of a transaction fee to the financial intermediary. 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 unified management fee of Institutional Class shares is 0.20% less than the unified management fee 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. (continued) - ------ 83 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 contingent deferred sales charge (CDSC) of 1.00%. There is no CDSC on shares acquired through reinvestment of dividends or capital gains. The unified management fee for C Class shares is the same as for Investor Class shares. 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. The unified management fee for R Class shares is the same as for Investor Class shares. 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 funds and generally have the same rights and preferences. - ------ 84 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) - ------ 85 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. - ------ 86 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. - ------ 87 Notes - ------ 88 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 PROFESSIONALS, 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 American Century Investment Century Proprietary Holdings, Inc. Services, Inc., Distributor 0601 (c)2006 American Century Proprietary SH-ANN-47305S Holdings, Inc. All rights reserved. - -------------------------------------------------------------------------------- American Century Investments ANNUAL REPORT NOVEMBER 30, 2005 [image of woman looking over man's shoulder] 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 Industry Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . 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 Report of Independent Registered Public Accounting Firm . . . . . . . . . . 32 OTHER INFORMATION Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Approval of Management Agreements for Life Sciences and Technology. . . . . . . . . . . . . . . . . . . . . . 36 Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . . 41 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 The opinions expressed in each of the Portfolio Commentaries reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the annual report for the American Century Life Sciences and Technology funds for the year ended November 30, 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 semiannual report dated May 31, 2006, 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 NOVEMBER 30, 2005 ---------------------- AVERAGE ANNUAL RETURNS - ----------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS INCEPTION DATE - ----------------------------------------------------------------------- INVESTOR CLASS 13.43% 0.67% 1.63% 6/30/00 - ----------------------------------------------------------------------- S&P COMPOSITE 1500 HEALTH CARE INDEX 10.26% -1.23% 0.12% -- - ----------------------------------------------------------------------- S&P 500 INDEX(1) 8.44% 0.64% -1.18% -- - ----------------------------------------------------------------------- Institutional Class 13.50% 0.89% 0.90% 7/17/00 - ----------------------------------------------------------------------- Advisor Class 13.15% 0.40% -0.34% 11/14/00 - ----------------------------------------------------------------------- C Class 12.06% -- 1.21% 11/29/01 - ----------------------------------------------------------------------- (1) Data provided by Lipper Inc. -- 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 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 of the total market 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 November 30 - -------------------------------------------------------------------------------- 2000* 2001 2002 2003 2004 2005 - -------------------------------------------------------------------------------- Investor Class 5.60% -5.35% -27.31% 23.16% 7.57% 13.43% - -------------------------------------------------------------------------------- S&P Composite 1500 Health Care Index 7.11% -6.10% -18.37% 8.06% 2.91% 10.26% - -------------------------------------------------------------------------------- S&P 500 Index -9.16% -12.22% -16.51% 15.09% 12.86% 8.44% - -------------------------------------------------------------------------------- * From 6/30/00, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. The fund concentrates its investments in a narrow segment of the total market 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 PORTFOLIO MANAGERS ON THE LIFE SCIENCES INVESTMENT TEAM: ARNOLD DOUVILLE AND CHRISTY TURNER. Life Sciences gained 13.43%* during the 12 months ended November 30, 2005, outperforming the 10.26% return of the S&P Composite 1500 Health Care Index (the Composite). Since its June 30, 2000, inception, the fund has achieved an average annual return of 1.63%, ahead of the 0.12% return posted by the Composite. STOCKS OVERCOME CHALLENGES Equity investors faced numerous challenges during the months covered by this report, a period that saw eight increases in short-term interest rates, a new record high for oil, and three major hurricanes. Despite those challenges, the equities market ultimately demonstrated resilience and secured solid gains. Against that backdrop, Life Sciences achieved positive contributions from all but one of its industry selections in the health care sector. The fund delivered performance that surpassed that of the Composite, results attributable to effective stock selection. HEALTH CARE PROVIDERS PACE GAINS Health care providers and services companies commanded considerable attention during the fiscal year, and the group emerged as a clear market leader, evidenced by the 23.03% gain of the Morgan Stanley Healthcare Providers Index, which tracks the performance of hospitals, and the 45.05% advance of the Morgan Stanley Healthcare Payor Index, which measures the progress of HMOs. This group represented, on average, our largest single stake. The majority of our holdings fared well, including PacifiCare Health Systems, UnitedHealth Group Inc., Aetna Inc., and Renal Care Group Inc., all of which ranked high among the contributors. The most rewarding position in this area was WellPoint, an HMO and our top-contributing stock. During the period, WellPoint continued to benefit from the successful completion of its merger with Anthem, a deal valued at $16.5 billion, and announced plans to merge with WellChoice. The company also consistently reported improved TOP TEN HOLDINGS AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Johnson & Johnson 5.1% 6.7% - -------------------------------------------------------------------------------- iShares Dow Jones US Healthcare Sector Index Fund 5.0% -- - -------------------------------------------------------------------------------- Amgen Inc. 4.3% 2.0% - -------------------------------------------------------------------------------- Renal Care Group Inc. 4.0% 3.0% - -------------------------------------------------------------------------------- UnitedHealth Group Incorporated 3.4% 3.2% - -------------------------------------------------------------------------------- WellPoint Inc. 3.2% 3.6% - -------------------------------------------------------------------------------- Medtronic, Inc. 3.0% - - -------------------------------------------------------------------------------- Aetna Inc. 3.0% 4.2% - -------------------------------------------------------------------------------- Wyeth 2.9% 4.0% - -------------------------------------------------------------------------------- Gilead Sciences, Inc. 2.5% 3.7% - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 4 Life Sciences - Portfolio Commentary revenues driven by solid pricing, increased membership and cost controls. All were factors that supported the stock's climb. SUCCESS IN BIOTECHNOLOGY Biotechnology stocks also garnered investors' attentions, as reflected in the 29.84% climb of the AMEX Biotechnology Index during the year. We focused on large, established companies --a strategy that made this group a rich source of absolute performance and produced a top-contributing stock that was not represented in the Composite. Genentech, a leading biotech firm, benefited from the results of clinical trials that underscored the effectiveness of its drugs Avastin and Herceptin in improving survival for cancer patients, news that was well received by investors. SOME DISAPPOINTMENTS While investments in the health care equipment and supplies industry augmented returns overall, some holdings nonetheless fell short. One was orthopedic-products firm Biomet, which makes replacement joints. Though the company twice reported record earnings, its stock faltered early in the period amid scrutiny into consultant and service agreements and payment practices by numerous firms in the industry, including Biomet. Still, we view this issue as transitory and see increased demand for its stable of products. Because of our continued confidence in this firm's long-term growth prospects, we have maintained a position. Elsewhere, our stake in the pharmaceutical industry, the only industry-level detractor in the health care sector, represented a modest drag on absolute performance. Several of our holdings retreated, including Pfizer, among the portfolio's top detractors. Late in the year, Pfizer reported that patent expirations and increased generic competition alongside slower prescription rates had eroded revenues. The share price fell sharply, and though we eliminated the position, it was not before incurring a loss. Overall, however, we remained underweight the pharmaceutical stocks, and better security selection helped us avoid some of the market's most downtrodden names in favor of those that either advanced or suffered lesser declines. Consequently, this industry represented our greatest source of strength relative to the Composite. INDUSTRY ALLOCATION AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Health Care Providers & Services 31.7% 36.7% - -------------------------------------------------------------------------------- Pharmaceuticals 25.0% 26.1% - -------------------------------------------------------------------------------- Health Care Equipment & Supplies 21.8% 18.2% - -------------------------------------------------------------------------------- Biotechnology 13.6% 14.8% - -------------------------------------------------------------------------------- Diversified 5.0% -- - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Common Stocks 97.1% 95.8% - -------------------------------------------------------------------------------- Temporary Cash Investments 3.5% 5.5% - -------------------------------------------------------------------------------- Other Assets & Liabilities* (0.6)% (1.3)% - -------------------------------------------------------------------------------- *Includes collateral received for securities lending and other assets and liabilities. - ------ 5 Life Sciences - Schedule of Investments NOVEMBER 30, 2005 Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 97.1% - -------------------------------------------------------------------------------- BIOTECHNOLOGY -- 13.6% - -------------------------------------------------------------------------------- 85,000 Amgen Inc.(1) $ 6,879,050 - -------------------------------------------------------------------------------- 65,000 Charles River Laboratories(1) 2,961,400 - -------------------------------------------------------------------------------- 58,000 Digene Corp.(1)(2) 1,590,360 - -------------------------------------------------------------------------------- 38,936 Genentech, Inc.(1) 3,723,060 - -------------------------------------------------------------------------------- 78,000 Gilead Sciences, Inc.(1) 3,953,820 - -------------------------------------------------------------------------------- 46,000 Progenics Pharmaceuticals, Inc.(1)(2) 1,217,620 - -------------------------------------------------------------------------------- 129,242 QIAGEN N.V.(1)(2) 1,451,388 - -------------------------------------------------------------------------------- 21,776,698 - -------------------------------------------------------------------------------- DIVERSIFIED -- 5.0% - -------------------------------------------------------------------------------- 130,000 iShares Dow Jones U.S. Healthcare Sector Index Fund(2) 7,987,200 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 21.8% - -------------------------------------------------------------------------------- 82,000 Baxter International, Inc. 3,188,980 - -------------------------------------------------------------------------------- 92,500 Biomet Inc. 3,294,850 - -------------------------------------------------------------------------------- 61,300 Cytyc Corp.(1) 1,686,363 - -------------------------------------------------------------------------------- 41,000 Dade Behring Holdings Inc. 1,676,490 - -------------------------------------------------------------------------------- 38,000 Hospira Inc.(1) 1,677,700 - -------------------------------------------------------------------------------- 60,000 ICU Medical Inc.(1) 2,158,800 - -------------------------------------------------------------------------------- 86,000 Medtronic, Inc. 4,779,020 - -------------------------------------------------------------------------------- 72,300 St. Jude Medical, Inc.(1) 3,453,771 - -------------------------------------------------------------------------------- 82,858 Stryker Corp. 3,587,751 - -------------------------------------------------------------------------------- 73,000 Sybron Dental Specialties Inc.(1)(2) 3,193,020 - -------------------------------------------------------------------------------- 108,500 Thermo Electron Corp.(1) 3,347,225 - -------------------------------------------------------------------------------- 104,000 Viasys Healthcare Inc.(1)(2) 2,839,200 - -------------------------------------------------------------------------------- 1,550 Zoll Medical Corp.(1)(2) 40,316 - -------------------------------------------------------------------------------- 34,923,486 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 31.7% - -------------------------------------------------------------------------------- 51,500 Aetna Inc. 4,763,235 - -------------------------------------------------------------------------------- 32,000 Cardinal Health, Inc. 2,046,400 - -------------------------------------------------------------------------------- 32,000 Caremark Rx Inc.(1) 1,644,480 - -------------------------------------------------------------------------------- 53,126 Community Health Systems Inc.(1)(2) 2,129,821 - -------------------------------------------------------------------------------- 33,000 Covance Inc.(1) 1,568,820 - -------------------------------------------------------------------------------- 29,000 Coventry Health Care Inc.(1) 1,727,530 - -------------------------------------------------------------------------------- 85,000 Henry Schein, Inc.(1)(2) 3,625,250 - -------------------------------------------------------------------------------- 43,500 Humana Inc.(1) 1,993,605 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- 56,800 LifePoint Hospitals Inc.(1) $ 2,161,240 - -------------------------------------------------------------------------------- 70,000 McKesson Corp. 3,521,000 - -------------------------------------------------------------------------------- 45,000 Medco Health Solutions Inc.(1) 2,414,250 - -------------------------------------------------------------------------------- 100,000 PSS World Medical Inc.(1)(2) 1,647,000 - -------------------------------------------------------------------------------- 47,000 Radiation Therapy Services Inc.(1)(2) 1,783,180 - -------------------------------------------------------------------------------- 135,500 Renal Care Group Inc.(1) 6,361,724 - -------------------------------------------------------------------------------- 102,402 Symbion Inc.(1)(2) 2,743,350 - -------------------------------------------------------------------------------- 91,587 UnitedHealth Group Incorporated 5,482,398 - -------------------------------------------------------------------------------- 65,902 WellPoint Inc.(1) 5,063,251 - -------------------------------------------------------------------------------- 50,676,534 - -------------------------------------------------------------------------------- PHARMACEUTICALS -- 25.0% - -------------------------------------------------------------------------------- 34,250 American Pharmaceutical Partners Inc.(1)(2) 1,302,185 - -------------------------------------------------------------------------------- 73,000 AstraZeneca plc ADR 3,361,650 - -------------------------------------------------------------------------------- 275,000 AVANIR Pharmaceuticals Cl A(1)(2) 772,750 - -------------------------------------------------------------------------------- 30,000 Endo Pharmaceuticals Holdings Inc.(1) 897,600 - -------------------------------------------------------------------------------- 103,109 IVAX Corp.(1) 3,089,146 - -------------------------------------------------------------------------------- 132,000 Johnson & Johnson 8,151,000 - -------------------------------------------------------------------------------- 82,500 K-V Pharmaceutical Co. Cl A(1)(2) 1,633,500 - -------------------------------------------------------------------------------- 75,000 Novartis AG ADR 3,930,000 - -------------------------------------------------------------------------------- 22,000 Roche Holding AG ORD 3,305,604 - -------------------------------------------------------------------------------- 90,000 Sanofi-Aventis ADR 3,618,900 - -------------------------------------------------------------------------------- 168,000 Schering-Plough Corp. 3,245,760 - -------------------------------------------------------------------------------- 52,000 Teva Pharmaceutical Industries Ltd. ADR(2) 2,125,760 - -------------------------------------------------------------------------------- 112,000 Wyeth 4,654,720 - -------------------------------------------------------------------------------- 40,088,575 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $137,748,591) 155,452,493 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 3.5% - -------------------------------------------------------------------------------- Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 3.00%, 7/15/12, valued at $5,708,970), in a joint trading account at 3.92%, dated 11/30/05, due 12/1/05 (Delivery value $5,600,610) (Cost $5,600,000) 5,600,000 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 6 Life Sciences - Schedule of Investments NOVEMBER 30, 2005 Shares Value - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 12.4% - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, Morgan Stanley Group, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.02%, dated 11/30/05, due 12/1/05 (Delivery value $1,735,324) $ 1,735,130 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.06%, dated 11/30/05, due 12/1/05 (Delivery value $18,127,409) 18,125,365 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $19,860,495) $ 19,860,495 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 113.0% (Cost $163,209,086) 180,912,988 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (13.0)% (20,855,667) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $160,057,321 ================================================================================ FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS* Contracts to Sell Settlement Date Value Unrealized Gain (Loss) - ------------------------------------------------------------------------------- 2,196,700 CHF for USD 12/30/05 $1,675,039 $(3,693) ==================================== (Value on Settlement Date $1,671,346) *Forward foreign currency exchange contracts are designed to protect the fund's foreign investments against declines in foreign currencies (also known as hedging). The contracts are called "forward" because they allow the fund to exchange a foreign currency for U.S. dollars on a specific date in the future -- and at a prearranged exchange rate. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt CHF = Swiss Franc ORD = Foreign Ordinary Share USD = United States Dollar (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of November 30, 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 NOVEMBER 30, 2005 ---------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 7.75% -9.27% -15.86% 6/30/00 - -------------------------------------------------------------------------------- S&P COMPOSITE 1500 TECHNOLOGY INDEX 7.21% -7.14% -13.42% -- - -------------------------------------------------------------------------------- S&P 500 INDEX(1) 8.44% 0.64% -1.18% -- - -------------------------------------------------------------------------------- Institutional Class 7.94% -9.06% -17.37% 7/14/00 - -------------------------------------------------------------------------------- Advisor Class 7.46% -9.56% -16.10% 6/30/00 - -------------------------------------------------------------------------------- (1) Data provided by Lipper Inc. -- 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 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 of the total market 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
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ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - ------------------------------------------------------------------------------ 2000* 2001 2002 2003 2004 2005 - ------------------------------------------------------------------------------ Investor Class -36.20% -34.48% -31.10% 35.97% -7.05% 7.75% - ------------------------------------------------------------------------------ S&P Composite 1500 Technology Index -33.66% -29.22% -27.70% 24.02% 1.48% 7.21% - ------------------------------------------------------------------------------ S&P 500 Index -9.16% -12.22% -16.51% 15.09% 12.86% 8.44% - ------------------------------------------------------------------------------ * From 6/30/00, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. The fund concentrates its investments in a narrow segment of the total market 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 PORTFOLIO MANAGER ON THE TECHNOLOGY INVESTMENT TEAM: TOM TELFORD. Technology gained 7.75%* during the 12 months ended November 30, 2005, outperforming its benchmark, the S&P Composite 1500 Technology Index (the Composite), which rose only 7.21%. SECOND-HALF SURGE It was a tale of two markets as stocks, technology stocks in particular, struggled in the first half of the fiscal year. After bottoming out in April, however, stocks rebounded with tech stocks leading the way. For instance, the Composite declined 1.39% for the first six months covered by this report, then gained 8.72% in the final half of the period. THE INTERNET REVOLUTION Technology's strongest performance came from the Internet software and services industry. The portfolio's holdings here in aggregate gained approximately 56%, far outpacing the benchmark's 9% return in this sector. Internet search-engine company Google was responsible for much of the portfolio's advance, spurred by strong earnings reports. Google is at the forefront of the move toward online advertising. Consumers are spending more of their media time online, and advertising dollars are following. Technology research firm Forrester Research predicted total U.S. online advertising and marketing spending in 2005 of nearly $15 billion, a 23% increase over 2004. It expects that amount to almost double by 2010. The global expansion of the Internet and online advertising has helped propel other companies in the portfolio, including Tokyo-based Softbank, which owns a 42% stake in Yahoo Japan. APPLE'S HALO EFFECT Apple Computer was another leading contributor in the portfolio as the success of the iPod and market-share gains in personal computers boosted revenues and earnings. Apple uses flash memory in its iPod products instead of hard-disk drives for storage, which helped lift the stocks of flash memory companies. The growing demand for flash technology in consumer electronics fueled TOP TEN HOLDINGS AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Softbank Corp. ORD 4.3% -- - -------------------------------------------------------------------------------- Google Inc. Cl A 3.6% 4.8% - -------------------------------------------------------------------------------- NII Holdings, Inc. 3.2% -- - -------------------------------------------------------------------------------- Fujitsu Ltd. ORD 3.0% -- - -------------------------------------------------------------------------------- Hewlett-Packard Co. 3.0% -- - -------------------------------------------------------------------------------- Lawson Software Inc. 2.7% -- - -------------------------------------------------------------------------------- Business Objects SA ADR 2.7% -- - -------------------------------------------------------------------------------- Motorola, Inc. 2.4% 1.5% - -------------------------------------------------------------------------------- Accenture Ltd. Cl A 2.2% -- - -------------------------------------------------------------------------------- Adobe Systems Inc. 2.1% -- - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 10 Technology - Portfolio Commentary a surge in SanDisk's stock. The flash-memory maker owns a large portion of the intellectual property rights surrounding flash technology. This means that in addition to the profits it earns on its own products, SanDisk also receives royalty payments from other companies, which boosts revenues and earnings as flash becomes more widely used. SETBACKS Data-integration software maker TIBCO Software was the top individual detractor to Technology's returns. TIBCO's share price fell sharply in early March when the company unexpectedly lowered its earnings target due to sales missteps in Europe. Shares in QLogic, a maker of storage networking components, slid on worries about slowing growth in the storage network business. Both positions were sold. SELECTIVE MARKET The technology sector has been a challenging place to invest in the past five years. However, we are encouraged by a variety of data that suggest we are entering a period that may favor select technology shares. The economy has been growing at a moderate, healthy rate, and corporate earnings have posted solid double-digit gains for the past 12 straight quarters. In fact, corporations have been sitting on record levels of cash and are now finding that they need to invest in technology again in order to maintain earnings and productivity growth. For instance, we see growing interest in the convergence of wireless networking--combining voice, video and data capabilities into a single device without disruption in connections. Motorola, a top-ten position, calls this "seamless mobility," and it's taking a lead role in developing next-generation networks, services and devices. The stock was a top contributor during the fund's fiscal year, bolstered in part by the popularity of its new Razr cellphone. We remain committed to pursuing attractive investment opportunities for the portfolio. In the months ahead, we will continue searching for companies benefiting from positive developments in the technology sector. TOP FIVE INDUSTRIES AS OF NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Semiconductors & Semiconductor Equipment 17.3% 17.3% - -------------------------------------------------------------------------------- Internet Software & Services 14.1% 12.8% - -------------------------------------------------------------------------------- Computers & Peripherals 13.5% 18.0% - -------------------------------------------------------------------------------- Software 11.6% 10.1% - -------------------------------------------------------------------------------- Communications Equipment 10.9% 16.6% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/05 5/31/05 - -------------------------------------------------------------------------------- Common Stocks 100.2% 99.2% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.3% -- - -------------------------------------------------------------------------------- Other Assets & Liabilities* (0.5)% 0.8% - -------------------------------------------------------------------------------- *Includes collateral received for securities lending and other assets and liabilities. - ------ 11 Technology - Schedule of Investments NOVEMBER 30, 2005 Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 100.2% - -------------------------------------------------------------------------------- AEROSPACE & DEFENSE -- 3.0% - -------------------------------------------------------------------------------- 109,563 BE Aerospace, Inc.(1) $ 1,919,544 - -------------------------------------------------------------------------------- 52,059 Ceradyne Inc.(1)(2) 2,451,458 - -------------------------------------------------------------------------------- 4,371,002 - -------------------------------------------------------------------------------- AUTO COMPONENTS -- 0.7% - -------------------------------------------------------------------------------- 52,000 Toyoda Gosei Co. Ltd. ORD 993,824 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES -- 0.8% - -------------------------------------------------------------------------------- 52,200 American Reprographics Co.(1)(2) 1,122,822 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT -- 10.9% - -------------------------------------------------------------------------------- 256,311 Centillium Communications, Inc.(1) 1,179,031 - -------------------------------------------------------------------------------- 106,368 Corning Inc.(1) 2,153,952 - -------------------------------------------------------------------------------- 164,241 Foundry Networks, Inc.(1)(2) 2,281,307 - -------------------------------------------------------------------------------- 938,600 JDS Uniphase Corp.(1) 2,412,202 - -------------------------------------------------------------------------------- 142,697 Motorola, Inc. 3,437,571 - -------------------------------------------------------------------------------- 44,544 QUALCOMM Inc. 2,025,416 - -------------------------------------------------------------------------------- 209,171 Tellabs, Inc.(1) 2,146,094 - -------------------------------------------------------------------------------- 15,635,573 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS -- 13.5% - -------------------------------------------------------------------------------- 169,675 Adaptec, Inc.(1) 843,285 - -------------------------------------------------------------------------------- 34,347 Apple Computer, Inc.(1) 2,329,414 - -------------------------------------------------------------------------------- 83,197 Electronics for Imaging, Inc.(1)(2) 2,323,692 - -------------------------------------------------------------------------------- 598,000 Fujitsu Ltd. ORD 4,371,958 - -------------------------------------------------------------------------------- 147,101 Hewlett-Packard Co. 4,364,487 - -------------------------------------------------------------------------------- 54,885 Neoware Systems Inc.(1)(2) 1,200,335 - -------------------------------------------------------------------------------- 33,720 SanDisk Corp.(1) 1,721,743 - -------------------------------------------------------------------------------- 429,000 Toshiba Corp. ORD 2,255,633 - -------------------------------------------------------------------------------- 9,410,547 - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT -- 1.7% - -------------------------------------------------------------------------------- 523,000 Fuji Electric Holdings Co. Ltd. ORD 2,422,509 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS -- 7.0% - -------------------------------------------------------------------------------- 196,155 Aeroflex Inc.(1) 2,151,820 - -------------------------------------------------------------------------------- 102,765 Metrologic Instruments Inc.(1) 2,009,056 - -------------------------------------------------------------------------------- 64,670 Multi-Fineline Electronix, Inc.(1)(2) 2,392,790 - -------------------------------------------------------------------------------- 114,286 Plexus Corp.(1)(2) 2,457,149 - -------------------------------------------------------------------------------- 115,668 TTM Technologies, Inc.(1)(2) 1,057,206 - -------------------------------------------------------------------------------- 10,068,021 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 1.6% - -------------------------------------------------------------------------------- 80,098 Merge Technologies Inc.(1) 2,285,997 - -------------------------------------------------------------------------------- HOUSEHOLD DURABLES -- 1.5% - -------------------------------------------------------------------------------- 110,000 Matsushita Electric Industrial Co., Ltd. ORD 2,217,076 - -------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL -- 1.3% - -------------------------------------------------------------------------------- 107,398 VistaPrint Ltd.(1)(2) $ 1,950,348 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES -- 14.1% - -------------------------------------------------------------------------------- 312,027 24/7 Real Media, Inc.(1)(2) 2,309,000 - -------------------------------------------------------------------------------- 118,592 Akamai Technologies, Inc.(1)(2) 2,367,096 - -------------------------------------------------------------------------------- 12,657 Google Inc. Cl A(1) 5,125,958 - -------------------------------------------------------------------------------- 110,656 Interwoven Inc.(1)(2) 1,050,125 - -------------------------------------------------------------------------------- 133,209 RADVision Ltd.(1) 2,264,553 - -------------------------------------------------------------------------------- 59,400 Rediff.Com India Ltd. ADR(1)(2) 1,006,236 - -------------------------------------------------------------------------------- 76,400 Softbank Corp. ORD 6,146,687 - -------------------------------------------------------------------------------- 20,269,655 - -------------------------------------------------------------------------------- IT SERVICES -- 8.8% - -------------------------------------------------------------------------------- 112,907 Accenture Ltd. Cl A 3,211,075 - -------------------------------------------------------------------------------- 63,620 Automatic Data Processing, Inc. 2,990,140 - -------------------------------------------------------------------------------- 19,400 Nomura Research Institute Ltd. ORD 1,991,487 - -------------------------------------------------------------------------------- 129,009 RightNow Technologies, Inc.(1)(2) 2,336,353 - -------------------------------------------------------------------------------- 59,894 Satyam Computer Services Ltd. ADR 2,110,665 - -------------------------------------------------------------------------------- 12,639,720 - -------------------------------------------------------------------------------- MACHINERY -- 0.7% - -------------------------------------------------------------------------------- 15,615 American Science and Engineering Inc.(1)(2) 1,053,388 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 17.3% - -------------------------------------------------------------------------------- 69,984 Advanced Micro Devices, Inc.(1) 1,832,181 - -------------------------------------------------------------------------------- 260,391 Anadigics, Inc.(1)(2) 1,365,751 - -------------------------------------------------------------------------------- 41,407 Broadcom Corp.(1) 1,927,082 - -------------------------------------------------------------------------------- 121,369 California Micro Devices Corporation(1)(2) 1,112,954 - -------------------------------------------------------------------------------- 39,958 Cree, Inc.(1)(2) 1,072,073 - -------------------------------------------------------------------------------- 80,281 Intersil Corp. Cl A 2,059,208 - -------------------------------------------------------------------------------- 252,166 Kulicke and Soffa Industries, Inc.(1)(2) 2,130,802 - -------------------------------------------------------------------------------- 140,429 Micron Technology, Inc.(1) 2,002,518 - -------------------------------------------------------------------------------- 290,123 Silicon Storage Technology, Inc.(1)(2) 1,598,578 - -------------------------------------------------------------------------------- 39,738 SiRF Technology Holdings, Inc.(1)(2) 1,101,537 - -------------------------------------------------------------------------------- 36,873 Standard Microsystems Corp.(1)(2) 1,102,503 - -------------------------------------------------------------------------------- 52,373 Supertex Inc.(1)(2) 2,212,235 - -------------------------------------------------------------------------------- 230,992 Taiwan Semiconductor Manufacturing Co. Ltd. ADR 2,212,902 - -------------------------------------------------------------------------------- 50,696 Teradyne, Inc.(1) 741,682 - -------------------------------------------------------------------------------- 60,513 Trident Microsystems, Inc.(1) 1,140,065 - -------------------------------------------------------------------------------- 276,003 TriQuint Semiconductor, Inc.(1)(2) 1,242,014 - -------------------------------------------------------------------------------- 24,854,085 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 12 Technology - Schedule of Investments NOVEMBER 30, 2005 Shares Value - -------------------------------------------------------------------------------- SOFTWARE -- 11.6% - -------------------------------------------------------------------------------- 299,818 Actuate Corp.(1)(2) $ 989,399 - -------------------------------------------------------------------------------- 91,907 Adobe Systems Inc. 2,997,087 - -------------------------------------------------------------------------------- 19,106 Advent Software, Inc.(1) 547,196 - -------------------------------------------------------------------------------- 98,300 Business Objects SA ADR(1)(2) 3,906,442 - -------------------------------------------------------------------------------- 23,036 Cerner Corporation(1)(2) 2,220,670 - -------------------------------------------------------------------------------- 515,125 Lawson Software Inc.(1)(2) 3,909,800 - -------------------------------------------------------------------------------- 304,100 Smith Micro Software Inc.(1) 2,077,003 - -------------------------------------------------------------------------------- 16,647,597 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES -- 5.7% - -------------------------------------------------------------------------------- 289,900 @Road Inc.(1) 1,437,904 - -------------------------------------------------------------------------------- 83,182 American Tower Corp. Cl A(1) 2,270,037 - -------------------------------------------------------------------------------- 105,800 NII Holdings, Inc.(1) 4,597,010 - -------------------------------------------------------------------------------- 8,304,951 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $121,411,661) 144,247,115 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 0.3% Repurchase Agreement, Morgan Stanley Group, Inc., (collateralized by various U.S. Treasury obligations, 7.25%-8.125%, 5/15/16-8/15/21, valued at $407,016), in a joint trading account at 3.91%, dated 11/30/05, due 12/1/05 (Delivery value $400,043) (Cost $400,000) 400,000 - -------------------------------------------------------------------------------- Value - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 18.3% - -------------------------------------------------------------------------------- REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, Morgan Stanley Group, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.02%, dated 11/30/05, due 12/1/05 (Delivery value $4,657,770) $ 4,657,250 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 4.06%, dated 11/30/05, due 12/1/05 (Delivery value $21,605,409) 21,602,973 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $26,260,223) 26,260,223 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 118.8% (Cost $148,071,884) 170,907,338 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (18.8)% (26,990,418) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $143,916,920 ================================================================================ 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 November 30, 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 June 1, 2005 to November 30, 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 6/1/05 - EXPENSE 6/1/05 11/30/05 11/30/05 RATIO* - -------------------------------------------------------------------------------- LIFE SCIENCES SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,047.20 $7.70 1.50% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,046.70 $6.67 1.30% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,045.80 $8.97 1.75% - -------------------------------------------------------------------------------- C Class $1,000 $1,040.70 $12.79 2.50% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,017.55 $7.59 1.50% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,018.55 $6.58 1.30% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,016.29 $8.85 1.75% - -------------------------------------------------------------------------------- C Class $1,000 $1,012.53 $12.61 2.50% - -------------------------------------------------------------------------------- TECHNOLOGY SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,156.90 $8.16 1.51% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,157.50 $7.09 1.31% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,155.00 $9.51 1.76% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,017.50 $7.64 1.51% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,018.50 $6.63 1.31% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,016.24 $8.90 1.76% - -------------------------------------------------------------------------------- *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 183, 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 NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $143,348,591 and $121,811,661, respectively) -- including $19,720,156 and $26,099,192 of securities on loan, respectively $161,052,493 $144,647,115 - -------------------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $19,860,495 and $26,260,223, respectively) 19,860,495 26,260,223 - -------------------------------------------------------------------------------- Total investment securities, at value (cost of $163,209,086 and $148,071,884, respectively) 180,912,988 170,907,33 - -------------------------------------------- Cash 35,318 1,502 - -------------------------------------------- Foreign currency holdings, at value (cost of $- and $32, respectively) -- 32 - -------------------------------------------- Receivable for investments sold -- 5,584,318 - -------------------------------------------- Receivable for capital shares sold 4,146 1,327 - -------------------------------------------- Dividends and interest receivable 124,949 29,364 - -------------------------------------------------------------------------------- 181,077,401 176,523,881 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payable for collateral received for securities on loan 19,860,495 26,260,223 - -------------------------------------------- Payable for investments purchased 958,293 6,174,937 - -------------------------------------------- Payable for forward foreign currency exchange contracts 3,693 -- - -------------------------------------------- Accrued management fees 197,490 171,759 - -------------------------------------------- Distribution fees payable 65 21 - -------------------------------------------- Service fees payable 44 21 - -------------------------------------------------------------------------------- 21,020,080 32,606,961 - -------------------------------------------------------------------------------- Net Assets $160,057,321 $143,916,920 ================================================================================ NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $164,162,257 $356,164,367 - -------------------------------------------- Accumulated net investment loss 3,695 (9,649) - -------------------------------------------- Accumulated net realized loss on investment and foreign currency transactions (21,807,353) (235,071,863) - -------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 17,698,722 22,834,065 - -------------------------------------------------------------------------------- $160,057,321 $143,916,920 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $155,834,677 $137,709,569 - -------------------------------------------- Shares outstanding 29,303,659 7,023,548 - -------------------------------------------- Net asset value per share $5.32 $19.61 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $3,953,474 $6,098,607 - -------------------------------------------- Shares outstanding 735,047 307,325 - -------------------------------------------- Net asset value per share $5.38 $19.84 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $167,601 $108,744 - -------------------------------------------- Shares outstanding 31,939 5,634 - -------------------------------------------- Net asset value per share $5.25 $19.30 - -------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $101,569 -- - -------------------------------------------- Shares outstanding 19,879 -- - -------------------------------------------- Net asset value per share $5.11 -- - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 16 Statement of Operations YEAR ENDED NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - ------------------------------------------------- Dividends (net of foreign taxes withheld of $20,116 and $18,645, respectively) $ 873,071 $ 396,233 - ------------------------------------------------- Interest 194,548 79,245 - ------------------------------------------------- Securities lending 41,907 164,002 - -------------------------------------------------------------------------------- 1,109,526 639,480 - -------------------------------------------------------------------------------- EXPENSES: - ------------------------------------------------- Management fees 2,396,835 2,136,224 - ------------------------------------------------- Distribution fees: - ------------------------------------------------- Advisor Class 362 189 - ------------------------------------------------- C Class 280 -- - ------------------------------------------------- Service fees: - ------------------------------------------------- Advisor Class 362 189 - ------------------------------------------------- C Class 93 -- - ------------------------------------------------- Directors' fees and expenses 2,442 2,211 - ------------------------------------------------- Other expenses 1,255 6,784 - -------------------------------------------------------------------------------- 2,401,629 2,145,597 - -------------------------------------------------------------------------------- Net investment income (loss) (1,292,103) (1,506,117) - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - ------------------------------------------------- Investment transactions 19,526,103 15,226,621 - ------------------------------------------------- Foreign currency transactions 132,430 394,387 - -------------------------------------------------------------------------------- 19,658,533 15,621,008 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: - ------------------------------------------------- Investments 1,573,327 (5,240,005) - ------------------------------------------------- Translation of assets and liabilities in foreign currencies (2,266) (1,389) - -------------------------------------------------------------------------------- 1,571,061 (5,241,394) - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 21,229,594 10,379,614 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $19,937,491 $8,873,497 ================================================================================ See Notes to Financial Statements. - ------ 17 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2005 AND NOVEMBER 30, 2004 - ------------------------------------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - ------------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2005 2004 2005 2004 OPERATIONS Net investment income (loss) $ (1,292,103) $ (1,417,072) $ (1,506,117) $ (2,462,822) - ----------------------------------------- Net realized gain (loss) 19,658,533 21,887,794 15,621,008 10,958,405 - ----------------------------------------- Change in net unrealized appreciation (depreciation) 1,571,061 (8,848,736) (5,241,394) (26,806,754) - ------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 19,937,491 11,621,986 8,873,497 (18,311,171) - ------------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - ------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (19,052,124) (16,712,454) (39,826,142) (19,912,500) - ------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 885,367 (5,090,468) (30,952,645) (38,223,671) - ------------------------------------------------------------------------------------------------------------- NET ASSETS - ------------------------------------------------------------------------------------------------------------- Beginning of period 159,171,954 164,262,422 174,869,565 213,093,236 - ------------------------------------------------------------------------------------------------------------- End of period $160,057,321 $159,171,954 $143,916,920 $174,869,565 ============================================================================================================= Accumulated net investment loss $3,695 $(243,196) $(9,649) -- ============================================================================================================= See Notes to Financial Statements. - ------ 18 Notes to Financial Statements NOVEMBER 30, 2005 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 primarily engaged in offering, using or developing products, processes or services that provide or will benefit significantly from technological advancements or improvements. The following is a summary of the funds' significant accounting policies. MULTIPLE CLASS -- 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 gain are recorded as a reduction of cost of investments and/or as a realized gain. The funds estimate the components of distributions received that may be considered nontaxable distributions or capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. SECURITIES ON LOAN -- The funds may lend portfolio securities through their lending agent to certain approved borrowers in order to earn additional income. The funds continue to recognize any gain or loss in the market price of the securities loaned and record any interest earned or dividends declared. EXCHANGE TRADED FUNDS -- The funds may invest in exchange traded funds (ETFs). ETFs are a type of index fund bought and sold on a securities exchange. An ETF trades like common stock and represents a fixed portfolio of securities designed to track the performance and dividend yield of a particular domestic or foreign market index. A fund may purchase an ETF to temporarily gain exposure to a portion of the U.S. or a foreign market while awaiting purchase of underlying securities. The risks of owning an ETF generally reflect the risks of owning the underlying securities they are designed to track, although the lack of liquidity on an ETF could result in it being more volatile. Additionally, ETFs have management fees, which increase their cost. (continued) - ------ 19 Notes to Financial Statements NOVEMBER 30, 2005 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The funds record the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The funds may enter into forward foreign currency exchange contracts to facilitate transactions of securities denominated in a foreign currency or to hedge the funds' exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the funds and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. The funds bear the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses may arise if the counterparties do not perform under the contract terms. REPURCHASE AGREEMENTS -- The funds may enter into repurchase agreements with institutions that 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. (continued) - ------ 20 Notes to Financial Statements NOVEMBER 30, 2005 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 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 the funds, as applicable 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% - ----------------------------------------------------------------------------- Next $250 million 1.30% 1.10% 1.05% - ----------------------------------------------------------------------------- Over $750 millon 1.20% 1.00% 0.95% - ----------------------------------------------------------------------------- The effective annual management fee for each class of the funds for the year ended November 30, 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 year ended November 30, 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. 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 NOVEMBER 30, 2005 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the year ended November 30, 2005, were as follows: - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- Purchases $249,105,513 $544,711,38 - -------------------------------------------------------------------------------- Proceeds from sales $271,376,318 $584,353,64 - -------------------------------------------------------------------------------- 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: - ---------------------------------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - ---------------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ---------------------------------------------------------------------------------------------------------- INVESTOR CLASS - ---------------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 200,000,000 100,000,000 ========================================================================================================== Sold 4,196,619 $ 21,419,017 1,411,513 $ 24,884,730 - ------------------------------ Redeemed (8,025,134) (40,548,888) (3,563,309) (62,608,154) - ---------------------------------------------------------------------------------------------------------- Net increase (decrease) (3,828,515) $(19,129,871) (2,151,796) $(37,723,424) ========================================================================================================== 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 increase (decrease) (3,574,345) $(15,989,420) (1,186,381) $(18,446,594) ========================================================================================================== INSTITUTIONAL CLASS - ------------------------------------------------------ YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 5,000,000 5,000,000 ========================================================================================================== Sold 318,444 $1,631,228 94,495 $ 1,626,558 - ------------------------------ Redeemed (324,251) (1,671,951) (211,751) (3,751,881) - ---------------------------------------------------------------------------------------------------------- Net increase (decrease) (5,807) $ (40,723) (117,256) $(2,125,323) ========================================================================================================== 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 increase (decrease) (173,266) $ (796,180) (91,749) $(1,526,471) ========================================================================================================== (continued) - ------ 22 Notes to Financial Statements NOVEMBER 30, 2005 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ---------------------------------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - ---------------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ---------------------------------------------------------------------------------------------------------- ADVISOR CLASS - ---------------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 5,000,000 5,000,000 ========================================================================================================== Sold 29,699 $152,255 2,153 $37,808 - ------------------------------ Redeemed (20,737) (106,285) (876) (15,203) - ---------------------------------------------------------------------------------------------------------- Net increase (decrease) 8,962 $ 45,970 1,277 $22,605 ========================================================================================================== 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 (decrease) 12,270 $58,401 3,424 $60,565 ========================================================================================================== C CLASS - ------------------------------ YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 5,000,000 N/A ========================================================================================================== Sold 14,845 $75,016 - ------------------------------ Redeemed (527) (2,516) - ---------------------------------------------------------------------------------------------------------- Net increase (decrease) 14,318 $72,500 ========================================================================================================== YEAR ENDED NOVEMBER 30, 2004 SHARES AUTHORIZED 10,000,000 N/A ========================================================================================================== Sold 4,908 $22,515 - ------------------------------ Redeemed (1,714) (7,770) - ---------------------------------------------------------------------------------------------------------- Net increase (decrease) 3,194 $14,745 ========================================================================================================== 5. SECURITIES LENDING As of November 30, 2005, securities in Life Sciences and Technology valued at $19,720,156 and $26,099,192, 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 $19,860,495 and $26,260,223, 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 to $500,000,000 effective December 14, 2005. The funds may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The funds did not borrow from the line during the year ended November 30, 2005. (continued) - ------ 23 Notes to Financial Statements NOVEMBER 30, 2005 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 book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. There were no distributions paid by the funds during the years ended November 30, 2005 and November 30, 2004. As of November 30, 2005, the components of distributable earnings on a tax-basis and the federal tax cost of investments were as follows: LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- Federal tax cost of investments $163,285,625 $148,180,526 ================================================================================ Gross tax appreciation of investments $20,402,836 $23,090,417 - ----------------------------------------- Gross tax depreciation of investments (2,775,473) (363,605) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $17,627,363 $22,726,812 ================================================================================ Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies $(1,486) $(1,389) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) $17,625,877 $22,725,423 ================================================================================ Undistributed ordinary income -- -- - ----------------------------------------- Accumulated capital losses $(21,395,404) $(234,963,221) - ----------------------------------------- Capital loss deferral $(335,409) -- - ----------------------------------------- Currency loss deferral -- $(9,649) - -------------------------------------------------------------------------------- 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, the realization for tax purposes of unrealized gains on certain forward foreign currency contracts, and return of capital dividends recieved. The accumulated capital losses listed above represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers expire as follows: 2009 2010 - ------------------------------------------------------------- Life Sciences -- $21,395,404 - ------------------------------------------------------------- Technology $182,228,391 $52,734,830 - ------------------------------------------------------------- The capital and currency loss deferrals represent net foreign currency losses incurred in the one-month period ended November 30, 2005. 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 - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $4.69 $4.36 $3.54 $4.87 $5.28 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------ Net Investment Income (Loss)(1) (0.04) (0.04) (0.03) (0.04) (0.03) - ------------------------ Net Realized and Unrealized Gain (Loss) 0.67 0.37 0.85 (1.29) (0.25) - -------------------------------------------------------------------------------- Total From Investment Operations 0.63 0.33 0.82 (1.33) (0.28) - -------------------------------------------------------------------------------- Distributions - ------------------------ From Net Realized Gains -- -- -- -- (0.13) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $5.32 $4.69 $4.36 $3.54 $4.87 ================================================================================ TOTAL RETURN(2) 13.43% 7.57% 23.16% (27.31)% (5.35)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50% 1.50% 1.50% 1.50% 1.50% - ------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.81)% (0.85)% (0.89)% (0.88)% (0.61)% - ------------------------ Portfolio Turnover Rate 162% 215% 138% 272% 206% - ------------------------ Net Assets, End of Period (in thousands) $155,835 $155,530 $160,187 $146,324 $227,341 - -------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 25 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $4.74 $4.40 $3.56 $4.89 $5.28 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------- Net Investment Income (Loss)(1) (0.03) (0.03) (0.03) (0.03) (0.02) - --------------------------- Net Realized and Unrealized Gain (Loss) 0.67 0.37 0.87 (1.30) (0.24) - -------------------------------------------------------------------------------- Total From Investment Operations 0.64 0.34 0.84 (1.33) (0.26) - -------------------------------------------------------------------------------- Distributions - --------------------------- From Net Realized Gains -- -- -- -- (0.13) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $5.38 $4.74 $4.40 $3.56 $4.89 ================================================================================ TOTAL RETURN(2) 13.50% 7.73% 23.60% (27.20)% (4.97)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.30% 1.30% 1.30% 1.30% 1.30% - --------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.61)% (0.65)% (0.69)% (0.68)% (0.41)% - --------------------------- Portfolio Turnover Rate 162% 215% 138% 272% 206% - --------------------------- Net Assets, End of Period (in thousands) $3,953 $3,510 $4,019 $3,365 $4,348 - -------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 26 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ------------------------------------------------------------------------------ ADVISOR CLASS - ------------------------------------------------------------------------------ 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------ PER-SHARE DATA - ------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $4.64 $4.33 $3.51 $4.86 $5.28 - ------------------------------------------------------------------------------ Income From Investment Operations - ---------------------- Net Investment Income (Loss)(1) (0.05) (0.05) (0.04) (0.05) (0.04) - ---------------------- Net Realized and Unrealized Gain (Loss) 0.66 0.36 0.86 (1.30) (0.25) - ------------------------------------------------------------------------------ Total From Investment Operations 0.61 0.31 0.82 (1.35) (0.29) - ------------------------------------------------------------------------------ Distributions - ---------------------- From Net Realized Gains -- -- -- -- (0.13) - ------------------------------------------------------------------------------ Net Asset Value, End of Period $5.25 $4.64 $4.33 $3.51 $4.86 ============================================================================== TOTAL RETURN(2) 13.15% 7.16% 23.36% (27.78)% (5.55)% - ------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 1.75% 1.75% 1.75% 1.75% 1.75% - ---------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.06)% (1.10)% (1.14)% (1.13)% (0.86)% - ---------------------- Portfolio Turnover Rate 162% 215% 138% 272% 206% - ---------------------- Net Assets, End of Period (in thousands) $168 $107 $46 $25 $13 - ------------------------------------------------------------------------------ (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 27 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2005 2004 2003 2002 2001(1) - -------------------------------------------------------------------------------- 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 Income (Loss)(2) (0.09) (0.08) (0.07) (0.08) --(3) - ------------------------- Net Realized and Unrealized Gain (Loss) 0.64 0.36 0.86 (1.30) --(3) - -------------------------------------------------------------------------------- Total From Investment Operations 0.55 0.28 0.79 (1.38) --(3) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $5.11 $4.56 $4.28 $3.49 $4.87 ================================================================================ TOTAL RETURN(4) 12.06% 6.54% 22.64% (28.34)% 0.00% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.50% 2.50% 2.50% 2.50% 2.50%(5) - ------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.81)% (1.85)% (1.89)% (1.88)% (1.46)%(5) - ------------------------- Portfolio Turnover Rate 162% 215% 138% 272% 206%(6) - ------------------------- Net Assets, End of Period (in thousands) $102 $25 $10 $6 $3 - -------------------------------------------------------------------------------- (1) November 29, 2001 (commencement of sale) through November 30, 2001. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2001. See Notes to Financial Statements. - ------ 28 Technology - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2005 2004 2003(1) 2002(1) 2001(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $18.20 $19.58 $14.40 $20.90 $31.90 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------ Net Investment Income (Loss)(2) (0.19) (0.24) (0.19) (0.20) (0.20) - ------------------------ Net Realized and Unrealized Gain (Loss) 1.60 (1.14) 5.37 (6.30) (10.80) - -------------------------------------------------------------------------------- Total From Investment Operations 1.41 (1.38) 5.18 (6.50) (11.00) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $19.61 $18.20 $19.58 $14.40 $20.90 ================================================================================ TOTAL RETURN(3) 7.75% (7.05)% 35.97% (31.10)% (34.48)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.51% 1.50% 1.50% 1.50% 1.50% - ------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (1.06)% (1.30)% (1.25)% (1.20)% (0.79)% - ------------------------ Portfolio Turnover Rate 388% 279% 218% 251% 356% - ------------------------ Net Assets, End of Period (in thousands) $137,710 $166,986 $202,884 $127,767 $173,877 - -------------------------------------------------------------------------------- (1) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 29 Technology - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ------------------------------------------------------------------------------- 2005 2004 2003(1) 2002(1) 2001(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $18.38 $19.74 $14.50 $21.00 $31.90 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------ Net Investment Income (Loss)(2) (0.15) (0.20) (0.16) (0.20) (0.20) - ------------------------ Net Realized and Unrealized Gain (Loss) 1.61 (1.16) 5.40 (6.30) (10.70) - -------------------------------------------------------------------------------- Total From Investment Operations 1.46 (1.36) 5.24 (6.50) (10.90) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $19.84 $18.38 $19.74 $14.50 $21.00 ================================================================================ TOTAL RETURN(3) 7.94% (6.89)% 36.14% (30.95)% (34.17)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.31% 1.30% 1.30% 1.30% 1.30% - ------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.86)% (1.10)% (1.05)% (1.00)% (0.59)% - ------------------------ Portfolio Turnover Rate 388% 279% 218% 251% 356% - ------------------------ Net Assets, End of Period (in thousands) $6,099 $7,805 $10,191 $8,444 $9,198 - -------------------------------------------------------------------------------- (1) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 30 Technology - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ------------------------------------------------------------------------------- ADVISOR CLASS - ------------------------------------------------------------------------------- 2005 2004 2003(1) 2002(1) 2001(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $17.96 $19.37 $14.30 $20.80 $31.90 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------- Net Investment Income (Loss)(2) (0.24) (0.27) (0.20) (0.20) (0.20) - ----------------------- Net Realized and Unrealized Gain (Loss) 1.58 (1.14) 5.27 (6.30) (10.90) - -------------------------------------------------------------------------------- Total From Investment Operations 1.34 (1.41) 5.07 (6.50) (11.10) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $19.30 $17.96 $19.37 $14.30 $20.80 ================================================================================ TOTAL RETURN(3) 7.46% (7.28)% 35.45% (31.25)% (34.80)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.76% 1.75% 1.75% 1.75% 1.75% - ----------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.31)% (1.55)% (1.50)% (1.45)% (1.04)% - ----------------------- Portfolio Turnover Rate 388% 279% 218% 251% 356% - ----------------------- Net Assets, End of Period (in thousands) $109 $78 $18 $54 $1 - -------------------------------------------------------------------------------- (1) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 31 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders, American Century World Mutual Funds, Inc.: We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Life Sciences Fund and Technology Fund (collectively the "Funds"), two of the mutual funds comprising American Century World Mutual Funds, Inc., as of November 30, 2005, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2005, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Life Sciences Fund and Technology Fund, as of November 30, 2005, the results of their operations for the year then ended, the changes in their net assets for each of the two years for the period then ended and their financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Kansas City, Missouri January 13, 2006 - ------ 32 Management The individuals listed below serve as directors or officers of the funds. Each director serves until his or her successor is duly elected and qualified or until he or she retires. Mandatory retirement age for independent directors is 72. Those listed as interested directors are "interested" primarily by virtue of their engagement as officers of American Century Companies, Inc. (ACC) or its wholly owned, direct or indirect, subsidiaries, including the funds' investment advisor, American Century Global Investment Management, Inc. (ACGIM) or American Century Investment Management, Inc. (ACIM); the funds' principal underwriter, American Century Investment Services, Inc. (ACIS); and the funds' transfer agent, American Century Services, LLC (ACS LLC). The other directors (more than three-fourths of the total number) are independent; that is, they have never been employees or officers of, and have no financial interest in, ACC or any of its wholly-owned subsidiaries, including ACGIM, ACIM, ACIS, and ACS LLC. The directors serve in this capacity for six registered investment companies in the American Century family of funds. All persons named as officers of the funds also serve in a similar capacity for the other 13 investment companies advised by ACIM or ACGIM, unless otherwise noted. Only officers with policy-making functions are listed. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The information below is provided as of December 15, 2005. INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- THOMAS A. BROWN, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1940 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1980 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Formerly Chief Executive Officer/Treasurer, Associated Bearings Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ANDREA C. HALL, PH.D., 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, Midwest Research Institute NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- D.D. (DEL) HOCK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1935 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1996 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Chairman, Public Service Company of Colorado NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Allied Motion Technologies, Inc - -------------------------------------------------------------------------------- (continued) - ------ 33 Management - -------------------------------------------------------------------------------- DONALD H. PRATT, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1937 POSITION(S) HELD WITH FUND: Director, Chairman of the Board FIRST YEAR OF SERVICE: 1995 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Western Investments, Inc.; Retired Chairman of the Board, Butler Manufacturing Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- GALE E. SAYERS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1943 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Chief Executive Officer and Founder, Sayers40, Inc., a technology products and service provider NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Triad Hospitals, Inc. - -------------------------------------------------------------------------------- M. JEANNINE STRANDJORD, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1994 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Senior Vice President, Sprint Corporation NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, DST Systems, Inc.; Director, Euronet Worldwide, Inc. - -------------------------------------------------------------------------------- TIMOTHY S. WEBSTER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1961 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 2001 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President and Chief Executive Officer, American Italian Pasta Company (1992 to December 2005) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- INTERESTED DIRECTORS - -------------------------------------------------------------------------------- JAMES E. STOWERS, JR.(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1924 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman FIRST YEAR OF SERVICE: 1958 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Founder, Director and Controlling Shareholder, ACC; Chairman, ACC (January 1995 to December 2004); Director, ACIM, ACGIM, ACS LLC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- JAMES E. STOWERS III(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1959 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman FIRST YEAR OF SERVICE: 1990 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, ACC (January 2005 to present); Co-Chairman, ACC (September 2000 to December 2004); Chairman, ACS LLC and other ACC subsidiaries; Director, ACC, ACIM, ACGIM, ACIS, ACS LLC and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 54 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (1) James E. Stowers, Jr. is the father of James E. Stowers III. (continued) - ------ 34 Management OFFICERS - -------------------------------------------------------------------------------- WILLIAM M. LYONS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1955 POSITION(S) HELD WITH FUND: President FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC (September 2000 to present); President, ACC (June 1997 to present); Also serves as: Chief Executive Officer and President, ACIS, ACGIM, ACIM and other ACC subsidiaries; Executive Vice President, ACS LLC; Director, ACC, ACIS, ACIM, ACGIM, ACS LLC and other ACC subsidiaries - -------------------------------------------------------------------------------- ROBERT T. JACKSON, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1946 POSITION(S) HELD WITH FUND: Executive Vice President FIRST YEAR OF SERVICE: 1995 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC (August 1997 to present); Chief Financial Officer, ACC (May 1995 to October 2002); Executive Vice President, ACC (May 1995 to present); Also serves as: Chief Executive Officer, Chief Financial Officer and President, ACS LLC; Chief Financial Officer and Executive Vice President, ACGIM, ACIM, ACIS and other ACC subsidiaries; Treasurer, ACGIM, ACIM and other ACC subsidiaries; Director, ACC and other subsidiaries - -------------------------------------------------------------------------------- JONATHAN THOMAS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1963 POSITION(S) HELD WITH FUND: Executive Vice President FIRST YEAR OF SERVICE: 2005 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Executive Vice President, ACC (November 2005 to present); Managing Director, Morgan Stanley (March 2000 to November 2005) - -------------------------------------------------------------------------------- MARYANNE ROEPKE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1956 POSITION(S) HELD WITH FUND: Senior Vice President, Treasurer, and Chief Financial Officer FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Assistant Treasurer, ACC (January 1995 to present); Also serves as: Senior Vice President, ACS LLC; Assistant Treasurer, ACGIM, ACIM, ACIS, ACS LLC and other ACC subsidiaries - -------------------------------------------------------------------------------- DAVID C. TUCKER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1958 POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (February 2001 to present); General Counsel, ACC (June 1998 to present); Also serves as: Senior Vice President and General Counsel, ACGIM, ACIM, ACIS, ACS LLC and other ACC subsidiaries - -------------------------------------------------------------------------------- CHARLES C.S. PARK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Vice President and Chief Compliance Officer FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Compliance Officer, ACS LLC, ACIM and ACGIM (March 2005 to present); Vice President, ACS LLC (February 2000 to present); Assistant General Counsel, ACS LLC (January 1998 to March 2005) - -------------------------------------------------------------------------------- ROBERT LEACH, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1966 POSITION(S) HELD WITH FUND: Controller FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS LLC (February 2000 to present); Controller-Fund Accounting, ACS LLC (June 1997 to present) - -------------------------------------------------------------------------------- JON ZINDEL, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Tax Officer FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (October 2001 to present); Vice President, Corporate Tax, ACS LLC (April 1998 to present); Also serves as: Vice President, ACGIM, ACIM, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- The SAI has additional information about the funds' directors and is available without charge, upon request, by calling 1-800-345-2021. - ------ 35 Approval of Management Agreements for Life Sciences and Technology Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated and approved by a majority of a fund's independent directors (the "Directors") each year. At American Century, this process -- referred to as the "15(c) Process" -- involves at least two board meetings spanning a 30 to 60 day period each year. In addition to this annual review, the board of directors and its committees oversee and evaluate at quarterly meetings the nature and quality of significant services the advisor performs on behalf of the fund. At these meetings the board reviews fund performance, shareholder services and feedback, audit and compliance information, and a variety of other reports from the advisor concerning fund operations. The board, or committees of the board, also hold special meetings, as needed. Under a new Securities and Exchange Commission rule, each fund is required to disclose in its annual or semiannual report, as appropriate, the material factors and conclusions that formed the basis for its board's approval or renewal of any advisory agreements within the fund's most recently completed fiscal half-year period. ANNUAL CONTRACT REVIEW PROCESS As part of the annual 15(c) Process undertaken during the most recent fiscal half-year, the Directors requested and received extensive data and information compiled by the advisor and certain independent providers of evaluative data (the "Independent 15(c) Providers") concerning Life Sciences and Technology (collectively, the "funds") and the services provided to the funds under the management agreement. The information included, but was not limited to: * the nature, extent and quality of investment management, shareholder services and other services provided to the funds under the management agreement; * reports on the advisor's activities relating to the wide range of programs and services the advisor provides to the funds and its shareholders on a routine and non-routine basis; * data comparing the cost of owning the funds to the cost of owning similar funds; * data comparing the funds' performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the funds to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. In keeping with its practice, the funds' board of directors held two regularly scheduled meetings and two special meetings to review and discuss the information provided by the advisor and the Independent 15(c) Providers and to complete its negotiations with the advisor regarding the renewal of the management agreement, including the setting of the applicable advisory fee. In addition, the independent directors met on several occasions in private session to review and discuss the information provided and evaluate the advisor's performance as manager of the funds. (continued) - ------ 36 Approval of Management Agreements for Life Sciences and Technology FACTORS CONSIDERED The Directors considered all of the information provided by the advisor, the Independent 15(c) Providers, and its independent counsel and evaluated such information for each fund for which the board has responsibility. The Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the agreement under the terms ultimately determined by the board to be appropriate, the Directors' decision was based on the following factors. NATURE, EXTENT AND QUALITY OF SERVICES -- GENERALLY. Under the management agreement, the advisor is responsible for providing or arranging for all services necessary for the operation of the funds. The board noted that under the management agreement, the advisor provides or arranges at its own expense a wide variety of services including, but not limited to: * fund construction and design * portfolio security selection * initial capitalization/funding * securities trading * custody of fund assets * daily valuation of the funds' portfolios * shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping and communications * legal services * regulatory and portfolio compliance * financial reporting * marketing and distribution The Directors noted that many of these services have expanded over time both in terms of quantity and complexity in response to shareholder demands, competition in the industry and the changing regulatory environment. In performing their evaluation, the Directors considered information received in connection with the annual review, as well as information provided on an ongoing basis at their regularly scheduled board and committee meetings. INVESTMENT MANAGEMENT SERVICES. The nature of the investment management services provided is quite complex and allows fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes, and liquidity. In evaluating investment performance, the board expects the advisor to manage the funds in accordance with its investment objective and approved strategies. In providing these services, the advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance and other systems to conduct their business. At each quarterly meeting the Directors review investment performance information for the funds, together with comparative information for appropriate benchmarks and a peer group of funds managed similarly to the funds. If performance concerns are identified, the Directors discuss with the advisor and its portfolio managers the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. Annually, the Directors review detailed performance information, as provided by the Independent (continued) - ------ 37 Approval of Management Agreements for Life Sciences and Technology 15(c) Providers, comparing the funds' performance with that of similar funds not managed by the advisor. Life Science's performance was above the median of its peer group for the one year period and below the median of its peer group for the three year period during part of the past year. Technology's performance was below the median of its peer group for the one year period and above the median of its peer group for the three year period during part of the past year. The Directors discussed the funds' performance with the advisor and were satisfied with the efforts being undertaken by the advisor. The Directors will continue to monitor those efforts and the performance of the funds. SHAREHOLDER AND OTHER SERVICES. The advisor provides the funds with a comprehensive package of transfer agency, shareholder, and other services. The Directors review reports and evaluations of such services at its regular quarterly meetings, including the annual meeting concerning contract review. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the advisor. COSTS OF SERVICES PROVIDED AND PROFITABILITY TO THE ADVISOR. The advisor provides detailed information concerning its cost of providing various services to the funds, its profitability in managing the funds, its overall profitability, and its financial condition. The Directors have reviewed with the advisor the methodology used to prepare this financial information. This financial information regarding the advisor is considered in order to evaluate the advisor's financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. ETHICS OF THE ADVISOR. The Directors generally considered the advisor's commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the advisor's practices generally meet or exceed industry best practices and that the advisor was not implicated in the industry scandals of 2003 and 2004. ECONOMIES OF SCALE. The Directors review reports provided by the advisor on economies of scale for the complex as a whole and the year-over-year changes in revenue, costs, and profitability. The Directors concluded that economies of scale are difficult to measure with precision, particularly on a fund-by-fund basis. This analysis is further complicated by the fact that the advisor is required to make a continuing reinvestment in the business to provide additional content and services for fund shareholders. Accordingly, the Directors also seek to evaluate economies of scale by reviewing other information, such as year-over-year profitability of the advisor generally, the profitability of (continued) - ------ 38 Approval of Management Agreements for Life Sciences and Technology its management of the funds specifically, the expenses incurred by the advisor in providing various services to the funds, and the breakpoint fees of competitive funds not managed by the advisor. The Directors believe the advisor is appropriately sharing any economies of scale through a competitive fee structure, through breakpoints that reduce fees as the fund increases in size, and through reinvestment in its business to provide shareholders additional content and services. COMPARISON TO OTHER FUNDS' FEES. The funds pay the advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the funds, other than brokerage expenses, taxes, interest, extraordinary expenses, and the fees and expenses of the funds' independent directors (including their independent legal counsel). Under the unified fee structure, the advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other fund groups are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges and other expenses. Other than their investment advisory fees and Rule 12b-1 distribution fees, all other components of the total fees charged by these other fund groups may be increased without shareholder approval. The board believes the unified fee structure is a benefit to fund shareholders because it clearly discloses to shareholders the cost of owning fund shares, and, since the unified fee cannot be increased without a vote of fund shareholders, it shifts to the advisor the increased costs of operating the funds and the risk of administrative inefficiencies. Part of the Directors' analysis of fee levels involves comparing the funds' unified fee to the total expense ratio of other funds in the funds' peer group. The unified fee charged to Life Sciences' shareholders was above the median of the total expense ratio of its peer group. The unified fee charged to Technology's shareholders was below the median of the total expense ratio of its peer group. COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The Directors also requested and received information from the advisor concerning the nature of the services, fees, and profitability of its advisory services to advisory clients other than the funds. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the funds. The Directors analyzed this information and concluded that the fees charged and services provided to the funds were reasonable by comparison. COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information from the advisor concerning collateral benefits it receives as a result of its relationship with the funds. They concluded that the advisor's primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Directors noted that the advisor receives proprietary research from broker dealers that (continued) - ------ 39 Approval of Management Agreements for Life Sciences and Technology execute fund portfolio transactions and concluded that this research is likely to benefit fund shareholders. The Directors also determined that the advisor is able to provide investment management services to clients other than the funds, at least in part, due to its existing infrastructure built to serve the fund complex. The Directors concluded, however, that the assets of those other clients are not material to the analysis and in any event are added to the assets of the funds within the fund complex that use substantially the same investment management team to determine whether each fund has reached breakpoints in its fee schedule. CONCLUSIONS OF THE DIRECTORS As a result of this process, the independent directors, assisted by the advice of legal counsel independent of the advisor, taking into account all of the factors discussed above and the information provided by the advisor, negotiated changes to the breakpoint schedule used to calculate the management fee. These changes were proposed by the Directors based on their review of the competitive changes in the mutual fund marketplace and their review of financial information provided by the advisor. The new schedule, effective July 29, 2005, will accelerate management fee reductions at lower asset levels than under the existing structure. Following these negotiations with the advisor, the independent directors concluded that the investment management agreements between the funds and the advisor, amended as described above, are fair and reasonable in light of the services provided and should be renewed. - ------ 40 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 certain financial intermediaries (such as banks, broker-dealers, insurance companies and investment advisors), which may require payment of a transaction fee to the financial intermediary. 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 unified management fee of Institutional Class shares is 0.20% less than the unified management fee 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. The unified management fee for C Class shares is the same as for Investor Class shares. 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. - ------ 41 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. - ------ 42 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 AMEX BIOTECHNOLOGY INDEX is designed to measure the performance of a cross section of companies in the biotechnology industry that are primarily involved in the use of biological processes to develop products or provide services. The Index is equal-dollar weighted, designed to ensure that each of its component securities is represented in approximate equal dollar value. 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. - ------ 43 Notes - ------ 44 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 PROFESSIONALS, 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 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. 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)2006 American Century Proprietary Holdings, Inc. All rights reserved. 0601 SH-ANN-47308N
ITEM 2. CODE OF ETHICS. a. The registrant has adopted a Code of Ethics for Senior Financial Officers that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. b. No response required. c. None. d. None. e. Not applicable. f. The registrant's Code of Ethics for Senior Financial Officers was filed as Exhibit 12 (a)(1) to American Century Asset Allocation Portfolios, Inc.'s Annual Certified Shareholder Report on Form N-CSR, File No. 811-21591, on September 29, 2005, and is incorporated herein by reference. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1) The registrant's board has determined that the registrant has at least one audit committee financial expert serving on its audit committee. (a)(2) D.D. (Del) Hock, Donald H. Pratt and Timothy Webster are the registrant's designated audit committee financial experts. They are "independent" as defined in Item 3 of Form N-CSR. (a)(3) Not applicable. (b) No response required. (c) No response required. (d) No response required. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Audit Fees. The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were as follows: FY 2004: $135,491 FY 2005: $152,470 (b) Audit-Related Fees. The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item were as follows: For services rendered to the registrant: FY 2004: $0 FY 2005: $0 Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant's investment adviser and its affiliates): FY 2004: $0 FY 2005: $0 (c) Tax Fees. The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were as follows: For services rendered to the registrant: FY 2004: $22,102 FY 2005: $23,535 These services included review of federal and state income tax forms and federal excise tax forms. Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant's investment adviser and its affiliates): FY 2004: $0 FY 2005: $0 (d) All Other Fees. The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item were as follows: For services rendered to the registrant: FY 2004: $0 FY 2005: $0 Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant's investment adviser and its affiliates): FY 2004: $0 FY 2005: $0 (e)(1) In accordance with paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X, before the accountant is engaged by the registrant to render audit or non-audit services, the engagement is approved by the registrant's audit committee. Pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, the registrant's audit committee also pre-approves its accountant's engagements for non-audit services with the registrant's investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant. (e)(2) All services described in each of paragraphs (b) through (d) of this Item were pre-approved before the engagement by the registrant's audit committee pursuant to paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X. Consequently, none of such services were required to be approved by the audit committee pursuant to paragraph (c)(7)(i)(C). (f) The percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was less than 50%. (g) The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant were as follows: FY 2004: $439,207 FY 2005: $186,271 (h) The registrant's investment adviser and accountant have notified the registrant's audit committee of all non-audit services that were rendered by the registrant's accountant to the registrant's investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides services to the registrant, which services were not required to be pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The notification provided to the registrant's audit committee included sufficient details regarding such services to allow the registrant's audit committee to consider the continuing independence of its principal accountant. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. During the reporting period, there were no material changes to the procedures by which shareholders may recommend nominees to the registrant's board. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Registrant's Code of Ethics for Senior Financial Officers, which is the subject of the disclosure required by Item 2 of Form N-CSR, was filed as Exhibit 12(a)(1) to American Century Asset Allocation Portfolios, Inc.'s Certified Shareholder Report on Form N-CSR, File No. 811-21591, on September 29, 2005. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as Exhibit 99.302CERT. (a)(3) Not applicable. (b) A certification by the registrant's chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is furnished and attached hereto as Exhibit 99.906CERT.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: AMERICAN CENTURY WORLD MUTUAL FUNDS, INC. By: /s/ William M. Lyons --------------------------------------------- Name: William M. Lyons Title: President Date: January 27, 2006 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 Date: January 27, 2006 By: /s/ Maryanne L. Roepke --------------------------------------------- Name: Maryanne L. Roepke Title: Sr. Vice President, Treasurer, and Chief Financial Officer (principal financial officer) Date: January 27, 2006