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: 05-31-2006 -------------------------------------------------- ITEM 1. REPORTS TO STOCKHOLDERS. American Century Investments SEMIANNUAL REPORT [photo of boy] MAY 31, 2006 International Growth Fund Global Growth Fund International Value Fund [american century investments logo and text logo] Table of Contents Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 INTERNATIONAL GROWTH Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 6 Investments by Country . . . . . . . . . . . . . . . . . . . . . . . . . 6 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 7 GLOBAL GROWTH Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . .13 Investments by Country . . . . . . . . . . . . . . . . . . . . . . . . .13 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . .14 INTERNATIONAL VALUE Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . .20 Investments by Country . . . . . . . . . . . . . . . . . . . . . . . . .20 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . .21 Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . . . .24 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .28 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .30 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . .31 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .33 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . .42 OTHER INFORMATION Approval of Management Agreement for International Value. . . . . . . . . .62 Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .64 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .66 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .67 The opinions expressed in the Market Perspective and each of the Portfolio Commentaries reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the semiannual report for the American Century International Growth, Global Growth and International Value funds for the period ended May 31, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our Web site, americancentury.com, where we post quarterly portfolio commentaries, the views of our senior investment officers, and other communications about investments, portfolio strategy, and the markets. Our Web site presents American Century's recently-announced strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). Our new campaign, featuring Lance, is designed to encourage investors to take a more active role in planning their financial futures and make every investment decision count. American Century's collaboration with Lance Armstrong and the LAF is a perfect fit. Like members of our family, Lance is a cancer survivor and shares our values of optimism, focus, and determination. In addition, Lance and our family have dedicated our success to improving lives, through the LAF and the Stowers Institute for Medical Research, respectively. To learn more about American Century's collaboration with Lance Armstrong and the LAF, please visit www.lanceface.com on the Web and click on the links to related sites. Besides the exciting new collaboration, we've enjoyed other good news -- in January, American Century was named, for the seventh consecutive year, one of FORTUNE magazine's 100 Best Companies to Work For in America. Fostering a positive work environment can benefit fund investors as well as our company -- it helps us continue to attract and retain talented people. 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 Market Perspective BY ENRIQUE CHANG, WHO JOINED AMERICAN CENTURY INVESTMENTS IN MARCH AS SENIOR VICE PRESIDENT AND CHIEF INVESTMENT OFFICER OF THE INTERNATIONAL EQUITY DISCIPLINE. From emerging markets to developed countries, international equities delivered solid, if not spectacular, returns during the six months ended May 31, 2006. Indeed, many of the world's equity markets rose to levels not seen in nearly five years, and I wanted to take a few moments to share my perspective on the investment environment and economic issues that played a role in their performance. MARKETS SHOW STRENGTH Perhaps the most striking aspect of the recent increase is the remarkable resiliency markets demonstrated in the face of record prices for oil and other commodities, rising interest rates, and continued geopolitical tension in the Middle East and elsewhere. Equities, however, weren't entirely immune to those headwinds. After rising to multi-year highs early in May, many exchanges retreated as concern intensified that central banks will increase borrowing costs to control inflation--and slow consumer spending, corporate profits and the world's economy in the process. While interest rates and other forces can exert a powerful influence on markets, I believe there are a variety of hopeful signs on both the economic and investment horizon. Europe's economic upturn looks set to continue through 2006, bolstered by strong global demand for European goods. Increased capital spending by companies worldwide has resulted in strong order flows for manufacturers on the Continent. European companies are also benefiting from a changing relationship with labor, with a number of businesses working with labor unions to control costs and increase productivity. In Asia, Japan's emergence from a long period of economic weakness stands out as one of the most welcome developments of the past year. Japan, the world's second-largest economy behind the United States, is now in the midst of its longest economic expansion in years, underpinned by strong domestic demand. The country's turnaround, now considered by many to be sustainable, could play a major role in the region's growth this year and perhaps well into the future. And, of course, China's rise continues to be remarkable. In just a few years since joining the World Trade Organization, China has emerged as a global engine for growth. Last year, the country's gross domestic product grew nearly 10%, and is expected to match that pace in 2006. While countless questions remain about China's evolution from socialism to capitalism, clearly the country is making history on several fronts. OPPORTUNITY ABROAD In short, I believe the economic, political and demographic changes now under way around the world are creating opportunity for investors. You can be assured that our investment team is dedicated to searching for new candidates to help drive investment performance. Thank you for the opportunity to share my thoughts with you. As always, it is a privilege to have you as an American Century investor. - ------ 2 International Growth - Performance TOTAL RETURNS AS OF MAY 31, 2006 -------------------------------- AVERAGE ANNUAL RETURNS - ------------------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - ------------------------------------------------------------------------------------------- INVESTOR CLASS 14.19% 26.80% 4.69% 8.48% 9.99% 5/9/91 - ------------------------------------------------------------------------------------------- MSCI EAFE INDEX 15.30% 28.24% 9.10% 6.46% 7.07%(2) -- - ------------------------------------------------------------------------------------------- MSCI EAFE GROWTH INDEX 14.93% 26.83% 7.02% 3.92% 4.76%(2) -- - ------------------------------------------------------------------------------------------- Institutional Class 14.26% 26.99% 4.91% -- 7.35% 11/20/97 - ------------------------------------------------------------------------------------------- Advisor Class 14.04% 26.54% 4.41% -- 8.31% 10/2/96 - ------------------------------------------------------------------------------------------- A Class 1/31/03 No sales charge* 14.02% 26.51% -- -- 20.15%(3) With sales charge* 7.50% 19.17% -- -- 18.04%(3) - ------------------------------------------------------------------------------------------- B Class 1/31/03 No sales charge* 13.60% 25.57% -- -- 19.26%(3) With sales charge* 8.60% 21.57% -- -- 18.66%(3) - ------------------------------------------------------------------------------------------- C Class 6/4/01 No sales charge* 13.57% 25.46% -- -- 3.56% With sales charge* 12.57% 25.46% -- -- 3.56% - ------------------------------------------------------------------------------------------- R Class 13.98% 26.19% -- -- 18.46%(3) 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) Total returns for periods less than one year are not annualized. (2) Since 4/30/91, the date nearest the Investor Class's inception for which data are available. (3) 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) - ------ 3 International Growth - Performance GROWTH OF $10,000 OVER 10 YEARS $10,000 investment made May 31, 1996
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ONE-YEAR RETURNS OVER 10 YEARS Periods ended May 31 - --------------------------------------------------------------------------------------------------- 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - --------------------------------------------------------------------------------------------------- Investor Class 23.36% 30.30% -2.85% 48.27% -22.48% -13.34% -15.25% 22.36% 10.36% 26.80% - --------------------------------------------------------------------------------------------------- MSCI EAFE Index 7.54% 11.11% 4.36% 17.14% -17.23% -9.60% -12.30% 32.66% 14.62% 28.24% - --------------------------------------------------------------------------------------------------- MSCI EAFE Growth Index 5.03% 10.50% 2.75% 20.82% -27.39% -11.58% -11.92% 27.01% 11.88% 26.83% - --------------------------------------------------------------------------------------------------- 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. - ------ 4 International Growth - Portfolio Commentary PORTFOLIO MANAGERS: MICHAEL PERELSTEIN AND KEITH CREVELING International Growth advanced 14.19%* during the six months ended May 31, 2006, while its benchmark, the Morgan Stanley Capital International EAFE Index, returned 15.30%. The gains came during a period in which many of the world's markets demonstrated their resiliency in the face of rising interest rates in the U.S. and Europe, and continued high energy prices. Equities, however, weren't entirely immune to those headwinds. After rising to multi-year highs early in May, many exchanges retreated as concern intensified that central banks will increase borrowing costs to control inflation--and slow consumer spending, corporate profits and the world's economy in the process. International Growth experienced its biggest monthly decline of the period in May. Against that backdrop, every sector in which International Growth was invested contributed to the portfolio's total return, and all of our top-10 holdings on average during the period advanced. The portfolio, which invests primarily in large growth companies, also achieved strong performance despite an investment environment that favored small companies over large, and the value style of investing over growth. Currency played a role during the six months, as the movement of the dollar versus other currencies increased the portfolio's return. ENERGY BOOSTS PORTFOLIO Effective security selection led to our energy holdings advancing and contributing most to relative performance. For example, we had an overweight stake in the energy equipment and services industry that includes portfolio-only positions in Norway's Aker Kvaerner, a global provider of deep-water drilling rigs, and Italian oilfield service contractor Saipem. Aker contributed more than any other security to our performance against the index during the period, and Saipem was among the top-10 contributors to relative performance. Conversely, we avoided companies that performed poorly in the oil and gas industry, while taking an overweight position in BG Group, a global natural gas company based in the United Kingdom. BG reported during the period that fourth-quarter profits soared 96% on the back of strong production and significant price increases in the wholesale gas market. BG was also among the 10 companies contributing most to relative performance. TOP TEN HOLDINGS AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Roche Holding AG 2.5% 1.7% - -------------------------------------------------------------------------------- GlaxoSmithKline plc 2.2% 2.7% - -------------------------------------------------------------------------------- ORIX Corp. 1.8% 1.5% - -------------------------------------------------------------------------------- Total SA 1.8% 2.8% - -------------------------------------------------------------------------------- BHP Billiton Ltd. 1.7% 1.6% - -------------------------------------------------------------------------------- Toyota Motor Corp. 1.7% -- - -------------------------------------------------------------------------------- Novartis AG 1.6% 1.6% - -------------------------------------------------------------------------------- Man Group plc 1.6% 1.2% - -------------------------------------------------------------------------------- BG Group plc 1.6% 1.0% - -------------------------------------------------------------------------------- SAP AG 1.5% -- - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. (continued) - ------ 5 International Growth - Portfolio Commentary STRENGTH AMONG FINANCIALS International Growth also benefited from stock selection among financials, the portfolio's largest sector stake. Financials contributed most to total return, and outperformed the index. Consumer finance companies helped our relative performance most, largely because we avoided numerous companies that declined, while taking an overweight position in Japan's ORIX Corp., an integrated financial services group benefiting from strong loan demand and a rebound in the Japanese economy. ORIX was among the portfolio's top contributors to return and relative performance. Our holdings in insurance, capital markets, and commercial banks also advanced and beat the benchmark. International Growth's overweight stake in Man Group plc, an asset manager in the United Kingdom, made the second-largest contribution to relative performance. Man Group reported that earnings for the year ended March 31, 2006, climbed 15% to about $1 billion as its assets under management increased. Man Group also made the largest contribution to total return. The financial sector, however, also included Leopalace21 Corp., a Japanese real-estate company, which detracted most from the portfolio's total return and hurt our relative performance. Leopalace21 declined as corporate governance issues surfaced and the CEO resigned. We maintained our position because the company's underlying fundamentals remain strong as it benefits from Japan's economic recovery. MATERIALS LAG INDEX Our investments in a few areas, however, lagged the index. International Growth's underweight position in the materials sector, particularly among metals and mining companies, slowed relative performance most. Holdings in the sector's chemicals industry also detracted, mostly due to a pullback that was pronounced among chemical companies in Japan, including Shin-Etsu Chemical and JSR Corp. Chemical companies weren't the only ones affected by the decline of Japanese markets late in the period. Of the 10 companies that detracted most from our relative performance, five were from Japan. INVESTMENTS BY COUNTRY AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Japan 24.4% 23.0% - -------------------------------------------------------------------------------- France 14.3% 15.2% - -------------------------------------------------------------------------------- United Kingdom 12.2% 17.1% - -------------------------------------------------------------------------------- Switzerland 9.7% 10.2% - -------------------------------------------------------------------------------- Germany 8.2% 4.4% - -------------------------------------------------------------------------------- Italy 4.2% 2.5% - -------------------------------------------------------------------------------- Australia 3.6% 3.7% - -------------------------------------------------------------------------------- Greece 3.0% 3.9% - -------------------------------------------------------------------------------- Netherlands 2.9% 4.2% - -------------------------------------------------------------------------------- Other Countries 16.9% 14.2% - -------------------------------------------------------------------------------- Cash and Equivalents* 0.6% 1.6% - -------------------------------------------------------------------------------- *Includes temporary cash investments, collateral received for securities lending and other assets and liabilities. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Foreign Common Stocks 99.4% 98.4% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.8% 1.6% - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) (0.2)% --(2) - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilities. (2) Category is less than 0.05% of total net assets. - ------ 6 International Growth - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 99.4% AUSTRALIA -- 3.6% - -------------------------------------------------------------------------------- 2,124,594 BHP Billiton Ltd. $ 45,976 - -------------------------------------------------------------------------------- 141,871 CSL Ltd. 5,496 - -------------------------------------------------------------------------------- 869,152 National Australia Bank Ltd. 23,198 - -------------------------------------------------------------------------------- 361,064 Rio Tinto Ltd.(1) 21,213 - -------------------------------------------------------------------------------- 95,883 - -------------------------------------------------------------------------------- AUSTRIA -- 0.8% - -------------------------------------------------------------------------------- 369,429 Erste Bank der Oesterreichischen Sparkassen AG(1) 21,050 - -------------------------------------------------------------------------------- BELGIUM -- 1.3% - -------------------------------------------------------------------------------- 314,945 KBC Groupe(1) 33,870 - -------------------------------------------------------------------------------- CANADA -- 0.7% - -------------------------------------------------------------------------------- 240,132 Suncor Energy Inc. 19,374 - -------------------------------------------------------------------------------- FRANCE -- 14.3% - -------------------------------------------------------------------------------- 462,029 Accor SA(1) 27,085 - -------------------------------------------------------------------------------- 367,832 Alstom RGPT(2) 31,218 - -------------------------------------------------------------------------------- 960,518 Axa SA(1) 33,378 - -------------------------------------------------------------------------------- 285,509 Essilor International SA Cie Generale D'Optique(1) 28,730 - -------------------------------------------------------------------------------- 276,079 Groupe Danone(1) 33,298 - -------------------------------------------------------------------------------- 123,633 Pernod-Ricard SA(1) 24,121 - -------------------------------------------------------------------------------- 175,293 PPR SA(1) 21,737 - -------------------------------------------------------------------------------- 273,259 Schneider Electric SA(1) 28,337 - -------------------------------------------------------------------------------- 244,327 Societe Generale(1)(2) 37,871 - -------------------------------------------------------------------------------- 725,316 Total SA(1) 47,298 - -------------------------------------------------------------------------------- 10,332 Vallourec 12,945 - -------------------------------------------------------------------------------- 578,518 Veolia Environnement(1) 32,195 - -------------------------------------------------------------------------------- 281,276 Vinci SA(1) 25,835 - -------------------------------------------------------------------------------- 384,048 - -------------------------------------------------------------------------------- GERMANY -- 8.2% - -------------------------------------------------------------------------------- 97,135 Adidas-Salomon AG(1) 19,398 - -------------------------------------------------------------------------------- 431,019 Bayerische Motoren Werke AG(1) 22,164 - -------------------------------------------------------------------------------- 370,751 Continental AG 40,690 - -------------------------------------------------------------------------------- 138,030 Deutsche Boerse AG(1) 17,933 - -------------------------------------------------------------------------------- 215,031 Fresenius Medical Care AG(1) 24,223 - -------------------------------------------------------------------------------- 406,757 Hypo Real Estate Holding AG 25,694 - -------------------------------------------------------------------------------- 135,338 MAN AG(1) 9,728 - -------------------------------------------------------------------------------- 196,101 SAP AG(1) 41,283 - -------------------------------------------------------------------------------- 234,591 Siemens AG 20,194 - -------------------------------------------------------------------------------- 221,307 - -------------------------------------------------------------------------------- GREECE -- 3.0% - -------------------------------------------------------------------------------- 681,910 Greek Organization of Football Prognostics SA 23,149 - -------------------------------------------------------------------------------- 1,107,030 Hellenic Telecommunications Organization SA(2) 24,534 - -------------------------------------------------------------------------------- 788,370 National Bank of Greece SA 33,269 - -------------------------------------------------------------------------------- 80,952 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- HONG KONG -- 0.4% - -------------------------------------------------------------------------------- 4,872,800 Li & Fung Ltd. $ 9,939 - -------------------------------------------------------------------------------- INDIA -- 0.7% - -------------------------------------------------------------------------------- 373,865 Bharti Airtel Ltd.(2) 2,959 - -------------------------------------------------------------------------------- 388,880 Tata Consultancy Services Ltd. 14,995 - -------------------------------------------------------------------------------- 17,954 - -------------------------------------------------------------------------------- IRELAND -- 2.4% - -------------------------------------------------------------------------------- 1,559,785 Anglo Irish Bank Corp. plc 24,278 - -------------------------------------------------------------------------------- 1,342,787 Bank of Ireland 24,371 - -------------------------------------------------------------------------------- 353,904 Ryanair Holdings plc ADR(1)(2) 17,338 - -------------------------------------------------------------------------------- 65,987 - -------------------------------------------------------------------------------- ITALY -- 4.2% - -------------------------------------------------------------------------------- 1,120,435 Banco Popolare di Verona e Novara Scrl(1) 30,702 - -------------------------------------------------------------------------------- 902,299 ENI SpA(1) 27,308 - -------------------------------------------------------------------------------- 1,195,318 Luxottica Group SpA(1) 32,608 - -------------------------------------------------------------------------------- 1,000,335 Saipem SpA(1) 23,502 - -------------------------------------------------------------------------------- 114,120 - -------------------------------------------------------------------------------- JAPAN -- 24.4% - -------------------------------------------------------------------------------- 2,855,000 Bank of Yokohama Ltd. (The) 20,403 - -------------------------------------------------------------------------------- 3,760 East Japan Railway Company 27,074 - -------------------------------------------------------------------------------- 306,600 Eisai Co. Ltd. 14,029 - -------------------------------------------------------------------------------- 792,600 Hoya Corp. 30,495 - -------------------------------------------------------------------------------- 483,000 JSR Corp. 12,787 - -------------------------------------------------------------------------------- 840,100 JTEKT Corp. 16,765 - -------------------------------------------------------------------------------- 87,700 Keyence Corp. 22,555 - -------------------------------------------------------------------------------- 1,179,000 Komatsu Ltd. 23,687 - -------------------------------------------------------------------------------- 598,000 Leopalace21 Corp. 18,062 - -------------------------------------------------------------------------------- 1,779,000 Matsushita Electric Industrial Co., Ltd. 38,835 - -------------------------------------------------------------------------------- 1,338,000 Matsushita Electric Works, Ltd. 15,600 - -------------------------------------------------------------------------------- 1,366,000 Mitsubishi Electric Corp. 11,162 - -------------------------------------------------------------------------------- 2,968 Mitsubishi UFJ Financial Group, Inc. 40,841 - -------------------------------------------------------------------------------- 172,300 Murata Manufacturing Co. Ltd. 11,183 - -------------------------------------------------------------------------------- 576,000 NGK Insulators Ltd.(1) 6,887 - -------------------------------------------------------------------------------- 1,054,500 Nikko Cordial Corp. 15,499 - -------------------------------------------------------------------------------- 215,200 Nitto Denko Corp. 16,637 - -------------------------------------------------------------------------------- 168,910 ORIX Corp. 48,664 - -------------------------------------------------------------------------------- 727,500 Sega Sammy Holdings Inc. 29,102 - -------------------------------------------------------------------------------- 2,074,000 Sekisui Chemical Co. Ltd.(1) 17,712 - -------------------------------------------------------------------------------- 495,100 Shin-Etsu Chemical Co., Ltd. 27,905 - -------------------------------------------------------------------------------- 2,086,000 Sumitomo Heavy Industries Ltd.(1) 19,689 - -------------------------------------------------------------------------------- 2,197 Sumitomo Mitsui Financial Group Inc. 22,959 - -------------------------------------------------------------------------------- 834,000 Sumitomo Realty & Development Co. Ltd. 20,242 - -------------------------------------------------------------------------------- 4,837,000 Taisei Corp.(1) 18,480 - -------------------------------------------------------------------------------- 3,176,000 Toray Industries Inc. 28,207 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 7 International Growth - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 848,300 Toyota Motor Corp. $ 45,545 - -------------------------------------------------------------------------------- 330,700 Yamada Denki Co. Ltd.(1) 34,217 - -------------------------------------------------------------------------------- 655,223 - -------------------------------------------------------------------------------- MEXICO -- 1.6% - -------------------------------------------------------------------------------- 990,212 America Movil SA de CV Series L ADR 32,340 - -------------------------------------------------------------------------------- 181,432 Cemex SA de CV ADR(1) 10,336 - -------------------------------------------------------------------------------- 42,676 - -------------------------------------------------------------------------------- NETHERLANDS -- 2.9% - -------------------------------------------------------------------------------- 1,025,863 ASML Holding N.V.(1)(2) 20,866 - -------------------------------------------------------------------------------- 562,756 ING Groep N.V. CVA(1) 22,066 - -------------------------------------------------------------------------------- 774,253 Royal Numico N.V.(1) 34,368 - -------------------------------------------------------------------------------- 77,300 - -------------------------------------------------------------------------------- NORWAY -- 2.8% - -------------------------------------------------------------------------------- 328,420 Aker Kvaerner ASA(1) 33,035 - -------------------------------------------------------------------------------- 403,660 Statoil ASA(1) 11,827 - -------------------------------------------------------------------------------- 2,531,307 Telenor ASA(1) 31,931 - -------------------------------------------------------------------------------- 76,793 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 0.5% - -------------------------------------------------------------------------------- 2,452,500 China Mobile Hong Kong Ltd. 12,949 - -------------------------------------------------------------------------------- SINGAPORE -- 0.5% - -------------------------------------------------------------------------------- 1,542,000 Keppel Corp. Ltd. 13,348 - -------------------------------------------------------------------------------- SOUTH KOREA -- 1.1% - -------------------------------------------------------------------------------- 46,650 Samsung Electronics 29,753 - -------------------------------------------------------------------------------- SPAIN -- 1.6% - -------------------------------------------------------------------------------- 1,206,316 Cintra Concesiones de Infraestructuras de Transporte SA(1) 15,531 - -------------------------------------------------------------------------------- 704,219 Inditex SA(1) 27,912 - -------------------------------------------------------------------------------- 43,443 - -------------------------------------------------------------------------------- SWEDEN -- 1.3% - -------------------------------------------------------------------------------- 863,265 Atlas Copco AB A Shares 23,409 - -------------------------------------------------------------------------------- 433,463 ForeningsSparbanken AB 11,334 - -------------------------------------------------------------------------------- 34,743 - -------------------------------------------------------------------------------- SWITZERLAND -- 9.7% - -------------------------------------------------------------------------------- 2,282,735 ABB Ltd.(1) 28,808 - -------------------------------------------------------------------------------- 418,799 Adecco SA(1) 27,054 - -------------------------------------------------------------------------------- 660,039 Compagnie Financiere Richemont AG Cl A 30,807 - -------------------------------------------------------------------------------- 299,262 Lonza Group AG(1) 20,424 - -------------------------------------------------------------------------------- 794,705 Novartis AG(1) 44,090 - -------------------------------------------------------------------------------- 438,049 Roche Holding AG(1) 68,335 - -------------------------------------------------------------------------------- 359,447 UBS AG 40,697 - -------------------------------------------------------------------------------- 260,215 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 0.8% - -------------------------------------------------------------------------------- 3,412,000 Hon Hai Precision Industry Co., Ltd. 21,699 - -------------------------------------------------------------------------------- Shares/Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- TURKEY -- 0.4% - -------------------------------------------------------------------------------- 3,394,380 Turkiye Garanti Bankasi AS $ 10,182 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 12.2% - -------------------------------------------------------------------------------- 2,615,183 Amvescap plc 25,563 - -------------------------------------------------------------------------------- 3,119,719 BG Group plc 41,774 - -------------------------------------------------------------------------------- 3,394,581 BP plc 40,007 - -------------------------------------------------------------------------------- 808,795 British American Tobacco plc 20,139 - -------------------------------------------------------------------------------- 1,793,998 Carphone Warehouse Group plc 10,865 - -------------------------------------------------------------------------------- 2,157,647 GlaxoSmithKline plc 59,659 - -------------------------------------------------------------------------------- 956,284 Man Group plc 41,811 - -------------------------------------------------------------------------------- 1,770,895 Marks & Spencer Group plc 17,875 - -------------------------------------------------------------------------------- 1,122,525 Reckitt Benckiser plc 41,232 - -------------------------------------------------------------------------------- 1,171,432 Standard Chartered plc 28,752 - -------------------------------------------------------------------------------- 327,677 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $2,019,446) 2,670,485 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 0.8% $22,400 FNMA Discount Notes, 4.90%, 6/1/06(3) (Cost $22,397) 22,400 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(4) -- 26.6% REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, BNP Paribas, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.02%, dated 5/31/06, due 6/1/06 (Delivery value $100,014) 100,000 - -------------------------------------------------------------------------------- Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations in a pooled account at the lending agent), 5.02%, dated 5/31/06, due 6/1/06 (Delivery value $300,042) 300,000 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.06%, dated 5/31/06, due 6/1/06 (Delivery value $316,303) 316,003 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $716,003) 716,003 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 126.8% (Cost $2,757,846) 3,408,888 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (26.8)% (721,321) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $2,687,567 ================================================================================ See Notes to Financial Statements. (continued) - ------ 8 International Growth - Schedule of Investments MAY 31, 2006 (UNAUDITED) MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 25.1% - -------------------------------------------------------------------------------- Consumer Discretionary 16.7% - -------------------------------------------------------------------------------- Industrials 14.6% - -------------------------------------------------------------------------------- Health Care 9.1% - -------------------------------------------------------------------------------- Energy 9.1% - -------------------------------------------------------------------------------- Information Technology 7.2% - -------------------------------------------------------------------------------- Materials 6.8% - -------------------------------------------------------------------------------- Consumer Staples 5.7% - -------------------------------------------------------------------------------- Telecommunication Services 3.9% - -------------------------------------------------------------------------------- Utilities 1.2% - -------------------------------------------------------------------------------- Cash and Cash Equivalents(+) 0.6% - -------------------------------------------------------------------------------- (+)Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt CVA = Certificaten Van Aandelen FNMA = Federal National Mortgage Association (1) Security, or a portion thereof, was on loan as of May 31, 2006. (2) Non-income producing. (3) The rate indicated is the yield to maturity at purchase. (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 May 31, 2006, was $1,694,931 (in thousands), which represented 63.1% of total net assets. See Notes to Financial Statements. - ------ 9 Global Growth - Performance TOTAL RETURNS AS OF MAY 31, 2006 ---------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 9.54% 24.97% 6.17% 10.98% 12/1/98 - -------------------------------------------------------------------------------- MSCI WORLD FREE INDEX 8.44% 17.98% 5.05% 4.01%(2) -- - -------------------------------------------------------------------------------- Institutional Class 9.69% 25.29% 6.40% 1.58% 8/1/00 - -------------------------------------------------------------------------------- Advisor Class 9.48% 24.66% 5.88% 9.35% 2/5/99 - -------------------------------------------------------------------------------- A Class 12/1/05 No sales charge* -- -- -- 7.72%(1) With sales charge* -- -- -- 1.53%(1) - -------------------------------------------------------------------------------- B Class 12/1/05 No sales charge* -- -- -- 7.36%(1) With sales charge* -- -- -- 2.36%(1) - -------------------------------------------------------------------------------- C Class 3/1/02 No sales charge* 8.96% 23.65% -- 10.42% With sales charge* 7.96% 23.65% -- 10.42% - -------------------------------------------------------------------------------- R Class 9.38% -- -- 15.78%(1) 7/29/05 - -------------------------------------------------------------------------------- *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) Total returns for periods less than one year are not annualized. (2) Since 11/30/98, the date nearest the Investor Class's inception for which data are available. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. (continued) - ------ 10 Global Growth - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made December 1, 1998
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ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended May 31 - -------------------------------------------------------------------------------------------------- 1999* 2000 2001 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------------------------- Investor Class 18.60% 61.77% -15.57% -12.17% -13.86% 26.69% 12.61% 24.97% - -------------------------------------------------------------------------------------------------- MSCI World Free Index 8.68% 13.56% -14.95% -12.56% -9.86% 23.60% 11.35% 17.98% - -------------------------------------------------------------------------------------------------- * 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. - ------ 11 Global Growth - Portfolio Commentary PORTFOLIO MANAGERS: KEITH CREVELING AND HELEN O'DONNELL Global Growth advanced 9.54%* during the six months ended May 31, 2006, outperforming its benchmark, the Morgan Stanley Capital International World Free Index, which returned 8.44%. Many of the world's equity markets advanced during the period, with several major markets reaching levels not seen for years as international stocks continued to outperform their U.S. counterparts. In this environment, all but one of the sectors in which Global Growth was invested contributed to return and outperformed the index. All of the portfolio's 10-largest holdings contributed to total return. STRONG SECURITY SELECTION The portfolio's gains were mostly due to superior stock selection, which was particularly evident among financial holdings. Our position in the United Kingdom's Man Group, an asset manager in the capital markets industry, contributed more to relative and absolute returns than any other security. Indeed, four of the top-10 contributing securities to Global Growth's relative performance were in the financials sector: Man Group, which reported record earnings of $1 billion for the year ended March 31; Japan's Sumitomo Realty & Development, which benefited from a resurgent Tokyo real estate market; ORIX Corp., an integrated financial services group based in Tokyo that gained on strong demand for loans; and China Construction Bank, which benefited from increased demand for financial services in the world's fastest-growing major economy. The consumer discretionary sector, however, provided Global Growth with the period's biggest contributor, the Las Vegas Sands Corp. Sands, the world's largest casino company by market value, advanced after winning the right to build Singapore's first casino. The expansion allows the company to tap a lucrative market in Asia, where Sands' first resort is already more profitable than its Las Vegas property. Sands is a portfolio-only position, meaning it's not listed in the index, and serves as an example of Global Growth's research and analysis leading to companies beyond the benchmark that can drive investment performance. BOOST FROM ENERGY Global Growth's position in the energy sector also advanced and outperformed the index, led by Canada's Suncor Energy Inc. Suncor produces oil from Western Canada's tar sands. The TOP TEN HOLDINGS AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- ORIX Corp. 2.0% 1.7% - -------------------------------------------------------------------------------- Schlumberger Ltd. 2.0% 1.5% - -------------------------------------------------------------------------------- Suncor Energy Inc. 1.9% 1.5% - -------------------------------------------------------------------------------- BHP Billiton Ltd. 1.9% 1.7% - -------------------------------------------------------------------------------- Man Group plc 1.7% 1.3% - -------------------------------------------------------------------------------- American Express Co. 1.4% 1.0% - -------------------------------------------------------------------------------- Carphone Warehouse Group plc 1.4% 0.5% - -------------------------------------------------------------------------------- American Tower Corp. Cl A 1.3% 2.0% - -------------------------------------------------------------------------------- Boeing Co. 1.3% 1.2% - -------------------------------------------------------------------------------- Monster Worldwide Inc. 1.3% 1.1% - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. (continued) - ------ 12 Global Growth - Portfolio Commentary company mines oil-encrusted sands and processes the crude they contain into synthetic oil, which is increasingly in demand by refineries to make gas and other petroleum products. The energy sector also provided another of the portfolio's standouts, Schlumberger Ltd., a U.S. oil services company incorporated in the Netherlands. Schlumberger benefited from increased demand for services as oil companies ramped up to take advantage of strong demand and record-high prices for crude. Schlumberger reported that first-quarter 2006 profit jumped 38% from the same period a year earlier to $722 million. Schlumberger and Suncor were among our largest positions. HEALTH CARE LAGS Global Growth's health care holdings detracted most from relative performance partly because of the portfolio's overweight positions in Aetna Inc. and UnitedHealth Group Inc. Both companies were long-time holdings that had contributed to Global Growth in the past, but during this period they were among the portfolio's biggest detractors, and we eliminated the positions. Both face increasingly unfavorable cost trends, which dim their profit growth potential. We maintained our position, however, in Genentech, Inc., even though the company detracted from performance. Genentech, a biotechnology company, fell early in the period, but subsequently reported first quarter 2006 profit climbed 48% on strong sales of its cancer-fighting drugs, and the company boosted its forecast for profit growth. In conclusion, we remain committed to looking for stocks of growing companies in the U.S. and abroad. The investment strategy of this fund is based on the belief that, over the long term, stocks of companies with earnings and revenue growth have a greater-than-average chance to increase in value. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Foreign Common Stocks 59.9% 50.9% - -------------------------------------------------------------------------------- U.S. Common Stocks 38.7% 45.7% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 98.6% 96.6% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.9% 3.8% - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) 0.5% (0.4)% - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- United States 38.7% 45.7% - -------------------------------------------------------------------------------- Japan 12.1% 11.6% - -------------------------------------------------------------------------------- United Kingdom 8.0% 4.5% - -------------------------------------------------------------------------------- Switzerland 6.2% 5.6% - -------------------------------------------------------------------------------- France 5.5% 4.6% - -------------------------------------------------------------------------------- Germany 4.8% 2.8% - -------------------------------------------------------------------------------- Netherlands 3.8% 2.4% - -------------------------------------------------------------------------------- South Korea 2.2% 2.0% - -------------------------------------------------------------------------------- Greece 2.0% 2.2% - -------------------------------------------------------------------------------- Other Countries 15.3% 15.2% - -------------------------------------------------------------------------------- Cash and Equivalents(2) 1.4% 3.4% - -------------------------------------------------------------------------------- (2) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. - ------ 13 Global Growth - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 98.6% AUSTRALIA -- 1.9% - -------------------------------------------------------------------------------- 361,685 BHP Billiton Ltd. $ 7,827 - -------------------------------------------------------------------------------- AUSTRIA -- 1.0% - -------------------------------------------------------------------------------- 74,500 Erste Bank der Oesterreichischen Sparkassen AG(1) 4,245 - -------------------------------------------------------------------------------- BELGIUM -- 1.0% - -------------------------------------------------------------------------------- 38,600 KBC Groupe(1) 4,151 - -------------------------------------------------------------------------------- CANADA -- 1.9% - -------------------------------------------------------------------------------- 101,021 Suncor Energy Inc. 8,151 - -------------------------------------------------------------------------------- CHANNEL ISLANDS -- 1.2% - -------------------------------------------------------------------------------- 137,710 Amdocs Ltd.(2) 5,160 - -------------------------------------------------------------------------------- FRANCE -- 5.5% - -------------------------------------------------------------------------------- 46,020 Alstom RGPT(2) 3,906 - -------------------------------------------------------------------------------- 110,171 Axa SA(1) 3,828 - -------------------------------------------------------------------------------- 29,630 Schneider Electric SA(1) 3,073 - -------------------------------------------------------------------------------- 29,210 Societe Generale(1)(2) 4,528 - -------------------------------------------------------------------------------- 74,600 Total SA(1) 4,865 - -------------------------------------------------------------------------------- 33,000 Vinci SA(1) 3,031 - -------------------------------------------------------------------------------- 23,231 - -------------------------------------------------------------------------------- GERMANY -- 4.8% - -------------------------------------------------------------------------------- 41,290 Continental AG 4,532 - -------------------------------------------------------------------------------- 85,380 Hypo Real Estate Holding AG(1) 5,393 - -------------------------------------------------------------------------------- 26,150 MAN AG(1) 1,880 - -------------------------------------------------------------------------------- 24,650 SAP AG(1) 5,189 - -------------------------------------------------------------------------------- 36,860 Siemens AG 3,173 - -------------------------------------------------------------------------------- 20,167 - -------------------------------------------------------------------------------- GREECE -- 2.0% - -------------------------------------------------------------------------------- 98,000 Greek Organization of Football Prognostics SA 3,327 - -------------------------------------------------------------------------------- 120,000 National Bank of Greece SA 5,064 - -------------------------------------------------------------------------------- 8,391 - -------------------------------------------------------------------------------- HONG KONG -- 0.7% - -------------------------------------------------------------------------------- 1,415,981 Link Real Estate Investment Trust (The)(2) 2,753 - -------------------------------------------------------------------------------- INDIA -- 1.4% - -------------------------------------------------------------------------------- 250,000 Bharti Airtel Ltd.(2) 1,979 - -------------------------------------------------------------------------------- 107,361 Tata Consultancy Services Ltd. 4,140 - -------------------------------------------------------------------------------- 6,119 - -------------------------------------------------------------------------------- IRELAND -- 0.9% - -------------------------------------------------------------------------------- 245,000 Anglo Irish Bank Corp. plc 3,813 - -------------------------------------------------------------------------------- ITALY -- 1.0% - -------------------------------------------------------------------------------- 182,290 Saipem SpA(1) 4,283 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- JAPAN -- 12.1% - -------------------------------------------------------------------------------- 1,189 Dentsu Inc.(1) $ 3,484 - -------------------------------------------------------------------------------- 140,800 Hoya Corp. 5,418 - -------------------------------------------------------------------------------- 148,000 JSR Corp.(1) 3,918 - -------------------------------------------------------------------------------- 210,000 JTEKT Corp.(1) 4,191 - -------------------------------------------------------------------------------- 220,000 NGK Insulators Ltd.(1) 2,630 - -------------------------------------------------------------------------------- 29,100 ORIX Corp. 8,384 - -------------------------------------------------------------------------------- 451,000 Shinsei Bank Ltd. 3,020 - -------------------------------------------------------------------------------- 69,800 Sony Corp.(1) 3,153 - -------------------------------------------------------------------------------- 498,000 Sumitomo Chemical Company, Ltd. 4,311 - -------------------------------------------------------------------------------- 495 Sumitomo Mitsui Financial Group Inc. 5,174 - -------------------------------------------------------------------------------- 204,000 Sumitomo Realty & Development Co. Ltd.(1) 4,951 - -------------------------------------------------------------------------------- 27,500 Yamada Denki Co. Ltd.(1) 2,845 - -------------------------------------------------------------------------------- 51,479 - -------------------------------------------------------------------------------- MEXICO -- 1.2% - -------------------------------------------------------------------------------- 158,000 America Movil SA de CV Series L ADR 5,160 - -------------------------------------------------------------------------------- NETHERLANDS -- 3.8% - -------------------------------------------------------------------------------- 99,924 ING Groep N.V. CVA(1) 3,918 - -------------------------------------------------------------------------------- 90,000 Royal Numico N.V. 3,995 - -------------------------------------------------------------------------------- 127,400 Schlumberger Ltd. 8,354 - -------------------------------------------------------------------------------- 16,267 - -------------------------------------------------------------------------------- SOUTH KOREA -- 2.2% - -------------------------------------------------------------------------------- 38,250 Hyundai Motor Company 2,930 - -------------------------------------------------------------------------------- 190,500 Macquarie Korea Infrastructure Fund GDR(2) 1,353 - -------------------------------------------------------------------------------- 7,590 Samsung Electronics 4,841 - -------------------------------------------------------------------------------- 9,124 - -------------------------------------------------------------------------------- SPAIN -- 1.0% - -------------------------------------------------------------------------------- 335,771 Cintra Concesiones de Infraestructuras de Transporte SA(1) 4,323 - -------------------------------------------------------------------------------- SWITZERLAND -- 6.2% - -------------------------------------------------------------------------------- 413,250 ABB Ltd.(1) 5,215 - -------------------------------------------------------------------------------- 43,340 Adecco SA(1) 2,800 - -------------------------------------------------------------------------------- 90,620 Compagnie Financiere Richemont AG Cl A 4,230 - -------------------------------------------------------------------------------- 83,700 Novartis AG 4,644 - -------------------------------------------------------------------------------- 31,500 Roche Holding AG(1) 4,913 - -------------------------------------------------------------------------------- 39,422 UBS AG(1) 4,463 - -------------------------------------------------------------------------------- 26,265 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 1.7% - -------------------------------------------------------------------------------- 25,000 High Tech Computer Corp. 735 - -------------------------------------------------------------------------------- 582,000 Hon Hai Precision Industry Co., Ltd. 3,701 - -------------------------------------------------------------------------------- 1,848,000 Lite-On Technology Corp. 2,858 - -------------------------------------------------------------------------------- 7,294 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 14 Global Growth - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- TURKEY -- 0.4% - -------------------------------------------------------------------------------- 625,000 Turkiye Garanti Bankasi AS $ 1,875 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 8.0% - -------------------------------------------------------------------------------- 286,710 Amvescap plc 2,803 - -------------------------------------------------------------------------------- 955,000 Carphone Warehouse Group plc 5,784 - -------------------------------------------------------------------------------- 190,000 GlaxoSmithKline plc 5,254 - -------------------------------------------------------------------------------- 164,542 Man Group plc 7,195 - -------------------------------------------------------------------------------- 138,765 Reckitt Benckiser plc 5,097 - -------------------------------------------------------------------------------- 76,000 Rio Tinto plc 4,218 - -------------------------------------------------------------------------------- 142,917 Standard Chartered plc 3,508 - -------------------------------------------------------------------------------- 33,859 - -------------------------------------------------------------------------------- UNITED STATES -- 38.7% - -------------------------------------------------------------------------------- 66,000 Air Products & Chemicals, Inc. 4,280 - -------------------------------------------------------------------------------- 130,000 Akamai Technologies, Inc.(1)(2) 4,068 - -------------------------------------------------------------------------------- 107,700 American Express Co. 5,854 - -------------------------------------------------------------------------------- 62,900 American International Group, Inc. 3,825 - -------------------------------------------------------------------------------- 184,370 American Tower Corp. Cl A(2) 5,710 - -------------------------------------------------------------------------------- 102,500 Automatic Data Processing, Inc. 4,660 - -------------------------------------------------------------------------------- 67,500 Boeing Co. 5,619 - -------------------------------------------------------------------------------- 58,000 Caterpillar Inc. 4,231 - -------------------------------------------------------------------------------- 118,365 Cheesecake Factory Inc.(2) 3,463 - -------------------------------------------------------------------------------- 35,000 Colgate-Palmolive Co. 2,112 - -------------------------------------------------------------------------------- 166,000 Corning Inc.(2) 4,026 - -------------------------------------------------------------------------------- 25,000 Corporate Executive Board Co. (The) 2,543 - -------------------------------------------------------------------------------- 189,000 CVS Corp. 5,273 - -------------------------------------------------------------------------------- 80,200 Danaher Corp. 5,141 - -------------------------------------------------------------------------------- 122,000 Disney (Walt) Co. 3,721 - -------------------------------------------------------------------------------- 358,400 EMC Corp.(2) 4,588 - -------------------------------------------------------------------------------- 81,200 Exxon Mobil Corp. 4,946 - -------------------------------------------------------------------------------- 83,500 FMC Technologies Inc.(1)(2) 5,573 - -------------------------------------------------------------------------------- 51,000 Gen-Probe Inc.(1)(2) 2,754 - -------------------------------------------------------------------------------- 54,910 Genentech, Inc.(2) 4,555 - -------------------------------------------------------------------------------- 36,530 Goldman Sachs Group, Inc. (The) 5,514 - -------------------------------------------------------------------------------- 51,200 Harrah's Entertainment, Inc. 3,893 - -------------------------------------------------------------------------------- 74,500 Laboratory Corporation of America Holdings(2) 4,422 - -------------------------------------------------------------------------------- 88,000 Lamar Advertising Co. Cl A(1)(2) 4,798 - -------------------------------------------------------------------------------- 66,233 Las Vegas Sands Corp.(2) 4,677 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 64,000 Manpower Inc. $ 4,213 - -------------------------------------------------------------------------------- 59,510 Medtronic, Inc. 3,005 - -------------------------------------------------------------------------------- 57,000 Monsanto Co. 4,797 - -------------------------------------------------------------------------------- 114,906 Monster Worldwide Inc.(1)(2) 5,615 - -------------------------------------------------------------------------------- 60,361 National Financial Partners Corp.(1) 2,707 - -------------------------------------------------------------------------------- 27,500 Peabody Energy Corp. 1,714 - -------------------------------------------------------------------------------- 48,156 Prudential Financial, Inc. 3,667 - -------------------------------------------------------------------------------- 109,000 QUALCOMM Inc. 4,927 - -------------------------------------------------------------------------------- 98,000 SEI Investments Co.(1) 4,448 - -------------------------------------------------------------------------------- 88,200 SLM Corporation 4,742 - -------------------------------------------------------------------------------- 52,750 Textron Inc. 4,796 - -------------------------------------------------------------------------------- 25,000 Transocean Inc.(2) 2,034 - -------------------------------------------------------------------------------- 115,566 XTO Energy Inc. 4,764 - -------------------------------------------------------------------------------- 71,300 Yahoo! Inc.(2) 2,252 - -------------------------------------------------------------------------------- 163,927 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $308,242) 417,864 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 0.9% Repurchase Agreement, Merrill Lynch & Co., Inc., (collateralized by various U.S. Treasury obligations, 10.375%, 11/15/12, valued at $3,672), in a joint trading account at 4.85%, dated 5/31/06, due 6/1/06 (Delivery value $3,600) (Cost $3,600) 3,600 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 22.4% REPURCHASE AGREEMENT - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.06%, dated 5/31/06, due 6/1/06 (Delivery value $95,090) (Cost $95,077) 95,077 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 121.9% (Cost $406,919) 516,541 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (21.9)% (92,737) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $423,804 ================================================================================ See Notes to Financial Statements. (continued) - ------ 15 Global Growth - Schedule of Investments MAY 31, 2006 (UNAUDITED) MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 26.2% - -------------------------------------------------------------------------------- Industrials 15.7% - -------------------------------------------------------------------------------- Information Technology 13.4% - -------------------------------------------------------------------------------- Consumer Discretionary 12.0% - -------------------------------------------------------------------------------- Energy 10.5% - -------------------------------------------------------------------------------- Health Care 7.0% - -------------------------------------------------------------------------------- Materials 6.9% - -------------------------------------------------------------------------------- Consumer Staples 3.9% - -------------------------------------------------------------------------------- Telecommunication Services 3.0% - -------------------------------------------------------------------------------- Cash and Cash Equivalents(+) 1.4% - -------------------------------------------------------------------------------- (+)Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt CVA = Certificaten Van Aandelen GDR = Global Depositary Receipt (1) Security, or a portion thereof, was on loan as of May 31, 2006. (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.) 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 May 31, 2006, was $147,884 (in thousands), which represented 34.9% of total net assets. See Notes to Financial Statements. - ------ 16 International Value - Performance TOTAL RETURNS AS OF MAY 31, 2006 ---------------------- AVERAGE ANNUAL RETURNS - ------------------------------------------------------------------------------------------ SINCE INCEPTION 2 MONTHS(1) 1 YEAR 5 YEARS INCEPTION DATE - ------------------------------------------------------------------------------------------ A CLASS 3/31/97 No sales charge* 1.42%(2) 24.74%(2) 8.16% 5.34%(2) With sales charge* -4.38%(2) 17.56%(2) 6.89% 4.66%(2) - ------------------------------------------------------------------------------------------ MSCI EAFE INDEX 0.71% 28.24% 9.10% 7.01% - ------------------------------------------------------------------------------------------ Investor Class(1) 4/3/06 Before redemption fee -- -- -- 0.23% Net of redemption fee(3) -- -- -- -1.77% - ------------------------------------------------------------------------------------------ Institutional Class(1) 4/3/06 Before redemption fee -- -- -- 0.31% Net of redemption fee(3) -- -- -- -1.69% - ------------------------------------------------------------------------------------------ B Class 3/31/97 No sales charge* 1.36%(2) 23.80%(2) 7.39% 4.64% With sales charge* -3.64%(2) 19.80%(2) 7.24% 4.64% - ------------------------------------------------------------------------------------------ C Class(1) 4/3/06 No sales charge* -- -- -- 0.08% With sales charge* -- -- -- -0.92% - ------------------------------------------------------------------------------------------ R Class(1) 4/3/06 Before redemption fee -- -- -- 0.16% Net of redemption fee(3) -- -- -- -1.85% - ------------------------------------------------------------------------------------------ *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) Total returns for periods less than one year are not annualized. (2) Class returns would have been lower if the class had not received partial reimbursements of distribution and service fees during the periods. (3) Returns reflect the deduction of a 2.00% redemption fee, incurred if shares were redeemed within the first 60 days after purchase. 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 A 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) - ------ 17 International Value - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made March 31, 1997
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ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended May 31 - ------------------------------------------------------------------------------------------------------ 1997* 1998 1999 2000 2001 2002 2003 2004 2005 2006 - ------------------------------------------------------------------------------------------------------ A Class (no sales charge) 1.40% 4.48% -3.43% 8.40% -1.91% -4.88% -16.59% 30.27% 14.87% 24.74% - ------------------------------------------------------------------------------------------------------ MSCI EAFE Index 7.07% 11.11% 4.36% 17.14% -17.23% -9.60% -12.30% 32.66% 14.62% 28.24% - ------------------------------------------------------------------------------------------------------ * From 3/31/97 the A Class's inception date. Not annualized. International Value A Class's initial investment is $9,425 to reflect the maximum 5.75% initial sales charge. 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 A 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. - ------ 18 International Value - Portfolio Commentary PORTFOLIO MANAGERS: GUANG YANG AND GARY MOTYL We are pleased to provide this initial report on your investment with American Century Investments. On March 31, 2006, American Century Investments acquired all of the net assets of Mason Street International Equity Fund pursuant to a plan of reorganization approved by the acquired fund's shareholders. This fund was reorganized into a newly created fund, International Value, issued by American Century World Mutual Funds, Inc. (ACWMF). Therefore, this two-month report is being provided based on the financial statement reporting period of ACWMF. The fund will continue to be sub-advised by Templeton Investment Counsel, LLC, and its investment objective and policy have not changed--the fund seeks long-term growth of capital by investing the majority of its assets in securities of companies outside the United States that we believe are undervalued. PORTFOLIO PERFORMANCE In the two months since the reorganization, the fund returned 1.42%*. By comparison, the fund's benchmark, the MSCI EAFE Index, returned 0.71%. One of the key reasons for International Value's strong performance relative to its benchmark was our positioning among the industrials, financials, and information technology sectors. However, the fund's return would have been even better relative to its benchmark but for our stock selection among health care shares. In the broader market, international stocks ended the period on a down note amid worry about rising inflation and interest rates after hitting record highs early in May. In that environment, value-oriented shares outperformed growth stocks, as the EAFE Value and Growth Indexes returned 1.28% and 0.13%, respectively. INDUSTRIAL-STRENGTH RETURNS Solid global economic growth helped industrial firms, with strong demand for shipping and logistics services, heavy equipment and cranes, and machine parts leading to growth in sales, earnings, and orders. Some of the portfolio's top contributors to relative and absolute returns from this segment were KCI Konecranes and Deutsche Post, both of which we were overweight relative to our benchmark. KCI Konecranes is a Finland-based machinery and engineering firm TOP TEN HOLDINGS AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 3/31/06 - -------------------------------------------------------------------------------- ING Groep N.V. CVA 1.6% 1.5% - -------------------------------------------------------------------------------- Samsung Electronics 1.6% -- - -------------------------------------------------------------------------------- E.On AG 1.6% 1.4% - -------------------------------------------------------------------------------- Axa SA 1.6% 1.4% - -------------------------------------------------------------------------------- BASF AG 1.6% 1.4% - -------------------------------------------------------------------------------- Deutsche Post AG 1.5% 1.3% - -------------------------------------------------------------------------------- Sanofi-Aventis 1.5% 1.4% - -------------------------------------------------------------------------------- Telenor ASA 1.5% 1.1% - -------------------------------------------------------------------------------- Repsol YPF SA 1.4% -- - -------------------------------------------------------------------------------- Rolls-Royce Group plc 1.4% 1.3% - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for A Class shares and are not reduced by sales charges. A Class shares are subject to a maximum sales charge of 4.50%. Had the sales charge been applied, returns would be lower than those shown. Total returns for periods less than one year are not annualized. (continued) - ------ 19 International Value - Portfolio Commentary experiencing surging orders in its specialty crane business unit. Deutsche Post is Europe's leading postal service, which we believe is trading at a compelling valuation. During the period, the company raised its profit forecast and said it was contemplating a stock buy-back and dividend increase. ADDING VALUE IN FINANCIALS We added value relative to our benchmark in the last two months in financials by avoiding some underperformers. We've been underweight in this sector based on our belief that these stocks were priced for perfection on inflation and interest rates, and that the sector in general is fairly valued. We think this is particularly true of Japanese banks, which had a very strong run until stumbling in May, as it looks increasingly likely that the government is going to raise interest rates for the first time in more than five years. HEALTH CARE HURTS The biggest detractor from performance relative to our benchmark was our positioning among health care stocks, particularly in pharmaceuticals. For example, we were underweight in GlaxoSmithKline, Roche, and AstraZeneca-- all of which had positive returns in dollar terms--because of such factors as valuations, drug safety concerns, and earnings pressure likely to result from competition by generics. OUR COMMITMENT As bottom-up managers, we build the International Value portfolio stock by stock, looking for companies trading at a discount to our estimate of their worth. What's more, we have a long-term focus, which allows us to wait patiently for the opportunity to purchase stocks at bargain levels. The depth of our research also gives us the conviction to wait for the market to reflect the fair value of a stock once it is added to our portfolio. We believe these elements of value, patience, and bottom-up stock selection are critical to successful long-term investing. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 3/31/06 - -------------------------------------------------------------------------------- Foreign Common Stocks and Rights 97.4% 88.6% - -------------------------------------------------------------------------------- Foreign Preferred Stocks 1.2% -- - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 98.6% 88.6% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.2% -- - -------------------------------------------------------------------------------- Other Assets and Liabilities 1.2% 11.4% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 3/31/06 - -------------------------------------------------------------------------------- United Kingdom 18.3% 19.4% - -------------------------------------------------------------------------------- Japan 9.9% 10.0% - -------------------------------------------------------------------------------- France 9.9% 7.6% - -------------------------------------------------------------------------------- Netherlands 7.9% 7.6% - -------------------------------------------------------------------------------- Germany 6.6% 6.3% - -------------------------------------------------------------------------------- South Korea 5.3% 1.4% - -------------------------------------------------------------------------------- Sweden 5.0% 5.4% - -------------------------------------------------------------------------------- Spain 4.3% 1.1% - -------------------------------------------------------------------------------- Hong Kong 3.9% 3.6% - -------------------------------------------------------------------------------- Australia 3.5% 3.7% - -------------------------------------------------------------------------------- Italy 3.5% 3.1% - -------------------------------------------------------------------------------- Other Countries 20.5% 19.4% - -------------------------------------------------------------------------------- Cash and Equivalents(1) 1.4% 11.4% - -------------------------------------------------------------------------------- (1) Includes temporary cash investments and other assets and liabilities. - ------ 20 International Value - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS AND RIGHTS -- 97.4% AUSTRALIA -- 3.5% - -------------------------------------------------------------------------------- 98,950 Alumina Ltd. $ 502 - -------------------------------------------------------------------------------- 4,630 Australia & New Zealand Banking Group Ltd. 92 - -------------------------------------------------------------------------------- 26,770 BHP Billiton Ltd. 579 - -------------------------------------------------------------------------------- 26,912 National Australia Bank Ltd. 718 - -------------------------------------------------------------------------------- 1,891 - -------------------------------------------------------------------------------- BELGIUM -- 0.4% - -------------------------------------------------------------------------------- 11,400 AGFA-Gevaert N.V. 231 - -------------------------------------------------------------------------------- BERMUDA -- 1.7% - -------------------------------------------------------------------------------- 11,760 Ace, Ltd. 608 - -------------------------------------------------------------------------------- 4,700 XL Capital Ltd. Cl A 297 - -------------------------------------------------------------------------------- 905 - -------------------------------------------------------------------------------- CANADA -- 2.5% - -------------------------------------------------------------------------------- 5,740 Alcan Inc. 297 - -------------------------------------------------------------------------------- 22,250 BCE Inc. 536 - -------------------------------------------------------------------------------- 21,300 Celestica Inc.(1) 201 - -------------------------------------------------------------------------------- 49,300 Domtar Inc.(1) 323 - -------------------------------------------------------------------------------- 1,357 - -------------------------------------------------------------------------------- DENMARK -- 0.9% - -------------------------------------------------------------------------------- 18,904 Vestas Wind Systems AS(1) 487 - -------------------------------------------------------------------------------- FINLAND -- 3.0% - -------------------------------------------------------------------------------- 32,760 KCI Konecranes Oyj 668 - -------------------------------------------------------------------------------- 34,110 Stora Enso Oyj R Shares 477 - -------------------------------------------------------------------------------- 20,660 UPM-Kymmene Oyj 443 - -------------------------------------------------------------------------------- 1,588 - -------------------------------------------------------------------------------- FRANCE -- 9.9% - -------------------------------------------------------------------------------- 8,700 Accor SA 510 - -------------------------------------------------------------------------------- 970 Arkema Rights(1) 3 - -------------------------------------------------------------------------------- 24,219 Axa SA 842 - -------------------------------------------------------------------------------- 8,110 Compagnie Generale des Etablissements Michelin Cl B 531 - -------------------------------------------------------------------------------- 6,680 Electricite de France(1) 364 - -------------------------------------------------------------------------------- 21,700 France Telecom SA 501 - -------------------------------------------------------------------------------- 8,483 Sanofi-Aventis 802 - -------------------------------------------------------------------------------- 4,378 Societe BIC SA(1) 293 - -------------------------------------------------------------------------------- 18,760 Suez SA 722 - -------------------------------------------------------------------------------- 15,920 Thomson(1) 303 - -------------------------------------------------------------------------------- 3,880 Total SA 253 - -------------------------------------------------------------------------------- 5,032 Valeo SA(1) 193 - -------------------------------------------------------------------------------- 5,317 - -------------------------------------------------------------------------------- GERMANY -- 6.6% - -------------------------------------------------------------------------------- 10,320 BASF AG 840 - -------------------------------------------------------------------------------- 11,900 Bayerische Motoren Werke AG 612 - -------------------------------------------------------------------------------- 30,710 Deutsche Post AG 832 - -------------------------------------------------------------------------------- 7,520 E.On AG 868 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 25,810 Infineon Technologies AG(1) $ 293 - -------------------------------------------------------------------------------- 1,000 Siemens AG ADR 86 - -------------------------------------------------------------------------------- 3,531 - -------------------------------------------------------------------------------- HONG KONG -- 3.9% - -------------------------------------------------------------------------------- 54,300 Cheung Kong Holdings Ltd. 582 - -------------------------------------------------------------------------------- 948 CK Life Sciences International Holdings Inc.(1) - - -------------------------------------------------------------------------------- 80,948 HongKong Electric Holdings 353 - -------------------------------------------------------------------------------- 56,900 Hutchison Whampoa Ltd. 512 - -------------------------------------------------------------------------------- 40,500 Swire Pacific Ltd. A Shares 380 - -------------------------------------------------------------------------------- 146,000 Swire Pacific Ltd. B Shares 250 - -------------------------------------------------------------------------------- 2,077 - -------------------------------------------------------------------------------- ISRAEL -- 0.7% - -------------------------------------------------------------------------------- 19,490 Check Point Software Technologies(1) 377 - -------------------------------------------------------------------------------- ITALY -- 3.5% - -------------------------------------------------------------------------------- 81,809 Banca Nazionale del Lavoro SpA 336 - -------------------------------------------------------------------------------- 21,370 ENI SpA 647 - -------------------------------------------------------------------------------- 23,415 RAS Holding SpA 570 - -------------------------------------------------------------------------------- 42,150 UniCredito Italiano SpA 321 - -------------------------------------------------------------------------------- 1,874 - -------------------------------------------------------------------------------- JAPAN -- 9.9% - -------------------------------------------------------------------------------- 57 East Japan Railway Company 410 - -------------------------------------------------------------------------------- 8,200 Fuji Photo Film Co. Ltd. 270 - -------------------------------------------------------------------------------- 62,400 Hitachi Ltd. 424 - -------------------------------------------------------------------------------- 4,200 Mabuchi Motor Co. Ltd. 250 - -------------------------------------------------------------------------------- 3,400 Nintendo Co., Ltd. 576 - -------------------------------------------------------------------------------- 101 Nippon Telegraph & Telephone Corp. 499 - -------------------------------------------------------------------------------- 17,600 Nomura Holdings, Inc. 345 - -------------------------------------------------------------------------------- 11,900 Olympus Corp. 326 - -------------------------------------------------------------------------------- 4,800 Ono Pharmaceutical Co Ltd. 238 - -------------------------------------------------------------------------------- 57,600 Sompo Japan Insurance Inc. 736 - -------------------------------------------------------------------------------- 12,300 Sony Corp. 556 - -------------------------------------------------------------------------------- 10,600 Takeda Pharmaceutical Co Ltd. 692 - -------------------------------------------------------------------------------- 300 Toshiba Corp. 2 - -------------------------------------------------------------------------------- 5,324 - -------------------------------------------------------------------------------- MEXICO -- 1.0% - -------------------------------------------------------------------------------- 26,460 Telefonos de Mexico SA de CV Series L ADR 524 - -------------------------------------------------------------------------------- NETHERLANDS -- 7.9% - -------------------------------------------------------------------------------- 12,580 Akzo Nobel N.V. 679 - -------------------------------------------------------------------------------- 22,430 ING Groep N.V. CVA 879 - -------------------------------------------------------------------------------- 23,417 Koninklijke Royal Philips Electronics N.V. 740 - -------------------------------------------------------------------------------- 33,730 Reed Elsevier N.V. 492 - -------------------------------------------------------------------------------- 21,145 Royal Dutch Shell plc B Shares 732 - -------------------------------------------------------------------------------- 5,860 SBM Offshore N.V. 628 - -------------------------------------------------------------------------------- 5,240 Wolters Kluwer N.V. 124 - -------------------------------------------------------------------------------- 4,274 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 21 International Value - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- NORWAY -- 2.6% - -------------------------------------------------------------------------------- 42,671 Norske Skogindustrier ASA $ 617 - -------------------------------------------------------------------------------- 62,970 Telenor ASA 794 - -------------------------------------------------------------------------------- 1,411 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 0.5% - -------------------------------------------------------------------------------- 824,000 China Telecom Corporation Limited H Shares 272 - -------------------------------------------------------------------------------- PORTUGAL -- 0.7% - -------------------------------------------------------------------------------- 32,950 Portugal Telecom SGPS SA 389 - -------------------------------------------------------------------------------- SINGAPORE -- 1.3% - -------------------------------------------------------------------------------- 61,500 DBS Group Holdings Ltd. 682 - -------------------------------------------------------------------------------- SOUTH KOREA -- 5.3% - -------------------------------------------------------------------------------- 6,890 Kookmin Bank 556 - -------------------------------------------------------------------------------- 13,780 Korea Electric Power Corp. 563 - -------------------------------------------------------------------------------- 19,660 KT Corp. ADR 434 - -------------------------------------------------------------------------------- 1,370 Samsung Electronics 874 - -------------------------------------------------------------------------------- 16,530 SK Telecom Co. Ltd. ADR 431 - -------------------------------------------------------------------------------- 2,858 - -------------------------------------------------------------------------------- SPAIN -- 4.3% - -------------------------------------------------------------------------------- 41,710 Banco Santander Central Hispano SA 603 - -------------------------------------------------------------------------------- 9,260 Iberdrola SA 297 - -------------------------------------------------------------------------------- 27,430 Repsol YPF SA 769 - -------------------------------------------------------------------------------- 13,460 Telefonica SA ADR 661 - -------------------------------------------------------------------------------- 2,330 - -------------------------------------------------------------------------------- SWEDEN -- 5.0% - -------------------------------------------------------------------------------- 25,490 Atlas Copco AB A Shares 691 - -------------------------------------------------------------------------------- 43,510 Nordea Bank AB 525 - -------------------------------------------------------------------------------- 47,630 Nordea Bank AB FDR 575 - -------------------------------------------------------------------------------- 32,850 Securitas AB B Shares 628 - -------------------------------------------------------------------------------- 5,020 Volvo AB Cl B 245 - -------------------------------------------------------------------------------- 2,664 - -------------------------------------------------------------------------------- SWITZERLAND -- 2.3% - -------------------------------------------------------------------------------- 2,030 Nestle SA 608 - -------------------------------------------------------------------------------- 9,307 Swiss Reinsurance 654 - -------------------------------------------------------------------------------- 1,262 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 1.7% - -------------------------------------------------------------------------------- 14,300 Chunghwa Telecom Co. Ltd. ADR 293 - -------------------------------------------------------------------------------- 292,000 Compal Electronics Inc. 296 - -------------------------------------------------------------------------------- 210,000 Lite-On Technology Corp. 325 - -------------------------------------------------------------------------------- 914 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- UNITED KINGDOM -- 18.3% - -------------------------------------------------------------------------------- 92,850 BAE Systems plc $ 665 - -------------------------------------------------------------------------------- 21,277 Boots Group plc 283 - -------------------------------------------------------------------------------- 54,390 BP plc 641 - -------------------------------------------------------------------------------- 65,150 British Airways plc(1) 417 - -------------------------------------------------------------------------------- 63,150 British Sky Broadcasting plc 627 - -------------------------------------------------------------------------------- 56,630 Cadbury Schweppes plc 546 - -------------------------------------------------------------------------------- 76,750 Compass Group plc 339 - -------------------------------------------------------------------------------- 18,940 GlaxoSmithKline plc 524 - -------------------------------------------------------------------------------- 28,000 HSBC Holdings plc 490 - -------------------------------------------------------------------------------- 59,370 Lloyds TSB Group plc 564 - -------------------------------------------------------------------------------- 35,602 National Grid plc 404 - -------------------------------------------------------------------------------- 40,140 Pearson plc 546 - -------------------------------------------------------------------------------- 139,260 Rentokil Initial plc 377 - -------------------------------------------------------------------------------- 99,630 Rolls-Royce Group plc(1) 769 - -------------------------------------------------------------------------------- 15,640 Royal Bank of Scotland Group plc 510 - -------------------------------------------------------------------------------- 17,610 Shire plc 259 - -------------------------------------------------------------------------------- 25,120 Smiths Group plc 417 - -------------------------------------------------------------------------------- 19,350 Standard Chartered plc 475 - -------------------------------------------------------------------------------- 18,085 Unilever plc 407 - -------------------------------------------------------------------------------- 263,890 Vodafone Group plc 607 - -------------------------------------------------------------------------------- 9,867 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS AND RIGHTS (Cost $36,158) 52,406 - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 1.2% BRAZIL -- 1.2% - -------------------------------------------------------------------------------- 10,430 Comphania Vale do Rio Doce ADR 407 - -------------------------------------------------------------------------------- 7,470 Empresa Brasiliera de Aeronautica SA ADR 250 - -------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost $302) 657 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 0.2% $100 FHLB Discount Notes, 4.90%, 6/1/06(2) (Cost $100) 100 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 98.8% (Cost $36,560) 53,163 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 1.2% 623 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $53,786 ================================================================================ See Notes to Financial Statements. (continued) - ------ 22 International Value - Schedule of Investments MAY 31, 2006 (UNAUDITED) MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 23.4% - -------------------------------------------------------------------------------- Industrials 14.5% - -------------------------------------------------------------------------------- Consumer Discretionary 11.3% - -------------------------------------------------------------------------------- Telecommunication Services 11.0% - -------------------------------------------------------------------------------- Materials 9.6% - -------------------------------------------------------------------------------- Energy 6.8% - -------------------------------------------------------------------------------- Information Technology 6.7% - -------------------------------------------------------------------------------- Utilities 6.6% - -------------------------------------------------------------------------------- Health Care 5.3% - -------------------------------------------------------------------------------- Consumer Staples 3.4% - -------------------------------------------------------------------------------- Cash and Cash Equivalents(+) 1.4% - -------------------------------------------------------------------------------- (+)Includes temporary cash investments and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt CVA = Certificaten Van Aandelen FDR = Finnish Depository Receipt FHLB = Federal Home Loan Bank (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. 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 May 31, 2006, was $31,618 (in thousands), which represented 58.8% of total net assets. See Notes to Financial Statements. - ------ 23 Shareholder Fee Examples (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from December 1, 2005 to May 31, 2006 (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 examples that appear in the shareholder reports of the other funds. (continued) - ------ 24 Shareholder Fee Examples (Unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 12/1/05 - EXPENSE 12/1/05 5/31/06 5/31/06 RATIO* - -------------------------------------------------------------------------------- INTERNATIONAL GROWTH SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,141.90 $6.62 1.24% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,142.60 $5.56 1.04% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,140.40 $7.95 1.49% - -------------------------------------------------------------------------------- A Class $1,000 $1,140.20 $7.95 1.49% - -------------------------------------------------------------------------------- B Class $1,000 $1,136.00 $11.93 2.24% - -------------------------------------------------------------------------------- C Class $1,000 $1,135.70 $11.93 2.24% - -------------------------------------------------------------------------------- R Class $1,000 $1,139.80 $9.28 1.74% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,018.75 $6.24 1.24% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,019.75 $5.24 1.04% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,017.50 $7.49 1.49% - -------------------------------------------------------------------------------- A Class $1,000 $1,017.50 $7.49 1.49% - -------------------------------------------------------------------------------- B Class $1,000 $1,013.76 $11.25 2.24% - -------------------------------------------------------------------------------- C Class $1,000 $1,013.76 $11.25 2.24% - -------------------------------------------------------------------------------- R Class $1,000 $1,016.26 $8.75 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 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (continued) - ------ 25 Shareholder Fee Examples (Unaudited) - -------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 12/1/05 - EXPENSE 12/1/05 5/31/06 5/31/06 RATIO* - -------------------------------------------------------------------------------- GLOBAL GROWTH SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,095.40 $6.84 1.31% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,096.90 $5.80 1.11% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,094.80 $8.15 1.56% - -------------------------------------------------------------------------------- A Class $1,000 $1,077.20 $8.08 1.56% - -------------------------------------------------------------------------------- B Class $1,000 $1,073.60 $11.94 2.31% - -------------------------------------------------------------------------------- C Class $1,000 $1,089.60 $12.03 2.31% - -------------------------------------------------------------------------------- R Class $1,000 $1,093.80 $9.45 1.81% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,018.40 $6.59 1.31% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,019.40 $5.59 1.11% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,017.15 $7.85 1.56% - -------------------------------------------------------------------------------- A Class $1,000 $1,017.15 $7.85 1.56% - -------------------------------------------------------------------------------- B Class $1,000 $1,013.41 $11.60 2.31% - -------------------------------------------------------------------------------- C Class $1,000 $1,013.41 $11.60 2.31% - -------------------------------------------------------------------------------- R Class $1,000 $1,015.91 $9.10 1.81% - -------------------------------------------------------------------------------- *Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (continued) - ------ 26 Shareholder Fee Examples (Unaudited) - ------------------------------------------------------------------------------------------ EXPENSES PAID BEGINNING ENDING DURING PERIOD(1) ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 12/1/05 - EXPENSE 12/1/05 5/31/06 5/31/06 RATIO(1) - ------------------------------------------------------------------------------------------ INTERNATIONAL VALUE SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------ ACTUAL - ------------------------------------------------------------------------------------------ Investor Class $1,000 $1,002.30(2) $2.07(5) 1.30% - ------------------------------------------------------------------------------------------ Institutional Class $1,000 $1,003.10(2) $1.75(5) 1.10% - ------------------------------------------------------------------------------------------ A Class (after waiver)(4) $1,000 $1,014.20(3) $2.36(6) 1.40% - ------------------------------------------------------------------------------------------ A Class (before waiver) $1,000 $1,014.20(3)(7) $2.61(6) 1.55% - ------------------------------------------------------------------------------------------ B Class (after waiver)(4) $1,000 $1,013.60(3) $3.52(6) 2.09% - ------------------------------------------------------------------------------------------ B Class (before waiver) $1,000 $1,013.60(3)(7) $3.87(6) 2.30% - ------------------------------------------------------------------------------------------ C Class $1,000 $1,000.80(2) $3.66(5) 2.30% - ------------------------------------------------------------------------------------------ R Class $1,000 $1,001.60(2) $2.86(5) 1.80% - ------------------------------------------------------------------------------------------ HYPOTHETICAL - ------------------------------------------------------------------------------------------ Investor Class $1,000 $1,018.45(8) $6.54(8) 1.30% - ------------------------------------------------------------------------------------------ Institutional Class $1,000 $1,019.45(8) $5.54(8) 1.10% - ------------------------------------------------------------------------------------------ A Class (after waiver)(4) $1,000 $1,017.95 $7.04 1.40% - ------------------------------------------------------------------------------------------ A Class (before waiver) $1,000 $1,017.20 $7.80 1.55% - ------------------------------------------------------------------------------------------ B Class (after waiver)(4) $1,000 $1,014.51 $10.50 2.09% - ------------------------------------------------------------------------------------------ B Class (before waiver) $1,000 $1,013.46 $11.55 2.30% - ------------------------------------------------------------------------------------------ C Class $1,000 $1,013.46(8) $11.55(8) 2.30% - ------------------------------------------------------------------------------------------ R Class $1,000 $1,015.96(8) $9.05(8) 1.80% - ------------------------------------------------------------------------------------------ (1) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (2) Ending account value based on actual return from April 3, 2006 (commencement of sale) through May 31, 2006. (3) Ending account value based on actual return from April 1, 2006 through May 31, 2006. International Value's fiscal year end was changed from March 31 to November 30, resulting in a two-month semiannual reporting period (see Note 9). (4) During the period ended May 31, 2006, the class received a partial waiver of its distribution and service fees. (5) 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 58, the number of days in the period from April 3, 2006 (commencement of sale), through May 31, 2006, 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. (6) 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 61, the number of days in the period from April 1, 2006 through May 31, 2006, divided by 365, to reflect the period. Had the class been available for a full fiscal half-year period, the expenses paid during the period would have been higher. (7) Ending account value assumes the return earned after waiver. The return would have been lower had fees not been waived and may have resulted in a lower ending account value. (8) Ending account value and expenses paid during period assumes the class had been available throughout the entire fiscal half-year period and are calculated using the class's annualized expense ratio listed in the table above. - ------ 27 Statement of Assets and Liabilities MAY 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- INTERNATIONAL GLOBAL INTERNATIONAL (AMOUNTS IN THOUSANDS) GROWTH GROWTH VALUE - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $2,041,843, $311,842, $36,560 and respectively) -- including $684,220, $90,298, and $- of securities on loan, respectively $2,692,885 $421,464 $53,163 - ------------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $716,003, $95,077, and $-, respectively) 716,003 95,077 -- - -------------------------------------------------------------------------------- Total investment securities, at value (cost of $2,757,846, $406,919, and $36,560, respectively) 3,408,888 516,541 53,163 - ------------------------------------- Cash -- -- 109 - ------------------------------------- Foreign currency holdings, at value (cost of $71, $275, and $324, respectively) 71 274 325 - ------------------------------------- Receivable for investments sold -- 3,153 10 - ------------------------------------- Receivable for capital shares sold 192 38 114 - ------------------------------------- Dividends and interest receivable 5,078 280 243 - -------------------------------------------------------------------------------- 3,414,229 520,286 53,964 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payable for collateral received for securities on loan 716,003 95,077 -- - ------------------------------------- Disbursements in excess of demand deposit cash 7,598 244 -- - ------------------------------------- Payable for investments purchased -- 671 87 - ------------------------------------- Payable for capital shares redeemed 8 -- 26 - ------------------------------------- Accrued management fees 2,899 486 60 - ------------------------------------- Distribution fees payable 76 2 3 - ------------------------------------- Service fees (and distribution fees -- A Class and R Class) payable 78 2 2 - -------------------------------------------------------------------------------- 726,662 96,482 178 - -------------------------------------------------------------------------------- NET ASSETS $2,687,567 $423,804 $53,786 ================================================================================ See Notes to Financial Statements. (continued) - ------ 28 Statement of Assets and Liabilities MAY 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- (AMOUNTS IN THOUSANDS INTERNATIONAL GLOBAL INTERNATIONAL EXCEPT AS NOTED) GROWTH GROWTH VALUE - -------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $2,655,882 $344,336 $18,468 - ----------------------------------- Accumulated undistributed net investment income (loss) (16,964) (3,860) 1,089 - ----------------------------------- Accumulated undistributed net realized gain (loss) on investment and foreign currency transactions (602,494) (26,300) 17,622 - ----------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 651,143 109,628 16,607 - -------------------------------------------------------------------------------- $2,687,567 $423,804 $53,786 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $2,222,828,959 $406,598,181 $50,143 - ----------------------------------- Shares outstanding 203,158,173 42,084,657 3,892 - ----------------------------------- Net asset value per share $10.94 $9.66 $12.88 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $114,045,616 $8,064,922 $31,667,141 - ----------------------------------- Shares outstanding 10,404,885 829,123 2,457,442 - ----------------------------------- Net asset value per share $10.96 $9.73 $12.89 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $310,300,571 $5,311,502 N/A - ----------------------------------- Shares outstanding 28,421,146 554,601 N/A - ----------------------------------- Net asset value per share $10.92 $9.58 N/A - -------------------------------------------------------------------------------- A CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $29,473,000 $2,686,441 $17,177,875 - ----------------------------------- Shares outstanding 2,696,637 278,321 1,333,721 - ----------------------------------- Net asset value per share $10.93 $9.65 $12.88 - ----------------------------------- Maximum offering price (net asset value divided by 0.9425) $11.60 $10.24 $13.67 - -------------------------------------------------------------------------------- B CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $2,411,694 $208,435 $4,841,051 - ----------------------------------- Shares outstanding 221,672 21,669 381,753 - ----------------------------------- Net asset value per share $10.88 $9.62 $12.68 - -------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $5,851,992 $905,592 $25,022 - ----------------------------------- Shares outstanding 540,654 96,717 1,946 - ----------------------------------- Net asset value per share $10.82 $9.36 $12.86 - -------------------------------------------------------------------------------- R CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------- Net assets $2,655,049 $28,941 $25,042 - ----------------------------------- Shares outstanding 243,018 3,003 1,946 - ----------------------------------- Net asset value per share $10.93 $9.64 $12.87 - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 29 Statement of Operations FOR THE SIX MONTHS ENDED MAY 31, 2006 (EXCEPT AS NOTED) (UNAUDITED) - ----------------------------------------------------------------------------------------------------------- INTERNATIONAL (AMOUNTS IN THOUSANDS) GROWTH GLOBAL GROWTH INTERNATIONAL VALUE - ----------------------------------------------------------------------------------------------------------- MAY 31, 2006 MAY 31, 2006 MAY 31, 2006(1) MARCH 31, 2006(2) - ----------------------------------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - ----------------------------------------------------------------------------------------------------------- INCOME: - ---------------------------------- Dividends (net of foreign taxes withheld of $2,583, $226, $89, and $699, respectively) $ 26,371 $ 2,739 $ 710 $ 5,514 - ---------------------------------- Interest and other income 1,034 147 14 256 - ---------------------------------- Securities lending 918 53 -- -- - ----------------------------------------------------------------------------------------------------------- 28,323 2,939 724 5,770 - ----------------------------------------------------------------------------------------------------------- EXPENSES: - ---------------------------------- Management fees 16,872 2,754 120 1,712 - ---------------------------------- Distribution fees: - ---------------------------------- Advisor Class 375 6 -- -- - ---------------------------------- A Class -- -- -- 22 - ---------------------------------- B Class 8 -- 6 36 - ---------------------------------- C Class 21 3 -- -- - ---------------------------------- Service fees: - ---------------------------------- Advisor Class 375 6 -- -- - ---------------------------------- B Class 3 -- 2 -- - ---------------------------------- C Class 7 1 -- -- - ---------------------------------- Service and distribution fees: - ---------------------------------- A Class 36 1 11 -- - ---------------------------------- R Class 6 -- -- -- - ---------------------------------- Shareholder servicing fees (A Class and B Class) -- -- -- 504 - ---------------------------------- Administrative fees -- -- -- 202 - ---------------------------------- Directors' fees and expenses 26 3 -- 6 - ---------------------------------- Other expenses 24 14 -- 269 - ----------------------------------------------------------------------------------------------------------- 17,753 2,788 139 2,751 - ----------------------------------------------------------------------------------------------------------- Amount waived -- -- (8) -- - ----------------------------------------------------------------------------------------------------------- 17,753 2,788 131 2,751 - ----------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 10,570 151 593 3,019 - ----------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - ----------------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - ---------------------------------- Investment transactions 271,755 26,823 2,606 71,060 - ---------------------------------- Foreign currency transactions (21,543) (744) 532 (125) - ----------------------------------------------------------------------------------------------------------- 250,212 26,079 3,138 70,935 - ----------------------------------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: - ---------------------------------- Investments (43,287) 515 (4,371) (38,422) - ---------------------------------- Translation of assets and liabilities in foreign currencies 163,712 10,716 1,543 6 - ----------------------------------------------------------------------------------------------------------- 120,425 11,231 (2,828) (38,416) - ----------------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 370,637 37,310 310 32,519 - ----------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETSRESULTING FROM OPERATIONS $381,207 $37,461 $ 903 $ 35,538 =========================================================================================================== (1) International Value's fiscal year end was changed from March 31 to November 30, resulting in a two-month semiannual reporting period (see Note 9). (2) Year ended March 31, 2006. See Notes to Financial Statements. - ------ 30 Statement of Changes in Net Assets SIX MONTHS ENDED MAY 31, 2006 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2005 - -------------------------------------------------------------------------------------------------------- (AMOUNTS IN THOUSANDS) INTERNATIONAL GROWTH GLOBAL GROWTH - -------------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS MAY 31, 2006 NOV. 30, 2005 MAY 31, 2006 NOV. 30, 2005 - -------------------------------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------------------------------- Net investment income (loss) $ 10,570 $ 34,683 $ 151 $ (45) - ------------------------------------- Net realized gain (loss) 250,212 374,500 26,079 31,417 - ------------------------------------- Change in net unrealized appreciation (depreciation) 120,425 (84,693) 11,231 26,155 - -------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 381,207 324,490 37,461 57,527 - -------------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------------------------------- From net investment income: - ------------------------------------- Investor Class (40,600) (25,087) (2,722) (804) - ------------------------------------- Institutional Class (4,912) (3,484) (80) (39) - ------------------------------------- Advisor Class (4,014) (2,209) (16) -- - ------------------------------------- A Class (391) (114) -- -- - ------------------------------------- B Class (13) (1) -- -- - ------------------------------------- C Class (42) (2) -- -- - ------------------------------------- R Class (24) (2) -- -- - -------------------------------------------------------------------------------------------------------- Decrease in net assets from distributions (49,996) (30,899) (2,818) (843) - -------------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (433,726) (478,006) (2,629) 25,866 - -------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS (102,515) (184,415) 32,014 82,550 NET ASSETS - -------------------------------------------------------------------------------------------------------- Beginning of period 2,790,082 2,974,497 391,790 309,240 - -------------------------------------------------------------------------------------------------------- End of period $2,687,567 $2,790,082 $423,804 $391,790 ======================================================================================================== Accumulated undistributed net investment income (loss) $(16,964) $22,462 $(3,860) $(1,193) ======================================================================================================== See Notes to Financial Statements. (continued) - ------ 31 Statement of Changes in Net Assets TWO MONTHS ENDED MAY 31, 2006 (UNAUDITED) AND YEARS ENDED MARCH 31, 2006 AND MARCH 31, 2005 (AS NOTED) - ------------------------------------------------------------------------------------------------- (AMOUNTS IN THOUSANDS) INTERNATIONAL VALUE - ------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS MAY 31, 2006(1) MARCH 31, 2006(2) MARCH 31, 2005(2) - ------------------------------------------------------------------------------------------------- OPERATIONS - ------------------------------------- Net investment income (loss) $ 593 $ 3,019 $ 2,384 - ------------------------------------- Net realized gain (loss) 3,138 70,935 11,549 - ------------------------------------- Change in net unrealized appreciation (depreciation) (2,828) (38,416) 13,985 - ------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 903 35,538 27,918 - ------------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------- From net investment income: - ------------------------------------- A Class -- (2,743) (2,010) - ------------------------------------- B Class -- (23) (22) - ------------------------------------- From net realized gains: - ------------------------------------- A Class -- (3,924) (2,190) - ------------------------------------- B Class -- (86) (57) - ------------------------------------------------------------------------------------------------- Decrease in net assets from distributions -- (6,776) (4,279) - ------------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - ------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (6,651) (177,608) 5,863 - ------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS (5,748) (148,846) 29,502 NET ASSETS - ------------------------------------------------------------------------------------------------- Beginning of period 59,534 208,380 178,878 - ------------------------------------------------------------------------------------------------- End of period $53,786 $ 59,534 $208,380 ================================================================================================= Accumulated undistributed net investment income (loss) $1,089 $496 $348 ================================================================================================= (1) International Value's fiscal year end was changed from March 31 to November 30, resulting in a two-month semiannual reporting period (see Note 9). (2) Years ended March 31, 2006 and March 31, 2005. See Notes to Financial Statements. - ------ 32 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. International Growth Fund (International Growth), Global Growth Fund (Global Growth) and International Value Fund (International Value) (collectively, the funds) are three funds in a series issued by the corporation (see Note 9). The funds are diversified under the 1940 Act. The funds' investment objectives are to seek capital growth. International Growth pursues its objective by investing primarily in equity securities of foreign companies in developed countries. Global Growth pursues its objective by investing primarily in equity securities of issuers in the United States and other developed countries. International Value pursues its objective by investing primarily in equity securities of foreign companies. International Value may also invest a portion of its assets in U.S. companies. The following is a summary of the funds' significant accounting policies. MULTIPLE CLASS -- International Growth and Global Growth are 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. International Value is authorized to issue the Investor Class, the Institutional 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 funds 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 Global Growth's R Class commenced on July 29, 2005. Sale of Global Growth's A Class and B Class commenced on December 1, 2005. Sale of International Value's Investor Class, Institutional Class, C Class and R Class commenced on April 3, 2006. 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 -- International Growth and Global Growth may lend portfolio securities through their lending agent to certain approved borrowers in order to earn additional income. International Growth and Global Growth continue to recognize any gain or loss in the market price of the securities loaned and record any interest earned or dividends declared. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest (continued) - ------ 33 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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. Prior year amounts for International Value as of March 31, 2006, related to 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. 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 -- The funds may impose a 2% redemption fee on shares held less than 60 days. The redemption fee may not be applicable to all classes. The redemption fee is recorded as a reduction in the cost of shares redeemed. The redemption fee is retained by the funds 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 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) - ------ 34 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACGIM (the investment advisor), under which ACGIM provides the funds with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of the funds, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACGIM. The fee is computed and accrued daily based on the daily net assets of each specific class of shares of each fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in each fund's investment strategy (strategy assets) to calculate the appropriate fee rate for each fund. The strategy assets include each fund's assets and the assets of other clients of the investment advisor that are not in the American Century family of funds, but that have the same investment team and investment strategy. The strategy assets of International Growth includes the assets of NT International Growth Fund, one fund in a series issued by the corporation. The annual management fee schedule for each class of International Growth 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 annual management fee schedule for each class of Global Growth is as follows: - -------------------------------------------------------------------------------- INVESTOR, A, B, C AND 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% - -------------------------------------------------------------------------------- The annual management fee schedule for each class of International Value is as follows: - --------------------------------------------------------------- INVESTOR, A, B, C AND R INSTITUTIONAL - --------------------------------------------------------------- STRATEGY ASSETS - --------------------------------------------------------------- First $1 billion 1.30% 1.10% - --------------------------------------------------------------- Next $1 billion 1.20% 0.95% - --------------------------------------------------------------- Over $2 billion 1.10% 0.85% - --------------------------------------------------------------- The effective annual management fees for the funds for the six months ended May 31, 2006 (except as noted) were as follows: - -------------------------------------------------------------------------------- INVESTOR, A, B, C AND R INSTITUTIONAL ADVISOR - -------------------------------------------------------------------------------- International Growth 1.24% 1.04% 0.99% - -------------------------------------------------------------------------------- Global Growth 1.30% 1.10% 1.05% - -------------------------------------------------------------------------------- International Value(1) 1.30% 1.10% N/A - -------------------------------------------------------------------------------- (1) International Value's fiscal year end changed from March 31 to November 30, resulting in a two-month semiannual reporting period (see Note 9). (continued) - ------ 35 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) ACGIM has entered into a Subadvisory Agreement with ACIM (the subadvisor) on behalf of the funds. The subadvisor makes investment decisions for the cash portion of the funds in accordance with the funds' investments objectives, policies and restrictions under the supervision of ACGIM and the Board of Directors. ACGIM pays all costs associated with retaining ACIM as the subadvisor of the funds. ACGIM has entered into a Subadvisory Agreement with Templeton Investment Counsel, LLC (Templeton) on behalf of International Value. Templeton makes investment decisions for 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 Templeton as the subadvisor of International Value. 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% for the A Class and 0.50% for the R Class. 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 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 A Class, B Class, C Class and R Class shares. ACGIM has agreed to voluntarily waive a portion of its service and distribution fees through March 31, 2008, by 0.15% for the A Class and 0.21% for the B Class of International Value. For the two months ended May 31, 2006, the A Class and B Class waived service and distribution fees of $6,381 and $1,758 ($ in full), respectively, for International Value. Fees incurred under the plans during the periods ended May 31, 2006, 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 subadvisor, ACIM, the distributor of the corporation, ACIS, and the corporation's transfer agent, American Century Services, LLC. International Growth and Global Growth 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. 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the six months ended May 31, 2006 (except as noted), were as follows: - ------------------------------------------------------------------------------------ INTERNATIONAL GROWTH GLOBAL GROWTH INTERNATIONAL VALUE(1) - ------------------------------------------------------------------------------------ Purchases $1,122,155 $157,995 $12,610 - ------------------------------------------------------------------------------------ Proceeds from sales $1,569,305 $155,750 $7,101 - ------------------------------------------------------------------------------------ (1) International Value's fiscal year end changed from March 31 to November 30, resulting in a two-month semiannual reporting period (see Note 9). For the six months ended May 31, 2006, International Growth incurred net realized gains of $8,733 from redemptions in kind. A redemption in kind occurs when a fund delivers securities from its portfolio in lieu of cash as payment to a redeeming shareholder. (continued) - ------ 36 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows (see Note 9): - ------------------------------------------------------------------------------------------------------------ INTERNATIONAL GROWTH GLOBAL GROWTH INTERNATIONAL VALUE - ------------------------------------------------------------------------------------------------------------ SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------ INVESTOR CLASS - ------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED MAY 31, 2006(1) SHARES AUTHORIZED 1,000,000 150,000 55,000 ============================================================================================================ Sold 19,052 $ 207,163 3,856 $ 37,398 4 $50 - ------------------------- Issued in reinvestment of distributions 3,470 34,698 289 2,636 -- -- - ------------------------- Redeemed (50,096) (537,151)(2) (4,746) (45,955)(2) -- -- - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) (27,574) $(295,290) (601) $ (5,921) 4 $50 ============================================================================================================ YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 1,000,000 150,000 N/A ============================================================================================================ Sold 37,805 $ 344,487 9,174 $ 76,444 - ------------------------- Issued in reinvestment of distributions 2,522 22,020 101 777 - ------------------------- Redeemed (82,031) (747,794)(3) (6,636) (52,915)(3) - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) (41,704) $(381,287) 2,639 $ 24,306 ============================================================================================================ INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED MAY 31, 2006(1) SHARES AUTHORIZED 150,000 5,000 55,000 ============================================================================================================ Sold 3,541 $ 37,897 175 $ 1,710 2,457 $31,730 - ------------------------- Issued in reinvestment of distributions 435 4,357 9 80 -- -- - ------------------------- Redeemed (18,847) (201,244)(4) (324) (3,205) -- -- - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) (14,871) $(158,990) (140) $(1,415) 2,457 $31,730 ============================================================================================================ YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 150,000 5,000 N/A ============================================================================================================ Sold 7,751 $ 70,675 220 $ 1,812 - ------------------------- Issued in reinvestment of distributions 363 3,171 5 39 - ------------------------- Redeemed (14,979) (137,041)(5) (153) (1,243) - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) (6,865) $ (63,195) 72 $ 608 ============================================================================================================ (1) April 3, 2006 (commencement of sale) through May 31, 2006 for International Value. (2) Net of redemption fees of $48 and $14 for International Growth and Global Growth, respectively. (3) Net of redemption fees of $55 and $20 for International Growth and Global Growth, respectively. (4) Net of redemption fees of $6 for International Growth. (5) Net of redemption fees of $1 for International Growth. (continued) - ------ 37 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ------------------------------------------------------------------------------------------------------------ INTERNATIONAL GROWTH GLOBAL GROWTH INTERNATIONAL VALUE - ------------------------------------------------------------------------------------------------------------ SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------ ADVISOR CLASS - ------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED MAY 31, 2006 SHARES AUTHORIZED 100,000 5,000 N/A ============================================================================================================ Sold 6,683 $ 72,348 293 $ 2,778 - ------------------------- Issued in reinvestment of distributions 373 3,722 1 13 - ------------------------- Redeemed (5,361) (57,734)(1) (156) (1,463)(1) - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) 1,695 $ 18,336 138 $ 1,328 ============================================================================================================ YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 100,000 5,000 N/A ============================================================================================================ Sold 11,746 $ 106,746 189 $1,530 - ------------------------- Issued in reinvestment of distributions 240 2,089 -- -- - ------------------------- Redeemed (16,669) (152,585)(2) (106) (826) - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) (4,683) $ (43,750) 83 $ 704 ============================================================================================================ A CLASS - ------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED MAY 31, 2006(3) SHARES AUTHORIZED 25,000 10,000 55,000 ============================================================================================================ Sold 433 $ 4,678 279 $2,757 67 $ 872 - ------------------------- Issued in reinvestment of distributions 38 377 -- -- -- -- - ------------------------- Redeemed (364) (3,931) (1) (8) (3,035) (39,209) - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) 107 $ 1,124 278 $2,749 (2,968) $(38,337) ============================================================================================================ YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 25,000 N/A N/A ============================================================================================================ Sold 1,381 $12,642 - ------------------------- Issued in reinvestment of distributions 12 110 - ------------------------- Redeemed (419) (3,867) - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) 974 $ 8,885 ============================================================================================================ YEAR ENDED MARCH 31, 2006 SHARES AUTHORIZED N/A N/A 179,529 ============================================================================================================ Sold 474 $ 5,502 - ------------------------- Issued in reinvestment of distributions 565 6,637 - ------------------------- Redeemed (15,369) (188,758) - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) (14,330) $(176,619) ============================================================================================================ YEAR ENDED MARCH 31, 2005 SHARES AUTHORIZED N/A N/A 179,529 ============================================================================================================ Sold 493 $ 4,940 - ------------------------- Issued in reinvestment of distributions 387 4,190 - ------------------------- Redeemed (331) (3,349) - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) 549 $ 5,781 ============================================================================================================ (1) Net of redemption fees of $36 and $1 for International Growth and Global Growth, respectively. (2) Net of redemption fees of $20 for International Growth. (3) April 1, 2006 through May 31, 2006. International Value's fiscal year end was changed from March 31 to November 30, resulting in a two-month semiannual reporting period (see Note 9). (continued) - ------ 38 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ------------------------------------------------------------------------------------------------------------ INTERNATIONAL GROWTH GLOBAL GROWTH INTERNATIONAL VALUE - ------------------------------------------------------------------------------------------------------------ SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------ B CLASS - ------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED MAY 31, 2006(1) SHARES AUTHORIZED 10,000 10,000 5,000 ============================================================================================================ Sold 60 $ 646 22 $208 13 $ 159 - ------------------------- Issued in reinvestment of distributions 1 10 -- -- -- -- - ------------------------- Redeemed (13) (144) -- -- (24) (303) - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) 48 $ 512 22 $208 (11) $(144) ============================================================================================================ YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 25,000 N/A N/A ============================================================================================================ Sold 56 $507 - ------------------------- Redeemed (9) (87) - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) 47 $420 ============================================================================================================ YEAR ENDED MARCH 31, 2006 SHARES AUTHORIZED N/A N/A 90,471 ============================================================================================================ Sold 54 $ 604 - ------------------------- Issued in reinvestment of distributions 9 108 - ------------------------- Redeemed (150) (1,701) - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) (87) $ (989) ============================================================================================================ YEAR ENDED MARCH 31, 2005 SHARES AUTHORIZED N/A N/A 90,471 ============================================================================================================ Sold 82 $ 808 - ------------------------- Issued in reinvestment of distributions 7 78 - ------------------------- Redeemed (81) (804) - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) 8 $ 82 ============================================================================================================ C CLASS - ------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED MAY 31, 2006(2) SHARES AUTHORIZED 10,000 5,000 50,000 ============================================================================================================ Sold 88 $ 955 51 $485 2 $25 - ------------------------- Issued in reinvestment of distributions 3 32 -- -- -- -- - ------------------------- Redeemed (97) (1,024) (7) (63) -- -- - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) (6) $ (37) 44 $422 2 $25 ============================================================================================================ YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 25,000 5,000 N/A ============================================================================================================ Sold 155 $ 1,389 31 $248 - ------------------------- Issued in reinvestment of distributions -- 2 -- -- - ------------------------- Redeemed (194) (1,765) (3) (25) - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) (39) $ (374) 28 $223 ============================================================================================================ (1) April 1, 2006 through May 31, 2006. International Value's fiscal year end was changed from March 31 to November 30, resulting in a two-month semiannual reporting period (see Note 9). (2) April 3, 2006 (commencement of sale) through May 31, 2006 for International Value. (continued) - ------ 39 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ------------------------------------------------------------------------------------------------------------ INTERNATIONAL GROWTH GLOBAL GROWTH INTERNATIONAL VALUE - ------------------------------------------------------------------------------------------------------------ SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------ R CLASS - ------------------------------------------------------------------------------------------------------------ SIX MONTHS ENDED MAY 31, 2006(1) SHARES AUTHORIZED 5,000 10,000 5,000 ============================================================================================================ Sold 72 $ 786 -- -- 2 $25 - ------------------------- Issued in reinvestment of distributions 2 20 -- -- -- -- - ------------------------- Redeemed (17) (187) -- -- -- -- - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) 57 $ 619 -- -- 2 $25 ============================================================================================================ YEAR ENDED NOVEMBER 30, 2005(2) SHARES AUTHORIZED 5,000 50,000 N/A ============================================================================================================ Sold 163 $1,474 3 $25 - ------------------------- Issued in reinvestment of distributions -- 2 -- -- - ------------------------- Redeemed (20) (181) -- -- - ------------------------------------------------------------------------------------------------------------ Net increase (decrease) 143 $1,295 3 $25 ============================================================================================================ (1) April 3, 2006 (commencement of sale) through May 31, 2006 for International Value. (2) July 29, 2005 (commencement of sale) through November 30, 2005 for Global Growth. 5. SECURITIES LENDING As of May 31, 2006, securities in International Growth and Global Growth, valued at $684,220 and $90,298, 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 $716,003 and $95,077, respectively. International Growth and Global Growth'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 funds may be delayed or limited. 6. BANK LINE OF CREDIT International Growth and Global Growth, along with certain other funds managed by ACIM or ACGIM, have a $500 million unsecured bank line of credit agreement with JPMCB. International Growth and Global Growth may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. International Growth and Global Growth did not borrow from the line during the six months ended May 31, 2006. 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) - ------ 40 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 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. As of May 31, 2006, the components of investments for federal income tax purposes were as follows: - -------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL GROWTH GLOBAL GROWTH VALUE - -------------------------------------------------------------------------------- Federal tax cost of investments $2,762,504 $406,944 $36,909 ================================================================================ Gross tax appreciation of investments $687,587 $115,366 $17,085 - -------------------------------- Gross tax depreciation of investments (41,203) (5,769) (831) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $646,384 $109,597 $16,254 ================================================================================ The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. Following are the capital loss carryovers and capital loss deferral amounts as of November 30, 2005 (except as noted): - -------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL GROWTH GLOBAL GROWTH VALUE - -------------------------------------------------------------------------------- Accumulated capital losses $(847,746) $(52,379) -- - -------------------------------------------------------------------------------- Currency loss deferral $(125) -- $(36,669) - -------------------------------------------------------------------------------- (1) As of March 31, 2006. The accumulated capital losses listed above represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers expire as follows: - -------------------------------------------------------------------------------- 2009 2010 2011 - -------------------------------------------------------------------------------- International Growth $(152,830) $(637,150) $(57,766) - -------------------------------------------------------------------------------- Global Growth $(23,203) $(28,717) $(459) - -------------------------------------------------------------------------------- The currency loss deferrals represent net foreign currency losses incurred in the one-month period ended November 30, 2005 or five-month period ended March 31, 2006 for International Value. The funds have elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. 9. REORGANIZATION PLAN As of the close of business on March 31, 2006, International Value acquired all of the net assets of the Mason Street International Equity Fund (International Equity), one fund in a series issued by Mason Street Funds, Inc., pursuant to a plan of reorganization approved by the acquired funds' shareholders on March 15, 2006. In the post-reorganization, International Value is maintaining the financial statements and performance history of International Equity. International Value's fiscal year end changed from March 31 to November 30. Prior to the reorganization, International Equity had A Class and B Class shares. At the close of business and as a result of the reorganization, A Class shares and B Class shares of the acquired fund were converted to A Class shares and B Class shares, respectively, of the surviving fund. A Class and B Class net assets of International Equity before the reorganization were $54,617 and $4,917, respectively. Immediately after the reorganization, A Class and B Class net assets of International Value were $54,617 and $4,917, respectively. - ------ 41 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.75 $8.79 $7.54 $6.69 $7.86 $12.05 - -------------------------------------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------- Net Investment Income (Loss)(2) 0.04 0.11 0.05 0.06 0.06 0.04 - -------------------------------------- Net Realized and Unrealized Gain (Loss) 1.33 0.94 1.26 0.85 (1.20) (2.50) - -------------------------------------------------------------------------------------------------------------- Total From Investment Operations 1.37 1.05 1.31 0.91 (1.14) (2.46) - -------------------------------------------------------------------------------------------------------------- Distributions - -------------------------------------- From Net Investment Income (0.18) (0.09) (0.06) (0.06) (0.03) -- - -------------------------------------- From Net Realized Gains -- -- -- -- -- (1.73) - -------------------------------------------------------------------------------------------------------------- Total Distributions (0.18) (0.09) (0.06) (0.06) (0.03) (1.73) - -------------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $10.94 $9.75 $8.79 $7.54 $6.69 $7.86 ============================================================================================================== TOTAL RETURN(3) 14.19% 12.09% 17.45% 13.70% (14.54)% (24.18)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.24%(4) 1.23% 1.26% 1.28% 1.25% 1.21% - -------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.77%(4) 1.22% 0.57% 0.84% 0.76% 0.48% - -------------------------------------- Portfolio Turnover Rate 41% 89% 118% 169% 215% 178% - -------------------------------------- Net Assets, End of Period (in thousands) $2,222,829 $2,249,430 $2,395,249 $2,502,831 $2,410,600 $3,290,867 - -------------------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 42 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - --------------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - --------------------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.78 $8.82 $7.56 $6.71 $7.88 $12.07 - --------------------------------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------- Net Investment Income (Loss)(2) 0.04 0.13 0.06 0.07 0.07 0.06 - -------------------------------------- Net Realized and Unrealized Gain (Loss) 1.34 0.94 1.27 0.85 (1.19) (2.50) - --------------------------------------------------------------------------------------------------------- Total From Investment Operations 1.38 1.07 1.33 0.92 (1.12) (2.44) - --------------------------------------------------------------------------------------------------------- Distributions - -------------------------------------- From Net Investment Income (0.20) (0.11) (0.07) (0.07) (0.05) -- - -------------------------------------- From Net Realized Gains -- -- -- -- -- (1.75) - --------------------------------------------------------------------------------------------------------- Total Distributions (0.20) (0.11) (0.07) (0.07) (0.05) (1.75) - --------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $10.96 $9.78 $8.82 $7.56 $6.71 $7.88 ========================================================================================================= TOTAL RETURN(3) 14.26% 12.28% 17.78% 13.89% (14.33)% (23.96)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.04%(4) 1.03% 1.06% 1.08% 1.05% 1.01% - -------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.97%(4) 1.42% 0.77% 1.04% 0.96% 0.68% - -------------------------------------- Portfolio Turnover Rate 41% 89% 118% 169% 215% 178% - -------------------------------------- Net Assets, End of Period (in thousands) $114,046 $247,077 $283,330 $301,854 $270,121 $353,399 - --------------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 43 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------------- ADVISOR CLASS - --------------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - --------------------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.72 $8.76 $7.52 $6.66 $7.83 $12.02 - --------------------------------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------- Net Investment Income (Loss)(2) 0.03 0.09 0.03 0.03 0.04 0.02 - -------------------------------------- Net Realized and Unrealized Gain (Loss) 1.32 0.94 1.25 0.87 (1.20) (2.51) - --------------------------------------------------------------------------------------------------------- Total From Investment Operations 1.35 1.03 1.28 0.90 (1.16) (2.49) - --------------------------------------------------------------------------------------------------------- Distributions - -------------------------------------- From Net Investment Income (0.15) (0.07) (0.04) (0.04) (0.01) -- - -------------------------------------- From Net Realized Gains -- -- -- -- -- (1.70) - --------------------------------------------------------------------------------------------------------- Total Distributions (0.15) (0.07) (0.04) (0.04) (0.01) (1.70) - --------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $10.92 $9.72 $8.76 $7.52 $6.66 $7.83 ========================================================================================================= TOTAL RETURN(3) 14.04% 11.85% 17.07% 13.62% (14.81)% (24.45)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.49%(4) 1.48% 1.51% 1.53% 1.50% 1.46% - -------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.52%(4) 0.97% 0.32% 0.59% 0.51% 0.23% - -------------------------------------- Portfolio Turnover Rate 41% 89% 118% 169% 215% 178% - -------------------------------------- Net Assets, End of Period (in thousands) $310,301 $259,651 $275,195 $239,256 $196,949 $205,483 - --------------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 44 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------- A CLASS - --------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003(2) - --------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.73 $8.77 $7.53 $6.10 - --------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(3) 0.03 0.09 0.03 (0.02) - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 1.32 0.94 1.25 1.45 - --------------------------------------------------------------------------------------- Total From Investment Operations 1.35 1.03 1.28 1.43 - --------------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Investment Income (0.15) (0.07) (0.04) -- - --------------------------------------------------------------------------------------- Net Asset Value, End of Period $10.93 $9.73 $8.77 $7.53 ======================================================================================= TOTAL RETURN(4) 14.02% 11.84% 17.10% 23.44% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.49%(5) 1.48% 1.51% 1.53%(5) - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.52%(5) 0.97% 0.32% (0.40)%(5) - ----------------------------------------- Portfolio Turnover Rate 41% 89% 118% 169%(6) - ----------------------------------------- Net Assets, End of Period (in thousands) $29,473 $25,193 $14,170 $7,395 - --------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) January 31, 2003 (commencement of sale) through November 30, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 45 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ---------------------------------------------------------------------------------------- B CLASS - ---------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003(2) - ---------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.65 $8.70 $7.48 $6.10 - ---------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(3) --(4) 0.02 (0.03) (0.03) - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 1.31 0.93 1.25 1.41 - ---------------------------------------------------------------------------------------- Total From Investment Operations 1.31 0.95 1.22 1.38 - ---------------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Investment Income (0.08) --(4) -- -- - ---------------------------------------------------------------------------------------- Net Asset Value, End of Period $10.88 $9.65 $8.70 $7.48 ======================================================================================== TOTAL RETURN(5) 13.60% 10.97% 16.31% 22.62% RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.24%(6) 2.23% 2.26% 2.28%(6) - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.23)%(6) 0.22% (0.43)% (0.51)%(6) - ----------------------------------------- Portfolio Turnover Rate 41% 89% 118% 169%(7) - ----------------------------------------- Net Assets, End of Period (in thousands) $2,412 $1,676 $1,107 $513 - ---------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) January 31, 2003 (commencement of sale) through November 30, 2003. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount is less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 46 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------------- C CLASS - --------------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001(2) - --------------------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.60 $8.66 $7.45 $6.60 $7.82 $9.16 - --------------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(3) (0.01) 0.02 (0.03) (0.01) --(4) (0.04) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 1.31 0.92 1.24 0.86 (1.22) (1.30) - --------------------------------------------------------------------------------------------------------- Total From Investment Operations 1.30 0.94 1.21 0.85 (1.22) (1.34) - --------------------------------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Investment Income (0.08) --(4) -- -- -- -- - --------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $10.82 $9.60 $8.66 $7.45 $6.60 $7.82 ========================================================================================================= TOTAL RETURN(5) 13.57% 10.91% 16.24% 12.88% (15.60)% (14.63)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.24%(6) 2.23% 2.26% 2.28% 2.25% 2.23%(6) - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.23)%(6) 0.22% (0.43)% (0.16)% (0.24)% (0.99)%(6) - ------------------------------------- Portfolio Turnover Rate 41% 89% 118% 169% 215% 178%(7) - ------------------------------------- Net Assets, End of Period (in thousands) $5,852 $5,246 $5,070 $1,933 $912 $138 - --------------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) June 4, 2001 (commencement of sale) through November 30, 2001. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount is less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2001. See Notes to Financial Statements. - ------ 47 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ---------------------------------------------------------------------------------------- R CLASS - ---------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003(2) - ---------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.71 $8.75 $7.53 $7.02 - ---------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(3) 0.03 0.07 0.02 (0.01) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 1.32 0.94 1.25 0.52 - ---------------------------------------------------------------------------------------- Total From Investment Operations 1.35 1.01 1.27 0.51 - ---------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Investment Income (0.13) (0.05) (0.05) -- - ---------------------------------------------------------------------------------------- Net Asset Value, End of Period $10.93 $9.71 $8.75 $7.53 ======================================================================================== TOTAL RETURN(4) 13.98% 11.58% 16.92% 7.26% RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.74%(5) 1.69%(6) 1.76% 1.78%(5) - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.27%(5) 0.76%(6) 0.07% (0.74)%(5) - ------------------------------------------ Portfolio Turnover Rate 41% 89% 118% 169%(7) - ------------------------------------------ Net Assets, End of Period (in thousands) $2,655 $1,809 $376 $3 - ---------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) August 29, 2003 (commencement of sale) through November 30, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) 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. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 48 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.88 $7.49 $6.48 $5.39 $6.18 $8.73 - -------------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(2) 0.01 --(3) (0.01) --(3) 0.01 --(3) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 0.83 1.41 1.02 1.09 (0.80) (1.90) - -------------------------------------------------------------------------------------------------------- Total From Investment Operations 0.84 1.41 1.01 1.09 (0.79) (1.90) - -------------------------------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Investment Income (0.06) (0.02) -- -- -- -- - ------------------------------------- From Net Realized Gains -- -- -- -- -- (0.65) - -------------------------------------------------------------------------------------------------------- Total Distributions (0.06) (0.02) -- -- -- (0.65) - -------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $9.66 $8.88 $7.49 $6.48 $5.39 $6.18 ======================================================================================================== TOTAL RETURN(4) 9.54% 18.87% 15.59% 20.22% (12.78)% (23.62)% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.31%(5) 1.30% 1.30% 1.31% 1.32% 1.30% - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.07%(5) (0.01)% (0.12)% 0.00% 0.13% (0.06)% - ------------------------------------- Portfolio Turnover Rate 37% 36% 79% 152% 278% 232% - ------------------------------------- Net Assets, End of Period (in thousands) $406,598 $378,976 $299,807 $250,306 $213,314 $272,402 - -------------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 49 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.95 $7.55 $6.52 $5.41 $6.19 $8.74 - ------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(2) 0.01 0.01 --(3) 0.01 0.02 0.01 - ------------------------------------- Net Realized and Unrealized Gain (Loss) 0.85 1.43 1.03 1.10 (0.80) (1.90) - ------------------------------------------------------------------------------------------------- Total From Investment Operations 0.86 1.44 1.03 1.11 (0.78) (1.89) - ------------------------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Investment Income (0.08) (0.04) -- -- -- -- - ------------------------------------- From Net Realized Gains -- -- -- -- -- (0.66) - ------------------------------------------------------------------------------------------------- Total Distributions (0.08) (0.04) -- -- -- (0.66) - ------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $9.73 $8.95 $7.55 $6.52 $5.41 $6.19 ================================================================================================= TOTAL RETURN(4) 9.69% 19.22% 15.80% 20.52% (12.60)% (23.53)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.11%(5) 1.10% 1.10% 1.11% 1.12% 1.10% - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.27%(5) 0.19% 0.08% 0.20% 0.33% 0.14% - ------------------------------------- Portfolio Turnover Rate 37% 36% 79% 152% 278% 232% - ------------------------------------- Net Assets, End of Period (in thousands) $8,065 $8,669 $6,774 $7,901 $3,288 $3,907 - ------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 50 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ------------------------------------------------------------------------------------------------------ ADVISOR CLASS - ------------------------------------------------------------------------------------------------------ 2006(1) 2005 2004 2003 2002 2001 - ------------------------------------------------------------------------------------------------------ PER-SHARE DATA - ------------------------------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $8.79 $7.41 $6.43 $5.36 $6.16 $8.72 - ------------------------------------------------------------------------------------------------------ Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(2) --(3) (0.02) (0.02) (0.02) (0.01) --(3) - ------------------------------------- Net Realized and Unrealized Gain (Loss) 0.83 1.40 1.00 1.09 (0.79) (1.93) - ------------------------------------------------------------------------------------------------------ Total From Investment Operations 0.83 1.38 0.98 1.07 (0.80) (1.93) - ------------------------------------------------------------------------------------------------------ Distributions - ------------------------------------- From Net Investment Income (0.04) -- -- -- -- -- - ------------------------------------- From Net Realized Gains -- -- -- -- -- (0.63) - ------------------------------------------------------------------------------------------------------ Total Distributions (0.04) -- -- -- -- (0.63) - ------------------------------------------------------------------------------------------------------ Net Asset Value, End of Period $9.58 $8.79 $7.41 $6.43 $5.36 $6.16 ====================================================================================================== TOTAL RETURN(4) 9.48% 18.62% 15.24% 19.96% (12.99)% (23.97)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 1.56%(5) 1.55% 1.55% 1.56% 1.57% 1.55% - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.18)%(5) (0.26)% (0.37)% (0.25)% (0.12)% (0.31)% - ------------------------------------- Portfolio Turnover Rate 37% 36% 79% 152% 278% 232% - ------------------------------------- Net Assets, End of Period (in thousands) $5,312 $3,664 $2,475 $1,044 $537 $623 - ------------------------------------------------------------------------------------------------------ (1) Six months ended May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 51 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- A CLASS - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.02 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------------------ Net Investment Income (Loss)(2) 0.02 - ------------------------------------------------------------------ Net Realized and Unrealized Gain (Loss) 0.67 - -------------------------------------------------------------------------------- Total From Investment Operations 0.69 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------------------ From Net Investment Income (0.06) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $9.65 ================================================================================ TOTAL RETURN(3) 7.72% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.56%(4) - ------------------------------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.18)%(4) - ------------------------------------------------------------------ Portfolio Turnover Rate 37% - ------------------------------------------------------------------ Net Assets, End of Period (in thousands) $2,686 - -------------------------------------------------------------------------------- (1) December 1, 2005 (commencement of sale) through May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, 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. See Notes to Financial Statements. - ------ 52 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- B CLASS - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.02 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------------------------------ Net Investment Income (Loss)(2) (0.03) - ------------------------------------------------------------------ Net Realized and Unrealized Gain (Loss) 0.69 - -------------------------------------------------------------------------------- Total From Investment Operations 0.66 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------------------------------ From Net Investment Income (0.06) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $9.62 ================================================================================ TOTAL RETURN(3) 7.36% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.31%(4) - ------------------------------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.93)%(4) - ------------------------------------------------------------------ Portfolio Turnover Rate 37% - ------------------------------------------------------------------ Net Assets, End of Period (in thousands) $208 - -------------------------------------------------------------------------------- (1) December 1, 2005 (commencement of sale) through May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, 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. See Notes to Financial Statements. - ------ 53 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------- C CLASS - --------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002(2) - --------------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.59 $7.29 $6.37 $5.35 $6.14 - --------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(3) (0.04) (0.08) (0.08) (0.05) (0.03) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 0.81 1.38 1.00 1.07 (0.76) - --------------------------------------------------------------------------------------------------- Total From Investment Operations 0.77 1.30 0.92 1.02 (0.79) - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $9.36 $8.59 $7.29 $6.37 $5.35 =================================================================================================== TOTAL RETURN(4) 8.96% 17.83% 14.44% 19.07% (12.87)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.31%(5) 2.30% 2.30% 2.31% 2.32%(5) - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.93)%(5) (1.01)% (1.12)% (1.00)% (0.60)%(5) - ------------------------------------------ Portfolio Turnover Rate 37% 36% 79% 152% 278%(6) - ------------------------------------------ Net Assets, End of Period (in thousands) $906 $454 $184 $56 $25 - --------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) March 1, 2002 (commencement of sale) through November 30, 2002. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2002. See Notes to Financial Statements. - ------ 54 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.86 $8.37 - -------------------------------------------------------------------------------- Income From Investment Operations - ---------------------------------------------------- Net Investment Income (Loss)(3) (0.02) (0.02) - ---------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.85 0.51 - -------------------------------------------------------------------------------- Total From Investment Operations 0.83 0.49 - -------------------------------------------------------------------------------- Distributions - ---------------------------------------------------- From Net Investment Income (0.05) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $9.64 $8.86 ================================================================================ TOTAL RETURN(4) 9.38% 5.85% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.81%(5) 1.80%(5) - ---------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.43)%(5) (0.71)%(5) - ---------------------------------------------------- Portfolio Turnover Rate 37% 36%(6) - ---------------------------------------------------- Net Assets, End of Period (in thousands) $29 $26 - -------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) July 29, 2005 (commencement of sale) through November 30, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2005. See Notes to Financial Statements. - ------ 55 International Value - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $12.85 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income (Loss)(2) 0.12 - ----------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) (0.09) - -------------------------------------------------------------------------------- Total From Investment Operations 0.03 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.88 ================================================================================ TOTAL RETURN(3) 0.23% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.30%(4) - ----------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 5.86%(4)(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 17% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $50 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable redemption fees. 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) Due to cyclical dividends and the two-month period ended May 31, 2006, the annualized ratio of net investment income to average net assets is higher than expected. See Notes to Financial Statements. - ------ 56 International Value - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $12.85 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income (Loss)(2) 0.13 - ----------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) (0.09) - -------------------------------------------------------------------------------- Total From Investment Operations 0.04 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.89 ================================================================================ TOTAL RETURN(3) 0.31% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.10%(4) - ----------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 6.06%(4)(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 17% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $31,667 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable redemption fees. 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) Due to cyclical dividends and the two-month period ended May 31, 2006, the annualized ratio of net investment income to average net assets is higher than expected. See Notes to Financial Statements. - ------ 57 International Value - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MARCH 31 (EXCEPT AS NOTED) - ----------------------------------------------------------------------------------------------------------- A CLASS - ----------------------------------------------------------------------------------------------------------- 2006(1) 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $12.70 $10.91 $9.64 $6.22 $8.70 $8.89 - ----------------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------ Net Investment Income (Loss) 0.12(2) 0.18(2) 0.13(2) 0.10(2) 0.07(2) 0.06 - ------------------------------------ Net Realized and Unrealized Gain (Loss) 0.06 1.97 1.37 3.42 (2.51) (0.21) - ----------------------------------------------------------------------------------------------------------- Total From Investment Operations 0.18 2.15 1.50 3.52 (2.44) (0.15) - ----------------------------------------------------------------------------------------------------------- Distributions - ------------------------------------ From Net Investment Income -- (0.15) (0.11) (0.10) (0.04) (0.04) - ------------------------------------ From Net Realized Gains -- (0.21) (0.12) -- -- -- - ----------------------------------------------------------------------------------------------------------- Total Distributions -- (0.36) (0.23) (0.10) (0.04) (0.04) - ----------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $12.88 $12.70 $10.91 $9.64 $6.22 $8.70 =========================================================================================================== TOTAL RETURN(3) 1.42% 19.95% 15.58% 56.65% (28.10)% (1.65)% RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.40%(4)(5) 1.35% 1.41% 1.47% 1.65% 1.65% - ------------------------------------ Ratio of Operating Expenses to Average Net Assets (Before Expense Waiver) 1.55%(5) 1.35% 1.41% 1.47% 1.66% 1.79% - ------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 5.76%(4)(5)(6) 1.52% 1.28% 1.13% 0.89% 0.74% - ------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (Before Expense Waiver) 5.61%(5)(6) 1.52% 1.28% 1.13% 0.88% 0.60% - ------------------------------------ Portfolio Turnover Rate 17% 7% 18% 10% 18% 21% - ------------------------------------ Net Assets, End of Period (in thousands) $17,178 $54,617 $203,215 $174,387 $105,862 $57,773 - ----------------------------------------------------------------------------------------------------------- (1) April 1, 2006 through May 31, 2006 (unaudited). International Value's fiscal year end was changed from March 31 to November 30, resulting in a two-month semiannual reporting period. For the years before May 31, 2006, International Value's fiscal year was March 31 (see Note 9). (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) During the period ended May 31, 2006, the distributor voluntarily waived a portion of service and distribution fees. (5) Annualized. (6) Due to cyclical dividends and the two-month period ended May 31, 2006, the annualized ratio of net investment income to average net assets is higher than expected. See Notes to Financial Statements. - ------ 58 International Value - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED MARCH 31 (EXCEPT AS NOTED) - ---------------------------------------------------------------------------------------------------------- B CLASS - ---------------------------------------------------------------------------------------------------------- 2006(1) 2006 2005 2004 2003 2002 - ---------------------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $12.51 $10.75 $9.52 $6.14 $8.61 $8.82 - ---------------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------ Net Investment Income (Loss) 0.11(2) 0.10(2) 0.06(2) 0.04(2) 0.01(2) --(3) - ------------------------------------ Net Realized and Unrealized Gain (Loss) 0.06 1.93 1.34 3.39 (2.48) (0.21) - ---------------------------------------------------------------------------------------------------------- Total From Investment Operations 0.17 2.03 1.40 3.43 (2.47) (0.21) - ---------------------------------------------------------------------------------------------------------- Distributions - ------------------------------------ From Net Investment Income -- (0.06) (0.05) (0.05) -- -- - ------------------------------------ From Net Realized Gains -- (0.21) (0.12) -- -- -- - ---------------------------------------------------------------------------------------------------------- Total Distributions -- (0.27) (0.17) (0.05) -- -- - ---------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $12.68 $12.51 $10.75 $9.52 $6.14 $8.61 ========================================================================================================== TOTAL RETURN(4) 1.36% 19.07% 14.69% 55.86% (28.69)% (2.38)% RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.09%(5)(6) 2.08% 2.09% 2.11% 2.30% 2.30% - ------------------------------------ Ratio of Operating Expenses to Average Net Assets (Before Expense Waiver) 2.30%(6) 2.08% 2.09% 2.11% 2.31% 2.44% - ------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 5.07%(5)(6)(7) 0.90% 0.61% 0.52% 0.10% 0.09% - ------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (Before Expense Waiver) 4.86%(6)(7) 0.90% 0.61% 0.52% 0.09% (0.05)% - ------------------------------------ Portfolio Turnover Rate 17% 7% 18% 10% 18% 21% - ------------------------------------ Net Assets, End of Period (in thousands) $4,841 $4,917 $5,165 $4,491 $3,011 $4,145 - ---------------------------------------------------------------------------------------------------------- (1) April 1, 2006 through May 31, 2006 (unaudited). International Value's fiscal year end was changed from March 31 to November 30, resulting in a two-month semiannual reporting period. For the years before May 31, 2006, International Value's fiscal year was March 31 (see Note 9). (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) During the period ended May 31, 2006, the distributor voluntarily waived a portion of service and distribution fees. (6) Annualized. (7) Due to cyclical dividends and the two-month period ended May 31, 2006, the annualized ratio of net investment income to average net assets is higher than expected. See Notes to Financial Statements. - ------ 59 International Value - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $12.85 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income (Loss)(2) 0.11 - ----------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) (0.10) - -------------------------------------------------------------------------------- Total From Investment Operations 0.01 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.86 ================================================================================ TOTAL RETURN(3) 0.08% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.30%(4) - ----------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 4.86%(4)(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 17% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $25 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, 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) Due to cyclical dividends and the two-month period ended May 31, 2006, the annualized ratio of net investment income to average net assets is higher than expected. See Notes to Financial Statements. - ------ 60 International Value - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $12.85 - -------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------------------------------- Net Investment Income (Loss)(2) 0.12 - ----------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) (0.10) - -------------------------------------------------------------------------------- Total From Investment Operations 0.02 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.87 ================================================================================ TOTAL RETURN(3) 0.16% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.80%(4) - ----------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 5.36%(4)(5) - ----------------------------------------------------------------- Portfolio Turnover Rate 17% - ----------------------------------------------------------------- Net Assets, End of Period (in thousands) $25 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable redemption fees. 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) Due to cyclical dividends and the two-month period ended May 31, 2006, the annualized ratio of net investment income to average net assets is higher than expected. See Notes to Financial Statements. - ------ 61 Approval of Management Agreement for International Value 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 each year. Under a 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. At a meeting held December 13, 2005, the board of directors unanimously approved the initial management agreement for International Value (the "fund"). In advance of the board's consideration, American Century Global Investment Management, Inc. (the "Advisor") provided information concerning the proposed fund. The information considered and the discussions held at the meeting included, but were not limited to: * the nature, extent, and quality of investment management, shareholder services, and other services to be provided to the fund under the management agreement; * the wide range of programs and services to be provided by the Advisor to the fund and its shareholders on a routine and non-routine basis; and * data comparing the cost of owning the Investor Class of the fund to the cost of owning similar funds. Consistent with the Advisor's business strategy for all of its funds, the Advisor proposed a unified management fee. Under the unified fee structure, the Advisor charges a single, all-inclusive fee for providing all services for the management and operation of the fund, except brokerage expenses, taxes, interest, the fees and expenses of the fund's independent directors (including their independent legal counsel), and extraordinary costs. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, record keeping, marketing, and shareholder services, or arranging and supervising third parties who 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 other advisors charge to their shareholders may be increased without shareholder approval. The Advisor and the board believe that the unified fee structure is a benefit to fund shareholders because it clearly discloses 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 risk of increased costs of operating the fund and provides a direct incentive to minimize administrative inefficiencies. The Advisor proposed the fund an initial unified management fee for the fund of 1.30%. In evaluating the proposed fee, the board reviewed data comparing the total expense ratio of the fund's Investor Class to the total expense ratios of other funds in its applicable fund universe. The proposed (continued) - ------ 62 Approval of Management Agreement for International Value fee level is below the median of the total expense ratios of its peer group. The proposed fee also contains breakpoints that reduce fees as the fund increases in size. When considering the proposed fee, the board considered the entrepreneurial risk that the Advisor assumes in launching a new fund. In particular, they considered the effect of the unified management fee structure and the fact that the total expense ratio of the fund would require the Advisor to assume a substantial part of the start-up costs of the fund and imposes on the Advisor the risk that the fund will grow to a level that will become profitable at the proposed fee level. The board is aware that the Advisor is likely to lose money on the fund initially and the board will receive information in connection with the annual contract renewal process that will enable it to determine when, if ever, adjustments to one or more breakpoints may be appropriate. Finally, the board considered the benefits to shareholders of adding the new fund to the American Century product line. Not specifically discussed, but important in the decision to approve the management agreement, is the directors' familiarity with the Advisor. The board of directors oversees and evaluates on a continuous basis the nature and quality of all services the Advisor performs for other funds within the American Century complex. As such, the directors have confidence in the Advisor's integrity and competence in providing services to fund. In their deliberations, the directors did not identify any single factor as being all important or controlling, and each director attributed different weights to various factors. However, based on their evaluation of all material factors and assisted by the advice of independent legal counsel, the board, including the independent directors, concluded that the overall arrangements between the fund and the Advisor, as provided in the management agreement, were fair and reasonable in light of the services to be performed and should be approved. At the meeting held December 13, 2005, the board of directors also unanimously approved an investment subadvisory agreement by which Templeton Investment Counsel, Inc. ("Templeton") would be engaged to manage the investments of the fund. In approving the subadvisory agreement, the board considered all material factors including the nature, extent, and quality of investment management services to be provided to the fund under the agreement. As a part of this review the board evaluated Templeton's historical performance, investment expertise, and capabilities, as well as its compliance policies, procedures, and regulatory experience. The Directors noted that the management fees to be paid to Templeton under the subadvisory agreement were subject to arm's length negotiation between the Advisor and Templeton and will be paid by the Advisor out of its unified management fee. - ------ 63 Share Class Information Seven classes of shares are authorized for sale by International Growth and Global Growth: Investor Class, Institutional Class, Advisor Class, A Class, B Class, C Class, and R Class. Six classes of shares are authorized for sale by International Value: Investor Class, Institutional 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. The funds are closed to new self-directed retail investors but are 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. 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 distribution and service 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 distribution and service fee. (continued) - ------ 64 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 distribution and service 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 distribution and service 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 distribution and service fee. All classes of shares represent a pro rata interest in the funds and generally have the same rights and preferences. - ------ 65 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. QUARTERLY PORTFOLIO DISCLOSURE The funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The funds' Forms N-Q are available on the SEC's Web site at sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in Washington, DC. Information on the operation of the Public Reference Room may be obtained by calling 1-800-SEC-0330. The funds also make their complete schedule of portfolio holdings for the most recent quarter of their fiscal year available on their Web site at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 66 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. Morgan Stanley Capital International (MSCI) has developed several indices that measure the performance of foreign stock markets. The MSCI EAFE(reg.tm) (Europe, Australasia, Far East) INDEX is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EAFE GROWTH INDEX is a capitalization-weighted index that monitors the performance of growth stocks from Europe, Australasia, and the Far East. The MSCI EAFE VALUE INDEX is a capitalization-weighted index that monitors the performance of value stocks from Europe, Australasia, and the Far East. The MSCI WORLD FREE INDEX represents the performance of stocks in developed countries (including the United States) that are available for purchase by global investors. - ------ 67 Notes - ------ 68 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. American Century Investment Services, Inc., Distributor (c)2006 American Century Proprietary Holdings, Inc. All rights reserved. 0607 SH-SAN-50110S
American Century Investments SEMIANNUAL REPORT MAY 31, 2006 [photo of boy with plane] International Stock Fund International Discovery Fund Emerging Markets Fund International Opportunities Fund [american century investments logo and text logo] Table of Contents Our Message to You . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Market Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 INTERNATIONAL STOCK Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . 7 INTERNATIONAL DISCOVERY Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . 14 EMERGING MARKETS Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . 21 INTERNATIONAL OPPORTUNITIES Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Shareholder Fee Examples . . . . . . . . . . . . . . . . . . . . . . . . . . 31 FINANCIAL STATEMENTS Statement of Assets and Liabilities. . . . . . . . . . . . . . . . . . . . . 34 Statement of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . . . . . 37 Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . 39 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 OTHER INFORMATION Share Class Information. . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 Index Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 The opinions expressed in the Market Perspective and each of the Portfolio Commentaries reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the semiannual report for the American Century International Stock, International Discovery, Emerging Markets and International Opportunities funds for the six months ended May 31, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our Web site, americancentury.com, where we post quarterly portfolio commentaries, the views of our senior investment officers, and other communications about investments, portfolio strategy, and the markets. Our Web site presents American Century's recently-announced strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). Our new campaign, featuring Lance, is designed to encourage investors to take a more active role in planning their financial futures and make every investment decision count. American Century's collaboration with Lance Armstrong and the LAF is a perfect fit. Like members of our family, Lance is a cancer survivor and shares our values of optimism, focus, and determination. In addition, Lance and our family have dedicated our success to improving lives, through the LAF and the Stowers Institute for Medical Research, respectively. To learn more about American Century's collaboration with Lance Armstrong and the LAF, please visit www.lanceface.com on the Web and click on the links to related sites. Besides the exciting new collaboration, we've enjoyed other good news -- in January, American Century was named, for the seventh consecutive year, one of FORTUNE magazine's 100 Best Companies to Work For in America. Fostering a positive work environment can benefit fund investors as well as our company -- it helps us continue to attract and retain talented people. 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 Market Perspective BY ENRIQUE CHANG, WHO JOINED AMERICAN CENTURY INVESTMENTS IN MARCH AS SENIOR VICE PRESIDENT AND CHIEF INVESTMENT OFFICER OF THE INTERNATIONAL EQUITY DISCIPLINE. From emerging markets to developed countries, international equities delivered solid, if not spectacular, returns during the six months ended May 31, 2006. Indeed, many of the world's equity markets rose to levels not seen in nearly five years, and I wanted to take a few moments to share my perspective on the investment environment and economic issues that played a role in their performance. MARKETS SHOW STRENGTH Perhaps the most striking aspect of the recent increase is the remarkable resiliency markets demonstrated in the face of record prices for oil and other commodities, rising interest rates, and continued geopolitical tension in the Middle East and elsewhere. Equities, however, weren't entirely immune to those headwinds. After rising to multi-year highs early in May, many exchanges retreated as concern intensified that central banks will increase borrowing costs to control inflation -- and slow consumer spending, corporate profits and the world's economy in the process. While interest rates and other forces can exert a powerful influence on markets, I believe there are a variety of hopeful signs on both the economic and investment horizon. Europe's economic upturn looks set to continue through 2006, bolstered by strong global demand for European goods. Increased capital spending by companies worldwide has resulted in strong order flows for manufacturers on the continent. European companies are also benefiting from a changing relationship with labor, with a number of businesses working with labor unions to control costs and increase productivity. In Asia, Japan's emergence from a long period of economic weakness stands out as one of the most welcome developments of the past year. Japan, the world's second-largest economy behind the United States, is now in the midst of its longest economic expansion in years, underpinned by strong domestic demand. The country's turnaround, now considered by many to be sustainable, could play a major role in the region's growth this year and perhaps well into the future. And, of course, China's rise continues to be remarkable. In just a few years since joining the World Trade Organization, China has emerged as a global engine for growth. Last year, the country's gross domestic product grew nearly 10%, and is expected to match that pace in 2006. While countless questions remain about China's evolution from socialism to capitalism, clearly the country is making history on several fronts. OPPORTUNITY ABROAD In short, I believe the economic, political and demographic changes now under way around the world are creating opportunity for investors. You can be assured that our investment team is dedicated to searching for new candidates to help drive investment performance. Thank you for the opportunity to share my thoughts with you. As always, it is a privilege to have you as an American Century investor. - ------ 2 International Stock - Performance TOTAL RETURNS AS OF MAY 31, 2006 -------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 13.71% 25.91% 19.63% 3/31/05 - -------------------------------------------------------------------------------- MSCI EAFE INDEX 15.30% 28.24% 21.32% -- - -------------------------------------------------------------------------------- (1) 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. (continued) - ------ 3 International Stock - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made March 31, 2005
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ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended May 31 - -------------------------------------------------------------------------------- 2005* 2006 - -------------------------------------------------------------------------------- Investor Class -2.10% 25.91% - -------------------------------------------------------------------------------- MSCI EAFE Index -2.30% 28.24% - -------------------------------------------------------------------------------- *From 3/31/05, 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. 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. - ------ 4 International Stock - Portfolio Commentary PORTFOLIO MANAGERS: KEITH CREVELING AND MICHAEL PERELSTEIN International Stock advanced 13.71%* during the six months ended May 31, 2006, while its benchmark, the Morgan Stanley Capital International EAFE Index, returned 15.30%. The gains came during a period in which many of the world's markets demonstrated their resiliency in the face of rising interest rates in the U.S. and Europe, and continued high energy prices. Equities, however, weren't entirely immune to those headwinds. After rising to multi-year highs early in May, many exchanges retreated as concern intensified that central banks will increase borrowing costs to control inflation-and slow consumer spending, corporate profits and the world's economy in the process. International Stock experienced its biggest monthly decline of the period in May. Against that backdrop, every sector in which International Stock was invested contributed to the portfolio's total return, and all of our top-10 holdings on average during the period advanced. The portfolio, which invests primarily in large growth companies, also achieved strong performance despite an investment environment that favored small companies over large, and the value style of investing over growth. Currency played a role during the six months, as the movement of the dollar versus other currencies increased the portfolio's return. ENERGY BOOSTS PORTFOLIO Effective security selection led to our energy holdings advancing and contributing most to relative performance. For example, we had an overweight stake in the energy equipment and services industry that includes positions in Norway's Aker Kvaerner, a global provider of deep-water drilling rigs, and Italian oilfield service contractor Saipem. Aker contributed more than any other security to our performance against the index during the period, and Saipem was among the top-10 contributors to relative performance. Conversely, we avoided companies that performed poorly in the oil and gas industry, while taking an overweight position in BG Group, a global natural gas company based in the United Kingdom. BG reported during the period that fourth-quarter profits soared 96% on the back of strong production and significant price increases in the wholesale gas market. BG was also among the 10 companies contributing most to relative performance. TOP TEN HOLDINGS AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Roche Holding AG 2.6% 1.6% - -------------------------------------------------------------------------------- GlaxoSmithKline plc 2.2% 2.6% - -------------------------------------------------------------------------------- BHP Billiton Ltd. 1.8% 1.6% - -------------------------------------------------------------------------------- ORIX Corp. 1.7% 1.5% - -------------------------------------------------------------------------------- Total SA 1.7% 2.8% - -------------------------------------------------------------------------------- Toyota Motor Corp. 1.7% -- - -------------------------------------------------------------------------------- Novartis AG 1.7% 1.6% - -------------------------------------------------------------------------------- SAP AG 1.6% -- - -------------------------------------------------------------------------------- Reckitt Benckiser plc 1.6% 1.0% - -------------------------------------------------------------------------------- Mitsubishi UFJ Financial Group, Inc.(1) 1.6% 1.5% - -------------------------------------------------------------------------------- (1) Formerly Mitsubishi Tokyo Financial Group, Inc. * Total returns for periods less than one year are not annualized. (continued) - ------ 5 International Stock - Portfolio Commentary STRENGTH AMONG FINANCIALS International Stock also benefited from stock selection among financials, the portfolio's largest sector stake. Financials contributed most to total return, and outperformed the index. Consumer finance companies helped our relative performance most, largely because we avoided numerous companies that declined, while taking an overweight position in Japan's ORIX Corp., an integrated financial services group benefiting from strong loan demand and a rebound in the Japanese economy. ORIX was among the portfolio's top contributors to return and relative performance. Our holdings in insurance, capital markets, and commercial banks also advanced and beat the benchmark. International Stock's overweight stake in Man Group plc, an asset manager in the United Kingdom, made the second-largest contribution to relative performance. Man Group reported that earnings for the year ended March 31, 2006, climbed 15% to about $1 billion as its assets under management increased. Man Group also made the largest contribution to total return. The financial sector, however, also included Leopalace21 Corp., a Japanese real-estate company, which detracted most from the portfolio's total return and hurt our relative performance. Leopalace21 declined as corporate governance issues surfaced and the CEO resigned. We maintained our position because the company's underlying fundamentals remain strong as we believe it will benefit from Japan's recovering real estate market. MATERIALS LAG INDEX Our investments in a few areas, however, lagged the index. International Stock's underweight position in the materials sector, particularly among metals and mining companies, slowed relative performance most. Holdings in the sector's chemicals industry also detracted, mostly due to a pullback that was pronounced among chemical companies in Japan, including Shin-Etsu Chemical and JSR Corp. Chemical companies weren't the only ones affected by the decline of Japanese markets late in the period. Of the 10 companies that detracted most from our relative performance, five were from Japan. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Foreign Common Stocks 98.3% 97.5% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.1% 3.0% - -------------------------------------------------------------------------------- Other Assets and Liabilities 0.6% (0.5)% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Japan 23.5% 22.4% - -------------------------------------------------------------------------------- France 14.1% 15.2% - -------------------------------------------------------------------------------- United Kingdom 12.1% 16.8% - -------------------------------------------------------------------------------- Switzerland 9.8% 10.0% - -------------------------------------------------------------------------------- Germany 8.1% 4.6% - -------------------------------------------------------------------------------- Italy 4.1% 2.4% - -------------------------------------------------------------------------------- Australia 3.5% 3.7% - -------------------------------------------------------------------------------- Netherlands 2.9% 4.0% - -------------------------------------------------------------------------------- Greece 2.8% 3.7% - -------------------------------------------------------------------------------- Norway 2.8% 1.2% - -------------------------------------------------------------------------------- Ireland 2.3% 2.6% - -------------------------------------------------------------------------------- Other Countries 12.3% 10.9% - -------------------------------------------------------------------------------- Cash and Equivalents(1) 1.7% 2.5% - -------------------------------------------------------------------------------- (1) Includes temporary cash investments and other assets and liabilities. - ------ 6 International Stock - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 98.3% AUSTRALIA -- 3.5% - -------------------------------------------------------------------------------- 53,219 BHP Billiton Ltd. $ 1,152 - -------------------------------------------------------------------------------- 3,355 CSL Ltd. 130 - -------------------------------------------------------------------------------- 19,375 National Australia Bank Ltd. 517 - -------------------------------------------------------------------------------- 7,883 Rio Tinto Ltd. 463 - -------------------------------------------------------------------------------- 2,262 - -------------------------------------------------------------------------------- AUSTRIA -- 0.7% - -------------------------------------------------------------------------------- 8,235 Erste Bank der Oesterreichischen Sparkassen AG 469 - -------------------------------------------------------------------------------- BELGIUM -- 1.2% - -------------------------------------------------------------------------------- 7,489 KBC Groupe 805 - -------------------------------------------------------------------------------- CANADA -- 0.7% - -------------------------------------------------------------------------------- 5,219 Suncor Energy Inc. 421 - -------------------------------------------------------------------------------- FRANCE -- 14.1% - -------------------------------------------------------------------------------- 11,201 Accor SA 657 - -------------------------------------------------------------------------------- 8,634 Alstom RGPT(1) 732 - -------------------------------------------------------------------------------- 22,839 Axa SA 794 - -------------------------------------------------------------------------------- 7,120 Essilor International SA Cie Generale D'Optique 716 - -------------------------------------------------------------------------------- 6,565 Groupe Danone 792 - -------------------------------------------------------------------------------- 2,756 Pernod-Ricard SA 538 - -------------------------------------------------------------------------------- 3,908 PPR SA 485 - -------------------------------------------------------------------------------- 6,103 Schneider Electric SA 633 - -------------------------------------------------------------------------------- 5,889 Societe Generale(1) 913 - -------------------------------------------------------------------------------- 16,764 Total SA 1,093 - -------------------------------------------------------------------------------- 246 Vallourec 308 - -------------------------------------------------------------------------------- 14,079 Veolia Environnement 783 - -------------------------------------------------------------------------------- 7,218 Vinci SA 663 - -------------------------------------------------------------------------------- 9,107 - -------------------------------------------------------------------------------- GERMANY -- 8.1% - -------------------------------------------------------------------------------- 2,165 Adidas-Salomon AG 432 - -------------------------------------------------------------------------------- 9,961 Bayerische Motoren Werke AG 512 - -------------------------------------------------------------------------------- 8,816 Continental AG 968 - -------------------------------------------------------------------------------- 3,067 Deutsche Boerse AG 398 - -------------------------------------------------------------------------------- 5,592 Fresenius Medical Care AG 630 - -------------------------------------------------------------------------------- 9,678 Hypo Real Estate Holding AG 611 - -------------------------------------------------------------------------------- 3,006 MAN AG 216 - -------------------------------------------------------------------------------- 4,942 SAP AG 1,040 - -------------------------------------------------------------------------------- 5,186 Siemens AG 446 - -------------------------------------------------------------------------------- 5,253 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- GREECE -- 2.8% - -------------------------------------------------------------------------------- 15,232 Greek Organization of Football Prognostics SA $ 517 - -------------------------------------------------------------------------------- 26,314 Hellenic Telecommunications Organization SA(1) 583 - -------------------------------------------------------------------------------- 17,574 National Bank of Greece SA 742 - -------------------------------------------------------------------------------- 1,842 - -------------------------------------------------------------------------------- HONG KONG -- 0.4% - -------------------------------------------------------------------------------- 111,000 Li & Fung Ltd. 226 - -------------------------------------------------------------------------------- INDIA -- 0.6% - -------------------------------------------------------------------------------- 5,130 Infosys Technologies Ltd. ADR 362 - -------------------------------------------------------------------------------- IRELAND -- 2.3% - -------------------------------------------------------------------------------- 36,047 Anglo Irish Bank Corp. plc 561 - -------------------------------------------------------------------------------- 29,933 Bank of Ireland 543 - -------------------------------------------------------------------------------- 8,280 Ryanair Holdings plc ADR(1) 406 - -------------------------------------------------------------------------------- 1,510 - -------------------------------------------------------------------------------- ITALY -- 4.1% - -------------------------------------------------------------------------------- 27,616 Banco Popolare di Verona e Novara Scrl 757 - -------------------------------------------------------------------------------- 20,114 ENI SpA 609 - -------------------------------------------------------------------------------- 27,568 Luxottica Group SpA 752 - -------------------------------------------------------------------------------- 22,300 Saipem SpA 524 - -------------------------------------------------------------------------------- 2,642 - -------------------------------------------------------------------------------- JAPAN -- 23.5% - -------------------------------------------------------------------------------- 63,000 Bank of Yokohama Ltd. (The) 450 - -------------------------------------------------------------------------------- 84 East Japan Railway Company 605 - -------------------------------------------------------------------------------- 6,700 Eisai Co. Ltd. 307 - -------------------------------------------------------------------------------- 18,800 Hoya Corp. 723 - -------------------------------------------------------------------------------- 10,000 JSR Corp. 265 - -------------------------------------------------------------------------------- 19,900 JTEKT Corp. 397 - -------------------------------------------------------------------------------- 2,100 Keyence Corp. 540 - -------------------------------------------------------------------------------- 31,000 Komatsu Ltd. 623 - -------------------------------------------------------------------------------- 13,000 Leopalace21 Corp. 393 - -------------------------------------------------------------------------------- 43,000 Matsushita Electric Industrial Co., Ltd. 939 - -------------------------------------------------------------------------------- 28,000 Matsushita Electric Works, Ltd. 327 - -------------------------------------------------------------------------------- 30,000 Mitsubishi Electric Corp. 245 - -------------------------------------------------------------------------------- 73 Mitsubishi UFJ Financial Group, Inc. 1,005 - -------------------------------------------------------------------------------- 4,000 Murata Manufacturing Co. Ltd. 260 - -------------------------------------------------------------------------------- 11,000 NGK Insulators Ltd. 132 - -------------------------------------------------------------------------------- 23,000 Nikko Cordial Corp. 338 - -------------------------------------------------------------------------------- 4,700 Nitto Denko Corp. 363 - -------------------------------------------------------------------------------- 3,880 ORIX Corp. 1,118 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 7 International Stock - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 16,100 Sega Sammy Holdings Inc. $ 644 - -------------------------------------------------------------------------------- 47,000 Sekisui Chemical Co. Ltd. 401 - -------------------------------------------------------------------------------- 11,700 Shin-Etsu Chemical Co., Ltd. 659 - -------------------------------------------------------------------------------- 49,000 Sumitomo Heavy Industries Ltd. 463 - -------------------------------------------------------------------------------- 49 Sumitomo Mitsui Financial Group Inc. 512 - -------------------------------------------------------------------------------- 19,000 Sumitomo Realty & Development Co. Ltd. 461 - -------------------------------------------------------------------------------- 123,000 Taisei Corp. 470 - -------------------------------------------------------------------------------- 75,000 Toray Industries Inc. 667 - -------------------------------------------------------------------------------- 20,300 Toyota Motor Corp. 1,090 - -------------------------------------------------------------------------------- 7,800 Yamada Denki Co. Ltd. 807 - -------------------------------------------------------------------------------- 15,204 - -------------------------------------------------------------------------------- MEXICO -- 1.5% - -------------------------------------------------------------------------------- 23,545 America Movil SA de CV Series L ADR 769 - -------------------------------------------------------------------------------- 4,043 Cemex SA de CV ADR 230 - -------------------------------------------------------------------------------- 999 - -------------------------------------------------------------------------------- MULTI-NATIONAL -- 1.4% - -------------------------------------------------------------------------------- 14,000 iShares MSCI EAFE Index Fund 915 - -------------------------------------------------------------------------------- NETHERLANDS -- 2.9% - -------------------------------------------------------------------------------- 26,676 ASML Holding N.V.(1) 543 - -------------------------------------------------------------------------------- 13,044 ING Groep N.V. CVA 512 - -------------------------------------------------------------------------------- 18,410 Royal Numico N.V. 817 - -------------------------------------------------------------------------------- 1,872 - -------------------------------------------------------------------------------- NORWAY -- 2.8% - -------------------------------------------------------------------------------- 7,809 Aker Kvaerner ASA 785 - -------------------------------------------------------------------------------- 9,329 Statoil ASA 273 - -------------------------------------------------------------------------------- 59,364 Telenor ASA 749 - -------------------------------------------------------------------------------- 1,807 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 0.4% - -------------------------------------------------------------------------------- 52,500 China Mobile Hong Kong Ltd. 277 - -------------------------------------------------------------------------------- SINGAPORE -- 0.4% - -------------------------------------------------------------------------------- 32,000 Keppel Corp. Ltd. 277 - -------------------------------------------------------------------------------- SOUTH KOREA -- 1.1% - -------------------------------------------------------------------------------- 1,100 Samsung Electronics 701 - -------------------------------------------------------------------------------- SPAIN -- 1.6% - -------------------------------------------------------------------------------- 29,994 Cintra Concesiones de Infraestructuras de Transporte SA 386 - -------------------------------------------------------------------------------- 17,120 Inditex SA 679 - -------------------------------------------------------------------------------- 1,065 - -------------------------------------------------------------------------------- Shares/Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- SWEDEN -- 1.2% - -------------------------------------------------------------------------------- 20,263 Atlas Copco AB A Shares $ 549 - -------------------------------------------------------------------------------- 9,663 ForeningsSparbanken AB 253 - -------------------------------------------------------------------------------- 802 - -------------------------------------------------------------------------------- SWITZERLAND -- 9.8% - -------------------------------------------------------------------------------- 53,167 ABB Ltd. 671 - -------------------------------------------------------------------------------- 9,832 Adecco SA 635 - -------------------------------------------------------------------------------- 16,429 Compagnie Financiere Richemont AG Cl A 767 - -------------------------------------------------------------------------------- 7,355 Lonza Group AG 502 - -------------------------------------------------------------------------------- 19,454 Novartis AG 1,079 - -------------------------------------------------------------------------------- 10,850 Roche Holding AG 1,692 - -------------------------------------------------------------------------------- 8,547 UBS AG 968 - -------------------------------------------------------------------------------- 6,314 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 0.8% - -------------------------------------------------------------------------------- 76,000 Hon Hai Precision Industry Co., Ltd. 483 - -------------------------------------------------------------------------------- TURKEY -- 0.3% - -------------------------------------------------------------------------------- 70,089 Turkiye Garanti Bankasi AS 210 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 12.1% - -------------------------------------------------------------------------------- 58,886 Amvescap plc 576 - -------------------------------------------------------------------------------- 74,181 BG Group plc 994 - -------------------------------------------------------------------------------- 82,553 BP plc 973 - -------------------------------------------------------------------------------- 18,691 British American Tobacco plc 465 - -------------------------------------------------------------------------------- 42,751 Carphone Warehouse Group plc 259 - -------------------------------------------------------------------------------- 52,396 GlaxoSmithKline plc 1,449 - -------------------------------------------------------------------------------- 22,739 Man Group plc 994 - -------------------------------------------------------------------------------- 42,201 Marks & Spencer Group plc 426 - -------------------------------------------------------------------------------- 28,066 Reckitt Benckiser plc 1,031 - -------------------------------------------------------------------------------- 26,114 Standard Chartered plc 641 - -------------------------------------------------------------------------------- 7,808 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $60,615) 63,633 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 1.1% - -------------------------------------------------------------------------------- $700 FNMA Discount Notes, 4.90%, 6/1/06(2) (Cost $700) 700 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 99.4% (Cost $61,315) 64,333 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 0.6% 389 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $64,722 ================================================================================ - ------ 8 See Notes to Financial Statements. (continued) International Stock - Schedule of Investments MAY 31, 2006 (UNAUDITED) MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 24.0% - -------------------------------------------------------------------------------- Consumer Discretionary 16.3% - -------------------------------------------------------------------------------- Industrials 14.2% - -------------------------------------------------------------------------------- Health Care 9.3% - -------------------------------------------------------------------------------- Energy 8.8% - -------------------------------------------------------------------------------- Information Technology 7.2% - -------------------------------------------------------------------------------- Materials 6.6% - -------------------------------------------------------------------------------- Consumer Staples 5.6% - -------------------------------------------------------------------------------- Telecommunication Services 3.7% - -------------------------------------------------------------------------------- Diversified 1.4% - -------------------------------------------------------------------------------- Utilities 1.2% - -------------------------------------------------------------------------------- Cash and Cash Equivalents(+) 1.7% - -------------------------------------------------------------------------------- + Includes temporary cash investments and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt CVA = Certificaten Van Aandelen EAFE = Europe, Australasia, and Far East FNMA = Federal National Mortgage Association MSCI = Morgan Stanley Capital International (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. 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 May 31, 2006, was $39,838 which represented 61.6% of total net assets. See Notes to Financial Statements. - ------ 9 International Discovery - Performance TOTAL RETURNS AS OF MAY 31, 2006 ------------------------ AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - -------------------------------------------------------------------------------------------- INVESTOR CLASS 28.08% 58.75% 15.39% 16.21% 16.49% 4/1/94 - -------------------------------------------------------------------------------------------- S&P/CITIGROUP EMI GROWTH WORLD EX-US 19.56% 35.69% 13.95% 6.68% 6.87%(2) -- - -------------------------------------------------------------------------------------------- Institutional Class 28.14% 59.04% 15.62% -- 16.28% 1/2/98 - -------------------------------------------------------------------------------------------- Advisor Class 27.88% 58.34% 15.10% -- 13.47% 4/28/98 - -------------------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) 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) - ------ 10 International Discovery - Performance GROWTH OF $10,000 OVER 10 YEARS $10,000 investment made May 31, 1996 ONE-YEAR RETURNS OVER 10 YEARS
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Periods ended May 31 - --------------------------------------------------------------------------------------------------- 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - --------------------------------------------------------------------------------------------------- Investor Class 23.42% 36.97% -0.37% 63.12% -20.05% -7.80% -8.75% 40.25% 9.25% 58.75% - --------------------------------------------------------------------------------------------------- S&P/Citigroup EMI Growth World ex-US 0.40% 6.18% -1.85% 21.21% -21.65% -8.01% -8.73% 42.23% 18.57% 35.69% - --------------------------------------------------------------------------------------------------- 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. - ------ 11 International Discovery - Portfolio Commentary PORTFOLIO MANAGERS: BRIAN BRADY AND MARK KOPINSKI International Discovery gained 28.08%* during the six-month period ended May 31, 2006, significantly outperforming its benchmark, the S&P/Citigroup EMI (Extended Market Index) Growth World ex-US, which returned 19.56%. The portfolio's results were also ahead of the 20.69% average return for its Morningstar Foreign Small/Mid Growth peer group.** Looking longer-term, the portfolio has compiled an outstanding record. Since its inception on April 1, 1994, International Discovery has provided an average annualized return of 16.49%, versus 6.87% for the benchmark. Despite persistently high oil prices, uneasiness about inflation and campaigns by central banks in the U.S. and Europe to raise interest rates, many international stock markets advanced strongly during the period. In International Discovery's case, all ten sectors in which it was invested provided positive returns, with industrials and information technology businesses contributing the most to our results. Our performance was also aided by a weakening dollar that improved overseas returns for U.S. investors. Additionally, as the chart on page 13 indicates, we greatly reduced our weighting in Japan since our last report to you six months ago. Our smaller weighting reflects a significant pull-back in Japanese stocks since the beginning of the year, as well as our redeployment of those assets in attractive opportunities in other regions. SUCCESS IN INDUSTRIALS Industrial stocks contributed the most to our results. Of note was Vallourec, a French maker of high-end seamless steel tubing used by oil companies for complex drilling operations. The current cycle being experienced by the seamless tube industry is unprecedented in terms of volume and price, the result of record demand by oil exploration and production companies. Elsewhere in industrials, Tokyo-based Japan Steel Works, a producer of industrial equipment used in oil refineries, petrochemical plants and nuclear power plants, was another rewarding investment. Operating in a related field -- energy equipment and services -- Norway's Aker Kvaerner, a provider of deep-water drilling rigs, was our top-contributing stock. As oil exploration moves further offshore and into deeper waters, more equipment is required on the seabed for production, processing and controlling the flow of oil. Aker Kvaerner, a holding not found in our benchmark, is capturing this higher-margin business. TOP TEN HOLDINGS AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Aker Kvaerner ASA 2.9% 2.5% - -------------------------------------------------------------------------------- CSL Ltd. 2.4% 2.4% - -------------------------------------------------------------------------------- Carphone Warehouse Group plc 2.3% 1.4% - -------------------------------------------------------------------------------- Vallourec 2.2% 1.3% - -------------------------------------------------------------------------------- Koninklijke BAM Groep N.V. 2.2% 2.2% - -------------------------------------------------------------------------------- Japan Steel Works Ltd. (The) 2.0% 1.5% - -------------------------------------------------------------------------------- Topdanmark AS 1.8% 0.8% - -------------------------------------------------------------------------------- Catcher Technology Co. Ltd. 1.7% -- - -------------------------------------------------------------------------------- Schwarz Pharma AG 1.7% 1.0% - -------------------------------------------------------------------------------- USG People N.V. 1.7% -- - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. ** The one-, five- and ten-year average returns as of May 31, 2006 for International Discovery's Morningstar peer group are 40.16%, 14.59% and 14.31%, respectively. (continued) - ------ 12 International Discovery - Portfolio Commentary GAINS IN TECHNOLOGY Our successes in the information technology sector were paced by United Internet AG, a leading Internet service provider in Germany, and the second-largest provider of digital subscriber lines (DSL) there. United Internet's subscriber growth is accelerating as DSL penetration grows in Germany, and the company is also benefiting from sales of online advertising. Our technology standouts continued to include Taiwan's High Tech Computer Corp., another holding exclusive to our portfolio. The company is a leading maker of feature-rich mobile phones ("smartphones") powered by Microsoft Corp. software and is exhibiting the solid earnings acceleration we look for. In addition to its R&D leadership, High Tech Computer has a unique business model of developing high-end handsets with wireless operators like Cingular, Vodafone, T-Mobile and Sprint. In the communications equipment realm, CSR plc played a strong supporting role. CSR, located in the United Kingdom, is a global provider of Bluetooth wireless technology, which enables wireless handsets to connect with devices such as computers or Blackberries. SOME DISAPPOINTMENTS While providing solid absolute results, our investments in financials slightly lagged those of the benchmark -- the only sector to do so. Within the space, our shares of Nishi-Nippon City Bank underwent a setback as investors weighed the dilutive effect of the bank's issuance of convertible bonds. We continue to hold the position. Japan's NGK Insulators, a maker of electrical insulators and industrial ceramic products, detracted modestly as its ceramic business, which includes auto exhaust filtering products, came in short of expectations. We reduced our weighting in the stock. In Germany, our investment in Premiere AG, a pay-TV broadcaster, lost ground when it failed to win the rights to show the country's soccer league. We sold our shares in December. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Foreign Common Stocks 95.4% 97.0% - -------------------------------------------------------------------------------- Foreign Preferred Stocks 0.7% -- - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 96.1% 97.0% - -------------------------------------------------------------------------------- Temporary Cash Investments 3.3% 2.7% - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) 0.6% 0.3% - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Japan 16.1% 31.7% - -------------------------------------------------------------------------------- United Kingdom 13.8% 11.2% - -------------------------------------------------------------------------------- Germany 9.8% 7.0% - -------------------------------------------------------------------------------- Norway 7.1% 5.6% - -------------------------------------------------------------------------------- Netherlands 6.3% 3.4% - -------------------------------------------------------------------------------- Australia 6.2% 5.2% - -------------------------------------------------------------------------------- France 5.3% 5.3% - -------------------------------------------------------------------------------- Taiwan (Republic of China) 4.9% 1.9% - -------------------------------------------------------------------------------- Denmark 3.1% 1.6% - -------------------------------------------------------------------------------- Switzerland 2.9% 3.0% - -------------------------------------------------------------------------------- Spain 2.8% 3.4% - -------------------------------------------------------------------------------- Italy 2.7% 1.7% - -------------------------------------------------------------------------------- Greece 2.1% 0.7% - -------------------------------------------------------------------------------- Other Countries 13.0% 15.3% - -------------------------------------------------------------------------------- Cash and Equivalents(2) 3.9% 3.0% - -------------------------------------------------------------------------------- (2) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. - ------ 13 International Discovery - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 95.4% AUSTRALIA -- 6.2% - -------------------------------------------------------------------------------- 1,024,000 Babcock & Brown Ltd. $ 15,421 - -------------------------------------------------------------------------------- 1,500,000 Computershare Ltd. 8,767 - -------------------------------------------------------------------------------- 1,088,300 CSL Ltd. 42,162 - -------------------------------------------------------------------------------- 519,904 Energy Resources of Australia Ltd. 4,967 - -------------------------------------------------------------------------------- 6,000,000 Lihir Gold Limited(1) 13,263 - -------------------------------------------------------------------------------- 2,474,900 Zinifex Ltd. 22,192 - -------------------------------------------------------------------------------- 106,772 - -------------------------------------------------------------------------------- AUSTRIA -- 0.8% - -------------------------------------------------------------------------------- 128,700 BETandWIN.com Interactive Entertainment AG(1) 13,486 - -------------------------------------------------------------------------------- BELGIUM -- 1.5% - -------------------------------------------------------------------------------- 89,647 Bekaert SA(2) 9,222 - -------------------------------------------------------------------------------- 117,400 Umicore 16,980 - -------------------------------------------------------------------------------- 26,202 - -------------------------------------------------------------------------------- BERMUDA -- 1.0% - -------------------------------------------------------------------------------- 451,800 Lazard Ltd. Cl A 17,927 - -------------------------------------------------------------------------------- BRAZIL -- 0.4% - -------------------------------------------------------------------------------- 357,200 Diagnosticos da America SA(1) 6,942 - -------------------------------------------------------------------------------- CANADA -- 1.9% - -------------------------------------------------------------------------------- 112,900 First Quantum Minerals Ltd.(1) 5,601 - -------------------------------------------------------------------------------- 412,000 Gildan Activewear Inc.(1) 17,205 - -------------------------------------------------------------------------------- 1,400,000 UTS Energy Corp.(1) 9,252 - -------------------------------------------------------------------------------- 32,058 - -------------------------------------------------------------------------------- CYPRUS -- 0.6% - -------------------------------------------------------------------------------- 1,136,875 Bank of Cyprus Public Co. Ltd.(1) 10,515 - -------------------------------------------------------------------------------- DENMARK -- 3.1% - -------------------------------------------------------------------------------- 110,400 Alk-Abello AS(1)(2) 14,979 - -------------------------------------------------------------------------------- 97,500 Novozymes AS Cl B 6,966 - -------------------------------------------------------------------------------- 226,450 Topdanmark AS(1) 31,191 - -------------------------------------------------------------------------------- 53,136 - -------------------------------------------------------------------------------- EGYPT(3) - -------------------------------------------------------------------------------- 4,948 Orascom Construction Industries 172 - -------------------------------------------------------------------------------- FRANCE -- 5.3% - -------------------------------------------------------------------------------- 646,700 Altran Technologies SA(1) 8,036 - -------------------------------------------------------------------------------- 90,800 Fimalac(2) 7,718 - -------------------------------------------------------------------------------- 182,400 Neopost SA(2) 19,558 - -------------------------------------------------------------------------------- 621,600 SOITEC(1) 18,203 - -------------------------------------------------------------------------------- 30,900 Vallourec(2) 38,714 - -------------------------------------------------------------------------------- 92,229 - -------------------------------------------------------------------------------- GERMANY -- 9.1% - -------------------------------------------------------------------------------- 1,466,000 GEA Group AG 25,541 - -------------------------------------------------------------------------------- 408,700 Hochtief AG 24,026 - -------------------------------------------------------------------------------- 576,300 IVG Immobilien AG(2) 17,755 - -------------------------------------------------------------------------------- 566,500 MLP AG(2) 12,635 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 97,400 Q-Cells AG(1) $ 7,549 - -------------------------------------------------------------------------------- 134,379 Rheinmetall AG 10,001 - -------------------------------------------------------------------------------- 354,100 Schwarz Pharma AG(2) 29,930 - -------------------------------------------------------------------------------- 390,800 United Internet AG(1)(2) 21,748 - -------------------------------------------------------------------------------- 73,239 Wacker Chemie AG(1) 8,491 - -------------------------------------------------------------------------------- 157,676 - -------------------------------------------------------------------------------- GREECE -- 2.1% - -------------------------------------------------------------------------------- 590,700 Motor Oil (Hellas) Corinth Refineries SA(1) 17,253 - -------------------------------------------------------------------------------- 625,900 Piraeus Bank SA 18,586 - -------------------------------------------------------------------------------- 35,839 - -------------------------------------------------------------------------------- HONG KONG -- 1.2% - -------------------------------------------------------------------------------- 888,000 Hong Kong Exchanges and Clearing Ltd. 5,926 - -------------------------------------------------------------------------------- 5,784,000 Melco International Development 14,969 - -------------------------------------------------------------------------------- 20,895 - -------------------------------------------------------------------------------- IRELAND -- 1.4% - -------------------------------------------------------------------------------- 1,342,500 Kingspan Group plc 24,008 - -------------------------------------------------------------------------------- ITALY -- 2.7% - -------------------------------------------------------------------------------- 332,300 Banca Italease 17,181 - -------------------------------------------------------------------------------- 1,817,456 Davide Campari-Milano SpA 17,171 - -------------------------------------------------------------------------------- 980,026 Geox SpA 12,253 - -------------------------------------------------------------------------------- 46,605 - -------------------------------------------------------------------------------- JAPAN -- 16.1% - -------------------------------------------------------------------------------- 832,000 Asics Corp. 9,057 - -------------------------------------------------------------------------------- 1,171,000 Bank of Kyoto Ltd. (The) 12,169 - -------------------------------------------------------------------------------- 490,900 EDION Corp. 10,679 - -------------------------------------------------------------------------------- 201,000 Elpida Memory Inc.(1) 9,125 - -------------------------------------------------------------------------------- 4,700 Fullcast Co. Ltd. 17,322 - -------------------------------------------------------------------------------- 4,966,000 Japan Steel Works Ltd. (The) 34,373 - -------------------------------------------------------------------------------- 1,014,200 JTEKT Corp.(2) 20,240 - -------------------------------------------------------------------------------- 531,600 MISUMI Group Inc.(2) 10,346 - -------------------------------------------------------------------------------- 1,389,000 Mitsubishi Gas Chemical Co. Inc. 17,130 - -------------------------------------------------------------------------------- 491,000 NGK Insulators Ltd. 5,870 - -------------------------------------------------------------------------------- 381,000 Nippon Electric Glass Co., Ltd. 8,391 - -------------------------------------------------------------------------------- 2,522,000 Nishi-Nippon City Bank Ltd. (The)(2) 11,789 - -------------------------------------------------------------------------------- 19,485,100 Nissin Co., Ltd.(2) 16,465 - -------------------------------------------------------------------------------- 565,000 Pioneer Corp. 9,406 - -------------------------------------------------------------------------------- 3,100 Round One Corp.(2) 13,125 - -------------------------------------------------------------------------------- 1,371,000 Senshu Bank Ltd. (The) 4,683 - -------------------------------------------------------------------------------- 194,800 Sysmex Corp.(2) 8,090 - -------------------------------------------------------------------------------- 546,300 THK Co. Ltd. 16,795 - -------------------------------------------------------------------------------- 137,000 Toho Titanium Co. Ltd. 8,596 - -------------------------------------------------------------------------------- 1,090,000 Tokuyama Corp.(2) 16,530 - -------------------------------------------------------------------------------- 946,000 Tokyo Tatemono Co. Ltd. 10,077 - -------------------------------------------------------------------------------- 351,000 Toyoda Gosei Co. Ltd. 8,346 - -------------------------------------------------------------------------------- 278,604 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 14 International Discovery - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- MEXICO -- 1.1% - -------------------------------------------------------------------------------- 552,400 Grupo Aeroportuario del Pacifico SA de CV ADR $ 18,395 - -------------------------------------------------------------------------------- NETHERLANDS -- 6.3% - -------------------------------------------------------------------------------- 205,800 Fugro N.V. CVA(2) 8,442 - -------------------------------------------------------------------------------- 3,794,900 Hagemeyer N.V.(1) 18,717 - -------------------------------------------------------------------------------- 1,775,500 Koninklijke BAM Groep N.V. 37,803 - -------------------------------------------------------------------------------- 379,000 USG People N.V.(2) 29,423 - -------------------------------------------------------------------------------- 655,000 Vedior N.V. CVA 14,038 - -------------------------------------------------------------------------------- 108,423 - -------------------------------------------------------------------------------- NORWAY -- 7.1% - -------------------------------------------------------------------------------- 494,200 Aker Kvaerner ASA(2) 49,709 - -------------------------------------------------------------------------------- 176,900 Fred. Olsen Energy ASA(1)(2) 7,836 - -------------------------------------------------------------------------------- 262,940 Petroleum Geo-Services ASA(1) 16,762 - -------------------------------------------------------------------------------- 1,376,600 SeaDrill Ltd.(1) 21,042 - -------------------------------------------------------------------------------- 1,534,500 Tandberg Television ASA(1)(2) 27,806 - -------------------------------------------------------------------------------- 123,155 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 0.8% - -------------------------------------------------------------------------------- 228,200 Focus Media Holding Ltd. ADR(1) 14,415 - -------------------------------------------------------------------------------- SOUTH KOREA -- 1.2% - -------------------------------------------------------------------------------- 750,000 LG Telecom Ltd.(1) 10,317 - -------------------------------------------------------------------------------- 1,440,000 Macquarie Korea Infrastructure Fund GDR(1) 10,225 - -------------------------------------------------------------------------------- 20,542 - -------------------------------------------------------------------------------- SPAIN -- 2.8% - -------------------------------------------------------------------------------- 347,200 Abengoa SA 9,403 - -------------------------------------------------------------------------------- 978,357 Enagas 20,830 - -------------------------------------------------------------------------------- 509,000 Red Electrica de Espana 17,605 - -------------------------------------------------------------------------------- 47,838 - -------------------------------------------------------------------------------- SWEDEN -- 0.8% - -------------------------------------------------------------------------------- 414,100 Hexagon AB Cl B 14,552 - -------------------------------------------------------------------------------- SWITZERLAND -- 2.9% - -------------------------------------------------------------------------------- 20,800 Geberit AG 22,624 - -------------------------------------------------------------------------------- 5,364 Lindt & Spruengli AG 10,287 - -------------------------------------------------------------------------------- 24,600 Sulzer AG 17,667 - -------------------------------------------------------------------------------- 50,578 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 4.9% - -------------------------------------------------------------------------------- 2,517,000 Catcher Technology Co. Ltd. 29,994 - -------------------------------------------------------------------------------- 963,400 High Tech Computer Corp. 28,315 - -------------------------------------------------------------------------------- 334,000 Motech Industries Inc. 8,579 - -------------------------------------------------------------------------------- 26,714,000 Powerchip Semiconductor Corp.(1) 17,980 - -------------------------------------------------------------------------------- 84,868 - -------------------------------------------------------------------------------- TURKEY -- 0.3% - -------------------------------------------------------------------------------- 1,426,000 Aksigorta AS 4,894 - -------------------------------------------------------------------------------- Shares/Principal Amount ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- UNITED KINGDOM -- 13.8% - -------------------------------------------------------------------------------- 3,072,500 Aberdeen Asset Management plc $ 9,477 - -------------------------------------------------------------------------------- 2,592,753 Ashtead Group plc 9,693 - -------------------------------------------------------------------------------- 6,490,800 Carphone Warehouse Group plc 39,312 - -------------------------------------------------------------------------------- 986,500 CSR plc(1) 26,702 - -------------------------------------------------------------------------------- 3,507,600 International Power plc 19,222 - -------------------------------------------------------------------------------- 186,900 Lonmin plc 9,188 - -------------------------------------------------------------------------------- 1,406,997 Michael Page International plc 10,402 - -------------------------------------------------------------------------------- 173,400 NDS Group plc ADR(1) 8,814 - -------------------------------------------------------------------------------- 805,600 Punch Taverns plc 12,913 - -------------------------------------------------------------------------------- 4,185,000 Regus Group plc(1) 8,762 - -------------------------------------------------------------------------------- 2,055,000 Serco Group plc 12,091 - -------------------------------------------------------------------------------- 3,891,400 Tullow Oil plc 26,442 - -------------------------------------------------------------------------------- 1,044,500 Vedanta Resources plc 28,253 - -------------------------------------------------------------------------------- 2,124,000 Wolfson Microelectronics plc(1) 17,867 - -------------------------------------------------------------------------------- 239,138 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $1,219,052) 1,649,864 - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 0.7% - -------------------------------------------------------------------------------- GERMANY -- 0.7% - -------------------------------------------------------------------------------- 474,900 ProSiebenSat.1 Media AG(1) (Cost $11,542) 12,289 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 3.3% - -------------------------------------------------------------------------------- $57,600 FHLB Discount Notes, 4.89%, 6/1/06(4) (Cost $57,592) 57,600 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(5) -- 10.3% - -------------------------------------------------------------------------------- Repurchase Agreement, Deutsche Bank AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.02%, dated 5/31/06, due 6/1/06 (Delivery value $100,014) 100,000 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.06%, dated 5/31/06, due 6/1/06 (Delivery value $79,047) 79,036 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $179,036) 179,036 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 109.7% (Cost $1,467,222) 1,898,789 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (9.7)% (168,271) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $1,730,518 ================================================================================ See Notes to Financial Statements. (continued) - ------ 15 International Discovery - Schedule of Investments MAY 31, 2006 (UNAUDITED) MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Industrials 26.9% - -------------------------------------------------------------------------------- Information Technology 15.1% - -------------------------------------------------------------------------------- Financials 13.1% - -------------------------------------------------------------------------------- Materials 10.3% - -------------------------------------------------------------------------------- Consumer Discretionary 10.0% - -------------------------------------------------------------------------------- Energy 9.3% - -------------------------------------------------------------------------------- Health Care 5.9% - -------------------------------------------------------------------------------- Utilities 3.3% - -------------------------------------------------------------------------------- Consumer Staples 1.6% - -------------------------------------------------------------------------------- Telecommunication Services 0.6% - -------------------------------------------------------------------------------- Cash and Cash Equivalents(+) 3.9% - -------------------------------------------------------------------------------- + Includes temporary cash investments, collateral received for securities lending and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt CVA = Certificaten Van Aandelen FHLB = Federal Home Loan Bank GDR = Global Depositary Receipt (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of May 31, 2006. (3) Region is less than 0.05% of total net assets. (4) The rate indicated is the yield to maturity at purchase. (5) 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 May 31, 2006, was $454,328, which represented 26.3% of total net assets. See Notes to Financial Statements. - ------ 16 Emerging Markets - Performance TOTAL RETURNS AS OF MAY 31, 2006 ---------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 21.26% 51.35% 16.81% 8.94% 9/30/97 - -------------------------------------------------------------------------------- MSCI EM INDEX 13.93% 40.90% 21.09% 7.42% -- - -------------------------------------------------------------------------------- Institutional Class 21.37% 51.67% 17.03% 16.88% 1/28/99 - -------------------------------------------------------------------------------- Advisor Class 21.06% 50.81% 16.52% 12.69% 5/12/99 - -------------------------------------------------------------------------------- C Class 12/18/01 No sales charge* 20.59% 49.79% -- 20.48% With sales charge* 19.59% 49.79% -- 20.48% - -------------------------------------------------------------------------------- * Sales charges include contingent deferred sales charges (CDSCs). C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. Please see the Share Class Information page 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) 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. 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) - ------ 17 Emerging Markets - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made September 30, 1997
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ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended May 31 - ------------------------------------------------------------------------------------------ 1998* 1999 2000 2001 2002 2003 2004 2005 2006 - ------------------------------------------------------------------------------------------ Investor Class -15.00% 1.88% 44.57% -22.82% -0.43% -17.03% 41.04% 23.34% 51.35% - ------------------------------------------------------------------------------------------ MSCI EM Index -25.24% 3.46% 17.75% -21.60% 7.28% -6.40% 40.48% 30.99% 40.90% - ------------------------------------------------------------------------------------------ *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. - ------ 18 Emerging Markets - Portfolio Commentary PORTFOLIO MANAGERS: MICHAEL DONNELLY AND PATRICIA RIBEIRO Emerging Markets gained 21.26%* during the six-month period ended May 31, 2006, outperforming its benchmark, the Morgan Stanley Capital International Emerging Markets Index, which returned 13.93%. Emerging Markets also outperformed the 13.38% average return of the diversified emerging markets funds tracked by Morningstar during the same six months.** Superior security selection accounted for most of the portfolio's outperformance, with our investments in Taiwan highlighting the period's stock-picking success. All of the sectors in which we were invested contributed to return during the period and all but one surpassed the index's performance. BOOST FROM TAIWAN, BRAZIL Taiwanese handset manufacturer Compal Communications serves as an example of our ability to go beyond the benchmark to find successful companies, and also of our sell discipline. A portfolio-only position, meaning the company isn't listed in the index, Compal contributed more than any other security to the portfolio's performance. Compal had higher-than-expected handset shipments during the period, and its share price soared 136%. When the company's stock price far exceeded reasonable expectations, even considering its great results, we sold the position. Elsewhere in Taiwan, we also benefited from Wistron NeWeb Corp., a designer and manufacturer that specializes in the field of advanced wireless communication. Wistron NeWeb surged on increasing demand for its satellite communications devices. Wistron NeWeb, the portfolio's largest holding on average during the period, made the second-largest contribution to absolute and relative performance. Brazil also lifted the portfolio, led by Lojas Renner, a retailer that's expanded and modernized its stores to take advantage of consumers who are benefiting from relatively low interest rates and high confidence. Lojas, a portfolio-only position, is another example of our research and analysis leading to companies not included in the index that can drive investment performance. Brazil's Usinas Siderurgicas de Minas Gerais, the country's second-largest steelmaker, also helped boost the portfolio's performance. The company reported during the period a record fourth-quarter 2005 profit of $61.2 million. The portfolio benefited from an overweight position in Usinas Siderurgicas de Minas Gerais, which was among the portfolio's top-10 contributing securities to relative and absolute performance. TOP TEN HOLDINGS AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Wistron NeWeb Corp. 3.3% 2.0% - -------------------------------------------------------------------------------- OAO Gazprom ADR 2.8% 0.3% - -------------------------------------------------------------------------------- Petroleo Brasileiro SA ADR 2.2% 2.2% - -------------------------------------------------------------------------------- China Steel Corp. 2.0% -- - -------------------------------------------------------------------------------- Samsung Electronics 2.0% 2.2% - -------------------------------------------------------------------------------- Centros Comerciales Sudamericanos SA 1.9% 1.2% - -------------------------------------------------------------------------------- M-Systems Flash Disk Pioneers Ltd. 1.8% 0.5% - -------------------------------------------------------------------------------- POSCO 1.7% -- - -------------------------------------------------------------------------------- Komercni Banka AS 1.7% -- - -------------------------------------------------------------------------------- Pyaterochka Holding N.V. GDR 1.7% 2.4% - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. ** The one-, five- and ten-year average returns as of May 31, 2006 for Emerging Markets' Morningstar peer group are 38.61%, 19.84% and 7.19%, respectively. (continued) - ------ 19 Emerging Markets - Portfolio Commentary As further evidence of our search for companies outside the index, our investment in Kazakhstan's Kazakhmys plc proved to be one of the most rewarding during the period. Kazakhmys is a mining company focused on extracting copper, but gold, silver and zinc are also valuable by-products of its process. Prices of those metals have risen sharply, and the company has benefited from high prices. The company reported during the period that net income increased 25% to $538 million during 2005. Kazakhyms made the third-largest contribution to total return and to our relative performance. OPPORTUNITY IN RUSSIA A Russian retailer, Pyaterochka Holding N.V., provided one of the few disappointments during the period. The company, which operates small supermarkets to cover day-to-day needs of customers in St. Petersburg and Moscow, disappointed investors early in the period with reports of slow sales. However, we have maintained a position in Pyaterochka because we believe the outlook for Russian retail sales is strong and will benefit the company. Energy holdings contributed to total return, but energy was the only sector in the portfolio that underperformed the index, mostly because of underweight positions in a few oil and gas companies that advanced. Still, we had overweight positions in several oil and gas companies that made significant contributions to both absolute and relative return. They included Russia's NovaTek and Gazprom, both of which were among the 10 securities that made the largest contributions to performance relative to the index. OUR COMMITMENT We believe the period's results stand as a testament to the commitment of the portfolio's managers and analysts to seek out foreign companies anywhere in the world's developing countries that drive investment performance. A final note: Patricia Ribeiro joined American Century's Emerging Markets team in May as a portfolio manager working with vice president and senior portfolio manager Michael Donnelly, who has managed the portfolio since its inception Sept. 30, 1997. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Foreign Common Stocks and Rights 91.0% 95.1% - -------------------------------------------------------------------------------- Foreign Preferred Stocks 2.8% 2.6% - -------------------------------------------------------------------------------- Domestic Common Stocks 1.1% -- - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 94.9% 97.7% - -------------------------------------------------------------------------------- Temporary Cash Investments 4.6% 4.5% - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) 0.5% (2.2)% - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- South Korea 13.3% 16.2% - -------------------------------------------------------------------------------- Taiwan (Republic of China) 12.5% 10.1% - -------------------------------------------------------------------------------- Brazil 10.2% 7.5% - -------------------------------------------------------------------------------- People's Republic of China 9.5% 8.2% - -------------------------------------------------------------------------------- Russian Federation 6.1% 6.7% - -------------------------------------------------------------------------------- South Africa 5.9% 12.6% - -------------------------------------------------------------------------------- Hong Kong 5.2% 4.8% - -------------------------------------------------------------------------------- Israel 4.1% 4.5% - -------------------------------------------------------------------------------- Mexico 3.7% 5.6% - -------------------------------------------------------------------------------- Chile 3.5% 3.4% - -------------------------------------------------------------------------------- Indonesia 2.7% 0.4% - -------------------------------------------------------------------------------- Other Countries 18.2% 17.7% - -------------------------------------------------------------------------------- Cash and Equivalents(2) 5.1% 2.3% - -------------------------------------------------------------------------------- (2) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. - ------ 20 Emerging Markets - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS AND RIGHTS -- 92.1% ARGENTINA -- 0.8% - -------------------------------------------------------------------------------- 172,334 Banco Macro Bansud SA ADR $ 3,757 - -------------------------------------------------------------------------------- AUSTRIA -- 0.9% - -------------------------------------------------------------------------------- 50,683 Raiffeisen International Bank Holding AG(1)(2) 4,199 - -------------------------------------------------------------------------------- BRAZIL -- 7.4% - -------------------------------------------------------------------------------- 213,372 American Banknote SA(1) 1,341 - -------------------------------------------------------------------------------- 148,278 Banco Nossa Caixa SA 2,776 - -------------------------------------------------------------------------------- 340,353 Equatorial Energia SA(1) 2,089 - -------------------------------------------------------------------------------- 207,225 Gafisa SA(1) 2,054 - -------------------------------------------------------------------------------- 151,946 Lojas Renner SA 7,718 - -------------------------------------------------------------------------------- 72,000 Lupatech SA(1) 697 - -------------------------------------------------------------------------------- 118,505 Petroleo Brasileiro SA ADR 10,292 - -------------------------------------------------------------------------------- 210,818 Totvs SA(1) 3,430 - -------------------------------------------------------------------------------- 531,200 Tractebel Energia SA 3,910 - -------------------------------------------------------------------------------- 87,500 Vivax SA(1) 1,092 - -------------------------------------------------------------------------------- 35,399 - -------------------------------------------------------------------------------- CHILE -- 3.5% - -------------------------------------------------------------------------------- 3,607,906 Centros Comerciales Sudamericanos SA 8,830 - -------------------------------------------------------------------------------- 1,598,208 Comercial Siglo XXI SA 5,350 - -------------------------------------------------------------------------------- 508,759 Compania Cervecerias Unidas SA 2,372 - -------------------------------------------------------------------------------- 16,552 - -------------------------------------------------------------------------------- CZECH REPUBLIC -- 1.7% - -------------------------------------------------------------------------------- 58,828 Komercni Banka AS 8,254 - -------------------------------------------------------------------------------- EGYPT -- 0.3% - -------------------------------------------------------------------------------- 219,413 Orascom Hotels & Development(1) 1,233 - -------------------------------------------------------------------------------- 11,023 Vodafone Egypt Telecommunications SAE 153 - -------------------------------------------------------------------------------- 1,386 - -------------------------------------------------------------------------------- FINLAND -- 1.6% - -------------------------------------------------------------------------------- 513,871 Nokian Renkaat Oyj(2) 7,682 - -------------------------------------------------------------------------------- GERMANY -- 0.8% - -------------------------------------------------------------------------------- 174,075 CAT Oil AG(1) 3,852 - -------------------------------------------------------------------------------- HONG KONG -- 5.2% - -------------------------------------------------------------------------------- 3,076,873 AAC Acoustic Technology Holdings Inc.(1) 3,173 - -------------------------------------------------------------------------------- 10,546,978 Bank of China Ltd. Cl H(1) 4,011 - -------------------------------------------------------------------------------- 5,463,000 China Yurun Food Group Ltd.(2) 4,048 - -------------------------------------------------------------------------------- 1,947,000 Parkson Retail Group Ltd.(2) 5,772 - -------------------------------------------------------------------------------- 937,000 Vtech Holdings Ltd. 4,155 - -------------------------------------------------------------------------------- 5,066,000 Xiwang Sugar Holdings Co. Ltd. 3,559 - -------------------------------------------------------------------------------- 24,718 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- INDIA -- 1.0% - -------------------------------------------------------------------------------- 114,840 Tata Consultancy Services Ltd. $ 4,428 - -------------------------------------------------------------------------------- INDONESIA -- 2.7% - -------------------------------------------------------------------------------- 61,035,500 Bank Niaga Tbk PT 3,759 - -------------------------------------------------------------------------------- 6,099,500 PT Aneka Tambang Tbk 2,933 - -------------------------------------------------------------------------------- 8,084,500 Telekomunikasi Indonesia Tbk PT 6,158 - -------------------------------------------------------------------------------- 12,850 - -------------------------------------------------------------------------------- ISRAEL -- 4.1% - -------------------------------------------------------------------------------- 261,159 M-Systems Flash Disk Pioneers Ltd.(1)(2) 8,735 - -------------------------------------------------------------------------------- 181,952 Orbotech Ltd.(1)(2) 4,571 - -------------------------------------------------------------------------------- 169,518 Teva Pharmaceutical Industries Ltd. ADR 6,172 - -------------------------------------------------------------------------------- 19,478 - -------------------------------------------------------------------------------- KAZAKHSTAN -- 0.5% - -------------------------------------------------------------------------------- 116,513 Kazakhmys plc 2,474 - -------------------------------------------------------------------------------- LUXEMBOURG -- 1.1% - -------------------------------------------------------------------------------- 217,610 Ternium SA ADR(1) 5,092 - -------------------------------------------------------------------------------- MALAYSIA -- 1.8% - -------------------------------------------------------------------------------- 4,509,000 AirAsia Bhd(1) 1,999 - -------------------------------------------------------------------------------- 948,000 Gamuda Bhd 898 - -------------------------------------------------------------------------------- 949,000 Kuala Lumpur Kepong Bhd 2,640 - -------------------------------------------------------------------------------- 784,000 Malakoff Bhd 2,116 - -------------------------------------------------------------------------------- 3,119,900 Scomi Group Bhd 1,022 - -------------------------------------------------------------------------------- 8,675 - -------------------------------------------------------------------------------- MEXICO -- 3.7% - -------------------------------------------------------------------------------- 1,584,970 Axtel, SA de CV(1) 3,173 - -------------------------------------------------------------------------------- 36,019 Cemex SA de CV ADR 2,052 - -------------------------------------------------------------------------------- 462,357 Corporacion GEO SA de CV, Series B(1) 1,599 - -------------------------------------------------------------------------------- 1,280,398 Corporacion Moctezuma, SA de CV 2,506 - -------------------------------------------------------------------------------- 207,113 Grupo Aeroportuario del Pacifico SA de CV ADR 6,897 - -------------------------------------------------------------------------------- 650,420 Urbi Desarrollos Urbanos SA de CV(1)(2) 1,578 - -------------------------------------------------------------------------------- 17,805 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 9.5% - -------------------------------------------------------------------------------- 12,016,000 Advanced Semiconductor Manufacturing Corp. Cl H(1) 2,881 - -------------------------------------------------------------------------------- 286,666 China Mobile Hong Kong Ltd. ADR(2) 7,410 - -------------------------------------------------------------------------------- 7,406,000 China Petroleum & Chemical Corp. Cl H 4,391 - -------------------------------------------------------------------------------- 12,310,000 Dongfeng Motor Group Co. Ltd. Cl H(1) 5,990 - -------------------------------------------------------------------------------- 1,307,000 Foxconn International Holdings Ltd.(1)(2) 3,504 - -------------------------------------------------------------------------------- 12,400,000 Global Bio-Chem Technology Group Co. Ltd.(2) 5,075 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 21 Emerging Markets - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 5,496,000 Golden Eagle Retail Group Ltd.(1) $ 3,206 - -------------------------------------------------------------------------------- 5,401,314 Nine Dragons Paper Holdings Ltd.(1) 4,491 - -------------------------------------------------------------------------------- 5,750,000 PetroChina Co. Ltd. Cl H 6,189 - -------------------------------------------------------------------------------- 705,000 Wumart Stores Inc. Cl H 2,086 - -------------------------------------------------------------------------------- 45,223 - -------------------------------------------------------------------------------- PERU -- 1.4% - -------------------------------------------------------------------------------- 242,366 Credicorp Ltd. 6,350 - -------------------------------------------------------------------------------- POLAND -- 0.4% - -------------------------------------------------------------------------------- 70,167 TVN SA(1) 1,996 - -------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 6.1% - -------------------------------------------------------------------------------- 120,092 NovaTek OAO GDR 4,648 - -------------------------------------------------------------------------------- 306,674 OAO Gazprom ADR 13,096 - -------------------------------------------------------------------------------- 476,429 Pyaterochka Holding N.V. GDR(1) 7,885 - -------------------------------------------------------------------------------- 932,611 VolgaTelecom 3,180 - -------------------------------------------------------------------------------- 28,809 - -------------------------------------------------------------------------------- SOUTH AFRICA -- 5.9% - -------------------------------------------------------------------------------- 153,958 Anglo American plc 6,112 - -------------------------------------------------------------------------------- 195,102 Barloworld Ltd. 3,310 - -------------------------------------------------------------------------------- 12,926 Impala Platinum Holdings Limited 2,178 - -------------------------------------------------------------------------------- 280,961 JD Group Ltd. 3,294 - -------------------------------------------------------------------------------- 208,023 Kumba Resources Ltd. 3,572 - -------------------------------------------------------------------------------- 61,737 Pretoria Portland Cement Co. Ltd. 3,272 - -------------------------------------------------------------------------------- 524,064 Sappi Ltd. 6,456 - -------------------------------------------------------------------------------- 28,194 - -------------------------------------------------------------------------------- SOUTH KOREA -- 13.3% - -------------------------------------------------------------------------------- 9,580 Amorepacific Corp. 3,230 - -------------------------------------------------------------------------------- 48,400 CJ Corp. 5,610 - -------------------------------------------------------------------------------- 206,250 GS Holdings Corp. 6,151 - -------------------------------------------------------------------------------- 183,330 Hynix Semiconductor Inc.(1) 6,182 - -------------------------------------------------------------------------------- 94,400 Hyundai Engineering & Construction(1) 4,636 - -------------------------------------------------------------------------------- 125,070 LG Card Co. Ltd.(1) 6,194 - -------------------------------------------------------------------------------- 31,640 POSCO 8,285 - -------------------------------------------------------------------------------- 14,690 Samsung Electronics 9,473 - -------------------------------------------------------------------------------- 160,560 Shinhan Financial Group Co., Ltd. 7,461 - -------------------------------------------------------------------------------- 13,430 Shinsegae Co. Ltd. 6,170 - -------------------------------------------------------------------------------- 63,392 - -------------------------------------------------------------------------------- SPAIN -- 1.4% - -------------------------------------------------------------------------------- 233,363 Repsol YPF, SA 6,508 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- SWEDEN -- 0.8% - -------------------------------------------------------------------------------- 103,479 Oriflame Cosmetics SA SDR $ 3,507 - -------------------------------------------------------------------------------- 103,479 Oriflame Cosmetics SA SDR Rights(1) 110 - -------------------------------------------------------------------------------- 3,617 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 12.5% - -------------------------------------------------------------------------------- 314,199 AU Optronics Corp. ADR(2) 4,562 - -------------------------------------------------------------------------------- 10,156,000 China Steel Corp. 9,669 - -------------------------------------------------------------------------------- 3,647,000 Chinatrust Financial Holding Co. 2,937 - -------------------------------------------------------------------------------- 6,768,000 Compal Electronics Inc. 6,930 - -------------------------------------------------------------------------------- 3,429,288 King Yuan Electronics Co. Ltd. 3,608 - -------------------------------------------------------------------------------- 182,000 Nan Ya Printed Circuit Board Corp.(1) 1,835 - -------------------------------------------------------------------------------- 4,625,000 Taishin Financial Holdings Co. Ltd. 3,003 - -------------------------------------------------------------------------------- 1,532,000 Taiwan Green Point Enterprise Co. Ltd.(1) 4,041 - -------------------------------------------------------------------------------- 1,277,000 Test-Rite International Co. 951 - -------------------------------------------------------------------------------- 8,672,000 Uni-President Enterprises Corp. 6,362 - -------------------------------------------------------------------------------- 4,438,000 Wistron NeWeb Corp.(1) 15,516 - -------------------------------------------------------------------------------- 59,414 - -------------------------------------------------------------------------------- THAILAND -- 1.2% - -------------------------------------------------------------------------------- 20,316,200 Krung Thai Bank Public Co. Ltd. 5,541 - -------------------------------------------------------------------------------- TURKEY -- 1.4% - -------------------------------------------------------------------------------- 169,832 Asya Katilim Bankasi AS(1) 460 - -------------------------------------------------------------------------------- 361,472 Denizbank AS(1) 3,331 - -------------------------------------------------------------------------------- 171,371 Tupras Turkiye Petrol Rafine 2,886 - -------------------------------------------------------------------------------- 6,677 - -------------------------------------------------------------------------------- UNITED STATES -- 1.1% - -------------------------------------------------------------------------------- 168,080 Avon Products, Inc. 5,328 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS AND RIGHTS (Cost $388,067) 437,650 - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 2.8% - -------------------------------------------------------------------------------- BRAZIL -- 2.8% - -------------------------------------------------------------------------------- 117,538 Aracruz Celulose SA ADR(2) 6,012 - -------------------------------------------------------------------------------- 34,050,000 Companhia de Gas de Sao Paulo Cl A 3,913 - -------------------------------------------------------------------------------- 105,100 Usinas Siderurgicas de Minas Gerais SA Cl A 3,382 - -------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost $12,841) 13,307 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 22 Emerging Markets - Schedule of Investments MAY 31, 2006 (UNAUDITED) ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 4.6% - -------------------------------------------------------------------------------- Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 5.50%, 8/15/28, valued at $22,454), in a joint trading account at 4.85%, dated 5/31/06, due 6/1/06 (Delivery value $22,103) (Cost $22,100) $ 22,100 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 10.2% - -------------------------------------------------------------------------------- Repurchase Agreement, Deutsche Bank AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.02%, dated 5/31/06, due 6/1/06 (Delivery value $30,004) 30,000 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.06%, dated 5/31/06, due 6/1/06 (Delivery value $18,582) 18,579 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $48,579) 48,579 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 109.7% (Cost $471,587) 521,636 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (9.7)% (46,242) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $475,394 ================================================================================ MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Information Technology 18.3% - -------------------------------------------------------------------------------- Materials 14.4% - -------------------------------------------------------------------------------- Consumer Staples 14.1% - -------------------------------------------------------------------------------- Financials 13.3% - -------------------------------------------------------------------------------- Energy 12.4% - -------------------------------------------------------------------------------- Consumer Discretionary 10.2% - -------------------------------------------------------------------------------- Telecommunication Services 4.5% - -------------------------------------------------------------------------------- Industrials 3.9% - -------------------------------------------------------------------------------- Utilities 2.5% - -------------------------------------------------------------------------------- Health Care 1.3% - -------------------------------------------------------------------------------- Cash and Cash Equivalents+ 5.1% - -------------------------------------------------------------------------------- + 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 SDR = Swedish Depositary Receipt (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of May 31, 2006. (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. - ------ 23 International Opportunities - Performance TOTAL RETURNS AS OF MAY 31, 2006 -------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 20.48% 46.95% 25.93% 6/1/01 - -------------------------------------------------------------------------------- S&P/CITIGROUP EMI GROWTH WORLD EX-US 19.56% 35.69% 13.95%(2) -- - -------------------------------------------------------------------------------- Institutional Class 20.57% 47.37% 42.34% 1/9/03 - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) 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) - ------ 24 International Opportunities - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made June 1, 2001
![](https://capedge.com/proxy/N-CSRS/0000872825-06-000062/growthintlopps0607.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended May 31 - -------------------------------------------------------------------------------- 2002* 2003 2004 2005 2006 - -------------------------------------------------------------------------------- Investor Class 15.00% -5.48% 62.50% 22.00% 46.95% - -------------------------------------------------------------------------------- S&P/Citigroup EMI Growth World ex-US -8.01% -8.73% 42.23% 18.57% 35.69% - -------------------------------------------------------------------------------- * 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. - ------ 25 International Opportunities - Portfolio Commentary PORTFOLIO MANAGERS: FEDERICO LAFFAN AND TREVOR GURWICH International Opportunities gained 20.48%* during the six-month period ended May 31, 2006, outperforming its benchmark, the S&P/Citigroup EMI (Extended Market Index) Growth World ex-US, which returned 19.56%. Looking longer-term, the portfolio has delivered enviable results. Since its inception on June 1, 2001, International Opportunities has provided an average annualized return of 25.93%, versus 13.95% for the benchmark. Despite persistently high oil prices, uneasiness about inflation and campaigns by central banks in the U.S. and Europe to raise interest rates, many international stock markets advanced strongly during the period. In International Opportunities' case, nine of the ten sectors in which it was invested provided positive returns, with industrials and information technology businesses contributing the most to our results. Our performance was also aided by a weakening dollar that improved overseas returns for U.S. investors. Additionally, as the chart on page 27 indicates, we reduced our weighting in Japan since our last report to you six months ago. Our smaller weighting reflects a pull-back in small-cap Japanese stocks during the period, as well as our redeployment of those assets in attractive opportunities in other regions. SUCCESS IN INDUSTRIALS Our search for smaller foreign companies demonstrating earnings acceleration, the heart of our discipline, drew us to the industrials sector, which contributed the most to our results. Our investments there were led by Netherlands' USG People N.V., Europe's fifth-largest staffing agency. Industry growth in the Netherlands, USG's most important market, has been accelerating over the past year, and the company posted strong first-quarter results. Elsewhere in the sector, two European providers of industrial machinery, Andritz AG and Pinguely-Haulotte, also performed particularly well for the portfolio. Andritz, based in Austria, supplies production equipment to customers in the pulp, paper and steel industries. The company is benefiting from strong orders from China and countries in South America. Pinguely-Haulotte, a French company, is Europe's largest maker of aerial platforms used in construction and industrial applications. TOP TEN HOLDINGS AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- USG People N.V.(1) 1.8% 0.5% - -------------------------------------------------------------------------------- Nexans SA 1.8% -- - -------------------------------------------------------------------------------- Andritz AG 1.8% 1.2% - -------------------------------------------------------------------------------- Tomra Systems ASA 1.6% 1.5% - -------------------------------------------------------------------------------- JM AB 1.5% 1.3% - -------------------------------------------------------------------------------- Acta Holding ASA 1.4% 0.8% - -------------------------------------------------------------------------------- IG Group Holdings plc 1.3% 1.2% - -------------------------------------------------------------------------------- SGL Carbon AG 1.3% -- - -------------------------------------------------------------------------------- Ordina N.V. 1.2% 1.1% - -------------------------------------------------------------------------------- Marfin Financial Group SA Holdings 1.2% -- - -------------------------------------------------------------------------------- (1) Formerly United Services Group N.V. * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. (continued) - ------ 26 International Opportunities - Portfolio Commentary GAINS IN TECHNOLOGY Technology businesses were another strong source of performance. In semiconductors, we were rewarded for taking a large position in SOITEC. This French company is the market leader in SOI (silicon-on-insulator) semiconductors that are used in wireless devices, new-generation game consoles and other consumer electronics. In April, SOITEC, whose customers include Advanced Micro Devices and IBM, announced an 89% increase in sales from a year earlier. Our successes in technology also included Option N.V., a Belgian-based supplier of computer wireless data cards that connect portable PCs to the Internet. The company's data card market share in Western Europe is well over 50%. MATERIALS, FINANCIALS AMONG DETRACTORS While both sectors provided positive results for the portfolio, our investments in companies involved in materials and financial businesses slowed us most against the benchmark. In materials, our decliners included Toagosei Co. Ltd., a Japanese chemical manufacturer, and Mytilineos Holdings, a group of Greek industrial companies active in metallurgy and mining. Price declines in acrylic acid, which occurred as the company completed cost-cutting efforts, pressured Toagosei's margins. Mytilineos lost ground during May as the prices of many base metals appeared to peak, implying a potential cyclical top in earnings for the company. We continue to hold Mytilineos; we sold our position in Toagosei. In the case of financials, two Japanese banks, Kyushu-Shinwa Holdings Inc. and Bank of the Ryukyus Ltd., were among our largest detractors. We're confident in both banks' longer-term prospects and have maintained our positions. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Foreign Common Stocks 96.9% 95.5% - -------------------------------------------------------------------------------- Domestic Common Stocks 1.0% -- - -------------------------------------------------------------------------------- Foreign Preferred Stocks 0.7% 0.7% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 98.6% 96.2% - -------------------------------------------------------------------------------- Temporary Cash Investments -- 3.2% - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) 1.4% 0.6% - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Japan 14.8% 26.8% - -------------------------------------------------------------------------------- United Kingdom 11.3% 7.8% - -------------------------------------------------------------------------------- France 9.2% 8.3% - -------------------------------------------------------------------------------- Germany 9.1% 10.5% - -------------------------------------------------------------------------------- Norway 7.1% 6.2% - -------------------------------------------------------------------------------- Netherlands 6.7% 5.1% - -------------------------------------------------------------------------------- Italy 6.3% 4.4% - -------------------------------------------------------------------------------- Sweden 4.7% 6.0% - -------------------------------------------------------------------------------- Switzerland 4.1% 1.5% - -------------------------------------------------------------------------------- Canada 3.2% 2.3% - -------------------------------------------------------------------------------- Greece 2.1% 0.7% - -------------------------------------------------------------------------------- People's Republic of China 2.1% -- - -------------------------------------------------------------------------------- Taiwan (Republic of China) 2.0% 1.6% - -------------------------------------------------------------------------------- Other Countries 15.9% 15.0% - -------------------------------------------------------------------------------- Cash and Equivalents(2) 1.4% 3.8% - -------------------------------------------------------------------------------- (2) Includes temporary cash investments, collateral received for securities lending, and other assets and liabilities. - ------ 27 International Opportunities - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 97.9% ARGENTINA -- 0.5% - -------------------------------------------------------------------------------- 52,076 Banco Macro Bansud SA ADR $ 1,135 - -------------------------------------------------------------------------------- AUSTRALIA -- 0.4% - -------------------------------------------------------------------------------- 790,645 Kimberley Diamond Co. NL(1)(2) 815 - -------------------------------------------------------------------------------- 11,701 Sino Gold Ltd.(1) 44 - -------------------------------------------------------------------------------- 859 - -------------------------------------------------------------------------------- AUSTRIA -- 1.8% - -------------------------------------------------------------------------------- 22,823 Andritz AG 3,640 - -------------------------------------------------------------------------------- BELGIUM -- 1.6% - -------------------------------------------------------------------------------- 23,533 EVS Broadcast Equipment SA 1,142 - -------------------------------------------------------------------------------- 88,235 Option N.V.(1)(2) 2,117 - -------------------------------------------------------------------------------- 3,259 - -------------------------------------------------------------------------------- BRAZIL -- 0.8% - -------------------------------------------------------------------------------- 86,600 Submarino SA 1,761 - -------------------------------------------------------------------------------- CANADA -- 3.2% - -------------------------------------------------------------------------------- 36,486 Aspreva Pharmaceuticals Corp.(1)(2) 1,094 - -------------------------------------------------------------------------------- 32,376 Aur Resources Inc. 525 - -------------------------------------------------------------------------------- 320,611 Eldorado Gold Corporation(1) 1,624 - -------------------------------------------------------------------------------- 22,782 Flint Energy Services Ltd.(1) 1,205 - -------------------------------------------------------------------------------- 121,689 Sierra Wireless(1)(2) 2,057 - -------------------------------------------------------------------------------- 6,505 - -------------------------------------------------------------------------------- DENMARK -- 1.5% - -------------------------------------------------------------------------------- 9,116 Bang & Olufsen AS B Shares(2) 1,071 - -------------------------------------------------------------------------------- 33,833 NKT Holding AS 2,133 - -------------------------------------------------------------------------------- 3,204 - -------------------------------------------------------------------------------- FINLAND -- 0.9% - -------------------------------------------------------------------------------- 94,713 KCI Konecranes Oyj 1,930 - -------------------------------------------------------------------------------- FRANCE -- 9.2% - -------------------------------------------------------------------------------- 29,250 Alten(1)(2) 1,028 - -------------------------------------------------------------------------------- 26,401 April Group 1,438 - -------------------------------------------------------------------------------- 35,868 Groupe Steria SCA(2) 2,027 - -------------------------------------------------------------------------------- 77,165 Ingenico(1)(2) 1,712 - -------------------------------------------------------------------------------- 48,616 Nexans SA(2) 3,752 - -------------------------------------------------------------------------------- 38,469 Nexity 2,349 - -------------------------------------------------------------------------------- 82,266 Pinguely-Haulotte(2) 2,295 - -------------------------------------------------------------------------------- 66,260 SOITEC(1)(2) 1,940 - -------------------------------------------------------------------------------- 56,997 SR Teleperformance(2) 2,488 - -------------------------------------------------------------------------------- 19,029 - -------------------------------------------------------------------------------- GERMANY -- 8.4% - -------------------------------------------------------------------------------- 51,868 CTS Eventim AG 1,502 - -------------------------------------------------------------------------------- 15,701 Deutsche Euroshop AG 1,076 - -------------------------------------------------------------------------------- 11,960 Interhyp AG(1) 1,118 - -------------------------------------------------------------------------------- 12,418 MPC Muenchmeyer Petersen Capital AG(2) 934 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 36,146 Praktiker Bau-und Heimwerkermaerkte AG(1) $ 1,042 - -------------------------------------------------------------------------------- 5,066 Rational AG 953 - -------------------------------------------------------------------------------- 121,402 SGL Carbon AG(1) 2,582 - -------------------------------------------------------------------------------- 34,821 Sixt AG(2) 2,074 - -------------------------------------------------------------------------------- 20,615 Software AG 1,057 - -------------------------------------------------------------------------------- 3,625 SolarWorld AG(2) 1,008 - -------------------------------------------------------------------------------- 45,036 Vivacon AG(1) 1,764 - -------------------------------------------------------------------------------- 15,915 Wincor Nixdorf AG 2,122 - -------------------------------------------------------------------------------- 17,232 - -------------------------------------------------------------------------------- GREECE -- 2.1% - -------------------------------------------------------------------------------- 74,366 Marfin Financial Group SA Holdings 2,529 - -------------------------------------------------------------------------------- 71,535 Mytilineos Holdings SA 1,835 - -------------------------------------------------------------------------------- 4,364 - -------------------------------------------------------------------------------- HONG KONG -- 0.3% - -------------------------------------------------------------------------------- 154,000 Vtech Holdings Ltd. 675 - -------------------------------------------------------------------------------- HUNGARY -- 0.9% - -------------------------------------------------------------------------------- 13,290 Egis Nyrt. 1,776 - -------------------------------------------------------------------------------- ITALY -- 6.3% - -------------------------------------------------------------------------------- 290,041 Astaldi SpA(2) 1,921 - -------------------------------------------------------------------------------- 227,846 Azimut Holding SpA(2) 2,472 - -------------------------------------------------------------------------------- 33,645 Digital Multimedia Technologies SpA(1) 1,940 - -------------------------------------------------------------------------------- 620,661 Gemina SpA(1) 2,153 - -------------------------------------------------------------------------------- 177,460 Recordati SpA 1,431 - -------------------------------------------------------------------------------- 14,918 Tod's SpA(2) 1,113 - -------------------------------------------------------------------------------- 66,036 Valentino Fashion Group SpA(2) 1,855 - -------------------------------------------------------------------------------- 12,885 - -------------------------------------------------------------------------------- JAPAN -- 14.8% - -------------------------------------------------------------------------------- 62,200 Amano Corp.(2) 980 - -------------------------------------------------------------------------------- 25,800 Bank of the Ryukyus Ltd.(1)(2) 673 - -------------------------------------------------------------------------------- 191 en-japan Inc.(2) 974 - -------------------------------------------------------------------------------- 1,078 ES-Con Japan Ltd.(2) 2,122 - -------------------------------------------------------------------------------- 24,800 FP Corp. 892 - -------------------------------------------------------------------------------- 84,000 Fuji Oil Co. Ltd. 874 - -------------------------------------------------------------------------------- 366,000 Godo Steel Ltd. 2,211 - -------------------------------------------------------------------------------- 69,000 Hitachi Koki Co., Ltd. 1,083 - -------------------------------------------------------------------------------- 26,800 Hogy Medical Co. Ltd. 1,402 - -------------------------------------------------------------------------------- 22,217 Honeys Co. Ltd.(2) 1,029 - -------------------------------------------------------------------------------- 191,000 J-Oil Mills, Inc. 987 - -------------------------------------------------------------------------------- 257,000 Kanto Denka Kogyo Co. Ltd. 2,396 - -------------------------------------------------------------------------------- 441,000 Kyushu-Shinwa Holdings Inc.(1)(2) 761 - -------------------------------------------------------------------------------- 4,400 Milbon Co. Ltd. 180 - -------------------------------------------------------------------------------- 160,000 Minato Bank Ltd. (The) 426 - -------------------------------------------------------------------------------- 13,200 Miraial Co. Ltd. 1,042 - -------------------------------------------------------------------------------- 19,950 Pal Co. Ltd. 1,330 - -------------------------------------------------------------------------------- 73,000 Shinko Plantech Co. Ltd. 522 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 28 International Opportunities - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 90,000 Showa Corp. $ 1,658 - -------------------------------------------------------------------------------- 38,000 Sysmex Corp.(2) 1,579 - -------------------------------------------------------------------------------- 42,600 Takeuchi Manufacturing Co. Ltd. 1,896 - -------------------------------------------------------------------------------- 315,000 Tsubakimoto Chain Co. 2,260 - -------------------------------------------------------------------------------- 317,000 Tsugami Corp. 2,109 - -------------------------------------------------------------------------------- 34,000 Tsumura & Co. 1,021 - -------------------------------------------------------------------------------- 30,407 - -------------------------------------------------------------------------------- NETHERLANDS -- 6.7% - -------------------------------------------------------------------------------- 40,477 Arcadis N.V. 1,960 - -------------------------------------------------------------------------------- 44,155 Brunel International 1,515 - -------------------------------------------------------------------------------- 41,118 Imtech N.V. 2,017 - -------------------------------------------------------------------------------- 120,788 Ordina N.V. 2,558 - -------------------------------------------------------------------------------- 23,754 Ten Cate N.V. 669 - -------------------------------------------------------------------------------- 48,860 USG People N.V.(2) 3,792 - -------------------------------------------------------------------------------- 68,862 Wegener N.V. CVA 1,217 - -------------------------------------------------------------------------------- 13,728 - -------------------------------------------------------------------------------- NORWAY -- 7.1% - -------------------------------------------------------------------------------- 776,768 Acta Holding ASA 2,810 - -------------------------------------------------------------------------------- 38,664 Fred. Olsen Energy ASA(1)(2) 1,713 - -------------------------------------------------------------------------------- 83,457 Norwegian Air Shuttle ASA(1)(2) 1,505 - -------------------------------------------------------------------------------- 169,920 Songa Offshore ASA(1) 1,515 - -------------------------------------------------------------------------------- 75,428 Tandberg Television ASA(1)(2) 1,367 - -------------------------------------------------------------------------------- 32,076 TGS Nopec Geophysical Company ASA(1) 2,464 - -------------------------------------------------------------------------------- 355,141 Tomra Systems ASA(2) 3,342 - -------------------------------------------------------------------------------- 14,716 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 2.1% - -------------------------------------------------------------------------------- 684,000 Global Bio-Chem Technology Group Co. Ltd. 283 - -------------------------------------------------------------------------------- 81,760 Sohu.com Inc.(1) 2,038 - -------------------------------------------------------------------------------- 68,586 The9 Ltd. ADR(1)(2) 1,913 - -------------------------------------------------------------------------------- 4,234 - -------------------------------------------------------------------------------- SINGAPORE -- 1.8% - -------------------------------------------------------------------------------- 1,699,360 Cosco Investment Singapore Ltd.(2) 1,384 - -------------------------------------------------------------------------------- 1,070,000 Jaya Holdings Ltd. 947 - -------------------------------------------------------------------------------- 1,388,000 Olam International Ltd. 1,344 - -------------------------------------------------------------------------------- 3,675 - -------------------------------------------------------------------------------- SOUTH AFRICA -- 1.2% - -------------------------------------------------------------------------------- 83,015 Ellerine Holdings Ltd. 1,011 - -------------------------------------------------------------------------------- 30,583 Investec Ltd. 1,561 - -------------------------------------------------------------------------------- 2,572 - -------------------------------------------------------------------------------- SOUTH KOREA -- 0.6% - -------------------------------------------------------------------------------- 91,970 Tong Yang Investment Bank(1) 1,222 - -------------------------------------------------------------------------------- SPAIN -- 1.5% - -------------------------------------------------------------------------------- 250,696 Grifols SA(1) 1,750 - -------------------------------------------------------------------------------- 219,022 Tubacex SA(2) 1,277 - -------------------------------------------------------------------------------- 3,027 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- SWEDEN -- 4.7% - -------------------------------------------------------------------------------- 104,533 D Carnegie & Co. AB $ 2,104 - -------------------------------------------------------------------------------- 45,376 JM AB 3,111 - -------------------------------------------------------------------------------- 140,846 KappAhl Holding AB 1,067 - -------------------------------------------------------------------------------- 108,248 Lindex AB 1,617 - -------------------------------------------------------------------------------- 50,329 Munters AB 1,789 - -------------------------------------------------------------------------------- 9,688 - -------------------------------------------------------------------------------- SWITZERLAND -- 4.1% - -------------------------------------------------------------------------------- 447 Bank Sarasin & Compagnie AG B Shares 1,195 - -------------------------------------------------------------------------------- 5,815 Galenica Holding AG 1,187 - -------------------------------------------------------------------------------- 4,823 Georg Fischer AG 2,182 - -------------------------------------------------------------------------------- 16,798 Partners Group(1) 1,047 - -------------------------------------------------------------------------------- 31,329 Tecan Group AG 1,696 - -------------------------------------------------------------------------------- 121,115 Temenos Group AG(1) 1,217 - -------------------------------------------------------------------------------- 8,524 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 2.0% - -------------------------------------------------------------------------------- 2,040,000 Polaris Securities Co. Ltd. 982 - -------------------------------------------------------------------------------- 390,000 Taiwan Green Point Enterprise Co. Ltd.(1) 1,017 - -------------------------------------------------------------------------------- 601,000 Wistron NeWeb Corp.(1) 2,078 - -------------------------------------------------------------------------------- 4,077 - -------------------------------------------------------------------------------- TURKEY -- 1.1% - -------------------------------------------------------------------------------- 211,697 Akcansa Cimento AS 1,137 - -------------------------------------------------------------------------------- 87,554 Asya Katilim Bankasi AS(1) 237 - -------------------------------------------------------------------------------- 56,727 Turk Ekonomi Bankasi AS 851 - -------------------------------------------------------------------------------- 2,225 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 11.3% - -------------------------------------------------------------------------------- 95,212 Acergy SA(1) 1,416 - -------------------------------------------------------------------------------- 199,346 Aggreko plc 987 - -------------------------------------------------------------------------------- 616,303 Ashtead Group plc 2,304 - -------------------------------------------------------------------------------- 193,894 Babcock International Group plc 1,117 - -------------------------------------------------------------------------------- 149,028 Charter plc(1) 2,284 - -------------------------------------------------------------------------------- 63,871 Homeserve plc 1,919 - -------------------------------------------------------------------------------- 666,379 IG Group Holdings plc 2,765 - -------------------------------------------------------------------------------- 345,605 Morgan Crucible Co. plc 1,589 - -------------------------------------------------------------------------------- 100,049 Peter Hambro Mining plc(1) 2,434 - -------------------------------------------------------------------------------- 611,466 Premier Farnell plc 2,215 - -------------------------------------------------------------------------------- 86,143 Rotork plc 1,127 - -------------------------------------------------------------------------------- 51,481 Ultra Electronics Holdings plc 1,004 - -------------------------------------------------------------------------------- 53,792 Vanco plc(1) 488 - -------------------------------------------------------------------------------- 181,960 VT Group plc 1,611 - -------------------------------------------------------------------------------- 23,260 - -------------------------------------------------------------------------------- UNITED STATES -- 1.0% - -------------------------------------------------------------------------------- 79,852 Zoran Corp.(1) 1,977 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $154,146) 201,586 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 29 International Opportunities - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 0.7% - -------------------------------------------------------------------------------- GERMANY -- 0.7% - -------------------------------------------------------------------------------- 37,235 Hugo Boss AG(2) (Cost $1,088) $ 1,535 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 21.5% - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.06%, dated 5/31/06, due 6/1/06 (Delivery value $44,331) (Cost $44,325) 44,325 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 120.1% (Cost $199,559) 247,446 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (20.1)% (41,468) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $205,978 ================================================================================ MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Industrials 31.1% - -------------------------------------------------------------------------------- Information Technology 17.7% - -------------------------------------------------------------------------------- Consumer Discretionary 16.3% - -------------------------------------------------------------------------------- Financials 14.1% - -------------------------------------------------------------------------------- Materials 7.4% - -------------------------------------------------------------------------------- Health Care 6.3% - -------------------------------------------------------------------------------- Energy 3.7% - -------------------------------------------------------------------------------- Consumer Staples 1.8% - -------------------------------------------------------------------------------- Telecommunication Services 0.2% - -------------------------------------------------------------------------------- Cash and Cash Equivalents+ 1.4% - -------------------------------------------------------------------------------- + Includes collateral received for securities lending and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt CVA = Certificaten Van Aandelen (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of May 31, 2006. (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.) 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 May 31, 2006, was $40,561, which represented 19.7% of total net assets. - ------ 30 See Notes to Financial Statements. Shareholder Fee Examples (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from December 1, 2005 to May 31, 2006. ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century account (i.e., not a financial intermediary or retirement plan account), American Century may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. To do so, compare this 5% hypothetical (continued) - ------ 31 Shareholder Fee Examples (Unaudited) example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 12/1/05 - EXPENSE 12/1/05 5/31/06 5/31/06 RATIO* - -------------------------------------------------------------------------------------------------- INTERNATIONAL STOCK SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------------------------- ACTUAL: - -------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,137.10 $7.99 1.50% - -------------------------------------------------------------------------------------------------- HYPOTHETICAL: - -------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,017.45 $7.54 1.50% - -------------------------------------------------------------------------------------------------- INTERNATIONAL DISCOVERY SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------------------------- ACTUAL: - -------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,280.80 $7.96 1.40% - -------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,281.40 $6.83 1.20% - -------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,278.80 $9.37 1.65% - -------------------------------------------------------------------------------------------------- HYPOTHETICAL: - -------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,017.95 $7.04 1.40% - -------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,018.95 $6.04 1.20% - -------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,016.70 $8.30 1.65% - -------------------------------------------------------------------------------------------------- * Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (continued) - ------ 32 Shareholder Fee Examples (Unaudited) - -------------------------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 12/1/05 - EXPENSE 12/1/05 5/31/06 5/31/06 RATIO* - -------------------------------------------------------------------------------------------------- EMERGING MARKETS SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------------------------- ACTUAL: - -------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,212.60 $9.93 1.80% - -------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,213.70 $8.83 1.60% - -------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,210.60 $11.30 2.05% - -------------------------------------------------------------------------------------------------- C Class $1,000 $1,205.90 $15.40 2.80% - -------------------------------------------------------------------------------------------------- HYPOTHETICAL: - -------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,015.96 $9.05 1.80% - -------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,016.95 $8.05 1.60% - -------------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,014.71 $10.30 2.05% - -------------------------------------------------------------------------------------------------- C Class $1,000 $1,010.97 $14.04 2.80% - -------------------------------------------------------------------------------------------------- INTERNATIONAL OPPORTUNITIES SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------------------------- ACTUAL: - -------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,204.80 $10.11 1.84% - -------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,205.70 $9.02 1.64% - -------------------------------------------------------------------------------------------------- HYPOTHETICAL: - -------------------------------------------------------------------------------------------------- Investor Class $1,000 $1,015.76 $9.25 1.84% - -------------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,016.75 $8.25 1.64% - -------------------------------------------------------------------------------------------------- * Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 33 Statement of Assets and Liabilities MAY 31, 2006 (UNAUDITED) - ----------------------------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL (AMOUNTS IN THOUSANDS) STOCK DISCOVERY MARKETS OPPORTUNITIES - ----------------------------------------------------------------------------------------------------- ASSETS - ----------------------------------------------------------------------------------------------------- Investment securities, at value (cost of $61,315, $1,288,186, $423,008 and $155,234, respectively) -- including $--, $171,590, $45,272, and $40,648 of securities on loan, respectively $64,333 $1,719,753 $473,057 $203,121 - ------------------------------------------------ Investments made with cash collateral received for securities on loan, at value (cost of $--, $179,036, $48,579 and $44,325, respectively) -- 179,036 48,579 44,325 - ----------------------------------------------------------------------------------------------------- Total investment securities, at value (cost of $61,315, $1,467,222, $471,587 and $199,559, respectively) 64,333 1,898,789 521,636 247,446 - ------------------------------------------------ Cash 276 316 1,031 -- - ------------------------------------------------ Cash collateral received for securities on loan -- 218 -- -- - ------------------------------------------------ Foreign currency holdings, at value (cost of $27, $7,867, $1,772, and $519, respectively) 26 7,845 1,772 512 - ------------------------------------------------ Receivable for investments sold -- 5,230 4,820 4,214 - ------------------------------------------------ Receivable for capital shares sold 54 -- 100 -- - ------------------------------------------------ Dividends and interest receivable 116 2,666 1,696 431 - ----------------------------------------------------------------------------------------------------- 64,805 1,915,064 531,055 252,603 - ----------------------------------------------------------------------------------------------------- LIABILITIES - ----------------------------------------------------------------------------------------------------- Payable for collateral received for securities on loan -- 179,254 48,579 44,325 - ------------------------------------------------ Disbursements in excess of demand deposit cash -- -- -- 775 - ------------------------------------------------ Payable for investments purchased -- 3,215 6,311 1,181 - ------------------------------------------------ Accrued management fees 83 2,077 768 344 - ------------------------------------------------ Distribution fees payable -- -- 2 -- - ------------------------------------------------ Service fees payable -- -- 1 -- - ----------------------------------------------------------------------------------------------------- 83 184,546 55,661 46,625 - ----------------------------------------------------------------------------------------------------- NET ASSETS $64,722 $1,730,518 $475,394 $205,978 ===================================================================================================== See Notes to Financial Statements. (continued) - ------ 34 Statement of Assets and Liabilities MAY 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL (AMOUNTS IN THOUSANDS EXCEPT AS NOTED) STOCK DISCOVERY MARKETS OPPORTUNITIES - -------------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $61,069 $1,065,161 $348,974 $118,734 - ----------------------------------- Undistributed net investment income 170 475 179 152 - ----------------------------------- Undistributed net realized gain on investment and foreign currency transactions 463 233,282 76,287 39,213 - ----------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 3,020 431,600 49,954 47,879 - -------------------------------------------------------------------------------------------------- $64,722 $1,730,518 $475,394 $205,978 ================================================================================================== INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------- Net assets $64,721,818 $1,408,744,419 $379,790,019 $205,941,137 - ----------------------------------- Shares outstanding 5,289,155 83,326,674 45,497,858 18,174,535 - ----------------------------------- Net asset value per share $12.24 $16.91 $8.35 $11.33 - -------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------- Net assets N/A $321,755,236 $88,810,582 $36,956 - ----------------------------------- Shares outstanding N/A 18,890,187 10,485,963 3,250 - ----------------------------------- Net asset value per share N/A $17.03 $8.47 $11.37 - -------------------------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------- Net assets N/A $18,788 $5,450,557 N/A - ----------------------------------- Shares outstanding N/A 1,126 665,501 N/A - ----------------------------------- Net asset value per share N/A $16.69 $8.19 N/A - -------------------------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------- Net assets N/A N/A $1,342,688 N/A - ----------------------------------- Shares outstanding N/A N/A 166,929 N/A - ----------------------------------- Net asset value per share N/A N/A $8.04 N/A - -------------------------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 35 Statement of Operations FOR THE SIX MONTHS ENDED MAY 31, 2006 (UNAUDITED) - ---------------------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL (AMOUNTS IN THOUSANDS) STOCK DISCOVERY MARKETS OPPORTUNITIES - ---------------------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - ---------------------------------------------------------------------------------------------- INCOME: - --------------------------------------- Dividends (net of foreign taxes withheld of $54, $976, $345, and $198, respectively) $ 524 $ 10,491 $ 6,020 $ 1,944 - --------------------------------------- Interest 42 828 583 58 - --------------------------------------- Securities lending -- 611 96 201 - ---------------------------------------------------------------------------------------------- 566 11,930 6,699 2,203 - ---------------------------------------------------------------------------------------------- EXPENSES: - --------------------------------------- Management fees 318 11,085 3,869 1,980 - --------------------------------------- Distribution fees: - --------------------------------------- Advisor Class -- -- 4 -- - --------------------------------------- C Class -- -- 4 -- - --------------------------------------- Service fees: - --------------------------------------- Advisor Class -- -- 4 -- - --------------------------------------- C Class -- -- 1 -- - --------------------------------------- Directors' fees and expenses -- 12 3 2 - --------------------------------------- Other expenses -- 29 6 5 - ---------------------------------------------------------------------------------------------- 318 11,126 3,891 1,987 - ---------------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 248 804 2,808 216 - ---------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - --------------------------------------- NET REALIZED GAIN (LOSS) ON: - --------------------------------------- Investment transactions (net of foreign taxes withheld of $--, $65, $68, and $--, respectively) 695 244,880 72,256 40,333 - --------------------------------------- Foreign currency transactions (net of foreign taxes withheld of $--, $--, $7, and $--, respectively) 10 (10,427) 3,989 (1,069) - ---------------------------------------------------------------------------------------------- 705 234,453 76,245 39,264 - ---------------------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: - --------------------------------------- Investments (including foreign tax liability reduction (increase) of $--, $333, $(4), and $11, respectively) (1,058) 52,961 (7,298) (11,789) - --------------------------------------- Translation of assets and liabilities in foreign currencies 2,799 88,690 (662) 11,522 - ---------------------------------------------------------------------------------------------- 1,741 141,651 (7,960) (267) - ---------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 2,446 376,104 68,285 38,997 - ---------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $2,694 $376,908 $71,093 $39,213 ============================================================================================== See Notes to Financial Statements. - ------ 36 Statement of Changes in Net Assets SIX MONTHS ENDED MAY 31, 2006 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2005 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------- (AMOUNTS IN THOUSANDS) INTERNATIONAL STOCK INTERNATIONAL DISCOVERY - -------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005(1) 2006 2005 - -------------------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------------------- Net investment income (loss) $ 248 $ 74 $ 804 $ 13,108 - ---------------------------------------- Net realized gain (loss) 705 (239) 234,453 235,786 - ---------------------------------------- Change in net unrealized appreciation (depreciation) 1,741 1,279 141,651 26,212 - -------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 2,694 1,114 376,908 275,106 - -------------------------------------------------------------------------------------------- DISTRIBUTIONS TO SHAREHOLDERS - -------------------------------------------------------------------------------------------- From net investment income: - ---------------------------------------- Investor Class (155) -- (9,105) -- - ---------------------------------------- Institutional Class -- -- (2,071) -- - ---------------------------------------- Advisor Class -- -- -- -- - ---------------------------------------- From net realized gains: - ---------------------------------------- Investor Class -- -- (200,176) (165,843) - ---------------------------------------- Institutional Class -- -- (36,186) (25,231) - ---------------------------------------- Advisor Class -- -- (12) (29) - -------------------------------------------------------------------------------------------- Decrease in net assets from distributions (155) -- (247,550) (191,103) - -------------------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions 41,841 19,228 250,061 (11,575) - -------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 44,380 20,342 379,419 72,428 NET ASSETS - -------------------------------------------------------------------------------------------- Beginning of period 20,342 -- 1,351,099 1,278,671 - -------------------------------------------------------------------------------------------- End of period $64,722 $20,342 $1,730,518 $1,351,099 ============================================================================================ Undistributed net investment income $170 $77 $475 $10,912 ============================================================================================ (1) March 31, 2005 (fund inception) through November 30, 2005. See Notes to Financial Statements. (continued) - ------ 37 Statement of Changes in Net Assets SIX MONTHS ENDED MAY 31, 2006 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2005 - ------------------------------------------------------------------------------------------------ (AMOUNTS IN THOUSANDS) EMERGING MARKETS INTERNATIONAL OPPORTUNITIES - ------------------------------------------------------------------------------------------------ INCREASE (DECREASE) IN NET ASSETS 2006 2005 2006 2005 - ------------------------------------------------------------------------------------------------ OPERATIONS - ------------------------------------------------------------------------------------------------ Net investment income (loss) $ 2,808 $ 584 $ 216 $ 399 - ---------------------------------------- Net realized gain (loss) 76,245 57,592 39,264 48,817 - ---------------------------------------- Change in net unrealized appreciation (depreciation) (7,960) 15,289 (267) 7,728 - ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations 71,093 73,465 39,213 56,944 - ------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------ From net investment income: - ---------------------------------------- Investor Class (1,354) -- (213) -- - ---------------------------------------- Institutional Class (916) -- -- -- - ---------------------------------------- Advisor Class (6) -- -- -- - ---------------------------------------- From net realized gains: - ---------------------------------------- Investor Class (38,795) (1,897) (48,721) (5,331) - ---------------------------------------- Institutional Class (18,743) (1,130) (8) (336) - ---------------------------------------- Advisor Class (323) (14) -- -- - ---------------------------------------- C Class (145) (8) -- -- - ------------------------------------------------------------------------------------------------ Decrease in net assets from distributions (60,282) (3,049) (48,942) (5,667) - ------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS - ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from capital share transactions 127,592 36,847 17,479 (40,017) - ------------------------------------------------------------------------------------------------ NET INCREASE (DECREASE) IN NET ASSETS 138,403 107,263 7,750 11,260 NET ASSETS - ------------------------------------------------------------------------------------------------ Beginning of period 336,991 229,728 198,228 186,968 - ------------------------------------------------------------------------------------------------ End of period $475,394 $336,991 $205,978 $198,228 ================================================================================================ Accumulated undistributed net investment income (loss) $179 $(278) $152 $149 ================================================================================================ See Notes to Financial Statements. - ------ 38 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. International Stock Fund (International Stock), International Discovery Fund (International Discovery), Emerging Markets Fund (Emerging Markets) and International Opportunities Fund (International Opportunities) (collectively, the funds) are four funds in a series issued by the corporation. The funds are diversified under the 1940 Act. The funds' investment objectives are to seek capital growth. The funds pursue their objectives by investing primarily in equity securities of foreign companies. 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 at least 80% of its assets in securities of issuers in emerging market countries and companies that derive a significant portion of their business from emerging market 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. 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). 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, except for International Stock, continue to recognize any gain or loss in the market price of the securities loaned and record any interest earned or dividends declared. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies (continued) - ------ 39 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 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. 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) - ------ 40 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACGIM (the investment advisor), under which ACGIM provides the funds with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of the funds, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACGIM. The fee is computed and accrued daily based on the daily net assets of each specific class of shares of each fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in each fund's investment strategy (strategy assets) to calculate the appropriate fee rate for each fund. The strategy assets include each fund's assets and the assets of other clients of the investment advisor that are not in the American Century family of funds, but that have the same investment team and investment strategy. The strategy assets of Emerging Markets includes the assets of NT Emerging Markets Fund, one fund in a series issued by the corporation. The annual management fee schedule for each class of International Stock is as follows: - -------------------------------------------------------------------------------- INVESTOR - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $1 billion 1.50% - -------------------------------------------------------------------------------- Next $1 billion 1.20% - -------------------------------------------------------------------------------- Over $2 billion 1.10% - -------------------------------------------------------------------------------- The annual management fee schedule for each class of International Discovery is as follows: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $500 million 1.75% 1.55% 1.50% - -------------------------------------------------------------------------------- Next $500 million 1.40% 1.20% 1.15% - -------------------------------------------------------------------------------- Over $1 billion 1.20% 1.00% 0.95% - -------------------------------------------------------------------------------- The annual management fee schedule for each class of Emerging Markets is as follows: - -------------------------------------------------------------------------------- INVESTOR & C INSTITUTIONAL ADVISOR - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $250 million 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 International Opportunities is as follows: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $250 million 2.00% 1.80% - -------------------------------------------------------------------------------- Next $250 million 1.80% 1.60% - -------------------------------------------------------------------------------- Over $500 million 1.60% 1.40% - -------------------------------------------------------------------------------- (continued) - ------ 41 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) The effective annual management fees for each class of the funds for the six months ended May 31, 2006, were as follows: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR C - -------------------------------------------------------------------------------- International Stock 1.50% N/A N/A N/A - -------------------------------------------------------------------------------- International Discovery 1.40% 1.20% 1.15% N/A - -------------------------------------------------------------------------------- Emerging Markets 1.80% 1.60% 1.55% 1.80% - -------------------------------------------------------------------------------- International Opportunities 1.83% 1.63% N/A N/A - -------------------------------------------------------------------------------- ACGIM has entered into a Subadvisory Agreement with ACIM (the subadvisor) on behalf of the funds. The subadvisor makes investment decisions for the cash portion of the funds in accordance with the funds' investments objectives, policies and restrictions under the supervision of ACGIM and the Board of Directors. ACGIM pays all costs associated with retaining ACIM as the subadvisor of the funds. DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master Distribution and Shareholder Services Plan for the Advisor Class and a Master Distribution and Individual Shareholder Services Plan for the C Class (collectively, the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the Advisor Class and C Class will pay American Century Investment Services, Inc. (ACIS) the following annual distribution and service fees: - -------------------------------------------------------------------------------- ADVISOR C - -------------------------------------------------------------------------------- Distribution Fee 0.25% 0.75% - -------------------------------------------------------------------------------- Service Fee 0.25% 0.25% - -------------------------------------------------------------------------------- The fees are computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The distribution fee provides compensation for expenses incurred by financial intermediaries in connection with distributing shares of the classes including, but not limited to, payments to brokers, dealers, and financial institutions that have entered into sales agreements with respect to shares of the funds. The service fee provides compensation for shareholder and administrative services rendered by ACIS, its affiliates or independent third party providers for Advisor Class shares and for individual shareholder services rendered by broker/dealers or other independent financial intermediaries for C Class shares. Fees incurred under the plans during the six months ended May 31, 2006, 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 subadvisor, ACIM, 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 with JPMorgan Chase Bank (JPMCB). The funds, except for International Stock, have a securities lending agreement with 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. 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the six months ended May 31, 2006, were as follows: - -------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL STOCK DISCOVERY MARKETS OPPORTUNITIES - -------------------------------------------------------------------------------- Purchases $64,543 $1,098,106 $367,953 $144,586 - -------------------------------------------------------------------------------- Proceeds from sales $23,211 $1,122,634 $315,511 $171,195 - -------------------------------------------------------------------------------- For the six months ended May 31, 2006, Emerging Markets incurred net realized gains of $1,401 from redemptions in kind. A redemption in kind occurs when a fund delivers securities from its portfolio in lieu of cash as payment to a redeeming shareholder. (continued) - ------ 42 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: - ------------------------------------------------------------------------------------------------- INTERNATIONAL STOCK INTERNATIONAL DISCOVERY - ------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------- INVESTOR CLASS - ------------------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2006 SHARES AUTHORIZED 100,000 400,000 ================================================================================================= Sold 3,894 $47,729 3,792 $ 60,622 - ------------------------------------------ Issued in reinvestment of distributions 14 153 14,024 198,368 - ------------------------------------------ Redeemed (496) (6,041)(1) (6,350) (103,138)(1) - ------------------------------------------------------------------------------------------------- Net increase (decrease) 3,412 $41,841 11,466 $ 155,852 ================================================================================================= YEAR ENDED NOVEMBER 30, 2005(2) SHARES AUTHORIZED 325,000 400,000 ================================================================================================= Sold 2,009 $20,604 3,599 $ 50,533 - ------------------------------------------ Issued in reinvestment of distributions -- -- 12,055 156,490 - ------------------------------------------ Redeemed (132) (1,376)(3) (17,459) (241,922)(3) - ------------------------------------------------------------------------------------------------- Net increase (decrease) 1,877 $19,228 (1,805) $ (34,899) ================================================================================================= INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2006 SHARES AUTHORIZED N/A 75,000 ================================================================================================= Sold 4,603 $ 75,296 - ------------------------------------------ Issued in reinvestment of distributions 2,683 38,220 - ------------------------------------------ Redeemed (1,186) (19,254)(4) - ------------------------------------------------------------------------------------------------- Net increase (decrease) 6,100 $ 94,262 ================================================================================================= YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED N/A 75,000 ================================================================================================= Sold 4,413 $ 62,162 - ------------------------------------------ Issued in reinvestment of distributions 1,917 25,031 - ------------------------------------------ Redeemed (4,430) (63,742)(5) - ------------------------------------------------------------------------------------------------- Net increase (decrease) 1,900 $ 23,451 ================================================================================================= (1) Net of redemption fees of $21 and $44 for International Stock and International Discovery, respectively. (2) March 31, 2005 (fund inception) through November 30, 2005 for International Stock. (3) Net of redemption fees of $3 and $34 for International Stock and International Discovery, respectively. (4) Net of redemption fees of $26. (5) Net of redemption fees of $22. (continued) - ------ 43 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------------------------- INTERNATIONAL STOCK INTERNATIONAL DISCOVERY - -------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2006 SHARES AUTHORIZED N/A 5,000 ================================================================================================== Issued in reinvestment of distributions 1 $ 12 - ----------------------------------------- Redeemed (4) (65) - -------------------------------------------------------------------------------------------------- Net increase (decrease) (3) $(53) ================================================================================================== YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED N/A 5,000 ================================================================================================== Sold 2 $ 23 - ----------------------------------------- Issued in reinvestment of distributions 2 29 - ----------------------------------------- Redeemed (13) (179) - -------------------------------------------------------------------------------------------------- Net increase (decrease) (9) $(127) ================================================================================================== - -------------------------------------------------------------------------------------------------- EMERGING MARKETS INTERNATIONAL OPPORTUNITIES - -------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2006 SHARES AUTHORIZED 100,000 100,000 ================================================================================================== Sold 22,906 $191,488 74 $ 836 - ----------------------------------------- Issued in reinvestment of distributions 4,400 32,030 4,720 48,005 - ----------------------------------------- Redeemed (8,567) (72,868)(1) (2,767) (31,370) - -------------------------------------------------------------------------------------------------- Net increase (decrease) 18,739 $150,650 2,027 $ 17,471 ================================================================================================== YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 100,000 100,000 ================================================================================================== Sold 13,237 $ 95,244 129 $ 1,320 - ----------------------------------------- Issued in reinvestment of distributions 231 1,506 559 5,242 - ----------------------------------------- Redeemed (8,251) (56,614)(2) (3,366) (34,929)(2) - -------------------------------------------------------------------------------------------------- Net increase (decrease) 5,217 $ 40,136 (2,678) $(28,367) ================================================================================================== (1) Net of redemption fees of $249. (2) Net of redemption fees of $117 and $24 for Emerging Markets and International Opportunities, respectively. (continued) - ------ 44 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ---------------------------------------------------------------------------------------------------- EMERGING MARKETS INTERNATIONAL OPPORTUNITIES - ---------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - ---------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ---------------------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2006 SHARES AUTHORIZED 50,000 10,000 ==================================================================================================== Sold 3,412 $ 27,808 -- -- - ------------------------------------------ Issued in reinvestment of distributions 2,503 18,363 1 $8 - ------------------------------------------ Redeemed (9,037) (73,526)(1) -- -- - ---------------------------------------------------------------------------------------------------- Net increase (decrease) (3,122) $(27,355) 1 $8 ==================================================================================================== YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 50,000 10,000 ==================================================================================================== Sold 6,983 $ 49,775 2 $ 30 - ------------------------------------------ Issued in reinvestment of distributions 170 1,103 36 336 - ------------------------------------------ Redeemed (8,128) (54,494)(2) (1,196) (12,016) - ------------------------------------------------------------------------------------------------ Net increase (decrease) (975) $ (3,616) (1,158) $(11,650) ==================================================================================================== ADVISOR CLASS - ---------------------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2006 SHARES AUTHORIZED 5,000 N/A ==================================================================================================== Sold 494 $4,075 - ------------------------------------------ Issued in reinvestment of distributions 44 312 - ------------------------------------------ Redeemed (91) (718)(3) - ---------------------------------------------------------------------------------------------------- Net increase (decrease) 447 $3,669 ==================================================================================================== YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 5,000 N/A ==================================================================================================== Sold 169 $1,207 - ------------------------------------------ Issued in reinvestment of distributions 2 13 - ------------------------------------------ Redeemed (142) (945)(4) - ---------------------------------------------------------------------------------------------------- Net increase (decrease) 29 $ 275 ==================================================================================================== C CLASS - ---------------------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2006 SHARES AUTHORIZED 5,000 N/A ==================================================================================================== Sold 197 $1,578 - ------------------------------------------ Issued in reinvestment of distributions 20 142 - ------------------------------------------ Redeemed (142) (1,092) - ---------------------------------------------------------------------------------------------------- Net increase (decrease) 75 $ 628 ==================================================================================================== YEAR ENDED NOVEMBER 30, 2005 SHARES AUTHORIZED 5,000 N/A ==================================================================================================== Sold 40 $ 269 - ------------------------------------------ Issued in reinvestment of distributions 1 7 - ------------------------------------------ Redeemed (34) (224) - ---------------------------------------------------------------------------------------------------- Net increase (decrease) 7 $ 52 ==================================================================================================== (1) Net of redemption fees of $72. (2) Net of redemption fees of $13. (3) Net of redemption fees of $4. (4) Net of redemption fees of $5. (continued) - ------ 45 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 5. SECURITIES LENDING As of May 31, 2006, securities in International Discovery, Emerging Markets and International Opportunities valued at $171,590, $45,272 and $40,648, 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 $179,254, $48,579 and $44,325, respectively. The risks of International Discovery, Emerging Markets and International Opportunities 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 International Discovery, Emerging Markets and International Opportunities may be delayed or limited. 6. BANK LINE OF CREDIT The funds, along with certain other funds managed by ACIM or ACGIM, have a $500 million unsecured bank line of credit agreement with JPMCB. The funds may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The funds did not borrow from the line during the six months ended May 31, 2006. 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) - ------ 46 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) (AMOUNTS IN THOUSANDS) 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. As of May 31, 2006, the components of investments for federal income tax purposes were as follows: - ------------------------------------------------------------------------------------------------ INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL STOCK DISCOVERY MARKETS OPPORTUNITIES - ------------------------------------------------------------------------------------------------ Federal tax cost of investments $61,443 $1,468,581 $471,733 $199,950 ================================================================================================ Gross tax appreciation of investments $ 4,086 $451,943 $ 66,208 $51,857 - ---------------------------------------- Gross tax depreciation of investments (1,196) (21,735) (16,305) (4,361) - ------------------------------------------------------------------------------------------------ Net tax appreciation (depreciation) of investments $ 2,890 $430,208 $ 49,903 $47,496 ================================================================================================ The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. Following are the capital loss carryovers, currency loss deferral and capital loss deferral amounts as of November 30, 2005: - -------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL STOCK DISCOVERY MARKETS OPPORTUNITIES - -------------------------------------------------------------------------------- Accumulated capital losses $ (60) -- -- -- - -------------------------------------------------------------------------------- Capital loss deferral $(140) -- -- -- - -------------------------------------------------------------------------------- Currency loss deferral $ (2) $(189) $(74) $(39) - -------------------------------------------------------------------------------- The accumulated capital losses listed above represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers in International Stock expire in 2013. The capital and currency loss deferrals 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. - ------ 47 International Stock - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006(1) 2005(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.84 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------- Net Investment Income (Loss) 0.07 0.06(3) - -------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.40 0.78 - -------------------------------------------------------------------------------- Total From Investment Operations 1.47 0.84 - -------------------------------------------------------------------------------- Distributions - -------------------------------------------- From Net Investment Income (0.08) -- - -------------------------------------------------------------------------------- Redemption Fees(3) 0.01 -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.24 $10.84 ================================================================================ TOTAL RETURN(4) 13.71% 8.40% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50%(5) 1.50%(5) - -------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 1.17%(5) 0.91%(5) - -------------------------------------------- Portfolio Turnover Rate 56% 109% - -------------------------------------------- Net Assets, End of Period (in thousands) $64,722 $20,342 - -------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) March 31, 2005 (fund inception) through November 30, 2005. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. (5) Annualized. See Notes to Financial Statements. - ------ 48 International Discovery - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ---------------------------------------------------------------------------------------------------------- INVESTOR CLASS - ---------------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - ---------------------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $15.94 $15.11 $12.75 $9.32 $10.13 $14.23 - ---------------------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------- Net Investment Income (Loss)(2) --(3) 0.14 (0.01) 0.03 0.03 0.01 - ----------------------------------- Net Realized and Unrealized Gain (Loss) 3.88 2.97 2.40 3.42 (0.84) (2.54) - ---------------------------------------------------------------------------------------------------------- Total From Investment Operations 3.88 3.11 2.39 3.45 (0.81) (2.53) - ---------------------------------------------------------------------------------------------------------- Distributions - ----------------------------------- From Net Investment Income (0.13) -- (0.03) (0.02) -- -- - ----------------------------------- From Net Realized Gains (2.78) (2.28) -- -- -- (1.57) - ---------------------------------------------------------------------------------------------------------- Total Distributions (2.91) (2.28) (0.03) (0.02) -- (1.57) - ---------------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $16.91 $15.94 $15.11 $12.75 $9.32 $10.13 ========================================================================================================== TOTAL RETURN(4) 28.08% 24.30% 18.76% 37.05% (8.00)% (20.17)% RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.40%(5) 1.47% 1.49% 1.57% 1.53% 1.45% - ----------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.07%(5) 1.02% (0.06)% 0.27% 0.35% 0.10% - ----------------------------------- Portfolio Turnover Rate 69% 145% 201% 215% 224% 180% - ----------------------------------- Net Assets, End of Period (in thousands) $1,408,744 $1,145,623 $1,112,870 $1,028,934 $841,706 $1,021,063 - ---------------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 49 International Discovery - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - --------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - --------------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $16.06 $15.21 $12.84 $9.39 $10.18 $14.26 - --------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------- Net Investment Income (Loss)(2) 0.03 0.17 0.02 0.05 0.06 0.04 - ------------------------------------- Net Realized and Unrealized Gain (Loss) 3.88 2.99 2.40 3.43 (0.85) (2.55) - --------------------------------------------------------------------------------------------------- Total From Investment Operations 3.91 3.16 2.42 3.48 (0.79) (2.51) - --------------------------------------------------------------------------------------------------- Distributions - ------------------------------------- From Net Investment Income (0.16) -- (0.05) (0.03) -- -- - ------------------------------------- From Net Realized Gains (2.78) (2.31) -- -- -- (1.57) - --------------------------------------------------------------------------------------------------- Total Distributions (2.94) (2.31) (0.05) (0.03) -- (1.57) - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $17.03 $16.06 $15.21 $12.84 $9.39 $10.18 =================================================================================================== TOTAL RETURN(3) 28.14% 24.56% 18.94% 37.25% (7.76)% (19.97)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.20%(4) 1.27% 1.29% 1.37% 1.33% 1.25% - ------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.27%(4) 1.22% 0.14% 0.47% 0.55% 0.30% - ------------------------------------- Portfolio Turnover Rate 69% 145% 201% 215% 224% 180% - ------------------------------------- Net Assets, End of Period (in thousands) $321,755 $205,406 $165,600 $147,531 $137,358 $192,155 - --------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 50 International Discovery - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------- ADVISOR CLASS - --------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - --------------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $15.75 $14.95 $12.63 $9.23 $10.05 $14.17 - --------------------------------------------------------------------------------------------------- Income From Investment Operations - ---------------------------------- Net Investment Income (Loss)(2) (0.05) 0.10 (0.05) 0.01 0.01 --(3) - ---------------------------------- Net Realized and Unrealized Gain (Loss) 3.86 2.95 2.37 3.39 (0.83) (2.55) - --------------------------------------------------------------------------------------------------- Total From Investment Operations 3.81 3.05 2.32 3.40 (0.82) (2.55) - --------------------------------------------------------------------------------------------------- Distributions - ---------------------------------- From Net Investment Income (0.09) -- -- -- -- -- - ---------------------------------- From Net Realized Gains (2.78) (2.25) -- -- -- (1.57) - --------------------------------------------------------------------------------------------------- Total Distributions (2.87) (2.25) -- -- -- (1.57) - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $16.69 $15.75 $14.95 $12.63 $9.23 $10.05 =================================================================================================== TOTAL RETURN(4) 27.88% 24.01% 18.37% 36.84% (8.16)% (20.43)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.65%(5) 1.72% 1.74% 1.82% 1.78% 1.70% - ---------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.18)%(5) 0.77% (0.31)% 0.02% 0.10% (0.15)% - ---------------------------------- Portfolio Turnover Rate 69% 145% 201% 215% 224% 180% - ---------------------------------- Net Assets, End of Period (in thousands) $19 $70 $201 $161 $153 $244 - --------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 51 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------- INVESTOR CLASS - --------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - --------------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.25 $6.28 $5.28 $3.61 $4.06 $4.68 - --------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------ Net Investment Income (Loss)(2) 0.05 0.01 (0.01) --(3) (0.02) (0.02) - ------------------------------------ Net Realized and Unrealized Gain (Loss) 1.46 2.05 1.00 1.66 (0.43) (0.43) - --------------------------------------------------------------------------------------------------- Total From Investment Operations 1.51 2.06 0.99 1.66 (0.45) (0.45) - --------------------------------------------------------------------------------------------------- Distributions - ------------------------------------ From Net Investment Income (0.05) -- -- -- -- -- - ------------------------------------ From Net Realized Gains (1.37) (0.09) -- -- -- (0.17) - --------------------------------------------------------------------------------------------------- Total Distributions (1.42) (0.09) -- -- -- (0.17) - --------------------------------------------------------------------------------------------------- Redemption Fees(4) 0.01 --(3) 0.01 0.01 -- -- - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $8.35 $8.25 $6.28 $5.28 $3.61 $4.06 =================================================================================================== TOTAL RETURN(5) 21.26% 33.10% 18.94% 46.26% (10.86)% (10.28)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.80%(6) 1.94% 2.00% 2.01% 2.05% 2.00% - ------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 1.23%(6) 0.17% (0.22)% 0.03% (0.37)% (0.27)% - ------------------------------------ Portfolio Turnover Rate 76% 153% 208% 286% 387% 326% - ------------------------------------ Net Assets, End of Period (in thousands) $379,790 $220,720 $135,355 $103,737 $81,756 $80,422 - --------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per-share effect of redemption fees. Periods prior to December 1, 2001, have not been restated to reflect this change. Amounts computed using average shares outstanding throughout the period. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. See Notes to Financial Statements. - ------ 52 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - --------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - --------------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.36 $6.35 $5.33 $3.64 $4.08 $4.70 - --------------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------ Net Investment Income (Loss)(2) 0.06 0.03 --(3) 0.01 --(3) (0.01) - ------------------------------------ Net Realized and Unrealized Gain (Loss) 1.48 2.07 1.01 1.67 (0.44) (0.44) - --------------------------------------------------------------------------------------------------- Total From Investment Operations 1.54 2.10 1.01 1.68 (0.44) (0.45) - --------------------------------------------------------------------------------------------------- Distributions - ------------------------------------ From Net Investment Income (0.07) -- -- -- -- -- - ------------------------------------ From Net Realized Gains (1.37) (0.09) -- -- -- (0.17) - --------------------------------------------------------------------------------------------------- Total Distributions (1.44) (0.09) -- -- -- (0.17) - --------------------------------------------------------------------------------------------------- Redemption Fees(4) 0.01 --(3) 0.01 0.01 -- -- - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $8.47 $8.36 $6.35 $5.33 $3.64 $4.08 =================================================================================================== TOTAL RETURN(5) 21.37% 33.37% 19.14% 46.43% (10.78)% (10.01)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.60%(6) 1.74% 1.80% 1.81% 1.85% 1.80% - ------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 1.43%(6) 0.37% (0.02)% 0.23% (0.17)% (0.07)% - ------------------------------------ Portfolio Turnover Rate 76% 153% 208% 286% 387% 326% - ------------------------------------ Net Assets, End of Period (in thousands) $88,811 $113,765 $92,673 $63,242 $18,969 $18,602 - --------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per-share effect of redemption fees. Periods prior to December 1, 2001, have not been restated to reflect this change. Amounts computed using average shares outstanding throughout the period. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. See Notes to Financial Statements. - ------ 53 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------- ADVISOR CLASS - --------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - --------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.11 $6.19 $5.22 $3.58 $4.03 $4.66 - --------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------- Net Investment Income (Loss)(2) 0.05 (0.01) (0.03) --(3) (0.01) (0.04) - ----------------------------------- Net Realized and Unrealized Gain (Loss) 1.42 2.02 0.99 1.63 (0.44) (0.42) - --------------------------------------------------------------------------------------------- Total From Investment Operations 1.47 2.01 0.96 1.63 (0.45) (0.46) - --------------------------------------------------------------------------------------------- Distributions - ----------------------------------- From Net Investment Income (0.03) -- -- -- -- -- - ----------------------------------- From Net Realized Gains (1.37) (0.09) -- -- -- (0.17) - --------------------------------------------------------------------------------------------- Total Distributions (1.40) (0.09) -- -- -- (0.17) - --------------------------------------------------------------------------------------------- Redemption Fees(4) 0.01 --(3) 0.01 0.01 -- -- - --------------------------------------------------------------------------------------------- Net Asset Value, End of Period $8.19 $8.11 $6.19 $5.22 $3.58 $4.03 ============================================================================================= TOTAL RETURN(5) 21.06% 32.77% 18.58% 45.81% (11.17)% (10.32)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.05%(6) 2.19% 2.25% 2.26% 2.30% 2.25% - ----------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.98%(6) (0.08)% (0.47)% (0.22)% (0.62)% (0.52)% - ----------------------------------- Portfolio Turnover Rate 76% 153% 208% 286% 387% 326% - ----------------------------------- Net Assets, End of Period (in thousands) $5,451 $1,773 $1,178 $597 $1,254 $815 - --------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per-share effect of redemption fees. Periods prior to December 1, 2001, have not been restated to reflect this change. Amounts computed using average shares outstanding throughout the period. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. See Notes to Financial Statements. - ------ 54 Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ---------------------------------------------------------------------------------------- C CLASS - ---------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002(2) - ---------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $7.95 $6.12 $5.19 $3.58 $4.24 - ---------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------- Net Investment Income (Loss)(3) 0.01 (0.05) (0.07) (0.04) (0.04) - ----------------------------------- Net Realized and Unrealized Gain (Loss) 1.41 1.97 0.99 1.64 (0.62) - ---------------------------------------------------------------------------------------- Total From Investment Operations 1.42 1.92 0.92 1.60 (0.66) - ---------------------------------------------------------------------------------------- Distributions - ----------------------------------- From Net Realized Gains (1.34) (0.09) -- -- -- - ---------------------------------------------------------------------------------------- Redemption Fees(3) 0.01 --(4) 0.01 0.01 -- - ---------------------------------------------------------------------------------------- Net Asset Value, End of Period $8.04 $7.95 $6.12 $5.19 $3.58 ======================================================================================== TOTAL RETURN(5) 20.59% 31.67% 17.92% 44.97% (15.57)% RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.80%(6) 2.94% 3.00% 3.01% 3.05%(6) - ----------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.23%(6) (0.83)% (1.22)% (0.97)% (1.10)%(6) - ----------------------------------- Portfolio Turnover Rate 76% 153% 208% 286% 387%(7) - ----------------------------------- Net Assets, End of Period (in thousands) $1,343 $733 $521 $291 $54 - ---------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) December 18, 2001 (commencement of sale) through November 30, 2002. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2002. See Notes to Financial Statements. - ------ 55 International Opportunities - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------------------- INVESTOR CLASS - --------------------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001(2) - --------------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $12.27 $9.35 $7.62 $4.73 $4.87 $5.00 - --------------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------- Net Investment Income (Loss)(3) 0.01 0.02 (0.05) (0.01) 0.02 (0.02) - ----------------------------------- Net Realized and Unrealized Gain (Loss) 2.05 3.19 2.03 2.90 (0.19) (0.11) - --------------------------------------------------------------------------------------------------- Total From Investment Operations 2.06 3.21 1.98 2.89 (0.17) (0.13) - --------------------------------------------------------------------------------------------------- Distributions - ----------------------------------- From Net Investment Income (0.01) -- -- (0.01) -- -- - ----------------------------------- From Net Realized Gains (2.99) (0.29) (0.27) -- -- -- - --------------------------------------------------------------------------------------------------- Total Distributions (3.00) (0.29) (0.27) (0.01) -- -- - --------------------------------------------------------------------------------------------------- Redemption Fees(4) --(5) --(5) 0.02 0.01 0.03 -- - --------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $11.33 $12.27 $9.35 $7.62 $4.73 $4.87 =================================================================================================== TOTAL RETURN(6) 20.48% 35.28% 27.14% 61.54% (2.87)% (2.60)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.84%(7) 1.91% 1.97% 2.00% 2.01% 2.00%(7) - ----------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.20%(7) 0.20% (0.63)% (0.23)% 0.30% (0.75)%(7) - ----------------------------------- Portfolio Turnover Rate 68% 112% 139% 219% 257% 147% - ----------------------------------- Net Assets, End of Period (in thousands) $205,941 $198,197 $176,100 $72,008 $21,977 $6,569 - --------------------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) June 1, 2001 (fund inception) through November 30, 2001. (3) Computed using average shares outstanding throughout the period. (4) The fund adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies which requires the disclosure of the per-share effect of redemption fees. Periods prior to December 1, 2001, have not been restated to reflect this change. Amounts computed using the average shares outstanding throughout the period. (5) Per-share amount was less than $0.005. (6) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (7) Annualized. See Notes to Financial Statements. - ------ 56 International Opportunities - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006(1) 2005 2004 2003(2) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $12.32 $9.37 $7.63 $4.80 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------- Net Investment Income (Loss)(3) 0.03 0.10 (0.03) 0.01 - -------------------------------------- Net Realized and Unrealized Gain (Loss) 2.05 3.14 2.04 2.81 - -------------------------------------------------------------------------------- Total From Investment Operations 2.08 3.24 2.01 2.82 - -------------------------------------------------------------------------------- Distributions - -------------------------------------- From Net Investment Income (0.04) -- -- -- - -------------------------------------- From Net Realized Gains (2.99) (0.29) (0.29) -- - -------------------------------------------------------------------------------- Total Distributions (3.03) (0.29) (0.29) -- - -------------------------------------------------------------------------------- Redemption Fees(3) --(4) --(4) 0.02 0.01 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.37 $12.32 $9.37 $7.63 ================================================================================ TOTAL RETURN(5) 20.57% 35.53% 27.50% 58.96% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.64%(6) 1.71% 1.77% 1.80%(6) - -------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.40%(6) 0.40% (0.43)% 0.18%(6) - -------------------------------------- Portfolio Turnover Rate 68% 112% 139% 219%(7) - -------------------------------------- Net Assets, End of Period (in thousands) $37 $31 $10,868 $8,523 - -------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) January 9, 2003 (commencement of sale) through November 30, 2003. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 57 Share Class Information One class of shares is authorized for sale by International Stock: Investor Class. Three classes of shares are authorized for sale by International Discovery: Investor Class, Institutional Class and Advisor Class. Four classes of shares are authorized for sale by Emerging Markets: Investor Class, Institutional Class, Advisor Class and C Class. Two classes of shares are authorized for sale by International Opportunities: Investor Class and Institutional Class. The total expense ratio of Institutional Class shares is lower than that of Investor Class shares. The total expense ratios of Advisor Class and C 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. 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 distribution and service 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 distribution and service fee of 1.00%. All classes of shares represent a pro rata interest in the funds and generally have the same rights and preferences. - ------ 58 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) - ------ 59 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. - ------ 60 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 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. - ------ 61 Notes - ------ 62 Notes - ------ 63 Notes - ------ 64 American Century Investments P.O. Box 419200 Kansas City, MO 64141-6200 CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL 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. PRSRT STD U.S. POSTAGE PAID AMERICAN CENTURY COMPANIES The American Century Investments logo, American Century and American Century Investments are service marks of American Century Investment American Century Proprietary Holdings, Inc. Services, Inc., Distributor 0607 (c)2006 American Century Proprietary SH-SAN-50109S Holdings, Inc. All rights reserved.
[front cover] American Century Investments SEMIANNUAL REPORT [photo of boy with plane] MAY 31, 2006 NT International Growth Fund NT Emerging Markets Fund [american century investments logo and text logo] Table of Contents Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 NT INTERNATIONAL GROWTH Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 3 Investments by Country . . . . . . . . . . . . . . . . . . . . . . . . . 3 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 4 NT EMERGING MARKETS Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 8 Investments by Country . . . . . . . . . . . . . . . . . . . . . . . . . 8 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . . . .12 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .14 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .15 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . .16 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .17 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . .21 OTHER INFORMATION Approval of Management Agreement for NT International Growth and NT Emerging Markets . . . . . . . . . . . . . .23 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .25 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26 The opinions expressed in each of the Portfolio Commentaries reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the semiannual report for the American Century NT International Growth and NT Emerging Markets funds from their inception May 12, 2006 through May 31, 2006. These are two of nine new NT tracker funds available exclusively in LIVESTRONG(tm) Portfolios from American Century Investments. NT is an acronym for "No Tobacco." We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our Web site, americancentury.com, where we post quarterly portfolio commentaries, the views of our senior investment officers, and other communications about investments, portfolio strategy, and the markets. Our Web site presents American Century's recently-announced strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). Our new campaign, featuring Lance, is designed to encourage investors to take a more active role in planning their financial futures and make every investment decision count. American Century's collaboration with Lance Armstrong and the LAF is a perfect fit. Like members of our family, Lance is a cancer survivor and shares our values of optimism, focus, and determination. In addition, Lance and our family have dedicated our success to improving lives, through the LAF and the Stowers Institute for Medical Research, respectively. To learn more about American Century's collaboration with Lance Armstrong and the LAF, please visit www.lanceface.com on the Web and click on the links to related sites. Besides the exciting new collaboration, we've enjoyed other good news -- in January, American Century was named, for the seventh consecutive year, one of FORTUNE magazine's 100 Best Companies to Work For in America. Fostering a positive work environment can benefit fund investors as well as our company -- it helps us continue to attract and retain talented people. 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 NT International Growth - Performance TOTAL RETURNS AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- SINCE INCEPTION(1) INCEPTION DATE - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS -6.60% 5/12/06 - -------------------------------------------------------------------------------- MSCI EAFE INDEX -5.59% -- - -------------------------------------------------------------------------------- MSCI EAFE GROWTH INDEX -6.04% -- - -------------------------------------------------------------------------------- (1) 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 indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 2 NT International Growth - Portfolio Commentary PORTFOLIO MANAGERS: KEITH CREVELING AND MICHAEL PERELSTEIN NT International Growth declined 6.60%* from its inception May 12, 2006, through May 31, 2006, while its benchmark, the Morgan Stanley Capital International EAFE Index, fell 5.59%. This is one of nine new NT tracker funds available exclusively in LIVESTRONG Portfolios from American Century Investments. NT is an acronym for "No Tobacco." American Century Investments introduced the portfolios May 2006, as part of a strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF).** American Century created LIVESTRONG Portfolios by enhancing its existing My Retirement Portfolios, a series of asset allocation funds first launched in August 2004. While the modified funds have the same fee structure and investment strategy as My Retirement Portfolios, the underlying funds in LIVESTRONG Portfolios will not invest in tobacco companies as part of American Century's commitment to the LAF and the fight against cancer. Due to the short time period since the portfolio's inception, this initial semiannual report is necessarily briefer than our usual performance reports. We will provide a more detailed report on performance at the end of the portfolio's fiscal year, November 30, 2006. TOP TEN HOLDINGS AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF NET ASSETS - -------------------------------------------------------------------------------- Roche Holding AG 2.7% - -------------------------------------------------------------------------------- GlaxoSmithKline plc 2.4% - -------------------------------------------------------------------------------- ORIX Corp. 1.9% - -------------------------------------------------------------------------------- Total SA 1.9% - -------------------------------------------------------------------------------- Toyota Motor Corp. 1.9% - -------------------------------------------------------------------------------- BHP Billiton Ltd. 1.7% - -------------------------------------------------------------------------------- SAP AG 1.6% - -------------------------------------------------------------------------------- Novartis AG 1.6% - -------------------------------------------------------------------------------- Matsushita Electric Industrial Co., Ltd. 1.5% - -------------------------------------------------------------------------------- BG Group plc 1.5% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF NET ASSETS AS OF 5/31/06 - -------------------------------------------------------------------------------- Foreign Common Stocks 99.4% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.3% - -------------------------------------------------------------------------------- Other Assets and Liabilities (0.7)% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF NET ASSETS - -------------------------------------------------------------------------------- Japan 25.0% - -------------------------------------------------------------------------------- France 14.2% - -------------------------------------------------------------------------------- United Kingdom 11.4% - -------------------------------------------------------------------------------- Switzerland 9.7% - -------------------------------------------------------------------------------- Germany 8.4% - -------------------------------------------------------------------------------- Italy 4.2% - -------------------------------------------------------------------------------- Australia 3.6% - -------------------------------------------------------------------------------- Greece 3.1% - -------------------------------------------------------------------------------- Netherlands 2.9% - -------------------------------------------------------------------------------- Norway 2.8% - -------------------------------------------------------------------------------- Ireland 2.5% - -------------------------------------------------------------------------------- Other Countries 11.6% - -------------------------------------------------------------------------------- Cash and Equivalents(1) 0.6% - -------------------------------------------------------------------------------- (1) Includes temporary cash investments and other assets and liabilities * Total returns for periods less than one year are not annualized. **American Century Investment Services, Inc., has entered into an agreement with the Lance Armstrong Foundation for rights to use the LIVESTRONG name. LIVESTRONG is a trademark of the Lance Armstrong Foundation. For more information about the foundation, visit www.livestrong.org. - ------ 3 NT International Growth - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS - 99.4% - -------------------------------------------------------------------------------- AUSTRALIA - 3.6% - -------------------------------------------------------------------------------- 23,531 BHP Billiton Ltd. $ 509,211 - -------------------------------------------------------------------------------- 1,543 CSL Ltd. 59,777 - -------------------------------------------------------------------------------- 9,958 National Australia Bank Ltd. 265,779 - -------------------------------------------------------------------------------- 4,046 Rio Tinto Ltd. 237,705 - -------------------------------------------------------------------------------- 1,072,472 - -------------------------------------------------------------------------------- AUSTRIA - 0.8% - -------------------------------------------------------------------------------- 4,135 Erste Bank der Oesterreichischen Sparkassen AG 235,617 - -------------------------------------------------------------------------------- BELGIUM - 1.3% - -------------------------------------------------------------------------------- 3,455 KBC Groupe 371,565 - -------------------------------------------------------------------------------- CANADA - 0.7% - -------------------------------------------------------------------------------- 2,758 Suncor Energy Inc. 222,523 - -------------------------------------------------------------------------------- FRANCE - 14.2% - -------------------------------------------------------------------------------- 5,021 Accor SA 294,335 - -------------------------------------------------------------------------------- 4,018 Alstom RGPT(1) 341,006 - -------------------------------------------------------------------------------- 10,431 Axa SA 362,477 - -------------------------------------------------------------------------------- 3,141 Essilor International SA Cie Generale D'Optique 316,068 - -------------------------------------------------------------------------------- 3,041 Groupe Danone 366,778 - -------------------------------------------------------------------------------- 1,317 Pernod-Ricard SA 256,952 - -------------------------------------------------------------------------------- 2,067 PPR SA 256,320 - -------------------------------------------------------------------------------- 3,011 Schneider Electric SA 312,244 - -------------------------------------------------------------------------------- 2,703 Societe Generale(1) 418,965 - -------------------------------------------------------------------------------- 8,524 Total SA 555,850 - -------------------------------------------------------------------------------- 88 Vallourec 110,252 - -------------------------------------------------------------------------------- 6,262 Veolia Environnement 348,480 - -------------------------------------------------------------------------------- 3,096 Vinci SA 284,371 - -------------------------------------------------------------------------------- 4,224,098 - -------------------------------------------------------------------------------- GERMANY - 8.4% - -------------------------------------------------------------------------------- 1,035 Adidas-Salomon AG 206,690 - -------------------------------------------------------------------------------- 4,891 Bayerische Motoren Werke AG 251,502 - -------------------------------------------------------------------------------- 4,049 Continental AG 444,378 - -------------------------------------------------------------------------------- 1,570 Deutsche Boerse AG 203,981 - -------------------------------------------------------------------------------- 2,490 Fresenius Medical Care AG 280,499 - -------------------------------------------------------------------------------- 4,433 Hypo Real Estate Holding AG 280,026 - -------------------------------------------------------------------------------- 1,442 MAN AG 103,651 - -------------------------------------------------------------------------------- 2,289 SAP AG 481,881 - -------------------------------------------------------------------------------- 2,699 Siemens AG 232,330 - -------------------------------------------------------------------------------- 2,484,938 - -------------------------------------------------------------------------------- GREECE - 3.1% - -------------------------------------------------------------------------------- 7,800 Greek Organization of Football Prognostics SA 264,793 - -------------------------------------------------------------------------------- 12,600 Hellenic Telecommunications Organization SA(1) 279,243 - -------------------------------------------------------------------------------- 9,000 National Bank of Greece SA 379,800 - -------------------------------------------------------------------------------- 923,836 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- HONG KONG - 0.4% - -------------------------------------------------------------------------------- 52,000 Li & Fung Ltd. $ 106,066 - -------------------------------------------------------------------------------- IRELAND - 2.5% - -------------------------------------------------------------------------------- 17,715 Anglo Irish Bank Corp. plc 275,730 - -------------------------------------------------------------------------------- 15,203 Bank of Ireland 275,935 - -------------------------------------------------------------------------------- 4,146 Ryanair Holdings plc ADR(1) 203,113 - -------------------------------------------------------------------------------- 754,778 - -------------------------------------------------------------------------------- ITALY - 4.2% - -------------------------------------------------------------------------------- 12,235 Banco Popolare di Verona e Novara Scrl 335,259 - -------------------------------------------------------------------------------- 9,811 ENI SpA 296,930 - -------------------------------------------------------------------------------- 13,032 Luxottica Group SpA 355,513 - -------------------------------------------------------------------------------- 11,355 Saipem SpA 266,780 - -------------------------------------------------------------------------------- 1,254,482 - -------------------------------------------------------------------------------- JAPAN - 25.0% - -------------------------------------------------------------------------------- 31,000 Bank of Yokohama Ltd. (The) 221,541 - -------------------------------------------------------------------------------- 40 East Japan Railway Company 288,017 - -------------------------------------------------------------------------------- 3,300 Eisai Co. Ltd. 150,993 - -------------------------------------------------------------------------------- 8,600 Hoya Corp. 330,878 - -------------------------------------------------------------------------------- 7,000 JSR Corp. 185,314 - -------------------------------------------------------------------------------- 9,500 JTEKT Corp. 189,584 - -------------------------------------------------------------------------------- 1,000 Keyence Corp. 257,184 - -------------------------------------------------------------------------------- 13,000 Komatsu Ltd. 261,184 - -------------------------------------------------------------------------------- 8,000 Leopalace21 Corp. 241,633 - -------------------------------------------------------------------------------- 21,000 Matsushita Electric Industrial Co., Ltd. 458,431 - -------------------------------------------------------------------------------- 15,000 Matsushita Electric Works, Ltd. 174,887 - -------------------------------------------------------------------------------- 15,000 Mitsubishi Electric Corp. 122,569 - -------------------------------------------------------------------------------- 32 Mitsubishi UFJ Financial Group, Inc. 440,319 - -------------------------------------------------------------------------------- 2,000 Murata Manufacturing Co. Ltd. 129,806 - -------------------------------------------------------------------------------- 6,000 NGK Insulators Ltd. 71,735 - -------------------------------------------------------------------------------- 11,500 Nikko Cordial Corp. 169,021 - -------------------------------------------------------------------------------- 2,300 Nitto Denko Corp. 177,808 - -------------------------------------------------------------------------------- 2,000 ORIX Corp. 576,214 - -------------------------------------------------------------------------------- 7,900 Sega Sammy Holdings Inc. 316,019 - -------------------------------------------------------------------------------- 23,000 Sekisui Chemical Co. Ltd. 196,416 - -------------------------------------------------------------------------------- 5,600 Shin-Etsu Chemical Co., Ltd. 315,632 - -------------------------------------------------------------------------------- 23,000 Sumitomo Heavy Industries Ltd. 217,092 - -------------------------------------------------------------------------------- 23 Sumitomo Mitsui Financial Group Inc. 240,350 - -------------------------------------------------------------------------------- 9,000 Sumitomo Realty & Development Co. Ltd. 218,440 - -------------------------------------------------------------------------------- 52,000 Taisei Corp. 198,664 - -------------------------------------------------------------------------------- 36,000 Toray Industries Inc. 319,733 - -------------------------------------------------------------------------------- 10,300 Toyota Motor Corp. 553,007 - -------------------------------------------------------------------------------- 3,900 Yamada Denki Co. Ltd. 403,521 - -------------------------------------------------------------------------------- 7,425,992 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 4 NT International Growth - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- MEXICO - 1.5% - -------------------------------------------------------------------------------- 10,748 America Movil SA de CV Series L ADR $ 351,030 - -------------------------------------------------------------------------------- 1,879 Cemex SA de CV ADR 107,047 - -------------------------------------------------------------------------------- 458,077 - -------------------------------------------------------------------------------- MULTI-NATIONAL - 0.7% - -------------------------------------------------------------------------------- 3,000 iShares MSCI EAFE Index Fund 196,050 - -------------------------------------------------------------------------------- NETHERLANDS - 2.9% - -------------------------------------------------------------------------------- 11,627 ASML Holding N.V.(1) 236,493 - -------------------------------------------------------------------------------- 6,394 ING Groep N.V. CVA 250,708 - -------------------------------------------------------------------------------- 8,447 Royal Numico N.V. 374,948 - -------------------------------------------------------------------------------- 862,149 - -------------------------------------------------------------------------------- NORWAY - 2.8% - -------------------------------------------------------------------------------- 3,598 Aker Kvaerner ASA 361,911 - -------------------------------------------------------------------------------- 4,300 Statoil ASA 125,990 - -------------------------------------------------------------------------------- 27,563 Telenor ASA 347,692 - -------------------------------------------------------------------------------- 835,593 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA - 0.5% - -------------------------------------------------------------------------------- 26,000 China Mobile Hong Kong Ltd. 137,273 - -------------------------------------------------------------------------------- SINGAPORE - 0.5% - -------------------------------------------------------------------------------- 17,000 Keppel Corp. Ltd. 147,158 - -------------------------------------------------------------------------------- SOUTH KOREA - 1.1% - -------------------------------------------------------------------------------- 500 Samsung Electronics 318,898 - -------------------------------------------------------------------------------- SPAIN - 1.6% - -------------------------------------------------------------------------------- 12,850 Cintra Concesiones de Infraestructuras de Transporte SA 165,438 - -------------------------------------------------------------------------------- 7,701 Inditex SA 305,234 - -------------------------------------------------------------------------------- 470,672 - -------------------------------------------------------------------------------- SWEDEN - 1.3% - -------------------------------------------------------------------------------- 9,895 Atlas Copco AB A Shares 268,316 - -------------------------------------------------------------------------------- 4,617 ForeningsSparbanken AB 120,725 - -------------------------------------------------------------------------------- 389,041 - -------------------------------------------------------------------------------- SWITZERLAND - 9.7% - -------------------------------------------------------------------------------- 24,815 ABB Ltd. 313,165 - -------------------------------------------------------------------------------- 4,561 Adecco SA 294,641 - -------------------------------------------------------------------------------- 7,231 Compagnie Financiere Richemont AG Cl A 337,498 - -------------------------------------------------------------------------------- 3,388 Lonza Group AG 231,221 - -------------------------------------------------------------------------------- 8,665 Novartis AG 480,734 - -------------------------------------------------------------------------------- 5,066 Roche Holding AG 790,295 - -------------------------------------------------------------------------------- 3,929 UBS AG 444,841 - -------------------------------------------------------------------------------- 2,892,395 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) - 0.8% - -------------------------------------------------------------------------------- 36,000 Hon Hai Precision Industry Co., Ltd. $ 228,950 - -------------------------------------------------------------------------------- TURKEY - 0.4% - -------------------------------------------------------------------------------- 36,900 Turkiye Garanti Bankasi AS 110,688 - -------------------------------------------------------------------------------- UNITED KINGDOM - 11.4% - -------------------------------------------------------------------------------- 28,457 Amvescap plc 278,167 - -------------------------------------------------------------------------------- 33,931 BG Group plc 454,336 - -------------------------------------------------------------------------------- 36,959 BP plc 435,587 - -------------------------------------------------------------------------------- 19,362 Carphone Warehouse Group plc 117,267 - -------------------------------------------------------------------------------- 25,483 GlaxoSmithKline plc 704,605 - -------------------------------------------------------------------------------- 10,386 Man Group plc 454,107 - -------------------------------------------------------------------------------- 19,105 Marks & Spencer Group plc 192,840 - -------------------------------------------------------------------------------- 12,257 Reckitt Benckiser plc 450,221 - -------------------------------------------------------------------------------- 12,778 Standard Chartered plc 313,622 - -------------------------------------------------------------------------------- 3,400,752 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $31,582,061) 29,524,063 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS - 1.3% Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 6.375% - 7.25%, 5/15/16 - 8/15/27, valued at $407,596), in a joint trading account at 4.87%, dated 5/31/06, due 6/1/06 (Delivery value $400,054) (Cost $400,000) 400,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 100.7% (Cost $31,982,061) 29,924,063 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - (0.7)% (202,507) - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $ 29,721,556 ================================================================================ See Notes to Financial Statements. (continued) - ------ 5 NT International Growth - Schedule of Investments MAY 31, 2006 (UNAUDITED) MARKET SECTOR DIVERSIFICATION - -------------------------------------------------------------------------------- (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 25.1% - -------------------------------------------------------------------------------- Consumer Discretionary 17.0% - -------------------------------------------------------------------------------- Industrials 14.5% - -------------------------------------------------------------------------------- Health Care 9.4% - -------------------------------------------------------------------------------- Energy 9.2% - -------------------------------------------------------------------------------- Materials 7.0% - -------------------------------------------------------------------------------- Information Technology 6.7% - -------------------------------------------------------------------------------- Consumer Staples 4.9% - -------------------------------------------------------------------------------- Telecommunication Services 3.7% - -------------------------------------------------------------------------------- Utilities 1.2% - -------------------------------------------------------------------------------- Diversified 0.7% - -------------------------------------------------------------------------------- Cash and Cash Equivalents(+) 0.6% - -------------------------------------------------------------------------------- (+)Includes temporary cash investments and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt CVA = Certificaten Van Aandelen EAFE = Europe, Australasia, and Far East MSCI = Morgan Stanley Capital International (1) Non-income producing. 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 May 31, 2006, was $18,781,457, which represented 63.2% of total net assets. See Notes to Financial Statements. - ------ 6 NT Emerging Markets - Performance TOTAL RETURNS AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- SINCE INCEPTION(1) INCEPTION DATE - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS -8.50% 5/12/06 - -------------------------------------------------------------------------------- MSCI EM INDEX -12.21% -- - -------------------------------------------------------------------------------- (1) 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. Investing in emerging markets may accentuate these risks. 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. - ------ 7 NT Emerging Markets - Portfolio Commentary PORTFOLIO MANAGERS: MICHAEL DONNELLY AND PATRICIA RIBEIRO NT Emerging Markets declined 8.50%* from its inception May 12, 2006, through May 31, 2006, while its benchmark, the Morgan Stanley Capital International Emerging Markets Index, fell 12.21%. This is one of nine new NT tracker funds available exclusively in LIVESTRONG Portfolios from American Century Investments. NT is an acronym for "No Tobacco." American Century Investments introduced the portfolios May 2006, as part of a strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF).** American Century created LIVESTRONG Portfolios by enhancing its existing My Retirement Portfolios, a series of asset allocation funds first launched in August 2004. While the modified funds have the same fee structure and investment strategy as My Retirement Portfolios, the underlying funds in LIVESTRONG Portfolios will not invest in tobacco companies as part of American Century's commitment to the LAF and the fight against cancer. Due to the short time period since the portfolio's inception, this initial semiannual report is necessarily briefer than our usual performance reports. We will provide a more detailed report on performance at the end of the portfolio's fiscal year, November 30, 2006. TOP TEN HOLDINGS AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF NET ASSETS - -------------------------------------------------------------------------------- Wistron NeWeb Corp. 3.2% - -------------------------------------------------------------------------------- OAO Gazprom ADR 2.8% - -------------------------------------------------------------------------------- Samsung Electronics 2.4% - -------------------------------------------------------------------------------- China Steel Corp. 2.2% - -------------------------------------------------------------------------------- Komercni Banka AS 2.0% - -------------------------------------------------------------------------------- Petroleo Brasileiro SA ADR 2.0% - -------------------------------------------------------------------------------- M-Systems Flash Disk Pioneers Ltd. 1.9% - -------------------------------------------------------------------------------- Centros Comerciales Sudamericanos SA 1.7% - -------------------------------------------------------------------------------- Pyaterochka Holding N.V. GDR 1.7% - -------------------------------------------------------------------------------- China Mobile Hong Kong Ltd. ADR 1.6% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF NET ASSETS AS OF 5/31/06 - -------------------------------------------------------------------------------- Foreign Common Stocks and Rights 89.0% - -------------------------------------------------------------------------------- Foreign Preferred Stocks 2.6% - -------------------------------------------------------------------------------- Domestic Common Stocks 1.2% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 92.8% - -------------------------------------------------------------------------------- Temporary Cash Investments 6.2% - -------------------------------------------------------------------------------- Other Assets and Liabilities 1.0% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF NET ASSETS - -------------------------------------------------------------------------------- South Korea 13.1% - -------------------------------------------------------------------------------- Taiwan (Republic of China) 12.1% - -------------------------------------------------------------------------------- Brazil 10.5% - -------------------------------------------------------------------------------- People's Republic of China 9.0% - -------------------------------------------------------------------------------- Russian Federation 6.3% - -------------------------------------------------------------------------------- South Africa 5.5% - -------------------------------------------------------------------------------- Hong Kong 4.9% - -------------------------------------------------------------------------------- Israel 4.0% - -------------------------------------------------------------------------------- Mexico 3.6% - -------------------------------------------------------------------------------- Chile 3.4% - -------------------------------------------------------------------------------- Other Countries 20.4% - -------------------------------------------------------------------------------- Cash and Equivalents(1) 7.2% - -------------------------------------------------------------------------------- (1) Includes temporary cash investments and other assets and liabilities. * Total returns for periods less than one year are not annualized. **American Century Investment Services, Inc., has entered into an agreement with the Lance Armstrong Foundation for rights to use the LIVESTRONG name. LIVESTRONG is a trademark of the Lance Armstrong Foundation. For more information about the foundation, visit www.livestrong.org. - ------ 8 NT Emerging Markets - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS AND RIGHTS - 90.2% ARGENTINA - 0.8% - -------------------------------------------------------------------------------- 4,282 Banco Macro Bansud SA ADR $ 93,348 - -------------------------------------------------------------------------------- AUSTRIA - 0.9% - -------------------------------------------------------------------------------- 1,300 Raiffeisen International Bank Holding AG(1) 107,699 - -------------------------------------------------------------------------------- BRAZIL - 7.9% - -------------------------------------------------------------------------------- 11,400 American Banknote SA(1) 71,643 - -------------------------------------------------------------------------------- 3,700 Banco Nossa Caixa SA 69,279 - -------------------------------------------------------------------------------- 7,300 Equatorial Energia SA(1) 44,808 - -------------------------------------------------------------------------------- 4,800 Gafisa SA(1) 47,583 - -------------------------------------------------------------------------------- 3,600 Lojas Renner SA 182,851 - -------------------------------------------------------------------------------- 5,800 Lupatech SA(1) 56,173 - -------------------------------------------------------------------------------- 2,582 Petroleo Brasileiro SA ADR 224,246 - -------------------------------------------------------------------------------- 4,600 Totvs SA(1) 74,845 - -------------------------------------------------------------------------------- 11,100 Tractebel Energia SA 81,702 - -------------------------------------------------------------------------------- 2,300 Vivax SA(1) 28,710 - -------------------------------------------------------------------------------- 881,840 - -------------------------------------------------------------------------------- CHILE - 3.4% - -------------------------------------------------------------------------------- 79,100 Centros Comerciales Sudamericanos SA 193,597 - -------------------------------------------------------------------------------- 39,900 Comercial Siglo XXI SA 133,574 - -------------------------------------------------------------------------------- 12,000 Compania Cervecerias Unidas SA 55,949 - -------------------------------------------------------------------------------- 383,120 - -------------------------------------------------------------------------------- CZECH REPUBLIC - 2.0% - -------------------------------------------------------------------------------- 1,600 Komercni Banka AS 224,457 - -------------------------------------------------------------------------------- FINLAND - 1.6% - -------------------------------------------------------------------------------- 11,978 Nokian Renkaat Oyj 179,069 - -------------------------------------------------------------------------------- GERMANY - 0.8% - -------------------------------------------------------------------------------- 3,862 CAT Oil AG(1) 85,442 - -------------------------------------------------------------------------------- HONG KONG - 4.9% - -------------------------------------------------------------------------------- 68,000 AAC Acoustic Technology Holdings Inc.(1) 70,122 - -------------------------------------------------------------------------------- 242,263 Bank of China Ltd. Cl H(1) 92,122 - -------------------------------------------------------------------------------- 120,000 China Yurun Food Group Ltd. 88,942 - -------------------------------------------------------------------------------- 42,500 Parkson Retail Group Ltd. 126,001 - -------------------------------------------------------------------------------- 21,000 Vtech Holdings Ltd. 93,118 - -------------------------------------------------------------------------------- 112,000 Xiwang Sugar Holdings Co. Ltd. 78,681 - -------------------------------------------------------------------------------- 548,986 - -------------------------------------------------------------------------------- INDONESIA - 2.7% - -------------------------------------------------------------------------------- 134,000 PT Aneka Tambang Tbk 64,430 - -------------------------------------------------------------------------------- 1,339,000 PT Bank Niaga Tbk 82,467 - -------------------------------------------------------------------------------- 295,500 PT Ciputra Development Tbk(1) 14,847 - -------------------------------------------------------------------------------- 180,500 PT Telekomunikasi Indonesia Tbk 137,497 - -------------------------------------------------------------------------------- 299,241 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- ISRAEL - 4.0% - -------------------------------------------------------------------------------- 6,432 M-Systems Flash Disk Pioneers Ltd.(1) $ 215,151 - -------------------------------------------------------------------------------- 3,994 Orbotech Ltd.(1) 100,329 - -------------------------------------------------------------------------------- 3,721 Teva Pharmaceutical Industries Ltd. ADR 135,482 - -------------------------------------------------------------------------------- 450,962 - -------------------------------------------------------------------------------- KAZAKHSTAN - 0.5% - -------------------------------------------------------------------------------- 2,675 Kazakhmys plc 56,804 - -------------------------------------------------------------------------------- LUXEMBOURG - 1.0% - -------------------------------------------------------------------------------- 4,776 Ternium SA ADR(1) 111,758 - -------------------------------------------------------------------------------- MALAYSIA - 2.5% - -------------------------------------------------------------------------------- 99,000 AirAsia Bhd(1) 43,897 - -------------------------------------------------------------------------------- 21,000 Gamuda Bhd 19,895 - -------------------------------------------------------------------------------- 29,000 Kuala Lumpur Kepong Bhd 80,666 - -------------------------------------------------------------------------------- 40,300 Malakoff Bhd 108,769 - -------------------------------------------------------------------------------- 68,500 Scomi Group Bhd 22,450 - -------------------------------------------------------------------------------- 275,677 - -------------------------------------------------------------------------------- MEXICO - 3.6% - -------------------------------------------------------------------------------- 34,787 Axtel, SA de CV(1) 69,632 - -------------------------------------------------------------------------------- 768 Cemex SA de CV ADR 43,753 - -------------------------------------------------------------------------------- 10,148 Corporacion GEO SA de CV, Series B(1) 35,087 - -------------------------------------------------------------------------------- 28,102 Corporacion Moctezuma, SA de CV 55,012 - -------------------------------------------------------------------------------- 4,946 Grupo Aeroportuario del Pacifico SA de CV ADR 164,702 - -------------------------------------------------------------------------------- 14,275 Urbi Desarrollos Urbanos SA de CV(1) 34,641 - -------------------------------------------------------------------------------- 402,827 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA - 9.0% - -------------------------------------------------------------------------------- 264,000 Advanced Semiconductor Manufacturing Corp. Cl H(1) 63,295 - -------------------------------------------------------------------------------- 7,092 China Mobile Hong Kong Ltd. ADR 183,328 - -------------------------------------------------------------------------------- 162,000 China Petroleum & Chemical Corp. Cl H 96,057 - -------------------------------------------------------------------------------- 270,000 Dongfeng Motor Group Co. Ltd. Cl H(1) 131,382 - -------------------------------------------------------------------------------- 29,000 Foxconn International Holdings Ltd.(1) 77,753 - -------------------------------------------------------------------------------- 272,000 Global Bio-Chem Technology Group Co. Ltd. 111,319 - -------------------------------------------------------------------------------- 121,000 Golden Eagle Retail Group Ltd.(1) 70,576 - -------------------------------------------------------------------------------- 119,000 Nine Dragons Paper Holdings Ltd.(1) 98,938 - -------------------------------------------------------------------------------- 126,000 PetroChina Co. Ltd. Cl H 135,617 - -------------------------------------------------------------------------------- 15,000 Wumart Stores Inc. Cl H 44,374 - -------------------------------------------------------------------------------- 1,012,639 - -------------------------------------------------------------------------------- PERU - 1.2% - -------------------------------------------------------------------------------- 5,319 Credicorp Ltd. 139,358 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 9 NT Emerging Markets - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- POLAND - 0.5% - -------------------------------------------------------------------------------- 1,900 TVN SA(1) $ 54,051 - -------------------------------------------------------------------------------- RUSSIAN FEDERATION - 6.3% - -------------------------------------------------------------------------------- 2,636 NovaTek OAO GDR 102,013 - -------------------------------------------------------------------------------- 7,300 OAO Gazprom ADR 311,709 - -------------------------------------------------------------------------------- 11,569 Pyaterochka Holding N.V. GDR(1) 191,467 - -------------------------------------------------------------------------------- 28,300 VolgaTelecom 96,503 - -------------------------------------------------------------------------------- 701,692 - -------------------------------------------------------------------------------- SOUTH AFRICA - 5.5% - -------------------------------------------------------------------------------- 3,379 Anglo American plc 134,132 - -------------------------------------------------------------------------------- 4,282 Barloworld Ltd. 72,643 - -------------------------------------------------------------------------------- 284 Impala Platinum Holdings Limited 47,843 - -------------------------------------------------------------------------------- 6,167 JD Group Ltd. 72,311 - -------------------------------------------------------------------------------- 4,566 Kumba Resources Ltd. 78,410 - -------------------------------------------------------------------------------- 1,355 Pretoria Portland Cement Co. Ltd. 71,807 - -------------------------------------------------------------------------------- 11,502 Sappi Ltd. 141,711 - -------------------------------------------------------------------------------- 618,857 - -------------------------------------------------------------------------------- SOUTH KOREA - 13.1% - -------------------------------------------------------------------------------- 210 Amorepacific Corp. 70,811 - -------------------------------------------------------------------------------- 1,100 CJ Corp. 127,503 - -------------------------------------------------------------------------------- 4,530 GS Holdings Corp. 135,089 - -------------------------------------------------------------------------------- 4,020 Hynix Semiconductor Inc.(1) 135,553 - -------------------------------------------------------------------------------- 2,100 Hyundai Engineering & Construction(1) 103,119 - -------------------------------------------------------------------------------- 2,740 LG Card Co. Ltd.(1) 135,701 - -------------------------------------------------------------------------------- 700 POSCO 183,298 - -------------------------------------------------------------------------------- 420 Samsung Electronics 270,854 - -------------------------------------------------------------------------------- 3,520 Shinhan Financial Group Co., Ltd. 163,574 - -------------------------------------------------------------------------------- 300 Shinsegae Co. Ltd. 137,829 - -------------------------------------------------------------------------------- 1,463,331 - -------------------------------------------------------------------------------- SPAIN - 1.3% - -------------------------------------------------------------------------------- 5,122 Repsol YPF, SA 142,844 - -------------------------------------------------------------------------------- SWEDEN - 0.7% - -------------------------------------------------------------------------------- 2,271 Oriflame Cosmetics SA SDR 76,977 - -------------------------------------------------------------------------------- 2,271 Oriflame Cosmetics SA SDR Rights(1) 2,404 - -------------------------------------------------------------------------------- 79,381 - -------------------------------------------------------------------------------- Shares/Principal Amount Value - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) - 12.1% - -------------------------------------------------------------------------------- 6,896 AU Optronics Corp. ADR $ 100,130 - -------------------------------------------------------------------------------- 256,000 China Steel Corp. 243,734 - -------------------------------------------------------------------------------- 80,000 Chinatrust Financial Holding Co. 64,430 - -------------------------------------------------------------------------------- 149,000 Compal Electronics Inc. 152,558 - -------------------------------------------------------------------------------- 75,000 King Yuan Electronics Co. Ltd. 78,898 - -------------------------------------------------------------------------------- 4,000 Nan Ya Printed Circuit Board Corp.(1) 40,331 - -------------------------------------------------------------------------------- 101,000 Taishin Financial Holdings Co. Ltd. 65,578 - -------------------------------------------------------------------------------- 34,000 Taiwan Green Point Enterprise Co. Ltd.(1) 89,683 - -------------------------------------------------------------------------------- 30,000 Test-Rite International Co. 22,335 - -------------------------------------------------------------------------------- 190,000 Uni-President Enterprises Corp. 139,378 - -------------------------------------------------------------------------------- 101,000 Wistron NeWeb Corp.(1) 353,114 - -------------------------------------------------------------------------------- 1,350,169 - -------------------------------------------------------------------------------- THAILAND - 1.1% - -------------------------------------------------------------------------------- 445,900 Krung Thai Bank Public Co. Ltd. 121,620 - -------------------------------------------------------------------------------- TURKEY - 1.6% - -------------------------------------------------------------------------------- 3,800 Asya Katilim Bankasi AS(1) 10,288 - -------------------------------------------------------------------------------- 10,500 Denizbank AS(1) 96,759 - -------------------------------------------------------------------------------- 4,600 Tupras Turkiye Petrol Rafine 77,471 - -------------------------------------------------------------------------------- 184,518 - -------------------------------------------------------------------------------- UNITED STATES - 1.2% - -------------------------------------------------------------------------------- 4,289 Avon Products, Inc. 135,961 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS AND RIGHTS (Cost $11,042,264) 10,105,651 - -------------------------------------------------------------------------------- PREFERRED STOCKS - 2.6% BRAZIL - 2.6% - -------------------------------------------------------------------------------- 2,580 Aracruz Celulose SA ADR 131,968 - -------------------------------------------------------------------------------- 690,000 Companhia de Gas de Sao Paulo Cl A 79,300 - -------------------------------------------------------------------------------- 2,400 Usinas Siderurgicas de Minas Gerais SA CI A 77,231 - -------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost $318,253) 288,499 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS - 6.2% $700,000 FHLB Discount Notes, 4.89%, 6/1/06(2) (Cost $699,905) 700,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 99.0% (Cost $12,060,422) 11,094,150 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 1.0% 110,211 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $11,204,361 ================================================================================ See Notes to Financial Statements. (continued) - ------ 10 NT Emerging Markets - Schedule of Investments MAY 31, 2006 (UNAUDITED) MARKET SECTOR DIVERSIFICATION - -------------------------------------------------------------------------------- (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Information Technology 17.1% - -------------------------------------------------------------------------------- Financials 13.9% - -------------------------------------------------------------------------------- Materials 13.8% - -------------------------------------------------------------------------------- Consumer Staples 13.7% - -------------------------------------------------------------------------------- Energy 11.9% - -------------------------------------------------------------------------------- Consumer Discretionary 9.7% - -------------------------------------------------------------------------------- Telecommunication Services 4.6% - -------------------------------------------------------------------------------- Industrials 4.1% - -------------------------------------------------------------------------------- Utilities 2.8% - -------------------------------------------------------------------------------- Health Care 1.2% - -------------------------------------------------------------------------------- Cash and Cash Equivalents(+) 7.2% - -------------------------------------------------------------------------------- (+)Includes temporary cash investments and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt FHLB = Federal Home Loan Bank GDR = Global Depositary Receipt SDR = Swedish Depositary Receipt (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. See Notes to Financial Statements. - ------- 11 Shareholder Fee Examples (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from December 1, 2005 to May 31, 2006 (except as noted). ACTUAL EXPENSES The table provides information about actual account values and actual expenses for each class. You may use the information, together with the amount you invested, to estimate the expenses that you paid over the period. First, identify the share class you own. Then simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number under the heading "Expenses Paid During Period" to estimate the expenses you paid on your account during this period. If you hold Investor Class shares of any American Century fund, or Institutional Class shares of the American Century Diversified Bond Fund, in an American Century account (i.e., not a financial intermediary or retirement plan account), American Century may charge you a $12.50 semiannual account maintenance fee if the value of those shares is less than $10,000. We will redeem shares automatically in one of your accounts to pay the $12.50 fee. In determining your total eligible investment amount, we will include your investments in all PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered under your Social Security number. PERSONAL ACCOUNTS include individual accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell Education Savings Accounts and IRAs (including traditional, Roth, Rollover, SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you have only business, business retirement, employer-sponsored or American Century Brokerage accounts, you are currently not subject to this fee. We will not charge the fee as long as you choose to manage your accounts exclusively online. If you are subject to the Account Maintenance Fee, your account value could be reduced by the fee amount. HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES The table also provides information about hypothetical account values and hypothetical expenses based on the actual expense ratio of each class of your fund and an assumed rate of return of 5% per year before expenses, which is not the actual return of a fund's share class. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in your fund and other funds. (continued) - ------ 12 Shareholder Fee Examples (Unaudited) To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. EXPENSES PAID BEGINNING ENDING DURING PERIOD(1) ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 12/1/05 - EXPENSE 12/1/05 5/31/06 5/31/06 RATIO(1) - -------------------------------------------------------------------------------- NT INTERNATIONAL GROWTH -- INSTITUTIONAL CLASS SHAREHOLDER FEE EXAMPLE - ------------------- Actual $1,000 $934.00(2) $0.52(3) 1.04% - -------------------------------------------------------------------------------- Hypothetical $1,000 $1,019.75(4) $5.24(4) 1.04% - -------------------------------------------------------------------------------- NT EMERGING MARKETS -- INSTITUTIONAL CLASS SHAREHOLDER FEE EXAMPLE - ------------------- Actual $1,000 $915.00(2) $0.79(3) 1.58% - -------------------------------------------------------------------------------- Hypothetical $1,000 $1017.05(4) $7.95(4) 1.58% - -------------------------------------------------------------------------------- (1) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (2) Ending account value based on actual return from May 12, 2006 (fund inception) through May 31, 2006. (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 19, the number of days in the period from May 12, 2006 (fund inception) through May 31, 2006, 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. - ------ 13 Statement of Assets and Liabilities MAY 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- NT INTERNATIONAL NT EMERGING GROWTH MARKETS - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $31,982,061 and $12,060,422, respectively) $ 29,924,063 $ 11,094,150 - ------------------------------------------------ Cash 123,007 329,283 - ------------------------------------------------ Foreign currency holdings, at value (cost of $- and $6,598, respectively) -- 6,618 - ------------------------------------------------ Receivable for investments sold 527,512 73,174 - ------------------------------------------------ Dividends and interest receivable 18,216 19,987 - -------------------------------------------------------------------------------- 30,592,798 11,523,212 - -------------------------------------------------------------------------------- LIABILITIES - ------------------------------------------------ Payable for investments purchased 856,751 310,482 - ------------------------------------------------ Accrued management fees 14,491 8,369 - -------------------------------------------------------------------------------- 871,242 318,851 - -------------------------------------------------------------------------------- NET ASSETS $29,721,556 $11,204,361 ================================================================================ INSTITUTIONAL CLASS CAPITAL SHARES, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Authorized 100,000,000 100,000,000 ================================================================================ Outstanding 3,180,960 1,224,241 ================================================================================ NET ASSET VALUE PER SHARE $9.34 $9.15 ================================================================================ NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $31,769,489 $12,217,731 - ------------------------------------------------ Undistributed net investment income 47,788 19,541 - ------------------------------------------------ Accumulated net realized loss on investment and foreign currency transactions (35,173) (66,181) - ------------------------------------------------ Net unrealized depreciation on investments and translation of assets and liabilities in foreign currencies (2,060,548) (966,730) - -------------------------------------------------------------------------------- $29,721,556 $11,204,361 ================================================================================ See Notes to Financial Statements. - ------ 14 Statement of Operations PERIOD ENDED MAY 31, 2006 (UNAUDITED)(1) - -------------------------------------------------------------------------------- NT INTERNATIONAL NT EMERGING GROWTH MARKETS INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - ------------------------------------------------ Dividends (net of foreign taxes withheld of $10,129 and $2,214, respectively) $ 61,826 $ 24,757 - ------------------------------------------------ Interest 453 3,153 - -------------------------------------------------------------------------------- 62,279 27,910 - -------------------------------------------------------------------------------- EXPENSES: - ------------------------------------------------ Management fees 14,491 8,369 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 47,788 19,541 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - ------------------------------------------------ Investment transactions (30,968) (58,252) - ------------------------------------------------ Foreign currency transactions (4,205) (7,929) - -------------------------------------------------------------------------------- (35,173) (66,181) - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: - ------------------------------------------------ Investments (1,661,639) (782,191) - ------------------------------------------------ Translation of assets and liabilities in foreign currencies (398,909) (184,539) - -------------------------------------------------------------------------------- (2,060,548) (966,730) - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) (2,095,721) (1,032,911) - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (2,047,933) $ (1,013,370) ================================================================================ (1) May 12, 2006 (fund inception) through May 31, 2006. See Notes to Financial Statements. - ------ 15 Statement of Changes in Net Assets PERIOD ENDED MAY 31, 2006 (UNAUDITED)(1) - -------------------------------------------------------------------------------- NT INTERNATIONAL NT EMERGING GROWTH MARKETS - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2006 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income (loss) $ 47,788 $ 19,541 - ------------------------------------------------ Net realized gain (loss) (35,173) (66,181) - ------------------------------------------------ Change in net unrealized appreciation (depreciation) (2,060,548) (966,730) - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (2,047,933) (1,013,370) - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Proceeds from shares sold 31,893,429 12,275,869 - ------------------------------------------------ Payments for shares redeemed (123,940) (58,138) - -------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions 31,769,489 12,217,731 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 29,721,556 11,204,361 - -------------------------------------------------------------------------------- NET ASSETS - -------------------------------------------------------------------------------- End of period $ 29,721,556 $ 11,204,361 ================================================================================ Undistributed net investment income $47,788 $19,541 ================================================================================ TRANSACTIONS IN SHARES OF THE FUNDS - -------------------------------------------------------------------------------- Sold 3,194,241 1,230,495 - ------------------------------------------------ Redeemed (13,281) (6,254) - -------------------------------------------------------------------------------- Net increase (decrease) in shares of the funds 3,180,960 1,224,241 ================================================================================ (1) May 12, 2006 (fund inception) through May 31, 2006. See Notes to Financial Statements. - ------ 16 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. NT International Growth Fund (NT International Growth) and NT Emerging Markets Fund (NT Emerging Markets) (collectively, the funds) are two funds in a series issued by the corporation. The funds are diversified under the 1940 Act. The funds' investment objective is to seek capital growth. The funds pursue this objective by investing primarily in equity securities of foreign companies. NT International Growth primarily invests in companies located in developed countries. NT Emerging Markets invests at least 80% of its assets in securities of issuers in emerging market countries and companies that derive a significant portion of their business from emerging market countries. The funds are not permitted to invest in any securities issued by companies assigned by the Global Industry Classification Standard to the tobacco industry. The funds incepted on May 12, 2006. The following is a summary of the funds' significant accounting policies. 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. 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. (continued) - ------ 17 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (ACIM) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. Each repurchase agreement is recorded at cost. Each fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable each fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to each fund under each repurchase agreement. JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, each fund, along with other registered investment companies having management agreements with ACIM or American Century Global Investment Management, Inc. (ACGIM), may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. INCOME TAX STATUS -- It is each fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income, if any, are generally declared and paid annually. Distributions from net realized gains, if any, are generally declared and paid twice per year. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business, the funds enter into contracts that provide general indemnifications. The funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with 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). 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 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 strategy assets of NT International Growth and NT Emerging Markets include the assets of International Growth Fund and Emerging Markets Fund, respectively, two funds in a series issued by the corporation. The annual management fee schedule for NT International Growth is as follows: - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $1 billion 1.30% - -------------------------------------------------------------------------------- Next $1 billion 1.00% - -------------------------------------------------------------------------------- Over $2 billion 0.90% - -------------------------------------------------------------------------------- The annual management fee schedule for NT Emerging Markets is as follows: - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $250 million 1.65% - -------------------------------------------------------------------------------- Next $250 million 1.55% - -------------------------------------------------------------------------------- Next $500 million 1.30% - -------------------------------------------------------------------------------- Over $1 billion 1.05% - -------------------------------------------------------------------------------- (continued) - ------ 18 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) The effective annual management fee for NT International Growth and NT Emerging Markets for the period May 12, 2006 (fund inception) through May 31, 2006 was 1.04% and 1.58%, respectively. ACGIM has entered into a Subadvisory Agreement with ACIM (the subadvisor) on behalf of the funds. The subadvisor makes investment decisions for the cash portion of the funds in accordance with the funds' investments objectives, policies and restrictions under the supervision of ACGIM and the Board of Directors. ACGIM pays all costs associated with retaining ACIM as the subadvisor of the funds. 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 subadvisor, ACIM, the distributor of the corporation, American Century Investment Services, Inc., and the corporation's transfer agent, American Century Services, LLC. The funds are wholly owned by American Century Asset Allocation Portfolios, Inc. (ACAAP). ACAAP does not invest in the funds for the purpose of exercising management or control. JPMorgan Chase Bank 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. 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the period May 12, 2006 (fund inception) through May 31, 2006, were as follows: - -------------------------------------------------------------------------------- NT INTERNATIONAL GROWTH NT EMERGING MARKETS - -------------------------------------------------------------------------------- Purchases $32,483,934 $11,784,879 - -------------------------------------------------------------------------------- Proceeds from sales $873,498 $361,818 - -------------------------------------------------------------------------------- For the period May 12, 2006 (fund inception) through May 31, 2006, NT International Growth and NT Emerging Markets incurred a purchase in kind of equity securities valued at $28,738,181 and $7,388,123, respectively. A purchase in kind occurs when a fund receives securities into its portfolio in lieu of cash as payment from a purchasing shareholder. 4. 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) - ------ 19 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) 5. 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. As of May 31, 2006, the components of investments for federal income tax purposes were as follows: - -------------------------------------------------------------------------------- NT INTERNATIONAL GROWTH NT EMERGING MARKETS - -------------------------------------------------------------------------------- Federal tax cost of investments $31,997,329 $12,060,422 ================================================================================ Gross tax appreciation of investments $ 16,811 $ 36,965 - ------------------------------------------ Gross tax depreciation of investments (2,090,077) (1,003,237) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $ (2,073,266) $ (966,272) ================================================================================ 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. - ------ 20 NT International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------------------------------- Net Investment Income (Loss) 0.02 - -------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) (0.68) - -------------------------------------------------------------------------------- Total From Investment Operations (0.66) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $9.34 ================================================================================ TOTAL RETURN(2) (6.60)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.04%(3) - -------------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 3.64%(3)(4) - -------------------------------------------------------------------- Portfolio Turnover Rate 4% - -------------------------------------------------------------------- Net Assets, End of Period (in thousands) $29,722 - -------------------------------------------------------------------------------- (1) May 12, 2006 (fund inception) through May 31, 2006 (unaudited). (2) 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. (3) Annualized. (4) Due to cyclical dividends and the period May 12, 2006 (fund inception) through May 31, 2006, the annualized ratio of net investment income to average net assets is higher than expected. See Notes to Financial Statements. - ------ 21 NT Emerging Markets - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED - -------------------------------------------------------------------------------- 2006(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------------------------------------- Net Investment Income (Loss) 0.02 - -------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) (0.87) - -------------------------------------------------------------------------------- Total From Investment Operations (0.85) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $9.15 ================================================================================ TOTAL RETURN(2) (8.50)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.58%(3) - -------------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 3.93%(3)(4) - -------------------------------------------------------------------- Portfolio Turnover Rate 4% - -------------------------------------------------------------------- Net Assets, End of Period (in thousands) $11,204 - -------------------------------------------------------------------------------- (1) May 12, 2006 (fund inception) through May 31, 2006 (unaudited). (2) 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. (3) Annualized. (4) Due to cyclical dividends and the period May 12, 2006 (fund inception) through May 31, 2006, the annualized ratio of net investment income to average net assets is higher than expected. See Notes to Financial Statements. - ------ 22 Approval of Management Agreement for NT International Growth and NT Emerging Markets 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 each year. Under a 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 recent fiscal half-year period. At a meeting held March 1, 2006, the board of directors unanimously approved the initial management agreement for NT International Growth and NT Emerging Markets (the "funds"). In advance of the board's consideration, American Century Global Investment Management, Inc. (the "advisor") provided information concerning the proposed funds. The information considered and the discussions held at the meeting detailed the investment objective and strategy proposed to be utilized by the advisor, the funds' characteristics and key attributes, the rationale for launching the funds, the experience of the portfolio management staff designated to manage the funds, the proposed pricing, and the markets in which the funds would be sold. The information considered and the discussions held at the meeting included, but were not limited to: * the nature, extent, and quality of investment management, shareholder services, and other services to be provided to the funds under the management agreement; * the wide range of programs and services to be provided by the advisor to fund shareholders on a routine and non-routine basis; and * a comparison of the cost of owning the funds to the cost of owning similar funds managed by the advisor. The advisor discussed with the directors that the funds were being created to provide underlying investments for the American Century LIVESTRONG Portfolios, and that the LIVESTRONG Portfolios are restricted from investing in funds owning tobacco-related securities. As a result, the funds are intended to replicate the portfolios of existing American Century funds, but for any tobacco-related investments. The advisor proposed an initial unified management fee schedule for the funds that is the same as the fee schedule previously approved by the directors for the existing fund on which its investments will be based. In addition, the advisor proposed that the assets of the fund and its counterpart will be combined for purposes of determining when each fund reaches the fee breakpoints in that schedule. Consistent with the advisor's business strategy for all of its funds, the advisor proposed a unified management fee. Under the unified fee structure, the advisor charges a single, all-inclusive fee for providing all services for the management and operation of the funds, except brokerage expenses, taxes, interest, the fees and expenses of the funds' independent directors (including their independent legal counsel), and extraordinary costs. (continued) - ------ 23 Approval of Management Agreement for NT International Growth and NT Emerging Markets Under the unified fee structure, the advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, record keeping, marketing, and shareholder services, or arranging and supervising third parties who 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, all other components of the total fees other advisors charge to their shareholders may be increased without shareholder approval. The board believes that the unified fee structure is a benefit to fund shareholders because it clearly discloses 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 risk of increased costs of operating the funds and provides a direct incentive to minimize administrative inefficiencies. Not specifically discussed, but important in the decision to approve the management agreement, is the directors' familiarity with the advisor. The board of directors oversees and evaluates on a continuous basis the nature and quality of all services the advisor performs for other funds within the American Century complex. As such, the directors have confidence in the advisor's integrity and competence in providing services to funds. In their deliberations, the directors did not identify any single factor as being all important or controlling, and each director attributed different weights to various factors. However, based on their evaluation of all material factors and assisted by the advice of independent legal counsel, the board, including the independent directors, concluded that the overall arrangements between the fund and the advisor, as provided in the management agreement, were fair and reasonable in light of the services to be performed and should be approved. At the March 1st meeting, the board of directors also unanimously approved an investment subadvisory agreement by which American Century Investment Management, Inc. (the "subadvisor") is engaged to manage the investment of the cash and cash equivalent investments of the funds. In approving the subadvisory agreement, the board considered all material factors including the nature, extent, and quality of investment management services to be provided by the subadvisor under the agreement. As a part of this review the board evaluated the subadvisor's historical performance, investment expertise, and capabilities, as well as its compliance policies, procedures, and regulatory experience. The Directors noted that the management fees paid to the subadvisor under the subadvisory agreement were subject to arm's length negotiation between the advisor and the subadvisor and are paid by the advisor out of its unified fee. - ------ 24 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. 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. - ------ 25 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, 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. The MSCI EM (Emerging Markets) INDEX(SM) represents the performance of stocks in global emerging market countries. - ------ 26 Notes - ------ 27 Notes - ------ 28 [inside back cover - blank] [back cover] CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL 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. 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 0607 (c)2006 American Century Proprietary Holdings, Inc. SH-SAN-50130N All rights reserved.
[front cover] American Century Investments SEMIANNUAL REPORT [photo of boy with plane] MAY 31, 2006 Life Sciences Fund Technology Fund [american century investments logo and text logo] Table of Contents Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Six-Month Total Returns . . . . . . . . . . . . . . . . . . . . . . . . 2 LIFE SCIENCES Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 6 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 7 TECHNOLOGY Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . .11 Top Five Industries . . . . . . . . . . . . . . . . . . . . . . . . . .12 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . .12 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . .13 Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . . . .15 FINANCIAL STATEMENTS Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .17 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .18 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . .19 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .20 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . .27 OTHER INFORMATION Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .34 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .35 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 The opinions expressed in the Market Perspective and each of the Portfolio Commentaries reflect those of the portfolio management team as of the date of the report, and do not necessarily represent the opinions of American Century or any other person in the American Century organization. Any such opinions are subject to change at any time based upon market or other conditions and American Century disclaims any responsibility to update such opinions. These opinions may not be relied upon as investment advice and, because investment decisions made by American Century funds are based on numerous factors, may not be relied upon as an indication of trading intent on behalf of any American Century fund. Security examples are used for representational purposes only and are not intended as recommendations to purchase or sell securities. Performance information for comparative indices and securities is provided to American Century by third party vendors. To the best of American Century's knowledge, such information is accurate at the time of printing. Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] JAMES E. STOWERS III WITH JAMES E. STOWERS, JR. We are pleased to provide you with the semiannual report for the American Century Life Sciences and Technology funds for the six months ended May 31, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our Web site, americancentury.com, where we post quarterly portfolio commentaries, the views of our senior investment officers, and other communications about investments, portfolio strategy, and the markets. Our Web site presents American Century's recently-announced strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). Our new campaign, featuring Lance, is designed to encourage investors to take a more active role in planning their financial futures and make every investment decision count. American Century's collaboration with Lance Armstrong and the LAF is a perfect fit. Like members of our family, Lance is a cancer survivor and shares our values of optimism, focus, and determination. In addition, Lance and our family have dedicated our success to improving lives, through the LAF and the Stowers Institute for Medical Research, respectively. To learn more about American Century's collaboration with Lance Armstrong and the LAF, please visit www.lanceface.com on the Web and click on the links to related sites. Besides the exciting new collaboration, we've enjoyed other good news -- in January, American Century was named, for the seventh consecutive year, one of FORTUNE magazine's 100 Best Companies to Work For in America. Fostering a positive work environment can benefit fund investors as well as our company -- it helps us continue to attract and retain talented people. 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 Market Perspective [photo of Chief Investment Officer] BY HAROLD BRADLEY, CHIEF INVESTMENT OFFICER, SMALL/MID-CAP GROWTH, AMERICAN CENTURY INVESTMENTS WHAT HAPPENED IN THE ECONOMY A short-lived economic slowdown on the heels of last summer's devastating Gulf Coast hurricanes gave way to a strong rebound after the first of the year. But persistent inflation and soaring commodity prices led to continued Federal Reserve rate hikes, even as growth again slowed toward the end of the 6-month period. By January 2006, a sluggish U.S. economy still recovering from disruptions caused by hurricanes Katrina and Rita gave way to resurging growth, with retailers reporting strong post-holiday sales and overall corporate profits remaining robust. Gross domestic product growth of 5.6% in the first quarter of 2006 more than tripled the 1.7% rate of the previous quarter. However, escalating crude oil, gold and other commodity values, plus annual core inflation rates above 2%, led the Federal Reserve to boost its short-term interest rate target by one full percentage point. That rate closed the period at 5%, the highest level since March 2001 -- even as a slowdown in the housing market and other data pointed to the likelihood of a cooling economy in the second half of 2006. WHAT HAPPENED IN THE MARKET The notion that the Fed might soon stop raising rates helped feed investors' appetites throughout most of the period. But sentiment shifted suddenly in the period's closing weeks as the Fed made it clear that more rate hikes remained on the horizon. Broad market indices posted high single-digit gains in the first four months of 2006. Indices solely comprising small-capitalization stocks fared even better, rising 10-14% and setting repeated record highs. By early May 2006, even the mega-cap Dow Jones Industrial Average had inched to within 14 points of its all-time high established in January 2000. The market's rally abruptly ended May 10, though, when the Fed again raised its short-term rate and investors anticipating a signal to an end of the 2-year, rate-hike campaign didn't get what they desired. As a result, those that had chased risk in the first four months of the year began avoiding it. The ensuing selloff wasn't kind to small-cap growth stocks. Investors flocked toward more stable large-cap stocks, with the small-cap Russell 2000 Index's loss of 7.6% in the last three weeks of May almost doubling the S&P 500's 4% loss in the same time frame. Meanwhile, value stocks continued outperforming growth stocks throughout the 6-month period in all capitalization ranges, particularly among large-cap stocks. SIX-MONTH TOTAL RETURNS AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- S&P 500 Index 2.60% - -------------------------------------------------------------------------------- Dow Jones Industrial Average 4.53% - -------------------------------------------------------------------------------- Nasdaq Composite Index -1.98% - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. - ------ 2 Life Sciences - Performance TOTAL RETURNS AS OF MAY 31, 2006 ---------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS -5.26% -0.79% 0.16% 0.57% 6/30/00 - -------------------------------------------------------------------------------- S&P COMPOSITE 1500 HEALTH CARE INDEX -0.68% -0.36% 0.37% 0.00% -- - -------------------------------------------------------------------------------- S&P 500 INDEX(2) 2.60% 8.64% 1.96% -0.65% -- - -------------------------------------------------------------------------------- Institutional Class -5.20% -0.78% 0.36% -0.09% 7/17/00 - -------------------------------------------------------------------------------- Advisor Class -5.33% -1.00% -0.12% -1.29% 11/14/00 - -------------------------------------------------------------------------------- C Class 11/29/01 No sales charge* -5.68% -1.83% -- -0.23% With sales charge* -6.62% -1.83% -- -0.23% - -------------------------------------------------------------------------------- * Sales charges include contingent deferred sales charges (CDSCs). C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. Please see the Share Class Information page 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) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. - A Reuters Company. (c) 2006 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) - ------ 3 Life Sciences - Performance GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made June 30, 2000
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ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended May 31 - -------------------------------------------------------------------------------- 2001* 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------- Investor Class 2.62% -6.60% -18.63% 24.74% 7.17% -0.79% - -------------------------------------------------------------------------------- S&P Composite 1500 Health Care Index -1.85% -8.21% -5.16% 12.59% 4.31% -0.36% - -------------------------------------------------------------------------------- S&P 500 Index -12.71% -13.85% -8.06% 18.33% 8.24% 8.64% - -------------------------------------------------------------------------------- * 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. - ------ 4 Life Sciences - Portfolio Commentary PORTFOLIO MANAGERS: ARNOLD DOUVILLE AND CHRISTY TURNER For the six months ended May 31, 2006, Life Sciences returned -5.26%.* The portfolio underperformed its benchmark, the S&P Composite 1500 Health Care Index, which had a return of -0.68%. Relative to the index, the fund's pharmaceutical, health care equipment, and health care provider stocks detracted from performance. In contrast, holdings in the biotechnology and life sciences tools industries helped relative results. CHALLENGING ENVIRONMENT After starting the reporting period on a positive note, the stock market retreated as concern intensified that the Federal Reserve will increase borrowing costs further than anticipated to control inflation. Investors worried that higher interest rates would take a bite out of consumer spending, corporate profits, and the economy. Indeed, the health care index was down more than 5% in April and May to finish the six-month reporting period with a slightly negative return. By comparison, the broader Nasdaq stock index was down 7% in April and May and 2% overall (see the Market Perspective on page 2 for more information about the economic and market environment). REVERSAL OF FORTUNE We manage the portfolio for long-term performance by seeking rapidly growing businesses. That reflects our belief that over time, investors will be drawn to stocks with accelerating earnings and revenues. But that long-term focus can sometimes lead to short-term set-backs as market sentiment changes, regardless of underlying business fundamentals. Two industry-level examples of how this long-term focus worked against us in the last six months are our pharmaceutical and health care provider stakes. We've been underweight in pharmaceuticals because we see limited opportunities in a group that is facing drug safety concerns, as well as earnings pressure likely to result from competition by generics. In our last report to you, we indicated that our underweight position in pharmaceuticals was our single largest CONTRIBUTOR to relative performance. Now, six months later, these stocks have rebounded after a long stretch of poor performance to become our largest DETRACTOR. Health care providers represent the other end of the spectrum -- these shares comprise our most significant overweight position. But after outsized gains in 2005, TOP TEN HOLDINGS AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Wyeth 3.9% 2.9% - -------------------------------------------------------------------------------- Novartis AG ADR 3.9% 2.5% - -------------------------------------------------------------------------------- Johnson & Johnson 3.9% 5.1% - -------------------------------------------------------------------------------- Baxter International, Inc. 3.7% 2.0% - -------------------------------------------------------------------------------- Hospira Inc. 3.4% 1.0% - -------------------------------------------------------------------------------- Pfizer Inc. 3.3% -- - -------------------------------------------------------------------------------- WellPoint Inc. 3.3% 3.2% - -------------------------------------------------------------------------------- Teva Pharmaceutical Industries Ltd. ADR 3.2% 1.3% - -------------------------------------------------------------------------------- Henry Schein, Inc. 3.0% 2.3% - -------------------------------------------------------------------------------- Manor Care, Inc. 3.0% -- - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. (continued) - ------ 5 Life Sciences - Portfolio Commentary these stocks experienced a reversal of fortune beginning in 2006, with the health care providers in the index down more than 9% for the six months. Despite poor performance overall, this position was home to our largest single contributor to both relative and absolute performance -- UnitedHealth Group Inc. This diversified health-benefits firm reported the addition of several million new customers during the period along with earnings growth in every business segment. We realized significant gains before selling the position in March. BIOTECH BENEFITS Biotechnology firms were among the largest contributors to performance compared with our benchmark. We were significantly overweight in this industry, and added value through stock selection. Some of our largest contributors were overweight positions in Digene and Gilead Sciences. Digene's growth is being powered by the only federally approved diagnostic test for cancer-causing types of the human Papilloma virus. Gilead Sciences' HIV treatments marked their ninth consecutive quarter of sales growth during the period, helping the company to nearly triple its income. Gilead has also benefited from rising sales of Tamiflu, the only existing antiviral treatment for avian flu. Gilead Sciences invented Tamiflu and receives royalties from distributor Roche Holding. OUR COMMITMENT Life Sciences is intended for long-term equity investors who want the potential to outperform the market by targeting their investments at fast-growing life sciences companies of all sizes. It's important to remember, however, that the fund is narrowly focused on a single sector of the market, so it's likely best used as a small slice of a larger portfolio, rather than as a core holding. We target companies experiencing accelerating fundamental growth and improving share price momentum. We believe that this strategy will be rewarded over time and provide relative outperformance to our shareholders. TOP FIVE INDUSTRIES AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Health Care Providers & Services 41.0% 31.7% - -------------------------------------------------------------------------------- Pharmaceuticals 26.0% 25.0% - -------------------------------------------------------------------------------- Health Care Equipment & Supplies 16.2% 21.8% - -------------------------------------------------------------------------------- Biotechnology 7.3% 13.6% - -------------------------------------------------------------------------------- Life Sciences Tools & Services 5.3% -- - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Domestic Common Stocks 77.6% 86.0% - -------------------------------------------------------------------------------- Foreign Common Stocks(1) 19.5% 11.1% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 97.1% 97.1% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.1% 3.5% - -------------------------------------------------------------------------------- Other Assets & Liabilities 1.8% (0.6)%(2) - -------------------------------------------------------------------------------- (1) Includes depositary receipts, dual listed securities and foreign ordinary shares. (2) Includes collateral received for securities lending and other assets and liabilities. - ------ 6 Life Sciences - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 97.1% BIOTECHNOLOGY - 7.3% - -------------------------------------------------------------------------------- 52,500 Amgen Inc.(1) $ 3,548,475 - -------------------------------------------------------------------------------- 21,169 Bioenvision, Inc.(1) 122,357 - -------------------------------------------------------------------------------- 50,000 Cephalon, Inc.(1) 2,986,000 - -------------------------------------------------------------------------------- 50,000 Gilead Sciences, Inc.(1) 2,866,500 - -------------------------------------------------------------------------------- 9,523,332 - -------------------------------------------------------------------------------- CHEMICALS - 1.3% - -------------------------------------------------------------------------------- 25,000 Sigma-Aldrich Corp. 1,735,500 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES - 16.2% - -------------------------------------------------------------------------------- 46,300 Bard (C.R.), Inc. 3,426,663 - -------------------------------------------------------------------------------- 130,000 Baxter International, Inc. 4,901,000 - -------------------------------------------------------------------------------- 29,870 Beckman Coulter, Inc. 1,651,811 - -------------------------------------------------------------------------------- 42,710 Biomet Inc. 1,503,819 - -------------------------------------------------------------------------------- 60,000 Dentsply International Inc. 3,588,000 - -------------------------------------------------------------------------------- 100,000 Hospira Inc.(1) 4,481,000 - -------------------------------------------------------------------------------- 38,000 Stryker Corp. 1,668,200 - -------------------------------------------------------------------------------- 21,220,493 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES - 41.0% - -------------------------------------------------------------------------------- 44,000 Cardinal Health, Inc. 2,944,040 - -------------------------------------------------------------------------------- 76,200 Caremark Rx Inc.(1) 3,655,314 - -------------------------------------------------------------------------------- 62,500 Chemed Corp. 3,365,625 - -------------------------------------------------------------------------------- 36,800 CIGNA Corp. 3,412,832 - -------------------------------------------------------------------------------- 66,500 DaVita Inc.(1) 3,521,840 - -------------------------------------------------------------------------------- 23,500 Fresenius Medical Care AG ORD 2,631,751 - -------------------------------------------------------------------------------- 85,000 Henry Schein, Inc.(1) 3,917,650 - -------------------------------------------------------------------------------- 89,000 Lincare Holdings Inc.(1) 3,319,700 - -------------------------------------------------------------------------------- 83,500 Manor Care, Inc. 3,877,740 - -------------------------------------------------------------------------------- 67,000 Medco Health Solutions Inc.(1) 3,611,300 - -------------------------------------------------------------------------------- 63,000 Omnicare, Inc. 2,920,680 - -------------------------------------------------------------------------------- 56,000 Owens & Minor Inc. 1,663,200 - -------------------------------------------------------------------------------- 48,000 Patterson Companies, Inc.(1) 1,644,000 - -------------------------------------------------------------------------------- 38,000 Pediatrix Medical Group, Inc.(1) 1,755,220 - -------------------------------------------------------------------------------- 98,000 PSS World Medical Inc.(1) 1,740,480 - -------------------------------------------------------------------------------- 66,000 Quest Diagnostics Inc. 3,678,840 - -------------------------------------------------------------------------------- 208,500 Sun Healthcare Group, Inc.(1) 1,711,785 - -------------------------------------------------------------------------------- 60,000 WellPoint Inc.(1) 4,294,800 - -------------------------------------------------------------------------------- 53,666,797 - -------------------------------------------------------------------------------- Shares/Principal Amount Value - -------------------------------------------------------------------------------- LIFE SCIENCES TOOLS & SERVICES - 5.3% - -------------------------------------------------------------------------------- 35,000 Icon plc ADR(1) $ 1,860,250 - -------------------------------------------------------------------------------- 98,680 QIAGEN N.V.(1) 1,406,190 - -------------------------------------------------------------------------------- 100,000 Thermo Electron Corp.(1) 3,674,000 - -------------------------------------------------------------------------------- 6,940,440 - -------------------------------------------------------------------------------- PHARMACEUTICALS - 26.0% - -------------------------------------------------------------------------------- 120,000 GlaxoSmithKline plc ORD 3,319,877 - -------------------------------------------------------------------------------- 84,000 Johnson & Johnson 5,058,480 - -------------------------------------------------------------------------------- 91,250 Novartis AG ADR 5,062,550 - -------------------------------------------------------------------------------- 183,000 Pfizer Inc. 4,329,780 - -------------------------------------------------------------------------------- 23,200 Roche Holding AG ORD 3,610,073 - -------------------------------------------------------------------------------- 77,000 Shire plc ADR 3,402,630 - -------------------------------------------------------------------------------- 115,000 Teva Pharmaceutical Industries Ltd. ADR 4,187,150 - -------------------------------------------------------------------------------- 112,000 Wyeth 5,122,880 - -------------------------------------------------------------------------------- 34,093,420 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $123,760,218) 127,179,982 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS - 1.1% $1,400,000 FNMA Discount Notes, 4.90%, 6/1/06(2) (Cost $1,399,809) 1,400,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 98.2% (Cost $125,160,027) 128,579,982 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 1.8% 2,343,370 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $ 130,923,352 ================================================================================ See Notes to Financial Statements. (continued) - ------ 7 Life Sciences - Schedule of Investments MAY 31, 2006 (UNAUDITED) FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS Contracts to Sell Settlement Date Value Unrealized Gain (Loss) - ------------------------------------------------------------------------------- 2,155,280 CHF for USD 6/30/06 $ 1,773,331 $ (10,097) - ------------------------------------------------------------------------------- 599,317 Euro for USD 6/30/06 769,181 (4,381) - ------------------------------------------------------------------------------- 438,795 Euro for USD 6/30/06 563,162 (2,940) - ------------------------------------------------------------------------------- 886,800 GBP for USD 6/30/06 1,658,380 (11,787) - ------------------------------------------------------------------------------- $ 4,764,054 $ (29,205) ========================================= (Value on Settlement Date $ 4,734,849) NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt CHF = Swiss Franc GBP = British Pound ORD = Foreign Ordinary Share FNMA = Federal National Mortgage Association USD = United States Dollar (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. See Notes to Financial Statements. - ------ 8 Technology - Performance TOTAL RETURNS AS OF MAY 31, 2006 ---------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 6 MONTHS(1) 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 5.00% 21.47% -3.49% -13.92% 6/30/00 - -------------------------------------------------------------------------------- S&P COMPOSITE 1500 TECHNOLOGY INDEX -5.47% 2.77% -3.07% -13.19% -- - -------------------------------------------------------------------------------- S&P 500 INDEX(2) 2.60% 8.64% 1.96% -0.65% -- - -------------------------------------------------------------------------------- Institutional Class 5.14% 21.70% -3.24% -15.30% 7/14/00 - -------------------------------------------------------------------------------- Advisor Class 4.92% 21.18% -3.74% -14.16% 6/30/00 - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. - A Reuters Company. (c) 2006 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) - ------ 9 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 May 31 - -------------------------------------------------------------------------------- 2001* 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------- Investor Class -50.80% -30.49% -10.64% 19.44% -7.12% 21.47% - -------------------------------------------------------------------------------- S&P Composite 1500 Technology Index -49.39% -27.13% -7.11% 22.54% 0.36% 2.77% - -------------------------------------------------------------------------------- S&P 500 Index -12.71% -13.85% -8.06% 18.33% 8.24% 8.64% - -------------------------------------------------------------------------------- * 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. - ------ 10 Technology - Portfolio Commentary PORTFOLIO MANAGERS: HAROLD BRADLEY AND TOM TELFORD Technology performed well relative to its benchmark and competition during the six months ended May 31, 2006. The portfolio returned 5.00%*, while the benchmark--the S&P Composite 1500 Technology Index--returned -5.47%. The average return of the 298 science and technology funds tracked by Lipper Inc. was - -0.59%.** What's more, Technology's performance for the 12 months ended in May was even better, with a return of 21.47%, compared with 2.77% for the benchmark and 9.84% for the Lipper category average of 292 funds. You can see additional performance comparisons on the previous page. SOLID GROWTH, STOCKS MIXED Though the economy fared surprisingly well during the period, stocks finished on a down note amid worry that interest rates and inflation might run higher than investors expected (see the Market Perspective on page 2). Against this market backdrop, one of the key reasons for Technology's strong performance relative to its benchmark was our stock selection among software firms, semiconductor and semiconductor equipment makers, and electronic equipment companies. However, the fund's relative return would have been even better but for some of our choices among information technology (IT) services companies. SOFTWARE AND SEMICONDUCTORS HELP The software and semiconductor industries were leading contributors to portfolio performance. For example, the portfolio's software stocks returned 22%, while those in the benchmark DECLINED 11%. Microsoft is a good place to start--it is far and away the largest stock in the index, but we avoided it. The shares fell 18% under the weight of slower-than-expected earnings growth, increased spending, lower revenues and margins, and new product delays. It's a similar story in semiconductor shares, where we had no exposure to Intel, which lost almost a third of its value (-32%). The world's leading chip maker is struggling with loss of market share to rival Advanced Micro Devices, a firm in which we were overweight and that enjoyed a good six months (up 18%). Communications-related chip makers made up another area of strength. Overweight positions in Anadigics, Broadcom, and Mindspeed contributed significantly to the portfolio's return on both a relative and absolute basis. TOP TEN HOLDINGS AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Anadigics, Inc. 3.5% 0.9% - -------------------------------------------------------------------------------- NII Holdings, Inc. CI B 2.7% 3.2% - -------------------------------------------------------------------------------- Sirenza Microdevices, Inc. 2.6% -- - -------------------------------------------------------------------------------- Alliance Data Systems Corp. 2.5% -- - -------------------------------------------------------------------------------- Orbital Sciences Corp. 2.4% -- - -------------------------------------------------------------------------------- Xyratex Ltd. 2.2% -- - -------------------------------------------------------------------------------- High Tech Computer Corp. ORD 2.1% -- - -------------------------------------------------------------------------------- Daktronics Inc. 2.1% -- - -------------------------------------------------------------------------------- Citrix Systems, Inc. 2.0% -- - -------------------------------------------------------------------------------- VistaPrint Ltd. 2.0% 1.4% - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. **The average returns of the 230 science and technology funds tracked by Lipper Inc. was -4.40% for the five-year period ended May 31, 2006. Performance data is total return, and is preliminary and subject to revision. (continued) - ------ 11 Technology - Portfolio Commentary MANUFACTURING PERFORMANCE Electronic equipment manufacturers were among the largest contributors to performance on an absolute and relative basis. We were significantly overweight in this industry and also made some good stock choices. The portfolio's stocks in this segment returned 33%, while those in the benchmark returned 9%. Some of our largest contributors in this space included Plexus, an electronic manufacturing services company, and TTM Technologies, a printed circuit board maker. We also got a significant contribution from Sirenza Microdevices, a maker of electronic components for wireless and wireline communications equipment. These companies posted better-than-expected revenues and earnings growth and provided positive outlooks for the year. IT SERVICES DETRACTS The single tech industry to detract from performance relative to our benchmark was IT services, where we were hurt by our stock selection. Our biggest detractor here was Sapient Corporation, a technology consulting firm. Sapient performed well through the end of April, before falling after warning of a revenue shortfall related to a recent acquisition. COMMITMENT TO GROWTH PHILOSOPHY We remain committed to pursuing attractive investment opportunities for the portfolio, targeting technology firms with accelerating earnings and revenue growth rates and positive share price momentum. We think the portfolio's strong showing relative to its peers and benchmark demonstrate how well this approach can work over time, and we think that Technology can be a good choice for investors interested in an aggressive, concentrated sector fund for a small slice of their overall portfolio. We think we have the opportunity to pursue that process in a favorable environment because we're seeing a variety of data that suggest we are entering a period that may favor select technology shares. That's because corporations have been sitting on record levels of cash and are now beginning to invest in technology again in order to maintain earnings and productivity growth. TOP FIVE INDUSTRIES AS OF MAY 31, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Electronic Equipment & Instruments 16.6% 7.0% - -------------------------------------------------------------------------------- Semiconductors & Semiconductor Equipment 14.2% 17.3% - -------------------------------------------------------------------------------- Internet Software & Services 10.1% 14.1% - -------------------------------------------------------------------------------- Software 9.1% 11.6% - -------------------------------------------------------------------------------- Computers & Peripherals 8.5% 13.5% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 5/31/06 11/30/05 - -------------------------------------------------------------------------------- Domestic Common Stocks 76.4% 79.6% - -------------------------------------------------------------------------------- Foreign Common Stocks(1) 22.3% 20.6% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 98.7% 100.2% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.7% 0.3% - -------------------------------------------------------------------------------- Other Assets & Liabilities 0.6% (0.5)%(2) - -------------------------------------------------------------------------------- (1) Includes depositary receipts, dual listed securities and foreign ordinary shares. (2) Includes collateral received for securities lending and other assets and liabilities. - ------ 12 Technology - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 98.7% - -------------------------------------------------------------------------------- AEROSPACE & DEFENSE - 7.2% - -------------------------------------------------------------------------------- 109,563 BE Aerospace, Inc.(1) $ 2,429,012 - -------------------------------------------------------------------------------- 38,462 HEICO Corp. 1,178,861 - -------------------------------------------------------------------------------- 44,376 HEICO Corp. Cl A 1,195,046 - -------------------------------------------------------------------------------- 224,653 Orbital Sciences Corp.(1) 3,367,547 - -------------------------------------------------------------------------------- 33,607 United Technologies Corp. 2,101,110 - -------------------------------------------------------------------------------- 10,271,576 - -------------------------------------------------------------------------------- COMMERCIAL SERVICES & SUPPLIES - 1.3% - -------------------------------------------------------------------------------- 52,200 American Reprographics Co.(1) 1,809,774 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 7.8% - -------------------------------------------------------------------------------- 56,639 CSR plc ORD(1) 1,533,074 - -------------------------------------------------------------------------------- 434,000 Foxconn International Holdings Ltd. ORD(1) 1,178,275 - -------------------------------------------------------------------------------- 2,722,000 Microelectronics Technology ORD(1) 1,184,892 - -------------------------------------------------------------------------------- 100,772 Netgear, Inc.(1) 2,359,073 - -------------------------------------------------------------------------------- 61,572 Sierra Wireless(1) 1,040,567 - -------------------------------------------------------------------------------- 329,998 Sirenza Microdevices, Inc.(1) 3,768,577 - -------------------------------------------------------------------------------- 11,064,458 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS - 8.5% - -------------------------------------------------------------------------------- 103,000 High Tech Computer Corp. ORD 3,027,232 - -------------------------------------------------------------------------------- 1,068,000 Ichia Technologies Inc. ORD 1,460,651 - -------------------------------------------------------------------------------- 39,085 Lexmark International, Inc. Cl A(1) 2,237,616 - -------------------------------------------------------------------------------- 179,000 Toshiba Corp. ORD 1,206,814 - -------------------------------------------------------------------------------- 79,590 Transact Technologies Inc.(1) 1,056,159 - -------------------------------------------------------------------------------- 115,151 Xyratex Ltd.(1) 3,095,260 - -------------------------------------------------------------------------------- 12,083,732 - -------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES - 7.2% - -------------------------------------------------------------------------------- 182,573 Broadwing Corp.(1) 2,081,332 - -------------------------------------------------------------------------------- 1,048,395 Covad Communications Group, Inc.(1) 2,180,662 - -------------------------------------------------------------------------------- 480,004 Level 3 Communications, Inc.(1) 2,385,619 - -------------------------------------------------------------------------------- 419 Nippon Telegraph & Telephone Corp. ORD 2,070,698 - -------------------------------------------------------------------------------- 122,135 Vonage Holdings Corp.(1) 1,468,063 - -------------------------------------------------------------------------------- 10,186,374 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 16.6% - -------------------------------------------------------------------------------- 40,550 Amphenol Corp. Cl A $ 2,252,553 - -------------------------------------------------------------------------------- 61,818 Daktronics Inc. 2,944,391 - -------------------------------------------------------------------------------- 36,000 Hioki E.E. Corp. ORD 1,433,614 - -------------------------------------------------------------------------------- 105,500 Innotech Corp. ORD 1,179,774 - -------------------------------------------------------------------------------- 37,042 Itron Inc.(1) 2,215,112 - -------------------------------------------------------------------------------- 218,707 Kemet Corp.(1) 2,090,839 - -------------------------------------------------------------------------------- 65,931 Littelfuse, Inc.(1) 2,309,563 - -------------------------------------------------------------------------------- 58,116 Plexus Corp.(1) 2,285,702 - -------------------------------------------------------------------------------- 420,519 Sanmina-SCI Corp.(1) 1,976,439 - -------------------------------------------------------------------------------- 111,000 Star Micronics Co. Ltd. ORD 2,200,177 - -------------------------------------------------------------------------------- 191,407 TTM Technologies, Inc.(1) 2,796,456 - -------------------------------------------------------------------------------- 23,684,620 - -------------------------------------------------------------------------------- INTERNET & CATALOG RETAIL - 3.4% - -------------------------------------------------------------------------------- 65,408 Priceline.com Inc.(1) 2,034,189 - -------------------------------------------------------------------------------- 89,439 VistaPrint Ltd.(1) 2,832,533 - -------------------------------------------------------------------------------- 4,866,722 - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES - 10.1% - -------------------------------------------------------------------------------- 79,017 Akamai Technologies, Inc.(1) 2,472,442 - -------------------------------------------------------------------------------- 26,483 Baidu.com ADR(1) 2,060,907 - -------------------------------------------------------------------------------- 1,076,713 Internap Network Services Corp.(1) 1,248,987 - -------------------------------------------------------------------------------- 486,101 Opera Software ASA ORD(1) 2,077,252 - -------------------------------------------------------------------------------- 962,775 SAVVIS, Inc.(1) 1,810,017 - -------------------------------------------------------------------------------- 88,218 TheStreet.com, Inc. 1,045,383 - -------------------------------------------------------------------------------- 59,310 Travelzoo Inc.(1) 1,766,252 - -------------------------------------------------------------------------------- 209,261 webMethods, Inc.(1) 1,889,627 - -------------------------------------------------------------------------------- 14,370,867 - -------------------------------------------------------------------------------- IT SERVICES - 4.2% - -------------------------------------------------------------------------------- 66,019 Alliance Data Systems Corp.(1) 3,503,629 - -------------------------------------------------------------------------------- 30,029 Devoteam SA ORD 1,000,185 - -------------------------------------------------------------------------------- 430,711 Emblaze Ltd. ORD(1) 1,159,384 - -------------------------------------------------------------------------------- 11,302 Forrester Research Inc.(1) 289,444 - -------------------------------------------------------------------------------- 5,952,642 - -------------------------------------------------------------------------------- MEDIA - 4.8% - -------------------------------------------------------------------------------- 70,351 Comcast Corporation Cl A(1) 2,260,378 - -------------------------------------------------------------------------------- 74,637 Disney (Walt) Co. 2,276,429 - -------------------------------------------------------------------------------- 112,617 News Corp. Cl B 2,248,961 - -------------------------------------------------------------------------------- 6,785,768 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 13 Technology - Schedule of Investments MAY 31, 2006 (UNAUDITED) Shares Value - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 14.2% - -------------------------------------------------------------------------------- 576,763 Anadigics, Inc.(1) $ 4,925,557 - -------------------------------------------------------------------------------- 1,248,000 Chartered Semiconductor Manufacturing Ltd. ORD(1) 1,192,344 - -------------------------------------------------------------------------------- 27,356 Cymer, Inc.(1) 1,269,045 - -------------------------------------------------------------------------------- 36,556 FormFactor, Inc.(1) 1,416,179 - -------------------------------------------------------------------------------- 44,385 International Rectifier Corp.(1) 1,977,352 - -------------------------------------------------------------------------------- 116,313 Jenoptik AG ORD(1) 1,062,390 - -------------------------------------------------------------------------------- 162,624 Kontron AG ORD(1) 1,833,299 - -------------------------------------------------------------------------------- 64,224 Melexis N.V. ORD 1,077,791 - -------------------------------------------------------------------------------- 60,076 MEMC Electronic Materials Inc.(1) 2,103,862 - -------------------------------------------------------------------------------- 52,442 Nextest Systems Corp.(1) 941,334 - -------------------------------------------------------------------------------- 50,838 Supertex Inc.(1) 2,061,989 - -------------------------------------------------------------------------------- 66,500 Towa Corp. ORD(1) 466,275 - -------------------------------------------------------------------------------- 20,327,417 - -------------------------------------------------------------------------------- SOFTWARE - 9.1% - -------------------------------------------------------------------------------- 76,604 Citrix Systems, Inc.(1) 2,878,779 - -------------------------------------------------------------------------------- 53,230 Kronos Inc.(1) 2,129,200 - -------------------------------------------------------------------------------- 175,506 Mentor Graphics Corp.(1) 2,206,110 - -------------------------------------------------------------------------------- 66,708 Protect Data AB ORD 1,033,646 - -------------------------------------------------------------------------------- 175,857 Smith Micro Software Inc.(1) 2,391,655 - -------------------------------------------------------------------------------- 59,007 Transaction Systems Architects, Inc.(1) 2,304,813 - -------------------------------------------------------------------------------- 12,944,203 - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES - 4.3% - -------------------------------------------------------------------------------- 2,570,000 China Unicom Limited ORD 2,331,373 - -------------------------------------------------------------------------------- 70,140 NII Holdings, Inc. Cl B(1) 3,819,824 - -------------------------------------------------------------------------------- 6,151,197 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $125,376,229) 140,499,350 - -------------------------------------------------------------------------------- Value - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS - 0.7% - -------------------------------------------------------------------------------- Repurchase Agreement, Morgan Stanley Group, Inc., (collateralized by various U.S. Treasury obligations, 7.25%, 8/15/22, valued at $1,018,808 ), in a joint trading account at 4.87%, dated 5/31/06, due 6/1/06 (Delivery value $1,000,135) (Cost $1,000,000) $1,000,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 99.4% (Cost $126,376,229) 141,499,350 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.6% 905,239 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $ 142,404,589 ================================================================================ NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt ORD = Foreign Ordinary Share (1) Non-income producing. 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 the fair valued securities as of May 31, 2006, was $18,932,123, which represented 13.3% of total net assets. See Notes to Financial Statements. - ------ 14 Shareholder Fee Examples (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from December 1, 2005 to May 31, 2006. 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) - ------ 15 Shareholder Fee Examples (Unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - -------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 12/1/05 - EXPENSE 12/1/05 5/31/06 5/31/06 RATIO* - -------------------------------------------------------------------------------- LIFE SCIENCES SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $947.40 $7.28 1.50% - -------------------------------------------------------------------------------- Institutional Class $1,000 $948.00 $6.31 1.30% - -------------------------------------------------------------------------------- Advisor Class $1,000 $946.70 $8.49 1.75% - -------------------------------------------------------------------------------- C Class $1,000 $943.20 $12.11 2.50% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,017.45 $7.54 1.50% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,018.45 $6.54 1.30% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,016.21 $8.80 1.75% - -------------------------------------------------------------------------------- C Class $1,000 $1,012.47 $12.54 2.50% - -------------------------------------------------------------------------------- TECHNOLOGY SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,050.00 $7.67 1.50% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,051.40 $6.65 1.30% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,049.20 $8.94 1.75% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,017.45 $7.54 1.50% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,018.45 $6.54 1.30% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,016.21 $8.80 1.75% - -------------------------------------------------------------------------------- *Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 16 Statement of Assets and Liabilities MAY 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $125,160,027 and $126,376,229, respectively) $128,579,982 $141,499,350 - ----------------------------------------- Foreign currency holdings, at value (cost of $- and $1,166,512, respectively) -- 1,170,153 - ----------------------------------------- Receivable for investments sold 4,932,384 7,746,216 - ----------------------------------------- Receivable for capital shares sold 260 3,177 - ----------------------------------------- Dividends and interest receivable 157,425 1,394 - -------------------------------------------------------------------------------- 133,670,051 150,420,290 - -------------------------------------------------------------------------------- LIABILITIES - ----------------------------------------- Disbursements in excess of demand deposit cash 2,095,824 10,385 - ----------------------------------------- Payable for investments purchased 447,336 7,811,762 - ----------------------------------------- Payable for forward foreign currency exchange contracts 29,205 -- - ----------------------------------------- Accrued management fees 174,217 193,500 - ----------------------------------------- Distribution fees payable 71 27 - ----------------------------------------- Service fees payable 46 27 - -------------------------------------------------------------------------------- 2,746,699 8,015,701 - -------------------------------------------------------------------------------- NET ASSETS $130,923,352 $142,404,589 ================================================================================ NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $142,274,538 $347,214,110 - ----------------------------------------- Accumulated net investment loss (554,172) (816,640) - ----------------------------------------- Accumulated net realized loss on investment and foreign currency transactions (14,188,350) (219,126,299) - ----------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 3,391,336 15,133,418 - -------------------------------------------------------------------------------- $130,923,352 $142,404,589 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $127,720,059 $136,096,712 - ----------------------------------------- Shares outstanding 25,334,607 6,611,981 - ----------------------------------------- Net asset value per share $5.04 $20.58 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $2,999,993 $6,182,275 - ----------------------------------------- Shares outstanding 587,778 296,462 - ----------------------------------------- Net asset value per share $5.10 $20.85 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $163,511 $125,602 - ----------------------------------------- Shares outstanding 32,908 6,206 - ----------------------------------------- Net asset value per share $4.97 $20.24 - -------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $39,789 N/A - ----------------------------------------- Shares outstanding 8,255 N/A - ----------------------------------------- Net asset value per share $4.82 N/A - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 17 Statement of Operations FOR THE SIX MONTHS ENDED MAY 31, 2006 (UNAUDITED) - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - ----------------------------------------- Dividends (net of foreign taxes withheld of $25,037 and $7,138, respectively) $ 477,520 $ 103,248 - ----------------------------------------- Interest 96,115 39,995 - ----------------------------------------- Securities lending 15,489 44,297 - -------------------------------------------------------------------------------- 589,124 187,540 - -------------------------------------------------------------------------------- EXPENSES: - ----------------------------------------- Management fees 1,144,578 1,149,129 - ----------------------------------------- Distribution fees: - ----------------------------------------- Advisor Class 184 155 - ----------------------------------------- C Class 419 -- - ----------------------------------------- Service fees: - ----------------------------------------- Advisor Class 184 155 - ----------------------------------------- C Class 140 -- - ----------------------------------------- Directors' fees and expenses 1,192 1,156 - ----------------------------------------- Other expenses 294 1,716 - -------------------------------------------------------------------------------- 1,146,991 1,152,311 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) (557,867) (964,771) - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - ----------------------------------------- Investment transactions 7,760,732 16,096,603 - ----------------------------------------- Foreign currency transactions (141,729) 6,741 - -------------------------------------------------------------------------------- 7,619,003 16,103,344 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: - ----------------------------------------- Investments (14,283,948) (7,707,229) - ----------------------------------------- Translation of assets and liabilities in foreign currencies (23,438) 6,582 - -------------------------------------------------------------------------------- (14,307,386) (7,700,647) - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) (6,688,383) 8,402,697 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $ (7,246,250) $ 7,437,926 ================================================================================ See Notes to Financial Statements. - ------ 18 Statement of Changes in Net Assets SIX MONTHS ENDED MAY 31, 2006 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005 2006 2005 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income (loss) $ (557,867) $ (1,292,103) $ (964,771) $ (1,506,117) - ----------------- Net realized gain (loss) 7,619,003 19,658,533 16,103,344 15,621,008 - ----------------- Change in net unrealized appreciation (depreciation) (14,307,386) 1,571,061 (7,700,647) (5,241,394) - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (7,246,250) 19,937,491 7,437,926 8,873,497 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (21,887,719) (19,052,124) (8,950,257) (39,826,142) - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS (29,133,969) 885,367 (1,512,331) (30,952,645) - -------------------------------------------------------------------------------- NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 160,057,321 159,171,954 143,916,920 174,869,565 - -------------------------------------------------------------------------------- End of period $130,923,352 $160,057,321 $142,404,589 $143,916,920 ================================================================================ Accumulated undistributed net investment income (loss) $(554,172) $3,695 $(816,640) $(9,649) ================================================================================ See Notes to Financial Statements. - ------ 19 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Life Sciences Fund (Life Sciences) and Technology Fund (Technology) (collectively, the funds) are two funds in a series issued by the corporation. The funds are non-diversified under the 1940 Act. The funds' investment objectives are to seek 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. 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. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective (continued) - ------ 20 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) dates of such transactions. For assets and liabilities, other than investments in securities, net realized and unrealized gains and losses from foreign currency translations arise from changes in currency exchange rates. Net realized and unrealized foreign currency exchange gains or losses occurring during the holding period of investment securities are a component of realized gain (loss) on investment transactions and unrealized appreciation (depreciation) on investments, respectively. Certain countries may impose taxes on the contract amount of purchases and sales of foreign currency contracts in their currency. The funds record the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The funds may enter into forward foreign currency exchange contracts to facilitate transactions of securities denominated in a foreign currency or to hedge the funds' exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the funds and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. The funds bear the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses may arise if the counterparties do not perform under the contract terms. REPURCHASE AGREEMENTS -- The funds may enter into repurchase agreements with institutions that 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) - ------ 21 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) 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 million 1.20% 1.00% 0.95% - -------------------------------------------------------------------------------- The effective annual management fee for each class of the funds for the six months ended May 31, 2006, 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 subadvisor) on behalf of Life Sciences. The subadvisor makes investment decisions for the cash portion of Life Sciences in accordance with Life Sciences' investment objectives, policies, and restrictions under the supervision of ACGIM and the Board of Directors. ACGIM pays all costs associated with retaining ACIM as the subadvisor of Life Sciences. DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master Distribution and Shareholder Services Plan for the Advisor Class and a Master Distribution and Individual Shareholder Services Plan for the C Class (collectively, the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the Advisor Class and C Class will pay American Century Investment Services, Inc. (ACIS) the following annual distribution and service fees: - -------------------------------------- ADVISOR C - -------------------------------------- Distribution Fee 0.25% 0.75% - -------------------------------------- Service Fee 0.25% 0.25% - -------------------------------------- The fees are computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The distribution fee provides compensation for expenses incurred by financial intermediaries in connection with distributing shares of the classes including, but not limited to, payments to brokers, dealers, and financial institutions that have entered into sales agreements with respect to shares of the funds. The service fee provides compensation for shareholder and administrative services rendered by ACIS, its affiliates or independent third party providers for Advisor Class shares and for individual shareholder services rendered by broker/dealers or other independent financial intermediaries for C Class shares. Fees incurred under the plans during the six months ended May 31, 2006, 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) - ------ 22 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the six months ended May 31, 2006 were as follows: - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- Purchases $127,632,295 $287,560,618 - -------------------------------------------------------------------------------- Proceeds from sales $151,254,807 $299,613,762 - -------------------------------------------------------------------------------- 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: - --------------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - --------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - --------------------------------------------------------------------------------------- INVESTOR CLASS - --------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2006 SHARES AUTHORIZED 100,000,000 100,000,000 ======================================================================================= Sold 1,406,983 $ 7,579,207 1,195,777 $25,802,965 - -------------------- Redeemed (5,376,035) (28,618,401) (1,607,344) (34,507,545) - --------------------------------------------------------------------------------------- Net increase (decrease) (3,969,052) $(21,039,194) (411,567) $(8,704,580) ======================================================================================= 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) ======================================================================================= INSTITUTIONAL CLASS - --------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2006 SHARES AUTHORIZED 5,000,000 5,000,000 ======================================================================================= Sold 86,387 $ 476,854 49,588 $1,082,773 - -------------------- Redeemed (233,656) (1,273,463) (60,451) (1,340,062) - --------------------------------------------------------------------------------------- Net increase (decrease) (147,269) $ (796,609) (10,863) $ (257,289) ======================================================================================= 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) ======================================================================================= (continued) - ------ 23 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) Transactions in shares of the funds were as follows: - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - --------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - --------------------------------------------------------------------------------------- ADVISOR CLASS - --------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2006 SHARES AUTHORIZED 5,000,000 5,000,000 ======================================================================================= Sold 14,488 $76,720 1,067 $22,028 - -------------------- Redeemed (13,519) (71,588) (495) (10,416) - --------------------------------------------------------------------------------------- Net increase (decrease) 969 $ 5,132 572 $11,612 ======================================================================================= 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 ======================================================================================= C CLASS - --------------------------------------------------------------------------------------- SIX MONTHS ENDED MAY 31, 2006 SHARES AUTHORIZED 5,000,000 N/A ======================================================================================= Sold 5,799 $ 30,130 - -------------------- Redeemed (17,423) (87,178) - --------------------------------------------------------------------------------------- Net increase (decrease) (11,624) $(57,048) ======================================================================================= 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 ======================================================================================= (continued) - ------ 24 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) 5. SECURITIES LENDING As of May 31, 2006, the funds had no securities on loan. In the case of securities lending transactions, 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. Any deficiencies or excess or collateral must be delivered or transferred by the member firms no later than the close of business on the next business day. 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 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 $500,000,000 unsecured bank line of credit agreement with JPMCB. The funds may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The funds did not borrow from the line during the six months ended May 31, 2006. 7. RISK FACTORS The funds concentrate their investments in a narrow segment of the total market. Because of this, the funds may be subject to greater risks and market fluctuations than a portfolio representing a broader range of industries. (continued) - ------ 25 Notes to Financial Statements MAY 31, 2006 (UNAUDITED) 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. As of May 31, 2006, the components of investments for federal income tax purposes were as follows: - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- Federal tax cost of investments $125,236,566 $126,484,871 ================================================================================ Gross tax appreciation of investments $8,151,603 $19,593,538 - ---------------------------------------- Gross tax depreciation of investments (4,808,187) (4,579,059) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $3,343,416 $15,014,479 ================================================================================ The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. Following are the capital loss carryovers and capital loss deferral amounts as of November 30, 2005: - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- Accumulated capital losses $(21,395,404) $(234,963,221) - -------------------------------------------------------------------------------- Capital loss deferral $(335,409) -- - -------------------------------------------------------------------------------- Currency loss deferral -- $(9,649) - -------------------------------------------------------------------------------- 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 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. - ------ 26 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.32 $4.69 $4.36 $3.54 $4.87 $5.28 - -------------------------------------------------------------------------------------- Income From Investment Operations - --------------------- Net Investment Income (Loss)(2) (0.02) (0.04) (0.04) (0.03) (0.04) (0.03) - --------------------- Net Realized and Unrealized Gain (Loss) (0.26) 0.67 0.37 0.85 (1.29) (0.25) - -------------------------------------------------------------------------------------- Total From Investment Operations (0.28) 0.63 0.33 0.82 (1.33) (0.28) - -------------------------------------------------------------------------------------- Distributions - --------------------- From Net Realized Gains -- -- -- -- -- (0.13) - -------------------------------------------------------------------------------------- Net Asset Value, End of Period $5.04 $5.32 $4.69 $4.36 $3.54 $4.87 ====================================================================================== TOTAL RETURN(3) (5.26)% 13.43% 7.57% 23.16% (27.31)% (5.35)% - -------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50%(4) 1.50% 1.50% 1.50% 1.50% 1.50% - --------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.73)%(4) (0.81)% (0.85)% (0.89)% (0.88)% (0.61)% - --------------------- Portfolio Turnover Rate 86% 162% 215% 138% 272% 206% - --------------------- Net Assets, End of Period (in thousands) $127,720 $155,835 $155,530 $160,187 $146,324 $227,341 - -------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 27 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - --------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - --------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - --------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.38 $4.74 $4.40 $3.56 $4.89 $5.28 - --------------------------------------------------------------------------------------- Income From Investment Operations - --------------------- Net Investment Income (Loss)(2) (0.01) (0.03) (0.03) (0.03) (0.03) (0.02) - --------------------- Net Realized and Unrealized Gain (Loss) (0.27) 0.67 0.37 0.87 (1.30) (0.24) - --------------------------------------------------------------------------------------- Total From Investment Operations (0.28) 0.64 0.34 0.84 (1.33) (0.26) - --------------------------------------------------------------------------------------- Distributions - --------------------- From Net Realized Gains -- -- -- -- -- (0.13) - --------------------------------------------------------------------------------------- Net Asset Value, End of Period $5.10 $5.38 $4.74 $4.40 $3.56 $4.89 ======================================================================================= TOTAL RETURN(3) (5.20)% 13.50% 7.73% 23.60% (27.20)% (4.97)% - --------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.30%(4) 1.30% 1.30% 1.30% 1.30% 1.30% - --------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.53)%(4) (0.61)% (0.65)% (0.69)% (0.68)% (0.41)% - --------------------- Portfolio Turnover Rate 86% 162% 215% 138% 272% 206% - --------------------- Net Assets, End of Period (in thousands) $3,000 $3,953 $3,510 $4,019 $3,365 $4,348 - --------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 28 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003 2002 2001 - -------------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.25 $4.64 $4.33 $3.51 $4.86 $5.28 - -------------------------------------------------------------------------------------- Income From Investment Operations - --------------------- Net Investment Income (Loss)(2) (0.03) (0.05) (0.05) (0.04) (0.05) (0.04) - --------------------- Net Realized and Unrealized Gain (Loss) (0.25) 0.66 0.36 0.86 (1.30) (0.25) - -------------------------------------------------------------------------------------- Total From Investment Operations (0.28) 0.61 0.31 0.82 (1.35) (0.29) - -------------------------------------------------------------------------------------- Distributions - --------------------- From Net Realized Gains -- -- -- -- -- (0.13) - -------------------------------------------------------------------------------------- Net Asset Value, End of Period $4.97 $5.25 $4.64 $4.33 $3.51 $4.86 ====================================================================================== TOTAL RETURN(3) (5.33)% 13.15% 7.16% 23.36% (27.78)% (5.55)% - -------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.75%(4) 1.75% 1.75% 1.75% 1.75% 1.75% - --------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.98)%(4) (1.06)% (1.10)% (1.14)% (1.13)% (0.86)% - --------------------- Portfolio Turnover Rate 86% 162% 215% 138% 272% 206% - --------------------- Net Assets, End of Period (in thousands) $164 $168 $107 $46 $25 $13 - -------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------- 29 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ------------------------------------------------------------------------------------------ C CLASS - ------------------------------------------------------------------------------------------ 2006(1) 2005 2004 2003 2002 2001 (2) - ------------------------------------------------------------------------------------------ PER-SHARE DATA - ------------------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $5.11 $4.56 $4.28 $3.49 $4.87 $4.87 - ------------------------------------------------------------------------------------------ Income From Investment Operations - --------------------- Net Investment Income (Loss)(3) (0.04) (0.09) (0.08) (0.07) (0.08) --(4) - --------------------- Net Realized and Unrealized Gain (Loss) (0.25) 0.64 0.36 0.86 (1.30) --(4) - ------------------------------------------------------------------------------------------ Total From Investment Operations (0.29) 0.55 0.28 0.79 (1.38) --(4) - ------------------------------------------------------------------------------------------ Net Asset Value, End of Period $4.82 $5.11 $4.56 $4.28 $3.49 $4.87 ========================================================================================== TOTAL RETURN(5) (5.68)% 12.06% 6.54% 22.64% (28.34)% 0.00% - ------------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 2.50%(6) 2.50% 2.50% 2.50% 2.50% 2.50%(6) - --------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.73)%(6) (1.81)% (1.85)% (1.89)% (1.88)% (1.46)%(6) - --------------------- Portfolio Turnover Rate 86% 162% 215% 138% 272% 206%(7) - --------------------- Net Assets, End of Period (in thousands) $40 $102 $25 $10 $6 $3 - ------------------------------------------------------------------------------------------ (1) Six months ended May 31, 2006 (unaudited). (2) November 29, 2001 (commencement of sale) through November 30, 2001. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2001. See Notes to Financial Statements. - ------ 30 Technology - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ----------------------------------------------------------------------------------------- INVESTOR CLASS - ----------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003(2) 2002(2) 2001(2) - ----------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $19.61 $18.20 $19.58 $14.40 $20.90 $31.90 - ----------------------------------------------------------------------------------------- Income From Investment Operations - --------------------- Net Investment Income (Loss)(3) (0.14) (0.19) (0.24) (0.19) (0.20) (0.20) - --------------------- Net Realized and Unrealized Gain (Loss) 1.11 1.60 (1.14) 5.37 (6.30) (10.80) - ----------------------------------------------------------------------------------------- Total From Investment Operations 0.97 1.41 (1.38) 5.18 (6.50) (11.00) - ----------------------------------------------------------------------------------------- Net Asset Value, End of Period $20.58 $19.61 $18.20 $19.58 $14.40 $20.90 ========================================================================================= TOTAL RETURN(4) 5.00% 7.75% (7.05)% 35.97% (31.10)% (34.48)% - ----------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50%(5) 1.51% 1.50% 1.50% 1.50% 1.50% - --------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.26)%(5) (1.06)% (1.30)% (1.25)% (1.20)% (0.79)% - --------------------- Portfolio Turnover Rate 188% 388% 279% 218% 251% 356% - --------------------- Net Assets, End of Period (in thousands) $136,097 $137,710 $166,986 $202,884 $127,767 $173,877 - ----------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 31 Technology - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ----------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - ----------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003(2) 2002(2) 2001(2) - ----------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $19.84 $18.38 $19.74 $14.50 $21.00 $31.90 - ----------------------------------------------------------------------------------------- Income From Investment Operations - --------------------- Net Investment Income (Loss)(3) (0.12) (0.15) (0.20) (0.16) (0.20) (0.20) - --------------------- Net Realized and Unrealized Gain (Loss) 1.13 1.61 (1.16) 5.40 (6.30) (10.70) - ----------------------------------------------------------------------------------------- Total From Investment Operations 1.01 1.46 (1.36) 5.24 (6.50) (10.90) - ----------------------------------------------------------------------------------------- Net Asset Value, End of Period $20.85 $19.84 $18.38 $19.74 $14.50 $21.00 ========================================================================================= TOTAL RETURN(4) 5.14% 7.94% (6.89)% 36.14% (30.95)% (34.17)% - ----------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.30%(5) 1.31% 1.30% 1.30% 1.30% 1.30% - --------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.06)%(5) (0.86)% (1.10)% (1.05)% (1.00)% (0.59)% - --------------------- Portfolio Turnover Rate 188% 388% 279% 218% 251% 356% - --------------------- Net Assets, End of Period (in thousands) $6,182 $6,099 $7,805 $10,191 $8,444 $9,198 - ----------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value on the last business day. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 32 Technology - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - ----------------------------------------------------------------------------------------- ADVISOR CLASS - ----------------------------------------------------------------------------------------- 2006(1) 2005 2004 2003(2) 2002(2) 2001(2) - ----------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $19.30 $17.96 $19.37 $14.30 $20.80 $31.90 - ----------------------------------------------------------------------------------------- Income From Investment Operations - --------------------- Net Investment Income (Loss)(3) (0.16) (0.24) (0.27) (0.20) (0.20) (0.20) - --------------------- Net Realized and Unrealized Gain (Loss) 1.10 1.58 (1.14) 5.27 (6.30) (10.90) - ----------------------------------------------------------------------------------------- Total From Investment Operations 0.94 1.34 (1.41) 5.07 (6.50) (11.10) - ----------------------------------------------------------------------------------------- Net Asset Value, End of Period $20.24 $19.30 $17.96 $19.37 $14.30 $20.80 ========================================================================================= TOTAL RETURN(4) 4.92% 7.46% (7.28)% 35.45% (31.25)% (34.80)% - ----------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.75%(5) 1.76% 1.75% 1.75% 1.75% 1.75% - --------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.51)%(5) (1.31)% (1.55)% (1.50)% (1.45)% (1.04)% - --------------------- Portfolio Turnover Rate 188% 388% 279% 218% 251% 356% - --------------------- Net Assets, End of Period (in thousands) $126 $109 $78 $18 $54 $1 - ----------------------------------------------------------------------------------------- (1) Six months ended May 31, 2006 (unaudited). (2) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. Total returns are calculated based on the net asset value on the last business day. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 33 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 distribution and service 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. - ------ 34 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 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. 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. - ------ 35 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 DOW JONES INDUSTRIAL AVERAGE (DJIA) is a price-weighted average of 30 actively traded blue chip stocks, primarily industrials but including service-oriented firms. Prepared and published by Dow Jones & Co., it is the oldest and most widely quoted of all the market indicators. The NASDAQ COMPOSITE INDEX is a market value-weighted index of all domestic and international common stocks listed on the Nasdaq stock market. The RUSSELL 2000(reg.tm) INDEX is a market-capitalization weighted index created by Frank Russell Company to measure the performance of the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization. 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 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. - ------ 36 [back cover] CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL 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. American Century Investments PRSRT STD P.O. Box 419200 U.S. POSTAGE PAID Kansas City, MO 64141-6200 AMERICAN CENTURY COMPANIES The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. American Century Investment Services, Inc., Distributor (c)2006 American Century Proprietary Holdings, Inc. All rights reserved. 0607 SH-SAN-50111S
ITEM 2. CODE OF ETHICS. Not applicable for semiannual report filings. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semiannual report filings. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semiannual report filings. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. 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) Not applicable for semiannual report filings. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as Exhibit 99.302CERT. (a)(3) Not applicable. (b) A certification by the registrant's chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is furnished and attached hereto as Exhibit 99.906CERT.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: AMERICAN CENTURY WORLD MUTUAL FUNDS, INC. By: /s/ William M. Lyons -------------------------------------------------- Name: William M. Lyons Title: President Date: July 28, 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 (principal executive officer) Date: July 28, 2006 By: /s/ Maryanne L. Roepke -------------------------------------------------- Name: Maryanne L. Roepke Title: Sr. Vice President, Treasurer, and Chief Financial Officer (principal financial officer) Date: July 28, 2006