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) WILLIAM M. LYONS, 4500 MAIN STREET, 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: 11-30-2006 ------------------------------------------------------
ITEM 1. REPORTS TO STOCKHOLDERS. [front cover] American Century Investments Annual Report November 30, 2006 [photo of winter scene] International Growth Fund Global Growth Fund International Value Fund [american century investments logo and text logo] Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] /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. We are pleased to provide you with the annual report for the American Century International Growth, Global Growth and International Value funds for the 12 months ended November 30, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our website, americancentury.com, where we post quarterly portfolio commentaries, the views of senior investment officers and analysts, and other communications about investments, portfolio strategy, personal finance, and the markets. In its most recent rankings, Dalbar -- which issues customer satisfaction ratings and rankings based on website functionality -- ranked americancentury.com seventh out of the sites provided by the top 25 fund companies that it believes lead the industry in web-based technology. Our website earned an "Excellent" rating, Dalbar's highest designation. For most of 2006, our website linked visitors to information explaining our strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). This 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. To learn more about the collaboration and the LAF, please visit americancentury.com or www.lanceface.com on the Web and click on the links to related sites. With the approach of the 2006 tax season, you can also find out more about tax information via a link from our website. We've posted online descriptions of all of the tax information we provide to investors. If you haven't visited americancentury.com yet, we encourage you to do so...it's there to serve you. And so are we. As always, we deeply appreciate your commitment to American Century Investments. Table of Contents Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 One-Year Total Returns . . . . . . . . . . . . . . . . . . . . . . . . . 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. . . . . . . . . . . . . . . . . . . . . . . . . . . .44 Report of Independent Registered Public Accounting Firm . . . . . . . . . .64 OTHER INFORMATION Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65 Approval of Management Agreements for International Growth and Global Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68 Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .73 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .75 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76 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. Market Perspective [photo of Enrique Chang] BY ENRIQUE CHANG, CHIEF INVESTMENT OFFICER, INTERNATIONAL EQUITY DISCIPLINE. MARKETS POSTED ROBUST GAINS Global equity markets continued to demonstrate strength and resilience during the 12 months ended November 30, 2006, with indices from the U.S.'s Dow Jones Industrials to Hong Kong's Hang Seng reaching record highs. The gains were so robust that each of the world's 23 developed markets tracked by Morgan Stanley Capital International (MSCI) advanced, with all but New Zealand registering a double-digit gain. The MSCI Emerging Markets Index, which tracks shares of 27 developing countries globally, also advanced, rebounding from a sharp correction that began in May to finish up 34%. That kind of vitality in the markets was remarkable in the face of continued high oil prices, geopolitical tensions in the Middle East, and interest-rate increases by central banks around the world. STRONG GLOBAL ECONOMY Developments in Europe were among the highlights of the period. The $10 trillion economy of the dozen euro-sharing nations grew the most in six years during the second quarter of 2006. That growth marked the first time since early 2001 that European gross domestic product (GDP) topped that of the U.S., Japan, and Britain. Europe also benefited from better-than-expected corporate earnings, and a record-breaking $1.4 trillion in merger-and-acquisition activity. The region's exporters also gained on increased capital spending by many companies around the world. These developments helped several equity markets in Europe reach their highest levels in five years, and lifted business confidence in Germany to a 15-year high in November. Japan and other Asian markets also gained during the period, with the MSCI AC Asia Pacific Index rising 20.90%. Japan's growth has been driven by the fastest pace of business investment in 16 years, a show of confidence that the economy has recovered from years of stagnation. Among emerging markets, China's GDP has hovered around 10% for four years, and the historic changes there continue to dramatically impact the global economy. Other developing countries also advanced this year, benefiting from continued high prices for oil and other commodities, rising income, and continued economic and political reform. The economic growth in many countries and increasing confidence among investors stand as testament to the resilience of international markets and the global economy. We believe there are significant opportunities abroad for investors, and you can be assured that our team is dedicated to searching the world for companies to help drive investment performance. ONE-YEAR TOTAL RETURNS FOR THE 12 MONTHS ENDED NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- MSCI EAFE Index 28.20% - -------------------------------------------------------------------------------- MSCI World Free Index 20.28% - -------------------------------------------------------------------------------- MSCI EM Index 34.38% - -------------------------------------------------------------------------------- - ------ 2 International Growth - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2006 -------------------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 27.03% 10.19% 9.02% 10.41% 5/9/91 - -------------------------------------------------------------------------------- MSCI EAFE INDEX 28.20% 14.40% 7.23% 7.56%(1) -- - -------------------------------------------------------------------------------- MSCI EAFE GROWTH INDEX 25.29% 11.78% 4.59% 5.19%(1) -- - -------------------------------------------------------------------------------- Institutional Class 27.19% 10.41% -- 8.20% 11/20/97 - -------------------------------------------------------------------------------- Advisor Class 26.57% 9.91% 8.76% 9.00% 10/2/96 - -------------------------------------------------------------------------------- A Class 1/31/03 No sales charge* 26.65% -- -- 20.56% With sales charge* 19.41% -- -- 18.72% - -------------------------------------------------------------------------------- B Class 1/31/03 No sales charge* 25.71% -- -- 19.66% With sales charge* 21.71% -- -- 19.19% - -------------------------------------------------------------------------------- C Class 25.64% 9.06% -- 5.15% 6/4/01 - -------------------------------------------------------------------------------- R Class 26.39% -- -- 19.13%(2) 8/29/03 - -------------------------------------------------------------------------------- *Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a maximum 5.75% initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. Please see the Share Class Information pages for more about the applicable sales charges for each share class. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. (1) Since 4/30/91, the date nearest the Investor Class's inception for which data are available. (2) Class returns would have been lower if the class had not received partial reimbursements of distribution and service fees during the periods. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. (continued) - ------ 3 International Growth - Performance GROWTH OF $10,000 OVER 10 YEARS $10,000 investment made November 30, 1996
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ONE-YEAR RETURNS OVER 10 YEARS Periods ended November 30 - --------------------------------------------------------------------------------------------------- 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - --------------------------------------------------------------------------------------------------- Investor Class 18.12% 16.74% 43.22% -2.47% -24.18% -14.54% 13.70% 17.45% 12.09% 27.03% - --------------------------------------------------------------------------------------------------- MSCI EAFE Index -0.40% 16.45% 21.10% -9.67% -19.13% -12.50% 24.22% 24.19% 13.25% 28.20% - --------------------------------------------------------------------------------------------------- MSCI EAFE Growth Index -1.03% 17.05% 23.18% -17.66% -23.61% -13.53% 20.63% 19.07% 12.14% 25.29% - --------------------------------------------------------------------------------------------------- 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: ALEX TEDDER AND KEITH CREVELING PERFORMANCE SUMMARY International Growth advanced 27.03%* during the 12 months ended November 30, 2006. Its benchmark, the MSCI EAFE Index, returned 28.20%. Against its peers, International Growth outperformed the 26.78% average return of Morningstar's Foreign Large Growth Funds category during the period**. Strong global economic growth and the U.S. dollar's decline drove these gains. Against that backdrop, every sector in which we invested contributed to the portfolio's total return, and all of our top-10 holdings on average during the period added value. But several sectors, notably materials, underperformed the index, ultimately causing the portfolio to lag the benchmark. MANAGEMENT CHANGES Portfolio manager Michael Perelstein left American Century on June 30, 2006. Effective July 5, 2006, Alex Tedder joined Keith Creveling as a portfolio manager for International Growth. Prior to joining us, Tedder was a managing director, head of international equities, and portfolio manager for Deutsche Asset Management Ltd. from 1994 to 2005. TELECOM LIFTED RELATIVE RETURNS Our telecommunication services position made the largest contribution to relative performance due to effective security selection in the wireless industry. The portfolio benefited most from our overweight position in Telenor, a Norwegian phone company with global reach. Two other companies in the telecom sector--America Movil, which provides mobile phone service in Latin America, and China Mobile Ltd.--were also among the top-10 contributors to relative performance. Both are portfolio-only positions, meaning they are not in the index. They serve as examples of our research and analysis leading to opportunities beyond the benchmark. BOOST FROM FINANCIALS Financial holdings, which represented the portfolio's largest sector stake, outperformed the index and made the largest contribution to total return. The financial sector included the security that made TOP TEN HOLDINGS AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Roche Holding AG 2.0% 2.5% - -------------------------------------------------------------------------------- ORIX Corp. 1.7% 1.8% - -------------------------------------------------------------------------------- Groupe Danone 1.7% 1.2% - -------------------------------------------------------------------------------- Total SA 1.6% 1.8% - -------------------------------------------------------------------------------- Toyota Motor Corp. 1.6% 1.7% - -------------------------------------------------------------------------------- AXA SA 1.6% 1.2% - -------------------------------------------------------------------------------- Tesco plc 1.5% -- - -------------------------------------------------------------------------------- Novartis AG 1.5% 1.6% - -------------------------------------------------------------------------------- Societe Generale 1.4% 1.4% - -------------------------------------------------------------------------------- Reckitt Benckiser plc 1.4% 1.5% - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. **The Morningstar's Foreign Large Growth Funds returned 12.24% and 6.57% for the five- and ten-year periods ended November 30, 2006, respectively. (c) 2006 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers: (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar Rankings are based on risk adjusted returns. (continued) - ------ 5 International Growth - Portfolio Commentary the largest contribution to the portfolio's relative and absolute performance. Shares of Man Group, a London-based fund manager, advanced 85.7% during the reporting period. Man reported that profit increased 40% during the six months through September 30, 2006. MATERIALS LAGGED Our investments in a few areas lagged the index. An underweight position in the materials sector, particularly among metals and mining companies, slowed relative performance most. Although our low exposure to the materials sector detracted from performance, we questioned the sustainability of recent performance among some metals and mining companies, and remained underweight. Holdings in the chemicals industry also detracted, mostly due to a pullback in Japan, including Nitto Denko Corp. and JSR Corp. Of the 10 companies that detracted most from relative performance, five were from Japan. OPPORTUNITIES IN EMERGING MARKETS While International Growth invests primarily in large companies in developed countries, we have found opportunity in emerging markets among several companies that fulfill our criteria for sustainable revenue and earnings. They include China Mobile and China Merchants Bank, India's Reliance Communications, and CEZ AS, a power producer in the Czech Republic. Each of these securities contributed to absolute and relative returns. PREPARED FOR CHANGE After the reporting period, portfolio manager Alex Tedder said, "The recent performance of the international equity markets has indeed been remarkable, and we believe the economic, political, and demographic changes under way around the world will continue to create opportunity for investors. But we have to be prepared for changes in the investment environment and economic climate, and that's why we believe it's critically important to invest in companies based on strong fundamentals and their ability to produce sustainable revenue and earnings growth, regardless of market conditions." TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Foreign Common Stocks 99.8% 99.4% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.3% 0.8% - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) (0.1)% (0.2)% - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- United Kingdom 17.2% 12.2% - -------------------------------------------------------------------------------- Japan 16.1% 24.4% - -------------------------------------------------------------------------------- Switzerland 12.4% 9.7% - -------------------------------------------------------------------------------- France 9.5% 14.3% - -------------------------------------------------------------------------------- Germany 5.4% 8.2% - -------------------------------------------------------------------------------- Australia 4.0% 3.6% - -------------------------------------------------------------------------------- Italy 3.7% 4.2% - -------------------------------------------------------------------------------- Netherlands 3.4% 2.9% - -------------------------------------------------------------------------------- Spain 3.0% 1.6% - -------------------------------------------------------------------------------- Other Countries 25.1% 18.3% - -------------------------------------------------------------------------------- Cash and Equivalents(2) 0.2% 0.6% - -------------------------------------------------------------------------------- (2) Includes temporary cash investments, collateral received for securities lending and other assets and liabilities. - ------ 6 International Growth - Schedule of Investments NOVEMBER 30, 2006 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 99.8% AUSTRALIA -- 4.0% - -------------------------------------------------------------------------------- 1,721,674 BHP Billiton Ltd.(1) $ 35,647 - -------------------------------------------------------------------------------- 252,790 CSL Ltd. 11,833 - -------------------------------------------------------------------------------- 799,442 National Australia Bank Ltd.(1) 24,724 - -------------------------------------------------------------------------------- 998,460 QBE Insurance Group Ltd. 20,405 - -------------------------------------------------------------------------------- 353,484 Rio Tinto Ltd.(1) 20,703 - -------------------------------------------------------------------------------- 113,312 - -------------------------------------------------------------------------------- AUSTRIA -- 0.9% - -------------------------------------------------------------------------------- 356,919 Erste Bank der Oesterreichischen Sparkassen AG(1) 26,012 - -------------------------------------------------------------------------------- BELGIUM -- 0.7% - -------------------------------------------------------------------------------- 176,315 KBC Groupe 19,844 - -------------------------------------------------------------------------------- BRAZIL -- 1.1% - -------------------------------------------------------------------------------- 348,360 Petroleo Brasileiro SA ADR 32,798 - -------------------------------------------------------------------------------- CZECH REPUBLIC -- 1.0% - -------------------------------------------------------------------------------- 615,520 CEZ AS(2) 27,423 - -------------------------------------------------------------------------------- DENMARK -- 0.3% - -------------------------------------------------------------------------------- 256,010 Vestas Wind Systems AS(2) 9,885 - -------------------------------------------------------------------------------- FINLAND -- 2.0% - -------------------------------------------------------------------------------- 758,150 Fortum Oyj 22,168 - -------------------------------------------------------------------------------- 401,010 Kone Oyj(1) 20,523 - -------------------------------------------------------------------------------- 334,970 Metso Oyj 15,435 - -------------------------------------------------------------------------------- 58,126 - -------------------------------------------------------------------------------- FRANCE -- 9.5% - -------------------------------------------------------------------------------- 347,879 Accor SA(1) 25,302 - -------------------------------------------------------------------------------- 1,175,588 AXA SA 44,544 - -------------------------------------------------------------------------------- 131,069 Essilor International SA Cie Generale D'Optique 14,083 - -------------------------------------------------------------------------------- 309,719 Groupe Danone(1) 47,680 - -------------------------------------------------------------------------------- 143,993 PPR SA(1) 21,977 - -------------------------------------------------------------------------------- 242,636 Societe Generale(1) 40,664 - -------------------------------------------------------------------------------- 643,146 Total SA(1) 45,628 - -------------------------------------------------------------------------------- 474,518 Veolia Environnement(1) 31,428 - -------------------------------------------------------------------------------- 271,306 - -------------------------------------------------------------------------------- GERMANY -- 5.4% - -------------------------------------------------------------------------------- 105,900 Deutsche Boerse AG 17,734 - -------------------------------------------------------------------------------- 270,581 Fresenius Medical Care AG 36,325 - -------------------------------------------------------------------------------- 218,218 Hochtief AG(1) 14,649 - -------------------------------------------------------------------------------- 242,057 Hypo Real Estate Holding AG 14,091 - -------------------------------------------------------------------------------- 270,700 Linde AG(1) 26,679 - -------------------------------------------------------------------------------- 78,858 MAN AG 7,521 - -------------------------------------------------------------------------------- 87,531 SAP AG 18,306 - -------------------------------------------------------------------------------- 187,880 Siemens AG 17,890 - -------------------------------------------------------------------------------- 153,195 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- GREECE -- 2.5% - -------------------------------------------------------------------------------- 1,257,870 Hellenic Telecommunications Organization SA(2) $ 36,562 - -------------------------------------------------------------------------------- 768,230 National Bank of Greece SA 35,236 - -------------------------------------------------------------------------------- 71,798 - -------------------------------------------------------------------------------- HONG KONG -- 2.1% - -------------------------------------------------------------------------------- 2,768,500 China Mobile Ltd. 23,276 - -------------------------------------------------------------------------------- 1,782,000 Esprit Holdings Ltd.(1) 18,475 - -------------------------------------------------------------------------------- 6,236,800 Li & Fung Ltd.(1) 18,120 - -------------------------------------------------------------------------------- 59,871 - -------------------------------------------------------------------------------- INDIA -- 2.3% - -------------------------------------------------------------------------------- 470,300 Infosys Technologies Ltd. 22,993 - -------------------------------------------------------------------------------- 2,341,180 Reliance Communication Ventures Ltd.(2) 22,522 - -------------------------------------------------------------------------------- 754,830 Tata Consultancy Services Ltd. 20,171 - -------------------------------------------------------------------------------- 65,686 - -------------------------------------------------------------------------------- IRELAND -- 1.8% - -------------------------------------------------------------------------------- 1,168,690 Anglo Irish Bank Corp. plc 22,219 - -------------------------------------------------------------------------------- 383,684 Ryanair Holdings plc ADR(1)(2) 29,386 - -------------------------------------------------------------------------------- 51,605 - -------------------------------------------------------------------------------- ITALY -- 3.7% - -------------------------------------------------------------------------------- 1,263,645 Banco Popolare di Verona e Novara Scrl(1) 35,525 - -------------------------------------------------------------------------------- 631,639 ENI SpA 20,687 - -------------------------------------------------------------------------------- 145,000 Fastweb 7,530 - -------------------------------------------------------------------------------- 676,678 Luxottica Group SpA(1) 20,530 - -------------------------------------------------------------------------------- 819,694 Saipem SpA(1) 20,655 - -------------------------------------------------------------------------------- 104,927 - -------------------------------------------------------------------------------- JAPAN -- 16.1% - -------------------------------------------------------------------------------- 232,400 Astellas Pharma Inc. 10,159 - -------------------------------------------------------------------------------- 3,118,000 Bank of Yokohama Ltd. (The) 23,892 - -------------------------------------------------------------------------------- 456,400 Canon, Inc. 24,131 - -------------------------------------------------------------------------------- 880,150 Daiei Inc. (The)(1)(2) 15,549 - -------------------------------------------------------------------------------- 124,500 Fanuc Ltd. 11,347 - -------------------------------------------------------------------------------- 261,800 Hoya Corp. 10,313 - -------------------------------------------------------------------------------- 973,700 JTEKT Corp. 19,683 - -------------------------------------------------------------------------------- 2,130 KDDI Corp. 14,242 - -------------------------------------------------------------------------------- 712,300 Konami Corp.(1) 20,491 - -------------------------------------------------------------------------------- 273,000 Leopalace21 Corp. 9,174 - -------------------------------------------------------------------------------- 1,293,000 Matsushita Electric Works, Ltd.(1) 14,532 - -------------------------------------------------------------------------------- 3,189,000 Mitsubishi Electric Corp. 29,011 - -------------------------------------------------------------------------------- 2,038 Mitsubishi UFJ Financial Group, Inc. 26,057 - -------------------------------------------------------------------------------- 188,700 Murata Manufacturing Co. Ltd.(1) 12,878 - -------------------------------------------------------------------------------- 62,300 Nintendo Co., Ltd. 14,854 - -------------------------------------------------------------------------------- 182,110 ORIX Corp. 49,873 - -------------------------------------------------------------------------------- 2,309,000 Sekisui Chemical Co. Ltd. 19,508 - -------------------------------------------------------------------------------- 466,400 Shin-Etsu Chemical Co., Ltd. 30,823 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 7 International Growth - Schedule of Investments NOVEMBER 30, 2006 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 863,000 Sumitomo Realty & Development Co. Ltd. $ 27,510 - -------------------------------------------------------------------------------- 1,428,000 Tokyo Tatemono Co. Ltd.(1) 15,346 - -------------------------------------------------------------------------------- 746,400 Toyota Motor Corp.(1) 45,266 - -------------------------------------------------------------------------------- 169,070 Yamada Denki Co. Ltd.(1) 16,023 - -------------------------------------------------------------------------------- 460,662 - -------------------------------------------------------------------------------- MEXICO -- 1.1% - -------------------------------------------------------------------------------- 711,512 America Movil SA de CV Series L ADR 31,641 - -------------------------------------------------------------------------------- NETHERLANDS -- 3.4% - -------------------------------------------------------------------------------- 599,690 ASML Holding N.V.(2) 14,905 - -------------------------------------------------------------------------------- 837,086 ING Groep N.V. CVA 35,699 - -------------------------------------------------------------------------------- 435,970 Koninklijke Philips Electronics N.V. 16,225 - -------------------------------------------------------------------------------- 600,983 Royal Numico N.V.(1) 30,997 - -------------------------------------------------------------------------------- 97,826 - -------------------------------------------------------------------------------- NORWAY -- 2.3% - -------------------------------------------------------------------------------- 170,040 Aker Kvaerner ASA(1) 19,444 - -------------------------------------------------------------------------------- 572,630 Statoil ASA 15,905 - -------------------------------------------------------------------------------- 1,704,357 Telenor ASA 29,276 - -------------------------------------------------------------------------------- 64,625 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 0.8% - -------------------------------------------------------------------------------- 11,460,000 China Merchants Bank Co. Ltd. Cl H(1)(2) 22,010 - -------------------------------------------------------------------------------- SINGAPORE -- 1.4% - -------------------------------------------------------------------------------- 1,715,000 Keppel Corp. Ltd. 19,375 - -------------------------------------------------------------------------------- 1,626,000 United Overseas Bank Ltd. 19,637 - -------------------------------------------------------------------------------- 39,012 - -------------------------------------------------------------------------------- SOUTH KOREA -- 1.5% - -------------------------------------------------------------------------------- 197,100 Hyundai Motor Company 14,925 - -------------------------------------------------------------------------------- 41,290 Samsung Electronics 28,335 - -------------------------------------------------------------------------------- 43,260 - -------------------------------------------------------------------------------- SPAIN -- 3.0% - -------------------------------------------------------------------------------- 1,468,936 Cintra Concesiones de Infraestructuras de Transporte SA(1) 24,579 - -------------------------------------------------------------------------------- 575,529 Inditex SA(1) 29,180 - -------------------------------------------------------------------------------- 1,537,970 Telefonica SA 31,155 - -------------------------------------------------------------------------------- 84,914 - -------------------------------------------------------------------------------- SWEDEN -- 1.5% - -------------------------------------------------------------------------------- 507,720 Swedbank AB A Shares 17,802 - -------------------------------------------------------------------------------- 6,232,370 Telefonaktiebolaget LM Ericsson Cl B(1) 24,129 - -------------------------------------------------------------------------------- 41,931 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- SWITZERLAND -- 12.4% - -------------------------------------------------------------------------------- 2,035,935 ABB Ltd. $ 32,883 - -------------------------------------------------------------------------------- 537,669 Adecco SA(1) 35,634 - -------------------------------------------------------------------------------- 615,269 Compagnie Financiere Richemont AG Cl A 33,150 - -------------------------------------------------------------------------------- 528,280 Credit Suisse Group 34,945 - -------------------------------------------------------------------------------- 337,670 Holcim Ltd. 30,300 - -------------------------------------------------------------------------------- 130,460 Julius Baer Holding AG 13,884 - -------------------------------------------------------------------------------- 39,560 Nestle SA 13,968 - -------------------------------------------------------------------------------- 724,185 Novartis AG 42,222 - -------------------------------------------------------------------------------- 318,729 Roche Holding AG 57,597 - -------------------------------------------------------------------------------- 161,340 Syngenta AG 28,388 - -------------------------------------------------------------------------------- 509,714 UBS AG 30,654 - -------------------------------------------------------------------------------- 353,625 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 1.8% - -------------------------------------------------------------------------------- 8,325,000 Acer Inc. 17,960 - -------------------------------------------------------------------------------- 4,714,800 Hon Hai Precision Industry Co., Ltd. 34,317 - -------------------------------------------------------------------------------- 52,277 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 17.2% - -------------------------------------------------------------------------------- 1,491,093 Amvescap plc 16,122 - -------------------------------------------------------------------------------- 2,746,851 Barclays plc 36,748 - -------------------------------------------------------------------------------- 2,205,889 BG Group plc 29,684 - -------------------------------------------------------------------------------- 1,272,240 BP plc 14,356 - -------------------------------------------------------------------------------- 2,555,010 BT Group plc 14,278 - -------------------------------------------------------------------------------- 2,816,766 Burberry Group plc 33,337 - -------------------------------------------------------------------------------- 2,665,397 Capita Group plc 30,051 - -------------------------------------------------------------------------------- 3,598,363 Carphone Warehouse Group plc 19,135 - -------------------------------------------------------------------------------- 620,000 Experian Group Ltd. 7,119 - -------------------------------------------------------------------------------- 926,382 GlaxoSmithKline plc 24,604 - -------------------------------------------------------------------------------- 2,918,210 International Power plc 19,462 - -------------------------------------------------------------------------------- 3,472,854 Man Group plc 32,361 - -------------------------------------------------------------------------------- 2,141,655 Marks & Spencer Group plc 28,756 - -------------------------------------------------------------------------------- 756,880 Pearson plc 11,167 - -------------------------------------------------------------------------------- 1,432,040 Prudential plc 18,595 - -------------------------------------------------------------------------------- 908,751 Reckitt Benckiser plc 40,411 - -------------------------------------------------------------------------------- 1,473,370 Reuters Group plc 13,107 - -------------------------------------------------------------------------------- 630,265 Royal Bank of Scotland Group plc 22,823 - -------------------------------------------------------------------------------- 1,050,360 SABMiller plc 21,950 - -------------------------------------------------------------------------------- 476,710 Standard Chartered plc 13,673 - -------------------------------------------------------------------------------- 5,690,570 Tesco plc 43,769 - -------------------------------------------------------------------------------- 491,508 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $2,094,687) 2,849,079 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 8 International Growth - Schedule of Investments NOVEMBER 30, 2006 ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 0.3% Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 2.375%, 1/15/25, valued at $8,677), in a joint trading account at 5.25%, dated 11/30/06, due 12/1/06 (Delivery value $8,501) (Cost $8,500) $ 8,500 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 17.0% REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, BNP Paribas, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.31%, dated 11/30/06, due 12/1/06 (Delivery value $111,016) 111,000 - -------------------------------------------------------------------------------- Repurchase Agreement, BNP Paribas, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.32%, dated 11/30/06, due 12/1/06 (Delivery value $126,019) 126,000 - -------------------------------------------------------------------------------- Repurchase Agreement, Citigroup Global Markets Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.32%, dated 11/30/06, due 12/1/06 (Delivery value $200,030) 200,000 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.31%, dated 11/30/06, due 12/1/06 (Delivery value $47,323) 47,316 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $484,316) 484,316 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 117.1% (Cost $2,587,503) 3,341,895 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (17.1)% (487,194) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $ 2,854,701 ================================================================================ MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 26.9% - -------------------------------------------------------------------------------- Consumer Discretionary 14.0% - -------------------------------------------------------------------------------- Industrials 11.9% - -------------------------------------------------------------------------------- Information Technology 9.2% - -------------------------------------------------------------------------------- Telecommunications Services 7.4% - -------------------------------------------------------------------------------- Energy 7.0% - -------------------------------------------------------------------------------- Consumer Staples 7.0% - -------------------------------------------------------------------------------- Health Care 6.9% - -------------------------------------------------------------------------------- Materials 6.0% - -------------------------------------------------------------------------------- Utilities 3.5% - -------------------------------------------------------------------------------- Cash and Equivalents(+) 0.2% - -------------------------------------------------------------------------------- (+)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 (1) Security, or a portion thereof, was on loan as of November 30, 2006. (2) Non-income producing. (3) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. See Notes to Financial Statements. - ------ 9 Global Growth - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2006 ---------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 19.30% 11.43% 11.44% 12/1/98 - -------------------------------------------------------------------------------- MSCI WORLD FREE INDEX 20.28% 9.66% 5.11%(2) - -------------------------------------------------------------------------------- Institutional Class 19.50% 11.68% 2.83% 8/1/00 - -------------------------------------------------------------------------------- Advisor Class 18.97% 11.16% 9.89% 2/5/99 - -------------------------------------------------------------------------------- A Class 12/1/05 No sales charge* -- -- 17.10%(1) With sales charge* -- -- 10.37%(1) - -------------------------------------------------------------------------------- B Class 12/1/05 No sales charge* -- -- 16.29%(1) With sales charge* -- -- 11.29%(1) - -------------------------------------------------------------------------------- C Class 18.04% -- 11.13% 3/1/02 - -------------------------------------------------------------------------------- R Class 18.79% -- 18.65% 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
![](https://capedge.com/proxy/N-CSR/0000872825-07-000004/growthglobalgrowth0701.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - ---------------------------------------------------------------------------------------- 1999* 2000 2001 2002 2003 2004 2005 2006 - ---------------------------------------------------------------------------------------- Investor Class 66.60% 8.81% -23.62% -12.78% 20.22% 15.59% 18.87% 19.30% - ---------------------------------------------------------------------------------------- MSCI World Free Index 21.11% -7.64% -16.01% -15.27% 19.17% 17.43% 11.20% 20.28% - ---------------------------------------------------------------------------------------- * 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 PERFORMANCE SUMMARY Global Growth advanced 19.30%* during the 12 months ended November 30, 2006, while its benchmark, the MSCI World Free Index, returned 20.28%. Against its peers, Global Growth outperformed the 18.16% average return of Lipper's Global Large-Capitalization Growth Funds during the period**. The gains came during a period in which many of the world's markets demonstrated resilience, advancing in the face of rising interest rates, continued high energy prices, and geopolitical tension in the Middle East and elsewhere. Against that backdrop, every sector in which Global Growth was invested contributed to total return, and all top-10 holdings on average during the period added value. Currency played a role, as the dollar's decline versus other currencies increased the portfolio's return. STRONG SECURITY SELECTION Our gains during the period were due mostly to superior stock selection, particularly among financial holdings. The United Kingdom's Man Group, for example, contributed more to relative and absolute performance than any other security. Indeed, three of the top-10 contributing securities to Global Growth's relative performance were in the financials sector. Man Group, an asset manager in the capital markets industry, reported record profit during the period as its increasing assets under management led to higher earnings. Japan's Sumitomo Realty and Development benefited from a resurgent Tokyo real estate market. And China Construction Bank advanced on increased demand for financial services in the world's fastest-growing major economy. However, when China Construction Bank's stock price far exceeded reasonable expectations, even considering its great results, we sold the position. Overall, financials made the largest contribution to relative performance and return. GOING BEYOND THE BENCHMARK Global Growth has the ability to invest in successful companies anywhere in the world that can drive investment performance. During the 12-month period, our research and analysis led to numerous holdings that we call "portfolio-only," meaning they are not listed in the benchmark. Many of those companies boosted performance, including America Movil, which provides TOP TEN HOLDINGS AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Cisco Systems Inc. 2.1% -- - -------------------------------------------------------------------------------- Schlumberger Ltd. 2.0% 2.0% - -------------------------------------------------------------------------------- American Express Co. 2.0% 1.4% - -------------------------------------------------------------------------------- Comcast Corporation Cl A 1.9% -- - -------------------------------------------------------------------------------- American Tower Corp. Cl A 1.8% 1.3% - -------------------------------------------------------------------------------- National Bank of Greece SA 1.8% 1.2% - -------------------------------------------------------------------------------- ORIX Corp. 1.8% 2.0% - -------------------------------------------------------------------------------- Alliance Data Systems Corp. 1.7% -- - -------------------------------------------------------------------------------- Boeing Co. 1.7% 1.3% - -------------------------------------------------------------------------------- Automatic Data Processing, Inc. 1.6% 1.1% - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. **The Lipper Global Large-Capitalization Growth Funds returned 7.32% for the five-year period ended November 30, 2006. (continued) - ------ 12 Global Growth - Portfolio Commentary mobile phone service in Latin America, and Taiwan's Hon Hai Precision Corp., which makes iPod music players and other electronic devices. Of the 10 securities that contributed most to relative performance, five were portfolio-only, a testament to Global Growth's ability to go beyond the benchmark. HEALTH CARE LAGGED Of course, not all positions worked out favorably. 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 early in the 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 increasing profits on strong sales of its cancer-fighting drugs. In terms of single-security detractors, the portfolio's position in XM Satellite Radio Inc. detracted most from relative and absolute performance. Most of the damage was done early in the period, when XM, the biggest U.S. pay-radio service, reported a loss as the company spent more on programming and promotions to add subscribers. We eliminated the position. OUR STARTING POINT FOR THE NEXT SIX MONTHS As of November 30, 2006, opportunities and positions in specific companies resulted in corresponding overweight positions in the information technology, industrials, and consumer discretionary sectors. At the same time, we remained underweight in sectors with companies that don't meet our criteria for accelerating growth, such as utilities. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Foreign Common Stocks 58.8% 59.9% - -------------------------------------------------------------------------------- U.S. Common Stocks 41.2% 38.7% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 100.0% 98.6% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.3% 0.9% - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) (0.3)% 0.5% - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- United States 41.2% 38.7% - -------------------------------------------------------------------------------- Switzerland 7.8% 6.2% - -------------------------------------------------------------------------------- Japan 7.4% 12.1% - -------------------------------------------------------------------------------- United Kingdom 7.1% 8.0% - -------------------------------------------------------------------------------- France 5.0% 5.5% - -------------------------------------------------------------------------------- Netherlands 3.5% 3.8% - -------------------------------------------------------------------------------- Germany 3.4% 4.8% - -------------------------------------------------------------------------------- India 2.8% 1.4% - -------------------------------------------------------------------------------- Italy 2.6% 1.0% - -------------------------------------------------------------------------------- Taiwan (Republic of China) 2.1% 1.7% - -------------------------------------------------------------------------------- Other Countries 17.1% 15.4% - -------------------------------------------------------------------------------- Cash and Equivalents(2) --(3) 1.4% - -------------------------------------------------------------------------------- (2) Includes temporary cash investments, collateral received for securities lending and other assets and liabilities. (3) Category is less than 0.05% of total net assets. - ------ 13 Global Growth - Schedule of Investments NOVEMBER 30, 2006 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 100.0% AUSTRALIA -- 1.5% - -------------------------------------------------------------------------------- 311,685 BHP Billiton Ltd.(1) $ 6,454 - -------------------------------------------------------------------------------- AUSTRIA -- 1.5% - -------------------------------------------------------------------------------- 91,300 Erste Bank der Oesterreichischen Sparkassen AG 6,654 - -------------------------------------------------------------------------------- BELGIUM -- 1.1% - -------------------------------------------------------------------------------- 43,600 KBC Groupe 4,907 - -------------------------------------------------------------------------------- CANADA -- 1.3% - -------------------------------------------------------------------------------- 75,521 Suncor Energy Inc.(1) 5,955 - -------------------------------------------------------------------------------- CHANNEL ISLANDS -- 1.0% - -------------------------------------------------------------------------------- 111,630 Amdocs Ltd.(2) 4,303 - -------------------------------------------------------------------------------- CZECH REPUBLIC -- 0.8% - -------------------------------------------------------------------------------- 78,660 CEZ AS(2) 3,505 - -------------------------------------------------------------------------------- DENMARK -- 0.3% - -------------------------------------------------------------------------------- 39,480 Vestas Wind Systems AS(2) 1,524 - -------------------------------------------------------------------------------- FRANCE -- 5.0% - -------------------------------------------------------------------------------- 67,960 Accor SA 4,943 - -------------------------------------------------------------------------------- 110,171 AXA SA 4,174 - -------------------------------------------------------------------------------- 39,190 Societe Generale(1) 6,568 - -------------------------------------------------------------------------------- 31,100 Total SA(1) 2,206 - -------------------------------------------------------------------------------- 33,000 Vinci SA(1) 4,147 - -------------------------------------------------------------------------------- 22,038 - -------------------------------------------------------------------------------- GERMANY -- 3.4% - -------------------------------------------------------------------------------- 27,610 Deutsche Boerse AG 4,624 - -------------------------------------------------------------------------------- 37,400 Fresenius Medical Care AG 5,021 - -------------------------------------------------------------------------------- 24,720 SAP AG 5,170 - -------------------------------------------------------------------------------- 14,815 - -------------------------------------------------------------------------------- GREECE -- 1.8% - -------------------------------------------------------------------------------- 169,980 National Bank of Greece SA 7,796 - -------------------------------------------------------------------------------- HONG KONG -- 1.8% - -------------------------------------------------------------------------------- 466,000 Esprit Holdings Ltd. 4,832 - -------------------------------------------------------------------------------- 1,034,000 Li & Fung Ltd. 3,004 - -------------------------------------------------------------------------------- 7,836 - -------------------------------------------------------------------------------- INDIA -- 2.8% - -------------------------------------------------------------------------------- 275,000 Bharti Airtel Ltd.(2) 4,022 - -------------------------------------------------------------------------------- 72,000 Infosys Technologies Ltd. ADR(1) 3,854 - -------------------------------------------------------------------------------- 164,722 Tata Consultancy Services Ltd. 4,402 - -------------------------------------------------------------------------------- 12,278 - -------------------------------------------------------------------------------- IRELAND -- 1.0% - -------------------------------------------------------------------------------- 229,894 Anglo Irish Bank Corp. plc 4,371 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- ITALY -- 2.6% - -------------------------------------------------------------------------------- 197,240 Banco Popolare di Verona e Novara Scrl(1) $ 5,545 - -------------------------------------------------------------------------------- 237,890 Saipem SpA 5,995 - -------------------------------------------------------------------------------- 11,540 - -------------------------------------------------------------------------------- JAPAN -- 7.4% - -------------------------------------------------------------------------------- 210,000 JTEKT Corp.(1) 4,245 - -------------------------------------------------------------------------------- 370,000 Mitsubishi Electric Corp. 3,366 - -------------------------------------------------------------------------------- 5,700 Nintendo Co., Ltd. 1,359 - -------------------------------------------------------------------------------- 28,070 ORIX Corp. 7,687 - -------------------------------------------------------------------------------- 499,000 Sekisui Chemical Co. Ltd. 4,216 - -------------------------------------------------------------------------------- 463,000 Sumitomo Chemical Company, Ltd. 3,112 - -------------------------------------------------------------------------------- 173,000 Sumitomo Realty & Development Co. Ltd. 5,515 - -------------------------------------------------------------------------------- 31,110 Yamada Denki Co. Ltd.(1) 2,948 - -------------------------------------------------------------------------------- 32,448 - -------------------------------------------------------------------------------- MEXICO -- 1.5% - -------------------------------------------------------------------------------- 147,150 America Movil SA de CV Series L ADR 6,544 - -------------------------------------------------------------------------------- NETHERLANDS -- 3.5% - -------------------------------------------------------------------------------- 30,294 ING Groep N.V. CVA 1,292 - -------------------------------------------------------------------------------- 98,000 Royal Numico N.V.(1) 5,054 - -------------------------------------------------------------------------------- 130,870 Schlumberger Ltd. 8,961 - -------------------------------------------------------------------------------- 15,307 - -------------------------------------------------------------------------------- NORWAY -- 0.6% - -------------------------------------------------------------------------------- 157,630 Telenor ASA 2,708 - -------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 0.6% - -------------------------------------------------------------------------------- 90,122 OAO TMK GDR(2) 2,659 - -------------------------------------------------------------------------------- SPAIN -- 1.1% - -------------------------------------------------------------------------------- 297,771 Cintra Concesiones de Infraestructuras de Transporte SA(1) 4,983 - -------------------------------------------------------------------------------- SWEDEN -- 1.2% - -------------------------------------------------------------------------------- 1,362,100 Telefonaktiebolaget LM Ericsson Cl B 5,273 - -------------------------------------------------------------------------------- SWITZERLAND -- 7.8% - -------------------------------------------------------------------------------- 303,250 ABB Ltd. 4,898 - -------------------------------------------------------------------------------- 68,340 Adecco SA(1) 4,529 - -------------------------------------------------------------------------------- 81,460 Compagnie Financiere Richemont AG Cl A 4,389 - -------------------------------------------------------------------------------- 30,540 Julius Baer Holding AG 3,250 - -------------------------------------------------------------------------------- 55,810 Novartis AG 3,254 - -------------------------------------------------------------------------------- 15,000 Phonak Holding AG 1,122 - -------------------------------------------------------------------------------- 30,260 Roche Holding AG 5,469 - -------------------------------------------------------------------------------- 22,550 Syngenta AG 3,968 - -------------------------------------------------------------------------------- 52,854 UBS AG 3,179 - -------------------------------------------------------------------------------- 34,058 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 14 Global Growth - Schedule of Investments NOVEMBER 30, 2006 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 2.1% - -------------------------------------------------------------------------------- 820,800 Hon Hai Precision Industry Co., Ltd. $ 5,975 - -------------------------------------------------------------------------------- 5,000,000 ProMOS Technologies Inc.(2) 2,248 - -------------------------------------------------------------------------------- 548,000 Quanta Computer Inc. 955 - -------------------------------------------------------------------------------- 9,178 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 7.1% - -------------------------------------------------------------------------------- 260,200 Amvescap plc 2,813 - -------------------------------------------------------------------------------- 489,458 Burberry Group plc 5,793 - -------------------------------------------------------------------------------- 391,190 Carphone Warehouse Group plc 2,080 - -------------------------------------------------------------------------------- 764,412 Man Group plc 7,124 - -------------------------------------------------------------------------------- 155,765 Reckitt Benckiser plc 6,927 - -------------------------------------------------------------------------------- 44,000 Rio Tinto plc 2,348 - -------------------------------------------------------------------------------- 108,210 Royal Bank of Scotland Group plc 3,918 - -------------------------------------------------------------------------------- 31,003 - -------------------------------------------------------------------------------- UNITED STATES -- 41.2% - -------------------------------------------------------------------------------- 87,740 Air Products & Chemicals, Inc. 6,066 - -------------------------------------------------------------------------------- 44,590 Akamai Technologies, Inc.(1)(2) 2,179 - -------------------------------------------------------------------------------- 55,100 Allergan, Inc. 6,423 - -------------------------------------------------------------------------------- 118,170 Alliance Data Systems Corp.(2) 7,647 - -------------------------------------------------------------------------------- 150,990 American Express Co. 8,865 - -------------------------------------------------------------------------------- 209,770 American Tower Corp. Cl A(2) 7,943 - -------------------------------------------------------------------------------- 148,500 Automatic Data Processing, Inc. 7,162 - -------------------------------------------------------------------------------- 85,690 Boeing Co. 7,586 - -------------------------------------------------------------------------------- 336,330 Cisco Systems Inc.(2) 9,041 - -------------------------------------------------------------------------------- 61,500 CIT Group Inc. 3,199 - -------------------------------------------------------------------------------- 79,410 Colgate-Palmolive Co. 5,166 - -------------------------------------------------------------------------------- 203,580 Comcast Corporation Cl A(2) 8,238 - -------------------------------------------------------------------------------- 31,500 Corporate Executive Board Co. (The) 2,981 - -------------------------------------------------------------------------------- 59,200 Danaher Corp. 4,329 - -------------------------------------------------------------------------------- 59,320 Exxon Mobil Corp. 4,557 - -------------------------------------------------------------------------------- 46,500 FMC Technologies Inc.(2) 2,790 - -------------------------------------------------------------------------------- 26,430 Genentech, Inc.(2) 2,161 - -------------------------------------------------------------------------------- 30,030 Goldman Sachs Group, Inc. (The) 5,850 - -------------------------------------------------------------------------------- 7,930 Google Inc. Cl A(2) 3,845 - -------------------------------------------------------------------------------- 161,450 Hewlett-Packard Co. 6,371 - -------------------------------------------------------------------------------- 46,700 ITT Educational Services Inc.(2) 3,202 - -------------------------------------------------------------------------------- 61,500 Kohl's Corp.(2) 4,280 - -------------------------------------------------------------------------------- 77,900 Laboratory Corp. of America Holdings(2) 5,515 - -------------------------------------------------------------------------------- 42,500 Lamar Advertising Co. Cl A(1)(2) 2,565 - -------------------------------------------------------------------------------- 43,000 Manor Care, Inc.(1) 2,043 - -------------------------------------------------------------------------------- 55,620 Manpower Inc. 3,949 - -------------------------------------------------------------------------------- 77,500 McKesson Corp. 3,829 - -------------------------------------------------------------------------------- 38,400 Millipore Corp.(2) 2,627 - -------------------------------------------------------------------------------- 84,620 Network Appliance, Inc.(2) 3,318 - -------------------------------------------------------------------------------- 151,000 News Corp. Cl B(1) 3,251 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 95,320 NVIDIA Corp.(2) $ 3,526 - -------------------------------------------------------------------------------- 51,920 PepsiCo, Inc. 3,217 - -------------------------------------------------------------------------------- 89,330 Precision Castparts Corp. 6,741 - -------------------------------------------------------------------------------- 65,870 Principal Financial Group 3,804 - -------------------------------------------------------------------------------- 66,000 Scientific Games Corp. Cl A(1)(2) 1,917 - -------------------------------------------------------------------------------- 86,704 Spirit Aerosystems Holdings Inc. Cl A(1)(2) 2,527 - -------------------------------------------------------------------------------- 56,250 Textron Inc. 5,482 - -------------------------------------------------------------------------------- 40,500 United Technologies Corp. 2,613 - -------------------------------------------------------------------------------- 66,000 Walt Disney Co. (The) 2,181 - -------------------------------------------------------------------------------- 59,770 Wells Fargo & Co. 2,106 - -------------------------------------------------------------------------------- 181,092 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $329,952) 439,229 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 0.3% Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 2.375%, 1/15/25, valued at $1,429), in a joint trading account at 5.25%, dated 11/30/06, due 12/1/06 (Delivery value $1,400) (Cost $1,400) 1,400 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 12.7% REPURCHASE AGREEMENTS - -------------------------------------------------------------------------------- Repurchase Agreement, BNP Paribas, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.31%, dated 11/30/06, due 12/1/06 (Delivery value $12,502) 12,500 - -------------------------------------------------------------------------------- Repurchase Agreement, BNP Paribas, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.32%, dated 11/30/06, due 12/1/06 (Delivery value $20,003) 20,000 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.31%, dated 11/30/06, due 12/1/06 (Delivery value $23,073) 23,070 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $55,570) 55,570 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 113.0% (Cost $386,922) 496,199 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (13.0)% (57,176) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $ 439,023 ================================================================================ See Notes to Financial Statements. (continued) - ------ 15 Global Growth - Schedule of Investments NOVEMBER 30, 2006 MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 23.5% - -------------------------------------------------------------------------------- Information Technology 17.5% - -------------------------------------------------------------------------------- Industrials 14.6% - -------------------------------------------------------------------------------- Consumer Discretionary 13.2% - -------------------------------------------------------------------------------- Health Care 8.5% - -------------------------------------------------------------------------------- Energy 7.5% - -------------------------------------------------------------------------------- Materials 5.0% - -------------------------------------------------------------------------------- Telecommunication Services 4.8% - -------------------------------------------------------------------------------- Consumer Staples 4.6% - -------------------------------------------------------------------------------- Utilities 0.8% - -------------------------------------------------------------------------------- Cash and Equivalents(1) --(2) - -------------------------------------------------------------------------------- (1) Includes temporary cash investments, collateral received for securities lending and other assets and liabilities. (2) Category is less than 0.05% of total net assets. 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 November 30, 2006. (2) Non-income producing. (3) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. See Notes to Financial Statements. - ------ 16 International Value - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2006 ---------------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 8 MONTHS(1) 1 YEAR 5 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- A CLASS(2) 3/31/97 No sales charge* 12.99% 28.36% 13.16% 6.23% With sales charge* 6.53% 21.01% 11.82% 5.58% - -------------------------------------------------------------------------------- MSCI EAFE INDEX 11.97% 28.20% 14.40% 7.81% -- - -------------------------------------------------------------------------------- Investor Class -- -- -- 11.75%(3) 4/3/06 - -------------------------------------------------------------------------------- Institutional Class -- -- -- 11.91%(3) 4/3/06 - -------------------------------------------------------------------------------- B Class(2) 3/31/97 No sales charge* 12.55% 27.49% 12.39% 5.53% With sales charge* 7.55% 23.49% 12.26% 5.53% - -------------------------------------------------------------------------------- C Class 4/3/06 No sales charge* -- -- -- 11.05%(3) With sales charge* -- -- -- 10.05%(3) - -------------------------------------------------------------------------------- R Class -- -- -- 11.36%(3) 4/3/06 - -------------------------------------------------------------------------------- *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. International Value acquired all the net assets of the Mason Street International Equity Fund on March 31, 2006, pursuant to a plan of reorganization approved by the acquired fund's shareholders on March 15, 2006. Performance information prior to April 1, 2006 is that of the Mason Street International Equity Fund. (1) Total returns for periods less than one year are not annualized. The fund's fiscal year was changed from March 31 to November 30, resulting in an eight-month reporting period. (2) Class returns would have been lower if the class had not received partial reimbursements of distribution and service fees during the periods. (3) Total returns for periods less than one year are not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. Unless otherwise indicated, performance reflects 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
![](https://capedge.com/proxy/N-CSR/0000872825-07-000004/growthintlvalue0701.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - ----------------------------------------------------------------------------------------------------- 1997* 1998 1999 2000 2001 2002 2003 2004 2005 2006 - ----------------------------------------------------------------------------------------------------- A Class - ----------------------------------------------------------------------------------------------------- (no sales charge)** -1.40% -0.96% 11.54% 0.00% -11.24% -10.87% 20.77% 21.40% 10.68% 28.36% - ----------------------------------------------------------------------------------------------------- MSCI EAFE Index 2.50% 16.45% 21.10% -9.67% -19.13% -12.50% 24.22% 24.19% 13.25% 28.20% - ----------------------------------------------------------------------------------------------------- *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. **Class returns would have been lower, along with ending value if fees had not been waived. 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: GARY MOTYL AND GUANG YANG PERFORMANCE SUMMARY International Value returned 12.99%* for the eight months from March 31, 2006 (when American Century Investments acquired the fund's assets from Mason Street) to November 30, 2006, the fund's new fiscal year-end. By comparison, the fund's benchmark, the MSCI EAFE Index, returned 11.97% for the same period. The positive performance of the portfolio and index reflected the strong growth of the global economy and decline of the U.S. dollar. In this environment, every sector contributed to performance. Relative to the benchmark, the portfolio's outperformance was led by positioning in industrials, telecommunication services, and information technology stocks, among other sectors. However, holdings in the consumer staples, utilities, and health care segments limited our relative results. SUCCESS IN INDUSTRIALS, TELECOM, & IT A healthy global economy meant solid returns for industrial firms. Some of the portfolio's leading contributors to relative and absolute returns were in the airline and electrical equipment industries, as airline stocks in the fund were up 59% and electrical equipment shares 40%. By comparison, these two segments of the benchmark returned 25% and 5%, respectively. Our biggest contributors were Vestas Windsystems and British Airways. Vestas, a Denmark-based provider of alternative energy, was a top-three contributor. British Airways benefited from increased traffic and fares. An overweight position and good stock selection in telecommunication services also helped relative performance. This sector was home to the portfolio's top contributor to relative and absolute returns, Norwegian telecommunication firm Telenor. This stock enjoyed a growing global market for its products--particularly among emerging market economies--and returned 64% in dollar terms. Another source of relative outperformance was positioning in information technology stocks. For the period, the portfolio's IT holdings returned 12%, compared with 1% for the index's IT companies. The biggest contributors were software firms, led by Japan's Nintendo. This stock was among the top contributors to both absolute and relative returns, up more than 60%, as the company enjoyed tremendous TOP TEN HOLDINGS AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Telenor ASA 1.8% 1.5% - -------------------------------------------------------------------------------- Repsol YPF, SA 1.6% 1.4% - -------------------------------------------------------------------------------- E.On AG 1.6% 1.6% - -------------------------------------------------------------------------------- ING Groep N.V. CVA 1.6% 1.6% - -------------------------------------------------------------------------------- Samsung Electronics 1.6% 1.6% - -------------------------------------------------------------------------------- AXA SA 1.5% 1.6% - -------------------------------------------------------------------------------- Deutsche Post AG 1.5% 1.5% - -------------------------------------------------------------------------------- Suez SA 1.5% 1.3% - -------------------------------------------------------------------------------- Royal Bank of Scotland Group plc 1.5% 0.9% - -------------------------------------------------------------------------------- Koninklijke Philips Electronics N.V. 1.4% 1.4% - -------------------------------------------------------------------------------- *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 5.75%. Had the sales charge been applied, returns would be lower than those shown. Total returns for periods less than one year are not annualized. Class returns would have been lower if fees had not been waived. (continued) - ------ 19 International Value - Portfolio Commentary success rolling out new video consoles and games. SHORTFALLS IN CONSUMER STAPLES, UTILITIES, & HEALTH CARE The leading detractor from relative performance was our positioning among consumer staples stocks. We were underweight this winning sector, and stock selection had a slight negative effect--the fund's staples names were up 19%, versus 20% for those in the index. Stock selection limited the fund's returns in utilities, where the portfolio's holdings were up 21%, compared with 30% for this segment of the index. In particular, Korea Electric Power performed poorly--despite solid earnings growth--largely because of geopolitical tension relating to North Korea. In health care, the lion's share of underperformance resulted from stock selection in pharmaceuticals, where we maintained an underweight because of such factors as valuations, drug safety concerns, and earnings pressure likely to result from competition by generics. OUR STARTING POINT FOR THE NEXT SIX MONTHS As fundamental, 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. We believe these elements of value, patience, and bottom-up stock selection are critical to successful long-term investing. As of November 30, 2006, we saw opportunity in companies within the industrial and telecommunication sectors, which we viewed as likely to benefit from continued strong global growth. Our largest overweight positions relative to our benchmark were in those sectors. At the same time, we were underweight in financials because of valuation concerns among companies in the sector. In addition, financials make up 30% of our index and we're reluctant to concentrate the portfolio so heavily in a single sector. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Foreign Common Stocks and Rights 93.0% 97.4% - -------------------------------------------------------------------------------- Foreign Preferred Stocks 1.3% 1.2% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 94.3% 98.6% - -------------------------------------------------------------------------------- Temporary Cash Investments 5.2% 0.2% - -------------------------------------------------------------------------------- Other Assets and Liabilities 0.5% 1.2% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- United Kingdom 19.8% 18.3% - -------------------------------------------------------------------------------- France 8.8% 9.9% - -------------------------------------------------------------------------------- Japan 8.6% 9.9% - -------------------------------------------------------------------------------- Netherlands 7.9% 7.9% - -------------------------------------------------------------------------------- Germany 6.8% 6.6% - -------------------------------------------------------------------------------- South Korea 4.9% 5.3% - -------------------------------------------------------------------------------- Spain 4.8% 4.3% - -------------------------------------------------------------------------------- Sweden 4.0% 5.0% - -------------------------------------------------------------------------------- Hong Kong 3.8% 3.9% - -------------------------------------------------------------------------------- Other Countries 24.9% 27.5% - -------------------------------------------------------------------------------- Cash and Equivalents(1) 5.7% 1.4% - -------------------------------------------------------------------------------- (1) Includes temporary cash investments and other assets and liabilities. - ------ 20 International Value - Schedule of Investments NOVEMBER 30, 2006 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 93.0% AUSTRALIA -- 2.9% - -------------------------------------------------------------------------------- 48,280 Alumina Ltd. $ 242 - -------------------------------------------------------------------------------- 4,630 Australia & New Zealand Banking Group Ltd. 104 - -------------------------------------------------------------------------------- 26,770 BHP Billiton Ltd. 554 - -------------------------------------------------------------------------------- 26,912 National Australia Bank Ltd. 832 - -------------------------------------------------------------------------------- 1,732 - -------------------------------------------------------------------------------- BELGIUM -- 0.5% - -------------------------------------------------------------------------------- 11,400 AGFA-Gevaert N.V. 271 - -------------------------------------------------------------------------------- BERMUDA -- 1.7% - -------------------------------------------------------------------------------- 11,760 Ace, Ltd. 669 - -------------------------------------------------------------------------------- 4,700 XL Capital Ltd. Cl A 334 - -------------------------------------------------------------------------------- 1,003 - -------------------------------------------------------------------------------- CANADA -- 1.9% - -------------------------------------------------------------------------------- 5,740 Alcan Inc. 275 - -------------------------------------------------------------------------------- 20,358 BCE Inc. 500 - -------------------------------------------------------------------------------- 49,300 Domtar Inc.(1) 354 - -------------------------------------------------------------------------------- 1,129 - -------------------------------------------------------------------------------- DENMARK -- 1.2% - -------------------------------------------------------------------------------- 18,904 Vestas Wind Systems AS(1) 730 - -------------------------------------------------------------------------------- FINLAND -- 1.7% - -------------------------------------------------------------------------------- 34,110 Stora Enso Oyj R Shares 532 - -------------------------------------------------------------------------------- 20,660 UPM-Kymmene Oyj 515 - -------------------------------------------------------------------------------- 1,047 - -------------------------------------------------------------------------------- FRANCE -- 8.8% - -------------------------------------------------------------------------------- 4,160 Accor SA 303 - -------------------------------------------------------------------------------- 24,219 AXA SA 918 - -------------------------------------------------------------------------------- 8,110 Compagnie Generale des Etablissements Michelin Cl B 705 - -------------------------------------------------------------------------------- 6,680 Electricite de France 428 - -------------------------------------------------------------------------------- 21,700 France Telecom SA 563 - -------------------------------------------------------------------------------- 8,483 Sanofi-Aventis 745 - -------------------------------------------------------------------------------- 18,760 Suez SA 902 - -------------------------------------------------------------------------------- 15,920 Thomson 295 - -------------------------------------------------------------------------------- 3,880 Total SA 275 - -------------------------------------------------------------------------------- 5,032 Valeo SA 201 - -------------------------------------------------------------------------------- 5,335 - -------------------------------------------------------------------------------- GERMANY -- 6.8% - -------------------------------------------------------------------------------- 6,820 BASF AG 630 - -------------------------------------------------------------------------------- 11,900 Bayerische Motoren Werke AG 657 - -------------------------------------------------------------------------------- 30,710 Deutsche Post AG 916 - -------------------------------------------------------------------------------- 7,520 E.On AG 966 - -------------------------------------------------------------------------------- 25,810 Infineon Technologies AG(1) 331 - -------------------------------------------------------------------------------- 6,300 Siemens AG ADR 601 - -------------------------------------------------------------------------------- 4,101 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- HONG KONG -- 3.8% - -------------------------------------------------------------------------------- 54,300 Cheung Kong Holdings Ltd. $ 641 - -------------------------------------------------------------------------------- 948 CK Life Sciences International Holdings Inc.(1) -- - -------------------------------------------------------------------------------- 80,948 Hongkong Electric Holdings 382 - -------------------------------------------------------------------------------- 56,900 Hutchison Whampoa Ltd. 535 - -------------------------------------------------------------------------------- 40,500 Swire Pacific Ltd. A Shares 427 - -------------------------------------------------------------------------------- 146,000 Swire Pacific Ltd. B Shares 290 - -------------------------------------------------------------------------------- 2,275 - -------------------------------------------------------------------------------- ISRAEL -- 0.7% - -------------------------------------------------------------------------------- 19,490 Check Point Software Technologies(1) 446 - -------------------------------------------------------------------------------- ITALY -- 2.3% - -------------------------------------------------------------------------------- 21,370 ENI SpA 700 - -------------------------------------------------------------------------------- 26,230 Mediaset SpA 311 - -------------------------------------------------------------------------------- 42,150 UniCredito Italiano SpA 364 - -------------------------------------------------------------------------------- 1,375 - -------------------------------------------------------------------------------- JAPAN -- 8.6% - -------------------------------------------------------------------------------- 57 East Japan Railway Company 400 - -------------------------------------------------------------------------------- 8,200 Fuji Photo Film Co. Ltd. 327 - -------------------------------------------------------------------------------- 62,400 Hitachi Ltd. 371 - -------------------------------------------------------------------------------- 4,200 Mabuchi Motor Co. Ltd. 247 - -------------------------------------------------------------------------------- 3,400 Nintendo Co., Ltd. 811 - -------------------------------------------------------------------------------- 101 Nippon Telegraph & Telephone Corp. 511 - -------------------------------------------------------------------------------- 17,600 Nomura Holdings, Inc. 309 - -------------------------------------------------------------------------------- 11,900 Olympus Corp. 373 - -------------------------------------------------------------------------------- 4,800 Ono Pharmaceutical Co Ltd. 245 - -------------------------------------------------------------------------------- 32,600 Sompo Japan Insurance Inc. 415 - -------------------------------------------------------------------------------- 12,300 Sony Corp. 486 - -------------------------------------------------------------------------------- 10,600 Takeda Pharmaceutical Co Ltd. 693 - -------------------------------------------------------------------------------- 300 Toshiba Corp. 2 - -------------------------------------------------------------------------------- 5,190 - -------------------------------------------------------------------------------- MEXICO -- 1.1% - -------------------------------------------------------------------------------- 26,460 Telefonos de Mexico SA de CV Series L ADR 691 - -------------------------------------------------------------------------------- NETHERLANDS -- 7.9% - -------------------------------------------------------------------------------- 12,580 Akzo Nobel N.V. 721 - -------------------------------------------------------------------------------- 22,430 ING Groep N.V. CVA 957 - -------------------------------------------------------------------------------- 23,417 Koninklijke Philips Electronics N.V. 872 - -------------------------------------------------------------------------------- 33,730 Reed Elsevier N.V. 568 - -------------------------------------------------------------------------------- 21,145 Royal Dutch Shell plc B Shares 755 - -------------------------------------------------------------------------------- 23,440 SBM Offshore N.V. 761 - -------------------------------------------------------------------------------- 5,240 Wolters Kluwer N.V. 147 - -------------------------------------------------------------------------------- 4,781 - -------------------------------------------------------------------------------- NORWAY -- 2.5% - -------------------------------------------------------------------------------- 23,899 Norske Skogindustrier ASA 398 - -------------------------------------------------------------------------------- 62,970 Telenor ASA 1,082 - -------------------------------------------------------------------------------- 1,480 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 21 International Value - Schedule of Investments NOVEMBER 30, 2006 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 1.1% - -------------------------------------------------------------------------------- 824,000 China Telecom Corporation Limited H Shares $ 379 - -------------------------------------------------------------------------------- 850,000 Shanghai Electric Group Corp. Cl H 297 - -------------------------------------------------------------------------------- 676 - -------------------------------------------------------------------------------- PORTUGAL -- 0.7% - -------------------------------------------------------------------------------- 32,950 Portugal Telecom SGPS SA 424 - -------------------------------------------------------------------------------- SINGAPORE -- 1.4% - -------------------------------------------------------------------------------- 61,500 DBS Group Holdings Ltd. 839 - -------------------------------------------------------------------------------- SOUTH KOREA -- 4.9% - -------------------------------------------------------------------------------- 6,890 Kookmin Bank 537 - -------------------------------------------------------------------------------- 13,780 Korea Electric Power Corp. 574 - -------------------------------------------------------------------------------- 19,660 KT Corp. ADR 499 - -------------------------------------------------------------------------------- 1,370 Samsung Electronics 940 - -------------------------------------------------------------------------------- 16,530 SK Telecom Co. Ltd. ADR 429 - -------------------------------------------------------------------------------- 2,979 - -------------------------------------------------------------------------------- SPAIN -- 4.8% - -------------------------------------------------------------------------------- 41,710 Banco Santander Central Hispano SA 758 - -------------------------------------------------------------------------------- 6,920 Iberdrola SA 307 - -------------------------------------------------------------------------------- 27,430 Repsol YPF, SA 985 - -------------------------------------------------------------------------------- 13,460 Telefonica SA ADR 821 - -------------------------------------------------------------------------------- 2,871 - -------------------------------------------------------------------------------- SWEDEN -- 4.0% - -------------------------------------------------------------------------------- 25,490 Atlas Copco AB A Shares 750 - -------------------------------------------------------------------------------- 21,950 Nordea Bank AB 310 - -------------------------------------------------------------------------------- 47,630 Nordea Bank AB FDR 672 - -------------------------------------------------------------------------------- 18,570 Securitas AB B Shares 255 - -------------------------------------------------------------------------------- 18,570 Securitas Direct AB B Shares(1) 54 - -------------------------------------------------------------------------------- 18,570 Securitas Systems AB B Shares(1) 69 - -------------------------------------------------------------------------------- 5,020 Volvo AB Cl B 326 - -------------------------------------------------------------------------------- 2,436 - -------------------------------------------------------------------------------- SWITZERLAND -- 2.5% - -------------------------------------------------------------------------------- 2,030 Nestle SA 717 - -------------------------------------------------------------------------------- 9,307 Swiss Reinsurance 795 - -------------------------------------------------------------------------------- 1,512 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 1.4% - -------------------------------------------------------------------------------- 14,586 Chunghwa Telecom Co. Ltd. ADR 277 - -------------------------------------------------------------------------------- 300,580 Compal Electronics Inc. 276 - -------------------------------------------------------------------------------- 211,032 Lite-On Technology Corp. 274 - -------------------------------------------------------------------------------- 827 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 19.8% - -------------------------------------------------------------------------------- 92,850 BAE Systems plc 706 - -------------------------------------------------------------------------------- 21,277 Boots Group plc 331 - -------------------------------------------------------------------------------- 54,390 BP plc 614 - -------------------------------------------------------------------------------- 65,150 British Airways plc(1) 631 - -------------------------------------------------------------------------------- 63,150 British Sky Broadcasting plc 655 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 30,150 Burberry Group plc $ 357 - -------------------------------------------------------------------------------- 56,630 Cadbury Schweppes plc 583 - -------------------------------------------------------------------------------- 76,750 Compass Group plc 433 - -------------------------------------------------------------------------------- 18,940 GlaxoSmithKline plc 503 - -------------------------------------------------------------------------------- 43,200 HSBC Holdings plc 802 - -------------------------------------------------------------------------------- 60,610 Kingfisher plc 290 - -------------------------------------------------------------------------------- 32,590 Lloyds TSB Group plc 346 - -------------------------------------------------------------------------------- 35,602 National Grid plc 481 - -------------------------------------------------------------------------------- 40,140 Pearson plc 592 - -------------------------------------------------------------------------------- 139,260 Rentokil Initial plc 411 - -------------------------------------------------------------------------------- 99,630 Rolls-Royce Group plc 834 - -------------------------------------------------------------------------------- 24,670 Royal Bank of Scotland Group plc 893 - -------------------------------------------------------------------------------- 17,610 Shire plc 353 - -------------------------------------------------------------------------------- 25,120 Smiths Group plc 449 - -------------------------------------------------------------------------------- 19,350 Standard Chartered plc 555 - -------------------------------------------------------------------------------- 18,085 Unilever plc 485 - -------------------------------------------------------------------------------- 230,903 Vodafone Group plc 611 - -------------------------------------------------------------------------------- 11,915 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $36,036) 56,065 - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 1.3% BRAZIL -- 1.3% - -------------------------------------------------------------------------------- 20,860 Comphania Vale do Rio Doce ADR 491 - -------------------------------------------------------------------------------- 7,470 Empresa Brasiliera de Aeronautica SA ADR 311 - -------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost $302) 802 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 5.2% Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 2.375%, 1/15/25, valued at $3,062), in a joint trading account at 5.25%, dated 11/30/06, due 12/1/06 (Delivery value $3,000) 3,000 - -------------------------------------------------------------------------------- Repurchase Agreement, Merrill Lynch & Co., Inc., (collateralized by various U.S. Treasury obligations, 4.25% - 5.01%, 12/28/06 - 1/15/11, valued at $102), in a joint trading account at 5.24%, dated 11/30/06, due 12/1/06 (Delivery value $100) 100 - -------------------------------------------------------------------------------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $3,100) 3,100 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 99.5% (Cost $39,438) 59,967 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 0.5% 316 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $ 60,283 ================================================================================ See Notes to Financial Statements. (continued) - ------ 22 International Value - Schedule of Investments NOVEMBER 30, 2006 MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 21.2% - -------------------------------------------------------------------------------- Industrials 13.6% - -------------------------------------------------------------------------------- Consumer Discretionary 12.5% - -------------------------------------------------------------------------------- Telecommunication Services 11.3% - -------------------------------------------------------------------------------- Materials 7.8% - -------------------------------------------------------------------------------- Energy 6.8% - -------------------------------------------------------------------------------- Utilities 6.7% - -------------------------------------------------------------------------------- Information Technology 6.1% - -------------------------------------------------------------------------------- Health Care 4.8% - -------------------------------------------------------------------------------- Consumer Staples 3.5% - -------------------------------------------------------------------------------- Cash and Equivalents(+) 5.7% - -------------------------------------------------------------------------------- (+)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 (1) Non-income producing. 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 June 1, 2006 to November 30, 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) - ------ 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(1) ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 6/1/06 - EXPENSE 6/1/06 11/30/06 11/30/06 RATIO(1) - ----------------------------------------------------------------------------------- INTERNATIONAL GROWTH SHAREHOLDER FEE EXAMPLE - ----------------------------------------------------------------------------------- ACTUAL - ----------------------------------------------------------------------------------- Investor Class $1,000 $1,112.40 $6.78 1.28% - ----------------------------------------------------------------------------------- Institutional Class $1,000 $1,113.10 $5.72 1.08% - ----------------------------------------------------------------------------------- Advisor Class $1,000 $1,109.90 $8.09 1.53% - ----------------------------------------------------------------------------------- A Class $1,000 $1,110.70 $8.10 1.53% - ----------------------------------------------------------------------------------- B Class $1,000 $1,106.60 $12.04 2.28% - ----------------------------------------------------------------------------------- C Class $1,000 $1,106.30 $12.04 2.28% - ----------------------------------------------------------------------------------- R Class $1,000 $1,108.90 $9.41 1.78% - ----------------------------------------------------------------------------------- HYPOTHETICAL - ----------------------------------------------------------------------------------- Investor Class $1,000 $1,018.65 $6.48 1.28% - ----------------------------------------------------------------------------------- Institutional Class $1,000 $1,019.65 $5.47 1.08% - ----------------------------------------------------------------------------------- Advisor Class $1,000 $1,017.40 $7.74 1.53% - ----------------------------------------------------------------------------------- A Class $1,000 $1,017.40 $7.74 1.53% - ----------------------------------------------------------------------------------- B Class $1,000 $1,013.64 $11.51 2.28% - ----------------------------------------------------------------------------------- C Class $1,000 $1,013.64 $11.51 2.28% - ----------------------------------------------------------------------------------- R Class $1,000 $1,016.14 $9.00 1.78% - ----------------------------------------------------------------------------------- (1) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (continued) - ------ 25 Shareholder Fee Examples (Unaudited) - ----------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD(1) ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 6/1/06 - EXPENSE 6/1/06 11/30/06 11/30/06 RATIO(1) - ----------------------------------------------------------------------------------- GLOBAL GROWTH SHAREHOLDER FEE EXAMPLE - ----------------------------------------------------------------------------------- ACTUAL - ----------------------------------------------------------------------------------- Investor Class $1,000 $1,089.00 $6.86 1.31% - ----------------------------------------------------------------------------------- Institutional Class $1,000 $1,089.40 $5.81 1.11% - ----------------------------------------------------------------------------------- Advisor Class $1,000 $1,086.60 $8.16 1.56% - ----------------------------------------------------------------------------------- A Class $1,000 $1,087.00 $8.16 1.56% - ----------------------------------------------------------------------------------- B Class $1,000 $1,083.20 $12.06 2.31% - ----------------------------------------------------------------------------------- C Class $1,000 $1,083.30 $12.06 2.31% - ----------------------------------------------------------------------------------- R Class $1,000 $1,086.10 $9.47 1.81% - ----------------------------------------------------------------------------------- HYPOTHETICAL - ----------------------------------------------------------------------------------- Investor Class $1,000 $1,018.50 $6.63 1.31% - ----------------------------------------------------------------------------------- Institutional Class $1,000 $1,019.50 $5.62 1.11% - ----------------------------------------------------------------------------------- Advisor Class $1,000 $1,017.25 $7.89 1.56% - ----------------------------------------------------------------------------------- A Class $1,000 $1,017.25 $7.89 1.56% - ----------------------------------------------------------------------------------- B Class $1,000 $1,013.49 $11.66 2.31% - ----------------------------------------------------------------------------------- C Class $1,000 $1,013.49 $11.66 2.31% - ----------------------------------------------------------------------------------- R Class $1,000 $1,015.99 $9.15 1.81% - ----------------------------------------------------------------------------------- (1) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (continued) - ------ 26 Shareholder Fee Examples (Unaudited) - ----------------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD(1) ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 6/1/06 - EXPENSE 6/1/06 11/30/06 11/30/06 RATIO(1) - ----------------------------------------------------------------------------------------- INTERNATIONAL VALUE SHAREHOLDER FEE EXAMPLE - ----------------------------------------------------------------------------------------- ACTUAL - ----------------------------------------------------------------------------------------- Investor Class $1,000 $1,114.90 $6.89 1.30% - ----------------------------------------------------------------------------------------- Institutional Class $1,000 $1,115.60 $5.83 1.10% - ----------------------------------------------------------------------------------------- A Class (after waiver)(2) $1,000 $1,114.10 $7.42 1.40% - ----------------------------------------------------------------------------------------- A Class (before waiver) $1,000 $1,114.10(3) $8.21 1.55% - ----------------------------------------------------------------------------------------- B Class (after waiver)(2) $1,000 $1,110.40 $11.06 2.09% - ----------------------------------------------------------------------------------------- B Class (before waiver) $1,000 $1,110.40(3) $12.17 2.30% - ----------------------------------------------------------------------------------------- C Class $1,000 $1,109.60 $12.16 2.30% - ----------------------------------------------------------------------------------------- R Class $1,000 $1,111.90 $9.53 1.80% - ----------------------------------------------------------------------------------------- HYPOTHETICAL - ----------------------------------------------------------------------------------------- Investor Class $1,000 $1,018.55 $6.58 1.30% - ----------------------------------------------------------------------------------------- Institutional Class $1,000 $1,019.55 $5.57 1.10% - ----------------------------------------------------------------------------------------- A Class (after waiver)(2) $1,000 $1,018.05 $7.08 1.40% - ----------------------------------------------------------------------------------------- A Class (before waiver) $1,000 $1,017.30 $7.84 1.55% - ----------------------------------------------------------------------------------------- B Class (after waiver)(2) $1,000 $1,014.59 $10.56 2.09% - ----------------------------------------------------------------------------------------- B Class (before waiver) $1,000 $1,013.54 $11.61 2.30% - ----------------------------------------------------------------------------------------- C Class $1,000 $1,013.54 $11.61 2.30% - ----------------------------------------------------------------------------------------- R Class $1,000 $1,016.04 $9.10 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 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (2) During the six months ended November 30, 2006, the class received a partial waiver of its distribution and service fees. (3) 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. - ------ 27 Statement of Assets and Liabilities NOVEMBER 30, 2006 - ----------------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL (AMOUNTS IN THOUSANDS) GROWTH GLOBAL GROWTH VALUE - ----------------------------------------------------------------------------------------- ASSETS - ----------------------------------------------------------------------------------------- Investment securities -- at value (cost of $2,103,187, $331,352 and $39,438, respectively) -- including $463,980, $53,748 and $- of securities on loan, respectively $2,857,579 $440,629 $59,967 - ----------------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $484,316, $55,570 and $-, respectively) 484,316 55,570 -- - ----------------------------------------------------------------------------------------- Total investment securities, at value (cost of $2,587,503, $386,922 and $39,438, respectively) 3,341,895 496,199 59,967 - ----------------------------------------- Cash -- 47 110 - ----------------------------------------- Foreign currency holdings, at value (cost of $6,695, $- and $5, respectively) 6,709 -- 5 - ----------------------------------------- Receivable for investments sold 15,773 6,879 108 - ----------------------------------------- Receivable for capital shares sold 10 33 23 - ----------------------------------------- Dividends and interest receivable 3,782 418 133 - ----------------------------------------------------------------------------------------- 3,368,169 503,576 60,346 - ----------------------------------------------------------------------------------------- LIABILITIES - ----------------------------------------------------------------------------------------- Payable for collateral received for securities on loan 484,316 55,570 -- - ----------------------------------------- Disbursements in excess of demand deposit cash 1,729 -- -- - ----------------------------------------- Payable for investments purchased 24,473 8,519 -- - ----------------------------------------- Payable for capital shares redeemed -- -- 1 - ----------------------------------------- Accrued management fees 2,801 460 57 - ----------------------------------------- Distribution fees payable 73 2 3 - ----------------------------------------- Service fees (and distribution fees - A Class and R Class) payable 76 2 2 - ----------------------------------------------------------------------------------------- 513,468 64,553 63 - ----------------------------------------------------------------------------------------- NET ASSETS $2,854,701 $439,023 $60,283 ========================================================================================= See Notes to Financial Statements. (continued) - ------ 28 Statement of Assets and Liabilities NOVEMBER 30, 2006 - ------------------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL (AMOUNTS IN THOUSANDS EXCEPT AS NOTED) GROWTH GLOBAL GROWTH VALUE - ------------------------------------------------------------------------------------------- NET ASSETS CONSIST OF: - ------------------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $2,544,142 $324,095 $18,790 - ----------------------------------------- Accumulated undistributed net investment income (loss) (11,917) (3,027) 1,532 - ----------------------------------------- Accumulated undistributed net realized gain (loss) on investment and foreign currency transactions (431,785) 8,973 19,427 - ----------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 754,261 108,982 20,534 - ------------------------------------------------------------------------------------------- $2,854,701 $439,023 $60,283 =========================================================================================== INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------------- Net assets $2,352,967,104 $418,184,803 $436,691 - ----------------------------------------- Shares outstanding 193,418,380 39,762,337 30,404 - ----------------------------------------- Net asset value per share $12.17 $10.52 $14.36 - ------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------------- Net assets $125,814,349 $8,539,696 $35,573,890 - ----------------------------------------- Shares outstanding 10,313,487 805,694 2,473,766 - ----------------------------------------- Net asset value per share $12.20 $10.60 $14.38 - ------------------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------------- Net assets $336,496,675 $5,571,074 N/A - ----------------------------------------- Shares outstanding 27,754,754 535,046 N/A - ----------------------------------------- Net asset value per share $12.12 $10.41 N/A - ------------------------------------------------------------------------------------------- A CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------------- Net assets $28,367,457 $5,294,614 $19,890,211 - ----------------------------------------- Shares outstanding 2,337,319 504,517 1,385,919 - ----------------------------------------- Net asset value per share $12.14 $10.49 $14.35 - ----------------------------------------- Maximum offering price (net asset value divided by 0.9425) $12.88 $11.13 $15.23 - ------------------------------------------------------------------------------------------- B CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------------- Net assets $2,699,184 $351,602 $4,313,335 - ----------------------------------------- Shares outstanding 224,259 33,747 306,314 - ----------------------------------------- Net asset value per share $12.04 $10.42 $14.08 - ------------------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------------- Net assets $6,250,168 $1,049,738 $41,498 - ----------------------------------------- Shares outstanding 521,961 103,507 2,909 - ----------------------------------------- Net asset value per share $11.97 $10.14 $14.27 - ------------------------------------------------------------------------------------------- R CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - ------------------------------------------------------------------------------------------- Net assets $2,106,384 $31,567 $27,848 - ----------------------------------------- Shares outstanding 173,837 3,016 1,946 - ----------------------------------------- Net asset value per share $12.12 $10.47 $14.31 - ------------------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 29 Statement of Operations YEAR ENDED NOVEMBER 30, 2006 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------------------------------------- INTERNATIONAL (AMOUNTS IN THOUSANDS) GROWTH GLOBAL GROWTH INTERNATIONAL VALUE - -------------------------------------------------------------------------------------------------------------- NOV. 30, 2006 NOV. 30, 2006 NOV. 30, 2006(1) MARCH 31, 2006(2) - -------------------------------------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------------------------------------- INCOME: - ------------------------------------ Dividends (net of foreign taxes withheld of $3,996, $311, $125 and $699, respectively) $ 45,027 $ 4,823 $1,429 $ 5,514 - ------------------------------------ Interest and other income 1,560 302 102 256 - ------------------------------------ Securities lending 2,295 157 -- -- - -------------------------------------------------------------------------------------------------------------- 48,882 5,282 1,531 5,770 - -------------------------------------------------------------------------------------------------------------- EXPENSES: - ------------------------------------ Management fees 33,200 5,437 446 1,712 - ------------------------------------ Distribution fees: - ------------------------------------ Advisor Class 763 13 -- -- - ------------------------------------ A Class -- -- -- 22 - ------------------------------------ B Class 17 1 23 36 - ------------------------------------ C Class 43 6 -- -- - ------------------------------------ Service fees: - ------------------------------------ Advisor Class 763 13 -- -- - ------------------------------------ B Class 6 -- 8 -- - ------------------------------------ C Class 14 2 -- -- - ------------------------------------ Distribution and service fees: - ------------------------------------ A Class 69 6 33 -- - ------------------------------------ R Class 12 -- -- -- - ------------------------------------ Shareholder servicing fees (A Class and B Class) -- -- -- 504 - ------------------------------------ Administrative fees -- -- -- 202 - ------------------------------------ Directors' fees and expenses 55 7 1 6 - ------------------------------------ Other expenses 208 25 -- 269 - -------------------------------------------------------------------------------------------------------------- 35,150 5,510 511 2,751 - -------------------------------------------------------------------------------------------------------------- Amount waived -- -- (26) -- - -------------------------------------------------------------------------------------------------------------- 35,150 5,510 485 2,751 - -------------------------------------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 13,732 (228) 1,046 3,019 - -------------------------------------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - ------------------------------------ Investment transactions 444,174 61,347 3,788 71,060 - ------------------------------------ Foreign currency transactions (12,934) 1,217 1,145 (125) - -------------------------------------------------------------------------------------------------------------- 431,240 62,564 4,933 70,935 - -------------------------------------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: - ------------------------------------ Investments (including foreign tax liability reduction (increase) of $(253), $(296) and $-, respectively) 28,561 (1,609) (688) (38,422) - ------------------------------------ Translation of assets and liabilities in foreign currencies 194,982 12,194 1,787 6 - -------------------------------------------------------------------------------------------------------------- 223,543 10,585 1,099 (38,416) - -------------------------------------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 654,783 73,149 6,032 32,519 - -------------------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $668,515 $72,921 $7,078 $ 35,538 ============================================================================================================== (1) International Value's fiscal year end was changed from March 31 to November 30, resulting in an eight-month annual reporting period (see Note 9). (2) Year ended March 31, 2006. See Notes to Financial Statements. - ------ 30 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2006 AND NOVEMBER 30, 2005 - ----------------------------------------------------------------------------------------- (AMOUNTS IN THOUSANDS) INTERNATIONAL GROWTH GLOBAL GROWTH - ----------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005 2006 2005 - ----------------------------------------------------------------------------------------- OPERATIONS - ----------------------------------------------------------------------------------------- Net investment income (loss) $ 13,732 $ 34,683 $ (228) $ (45) - ------------------------------ Net realized gain (loss) 431,240 374,500 62,564 31,417 - ------------------------------ Change in net unrealized appreciation (depreciation) 223,543 (84,693) 10,585 26,155 - ----------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 668,515 324,490 72,921 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 (553,900) (478,006) (22,870) 25,866 - ----------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 64,619 (184,415) 47,233 82,550 NET ASSETS - ----------------------------------------------------------------------------------------- Beginning of period 2,790,082 2,974,497 391,790 309,240 - ----------------------------------------------------------------------------------------- End of period $2,854,701 $2,790,082 $439,023 $391,790 ========================================================================================= Accumulated undistributed net investment income (loss) $(11,917) $22,462 $(3,027) $(1,193) ========================================================================================= See Notes to Financial Statements. (continued) - ------ 31 Statement of Changes in Net Assets EIGHT MONTHS ENDED NOVEMBER 30, 2006 AND YEARS ENDED MARCH 31, 2006 AND MARCH 31, 2005, RESPECTIVELY - --------------------------------------------------------------------------------------------- (AMOUNTS IN THOUSANDS) INTERNATIONAL VALUE - --------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS NOV. 30, 2006(1) MARCH 31, 2006 MARCH 31, 2005 - --------------------------------------------------------------------------------------------- OPERATIONS - --------------------------------------------------------------------------------------------- Net investment income (loss) $ 1,046 $ 3,019 $ 2,384 - ---------------------------------------- Net realized gain (loss) 4,933 70,935 11,549 - ---------------------------------------- Change in net unrealized appreciation (depreciation) 1,099 (38,416) 13,985 - --------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 7,078 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 (6,329) (177,608) 5,863 - --------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 749 (148,846) 29,502 NET ASSETS - --------------------------------------------------------------------------------------------- Beginning of period 59,534 208,380 178,878 - --------------------------------------------------------------------------------------------- End of period $60,283 $ 59,534 $208,380 ============================================================================================= Undistributed net investment income $1,532 $496 $348 ============================================================================================= (1) The fund's fiscal year end was changed from March 31 to November 30, resulting in an eight-month annual reporting period (see Note 9). See Notes to Financial Statements. - ------ 32 Notes to Financial Statements NOVEMBER 30, 2006 (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. International Growth and Global Growth's investment objectives are to seek capital growth. International Value's investment objective is to seek long-term capital growth. International Growth pursues its objective by investing primarily in equity securities of foreign companies in at least three developed countries (excluding the United States). 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 distribution and shareholder servicing 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. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued at fair value as determined in accordance with procedures adopted by the Board of Directors. 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. Certain other circumstances may cause the funds to fair value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence. 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 (continued) - ------ 33 Notes to Financial Statements NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) of the securities loaned and record any interest earned or dividends declared. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest income, and certain expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. 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 NOVEMBER 30, 2006 (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 & 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 & R INSTITUTIONAL - ------------------------------------------------------------------- STRATEGY ASSETS - ------------------------------------------------------------------- First $1 billion 1.30% 1.10% - ------------------------------------------------------------------- Next $1 billion 1.20% 1.00% - ------------------------------------------------------------------- Over $2 billion 1.10% 0.90% - ------------------------------------------------------------------- The effective annual management fees for each class of the funds for the year ended November 30, 2006 (except as noted) were as follows: - -------------------------------------------------------------------------------- INVESTOR, A, B, C & R INSTITUTIONAL ADVISOR - -------------------------------------------------------------------------------- International Growth 1.25% 1.05% 1.00% - -------------------------------------------------------------------------------- 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 an eight-month reporting period (See Note 9). (continued) - ------ 35 Notes to Financial Statements NOVEMBER 30, 2006 (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 International Growth and Global Growth. The subadvisor makes investment decisions for the cash portion of the funds in accordance with the funds' investment objectives, policies and restrictions under the supervision of ACGIM and the Board of Directors. ACGIM pays all costs associated with retaining ACIM as the subadvisor of International Growth and Global Growth. 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 distribution and service fees through March 31, 2008, by 0.15% for the A Class and 0.21% for the B Class of International Value. For the eight months ended November 30, 2006, the A Class and the B Class waived distribution and service fees of $19,873 and $6,355 ($ in full), respectively, for International Value. Fees incurred under the plans during the periods ended November 30, 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 JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC. 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the year ended November 30, 2006 (except as noted), were as follows: - ----------------------------------------------------------------------------------- INTERNATIONAL GROWTH GLOBAL GROWTH INTERNATIONAL VALUE(1) - ----------------------------------------------------------------------------------- Purchases $2,557,000 $392,118 $9,030 - ----------------------------------------------------------------------------------- Proceeds from sales $3,111,028 $404,635 $10,909 - ----------------------------------------------------------------------------------- (1) International Value's fiscal year end changed from March 31 to November 30, resulting in an eight-month annual reporting period (see Note 9). For the year ended November 30, 2006, International Growth incurred net realized gains of $8,773 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 NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follow (See Note 9): - ------------------------------------------------------------------------------------------------------------- INTERNATIONAL GROWTH GLOBAL GROWTH INTERNATIONAL VALUE - ------------------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------------- INVESTOR CLASS - ------------------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006(1) SHARES AUTHORIZED 1,000,000 150,000 55,000 ============================================================================================================= Sold 31,222 $ 343,306 5,161 $ 50,085 30 $413 - ---------------------------------- Issued in reinvestment of distributions 3,469 34,698 289 2,636 -- -- - ---------------------------------- Redeemed (72,005) (780,967)(2) (8,373) (80,834)(2) -- -- - ------------------------------------------------------------------------------------------------------------- Net increase (decrease) (37,314) $(402,963) (2,923) $(28,113) 30 $413 ============================================================================================================= 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 - ------------------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006(1) SHARES AUTHORIZED 150,000 5,000 55,000 ============================================================================================================= Sold 4,490 $ 48,649 219 $ 2,130 2,474 $31,954 - ---------------------------------- Issued in reinvestment of distributions 435 4,357 9 80 -- -- - ---------------------------------- Redeemed (19,888) (212,746)(4) (391) (3,851) -- -- - ------------------------------------------------------------------------------------------------------------- Net increase (decrease) (14,963) $(159,740) (163) $(1,641) 2,474 $31,954 ============================================================================================================= 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 November 30, 2006 for International Value. (2) Net of redemption fees of $156 and $18 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 $16 for International Growth. (5) Net of redemption fees of $1 for International Growth. (continued) - ------ 37 Notes to Financial Statements NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ---------------------------------------------------------------------------------------------------------- INTERNATIONAL GROWTH GLOBAL GROWTH INTERNATIONAL VALUE - ---------------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT - ---------------------------------------------------------------------------------------------------------- ADVISOR CLASS - ---------------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006 SHARES AUTHORIZED 100,000 5,000 N/A ========================================================================================================== Sold 10,987 $ 120,231 332 $ 3,165 - -------------------------------- Issued in reinvestment of distributions 373 3,722 1 13 - -------------------------------- Redeemed (10,331) (112,654)(1) (215) (2,037)(1) - ---------------------------------------------------------------------------------------------------------- Net increase (decrease) 1,029 $ 11,299 118 $ 1,141 ========================================================================================================== 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 - ---------------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006(3) SHARES AUTHORIZED 25,000 10,000 55,000 ========================================================================================================== Sold 608 $ 6,644 532 $5,196 242 $ 3,170 - -------------------------------- Issued in reinvestment of distributions 38 377 -- -- -- -- - -------------------------------- Redeemed (899) (9,623) (27) (261) (3,158) (40,813) - ---------------------------------------------------------------------------------------------------------- Net increase (decrease) (253) $(2,602) 505 $4,935 (2,916) $(37,643) ========================================================================================================== 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 $81 and $1 for International Growth and Global Growth, respectively. (2) Net of redemption fees of $20 for International Growth. (3) April 1, 2006 through November 30, 2006. International Value's fiscal year end was changed from March 31 to November 30, resulting in an eight-month annual reporting period (see Note 9). (continued) - ------ 38 Notes to Financial Statements NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ------------------------------------------------------------------------------------------------------- INTERNATIONAL GROWTH GLOBAL GROWTH INTERNATIONAL VALUE - ------------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------------- B CLASS - ------------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006(1) SHARES AUTHORIZED 10,000 10,000 5,000 ======================================================================================================= Sold 80 $ 866 37 $357 30 $ 385 - ---------------------------------- Issued in reinvestment of distributions 1 10 -- -- -- -- - ---------------------------------- Redeemed (31) (330) (3) (32) (117) (1,501) - ------------------------------------------------------------------------------------------------------- Net increase (decrease) 50 $ 546 34 $325 (87) $(1,116) ======================================================================================================= 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 - ------------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006(2) SHARES AUTHORIZED 10,000 5,000 50,000 ======================================================================================================= Sold 128 $ 1,397 82 $ 772 3 $38 - ---------------------------------- Issued in reinvestment of distributions 3 32 -- -- -- -- - ---------------------------------- Redeemed (156) (1,664) (31) (289) -- -- - ------------------------------------------------------------------------------------------------------- Net increase (decrease) (25) $ (235) 51 $ 483 3 $38 ======================================================================================================= 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 November 30, 2006. International Value's fiscal year end was changed from March 31 to November 30, resulting in an eight-month annual reporting period (See Note 9). (2) April 3, 2006 (commencement of sale) through November 30, 2006 for International Value. (continued) - ------ 39 Notes to Financial Statements NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - ------------------------------------------------------------------------------------------------ INTERNATIONAL GROWTH GLOBAL GROWTH INTERNATIONAL VALUE - ------------------------------------------------------------------------------------------------ SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT - ------------------------------------------------------------------------------------------------ R CLASS - ------------------------------------------------------------------------------------------------ YEAR ENDED NOVEMBER 30, 2006(1) SHARES AUTHORIZED 5,000 10,000 5,000 ================================================================================================ Sold 140 $ 1,533 -- -- 2 $25 - ---------------------------------- Issued in reinvestment of distributions 2 20 -- -- -- -- - ---------------------------------- Redeemed (154) (1,758) -- -- -- -- - ------------------------------------------------------------------------------------------------ Net increase (decrease) (12) $ (205) -- -- 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 November 30, 2006 for International Value. (2) July 29, 2005 (commencement of sale) through November 30, 2005 for Global Growth. 5. SECURITIES LENDING As of November 30, 2006, securities in International Growth and Global Growth valued at $463,980 and $53,748, 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 $484,316 and $55,570, 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 International Growth and Global Growth 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 (the agreement), with JPMCB. International Value entered into the agreement on December 13, 2006. The funds may borrow money for temporary or emergency purposes to fund shareholder redemptions. Borrowings under the agreement bear interest at the Federal Funds rate plus 0.50%. The funds did not borrow from the line during the year ended November 30, 2006. (continued) - ------ 40 Notes to Financial Statements NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) 7. RISK FACTORS There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions. Investing in emerging markets may accentuate these risks. 8. FEDERAL TAX INFORMATION On December 12, 2006, International Value declared and paid the following per-share distribution from net investment income to shareholders of record on December 11, 2006. On December 19, 2006, International Growth and Global Growth declared and paid the following per-share distributions from net investment income to shareholders of record on December 18, 2006: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR - -------------------------------------------------------------------------------- International Growth $0.0913 $0.1162 $0.0601 - -------------------------------------------------------------------------------- Global Growth $0.0481 $0.0695 $0.0212 - -------------------------------------------------------------------------------- International Value $0.4734 $0.4938 N/A - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- A B C R - -------------------------------------------------------------------------------- International Growth $0.0601 -- -- $0.0289 - -------------------------------------------------------------------------------- Global Growth $0.0212 -- -- -- - -------------------------------------------------------------------------------- International Value $0.4478 $0.3709 $0.3709 $0.4221 - -------------------------------------------------------------------------------- On December 12, 2006, International Value declared and paid a per-share distribution from net realized gains to shareholders of record on December 11, 2006 of $4.7153 for each class of the fund. The tax character of distributions paid during the years ended November 30, 2006 and November 30, 2005 for International Growth and Global Growth were as follows: - -------------------------------------------------------------------------------- INTERNATIONAL GROWTH GLOBAL GROWTH - -------------------------------------------------------------------------------- 2006 2005 2006 2005 - -------------------------------------------------------------------------------- DISTRIBUTIONS PAID FROM - -------------------------------------------------------------------------------- Ordinary income $49,996 $30,899 $2,818 $843 - -------------------------------------------------------------------------------- Long-term capital gains -- -- -- -- - -------------------------------------------------------------------------------- The tax character of distributions paid during the eight months ended November 30, 2006 and the years ended March 31, 2006 and March 31, 2005 for International Value were as follows: - -------------------------------------------------------------------------------- INTERNATIONAL VALUE - -------------------------------------------------------------------------------- NOV. 30, 2006(1) MARCH 31, 2006 MARCH 31, 2005 - -------------------------------------------------------------------------------- DISTRIBUTIONS PAID FROM - -------------------------------------------------------------------------------- Ordinary income -- $2,768 $2,032 - -------------------------------------------------------------------------------- Long-term capital gains -- $4,008 $2,247 - -------------------------------------------------------------------------------- (1) April 1, 2006 through November 30, 2006, International Value's fiscal year end was charged from March 31 to November 30, resulting in an eight-month annual reporting period. The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. (continued) - ------ 41 Notes to Financial Statements NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) 8. FEDERAL TAX INFORMATION (CONTINUED) As of November 30, 2006, the components of distributable earnings on a tax-basis and the federal tax cost of investments were as follows: - ---------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL GROWTH GLOBAL GROWTH VALUE - ---------------------------------------------------------------------------------- Federal tax cost of investments $2,626,220 $391,737 $40,191 ================================================================================== Gross tax appreciation of investments $758,733 $110,134 $20,721 - ---------------------------------- Gross tax depreciation of investments (43,058) (5,672) (945) - ---------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $715,675 $104,462 $19,776 ================================================================================== Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies (120) (307) 5 - ---------------------------------------------------------------------------------- Net tax appreciation (depreciation) $715,555 $104,155 $19,781 ================================================================================== Undistributed ordinary income $19,727 $1,709 $3,169 - ---------------------------------- Accumulated long-term gains -- $9,100 $18,546 - ---------------------------------- Accumulated capital losses $(424,461) -- -- - ---------------------------------- Currency loss deferrals $(262) $(36) $(3) - ---------------------------------------------------------------------------------- The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and investments in passive foreign investment companies. The accumulated capital losses listed above represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. In International Growth, capital loss carryovers of $(366,696) and $(57,765) expire in 2010 and 2011, respectively. The currency loss deferrals represent net foreign currency losses incurred in the one-month period ended November 30, 2006. 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 fund's shareholders on March 15, 2006. 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 $4,917, respectively. (continued) - ------ 42 Notes to Financial Statements NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) 10. RECENTLY ISSUED ACCOUNTING STANDARDS In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes -- an Interpretation of FASB Statement No. 109" (FIN 48). FIN 48 establishes a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. FIN 48 is effective for fiscal years beginning after December 15, 2006, and is to be applied to all open tax years as of the date of effectiveness. The FASB issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), in September 2006, which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands the required financial statement disclosures about fair value measurements. Management is currently evaluating the impact of adopting FIN 48 and FAS 157. 11. OTHER TAX INFORMATION (UNAUDITED) ($ IN FULL) The following information is provided pursuant to provisions of the Internal Revenue Code. The funds hereby designate qualified dividend income for the fiscal year ended November 30, 2006 as follows: - -------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL GROWTH GLOBAL GROWTH VALUE - -------------------------------------------------------------------------------- $54,311,175 $2,818,981 $-- - -------------------------------------------------------------------------------- For corporate taxpayers, the following ordinary income distributions paid during the fiscal year ended November 30, 2006, qualify for the corporate dividends received deduction. - -------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL GROWTH GLOBAL GROWTH VALUE - -------------------------------------------------------------------------------- $-- $1,048,168 $-- - -------------------------------------------------------------------------------- As of November 30, 2006, the funds designate the following as a foreign tax credit, which represents taxes paid on income derived from sources within foreign countries or possession of the United States. - -------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL GROWTH GLOBAL GROWTH VALUE - -------------------------------------------------------------------------------- $1,104,337 $74,175 $115,918 - -------------------------------------------------------------------------------- - ------ 43 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ------------------------------------------------------------------------------------------- INVESTOR CLASS - ------------------------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.75 $8.79 $7.54 $6.69 $7.86 - ------------------------------------------------------------------------------------------- Income From Investment Operations - -------------------------- Net Investment Income (Loss)(1) 0.06 0.11 0.05 0.06 0.06 - -------------------------- Net Realized and Unrealized Gain (Loss) 2.54 0.94 1.26 0.85 (1.20) - ------------------------------------------------------------------------------------------- Total From Investment Operations 2.60 1.05 1.31 0.91 (1.14) - ------------------------------------------------------------------------------------------- Distributions - -------------------------- From Net Investment Income (0.18) (0.09) (0.06) (0.06) (0.03) - ------------------------------------------------------------------------------------------- Net Asset Value, End of Period $12.17 $9.75 $8.79 $7.54 $6.69 =========================================================================================== TOTAL RETURN(2) 27.03% 12.09% 17.45% 13.70% (14.54)% - ------------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.26% 1.23% 1.26% 1.28% 1.25% - -------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.52% 1.22% 0.57% 0.84% 0.76% - -------------------------- Portfolio Turnover Rate 95% 89% 118% 169% 215% - -------------------------- Net Assets, End of Period (in thousands) $2,352,967 $2,249,430 $2,395,249 $2,502,831 $2,410,600 - ------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 44 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - --------------------------------------------------------------------------------- INSTITUTIONAL CLASS - --------------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.78 $8.82 $7.56 $6.71 $7.88 - --------------------------------------------------------------------------------- Income From Investment Operations - -------------------------- Net Investment Income (Loss)(1) 0.07 0.13 0.06 0.07 0.07 - -------------------------- Net Realized and Unrealized Gain (Loss) 2.55 0.94 1.27 0.85 (1.19) - --------------------------------------------------------------------------------- Total From Investment Operations 2.62 1.07 1.33 0.92 (1.12) - --------------------------------------------------------------------------------- Distributions - -------------------------- From Net Investment Income (0.20) (0.11) (0.07) (0.07) (0.05) - --------------------------------------------------------------------------------- Net Asset Value, End of Period $12.20 $9.78 $8.82 $7.56 $6.71 ================================================================================= TOTAL RETURN(2) 27.19% 12.28% 17.78% 13.89% (14.33)% - --------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.06% 1.03% 1.06% 1.08% 1.05% - -------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.72% 1.42% 0.77% 1.04% 0.96% - -------------------------- Portfolio Turnover Rate 95% 89% 118% 169% 215% - -------------------------- Net Assets, End of Period (in thousands) $125,814 $247,077 $283,330 $301,854 $270,121 - --------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 45 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ------------------------------------------------------------------------------------- ADVISOR CLASS - ------------------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.72 $8.76 $7.52 $6.66 $7.83 - ------------------------------------------------------------------------------------- Income From Investment Operations - -------------------------- Net Investment Income (Loss)(1) 0.03 0.09 0.03 0.03 0.04 - -------------------------- Net Realized and Unrealized Gain (Loss) 2.52 0.94 1.25 0.87 (1.20) - ------------------------------------------------------------------------------------- Total From Investment Operations 2.55 1.03 1.28 0.90 (1.16) - ------------------------------------------------------------------------------------- Distributions - -------------------------- From Net Investment Income (0.15) (0.07) (0.04) (0.04) (0.01) - ------------------------------------------------------------------------------------- Net Asset Value, End of Period $12.12 $9.72 $8.76 $7.52 $6.66 ===================================================================================== TOTAL RETURN(2) 26.57% 11.85% 17.07% 13.62% (14.81)% - ------------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.51% 1.48% 1.51% 1.53% 1.50% - -------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.27% 0.97% 0.32% 0.59% 0.51% - -------------------------- Portfolio Turnover Rate 95% 89% 118% 169% 215% - -------------------------- Net Assets, End of Period (in thousands) $336,497 $259,651 $275,195 $239,256 $196,949 - ------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 46 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- A CLASS - -------------------------------------------------------------------------------- 2006 2005 2004 2003(1) - -------------------------------------------------------------------------------- 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)(2) 0.04 0.09 0.03 (0.02) - -------------------------- Net Realized and Unrealized Gain (Loss) 2.52 0.94 1.25 1.45 - -------------------------------------------------------------------------------- Total From Investment Operations 2.56 1.03 1.28 1.43 - -------------------------------------------------------------------------------- Distributions - -------------------------- From Net Investment Income (0.15) (0.07) (0.04) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.14 $9.73 $8.77 $7.53 ================================================================================ TOTAL RETURN(3) 26.65% 11.84% 17.10% 23.44% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.51% 1.48% 1.51% 1.53%(4) - -------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.27% 0.97% 0.32% (0.40)%(4) - -------------------------- Portfolio Turnover Rate 95% 89% 118% 169%(5) - -------------------------- Net Assets, End of Period (in thousands) $28,367 $25,193 $14,170 $7,395 - -------------------------------------------------------------------------------- (1) January 31, 2003 (commencement of sale) through November 30, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 47 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- B CLASS - -------------------------------------------------------------------------------- 2006 2005 2004 2003(1) - -------------------------------------------------------------------------------- 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)(2) (0.05) 0.02 (0.03) (0.03) - ----------------------------- Net Realized and Unrealized Gain (Loss) 2.52 0.93 1.25 1.41 - -------------------------------------------------------------------------------- Total From Investment Operations 2.47 0.95 1.22 1.38 - -------------------------------------------------------------------------------- Distributions - ----------------------------- From Net Investment Income (0.08) --(3) -- -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.04 $9.65 $8.70 $7.48 ================================================================================ TOTAL RETURN(4) 25.71% 10.97% 16.31% 22.62% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.26% 2.23% 2.26% 2.28%(5) - ----------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.48)% 0.22% (0.43)% (0.51)%(5) - ----------------------------- Portfolio Turnover Rate 95% 89% 118% 169%(6) - ----------------------------- Net Assets, End of Period (in thousands) $2,699 $1,676 $1,107 $513 - -------------------------------------------------------------------------------- (1) January 31, 2003 (commencement of sale) through November 30, 2003. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 48 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.60 $8.66 $7.45 $6.60 $7.82 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------------- Net Investment Income (Loss)(1) (0.05) 0.02 (0.03) (0.01) --(2) - --------------------------- Net Realized and Unrealized Gain (Loss) 2.50 0.92 1.24 0.86 (1.22) - -------------------------------------------------------------------------------- Total From Investment Operations 2.45 0.94 1.21 0.85 (1.22) - -------------------------------------------------------------------------------- Distributions - --------------------------- From Net Investment Income (0.08) --(2) -- -- -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.97 $9.60 $8.66 $7.45 $6.60 ================================================================================ TOTAL RETURN(3) 25.64% 10.91% 16.24% 12.88% (15.60)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.26% 2.23% 2.26% 2.28% 2.25% - --------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.48)% 0.22% (0.43)% (0.16)% (0.24)% - --------------------------- Portfolio Turnover Rate 95% 89% 118% 169% 215% - --------------------------- Net Assets, End of Period (in thousands) $6,250 $5,246 $5,070 $1,933 $912 - -------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 49 International Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2006 2005 2004 2003(1) - -------------------------------------------------------------------------------- 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)(2) 0.01 0.07 0.02 (0.01) - ----------------------------- Net Realized and Unrealized Gain (Loss) 2.53 0.94 1.25 0.52 - -------------------------------------------------------------------------------- Total From Investment Operations 2.54 1.01 1.27 0.51 - -------------------------------------------------------------------------------- Distributions - ----------------------------- From Net Investment Income (0.13) (0.05) (0.05) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $12.12 $9.71 $8.75 $7.53 ================================================================================ TOTAL RETURN(3) 26.39% 11.58% 16.92% 7.26% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.76% 1.69%(4) 1.76% 1.78%(5) - ----------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.02% 0.76%(4) 0.07% (0.74)%(5) - ----------------------------- Portfolio Turnover Rate 95% 89% 118% 169%(6) - ----------------------------- Net Assets, End of Period (in thousands) $2,106 $1,809 $376 $3 - -------------------------------------------------------------------------------- (1) August 29, 2003 (commencement of sale) through November 30, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) During the year ended November 30, 2005, the class received a partial reimbursement of its distribution and service fees. Had fees not been reimbursed, the ratio of operating expenses to average net assets and the ratio of net investment income (loss) to average net assets would have been 1.73% and 0.72%, respectively. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 50 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - ------------------------------------------------------------------------------------ INVESTOR CLASS - ------------------------------------------------------------------------------------ 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------ PER-SHARE DATA - ------------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $8.88 $7.49 $6.48 $5.39 $6.18 - ------------------------------------------------------------------------------------ Income From Investment Operations - -------------------------- Net Investment Income (Loss)(1) --(2) --(2) (0.01) --(2) 0.01 - -------------------------- Net Realized and Unrealized Gain (Loss) 1.70 1.41 1.02 1.09 (0.80) - ------------------------------------------------------------------------------------ Total From Investment Operations 1.70 1.41 1.01 1.09 (0.79) - ------------------------------------------------------------------------------------ Distributions - -------------------------- From Net Investment Income (0.06) (0.02) -- -- -- - ------------------------------------------------------------------------------------ Net Asset Value, End of Period $10.52 $8.88 $7.49 $6.48 $5.39 ==================================================================================== TOTAL RETURN(3) 19.30% 18.87% 15.59% 20.22% (12.78)% - ------------------------------------------------------------------------------------ RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 1.31% 1.30% 1.30% 1.31% 1.32% - -------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.05)% (0.01)% (0.12)% 0.00% 0.13% - -------------------------- Portfolio Turnover Rate 95% 36% 79% 152% 278% - -------------------------- Net Assets, End of Period (in thousands) $418,185 $378,976 $299,807 $250,306 $213,314 - ------------------------------------------------------------------------------------ (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 51 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.95 $7.55 $6.52 $5.41 $6.19 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------------- Net Investment Income (Loss)(1) 0.01 0.01 --(2) 0.01 0.02 - -------------------------- Net Realized and Unrealized Gain (Loss) 1.72 1.43 1.03 1.10 (0.80) - -------------------------------------------------------------------------------- Total From Investment Operations 1.73 1.44 1.03 1.11 (0.78) - -------------------------------------------------------------------------------- Distributions - -------------------------- From Net Investment Income (0.08) (0.04) -- -- -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.60 $8.95 $7.55 $6.52 $5.41 ================================================================================ TOTAL RETURN(3) 19.50% 19.22% 15.80% 20.52% (12.60)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.11% 1.10% 1.10% 1.11% 1.12% - -------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.15% 0.19% 0.08% 0.20% 0.33% - -------------------------- Portfolio Turnover Rate 95% 36% 79% 152% 278% - -------------------------- Net Assets, End of Period (in thousands) $8,540 $8,669 $6,774 $7,901 $3,288 - -------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 52 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - --------------------------------------------------------------------------------- ADVISOR CLASS - --------------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.79 $7.41 $6.43 $5.36 $6.16 - --------------------------------------------------------------------------------- Income From Investment Operations - -------------------------- Net Investment Income (Loss)(1) (0.03) (0.02) (0.02) (0.02) (0.01) - -------------------------- Net Realized and Unrealized Gain (Loss) 1.69 1.40 1.00 1.09 (0.79) - --------------------------------------------------------------------------------- Total From Investment Operations 1.66 1.38 0.98 1.07 (0.80) - --------------------------------------------------------------------------------- Distributions - -------------------------- From Net Investment Income (0.04) -- -- -- -- - --------------------------------------------------------------------------------- Net Asset Value, End of Period $10.41 $8.79 $7.41 $6.43 $5.36 ================================================================================= TOTAL RETURN(2) 18.97% 18.62% 15.24% 19.96% (12.99)% - --------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.56% 1.55% 1.55% 1.56% 1.57% - -------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.30)% (0.26)% (0.37)% (0.25)% (0.12)% - -------------------------- Portfolio Turnover Rate 95% 36% 79% 152% 278% - -------------------------- Net Assets, End of Period (in thousands) $5,571 $3,664 $2,475 $1,044 $537 - --------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 53 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- A CLASS - -------------------------------------------------------------------------------- 2006 - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.02 - -------------------------------------------------------------------------------- Income From Investment Operations - ---------------------------------------------------------------- Net Investment Income (Loss)(1) (0.03) - ---------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.56 - -------------------------------------------------------------------------------- Total From Investment Operations 1.53 - -------------------------------------------------------------------------------- Distributions - ---------------------------------------------------------------- From Net Investment Income (0.06) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.49 ================================================================================ TOTAL RETURN(2) 17.10% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.56% - ---------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.30)% - ---------------------------------------------------------------- Portfolio Turnover Rate 95% - ---------------------------------------------------------------- Net Assets, End of Period (in thousands) $5,295 - -------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) 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. See Notes to Financial Statements. - ------ 54 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEAR ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- B CLASS - -------------------------------------------------------------------------------- 2006 - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $9.02 - -------------------------------------------------------------------------------- Income From Investment Operations - ---------------------------------------------------------------- Net Investment Income (Loss)(1) (0.11) - ---------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.57 - -------------------------------------------------------------------------------- Total From Investment Operations 1.46 - -------------------------------------------------------------------------------- Distributions - ---------------------------------------------------------------- From Net Investment Income (0.06) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.42 ================================================================================ TOTAL RETURN(2) 16.29% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.31% - ---------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.05)% - ---------------------------------------------------------------- Portfolio Turnover Rate 95% - ---------------------------------------------------------------- Net Assets, End of Period (in thousands) $352 - -------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) 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. See Notes to Financial Statements. - ------ 55 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2006 2005 2004 2003 2002(1) - -------------------------------------------------------------------------------- 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)(2) (0.10) (0.08) (0.08) (0.05) (0.03) - --------------------------- Net Realized and Unrealized Gain (Loss) 1.65 1.38 1.00 1.07 (0.76) - -------------------------------------------------------------------------------- Total From Investment Operations 1.55 1.30 0.92 1.02 (0.79) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.14 $8.59 $7.29 $6.37 $5.35 ================================================================================ TOTAL RETURN(3) 18.04% 17.83% 14.44% 19.07% (12.87)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.31% 2.30% 2.30% 2.31% 2.32%(4) - --------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.05)% (1.01)% (1.12)% (1.00)% (0.60)%(4) - --------------------------- Portfolio Turnover Rate 95% 36% 79% 152% 278%(5) - --------------------------- Net Assets, End of Period (in thousands) $1,050 $454 $184 $56 $25 - -------------------------------------------------------------------------------- (1) March 1, 2002 (commencement of sale) through November 30, 2002. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2002. See Notes to Financial Statements. - ------ 56 Global Growth - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED) - -------------------------------------------------------------------------------- R CLASS - -------------------------------------------------------------------------------- 2006 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.86 $8.37 - -------------------------------------------------------------------------------- Income From Investment Operations - ---------------------------------------------------- Net Investment Income (Loss)(2) (0.05) (0.02) - ---------------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.71 0.51 - -------------------------------------------------------------------------------- Total From Investment Operations 1.66 0.49 - -------------------------------------------------------------------------------- Distributions - ---------------------------------------------------- From Net Investment Income (0.05) -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.47 $8.86 ================================================================================ TOTAL RETURN(3) 18.79% 5.85% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.81% 1.80%(4) - ---------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.55)% (0.71)%(4) - ---------------------------------------------------- Portfolio Turnover Rate 95% 36%(5) - ---------------------------------------------------- Net Assets, End of Period (in thousands) $32 $26 - -------------------------------------------------------------------------------- (1) July 29, 2005 (commencement of sale) through November 30, 2005. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2005. See Notes to Financial Statements. - ------ 57 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) 0.15 - -------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.36 - -------------------------------------------------------------------------------- Total From Investment Operations 1.51 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $14.36 ================================================================================ TOTAL RETURN(3) 11.75% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.30%(4) - -------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 2.77%(4)(5) - -------------------------------------------------------------- Portfolio Turnover Rate 17% - -------------------------------------------------------------- Net Assets, End of Period (in thousands) $437 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through November 30, 2006. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Due to cyclical dividends and the eight-month period ended November 30, 2006, the annualized ratio of net investment income (loss) to average net assets is higher than expected. See Notes to Financial Statements. - ------ 58 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) 0.25 - -------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.28 - -------------------------------------------------------------------------------- Total From Investment Operations 1.53 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $14.38 ================================================================================ TOTAL RETURN(3) 11.91% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.10%(4) - -------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 2.97%(4)(5) - -------------------------------------------------------------- Portfolio Turnover Rate 17% - -------------------------------------------------------------- Net Assets, End of Period (in thousands) $35,574 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through November 30, 2006. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Due to cyclical dividends and the eight-month period ended November 30, 2006, the annualized ratio of net investment income (loss) to average net assets is higher than expected. See Notes to Financial Statements. - ------ 59 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) 0.25(2) 0.18(2) 0.13(2) 0.10(2) 0.07(2) 0.06 - ------------------------------ Net Realized and Unrealized Gain (Loss) 1.40 1.97 1.37 3.42 (2.51) (0.21) - -------------------------------------------------------------------------------------------------------------- Total From Investment Operations 1.65 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 $14.35 $12.70 $10.91 $9.64 $6.22 $8.70 ============================================================================================================== TOTAL RETURN(3) 12.99% 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%(6) 1.65%(6) - ------------------------------ 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 2.67%(4)(5)(7) 1.52% 1.28% 1.13% 0.89%(6) 0.74%(6) - ------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (Before Expense Waiver) 2.52%(5)(7) 1.52% 1.28% 1.13% 0.90% 0.60% - ------------------------------ Portfolio Turnover Rate 17% 7% 18% 10% 18% 21% - ------------------------------ Net Assets, End of Period (in thousands) $19,890 $54,617 $203,215 $174,387 $105,862 $57,773 - -------------------------------------------------------------------------------------------------------------- (1) April 1, 2006 through November 30, 2006. The fund's fiscal year end was changed from March 31 to November 30, resulting in an eight-month annual reporting period. For the years before November 30, 2006, the fund'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 November 30, 2006, the distributor voluntarily waived a portion of its distribution and service fees. (5) Annualized. (6) The investment advisor voluntarily agreed to waive fees and absorb certain operating expenses. (7) Due to cyclical dividends and the eight-month period ended November 30, 2006, the annualized ratio of net investment income (loss) to average net assets is higher than expected. See Notes to Financial Statements. - ------ 60 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) 0.17(2) 0.10(2) 0.06(2) 0.04(2) 0.01(2) --(3) - ------------------------------ Net Realized and Unrealized Gain (Loss) 1.40 1.93 1.34 3.39 (2.48) (0.21) - ----------------------------------------------------------------------------------------------------------- Total From Investment Operations 1.57 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 $14.08 $12.51 $10.75 $9.52 $6.14 $8.61 =========================================================================================================== TOTAL RETURN(4) 12.55% 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%(7) 2.30%(7) - ------------------------------ 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 1.98%(5)(6)(8) 0.90% 0.61% 0.52% 0.10%(7) 0.09%(7) - ------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (Before Expense Waiver) 1.77%(6)(8) 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) $4,313 $4,917 $5,165 $4,491 $3,011 $4,145 - ----------------------------------------------------------------------------------------------------------- (1) April 1, 2006 through November 30, 2006. The fund's fiscal year end was changed from March 31 to November 30, resulting in an eight-month annual reporting period. For the years before November 30, 2006, the fund'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 November 30, 2006, the distributor voluntarily waived a portion of its distribution and service fees. (6) Annualized. (7) The investment advisor voluntarily agreed to waive fees and absorb certain operating expenses. (8) Due to cyclical dividends and the eight-month period ended November 30, 2006, the annualized ratio of net investment income (loss) to average net assets is higher than expected. See Notes to Financial Statements. - ------ 61 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) 0.14 - ---------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.28 - -------------------------------------------------------------------------------- Total From Investment Operations 1.42 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $14.27 ================================================================================ TOTAL RETURN(3) 11.05% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.30%(4) - ---------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 1.77%(4)(5) - ---------------------------------------------------------------- Portfolio Turnover Rate 17% - ---------------------------------------------------------------- Net Assets, End of Period (in thousands) $41 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through November 30, 2006. (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 eight-month period ended November 30, 2006, the annualized ratio of net investment income (loss) to average net assets is higher than expected. See Notes to Financial Statements. - ------ 62 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) 0.19 - --------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 1.27 - -------------------------------------------------------------------------------- Total From Investment Operations 1.46 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $14.31 ================================================================================ TOTAL RETURN(3) 11.36% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.80%(4) - --------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 2.27%(4)(5) - --------------------------------------------------------------- Portfolio Turnover Rate 17% - --------------------------------------------------------------- Net Assets, End of Period (in thousands) $28 - -------------------------------------------------------------------------------- (1) April 3, 2006 (commencement of sale) through November 30, 2006. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. (5) Due to cyclical dividends and the eight-month period ended November 30, 2006, the annualized ratio of net investment income (loss) to average net assets is higher than expected. See Notes to Financial Statements. - ------ 63 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders, American Century World Mutual Funds, Inc.: We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of International Growth Fund, and Global Growth Fund, (collectively the "Fund"), two of the mutual funds comprising American Century World Mutual Funds, Inc., as of November 30, 2006, and the related statement of operations for the year then ended, the statement of changes in net assets for each of the two years in the period then ended, and the financial highlights for the periods presented. In addition, we have audited the accompanying statement of assets and liabilities, including the schedule of investments of International Value Fund, one of the mutual funds comprising American Century World Mutual Funds, Inc., as of November 30, 2006, and the related statements of operations and changes in net assets for the eight month periods then ended, and the financial highlights for the fiscal periods then ended. These financial statements and the financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. The statement of operations for the fiscal year ended March 31, 2006, and the statements of changes in net assets for the each of the two years in the period ended March 31, 2006 and the financial highlights for each of the periods presented in the five-year period ended March 31, 2006 for International Value Fund were audited by other auditors whose report, dated May 1, 2006, expressed an unqualified opinion on those financial statements and financial highlights. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2005, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds of American Century World Mutual Funds, Inc. as of November 30, 2006, the results of their operations for the fiscal periods then ended, and the changes in their net assets and their financial highlights for the periods presented (except as noted above in reference to the report of other auditors), in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Kansas City, Missouri January 16, 2007 - ------ 64 Management The individuals listed below serve as directors or officers of the funds. Each director serves until his or her successor is duly elected and qualified or until he or she retires. Mandatory retirement age for independent directors is 72. Those listed as interested directors are "interested" primarily by virtue of their engagement as officers of American Century Companies, Inc. (ACC) or its wholly owned, direct or indirect, subsidiaries, including the funds' investment advisor, American Century Global Investment Management, Inc. (ACGIM) or American Century Investment Management, Inc. (ACIM); the funds' principal underwriter, American Century Investment Services, Inc. (ACIS); and the funds' transfer agent, American Century Services, LLC (ACS). The other directors (more than three-fourths of the total number) are independent; that is, they have never been employees or officers of, and have no financial interest in, ACC or any of its wholly owned subsidiaries, including ACGIM, ACIM, ACIS, and ACS. The directors serve in this capacity for seven registered investment companies in the American Century family of funds. All persons named as officers of the funds also serve in a similar capacity for the other 14 investment companies advised by ACIM or ACGIM, unless otherwise noted. Only officers with policy-making functions are listed. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- THOMAS A. BROWN, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1940 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1980 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Formerly Chief Executive Officer/Treasurer, Associated Bearings Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ANDREA C. HALL, PH.D., 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Advisor to the President, Midwest Research Institute NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- D.D. (DEL) HOCK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1935 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1996 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Chairman, Public Service Company of Colorado NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Allied Motion Technologies, Inc. - -------------------------------------------------------------------------------- (continued) - ------ 65 Management INDEPENDENT DIRECTORS (CONTINUED) - -------------------------------------------------------------------------------- JAMES A. OLSON, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1942 POSITION(S) HELD WITH FUND: Advisory Board Member FIRST YEAR OF SERVICE: 2006 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Principal, Plaza Belmont LLC; Chief Financial Officer, Plaza Belmont LLC (September 1999 to July 2006) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Saia, Inc. and Entertainment Properties Trust - -------------------------------------------------------------------------------- DONALD H. PRATT, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1937 POSITION(S) HELD WITH FUND: Director, Chairman of the Board FIRST YEAR OF SERVICE: 1995 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Western Investments, Inc.; Retired Chairman of the Board, Butler Manufacturing Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- GALE E. SAYERS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1943 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Chief Executive Officer and Founder, Sayers40, Inc., a technology products and service provider NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Triad Hospitals, Inc. - -------------------------------------------------------------------------------- M. JEANNINE STRANDJORD, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1994 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Senior Vice President, Sprint Corporation NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, DST Systems, Inc.; Director, Euronet Worldwide, Inc. - -------------------------------------------------------------------------------- TIMOTHY S. WEBSTER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1961 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 2001 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Managing Director, TDB Acquisition Group LLC (September 2006 - present); President and Chief Executive Officer, American Italian Pasta Company (1992 to December 2005) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- INTERESTED DIRECTORS - -------------------------------------------------------------------------------- JAMES E. STOWERS, JR.(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1924 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman FIRST YEAR OF SERVICE: 1958 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Founder, Director and Controlling Shareholder, ACC; Chairman, ACC (January 1995 to December 2004); Director, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- JAMES E. STOWERS III(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1959 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman FIRST YEAR OF SERVICE: 1990 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, ACC (January 2005 to present); Co-Chairman, ACC (September 2000 to December 2004); Chairman, ACS and other ACC subsidiaries (April 2005 to September 2006); Director, ACC, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (1) James E. Stowers, Jr. is the father of James E. Stowers III. (continued) - ------ 66 Management OFFICERS - -------------------------------------------------------------------------------- WILLIAM M. LYONS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1955 POSITION(S) HELD WITH FUND: President FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC (September 2000 to present); President, ACC (June 1997 to present); Also serves as: Chairman, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries; Chief Executive Officer, ACIM, ACGIM, ACIS and other ACC subsidiaries (October 2000 to October 2006); President, ACIM, ACGIM and other ACC subsidiaries (September 2002 to September 2006); Executive Vice President, ACS (January 2005 to September 2006); Director, ACC, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- JONATHAN THOMAS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1963 POSITION(S) HELD WITH FUND: Executive Vice President FIRST YEAR OF SERVICE: 2005 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC (February 2006 to present); Executive Vice President, ACC (November 2005 to present); Also serves as: President and Chief Executive Officer, ACS; Chief Financial Officer and Chief Accounting Officer, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries; Managing Director, Morgan Stanley (March 2000 to November 2005) - -------------------------------------------------------------------------------- MARYANNE ROEPKE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1956 POSITION(S) HELD WITH FUND: Chief Compliance Officer and Senior Vice President FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Compliance Officer, ACIM, ACGIM and ACS (August 2006 to present); Assistant Treasurer, ACC (January 1995 to August 2006); Treasurer and Chief Financial Officer, various American Century funds (July 2000 to August 2006); Also serves as: Senior Vice President, ACS - -------------------------------------------------------------------------------- DAVID C. TUCKER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1958 POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (February 2001 to present); General Counsel, ACC (June 1998 to present); Also serves as: Senior Vice President and General Counsel, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- ROBERT LEACH, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1966 POSITION(S) HELD WITH FUND: Vice President, Treasurer and Chief Financial Officer FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS (February 2000 to present); Controller, various American Century funds (June 1997 to September 2006) - -------------------------------------------------------------------------------- C. JEAN WADE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1964 POSITION(S) HELD WITH FUND: Controller FIRST YEAR OF SERVICE: 2006 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS (February 2000 to present) - -------------------------------------------------------------------------------- JON ZINDEL, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Tax Officer FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, ACC (August 2006 to present); Vice President, ACC and certain ACC subsidiaries (October 2001 to August 2006); Vice President, Corporate Tax, ACS (April 1998 to August 2006); Also serves as: Senior Vice President, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- The SAI has additional information about the funds' directors and is available without charge, upon request, by calling 1-800-345-2021. - ------ 67 Approval of Management Agreements for International Growth and Global Growth Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated and approved by a majority of a fund's independent directors or trustees (the "Directors") each year. At American Century, this process is referred to as the "15(c) Process." As a part of this process, the board reviews fund performance, shareholder services, audit and compliance information, and a variety of other reports from the advisor concerning fund operations. In addition to this annual review, the board of directors oversees and evaluates on a continuous basis at its quarterly meetings the nature and quality of significant services performed by the advisor, fund performance, audit and compliance information, and a variety of other reports relating to fund operations. The board, or committees of the board, also holds special meetings as needed. 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 the board's approval or renewal of any advisory agreements within the fund's most recently completed fiscal half-year period. ANNUAL CONTRACT REVIEW PROCESS As part of the annual 15(c) Process undertaken during the most recent fiscal half-year period, the Directors reviewed extensive data and information compiled by the advisor and certain independent providers of evaluative data (the "15(c) Providers") concerning International Growth and Global Growth (the "funds") and the services provided to the funds under the management agreement. The information considered and the discussions held at the meetings included, but were not limited to: * the nature, extent and quality of investment management, shareholder services and other services provided to the funds under the management agreement; * reports on the advisor's activities relating to the wide range of programs and services the advisor provides to the funds and their shareholders on a routine and non-routine basis; * data comparing the cost of owning the funds to the cost of owning similar funds; * data comparing the funds' performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the funds to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. In keeping with its practice, the funds' board of directors held two regularly scheduled meetings and one special meeting to review and discuss the information provided by the advisor and to complete its negotiations with the advisor regarding the renewal of the management agreement, including the setting of the applicable advisory fee. The board also had the benefit of the advice of its independent counsel throughout the period. (continued) - ------ 68 Approval of Management Agreements for International Growth and Global Growth FACTORS CONSIDERED The Directors considered all of the information provided by the advisor, the 15(c) Providers, and the board's independent counsel, and evaluated such information for each fund for which the board has responsibility. The Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the agreement under the terms ultimately determined by the board to be appropriate, the Directors' decision was based on the following factors. NATURE, EXTENT AND QUALITY OF SERVICES -- GENERALLY. Under the management agreement, the advisor is responsible for providing or arranging for all services necessary for the operation of the funds. The board noted that under the management agreement, the advisor provides or arranges at its own expense a wide variety of services including: * fund construction and design * portfolio security selection * initial capitalization/funding * securities trading * custody of fund assets * daily valuation of the funds' portfolio * shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping and communications * legal services * regulatory and portfolio compliance * financial reporting * marketing and distribution The Directors noted that many of these services have expanded over time both in terms of quantity and complexity in response to shareholder demands, competition in the industry and the changing regulatory environment. In performing their evaluation, the Directors considered information received in connection with the annual review, as well as information provided on an ongoing basis at their regularly scheduled board and committee meetings. INVESTMENT MANAGEMENT SERVICES. The nature of the investment management services provided is quite complex and allows fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes, and liquidity. In evaluating investment performance, the board expects the advisor to manage the funds in accordance with their investment objectives and approved strategies. In providing these services, the advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance and other systems to conduct their business. At each quarterly meeting the Directors review investment performance information for the funds, together with comparative information for appropriate benchmarks and peer groups of funds managed similarly to the funds. The Directors also review detailed performance information during the 15(c) Process comparing the funds' performance with that of similar funds not managed by the advisor. If performance concerns are identified, the Directors discuss with the advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. International (continued) - ------ 69 Approval of Management Agreements for International Growth and Global Growth Growth's performance for both the one and three year periods fell below the median of its peer group during the past year. The board discussed the fund's performance with the advisor and was satisfied with the efforts being undertaken by the advisor. Global Growth's performance for both the one and three year periods was above the median of its peer group. SHAREHOLDER AND OTHER SERVICES. The advisor provides the funds with a comprehensive package of transfer agency, shareholder, and other services. The Directors review reports and evaluations of such services at their regular quarterly meetings, including the annual meeting concerning contract review, and reports to the board. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the advisor. COSTS OF SERVICES PROVIDED AND PROFITABILITY TO THE ADVISOR. The advisor provides detailed information concerning its cost of providing various services to the funds, its profitability in managing the funds, its overall profitability, and its financial condition. The Directors have reviewed with the advisor the methodology used to prepare this financial information. This financial information regarding the advisor is considered in order to evaluate the advisor's financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. ETHICS OF THE ADVISOR. The Directors generally consider the advisor's commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the advisor's practices generally meet or exceed industry best practices and that the advisor was not implicated in the industry scandals of 2003 and 2004. ECONOMIES OF SCALE. The Directors review reports provided by the advisor on economies of scale for the complex as a whole and the year-over-year changes in revenue, costs, and profitability. The Directors concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. This analysis is also complicated by the additional services and content provided by the advisor and its reinvestment in its ability to provide and expand those services. Accordingly, the Directors also seek to evaluate economies of scale by reviewing other information, such as year-over-year profitability of the advisor generally, the profitability of its management of the funds specifically, the expenses incurred by the advisor in providing various functions to the funds, and the breakpoint fees of competitive funds not managed by the advisor. The Directors believe the advisor is appropriately sharing economies of scale through its competitive fee structure, fee breakpoints as the funds increase in size, and through (continued) - ------ 70 Approval of Management Agreements for International Growth and Global Growth reinvestment in its business to provide shareholders additional content and services. COMPARISON TO OTHER FUNDS' FEES. The funds pay the advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the funds, other than brokerage expenses, taxes, interest, extraordinary expenses, and the fees and expenses of the funds' independent directors (including their independent legal counsel). Under the unified fee structure, the advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges and other expenses. Other than their investment advisory fees and Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The board believes the unified fee structure is a benefit to fund shareholders because it clearly discloses to shareholders the cost of owning fund shares, and, since the unified fee cannot be increased without a vote of fund shareholders, it shifts to the advisor the risk of increased costs of operating the funds and provides a direct incentive to minimize administrative inefficiencies. Part of the Directors' analysis of fee levels involves reviewing certain evaluative data compiled by a 15(c) Provider comparing the funds' unified fee to the total expense ratio of other funds in the funds' peer group. The unified fees charged to shareholders of International Growth and Global Growth were below the median of the total expense ratios of their peer groups. COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The Directors also requested and received information from the advisor concerning the nature of the services, fees, and profitability of its advisory services to advisory clients other than the funds. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the funds. The Directors analyzed this information and concluded that the fees charged and services provided to the funds were reasonable by comparison. COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information from the advisor concerning collateral benefits it receives as a result of its relationship with the funds. They concluded that the advisor's primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Directors noted that the advisor receives proprietary research from broker dealers that execute fund portfolio transactions and concluded that this research is likely to benefit fund shareholders. The Directors also determined that the advisor is able to provide investment management services to certain clients other than the funds, at least in part, due to its existing infrastructure built to serve the fund complex. The Directors concluded, however, that the assets of those other clients are not material to the analysis (continued) - ------ 71 Approval of Management Agreements for International Growth and Global Growth and, in any event, are included with the assets of the funds to determine breakpoints in the funds' fee schedule, provided they are managed using the same investment team and strategy. CONCLUSIONS OF THE DIRECTORS As a result of this process, the independent directors, in the absence of particular circumstances and assisted by the advice of legal counsel that is independent of the advisor, taking into account all of the factors discussed above and the information provided by the advisor, concluded that the investment management agreement between the funds and the advisor is fair and reasonable in light of the services provided and should be renewed. As a part of the 15(c) Process, the board of directors also unanimously approved the renewal of the investment subadvisory agreement by which American Century Investment Management, Inc. (the "subadvisor") is engaged to manage the cash portion of the funds. In approving the subadvisory agreement, the board considered all material factors including the nature, extent, and quality of investment management services provided by the subadvisor to the funds under the agreement. As a part of this review the Directors evaluated the subadvisor's investment performance 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. - ------ 72 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 Class, A Class, B Class, C Class, 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) - ------ 73 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. - ------ 74 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 website at americancentury.com and on the Securities and Exchange Commission's website 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 website 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 website at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 75 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 AC (ALL COUNTRY) ASIA PACIFIC INDEX is a total return, capitalization-weighted index that measures the performance of stock markets in 15 Pacific region countries, including Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, Sri Lanka, Taiwan and Thailand. The MSCI EAFE(reg.sm) (Europe, Australasia, Far East) INDEX is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EAFE GROWTH INDEX is a capitalization-weighted index that monitors the performance of growth stocks from Europe, Australasia, and the Far East. The MSCI EM (Emerging Markets) INDEX represents the performance of stocks in global emerging market countries. The MSCI WORLD FREE INDEX represents the performance of stocks in developed countries (including the United States) that are available for purchase by global investors. - ------ 76 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. 0701 SH-ANN-52641S American Century Investment Services, Inc., Distributor (c)2007 American Century Proprietary Holdings, Inc. All rights reserved.
AMERICAN CENTURY INVESTMENTS Annual Report November 30, 2006 [photo of winter scene] International Stock Fund International Discovery Fund Emerging Markets Fund International Opportunities Fund [american century investments logo and text logo] Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] /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. We are pleased to provide you with the annual report for the American Century International Stock, International Discovery, Emerging Markets, and International Opportunities funds for the 12 months ended November 30, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our website, americancentury.com, where we post quarterly portfolio commentaries, the views of senior investment officers and analysts, and other communications about investments, portfolio strategy, personal finance, and the markets. In its most recent rankings, Dalbar -- which issues customer satisfaction ratings and rankings based on website functionality -- ranked americancentury.com seventh out of the sites provided by the top 25 fund companies that it believes lead the industry in web-based technology. Our website earned an "Excellent" rating, Dalbar's highest designation. For most of 2006, our website linked visitors to information explaining our strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). This 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. To learn more about the collaboration and the LAF, please visit americancentury.com or www.lanceface.com on the Web and click on the links to related sites. With the approach of the 2006 tax season, you can also find out more about tax information via a link from our website. We've posted online descriptions of all of the tax information we provide to investors. If you haven't visited americancentury.com yet, we encourage you to do so...it's there to serve you. And so are we. As always, we deeply appreciate your commitment to American Century Investments. Table of Contents Market Perspective . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 One-Year Total Returns. . . . . . . . . . . . . . . . . . . . . . . . . 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 . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 Report of Independent Registered Public Accounting Firm. . . . . . . . . . 59 OTHER INFORMATION Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 Approval of Management Agreements for International Stock, International Discovery, Emerging Markets, and International Opportunities. . . . . . . . . . . . . . . . . . . . . . 63 Share Class Information. . . . . . . . . . . . . . . . . . . . . . . . . . 68 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Index Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71 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. Market Perspective [photo of Enrique Chang] BY ENRIQUE CHANG, SENIOR VICE PRESIDENT AND CHIEF INVESTMENT OFFICER, INTERNATIONAL EQUITY RESILIENT MARKETS POSTED ROBUST GAINS Global equity markets continued to demonstrate strength and resilience during the 12 months ended November 30, 2006, with indices from the U.S.'s Dow Jones Industrials to Hong Kong's Hang Seng reaching record highs. The gains were so robust that each of the world's 23 developed markets tracked by Morgan Stanley Capital International (MSCI) advanced, with all but New Zealand registering a double-digit gain. The MSCI Emerging Markets Index, which tracks shares of 27 developing countries globally, also advanced, rebounding from a sharp correction that began in May to finish up 34%. That kind of vitality in the markets was remarkable in the face of continued high oil prices, geopolitical tensions in the Middle East, and interest-rate increases by central banks around the world. STRONG GLOBAL ECONOMYBASIS FOR MARKET GAINS Developments in Europe were among the highlights of the period. The $10 trillion economy of the dozen euro-sharing nations grew the most in six years during the second quarter of 2006. That growth marked the first time since early 2001 that European gross domestic product (GDP) topped that of the U.S., Japan, and Britain. Europe also benefited from better-than-expected corporate earnings, and a record-breaking $1.4 trillion in merger-and-acquisition activity. The region's exporters also gained on increased capital spending by many companies around the world. These developments helped several equity markets in Europe reach their highest levels in five years, and lifted business confidence in Germany, Europe's largest economy, to a 15-year high in November. Japan and other Asian markets also gained during the period, with the MSCI AC Asia Pacific Index rising 20.90%. Japan's growth has been driven by the fastest pace of business investment in 16 years, a show of confidence that the economy has recovered from years of stagnation. Among emerging markets, China's GDP has hovered around 10% for four years, and the historic changes there continue to dramatically impact the global economy. Other developing countries also advanced this year, benefiting from continued high prices for oil and other commodities, rising income and demand among consumers, and continued economic and political reform. The economic growth in many countries and increasing confidence among investors stand as testament to the resilience of international markets and the global economy. We believe there are significant opportunities abroad for investors, and you can be assured that our team is dedicated to searching the world for companies to help drive investment performance. As always, it is our privilege to have you as an American Century investor. ONE-YEAR TOTAL RETURNS AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- MSCI EAFE Index 28.20% - -------------------------------------------------------------------------------- MSCI World Free Index 20.28% - -------------------------------------------------------------------------------- MSCI EM Index 34.38% - -------------------------------------------------------------------------------- - ------ 2 International Stock - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2006 -------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 26.07% 20.58% 3/31/05 - -------------------------------------------------------------------------------- MSCI EAFE INDEX 28.20% 22.01% -- - -------------------------------------------------------------------------------- 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
![](https://capedge.com/proxy/N-CSR/0000872825-07-000004/growthintlstock0701.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - -------------------------------------------------------------------------------- 2005* 2006 - -------------------------------------------------------------------------------- Investor Class 8.40% 26.07% - -------------------------------------------------------------------------------- MSCI EAFE Index 8.67% 28.20% - -------------------------------------------------------------------------------- * From 3/31/05, the Investor Class's inception date. Not annualized. 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: ALEX TEDDER AND KEITH CREVELING PERFORMANCE SUMMARY International Stock advanced 26.07% during the 12 months ended November 30, 2006. Its benchmark, the MSCI EAFE Index, returned 28.20%. The portfolio's results reflected operating expenses, while the index returns did not. Strong global economic growth and the U.S. dollar's decline versus other currencies drove these gains. Against that backdrop, every sector in which we invested contributed to the portfolio's total return, and all of our top-10 holdings on average during the period added value. But several sectors, notably materials, underperformed the index, ultimately causing the portfolio to lag the benchmark. MANAGEMENT CHANGES Portfolio manager Michael Perelstein left American Century on June 30, 2006. Effective July 5, 2006, Alex Tedder joined Keith Creveling as a portfolio manager for International Stock. Previously, Tedder was a managing director, head of international equities, and portfolio manager for Deutsche Asset Management Ltd. from 1994 to 2005. TELECOM LIFTED RELATIVE RETURNS Our telecommunication services position made the largest contribution to relative returns versus the benchmark, due to effective security selection in the wireless industry. The portfolio benefited most from our overweight position in Telenor, a Norwegian phone company with global reach. Two other companies in the telecom sector -- America Movil, which provides mobile phone service in Latin America, and China Mobile Ltd. -- were also among the top-10 contributors to relative performance. Both are portfolio-only positions, meaning they are not in the index. They serve as examples of our research and analysis leading to opportunities beyond the benchmark. FINANCIALS SPURRED GAINS Financial holdings, which represented the portfolio's largest sector stake, outperformed the index and made the largest contribution to total return. The financial sector included the security that made the largest contribution to the portfolio's relative and absolute performance. Shares of Man Group, a London-based fund manager, advanced 85.7% during the reporting period. Man reported that profit increased 40% during the six months ended September 30, 2006. MATERIALS LAGGED Our investments in a few areas lagged the index. An underweight position in the materials sector, particularly among TOP TEN HOLDINGS AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Roche Holding AG 2.2% 2.6% - -------------------------------------------------------------------------------- Total SA 1.7% 1.7% - -------------------------------------------------------------------------------- ORIX Corp. 1.7% 1.7% - -------------------------------------------------------------------------------- Groupe Danone 1.6% 1.2% - -------------------------------------------------------------------------------- AXA SA 1.5% 1.2% - -------------------------------------------------------------------------------- Tesco plc 1.5% -- - -------------------------------------------------------------------------------- Toyota Motor Corp. 1.5% 1.7% - -------------------------------------------------------------------------------- Novartis AG 1.5% 1.7% - -------------------------------------------------------------------------------- Societe Generale 1.4% 1.4% - -------------------------------------------------------------------------------- Reckitt Benckiser plc 1.4% 1.6% - -------------------------------------------------------------------------------- (continued) - ------ 5 International Stock - Portfolio Commentary metals and mining companies, slowed relative performance most. Holdings in the sector's chemicals industry also detracted, mostly due to a pullback among chemical companies in Japan, including Nitto Denko Corp. and JSR Corp. Of the 10 companies that detracted most from relative performance, five were from Japan. Although our low exposure to the materials sector slowed performance, we still questioned the sustainability of recent performance among some metals and mining companies, and remained underweight. OPPORTUNITIES IN EMERGING MARKETS While International Stock invests primarily in large companies in developed countries, we have found opportunity in emerging markets among several companies that fulfill our criteria for sustainable revenue and earnings. They include China Mobile, China Merchants Bank and CEZ AS, a power producer in the Czech Republic. Each of these securities contributed to absolute and relative returns. OUR STARTING POINT FOR THE NEXT SIX MONTHS After the reporting period, portfolio manager Alex Tedder said, "The recent performance of the international equity markets has indeed been remarkable, and we believe the economic, political, and demographic changes under way around the world will continue to create opportunity for investors. But we have to be prepared for changes in the investment environment and economic climate, and that's why we believe it's critically important to invest in companies based on strong fundamentals and their ability to produce sustainable revenue and earnings growth, regardless of market conditions." As of November 30, 2006, we continued to see opportunities in the industrials sector. That was reflected in overweight positions in electrical equipment companies such as Switzerland's ABB Ltd., one of the world's largest makers of power networks, whose products include robotics for car manufacturers. ABB benefited from strong order flows due to increased capital spending by companies worldwide. We expect industrials to remain a source of strength for International Stock. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Foreign Common Stocks 98.0% 98.3% - -------------------------------------------------------------------------------- Temporary Cash Investments 2.1% 1.1% - -------------------------------------------------------------------------------- Other Assets and Liabilities (0.1)% 0.6% - -------------------------------------------------------------------------------- INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- United Kingdom 17.2% 12.1% - -------------------------------------------------------------------------------- Japan 16.3% 23.5% - -------------------------------------------------------------------------------- Switzerland 12.3% 9.8% - -------------------------------------------------------------------------------- France 9.6% 14.1% - -------------------------------------------------------------------------------- Germany 5.4% 8.1% - -------------------------------------------------------------------------------- Australia 3.8% 3.5% - -------------------------------------------------------------------------------- Italy 3.7% 4.1% - -------------------------------------------------------------------------------- Netherlands 3.3% 2.9% - -------------------------------------------------------------------------------- Spain 2.9% 1.6% - -------------------------------------------------------------------------------- Greece 2.6% 2.8% - -------------------------------------------------------------------------------- Norway 2.3% 2.8% - -------------------------------------------------------------------------------- Hong Kong 2.2% -- - -------------------------------------------------------------------------------- Other Countries 16.4% 13.0% - -------------------------------------------------------------------------------- Cash and Equivalents(1) 2.0% 1.7% - -------------------------------------------------------------------------------- (1) Includes temporary cash investments and other assets and liabilities. - ------ 6 International Stock - Schedule of Investments NOVEMBER 30, 2006 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 98.0% AUSTRALIA -- 3.8% - -------------------------------------------------------------------------------- 55,122 BHP Billiton Ltd. $ 1,141 - -------------------------------------------------------------------------------- 7,424 CSL Ltd. 348 - -------------------------------------------------------------------------------- 24,688 National Australia Bank Ltd. 763 - -------------------------------------------------------------------------------- 28,587 QBE Insurance Group Limited 584 - -------------------------------------------------------------------------------- 10,787 Rio Tinto Ltd. 632 - -------------------------------------------------------------------------------- 3,468 - -------------------------------------------------------------------------------- AUSTRIA -- 0.9% - -------------------------------------------------------------------------------- 11,137 Erste Bank der Oesterreichischen Sparkassen AG 812 - -------------------------------------------------------------------------------- BELGIUM -- 0.7% - -------------------------------------------------------------------------------- 5,501 KBC Groupe 619 - -------------------------------------------------------------------------------- BRAZIL -- 1.1% - -------------------------------------------------------------------------------- 10,941 Petroleo Brasileiro SA ADR 1,030 - -------------------------------------------------------------------------------- CZECH REPUBLIC -- 0.9% - -------------------------------------------------------------------------------- 18,971 CEZ AS(1) 846 - -------------------------------------------------------------------------------- DENMARK -- 0.3% - -------------------------------------------------------------------------------- 8,074 Vestas Wind Systems AS(1) 312 - -------------------------------------------------------------------------------- FINLAND -- 2.0% - -------------------------------------------------------------------------------- 23,716 Fortum Oyj 693 - -------------------------------------------------------------------------------- 12,514 Kone Oyj 640 - -------------------------------------------------------------------------------- 10,342 Metso Oyj 477 - -------------------------------------------------------------------------------- 1,810 - -------------------------------------------------------------------------------- FRANCE -- 9.6% - -------------------------------------------------------------------------------- 11,726 Accor SA 853 - -------------------------------------------------------------------------------- 36,599 AXA SA 1,387 - -------------------------------------------------------------------------------- 3,828 Essilor International SA Cie Generale D'Optique 411 - -------------------------------------------------------------------------------- 9,523 Groupe Danone 1,466 - -------------------------------------------------------------------------------- 4,313 PPR SA 658 - -------------------------------------------------------------------------------- 7,533 Societe Generale 1,262 - -------------------------------------------------------------------------------- 22,122 Total SA 1,569 - -------------------------------------------------------------------------------- 15,235 Veolia Environnement 1,009 - -------------------------------------------------------------------------------- 8,615 - -------------------------------------------------------------------------------- GERMANY -- 5.4% - -------------------------------------------------------------------------------- 3,270 Deutsche Boerse AG 548 - -------------------------------------------------------------------------------- 8,433 Fresenius Medical Care AG 1,132 - -------------------------------------------------------------------------------- 6,801 Hochtief AG 457 - -------------------------------------------------------------------------------- 7,634 Hypo Real Estate Holding AG 444 - -------------------------------------------------------------------------------- 8,239 Linde AG 812 - -------------------------------------------------------------------------------- 2,481 MAN AG 237 - -------------------------------------------------------------------------------- 3,158 SAP AG 660 - -------------------------------------------------------------------------------- 5,849 Siemens AG 557 - -------------------------------------------------------------------------------- 4,847 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- GREECE -- 2.6% - -------------------------------------------------------------------------------- 38,232 Hellenic Telecommunications Organization SA(1) $ 1,111 - -------------------------------------------------------------------------------- 26,425 National Bank of Greece SA 1,212 - -------------------------------------------------------------------------------- 2,323 - -------------------------------------------------------------------------------- HONG KONG -- 2.2% - -------------------------------------------------------------------------------- 99,000 China Mobile Ltd. 832 - -------------------------------------------------------------------------------- 56,000 Esprit Holdings Limited 581 - -------------------------------------------------------------------------------- 183,000 Li & Fung Ltd. 532 - -------------------------------------------------------------------------------- 1,945 - -------------------------------------------------------------------------------- INDIA -- 0.8% - -------------------------------------------------------------------------------- 13,860 Infosys Technologies Ltd. ADR 742 - -------------------------------------------------------------------------------- IRELAND -- 1.8% - -------------------------------------------------------------------------------- 37,520 Anglo Irish Bank Corp. plc 713 - -------------------------------------------------------------------------------- 11,794 Ryanair Holdings plc ADR(1) 903 - -------------------------------------------------------------------------------- 1,616 - -------------------------------------------------------------------------------- ITALY -- 3.7% - -------------------------------------------------------------------------------- 38,948 Banco Popolare di Verona e Novara Scrl 1,095 - -------------------------------------------------------------------------------- 20,223 ENI SpA 662 - -------------------------------------------------------------------------------- 4,516 Fastweb 235 - -------------------------------------------------------------------------------- 21,725 Luxottica Group SpA 659 - -------------------------------------------------------------------------------- 26,316 Saipem SpA 663 - -------------------------------------------------------------------------------- 3,314 - -------------------------------------------------------------------------------- JAPAN -- 16.3% - -------------------------------------------------------------------------------- 7,200 Astellas Pharma Inc. 315 - -------------------------------------------------------------------------------- 97,000 Bank of Yokohama Ltd. (The) 743 - -------------------------------------------------------------------------------- 14,600 Canon, Inc. 772 - -------------------------------------------------------------------------------- 27,000 Daiei Inc. (The)(1) 477 - -------------------------------------------------------------------------------- 3,900 Fanuc Ltd. 355 - -------------------------------------------------------------------------------- 8,100 Hoya Corp. 319 - -------------------------------------------------------------------------------- 31,200 JTEKT Corp. 631 - -------------------------------------------------------------------------------- 67 KDDI Corp. 448 - -------------------------------------------------------------------------------- 22,800 Konami Corp. 656 - -------------------------------------------------------------------------------- 9,000 Leopalace21 Corp. 302 - -------------------------------------------------------------------------------- 40,000 Matsushita Electric Works, Ltd. 450 - -------------------------------------------------------------------------------- 100,000 Mitsubishi Electric Corp. 909 - -------------------------------------------------------------------------------- 63 Mitsubishi UFJ Financial Group, Inc. 806 - -------------------------------------------------------------------------------- 5,900 Murata Manufacturing Co. Ltd. 403 - -------------------------------------------------------------------------------- 19,000 NGK Insulators Ltd. 282 - -------------------------------------------------------------------------------- 1,900 Nintendo Co., Ltd. 453 - -------------------------------------------------------------------------------- 5,720 ORIX Corp. 1,566 - -------------------------------------------------------------------------------- 72,000 Sekisui Chemical Co. Ltd. 609 - -------------------------------------------------------------------------------- 14,300 Shin-Etsu Chemical Co., Ltd. 945 - -------------------------------------------------------------------------------- 26,000 Sumitomo Realty & Development Co. Ltd. 829 - -------------------------------------------------------------------------------- 43,000 Tokyo Tatemono Co. Ltd. 462 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 7 International Stock - Schedule of Investments NOVEMBER 30, 2006 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 22,500 Toyota Motor Corp. $ 1,365 - -------------------------------------------------------------------------------- 5,130 Yamada Denki Co. Ltd. 486 - -------------------------------------------------------------------------------- 14,583 - -------------------------------------------------------------------------------- MEXICO -- 1.1% - -------------------------------------------------------------------------------- 21,811 America Movil SA de CV Series L ADR 970 - -------------------------------------------------------------------------------- NETHERLANDS -- 3.3% - -------------------------------------------------------------------------------- 18,714 ASML Holding N.V.(1) 465 - -------------------------------------------------------------------------------- 25,737 ING Groep N.V. CVA 1,097 - -------------------------------------------------------------------------------- 13,201 Koninklijke Philips Electronics N.V. 491 - -------------------------------------------------------------------------------- 18,478 Royal Numico N.V. 953 - -------------------------------------------------------------------------------- 3,006 - -------------------------------------------------------------------------------- NORWAY -- 2.3% - -------------------------------------------------------------------------------- 5,168 Aker Kvaerner ASA 591 - -------------------------------------------------------------------------------- 19,696 Statoil ASA 547 - -------------------------------------------------------------------------------- 53,083 Telenor ASA 912 - -------------------------------------------------------------------------------- 2,050 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 0.7% - -------------------------------------------------------------------------------- 359,000 China Merchants Bank Co. Ltd. Cl H(1) 689 - -------------------------------------------------------------------------------- SINGAPORE -- 1.3% - -------------------------------------------------------------------------------- 54,000 Keppel Corp. Ltd. 610 - -------------------------------------------------------------------------------- 50,000 United Overseas Bank Ltd. 604 - -------------------------------------------------------------------------------- 1,214 - -------------------------------------------------------------------------------- SOUTH KOREA -- 1.6% - -------------------------------------------------------------------------------- 7,555 Hyundai Motor Company 572 - -------------------------------------------------------------------------------- 1,300 Samsung Electronics 892 - -------------------------------------------------------------------------------- 1,464 - -------------------------------------------------------------------------------- SPAIN -- 2.9% - -------------------------------------------------------------------------------- 44,827 Cintra Concesiones de Infraestructuras de Transporte SA 750 - -------------------------------------------------------------------------------- 18,003 Inditex SA 913 - -------------------------------------------------------------------------------- 46,809 Telefonica SA 948 - -------------------------------------------------------------------------------- 2,611 - -------------------------------------------------------------------------------- SWEDEN -- 1.4% - -------------------------------------------------------------------------------- 15,819 Swedbank AB A Shares 555 - -------------------------------------------------------------------------------- 194,027 Telefonaktiebolaget LM Ericsson Cl B 751 - -------------------------------------------------------------------------------- 1,306 - -------------------------------------------------------------------------------- SWITZERLAND -- 12.3% - -------------------------------------------------------------------------------- 63,940 ABB Ltd. 1,033 - -------------------------------------------------------------------------------- 16,342 Adecco SA 1,083 - -------------------------------------------------------------------------------- 19,163 Compagnie Financiere Richemont AG Cl A 1,032 - -------------------------------------------------------------------------------- 16,029 Credit Suisse Group 1,060 - -------------------------------------------------------------------------------- 10,263 Holcim Ltd. 921 - -------------------------------------------------------------------------------- 4,065 Julius Baer Holding AG 433 - -------------------------------------------------------------------------------- 1,242 Nestle SA 439 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 22,759 Novartis AG $ 1,327 - -------------------------------------------------------------------------------- 10,963 Roche Holding AG 1,981 - -------------------------------------------------------------------------------- 4,831 Syngenta AG 850 - -------------------------------------------------------------------------------- 15,514 UBS AG 933 - -------------------------------------------------------------------------------- 11,092 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 1.8% - -------------------------------------------------------------------------------- 259,000 Acer Inc. 559 - -------------------------------------------------------------------------------- 147,600 Hon Hai Precision Industry Co., Ltd. 1,074 - -------------------------------------------------------------------------------- 1,633 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 17.2% - -------------------------------------------------------------------------------- 46,458 Amvescap plc 502 - -------------------------------------------------------------------------------- 88,186 Barclays plc 1,179 - -------------------------------------------------------------------------------- 69,277 BG Group plc 932 - -------------------------------------------------------------------------------- 39,624 BP plc 447 - -------------------------------------------------------------------------------- 78,322 BT Group plc 438 - -------------------------------------------------------------------------------- 88,625 Burberry Group plc 1,049 - -------------------------------------------------------------------------------- 85,571 Capita Group plc 964 - -------------------------------------------------------------------------------- 108,175 Carphone Warehouse Group plc 575 - -------------------------------------------------------------------------------- 19,554 Experian Group Ltd. 226 - -------------------------------------------------------------------------------- 28,158 GlaxoSmithKline plc 748 - -------------------------------------------------------------------------------- 90,923 International Power plc 606 - -------------------------------------------------------------------------------- 108,205 Man Group plc 1,009 - -------------------------------------------------------------------------------- 66,924 Marks & Spencer Group plc 899 - -------------------------------------------------------------------------------- 25,449 Pearson plc 375 - -------------------------------------------------------------------------------- 49,257 Prudential plc 640 - -------------------------------------------------------------------------------- 27,732 Reckitt Benckiser plc 1,233 - -------------------------------------------------------------------------------- 43,986 Reuters Group plc 392 - -------------------------------------------------------------------------------- 20,618 Royal Bank of Scotland Group plc 747 - -------------------------------------------------------------------------------- 32,198 SABMiller plc 673 - -------------------------------------------------------------------------------- 14,853 Standard Chartered plc 426 - -------------------------------------------------------------------------------- 178,715 Tesco plc 1,375 - -------------------------------------------------------------------------------- 15,435 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $75,974) 88,352 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 2.1% Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 2.375%, 1/15/25, valued at $1,940), in a joint trading account at 5.25%, dated 11/30/06, due 12/1/06 (Delivery value $1,900) (Cost $1,900) 1,900 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 100.1% (Cost $77,874) 90,252 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (0.1)% (71) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $90,181 ================================================================================ See Notes to Financial Statements. (continued) - ------ 8 International Stock - Schedule of Investments NOVEMBER 30, 2006 MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 26.6% - -------------------------------------------------------------------------------- Consumer Discretionary 13.9% - -------------------------------------------------------------------------------- Industrials 12.1% - -------------------------------------------------------------------------------- Information Technology 8.6% - -------------------------------------------------------------------------------- Energy 7.1% - -------------------------------------------------------------------------------- Health Care 7.0% - -------------------------------------------------------------------------------- Consumer Staples 6.8% - -------------------------------------------------------------------------------- Telecommunication Services 6.5% - -------------------------------------------------------------------------------- Materials 5.9% - -------------------------------------------------------------------------------- Utilities 3.5% - -------------------------------------------------------------------------------- Cash and Equivalents(+) 2.0% - -------------------------------------------------------------------------------- + Includes temporary cash investments and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt CVA = Certificaten Van Aandelen (1) Non-income producing. See Notes to Financial Statements. - ------ 9 International Discovery - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2006 ----------------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS 10 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 36.41% 20.47% 16.13% 16.36% 4/1/94 - -------------------------------------------------------------------------------- S&P/CITIGROUP EMI GROWTH WORLD EX-US 31.56% 19.85% 7.75% 7.40%(1) -- - -------------------------------------------------------------------------------- Institutional Class 36.65% 20.70% -- 16.13% 1/2/98 - -------------------------------------------------------------------------------- Advisor Class 36.08% 20.20% -- 13.45% 4/28/98 - -------------------------------------------------------------------------------- (1) Since 3/31/94, the date nearest the Investor Class's inception for which data are available. 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 November 30, 1996
![](https://capedge.com/proxy/N-CSR/0000872825-07-000004/growthintldiscovery0701.gif)
ONE-YEAR RETURNS OVER 10 YEARS Periods ended November 30 - ------------------------------------------------------------------------------------------------------ 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 - ------------------------------------------------------------------------------------------------------ Investor Class 17.76% 14.79% 65.12% -1.27% -20.17% -8.00% 37.05% 18.76% 24.30% 36.41% - ------------------------------------------------------------------------------------------------------ S&P/Citigroup EMI Growth World ex-US -8.85% 7.30% 27.50% -14.20% -20.23% -10.96% 38.79% 27.58% 19.21% 31.56% - ------------------------------------------------------------------------------------------------------ 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: MARK KOPINSKI AND BRIAN BRADY PERFORMANCE SUMMARY International Discovery gained 36.41%* during the 12 months ended November 30, 2006, compared with the 31.56% gain of its benchmark index, the S&P/Citigroup EMI Growth World ex-US. The portfolio also outperformed the 30.50% average return of Morningstar's Foreign Small/Mid Growth category.** Since its inception on April 1, 1994, International Discovery has provided an average annualized return of 16.36%, versus 7.40% for its benchmark. The global stock rally outlined in the Market Perspective on page 2 and the decline of the U.S. dollar versus other currencies help explain the fund's powerful absolute performance. We received positive absolute contributions from all 10 of the stock sectors in which we were invested. Meanwhile, our favorable relative performance was attributable to effective security selection. In addition, the fund paid a record dividend of 22% for 2006. INDUSTRIALS PACED GAINS Our investments in the industrials sector contributed most to performance during the reporting period, led by machinery companies. Vallourec (up 138% in U.S. dollar terms), a French maker of seamless steel tubing used by oil companies for drilling operations, was noteworthy. During the period, the firm recorded strong first-half 2006 sales, which were supported by thriving global oil and gas markets alongside robust power generation and mechanical engineering markets. These factors were bolstered by relatively favorable economic conditions. When the company's stock price far exceeded reasonable expectations, even considering its great results, we sold the position. ENERGY, TECHNOLOGY BOLSTERED RESULTS Our stake in the energy sector is a good example of our process at work. Our search for companies demonstrating improving earnings led us to Norway's Aker Kvaerner (up 56%). This provider of deepwater 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 is an active player in this higher margin business, securing several new equipment and service contracts. We also sold this stock during the period. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Millicom International Cellular SA 3.1% -- - -------------------------------------------------------------------------------- CSL Ltd. 2.4% 2.4% - -------------------------------------------------------------------------------- Neopost SA 2.3% 1.1% - -------------------------------------------------------------------------------- Carphone Warehouse Group plc 2.3% 2.3% - -------------------------------------------------------------------------------- Punch Taverns plc 2.1% 0.7% - -------------------------------------------------------------------------------- Enagas 2.0% 1.2% - -------------------------------------------------------------------------------- Banca Italease 2.0% 1.0% - -------------------------------------------------------------------------------- Kingspan Group plc 1.8% 1.4% - -------------------------------------------------------------------------------- Nexans SA 1.8% -- - -------------------------------------------------------------------------------- Gildan Activewear Inc. 1.8% 1.0% - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares. ** The five- and ten-year average returns as of November 30, 2006, for International Discovery's Morningstar category were 20.47% and 14.61%, respectively. (c) 2006 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers: (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. (continued) - ------ 12 International Discovery - Portfolio Commentary Stock selection also played a role in the superior results from our technology position, a rich source of both absolute contribution and relative outperformance. Taiwan's High Tech Computer Corp. (up 89%), a non-benchmark holding, exhibited exactly the kind of improving earnings growth that we require. The company is a leading maker of feature-rich mobile phones, or "smartphones", powered by Microsoft Corp. software. In September 2006, the company brought the world's smallest and thinnest smartphone, the Cingular 3125, to market. Shortly thereafter, the firm reported historically high quarterly earnings, followed by record high sales in October. FINANCIALS ADDED VALUE Our bottom-up stock selection process also served us well in the commercial banking industry. Our strategy led us to numerous non-benchmark holdings, and of these, all but two contributed to total return and helped us outdistance our benchmark. Bank of Cyprus Public Co. Ltd., which we sold during the period, and Greece's Piraeus Bank were two noteworthy names. OUR STARTING POINT FOR THE NEXT SIX MONTHS As fundamental, bottom-up managers, we evaluate each company individually on its own merits, and build the portfolio from the ground up, one stock at a time. In our search for companies demonstrating earnings acceleration, we will structure exposure to stocks and market segments as warranted based on the strength of individual companies. As of November 30, 2006, our investment process led us to build relatively overweight positions in the industrials and information technology sectors. Continuing global economic growth and company spending for technology infrastructure and equipment drove top- and bottom-line growth for tech companies, which drew our interest. Conversely, amid interest rate uncertainty and shaky consumer confidence, we saw less opportunity in the financials and the consumer discretionary sectors, where companies experienced slower earnings growth. Consequently, we maintained underweight positions in those sectors. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Foreign Common Stocks 96.4% 95.4% - -------------------------------------------------------------------------------- Foreign Preferred Stocks -- 0.7% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 96.4% 96.1% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.5% 3.3% - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) 2.1% 0.6% - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- United Kingdom 12.8% 13.8% - -------------------------------------------------------------------------------- Japan 10.4% 16.1% - -------------------------------------------------------------------------------- Australia 7.1% 6.2% - -------------------------------------------------------------------------------- Italy 5.8% 2.7% - -------------------------------------------------------------------------------- Switzerland 5.3% 2.9% - -------------------------------------------------------------------------------- Germany 5.0% 9.8% - -------------------------------------------------------------------------------- Sweden 4.9% 0.8% - -------------------------------------------------------------------------------- France 4.5% 5.3% - -------------------------------------------------------------------------------- Spain 4.3% 2.8% - -------------------------------------------------------------------------------- Taiwan (Republic of China) 3.8% 4.9% - -------------------------------------------------------------------------------- Ireland 3.6% 1.4% - -------------------------------------------------------------------------------- Denmark 3.3% 3.1% - -------------------------------------------------------------------------------- Other Countries 25.6% 26.3% - -------------------------------------------------------------------------------- Cash and Equivalents(2) 3.6% 3.9% - -------------------------------------------------------------------------------- (2) Includes temporary cash investments, collateral received for securities lending and other assets and liabilities. - ------ 13 International Discovery - Schedule of Investments NOVEMBER 30, 2006 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 96.4% AUSTRALIA -- 7.1% - -------------------------------------------------------------------------------- 1,304,500 Babcock & Brown International Pty Ltd. $ 25,538 - -------------------------------------------------------------------------------- 804,800 CSL Ltd. 37,671 - -------------------------------------------------------------------------------- 1,420,900 Lend Lease Corp. Ltd. 19,628 - -------------------------------------------------------------------------------- 2,313,800 Macquarie Communications Infrastructure Group 11,707 - -------------------------------------------------------------------------------- 1,478,600 Paladin Resources Ltd.(1) 8,228 - -------------------------------------------------------------------------------- 502,700 WorleyParsons Ltd. 7,591 - -------------------------------------------------------------------------------- 110,363 - -------------------------------------------------------------------------------- AUSTRIA -- 0.7% - -------------------------------------------------------------------------------- 458,100 Meinl European Land Ltd.(1) 10,803 - -------------------------------------------------------------------------------- BELGIUM -- 1.2% - -------------------------------------------------------------------------------- 122,600 Umicore 18,435 - -------------------------------------------------------------------------------- CANADA -- 2.4% - -------------------------------------------------------------------------------- 409,200 Alimentation Couche-Tard Inc. Cl B 9,070 - -------------------------------------------------------------------------------- 507,200 Gildan Activewear Inc.(1) 27,760 - -------------------------------------------------------------------------------- 36,830 - -------------------------------------------------------------------------------- DENMARK -- 3.3% - -------------------------------------------------------------------------------- 12,234 Alk-Abello AS(1) 2,633 - -------------------------------------------------------------------------------- 177,100 Coloplast AS Cl B(2) 15,581 - -------------------------------------------------------------------------------- 207,900 FLSmidth & Co. AS 12,120 - -------------------------------------------------------------------------------- 126,900 Topdanmark AS(1) 20,276 - -------------------------------------------------------------------------------- 50,610 - -------------------------------------------------------------------------------- EGYPT -- 0.5% - -------------------------------------------------------------------------------- 819,000 Commercial International Bank 8,192 - -------------------------------------------------------------------------------- FRANCE -- 4.5% - -------------------------------------------------------------------------------- 71,400 Iliad SA 6,215 - -------------------------------------------------------------------------------- 280,500 Neopost SA(2) 36,066 - -------------------------------------------------------------------------------- 265,200 Nexans SA 28,354 - -------------------------------------------------------------------------------- 70,635 - -------------------------------------------------------------------------------- GERMANY -- 5.0% - -------------------------------------------------------------------------------- 609,500 GEA Group AG 12,104 - -------------------------------------------------------------------------------- 118,700 Hochtief AG 7,968 - -------------------------------------------------------------------------------- 597,500 IVG Immobilien AG 23,257 - -------------------------------------------------------------------------------- 1,331,500 United Internet AG 20,110 - -------------------------------------------------------------------------------- 98,100 Wincor Nixdorf AG 14,079 - -------------------------------------------------------------------------------- 77,518 - -------------------------------------------------------------------------------- GREECE -- 2.5% - -------------------------------------------------------------------------------- 722,800 Greek Postal Savings Bank(1) 16,892 - -------------------------------------------------------------------------------- 156,500 Intralot SA-Integrated Lottery Systems & Services 4,997 - -------------------------------------------------------------------------------- 558,400 Piraeus Bank SA 16,719 - -------------------------------------------------------------------------------- 38,608 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- HONG KONG -- 3.0% - -------------------------------------------------------------------------------- 4,333,000 Kowloon Development Co. Ltd. $ 8,567 - -------------------------------------------------------------------------------- 9,516,000 Melco International Development 26,913 - -------------------------------------------------------------------------------- 7,376,000 Shun Tak Holdings Ltd. 11,568 - -------------------------------------------------------------------------------- 47,048 - -------------------------------------------------------------------------------- INDIA -- 1.4% - -------------------------------------------------------------------------------- 777,800 Indiabulls Financial Services Ltd. 9,977 - -------------------------------------------------------------------------------- 477,400 Tech Mahindra Ltd.(1) 12,018 - -------------------------------------------------------------------------------- 21,995 - -------------------------------------------------------------------------------- INDONESIA -- 0.4% - -------------------------------------------------------------------------------- 22,967,500 PT Bank Mandiri Tbk 6,954 - -------------------------------------------------------------------------------- IRELAND -- 3.6% - -------------------------------------------------------------------------------- 1,785,700 C&C Group plc 27,207 - -------------------------------------------------------------------------------- 1,273,400 Kingspan Group plc 28,427 - -------------------------------------------------------------------------------- 55,634 - -------------------------------------------------------------------------------- ITALY -- 5.8% - -------------------------------------------------------------------------------- 1,491,100 ASM Brescia SpA 7,788 - -------------------------------------------------------------------------------- 546,100 Banca Italease 30,734 - -------------------------------------------------------------------------------- 1,204,100 Davide Campari-Milano SpA 12,028 - -------------------------------------------------------------------------------- 607,000 Geox SpA 9,288 - -------------------------------------------------------------------------------- 3,737,200 Hera SpA 15,894 - -------------------------------------------------------------------------------- 128,643 Pirelli & C. Real Estate SpA 8,883 - -------------------------------------------------------------------------------- 64,968 Tod's SpA 5,216 - -------------------------------------------------------------------------------- 89,831 - -------------------------------------------------------------------------------- JAPAN -- 10.4% - -------------------------------------------------------------------------------- 1,100,000 Asics Corp. 13,988 - -------------------------------------------------------------------------------- 593,000 Brother Industries Ltd. 7,766 - -------------------------------------------------------------------------------- 390,000 Hitachi Kokusai Electric Inc. 4,575 - -------------------------------------------------------------------------------- 2,962,000 Japan Steel Works Ltd. (The) 21,853 - -------------------------------------------------------------------------------- 722,900 JTEKT Corp.(2) 14,614 - -------------------------------------------------------------------------------- 678,400 Konami Corp. 19,517 - -------------------------------------------------------------------------------- 1,137,000 NGK Insulators Ltd. 16,875 - -------------------------------------------------------------------------------- 1,353,000 Nishi-Nippon City Bank Ltd. (The) 6,312 - -------------------------------------------------------------------------------- 1,056,000 Senshu Bank Ltd. (The) 2,700 - -------------------------------------------------------------------------------- 240,700 Sohgo Security Services Co. Ltd. 4,720 - -------------------------------------------------------------------------------- 1,271,000 Sumitomo Rubber Industries Inc. 16,481 - -------------------------------------------------------------------------------- 1,648,000 Tokyo Tatemono Co. Ltd. 17,711 - -------------------------------------------------------------------------------- 626,000 Toyoda Gosei Co. Ltd. 14,223 - -------------------------------------------------------------------------------- 161,335 - -------------------------------------------------------------------------------- MEXICO -- 2.2% - -------------------------------------------------------------------------------- 1,971,200 Corporacion GEO SA de CV Series B(1) 8,540 - -------------------------------------------------------------------------------- 644,500 Grupo Aeroportuario del Pacifico SA de CV ADR 25,451 - -------------------------------------------------------------------------------- 33,991 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 14 International Discovery - Schedule of Investments NOVEMBER 30, 2006 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- NETHERLANDS -- 2.8% - -------------------------------------------------------------------------------- 361,900 Fugro N.V. CVA $ 16,757 - -------------------------------------------------------------------------------- 1,556,800 Hagemeyer N.V.(1) 7,404 - -------------------------------------------------------------------------------- 30,609 Koninklijke BAM Groep N.V. 557 - -------------------------------------------------------------------------------- 480,150 USG People N.V. 18,893 - -------------------------------------------------------------------------------- 43,611 - -------------------------------------------------------------------------------- NORWAY -- 2.3% - -------------------------------------------------------------------------------- 247,100 Petroleum Geo-Services ASA(1) 16,657 - -------------------------------------------------------------------------------- 1,161,600 SeaDrill Ltd.(1) 19,293 - -------------------------------------------------------------------------------- 35,950 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 2.8% - -------------------------------------------------------------------------------- 4,974,647 China Resources Power Holdings Co. 6,248 - -------------------------------------------------------------------------------- 151,900 Focus Media Holding Ltd. ADR(1) 10,826 - -------------------------------------------------------------------------------- 18,880,000 Huadian Power International Corp. Ltd. H Shares 7,281 - -------------------------------------------------------------------------------- 494,700 Mindray Medical International Ltd. ADR(1) 11,873 - -------------------------------------------------------------------------------- 18,342,000 PICC Property & Casualty Co. Ltd. H Shares(1) 7,192 - -------------------------------------------------------------------------------- 43,420 - -------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 1.0% - -------------------------------------------------------------------------------- 344,300 OAO TMK GDR(1) 10,157 - -------------------------------------------------------------------------------- 382,000 Sistema Hals GDR(1) 4,691 - -------------------------------------------------------------------------------- 14,848 - -------------------------------------------------------------------------------- SOUTH KOREA -- 2.4% - -------------------------------------------------------------------------------- 53,800 KCC Corp. 17,100 - -------------------------------------------------------------------------------- 468,500 LG Dacom Corp. 10,784 - -------------------------------------------------------------------------------- 227,300 Samsung Techwin Co. Ltd. 8,850 - -------------------------------------------------------------------------------- 36,734 - -------------------------------------------------------------------------------- SPAIN -- 4.3% - -------------------------------------------------------------------------------- 593,700 Banco Pastor SA(2) 11,224 - -------------------------------------------------------------------------------- 1,265,800 Enagas 31,713 - -------------------------------------------------------------------------------- 189,400 Red Electrica de Espana 8,240 - -------------------------------------------------------------------------------- 416,300 Tecnicas Reunidas SA(1) 15,355 - -------------------------------------------------------------------------------- 66,532 - -------------------------------------------------------------------------------- SWEDEN -- 4.9% - -------------------------------------------------------------------------------- 433,600 Hexagon AB Cl B 16,914 - -------------------------------------------------------------------------------- 364,400 Meda AB A Shares 11,765 - -------------------------------------------------------------------------------- 830,500 Millicom International Cellular SA(1) 47,554 - -------------------------------------------------------------------------------- 76,233 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- SWITZERLAND -- 5.3% - -------------------------------------------------------------------------------- 44,500 Actelion Ltd.(1) $ 7,938 - -------------------------------------------------------------------------------- 16,900 Geberit AG 24,517 - -------------------------------------------------------------------------------- 4,664 Lindt & Spruengli AG 10,791 - -------------------------------------------------------------------------------- 229,700 Lonza Group AG 19,192 - -------------------------------------------------------------------------------- 18,800 Sulzer AG 19,207 - -------------------------------------------------------------------------------- 81,645 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 3.8% - -------------------------------------------------------------------------------- 1,331,933 Catcher Technology Co. Ltd. 11,835 - -------------------------------------------------------------------------------- 308,080 High Tech Computer Corp. 7,122 - -------------------------------------------------------------------------------- 2,135,000 Inventec Appliances Corp. 5,008 - -------------------------------------------------------------------------------- 6,081,000 Inventec Co. Ltd. 5,281 - -------------------------------------------------------------------------------- 16,746,000 ProMOS Technologies Inc.(1) 7,531 - -------------------------------------------------------------------------------- 10,096,000 Realtek Semiconductor Corp. 15,696 - -------------------------------------------------------------------------------- 885,000 Shin Zu Shing Co. Ltd. 6,236 - -------------------------------------------------------------------------------- 58,709 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 12.8% - -------------------------------------------------------------------------------- 667,100 Admiral Group plc 11,843 - -------------------------------------------------------------------------------- 239,900 Berkeley Group Holdings plc(1) 7,659 - -------------------------------------------------------------------------------- 6,750,800 Carphone Warehouse Group plc 35,900 - -------------------------------------------------------------------------------- 1,207,600 Cattles plc 9,567 - -------------------------------------------------------------------------------- 1,643,800 Hochschild Mining plc(1) 12,281 - -------------------------------------------------------------------------------- 2,307,300 International Power plc 15,388 - -------------------------------------------------------------------------------- 162,500 Lonmin plc 9,807 - -------------------------------------------------------------------------------- 2,951,500 Michael Page International plc 23,674 - -------------------------------------------------------------------------------- 1,416,000 Punch Taverns plc 32,110 - -------------------------------------------------------------------------------- 2,669,500 Serco Group plc 19,063 - -------------------------------------------------------------------------------- 2,838,200 Tullow Oil plc 22,611 - -------------------------------------------------------------------------------- 199,903 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $1,115,654) 1,496,367 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 1.5% Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 2.375%, 1/15/25, valued at $23,785), in a joint trading account at 5.25%, dated 11/30/06, due 12/1/06 (Delivery value $23,303) (Cost $23,300) 23,300 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 15 International Discovery - Schedule of Investments NOVEMBER 30, 2006 ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 1.3% Repurchase Agreement, BNP Paribas, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.31%, dated 11/30/06, due 12/1/06 (Delivery value $7,501) $ 7,500 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.31%, dated 11/30/06, due 12/1/06 (Delivery value $13,463) 13,461 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $20,961) 20,961 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 99.2% (Cost $1,159,915) 1,540,628 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- 0.8% 12,183 - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $1,552,811 ================================================================================ MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Industrials 23.5% - -------------------------------------------------------------------------------- Financials 18.6% - -------------------------------------------------------------------------------- Consumer Discretionary 13.1% - -------------------------------------------------------------------------------- Information Technology 10.8% - -------------------------------------------------------------------------------- Energy 6.5% - -------------------------------------------------------------------------------- Utilities 6.0% - -------------------------------------------------------------------------------- Health Care 5.7% - -------------------------------------------------------------------------------- Materials 4.6% - -------------------------------------------------------------------------------- Consumer Staples 3.8% - -------------------------------------------------------------------------------- Telecommunication Services 3.8% - -------------------------------------------------------------------------------- Cash and Equivalents(+) 3.6% - -------------------------------------------------------------------------------- + Includes temporary cash investments, collateral received for securities lending and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt CVA = Certificaten Van Aandelen GDR = Global Depositary Receipt (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of November 30, 2006. (3) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. See Notes to Financial Statements. - ------ 16 Emerging Markets - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2006 ------------------------ AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 46.10% 24.69% 10.66% 9/30/97 - -------------------------------------------------------------------------------- MSCI EM INDEX 34.38% 27.80% 8.94% -- - -------------------------------------------------------------------------------- Institutional Class 46.31% 24.86% 18.51% 1/28/99 - -------------------------------------------------------------------------------- Advisor Class 45.59% 24.30% 14.56% 5/12/99 - -------------------------------------------------------------------------------- C Class 44.59% -- 22.64% 12/18/01 - -------------------------------------------------------------------------------- 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
![](https://capedge.com/proxy/N-CSR/0000872825-07-000004/growthemergingmkts0701.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - ---------------------------------------------------------------------------------------------------- 1997* 1998 1999 2000 2001 2002 2003 2004 2005 2006 - ---------------------------------------------------------------------------------------------------- Investor Class -17.00% -15.90% 61.03% -16.73% -10.28% -10.86% 46.26% 18.94% 33.10% 46.10% - ---------------------------------------------------------------------------------------------------- MSCI EM Index -19.46% -22.42% 45.49% -23.63% -7.37% 4.95% 40.87% 28.88% 33.13% 34.38% - ---------------------------------------------------------------------------------------------------- * From 9/30/97, the Investor Class's inception date. Not annualized. 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 PERFORMANCE SUMMARY Emerging Markets gained 46.10%* during the 12 months ended November 30, 2006, outpacing the 34.38% return of its benchmark, the MSCI EM Index. Emerging Markets also outperformed the 33.79% average return of Morningstar's Diversified Emerging Markets category during the period.** The global stock rally outlined in the Market Perspective on page 2 helps explain the fund's powerful absolute performance for the period. On a relative return basis, favorable stock selection generated Emerging Markets' outperformance. BRAZIL: THE TOP CONTRIBUTING COUNTRY Our investments in Brazil delivered the best absolute performance by country during the reporting period. Brazil gave us Lojas Renner (up 99% in U.S. dollar terms for the period; all subsequent individual security returns are defined the same), one of the country's three largest apparel department-store chains. Lojas Renner opened three new stores during the third quarter of 2006 as consumers enjoyed relatively low interest rates and high confidence. Our search for companies demonstrating improving earnings growth also led us to Brazilian oil company Petroleo Brasileiro (up 45%), one of the portfolio's 10 largest holdings by average weight during the period. TAIWAN: THE BEST RELATIVE PERFORMANCE We added the most value compared with the benchmark in Taiwan, with a judicious underweight overall and effective security selection. Taiwanese handset manufacturer Compal Communications (up 136%) contributed more than any other security to the portfolio's performance. Compal is expected to ship 83 million handsets in 2006, a 124% increase from 2005. This stock is a good example of our buy and sell disciplines. When the company's stock price far exceeded reasonable expectations, even considering its great results, we sold the position. Wistron NeWeb Corp. (up 63%), a wireless communication designer and manufacturer, also provided lift in Taiwan. The firm benefited from demand growth for its dual-mode handset that allows users to multitask and make either standard cell phone calls or voice over Internet Protocol (VoIP) calls. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- OAO Gazprom ADR 2.1% 2.8% - -------------------------------------------------------------------------------- Unified Energy System 2.1% -- - -------------------------------------------------------------------------------- Petroleo Brasileiro SA ADR 1.9% 2.2% - -------------------------------------------------------------------------------- Asustek Computer Inc. 1.8% -- - -------------------------------------------------------------------------------- Wistron NeWeb Corp. 1.8% 3.3% - -------------------------------------------------------------------------------- Centros Comerciales Sudamericanos SA 1.8% 1.9% - -------------------------------------------------------------------------------- X5 Retail Group N.V. GDR(1) 1.7% 1.7% - -------------------------------------------------------------------------------- Sappi Ltd. 1.7% 1.4% - -------------------------------------------------------------------------------- Parkson Retail Group Ltd. 1.6% 1.2% - -------------------------------------------------------------------------------- Samsung Electronics 1.6% 2.0% - -------------------------------------------------------------------------------- (1) Formerly Pyaterochka Holding N.V. GDR. * All fund returns referenced in this commentary are for Investor Class shares. ** The five-year average return as of November 30, 2006 for Emerging Markets' Morningstar category was 26.43%. (c) 2006 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers: (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. (continued) - ------ 19 Emerging Markets - Portfolio Commentary Wistron NeWeb represented one of the portfolio's largest holdings on average during the period. OPPORTUNITY IN KAZAKHSTAN Our search for companies outside the benchmark took us to Kazakhstan, a former Soviet Union republic that stretches across northern and central Eurasia. A position there in Kazakhmys plc (up 106%) made the third-largest contribution to total return and to our relative performance during the period. Kazakhmys is a mining company focused on extracting copper, but gold, silver, and zinc are valuable by-products of its process. Prices of those metals rose during the first half of the reporting period, benefiting the company. OUR STARTING POINT FOR THE NEXT SIX MONTHS Senior portfolio manager Michael Donnelly noted after the reporting period, "The MSCI EM Index gained over 200% cumulatively from December 31, 2002, to November 30, 2006, a powerful performance run triggered by generally strong macroeconomic conditions in the developing world. These emerging market conditions and related equity performance can't last indefinitely, but we believe our process can help us identify investment opportunities even when broad market conditions become less favorable." As fundamental, bottom-up managers, we evaluate each company individually on its own merits, and build the portfolio from the ground up, one stock at a time. In our search for companies demonstrating earnings acceleration, we will structure exposure to stocks and market segments as warranted based on the strength of individual companies. As of November 30, 2006, we continued to see opportunities in China and Hong Kong, as reflected by our overweight positions in those countries compared with the fund's benchmark. At the same time, we were more challenged to find opportunity in Taiwan and South Korea. Consequently, we maintained underweight positions in those regions. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Foreign Common Stocks and Rights 92.1% 91.0% - -------------------------------------------------------------------------------- Foreign Preferred Stocks 2.7% 2.8% - -------------------------------------------------------------------------------- Domestic Common Stocks -- 1.1% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 94.8% 94.9% - -------------------------------------------------------------------------------- Temporary Cash Investments 4.0% 4.6% - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) 1.2% 0.5% - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- South Korea 12.1% 13.3% - -------------------------------------------------------------------------------- Taiwan (Republic of China) 12.1% 12.5% - -------------------------------------------------------------------------------- Brazil 11.7% 10.2% - -------------------------------------------------------------------------------- Russian Federation 9.3% 6.1% - -------------------------------------------------------------------------------- Hong Kong 6.2% 5.2% - -------------------------------------------------------------------------------- Mexico 6.2% 3.7% - -------------------------------------------------------------------------------- People's Republic of China 5.6% 9.5% - -------------------------------------------------------------------------------- South Africa 5.3% 5.9% - -------------------------------------------------------------------------------- Indonesia 4.4% 2.7% - -------------------------------------------------------------------------------- Chile 4.4% 3.5% - -------------------------------------------------------------------------------- Other Countries 17.5% 22.3% - -------------------------------------------------------------------------------- Cash and Equivalents(2) 5.2% 5.1% - -------------------------------------------------------------------------------- (2) Includes temporary cash investments, collateral received for securities lending and other assets and liabilities. - ------ 20 Emerging Markets - Schedule of Investments NOVEMBER 30, 2006 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 92.1% ARGENTINA -- 0.6% - -------------------------------------------------------------------------------- 123,487 Banco Macro Bansud SA ADR(1) $ 3,461 - -------------------------------------------------------------------------------- AUSTRIA -- 1.0% - -------------------------------------------------------------------------------- 53,843 Raiffeisen International Bank Holding AG(1) 6,334 - -------------------------------------------------------------------------------- BRAZIL -- 9.0% - -------------------------------------------------------------------------------- 473,690 ALL -- America Latina Logistica SA 4,196 - -------------------------------------------------------------------------------- 213,372 American Banknote SA 1,679 - -------------------------------------------------------------------------------- 340,353 Equatorial Energia SA(2) 2,747 - -------------------------------------------------------------------------------- 317,963 Gafisa SA(2) 4,633 - -------------------------------------------------------------------------------- 717,840 Lojas Renner SA 9,407 - -------------------------------------------------------------------------------- 328,300 Lupatech SA(2) 4,106 - -------------------------------------------------------------------------------- 334,149 Medial Saude SA(2) 3,553 - -------------------------------------------------------------------------------- 125,834 Petroleo Brasileiro SA ADR 11,847 - -------------------------------------------------------------------------------- 562,796 Santos-Brasil SA(2) 6,117 - -------------------------------------------------------------------------------- 210,818 Totvs SA(2) 4,923 - -------------------------------------------------------------------------------- 387,500 Tractebel Energia SA 2,927 - -------------------------------------------------------------------------------- 56,135 - -------------------------------------------------------------------------------- CHILE -- 4.4% - -------------------------------------------------------------------------------- 3,607,906 Centros Comerciales Sudamericanos SA 10,900 - -------------------------------------------------------------------------------- 856,270 Compania Cervecerias Unidas SA 5,012 - -------------------------------------------------------------------------------- 1,598,208 La Polar SA 7,550 - -------------------------------------------------------------------------------- 3,181,822 Ripley Corp. SA(2) 3,621 - -------------------------------------------------------------------------------- 27,083 - -------------------------------------------------------------------------------- CZECH REPUBLIC -- 1.0% - -------------------------------------------------------------------------------- 40,740 Komercni Banka AS 6,081 - -------------------------------------------------------------------------------- EGYPT -- 0.9% - -------------------------------------------------------------------------------- 803,870 Egyptian Financial Group -- Hermes Holding SAE(2) 5,736 - -------------------------------------------------------------------------------- FINLAND -- 1.6% - -------------------------------------------------------------------------------- 473,235 Nokian Renkaat Oyj 9,800 - -------------------------------------------------------------------------------- GERMANY -- 1.0% - -------------------------------------------------------------------------------- 252,219 CAT Oil AG(1)(2) 6,182 - -------------------------------------------------------------------------------- HONG KONG -- 6.2% - -------------------------------------------------------------------------------- 4,242,873 AAC Acoustic Technology Holdings Inc.(2) 4,582 - -------------------------------------------------------------------------------- 171,673 China Mobile Ltd. ADR(1) 7,245 - -------------------------------------------------------------------------------- 5,463,000 China Yurun Food Group Ltd.(1) 5,056 - -------------------------------------------------------------------------------- 1,696,000 FU JI Food and Catering Services Holdings Ltd.(1) 3,924 - -------------------------------------------------------------------------------- 1,996,000 Parkson Retail Group Ltd.(1) 10,135 - -------------------------------------------------------------------------------- 793,000 Vtech Holdings Ltd. 4,990 - -------------------------------------------------------------------------------- 5,066,000 Xiwang Sugar Holdings Co. Ltd.(1) 2,820 - -------------------------------------------------------------------------------- 38,752 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- INDIA -- 1.9% - -------------------------------------------------------------------------------- 225,506 JSW Steel Ltd. $ 1,660 - -------------------------------------------------------------------------------- 283,274 Tata Consultancy Services Ltd. 7,570 - -------------------------------------------------------------------------------- 74,117 WNS Holdings Ltd. ADR(2) 2,513 - -------------------------------------------------------------------------------- 11,743 - -------------------------------------------------------------------------------- INDONESIA -- 4.4% - -------------------------------------------------------------------------------- 2,494,000 PT Astra Agro Lestari Tbk 2,898 - -------------------------------------------------------------------------------- 1,454,500 PT Astra International Tbk 2,531 - -------------------------------------------------------------------------------- 17,150,000 PT Bank Mandiri Tbk 5,193 - -------------------------------------------------------------------------------- 80,373,500 PT Bank Niaga Tbk 8,770 - -------------------------------------------------------------------------------- 7,016,500 PT Telekomunikasi Indonesia Tbk 7,579 - -------------------------------------------------------------------------------- 870,800 PT United Tractors Tbk 613 - -------------------------------------------------------------------------------- 27,584 - -------------------------------------------------------------------------------- ISRAEL -- 0.7% - -------------------------------------------------------------------------------- 142,633 Teva Pharmaceutical Industries Ltd. ADR 4,573 - -------------------------------------------------------------------------------- KAZAKHSTAN -- 1.1% - -------------------------------------------------------------------------------- 78,270 Kazakhmys plc 1,788 - -------------------------------------------------------------------------------- 260,888 KazMunaiGas Exploration Production GDR(2) 4,866 - -------------------------------------------------------------------------------- 6,654 - -------------------------------------------------------------------------------- LUXEMBOURG -- 0.8% - -------------------------------------------------------------------------------- 217,610 Ternium SA ADR(1)(2) 5,181 - -------------------------------------------------------------------------------- MALAYSIA -- 1.4% - -------------------------------------------------------------------------------- 6,450,000 AirAsia Bhd(2) 2,728 - -------------------------------------------------------------------------------- 1,194,000 Kuala Lumpur Kepong Bhd 4,488 - -------------------------------------------------------------------------------- 439,700 Malakoff Bhd 1,215 - -------------------------------------------------------------------------------- 8,431 - -------------------------------------------------------------------------------- MEXICO -- 6.2% - -------------------------------------------------------------------------------- 2,048,998 Axtel SA de CV(1)(2) 5,003 - -------------------------------------------------------------------------------- 900,408 Corporacion GEO SA de CV Series B(2) 3,901 - -------------------------------------------------------------------------------- 1,280,398 Corporacion Moctezuma, SA de CV 3,302 - -------------------------------------------------------------------------------- 1,007,296 GRUMA SA de CV Cl B(1) 3,442 - -------------------------------------------------------------------------------- 247,268 Grupo Aeroportuario del Pacifico SA de CV ADR 9,765 - -------------------------------------------------------------------------------- 1,179,215 Grupo Financiero Banorte SA de CV 4,394 - -------------------------------------------------------------------------------- 1,079,135 Organizacion Soriana SA de CV Cl B 6,814 - -------------------------------------------------------------------------------- 650,420 Urbi Desarrollos Urbanos SA de CV(2) 2,050 - -------------------------------------------------------------------------------- 38,671 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 5.6% - -------------------------------------------------------------------------------- 8,844,000 Air China Ltd. 4,502 - -------------------------------------------------------------------------------- 7,406,000 China Petroleum & Chemical Corp. Cl H 5,855 - -------------------------------------------------------------------------------- 12,310,000 Dongfeng Motor Group Co. Ltd. Cl H(1)(2) 5,492 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 21 Emerging Markets - Schedule of Investments NOVEMBER 30, 2006 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 5,496,000 Golden Eagle Retail Group Ltd.(1) $ 4,013 - -------------------------------------------------------------------------------- 2,552,314 Nine Dragons Paper Holdings Ltd.(1) 4,574 - -------------------------------------------------------------------------------- 5,750,000 PetroChina Co. Ltd. Cl H 7,317 - -------------------------------------------------------------------------------- 3,292,000 Wumart Stores Inc. Cl H(1) 2,912 - -------------------------------------------------------------------------------- 34,665 - -------------------------------------------------------------------------------- PERU -- 0.2% - -------------------------------------------------------------------------------- 29,460 Credicorp Ltd. 1,177 - -------------------------------------------------------------------------------- PHILIPPINES -- 1.8% - -------------------------------------------------------------------------------- 162,575 Philippine Long Distance Telephone Co. ADR(1) 7,984 - -------------------------------------------------------------------------------- 9,988,200 Robinsons Land Corp. 3,225 - -------------------------------------------------------------------------------- 11,209 - -------------------------------------------------------------------------------- POLAND -- 0.9% - -------------------------------------------------------------------------------- 266,773 Globe Trade Centre SA(2) 3,787 - -------------------------------------------------------------------------------- 41,455 TVN SA(2) 1,772 - -------------------------------------------------------------------------------- 5,559 - -------------------------------------------------------------------------------- RUSSIAN FEDERATION -- 9.3% - -------------------------------------------------------------------------------- 1,112,889 Comstar United Telesystems GDR 8,280 - -------------------------------------------------------------------------------- 43,549 NovaTek OAO GDR 2,809 - -------------------------------------------------------------------------------- 286,394 OAO Gazprom ADR 13,374 - -------------------------------------------------------------------------------- 211,984 OAO TMK GDR(2) 6,253 - -------------------------------------------------------------------------------- 277,505 Sistema Hals GDR(1)(2) 3,408 - -------------------------------------------------------------------------------- 13,944,791 Unified Energy System 13,248 - -------------------------------------------------------------------------------- 410,564 X5 Retail Group N.V. GDR(2) 10,675 - -------------------------------------------------------------------------------- 58,047 - -------------------------------------------------------------------------------- SINGAPORE -- 0.2% - -------------------------------------------------------------------------------- 2,312,000 Beauty China Holdings Ltd. 1,359 - -------------------------------------------------------------------------------- SOUTH AFRICA -- 5.3% - -------------------------------------------------------------------------------- 131,422 Anglo American plc 6,105 - -------------------------------------------------------------------------------- 217,273 Barloworld Ltd. 4,478 - -------------------------------------------------------------------------------- 180,287 Exxaro Resources Ltd. 1,392 - -------------------------------------------------------------------------------- 180,287 Kumba Iron Ore Ltd.(2) 2,884 - -------------------------------------------------------------------------------- 570,801 Murray & Roberts Holdings Ltd. 3,110 - -------------------------------------------------------------------------------- 86,689 Pretoria Portland Cement Co. Ltd. 4,584 - -------------------------------------------------------------------------------- 656,416 Sappi Ltd. 10,594 - -------------------------------------------------------------------------------- 33,147 - -------------------------------------------------------------------------------- SOUTH KOREA -- 12.1% - -------------------------------------------------------------------------------- 10,779 Amorepacific Corp.(2) 5,855 - -------------------------------------------------------------------------------- 25,200 CJ Corp. 2,887 - -------------------------------------------------------------------------------- 265,560 GS Holdings Corp. 8,755 - -------------------------------------------------------------------------------- 300,590 Halla Climate Control 3,815 - -------------------------------------------------------------------------------- 23,550 KCC Corp. 7,485 - -------------------------------------------------------------------------------- 293,400 LG Dacom Corp. 6,754 - -------------------------------------------------------------------------------- 376,200 LIG Non-Life Insurance Co., Ltd. 5,848 - -------------------------------------------------------------------------------- 24,522 POSCO 7,702 - -------------------------------------------------------------------------------- 14,690 Samsung Electronics 10,081 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- 160,560 Shinhan Financial Group Co., Ltd. $ 7,815 - -------------------------------------------------------------------------------- 13,430 Shinsegae Co. Ltd. 8,624 - -------------------------------------------------------------------------------- 75,621 - -------------------------------------------------------------------------------- SPAIN -- 0.2% - -------------------------------------------------------------------------------- 41,585 Repsol YPF, SA 1,493 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 12.1% - -------------------------------------------------------------------------------- 2,409,000 Asia Cement Corp. 2,386 - -------------------------------------------------------------------------------- 4,077,000 Asustek Computer Inc. 11,202 - -------------------------------------------------------------------------------- 6,073,460 China Steel Corp. 6,157 - -------------------------------------------------------------------------------- 4,084,640 Chinatrust Financial Holding Co. 3,484 - -------------------------------------------------------------------------------- 10,417,000 Chung Hwa Pulp Corp. 5,602 - -------------------------------------------------------------------------------- 399,214 Himax Technologies Inc. ADR(2) 2,124 - -------------------------------------------------------------------------------- 1,290,000 Hon Hai Precision Industry Co., Ltd. 9,389 - -------------------------------------------------------------------------------- 2,042,000 Hung Poo Real Estate Development Corp.(2) 2,515 - -------------------------------------------------------------------------------- 3,762,000 Realtek Semiconductor Corp. 5,848 - -------------------------------------------------------------------------------- 3,534,247 Shin Kong Financial Holding Co. Ltd. 3,637 - -------------------------------------------------------------------------------- 5,936,000 U-Ming Marine Transport Corp.(2) 7,467 - -------------------------------------------------------------------------------- 3,247,000 Wistron Corp. 4,140 - -------------------------------------------------------------------------------- 3,797,459 Wistron NeWeb Corp. 11,197 - -------------------------------------------------------------------------------- 75,148 - -------------------------------------------------------------------------------- THAILAND -- 1.6% - -------------------------------------------------------------------------------- 11,783,000 Krung Thai Bank Public Co. Ltd. 4,530 - -------------------------------------------------------------------------------- 6,764,500 Thoresen Thai Agencies Public Co. Ltd.(2) 5,324 - -------------------------------------------------------------------------------- 9,854 - -------------------------------------------------------------------------------- TURKEY -- 0.6% - -------------------------------------------------------------------------------- 1,084,144 Turkiye Garanti Bankasi AS 3,591 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $445,595) 573,271 - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 2.7% BRAZIL -- 2.7% - -------------------------------------------------------------------------------- 117,538 Aracruz Celulose SA ADR(1) 7,153 - -------------------------------------------------------------------------------- 43,730,000 Companhia de Gas de Sao Paulo Cl A 6,594 - -------------------------------------------------------------------------------- 61,500,000 Lojas Americanas SA 2,976 - -------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost $14,933) 16,723 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 4.0% Repurchase Agreement, Morgan Stanley Group, Inc., (collateralized by various U.S. Treasury obligations, 6.875%, 8/15/25, valued at $25,433), in a joint trading account at 5.25%, dated 11/30/06, due 12/1/06 (Delivery value $24,804) (Cost $24,800) 24,800 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 22 Emerging Markets - Schedule of Investments NOVEMBER 30, 2006 ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 6.0% Repurchase Agreement, BNP Paribas, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.31%, dated 11/30/06, due 12/1/06 (Delivery value $5,001) $ 5,000 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.31%, dated 11/30/06, due 12/1/06 (Delivery value $32,208) 32,203 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $37,203) 37,203 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 104.8% (Cost $522,531) 651,997 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (4.8)% (29,813) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $622,184 ================================================================================ MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 13.3% - -------------------------------------------------------------------------------- Information Technology 12.6% - -------------------------------------------------------------------------------- Consumer Discretionary 12.2% - -------------------------------------------------------------------------------- Consumer Staples 11.8% - -------------------------------------------------------------------------------- Materials 11.4% - -------------------------------------------------------------------------------- Energy 11.1% - -------------------------------------------------------------------------------- Industrials 9.9% - -------------------------------------------------------------------------------- Telecommunication Services 6.9% - -------------------------------------------------------------------------------- Utilities 4.3% - -------------------------------------------------------------------------------- Health Care 1.3% - -------------------------------------------------------------------------------- Cash and Equivalents(+) 5.2% - -------------------------------------------------------------------------------- + Includes temporary cash investments, collateral received for securities lending and other assets and liabilities. NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt GDR = Global Depositary Receipt (1) Security, or a portion thereof, was on loan as of November 30, 2006. (2) Non-income producing. (3) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. The aggregrate value of fair valued securities as of November 30, 2006, was $2,912 (in thousands), which represented 0.5% of total net assets. See Notes to Financial Statements. - ------ 23 International Opportunities - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2006 ------------------------ AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 25.37% 27.59% 24.20% 6/1/01 - -------------------------------------------------------------------------------- S&P/CITIGROUP EMI GROWTH WORLD EX-US 31.56% 19.85% 14.58%(1) -- - -------------------------------------------------------------------------------- Institutional Class 25.66% -- 37.47% 1/9/03 - -------------------------------------------------------------------------------- (1) Since 5/31/01, the date nearest the Investor Class's inception for which data are available. 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-CSR/0000872825-07-000004/growthintlopps0701.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - -------------------------------------------------------------------------------- 2001* 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------- Investor Class -2.60% -2.87% 61.54% 27.14% 35.28% 25.37% - -------------------------------------------------------------------------------- S&P/Citigroup EMI Growth World ex-US -14.51% -10.96% 38.79% 27.58% 19.21% 31.56% - -------------------------------------------------------------------------------- * 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. 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 PERFORMANCE SUMMARY International Opportunities gained 25.37%* during the 12 months ended November 30, 2006, compared with 31.56% for its benchmark index, the S&P/Citigroup EMI Growth World ex-US. Despite recent underperformance, longer-term results are still compelling. For the five years ended November 30, 2006, the fund had an average annualized gain of 27.59% versus 19.85% for the benchmark. Since its inception on June 1, 2001, International Opportunities has provided an average annualized return of 24.20%, compared with 14.58% for the benchmark. The global stock rally outlined in the Market Perspective on page 2 and the dollar's decline help explain the fund's powerful absolute performance for the period. We received positive absolute contributions from eight of the 10 stock sectors in which we were invested. Although it appears that allocation decisions and security selection worked against us versus the benchmark during the reporting period, in reality, smaller-cap stocks have lagged their larger, mid-cap cousins quite significantly in recent months. That's especially true in Japan and the United Kingdom, the largest constituents of our benchmark. Consider the 23.10% return of the MSCI World ex-US Small Cap Index, which tracks the progress of the market's smallest stocks, versus the return of our benchmark, which also tracks mid-cap names. Because we invest only in small stocks, we lost ground compared to our benchmark but outdistanced this exclusively small-cap benchmark. INDUSTRIALS LED GAINS Investments in the industrials sector, our largest sector position, made the biggest contribution to total return during the reporting period. Machinery companies were the strongest performers, led by Switzerland's Georg Fischer Ag (up 81% in U.S. dollar terms), a non-benchmark holding. The company has three primary businesses -- automotive, piping systems, and machine tools. Georg Fischer's mid-year 2006 earnings release told us that this is the kind of company we seek; the firm demonstrated sales and earnings growth in all three business segments, supported by encouraging economic conditions across all of its markets. FINANCIALS ADDED VALUE Investments in the financials sector also provided lift, led by capital markets companies. Greece's Marfin Financial (up 111%) was the top-contributing stock, rewarding us for taking a relatively overweight position. The Athens-based investment bank reported that acquisitions caused profits to triple for the nine months ended November 2006. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Marfin Financial Group SA Holdings 2.3% 1.2% - -------------------------------------------------------------------------------- Software AG 2.0% 0.5% - -------------------------------------------------------------------------------- Cosco Investment Singapore Ltd. 2.0% 0.7% - -------------------------------------------------------------------------------- Nexans SA 1.9% 1.8% - -------------------------------------------------------------------------------- NKT Holding AS 1.8% 1.0% - -------------------------------------------------------------------------------- India Cements Ltd. 1.7% -- - -------------------------------------------------------------------------------- Georg Fischer AG 1.6% 1.1% - -------------------------------------------------------------------------------- Grifols SA 1.6% 0.8% - -------------------------------------------------------------------------------- IG Group Holdings plc 1.6% 1.3% - -------------------------------------------------------------------------------- Azimut Holding SpA 1.5% 1.2% - -------------------------------------------------------------------------------- * All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 26 International Opportunities - Portfolio Commentary The same sector that gave the portfolio some of its best performance also gave it some of its worst in Kyushu-Shinwa Holdings, a small Japanese bank. Much of our difficulty during the reporting period came from Japan, particularly in the banking industry and especially beginning in the second quarter of 2006. That's when fraud allegations related to another bank rocked the industry. That's also when growing uncertainty about Japan's new, tighter monetary policy, combined with moderation in consumption growth expectations, began to take a toll. In that environment, Kyushu-Shinwa declined 44%, and though we eliminated the position, we incurred losses first. CONSUMER DISCRETIONARY, MATERIALS DELIVERED MIXED RESULTS While the materials and consumer discretionary sectors contributed to total return, both represented shortfalls that contributed to underperformance versus our benchmark. The materials sector represented our greatest relative shortfall, due largely to unfavorable security selection, particularly in the metals and mining industry. In the consumer discretionary sector, stock selection worked against us. We maintained a relatively larger weight in specialty retailers -- including names such as Japan's Village Vanguard, which we eventually sold -- a distinct liability. OUR STARTING POINT FOR THE NEXT SIX MONTHS As of November 30, 2006, we had decreased our weighting in Japan because we had seen major deceleration in consumption there. That development led us to seek portfolio candidates elsewhere. We consequently increased our weighting in China and in nations such as Hong Kong and Singapore that have exposure to China as companies in those regions have benefited from strong economic and earnings growth trends driven by China's expansion. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Foreign Common Stocks 95.4% 96.9% - -------------------------------------------------------------------------------- Domestic Common Stocks -- 1.0% - -------------------------------------------------------------------------------- Foreign Preferred Stocks 1.3% 0.7% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 96.7% 98.6% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.1% -- - -------------------------------------------------------------------------------- Other Assets and Liabilities(1) 2.2% 1.4% - -------------------------------------------------------------------------------- (1) Includes collateral received for securities lending and other assets and liabilities. INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- United Kingdom 13.8% 11.3% - -------------------------------------------------------------------------------- Germany 9.2% 9.1% - -------------------------------------------------------------------------------- Italy 9.0% 6.3% - -------------------------------------------------------------------------------- Switzerland 7.9% 4.1% - -------------------------------------------------------------------------------- People's Republic of China 7.2% 2.1% - -------------------------------------------------------------------------------- Japan 6.6% 14.8% - -------------------------------------------------------------------------------- Norway 5.5% 7.1% - -------------------------------------------------------------------------------- Denmark 4.3% 1.5% - -------------------------------------------------------------------------------- Hong Kong 3.7% 0.3% - -------------------------------------------------------------------------------- Spain 3.6% 1.5% - -------------------------------------------------------------------------------- Netherlands 3.4% 6.7% - -------------------------------------------------------------------------------- France 3.3% 9.2% - -------------------------------------------------------------------------------- Greece 3.0% 2.1% - -------------------------------------------------------------------------------- Singapore 2.9% 1.8% - -------------------------------------------------------------------------------- India 2.2% -- - -------------------------------------------------------------------------------- Australia 2.1% 0.4% - -------------------------------------------------------------------------------- Other Countries 9.0% 20.3% - -------------------------------------------------------------------------------- Cash and Equivalents(2) 3.3% 1.4% - -------------------------------------------------------------------------------- (2) Includes temporary cash investments, collateral received for securities lending and other assets and liabilities. - ------ 27 International Opportunities - Schedule of Investments NOVEMBER 30, 2006 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 95.4% AUSTRALIA -- 2.1% - -------------------------------------------------------------------------------- 1,426,401 Austar United Communications Ltd.(1) $ 1,402 - -------------------------------------------------------------------------------- 418,660 Perilya Ltd. 1,550 - -------------------------------------------------------------------------------- 83,949 United Group Ltd.(1) 926 - -------------------------------------------------------------------------------- 3,878 - -------------------------------------------------------------------------------- CANADA -- 1.5% - -------------------------------------------------------------------------------- 22,551 Canadian Western Bank 918 - -------------------------------------------------------------------------------- 13,841 Flint Energy Services Ltd.(2) 739 - -------------------------------------------------------------------------------- 48,355 Forzani Group Ltd. (The) Cl A(2) 724 - -------------------------------------------------------------------------------- 8,878 Novatel Inc.(2) 366 - -------------------------------------------------------------------------------- 2,747 - -------------------------------------------------------------------------------- DENMARK -- 4.3% - -------------------------------------------------------------------------------- 22,927 Alm. Brand AS(2) 1,450 - -------------------------------------------------------------------------------- 7,303 Bang & Olufsen AS B Shares(1) 887 - -------------------------------------------------------------------------------- 46,997 Genmab AS(1)(2) 2,268 - -------------------------------------------------------------------------------- 38,896 NKT Holding AS 3,197 - -------------------------------------------------------------------------------- 7,802 - -------------------------------------------------------------------------------- FRANCE -- 3.3% - -------------------------------------------------------------------------------- 10,625 Etam Developpement SA 987 - -------------------------------------------------------------------------------- 65,883 Ingenico(1)(2) 1,661 - -------------------------------------------------------------------------------- 31,955 Nexans SA 3,416 - -------------------------------------------------------------------------------- 6,064 - -------------------------------------------------------------------------------- GERMANY -- 7.9% - -------------------------------------------------------------------------------- 93,705 Air Berlin plc(2) 1,738 - -------------------------------------------------------------------------------- 23,297 CAT Oil AG(2) 571 - -------------------------------------------------------------------------------- 26,976 CTS Eventim AG 929 - -------------------------------------------------------------------------------- 12,128 Deutsche Euroshop AG(1) 863 - -------------------------------------------------------------------------------- 50,667 Francotyp-Postalia Holding AG(2) 1,275 - -------------------------------------------------------------------------------- 99,703 Kontron AG(1) 1,437 - -------------------------------------------------------------------------------- 28,262 Praktiker Bau-und Heimwerkermaerkte AG 900 - -------------------------------------------------------------------------------- 5,049 Rational AG(1) 843 - -------------------------------------------------------------------------------- 49,501 Software AG 3,567 - -------------------------------------------------------------------------------- 6,343 Wincor Nixdorf AG 910 - -------------------------------------------------------------------------------- 152,491 Wire Card AG(2) 1,370 - -------------------------------------------------------------------------------- 14,403 - -------------------------------------------------------------------------------- GREECE -- 3.0% - -------------------------------------------------------------------------------- 37,410 Frigoglass SA 834 - -------------------------------------------------------------------------------- 23,639 Hellenic Exchanges SA(2) 448 - -------------------------------------------------------------------------------- 74,466 Marfin Financial Group SA Holdings 4,212 - -------------------------------------------------------------------------------- 5,494 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- HONG KONG -- 3.7% - -------------------------------------------------------------------------------- 756,000 AAC Acoustic Technology Holdings Inc.(2) $ 816 - -------------------------------------------------------------------------------- 1,576,544 eSun Holdings Ltd.(2) 1,644 - -------------------------------------------------------------------------------- 1,566,000 Huabao International Holdings Ltd.(2) 833 - -------------------------------------------------------------------------------- 2,200,000 Norstar Founders Group Ltd.(1) 738 - -------------------------------------------------------------------------------- 1,954,000 Peace Mark Holdings Ltd. 1,329 - -------------------------------------------------------------------------------- 231,000 Vtech Holdings Ltd. 1,454 - -------------------------------------------------------------------------------- 6,814 - -------------------------------------------------------------------------------- INDIA -- 2.2% - -------------------------------------------------------------------------------- 579,100 India Cements Ltd.(2) 3,057 - -------------------------------------------------------------------------------- 28,758 WNS Holdings Ltd. ADR(2) 975 - -------------------------------------------------------------------------------- 4,032 - -------------------------------------------------------------------------------- ISRAEL -- 1.0% - -------------------------------------------------------------------------------- 167,120 Ormat Industries Ltd. 1,877 - -------------------------------------------------------------------------------- ITALY -- 9.0% - -------------------------------------------------------------------------------- 150,495 Astaldi SpA(1) 1,132 - -------------------------------------------------------------------------------- 214,569 Azimut Holding SpA(1) 2,749 - -------------------------------------------------------------------------------- 88,050 Brembo SpA 1,052 - -------------------------------------------------------------------------------- 35,229 Digital Multimedia Technologies SpA(2) 2,560 - -------------------------------------------------------------------------------- 556,471 Gemina SpA(1)(2) 2,356 - -------------------------------------------------------------------------------- 93,120 MARR SpA 854 - -------------------------------------------------------------------------------- 460,150 Safilo SpA(2) 2,657 - -------------------------------------------------------------------------------- 11,143 Tod's SpA(1) 895 - -------------------------------------------------------------------------------- 54,576 Valentino Fashion Group SpA(1) 2,133 - -------------------------------------------------------------------------------- 16,388 - -------------------------------------------------------------------------------- JAPAN -- 6.6% - -------------------------------------------------------------------------------- 51,100 Capcom Co. Ltd.(1) 907 - -------------------------------------------------------------------------------- 882 ES-Con Japan Ltd.(1) 1,524 - -------------------------------------------------------------------------------- 63,500 Joint Corp. 2,364 - -------------------------------------------------------------------------------- 71,000 Kanto Denka Kogyo Co. Ltd. 463 - -------------------------------------------------------------------------------- 123,000 Nichias Corp. 876 - -------------------------------------------------------------------------------- 217,000 Ryobi Ltd.(1) 1,753 - -------------------------------------------------------------------------------- 164,000 Shinko Plantech Co. Ltd. 1,261 - -------------------------------------------------------------------------------- 60,600 Tamron Co. Ltd.(1) 1,139 - -------------------------------------------------------------------------------- 531 Tempstaff Co. Ltd. 812 - -------------------------------------------------------------------------------- 128,000 Tokai Carbon Co. Ltd. 881 - -------------------------------------------------------------------------------- 11,980 - -------------------------------------------------------------------------------- NETHERLANDS -- 3.4% - -------------------------------------------------------------------------------- 34,532 Arcadis N.V. 1,999 - -------------------------------------------------------------------------------- 33,068 Imtech N.V. 1,925 - -------------------------------------------------------------------------------- 24,910 Macintosh Retail Group N.V. 842 - -------------------------------------------------------------------------------- 14,006 Smit Internationale N.V. 703 - -------------------------------------------------------------------------------- 8,330 TKH Group N.V. CVA 651 - -------------------------------------------------------------------------------- 6,120 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 28 International Opportunities - Schedule of Investments NOVEMBER 30, 2006 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- NORWAY -- 5.5% - -------------------------------------------------------------------------------- 45,025 Ability Group ASA(2) $ 380 - -------------------------------------------------------------------------------- 459,374 Acta Holding ASA 2,291 - -------------------------------------------------------------------------------- 91,124 Cermaq ASA 1,288 - -------------------------------------------------------------------------------- 438,248 Deep Sea Supply ASA(2) 1,189 - -------------------------------------------------------------------------------- 367,416 Ementor ASA(2) 2,017 - -------------------------------------------------------------------------------- 27,261 ODIM ASA(2) 702 - -------------------------------------------------------------------------------- 138,995 SeaBird Exploration Ltd.(1)(2) 878 - -------------------------------------------------------------------------------- 123,107 Songa Offshore ASA(2) 1,175 - -------------------------------------------------------------------------------- 9,920 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA -- 7.2% - -------------------------------------------------------------------------------- 888,000 China Insurance International Holdings Co. Ltd.(2) 950 - -------------------------------------------------------------------------------- 3,024,000 China National Building Material Co. Ltd. Cl H 2,037 - -------------------------------------------------------------------------------- 1,298,966 Greentown China Holdings Ltd.(2) 2,238 - -------------------------------------------------------------------------------- 3,773,000 Hongguo International Holdings Ltd.(2) 1,874 - -------------------------------------------------------------------------------- 1,242,000 Li Ning Co. Ltd. 1,657 - -------------------------------------------------------------------------------- 39,784 Mindray Medical International Ltd. ADR(1)(2) 955 - -------------------------------------------------------------------------------- 2,010,000 Shenzhen Investment Ltd. 853 - -------------------------------------------------------------------------------- 15,659 The9 Ltd. ADR(1)(2) 429 - -------------------------------------------------------------------------------- 662,000 Travelsky Technology Ltd. H Shares 895 - -------------------------------------------------------------------------------- 942,000 Xinao Gas Holdings Ltd. 1,156 - -------------------------------------------------------------------------------- 13,044 - -------------------------------------------------------------------------------- PORTUGAL -- 0.9% - -------------------------------------------------------------------------------- 227,966 Mota-Engil SGPS SA(1) 1,601 - -------------------------------------------------------------------------------- SINGAPORE -- 2.9% - -------------------------------------------------------------------------------- 2,492,360 Cosco Investment Singapore Ltd. 3,560 - -------------------------------------------------------------------------------- 920,000 Datacraft Asia Ltd.(2) 1,076 - -------------------------------------------------------------------------------- 26,416 Hartford Education Corp. Ltd.(2) 10 - -------------------------------------------------------------------------------- 634,000 Raffles Education Corp. Ltd. 696 - -------------------------------------------------------------------------------- 5,342 - -------------------------------------------------------------------------------- SOUTH AFRICA -- 1.7% - -------------------------------------------------------------------------------- 94,688 Aquarius Platinum Ltd. 2,101 - -------------------------------------------------------------------------------- 149,937 JSE Ltd.(2) 985 - -------------------------------------------------------------------------------- 3,086 - -------------------------------------------------------------------------------- SOUTH KOREA -- 0.5% - -------------------------------------------------------------------------------- 57,000 LIG Non-Life Insurance Co., Ltd. 886 - -------------------------------------------------------------------------------- SPAIN -- 3.6% - -------------------------------------------------------------------------------- 82,282 Corp. Dermoestetica(1)(2) 917 - -------------------------------------------------------------------------------- 262,910 Grifols SA(2) 2,891 - -------------------------------------------------------------------------------- 36,068 Mecalux SA(1) 1,481 - -------------------------------------------------------------------------------- 205,048 Tubacex SA(1) 1,331 - -------------------------------------------------------------------------------- 6,620 - -------------------------------------------------------------------------------- Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- SWEDEN -- 1.8% - -------------------------------------------------------------------------------- 39,251 Hemtex AB $ 685 - -------------------------------------------------------------------------------- 97,222 JM AB 1,967 - -------------------------------------------------------------------------------- 71,984 Rezidor Hotel Group AB(2) 542 - -------------------------------------------------------------------------------- 3,194 - -------------------------------------------------------------------------------- SWITZERLAND -- 7.9% - -------------------------------------------------------------------------------- 2,107 Advanced Digital Broadcast Holdings SA(2) 131 - -------------------------------------------------------------------------------- 369 Bank Sarasin & Compagnie AG B Shares 1,078 - -------------------------------------------------------------------------------- 8,477 Burckhardt Compression Holding AG(2) 1,160 - -------------------------------------------------------------------------------- 2,500 Forbo Holding AG(2) 969 - -------------------------------------------------------------------------------- 5,017 Galenica Holding AG 1,323 - -------------------------------------------------------------------------------- 5,095 Georg Fischer AG 2,892 - -------------------------------------------------------------------------------- 5,933 Kaba Holding AG 1,847 - -------------------------------------------------------------------------------- 14,781 Partners Group(2) 1,420 - -------------------------------------------------------------------------------- 2,051 Schulthess Group AG 1,299 - -------------------------------------------------------------------------------- 66,731 Temenos Group AG(2) 1,106 - -------------------------------------------------------------------------------- 3,940 Verwaltungs-und Privat-Bank AG 1,066 - -------------------------------------------------------------------------------- 14,291 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) -- 1.6% - -------------------------------------------------------------------------------- 3,411,000 Chung Hwa Pulp Corp. 1,834 - -------------------------------------------------------------------------------- 376,000 Merry Electronics Co. Ltd. 1,092 - -------------------------------------------------------------------------------- 2,926 - -------------------------------------------------------------------------------- UNITED KINGDOM -- 13.8% - -------------------------------------------------------------------------------- 103,259 Alfred McAlpine plc 1,149 - -------------------------------------------------------------------------------- 297,613 Babcock International Group plc 2,343 - -------------------------------------------------------------------------------- 148,220 Big Yellow Group plc 1,674 - -------------------------------------------------------------------------------- 126,212 Charter plc(2) 2,150 - -------------------------------------------------------------------------------- 123,645 Gyrus Group plc(2) 899 - -------------------------------------------------------------------------------- 57,759 Homeserve plc 2,048 - -------------------------------------------------------------------------------- 494,305 IG Group Holdings plc 2,873 - -------------------------------------------------------------------------------- 398,269 Morgan Crucible Co. plc 2,018 - -------------------------------------------------------------------------------- 58,516 Rotork plc 928 - -------------------------------------------------------------------------------- 250,318 RPS Group plc 1,310 - -------------------------------------------------------------------------------- 191,251 Southern Cross Healthcare Ltd.(2) 1,141 - -------------------------------------------------------------------------------- 52,446 Ultra Electronics Holdings plc 1,114 - -------------------------------------------------------------------------------- 136,609 Unite Group plc 1,339 - -------------------------------------------------------------------------------- 141,296 VT Group plc 1,247 - -------------------------------------------------------------------------------- 140,169 Wetherspoon (J.D.) plc 1,783 - -------------------------------------------------------------------------------- 52,654 WS Atkins plc 878 - -------------------------------------------------------------------------------- 24,894 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $133,741) 173,403 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 29 International Opportunities - Schedule of Investments NOVEMBER 30, 2006 Shares ($ IN THOUSANDS) Value - -------------------------------------------------------------------------------- PREFERRED STOCKS -- 1.3% GERMANY -- 1.3% - -------------------------------------------------------------------------------- 46,671 Hugo Boss AG (Cost $1,580) $ 2,408 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 1.1% Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 2.375%, 1/15/25, valued at $2,042), in a joint trading account at 5.25%, dated 11/30/06, due 12/1/06 (Delivery value $2,000) (Cost $2,000) 2,000 - -------------------------------------------------------------------------------- COLLATERAL RECEIVED FOR SECURITIES LENDING(3) -- 9.0% Repurchase Agreement, BNP Paribas, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.31%, dated 11/30/06, due 12/1/06 (Delivery value $10,001) 10,000 - -------------------------------------------------------------------------------- Repurchase Agreement, UBS AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.31%, dated 11/30/06, due 12/1/06 (Delivery value $6,306) 6,305 - -------------------------------------------------------------------------------- TOTAL COLLATERAL RECEIVED FOR SECURITIES LENDING (Cost $16,305) 16,305 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 106.8% (Cost $153,626) 194,116 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (6.8)% (12,285) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $181,831 ================================================================================ MARKET SECTOR DIVERSIFICATION (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Industrials 29.9% - -------------------------------------------------------------------------------- Consumer Discretionary 20.1% - -------------------------------------------------------------------------------- Financials 16.9% - -------------------------------------------------------------------------------- Information Technology 12.0% - -------------------------------------------------------------------------------- Materials 7.3% - -------------------------------------------------------------------------------- Health Care 5.7% - -------------------------------------------------------------------------------- Energy 3.0% - -------------------------------------------------------------------------------- Consumer Staples 1.2% - -------------------------------------------------------------------------------- Utilities 0.6% - -------------------------------------------------------------------------------- Cash and Equivalents(+) 3.3% - -------------------------------------------------------------------------------- + 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 (1) Security, or a portion thereof, was on loan as of November 30, 2006. (2) Non-income producing. (3) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. See Notes to Financial Statements. - ------ 30 Shareholder Fee Examples (Unaudited) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2006 to November 30, 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) - ------ 31 Shareholder Fee Examples (Unaudited) Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or redemption/exchange fees. Therefore, the table is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. - ------------------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 6/1/06 - EXPENSE 6/1/06 11/30/06 11/30/06 RATIO* - ------------------------------------------------------------------------------------------- INTERNATIONAL STOCK SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------- ACTUAL - ------------------------------------------------------------------------------------------- Investor Class $1,000 $1,108.70 $7.93 1.50% - ------------------------------------------------------------------------------------------- HYPOTHETICAL - ------------------------------------------------------------------------------------------- Investor Class $1,000 $1,017.55 $7.59 1.50% - ------------------------------------------------------------------------------------------- INTERNATIONAL DISCOVERY SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------- ACTUAL - ------------------------------------------------------------------------------------------- Investor Class $1,000 $1,065.10 $7.30 1.41% - ------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,066.40 $6.27 1.21% - ------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,064.10 $8.59 1.66% - ------------------------------------------------------------------------------------------- HYPOTHETICAL - ------------------------------------------------------------------------------------------- Investor Class $1,000 $1,018.00 $7.13 1.41% - ------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,019.00 $6.12 1.21% - ------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,016.75 $8.39 1.66% - ------------------------------------------------------------------------------------------- * Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (continued) - ------ 32 Shareholder Fee Examples (Unaudited) - ------------------------------------------------------------------------------------------- EXPENSES PAID BEGINNING ENDING DURING PERIOD* ANNUALIZED ACCOUNT VALUE ACCOUNT VALUE 6/1/06 - EXPENSE 6/1/06 11/30/06 11/30/06 RATIO* - ------------------------------------------------------------------------------------------- EMERGING MARKETS SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------- ACTUAL - ------------------------------------------------------------------------------------------- Investor Class $1,000 $1,204.80 $9.89 1.79% - ------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,205.40 $8.79 1.59% - ------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,202.70 $11.26 2.04% - ------------------------------------------------------------------------------------------- C Class $1,000 $1,199.00 $15.38 2.79% - ------------------------------------------------------------------------------------------- HYPOTHETICAL - ------------------------------------------------------------------------------------------- Investor Class $1,000 $1,016.09 $9.05 1.79% - ------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,017.10 $8.04 1.59% - ------------------------------------------------------------------------------------------- Advisor Class $1,000 $1,014.84 $10.30 2.04% - ------------------------------------------------------------------------------------------- C Class $1,000 $1,011.08 $14.07 2.79% - ------------------------------------------------------------------------------------------- INTERNATIONAL OPPORTUNITIES SHAREHOLDER FEE EXAMPLE - ------------------------------------------------------------------------------------------- ACTUAL - ------------------------------------------------------------------------------------------- Investor Class $1,000 $1,040.60 $9.51 1.86% - ------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,042.20 $8.50 1.66% - ------------------------------------------------------------------------------------------- HYPOTHETICAL - ------------------------------------------------------------------------------------------- Investor Class $1,000 $1,015.74 $9.40 1.86% - ------------------------------------------------------------------------------------------- Institutional Class $1,000 $1,016.75 $8.39 1.66% - ------------------------------------------------------------------------------------------- * Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 33 Statement of Assets and Liabilities NOVEMBER 30, 2006 - ------------------------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL (AMOUNTS IN THOUSANDS) STOCK DISCOVERY MARKETS OPPORTUNITIES - ------------------------------------------------------------------------------------------------- ASSETS - ------------------------------------------------------------------------------------------------- Investment securities, at value (cost of $77,874, $1,138,954, $485,328 and $137,321, respectively) -- including $--, $20,368, $36,334 and $15,619 of securities on loan, respectively $90,252 $1,519,667 $614,794 177,811 - ---------------------------------------- Investments made with cash collateral received for securities on loan, at value (cost of $--, $20,961, $37,203 and $16,305, respectively) -- 20,961 37,203 16,305 - ------------------------------------------------------------------------------------------------- Total investment securities, at value (cost of $77,874, $1,159,915, $522,531 and $153,626, respectively) 90,252 1,540,628 651,997 194,116 - ---------------------------------------- Cash 213 -- 2,593 -- - ---------------------------------------- Foreign currency holdings, at value (cost of $27, $1,354, $3,131 and $1,219, respectively) 27 1,373 3,175 1,236 - ---------------------------------------- Receivable for investments sold 481 46,491 13,490 6,221 - ---------------------------------------- Dividends and interest receivable 127 1,166 1,049 148 - ------------------------------------------------------------------------------------------------- 91,100 1,589,658 672,304 201,721 - ------------------------------------------------------------------------------------------------- LIABILITIES - ------------------------------------------------------------------------------------------------- Payable for collateral received for securities on loan -- 20,961 37,203 16,305 - ---------------------------------------- Disbursements in excess of demand deposit cash -- 628 -- 38 - ---------------------------------------- Payable for investments purchased 812 13,551 12,083 3,280 - ---------------------------------------- Accrued management fees 107 1,707 829 267 - ---------------------------------------- Distribution fees payable -- -- 3 -- - ---------------------------------------- Service fees payable -- -- 2 -- - ------------------------------------------------------------------------------------------------- 919 36,847 50,120 19,890 - ------------------------------------------------------------------------------------------------- NET ASSETS $90,181 $1,552,811 $622,184 $181,831 ================================================================================================= See Notes to Financial Statements. (continued) - ------ 34 Statement of Assets and Liabilities NOVEMBER 30, 2006 - -------------------------------------------------------------------------------------------------------- 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) $78,399 $803,063 $398,605 $89,541 - ------------------------------------------ Accumulated undistributed net investment income (loss) 87 (54) 4,164 (174) - ------------------------------------------ Accumulated undistributed net realized gain (loss) on investment and foreign currency transactions (687) 369,713 90,226 51,971 - ------------------------------------------ Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 12,382 380,089 129,189 40,493 - -------------------------------------------------------------------------------------------------------- $90,181 $1,552,811 $622,184 $181,831 ======================================================================================================== INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------------- Net assets $90,180,648 $1,446,954,550 $523,812,930 $180,732,276 - ------------------------------------------ Shares outstanding 6,645,604 80,337,882 52,093,138 15,326,904 - ------------------------------------------ Net asset value per share $13.57 $18.01 $10.06 $11.79 - -------------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------------- Net assets N/A $105,849,338 $85,885,878 $1,099,124 - ------------------------------------------ Shares outstanding N/A 5,828,226 8,409,981 92,775 - ------------------------------------------ Net asset value per share N/A $18.16 $10.21 $11.85 - -------------------------------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------------- Net assets N/A $6,765 $9,904,766 N/A - ------------------------------------------ Shares outstanding N/A 381 1,005,173 N/A - ------------------------------------------ Net asset value per share N/A $17.76 $9.85 N/A - -------------------------------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) - -------------------------------------------------------------------------------------------------------- Net assets N/A N/A $2,580,563 N/A - ------------------------------------------ Shares outstanding N/A N/A 267,658 N/A - ------------------------------------------ Net asset value per share N/A N/A $9.64 N/A - -------------------------------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 35 Statement of Operations YEAR ENDED NOVEMBER 30, 2006 - ------------------------------------------------------------------------------------------------ INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL (AMOUNTS IN THOUSANDS) STOCK DISCOVERY MARKETS OPPORTUNITIES - ------------------------------------------------------------------------------------------------ INVESTMENT INCOME (LOSS) - ------------------------------------------------------------------------------------------------ INCOME: - --------------------------------------- Dividends (net of foreign taxes withheld of $94, $1,708, $1,015 and $256, respectively) $1,009 $17,279 $13,184 $3,045 - --------------------------------------- Interest 84 1,861 1,127 126 - --------------------------------------- Securities lending -- 954 247 362 - ------------------------------------------------------------------------------------------------ 1,093 20,094 14,558 3,533 - ------------------------------------------------------------------------------------------------ EXPENSES: - --------------------------------------- Management fees 862 21,230 8,207 3,641 - --------------------------------------- Distribution fees: - --------------------------------------- Advisor Class -- -- 12 -- - --------------------------------------- C Class -- -- 10 -- - --------------------------------------- Service fees: - --------------------------------------- Advisor Class -- -- 12 -- - --------------------------------------- C Class -- -- 3 -- - --------------------------------------- Directors' fees and expenses 1 25 8 3 - --------------------------------------- Other expenses 1 93 10 11 - ------------------------------------------------------------------------------------------------ 864 21,348 8,262 3,655 - ------------------------------------------------------------------------------------------------ NET INVESTMENT INCOME (LOSS) 229 (1,254) 6,296 (122) - ------------------------------------------------------------------------------------------------ REALIZED AND UNREALIZED GAIN (LOSS) - ------------------------------------------------------------------------------------------------ NET REALIZED GAIN (LOSS) ON: - --------------------------------------- Investment transactions (net of foreign taxes withheld of $--, $63, $93 and $--, respectively) (813) 369,488 88,692 51,382 - --------------------------------------- Foreign currency transactions (net of foreign taxes withheld of $--, $--, $7 and $1, respectively) 305 2,928 3,368 652 - ------------------------------------------------------------------------------------------------ (508) 372,416 92,060 52,034 - ------------------------------------------------------------------------------------------------ CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: - --------------------------------------- Investments (net of foreign taxes accrued of $--, $(318), $(267) and $(30), respectively) 6,964 (3,343) 67,018 (20,013) - --------------------------------------- Translation of assets and liabilities in foreign currencies 4,138 93,483 4,257 12,360 - ------------------------------------------------------------------------------------------------ 11,102 90,140 71,275 (7,653) - ------------------------------------------------------------------------------------------------ NET REALIZED AND UNREALIZED GAIN (LOSS) 10,594 462,556 163,335 44,381 - ------------------------------------------------------------------------------------------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $10,823 $461,302 $169,631 $44,259 ================================================================================================ See Notes to Financial Statements. - ------ 36 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2006 AND 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) $229 $74 $(1,254) $13,108 - ----------------------------------------- Net realized gain (loss) (508) (239) 372,416 235,786 - ----------------------------------------- Change in net unrealized appreciation (depreciation) 11,102 1,279 90,140 26,212 - ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets resulting from operations 10,823 1,114 461,302 275,106 - ------------------------------------------------------------------------------------------------ DISTRIBUTIONS TO SHAREHOLDERS - ------------------------------------------------------------------------------------------------ From net investment income: - ----------------------------------------- Investor Class (155) -- (9,106) -- - ----------------------------------------- Institutional Class -- -- (2,071) -- - ----------------------------------------- From net realized gains: - ----------------------------------------- Investor Class -- -- (200,178) (165,843) - ----------------------------------------- Institutional Class -- -- (36,186) (25,231) - ----------------------------------------- Advisor Class -- -- (12) (29) - ------------------------------------------------------------------------------------------------ Decrease in net assets from distributions (155) -- (247,553) (191,103) - ------------------------------------------------------------------------------------------------ CAPITAL SHARE TRANSACTIONS - ------------------------------------------------------------------------------------------------ Net increase (decrease) in net assets from capital share transactions 59,171 19,228 (12,037) (11,575) - ------------------------------------------------------------------------------------------------ NET INCREASE (DECREASE) IN NET ASSETS 69,839 20,342 201,712 72,428 ================================================================================================ NET ASSETS - ------------------------------------------------------------------------------------------------ Beginning of period 20,342 -- 1,351,099 1,278,671 - ------------------------------------------------------------------------------------------------ End of period $90,181 $20,342 $1,552,811 $1,351,099 ================================================================================================ Accumulated undistributed net investment income (loss) $87 $77 $(54) $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 YEARS ENDED NOVEMBER 30, 2006 AND NOVEMBER 30, 2005 - -------------------------------------------------------------------------------------------------- (AMOUNTS IN THOUSANDS) EMERGING MARKETS INTERNATIONAL OPPORTUNITIES - -------------------------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005 2006 2005 - -------------------------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------------------------- Net investment income (loss) $6,296 $584 $(122) $399 - ------------------------------------------- Net realized gain (loss) 92,060 57,592 52,034 48,817 - ------------------------------------------- Change in net unrealized appreciation (depreciation) 71,275 15,289 (7,653) 7,728 - -------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 169,631 73,465 $44,259 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 175,844 36,847 (11,714) (40,017) - -------------------------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 285,193 107,263 (16,397) 11,260 ================================================================================================== NET ASSETS - -------------------------------------------------------------------------------------------------- Beginning of period 336,991 229,728 198,228 186,968 - -------------------------------------------------------------------------------------------------- End of period $622,184 $336,991 $181,831 $198,228 ================================================================================================== Accumulated undistributed net investment income (loss) $4,164 $(278) $(174) $149 ================================================================================================== See Notes to Financial Statements. - ------ 38 Notes to Financial Statements NOVEMBER 30, 2006 (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 distribution and shareholder servicing 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. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued at fair value as determined in accordance with procedures adopted by the Board of Directors. 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. Certain other circumstances may cause the funds to fair value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence. 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. (continued) - ------ 39 Notes to Financial Statements NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 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 NOVEMBER 30, 2006 (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 NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) The effective annual management fee for each class of the funds for the year ended November 30, 2006, was 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 1.79% 1.59% 1.54% 1.79% - -------------------------------------------------------------------------------- International Opportunities 1.84% 1.64% 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 year ended November 30, 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 JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC. 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the year ended November 30, 2006, were as follows: - -------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL STOCK DISCOVERY MARKETS OPPORTUNITIES - -------------------------------------------------------------------------------- Purchases $119,186 $2,227,210 $607,551 $308,871 - -------------------------------------------------------------------------------- Proceeds from sales $61,320 $2,504,953 $511,626 $368,279 - -------------------------------------------------------------------------------- For the year ended November 30, 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 NOVEMBER 30, 2006 (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 - --------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006 SHARES AUTHORIZED 100,000 400,000 ============================================================================================= Sold 6,064 $75,036 5,524 $89,151 - ---------------------------------------- Issued in reinvestment of distributions 14 152 14,024 198,371 - ---------------------------------------- Redeemed (1,309) (16,017)(1) (11,071) (179,701)(1) - --------------------------------------------------------------------------------------------- Net increase (decrease) 4,769 $59,171 8,477 $107,821 ============================================================================================= 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 - --------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006 SHARES AUTHORIZED N/A 75,000 ============================================================================================= Sold 5,976 $97,632 - ---------------------------------------- Issued in reinvestment of distributions 2,683 38,220 - ---------------------------------------- Redeemed (15,621) (255,645)(4) - --------------------------------------------------------------------------------------------- Net increase (decrease) (6,962) $(119,793) ============================================================================================= 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 $37 and $90 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 $164. (5) Net of redemption fees of $22. (continued) - ------ 43 Notes to Financial Statements NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - --------------------------------------------------------------------------------------------------- INTERNATIONAL STOCK INTERNATIONAL DISCOVERY - --------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - --------------------------------------------------------------------------------------------------- ADVISOR CLASS - --------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006 SHARES AUTHORIZED N/A 5,000 =================================================================================================== Issued in reinvestment of distributions 1 $12 - ----------------------------------------- Redeemed (5) (77) - --------------------------------------------------------------------------------------------------- Net increase (decrease) (4) $(65) =================================================================================================== 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 - --------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006 SHARES AUTHORIZED 100,000 100,000 =================================================================================================== Sold 35,516 $303,189 96 $1,070 - ----------------------------------------- Issued in reinvestment of distributions 4,400 32,030 4,719 48,005 - ----------------------------------------- Redeemed (14,582) (122,512)(1) (5,636) (61,797) - --------------------------------------------------------------------------------------------------- Net increase (decrease) 25,334 $212,707 (821) $(12,722) =================================================================================================== 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 $540. (2) Net of redemption fees of $117 and $24 for Emerging Markets and International Opportunities, respectively. (continued) - ------ 44 Notes to Financial Statements NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - --------------------------------------------------------------------------------------------------- EMERGING MARKETS INTERNATIONAL OPPORTUNITIES - --------------------------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - --------------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - --------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006 SHARES AUTHORIZED 50,000 10,000 =================================================================================================== Sold 3,640 $29,912 90 $1,000 - ------------------------------------------- Issued in reinvestment of distributions 2,503 18,363 1 8 - ------------------------------------------- Redeemed (11,341) (93,403)(1) -- -- - --------------------------------------------------------------------------------------------------- Net increase (decrease) (5,198) $(45,128) 91 $1,008 =================================================================================================== 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 - --------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006 SHARES AUTHORIZED 5,000 N/A =================================================================================================== Sold 975 $8,291 - ------------------------------------------- Issued in reinvestment of distributions 43 313 - ------------------------------------------- Redeemed (232) (1,859)(3) - --------------------------------------------------------------------------------------------------- Net increase (decrease) 786 $6,745 =================================================================================================== 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 - --------------------------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006 SHARES AUTHORIZED 5,000 N/A =================================================================================================== Sold 321 $2,649 - ------------------------------------------- Issued in reinvestment of distributions 20 142 - ------------------------------------------- Redeemed (165) (1,271) - --------------------------------------------------------------------------------------------------- Net increase (decrease) 176 $1,520 =================================================================================================== 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 $134. (2) Net of redemption fees of $13. (3) Net of redemption fees of $14. (4) Net of redemption fees of $5. (continued) - ------ 45 Notes to Financial Statements NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) 5. SECURITIES LENDING As of November 30, 2006, securities in International Discovery, Emerging Markets and International Opportunities valued at $20,368, $36,334 and $15,619, 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 $20,961, $37,203 and $16,305, respectively. The funds' risks in securities lending are that the borrower may not provide additional collateral when required or return the securities when due. If the borrower defaults, receipt of the collateral by the funds may be delayed or limited. 6. BANK LINE OF CREDIT The funds, along with certain other funds managed by ACIM or ACGIM, have a $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 year ended November 30, 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. 8. FEDERAL TAX INFORMATION On December 19, 2006, the funds declared and paid the following per-share distributions from net investment income to shareholders of record on December 18, 2006: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR C - -------------------------------------------------------------------------------- International Stock $0.0465 N/A N/A N/A - -------------------------------------------------------------------------------- International Discovery -- -- -- N/A - -------------------------------------------------------------------------------- Emerging Markets $0.1310 $0.1515 $0.1054 $0.0285 - -------------------------------------------------------------------------------- International Opportunities $0.0030 $0.0271 N/A N/A - -------------------------------------------------------------------------------- On December 19, 2006, the funds declared and paid the following per-share distributions from net realized gains to shareholders of record on December 18, 2006: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR C - -------------------------------------------------------------------------------- International Stock -- N/A N/A N/A - -------------------------------------------------------------------------------- International Discovery $3.7661 $3.8035 $3.7193 N/A - -------------------------------------------------------------------------------- Emerging Markets $1.3189 $1.3189 $1.3189 $1.3189 - -------------------------------------------------------------------------------- International Opportunities $3.1750 $3.1750 N/A N/A - -------------------------------------------------------------------------------- (continued) - ------ 46 Notes to Financial Statements NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) 8. FEDERAL TAX INFORMATION (CONTINUED) The tax character of distributions paid during the years ended November 30, 2006 and November 30, 2005 were as follows: - -------------------------------------------------------------------------------- INTERNATIONAL STOCK INTERNATIONAL DISCOVERY - -------------------------------------------------------------------------------- 2006 2005 2006 2005 - -------------------------------------------------------------------------------- DISTRIBUTIONS PAID FROM - -------------------------------------------------------------------------------- Ordinary income $155 -- $115,168 $23,372 - -------------------------------------------------------------------------------- Long-term capital gains -- -- $132,385 $167,731 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- EMERGING MARKETS INTERNATIONAL OPPORTUNITIES - -------------------------------------------------------------------------------- 2006 2005 2006 2005 - -------------------------------------------------------------------------------- DISTRIBUTIONS PAID FROM - -------------------------------------------------------------------------------- Ordinary income $38,186 -- $19,416 -- - -------------------------------------------------------------------------------- Long-term capital gains $22,096 $3,049 $29,526 $5,667 - -------------------------------------------------------------------------------- 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 November 30, 2006, the components of distributable earnings on a tax-basis and the federal tax cost of investments were as follows: - ------------------------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL STOCK DISCOVERY MARKETS OPPORTUNITIES - ------------------------------------------------------------------------------------------------- Federal tax cost of investments $78,383 $1,164,109 $526,595 $154,465 ================================================================================================= Gross tax appreciation of investments $12,417 $383,270 $132,311 $40,984 - ---------------------------------------- Gross tax depreciation of investments (548) (6,751) (6,909) (1,333) - ------------------------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $11,869 $376,519 $125,402 $39,651 ================================================================================================= Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies 4 (602) (277) 12 - ------------------------------------------------------------------------------------------------- Net tax appreciation (depreciation) $11,873 $375,917 $125,125 $39,663 ================================================================================================= Undistributed ordinary income $309 $117,017 $64,712 $9,412 - ---------------------------------------- Accumulated long-term gains -- $256,890 $33,782 $43,223 - ---------------------------------------- Accumulated capital losses $(386) -- -- -- - ---------------------------------------- Currency loss deferrals $(14) $(76) $(40) $(8) - ------------------------------------------------------------------------------------------------- (continued) - ------ 47 Notes to Financial Statements NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) 8. FEDERAL TAX INFORMATION (CONTINUED) The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and on investments in passive foreign investment companies. The accumulated capital losses listed on the previous page represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Capital loss carryovers of $60 and $326 in International Stock expire in 2013 and 2014, respectively. The currency loss deferrals listed on the previous page represent net foreign currency losses incurred in the one-month period ended November 30, 2006. The funds have elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. 9. RECENTLY ISSUED ACCOUNTING STANDARDS In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109" (FIN 48). FIN 48 establishes a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. FIN 48 is effective for fiscal years beginning after December 15, 2006, and is to be applied to all open tax years as of the date of effectiveness. The FASB issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), in September 2006, which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands the required financial statement disclosures about fair value measurements. Management is currently evaluating the impact of adopting FIN 48 and FAS 157. 10. OTHER TAX INFORMATION (UNAUDITED) ($ IN FULL) The following information is provided pursuant to provisions of the Internal Revenue Code. The funds hereby designate qualified dividend income for the fiscal year ended November 30, 2006, as follows: - -------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL STOCK DISCOVERY MARKETS OPPORTUNITIES - -------------------------------------------------------------------------------- $169,225 $29,179,070 $3,897,427 $3,142,465 - -------------------------------------------------------------------------------- The funds hereby designate capital gain distributions for the fiscal year ended November 30, 2006,as follows: - -------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL STOCK DISCOVERY MARKETS OPPORTUNITIES - -------------------------------------------------------------------------------- -- $132,384,644 $22,096,189 $29,525,591 - -------------------------------------------------------------------------------- The funds hereby designate qualified short-term capital gains distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended November 30, 2006, as follows: - -------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL STOCK DISCOVERY MARKETS OPPORTUNITIES - -------------------------------------------------------------------------------- -- $104,037,977 $35,909,746 $19,202,595 - -------------------------------------------------------------------------------- As of November 30, 2006, the funds designate the following as a foreign tax credit, which represents taxes paid on income derived from sources within foreign countries or possessions of the United States: - -------------------------------------------------------------------------------- INTERNATIONAL INTERNATIONAL EMERGING INTERNATIONAL STOCK DISCOVERY MARKETS OPPORTUNITIES - -------------------------------------------------------------------------------- $89,081 $778,318 $289,314 $150,805 - -------------------------------------------------------------------------------- - ------ 48 International Stock - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted) - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006 2005(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $10.84 $10.00 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------- Net Investment Income (Loss) 0.06 0.06(2) - ------------------------------------------- Net Realized and Unrealized Gain (Loss) 2.74 0.78 - -------------------------------------------------------------------------------- Total From Investment Operations 2.80 0.84 - -------------------------------------------------------------------------------- Distributions - ------------------------------------------- From Net Investment Income (0.08) -- - -------------------------------------------------------------------------------- Redemption Fees(2) 0.01 -- - -------------------------------------------------------------------------------- Net Asset Value, End of Period $13.57 $10.84 ================================================================================ TOTAL RETURN(3) 26.07% 8.40% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.50% 1.50%(4) - ------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.40% 0.91%(4) - ------------------------------------------- Portfolio Turnover Rate 109% 109% - ------------------------------------------- Net Assets, End of Period (in thousands) $90,181 $20,342 - -------------------------------------------------------------------------------- (1) March 31, 2005 (fund inception) through November 30, 2005. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. (4) Annualized. See Notes to Financial Statements. - ------ 49 International Discovery - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 - ---------------------------------------------------------------------------------------------------- INVESTOR CLASS - ---------------------------------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - ---------------------------------------------------------------------------------------------------- PER-SHARE DATA - ---------------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $15.94 $15.11 $12.75 $9.32 $10.13 - ---------------------------------------------------------------------------------------------------- Income From Investment Operations - -------------------------------------- Net Investment Income (Loss)(1) (0.02) 0.14 (0.01) 0.03 0.03 - -------------------------------------- Net Realized and Unrealized Gain (Loss) 5.00 2.97 2.40 3.42 (0.84) - ---------------------------------------------------------------------------------------------------- Total From Investment Operations 4.98 3.11 2.39 3.45 (0.81) - ---------------------------------------------------------------------------------------------------- Distributions - -------------------------------------- From Net Investment Income (0.13) -- (0.03) (0.02) -- - -------------------------------------- From Net Realized Gains (2.78) (2.28) -- -- -- - ---------------------------------------------------------------------------------------------------- Total Distributions (2.91) (2.28) (0.03) (0.02) -- - ---------------------------------------------------------------------------------------------------- Net Asset Value, End of Period $18.01 $15.94 $15.11 $12.75 $9.32 ==================================================================================================== TOTAL RETURN(2) 36.41% 24.30% 18.76% 37.05% (8.00)% RATIOS/SUPPLEMENTAL DATA - ---------------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.41% 1.47% 1.49% 1.57% 1.53% - -------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.11)% 1.02% (0.06)% 0.27% 0.35% - -------------------------------------- Portfolio Turnover Rate 148% 145% 201% 215% 224% - -------------------------------------- Net Assets, End of Period (in thousands) $1,446,955 $1,145,623 $1,112,870 $1,028,934 $841,706 - ---------------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 50 International Discovery - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 - --------------------------------------------------------------------------------------------- INSTITUTIONAL CLASS - --------------------------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - --------------------------------------------------------------------------------------------- PER-SHARE DATA - --------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $16.06 $15.21 $12.84 $9.39 $10.18 - --------------------------------------------------------------------------------------------- Income From Investment Operations - ----------------------------------------- Net Investment Income (Loss)(1) 0.04 0.17 0.02 0.05 0.06 - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 5.00 2.99 2.40 3.43 (0.85) - --------------------------------------------------------------------------------------------- Total From Investment Operations 5.04 3.16 2.42 3.48 (0.79) - --------------------------------------------------------------------------------------------- Distributions - ----------------------------------------- From Net Investment Income (0.16) -- (0.05) (0.03) -- - ----------------------------------------- From Net Realized Gains (2.78) (2.31) -- -- -- - --------------------------------------------------------------------------------------------- Total Distributions (2.94) (2.31) (0.05) (0.03) -- - --------------------------------------------------------------------------------------------- Net Asset Value, End of Period $18.16 $16.06 $15.21 $12.84 $9.39 ============================================================================================= TOTAL RETURN(2) 36.65% 24.56% 18.94% 37.25% (7.76)% RATIOS/SUPPLEMENTAL DATA - --------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.21% 1.27% 1.29% 1.37% 1.33% - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.09% 1.22% 0.14% 0.47% 0.55% - ----------------------------------------- Portfolio Turnover Rate 148% 145% 201% 215% 224% - ----------------------------------------- Net Assets, End of Period (in thousands) $105,849 $205,406 $165,600 $147,531 $137,358 - --------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guideline and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 51 International Discovery - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 - ------------------------------------------------------------------------------------------- ADVISOR CLASS - ------------------------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $15.75 $14.95 $12.63 $9.23 $10.05 - ------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------- Net Investment Income (Loss)(1) (0.08) 0.10 (0.05) 0.01 0.01 - ------------------------------------------- Net Realized and Unrealized Gain (Loss) 4.96 2.95 2.37 3.39 (0.83) - ------------------------------------------------------------------------------------------- Total From Investment Operations 4.88 3.05 2.32 3.40 (0.82) - ------------------------------------------------------------------------------------------- Distributions - ------------------------------------------- From Net Investment Income (0.09) -- -- -- -- - ------------------------------------------- From Net Realized Gains (2.78) (2.25) -- -- -- - ------------------------------------------------------------------------------------------- Total Distributions (2.87) (2.25) -- -- -- - ------------------------------------------------------------------------------------------- Net Asset Value, End of Period $17.76 $15.75 $14.95 $12.63 $9.23 =========================================================================================== TOTAL RETURN(2) 36.08% 24.01% 18.37% 36.84% (8.16)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.66% 1.72% 1.74% 1.82% 1.78% - ------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.36)% 0.77% (0.31)% 0.02% 0.10% - ------------------------------------------- Portfolio Turnover Rate 148% 145% 201% 215% 224% - ------------------------------------------- Net Assets, End of Period (in thousands) $7 $70 $201 $161 $153 - ------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 52 Emerging Markets - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 - ------------------------------------------------------------------------------------------------ INVESTOR CLASS - ------------------------------------------------------------------------------------------------ 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------------ PER-SHARE DATA - ------------------------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $8.25 $6.28 $5.28 $3.61 $4.06 - ------------------------------------------------------------------------------------------------ Income From Investment Operations - ------------------------------------------- Net Investment Income (Loss)(1) 0.11 0.01 (0.01) --(2) (0.02) - ------------------------------------------- Net Realized and Unrealized Gain (Loss) 3.11 2.05 1.00 1.66 (0.43) - ------------------------------------------------------------------------------------------------ Total From Investment Operations 3.22 2.06 0.99 1.66 (0.45) - ------------------------------------------------------------------------------------------------ Distributions - ------------------------------------------- From Net Investment Income (0.05) -- -- -- -- - ------------------------------------------- From Net Realized Gains (1.37) (0.09) -- -- -- - ------------------------------------------------------------------------------------------------ Total Distributions (1.42) (0.09) -- -- -- - ------------------------------------------------------------------------------------------------ Redemption Fees(1) 0.01 --(2) 0.01 0.01 -- - ------------------------------------------------------------------------------------------------ Net Asset Value, End of Period $10.06 $8.25 $6.28 $5.28 $3.61 ================================================================================================ TOTAL RETURN(3) 46.10% 33.10% 18.94% 46.26% (10.86)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 1.80% 1.94% 2.00% 2.01% 2.05% - ------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 1.31% 0.17% (0.22)% 0.03% (0.37)% - ------------------------------------------- Portfolio Turnover Rate 115% 153% 208% 286% 387% - ------------------------------------------- Net Assets, End of Period (in thousands) $523,813 $220,720 $135,355 $103,737 $81,756 - ------------------------------------------------------------------------------------------------ (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 53 Emerging Markets - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 - ------------------------------------------------------------------------------------------ INSTITUTIONAL CLASS - ------------------------------------------------------------------------------------------ 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------ PER-SHARE DATA - ------------------------------------------------------------------------------------------ Net Asset Value, Beginning of Period $8.36 $6.35 $5.33 $3.64 $4.08 - ------------------------------------------------------------------------------------------ Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(1) 0.12 0.03 --(2) 0.01 --(2) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 3.16 2.07 1.01 1.67 (0.44) - ------------------------------------------------------------------------------------------ Total From Investment Operations 3.28 2.10 1.01 1.68 (0.44) - ------------------------------------------------------------------------------------------ Distributions - ------------------------------------------ From Net Investment Income (0.07) -- -- -- -- - ------------------------------------------ From Net Realized Gains (1.37) (0.09) -- -- -- - ------------------------------------------------------------------------------------------ Total Distributions (1.44) (0.09) -- -- -- - ------------------------------------------------------------------------------------------ Redemption Fees(1) 0.01 --(2) 0.01 0.01 -- - ------------------------------------------------------------------------------------------ Net Asset Value, End of Period $10.21 $8.36 $6.35 $5.33 $3.64 ========================================================================================== TOTAL RETURN(3) 46.31% 33.37% 19.14% 46.43% (10.78)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 1.60% 1.74% 1.80% 1.81% 1.85% - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 1.51% 0.37% (0.02)% 0.23% (0.17)% - ------------------------------------------ Portfolio Turnover Rate 115% 153% 208% 286% 387% - ------------------------------------------ Net Assets, End of Period (in thousands) $85,886 $113,765 $92,673 $63,242 $18,969 - ------------------------------------------------------------------------------------------ (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 54 Emerging Markets - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 - ----------------------------------------------------------------------------------------- ADVISOR CLASS - ----------------------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - ----------------------------------------------------------------------------------------- PER-SHARE DATA - ----------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $8.11 $6.19 $5.22 $3.58 $4.03 - ----------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(1) 0.11 (0.01) (0.03) --(2) (0.01) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 3.02 2.02 0.99 1.63 (0.44) - ----------------------------------------------------------------------------------------- Total From Investment Operations 3.13 2.01 0.96 1.63 (0.45) - ----------------------------------------------------------------------------------------- Distributions - ------------------------------------------ From Net Investment Income (0.03) -- -- -- -- - ------------------------------------------ From Net Realized Gains (1.37) (0.09) -- -- -- - ----------------------------------------------------------------------------------------- Total Distributions (1.40) (0.09) -- -- -- - ----------------------------------------------------------------------------------------- Redemption Fees(1) 0.01 --(2) 0.01 0.01 -- - ----------------------------------------------------------------------------------------- Net Asset Value, End of Period $9.85 $8.11 $6.19 $5.22 $3.58 ========================================================================================= TOTAL RETURN(3) 45.59% 32.77% 18.58% 45.81% (11.17)% RATIOS/SUPPLEMENTAL DATA - ----------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.05% 2.19% 2.25% 2.26% 2.30% - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 1.06% (0.08)% (0.47)% (0.22)% (0.62)% - ------------------------------------------ Portfolio Turnover Rate 115% 153% 208% 286% 387% - ------------------------------------------ Net Assets, End of Period (in thousands) $9,905 $1,773 $1,178 $597 $1,254 - ----------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 55 Emerging Markets - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted) - ------------------------------------------------------------------------------------------ C CLASS - ------------------------------------------------------------------------------------------ 2006 2005 2004 2003 2002(1) - ------------------------------------------------------------------------------------------ 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)(2) 0.03 (0.05) (0.07) (0.04) (0.04) - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 2.99 1.97 0.99 1.64 (0.62) - ------------------------------------------------------------------------------------------ Total From Investment Operations 3.02 1.92 0.92 1.60 (0.66) - ------------------------------------------------------------------------------------------ Distributions - ------------------------------------------ From Net Realized Gains (1.34) (0.09) -- -- -- - ------------------------------------------------------------------------------------------ Redemption Fees(2) 0.01 --(3) 0.01 0.01 -- - ------------------------------------------------------------------------------------------ Net Asset Value, End of Period $9.64 $7.95 $6.12 $5.19 $3.58 ========================================================================================== TOTAL RETURN(4) 44.59% 31.67% 17.92% 44.97% (15.57)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------ Ratio of Operating Expenses to Average Net Assets 2.80% 2.94% 3.00% 3.01% 3.05%(5) - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets 0.31% (0.83)% (1.22)% (0.97)% (1.10)%(5) - ------------------------------------------ Portfolio Turnover Rate 115% 153% 208% 286% 387%(6) - ------------------------------------------ Net Assets, End of Period (in thousands) $2,581 $733 $521 $291 $54 - ------------------------------------------------------------------------------------------ (1) December 18, 2001 (commencement of sale) through November 30, 2002. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2002. See Notes to Financial Statements. - ------ 56 International Opportunities - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 - ------------------------------------------------------------------------------------------- INVESTOR CLASS - ------------------------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - ------------------------------------------------------------------------------------------- PER-SHARE DATA - ------------------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $12.27 $9.35 $7.62 $4.73 $4.87 - ------------------------------------------------------------------------------------------- Income From Investment Operations - ------------------------------------------ Net Investment Income (Loss)(1) (0.01) 0.02 (0.05) (0.01) 0.02 - ------------------------------------------ Net Realized and Unrealized Gain (Loss) 2.53 3.19 2.03 2.90 (0.19) - ------------------------------------------------------------------------------------------- Total From Investment Operations 2.52 3.21 1.98 2.89 (0.17) - ------------------------------------------------------------------------------------------- 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(1) --(2) --(2) 0.02 0.01 0.03 - ------------------------------------------------------------------------------------------- Net Asset Value, End of Period $11.79 $12.27 $9.35 $7.62 $4.73 =========================================================================================== TOTAL RETURN(3) 25.37% 35.28% 27.14% 61.54% (2.87)% RATIOS/SUPPLEMENTAL DATA - ------------------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.85% 1.91% 1.97% 2.00% 2.01% - ------------------------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.06)% 0.20% (0.63)% (0.23)% 0.30% - ------------------------------------------ Portfolio Turnover Rate 160% 112% 139% 219% 257% - ------------------------------------------ Net Assets, End of Period (in thousands) $180,732 $198,197 $176,100 $72,008 $21,977 - ------------------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Per-share amount was less than $0.005. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 57 International Opportunities - Financial Highlights For a Share Outstanding Throughout the Years Ended November 30 (except as noted) - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006 2005 2004 2003(1) - -------------------------------------------------------------------------------- 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)(2) 0.02 0.10 (0.03) 0.01 - ----------------------------------------- Net Realized and Unrealized Gain (Loss) 2.54 3.14 2.04 2.81 - -------------------------------------------------------------------------------- Total From Investment Operations 2.56 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(2) --(3) --(3) 0.02 0.01 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.85 $12.32 $9.37 $7.63 ================================================================================ TOTAL RETURN(4) 25.66% 35.53% 27.50% 58.96% RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.65% 1.71% 1.77% 1.80%(5) - ----------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.14% 0.40% (0.43)% 0.18%(5) - ----------------------------------------- Portfolio Turnover Rate 160% 112% 139% 219%(6) - ----------------------------------------- Net Assets, End of Period (in thousands) $1,099 $31 $10,868 $8,523 - -------------------------------------------------------------------------------- (1) January 9, 2003 (commencement of sale) through November 30, 2003. (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 58 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders, American Century World Mutual Funds, Inc.: We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of International Stock Fund, International Discovery Fund, Emerging Markets Fund, and International Opportunities Fund (collectively the "Funds"), four of the mutual funds comprising American Century World Mutual Funds, Inc., as of November 30, 2006, and the related statements of operations for the year then ended, the statements of changes in net assets for the periods presented, and the financial highlights for the periods presented. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2006, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds comprising American Century World Mutual Funds, Inc., as of November 30, 2006, the results of their operations for the year then ended, the changes in their net assets and their financial highlights for the periods presented, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Kansas City, Missouri January 16, 2007 - ------ 59 Management The individuals listed below serve as directors or officers of the funds. Each director serves until his or her successor is duly elected and qualified or until he or she retires. Mandatory retirement age for independent directors is 72. Those listed as interested directors are "interested" primarily by virtue of their engagement as officers of American Century Companies, Inc. (ACC) or its wholly owned, direct or indirect, subsidiaries, including the funds' investment advisor, American Century Global Investment Management, Inc. (ACGIM) or American Century Investment Management, Inc. (ACIM); the funds' principal underwriter, American Century Investment Services, Inc. (ACIS); and the funds' transfer agent, American Century Services, LLC (ACS). The other directors (more than three-fourths of the total number) are independent; that is, they have never been employees or officers of, and have no financial interest in, ACC or any of its wholly owned subsidiaries, including ACGIM, ACIM, ACIS, and ACS. The directors serve in this capacity for seven registered investment companies in the American Century family of funds. All persons named as officers of the funds also serve in a similar capacity for the other 14 investment companies advised by ACIM or ACGIM, unless otherwise noted. Only officers with policy-making functions are listed. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- THOMAS A. BROWN, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1940 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1980 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Formerly Chief Executive Officer/Treasurer, Associated Bearings Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ANDREA C. HALL, PH.D., 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Advisor to the President, Midwest Research Institute NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- D.D. (DEL) HOCK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1935 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1996 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Chairman, Public Service Company of Colorado NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Allied Motion Technologies, Inc. - -------------------------------------------------------------------------------- JAMES A. OLSON, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1942 POSITION(S) HELD WITH FUND: Advisory Board Member FIRST YEAR OF SERVICE: 2006 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Principal, Plaza Belmont LLC; Chief Financial Officer, Plaza Belmont LLC (September 1999 to July 2006) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Saia, Inc. and Entertainment Properties Trust - -------------------------------------------------------------------------------- (continued) - ------ 60 Management INDEPENDENT DIRECTORS (CONTINUED) - -------------------------------------------------------------------------------- DONALD H. PRATT, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1937 POSITION(S) HELD WITH FUND: Director, Chairman of the Board FIRST YEAR OF SERVICE: 1995 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Western Investments, Inc.; Retired Chairman of the Board, Butler Manufacturing Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- GALE E. SAYERS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1943 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Chief Executive Officer and Founder, Sayers40, Inc., a technology products and service provider NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Triad Hospitals, Inc. - -------------------------------------------------------------------------------- M. JEANNINE STRANDJORD, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1994 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Senior Vice President, Sprint Corporation NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, DST Systems, Inc.; Director, Euronet Worldwide, Inc. - -------------------------------------------------------------------------------- TIMOTHY S. WEBSTER,4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1961 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 2001 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Managing Director, TDB Acquisition Group LLC (September 2006 - present); President and Chief Executive Officer, American Italian Pasta Company (1992 to December 2005) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- INTERESTED DIRECTORS - -------------------------------------------------------------------------------- JAMES E. STOWERS, JR.(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1924 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman FIRST YEAR OF SERVICE: 1958 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Founder, Director and Controlling Shareholder, ACC; Chairman, ACC (January 1995 to December 2004); Director, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- JAMES E. STOWERS III(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1959 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman FIRST YEAR OF SERVICE: 1990 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, ACC (January 2005 to present); Co-Chairman, ACC (September 2000 to December 2004); Chairman, ACS and other ACC subsidiaries (April 2005 to September 2006); Director, ACC, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (1) James E. Stowers, Jr. is the father of James E. Stowers III. (continued) - ------ 61 Management OFFICERS - -------------------------------------------------------------------------------- WILLIAM M. LYONS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1955 POSITION(S) HELD WITH FUND: President FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC (September 2000 to present); President, ACC (June 1997 to present); Also serves as: Chairman, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries; Chief Executive Officer, ACIM, ACGIM, ACIS and other ACC subsidiaries (October 2000 to October 2006); President, ACIM, ACGIM and other ACC subsidiaries (September 2002 to September 2006); Executive Vice President, ACS (January 2005 to September 2006); Director, ACC, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- JONATHAN THOMAS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1963 POSITION(S) HELD WITH FUND: Executive Vice President FIRST YEAR OF SERVICE: 2005 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC (February 2006 to present); Executive Vice President, ACC (November 2005 to present); Also serves as: President and Chief Executive Officer, ACS; Chief Financial Officer and Chief Accounting Officer, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries; Managing Director, Morgan Stanley (March 2000 to November 2005) - -------------------------------------------------------------------------------- MARYANNE ROEPKE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1956 POSITION(S) HELD WITH FUND: Chief Compliance Officer and Senior Vice President FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Compliance Officer, ACIM, ACGIM and ACS (August 2006 to present); Assistant Treasurer, ACC (January 1995 to August 2006); Treasurer and Chief Financial Officer, various American Century funds (July 2000 to August 2006); Also serves as: Senior Vice President, ACS - -------------------------------------------------------------------------------- DAVID C. TUCKER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1958 POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (February 2001 to present); General Counsel, ACC (June 1998 to present); Also serves as: Senior Vice President and General Counsel, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- ROBERT LEACH, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1966 POSITION(S) HELD WITH FUND: Vice President, Treasurer and Chief Financial Officer FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS (February 2000 to present); Controller, various American Century funds (June 1997 to September 2006) - -------------------------------------------------------------------------------- C. JEAN WADE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1964 POSITION(S) HELD WITH FUND: Controller FIRST YEAR OF SERVICE: 2006 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS (February 2000 to present) - -------------------------------------------------------------------------------- JON ZINDEL, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Tax Officer FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, ACC (August 2006 to present); Vice President, ACC and certain ACC subsidiaries (October 2001 to August 2006); Vice President, Corporate Tax, ACS (April 1998 to August 2006); Also serves as: Senior Vice President, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- The SAI has additional information about the funds' directors and is available without charge, upon request, by calling 1-800-345-2021. - ------ 62 Approval of Management Agreements for International Stock, International Discovery, Emerging Markets, and International Opportunities Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated and approved by a majority of a fund's independent directors or trustees (the "Directors") each year. At American Century, this process is referred to as the "15(c) Process." As a part of this process, the board reviews fund performance, shareholder services, audit and compliance information, and a variety of other reports from the advisor concerning fund operations. In addition to this annual review, the board of directors oversees and evaluates on a continuous basis at its quarterly meetings the nature and quality of significant services performed by the advisor, fund performance, audit and compliance information, and a variety of other reports relating to fund operations. The board, or committees of the board, also holds special meetings as needed. 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 the board's approval or renewal of any advisory agreements within the fund's most recently completed fiscal half-year period. ANNUAL CONTRACT REVIEW PROCESS As part of the annual 15(c) Process undertaken during the most recent fiscal half-year period, the Directors reviewed extensive data and information compiled by the advisor and certain independent providers of evaluative data (the "15(c) Providers") concerning International Stock, International Discovery, Emerging Markets and International Opportunities (the "funds") and the services provided to the funds under the management agreement. The information considered and the discussions held at the meetings included, but were not limited to: * the nature, extent and quality of investment management, shareholder services and other services provided to the funds under the management agreement; * reports on the advisor's activities relating to the wide range of programs and services the advisor provides to the funds and their shareholders on a routine and non-routine basis; * data comparing the cost of owning the funds to the cost of owning similar funds; * data comparing the funds' performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the funds to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. In keeping with its practice, the funds' board of directors held two regularly scheduled meetings and one special meeting to review and discuss the information provided by the advisor and to complete its negotiations with the advisor regarding the renewal of the management agreement, including the setting of the applicable advisory fee. The board also had the benefit of the advice of its independent counsel throughout the period. (continued) - ------ 63 Approval of Management Agreements for International Stock, International Discovery, Emerging Markets, and International Opportunities FACTORS CONSIDERED The Directors considered all of the information provided by the advisor, the 15(c) Providers, and the board's independent counsel, and evaluated such information for each fund for which the board has responsibility. The Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the agreement under the terms ultimately determined by the board to be appropriate, the Directors' decision was based on the following factors. NATURE, EXTENT AND QUALITY OF SERVICES -- GENERALLY. Under the management agreement, the advisor is responsible for providing or arranging for all services necessary for the operation of the funds. The board noted that under the management agreement, the advisor provides or arranges at its own expense a wide variety of services including: * fund construction and design * portfolio security selection * initial capitalization/funding * securities trading * custody of fund assets * daily valuation of the funds' portfolio * shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping and communications * legal services * regulatory and portfolio compliance * financial reporting * marketing and distribution The Directors noted that many of these services have expanded over time both in terms of quantity and complexity in response to shareholder demands, competition in the industry and the changing regulatory environment. In performing their evaluation, the Directors considered information received in connection with the annual review, as well as information provided on an ongoing basis at their regularly scheduled board and committee meetings. INVESTMENT MANAGEMENT SERVICES. The nature of the investment management services provided is quite complex and allows fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes, and liquidity. In evaluating investment performance, the board expects the advisor to manage the funds in accordance with their investment objectives and approved strategies. In providing these services, the advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance and other systems to conduct their business. At each quarterly meeting, the Directors review investment performance information for the funds, together with comparative information for appropriate benchmarks and peer groups of funds managed similarly to the funds. The Directors also review detailed performance information during the 15(c) Process comparing the funds' performance with that of similar funds not managed by the advisor. If performance concerns are identified, the Directors discuss with the advisor the reasons for (continued) - ------ 64 Approval of Management Agreements for International Stock, International Discovery, Emerging Markets, and International Opportunities such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. International Discovery's and Emerging Markets' performance was above the median for its peer group for the one year period and was below the median for the three year period during the last year. The board discussed the funds' performance with the advisor and was satisfied with the efforts being undertaken by the advisor. International Opportunities' performance for both the one and three year periods was above the median for its peer group. SHAREHOLDER AND OTHER SERVICES. The advisor provides the funds with a comprehensive package of transfer agency, shareholder, and other services. The Directors review reports and evaluations of such services at their regular quarterly meetings, including the annual meeting concerning contract review, and reports to the board. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the advisor. COSTS OF SERVICES PROVIDED AND PROFITABILITY TO THE ADVISOR. The advisor provides detailed information concerning its cost of providing various services to the funds, its profitability in managing the funds, its overall profitability, and its financial condition. The Directors have reviewed with the advisor the methodology used to prepare this financial information. This financial information regarding the advisor is considered in order to evaluate the advisor's financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. ETHICS OF THE ADVISOR. The Directors generally consider the advisor's commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the advisor's practices generally meet or exceed industry best practices and that the advisor was not implicated in the industry scandals of 2003 and 2004. ECONOMIES OF SCALE. The Directors review reports provided by the advisor on economies of scale for the complex as a whole and the year-over-year changes in revenue, costs, and profitability. The Directors concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. This analysis is also complicated by the additional services and content provided by the advisor and its reinvestment in its ability to provide and expand those services. Accordingly, the Directors also seek to evaluate economies of scale by reviewing other information, such as year-over-year profitability of the advisor generally, the (continued) - ------ 65 Approval of Management Agreements for International Stock, International Discovery, Emerging Markets, and International Opportunities profitability of its management of the funds specifically, the expenses incurred by the advisor in providing various functions to the funds, and the breakpoint fees of competitive funds not managed by the advisor. The Directors believe the advisor is appropriately sharing economies of scale through its competitive fee structure, fee breakpoints as the funds increase in size, and through reinvestment in its business to provide shareholders additional content and services. COMPARISON TO OTHER FUNDS' FEES. The funds pay the advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the funds, other than brokerage expenses, taxes, interest, extraordinary expenses, and the fees and expenses of the funds' independent directors (including their independent legal counsel). Under the unified fee structure, the advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges and other expenses. Other than their investment advisory fees and Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The board believes the unified fee structure is a benefit to fund shareholders because it clearly discloses to shareholders the cost of owning fund shares, and, since the unified fee cannot be increased without a vote of fund shareholders, it shifts to the advisor the risk of increased costs of operating the funds and provides a direct incentive to minimize administrative inefficiencies. Part of the Directors' analysis of fee levels involves reviewing certain evaluative data compiled by a 15(c) Provider comparing the funds' unified fee to the total expense ratio of other funds in the funds' peer group. The unified fee charged to shareholders of International Stock, Emerging Markets and International Opportunities was above the median of the total expense ratios of their peer groups. The unified fee charged to shareholders of International Discovery was below the median of the total expense ratios of its peer group. COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The Directors also requested and received information from the advisor concerning the nature of the services, fees, and profitability of its advisory services to advisory clients other than the funds. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the funds. The Directors analyzed this information and concluded that the fees charged and services provided to the funds were reasonable by comparison. COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information from the advisor concerning collateral benefits it receives as a result of its relationship with the funds. They concluded that the advisor's primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits (continued) - ------ 66 Approval of Management Agreements for International Stock, International Discovery, Emerging Markets, and International Opportunities in other lines of business, and therefore does not derive any significant collateral benefits from them. The Directors noted that the advisor receives proprietary research from broker dealers that execute fund portfolio transactions and concluded that this research is likely to benefit fund shareholders. The Directors also determined that the advisor is able to provide investment management services to certain clients other than the funds, at least in part, due to its existing infrastructure built to serve the fund complex. The Directors concluded, however, that the assets of those other clients are not material to the analysis and, in any event, are included with the assets of the funds to determine breakpoints in the funds' fee schedule, provided they are managed using the same investment team and strategy. CONCLUSIONS OF THE DIRECTORS As a result of this process, the independent directors, in the absence of particular circumstances and assisted by the advice of legal counsel that is independent of the advisor, taking into account all of the factors discussed above and the information provided by the advisor, concluded that the investment management agreement between the funds and the advisor is fair and reasonable in light of the services provided and should be renewed. As a part of the 15(c) Process, the board of directors also unanimously approved the renewal of the investment subadvisory agreement by which American Century Investment Management, Inc. (the "subadvisor") is engaged to manage the cash portion of the funds. In approving the subadvisory agreement, the board considered all material factors including the nature, extent, and quality of investment management services provided by the subadvisor to the funds under the agreement. As a part of this review the Directors evaluated the subadvisor's investment performance 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. - ------ 67 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. - ------ 68 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 website at americancentury.com and on the Securities and Exchange Commission's website 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) - ------ 69 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 website 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 website at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 70 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 AC (ALL COUNTRY) ASIA PACIFIC INDEX is a total return, capitalization-weighted index that measures the performance of stock markets in 15 Pacific region countries, including Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Pakistan, the Philippines, Singapore, Sri Lanka, Taiwan and Thailand. The MSCI EAFE(reg.tm) (Europe, Australasia, Far East) INDEX is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EM (Emerging Markets) INDEX represents the performance of stocks in global emerging market countries. The MSCI WORLD EX-US INDEX comprises the entire developed world less the United States. The designation of a country as developed arises primarily as a measurement of GDP per capita. There are 21 countries within this index. The MSCI WORLD EX-US SMALL CAP INDEX is the small cap component of the MSCI World ex-US Index. Securities selected represent 40% of the small cap asset class in each developed market on a capitalization-weighted basis. The MSCI WORLD FREE INDEX represents the performance of stocks in developed countries (including the United States) that are available for purchase by global investors. The S&P/CITIGROUP EMI (Extended Market Index) GROWTH WORLD EX-US represents the smaller-cap universe of stocks of growth companies in developed country markets outside the United States. - ------ 71 Notes - ------ 72 CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY WORLD MUTUAL FUNDS, INC. INVESTMENT ADVISOR: American Century Global Investment Management, Inc. New York, New York THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. American Century Investments PRSRT STD P.O. Box 419200 U.S. POSTAGE PAID Kansas City, MO 64141-6200 AMERICAN CENTURY COMPANIES The American Century Investments American Century Investment logo, American Century Services, Inc., Distributor and American Century Investments are service marks of American Century Proprietary (c)2007 American Century Holdings, Inc. Proprietary Holdings, Inc. 0701 SH-ANN-52640S
[front cover] AMERICAN CENTURY INVESTMENTS Annual Report November 30, 2006 [photo of winter scene] NT International Growth Fund NT Emerging Markets Fund [american century investments logo and text logo] Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] /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. We are pleased to provide you with the annual report for the American Century NT International Growth and NT Emerging Markets funds from their inception, May 12, 2006, through November 30, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our website, americancentury.com, where we post quarterly portfolio commentaries, the views of senior investment officers and analysts, and other communications about investments, portfolio strategy, personal finance, and the markets. In its most recent rankings, Dalbar -- which issues customer satisfaction ratings and rankings based on website functionality -- ranked americancentury.com seventh out of the sites provided by the top 25 fund companies that it believes lead the industry in web-based technology. Our website earned an "Excellent" rating, Dalbar's highest designation. For most of 2006, our website linked visitors to information explaining our strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). This 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. To learn more about the collaboration and the LAF, please visit americancentury.com or www.lanceface.com on the Web and click on the links to related sites. With the approach of the 2006 tax season, you can also find out more about tax information via a link from our website. We've posted online descriptions of all of the tax information we provide to investors. If you haven't visited americancentury.com yet, we encourage you to do so...it's there to serve you. And so are we. As always, we deeply appreciate your commitment to American Century Investments. Table of Contents Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 International Equity Total Returns . . . . . . . . . . . . . . . . . . . 2 NT INTERNATIONAL GROWTH Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Investments by Country . . . . . . . . . . . . . . . . . . . . . . . . . 5 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 5 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 6 NT EMERGING MARKETS Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Investments by Country . . . . . . . . . . . . . . . . . . . . . . . . .11 Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . .11 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . .12 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. . . . . . . . . . . . . . . . . . . . . . . . . . . .24 Report of Independent Registered Public Accounting Firm . . . . . . . . . .26 OTHER INFORMATION Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .31 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 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. Market Perspective [photo of chief investment officer] BY ENRIQUE CHANG, CHIEF INVESTMENT OFFICER, INTERNATIONAL EQUITY DISCIPLINE RESILIENT MARKETS POSTED GAINS Global equity markets demonstrated strength and resilience from May 12, 2006 (the inception date for American Century's NT tracker funds -- see the Portfolio Commentaries for more details) through November 30, 2006 (the funds' fiscal year end), with indices from the U.S.'s Dow Jones Industrials to Hong Kong's Hang Seng reaching record highs. The gains occurred in the face of the continued high oil prices, geopolitical tensions in the Middle East, and interest-rate increases by central banks around the world. 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 the world's economy in the process. That concern eased somewhat after the U.S. Federal Reserve paused in its campaign to raise rates. GLOBAL ECONOMY SHOWED STRENGTH Developments in Europe were among the highlights of the period. The $10 trillion economy of the dozen euro-sharing nations grew the most in six years during the second quarter of 2006. Europe also benefited from better-than-expected corporate earnings, a high level of merger-and-acquisition activity, and increased capital spending by many companies around the world. These developments helped several equity markets in Europe reach their highest levels in five years. Japan and other Asian markets also gained during the period. Japan's growth has been driven by the fastest pace of business investment in 16 years, a show of confidence that the economy has recovered from years of stagnation. Among emerging markets, China's gross domestic product (GDP) has hovered around 10% for four years, and the historic changes there continue to dramatically impact the global economy. Other developing countries also advanced, benefiting from continued high commodity prices, rising consumer income and demand, and continued economic and political reform. SEEKING OPPORTUNITIES The economic growth in many countries and increasing confidence among investors were testament to the resilience of international markets and the global economy. We believe there are significant opportunities abroad for investors, and our team is dedicated to searching for companies to help drive investment performance. INTERNATIONAL EQUITY TOTAL RETURNS FROM MAY 12, 2006 TO NOVEMBER 30, 2006(1) - -------------------------------------------------------------------------------- MSCI EAFE Index 4.97% - -------------------------------------------------------------------------------- MSCI World Free Index 7.23% - -------------------------------------------------------------------------------- MSCI EM Index 3.56% - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. - ------ 2 NT International Growth - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- SINCE INCEPTION(1) INCEPTION DATE - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS 3.40% 5/12/06 - -------------------------------------------------------------------------------- MSCI EAFE INDEX 4.97% -- - -------------------------------------------------------------------------------- MSCI EAFE GROWTH INDEX 2.43% -- - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made May 12, 2006
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QUARTERLY RETURNS OVER LIFE OF CLASS - -------------------------------------------------------------------------------- 5/31/06* 8/31/06 11/30/06 - -------------------------------------------------------------------------------- Institutional Class -6.60% 2.78% 7.71% - -------------------------------------------------------------------------------- MSCI EAFE Index -5.60% 3.76% 7.16% - -------------------------------------------------------------------------------- MSCI EAFE Growth Index -6.04% 3.03% 5.81% - -------------------------------------------------------------------------------- *From 5/12/06, the Institutional 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 indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 3 NT International Growth - Portfolio Commentary PORTFOLIO MANAGERS: ALEX TEDDER AND KEITH CREVELING PERFORMANCE SUMMARY NT International Growth advanced 3.40%* from its May 12, 2006, inception through November 30, 2006, while its benchmark, the MSCI EAFE Index, returned 4.97%. This portfolio 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 in May 2006 as part of a strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF).** As discussed in the Market Perspective on page 2, international equity gains for the period were driven by strong global economic growth. Meanwhile, an underweight position in the utilities sector and market volatility that affected our Japanese holdings were key reasons why the fund underperformed its benchmark. MANAGEMENT CHANGES Portfolio manager Michael Perelstein left American Century on June 30, 2006. Effective July 5, 2006, Alex Tedder joined Keith Creveling as a portfolio manager for NT International Growth. Prior to joining us, Tedder was a managing director, head of international equities, and portfolio manager for Deutsche Asset Management Ltd. from 1994 to 2005. TELECOM, TECH LIFTED RETURNS Our telecommunication services position made the largest contribution to relative performance, due to effective security selection in the wireless industry. The portfolio benefited most from our overweight position in Telenor, a Norwegian phone company with global reach. Two other companies in the telecom sector -- America Movil, which provides mobile phone service in Latin America, and China Mobile Ltd. -- were also among the top-10 contributors to relative performance. Both are portfolio-only positions, meaning they are not in the index. They serve as examples of our research and analysis leading to opportunities beyond the benchmark. In the technology sector, NT International Growth's portfolio-only position in Taiwan's Hon Hai Precision Industry Co. was also among the 10 securities providing the most excess performance. Hon Hai, the world's biggest contract electronics maker, had record profit of $454 million in the third quarter on strong demand for iPod music players and other electronic products. TOP TEN HOLDINGS AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Roche Holding AG 1.8% 2.7% - -------------------------------------------------------------------------------- ORIX Corp. 1.7% 1.9% - -------------------------------------------------------------------------------- AXA SA 1.5% 1.2% - -------------------------------------------------------------------------------- Groupe Danone 1.5% 1.2% - -------------------------------------------------------------------------------- Total SA 1.4% 1.9% - -------------------------------------------------------------------------------- Toyota Motor Corp. 1.4% 1.9% - -------------------------------------------------------------------------------- Novartis AG 1.4% 1.6% - -------------------------------------------------------------------------------- Tesco plc 1.4% -- - -------------------------------------------------------------------------------- Reckitt Benckiser plc 1.4% 1.5% - -------------------------------------------------------------------------------- Societe Generale 1.3% 1.4% - -------------------------------------------------------------------------------- * Total returns for periods less than one year are not annualized. **American Century Investment Services, Inc., has entered into an agreement with the LAF for rights to use the LIVESTRONG name. LIVESTRONG is a trademark of the LAF. For more information about the foundation, visit www.livestrong.org. (continued) - ------ 4 NT International Growth - Portfolio Commentary SOME SETBACKS The portfolio's underweight position in the utilities sector, particularly among electric utilities, slowed relative performance most during the quarter. We lacked exposure to several companies whose share price increased on merger and acquisition activity. Financials also underperformed, and included the security that detracted most from relative performance, Japan's Orix Corp., an integrated financial services company. Orix declined partly due to con-cern over loan demand and the strength of the economic recovery in Japan. That issue affected other holdings in Japan. Of the 10 companies that detracted most from relative performance, eight were from Japan. OPPORTUNITIES IN EMERGING MARKETS While NT International Growth invests primarily in large companies in developed countries, we have found opportunity in emerging markets among several companies that fulfill our criteria for sustainable revenue and earnings. They include China Mobile and China Merchants Bank, India's Reliance Communications, and CEZ AS, a power producer in the Czech Republic. Each of these securities contributed to absolute and relative returns. OUR STARTING POINT FOR THE NEXT SIX MONTHS After the reporting period, portfolio manager Alex Tedder said, "The recent performance of the international equity markets has been remarkable, and we believe the economic, political, and demographic changes under way around the world will continue to create opportunity for investors. But we have to be prepared for changes in the investment environment and economic climate, and that's why we believe it's critically important to invest in companies based on strong fundamentals and their ability to produce sustainable revenue and earnings growth, regardless of market conditions." As of November 30, 2006, we continued to see opportunities in the industrials sector, reflected in our overweight position in electrical equipment companies that are benefiting from increased capital spending by companies worldwide. INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- United Kingdom 16.2% 11.4% - -------------------------------------------------------------------------------- Japan 14.6% 25.0% - -------------------------------------------------------------------------------- Switzerland 11.6% 9.7% - -------------------------------------------------------------------------------- France 8.8% 14.2% - -------------------------------------------------------------------------------- Germany 5.0% 8.4% - -------------------------------------------------------------------------------- Australia 3.7% 3.6% - -------------------------------------------------------------------------------- Italy 3.3% 4.2% - -------------------------------------------------------------------------------- Netherlands 3.3% 2.9% - -------------------------------------------------------------------------------- Spain 2.9% 1.6% - -------------------------------------------------------------------------------- Greece 2.3% 3.1% - -------------------------------------------------------------------------------- India 2.2% -- - -------------------------------------------------------------------------------- Norway 2.1% 2.8% - -------------------------------------------------------------------------------- Finland 2.0% -- - -------------------------------------------------------------------------------- Other Countries 15.5% 12.5% - -------------------------------------------------------------------------------- Cash and Equivalents(1) 6.5% 0.6% - -------------------------------------------------------------------------------- (1) Includes temporary cash investments and other assets and liabilities TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Foreign Common Stocks 93.5% 99.4% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.9% 1.3% - -------------------------------------------------------------------------------- Other Assets and Liabilities 4.6% (0.7)% - -------------------------------------------------------------------------------- - ------ 5 NT International Growth - Schedule of Investments NOVEMBER 30, 2006 Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 93.5% - -------------------------------------------------------------------------------- AUSTRALIA - 3.7% - -------------------------------------------------------------------------------- 25,131 BHP Billiton Ltd. $ 520,330 - -------------------------------------------------------------------------------- 3,900 CSL Ltd. 182,553 - -------------------------------------------------------------------------------- 11,658 National Australia Bank Ltd. 360,544 - -------------------------------------------------------------------------------- 15,000 QBE Insurance Group Ltd. 306,544 - -------------------------------------------------------------------------------- 5,546 Rio Tinto Ltd. 324,828 - -------------------------------------------------------------------------------- 1,694,799 - -------------------------------------------------------------------------------- AUSTRIA - 0.9% - -------------------------------------------------------------------------------- 5,735 Erste Bank der Oesterreichischen Sparkassen AG 417,967 - -------------------------------------------------------------------------------- BELGIUM - 0.7% - -------------------------------------------------------------------------------- 2,855 KBC Groupe 321,319 - -------------------------------------------------------------------------------- BRAZIL - 1.1% - -------------------------------------------------------------------------------- 5,100 Petroleo Brasileiro SA ADR 480,165 - -------------------------------------------------------------------------------- CZECH REPUBLIC - 0.9% - -------------------------------------------------------------------------------- 9,700 CEZ AS(1) 432,164 - -------------------------------------------------------------------------------- DENMARK - 0.4% - -------------------------------------------------------------------------------- 3,900 Vestas Wind Systems AS(1) 150,587 - -------------------------------------------------------------------------------- FINLAND - 2.0% - -------------------------------------------------------------------------------- 12,200 Fortum Oyj 356,721 - -------------------------------------------------------------------------------- 6,400 Kone Oyj 327,545 - -------------------------------------------------------------------------------- 5,300 Metso Oyj 244,215 - -------------------------------------------------------------------------------- 928,481 - -------------------------------------------------------------------------------- FRANCE - 8.8% - -------------------------------------------------------------------------------- 5,421 Accor SA 394,292 - -------------------------------------------------------------------------------- 18,831 AXA SA 713,520 - -------------------------------------------------------------------------------- 2,041 Essilor International SA Cie Generale D'Optique 219,296 - -------------------------------------------------------------------------------- 4,541 Groupe Danone 699,076 - -------------------------------------------------------------------------------- 2,267 PPR SA 345,996 - -------------------------------------------------------------------------------- 3,478 Societe Generale 582,890 - -------------------------------------------------------------------------------- 9,424 Total SA 668,592 - -------------------------------------------------------------------------------- 6,962 Veolia Environnement 461,088 - -------------------------------------------------------------------------------- 4,084,750 - -------------------------------------------------------------------------------- GERMANY - 5.0% - -------------------------------------------------------------------------------- 1,670 Deutsche Boerse AG 279,660 - -------------------------------------------------------------------------------- 3,890 Fresenius Medical Care AG 522,221 - -------------------------------------------------------------------------------- 3,500 Hochtief AG 234,956 - -------------------------------------------------------------------------------- 3,733 Hypo Real Estate Holding AG 217,313 - -------------------------------------------------------------------------------- 4,300 Linde AG 423,789 - -------------------------------------------------------------------------------- 1,242 MAN AG 118,457 - -------------------------------------------------------------------------------- 1,189 SAP AG 248,668 - -------------------------------------------------------------------------------- 3,000 Siemens AG 285,651 - -------------------------------------------------------------------------------- 2,330,715 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- GREECE - 2.3% - -------------------------------------------------------------------------------- 19,800 Hellenic Telecommunications Organization SA(1) $ 575,531 - -------------------------------------------------------------------------------- 11,200 National Bank of Greece SA 513,703 - -------------------------------------------------------------------------------- 1,089,234 - -------------------------------------------------------------------------------- HONG KONG - 1.9% - -------------------------------------------------------------------------------- 41,000 China Mobile Ltd. 344,704 - -------------------------------------------------------------------------------- 28,000 Esprit Holdings Ltd. 290,300 - -------------------------------------------------------------------------------- 92,000 Li & Fung Ltd. 267,289 - -------------------------------------------------------------------------------- 902,293 - -------------------------------------------------------------------------------- INDIA - 2.2% - -------------------------------------------------------------------------------- 7,200 Infosys Technologies Ltd. 352,001 - -------------------------------------------------------------------------------- 37,600 Reliance Communication Ventures Ltd.(1) 361,710 - -------------------------------------------------------------------------------- 11,900 Tata Consultancy Services Ltd. 318,005 - -------------------------------------------------------------------------------- 1,031,716 - -------------------------------------------------------------------------------- IRELAND - 1.7% - -------------------------------------------------------------------------------- 17,393 Anglo Irish Bank Corp. plc 330,669 - -------------------------------------------------------------------------------- 6,046 Ryanair Holdings plc ADR(1) 463,066 - -------------------------------------------------------------------------------- 793,735 - -------------------------------------------------------------------------------- ITALY - 3.3% - -------------------------------------------------------------------------------- 18,435 Banco Popolare di Verona e Novara Scrl 518,269 - -------------------------------------------------------------------------------- 9,211 ENI SpA 301,663 - -------------------------------------------------------------------------------- 2,300 Fastweb 119,448 - -------------------------------------------------------------------------------- 9,932 Luxottica Group SpA 301,328 - -------------------------------------------------------------------------------- 12,162 Saipem SpA 306,466 - -------------------------------------------------------------------------------- 1,547,174 - -------------------------------------------------------------------------------- JAPAN - 14.6% - -------------------------------------------------------------------------------- 3,800 Astellas Pharma Inc. 166,109 - -------------------------------------------------------------------------------- 46,000 Bank of Yokohama Ltd. (The) 352,486 - -------------------------------------------------------------------------------- 6,600 Canon, Inc. 348,944 - -------------------------------------------------------------------------------- 13,000 Daiei Inc. (The)(1) 229,666 - -------------------------------------------------------------------------------- 1,900 Fanuc Ltd. 173,167 - -------------------------------------------------------------------------------- 4,200 Hoya Corp. 165,453 - -------------------------------------------------------------------------------- 14,500 JTEKT Corp. 293,119 - -------------------------------------------------------------------------------- 10,600 Konami Corp. 304,937 - -------------------------------------------------------------------------------- 4,000 Leopalace21 Corp. 134,422 - -------------------------------------------------------------------------------- 20,000 Matsushita Electric Works, Ltd. 224,785 - -------------------------------------------------------------------------------- 49,000 Mitsubishi Electric Corp. 445,743 - -------------------------------------------------------------------------------- 32 Mitsubishi UFJ Financial Group, Inc. 409,140 - -------------------------------------------------------------------------------- 3,000 Murata Manufacturing Co. Ltd. 204,743 - -------------------------------------------------------------------------------- 1,000 Nintendo Co., Ltd. 238,435 - -------------------------------------------------------------------------------- 2,800 ORIX Corp. 766,792 - -------------------------------------------------------------------------------- 36,000 Sekisui Chemical Co. Ltd. 304,160 - -------------------------------------------------------------------------------- 6,800 Shin-Etsu Chemical Co., Ltd. 449,397 - -------------------------------------------------------------------------------- 13,000 Sumitomo Realty & Development Co. Ltd. 414,410 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 6 NT International Growth - Schedule of Investments NOVEMBER 30, 2006 Shares Value - -------------------------------------------------------------------------------- 22,000 Tokyo Tatemono Co. Ltd. $ 236,430 - -------------------------------------------------------------------------------- 10,900 Toyota Motor Corp. 661,033 - -------------------------------------------------------------------------------- 2,700 Yamada Denki Co. Ltd. 255,877 - -------------------------------------------------------------------------------- 6,779,248 - ------------------------------------------------------------------------------- MEXICO - 1.1% - -------------------------------------------------------------------------------- 11,248 America Movil SAB de CV Series L ADR 500,199 - -------------------------------------------------------------------------------- NETHERLANDS - 3.3% - -------------------------------------------------------------------------------- 9,600 ASML Holding N.V.(1) 238,600 - -------------------------------------------------------------------------------- 13,194 ING Groep N.V. CVA 562,683 - -------------------------------------------------------------------------------- 6,800 Koninklijke Philips Electronics N.V. 253,062 - -------------------------------------------------------------------------------- 9,547 Royal Numico N.V. 492,400 - -------------------------------------------------------------------------------- 1,546,745 - -------------------------------------------------------------------------------- NORWAY - 2.1% - -------------------------------------------------------------------------------- 2,698 Aker Kvaerner ASA 308,518 - -------------------------------------------------------------------------------- 8,500 Statoil ASA 236,092 - -------------------------------------------------------------------------------- 24,863 Telenor ASA 427,071 - -------------------------------------------------------------------------------- 971,681 - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA - 0.8% - -------------------------------------------------------------------------------- 185,500 China Merchants Bank Co. Ltd. Cl H(1) 356,270 - -------------------------------------------------------------------------------- SINGAPORE - 1.4% - -------------------------------------------------------------------------------- 28,000 Keppel Corp. Ltd. 316,333 - -------------------------------------------------------------------------------- 26,000 United Overseas Bank Ltd. 313,995 - -------------------------------------------------------------------------------- 630,328 - -------------------------------------------------------------------------------- SOUTH KOREA - 1.4% - -------------------------------------------------------------------------------- 2,900 Hyundai Motor Company 219,598 - -------------------------------------------------------------------------------- 600 Samsung Electronics 411,746 - -------------------------------------------------------------------------------- 631,344 - -------------------------------------------------------------------------------- SPAIN - 2.9% - -------------------------------------------------------------------------------- 23,150 Cintra Concesiones de Infraestructuras de Transporte SA 387,366 - -------------------------------------------------------------------------------- 9,301 Inditex SA 471,579 - -------------------------------------------------------------------------------- 24,200 Telefonica SA 490,218 - -------------------------------------------------------------------------------- 1,349,163 - -------------------------------------------------------------------------------- SWEDEN - 1.5% - -------------------------------------------------------------------------------- 8,100 Swedbank AB A Shares 284,009 - -------------------------------------------------------------------------------- 99,700 Telefonaktiebolaget LM Ericsson Cl B 385,991 - -------------------------------------------------------------------------------- 670,000 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- SWITZERLAND - 11.6% - -------------------------------------------------------------------------------- 29,715 ABB Ltd. $ 479,934 - -------------------------------------------------------------------------------- 8,461 Adecco SA 560,748 - -------------------------------------------------------------------------------- 8,931 Compagnie Financiere Richemont AG Cl A 481,195 - -------------------------------------------------------------------------------- 8,300 Credit Suisse Group 549,038 - -------------------------------------------------------------------------------- 5,300 Holcim Ltd. 475,564 - -------------------------------------------------------------------------------- 2,100 Julius Baer Holding AG 223,488 - -------------------------------------------------------------------------------- 600 Nestle SA 211,844 - -------------------------------------------------------------------------------- 11,065 Novartis AG 645,124 - -------------------------------------------------------------------------------- 4,666 Roche Holding AG 843,195 - -------------------------------------------------------------------------------- 2,500 Syngenta AG 439,881 - -------------------------------------------------------------------------------- 8,058 UBS AG 484,603 - -------------------------------------------------------------------------------- 5,394,614 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) - 1.7% - -------------------------------------------------------------------------------- 133,000 Acer Inc. 286,923 - -------------------------------------------------------------------------------- 69,000 Hon Hai Precision Industry Co., Ltd. 502,225 - -------------------------------------------------------------------------------- 789,148 - -------------------------------------------------------------------------------- UNITED KINGDOM - 16.2% - -------------------------------------------------------------------------------- 23,957 Amvescap plc 259,034 - -------------------------------------------------------------------------------- 40,051 Barclays plc 535,800 - -------------------------------------------------------------------------------- 32,131 BG Group plc 432,374 - -------------------------------------------------------------------------------- 20,359 BP plc 229,736 - -------------------------------------------------------------------------------- 40,400 BT Group plc 225,758 - -------------------------------------------------------------------------------- 42,910 Burberry Group plc 507,828 - -------------------------------------------------------------------------------- 41,978 Capita Group plc 473,278 - -------------------------------------------------------------------------------- 56,045 Carphone Warehouse Group plc 298,034 - -------------------------------------------------------------------------------- 9,500 Experian Group Ltd. 109,077 - -------------------------------------------------------------------------------- 14,572 GlaxoSmithKline plc 387,022 - -------------------------------------------------------------------------------- 46,800 International Power plc 312,124 - -------------------------------------------------------------------------------- 50,616 Man Group plc 471,658 - -------------------------------------------------------------------------------- 34,605 Marks & Spencer Group plc 464,645 - -------------------------------------------------------------------------------- 11,000 Pearson plc 162,295 - -------------------------------------------------------------------------------- 21,300 Prudential plc 276,576 - -------------------------------------------------------------------------------- 14,307 Reckitt Benckiser plc 636,213 - -------------------------------------------------------------------------------- 22,800 Reuters Group plc 202,822 - -------------------------------------------------------------------------------- 9,151 Royal Bank of Scotland Group plc 331,375 - -------------------------------------------------------------------------------- 16,600 SABMiller plc 346,899 - -------------------------------------------------------------------------------- 7,600 Standard Chartered plc 217,987 - -------------------------------------------------------------------------------- 83,000 Tesco plc 638,401 - -------------------------------------------------------------------------------- 7,518,936 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $39,346,748) 43,342,775 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------- 7 NT International Growth - Schedule of Investments NOVEMBER 30, 2006 Value - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS - 1.9% - -------------------------------------------------------------------------------- Repurchase Agreement, Merrill Lynch & Co., Inc., (collateralized by various U.S. Treasury obligations, 4.25% - 5.01%, 12/28/06 - 1/15/11, valued at $918,339), in a joint trading account at 5.24%, dated 11/30/06, due 12/1/06 (Delivery value $900,131) (Cost $900,000) $ 900,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 95.4% (Cost $40,246,748) 44,242,775 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 4.6% 2,136,858 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $46,379,633 ================================================================================ MARKET SECTOR DIVERSIFICATION - -------------------------------------------------------------------------------- (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 25.3% - -------------------------------------------------------------------------------- Consumer Discretionary 13.2% - -------------------------------------------------------------------------------- Industrials 11.4% - -------------------------------------------------------------------------------- Information Technology 8.6% - -------------------------------------------------------------------------------- Telecommunication Services 6.6% - -------------------------------------------------------------------------------- Consumer Staples 6.5% - -------------------------------------------------------------------------------- Health Care 6.4% - -------------------------------------------------------------------------------- Energy 6.4% - -------------------------------------------------------------------------------- Materials 5.7% - -------------------------------------------------------------------------------- Utilities 3.4% - -------------------------------------------------------------------------------- Cash and Equivalents(+) 6.5% - -------------------------------------------------------------------------------- (+)Includes temporary cash investments and other assets and liabilities. - -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt CVA = Certificaten Van Aandelen (1) Non-income producing. See Notes to Financial Statements. - ------- 8 NT Emerging Markets - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- SINCE INCEPTION(1) INCEPTION DATE - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS 10.10% 5/12/06 - -------------------------------------------------------------------------------- MSCI EM INDEX 3.56% -- - -------------------------------------------------------------------------------- (1) Total returns for periods less than one year are not annualized. GROWTH OF $10,000 OVER LIFE OF CLASS $10,000 investment made May 12, 2006
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QUARTERLY RETURNS OVER LIFE OF CLASS - -------------------------------------------------------------------------------- 5/31/06* 8/31/06 11/30/06 - -------------------------------------------------------------------------------- Institutional Class -8.50% 4.26% 15.41% - -------------------------------------------------------------------------------- MSCI EM Index -12.20% 3.91% 13.50% - -------------------------------------------------------------------------------- *From 5/12/06, the Institutional 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. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 9 NT Emerging Markets - Portfolio Commentary PORTFOLIO MANAGERS: MICHAEL DONNELLY AND PATRICIA RIBEIRO PERFORMANCE SUMMARY NT Emerging Markets gained 10.10%* from its May 12, 2006, inception through November 30, 2006. Its benchmark, the MSCI EM Index, advanced 3.56%. This portfolio 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 LIVESTRONG Portfolios on May 12, 2006, as part of a strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF).** The global stock gains discussed in the Market Perspective on page 2 help explain the fund's positive absolute performance. Favorable stock selection generated NT Emerging Markets' outperformance compared with the benchmark. RUSSIA: THE TOP CONTRIBUTING COUNTRY Investments in Russia delivered the best absolute performance during the reporting period. Effective stock selection also made this region the best contributor versus the benchmark and yielded a top-contributing stock in X5 Retail Group N.V. GDR (up 42% in U.S. dollar terms for the period). The company reported that it recorded record sales growth in 2005. Comstar United Telesystems was another noteworthy name. The Russian telecom firm reported that its second-quarter profit nearly tripled. CHINA ADDED VALUE Our holdings in China significantly bolstered results on an absolute and a relative basis. One standout was Nine Dragons Paper (up 97%), the largest maker of containerboard for the cardboard boxes used to export China's products. The stock rose following announcements that the firm plans to build a new pulp-making plant to make containerboard, some of which it will sell to rival paper makers. OPPORTUNITY IN HONG KONG We also found opportunity in Hong Kong, where our search for companies demonstrating earnings growth led us to China Mobile Ltd., the period's top-contributing stock. We were rewarded for taking an overweight position in China Mobile, the world's largest mobile phone service provider, which had 449 million subscribers by the end of October, reflecting a gain of 55 million subscribers in the first 10 months of 2006. Elsewhere, TOP TEN HOLDINGS AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Vanguard Emerging Markets ETF 4.5% -- - -------------------------------------------------------------------------------- iShares MSCI Emerging Markets Index Fund 4.4% -- - -------------------------------------------------------------------------------- OAO Gazprom ADR 1.8% 2.8% - -------------------------------------------------------------------------------- Unified Energy System 1.8% -- - -------------------------------------------------------------------------------- X5 Retail Group N.V. GDR 1.6% -- - -------------------------------------------------------------------------------- Sappi Ltd. 1.4% 1.3% - -------------------------------------------------------------------------------- PT Bank Niaga Tbk 1.3% 0.7% - -------------------------------------------------------------------------------- Parkson Retail Group Ltd. 1.3% 1.1% - -------------------------------------------------------------------------------- Comstar United Telesystems GDR 1.3% -- - -------------------------------------------------------------------------------- Centros Comerciales Sudamericanos SA 1.3% 1.7% - -------------------------------------------------------------------------------- * Total returns for periods less than one year are not annualized. **American Century Investment Services, Inc., has entered into an agreement with the LAF for rights to use the LIVESTRONG name. LIVESTRONG is a trademark of the LAF. For more information about the foundation, visit www.livestrong.org. (continued) - ------ 10 NT Emerging Markets - Portfolio Commentary Parkson Retail (up 59%), a non-benchmark holding, ranked among the top-contributing stocks. MINOR SETBACKS Israel was the only nation to detract (modestly) from absolute performance on a country basis. One disappointment from this region was Teva Pharmaceuticals, the world's biggest generic drug maker, which saw its shares fall in May and June over concern about increased competition and reduced prices for generic drugs. The firm also encountered challenges to its right to six-month exclusive sales of its version of the popular Zocor cholesterol drug produced by Merck & Co. OUR STARTING POINT FOR THE NEXT SIX MONTHS Senior portfolio manager Michael Donnelly noted after the reporting period, "The MSCI EM Index gained over 200% cumulatively from December 31, 2002 to November 30, 2006, a powerful performance run triggered by generally strong macroeconomic conditions in the developing world. These emerging market conditions and related equity performance can't last indefinitely, but we believe our process can help us identify investment opportunities even when broad market conditions become less favorable." As fundamental, bottom-up managers, we evaluate each company individually on its own merits, and build the portfolio from the ground up, one stock at a time. In our search for companies demonstrating earnings acceleration, we will structure exposure to stocks and market segments as warranted based on the strength of individual companies. As of November 30, 2006, our process had led us to companies in China, Indonesia, and Brazil, where we continued to see opportunities, as reflected in our overweight positions in those countries compared with the fund's benchmark. Alternately, opportunities in Russia and South Korea were tougher to find; consequently, we maintained underweight positions in those regions. INVESTMENTS BY COUNTRY AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Brazil 10.1% 10.5% - -------------------------------------------------------------------------------- South Korea 9.8% 13.1% - -------------------------------------------------------------------------------- Taiwan (Republic of China) 9.4% 12.1% - -------------------------------------------------------------------------------- Multi-National 8.9% -- - -------------------------------------------------------------------------------- Russian Federation 8.4% 6.3% - -------------------------------------------------------------------------------- Mexico 5.8% 3.6% - -------------------------------------------------------------------------------- People's Republic of China 5.2% 9.0% - -------------------------------------------------------------------------------- Hong Kong 5.0% 4.9% - -------------------------------------------------------------------------------- South Africa 3.8% 5.5% - -------------------------------------------------------------------------------- Chile 3.8% 3.4% - -------------------------------------------------------------------------------- Other Countries 19.3% 24.4% - -------------------------------------------------------------------------------- Cash and Equivalents(1) 10.5% 7.2% - -------------------------------------------------------------------------------- (1) Includes temporary cash investments and other assets and liabilities. TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Foreign Common Stocks 87.1% 89.0% - -------------------------------------------------------------------------------- Foreign Preferred Stocks 2.4% 2.6% - -------------------------------------------------------------------------------- Domestic Common Stocks -- 1.2% - -------------------------------------------------------------------------------- TOTAL EQUITY EXPOSURE 89.5% 92.8% - -------------------------------------------------------------------------------- Temporary Cash Investments 1.5% 6.2% - -------------------------------------------------------------------------------- Other Assets and Liabilities 9.0% 1.0% - -------------------------------------------------------------------------------- - ------ 11 NT Emerging Markets - Schedule of Investments NOVEMBER 30, 2006 Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 87.1% - -------------------------------------------------------------------------------- ARGENTINA - 0.5% - -------------------------------------------------------------------------------- 3,882 Banco Macro Bansud SA ADR $ 108,812 - -------------------------------------------------------------------------------- AUSTRIA - 0.5% - -------------------------------------------------------------------------------- 800 Raiffeisen International Bank Holding AG 94,117 - -------------------------------------------------------------------------------- BRAZIL - 7.7% - -------------------------------------------------------------------------------- 14,000 ALL - America Latina Logistica SA 124,006 - -------------------------------------------------------------------------------- 6,100 American Banknote SA 47,993 - -------------------------------------------------------------------------------- 12,200 Equatorial Energia SA(1) 98,469 - -------------------------------------------------------------------------------- 9,700 Gafisa SA(1) 141,327 - -------------------------------------------------------------------------------- 18,500 Lojas Renner SA 242,417 - -------------------------------------------------------------------------------- 10,000 Lupatech SA(1) 125,069 - -------------------------------------------------------------------------------- 10,651 Medial Saude SA(1) 113,259 - -------------------------------------------------------------------------------- 2,182 Petroleo Brasileiro SA ADR 205,435 - -------------------------------------------------------------------------------- 17,982 Santos-Brasil SA(1) 195,457 - -------------------------------------------------------------------------------- 6,100 Totvs SA(1) 142,456 - -------------------------------------------------------------------------------- 12,400 Tractebel Energia SA 93,660 - -------------------------------------------------------------------------------- 1,529,548 - -------------------------------------------------------------------------------- CHILE - 3.8% - -------------------------------------------------------------------------------- 85,200 Centros Comerciales Sudamericanos SA 257,422 - -------------------------------------------------------------------------------- 26,100 Compania Cervecerias Unidas SA 152,756 - -------------------------------------------------------------------------------- 48,400 La Polar SA 228,632 - -------------------------------------------------------------------------------- 100,800 Ripley Corp. SA(1) 114,716 - -------------------------------------------------------------------------------- 753,526 - -------------------------------------------------------------------------------- CZECH REPUBLIC - 0.8% - -------------------------------------------------------------------------------- 1,000 Komercni Banka AS 149,253 - -------------------------------------------------------------------------------- EGYPT - 0.9% - -------------------------------------------------------------------------------- 25,600 Egyptian Financial Group -- Hermes Holding SAE(1) 182,662 - -------------------------------------------------------------------------------- FINLAND - 1.2% - -------------------------------------------------------------------------------- 11,878 Nokian Renkaat Oyj 245,963 - -------------------------------------------------------------------------------- GERMANY - 1.0% - -------------------------------------------------------------------------------- 7,762 CAT Oil AG(1) 190,244 - -------------------------------------------------------------------------------- HONG KONG - 5.0% - -------------------------------------------------------------------------------- 124,000 AAC Acoustic Technology Holdings Inc.(1) 133,902 - -------------------------------------------------------------------------------- 2,292 China Mobile Ltd. ADR 96,722 - -------------------------------------------------------------------------------- 166,000 China Yurun Food Group Ltd. 153,647 - -------------------------------------------------------------------------------- 44,000 FU JI Food and Catering Services Holdings Ltd. 101,815 - -------------------------------------------------------------------------------- 52,500 Parkson Retail Group Ltd. 266,587 - -------------------------------------------------------------------------------- 25,000 Vtech Holdings Ltd. 157,318 - -------------------------------------------------------------------------------- 146,000 Xiwang Sugar Holdings Co. Ltd. 81,269 - -------------------------------------------------------------------------------- 991,260 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- INDIA - 1.8% - -------------------------------------------------------------------------------- 6,900 JSW Steel Ltd. $ 50,783 - -------------------------------------------------------------------------------- 8,400 Tata Consultancy Services Ltd. 224,474 - -------------------------------------------------------------------------------- 2,324 WNS Holdings Ltd. ADR(1) 78,784 - -------------------------------------------------------------------------------- 354,041 - -------------------------------------------------------------------------------- INDONESIA - 3.7% - -------------------------------------------------------------------------------- 67,500 PT Astra Agro Lestari Tbk 78,437 - -------------------------------------------------------------------------------- 46,000 PT Astra International Tbk 80,055 - -------------------------------------------------------------------------------- 543,500 PT Bank Mandiri Tbk 164,562 - -------------------------------------------------------------------------------- 2,450,500 PT Bank Niaga Tbk 267,377 - -------------------------------------------------------------------------------- 137,000 PT Telekomunikasi Indonesia Tbk 147,987 - -------------------------------------------------------------------------------- 738,418 - -------------------------------------------------------------------------------- ISRAEL - 0.7% - -------------------------------------------------------------------------------- 4,521 Teva Pharmaceutical Industries Ltd. ADR 144,944 - -------------------------------------------------------------------------------- KAZAKHSTAN - 1.1% - -------------------------------------------------------------------------------- 2,475 Kazakhmys plc 56,538 - -------------------------------------------------------------------------------- 8,369 KazMunaiGas Exploration Production GDR(1) 156,082 - -------------------------------------------------------------------------------- 212,620 - -------------------------------------------------------------------------------- LUXEMBOURG - 0.8% - -------------------------------------------------------------------------------- 6,876 Ternium SA ADR(1) 163,718 - -------------------------------------------------------------------------------- MALAYSIA - 1.2% - -------------------------------------------------------------------------------- 204,000 AirAsia Bhd(1) 86,269 - -------------------------------------------------------------------------------- 38,000 Kuala Lumpur Kepong Bhd 142,841 - -------------------------------------------------------------------------------- 229,110 - -------------------------------------------------------------------------------- MEXICO - 5.8% - -------------------------------------------------------------------------------- 65,187 Axtel SA de CV(1) 159,177 - -------------------------------------------------------------------------------- 28,448 Corporacion GEO SA de CV Series B(1) 123,250 - -------------------------------------------------------------------------------- 37,902 Corporacion Moctezuma, SA de CV 97,731 - -------------------------------------------------------------------------------- 31,000 GRUMA SA de CV Cl B 105,920 - -------------------------------------------------------------------------------- 6,246 Grupo Aeroportuario del Pacifico SA de CV ADR 246,654 - -------------------------------------------------------------------------------- 37,500 Grupo Financiero Banorte SA de CV 139,746 - -------------------------------------------------------------------------------- 32,600 Organizacion Soriana SA de CV Cl B 205,843 - -------------------------------------------------------------------------------- 20,675 Urbi Desarrollos Urbanos SA de CV(1) 65,179 - -------------------------------------------------------------------------------- 1,143,500 - -------------------------------------------------------------------------------- MULTI-NATIONAL - 8.9% - -------------------------------------------------------------------------------- 8,000 iShares MSCI Emerging Markets Index Fund 878,400 - -------------------------------------------------------------------------------- 11,800 Vanguard Emerging Markets ETF 893,850 - -------------------------------------------------------------------------------- 1,772,250 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 12 NT Emerging Markets - Schedule of Investments NOVEMBER 30, 2006 Shares Value - -------------------------------------------------------------------------------- PEOPLE'S REPUBLIC OF CHINA - 5.2% - -------------------------------------------------------------------------------- 278,000 Air China Ltd. $ 141,522 - -------------------------------------------------------------------------------- 210,000 China Petroleum & Chemical Corp. Cl H 166,027 - -------------------------------------------------------------------------------- 348,000 Dongfeng Motor Group Co. Ltd. Cl H(1) 155,236 - -------------------------------------------------------------------------------- 174,000 Golden Eagle Retail Group Ltd. 127,052 - -------------------------------------------------------------------------------- 58,000 Nine Dragons Paper Holdings Ltd. 103,938 - -------------------------------------------------------------------------------- 190,000 PetroChina Co. Ltd. Cl H 241,810 - -------------------------------------------------------------------------------- 104,000 Wumart Stores Inc. Cl H 91,983 - -------------------------------------------------------------------------------- 1,027,568 - -------------------------------------------------------------------------------- PERU - 0.2% - -------------------------------------------------------------------------------- 919 Credicorp Ltd. 36,714 - -------------------------------------------------------------------------------- PHILIPPINES - 1.8% - -------------------------------------------------------------------------------- 5,200 Philippine Long Distance Telephone Co. ADR 255,372 - -------------------------------------------------------------------------------- 315,200 Robinsons Land Corp. 101,780 - -------------------------------------------------------------------------------- 357,152 - -------------------------------------------------------------------------------- POLAND - 0.6% - -------------------------------------------------------------------------------- 8,420 Globe Trade Centre SA(1) 119,534 - -------------------------------------------------------------------------------- RUSSIAN FEDERATION - 8.4% - -------------------------------------------------------------------------------- 35,338 Comstar United Telesystems GDR 262,915 - -------------------------------------------------------------------------------- 7,800 OAO Gazprom ADR 364,260 - -------------------------------------------------------------------------------- 1,336 OAO NovaTek GDR 86,172 - -------------------------------------------------------------------------------- 6,773 OAO TMK GDR(1) 199,804 - -------------------------------------------------------------------------------- 7,585 Sistema Hals GDR(1) 93,144 - -------------------------------------------------------------------------------- 367,454 Unified Energy System 349,081 - -------------------------------------------------------------------------------- 12,169 X5 Retail Group N.V. GDR(1) 316,395 - -------------------------------------------------------------------------------- 1,671,771 - -------------------------------------------------------------------------------- SINGAPORE - 0.2% - -------------------------------------------------------------------------------- 73,000 Beauty China Holdings Ltd. 42,895 - -------------------------------------------------------------------------------- SOUTH AFRICA - 3.8% - -------------------------------------------------------------------------------- 4,582 Barloworld Ltd. 94,425 - -------------------------------------------------------------------------------- 5,766 Exxaro Resources Ltd. 44,509 - -------------------------------------------------------------------------------- 5,766 Kumba Iron Ore Ltd.(1) 92,248 - -------------------------------------------------------------------------------- 18,200 Murray & Roberts Holdings Ltd. 99,169 - -------------------------------------------------------------------------------- 2,755 Pretoria Portland Cement Co. Ltd. 145,685 - -------------------------------------------------------------------------------- 17,702 Sappi Ltd. 285,705 - -------------------------------------------------------------------------------- 761,741 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- SOUTH KOREA - 9.8% - -------------------------------------------------------------------------------- 330 Amorepacific Corp.(1) $ 179,251 - -------------------------------------------------------------------------------- 800 CJ Corp. 91,642 - -------------------------------------------------------------------------------- 6,730 GS Holdings Corp. 221,872 - -------------------------------------------------------------------------------- 6,500 Halla Climate Control 82,500 - -------------------------------------------------------------------------------- 700 KCC Corp. 222,491 - -------------------------------------------------------------------------------- 9,300 LG Dacom Corp. 214,069 - -------------------------------------------------------------------------------- 12,000 LIG Non-Life Insurance Co., Ltd. 186,513 - -------------------------------------------------------------------------------- 800 POSCO 251,264 - -------------------------------------------------------------------------------- 4,920 Shinhan Financial Group Co., Ltd. 239,465 - -------------------------------------------------------------------------------- 400 Shinsegae Co. Ltd. 256,858 - -------------------------------------------------------------------------------- 1,945,925 - -------------------------------------------------------------------------------- SPAIN - 0.3% - -------------------------------------------------------------------------------- 1,322 Repsol YPF, SA 47,464 - -------------------------------------------------------------------------------- TAIWAN (REPUBLIC OF CHINA) - 9.4% - -------------------------------------------------------------------------------- 77,000 Asia Cement Corp. 76,274 - -------------------------------------------------------------------------------- 77,000 Asustek Computer Inc. 211,569 - -------------------------------------------------------------------------------- 136,220 China Steel Corp. 138,094 - -------------------------------------------------------------------------------- 117,600 Chinatrust Financial Holding Co. 100,317 - -------------------------------------------------------------------------------- 320,000 Chung Hwa Pulp Corp. 172,091 - -------------------------------------------------------------------------------- 34,400 Hon Hai Precision Industry Co., Ltd. 250,384 - -------------------------------------------------------------------------------- 45,000 Hung Poo Real Estate Development Corp.(1) 55,424 - -------------------------------------------------------------------------------- 119,000 Realtek Semiconductor Corp. 185,001 - -------------------------------------------------------------------------------- 106,325 Shin Kong Financial Holding Co. Ltd. 109,430 - -------------------------------------------------------------------------------- 157,000 U-Ming Marine Transport Corp.(1) 197,493 - -------------------------------------------------------------------------------- 99,000 Wistron Corp. 126,217 - -------------------------------------------------------------------------------- 85,772 Wistron NeWeb Corp. 252,901 - -------------------------------------------------------------------------------- 1,875,195 - -------------------------------------------------------------------------------- THAILAND - 1.4% - -------------------------------------------------------------------------------- 375,200 Krung Thai Bank Public Co. Ltd. 144,247 - -------------------------------------------------------------------------------- 168,600 Thoresen Thai Agencies Public Co. Ltd.(1) 132,691 - -------------------------------------------------------------------------------- 276,938 - -------------------------------------------------------------------------------- TURKEY - 0.6% - -------------------------------------------------------------------------------- 34,700 Turkiye Garanti Bankasi AS 114,951 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $15,031,996) $ 17,281,834 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 13 NT Emerging Markets - Schedule of Investments NOVEMBER 30, 2006 Shares Value - -------------------------------------------------------------------------------- PREFERRED STOCKS - 2.4% - -------------------------------------------------------------------------------- BRAZIL - 2.4% - -------------------------------------------------------------------------------- 3,780 Aracruz Celulose SA ADR $ 230,050 - -------------------------------------------------------------------------------- 1,330,000 Companhia de Gas de Sao Paulo Cl A 200,540 - -------------------------------------------------------------------------------- 800,000 Lojas Americanas SA 38,705 - -------------------------------------------------------------------------------- TOTAL PREFERRED STOCKS (Cost $418,778) 469,295 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS - 1.5% - -------------------------------------------------------------------------------- Repurchase Agreement, Merrill Lynch & Co., Inc., (collateralized by various U.S. Treasury obligations, 4.25% - 5.01%, 12/28/06 - 1/15/11, valued at $306,113), in a joint trading account at 5.24%, dated 11/30/06, due 12/1/06 (Delivery value $300,044) (Cost $300,000) 300,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 91.0% (Cost $15,750,774) 18,051,129 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 9.0% 1,793,011 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $19,844,140 ================================================================================ MARKET SECTOR DIVERSIFICATION - -------------------------------------------------------------------------------- (AS A % OF NET ASSETS) - -------------------------------------------------------------------------------- Financials 12.2% - -------------------------------------------------------------------------------- Consumer Staples 10.9% - -------------------------------------------------------------------------------- Consumer Discretionary 10.1% - -------------------------------------------------------------------------------- Materials 9.6% - -------------------------------------------------------------------------------- Energy 9.5% - -------------------------------------------------------------------------------- Diversified 8.9% - -------------------------------------------------------------------------------- Information Technology 8.9% - -------------------------------------------------------------------------------- Industrials 8.6% - -------------------------------------------------------------------------------- Telecommunication Services 5.7% - -------------------------------------------------------------------------------- Utilities 3.8% - -------------------------------------------------------------------------------- Health Care 1.3% - -------------------------------------------------------------------------------- Cash and Equivalents(+) 10.5% - -------------------------------------------------------------------------------- (+)Includes temporary cash investments and other assets and liabilities. - -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt ETF = Exchange Traded Funds GDR = Global Depositary Receipt (1) Non-income producing. The aggregate value of fair valued securities as of November 30, 2006, was $91,983, which represented 0.5% 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 June 1, 2006 to November 30, 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 6/1/06 - EXPENSE 6/1/06 11/30/06 11/30/06 RATIO* - -------------------------------------------------------------------------------- NT INTERNATIONAL GROWTH -- INSTITUTIONAL CLASS SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- Actual $1,000 $1,107.10 $5.65 1.07% - -------------------------------------------------------------------------------- Hypothetical $1,000 $1,019.70 $5.42 1.07% - -------------------------------------------------------------------------------- NT EMERGING MARKETS -- INSTITUTIONAL CLASS SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- Actual $1,000 $1,203.30 $8.84 1.60% - -------------------------------------------------------------------------------- Hypothetical $1,000 $1,017.05 $8.09 1.60% - -------------------------------------------------------------------------------- *Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 16 Statement of Assets and Liabilities NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- NT INTERNATIONAL NT EMERGING GROWTH MARKETS - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities -- at value (cost of $40,246,748 and $15,750,774, respectively) $44,242,775 $18,051,129 - ---------------------------------------------- Cash 66,275 1,075,770 - ---------------------------------------------- Foreign currency holdings, at value (cost of $144,326 and $258,161, respectively) 144,404 258,280 - ---------------------------------------------- Receivable for investments sold 2,216,035 1,457,353 - ---------------------------------------------- Dividends and interest receivable 67,703 18,756 - -------------------------------------------------------------------------------- 46,737,192 20,861,288 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Payable for investments purchased 318,876 993,304 - ---------------------------------------------- Accrued management fees 38,683 23,844 - -------------------------------------------------------------------------------- 357,559 1,017,148 - -------------------------------------------------------------------------------- NET ASSETS $46,379,633 $19,844,140 ================================================================================ INSTITUTIONAL CLASS CAPITAL SHARES, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Authorized 100,000,000 100,000,000 ================================================================================ Outstanding 4,483,424 1,802,556 ================================================================================ NET ASSET VALUE PER SHARE $10.34 $11.01 ================================================================================ NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $43,853,815 $17,537,705 - ---------------------------------------------- Undistributed net investment income 96,508 121,733 - ---------------------------------------------- Accumulated net realized loss on investment and foreign currency transactions (1,559,008) (107,096) - ---------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 3,988,318 2,291,798 - -------------------------------------------------------------------------------- $46,379,633 $19,844,140 ================================================================================ See Notes to Financial Statements. - ------ 17 Statement of Operations PERIOD ENDED NOVEMBER 30, 2006(1) - -------------------------------------------------------------------------------- NT INTERNATIONAL NT EMERGING GROWTH MARKETS - -------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - ---------------------------------------------- Dividends (net of foreign taxes withheld of $29,255 and $21,641, respectively) $311,562 $240,962 - ---------------------------------------------- Interest 23,053 23,584 - -------------------------------------------------------------------------------- 334,615 264,546 - -------------------------------------------------------------------------------- EXPENSES: - ---------------------------------------------- Management fees 213,309 128,042 - ---------------------------------------------- Directors' fees and expenses 303 120 - ---------------------------------------------- Other expenses 2,195 1,654 - -------------------------------------------------------------------------------- 215,807 129,816 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) 118,808 134,730 - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) NET REALIZED GAIN (LOSS) ON: - ---------------------------------------------- Investment transactions (net of foreign taxes withheld of $411 and $33, respectively) (1,162,467) (17,129) - ---------------------------------------------- Foreign currency transactions (net of foreign taxes withheld of $- and $261, respectively) (418,841) (102,964) - -------------------------------------------------------------------------------- (1,581,308) (120,093) - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION ON: - ---------------------------------------------- Investments (net of foreign taxes accrued of $(20,305), and $(8,754), respectively) 3,075,487 2,222,310 - ---------------------------------------------- Translation of assets and liabilities in foreign currencies 912,831 69,488 - -------------------------------------------------------------------------------- 3,988,318 2,291,798 - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) 2,407,010 2,171,705 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $2,525,818 $2,306,435 ================================================================================ (1) May 12, 2006 (fund inception) through November 30, 2006. See Notes to Financial Statements. - ------ 18 Statement of Changes in Net Assets PERIOD ENDED NOVEMBER 30, 2006(1) - -------------------------------------------------------------------------------- NT INTERNATIONAL NT EMERGING INCREASE (DECREASE) IN NET ASSETS GROWTH MARKETS - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income (loss) $ 118,808 $ 134,730 - ---------------------------------------------- Net realized gain (loss) (1,581,308) (120,093) - ---------------------------------------------- Change in net unrealized appreciation (depreciation) 3,988,318 2,291,798 - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations 2,525,818 2,306,435 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Proceeds from shares sold 44,735,507 17,857,562 - ---------------------------------------------- Payments for shares redeemed (881,692) (319,857) - -------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions 43,853,815 17,537,705 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS 46,379,633 19,844,140 - -------------------------------------------------------------------------------- NET ASSETS - -------------------------------------------------------------------------------- End of period $46,379,633 $19,844,140 ================================================================================ Undistributed net investment income $96,508 $121,733 ================================================================================ TRANSACTIONS IN SHARES OF THE FUNDS - -------------------------------------------------------------------------------- Sold 4,577,398 1,836,860 - ---------------------------------------------- Redeemed (93,974) (34,304) - -------------------------------------------------------------------------------- Net increase (decrease) in shares of the funds 4,483,424 1,802,556 ================================================================================ (1) May 12, 2006 (fund inception) through November 30, 2006. See Notes to Financial Statements. - ------ 19 Notes to Financial Statements NOVEMBER 30, 2006 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 at least three developed countries (excluding the United States). 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. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued at fair value as determined in accordance with procedures adopted by the Board of Directors. 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. Certain other circumstances may cause the funds to fair value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence. 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. 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 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 pur- (continued) - ------ 20 Notes to Financial Statements NOVEMBER 30, 2006 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) chases and sales of foreign currency contracts in their currency. The funds record the foreign tax expense, if any, as a reduction to the net realized gain (loss) on foreign currency transactions. FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The funds may enter into forward foreign currency exchange contracts to facilitate transactions of securities denominated in a foreign currency or to hedge the funds' exposure to foreign currency exchange rate fluctuations. The net U.S. dollar value of foreign currency underlying all contractual commitments held by the funds and the resulting unrealized appreciation or depreciation are determined daily using prevailing exchange rates. The funds bear the risk of an unfavorable change in the foreign currency exchange rate underlying the forward contract. Additionally, losses may arise if the counterparties do not perform under the contract terms. REPURCHASE AGREEMENTS -- The funds may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. Each repurchase agreement is recorded at cost. Each fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable each fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to each fund under each repurchase agreement. JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, each fund, along with other registered investment companies having management agreements with ACIM or American Century Global Investment Management, Inc. (ACGIM), may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations. INCOME TAX STATUS -- It is each fund's policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for federal or state income taxes. DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on the ex-dividend date. Distributions from net investment income, if any, are generally declared and paid annually. Distributions from net realized gains, if any, are generally declared and paid twice per year. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business, the funds enter into contracts that provide general indemnifications. The funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with 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. (continued) - ------ 21 Notes to Financial Statements NOVEMBER 30, 2006 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) 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% - -------------------------------------------------------------------------------- The effective annual management fee for NT International Growth and NT Emerging Markets for the period May 12, 2006 (fund inception) through November 30, 2006 was 1.06% and 1.59%, 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' investment objectives, policies and restrictions under the supervision of ACGIM and the Board of Directors. ACGIM pays all costs associated with retaining ACIM as the subadvisor of the funds. 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 JPMorgan 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 November 30, 2006, were as follows: - -------------------------------------------------------------------------------- NT INTERNATIONAL GROWTH NT EMERGING MARKETS - -------------------------------------------------------------------------------- Purchases $63,967,672 $23,684,669 - -------------------------------------------------------------------------------- Proceeds from sales $23,060,941 $8,125,811 - -------------------------------------------------------------------------------- For the period May 12, 2006 (fund inception) through November 30, 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. BANK LINE OF CREDIT Effective December 13, 2006, the funds, along with certain other funds managed by ACIM, entered into a $500,000,000, unsecured bank line of credit agreement with JPMorgan Chase Bank (JBMCB). JPMCB is a wholly owned subsidiary of JPM. 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 0.40%. (continued) - ------ 22 Notes to Financial Statements NOVEMBER 30, 2006 5. 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. 6. FEDERAL TAX INFORMATION On December 19, 2006, NT International Growth and NT Emerging Markets paid a per-share distribution from net investment income of $0.0324 and $0.0885, respectively, to shareholders of record on December 18, 2006. The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. There were no distributions paid by the funds during the period May 12, 2006 (fund inception) through November 30, 2006. As of November 30, 2006, the components of distributable earnings on a tax-basis and the federal tax cost of investments were as follows: - -------------------------------------------------------------------------------- NT INTERNATIONAL NT EMERGING GROWTH MARKETS - -------------------------------------------------------------------------------- Federal tax cost of investments $40,441,820 $15,785,13 ================================================================================ Gross tax appreciation of investments $4,312,592 $2,487,692 - ----------------------------------------------- Gross tax depreciation of investments (511,637) (221,696) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $3,800,955 $2,265,996 ================================================================================ Net tax appreciation (depreciation) translation of assets and liabilities in foreign currencies (4,729) (7,859) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) $3,796,226 $2,258,137 ================================================================================ Undistributed ordinary income $124,218 $128,512 - ----------------------------------------------- Accumulated capital losses $(1,383,858) $(80,214) - ----------------------------------------------- Currency loss deferrals $(10,768) -- - -------------------------------------------------------------------------------- The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and on investments in passive foreign investment companies. The accumulated capital losses listed above represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers for the funds expire in 2014. The currency loss deferrals represent net foreign currency losses incurred in the one-month period ended November 30, 2006. The funds have elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. 7. RECENTLY ISSUED ACCOUNTING STANDARDS In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109" (FIN 48). FIN 48 establishes a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. FIN 48 is effective for fiscal years beginning after December 15, 2006, and is to be applied to all open tax years as of the date of effectiveness. The FASB issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), in September 2006, which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands the required financial statement disclosures about fair value measurements. Management is currently evaluating the impact of adopting FIN 48 and FAS 157. - ------ 23 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) 0.03 - ---------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.31 - -------------------------------------------------------------------------------- Total From Investment Operations 0.34 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $10.34 ================================================================================ TOTAL RETURN(2) 3.40% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.07%(3) - ---------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 0.59%(3) - ---------------------------------------------------------------- Portfolio Turnover Rate 65% - ---------------------------------------------------------------- Net Assets, End of Period (in thousands) $46,380 - -------------------------------------------------------------------------------- (1) May 12, 2006 (fund inception) through November 30, 2006. (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. See Notes to Financial Statements. - ------ 24 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) 0.07 - ---------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) 0.94 - -------------------------------------------------------------------------------- Total From Investment Operations 1.01 - -------------------------------------------------------------------------------- Net Asset Value, End of Period $11.01 ================================================================================ TOTAL RETURN(2) 10.10% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.60%(3) - ---------------------------------------------------------------- Ratio of Net Investment Income (Loss) to Average Net Assets 1.68%(3) - ---------------------------------------------------------------- Portfolio Turnover Rate 59% - ---------------------------------------------------------------- Net Assets, End of Period (in thousands) $19,844 - -------------------------------------------------------------------------------- (1) May 12, 2006 (fund inception) through November 30, 2006. (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. See Notes to Financial Statements. - ------ 25 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders, American Century World Mutual Funds, Inc.: We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of NT International Growth Fund and NT Emerging Markets Fund (collectively the "Funds"), two of the mutual funds comprising American Century World Mutual Funds, Inc., as of November 30, 2006, and the related statements of operations, the statements of changes in net assets, and the financial highlights for the period May 12, 2006 (inception) to November 30, 2006. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2006, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of each of the respective Funds comprising American Century World Mutual Funds, Inc., as of November 30, 2006, and the results of their operations, the changes in their net assets and the financial highlights for the period May 12, 2006 (inception) to November 30, 2006, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Kansas City, Missouri January 16, 2007 - ------ 26 Management The individuals listed below serve as directors or officers of the funds. Each director serves until his or her successor is duly elected and qualified or until he or she retires. Mandatory retirement age for independent directors is 72. Those listed as interested directors are "interested" primarily by virtue of their engagement as officers of American Century Companies, Inc. (ACC) or its wholly owned, direct or indirect, subsidiaries, including the funds' investment advisor, American Century Global Investment Management, Inc. (ACGIM) or American Century Investment Management, Inc. (ACIM); the funds' principal underwriter, American Century Investment Services, Inc. (ACIS); and the funds' transfer agent, American Century Services, LLC (ACS). The other directors (more than three-fourths of the total number) are independent; that is, they have never been employees or officers of, and have no financial interest in, ACC or any of its wholly owned subsidiaries, including ACGIM, ACIM, ACIS, and ACS. The directors serve in this capacity for seven registered investment companies in the American Century family of funds. All persons named as officers of the funds also serve in a similar capacity for the other 14 investment companies advised by ACIM or ACGIM, unless otherwise noted. Only officers with policy-making functions are listed. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. - -------------------------------------------------------------------------------- INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- THOMAS A. BROWN, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1940 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1980 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Formerly Chief Executive Officer/Treasurer, Associated Bearings Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ANDREA C. HALL, PH.D., 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Advisor to the President, Midwest Research Institute NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- D.D. (DEL) HOCK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1935 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1996 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Chairman, Public Service Company Colorado NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Allied Motion Technologies, Inc. - -------------------------------------------------------------------------------- (continued) - ------ 27 Management - -------------------------------------------------------------------------------- INDEPENDENT DIRECTORS (CONTINUED) - -------------------------------------------------------------------------------- JAMES A. OLSON, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1942 POSITION(S) HELD WITH FUND: Advisory Board Member FIRST YEAR OF SERVICE: 2006 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Principal, Plaza Belmont LLC; Chief Financial Officer, Plaza Belmont LLC (September 1999 to July 2006) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Saia, Inc. and Entertainment Properties Trust - -------------------------------------------------------------------------------- DONALD H. PRATT, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1937 POSITION(S) HELD WITH FUND: Director, Chairman of the Board FIRST YEAR OF SERVICE: 1995 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Western Investments, Inc.; Retired Chairman of the Board, Butler Manufacturing Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- GALE E. SAYERS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1943 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Chief Executive Officer and Founder, Sayers40, Inc., a technology products and service provider NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Triad Hospitals, Inc. - -------------------------------------------------------------------------------- M. JEANNINE STRANDJORD, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1994 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Senior Vice President, Sprint Corporation NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, DST Systems, Inc.; Director, Euronet Worldwide, Inc. - -------------------------------------------------------------------------------- TIMOTHY S. WEBSTER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1961 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 2001 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Managing Director, TDB Acquisition Group LLC (September 2006 to present); President and Chief Executive Officer, American Italian Pasta Company (1992 to December 2005) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (continued) - ------ 28 Management - -------------------------------------------------------------------------------- INTERESTED DIRECTORS - -------------------------------------------------------------------------------- JAMES E. STOWERS, JR.(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1924 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman FIRST YEAR OF SERVICE: 1958 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Founder, Director and Controlling Shareholder, ACC; Chairman, ACC (January 1995 to December 2004); Director, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- JAMES E. STOWERS III(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1959 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman FIRST YEAR OF SERVICE: 1990 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, ACC (January 2005 to present); Co-Chairman, ACC (September 2000 to December 2004); Chairman, ACS and other ACC subsidiaries (April 2005 to September 2006); Director, ACC, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (1) James E. Stowers, Jr. is the father of James E. Stowers III. - -------------------------------------------------------------------------------- OFFICERS - -------------------------------------------------------------------------------- WILLIAM M. LYONS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1955 POSITION(S) HELD WITH FUND: President FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC (September 2000 to present); President, ACC (June 1997 to present); Also serves as: Chairman, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries; Chief Executive Officer, ACIM, ACGIM, ACIS and other ACC subsidiaries (October 2000 to October 2006); President, ACIM, ACGIM and other ACC subsidiaries (September 2002 to September 2006); Executive Vice President, ACS (January 2005 to September 2006); Director, ACC, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- JONATHAN THOMAS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1963 POSITION(S) HELD WITH FUND: Executive Vice President FIRST YEAR OF SERVICE: 2005 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC (February 2006 to present); Executive Vice President, ACC (November 2005 to present); Also serves as: President and Chief Executive Officer, ACS; Chief Financial Officer and Chief Accounting Officer, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries; Managing Director, Morgan Stanley (March 2000 to November 2005) - -------------------------------------------------------------------------------- MARYANNE ROEPKE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1956 POSITION(S) HELD WITH FUND: Chief Compliance Officer and Senior Vice President FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Compliance Officer, ACIM, ACGIM and ACS (August 2006 to present); Assistant Treasurer, ACC (January 1995 to August 2006); Treasurer and Chief Financial Officer, various American Century funds (July 2000 to August 2006); Also serves as: Senior Vice President, ACS - -------------------------------------------------------------------------------- DAVID C. TUCKER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1958 POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (February 2001 to present); General Counsel, ACC (June 1998 to present); Also serves as: Senior Vice President and General Counsel, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- (continued) - ------ 29 Management - -------------------------------------------------------------------------------- OFFICERS (CONTINUED) - -------------------------------------------------------------------------------- ROBERT LEACH, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1966 POSITION(S) HELD WITH FUND: Vice President, Treasurer and Chief Financial Officer FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS (February 2000 to present); Controller, various American Century funds (June 1997 to September 2006) - -------------------------------------------------------------------------------- C. JEAN WADE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1964 POSITION(S) HELD WITH FUND: Controller FIRST YEAR OF SERVICE: 2006 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS (February 2000 to present) - -------------------------------------------------------------------------------- JON ZINDEL, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Tax Officer FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, ACC (August 2006 to present); Vice President, ACC and certain ACC subsidiaries (October 2001 to August 2006); Vice President, Corporate Tax, ACS (April 1998 to August 2006); Also serves as: Senior Vice President, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- The SAI has additional information about the funds' directors and is available without charge, upon request, by calling 1-800-345-2021. - ------ 30 Additional Information RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld. If you don't want us to withhold on this amount, you must notify us to not withhold the federal income tax. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Global Investment Management, Inc., the 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 website at americancentury.com and on the Securities and Exchange Commission's website 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 website 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 website at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 31 Index Definitions The following indices are used to illustrate investment market, sector, or style performance or to serve as fund performance comparisons. They are not investment products available for purchase. MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) has developed several indices that measure the performance of foreign stock markets. The MSCI EAFE(reg.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 represents the performance of stocks in global emerging market countries. The MSCI WORLD FREE INDEX represents the performance of stocks in developed countries (including the United States) that are available for purchase by global investors. - ------ 32 [blank inside 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 (c)2007 American Century Proprietary Holdings, Inc. All rights reserved. 0701 SH-ANN-52644N
[front cover] AMERICAN CENTURY INVESTMENTS Annual Report November 30, 2006 [photo of winter scene] Life Sciences Fund Technology Fund [american century investments logo and text logo] Our Message to You [photo of James E. Stowers III and James E. Stowers, Jr.] /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. We are pleased to provide you with the annual report for the American Century Life Sciences and Technology funds for the 12 months ended November 30, 2006. We hope you find this information helpful in monitoring your investment. Another useful resource we offer is our website, americancentury.com, where we post quarterly portfolio commentaries, the views of senior investment officers and analysts, and other communications about investments, portfolio strategy, personal finance, and the markets. In its most recent rankings, Dalbar -- which issues customer satisfaction ratings and rankings based on website functionality -- ranked americancentury.com seventh out of the sites provided by the top 25 fund companies that it believes lead the industry in web-based technology. Our website earned an "Excellent" rating, Dalbar's highest designation. For most of 2006, our website linked visitors to information explaining our strategic collaboration with Lance Armstrong and the Lance Armstrong Foundation (LAF). This 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. To learn more about the collaboration and the LAF, please visit americancentury.com or www.lanceface.com on the Web and click on the links to related sites. With the approach of the 2006 tax season, you can also find out more about tax information via a link from our website. We've posted online descriptions of all of the tax information we provide to investors. If you haven't visited americancentury.com yet, we encourage you to do so...it's there to serve you. And so are we. As always, we deeply appreciate your commitment to American Century Investments. Table of Contents Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 U.S. Stock Index 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 Report of Independent Registered Public Accounting Firm . . . . . . . . . .34 OTHER INFORMATION Management. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .35 Approval of Management Agreements for Life Sciences and Technology. . . . .39 Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .44 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .45 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .46 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. Market Perspective [photo of chief investment officer] BY HAROLD BRADLEY CHIEF INVESTMENT OFFICER, SMALL/MID-CAP GROWTH ECONOMIC GROWTH SURGED, THEN MODERATED Economic growth -- along with commodity prices, short-term interest rates, and inflation -- surged early in the 12-month period ended November 30, 2006. But growth and inflation moderated in the period's second half, during which the Federal Reserve halted its two-year string of interest rate hikes. After a hurricane-related slowdown in the fourth quarter of 2005, U.S. gross domestic product grew in the first quarter of 2006 at a 5.6% annualized pace, the highest level in more than two years. The Fed steadily raised short-term interest rates through June 2006 to keep inflation in check, including pressures from soaring commodity prices. The Fed finally snapped its string of rate hikes in August 2006, leaving its target at 5.25%, a five-year high. By then, economic growth had slowed, dragged down in part by a cooling housing market. DOUBLE-DIGIT STOCK INDEX RETURNS The Fed's pause and expectations for lower interest rates and mild inflation going forward helped produce double-digit stock index returns for the 12 months ended November 30, 2006. Market rallies beginning and ending the period offset a late-spring/early-summer selloff. Growth stocks flourished in the latter rally, but value stocks outperformed growth for the full reporting period. Likewise, though large-cap stocks gained ground late in the period, small-caps posted higher returns for the entire 12-month stretch. Early in the 12-month period, investors celebrated a dip in crude oil prices and strong economic growth by pushing stock prices higher. The small-cap Russell 2000 Index led the way, surging 13.40% between the beginning of the period and April 30, 2006. Sentiment changed in early May, however, when the Fed made it clear that more interest rate hikes might be necessary to control inflation. Between April 30 and July 15, the S&P 500 fell 5.28%, and the Russell 2000 more than doubled that loss as investors desired larger, more stable companies. The selloff ended in late July after Fed chairman Ben Bernanke predicted inflation would moderate. The Fed's subsequent rate pause in August and plunging energy prices allowed stocks to rebound nicely in the last four-and-a-half months of the reporting period. U.S. STOCK INDEX RETURNS FOR THE 12 MONTHS ENDED NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- RUSSELL 1000 INDEX (LARGE-CAP) 14.15% - -------------------------------------------------------------------------------- Russell 1000 Growth 8.36% - -------------------------------------------------------------------------------- Russell 1000 Value 20.28% - -------------------------------------------------------------------------------- RUSSELL MIDCAP INDEX 16.47% - -------------------------------------------------------------------------------- Russell Midcap Growth 12.88% - -------------------------------------------------------------------------------- Russell Midcap Value 20.16% - -------------------------------------------------------------------------------- RUSSELL 2000 INDEX (SMALL-CAP) 17.43% - -------------------------------------------------------------------------------- Russell 2000 Growth 13.45% - -------------------------------------------------------------------------------- Russell 2000 Value 21.47% - -------------------------------------------------------------------------------- - ------ 2 Life Sciences - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2006 ---------------------- AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS -1.88% 1.40% 1.08% 6/30/00 - -------------------------------------------------------------------------------- S&P COMPOSITE 1500 HEALTH CARE INDEX 9.09% 1.77% 1.47% -- - -------------------------------------------------------------------------------- S&P 500 INDEX(1) 14.23% 6.08% 1.08% -- - -------------------------------------------------------------------------------- Institutional Class -1.67% 1.58% 0.49% 7/17/00 - -------------------------------------------------------------------------------- Advisor Class -2.10% 1.13% -0.63% 11/14/00 - -------------------------------------------------------------------------------- C Class -2.74% 0.41% 0.41% 11/29/01 - -------------------------------------------------------------------------------- (1) 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
![](https://capedge.com/proxy/N-CSR/0000872825-07-000004/growthlifesci0611.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - -------------------------------------------------------------------------------- 2000* 2001 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------- Investor Class 5.60% -5.35% -27.31% 23.16% 7.57% 13.43% -1.88% - -------------------------------------------------------------------------------- S&P Composite 1500 Health Care Index 7.11% -6.10% -18.37% 8.06% 2.91% 10.26% 9.09% - -------------------------------------------------------------------------------- S&P 500 Index -9.16% -12.22% -16.51% 15.09% 12.86% 8.44% 14.23% - -------------------------------------------------------------------------------- * 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 PERFORMANCE SUMMARY Life Sciences returned -1.88%* for the 12 months ended November 30, 2006, compared with 9.09% for its benchmark, the S&P Composite 1500 Health Care Index. The broader market, represented by the S&P 500 Index, returned 14.23%. As outlined in the Market Perspective on page 2, U.S. stock index returns were mostly in the 10-20% range for the 12-month period. Health care lagged, however, dragged down by concerns about tightening profit margins and slowing increases in managed care premiums. Life Sciences underperformed its benchmark primarily because of its underweight position and poor stock selection in pharmaceuticals and its overweight position and adverse stock selection in health care providers. LARGE SHORTFALL IN PHARMACEUTICALS Pharmaceutical stocks represented our largest relative shortfall against the benchmark for two reasons. First, we maintained an underweight position in this industry at a time when it outperformed. Pharmaceutical stocks have not shown earnings acceleration for several years and, historically, our underweighting of the group, compared with the fund benchmark, has been beneficial. This year, however, investors sought such stocks for their defensive characteristics and high dividend yields. So, although we devoted, on average, over 25% of the fund's assets to pharmaceutical stocks during the reporting period, we did not own enough to keep pace with the benchmark. Our pharmaceutical position was also underweight for diversification reasons. Pharmaceutical stocks constitute nearly 50% of the benchmark, with Pfizer, Johnson & Johnson, and Merck alone accounting for 28% of the index. We typically do not invest so much of the fund in so few names. Second, stock selection also proved detrimental. We held several non-benchmark names -- including Teva Pharmaceuticals -- that declined. Teva, the world's biggest generic drug maker, saw its shares fall in May and June over concern about increased competition and reduced prices for generic drugs. Still, there were some bright spots in pharmaceuticals, including international drug companies Roche Holding (up 22%) and Novartis (up 13%), and TOP TEN HOLDINGS AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Thermo Fisher Scientific Inc.(1) 3.8% 2.8% - -------------------------------------------------------------------------------- Roche Holding AG ORD 3.6% 2.8% - -------------------------------------------------------------------------------- Johnson & Johnson 3.4% 3.9% - -------------------------------------------------------------------------------- Bard (C.R.), Inc. 3.3% 2.6% - -------------------------------------------------------------------------------- Wyeth 3.0% 3.9% - -------------------------------------------------------------------------------- Amgen Inc. 2.9% 2.7% - -------------------------------------------------------------------------------- Shire plc ADR 2.5% 2.6% - -------------------------------------------------------------------------------- Manor Care, Inc. 2.5% 3.0% - -------------------------------------------------------------------------------- Allergan, Inc. 2.3% -- - -------------------------------------------------------------------------------- Waters Corp. 2.3% -- - -------------------------------------------------------------------------------- (1) Thermo Fisher Scientific Inc. changed its name from Thermo Electron Corp. effective 11/10/06. *All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 5 Life Sciences - Portfolio Commentary diversified drug companies Wyeth (up 19%), and Johnson & Johnson (up 9%). HEALTH CARE PROVIDERS DETRACTED Health care providers & services -- on average our largest single position and most significant overweight during the reporting period -- detracted on both an absolute and a relative basis. Shifts in sentiment can sometimes lead to losses, regardless of underlying business fundamentals. Following outsized gains in 2005, this industry began to decline in 2006, and the market did not always recognize the kinds of companies we find attractive. Industry challenges also played a role. Chemed Corp. (down 26%), the nation's largest end-of-life care provider, was one of the portfolio's biggest detractors. This stock declined sharply after the company announced that its earnings might fall in the wake of potential Medicare cap billing limitations. TOP CONTRIBUTOR Our search for companies demonstrating improving earnings led us to Thermo Fisher Scientific Inc. (up 42%, our top-contributing stock), in the life sciences tools & services industry. The company produces a range of laboratory instruments and tools for education, scientific research, and health care. Our small position was significantly overweight compared with its benchmark weighting. OUR STARTING POINT FOR THE NEXT SIX MONTHS As fundamental, bottom-up managers, we evaluate each company individually on its own merits, and build the portfolio from the ground up, one stock at a time. In our search for companies demonstrating earnings acceleration, we will structure exposure to stocks and market segments as warranted based on the strength of individual companies. Thermo Fisher Scientific is a good example of our process at work. Each quarter of 2006, the company demonstrated momentum in earnings growth, generating profits that were reinvested back into the business. TOP FIVE INDUSTRIES AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Health Care Equipment & Supplies 29.7% 16.2% - -------------------------------------------------------------------------------- Pharmaceuticals 22.8% 26.0% - -------------------------------------------------------------------------------- Health Care Providers & Services 21.7% 41.0% - -------------------------------------------------------------------------------- Life Sciences Tools & Services 10.6% 5.3% - -------------------------------------------------------------------------------- Biotechnology 7.7% 7.3% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Domestic Common Stocks 79.3% 77.6% - -------------------------------------------------------------------------------- Foreign Common Stocks(1) 16.8% 19.5% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 96.1% 97.1% - -------------------------------------------------------------------------------- Temporary Cash Investments 6.5% 1.1% - -------------------------------------------------------------------------------- Other Assets & Liabilities (2.6)% 1.8% - -------------------------------------------------------------------------------- (1) Includes depositary shares, dual listed securities and foreign ordinary shares. - ------ 6 Life Sciences - Schedule of Investments NOVEMBER 30, 2006 Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 96.1% - -------------------------------------------------------------------------------- BIOTECHNOLOGY -- 7.7% - -------------------------------------------------------------------------------- 48,000 Amgen Inc.(1) $ 3,408,000 - -------------------------------------------------------------------------------- 20,000 Genentech, Inc.(1) 1,635,000 - -------------------------------------------------------------------------------- 35,500 Genzyme Corp.(1) 2,286,200 - -------------------------------------------------------------------------------- 24,000 Gilead Sciences, Inc.(1) 1,582,080 - -------------------------------------------------------------------------------- 8,911,280 - -------------------------------------------------------------------------------- CHEMICALS -- 1.7% - -------------------------------------------------------------------------------- 26,500 Sigma-Aldrich Corp. 2,016,916 - -------------------------------------------------------------------------------- HEALTH CARE EQUIPMENT & SUPPLIES -- 29.7% - -------------------------------------------------------------------------------- 51,500 Arrow International Inc. 1,799,410 - -------------------------------------------------------------------------------- 46,300 Bard (C.R.), Inc. 3,810,026 - -------------------------------------------------------------------------------- 57,000 Baxter International, Inc. 2,550,180 - -------------------------------------------------------------------------------- 40,000 Beckman Coulter, Inc. 2,374,000 - -------------------------------------------------------------------------------- 36,500 Becton Dickinson & Co. 2,617,780 - -------------------------------------------------------------------------------- 80,000 Conmed Corp.(1) 1,770,400 - -------------------------------------------------------------------------------- 33,400 Cooper Companies, Inc. (The) 1,802,598 - -------------------------------------------------------------------------------- 77,500 DENTSPLY International Inc. 2,474,575 - -------------------------------------------------------------------------------- 44,000 Medtronic, Inc. 2,293,720 - -------------------------------------------------------------------------------- 32,500 Mettler-Toledo International, Inc.(1) 2,516,150 - -------------------------------------------------------------------------------- 50,000 Mindray Medical International Ltd. ADR(1) 1,200,000 - -------------------------------------------------------------------------------- 68,205 Respironics, Inc.(1) 2,459,472 - -------------------------------------------------------------------------------- 46,250 Stryker Corp. 2,398,525 - -------------------------------------------------------------------------------- 35,000 Varian Medical Systems, Inc.(1) 1,722,700 - -------------------------------------------------------------------------------- 34,000 Zimmer Holdings Inc.(1) 2,480,640 - -------------------------------------------------------------------------------- 34,270,176 - -------------------------------------------------------------------------------- HEALTH CARE PROVIDERS & SERVICES -- 21.7% - -------------------------------------------------------------------------------- 23,000 Cardinal Health, Inc. 1,486,260 - -------------------------------------------------------------------------------- 50,000 Community Health Systems Inc.(1) 1,750,000 - -------------------------------------------------------------------------------- 32,500 DaVita Inc.(1) 1,729,325 - -------------------------------------------------------------------------------- 17,145 Fresenius Medical Care AG ORD 2,301,666 - -------------------------------------------------------------------------------- 50,000 Henry Schein, Inc.(1) 2,576,500 - -------------------------------------------------------------------------------- 61,500 Manor Care, Inc. 2,922,480 - -------------------------------------------------------------------------------- 56,000 Owens & Minor Inc. 1,737,680 - -------------------------------------------------------------------------------- 65,500 Psychiatric Solutions, Inc.(1) 2,383,545 - -------------------------------------------------------------------------------- 30,000 Quest Diagnostics Inc. 1,595,100 - -------------------------------------------------------------------------------- 170,500 Sun Healthcare Group, Inc.(1) 1,720,345 - -------------------------------------------------------------------------------- 45,000 Sunrise Senior Living Inc.(1) 1,435,500 - -------------------------------------------------------------------------------- 34,171 Universal Health Services, Inc. Cl B 1,886,581 - -------------------------------------------------------------------------------- 20,000 WellPoint Inc.(1) 1,513,400 - -------------------------------------------------------------------------------- 25,038,382 - -------------------------------------------------------------------------------- HEALTH CARE TECHNOLOGY -- 1.9% - -------------------------------------------------------------------------------- 82,500 IMS Health Inc. 2,266,275 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- LIFE SCIENCES TOOLS & SERVICES -- 10.6% - -------------------------------------------------------------------------------- 38,000 ICON plc ADR(1) $ 1,412,840 - -------------------------------------------------------------------------------- 35,000 Millipore Corp.(1) 2,394,350 - -------------------------------------------------------------------------------- 93,700 QIAGEN N.V.(1) 1,367,083 - -------------------------------------------------------------------------------- 100,000 Thermo Fisher Scientific Inc.(1) 4,383,000 - -------------------------------------------------------------------------------- 53,000 Waters Corp.(1) 2,652,120 - -------------------------------------------------------------------------------- 12,209,393 - -------------------------------------------------------------------------------- PHARMACEUTICALS -- 22.8% - -------------------------------------------------------------------------------- 50,000 Abbott Laboratories 2,333,000 - -------------------------------------------------------------------------------- 23,000 Allergan, Inc. 2,681,340 - -------------------------------------------------------------------------------- 33,500 AstraZeneca plc ORD 1,942,801 - -------------------------------------------------------------------------------- 32,000 Forest Laboratories, Inc.(1) 1,558,400 - -------------------------------------------------------------------------------- 60,000 Johnson & Johnson 3,954,600 - -------------------------------------------------------------------------------- 39,000 Merck & Co., Inc. 1,735,890 - -------------------------------------------------------------------------------- 26,250 Novartis AG ADR 1,533,263 - -------------------------------------------------------------------------------- 23,200 Roche Holding AG ORD 4,192,479 - -------------------------------------------------------------------------------- 48,500 Shire plc ADR 2,939,100 - -------------------------------------------------------------------------------- 72,814 Wyeth 3,515,460 - -------------------------------------------------------------------------------- 26,386,333 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $99,635,793) 111,098,755 - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS -- 6.5% - -------------------------------------------------------------------------------- Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 2.375%, 1/15/25, valued at $5,818,568), in a joint trading account at 5.25%, dated 11/30/06, due 12/1/06 (Delivery value $5,700,831) 5,700,000 - -------------------------------------------------------------------------------- Repurchase Agreement, Merrill Lynch & Co., Inc., (collateralized by various U.S. Treasury obligations, 4.25% -- 5.01%, 12/28/06 -- 1/15/11, valued at $1,836,678), in a joint trading account at 5.24%, dated 11/30/06, due 12/1/06 (Delivery value $1,800,262) 1,800,000 - -------------------------------------------------------------------------------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $7,500,000) 7,500,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES -- 102.6% (Cost $107,135,793) 118,598,755 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES -- (2.6)% (3,032,209) - -------------------------------------------------------------------------------- TOTAL NET ASSETS -- 100.0% $115,566,546 ================================================================================ See Notes to Financial Statements. (continued) - ------ 7 Life Sciences - Schedule of Investments NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS - -------------------------------------------------------------------------------- Contracts to Sell Settlement Date Value Unrealized Gain (Loss) - -------------------------------------------------------------------------------- 2,536,920 CHF for USD 12/29/06 $ 2,122,749 $ (15,249) - -------------------------------------------------------------------------------- 867,794 Euro for USD 12/29/06 1,151,132 (7,992) - -------------------------------------------------------------------------------- 488,932 GBP for USD 12/29/06 961,340 (8,685) - -------------------------------------------------------------------------------- $ 4,235,221 $ (31,926) ==================================== (Value on Settlement Date $4,203,295) - -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt CHF = Swiss Franc GBP = British Pound ORD = Foreign Ordinary Share USD = United States Dollar (1) Non-income producing. See Notes to Financial Statements. - ------ 8 Technology - Performance TOTAL RETURNS AS OF NOVEMBER 30, 2006 ------------------------ AVERAGE ANNUAL RETURNS - -------------------------------------------------------------------------------- SINCE INCEPTION 1 YEAR 5 YEARS INCEPTION DATE - -------------------------------------------------------------------------------- INVESTOR CLASS 7.60% 0.19% -12.57% 6/30/00 - -------------------------------------------------------------------------------- S&P COMPOSITE 1500 TECHNOLOGY INDEX 7.65% 0.98% -10.43% -- - -------------------------------------------------------------------------------- S&P 500 INDEX(1) 14.23% 6.08% 1.08% -- - -------------------------------------------------------------------------------- Institutional Class 7.86% 0.38% -13.84% 7/14/00 - -------------------------------------------------------------------------------- Advisor Class 7.36% -0.08% -12.82% 6/30/00 - -------------------------------------------------------------------------------- (1) 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
![](https://capedge.com/proxy/N-CSR/0000872825-07-000004/growthtech0611.gif)
ONE-YEAR RETURNS OVER LIFE OF CLASS Periods ended November 30 - -------------------------------------------------------------------------------- 2000* 2001 2002 2003 2004 2005 2006 - -------------------------------------------------------------------------------- Investor Class -36.20% -34.48% -31.10% 35.97% -7.05% 7.75% 7.60% - -------------------------------------------------------------------------------- S&P Composite 1500 Technology Index -33.66% -29.22% -27.70% 24.02% 1.48% 7.21% 7.65% - -------------------------------------------------------------------------------- S&P 500 Index -9.16% -12.22% -16.51% 15.09% 12.86% 8.44% 14.23% - -------------------------------------------------------------------------------- * 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 MANAGER: TOM TELFORD PERFORMANCE SUMMARY American Century Technology returned 7.60%* during the 12 months ended November 30, 2006. By comparison, the fund's benchmark, the S&P Composite 1500 Technology Index, returned 7.65%. The performance of the fund and benchmark reflected a period in which growth-oriented stocks lagged the broader market (see the Market Perspective on page 2). Nevertheless, holdings in every information technology industry contributed to performance. Relative to the benchmark, the portfolio's return was helped by positioning in internet software & services, electronic equipment, and semiconductor firms. Our positioning among computers & peripherals, IT services, and software companies detracted from relative results. PICKING WINNERS IN INTERNET SOFTWARE & SERVICES Our stock selection was strongest in internet software & services shares, where the portfolio's holdings returned 42% for the 12 months, while this segment of the index was down 16%. Our top contributor was Akamai Technologies, a leading provider of internet content delivery services. We owned the stock at a time of increased revenue growth because of an explosion of online transactions and Web traffic. What we didn't own was just as important as what we did -- the fund had no exposure to Yahoo! and eBay, two of the largest stocks in this space, with returns of -33% and -28%, respectively. ELECTRONIC EQUIPMENT AND SEMICONDUCTORS HELPED Electronic equipment firms were the leading contributors to fund performance in both relative and absolute terms. We held overweight positions in this winning industry, and enjoyed positive stock selection. For the year, Technology's electronic equipment holdings returned 32%, versus 10% for this segment of the index. Some of our leading contributing firms in this space were Plexus, TTM Technologies, and Daktronics. We closed out these positions after sizable gains during the fiscal year. Semiconductor shares were home to the portfolio's biggest contributor to relative performance -- our underweight position in Intel, which accounts for more than 5% of the index. This positioning benefited fund shareholders when Intel performed poorly for much of the period amid intense competition with rival Advanced Micro Devices. Finally, wireless communication device maker Research in Motion -- our largest position at period-end -- was a leading contributor to relative and absolute returns. The firm, which makes the BlackBerry TOP TEN HOLDINGS AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Research In Motion Ltd. 4.3% -- - -------------------------------------------------------------------------------- Oracle Corp. 3.7% -- - -------------------------------------------------------------------------------- Intel Corp. 3.6% -- - -------------------------------------------------------------------------------- Google Inc. Cl A 2.9% -- - -------------------------------------------------------------------------------- Vignette Corp. 2.9% -- - -------------------------------------------------------------------------------- Cisco Systems Inc. 2.9% -- - -------------------------------------------------------------------------------- Millicom International Cellular SA 2.8% -- - -------------------------------------------------------------------------------- Precision Castparts Corp. 2.3% -- - -------------------------------------------------------------------------------- Amphenol Corp. Cl A 2.2% 1.6% - -------------------------------------------------------------------------------- Infosys Technologies Ltd. ADR 2.0% -- - -------------------------------------------------------------------------------- *All fund returns referenced in this commentary are for Investor Class shares. (continued) - ------ 11 Technology - Portfolio Commentary handheld device, saw its stock more than double during the fiscal year as it enjoyed solid revenue and subscriber growth, as well as strong sales of its new product, the Pearl. COMPUTERS & PERIPHERALS LED DETRACTORS We held underweight positions in computer makers compared with the benchmark, as many firms in this area were subject to intense price competition and declining margins. In some cases, this strategy worked; for example, we had no exposure to Dell, which declined 10%. But stocks in this portion of the index returned 15% overall, so holding an underweight position detracted from relative performance. Two of the portfolio's top-three relative detractors resided in this space -- Apple Computer and Hewlett-Packard. We had substantial positions in these two stocks throughout the period, but our underweight position relative to the benchmark limited relative results. IT SERVICES, SOFTWARE ALSO DETRACTED An underweight position and disappointing stock selection detracted from performance relative to our benchmark in IT services. In contrast, we enjoyed a positive effect from stock selection in the software sector; however, fund performance relative to the benchmark was limited by our underweight in this winning sector. OUR STARTING POINT FOR THE NEXT SIX MONTHS We target technology firms with accelerating earnings and revenue growth rates and positive share price momentum. As of November 30, 2006, we saw opportunity in companies in the internet software and services industry -- in which we held an overweight position relative to our benchmark -- which are using increasingly sophisticated products and approaches to profit from the internet. We think that Technology can be a good choice for investors interested in an aggressive, concentrated sector fund with the potential to outperform the broader market. But it's important to remind shareholders that a narrowly focused fund can be quite volatile to both the up and the down side, so it's best used as a small slice of a larger portfolio, rather than as a core holding. TOP FIVE INDUSTRIES AS OF NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Software 14.8% 9.1% - -------------------------------------------------------------------------------- Communications Equipment 12.9% 7.8% - -------------------------------------------------------------------------------- Semiconductors & Semiconductor Equipment 12.7% 14.2% - -------------------------------------------------------------------------------- Electronic Equipment & Instruments 12.4% 16.6% - -------------------------------------------------------------------------------- Internet Software & Services 12.1% 10.1% - -------------------------------------------------------------------------------- TYPES OF INVESTMENTS IN PORTFOLIO - -------------------------------------------------------------------------------- % OF % OF NET ASSETS NET ASSETS AS OF AS OF 11/30/06 5/31/06 - -------------------------------------------------------------------------------- Domestic Common Stocks 73.1% 76.4% - -------------------------------------------------------------------------------- Foreign Common Stocks(1) 25.5% 22.3% - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS 98.6% 98.7% - -------------------------------------------------------------------------------- Temporary Cash Investments 0.5% 0.7% - -------------------------------------------------------------------------------- Other Assets & Liabilities 0.9% 0.6% - -------------------------------------------------------------------------------- (1) Includes depositary shares, dual listed securities and foreign ordinary shares. - ------ 12 Technology - Schedule of Investments NOVEMBER 30, 2006 Shares Value - -------------------------------------------------------------------------------- COMMON STOCKS -- 98.6% - -------------------------------------------------------------------------------- AEROSPACE & DEFENSE - 2.3% - -------------------------------------------------------------------------------- 39,191 Precision Castparts Corp. $ 2,957,353 - -------------------------------------------------------------------------------- COMMUNICATIONS EQUIPMENT - 12.9% - -------------------------------------------------------------------------------- 137,592 Cisco Systems Inc.(1) 3,698,473 - -------------------------------------------------------------------------------- 305,000 Foxconn International Holdings Ltd. ORD(1) 921,409 - -------------------------------------------------------------------------------- 295,661 Harmonic Inc.(1) 2,350,505 - -------------------------------------------------------------------------------- 90,163 Juniper Networks, Inc.(1) 1,919,570 - -------------------------------------------------------------------------------- 39,777 Research In Motion Ltd.(1) 5,522,241 - -------------------------------------------------------------------------------- 86,412 SafeNet Inc.(1) 2,011,671 - -------------------------------------------------------------------------------- 16,423,869 - -------------------------------------------------------------------------------- COMPUTERS & PERIPHERALS - 9.7% - -------------------------------------------------------------------------------- 24,414 Apple Computer, Inc.(1) 2,238,275 - -------------------------------------------------------------------------------- 55,373 Hewlett-Packard Co. 2,185,019 - -------------------------------------------------------------------------------- 70,302 Logitech International SA(1) 2,078,127 - -------------------------------------------------------------------------------- 94,987 QLogic Corp.(1) 2,113,461 - -------------------------------------------------------------------------------- 193,890 SimpleTech, Inc.(1) 1,745,010 - -------------------------------------------------------------------------------- 67,085 Synaptics Inc.(1) 1,923,327 - -------------------------------------------------------------------------------- 12,283,219 - -------------------------------------------------------------------------------- DIVERSIFIED TELECOMMUNICATION SERVICES - 2.4% - -------------------------------------------------------------------------------- 59,201 AT&T Inc. 2,007,506 - -------------------------------------------------------------------------------- 24 Nippon Telegraph & Telephone Corp. ORD 121,498 - -------------------------------------------------------------------------------- 72,858 Tele2 AB Cl B ORD 936,690 - -------------------------------------------------------------------------------- 3,065,694 - -------------------------------------------------------------------------------- ELECTRICAL EQUIPMENT - 0.8% - -------------------------------------------------------------------------------- 304,500 BYD Co. Ltd. Cl H ORD(1) 947,299 - -------------------------------------------------------------------------------- ELECTRONIC EQUIPMENT & INSTRUMENTS - 12.4% - -------------------------------------------------------------------------------- 42,083 Amphenol Corp. Cl A 2,867,115 - -------------------------------------------------------------------------------- 33,750 Anixter International Inc.(1) 1,978,425 - -------------------------------------------------------------------------------- 280,650 Bell Microproducts Inc.(1) 1,930,872 - -------------------------------------------------------------------------------- 44,000 Canon Electronics Inc. ORD 1,908,168 - -------------------------------------------------------------------------------- 30,649 CDW Corp. 2,160,755 - -------------------------------------------------------------------------------- 33,397 Dolby Laboratories Inc. Cl A(1) 953,150 - -------------------------------------------------------------------------------- 30,836 Rogers Corp.(1) 2,142,485 - -------------------------------------------------------------------------------- 158,679 SMART Modular Technologies (WWH), Inc.(1) 1,886,693 - -------------------------------------------------------------------------------- 15,827,663 - -------------------------------------------------------------------------------- HEALTH CARE TECHNOLOGY - 1.7% - -------------------------------------------------------------------------------- 78,556 Allscripts Healthcare Solutions Inc.(1) 2,193,284 - -------------------------------------------------------------------------------- Shares Value - -------------------------------------------------------------------------------- INTERNET SOFTWARE & SERVICES - 12.1% - -------------------------------------------------------------------------------- 7,662 Google Inc. Cl A(1) $ 3,715,458 - -------------------------------------------------------------------------------- 141,066 Interwoven Inc.(1) 1,998,905 - -------------------------------------------------------------------------------- 102,820 Perficient Inc.(1) 1,796,265 - -------------------------------------------------------------------------------- 98,952 ValueClick Inc.(1) 2,460,936 - -------------------------------------------------------------------------------- 220,374 Vignette Corp.(1) 3,708,894 - -------------------------------------------------------------------------------- 68,612 Websense Inc.(1) 1,753,037 - -------------------------------------------------------------------------------- 15,433,495 - -------------------------------------------------------------------------------- IT SERVICES - 10.7% - -------------------------------------------------------------------------------- 46,028 Fidelity National Information Services, Inc. 1,836,517 - -------------------------------------------------------------------------------- 39,558 Fiserv, Inc.(1) 2,021,809 - -------------------------------------------------------------------------------- 23,200 Information Services International-Dentsu, Ltd. ORD 284,200 - -------------------------------------------------------------------------------- 46,473 Infosys Technologies Ltd. ADR 2,487,700 - -------------------------------------------------------------------------------- 24,000 Infosys Technologies Ltd. ORD 1,173,336 - -------------------------------------------------------------------------------- 20,793 International Business Machines Corp. 1,911,293 - -------------------------------------------------------------------------------- 72,213 Total System Services Inc. 1,875,372 - -------------------------------------------------------------------------------- 71,595 Tyler Technologies Inc.(1) 1,034,548 - -------------------------------------------------------------------------------- 67,000 Wipro Ltd. ADR 1,050,560 - -------------------------------------------------------------------------------- 13,675,335 - -------------------------------------------------------------------------------- OFFICE ELECTRONICS - 1.6% - -------------------------------------------------------------------------------- 158,000 Brother Industries Ltd. ORD 2,069,267 - -------------------------------------------------------------------------------- SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT - 12.7% - -------------------------------------------------------------------------------- 80,796 ASML Holding N.V. New York Shares(1) 2,011,820 - -------------------------------------------------------------------------------- 215,211 Intel Corp. 4,594,757 - -------------------------------------------------------------------------------- 58,551 NVIDIA Corp.(1) 2,165,802 - -------------------------------------------------------------------------------- 35,062 Power Integrations Inc.(1) 976,827 - -------------------------------------------------------------------------------- 967,400 Realtek Semiconductor Corp. ORD 1,503,947 - -------------------------------------------------------------------------------- 75,261 Sigma Designs Inc.(1) 1,968,075 - -------------------------------------------------------------------------------- 26,913 Tessera Technologies Inc.(1) 1,019,195 - -------------------------------------------------------------------------------- 55,891 Volterra Semiconductor Corp.(1) 947,352 - -------------------------------------------------------------------------------- 2,409,000 Winbond Electronics Corp. ORD(1) 1,008,869 - -------------------------------------------------------------------------------- 16,196,644 - -------------------------------------------------------------------------------- SOFTWARE - 14.8% - -------------------------------------------------------------------------------- 40,182 Adobe Systems Inc.(1) 1,612,504 - -------------------------------------------------------------------------------- 43,402 Business Objects SA ADR(1) 1,684,866 - -------------------------------------------------------------------------------- 103,105 Epicor Software Corp.(1) 1,371,297 - -------------------------------------------------------------------------------- 59,536 Macrovision Corp.(1) 1,646,170 - -------------------------------------------------------------------------------- 26,579 Micros Systems, Inc.(1) 1,353,403 - -------------------------------------------------------------------------------- 68,163 Microsoft Corporation 1,999,221 - -------------------------------------------------------------------------------- 72,995 OPNET Technologies, Inc.(1) 1,177,409 - -------------------------------------------------------------------------------- 251,135 Oracle Corp.(1) 4,779,099 - -------------------------------------------------------------------------------- 97,794 Shanda Interactive Entertainment Ltd. ADR(1) 1,891,336 - -------------------------------------------------------------------------------- 82,452 Temenos Group AG ORD(1) 1,366,113 - -------------------------------------------------------------------------------- 18,881,418 - -------------------------------------------------------------------------------- See Notes to Financial Statements. (continued) - ------ 13 Technology - Schedule of Investments NOVEMBER 30, 2006 Shares Value - -------------------------------------------------------------------------------- WIRELESS TELECOMMUNICATION SERVICES - 4.5% - -------------------------------------------------------------------------------- 57,860 American Tower Corp. Cl A(1) $ 2,191,158 - -------------------------------------------------------------------------------- 62,580 Millicom International Cellular SA(1) 3,583,331 - -------------------------------------------------------------------------------- 5,774,489 - -------------------------------------------------------------------------------- TOTAL COMMON STOCKS (Cost $108,223,513) 125,729,029 - -------------------------------------------------------------------------------- Value - -------------------------------------------------------------------------------- TEMPORARY CASH INVESTMENTS - 0.5% - -------------------------------------------------------------------------------- Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 4.81%, 2/1/07, valued at $714,286), in a joint trading account at 5.24%, dated 11/30/06, due 12/1/06 (Delivery value $700,102) (Cost $700,000) $ 700,000 - -------------------------------------------------------------------------------- TOTAL INVESTMENT SECURITIES - 99.1% (Cost $108,923,513) 126,429,029 - -------------------------------------------------------------------------------- OTHER ASSETS AND LIABILITIES - 0.9% 1,114,607 - -------------------------------------------------------------------------------- TOTAL NET ASSETS - 100.0% $127,543,636 ================================================================================ - -------------------------------------------------------------------------------- NOTES TO SCHEDULE OF INVESTMENTS - -------------------------------------------------------------------------------- ADR = American Depositary Receipt ORD = Foreign Ordinary Share (1) Non-income producing. 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 June 1, 2006 to November 30, 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 6/1/06 - EXPENSE 6/1/06 11/30/06 11/30/06 RATIO* - -------------------------------------------------------------------------------- LIFE SCIENCES SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,035.70 $7.20 1.41% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,037.30 $6.18 1.21% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,034.20 $8.47 1.66% - -------------------------------------------------------------------------------- C Class $1,000 $1,031.10 $12.27 2.41% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,018.00 $7.13 1.41% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,019.00 $6.12 1.21% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,016.75 $8.39 1.66% - -------------------------------------------------------------------------------- C Class $1,000 $1,012.99 $12.16 2.41% - -------------------------------------------------------------------------------- TECHNOLOGY SHAREHOLDER FEE EXAMPLE - -------------------------------------------------------------------------------- ACTUAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,024.80 $7.66 1.51% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,025.90 $6.65 1.31% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,023.20 $8.93 1.76% - -------------------------------------------------------------------------------- HYPOTHETICAL - -------------------------------------------------------------------------------- Investor Class $1,000 $1,017.50 $7.64 1.51% - -------------------------------------------------------------------------------- Institutional Class $1,000 $1,018.50 $6.63 1.31% - -------------------------------------------------------------------------------- Advisor Class $1,000 $1,016.24 $8.90 1.76% - -------------------------------------------------------------------------------- *Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 16 Statement of Assets and Liabilities NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- ASSETS - -------------------------------------------------------------------------------- Investment securities, at value (cost of $107,135,793 and $108,923,513, respectively) $118,598,755 $126,429,029 - ------------------------------------------------- Cash 19,487 -- - ------------------------------------------------- Receivable for investments sold -- 12,125,043 - ------------------------------------------------- Dividends and interest receivable 122,553 40,337 - -------------------------------------------------------------------------------- 118,740,795 138,594,409 - -------------------------------------------------------------------------------- LIABILITIES - -------------------------------------------------------------------------------- Disbursements in excess of demand deposit cash -- 28,676 - ------------------------------------------------- Payable for investments purchased 3,012,079 10,866,591 - ------------------------------------------------- Payable for forward foreign currency exchange contracts 31,926 -- - ------------------------------------------------- Accrued management fees 130,155 155,448 - ------------------------------------------------- Distribution fees payable 52 29 - ------------------------------------------------- Service fees payable 37 29 - -------------------------------------------------------------------------------- 3,174,249 11,050,773 - -------------------------------------------------------------------------------- NET ASSETS $115,566,546 $127,543,636 ================================================================================ NET ASSETS CONSIST OF: - -------------------------------------------------------------------------------- Capital (par value and paid-in surplus) $121,320,212 $328,610,529 - ------------------------------------------------- Accumulated net investment loss (98,867) (3,910) - ------------------------------------------------- Accumulated net realized loss on investment and foreign currency transactions (17,087,082) (218,549,620) - ------------------------------------------------- Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 11,432,283 17,486,637 - -------------------------------------------------------------------------------- $115,566,546 $127,543,636 ================================================================================ INVESTOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $112,647,658 $122,353,237 - ------------------------------------------------- Shares outstanding 21,573,181 5,799,269 - ------------------------------------------------- Net asset value per share $5.22 $21.10 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $2,744,372 $5,051,036 - ------------------------------------------------- Shares outstanding 518,609 236,073 - ------------------------------------------------- Net asset value per share $5.29 $21.40 - -------------------------------------------------------------------------------- ADVISOR CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $139,948 $139,363 - ------------------------------------------------- Shares outstanding 27,228 6,727 - ------------------------------------------------- Net asset value per share $5.14 $20.72 - -------------------------------------------------------------------------------- C CLASS, $0.01 PAR VALUE - -------------------------------------------------------------------------------- Net assets $34,568 N/A - ------------------------------------------------- Shares outstanding 6,959 N/A - ------------------------------------------------- Net asset value per share $4.97 N/A - -------------------------------------------------------------------------------- See Notes to Financial Statements. - ------ 17 Statement of Operations YEAR ENDED NOVEMBER 30, 2006 - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- INVESTMENT INCOME (LOSS) - -------------------------------------------------------------------------------- INCOME: - ------------------------------------------------- Dividends (net of foreign taxes withheld of $24,993 and $28,955, respectively) $ 865,740 $ 371,039 - ------------------------------------------------- Interest 213,940 89,693 - ------------------------------------------------- Securities lending 15,489 44,297 - -------------------------------------------------------------------------------- 1,095,169 505,029 - -------------------------------------------------------------------------------- EXPENSES: - ------------------------------------------------- Management fees 2,021,615 2,093,950 - ------------------------------------------------- Distribution fees: - ------------------------------------------------- Advisor Class 363 304 - ------------------------------------------------- C Class 569 -- - ------------------------------------------------- Service fees: - ------------------------------------------------- Advisor Class 363 304 - ------------------------------------------------- C Class 190 -- - ------------------------------------------------- Directors' fees and expenses 2,306 2,297 - ------------------------------------------------- Other expenses 722 5,941 - -------------------------------------------------------------------------------- 2,026,128 2,102,796 - -------------------------------------------------------------------------------- NET INVESTMENT INCOME (LOSS) (930,959) (1,597,767) - -------------------------------------------------------------------------------- REALIZED AND UNREALIZED GAIN (LOSS) - -------------------------------------------------------------------------------- NET REALIZED GAIN (LOSS) ON: - ------------------------------------------------- Investment transactions 4,718,168 16,522,243 - ------------------------------------------------- Foreign currency transactions (243,983) 19,193 - -------------------------------------------------------------------------------- 4,474,185 16,541,436 - -------------------------------------------------------------------------------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: - ------------------------------------------------- Investments (net of foreign taxes accrued of $- and $(23,057), respectively) (6,240,940) (5,352,995) - ------------------------------------------------- Translation of assets and liabilities in foreign currencies (25,499) 5,567 - -------------------------------------------------------------------------------- (6,266,439) (5,347,428) - -------------------------------------------------------------------------------- NET REALIZED AND UNREALIZED GAIN (LOSS) (1,792,254) 11,194,008 - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $(2,723,213) $ 9,596,241 ================================================================================ See Notes to Financial Statements. - ------ 18 Statement of Changes in Net Assets YEARS ENDED NOVEMBER 30, 2006 AND NOVEMBER 30, 2005 - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- INCREASE (DECREASE) IN NET ASSETS 2006 2005 2006 2005 - -------------------------------------------------------------------------------- OPERATIONS - -------------------------------------------------------------------------------- Net investment income (loss) $ (930,959) $ (1,292,103) $ (1,597,767) $ (1,506,117) - ---------------- Net realized gain (loss) 4,474,185 19,658,533 16,541,436 15,621,008 - ---------------- Change in net unrealized appreciation (depreciation) (6,266,439) 1,571,061 (5,347,428) (5,241,394) - -------------------------------------------------------------------------------- Net increase (decrease) in net assets resulting from operations (2,723,213) 19,937,491 9,596,241 8,873,497 - -------------------------------------------------------------------------------- CAPITAL SHARE TRANSACTIONS - -------------------------------------------------------------------------------- Net increase (decrease) in net assets from capital share transactions (41,767,562) (19,052,124) (25,969,525) (39,826,142) - -------------------------------------------------------------------------------- NET INCREASE (DECREASE) IN NET ASSETS (44,490,775) 885,367 (16,373,284) (30,952,645) - -------------------------------------------------------------------------------- NET ASSETS - -------------------------------------------------------------------------------- Beginning of period 160,057,321 159,171,954 143,916,920 174,869,565 - -------------------------------------------------------------------------------- End of period $115,566,546 $160,057,321 $127,543,636 $143,916,920 ================================================================================ Accumulated undistributed net investment income (loss) $(98,867) $3,695 $(3,910) $(9,649) ================================================================================ See Notes to Financial Statements. - ------ 19 Notes to Financial Statements NOVEMBER 30, 2006 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 distribution and shareholder servicing 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. Securities traded on foreign securities exchanges and over-the-counter markets are normally completed before the close of business on days that the New York Stock Exchange (the Exchange) is open and may also take place on days when the Exchange is not open. If an event occurs after the value of a security was established but before the net asset value per share was determined that was likely to materially change the net asset value, that security would be valued at fair value as determined in accordance with procedures adopted by the Board of Directors. 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. Certain other circumstances may cause the funds to fair value a security such as: a security has been declared in default; trading in a security has been halted during the trading day; or there is a foreign market holiday and no trading will commence. SECURITY TRANSACTIONS -- Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. Certain countries impose taxes on realized gains on the sale of securities registered in their country. The funds record the foreign tax expense, if any, on an accrual basis. The realized and unrealized tax provision reduces the net realized gain (loss) on investment transactions and net unrealized appreciation (depreciation) on investments, respectively. INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. SECURITIES ON LOAN -- The funds may lend portfolio securities through their lending agent to certain approved borrowers in order to earn additional income. The funds continue to recognize any gain or loss in the market price of the securities loaned and record any interest earned or dividends declared. 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. (continued) - ------ 20 Notes to Financial Statements NOVEMBER 30, 2006 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) 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 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 NOVEMBER 30, 2006 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. Effective August 1, 2006, Life Sciences modified its management fee schedule, resulting in lower fee rates. There was a reduction of the effective annual management fee for the year ended November 30, 2006 resulting from this change. Effective August 1, 2006, the annual management fee schedule for each class of Life Sciences is as follows: - -------------------------------------------------------------------------------- INVESTOR & C INSTITUTIONAL ADVISOR - -------------------------------------------------------------------------------- STRATEGY ASSETS - -------------------------------------------------------------------------------- First $250 million 1.35% 1.15% 1.10% - -------------------------------------------------------------------------------- Next $250 million 1.25% 1.05% 1.00% - -------------------------------------------------------------------------------- Next $250 million 1.15% 0.95% 0.90% - -------------------------------------------------------------------------------- Over $750 million 1.10% 0.90% 0.85% - -------------------------------------------------------------------------------- The annual management fee schedule for each class of Technology is as follows: - -------------------------------------------------------------------------------- INVESTOR 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 year ended November 30, 2006 was as follows: - -------------------------------------------------------------------------------- INVESTOR INSTITUTIONAL ADVISOR C - -------------------------------------------------------------------------------- Life Sciences 1.46% 1.26% 1.21% 1.46% - -------------------------------------------------------------------------------- Technology 1.50% 1.30% 1.25% N/A - -------------------------------------------------------------------------------- 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. (continued) - ------ 22 Notes to Financial Statements NOVEMBER 30, 2006 2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED) DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master Distribution and Shareholder Services Plan for the Advisor Class and a Master Distribution and Individual Shareholder Services Plan for the C Class (collectively, the plans), pursuant to Rule 12b-1 of the 1940 Act. The plans provide that the Advisor Class and C Class will pay American Century Investment Services, Inc. (ACIS) the following annual distribution and service fees: - -------------------------------------------------------------------------------- ADVISOR C - -------------------------------------------------------------------------------- Distribution Fee 0.25% 0.75% - -------------------------------------------------------------------------------- Service Fee 0.25% 0.25% - -------------------------------------------------------------------------------- The fees are computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The distribution fee provides compensation for expenses incurred by financial intermediaries in connection with distributing shares of the classes including, but not limited to, payments to brokers, dealers, and financial institutions that have entered into sales agreements with respect to shares of the funds. The service fee provides compensation for shareholder and administrative services rendered by ACIS, its affiliates or independent third party providers for Advisor Class shares and for individual shareholder services rendered by broker/dealers or other independent financial intermediaries for C Class shares. Fees incurred under the plans during the year ended November 30, 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 JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC. 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the year ended November 30, 2006, were as follows: - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- Purchases $202,509,030 $533,217,961 - -------------------------------------------------------------------------------- Proceeds from sales $247,198,753 $562,771,776 - -------------------------------------------------------------------------------- 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006 SHARES AUTHORIZED 100,000,000 100,000,000 ================================================================================ Sold 2,142,299 $11,360,065 1,661,765 $34,930,608 - ------------------- Redeemed (9,872,777) (51,883,699) (2,886,044) (59,469,218) - -------------------------------------------------------------------------------- Net increase (decrease) (7,730,478) $(40,523,634) (1,224,279) $(24,538,610) ================================================================================ 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) ================================================================================ (continued) - ------ 23 Notes to Financial Statements NOVEMBER 30, 2006 4. CAPITAL SHARE TRANSACTIONS (CONTINUED) - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- SHARES AMOUNT SHARES AMOUNT - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006 SHARES AUTHORIZED 5,000,000 5,000,000 ================================================================================ Sold 131,154 $713,811 69,396 $1,474,148 - ------------------- Redeemed (347,592) (1,871,619) (140,648) (2,927,075) - -------------------------------------------------------------------------------- Net increase (decrease) (216,438) $(1,157,808) (71,252) $(1,452,927) ================================================================================ 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) ================================================================================ ADVISOR CLASS - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006 SHARES AUTHORIZED 5,000,000 5,000,000 ================================================================================ Sold 15,949 $84,134 3,675 $72,810 - ------------------- Redeemed (20,660) (106,796) (2,582) (50,798) - -------------------------------------------------------------------------------- Net increase (decrease) (4,711) $(22,662) 1,093 $22,012 ================================================================================ 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 - -------------------------------------------------------------------------------- YEAR ENDED NOVEMBER 30, 2006 SHARES AUTHORIZED 5,000,000 N/A ================================================================================ Sold 5,990 $31,096 - ------------------- Redeemed (18,910) (94,554) - -------------------------------------------------------------------------------- Net increase (decrease) (12,920) $(63,458) ================================================================================ 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 NOVEMBER 30, 2006 5. SECURITIES LENDING As of November 30, 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 of 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 the collateral by the funds may be delayed or limited. 6. BANK LINE OF CREDIT The funds, along with certain other funds managed by ACIM or ACGIM, have a $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 year ended November 30, 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. 8. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. There were no distributions paid by the funds during the years ended November 30, 2006 and November 30, 2005. As of November 30, 2006, the components of distributable earnings on a tax-basis and the federal tax cost of investments were as follows: - -------------------------------------------------------------------------------- LIFE SCIENCES TECHNOLOGY - -------------------------------------------------------------------------------- Federal tax cost of investments $107,176,582 $109,198,928 ================================================================================ Gross tax appreciation of investments $12,216,626 $17,490,28 - --------------------------------------------- Gross tax depreciation of investments (794,453) (260,179) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) of investments $11,422,173 $17,230,10 ================================================================================ Net tax appreciation (depreciation) on derivatives and translation of assets and liabilities in foreign currencies $1,247 $(22,868) - -------------------------------------------------------------------------------- Net tax appreciation (depreciation) $11,423,420 $17,207,23 ================================================================================ Undistributed ordinary income -- $79 - --------------------------------------------- Accumulated capital losses $(17,046,292) $(218,274,205) - --------------------------------------------- Currency loss deferral $(130,794) -- - -------------------------------------------------------------------------------- (continued) - ------ 25 Notes to Financial Statements NOVEMBER 30, 2006 8. FEDERAL TAX INFORMATION (CONTINUED) The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains on certain forward foreign currency contracts. 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 -- $(17,046,292) - -------------------------------------------------------------------------------- Technology $(165,539,375) $(52,734,830) - -------------------------------------------------------------------------------- The capital and currency loss deferrals represent net foreign currency losses incurred in the one-month period ended November 30, 2006. The funds have elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. 9. RECENTLY ISSUED ACCOUNTING STANDARDS In June 2006, the Financial Accounting Standards Board (FASB) issued Interpretation No. 48, "Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement No. 109" (FIN 48). FIN 48 establishes a minimum threshold for financial statement recognition of the benefit of positions taken in filing tax returns (including whether an entity is taxable in a particular jurisdiction), and requires certain expanded tax disclosures. FIN 48 is effective for fiscal years beginning after December 15, 2006, and is to be applied to all open tax years as of the date of effectiveness. The FASB issued Statement of Financial Accounting Standards No. 157, "Fair Value Measurements" (FAS 157), in September 2006, which is effective for fiscal years beginning after November 15, 2007. FAS 157 defines fair value, establishes a framework for measuring fair value and expands the required financial statement disclosures about fair value measurements. Management is currently evaluating the impact of adopting FIN 48 and FAS 157. - ------ 26 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.32 $4.69 $4.36 $3.54 $4.87 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------ Net Investment Income (Loss)(1) (0.04) (0.04) (0.04) (0.03) (0.04) - ------------------------ Net Realized and Unrealized Gain (Loss) (0.06) 0.67 0.37 0.85 (1.29) - -------------------------------------------------------------------------------- Total From Investment Operations (0.10) 0.63 0.33 0.82 (1.33) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $5.22 $5.32 $4.69 $4.36 $3.54 ================================================================================ TOTAL RETURN(2) (1.88)% 13.43% 7.57% 23.16% (27.31)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.46% 1.50% 1.50% 1.50% 1.50% - ------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.67)% (0.81)% (0.85)% (0.89)% (0.88)% - ------------------------ Portfolio Turnover Rate 151% 162% 215% 138% 272% - ------------------------ Net Assets, End of Period (in thousands) $112,648 $155,835 $155,530 $160,187 $146,324 - -------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 27 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.38 $4.74 $4.40 $3.56 $4.89 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------ Net Investment Income (Loss)(1) (0.02) (0.03) (0.03) (0.03) (0.03) - ------------------------ Net Realized and Unrealized Gain (Loss) (0.07) 0.67 0.37 0.87 (1.30) - -------------------------------------------------------------------------------- Total From Investment Operations (0.09) 0.64 0.34 0.84 (1.33) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $5.29 $5.38 $4.74 $4.40 $3.56 ================================================================================ TOTAL RETURN(2) (1.67)% 13.50% 7.73% 23.60% (27.20)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.26% 1.30% 1.30% 1.30% 1.30% - ------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.47)% (0.61)% (0.65)% (0.69)% (0.68)% - ------------------------ Portfolio Turnover Rate 151% 162% 215% 138% 272% - ------------------------ Net Assets, End of Period (in thousands) $2,744 $3,953 $3,510 $4,019 $3,365 - -------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 28 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.25 $4.64 $4.33 $3.51 $4.86 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------ Net Investment Income (Loss)(1) (0.05) (0.05) (0.05) (0.04) (0.05) - ------------------------ Net Realized and Unrealized Gain (Loss) (0.06) 0.66 0.36 0.86 (1.30) - -------------------------------------------------------------------------------- Total From Investment Operations (0.11) 0.61 0.31 0.82 (1.35) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $5.14 $5.25 $4.64 $4.33 $3.51 ================================================================================ TOTAL RETURN(2) (2.10)% 13.15% 7.16% 23.36% (27.78)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.71% 1.75% 1.75% 1.75% 1.75% - ------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (0.92)% (1.06)% (1.10)% (1.14)% (1.13)% - ------------------------ Portfolio Turnover Rate 151% 162% 215% 138% 272% - ------------------------ Net Assets, End of Period (in thousands) $140 $168 $107 $46 $25 - -------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 29 Life Sciences - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- C CLASS - -------------------------------------------------------------------------------- 2006 2005 2004 2003 2002 - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $5.11 $4.56 $4.28 $3.49 $4.87 - -------------------------------------------------------------------------------- Income From Investment Operations - ------------------------ Net Investment Income (Loss)(1) (0.09) (0.09) (0.08) (0.07) (0.08) - ------------------------ Net Realized and Unrealized Gain (Loss) (0.05) 0.64 0.36 0.86 (1.30) - -------------------------------------------------------------------------------- Total From Investment Operations (0.14) 0.55 0.28 0.79 (1.38) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $4.97 $5.11 $4.56 $4.28 $3.49 ================================================================================ TOTAL RETURN(2) (2.74)% 12.06% 6.54% 22.64% (28.34)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 2.46% 2.50% 2.50% 2.50% 2.50% - ------------------------ Ratio of Net Investment Income (Loss) to Average Net Assets (1.67)% (1.81)% (1.85)% (1.89)% (1.88)% - ------------------------ Portfolio Turnover Rate 151% 162% 215% 138% 272% - ------------------------ Net Assets, End of Period (in thousands) $35 $102 $25 $10 $6 - -------------------------------------------------------------------------------- (1) Computed using average shares outstanding throughout the period. (2) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 30 Technology - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- INVESTOR CLASS - -------------------------------------------------------------------------------- 2006 2005 2004 2003(1) 2002(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $19.61 $18.20 $19.58 $14.40 $20.90 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------- Net Investment Income (Loss)(2) (0.24) (0.19) (0.24) (0.19) (0.20) - --------------------- Net Realized and Unrealized Gain (Loss) 1.73 1.60 (1.14) 5.37 (6.30) - -------------------------------------------------------------------------------- Total From Investment Operations 1.49 1.41 (1.38) 5.18 (6.50) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $21.10 $19.61 $18.20 $19.58 $14.40 ================================================================================ TOTAL RETURN(3) 7.60% 7.75% (7.05)% 35.97% (31.10)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.51% 1.51% 1.50% 1.50% 1.50% - --------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.15)% (1.06)% (1.30)% (1.25)% (1.20)% - --------------------- Portfolio Turnover Rate 385% 388% 279% 218% 251% - --------------------- Net Assets, End of Period (in thousands) $122,353 $137,710 $166,986 $202,884 $127,767 - -------------------------------------------------------------------------------- (1) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 31 Technology - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- INSTITUTIONAL CLASS - -------------------------------------------------------------------------------- 2006 2005 2004 2003(1) 2002(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $19.84 $18.38 $19.74 $14.50 $21.00 - -------------------------------------------------------------------------------- Income From Investment Operations - --------------------- Net Investment Income (Loss)(2) (0.20) (0.15) (0.20) (0.16) (0.20) - --------------------- Net Realized and Unrealized Gain (Loss) 1.76 1.61 (1.16) 5.40 (6.30) - -------------------------------------------------------------------------------- Total From Investment Operations 1.56 1.46 (1.36) 5.24 (6.50) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $21.40 $19.84 $18.38 $19.74 $14.50 ================================================================================ TOTAL RETURN(3) 7.86% 7.94% (6.89)% 36.14% (30.95)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.31% 1.31% 1.30% 1.30% 1.30% - --------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (0.95)% (0.86)% (1.10)% (1.05)% (1.00)% - --------------------- Portfolio Turnover Rate 385% 388% 279% 218% 251% - --------------------- Net Assets, End of Period (in thousands) $5,051 $6,099 $7,805 $10,191 $8,444 - -------------------------------------------------------------------------------- (1) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 32 Technology - Financial Highlights FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 - -------------------------------------------------------------------------------- ADVISOR CLASS - -------------------------------------------------------------------------------- 2006 2005 2004 2003(1) 2002(1) - -------------------------------------------------------------------------------- PER-SHARE DATA - -------------------------------------------------------------------------------- Net Asset Value, Beginning of Period $19.30 $17.96 $19.37 $14.30 $20.80 - -------------------------------------------------------------------------------- Income From Investment Operations - -------------------- Net Investment Income (Loss)(2) (0.28) (0.24) (0.27) (0.20) (0.20) - -------------------- Net Realized and Unrealized Gain (Loss) 1.70 1.58 (1.14) 5.27 (6.30) - -------------------------------------------------------------------------------- Total From Investment Operations 1.42 1.34 (1.41) 5.07 (6.50) - -------------------------------------------------------------------------------- Net Asset Value, End of Period $20.72 $19.30 $17.96 $19.37 $14.30 ================================================================================ TOTAL RETURN(3) 7.36% 7.46% (7.28)% 35.45% (31.25)% - -------------------------------------------------------------------------------- RATIOS/SUPPLEMENTAL DATA - -------------------------------------------------------------------------------- Ratio of Operating Expenses to Average Net Assets 1.76% 1.76% 1.75% 1.75% 1.75% - -------------------- Ratio of Net Investment Income (Loss) to Average Net Assets (1.40)% (1.31)% (1.55)% (1.50)% (1.45)% - -------------------- Portfolio Turnover Rate 385% 388% 279% 218% 251% - -------------------- Net Assets, End of Period (in thousands) $139 $109 $78 $18 $54 - -------------------------------------------------------------------------------- (1) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. See Notes to Financial Statements. - ------ 33 Report of Independent Registered Public Accounting Firm The Board of Directors and Shareholders, American Century World Mutual Funds, Inc.: We have audited the accompanying statements of assets and liabilities, including the schedules of investments, of Life Sciences Fund and Technology Fund (collectively the "Funds"), two of the mutual funds comprising American Century World Mutual Funds, Inc., as of November 30, 2006, and the related statements of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Funds' management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Funds are not required to have, nor were we engaged to perform, an audit of their internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Funds' internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2006, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Life Sciences Fund and Technology Fund, as of November 30, 2006, the results of their operations for the year then ended, the changes in the net assets for each of the two years for the period then ended and their financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. Deloitte & Touche LLP Kansas City, Missouri January 16, 2007 - ------ 34 Management The individuals listed below serve as directors or officers of the funds. Each director serves until his or her successor is duly elected and qualified or until he or she retires. Mandatory retirement age for independent directors is 72. Those listed as interested directors are "interested" primarily by virtue of their engagement as officers of American Century Companies, Inc. (ACC) or its wholly owned, direct or indirect, subsidiaries, including the funds' investment advisor, American Century Global Investment Management, Inc. (ACGIM) or American Century Investment Management, Inc. (ACIM); the funds' principal underwriter, American Century Investment Services, Inc. (ACIS); and the funds' transfer agent, American Century Services, LLC (ACS). The other directors (more than three-fourths of the total number) are independent; that is, they have never been employees or officers of, and have no financial interest in, ACC or any of its wholly owned subsidiaries, including ACGIM, ACIM, ACIS, and ACS. The directors serve in this capacity for seven registered investment companies in the American Century family of funds. All persons named as officers of the funds also serve in a similar capacity for the other 14 investment companies advised by ACIM or ACGIM, unless otherwise noted. Only officers with policy-making functions are listed. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. - -------------------------------------------------------------------------------- INDEPENDENT DIRECTORS - -------------------------------------------------------------------------------- THOMAS A. BROWN, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1940 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1980 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Formerly Chief Executive Officer/Treasurer, Associated Bearings Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- ANDREA C. HALL, PH.D., 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, Advisor to the President, Midwest Research Institute NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- D.D. (DEL) HOCK, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1935 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1996 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Chairman, Public Service Company of Colorado NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Allied Motion Technologies, Inc. - -------------------------------------------------------------------------------- (continued) - ------ 35 Management - -------------------------------------------------------------------------------- INDEPENDENT DIRECTORS (CONTINUED) - -------------------------------------------------------------------------------- JAMES A. OLSON, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1942 POSITION(S) HELD WITH FUND: Advisory Board Member FIRST YEAR OF SERVICE: 2006 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Principal, Plaza Belmont LLC; Chief Financial Officer, Plaza Belmont LLC (September 1999 to July 2006) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Saia, Inc. and Entertainment Properties Trust - -------------------------------------------------------------------------------- DONALD H. PRATT, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1937 POSITION(S) HELD WITH FUND: Director, Chairman of the Board FIRST YEAR OF SERVICE: 1995 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, Western Investments, Inc.; Retired Chairman of the Board, Butler Manufacturing Company NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- GALE E. SAYERS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1943 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President, Chief Executive Officer and Founder, Sayers40, Inc., a technology products and service provider NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Triad Hospitals, Inc. - -------------------------------------------------------------------------------- M. JEANNINE STRANDJORD, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1945 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 1994 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Retired, formerly Senior Vice President, Sprint Corporation NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, DST Systems, Inc.; Director, Euronet Worldwide, Inc. - -------------------------------------------------------------------------------- TIMOTHY S. WEBSTER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1961 POSITION(S) HELD WITH FUND: Director FIRST YEAR OF SERVICE: 2001 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Managing Director, TDB Acquisition Group LLC (September 2006 to present); President and Chief Executive Officer, American Italian Pasta Company (1992 to December 2005) NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- (continued) - ------ 36 Management - -------------------------------------------------------------------------------- INDEPENDENT DIRECTORS (CONTINUED) - -------------------------------------------------------------------------------- JAMES E. STOWERS, JR.(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1924 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman FIRST YEAR OF SERVICE: 1958 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Founder, Director and Controlling Shareholder, ACC; Chairman, ACC (January 1995 to December 2004); Director, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 66 OTHER DIRECTORSHIPS HELD BY DIRECTOR: None - -------------------------------------------------------------------------------- JAMES E. STOWERS III(1), 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1959 POSITION(S) HELD WITH FUND: Director, Co-Vice Chairman FIRST YEAR OF SERVICE: 1990 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chairman, ACC (January 2005 to present); Co-Chairman, ACC (September 2000 to December 2004); Chairman, ACS and other ACC subsidiaries (April 2005 to September 2006); Director, ACC, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries Number of Portfolios in Fund Complex Overseen by Director: 66 Other Directorships Held by Director: None - -------------------------------------------------------------------------------- (1) James E. Stowers, Jr. is the father of James E. Stowers III. - -------------------------------------------------------------------------------- OFFICERS - -------------------------------------------------------------------------------- WILLIAM M. LYONS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1955 POSITION(S) HELD WITH FUND: President FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC (September 2000 to present); President, ACC (June 1997 to present); Also serves as: Chairman, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries; Chief Executive Officer, ACIM, ACGIM, ACIS and other ACC subsidiaries (October 2000 to October 2006); President, ACIM, ACGIM and other ACC subsidiaries (September 2002 to September 2006); Executive Vice President, ACS (January 2005 to September 2006); Director, ACC, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- JONATHAN THOMAS, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1963 POSITION(S) HELD WITH FUND: Executive Vice President FIRST YEAR OF SERVICE: 2005 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC (February 2006 to present); Executive Vice President, ACC (November 2005 to present); Also serves as: President and Chief Executive Officer, ACS; Chief Financial Officer and Chief Accounting Officer, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries; Managing Director, Morgan Stanley (March 2000 to November 2005) - -------------------------------------------------------------------------------- MARYANNE ROEPKE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1956 POSITION(S) HELD WITH FUND: Chief Compliance Officer and Senior Vice President FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Compliance Officer, ACIM, ACGIM and ACS (August 2006 to present); Assistant Treasurer, ACC (January 1995 to August 2006); Treasurer and Chief Financial Officer, various American Century funds (July 2000 to August 2006); Also serves as: Senior Vice President, ACS - -------------------------------------------------------------------------------- DAVID C. TUCKER, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1958 POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel FIRST YEAR OF SERVICE: 2000 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACC (February 2001 to present); General Counsel, ACC (June 1998 to present); Also serves as: Senior Vice President and General Counsel, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- (continued) - ------ 37 Management - -------------------------------------------------------------------------------- OFFICERS (CONTINUED) - -------------------------------------------------------------------------------- ROBERT LEACH, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1966 POSITION(S) HELD WITH FUND: Vice President, Treasurer and Chief Financial Officer FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS (February 2000 to present); Controller, various American Century funds (June 1997 to September 2006) - -------------------------------------------------------------------------------- C. JEAN WADE, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1964 POSITION(S) HELD WITH FUND: Controller FIRST YEAR OF SERVICE: 2006 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACS (February 2000 to present) - -------------------------------------------------------------------------------- JON ZINDEL, 4500 Main Street, Kansas City, MO 64111 YEAR OF BIRTH: 1967 POSITION(S) HELD WITH FUND: Tax Officer FIRST YEAR OF SERVICE: 1997 PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, ACC (August 2006 to present); Vice President, ACC and certain ACC subsidiaries (October 2001 to August 2006); Vice President, Corporate Tax, ACS (April 1998 to August 2006); Also serves as: Senior Vice President, ACIM, ACGIM, ACS, ACIS and other ACC subsidiaries - -------------------------------------------------------------------------------- The SAI has additional information about the funds' directors and is available without charge, upon request, by calling 1-800-345-2021. - ------ 38 Approval of Management Agreements for Life Sciences and Technology Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated and approved by a majority of a fund's independent directors or trustees (the "Directors") each year. At American Century, this process is referred to as the "15(c) Process." As a part of this process, the board reviews fund performance, shareholder services, audit and compliance information, and a variety of other reports from the advisor concerning fund operations. In addition to this annual review, the board of directors oversees and evaluates on a continuous basis at its quarterly meetings the nature and quality of significant services performed by the advisor, fund performance, audit and compliance information, and a variety of other reports relating to fund operations. The board, or committees of the board, also holds special meetings as needed. 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 the board's approval or renewal of any advisory agreements within the fund's most recently completed fiscal half-year period. ANNUAL CONTRACT REVIEW PROCESS As part of the annual 15(c) Process undertaken during the most recent fiscal half-year period, the Directors reviewed extensive data and information compiled by the advisor and certain independent providers of evaluative data (the "15(c) Providers") concerning Life Sciences and Technology (the "funds") and the services provided to the funds under the management agreement. The information considered and the discussions held at the meetings included, but were not limited to: * the nature, extent and quality of investment management, shareholder services and other services provided to the funds under the management agreement; * reports on the advisor's activities relating to the wide range of programs and services the advisor provides to the funds and their shareholders on a routine and non-routine basis; * data comparing the cost of owning the funds to the cost of owning similar funds; * data comparing the funds' performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the funds to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. In keeping with its practice, the funds' board of directors held two regularly scheduled meetings and one special meeting to review and discuss the information provided by the advisor and to complete its negotiations with the advisor regarding the renewal of the management agreement, including the setting of the applicable advisory (continued) - ------ 39 Approval of Management Agreements for Life Sciences and Technology fee. The board also had the benefit of the advice of its independent counsel throughout the period. FACTORS CONSIDERED The Directors considered all of the information provided by the advisor, the 15(c) Providers, and the board's independent counsel, and evaluated such information for each fund for which the board has responsibility. The Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the agreement under the terms ultimately determined by the board to be appropriate, the Directors' decision was based on the following factors. NATURE, EXTENT AND QUALITY OF SERVICES -- GENERALLY. Under the management agreement, the advisor is responsible for providing or arranging for all services necessary for the operation of the funds. The board noted that under the management agreement, the advisor provides or arranges at its own expense a wide variety of services including: * fund construction and design * portfolio security selection * initial capitalization/funding * securities trading * custody of fund assets * daily valuation of the funds' portfolio * shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping and communications * legal services * regulatory and portfolio compliance * financial reporting * marketing and distribution The Directors noted that many of these services have expanded over time both in terms of quantity and complexity in response to shareholder demands, competition in the industry and the changing regulatory environment. In performing their evaluation, the Directors considered information received in connection with the annual review, as well as information provided on an ongoing basis at their regularly scheduled board and committee meetings. INVESTMENT MANAGEMENT SERVICES. The nature of the investment management services provided is quite complex and allows fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes, and liquidity. In evaluating investment performance, the board expects the advisor to manage the funds in accordance with their investment objectives and approved strategies. In providing these services, the advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance and other systems to conduct their business. At each quarterly meeting the Directors review investment performance information for the funds, together with comparative information for appropriate benchmarks and peer groups of funds (continued) - ------ 40 Approval of Management Agreements for Life Sciences and Technology managed similarly to the funds. The Directors also review detailed performance information during the 15(c) Process comparing the funds' performance with that of similar funds not managed by the advisor. If performance concerns are identified, the Directors discuss with the advisor the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. Life Sciences' performance was below the median for its peer group for the one year period and equal to the median for the three year period during part of the past year. Technology's performance was above the median of its peer group for the one year period and below the median for the three year period during part of the past year. The board discussed the funds' performance with the advisor and was satisfied with the efforts being undertaken by the advisor. SHAREHOLDER AND OTHER SERVICES. The advisor provides the funds with a comprehensive package of transfer agency, shareholder, and other services. The Directors review reports and evaluations of such services at their regular quarterly meetings, including the annual meeting concerning contract review, and reports to the board. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the advisor. COSTS OF SERVICES PROVIDED AND PROFITABILITY TO THE ADVISOR. The advisor provides detailed information concerning its cost of providing various services to the funds, its profitability in managing the funds, its overall profitability, and its financial condition. The Directors have reviewed with the advisor the methodology used to prepare this financial information. This financial information regarding the advisor is considered in order to evaluate the advisor's financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. ETHICS OF THE ADVISOR. The Directors generally consider the advisor's commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the advisor's practices generally meet or exceed industry best practices and that the advisor was not implicated in the industry scandals of 2003 and 2004. ECONOMIES OF SCALE. The Directors review reports provided by the advisor on economies of scale for the complex as a whole and the year-over-year changes in revenue, costs, and profitability. The Directors concluded that economies of scale are difficult to (continued) - ------ 41 Approval of Management Agreements for Life Sciences and Technology measure and predict with precision, especially on a fund-by-fund basis. This analysis is also complicated by the additional services and content provided by the advisor and its reinvestment in its ability to provide and expand those services. Accordingly, the Directors also seek to evaluate economies of scale by reviewing other information, such as year-over-year profitability of the advisor generally, the profitability of its management of the funds specifically, the expenses incurred by the advisor in providing various functions to the funds, and the breakpoint fees of competitive funds not managed by the advisor. The Directors believe the advisor is appropriately sharing economies of scale through its competitive fee structure, fee breakpoints as the funds increase in size, and through reinvestment in its business to provide shareholders additional content and services. COMPARISON TO OTHER FUNDS' FEES. The funds pay the advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the funds, other than brokerage expenses, taxes, interest, extraordinary expenses, and the fees and expenses of the funds' independent directors (including their independent legal counsel). Under the unified fee structure, the advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges and other expenses. Other than their investment advisory fees and Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The board believes the unified fee structure is a benefit to fund shareholders because it clearly discloses to shareholders the cost of owning fund shares, and, since the unified fee cannot be increased without a vote of fund shareholders, it shifts to the advisor the risk of increased costs of operating the funds and provides a direct incentive to minimize administrative inefficiencies. Part of the Directors' analysis of fee levels involves reviewing certain evaluative data compiled by a 15(c) Provider comparing the funds' unified fee to the total expense ratio of other funds in the funds' peer group. The unified fee charged to shareholders of the funds was above the median of the total expense ratios of their peer groups. COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The Directors also requested and received information from the advisor concerning the nature of the services, fees, and profitability of its advisory services to advisory clients other than the funds. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the funds. The Directors analyzed this information and concluded that the fees charged and services provided to the funds were reasonable by comparison. (continued) - ------ 42 Approval of Management Agreements for Life Sciences and Technology COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information from the advisor concerning collateral benefits it receives as a result of its relationship with the funds. They concluded that the advisor's primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Directors noted that the advisor receives proprietary research from broker dealers that execute fund portfolio transactions and concluded that this research is likely to benefit fund shareholders. The Directors also determined that the advisor is able to provide investment management services to certain clients other than the funds, at least in part, due to its existing infrastructure built to serve the fund complex. The Directors concluded, however, that the assets of those other clients are not material to the analysis and, in any event, are included with the assets of the funds to determine breakpoints in the funds' fee schedule, provided they are managed using the same investment team and strategy. CONCLUSIONS OF THE DIRECTORS As a result of this process, the independent directors of Technology, in the absence of particular circumstances and assisted by the advice of legal counsel that is independent of the advisor, taking into account all of the factors discussed above and the information provided by the advisor, concluded that the investment management agreement between Technology and the advisor is fair and reasonable in light of the services provided and should be renewed. The independent directors of Life Sciences negotiated changes to the breakpoint schedule used to calculate the management fee. These changes were proposed by the Directors based on their review of the competitive changes in the mutual fund marketplace and their review of financial information provided by the advisor. The new schedule, effective August 1, 2006, contains lower management fees at certain asset levels than under the existing structure. Following these negotiations with the advisor, the independent directors concluded that the investment management agreement between Life Sciences and the advisor is fair and reasonable in light of the services provided and should be renewed. - ------ 43 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 Class 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 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. - ------ 44 Additional Information RETIREMENT ACCOUNT INFORMATION As required by law, any distributions you receive from an IRA or certain 403(b), 457 and qualified plans [those not eligible for rollover to an IRA or to another qualified plan] are subject to federal income tax withholding, unless you elect not to have withholding apply. Tax will be withheld on the total amount withdrawn even though you may be receiving amounts that are not subject to withholding, such as nondeductible contributions. In such case, excess amounts of withholding could occur. You may adjust your withholding election so that a greater or lesser amount will be withheld. If you don't want us to withhold on this amount, you must notify us to not withhold the federal income tax. Even if you plan to roll over the amount you withdraw to another tax-deferred account, the withholding rate still applies to the withdrawn amount unless we have received notice not to withhold federal income tax prior to the withdrawal. You may notify us in writing or in certain situations by telephone or through other electronic means. You have the right to revoke your withholding election at any time and any election you make may remain in effect until revoked by filing a new election. Remember, even if you elect not to have income tax withheld, you are liable for paying income tax on the taxable portion of your withdrawal. If you elect not to have income tax withheld or you don't have enough income tax withheld, you may be responsible for payment of estimated tax. You may incur penalties under the estimated tax rules if your withholding and estimated tax payments are not sufficient. State tax will be withheld if, at the time of your distribution, your address is within one of the mandatory withholding states and you have federal income tax withheld. State taxes will be withheld from your distribution in accordance with the respective state rules. PROXY VOTING GUIDELINES American Century Investment Management, Inc. and American Century Global Investment Management, Inc., the funds' investment advisors, are responsible for exercising the voting rights associated with the securities purchased and/or held by the funds. A description of the policies and procedures the advisor uses in fulfilling this responsibility is available without charge, upon request, by calling 1-800-345-2021. It is also available on American Century's website at americancentury.com and on the Securities and Exchange Commission's website 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 website 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 website at americancentury.com and, upon request, by calling 1-800-345-2021. - ------ 45 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 RUSSELL 1000(reg.tm) INDEX is a market-capitalization weighted, large-cap index created by Frank Russell Company to measure the performance of the 1,000 largest companies in the Russell 3000 Index (the 3,000 largest publicly traded U.S. companies, based on total market capitalization). The RUSSELL 1000(reg.tm) GROWTH INDEX measures the performance of those Russell 1000 Index companies (the 1,000 largest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth rates. The RUSSELL 1000(reg.tm) VALUE INDEX measures the performance of those Russell 1000 Index companies (the 1,000 largest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth rates. 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 RUSSELL 2000(reg.tm) GROWTH INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth rates. The RUSSELL 2000(reg.tm) VALUE INDEX measures the performance of those Russell 2000 Index companies (the 2,000 smallest of the 3,000 largest publicly traded U.S. companies, based on total market capitalization) with lower price-to-book ratios and lower forecasted growth rates. The RUSSELL MIDCAP(reg.tm) INDEX measures the performance of the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization. The RUSSELL MIDCAP(reg.tm) GROWTH INDEX measures the performance of those Russell Midcap Index companies (the 800 smallest of the 1,000 largest publicly traded U.S. companies, based on total market capitalization) with higher price-to-book ratios and higher forecasted growth values. The RUSSELL MIDCAP(reg.tm) VALUE INDEX measures the performance of those Russell Midcap companies with lower price-to-book ratios and lower forecasted growth values. 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 (continued) - ------ 46 Index Definitions 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. - ------ 47 Notes - ------ 48 [blank inside 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)2007 American Century Proprietary Holdings, Inc. All rights reserved. 0701 SH-ANN-52642S
ITEM 2. CODE OF ETHICS. a. The registrant has adopted a Code of Ethics for Senior Financial Officers that applies to the registrant's principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. b. No response required. c. None. d. None. e. Not applicable. f. The registrant's Code of Ethics for Senior Financial Officers was filed as Exhibit 12 (a)(1) to American Century Asset Allocation Portfolios, Inc.'s Annual Certified Shareholder Report on Form N-CSR, File No. 811-21591, on September 29, 2005, and is incorporated herein by reference. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. (a)(1) The registrant's board has determined that the registrant has at least one audit committee financial expert serving on its audit committee. (a)(2) D.D. (Del) Hock, Donald H. Pratt and Thomas A. Brown are the registrant's designated audit committee financial experts. They are "independent" as defined in Item 3 of Form N-CSR. (a)(3) Not applicable. (b) No response required. (c) No response required. (d) No response required. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. (a) Audit Fees. The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant's annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were as follows: FY 2005: $152,470 FY 2006: $202,398 (b) Audit-Related Fees. The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant's financial statements and are not reported under paragraph (a) of this Item were as follows: For services rendered to the registrant: FY 2005: $0 FY 2006: $0 Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant's investment adviser and its affiliates): FY 2005: $0 FY 2006: $0 (c) Tax Fees. The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were as follows: For services rendered to the registrant: FY 2005: $23,535 FY 2006: $32,267 These services included review of federal and state income tax forms and federal excise tax forms. Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant's investment adviser and its affiliates): FY 2005: $0 FY 2006: $0 (d) All Other Fees. The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item were as follows: For services rendered to the registrant: FY 2005: $0 FY 2006: $0 Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant's investment adviser and its affiliates): FY 2005: $0 FY 2006: $0 (e)(1) In accordance with paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X, before the accountant is engaged by the registrant to render audit or non-audit services, the engagement is approved by the registrant's audit committee. Pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, the registrant's audit committee also pre-approves its accountant's engagements for non-audit services with the registrant's investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant. (e)(2) All services described in each of paragraphs (b) through (d) of this Item were pre-approved before the engagement by the registrant's audit committee pursuant to paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X. Consequently, none of such services were required to be approved by the audit committee pursuant to paragraph (c)(7)(i)(C). (f) The percentage of hours expended on the principal accountant's engagement to audit the registrant's financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was less than 50%. (g) The aggregate non-audit fees billed by the registrant's accountant for services rendered to the registrant, and rendered to the registrant's investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant were as follows: FY 2005: $186,271 FY 2006: $201,504 (h) The registrant's investment adviser and accountant have notified the registrant's audit committee of all non-audit services that were rendered by the registrant's accountant to the registrant's investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides services to the registrant, which services were not required to be pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The notification provided to the registrant's audit committee included sufficient details regarding such services to allow the registrant's audit committee to consider the continuing independence of its principal accountant. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. During the reporting period, there were no material changes to the procedures by which shareholders may recommend nominees to the registrant's board. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Registrant's Code of Ethics for Senior Financial Officers, which is the subject of the disclosure required by Item 2 of Form N-CSR, was filed as Exhibit 12(a)(1) to American Century Asset Allocation Portfolios, Inc.'s Certified Shareholder Report on Form N-CSR, File No. 811-21591, on September 29, 2005. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as Exhibit 99.302CERT. (a)(3) Not applicable. (b) A certification by the registrant's chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is furnished and attached hereto as Exhibit 99.906CERT.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: AMERICAN CENTURY WORLD MUTUAL FUNDS, INC. By: /s/ William M. Lyons ----------------------------------------------- Name: William M. Lyons Title: President Date: January 29, 2007 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. By: /s/ William M. Lyons ----------------------------------------------- Name: William M. Lyons Title: President (principal executive officer) Date: January 29, 2007 By: /s/ Robert J. Leach ----------------------------------------------- Name: Robert J. Leach Title: Vice President, Treasurer, and Chief Financial Officer (principal financial officer) Date: January 29, 2007