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) CHARLES A. ETHERINGTON, 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: 05-31-2007 ------------------------------------------------------
ITEM 1. REPORTS TO STOCKHOLDERS. [front cover] AMERICAN CENTURY INVESTMENTS Semiannual Report May 31, 2007 [photo of summer] International Growth Fund Global Growth Fund International Value Fund [american century investments logo and text logo] OUR MESSAGE TO YOU We have the privilege of providing you with the semiannual report for the American Century® International Growth, Global Growth and International Value funds for the six months ended May 31, 2007. We've gathered this information to help you monitor your investment. Another resource is our website, americancentury.com, where we post company news and other communications about portfolio strategy, personal finance, government policy, and the markets. Speaking of company news, American Century Investments announced the following leadership changes. Chief Investment Officer Mark Mallon retired in the first quarter of 2007, after nearly a decade with us. Effective January 1, 2007, former International Equity CIO Enrique Chang became CIO with responsibilities for the entire investment management operation. Prior to joining us in 2006, Enrique worked at Munder Capital Management, serving the last four years as president and CIO. Filling the vacant International Equity CIO position, Mark On joined American Century Investments in May 2007. Mark came to us from AXA Rosenberg, where he most recently served as CIO and managing director of their Asia Pacific operations in Singapore. In January 2007, President and Chief Executive Officer Bill Lyons announced his retirement after nearly 20 years at American Century Investments. Chief Financial Officer Jonathan Thomas was appointed president and CEO effective March 1, 2007. Since 2005, Jonathan has overseen our financial area, with additional responsibilities in purchasing, facilities, real estate, information technology, operations, and human resources. Before joining American Century, Jonathan was a managing director and global chief operating officer of Morgan Stanley's investment division. We wish to thank Mark and Bill for their many years of distinguished service - -- American Century is a stronger company as a result of their hard work. And we firmly believe their roles in our firm have transitioned to two talented, committed, and experienced top executives. [photo of James E. Stowers, Jr.] /s/James E. Stowers, Jr. James E. Stowers, Jr. FOUNDER AND CO-CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. TABLE OF CONTENTS Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . 2 International Equity 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 . . . . . . . . . . . . . . . . . 27 Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . 29 Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . 30 Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 32 Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . 41 OTHER INFORMATION Approval of Management Agreements for International Growth, Global Growth and International Value. . . . . . . . . . . . . . . . 61 Share Class Information . . . . . . . . . . . . . . . . . . . . . . . 66 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . 68 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 69 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 Mark On, Chief Investment Officer, International Equity INTERNATIONAL STOCKS HIGHER International equities registered healthy gains for the six months ended May 31, 2007, with most global equity markets posting double-digit returns. Market indexes in the U.S. and most European countries reached six-year highs, and many emerging market indexes in Asia, Europe, and Latin America approached or established record highs. The ride was bumpy, however. Global equity markets sold off sharply in March as investors pondered the implications of trouble in the U.S. subprime mortgage market for the broader economy, and a potential ripple effect from slower consumer spending. However, a number of factors helped international equities bounce back to post solid gains. Steady global growth, massive liquidity, corporate share buybacks, and record merger and acquisition activity all buoyed global asset prices. Emerging market shares, whose performance is most closely tied to global growth and investor appetite for risk, performed best. European stocks were next, while shares of Japanese equities lagged. Looking at performance by style, growth shares narrowly led value, as measured by the MSCI EAFE Growth and Value indexes, breaking a lengthy streak of value outperformance. HEALTHY GLOBAL GROWTH Despite a slowdown in U.S. economic growth, the global economy remained resilient. Strong consumer and corporate demand, reasonably low inflation, improving labor markets, and moderate (though rising) global interest rates have provided steady support for global growth since the recovery began in 2002. Healthy economic growth led the European Central Bank to hike short-term interest rates twice during the period in the latest of seven-consecutive rate increases. The Bank of Japan also raised interest rates during the period, as unemployment fell to a nine-year low. 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 international team is dedicated to searching for companies to help drive investment performance. International Equity Total Returns For the six months ended May 31, 2007 (in U.S. dollars)* MSCI EM Index 17.50% MSCI Europe Index 16.13% MSCI EAFE Growth Index 14.78% MSCI EAFE Index 14.08% MSCI EAFE Value Index 13.37% MSCI World Free Index 12.25% MSCI Japan Index 5.72% * Total returns for periods less than one year are not annualized. - ------ 2 PERFORMANCE International Growth Total Returns as of May 31, 2007 Average Annual Returns 6 10 Since Inception months(1) 1 year 5 years years Inception Date INVESTOR CLASS 13.90% 26.71% 12.95% 8.77% 10.97% 5/9/91 MSCI EAFE INDEX 14.08% 26.84% 16.75% 8.23% 8.20%(2) -- MSCI EAFE GROWTH INDEX 14.78% 25.13% 14.71% 5.75% 5.92%(2) -- Institutional Class 14.01% 26.91% 13.17% -- 9.25% 11/20/97 Advisor Class 13.84% 26.34% 12.67% 8.50% 9.89% 10/2/96 A Class No sales charge* 13.73% 26.32% -- -- 21.55% With sales charge* 7.20% 19.02% -- -- 19.90% 1/31/03 B Class No sales charge* 13.29% 25.37% -- -- 20.64% With sales charge* 8.29% 21.37% -- -- 20.39% 1/31/03 C Class No sales charge* 13.37% 25.42% 11.80% -- 6.92% With sales charge* 12.37% 25.42% 11.80% -- 6.92% 6/4/01 R Class 13.63% 26.00% -- -- 20.42%(3) 8/29/03 * Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum initial sales charge for equity funds and may be subject to a maximum CDSC of 1.00%. B Class shares redeemed within six years of purchase are subject to a CDSC that declines from 5.00% during the first year after purchase to 0.00% the sixth year after purchase. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. Please see the Share Class Information pages for more about the applicable sales charges for each share class. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. (1) Total returns for periods less than one year are not annualized. (2) Since 4/30/91, the date nearest the Investor Class's inception for which data are available. (3) Class returns would have been lower if the class had not received partial reimbursements of its 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. 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 indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 3 International Growth Growth of $10,000 Over 10 Years $10,000 investment made May 31, 1997
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One-Year Returns Over 10 Years Periods ended May 31 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Investor Class 30.30% -2.85% 48.27% -22.48% -13.34% -15.25% 22.36% 10.36% 26.80% 26.71% MSCI EAFE Index 11.11% 4.36% 17.14% -17.23% -9.60% -12.30% 32.66% 14.62% 28.24% 26.84% MSCI EAFE Growth Index 10.50% 2.75% 20.82% -27.39% -11.58% -11.92% 27.01% 11.88% 26.83% 25.13% Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the 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 PORTFOLIO COMMENTARY International Growth Portfolio Managers: Alex Tedder and Keith Creveling PERFORMANCE SUMMARY International Growth gained 13.90%* during the six months ended May 31, 2007. Its benchmark, the MSCI EAFE Index, advanced 14.08%. The portfolio's results reflected operating expenses, while the index returns did not. Since its inception on May 9, 1991, International Growth has provided an average annualized return of 10.97%**, versus 8.20% for its benchmark. As noted in the Market Perspective on page 2, economies worldwide enjoyed healthy growth during the period and contributed to absolute gains. The optimism was somewhat tempered, however, as central banks moved to cool growth rates by raising interest rates. Within the portfolio, stock selection in the consumer staples and information technology sectors weighed on relative performance, while more effective stock selection in the financials and telecommunication services sectors helped boost the portfolio's relative returns. From a geographic perspective, underperforming stocks from the Netherlands and Sweden diminished relative returns, while effective security selection in the United Kingdom and an underweight stake in Japan, which trailed the benchmark, helped the portfolio advance on a relative basis. FOOD HOLDINGS WEIGHED Although every sector contributed positively on an absolute basis during the period, five lagged the benchmark on a relative basis, which led to underperformance compared to the benchmark. Two overweight positions within the consumer staples sector, food manufacturers Group Danone of France and Royal Numico N.V. of the Netherlands, ranked among the portfolio's poorest relative performers during the period. Sluggish revenue growth in Group Danone's beverage division coincided with legal issues surrounding a Chinese venture and dampened returns. Royal Numico, which expanded into China and Vietnam last year with its purchase of Dumex, contended with lower-than-expected earnings, which it primarily attributed to rising prices for raw ingredients. INDUSTRIALS SPURRED ADVANCE Enhancing the portfolio's relative returns were two holdings within the industrials sector. Despite a late-period setback due to lower-than-expected quarterly earnings, Denmark's Vestas Wind Systems AS, the largest wind-power system developer in the world, advanced significantly, and the portfolio benefited from its overweight position. The company reiterated its 2007 forecast for a 17% increase in annual revenues and a global market share goal of 35% by 2008. Top Ten Holdings as of May 31, 2007 % of net % of net assets as of assets as of 5/31/07 11/30/06 Total SA 1.6% 1.6% Nintendo Co., Ltd. 1.6% 0.5% National Bank of Greece SA 1.6% 1.2% Julius Baer Holding AG 1.6% 0.5% Tesco plc 1.6% 1.5% Roche Holding AG 1.5% 2.0% Burberry Group plc 1.5% 1.2% Groupe Danone 1.5% 1.7% Saipem SpA 1.4% 0.7% HSBC Holdings plc 1.4% -- * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. ** Return shown for the benchmark is since 4/30/91, the date nearest the Investor Class's inception for which data are available. - ------ 5 International Growth Also helping performance was an overweight stake in Hochtief AG, a German construction and engineering firm. To counter lackluster results from its domestic construction division, due in part to rising costs for materials and subcontractors, the company has built profitable units across Asia and Australia. SELECT FINANCIALS THRIVED Notable stock selections in the financials sector included overweight positions in Swiss asset manager Julius Baer Holding AG from the capital markets group and National Bank of Greece SA, a commercial bank. Julius Baer, a holding that doesn't appear in the benchmark, said operating profits rose 12% -- and net profits by 35% -- in 2006 while operating expenses increased by just 1%. Meanwhile, as it pushes to become the largest bank in southeast Europe and Turkey, National Bank of Greece, an overweight position, announced it expects profits to expand by an average of more than 30% a year for the next three years. Both stocks also received lifts amid merger and acquisition speculation. STARTING POINT FOR NEXT REPORTING PERIOD The landscape continues to change for international investors: Although emerging economies continue to be the driver of growth worldwide, many are moving from export-driven growth to internal growth, based on consumption. Against this backdrop, we continue to believe that the outlook for large-cap growth companies remains very good. International Growth has broad exposure to high-quality growth companies in a number of markets, and we believe that these will deliver solid returns, even in volatile market conditions. Types of Investments in Portfolio % of net % of net assets as of assets as of 5/31/07 11/30/06 Foreign Common Stocks 100.6% 99.8% Foreign Preferred Stocks 0.6% -- TOTAL EQUITY EXPOSURE 101.2% 99.8% Temporary Cash Investments 0.1% 0.3% Other Assets and Liabilities(1) (1.3)% (0.1)% (1) Includes securities lending collateral and other assets and liabilities. Investments by Country as of May 31, 2007 % of net % of net assets as of assets as of 5/31/07 11/30/06 Japan 17.5% 16.1% United Kingdom 14.7% 17.2% Switzerland 12.9% 12.4% Germany 10.9% 5.4% France 9.5% 9.5% Australia 5.0% 4.0% Italy 4.6% 3.7% India 2.8% 2.3% Spain 2.3% 3.0% Other Countries 21.0% 26.2% Cash and Equivalents(2) (1.2)% 0.2% (2) Includes temporary cash investments, securities lending collateral and other assets and liabilities. - ------ 6 SCHEDULE OF INVESTMENTS International Growth MAY 31, 2007 (UNAUDITED) Shares ($ IN THOUSANDS) Value Common Stocks -- 100.6% AUSTRALIA -- 5.0% 1,274,964 BHP Billiton Ltd.(1) $ 33,290 281,310 CSL Ltd.(1) 20,775 860,272 National Australia Bank Ltd.(1) 30,305 1,196,060 QBE Insurance Group Ltd.(1) 30,922 221,214 Rio Tinto Ltd.(1) 17,487 ---------- 132,779 ---------- AUSTRIA -- 0.9% 297,169 Erste Bank der Oesterreichischen Sparkassen AG(1)(2) 23,310 ---------- BELGIUM -- 1.9% 209,725 KBC Groupe 28,937 108,450 Umicore 23,145 ---------- 52,082 ---------- CANADA -- 0.8% 494,930 Rogers Communications Inc. Cl B(1) 20,524 ---------- CZECH REPUBLIC -- 0.8% 416,030 CEZ AS(2) 21,257 ---------- DENMARK -- 0.8% 305,210 Vestas Wind Systems AS(2) 21,444 ---------- FINLAND -- 1.8% 490,480 Metso Oyj 27,281 805,810 Nokia Oyj 22,063 ---------- 49,344 ---------- FRANCE -- 9.5% 312,569 Accor SA(1) 29,064 108,850 ALSTOM Co.(2) 17,237 717,498 AXA SA(1) 31,365 249,089 Groupe Danone(1) 39,020 125,783 PPR SA(1) 22,958 168,870 Schneider Electric SA(1) 24,377 139,076 Societe Generale(1) 27,093 579,086 Total SA(1) 43,631 231,068 Veolia Environnement(1) 19,337 ---------- 254,082 ---------- GERMANY -- 10.3% 258,710 adidas AG 16,513 136,390 Allianz SE(1) 30,278 182,390 BASF AG 22,586 128,760 Continental AG 18,209 131,250 DaimlerChrysler AG 12,035 Shares ($ IN THOUSANDS) Value 130,780 Deutsche Boerse AG(1) $ 30,954 162,401 Fresenius Medical Care AG & Co. KGaA(1) 23,834 807,986 GEA Group AG(2) 26,058 193,468 Hochtief AG(1) 22,425 517,285 KarstadtQuelle AG(2) 18,513 253,310 Q-Cells AG(1)(2) 21,131 175,620 SAP AG 8,405 188,000 Siemens AG 24,773 ---------- 275,714 ---------- GREECE -- 1.6% 710,870 National Bank of Greece SA(2) 42,447 ---------- HONG KONG -- 1.0% 2,186,300 Esprit Holdings Limited 26,921 ---------- INDIA -- 2.8% 388,800 Housing Development Finance Corp. Ltd. 18,015 221,200 Infosys Technologies Ltd. 10,520 2,323,540 Reliance Communication Ventures Ltd.(2) 29,065 540,460 Tata Consultancy Services Ltd. 16,179 ---------- 73,779 ---------- IRELAND -- 1.5% 907,622 Anglo Irish Bank Corp. plc 21,309 456,624 Ryanair Holdings plc ADR(1)(2) 18,854 ---------- 40,163 ---------- ITALY -- 4.6% 851,705 Banco Popolare di Verona e Novara Scrl(1) 25,875 759,509 ENI SpA 26,855 291,360 Fiat SpA 8,342 451,100 Finmeccanica SpA(1) 14,190 238,840 Luxottica Group SpA(1) 8,384 1,230,724 Saipem SpA(1) 38,466 ---------- 122,112 ---------- JAPAN -- 17.5% 266,500 AEON Mall Co., Ltd.(1) 9,658 533,900 Canon, Inc.(1) 31,414 378,300 Daikin Industries Ltd. 13,834 161,300 Fanuc Ltd. 15,402 243,000 Ibiden Co. Ltd. 13,119 2,105,000 Isuzu Motors Ltd. 10,258 3,080 KDDI Corp. 26,323 358,200 LAWSON Inc.(1) 12,775 412,400 Makita Corp. 17,148 2,692,000 Marubeni Corp. 18,826 - ------ 7 International Growth Shares ($ IN THOUSANDS) Value 2,958,000 Mitsubishi Electric Corp. $ 27,054 1,357 Mitsubishi UFJ Financial Group, Inc. 15,612 123,800 Nintendo Co., Ltd. 43,288 2,086,000 Nippon Yusen Kabushiki Kaisha(1) 19,250 135,430 ORIX Corp. 36,281 705,000 Sharp Corp. 13,499 195,500 Sony Corp.(1) 11,262 2,279,000 Sumitomo Heavy Industries Ltd. 25,901 4,890,000 Sumitomo Metal Industries Ltd. 26,481 661,000 Sumitomo Realty & Development Co. Ltd. 24,986 1,336,000 Tokyo Tatemono Co. Ltd.(1) 19,268 594,900 Toyota Motor Corp. 35,687 ---------- 467,326 ---------- MEXICO -- 1.3% 564,382 America Movil, SAB de CV ADR 34,172 ---------- NETHERLANDS -- 1.4% 308,180 Heineken N.V. 17,954 450,696 ING Groep N.V. CVA 20,078 ---------- 38,032 ---------- NORWAY -- 1.9% 675,150 Aker Kvaerner ASA(1) 16,570 1,298,160 Statoil ASA(1) 35,467 ---------- 52,037 ---------- PEOPLE'S REPUBLIC OF CHINA -- 0.4% 4,198,500 China Merchants Bank Co. Ltd. Cl H(1) 10,834 ---------- RUSSIAN FEDERATION -- 0.6% 304,466 Mobile TeleSystems ADR(1)(2) 16,496 ---------- SINGAPORE -- 1.0% 3,538,000 Keppel Corp. Ltd.(1) 25,580 ---------- SOUTH AFRICA -- 0.7% 331,880 Anglo American plc 19,965 ---------- SPAIN -- 2.3% 1,380,780 Banco Bilbao Vizcaya Argentaria SA 34,889 398,879 Inditex SA(1) 25,175 ---------- 60,064 ---------- Shares ($ IN THOUSANDS) Value SWEDEN -- 1.4% 361,820 Swedbank AB Cl A $ 13,333 6,420,160 Telefonaktiebolaget LM Ericsson Cl B 24,355 ---------- 37,688 ---------- SWITZERLAND -- 12.9% 1,340,595 ABB Ltd.(1) 28,668 275,199 Adecco SA(1) 20,069 440,909 Compagnie Financiere Richemont SA Cl A 27,116 448,840 Credit Suisse Group 34,125 323,940 Holcim Ltd.(1) 35,826 556,700 Julius Baer Holding AG(1) 42,347 75,550 Nestle SA 29,413 424,165 Novartis AG 23,836 216,499 Roche Holding AG 39,723 167,933 Syngenta AG 31,608 127,830 Synthes Inc. 15,932 234,084 UBS AG 15,266 ---------- 343,929 ---------- TAIWAN (REPUBLIC OF CHINA) -- 0.9% 3,494,800 Hon Hai Precision Industry Co., Ltd. 24,703 ---------- TURKEY -- 0.3% 1,126,171 Turkiye Halk Bankasi AS(2) 7,351 ---------- UNITED KINGDOM -- 14.7% 1,486,061 Barclays plc 21,239 2,224,429 BG Group plc 33,993 2,572,170 BT Group plc 16,777 2,902,676 Burberry Group plc 39,273 1,496,787 Capita Group plc 21,955 401,830 Daily Mail and General Trust plc A Shares 6,701 703,962 GlaxoSmithKline plc 18,255 2,059,550 HSBC Holdings plc 38,077 1,294,680 Informa plc 15,134 3,112,200 International Power plc 27,954 2,475,754 Man Group plc 28,841 342,990 Punch Taverns plc 9,125 555,531 Reckitt Benckiser plc 30,197 1,995,665 Royal Bank of Scotland Group plc 24,789 4,656,009 Tesco plc 42,281 5,612,810 Vodafone Group plc 17,555 ---------- 392,146 ---------- TOTAL COMMON STOCKS (Cost $1,925,386) 2,686,281 ---------- - ------ 8 International Growth Shares ($ IN THOUSANDS) Value Preferred Stocks -- 0.6% GERMANY -- 0.6% 97,430 Henkel KGaA(1) $ 15,159 (Cost $15,369) ---------- Principal Amount Temporary Cash Investments -- 0.1% $1,400 FHLB Discount Notes, 5.05%, 6/1/07(3) 1,400 (Cost $1,400) ---------- Temporary Cash Investments -- Securities Lending Collateral(4) -- 25.1% Repurchase Agreement, Citigroup Global Markets Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.30%, dated 5/31/07, due 6/1/07 (Delivery value $18,189) 18,186 Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.28%, dated 5/31/07, due 6/1/07 (Delivery value $20,003) 20,000 Repurchase Agreement, Lehman Brothers Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.30%, dated 5/31/07, due 6/1/07 (Delivery value $631,008) 630,915 ---------- TOTAL TEMPORARY CASH INVESTMENTS -- SECURITIES LENDING COLLATERAL (Cost $669,101) 669,101 ---------- TOTAL INVESTMENT SECURITIES -- 126.4% (Cost $2,611,256) 3,371,941 ---------- OTHER ASSETS AND LIABILITIES -- (26.4)% (703,461) ---------- TOTAL NET ASSETS -- 100.0% $2,668,480 ========== Market Sector Diversification (as a % of net assets) Financials 27.6% Industrials 16.3% Consumer Discretionary 13.9% Materials 7.9% Energy 7.3% Information Technology 7.3% Consumer Staples 7.0% Telecommunication Services 6.0% Health Care 5.3% Utilities 2.6% Cash and Equivalents* (1.2)% * Includes temporary cash investments, securities lending collateral and other assets and liabilities. Notes to Schedule of Investments ADR = American Depositary Receipt CVA = Certificaten Van Aandelen FHLB = Federal Home Loan Bank (1) Security, or a portion thereof, was on loan as of May 31, 2007. (2) Non-income producing. (3) The rate indicated is the yield to maturity at purchase. (4) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. As of May 31, 2007, securities with an aggregate value of $25,580 (in thousands), which represented 1.0% of total net assets, were valued in accordance with alternative pricing procedures adopted by the Board of Directors. See Notes to Financial Statements. - ------ 9 PERFORMANCE Global Growth Total Returns as of May 31, 2007 Average Annual Returns Since Inception 6 months(1) 1 year 5 years Inception Date INVESTOR CLASS 14.76% 24.97% 13.92% 12.54% 12/1/98 MSCI WORLD FREE INDEX 12.25% 24.51% 12.75% 6.24%(2) -- Institutional Class 14.87% 25.15% 14.16% 4.73% 8/1/00 Advisor Class 14.72% 24.66% 13.67% 11.09% 2/5/99 A Class No sales charge* 14.70% 24.69% -- 21.80% With sales charge* 8.11% 17.50% -- 17.08% 12/1/05 B Class No sales charge* 14.18% 23.68% -- 20.87% With sales charge* 9.18% 19.68% -- 18.42% 12/1/05 C Class No sales charge* 14.28% 23.80% 12.85% 12.85% With sales charge* 13.28% 23.80% 12.85% 12.85% 3/1/02 R Class 14.50% 24.36% -- 21.93% 7/29/05 * Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum 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. 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. - ------ 10 Global Growth Growth of $10,000 Over Life of Class $10,000 investment made December 1, 1998
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One-Year Returns Over Life of Class Periods ended May 31 1999* 2000 2001 2002 2003 2004 2005 2006 2007 Investor Class 18.60% 61.77% -15.57% -12.17% -13.86% 26.69% 12.61% 24.97% 24.97% MSCI World Free Index 8.68% 13.56% -14.95% -12.56% -9.86% 23.60% 11.35% 17.98% 24.51% * 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. 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. - ------ 11 PORTFOLIO COMMENTARY Global Growth Portfolio Managers: Keith Creveling and Helen O'Donnell PERFORMANCE SUMMARY Global Growth advanced 14.76%* during the six months ended May 31, 2007, while its benchmark, the MSCI World Free Index, posted a 12.25% gain. Versus its peers, the portfolio also outperformed the 12.98%** average return of Morningstar's World Stock category. Strong economic growth worldwide boosted stock markets around the globe, helping to produce solid absolute returns for Global Growth and its benchmark. On a relative basis, effective stock selection among financial stocks and U.S., Danish, and Japanese stocks in general gave Global Growth an edge over its benchmark. ECONOMIC GROWTH SPURRED RATE HIKES As we touched on in the Market Perspective on page 2, many central banks, including the European Central Bank, Bank of England, and Bank of Japan, increased key interest rates during the period in an effort to temper robust economic conditions. In the U.S., where economic activity cooled, the Federal Reserve held its overnight lending rate steady. Although such developments contributed to varied results within the financials sector, strong stock selection in that area provided a significant relative lift for the portfolio. Five other sectors furnished relative gains as well, including industrials and telecommunication services. All but one sector -- utilities -- generated positive absolute returns, although lagging stock picks led to a relative loss from the materials sector. Hindering relative returns from a geographic standpoint was a portfolio-only stake in Taiwan, which generated a loss, and underperforming stock selections in Sweden. SELECT FINANCIAL POSITIONS RALLIED Drilling deeper into the outperformance of the portfolio's financial holdings, solid picks in the commercial banks and diversified financial services groups proved especially advantageous. More specifically, National Bank of Greece SA and Deutsche Boerse AG ranked among the best individual performers during the period. National Bank of Greece, which is striving to become the largest bank in southeast Europe and Turkey, announced that it expects profits to expand by an average of more than 30% a year for the next three years. Deutsche Boerse, which operates the Frankfurt financial market in Germany, announced its plan to acquire U.S.-based International Securities Exchange Holdings to create a massive derivatives market. Top Ten Holdings as of May 31, 2007 % of net % of net assets as of assets as of 5/31/07 11/30/06 Schlumberger Ltd. 2.2% 2.0% Boeing Co. 2.1% 1.7% Precision Castparts Corp. 2.0% 1.5% Cisco Systems Inc. 2.0% 2.1% Syngenta AG 1.9% 0.9% Deutsche Boerse AG 1.9% 1.1% Hewlett-Packard Co. 1.9% 1.5% Accor SA 1.8% 1.1% America Movil, SAB de CV ADR 1.8% 1.5% Comcast Corp. Cl A 1.7% 1.9% * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. ** The one- and five-year average returns as of May 31, 2007, for Morningstar's World Stock category were 24.27% and 13.38%, respectively. © 2007 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. - ------ 12 Global Growth Deutsche Boerse also gained a foothold in China's coveted capital markets via an agreement of increased cooperation with the Tianjin exchange. NON-INDEX WIRELESS INVESTMENTS JUMPED As our universe of potential holdings extends beyond the confines of the benchmark, we frequently enjoy success with companies that are not index components. For example, during this period we benefited from stakes in wireless service providers America Movil, SAB de CV and Bharti Airtel Ltd., neither of which is found in the benchmark. America Movil of Mexico bolstered its position as the largest wireless operator in Latin America with the purchase of systems in Puerto Rico and the Dominican Republic. Bharti Airtel, based in India, where six million new wireless service subscribers sign up on a monthly basis, is expected to profit from subscriber growth and agreements to share its existing infrastructure network with competitors. TECH STRUGGLES DIMINISHED RETURNS Although information technology sector stocks contributed positively overall, losses from a number of individual stocks that ranked among the poorest performers for the period factored into a negative relative return from the sector. Channel Islands-based Amdocs Ltd., which supplies customer support services to the telecommunication industry, dipped as it forecast softening full-year demand for 2007. Tech services outsourcing firm Infosys Technologies Ltd. of India drifted lower as strength in the Indian rupee cut into profits. STARTING POINT FOR NEXT REPORTING PERIOD Uncertain over the broad impact of elevated energy costs, higher interest rates, and the housing market slowdown in the U.S., we pared back the portfolio's exposure to the financials and tech sectors by the period's close. Alternatively, we modestly increased the portfolio's weighting in the consumer discretionary and telecommunication services areas. While considering macroeconomic developments, our focus remains first and foremost on individual companies and their potential for accelerating growth into the future. Types of Investments in Portfolio % of net % of net assets as of assets as of 5/31/07 11/30/06 Foreign Common Stocks 58.3% 58.8% Foreign Preferred Stocks 0.7% -- U.S. Common Stocks 40.3% 41.2% TOTAL EQUITY EXPOSURE 99.3% 100.0% Temporary Cash Investments 0.8% 0.3% Other Assets and Liabilities(1) (0.1)% (0.3)% (1) Includes securities lending collateral and other assets and liabilities. Investments by Country as of May 31, 2007 % of net % of net assets as of assets as of 5/31/07 11/30/06 United States 40.3% 41.2% Switzerland 9.3% 7.8% Japan 8.0% 7.4% France 7.0% 5.0% United Kingdom 6.2% 7.1% Germany 4.1% 3.4% Italy 3.3% 2.6% Netherlands 2.2% 3.5% India 2.1% 2.8% Other Countries 16.8% 19.2% Cash and Equivalents(2) 0.7% --(3) (2) Includes temporary cash investments, securities lending collateral and other assets and liabilities. (3) Category is less than 0.05% of total net assets. - ------ 13 SCHEDULE OF INVESTMENTS Global Growth MAY 31, 2007 (UNAUDITED) Shares ($ IN THOUSANDS) Value Common Stocks -- 98.6% AUSTRALIA -- 1.4% 136,000 BHP Billiton Ltd. $ 3,551 43,370 CSL Ltd. 3,203 -------- 6,754 -------- AUSTRIA -- 1.3% 81,670 Erste Bank der Oesterreichischen Sparkassen AG(1)(2) 6,406 -------- BELGIUM -- 1.8% 34,690 KBC Groupe 4,786 17,740 Umicore 3,786 -------- 8,572 -------- CANADA -- 0.8% 46,061 Suncor Energy Inc.(2) 4,001 -------- CAYMAN ISLANDS -- 0.3% 50,000 Suntech Power Holdings Co. Ltd. ADR(1)(2) 1,696 -------- DENMARK -- 1.1% 75,535 Vestas Wind Systems AS(1) 5,307 -------- FINLAND -- 0.7% 64,800 Metso Oyj 3,604 -------- FRANCE -- 7.0% 93,550 Accor SA(2) 8,699 104,801 AXA SA(2) 4,581 15,400 Groupe Danone 2,412 34,250 Schneider Electric SA(2) 4,944 23,600 Societe Generale(2) 4,597 58,000 Total SA(2) 4,370 59,100 Vinci SA(2) 4,676 -------- 34,279 -------- GERMANY -- 3.4% 38,960 Deutsche Boerse AG(2) 9,222 24,190 Fresenius Medical Care AG & Co. KGaA 3,550 43,910 Q-Cells AG(1)(2) 3,663 -------- 16,435 -------- GREECE -- 1.7% 139,930 National Bank of Greece SA(1) 8,356 -------- HONG KONG -- 1.4% 554,000 Esprit Holdings Limited 6,822 -------- INDIA -- 2.1% 239,211 Bharti Airtel Ltd.(1) 5,123 162,322 Tata Consultancy Services Ltd. 4,859 -------- 9,982 -------- Shares ($ IN THOUSANDS) Value IRELAND -- 0.8% 161,334 Anglo Irish Bank Corp. plc $ 3,788 -------- ITALY -- 3.3% 145,990 Banco Popolare di Verona e Novara Scrl(2) 4,435 121,300 Fiat SpA 3,473 255,770 Saipem SpA(2) 7,994 -------- 15,902 -------- JAPAN -- 8.0% 41,100 Canon, Inc. 2,418 89,000 Makita Corp. 3,701 172,000 NGK Insulators Ltd. 4,022 15,000 Nintendo Co., Ltd. 5,245 23,520 ORIX Corp.(2) 6,301 144,000 Sharp Corp. 2,757 352,000 Sumitomo Heavy Industries Ltd. 4,000 160,000 Sumitomo Realty & Development Co. Ltd. 6,048 71,400 Toyota Motor Corp. 4,283 -------- 38,775 -------- MEXICO -- 1.8% 140,950 America Movil, SAB de CV ADR 8,535 -------- NETHERLANDS -- 2.2% 135,270 Schlumberger Ltd. 10,534 -------- PEOPLE'S REPUBLIC OF CHINA -- 0.2% 309,000 Foxconn International Holdings Ltd.(1) 960 -------- RUSSIAN FEDERATION -- 0.5% 42,368 Mobile TeleSystems ADR(1)(2) 2,295 -------- SWEDEN -- 1.5% 1,949,760 Telefonaktiebolaget LM Ericsson Cl B 7,396 -------- SWITZERLAND -- 9.3% 265,880 ABB Ltd. 5,686 66,700 Adecco SA(2) 4,864 106,440 Compagnie Financiere Richemont SA Cl A 6,546 43,300 Credit Suisse Group 3,292 89,400 Julius Baer Holding AG 6,801 54,810 Novartis AG 3,080 30,260 Roche Holding AG 5,552 50,020 Syngenta AG 9,414 -------- 45,235 -------- - ------ 14 Global Growth Shares ($ IN THOUSANDS) Value TAIWAN (REPUBLIC OF CHINA) -- 1.5% 679,800 Hon Hai Precision Industry Co., Ltd. $ 4,805 230,000 Taiwan Semiconductor Manufacturing Co. Ltd. ADR 2,509 -------- 7,314 -------- UNITED KINGDOM -- 6.2% 568,798 Burberry Group plc 7,696 205,550 HSBC Holdings plc 3,800 615,302 Man Group plc 7,168 130,295 Reckitt Benckiser plc 7,082 358,860 Royal Bank of Scotland Group plc 4,458 -------- 30,204 -------- UNITED STATES -- 40.3% 82,420 Adobe Systems Inc.(1) 3,633 80,440 Air Products & Chemicals, Inc. 6,274 55,100 Allergan, Inc. 6,862 79,990 Alliance Data Systems Corp.(1) 6,233 128,570 American Express Co. 8,354 160,890 American Tower Corp. Cl A(1) 6,948 35,530 Apple Inc.(1) 4,319 164,500 Automatic Data Processing, Inc. 8,176 100,360 Boeing Co. 10,095 358,260 Cisco Systems Inc.(1) 9,644 72,200 Coach Inc.(1) 3,708 78,910 Colgate-Palmolive Co. 5,284 305,870 Comcast Corp. Cl A(1) 8,384 51,600 Corrections Corp. of America(1)(2) 3,343 30,630 Deere & Co. 3,690 76,350 Estee Lauder Companies, Inc. (The) Cl A 3,611 61,390 FMC Technologies Inc.(1)(2) 4,641 31,670 Goldman Sachs Group, Inc. (The) 7,310 10,000 Google Inc. Cl A(1) 4,978 201,380 Hewlett-Packard Co. 9,205 62,010 Laboratory Corp. of America Holdings(1) 4,883 29,430 Manpower Inc. 2,708 10,540 MasterCard Inc. Cl A(2) 1,576 Shares ($ IN THOUSANDS) Value 94,700 McDonald's Corporation $ 4,787 77,500 McKesson Corp. 4,892 148,450 Microsoft Corporation 4,553 46,100 Millipore Corp.(1)(2) 3,447 75,230 Monsanto Co. 4,634 277,610 News Corp. Cl B(2) 6,560 70,590 NII Holdings, Inc. Cl B(1)(2) 5,751 82,990 Precision Castparts Corp. 9,922 47,010 Prudential Financial, Inc. 4,796 151,500 Schering-Plough Corp. 4,960 65,300 Southwestern Energy Company(1) 3,108 54,800 St. Jude Medical, Inc.(1) 2,339 90,900 Urban Outfitters Inc.(1)(2) 2,416 -------- 196,024 -------- TOTAL COMMON STOCKS (Cost $349,903) 479,176 -------- Preferred Stocks -- 0.7% GERMANY -- 0.7% 23,300 Henkel KGaA(2) 3,625 (Cost $3,673) -------- Principal Amount Temporary Cash Investments -- 0.8% $3,900 FHLB Discount Notes, 5.05%, 6/1/07(3) 3,900 (Cost $3,900) -------- Temporary Cash Investments -- Securities Lending Collateral(4) -- 18.3% Repurchase Agreement, Citigroup Global Markets Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.30%, dated 5/31/07, due 6/1/07 (Delivery value $89,109) (Cost $89,096) 89,096 -------- TOTAL INVESTMENT SECURITIES -- 118.4% (Cost $446,572) 575,797 -------- OTHER ASSETS AND LIABILITIES -- (18.4)% (89,397) -------- TOTAL NET ASSETS -- 100.0% $486,400 ======== - ------ 15 Global Growth Market Sector Diversification (as a % of net assets) Financials 21.5% Information Technology 16.6% Industrials 14.8% Consumer Discretionary 14.4% Health Care 8.8% Energy 7.1% Telecommunication Services 5.9% Materials 5.7% Consumer Staples 4.5% Cash and Equivalents* 0.7% * Includes temporary cash investments, securities lending collateral and other assets and liabilities. Notes to Schedule of Investments ADR = American Depositary Receipt FHLB = Federal Home Loan Bank (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of May 31, 2007. (3) The rate indicated is the yield to maturity at purchase. (4) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. See Notes to Financial Statements. - ------ 16 PERFORMANCE International Value Total Returns as of May 31, 2007 Average Annual Returns 6 10 Since Inception months(1) 1 year 5 years years Inception Date A CLASS(2) No sales charge* 17.64% 31.07% 15.32% 7.61% 7.62% With sales charge* 10.84% 23.49% 13.97% 6.97% 7.00% 3/31/97 MSCI EAFE INDEX 14.08% 26.84% 16.75% 8.23% 8.82% -- Investor Class 17.63% 31.15% -- -- 26.62% 4/3/06 Institutional Class 17.74% 31.35% -- -- 26.87% 4/3/06 B Class(2) No sales charge* 17.13% 30.06% 14.53% 6.87% 6.90% With sales charge* 12.13% 26.06% 14.41% 6.87% 6.90% 3/31/97 C Class No sales charge* 17.01% 29.84% -- -- 25.36% With sales charge* 16.25% 29.84% -- -- 25.36% 4/3/06 R Class 17.42% 30.56% -- -- 26.04% 4/3/06 * Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. A Class shares have a 5.75% maximum 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. (2) Class returns may have been lower 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. Investing in emerging markets may accentuate these risks. 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. - ------ 17 International Value Growth of $10,000 Over 10 Years $10,000 investment made May 31, 1997*
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One-Year Returns Over 10 Years Periods ended May 31 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 A Class (no sales charge)** 4.48% -3.43% 8.40% -1.91% -4.88% -16.59% 30.27% 14.87% 24.74% 31.07% MSCI EAFE Index 11.11% 4.36% 17.14% -17.23% -9.60% -12.30% 32.66% 14.62% 28.24% 26.84% * International Value A Class's initial investment is $9,425 to reflect the maximum 5.75% initial sales charge. ** Class returns may 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. Investing in emerging markets may accentuate these risks. 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 PORTFOLIO COMMENTARY International Value Portfolio Managers: Gary Motyl and Guang Yang PERFORMANCE SUMMARY International Value returned 17.64%* for the six months ended May 31, 2007. Its benchmark, the MSCI EAFE Index, returned 14.08%. The portfolio's performance reflected the steady growth of the global economy and healthy demand for international equities (see the Market Perspective on page 2). Against that backdrop, every sector contributed to performance on an absolute basis and relative to the benchmark. The portfolio's outperformance was led by positioning in consumer discretionary, materials, and industrials shares. DISCRETIONARY GAINS Many of the leading contributors to the portfolio's relative results benefited from exposure to the growing global economy and resulting demand for raw materials and equipment, explaining the significant contributions from materials and industrials shares. This is true also in the consumer discretionary sector, where the leading contributor to relative performance was auto parts manufacturer Michelin. The French firm demonstrated strong revenue and market share gains, sending its stock up more than 50% for the six months. Effective stock selection also contributed among hotels, restaurants & leisure, household durables, media, and automobiles. For the reporting period, the consumer discretionary stocks in the portfolio returned almost 25%, compared with 15% for this portion of the index. MATERIAL DIFFERENCE The materials sector was home to many of the portfolio's leading contributors to relative and absolute performance, including metals & mining firms Companhia Vale do Rio Doce (CVRD) and Alcan, Dutch chemical giant Akzo Nobel, and paper & forest products name Domtar. CVRD is a leading producer of iron ore and nickel, whose prices are supported by strong demand and limited supply. Alcan's shares surged 80% during the six months, when the company became the subject of a hostile takeover bid from Alcoa. Akzo's stock surged after selling off its biotechnology arm to Schering-Plough -- in addition to other, smaller divestitures -- building cash to fund anticipated acquisitions. Domtar, the leading supplier of office paper, swung to profitability despite higher energy and currency costs. Top Ten Holdings as of May 31, 2007 % of net % of net assets as of assets as of 5/31/07 11/30/06 Telenor ASA 1.7% 1.8% ING Groep N.V. CVA 1.7% 1.6% Nintendo Co., Ltd. 1.7% 1.3% Vestas Wind Systems AS 1.6% 1.2% E.On AG 1.6% 1.6% Telefonos de Mexico, SAB de CV ADR 1.5% 1.1% Compagnie Generale des Etablissements Michelin Cl B 1.5% 1.2% AXA SA 1.5% 1.5% Bayerische Motoren Werke AG 1.4% 1.1% Repsol YPF, SA 1.4% 1.6% * 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 or if distribution and service fees had not been waived, returns would be lower than those shown. Total returns for periods less than one year are not annualized. - ------ 19 International Value INDUSTRIAL-STRENGTH RETURNS The industrial sector was home to the largest single contributor to portfolio performance -- Danish firm Vestas Wind Systems, the leading provider of wind turbines. Vestas continued to benefit from strong demand for its products as companies and government entities seek out energy alternatives to fossil fuels. For the six months, the stock was up more than 80%. DETRACTORS No sector detracted from portfolio performance on an absolute basis or relative to our benchmark. That said, our performance would have been even better but for some disappointing individual holdings, including overweight positions in Samsung Electronics and British Airways. Samsung had a negative return as prices on its computer chips fell sharply in 2007. British Airways underperformed as the European Union deregulated its skies to encourage airline competition. It also hurt relative returns not to own DaimlerChrysler and ABN AMRO, both of which rallied amid large buyout deals. STARTING POINT FOR NEXT REPORTING PERIOD "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," says portfolio manager Guang Yang. "As of May 31, 2007, that process led us to see opportunity in the telecommunication services and industrials sectors, which were our largest overweight positions, and we viewed them as likely to benefit from continued strong global growth," Yang avers. "At the same time, we were underweight in financials because of valuation concerns among companies in the sector. In addition, financials make up almost 30% of our index, and we're reluctant to concentrate the portfolio so heavily in a single sector." Types of Investments in Portfolio % of net % of net assets as of assets as of 5/31/07 11/30/06 Foreign Common Stocks 92.5% 93.0% Foreign Preferred Stocks 1.6% 1.3% TOTAL EQUITY EXPOSURE 94.1% 94.3% Temporary Cash Investments 5.6% 5.2% Other Assets and Liabilities 0.3% 0.5% Investments by Country as of May 31, 2007 % of net % of net assets as of assets as of 5/31/07 11/30/06 United Kingdom 19.9% 19.8% France 8.7% 8.8% Japan 8.6% 8.6% Netherlands 7.1% 7.9% Germany 6.9% 6.8% South Korea 5.2% 4.9% Spain 4.4% 4.8% Sweden 4.1% 4.0% Hong Kong 2.8% 3.8% Canada 2.5% 1.9% People's Republic of China 2.4% 1.1% Switzerland 2.4% 2.5% Norway 2.2% 2.5% Italy 2.0% 2.3% Other Countries 14.9% 14.6% Cash and Equivalents(1) 5.9% 5.7% (1) Includes temporary cash investments and other assets and liabilities. - ------ 20 SCHEDULE OF INVESTMENTS International Value MAY 31, 2007 (UNAUDITED) Shares ($ IN THOUSANDS) Value Common Stocks -- 92.5% AUSTRALIA -- 1.9% 48,280 Alumina Ltd. $ 310 4,630 Australia & New Zealand Banking Group Ltd. 111 26,912 National Australia Bank Ltd. 948 ------- 1,369 ------- BELGIUM -- 0.4% 11,400 AGFA-Gevaert N.V. 298 ------- BERMUDA -- 1.6% 11,760 Ace, Ltd. 724 4,700 XL Capital Ltd. Cl A 383 ------- 1,107 ------- CANADA -- 2.5% 5,740 Alcan Inc. 494 20,358 BCE Inc. 751 49,300 Domtar Inc.(1) 532 ------- 1,777 ------- DENMARK -- 1.6% 16,564 Vestas Wind Systems AS(1) 1,164 ------- FINLAND -- 1.7% 34,110 Stora Enso Oyj R Shares 652 20,660 UPM-Kymmene Oyj 535 ------- 1,187 ------- FRANCE -- 8.7% 4,160 Accor SA 387 24,219 AXA SA 1,059 8,110 Compagnie Generale des Etablissements Michelin Cl B 1,062 6,680 Electricite de France 620 21,700 France Telecom SA(1) 667 8,483 Sanofi-Aventis 818 12,420 Suez SA 714 15,920 Thomson 307 3,880 Total SA 292 5,032 Valeo SA 287 ------- 6,213 ------- GERMANY -- 6.9% 4,310 BASF AG 534 15,080 Bayerische Motoren Werke AG 1,010 30,710 Deutsche Post AG 977 6,950 E.On AG 1,143 25,810 Infineon Technologies AG(1) 400 6,300 Siemens AG ADR 832 ------- 4,896 ------- Shares ($ IN THOUSANDS) Value HONG KONG -- 2.8% 54,300 Cheung Kong Holdings Ltd. $ 703 948 CK Life Sciences International Holdings Inc.(1) -- 56,900 Hutchison Whampoa Ltd. 549 40,500 Swire Pacific Ltd. A Shares 456 146,000 Swire Pacific Ltd. B Shares 317 ------- 2,025 ------- ISRAEL -- 0.6% 19,490 Check Point Software Technologies(1) 455 ------- ITALY -- 2.0% 21,370 ENI SpA 756 26,230 Mediaset SpA 281 42,150 UniCredito Italiano SpA 396 ------- 1,433 ------- JAPAN -- 8.6% 8,200 FUJIFILM Holdings Corp. 339 62,400 Hitachi Ltd. 458 6,600 Mabuchi Motor Co. Ltd. 397 22 Mitsubishi UFJ Financial Group, Inc. 253 9,000 Mitsubishi UFJ Financial Group, Inc. ADR 104 3,400 Nintendo Co., Ltd. 1,189 101 Nippon Telegraph & Telephone Corp. 476 17,600 Nomura Holdings, Inc. 360 11,900 Olympus Corp. 451 4,800 Ono Pharmaceutical Co Ltd. 275 32,600 Sompo Japan Insurance Inc. 409 12,300 Sony Corp. 709 10,600 Takeda Pharmaceutical Co Ltd. 712 300 Toshiba Corp. 2 ------- 6,134 ------- MEXICO -- 1.5% 26,460 Telefonos de Mexico, SAB de CV ADR 1,070 ------- NETHERLANDS -- 7.1% 4,410 Akzo Nobel N.V. 360 27,040 ING Groep N.V. CVA 1,205 23,417 Koninklijke Philips Electronics N.V. 995 33,730 Reed Elsevier N.V. 672 21,145 Royal Dutch Shell plc B Shares 799 23,440 SBM Offshore N.V. 866 5,240 Wolters Kluwer N.V. 163 ------- 5,060 ------- - ------ 21 International Value Shares ($ IN THOUSANDS) Value NORWAY -- 2.2% 23,899 Norske Skogindustrier ASA $ 359 62,970 Telenor ASA 1,223 ------- 1,582 ------- PEOPLE'S REPUBLIC OF CHINA -- 2.4% 298,500 China Shenhua Energy Co. Ltd. Cl H 875 824,000 China Telecom Corp. Ltd. H Shares 443 850,000 Shanghai Electric Group Corp. Cl H 362 ------- 1,680 ------- PORTUGAL -- 0.7% 32,950 Portugal Telecom SGPS SA 459 ------- SINGAPORE -- 1.4% 61,500 DBS Group Holdings Ltd. 977 ------- SOUTH KOREA -- 5.2% 10,360 Hyundai Motor Company 733 6,890 Kookmin Bank 624 13,780 Korea Electric Power Corp. 606 19,660 KT Corp. ADR 473 1,370 Samsung Electronics 790 16,530 SK Telecom Co. Ltd. ADR 444 ------- 3,670 ------- SPAIN -- 4.4% 41,710 Banco Santander Central Hispano SA 801 6,920 Iberdrola SA 399 27,430 Repsol YPF, SA 1,005 13,460 Telefonica SA ADR 921 ------- 3,126 ------- SWEDEN -- 4.1% 50,980 Atlas Copco AB A Shares 856 25,490 Atlas Copco AB A Redemption Shares 147 12,900 Nordea Bank AB 213 47,630 Nordea Bank AB FDR 786 18,570 Securitas AB B Shares 276 18,570 Securitas Direct AB B Shares(1) 54 18,570 Securitas Systems AB B Shares 65 25,100 Volvo AB Cl B 526 ------- 2,923 ------- Shares ($ IN THOUSANDS) Value SWITZERLAND -- 2.4% 2,030 Nestle SA $ 790 9,307 Swiss Reinsurance 886 ------- 1,676 ------- TAIWAN (REPUBLIC OF CHINA) -- 1.9% 676,000 Chinatrust Financial Holding Co. 513 14,586 Chunghwa Telecom Co. Ltd. ADR 275 300,580 Compal Electronics Inc. 273 211,032 Lite-On Technology Corp. 249 ------- 1,310 ------- UNITED KINGDOM -- 19.9% 92,850 BAE Systems plc 822 54,390 BP plc 608 65,150 British Airways plc(1) 606 63,150 British Sky Broadcasting Group plc 825 30,150 Burberry Group plc 408 56,630 Cadbury Schweppes plc 797 76,750 Compass Group plc 573 45,210 GKN plc 350 18,940 GlaxoSmithKline plc 491 43,200 HSBC Holdings plc 799 60,610 Kingfisher plc 298 32,590 Lloyds TSB Group plc 371 35,602 National Grid plc 552 195,070 Old Mutual plc 669 40,140 Pearson plc 714 139,260 Rentokil Initial plc 474 99,630 Rolls-Royce Group plc 982 5,898,096 Rolls-Royce Group plc B Shares 12 74,010 Royal Bank of Scotland Group plc 920 17,610 Shire plc 414 25,120 Smiths Group plc 565 19,350 Standard Chartered plc 655 18,085 Unilever plc 558 230,903 Vodafone Group plc 722 ------- 14,185 ------- TOTAL COMMON STOCKS (Cost $38,326) 65,776 ------- - ------ 22 International Value Shares ($ IN THOUSANDS) Value Preferred Stocks -- 1.6% BRAZIL -- 1.6% 20,860 Comphania Vale do Rio Doce ADR $ 801 7,470 Empresa Brasiliera de Aeronautica SA ADR 362 ------- TOTAL PREFERRED STOCKS (Cost $302) 1,163 ------- Principal Amount Temporary Cash Investments -- 5.6% $4,000 FHLB Discount Notes, 5.05%, 6/1/07(2) 4,000 (Cost $4,000) ------- TOTAL INVESTMENT SECURITIES -- 99.7% (Cost $42,628) 70,939 ------- OTHER ASSETS AND LIABILITIES -- 0.3% 239 ------- TOTAL NET ASSETS -- 100.0% $71,178 ======= Market Sector Diversification (as a % of net assets) Financials 22.0% Consumer Discretionary 14.3% Industrials 13.5% Telecommunication Services 11.1% Energy 7.3% Materials 6.4% Information Technology 5.9% Utilities 5.7% Health Care 4.9% Consumer Staples 3.0% Cash and Equivalents* 5.9% * Includes temporary cash investments and other assets and liabilities. Notes to Schedule of Investments ADR = American Depositary Receipt CVA = Certificaten Van Aandelen FDR = Finnish Depository Receipt FHLB = Federal Home Loan Bank (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. As of May 31, 2007, securities with an aggregate value of $977 (in thousands), which represented 1.4% of total net assets, were valued in accordance with alternative pricing procedures adopted by the Board of Directors. See Notes to Financial Statements. - ------ 23 SHAREHOLDER FEE EXAMPLES (UNAUDITED) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from December 1, 2006 to May 31, 2007. 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. 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. - ------ 24 Beginning Ending Expenses Paid Account Account During Annualized Value Value Period(1) Expense 12/1/06 5/31/07 12/1/06 - 5/31/07 Ratio(1) International Growth ACTUAL Investor Class $1,000 $1,139.00 $6.72 1.26% Institutional Class $1,000 $1,140.10 $5.66 1.06% Advisor Class $1,000 $1,138.40 $8.05 1.51% A Class $1,000 $1,137.30 $8.05 1.51% B Class $1,000 $1,132.90 $12.02 2.26% C Class $1,000 $1,133.70 $12.02 2.26% R Class $1,000 $1,136.30 $9.37 1.76% HYPOTHETICAL Investor Class $1,000 $1,018.65 $6.34 1.26% Institutional Class $1,000 $1,019.65 $5.34 1.06% Advisor Class $1,000 $1,017.40 $7.59 1.51% A Class $1,000 $1,017.40 $7.59 1.51% B Class $1,000 $1,013.66 $11.35 2.26% C Class $1,000 $1,013.66 $11.35 2.26% R Class $1,000 $1,016.16 $8.85 1.76% Global Growth ACTUAL Investor Class $1,000 $1,147.60 $7.01 1.31% Institutional Class $1,000 $1,148.70 $5.95 1.11% Advisor Class $1,000 $1,147.20 $8.35 1.56% A Class $1,000 $1,147.00 $8.35 1.56% B Class $1,000 $1,141.80 $12.34 2.31% C Class $1,000 $1,142.80 $12.34 2.31% R Class $1,000 $1,145.00 $9.68 1.81% HYPOTHETICAL Investor Class $1,000 $1,018.40 $6.59 1.31% Institutional Class $1,000 $1,019.40 $5.59 1.11% Advisor Class $1,000 $1,017.15 $7.85 1.56% A Class $1,000 $1,017.15 $7.85 1.56% B Class $1,000 $1,013.41 $11.60 2.31% C Class $1,000 $1,013.41 $11.60 2.31% R Class $1,000 $1,015.91 $9.10 1.81% (1) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 25 Expenses Paid Beginning Ending During Account Account Period(1) Annualized Value Value 12/1/06 - Expense 12/1/06 5/31/07 5/31/07 Ratio(1) International Value ACTUAL Investor Class $1,000 $1,176.30 $7.05 1.30% Institutional Class $1,000 $1,177.40 $5.97 1.10% A Class (after waiver)(2) $1,000 $1,176.40 $7.60 1.40% A Class (before waiver) $1,000 $1,176.40(3) $8.41 1.55% B Class (after waiver)(2) $1,000 $1,171.30 $11.31 2.09% B Class (before waiver) $1,000 $1,171.30(3) $12.45 2.30% C Class $1,000 $1,170.10 $12.44 2.30% R Class $1,000 $1,174.20 $9.76 1.80% HYPOTHETICAL Investor Class $1,000 $1,018.45 $6.54 1.30% Institutional Class $1,000 $1,019.45 $5.54 1.10% A Class (after waiver)(2) $1,000 $1,017.95 $7.04 1.40% A Class (before waiver) $1,000 $1,017.20 $7.80 1.55% B Class (after waiver)(2) $1,000 $1,014.51 $10.50 2.09% B Class (before waiver) $1,000 $1,013.46 $11.55 2.30% C Class $1,000 $1,013.46 $11.55 2.30% R Class $1,000 $1,015.96 $9.05 1.80% (1) Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. (2) During the six months ended May 31, 2007, 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. - ------ 26 STATEMENT OF ASSETS AND LIABILITIES MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) International Global International Growth Growth Value ASSETS Investment securities -- at value (cost of $1,942,155, $357,476 and $42,628, respectively) -- including $633,765, $92,141 and $- of securities on loan, respectively $2,702,840 $486,701 $70,939 Investments made with cash collateral received for securities on loan, at value (cost of $669,101, $89,096 and $-, respectively) 669,101 89,096 -- ------------ -------- ------------ Total investment securities, at value (cost of $2,611,256, $446,572 and $42,628, respectively) 3,371,941 575,797 70,939 Cash -- -- 104 Foreign currency holdings, at value (cost of $90, $- and $5, respectively) 90 -- 5 Receivable for investments sold 18,613 1,089 -- Receivable for capital shares sold 28 2 -- Dividends and interest receivable 8,410 1,139 235 ------------ -------- ------------ 3,399,082 578,027 71,283 ------------ -------- ------------ LIABILITIES Disbursements in excess of demand deposit cash 40,900 684 -- Payable for collateral received for securities on loan 669,101 89,096 -- Payable for investments purchased 17,661 1,316 -- Payable for capital shares redeemed 14 -- 30 Accrued management fees 2,804 525 70 Distribution fees payable 59 3 3 Service fees (and distribution fees -- A Class and R Class) payable 63 3 2 ------------ -------- ------------ 730,602 91,627 105 ------------ -------- ------------ NET ASSETS $2,668,480 $486,400 $71,178 ============ ======== ============ See Notes to Financial Statements. - ------ 27 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS EXCEPT AS NOTED) International Global International Growth Growth Value NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $2,007,289 $319,057 $40,817 Accumulated undistributed net investment income (loss) (15,713) (4,459) 385 Accumulated undistributed net realized gain (loss) on investment and foreign currency transactions (82,853) 42,866 1,665 Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 759,757 128,936 28,311 ------------ ---------- ------------ $2,668,480 $486,400 $71,178 ------------ ---------- ------------ INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) Net assets $2,295,387,784 $455,073,574 $1,052,888 Shares outstanding 166,851,978 38,659,611 96,287 Net asset value per share $13.76 $11.77 $10.93 INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) Net assets $78,683,842 $14,597,211 $42,900,108 Shares outstanding 5,709,397 1,231,409 3,920,258 Net asset value per share $13.78 $11.85 $10.94 ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) Net assets $249,296,012 $5,905,819 N/A Shares outstanding 18,161,894 506,227 N/A Net asset value per share $13.73 $11.67 N/A A CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) Net assets $31,957,298 $8,678,458 $22,680,909 Shares outstanding 2,325,564 737,913 2,071,902 Net asset value per share $13.74 $11.76 $10.95 Maximum offering price (net asset value divided by 0.9425) $14.58 $12.48 $11.62 B CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) Net assets $3,133,498 $466,533 $4,348,959 Shares outstanding 229,682 40,033 407,456 Net asset value per share $13.64 $11.65 $10.67 C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) Net assets $6,716,991 $1,620,319 $131,543 Shares outstanding 494,888 142,918 12,087 Net asset value per share $13.57 $11.34 $10.88 R CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) Net assets $3,304,517 $57,962 $62,828 Shares outstanding 240,548 4,938 5,760 Net asset value per share $13.74 $11.74 $10.91 See Notes to Financial Statements. - ------ 28 STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) International Global International Growth Growth Value INVESTMENT INCOME (LOSS) INCOME: Dividends (net of foreign taxes withheld of $3,883, $353 and $129, respectively) $ 32,704 $ 3,379 $ 1,156 Interest and other income 191 78 72 Securities lending 1,431 93 -- ------------ -------- ------------ 34,326 3,550 1,228 ------------ -------- ------------ EXPENSES: Management fees 17,112 2,951 381 Distribution fees: Advisor Class 402 7 -- B Class 11 2 16 C Class 24 5 -- Service fees: Advisor Class 402 7 -- B Class 4 1 5 C Class 8 2 -- Distribution and service fees: A Class 38 9 26 R Class 6 -- -- Directors' fees and expenses 26 3 1 Other expenses 116 9 -- ------------ -------- ------------ 18,149 2,996 429 ------------ -------- ------------ Amount waived -- -- (20) ------------ -------- ------------ 18,149 2,996 409 ------------ -------- ------------ NET INVESTMENT INCOME (LOSS) 16,177 554 819 ------------ -------- ------------ REALIZED AND UNREALIZED GAIN (LOSS) NET REALIZED GAIN (LOSS) ON: Investment transactions 299,551 40,164 1,661 Foreign currency transactions 49,381 2,828 343 ------------ -------- ------------ 348,932 42,992 2,004 ------------ -------- ------------ CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: Investments (net of foreign taxes accrued of $(623), $17 and $-, respectively) 50,103 23,154 7,928 Translation of assets and liabilities in foreign currencies (44,607) (3,200) (151) ------------ -------- ------------ 5,496 19,954 7,777 ------------ -------- ------------ NET REALIZED AND UNREALIZED GAIN (LOSS) 354,428 62,946 9,781 ------------ -------- ------------ NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $370,605 $63,500 $10,600 ============ ======== ============ See Notes to Financial Statements. - ------ 29 STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED MAY 31, 2007 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) International Growth Global Growth Increase (Decrease) in Net Nov. 30, May 31, Nov. 30, Assets May 31, 2007 2006 2007 2006 OPERATIONS Net investment income (loss) $ 16,177 $ 13,732 $ 554 $ (228) Net realized gain (loss) 348,932 431,240 42,992 62,564 Change in net unrealized appreciation (depreciation) 5,496 223,543 19,954 10,585 ---------- ---------- -------- -------- Net increase (decrease) in net assets resulting from operations 370,605 668,515 63,500 72,921 ---------- ---------- -------- -------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Investor Class (16,995) (40,600) (1,908) (2,722) Institutional Class (1,199) (4,912) (56) (80) Advisor Class (1,634) (4,014) (11) (16) A Class (140) (391) (11) -- B Class -- (13) -- -- C Class -- (42) -- -- R Class (5) (24) -- -- From net realized gains: Investor Class -- -- (8,547) -- Institutional Class -- -- (266) -- Advisor Class -- -- (113) -- A Class -- -- (136) -- B Class -- -- (8) -- C Class -- -- (28) -- R Class -- -- (1) -- ---------- ---------- -------- -------- Decrease in net assets from distributions (19,973) (49,996) (11,085) (2,818) ---------- ---------- -------- -------- CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions (536,853) (553,900) (5,038) (22,870) ---------- ---------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS (186,221) 64,619 47,377 47,233 NET ASSETS Beginning of period 2,854,701 2,790,082 439,023 391,790 ---------- ---------- -------- -------- End of period $2,668,480 $2,854,701 $486,400 $439,023 ========== ========== ======== ======== Accumulated net investment loss $(15,713) $(11,917) $(4,459) $(3,027) ========== ========== ======== ======== See Notes to Financial Statements. - ------ 30 SIX MONTHS ENDED MAY 31, 2007 (UNAUDITED), EIGHT MONTHS ENDED NOVEMBER 30, 2006 AND YEAR ENDED MARCH 31, 2006 (AMOUNTS IN THOUSANDS) International Value May 31, Nov. 30, March 31, Increase (Decrease) in Net Assets 2007 2006(1) 2006 OPERATIONS Net investment income (loss) $ 819 $ 1,046 $ 3,019 Net realized gain (loss) 2,004 4,933 70,935 Change in net unrealized appreciation (depreciation) 7,777 1,099 (38,416) --------- -------- -------- Net increase (decrease) in net assets resulting from operations 10,600 7,078 35,538 --------- -------- -------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Investor Class (15) -- -- Institutional Class (1,222) -- -- A Class (614) -- (2,743) B Class (113) -- (23) C Class (1) -- -- R Class (1) -- -- From net realized gains: Investor Class (145) -- -- Institutional Class (11,690) -- -- A Class (6,476) -- (3,924) B Class (1,432) -- (86) C Class (14) -- -- R Class (9) -- -- --------- -------- -------- Decrease in net assets from distributions (21,732) -- (6,776) --------- -------- -------- CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions 22,027 (6,329) (177,608) --------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS 10,895 749 (148,846) NET ASSETS Beginning of period 60,283 59,534 208,380 --------- -------- -------- End of period $71,178 $60,283 $ 59,534 ========= ======== ======== Undistributed net investment income $385 $1,532 $496 ========= ======== ======== (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. - ------ 31 NOTES TO FINANCIAL STATEMENTS MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. International Growth Fund (International Growth), Global Growth Fund (Global Growth) and International Value Fund (International Value) (collectively, the funds) are three funds in a series issued by the corporation (see Note 9). The funds are diversified under the 1940 Act. International Growth and Global Growth's investment objective is 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 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 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 as determined by, or in accordance with procedures adopted by, the Board of Directors or its designee if such determination would materially impact a fund's net asset value. Certain other circumstances may cause the funds to use alternative procedures to 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. - ------ 32 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) SECURITIES ON LOAN -- International Growth and Global Growth may lend portfolio securities through their lending agent to certain approved borrowers in order to earn additional income. International Growth and Global Growth continue to recognize any gain or loss in the market price of the securities loaned and record any interest earned or dividends declared. FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. Purchases and sales of investment securities, dividend and interest 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. 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. The funds may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code, in all events in a manner consistent with provisions of the 1940 Act. REDEMPTION -- The funds may impose a 2.00% 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. - ------ 33 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACGIM (the investment advisor), under which ACGIM provides the funds with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of the funds, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACGIM. The fee is computed and accrued daily based on the daily net assets of each specific class of shares of each fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in each fund's investment strategy (strategy assets) to calculate the appropriate fee rate for each fund. The strategy assets include each fund's assets and the assets of other clients of the investment advisor that are not in the American Century family of funds, but that have the same investment team and investment strategy. The strategy assets of International Growth includes the assets of NT International Growth Fund, one fund in a series issued by the corporation. The annual management fee schedule for International Growth ranges from 1.10% to 1.50% for the Investor Class, A Class, B Class, C Class and R Class. The annual management fee schedule for Global Growth ranges from 1.05% to 1.30% for the Investor Class, A Class, B Class, C Class and R Class. The annual management fee schedule for International Value ranges from 1.10% to 1.30% for the Investor Class, A Class, B Class, C Class and R Class. The Institutional Class is 0.20% less and the Advisor Class is 0.25% less, as applicable, at each point within the range. The effective annual management fee for each class of each fund for the six months ended May 31, 2007 was 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 1.30% 1.10% N/A 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 International Growth and Global Growth in accordance with their 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 International Value in accordance with its 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. - ------ 34 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) 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 will pay American Century Investment Services, Inc. (ACIS) an annual distribution fee of 0.25% and service fee of 0.25%. The plans provide that the A Class will pay ACIS an annual distribution and service fee of 0.25%. The plans provide that the B Class and the C Class will pay ACIS an annual distribution fee of 0.75% and service fee of 0.25%. The plans provide that the R Class will pay ACIS an annual distribution and service fee of 0.50%. The fees are computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The distribution fee provides compensation for expenses incurred 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. ACIS 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 six months ended May 31, 2007, the A Class and B Class waived $15,453 and $4,508 ($ in full), respectively, of distribution and service fees for International Value. Fees incurred under the plans during the six months ended May 31, 2007, 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. Beginning in December 2006, the funds were eligible to invest in a money market fund for temporary purposes, which was managed by J.P. Morgan Investment Management, Inc. (JPMIM). JPMIM is a wholly owned subsidiary of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC. The funds have a bank line of credit agreement with JPMorgan Chase Bank (JPMCB). International Growth and Global Growth have a securities lending agreement with JPMCB. JPMCB is a custodian of the funds and a wholly owned subsidiary of JPM. 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the six months ended May 31, 2007, were as follows: International Growth Global Growth International Value Purchases $1,961,657 $234,652 $4,009 Proceeds from sales $2,464,969 $254,013 $3,701 - ------ 35 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: Six months Year ended ended May 31, 2007 November 30, 2006 Shares Amount Shares Amount International Growth INVESTOR CLASS/SHARES AUTHORIZED 1,000,000 1,000,000 ========= ========= Sold 13,594 $ 173,806 31,222 $ 343,306 Issued in reinvestment of distributions 1,168 14,427 3,469 34,698 Redeemed (41,328) (535,197)(1) (72,005) (780,967)(2) --------- ------------ --------- ------------ (26,566) (346,964) (37,314) (402,963) --------- ------------ --------- ------------ INSTITUTIONAL CLASS/SHARES AUTHORIZED 150,000 150,000 ========= ========= Sold 1,516 19,577 4,490 48,649 Issued in reinvestment of distributions 90 1,117 435 4,357 Redeemed (6,210) (81,607)(3) (19,888) (212,746)(4) --------- ------------ --------- ------------ (4,604) (60,913) (14,963) (159,740) --------- ------------ --------- ------------ ADVISOR CLASS/SHARES AUTHORIZED 100,000 100,000 ========= ========= Sold 4,389 56,194 10,987 120,231 Issued in reinvestment of distributions 121 1,489 373 3,722 Redeemed (14,103) (187,110)(5) (10,331) (112,654)(6) --------- ------------ --------- ------------ (9,593) (129,427) 1,029 11,299 --------- ------------ --------- ------------ A CLASS/SHARES AUTHORIZED 25,000 25,000 ========= ========= Sold 248 3,201 608 6,644 Issued in reinvestment of distributions 11 134 38 377 Redeemed (270) (3,485) (899) (9,623) --------- ------------ --------- ------------ (11) (150) (253) (2,602) --------- ------------ --------- ------------ B CLASS/SHARES AUTHORIZED 10,000 10,000 ========= ========= Sold 22 277 80 866 Issued in reinvestment of distributions -- -- 1 10 Redeemed (16) (203) (31) (330) --------- ------------ --------- ------------ 6 74 50 546 --------- ------------ --------- ------------ C CLASS/SHARES AUTHORIZED 10,000 10,000 ========= ========= Sold 45 562 128 1,397 Issued in reinvestment of distributions -- -- 3 32 Redeemed (72) (910) (156) (1,664) --------- ------------ --------- ------------ (27) (348) (25) (235) --------- ------------ --------- ------------ R CLASS/SHARES AUTHORIZED 5,000 5,000 ========= ========= Sold 89 1,155 140 1,533 Issued in reinvestment of distributions -- 4 2 20 Redeemed (22) (284) (154) (1,758) --------- ------------ --------- ------------ 67 875 (12) (205) --------- ------------ --------- ------------ Net increase (decrease) (40,728) $(536,853) (51,488) $(553,900) ========= ============ ========= ============ (1) Net of redemption fees of $79. (2) Net of redemption fees of $156. (3) Net of redemption fees of $5. (4) Net of redemption fees of $16. (5) Net of redemption fees of $31. (6) Net of redemption fees of $81. - ------ 36 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) Six months Year ended ended May 31, 2007 November 30, 2006 Shares Amount Shares Amount Global Growth INVESTOR CLASS/SHARES AUTHORIZED 150,000 150,000 ======= ======= Sold 1,891 $ 20,738 5,161 $ 50,085 Issued in reinvestment of distributions 962 10,090 289 2,636 Redeemed (3,955) (43,220)(1) (8,373) (80,834)(2) ------- ----------- ------- ----------- (1,102) (12,392) (2,923) (28,113) ------- ----------- ------- ----------- INSTITUTIONAL CLASS/SHARES AUTHORIZED 5,000 5,000 ======= ======= Sold 522 5,703 219 2,130 Issued in reinvestment of distributions 30 322 9 80 Redeemed (127) (1,415) (391) (3,851) ------- ----------- ------- ----------- 425 4,610 (163) (1,641) ------- ----------- ------- ----------- ADVISOR CLASS/SHARES AUTHORIZED 5,000 5,000 ======= ======= Sold 34 376 332 3,165 Issued in reinvestment of distributions 12 124 1 13 Redeemed (75) (818) (215) (2,037)(3) ------- ----------- ------- ----------- (29) (318) 118 1,141 ------- ----------- ------- ----------- A CLASS/SHARES AUTHORIZED 10,000 10,000 ======= ======= Sold 276 3,041 532 5,196 Issued in reinvestment of distributions 13 135 -- -- Redeemed (56) (616) (27) (261) ------- ----------- ------- ----------- 233 2,560 505 4,935 ------- ----------- ------- ----------- B CLASS/SHARES AUTHORIZED 10,000 10,000 ======= ======= Sold 7 79 37 357 Issued in reinvestment of distributions 1 8 -- -- Redeemed (2) (19) (3) (32) ------- ----------- ------- ----------- 6 68 34 325 ------- ----------- ------- ----------- C CLASS/SHARES AUTHORIZED 5,000 5,000 ======= ======= Sold 45 476 82 772 Issued in reinvestment of distributions 2 22 -- -- Redeemed (8) (85) (31) (289) ------- ----------- ------- ----------- 39 413 51 483 ------- ----------- ------- ----------- R CLASS/SHARES AUTHORIZED 10,000 10,000 ======= ======= Sold 2 20 -- -- Issued in reinvestment of distributions -- 1 -- -- ------- ----------- ------- ----------- 2 21 -- -- ------- ----------- ------- ----------- Net increase (decrease) (426) $ (5,038) (2,378) $(22,870) ======= =========== ======= =========== (1) Net of redemption fees of $9. (2) Net of redemption fees of $18. (3) Net of redemption fees of $1. - ------ 37 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) Six months Year ended ended November 30, Year ended May 31, 2007 2006(1) March 31, 2006 Shares Amount Shares Amount Shares Amount International Value INVESTOR CLASS/SHARES AUTHORIZED 55,000 55,000 N/A ======= ======= ======== Sold 53 $ 542 30 $ 413 Issued in reinvestment of distributions 17 157 -- -- Redeemed (4) (34) -- -- ------- ------- ------- -------- 66 665 30 413 ------- ------- ------- -------- INSTITUTIONAL CLASS/SHARES AUTHORIZED 55,000 55,000 N/A ======= ======= ======== Sold 103 1,046 2,474 31,954 Issued in reinvestment of distributions 1,355 12,912 -- -- Redeemed (12) (120) -- -- ------- ------- ------- -------- 1,446 13,838 2,474 31,954 ------- ------- ------- -------- A CLASS/SHARES AUTHORIZED 55,000 55,000 179,529 ======= ======= ======== Sold 415 4,204 242 3,170 474 $ 5,502 Issued in reinvestment of distributions 697 6,655 -- -- 565 6,637 Redeemed (426) (4,359) (3,158) (40,813) (15,369) (188,758) ------- ------- ------- -------- -------- ---------- 686 6,500 (2,916) (37,643) (14,330) (176,619) ------- ------- ------- -------- -------- ---------- B CLASS/SHARES AUTHORIZED 5,000 5,000 90,471 ======= ======= ======== Sold 33 323 30 385 54 604 Issued in reinvestment of distributions 161 1,506 -- -- 9 108 Redeemed (93) (932) (117) (1,501) (150) (1,701) ------- ------- ------- -------- -------- ---------- 101 897 (87) (1,116) (87) (989) ------- ------- ------- -------- -------- ---------- C CLASS/SHARES AUTHORIZED 50,000 50,000 N/A ======= ======= ======== Sold 7 75 3 38 Issued in reinvestment of distributions 2 15 -- -- ------- ------- ------- -------- 9 90 3 38 ------- ------- ------- -------- R CLASS/SHARES AUTHORIZED 5,000 5,000 N/A ======= ======= ======== Sold 3 31 2 25 Issued in reinvestment of distributions 1 10 -- -- Redeemed -- (4) -- -- ------- ------- ------- -------- 4 37 2 25 ------- ------- ------- -------- Net increase (decrease) 2,312 $22,027 (494) $(6,329) (14,417) $(177,608) ======= ======= ======= ======== ======== ========== (1) April 3, 2006 (commencement of sale) through November 30, 2006 for Investor Class, Institutional Class, C Class and R Class. April 1, 2006 through November 30, 2006 for A Class and B Class. 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). - ------ 38 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) 5. SECURITIES LENDING As of May 31, 2007, securities in International Growth and Global Growth valued at $633,765 and $92,141, 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 $676,536 and $95,909, 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 0.40%. The funds did not borrow from the line during the six months ended May 31, 2007. 7. RISK FACTORS There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions. Investing in emerging markets may accentuate these risks. 8. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of May 31, 2007, the components of investments for federal income tax purposes were as follows: International Global International Growth Growth Value Federal tax cost of investments $2,648,180 $451,444 $43,391 ============= ========= ============= Gross tax appreciation of investments $728,687 $125,197 $27,975 Gross tax depreciation of investments (4,926) (844) (427) ------------- --------- ------------- Net tax appreciation (depreciation) of investments $723,761 $124,353 $27,548 ============= ========= ============= 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. - ------ 39 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) Following are the capital loss carryovers and currency loss deferral amounts as of November 30, 2006: International International Growth Global Growth Value Accumulated capital losses $(424,461) -- -- Currency loss deferrals $(262) $(36) $(3) The accumulated capital losses listed above represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Capital loss carryovers of $(366,696) and $(57,765) in International Growth 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 of 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. 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. - ------ 40 FINANCIAL HIGHLIGHTS International Growth Investor Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $12.17 $9.75 $8.79 $7.54 $6.69 $7.86 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.08 0.06 0.11 0.05 0.06 0.06 Net Realized and Unrealized Gain (Loss) 1.60 2.54 0.94 1.26 0.85 (1.20) -------- -------- -------- -------- -------- -------- Total From Investment Operations 1.68 2.60 1.05 1.31 0.91 (1.14) -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.09) (0.18) (0.09) (0.06) (0.06) (0.03) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $13.76 $12.17 $9.75 $8.79 $7.54 $6.69 ======== ======== ======== ======== ======== ======== TOTAL RETURN(3) 13.90% 27.03% 12.09% 17.45% 13.70% (14.54)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.26%(4) 1.26% 1.23% 1.26% 1.28% 1.25% Ratio of Net Investment Income (Loss) to Average Net Assets 1.18%(4) 0.52% 1.22% 0.57% 0.84% 0.76% Portfolio Turnover Rate 70% 95% 89% 118% 169% 215% Net Assets, End of Period (in thousands) $2,295,388 $2,352,967 $2,249,430 $2,395,249 $2,502,831 $2,410,600 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 41 International Growth Institutional Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $12.20 $9.78 $8.82 $7.56 $6.71 $7.88 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.09 0.07 0.13 0.06 0.07 0.07 Net Realized and Unrealized Gain (Loss) 1.61 2.55 0.94 1.27 0.85 (1.19) -------- -------- -------- -------- -------- -------- Total From Investment Operations 1.70 2.62 1.07 1.33 0.92 (1.12) -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.12) (0.20) (0.11) (0.07) (0.07) (0.05) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $13.78 $12.20 $9.78 $8.82 $7.56 $6.71 ======== ======== ======== ======== ======== ======== TOTAL RETURN(3) 14.01% 27.19% 12.28% 17.78% 13.89% (14.33)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.06%(4) 1.06% 1.03% 1.06% 1.08% 1.05% Ratio of Net Investment Income (Loss) to Average Net Assets 1.38%(4) 0.72% 1.42% 0.77% 1.04% 0.96% Portfolio Turnover Rate 70% 95% 89% 118% 169% 215% Net Assets, End of Period (in thousands) $78,684 $125,814 $247,077 $283,330 $301,854 $270,121 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 42 International Growth Advisor Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $12.12 $9.72 $8.76 $7.52 $6.66 $7.83 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.05 0.03 0.09 0.03 0.03 0.04 Net Realized and Unrealized Gain (Loss) 1.62 2.52 0.94 1.25 0.87 (1.20) -------- -------- -------- -------- -------- -------- Total From Investment Operations 1.67 2.55 1.03 1.28 0.90 (1.16) -------- -------- -------- -------- -------- -------- Distributions From Net Investment Income (0.06) (0.15) (0.07) (0.04) (0.04) (0.01) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $13.73 $12.12 $9.72 $8.76 $7.52 $6.66 ======== ======== ======== ======== ======== ======== TOTAL RETURN(3) 13.84% 26.57% 11.85% 17.07% 13.62% (14.81)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.51%(4) 1.51% 1.48% 1.51% 1.53% 1.50% Ratio of Net Investment Income (Loss) to Average Net Assets 0.93%(4) 0.27% 0.97% 0.32% 0.59% 0.51% Portfolio Turnover Rate 70% 95% 89% 118% 169% 215% Net Assets, End of Period (in thousands) $249,296 $336,497 $259,651 $275,195 $239,256 $196,949 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 43 International Growth A Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003(2) PER-SHARE DATA Net Asset Value, Beginning of Period $12.14 $9.73 $8.77 $7.53 $6.10 ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(3) 0.07 0.04 0.09 0.03 (0.02) Net Realized and Unrealized Gain (Loss) 1.59 2.52 0.94 1.25 1.45 ------- ------- ------- ------- ------- Total From Investment Operations 1.66 2.56 1.03 1.28 1.43 ------- ------- ------- ------- ------- Distributions From Net Investment Income (0.06) (0.15) (0.07) (0.04) -- ------- ------- ------- ------- ------- Net Asset Value, End of Period $13.74 $12.14 $9.73 $8.77 $7.53 ======= ======= ======= ======= ======= TOTAL RETURN(4) 13.73% 26.65% 11.84% 17.10% 23.44% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.51%(5) 1.51% 1.48% 1.51% 1.53%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 0.93%(5) 0.27% 0.97% 0.32% (0.40)%(5) Portfolio Turnover Rate 70% 95% 89% 118% 169%(6) Net Assets, End of Period (in thousands) $31,957 $28,367 $25,193 $14,170 $7,395 (1) Six months ended May 31, 2007 (unaudited). (2) January 31, 2003 (commencement of sale) through November 30, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 44 International Growth B Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003(2) PER-SHARE DATA Net Asset Value, Beginning of Period $12.04 $9.65 $8.70 $7.48 $6.10 ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(3) 0.02 (0.05) 0.02 (0.03) (0.03) Net Realized and Unrealized Gain (Loss) 1.58 2.52 0.93 1.25 1.41 ------- ------- ------- ------- ------- Total From Investment Operations 1.60 2.47 0.95 1.22 1.38 ------- ------- ------- ------- ------- Distributions From Net Investment Income -- (0.08) --(4) -- -- ------- ------- ------- ------- ------- Net Asset Value, End of Period $13.64 $12.04 $9.65 $8.70 $7.48 ======= ======= ======= ======= ======= TOTAL RETURN(5) 13.29% 25.71% 10.97% 16.31% 22.62% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 2.26%(6) 2.26% 2.23% 2.26% 2.28%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 0.18%(6) (0.48)% 0.22% (0.43)% (0.51)%(6) Portfolio Turnover Rate 70% 95% 89% 118% 169%(7) Net Assets, End of Period (in thousands) $3,133 $2,699 $1,676 $1,107 $513 (1) Six months ended May 31, 2007 (unaudited). (2) January 31, 2003 (commencement of sale) through November 30, 2003. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 45 International Growth C Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $11.97 $9.60 $8.66 $7.45 $6.60 $7.82 ------- ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(2) 0.02 (0.05) 0.02 (0.03) (0.01) --(3) Net Realized and Unrealized Gain (Loss) 1.58 2.50 0.92 1.24 0.86 (1.22) ------- ------- ------- ------- ------- ------- Total From Investment Operations 1.60 2.45 0.94 1.21 0.85 (1.22) ------- ------- ------- ------- ------- ------- Distributions From Net Investment Income -- (0.08) --(3) -- -- -- ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $13.57 $11.97 $9.60 $8.66 $7.45 $6.60 ======= ======= ======= ======= ======= ======= TOTAL RETURN(4) 13.37% 25.64% 10.91% 16.24% 12.88% (15.60)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 2.26%(5) 2.26% 2.23% 2.26% 2.28% 2.25% Ratio of Net Investment Income (Loss) to Average Net Assets 0.18%(5) (0.48)% 0.22% (0.43)% (0.16)% (0.24)% Portfolio Turnover Rate 70% 95% 89% 118% 169% 215% Net Assets, End of Period (in thousands) $6,717 $6,250 $5,246 $5,070 $1,933 $912 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, 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. See Notes to Financial Statements. - ------ 46 International Growth R Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003(2) PER-SHARE DATA Net Asset Value, Beginning of Period $12.12 $9.71 $8.75 $7.53 $7.02 ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(3) 0.06 0.01 0.07 0.02 (0.01) Net Realized and Unrealized Gain (Loss) 1.59 2.53 0.94 1.25 0.52 ------- ------- ------- ------- ------- Total From Investment Operations 1.65 2.54 1.01 1.27 0.51 ------- ------- ------- ------- ------- Distributions From Net Investment Income (0.03) (0.13) (0.05) (0.05) -- ------- ------- ------- ------- ------- Net Asset Value, End of Period $13.74 $12.12 $9.71 $8.75 $7.53 ======= ======= ======= ======= ======= TOTAL RETURN(4) 13.63% 26.39% 11.58% 16.92% 7.26% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.76%(5) 1.76% 1.69%(6) 1.76% 1.78%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 0.68%(5) 0.02% 0.76%(6) 0.07% (0.74)%(5) Portfolio Turnover Rate 70% 95% 89% 118% 169%(7) Net Assets, End of Period (in thousands) $3,305 $2,106 $1,809 $376 $3 (1) Six months ended May 31, 2007 (unaudited). (2) August 29, 2003 (commencement of sale) through November 30, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) During the year ended November 30, 2005, the class received a partial reimbursement of its distribution and service fees. Had fees not been reimbursed, the ratio of operating expenses to average net assets and the ratio of net investment income (loss) to average net assets would have been 1.73% and 0.72%, respectively. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 47 Global Growth Investor Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $10.52 $8.88 $7.49 $6.48 $5.39 $6.18 ------- ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(2) 0.01 --(3) --(3) (0.01) --(3) 0.01 Net Realized and Unrealized Gain (Loss) 1.51 1.70 1.41 1.02 1.09 (0.80) ------- ------- ------- ------- ------- ------- Total From Investment Operations 1.52 1.70 1.41 1.01 1.09 (0.79) ------- ------- ------- ------- ------- ------- Distributions From Net Investment Income (0.05) (0.06) (0.02) -- -- -- From Net Realized Gains (0.22) -- -- -- -- -- ------- ------- ------- ------- ------- ------- Total Distributions (0.27) (0.06) (0.02) -- -- -- ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $11.77 $10.52 $8.88 $7.49 $6.48 $5.39 ======= ======= ======= ======= ======= ======= TOTAL RETURN(4) 14.76% 19.30% 18.87% 15.59% 20.22% (12.78)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.31%(5) 1.31% 1.30% 1.30% 1.31% 1.32% Ratio of Net Investment Income (Loss) to Average Net Assets 0.24%(5) (0.05)% (0.01)% (0.12)% 0.00% 0.13% Portfolio Turnover Rate 51% 95% 36% 79% 152% 278% Net Assets, End of Period (in thousands) $455,074 $418,185 $378,976 $299,807 $250,306 $213,314 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 48 Global Growth Institutional Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $10.60 $8.95 $7.55 $6.52 $5.41 $6.19 -------- ------- ------- ------- ------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.03 0.01 0.01 --(3) 0.01 0.02 Net Realized and Unrealized Gain (Loss) 1.51 1.72 1.43 1.03 1.10 (0.80) -------- ------- ------- ------- ------- -------- Total From Investment Operations 1.54 1.73 1.44 1.03 1.11 (0.78) -------- ------- ------- ------- ------- -------- Distributions From Net Investment Income (0.07) (0.08) (0.04) -- -- -- From Net Realized Gains (0.22) -- -- -- -- -- -------- ------- ------- ------- ------- -------- Total Distributions (0.29) (0.08) (0.04) -- -- -- -------- ------- ------- ------- ------- -------- Net Asset Value, End of Period $11.85 $10.60 $8.95 $7.55 $6.52 $5.41 ======== ======= ======= ======= ======= ======== TOTAL RETURN(4) 14.87% 19.50% 19.22% 15.80% 20.52% (12.60)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.11%(5) 1.11% 1.10% 1.10% 1.11% 1.12% Ratio of Net Investment Income (Loss) to Average Net Assets 0.44%(5) 0.15% 0.19% 0.08% 0.20% 0.33% Portfolio Turnover Rate 51% 95% 36% 79% 152% 278% Net Assets, End of Period (in thousands) $14,597 $8,540 $8,669 $6,774 $7,901 $3,288 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 49 Global Growth Advisor Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $10.41 $8.79 $7.41 $6.43 $5.36 $6.16 ------- ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(2) --(3) (0.03) (0.02) (0.02) (0.02) (0.01) Net Realized and Unrealized Gain (Loss) 1.50 1.69 1.40 1.00 1.09 (0.79) ------- ------- ------- ------- ------- ------- Total From Investment Operations 1.50 1.66 1.38 0.98 1.07 (0.80) ------- ------- ------- ------- ------- ------- Distributions From Net Investment Income (0.02) (0.04) -- -- -- -- From Net Realized Gains (0.22) -- -- -- -- -- ------- ------- ------- ------- ------- ------- Total Distributions (0.24) (0.04) -- -- -- -- ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $11.67 $10.41 $8.79 $7.41 $6.43 $5.36 ======= ======= ======= ======= ======= ======= TOTAL RETURN(4) 14.72% 18.97% 18.62% 15.24% 19.96% (12.99)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.56%(5) 1.56% 1.55% 1.55% 1.56% 1.57% Ratio of Net Investment Income (Loss) to Average Net Assets (0.01)%(5) (0.30)% (0.26)% (0.37)% (0.25)% (0.12)% Portfolio Turnover Rate 51% 95% 36% 79% 152% 278% Net Assets, End of Period (in thousands) $5,906 $5,571 $3,664 $2,475 $1,044 $537 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 50 Global Growth A Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 PER-SHARE DATA Net Asset Value, Beginning of Period $10.49 $9.02 -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.01 (0.03) Net Realized and Unrealized Gain (Loss) 1.50 1.56 -------- -------- Total From Investment Operations 1.51 1.53 -------- -------- Distributions From Net Investment Income (0.02) (0.06) From Net Realized Gains (0.22) -- -------- -------- Total Distributions (0.24) (0.06) -------- -------- Net Asset Value, End of Period $11.76 $10.49 ======== ======== TOTAL RETURN(3) 14.70% 17.10% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.56%(4) 1.56% Ratio of Net Investment Income (Loss) to Average Net Assets (0.01)%(4) (0.30)% Portfolio Turnover Rate 51% 95% Net Assets, End of Period (in thousands) $8,678 $5,295 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 51 Global Growth B Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 PER-SHARE DATA Net Asset Value, Beginning of Period $10.42 $9.02 -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) (0.04) (0.11) Net Realized and Unrealized Gain (Loss) 1.49 1.57 -------- -------- Total From Investment Operations 1.45 1.46 -------- -------- Distributions From Net Investment Income -- (0.06) From Net Realized Gains (0.22) -- -------- -------- Total Distributions (0.22) (0.06) -------- -------- Net Asset Value, End of Period $11.65 $10.42 ======== ======== TOTAL RETURN(3) 14.18% 16.29% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 2.31%(4) 2.31% Ratio of Net Investment Income (Loss) to Average Net Assets (0.76)%(4) (1.05)% Portfolio Turnover Rate 51% 95% Net Assets, End of Period (in thousands) $467 $352 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 52 Global Growth C Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002(2) PER-SHARE DATA Net Asset Value, Beginning of Period $10.14 $8.59 $7.29 $6.37 $5.35 $6.14 ------- ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(3) (0.04) (0.10) (0.08) (0.08) (0.05) (0.03) Net Realized and Unrealized Gain (Loss) 1.46 1.65 1.38 1.00 1.07 (0.76) ------- ------- ------- ------- ------- ------- Total From Investment Operations 1.42 1.55 1.30 0.92 1.02 (0.79) ------- ------- ------- ------- ------- ------- Distributions From Net Realized Gains (0.22) -- -- -- -- -- ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $11.34 $10.14 $8.59 $7.29 $6.37 $5.35 ======= ======= ======= ======= ======= ======= TOTAL RETURN(4) 14.28% 18.04% 17.83% 14.44% 19.07% (12.87)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 2.31%(5) 2.31% 2.30% 2.30% 2.31% 2.32%(5) Ratio of Net Investment Income (Loss) to Average Net Assets (0.76)%(5) (1.05)% (1.01)% (1.12)% (1.00)% (0.60)%(5) Portfolio Turnover Rate 51% 95% 36% 79% 152% 278%(6) Net Assets, End of Period (in thousands) $1,620 $1,050 $454 $184 $56 $25 (1) Six months ended May 31, 2007 (unaudited). (2) March 1, 2002 (commencement of sale) through November 30, 2002. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2002. See Notes to Financial Statements. - ------ 53 Global Growth R Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $10.47 $8.86 $8.37 -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) --(4) (0.05) (0.02) Net Realized and Unrealized Gain (Loss) 1.49 1.71 0.51 -------- -------- -------- Total From Investment Operations 1.49 1.66 0.49 -------- -------- -------- Distributions From Net Investment Income -- (0.05) -- From Net Realized Gains (0.22) -- -- -------- -------- -------- Total Distributions (0.22) (0.05) -- -------- -------- -------- Net Asset Value, End of Period $11.74 $10.47 $8.86 ======== ======== ======== TOTAL RETURN(5) 14.50% 18.79% 5.85% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.81%(6) 1.81% 1.80%(6) Ratio of Net Investment Income (Loss) to Average Net Assets (0.26)%(6) (0.55)% (0.71)%(6) Portfolio Turnover Rate 51% 95% 36%(7) Net Assets, End of Period (in thousands) $58 $32 $26 (1) Six months ended May 31, 2007 (unaudited). (2) July 29, 2005 (commencement of sale) through November 30, 2005. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2005. See Notes to Financial Statements. - ------ 54 International Value Investor Class For a Share Outstanding Throughout the Periods Indicated 2007(1) 2006(2) PER-SHARE DATA Net Asset Value, Beginning of Period $14.36 $12.85 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.17 0.15 Net Realized and Unrealized Gain (Loss) 1.59 1.36 -------- -------- Total From Investment Operations 1.76 1.51 -------- -------- Distributions From Net Investment Income (0.47) -- From Net Realized Gains (4.72) -- -------- -------- Total Distributions (5.19) -- -------- -------- Net Asset Value, End of Period $10.93 $14.36 ======== ======== TOTAL RETURN(4) 17.63% 11.75% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.30%(5) 1.30%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 2.50%(5)(6) 2.77%(5)(6) Portfolio Turnover Rate 6% 17% Net Assets, End of Period (in thousands) $1,053 $437 (1) Six months ended May 31, 2007 (unaudited). (2) April 3, 2006 (commencement of sale) through November 30, 2006. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Due to cyclical dividends, the annualized ratio of net investment income (loss) to average net assets is higher than expected. See Notes to Financial Statements. - ------ 55 International Value Institutional Class For a Share Outstanding Throughout the Periods Indicated 2007(1) 2006(2) PER-SHARE DATA Net Asset Value, Beginning of Period $14.38 $12.85 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.14 0.25 Net Realized and Unrealized Gain (Loss) 1.63 1.28 -------- -------- Total From Investment Operations 1.77 1.53 -------- -------- Distributions From Net Investment Income (0.49) -- From Net Realized Gains (4.72) -- -------- -------- Total Distributions (5.21) -- -------- -------- Net Asset Value, End of Period $10.94 $14.38 ======== ======== TOTAL RETURN(4) 17.74% 11.91% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.10%(5) 1.10%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 2.70%(5)(6) 2.97%(5)(6) Portfolio Turnover Rate 6% 17% Net Assets, End of Period (in thousands) $42,900 $35,574 (1) Six months ended May 31, 2007 (unaudited). (2) April 3, 2006 (commencement of sale) through November 30, 2006. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Due to cyclical dividends, the annualized ratio of net investment income (loss) to average net assets is higher than expected. See Notes to Financial Statements. - ------ 56 International Value A Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2007(1) 2006(2) 2006 2005 2004 2003 PER-SHARE DATA Net Asset Value, Beginning of Period $14.35 $12.70 $10.91 $9.64 $6.22 $8.70 ------- ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(3) 0.12 0.25 0.18 0.13 0.10 0.07 Net Realized and Unrealized Gain (Loss) 1.65 1.40 1.97 1.37 3.42 (2.51) ------- ------- ------- ------- ------- ------- Total From Investment Operations 1.77 1.65 2.15 1.50 3.52 (2.44) ------- ------- ------- ------- ------- ------- Distributions From Net Investment Income (0.45) -- (0.15) (0.11) (0.10) (0.04) From Net Realized Gains (4.72) -- (0.21) (0.12) -- -- ------- ------- ------- ------- ------- ------- Total Distributions (5.17) -- (0.36) (0.23) (0.10) (0.04) ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $10.95 $14.35 $12.70 $10.91 $9.64 $6.22 ======= ======= ======= ======= ======= ======= TOTAL RETURN(4) 17.64% 12.99% 19.95% 15.58% 56.65% (28.10)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.40%(5)(6) 1.40%(5)(6) 1.35% 1.41% 1.47% 1.65%(7) Ratio of Operating Expenses to Average Net Assets (Before Expense Waiver) 1.55%(6) 1.55%(6) 1.35% 1.41% 1.47% 1.66% Ratio of Net Investment Income (Loss) to Average Net Assets 2.40%(5)(6)(8) 2.67%(5)(6)(8) 1.52% 1.28% 1.13% 0.89%(7) Ratio of Net Investment Income (Loss) to Average Net Assets (Before Expense Waiver) 2.25%(6)(8) 2.52%(6)(8) 1.52% 1.28% 1.13% 0.90% Portfolio Turnover Rate 6% 17% 7% 18% 10% 18% Net Assets, End of Period (in thousands) $22,681 $19,890 $54,617 $203,215 $174,387 $105,862 (1) Six months ended May 31, 2007 (unaudited). (2) 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). (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) During the periods ended May 31, 2007 and 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, the annualized ratio of net investment income (loss) to average net assets is higher than expected. See Notes to Financial Statements. - ------ 57 International Value B Class For a Share Outstanding Throughout the Years Ended March 31 (except as noted) 2007(1) 2006(2) 2006 2005 2004 2003 PER-SHARE DATA Net Asset Value, Beginning of Period $14.08 $12.51 $10.75 $9.52 $6.14 $8.61 ------- ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(3) 0.08 0.17 0.10 0.06 0.04 0.01 Net Realized and Unrealized Gain (Loss) 1.60 1.40 1.93 1.34 3.39 (2.48) ------- ------- ------- ------- ------- ------- Total From Investment Operations 1.68 1.57 2.03 1.40 3.43 (2.47) ------- ------- ------- ------- ------- ------- Distributions From Net Investment Income (0.37) -- (0.06) (0.05) (0.05) -- From Net Realized Gains (4.72) -- (0.21) (0.12) -- -- ------- ------- ------- ------- ------- ------- Total Distributions (5.09) -- (0.27) (0.17) (0.05) -- ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $10.67 $14.08 $12.51 $10.75 $9.52 $6.14 ======= ======= ======= ======= ======= ======= TOTAL RETURN(4) 17.13% 12.55% 19.07% 14.69% 55.86% (28.69)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 2.09%(5)(6) 2.09%(5)(6) 2.08% 2.09% 2.11% 2.30%(7) Ratio of Operating Expenses to Average Net Assets (Before Expense Waiver) 2.30%(6) 2.30%(6) 2.08% 2.09% 2.11% 2.31% Ratio of Net Investment Income (Loss) to Average Net Assets 1.71%(5)(6)(8) 1.98%(5)(6)(8) 0.90% 0.61% 0.52% 0.10%(7) Ratio of Net Investment Income (Loss) to Average Net Assets (Before Expense Waiver) 1.50%(6)(8) 1.77%(6)(8) 0.90% 0.61% 0.52% 0.09% Portfolio Turnover Rate 6% 17% 7% 18% 10% 18% Net Assets, End of Period (in thousands) $4,349 $4,313 $4,917 $5,165 $4,491 $3,011 (1) Six months ended May 31, 2007 (unaudited). (2) 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). (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) During the periods ended May 31, 2007 and 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, the annualized ratio of net investment income (loss) to average net assets is higher than expected. See Notes to Financial Statements. - ------ 58 International Value C Class For a Share Outstanding Throughout the Periods Indicated 2007(1) 2006(2) PER-SHARE DATA Net Asset Value, Beginning of Period $14.27 $12.85 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.11 0.14 Net Realized and Unrealized Gain (Loss) 1.59 1.28 -------- -------- Total From Investment Operations 1.70 1.42 -------- -------- Distributions From Net Investment Income (0.37) -- From Net Realized Gains (4.72) -- -------- -------- Total Distributions (5.09) -- -------- -------- Net Asset Value, End of Period $10.88 $14.27 ======== ======== TOTAL RETURN(4) 17.01% 11.05% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 2.30%(5) 2.30%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 1.50%(5)(6) 1.77%(5)(6) Portfolio Turnover Rate 6% 17% Net Assets, End of Period (in thousands) $132 $41 (1) Six months ended May 31, 2007 (unaudited). (2) April 3, 2006 (commencement of sale) through November 30, 2006. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Due to cyclical dividends, the annualized ratio of net investment income (loss) to average net assets is higher than expected. See Notes to Financial Statements. - ------ 59 International Value R Class For a Share Outstanding Throughout the Periods Indicated 2007(1) 2006(2) PER-SHARE DATA Net Asset Value, Beginning of Period $14.31 $12.85 -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) 0.13 0.19 Net Realized and Unrealized Gain (Loss) 1.61 1.27 -------- -------- Total From Investment Operations 1.74 1.46 -------- -------- Distributions From Net Investment Income (0.42) -- From Net Realized Gains (4.72) -- -------- -------- Total Distributions (5.14) -- -------- -------- Net Asset Value, End of Period $10.91 $14.31 ======== ======== TOTAL RETURN(4) 17.42% 11.36% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.80%(5) 1.80%(5) Ratio of Net Investment Income (Loss) to Average Net Assets 2.00%(5)(6) 2.27%(5)(6) Portfolio Turnover Rate 6% 17% Net Assets, End of Period (in thousands) $63 $28 (1) Six months ended May 31, 2007 (unaudited). (2) April 3, 2006 (commencement of sale) through November 30, 2006. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. (6) Due to cyclical dividends, the annualized ratio of net investment income (loss) to average net assets is higher than expected. See Notes to Financial Statements. - ------ 60 APPROVAL OF MANAGEMENT AGREEMENTS International Growth, Global Growth, International Value Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated and approved by a majority of a fund's independent directors 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, Global Growth and International Value (the "funds") and the services provided to the funds under the management agreements. 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 agreements; * reports on the advisor's activities relating to the wide range of programs and services the advisor provides to the funds and its shareholders on a routine and non-routine basis; * data comparing the cost of owning the funds to the cost of owning similar funds; * data comparing the funds' performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the funds to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. In keeping with its practice, the funds' board of directors held two regularly scheduled meetings and 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 agreements, including the setting of the applicable advisory fee. The board also had the benefit of the advice of its independent counsel throughout the period. - ------ 61 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 agreements 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 agreements, 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 agreements, 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 its 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. - ------ 62 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. Performance for each of International Growth and International Value was above the median for the one year period and below the median for the three year period. Global Growth's 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 agreements, 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. 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 reinvestment in its business to provide shareholders additional content and services. - ------ 63 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 Growth was equal to the median of the total expense ratios of its peer group. The unified fees charged to shareholders of Global Growth and International Value were slightly 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. 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 the funds 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. - ------ 64 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 agreements between the funds and the advisor are fair and reasonable in light of the services provided and should be renewed. 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 investments of the fund. In approving the subadvisory agreement, the board considered all material factors including the nature, extent, and quality of investment management services provided by the subadvisor to the fund under the agreement. As a part of this review the board 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. - ------ 65 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. 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. - ------ 66 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. - ------ 67 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. - ------ 68 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® (Europe, Australasia, Far East) INDEX is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EAFE® GROWTH INDEX is a capitalization-weighted index that monitors the performance of growth stocks from Europe, Australasia, and the Far East. The MSCI EAFE® VALUE INDEX is a capitalization-weighted index that monitors the performance of value stocks from Europe, Australasia, and the Far East. The MSCI EM (Emerging Markets) INDEX represents the performance of stocks in global emerging market countries. The MSCI EUROPE INDEX is designed to measure equity market performance in Europe. The MSCI JAPAN INDEX is designed to measure equity market performance in Japan. 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. - ------ 69 NOTES - ------ 70 NOTES - ------ 71 NOTES - ------ 72 [back cover] 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 P.O. Box 419200 Kansas City, MO 64141-6200 PRSRT STD U.S. POSTAGE PAID AMERICAN CENTURY COMPANIES American Century Investment Services, Inc., Distributor ©2007 American Century Proprietary Holdings, Inc. All rights reserved. The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. 0707 SH-SAN-55132S
[cover] American Century Investments Semiannual Report May 31, 2007 [photo of summer] International Stock Fund International Discovery Fund Emerging Markets Fund International Opportunities Fund [american century investments logo and text logo] OUR MESSAGE TO YOU We have the privilege of providing you with the semiannual report for the American Century® International Stock, International Discovery, Emerging Markets and International Opportunities funds for the six months ended May 31, 2007. We've gathered this information to help you monitor your investment. Another resource is our website, americancentury.com, where we post company news and other communications about portfolio strategy, personal finance, government policy, and the markets. Speaking of company news, American Century Investments announced the following leadership changes. Chief Investment Officer Mark Mallon retired in the first quarter of 2007, after nearly a decade with us. Effective January 1, 2007, former International Equity CIO Enrique Chang became CIO with responsibilities for the entire investment management operation. Prior to joining us in 2006, Enrique worked at Munder Capital Management, serving the last four years as president and CIO. Filling the vacant International Equity CIO position, Mark On joined American Century Investments in May 2007. Mark came to us from AXA Rosenberg, where he most recently served as CIO and managing director of their Asia Pacific operations in Singapore. In January 2007, President and Chief Executive Officer Bill Lyons announced his retirement after nearly 20 years at American Century Investments. Chief Financial Officer Jonathan Thomas was appointed president and CEO effective March 1, 2007. Since 2005, Jonathan has overseen our financial area, with additional responsibilities in purchasing, facilities, real estate, information technology, operations, and human resources. Before joining American Century, Jonathan was a managing director and global chief operating officer of Morgan Stanley's investment division. We wish to thank Mark and Bill for their many years of distinguished service - -- American Century is a stronger company as a result of their hard work. And we firmly believe their roles in our firm have transitioned to two talented, committed, and experienced top executives. [photo of James E. Stowers, Jr.] /s/ James E. Stowers, Jr. James E. Stowers, Jr. FOUNDER AND CO-CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. TABLE OF CONTENTS Market Perspective . . . . . . . . . . . . . . . . . . . . . . . . . 2 International Equity Total Returns. . . . . . . . . . . . . . . . . 2 INTERNATIONAL STOCK Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . 5 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . 5 Types of Investments in Portfolio and Investments by Country. . . . 6 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 7 INTERNATIONAL DISCOVERY Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . 12 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . 12 Types of Investments in Portfolio and Investments by Country. . . . 13 Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 14 EMERGING MARKETS Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . 19 Top Ten Holdings. . . . . . . . . . . . . . . . . . . . . . . . . . 19 Types of Investments in Portfolio and Investments by Country. . . . 20 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . 21 INTERNATIONAL OPPORTUNITIES Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Portfolio Commentary . . . . . . . . . . . . . . . . . . . . . . . . 26 Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . 26 Types of Investments in Portfolio and Investments by Country . . . 27 Schedule of Investments. . . . . . . . . . . . . . . . . . . . . . . 28 Shareholder Fee Examples . . . . . . . . . . . . . . . . . . . . . . 31 FINANCIAL STATEMENTS Statement of Assets and Liabilities. . . . . . . . . . . . . . . . . 33 Statement of Operations. . . . . . . . . . . . . . . . . . . . . . . 35 Statement of Changes in Net Assets . . . . . . . . . . . . . . . . . 36 Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . 38 Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . 45 OTHER INFORMATION Approval of Management Agreements for International Stock, International Discovery, Emerging Markets and International Opportunities. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 Share Class Information. . . . . . . . . . . . . . . . . . . . . . . 60 Additional Information . . . . . . . . . . . . . . . . . . . . . . . 61 Index Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . 62 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 Mark On, Chief Investment Officer, International Equity INTERNATIONAL STOCKS HIGHER International equities registered healthy gains for the six months ended May 31, 2007, with most global equity markets posting double-digit returns. Market indexes in the U.S. and most European countries reached six-year highs, and many emerging market indexes in Asia, Europe, and Latin America approached or established record highs. The ride was bumpy, however. Global equity markets sold off sharply in March as investors pondered the implications of trouble in the U.S. subprime mortgage market for the broader economy, and a potential ripple effect from slower consumer spending. However, a number of factors helped international equities bounce back to post solid gains. Steady global growth, massive liquidity, corporate share buybacks, and record merger and acquisition activity all buoyed global asset prices. Emerging market shares, whose performance is most closely tied to global growth and investor appetite for risk, performed best. European stocks were next, while shares of Japanese equities lagged. Looking at performance by style, growth shares narrowly led value, as measured by the MSCI EAFE Growth and Value indexes, breaking a lengthy streak of value outperformance. HEALTHY GLOBAL GROWTH Despite a slowdown in U.S. economic growth, the global economy remained resilient. Strong consumer and corporate demand, reasonably low inflation, improving labor markets, and moderate (though rising) global interest rates have provided steady support for global growth since the recovery began in 2002. Healthy economic growth led the European Central Bank to hike short-term interest rates twice during the period in the latest of seven-consecutive rate increases. The Bank of Japan also raised interest rates during the period, as unemployment fell to a nine-year low. 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 international team is dedicated to searching for companies to help drive investment performance. International Equity Total Returns For the six months ended May 31, 2007 (in U.S. dollars)* MSCI EM Index 17.50% MSCI Europe Index 16.13% MSCI EAFE Growth Index 14.78% MSCI EAFE Index 14.08% MSCI EAFE Value Index 13.37% MSCI World Free Index 12.25% MSCI Japan Index 5.72% *Total returns for periods less than one year are not annualized. - ------ 2 PERFORMANCE International Stock Total Returns as of May 31, 2007 Average Annual Returns Since Inception 6 months(1) 1 year Inception Date INVESTOR CLASS 13.65% 25.99% 22.52% 3/31/05 MSCI EAFE INDEX 14.08% 26.84% 23.84% -- (1) Total returns for periods less than one year are not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 3 International Stock Growth of $10,000 Over Life of Class $10,000 investment made March 31, 2005
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One-Year Returns Over Life of Class Periods ended May 31 2005* 2006 2007 Investor Class -2.10% 25.91% 25.99% MSCI EAFE Index -2.30% 28.24% 26.84% *From 3/31/05, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. 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. - ------ 4 PORTFOLIO COMMENTARY International Stock Portfolio Managers: Alex Tedder and Keith Creveling PERFORMANCE SUMMARY International Stock advanced 13.65%* during the six months ended May 31, 2007. Its benchmark, the MSCI EAFE Index, posted a 14.08% gain. The portfolio's results reflected operating expenses, while the index returns did not. As noted in the Market Perspective on page 2, economies worldwide enjoyed healthy growth during the period and contributed to gains in the portfolio and benchmark. Investor optimism was tempered somewhat, however, as governments and central banks moved to ease growth rates with interest rate hikes. Within the portfolio, stock selection in the information technology and consumer staples sectors hindered relative performance, while more effective stock selection in the financials and health care sectors helped boost the portfolio's relative returns. From a geographic perspective, underperforming stocks from the Netherlands and Sweden diminished relative returns, while effective security selection in the United Kingdom and an underweight stake in Japan, which trailed the benchmark, aided performance on a relative basis. TECH STOCKS SLUMPED Although every sector contributed positively on an absolute basis during the period, four lagged the benchmark, which led to underperformance on a relative basis. Two of the poorest performing stocks during the period came from the tech sector as pricing swings, currency volatility, and uncertainties in end-market demand destabilized earnings outlooks. Our stake in Samsung Electronics slumped amid inconsistent pricing in NAND memory chips, which are found in digital cameras and portable music players. The manufacturer of semiconductor chips and South Korea's largest exporter was also affected by a climb in the value of the won, the country's currency, against the U.S. dollar and the Japanese yen. Another holding that detracted from relative performance was contract manufacturer Hon Hai Precision of Taiwan. Although the company benefits from the popularity of Apple products such as the iPod, Hon Hai's stock drifted as fears of slowing growth in the U.S. grew. Top Ten Holdings as of May 31, 2007 % of % of net assets net assets as of as of 5/31/07 11/30/06 Groupe Danone 1.7% 1.6% Nintendo Co., Ltd. 1.6% 0.5% National Bank of Greece SA 1.6% 1.3% Total SA 1.5% 1.7% Roche Holding AG 1.5% 2.2% Burberry Group plc 1.4% 1.2% Credit Suisse Group 1.4% 1.2% AXA SA 1.4% 1.5% HSBC Holdings plc 1.4% -- Esprit Holdings Ltd. 1.4% 0.6% *Total returns for periods less than one year are not annualized. - ------ 5 International Stock INDUSTRIALS SPURRED ADVANCE Enhancing the portfolio's relative returns were two holdings within the industrials sector -- one of the best performers within the benchmark. Despite a late-period setback due to lower-than-expected quarterly earnings, Denmark's Vestas Wind Systems AS, the largest wind-power system developer in the world, advanced, and the portfolio benefited from its overweight position. The company reiterated its 2007 forecast for a 17% increase in annual revenues and a global market share goal of 35% by 2008. Also helping performance was Hochtief AG, a German construction and engineering firm. To counter lackluster results from its domestic construction division, the company has built profitable units across Asia and Australia. SELECT FINANCIALS THRIVED Notable stock selections in the financials sector included overweight positions in Swiss asset manager Julius Baer Holdings AG and National Bank of Greece. Julius Baer said operating profits rose 12% -- and net profits by 35% - -- in 2006 while operating expenses increased by just 1%. As it pushes to become the largest bank in southeast Europe and Turkey, National Bank of Greece announced it expects profits to expand by an average of more than 30% a year for the next three years. Both stocks also received lifts amid merger and acquisition speculation. STARTING POINT FOR NEXT REPORTING PERIOD The landscape continues to change for international investors: Although emerging economies continue to be the driver of growth worldwide, many are moving from export-driven growth to internal growth, based on consumption. Against this backdrop, we continue to believe that the outlook for large-cap growth companies remains very good. International Stock has broad exposure to high quality growth companies in a number of markets, and we believe that these will deliver solid returns, even in volatile market conditions. Types of Investments in Portfolio % of % of net assets net assets as of as of 5/31/07 11/30/06 Foreign Common Stocks 98.5% 98.0% Foreign Preferred Stocks 0.4% -- TOTAL EQUITY EXPOSURE 98.9% 98.0% Temporary Cash Investments 0.9% 2.1% Other Assets and Liabilities(1) 0.2% (0.1)% (1) Includes securities lending collateral and other assets and liabilities. Investments by Country as of May 31, 2007 % of % of net assets net assets as of as of 5/31/07 11/30/06 Japan 18.2% 16.3% United Kingdom 14.7% 17.2% Switzerland 11.7% 12.3% Germany 10.5% 5.4% France 9.8% 9.6% Australia 4.8% 3.8% Italy 4.0% 3.7% Norway 2.9% 2.3% Hong Kong 2.0% 2.2% Other Countries 20.3% 25.2% Cash and Equivalents(2) 1.1% 2.0% (2) Includes temporary cash investments, securities lending collateral and other assets and liabilities. - ------ 6 SCHEDULE OF INVESTMENTS International Stock MAY 31, 2007 (UNAUDITED) Shares ($ IN THOUSANDS) Value Common Stocks -- 98.5% AUSTRALIA -- 4.8% 63,182 BHP Billiton Ltd.(1) $ 1,649 14,647 CSL Ltd. 1,082 37,544 National Australia Bank Ltd. 1,323 54,592 QBE Insurance Group Ltd. 1,411 13,011 Rio Tinto Ltd.(1) 1,029 -------- 6,494 -------- AUSTRIA -- 0.9% 15,420 Erste Bank der Oesterreichischen Sparkassen AG(1)(2) 1,210 -------- BELGIUM -- 1.7% 9,799 KBC Groupe 1,352 4,820 Umicore 1,029 -------- 2,381 -------- CANADA -- 0.8% 24,762 Rogers Communications Inc. Cl B 1,027 -------- CZECH REPUBLIC -- 0.8% 20,814 CEZ AS(2) 1,063 -------- DENMARK -- 1.0% 18,601 Vestas Wind Systems AS(2) 1,307 -------- FINLAND -- 1.9% 8,493 Kone Oyj 508 24,574 Metso Oyj 1,367 25,781 Nokia Oyj 706 -------- 2,581 -------- FRANCE -- 9.8% 16,849 Accor SA(1) 1,567 4,438 ALSTOM Co.(2) 703 44,273 AXA SA(1) 1,935 14,414 Groupe Danone 2,258 5,520 PPR SA(1) 1,008 8,457 Schneider Electric SA 1,221 6,357 Societe Generale(1) 1,238 27,932 Total SA 2,105 15,211 Veolia Environnement(1) 1,273 -------- 13,308 -------- GERMANY -- 10.1% 12,965 adidas AG 828 6,003 Allianz SE 1,333 9,106 BASF AG 1,128 4,731 Continental AG 669 4,819 DaimlerChrysler AG 442 Shares ($ IN THOUSANDS) Value 6,554 Deutsche Boerse AG $ 1,551 9,267 Fresenius Medical Care AG & Co. KGaA 1,360 40,473 GEA Group AG(2) 1,305 9,623 Hochtief AG 1,115 27,020 KarstadtQuelle AG(2) 967 4,511 Linde AG(1)(2) 498 12,671 Q-Cells AG(1)(2) 1,057 8,204 SAP AG 393 8,194 Siemens AG 1,080 -------- 13,726 -------- GREECE -- 1.9% 13,980 Hellenic Telecommunications Organization SA(2) 446 35,616 National Bank of Greece SA(2) 2,128 -------- 2,574 -------- HONG KONG -- 2.0% 151,500 Esprit Holdings Ltd. 1,865 239,000 Li & Fung Ltd. 802 -------- 2,667 -------- IRELAND -- 1.6% 53,930 Anglo Irish Bank Corp. plc 1,266 22,841 Ryanair Holdings plc ADR(1)(2) 943 -------- 2,209 -------- ITALY -- 4.0% 40,270 Banco Popolare di Verona e Novara Scrl(1) 1,223 32,596 ENI SpA 1,153 14,592 Fiat SpA 418 22,438 Finmeccanica SpA 706 11,968 Luxottica Group SpA(1) 420 50,724 Saipem SpA(1) 1,585 -------- 5,505 -------- JAPAN -- 18.2% 9,000 AEON Mall Co., Ltd. 326 82,000 Bank of Yokohama Ltd. (The)(1) 613 20,900 Canon, Inc. 1,230 18,800 Daikin Industries Ltd. 687 7,300 Daito Trust Construction Co., Ltd. 387 7,400 Fanuc Ltd. 707 13,000 Ibiden Co. Ltd. 702 31,934 iShares MSCI Japan Index Fund(1) 467 95,000 Isuzu Motors Ltd. 463 17,600 JTEKT Corp. 313 - ------ 7 International Stock Shares ($ IN THOUSANDS) Value 123 KDDI Corp. $ 1,051 17,300 LAWSON Inc. 617 11,000 Makita Corp. 457 107,000 Marubeni Corp. 748 176,000 Mitsubishi Electric Corp. 1,610 61 Mitsubishi UFJ Financial Group, Inc. 701 2,900 Murata Manufacturing Co. Ltd. 205 6,200 Nintendo Co., Ltd. 2,168 94,000 Nippon Yusen Kabushiki Kaisha 867 6,410 ORIX Corp. 1,717 89,000 Osaka Gas Co. Ltd. 331 35,000 Sharp Corp. 670 15,900 Sony Corp. 916 113,000 Sumitomo Heavy Industries Ltd. 1,284 241,000 Sumitomo Metal Industries Ltd. 1,305 38,000 Sumitomo Realty & Development Co. Ltd. 1,436 111,000 Taisei Corp.(1) 366 59,000 Tokyo Tatemono Co. Ltd. 851 26,500 Toyota Motor Corp. 1,589 -------- 24,784 -------- MEXICO -- 1.0% 22,562 America Movil, SAB de CV ADR 1,366 -------- NETHERLANDS -- 1.6% 15,441 Heineken N.V. 900 22,549 ING Groep N.V. CVA 1,005 6,273 Royal Numico N.V. 312 -------- 2,217 -------- NORWAY -- 2.9% 33,734 Aker Kvaerner ASA 828 59,567 Statoil ASA(1) 1,627 31,418 Telenor ASA(1) 611 30,569 Yara International ASA(1) 886 -------- 3,952 -------- PEOPLE'S REPUBLIC OF CHINA -- 0.4% 210,500 China Merchants Bank Co. Ltd. Cl H 543 -------- RUSSIAN FEDERATION -- 0.6% 16,184 Mobile TeleSystems ADR(2) 877 -------- SINGAPORE -- 0.7% 132,000 Keppel Corp. Ltd. 954 -------- SOUTH AFRICA -- 0.6% 14,073 Anglo American plc 847 -------- Shares ($ IN THOUSANDS) Value SOUTH KOREA -- 0.2% 440 Samsung Electronics $ 254 -------- SPAIN -- 1.5% 40,710 Banco Bilbao Vizcaya Argentaria SA 1,029 17,025 Inditex SA 1,075 -------- 2,104 -------- SWEDEN -- 1.8% 26,791 Swedbank AB Cl A 987 384,256 Telefonaktiebolaget LM Ericsson Cl B 1,458 -------- 2,445 -------- SWITZERLAND -- 11.7% 69,207 ABB Ltd. 1,480 1,187 Actelion Ltd.(1)(2) 259 12,959 Adecco SA(1) 945 19,646 Compagnie Financiere Richemont SA Cl A 1,208 25,736 Credit Suisse Group 1,957 14,517 Holcim Ltd. 1,605 23,092 Julius Baer Holding AG(1) 1,757 1,598 Nestle SA 622 18,773 Novartis AG 1,055 11,114 Roche Holding AG 2,039 8,396 Syngenta AG 1,580 6,406 Synthes Inc. 798 10,169 UBS AG 663 -------- 15,968 -------- TAIWAN (REPUBLIC OF CHINA) -- 1.1% 175,600 Hon Hai Precision Industry Co., Ltd. 1,241 186,000 Quanta Computer Inc. 282 -------- 1,523 -------- TURKEY -- 0.2% 52,585 Turkiye Halk Bankasi AS(2) 343 -------- UNITED KINGDOM -- 14.7% 70,263 Barclays plc 1,004 110,823 BG Group plc 1,694 15,266 British American Tobacco plc 517 128,687 BT Group plc 839 145,433 Burberry Group plc 1,968 73,789 Capita Group plc 1,082 61,712 Carphone Warehouse Group plc 367 20,134 Daily Mail and General Trust plc A Shares 336 35,214 GlaxoSmithKline plc 913 - ------ 8 International Stock Shares ($ IN THOUSANDS) Value 103,951 HSBC Holdings plc $ 1,923 64,769 Informa plc 757 147,951 International Power plc 1,329 123,344 Man Group plc 1,437 14,698 Punch Taverns plc 391 24,841 Reckitt Benckiser plc 1,350 99,841 Royal Bank of Scotland Group plc 1,240 201,681 Tesco plc 1,831 360,138 Vodafone Group plc 1,126 -------- 20,104 -------- TOTAL COMMON STOCKS (Cost $111,128) 134,333 -------- Preferred Stocks -- 0.4% GERMANY -- 0.4% 3,413 Henkel KGaA 531 (Cost $543) -------- Principal Amount Temporary Cash Investments -- 0.9% $1,300 FHLB Discount Notes, 5.05%, 6/1/07(3) 1,300 (Cost $1,300) -------- Temporary Cash Investments - Securities Lending Collateral(4) -- 11.1% Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.28%, dated 5/31/07, due 6/1/07 (Delivery value $10,001) 10,000 Repurchase Agreement, Lehman Brothers Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.30%, dated 5/31/07, due 6/1/07 (Delivery value $5,094) 5,093 -------- TOTAL TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL (Cost $15,093) 15,093 -------- TOTAL INVESTMENT SECURITIES -- 110.9% (Cost $128,064) 151,257 -------- OTHER ASSETS AND LIABILITIES -- (10.9)% (14,836) -------- TOTAL NET ASSETS -- 100.0% $136,421 ======== Market Sector Diversification (as a % of net assets) Financials 26.1% Industrials 16.4% Consumer Discretionary 14.3% Materials 8.5% Energy 6.6% Consumer Staples 6.6% Information Technology 6.3% Health Care 5.5% Telecommunication Services 5.4% Utilities 2.9% Diversified 0.3% Cash and Equivalents* 1.1% * Includes temporary cash investments, securities lending collateral and other assets and liabilities. Notes to Schedule of Investments ADR = American Depositary Receipt CVA = Certificaten Van Aandelen FHLB = Federal Home Loan Bank MSCI = Morgan Stanley Capital International (1) Security, or a portion thereof, was on loan as of May 31, 2007. (2) Non-income producing. (3) The rate indicated is the yield to maturity at purchase. (4) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. As of May 31, 2007, securities with an aggregate value of $954, which represented 0.7% of total net assets were valued in accordance with alternative pricing procedures adopted by the Board of Directors. See Notes to Financial Statements. - ------ 9 PERFORMANCE International Discovery Total Returns as of May 31, 2007 Average Annual Returns 10 Since Inception 6 months(1) 1 year 5 years years Inception Date INVESTOR CLASS 22.34% 30.29% 23.65% 16.84% 17.48% 4/1/94 S&P/CITIGROUP EMI GROWTH WORLD EX-US 17.64% 29.45% 22.01% 9.43% 8.44%(2) -- Institutional Class 22.40% 30.53% 23.88% -- 17.71% 1/2/98 Advisor Class 22.13% 29.96% 23.36% -- 15.17% 4/28/98 (1) Total returns for periods less than one year are not annualized. (2) Since 3/31/94, the date nearest the Investor Class's inception for which data are available. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. 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. - ------ 10 International Discovery Growth of $10,000 Over 10 Years $10,000 investment made May 31, 1997
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One-Year Returns Over 10 Years Periods ended May 31 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Investor Class 36.97% -0.37% 63.12% -20.05% -7.80% -8.75% 40.25% 9.25% 58.75% 30.29% S&P/Citigroup EMI 6.18% -1.85% 21.21% -21.65% -8.01% -8.73% 42.23% 18.57% 35.69% 29.45% Growth World ex-US Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 11 PORTFOLIO COMMENTARY International Discovery Portfolio Managers: Mark Kopinski and Brian Brady PERFORMANCE SUMMARY International Discovery advanced 22.34%* during the six months ended May 31, 2007, compared with the 17.64% gain of its benchmark index, the S&P/Citigroup EMI Growth World ex-US. The portfolio also outperformed the 19.18%** average return of Morningstar's Foreign Small/Mid Growth category during the period. Since its inception on April 1, 1994, International Discovery has provided an average annualized return of 17.48%, versus 8.44% for its benchmark. The portfolio and its benchmark participated in the broad global market's advance during the period as investors benefited from the healthy economic conditions described in the Market Perspective on page 2. An overweight position and solid stock selection in the industrials sector helped spark the portfolio's relative outperformance, while investments in the telecommunication services and consumer discretionary sectors further enhanced relative gains. From a geographic standpoint, effective stock selection in Japan and Australia lifted relative returns. INDUSTRIALS LED THE WAY Macro conditions proved especially advantageous for stocks in the industrials sector, which tends to be more sensitive to economic developments. Among the portfolio's industrial holdings, two top contributors were Japan Steel Works and NGK Insulators, also of Japan. Japan Steel Works, which builds fabricating machinery for a number of industries, participated in a rally among suppliers to the nuclear power industry as officials in Texas announced plans to build two new power-generating reactors. NGK, which produces diverse insulation products, from porcelain insulators for high-tension power lines to materials used in DNA micro-array applications, upgraded its projections for net sales and profits and bumped up its dividend payment to shareholders. Elsewhere, France's Nexans, the world's largest producer of cables and wires, rose as it offered a steadily improving outlook. The company is striving to reach sales of 5 billion euros in 2009 by focusing on higher growth industries. Top Ten Holdings as of May 31, 2007 % of % of net assets net assets as of as of 5/31/07 11/30/06 Millicom International Cellular SA 2.9% 3.1% Japan Steel Works Ltd. (The) 2.5% 1.4% CSL Ltd. 2.5% 2.4% Boart Longyear Group 2.3% -- Nexans SA 2.3% 1.8% NGK Insulators Ltd. 2.2% 1.1% Michael Page International plc 2.1% 1.5% Lonza Group AG 2.0% 1.2% Kingspan Group plc 1.9% 1.8% Neopost SA 1.8% 2.3% * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. ** The one-, five- and ten-year average returns as of May 31, 2007, for Morningstar's Foreign Small/Mid Growth category were 28.30%, 23.27% and 14.34%, respectively. © 2007 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. - ------ 12 International Discovery OTHER STOCK-SPECIFIC GAINERS Two holdings that contributed to relative performance during the period were wireless telecommunications service provider Millicom International Cellular SA of Luxembourg and Australian biotechnology outfit CSL. Millicom serves about 16.5 million customers in 16 countries across South America, Central America, Asia, and Africa. During the period, the company reported exceptional subscriber and revenue growth and sold non-essential operations based in Pakistan. CSL, a leading developer of blood plasma products, increased its full-year profit projections by more than 10% and said it asked for a priority review of its flu vaccine in the U.S. A quick approval could allow CSL to market the vaccine in the U.S. this fall. LAGGARDS IN UTILITIES, FINANCIALS HURT Detractors from relative performance included select positions within the utilities and financial sectors, which ranked among the poorest in the portfolio during the period. From a geographic perspective, an underweight stake in South Korea, which experienced significant gains, diminished relative performance. Within the financials space, SBI Holdings of Japan tumbled despite an investment in the company by Wall Street giant Goldman Sachs. Among utilities, Enagas SA, a Spanish natural gas distributor, underperformed after reports that the government may trim the company's regulated profit margin levels. STARTING POINT FOR NEXT REPORTING PERIOD 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. Over the past six months, we have continued to find an abundance of growth potential in the industrials and materials sectors. This has led us to build relatively overweight positions in both sectors. Conversely, we saw less opportunity in the financials sector and scaled back the portfolio's exposure there, maintaining a relative underweight position. From a country point of view, we continue to find attractive growth opportunities in Australia and have been building a relatively overweight position in that region. In the United Kingdom, we are underweight on a relative basis. Types of Investments in Portfolio % of % of net assets net assets as of as of 5/31/07 11/30/06 Foreign Common Stocks 99.0% 96.4% Temporary Cash Investments -- 1.5% Other Assets and Liabilities(1) 1.0% 2.1% (1) Includes securities lending collateral and other assets and liabilities. Investments by Country as of May 31, 2007 % of % of net assets net assets as of as of 5/31/07 11/30/06 Australia 12.1% 7.1% United Kingdom 11.8% 12.8% Japan 10.5% 10.4% Germany 8.3% 5.0% Canada 7.3% 2.4% Switzerland 6.0% 5.3% France 5.6% 4.5% Denmark 4.1% 3.3% People's Republic of China 3.4% 2.8% Italy 3.3% 5.8% Netherlands 3.2% 2.8% Other Countries 23.4% 34.2% Cash and Equivalents(2) 1.0% 3.6% (2) Includes temporary cash investments, securities lending collateral and other assets and liabilities. - ------ 13 SCHEDULE OF INVESTMENTS International Discovery MAY 31, 2007 (UNAUDITED) Shares ($ IN THOUSANDS) Value Common Stocks -- 99.0% AUSTRALIA -- 12.1% 1,174,100 Babcock & Brown Ltd. $ 31,267 22,421,700 Boart Longyear Group(1) 40,663 1,949,300 Challenger Financial Services Group Ltd. 9,524 597,900 CSL Ltd. 44,155 1,059,600 Lend Lease Corp. Ltd. 17,461 5,853,200 Oxiana Ltd. 15,850 1,246,800 Paladin Resources Ltd.(1) 9,034 885,000 Transfield Services Ltd. 8,912 1,874,700 Transpacific Industries Group Ltd. 21,377 749,300 WorleyParsons Ltd. 18,478 ---------- 216,721 ---------- AUSTRIA -- 2.2% 194,800 Andritz AG 13,183 192,200 Meinl European Land Ltd.(1) 5,487 283,200 Wienerberger AG(2) 21,376 ---------- 40,046 ---------- BELGIUM -- 1.3% 107,100 Umicore 22,857 ---------- CANADA -- 7.3% 360,700 Agrium Inc. 13,934 1,512,200 CAE Inc. 19,569 1,102,800 Eldorado Gold Corporation(1) 6,300 319,800 Finning International Inc. 9,066 768,400 Gildan Activewear Inc.(1) 26,727 1,650,500 Ivanhoe Mines Ltd.(1) 23,256 550,800 Petrobank Energy & Resources Ltd.(1) 13,416 234,100 Silver Standard Resources Inc.(1)(2) 8,842 782,200 Silver Wheaton Corp.(1) 8,945 ---------- 130,055 ---------- DENMARK -- 4.1% 280,300 FLSmidth & Co. AS 22,782 330,100 Genmab AS(1) 23,759 140,877 Topdanmark AS(1) 26,030 ---------- 72,571 ---------- Shares ($ IN THOUSANDS) Value EGYPT -- 0.3% 538,300 Orascom Hotels & Development $ 5,202 ---------- FINLAND -- 0.8% 421,900 Nokian Renkaat Oyj 14,702 ---------- FRANCE -- 5.6% 153,800 Bourbon SA(1)(2) 11,271 42,267 Iliad SA 4,265 218,700 Neopost SA 32,470 251,300 Nexans SA 40,536 125,214 Nexity 11,287 ---------- 99,829 ---------- GERMANY -- 8.3% 306,600 GEA Group AG(1) 9,888 212,200 IVG Immobilien AG 9,179 111,400 K+S AG(2) 15,993 377,100 Kloeckner & Co. AG(1) 27,540 855,500 Premiere AG(1) 20,834 147,000 SolarWorld AG(2) 13,429 917,000 United Internet AG(2) 18,025 361,600 Wacker Construction Equipment AG(1) 12,742 205,200 Wincor Nixdorf AG 20,403 ---------- 148,033 ---------- HONG KONG -- 0.5% 1,304,000 Parkson Retail Group Ltd. 8,776 ---------- INDIA -- 0.3% 50,361 ABB India Ltd. 5,732 ---------- IRELAND -- 2.7% 435,400 C&C Group plc 7,246 154,215 ICON plc ADR(1)(2) 7,154 1,119,200 Kingspan Group plc 33,279 ---------- 47,679 ---------- ITALY -- 3.3% 1,179,700 ASM SpA(2) 7,516 903,700 Geox SpA 16,354 1,893,400 Hera SpA(2) 8,565 98,954 Pirelli & C. Real Estate SpA 6,917 798,600 Prysmian SpA(1) 19,975 ---------- 59,327 ---------- - ------ 14 International Discovery Shares ($ IN THOUSANDS) Value JAPAN -- 10.5% 375,000 DOWA HOLDINGS Co., Ltd. $ 3,615 3,152,000 Japan Steel Works Ltd. (The) 45,068 437,000 Makita Corp. 18,171 418,000 Mitsumi Electric Co., Ltd. 13,225 1,645,000 NGK Insulators Ltd. 38,459 1,000 ORIX JREIT Inc. 9,615 2,300 Osaka Securities Exchange Co. Ltd. 9,942 142,000 Senshu Bank Ltd. (The) 341 480,700 Shinko Electric Industries 9,224 356,000 Tadano Ltd. 5,357 701,000 Taiyo Yuden Co. Ltd. 14,545 1,358,000 Tokyo Tatemono Co. Ltd. 19,585 ---------- 187,147 ---------- LUXEMBOURG -- 2.9% 616,400 Millicom International Cellular SA(1)(2) 52,443 ---------- MEXICO -- 1.6% 2,295,200 Corporacion GEO, SAB de CV Series B(1) 13,025 316,700 Grupo Aeroportuario del Pacifico, SAB de CV ADR 15,563 ---------- 28,588 ---------- NETHERLANDS -- 3.2% 200,900 Fugro N.V. CVA 11,772 952,500 Koninklijke BAM Groep N.V.(2) 28,309 290,300 Koninklijke Vopak N.V. 17,650 ---------- 57,731 ---------- NORWAY -- 1.6% 482,700 Petroleum Geo-Services ASA(1) 12,127 847,700 SeaDrill Ltd.(1) 16,343 ---------- 28,470 ---------- PEOPLE'S REPUBLIC OF CHINA -- 3.4% 16,270,901 Agile Property Holdings Ltd. 17,941 2,605,000 China Mengniu Dairy Co. Ltd. 8,507 1,260,000 Dongfang Electrical Machinery Co. Ltd. H Shares 5,567 631,300 Focus Media Holding Ltd. ADR(1)(2) 27,922 ---------- 59,937 ---------- SINGAPORE -- 1.2% 1,684,000 Neptune Orient Lines Ltd. 5,050 8,437,000 Yanlord Land Group Ltd. 15,617 ---------- 20,667 ---------- Shares ($ IN THOUSANDS) Value SOUTH AFRICA -- 0.6% 336,800 Aquarius Platinum Ltd. $ 10,567 ---------- SOUTH KOREA -- 1.8% 407,000 Hyundai Steel Co. 24,336 7,233,000 STX Pan Ocean Co. Ltd. 7,835 ---------- 32,171 ---------- SPAIN -- 1.6% 448,000 Tecnicas Reunidas SA 28,318 ---------- SWEDEN -- 1.6% 270,500 Hexagon AB Cl B(2) 15,245 483,900 Lindab International AB 13,566 ---------- 28,811 ---------- SWITZERLAND -- 6.0% 64,000 Basilea Pharmaceutica AG(1) 14,600 76,000 Geberit AG 13,275 6,300 Lindt & Spruengli AG 16,712 368,000 Lonza Group AG 36,373 9,200 Sika AG 18,269 6,700 Sulzer AG 8,602 ---------- 107,831 ---------- TAIWAN (REPUBLIC OF CHINA) -- 2.4% 2,018,933 Catcher Technology Co. Ltd. 19,251 3,345,000 Coretronic Corp. 5,286 7,438,000 Realtek Semiconductor Corp. 19,025 ---------- 43,562 ---------- UNITED KINGDOM -- 11.8% 764,200 Aggreko plc 8,558 476,200 AVEVA Group plc 8,884 273,000 Berkeley Group Holdings plc 10,224 2,824,800 Carphone Warehouse Group plc 16,803 900,900 Cookson Group plc 12,769 833,900 Croda International plc 11,415 4,213,500 Galiform plc(1) 12,803 98,829 Homeserve plc 3,662 2,846,500 IG Group Holdings plc 18,637 3,323,900 Michael Page International plc 37,537 641,900 Punch Taverns plc 17,077 310,415 Rotork plc 5,644 1,844,300 Serco Group plc 17,369 776,000 SIG plc 21,813 369,300 WS Atkins plc 8,195 ---------- 211,390 ---------- TOTAL COMMON STOCKS (Cost $1,276,622) 1,769,163 ---------- Shares ($ IN THOUSANDS) Value Temporary Cash Investments - Securities Lending Collateral(3) -- 9.5% Repurchase Agreement, Citigroup Global Markets Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.30%, dated 5/31/07, due 6/1/07 (Delivery value $170,685) (Cost $170,660) $ 170,660 ---------- TOTAL INVESTMENT SECURITIES -- 108.5% (Cost $1,447,282) 1,939,823 ---------- OTHER ASSETS AND LIABILITIES -- (8.5)% (151,693) ---------- TOTAL NET ASSETS -- 100.0% $1,788,130 ========== Market Sector Diversification (as a % of net assets) Industrials 38.0% Materials 12.3% Consumer Discretionary 12.3% Financials 11.0% Information Technology 9.3% Energy 5.2% Health Care 5.0% Telecommunication Services 3.2% Consumer Staples 1.8% Utilities 0.9% Cash and Equivalents* 1.0% * Includes securities lending collateral and other assets and liabilities. Notes to Schedule of Investments ADR = American Depositary Receipt CVA = Certificaten Van Aandelen (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of May 31, 2007. (3) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. As of May 31, 2007, securities with an aggregate value of $28,502, which represented 1.6% of total net assets were valued in accordance with alternative pricing procedures adopted by the Board of Directors. See Notes to Financial Statements. - ------ 16 PERFORMANCE Emerging Markets Total Returns as of May 31, 2007 Average Annual Returns Since Inception 6 months(1) 1 year 5 years Inception Date INVESTOR CLASS 21.72% 46.65% 26.20% 12.34% 9/30/97 MSCI EM INDEX 17.50% 38.59% 27.45% 10.28% -- Institutional Class 21.95% 47.01% 26.46% 20.14% 1/28/99 Advisor Class 21.76% 46.44% 25.92% 16.41% 5/12/99 C Class 12/18/01 No sales charge* 21.20% 45.32% 25.02% 24.69% With sales charge* 20.20% 45.32% 25.02% 24.69% *Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. Please see the Share Class Information page for more about the applicable sales charges for each share class. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. (1) Total returns for periods less than one year are not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 17 Emerging Markets Growth of $10,000 Over Life of Class $10,000 investment made September 30, 1997
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One-Year Returns Over Life of Class Periods ended May 31 1998* 1999 2000 2001 2002 2003 2004 2005 2006 2007 Investor Class -15.00% 1.88% 44.57% -22.82% -0.43% -17.03% 41.04% 23.34% 51.35% 46.65% MSCI EM Index -25.24% 3.46% 17.75% -21.60% 7.28% -6.40% 40.48% 30.99% 40.90% 38.59% *From 9/30/97, the Investor Class's inception date. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. Investing in emerging markets may accentuate these risks. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the index are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the index do not. - ------ 18 PORTFOLIO COMMENTARY Emerging Markets Portfolio Managers: Mark On and Patricia Ribeiro On May 3, 2007, Mark On joined Patricia Ribeiro as co-manager of Emerging Markets. On, who was also appointed chief investment officer of American Century's International Equity discipline, filled the vacancy created when a former portfolio manager left the company on March 9, 2007. PERFORMANCE SUMMARY Emerging Markets gained 21.72%* during the six months ended May 31, 2007, compared to the 17.50% advance of its benchmark, the MSCI EM Index. Emerging Markets also outperformed the 18.76%** average return of Morningstar's Diversified Emerging Markets category during the period. As we mentioned in the Market Perspective on page 2, expanding economic growth rates in developing countries proved beneficial for stocks in the portfolio and benchmark and led to solid gains. On a sector basis, energy and information technology stocks contributed notably to the portfolio's relative outperformance while underweight stakes in the materials and financials sectors detracted from relative gains. IPOS CONTRIBUTED TO GAINS During the reporting period, the portfolio derived a meaningful portion of its returns from investments in initial public offerings. We participate selectively in initial public offerings, and only if the offering fits our process. Notable contributors included Dufry South America Ltd., an operator of duty-free stores in airports and on cruise ships; China's Yangzijiang Shipbuilding Holdings Ltd., a cargo vessel manufacturer; and mining concern China Coal Energy Company Ltd. RUSSIAN STRATEGY PROVED EFFECTIVE The portfolio's top relative country contributors were Russia, Mexico, and Taiwan. Our relative outperformance in Russia stemmed from a mixture of investment choices. On one hand, we benefited from an overweight stake in RAO "UES of Russia," the Federation-wide power utility that is being split into 14 regional entities and six wholesale power generators. On the other hand, our decision to maintain underweight stakes in the natural gas producer OAO Gazprom, and oil concern LUKOIL proved effective as both stocks slumped. OTHER STOCK-SPECIFIC CONTRIBUTORS Two leading stocks during the period were Axtel SAB of Mexico and Realtek Semiconductor Corp. of Taiwan. Axtel SAB, the second-largest wireline provider of telecommunication services in Mexico, expanded its reach from 12 to 17 cities Top Ten Holdings as of May 31, 2007 % of % of net assets net assets as of as of 5/31/07 11/30/06 Petroleo Brasileiro SA ADR 2.0% 1.9% Samsung Electronics 1.8% 1.6% Telkom SA Ltd. 1.7% -- Cia Vale do Rio Doce ADR 1.7% -- America Movil, SAB de CV ADR 1.7% -- Nokian Renkaat Oyj 1.6% 1.6% Shinsegae Co. Ltd. 1.5% 1.4% Amorepacific Corp. 1.5% 0.9% Turkiye Garanti Bankasi AS 1.5% 0.6% Unified Energy System 1.4% 2.1% * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. ** The one- and five-year average returns as of May 31, 2007, for Morningstar's Diversified Emerging Markets category were 39.99% and 26.09%, respectively. © 2007 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. - ------ 19 Emerging Markets during 2006. The company, which derives about 80% of its revenues from corporate clients, is planning to add six to eight markets in 2007. Taiwan-based chipmaker Realtek Semiconductor announced it will supply parts for an Apple Inc. product that enables Internet downloads to be shown on televisions. MATERIALS, APPAREL, TECH NAMES SLOWED ADVANCE The materials sector was the largest detractor to relative performance on a sector basis. Specifically, our underweight position in that sector as well as our underweight position in Cia Vale do Rio Doce of Brazil, a stock that performed well over the period, hindered performance. Another detractor was Win Hanverky Holdings, a Hong Kong-based manufacturer and distributor of sportswear, which reported softening profit margins in 2006. Additionally, the portfolio's overweight stake in Taiwanese notebook computer maker Asustek Computer underperformed amid disappointing sales of Microsoft's Windows Vista operating system. Asustek also slumped after announcing it was suspending a joint venture with a competitor to manufacture motherboard circuits. STARTING POINT FOR NEXT REPORTING PERIOD 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 May 31, 2007, we continued to see opportunities in Chile and Brazil, as reflected by our overweight positions in those countries compared with the fund's benchmark. Conversely, the portfolio holds underweight positions in Russia, Israel, and India. From a sector point of view, we continue to find attractive growth opportunities in the consumer discretionary sector, while we maintain our underweight position in the energy and financials sectors. Types of Investments in Portfolio % of % of net assets net assets as of as of 5/31/07 11/30/06 Foreign Common Stocks and Rights 96.5% 92.1% Foreign Preferred Stocks 1.4% 2.7% TOTAL EQUITY EXPOSURE 97.9% 94.8% Temporary Cash Investments 2.6% 4.0% Other Assets and Liabilities(1) (0.5)% 1.2% (1) Includes securities lending collateral and other assets and liabilities. Investments by Country as of May 31, 2007 % of % of net assets net assets as of as of 5/31/07 11/30/06 South Korea 14.9% 12.1% Brazil 13.3% 11.7% Taiwan (Republic of China) 11.5% 12.1% South Africa 8.0% 5.3% Mexico 6.6% 6.2% Russian Federation 6.5% 9.3% People's Republic of China 5.8% 5.6% India 5.0% 1.9% Hong Kong 4.2% 6.2% Chile 3.6% 4.4% Malaysia 3.2% 1.4% Other Countries 15.3% 18.6% Cash and Equivalents(2) 2.1% 5.2% (2) Includes temporary cash investments, securities lending collateral and other assets and liabilities. - ------ 20 SCHEDULE OF INVESTMENTS Emerging Markets MAY 31, 2007 (UNAUDITED) Shares ($ IN THOUSANDS) Value Common Stocks and Rights -- 96.5% ARGENTINA -- 0.5% 123,487 Banco Macro SA ADR $ 4,411 -------- BRAZIL -- 11.9% 726,830 ALL - America Latina Logistica SA 9,287 219,100 Bematech Industria e Comercio de Equipamentos Electronicos SA(1) 2,298 319,889 Cia Vale do Rio Doce ADR 14,539 272,727 Dufry South America Ltd. BDR(1) 6,134 340,353 Equatorial Energia SA 3,454 317,963 Gafisa SA 5,335 917,292 JBS SA(1) 3,869 717,840 Lojas Renner SA 11,946 550,454 LPS Brasil - Consultoria de Imoveis SA(1) 6,604 328,300 Lupatech SA 6,777 161,619 Petroleo Brasileiro SA ADR 17,480 562,796 Santos-Brasil SA 7,878 210,818 Totvs SA 7,227 -------- 102,828 -------- CHILE -- 3.6% 2,522,573 Cencosud SA 10,175 709,607 Compania Cervecerias Unidas SA 4,995 1,554,437 La Polar SA 8,902 24,460 LAN Airlines SA ADR(2) 1,967 1,524 LAN Airlines SA Rights(2) -- 7,452,009 Masisa SA 2,035 2,296,273 Ripley Corp. SA 3,325 -------- 31,399 -------- CZECH REPUBLIC -- 1.9% 169,290 CEZ AS(1) 8,650 40,740 Komercni Banka AS 7,458 -------- 16,108 -------- FINLAND -- 1.6% 397,557 Nokian Renkaat Oyj(2) 13,854 -------- HONG KONG -- 4.2% 171,673 China Mobile Ltd. ADR 7,969 6,807,000 China Yurun Food Group Ltd.(2) 8,194 1,696,000 FU JI Food and Catering Services Holdings Ltd.(2) 5,799 1,338,000 Parkson Retail Group Ltd.(2) 9,005 793,000 Vtech Holdings Ltd. 5,789 -------- 36,756 -------- Shares ($ IN THOUSANDS) Value HUNGARY -- 0.5% 34,795 MOL Hungarian Oil and Gas Nyrt $ 4,488 -------- INDIA -- 5.0% 38,500 ABB India Ltd. 4,382 62,772 Bharat Heavy Electricals Ltd. 2,175 233,183 ICICI Bank Ltd. ADR(2) 11,088 367,300 JSW Steel Ltd. 5,515 670,242 Reliance Communication Ventures Ltd.(1) 8,384 465,600 Rolta India Ltd. 5,304 214,790 Tata Consultancy Services Ltd. 6,430 -------- 43,278 -------- INDONESIA -- 2.5% 4,996,500 PT Astra International Tbk 9,283 24,086,000 PT Bank Mandiri Tbk 8,868 3,522,500 PT Telekomunikasi Indonesia Tbk 3,811 -------- 21,962 -------- KAZAKHSTAN -- 0.6% 260,888 KazMunaiGas Exploration Production GDR(1) 5,147 -------- MALAYSIA -- 3.2% 9,141,000 AirAsia Bhd(1) 5,272 2,473,000 Bumiputra - Commerce Holdings Bhd 8,659 1,791,000 Kuala Lumpur Kepong Bhd 7,062 822,100 Malaysian Plantations Bhd(1) 702 748,800 Tanjong plc 3,988 829,000 Top Glove Corp. Bhd(1) 2,110 -------- 27,793 -------- MEXICO -- 6.6% 239,643 America Movil, SAB de CV ADR 14,511 1,918,547 Axtel, SAB de CV(1)(2) 9,985 1,257,114 Corporacion GEO, SAB de CV Series B(1) 7,134 1,280,398 Corporacion Moctezuma, SAB de CV 3,815 247,268 Grupo Aeroportuario del Pacifico, SAB de CV ADR 12,151 1,179,215 Grupo Financiero Banorte, SAB de CV 5,511 997,572 Urbi Desarrollos Urbanos, SAB de CV(1) 4,271 -------- 57,378 -------- PAKISTAN -- 0.8% 340,975 Oil & Gas Development Co. Ltd. GDR 6,768 -------- - ------ 21 Emerging Markets Shares ($ IN THOUSANDS) Value PEOPLE'S REPUBLIC OF CHINA -- 5.8% 3,506,000 Agile Property Holdings Ltd. $ 3,866 9,684,000 China Construction Bank Cl H(2) 5,804 1,581,000 China Merchants Bank Co. Ltd. Cl H 4,080 1,918,000 China National Building Material Co. Ltd. Cl H(2) 2,776 7,716,000 China Petroleum & Chemical Corp. Cl H(2) 8,617 137,939 Focus Media Holding Ltd. ADR(1)(2) 6,101 715,000 Haitian International Holdings Ltd.(1) 531 4,677,314 Nine Dragons Paper Holdings Ltd.(2) 9,787 1,668,000 PetroChina Co. Ltd. Cl H 2,183 3,292,000 Wumart Stores Inc. Cl H(2) 2,320 3,645,000 Yangzijiang Shipbuilding Holdings Ltd.(1)(2) 4,100 -------- 50,165 -------- PHILIPPINES -- 1.2% 141,903,200 Filinvest Land Inc.(1) 5,891 9,129,300 Robinsons Land Corp. 3,948 -------- 9,839 -------- POLAND -- 1.3% 462,490 Agora SA 7,537 225,681 Globe Trade Centre SA(1) 3,924 -------- 11,461 -------- RUSSIAN FEDERATION -- 6.5% 132,504 CTC Media Inc.(1) 3,388 69,457 LUKOIL 5,272 123,110 Mobile TeleSystems ADR(1) 6,670 266,383 OAO TMK GDR(1) 9,723 94,288 OJSC Pharmstandard GDR(1)(2) 1,560 1,470 Sberbank(1) 5,204 321,339 Sistema Hals GDR(1)(2) 4,129 10,139,953 Unified Energy System(1) 12,543 254,752 X5 Retail Group N.V. GDR(1) 7,655 -------- 56,144 -------- SINGAPORE -- 2.2% 6,186,000 Midas Holdings Ltd. 8,915 5,298,000 Yanlord Land Group Ltd.(2) 9,807 -------- 18,722 -------- SOUTH AFRICA -- 8.0% 132,897 Anglo American plc 7,944 1,057,731 Aspen Pharmacare Holdings Ltd. 5,790 269,286 Barloworld Ltd. 7,465 Shares ($ IN THOUSANDS) Value 132,546 Impala Platinum Holdings Limited(2) $ 4,056 282,954 Kumba Iron Ore Ltd. 7,665 383,537 Murray & Roberts Holdings Ltd. 3,633 2,651,144 Network Healthcare Holdings Ltd.(2) 5,768 86,689 Pretoria Portland Cement Co. Ltd. 6,145 326,735 Sappi Ltd. 6,101 623,378 Telkom SA Ltd. 15,006 -------- 69,573 -------- SOUTH KOREA -- 14.9% 15,399 Amorepacific Corp. 12,940 198,240 GS Holdings Corp. 10,145 533,200 Hankook Tire Co. Ltd. 8,588 40,480 Hyundai Department Store Co. Ltd. 4,993 23,700 Hyundai Heavy Industries Co., Ltd. 8,094 85,000 Korean Air Lines Co., Ltd. 5,037 444,800 LG Dacom Corp. 10,782 319,600 LIG Non-Life Insurance Co., Ltd. 6,198 30,990 MegaStudy Co., Ltd. 5,753 103,005 Modetour Network Inc. 4,605 24,522 POSCO 11,783 26,980 Samsung Electronics 15,551 191,511 Shinhan Financial Group Co., Ltd. 11,822 18,430 Shinsegae Co. Ltd. 13,205 -------- 129,496 -------- TAIWAN (REPUBLIC OF CHINA) -- 11.5% 4,536,490 Asia Cement Corp. 5,067 6,073,460 China Steel Corp. 7,078 4,084,640 Chinatrust Financial Holding Co. 3,097 2,148,000 Gemtek Technology Corp. 6,028 569,360 Himax Technologies Inc. ADR(1)(2) 2,881 1,682,000 Hon Hai Precision Industry Co., Ltd. 11,888 647,000 MediaTek Inc. 10,243 2,233,000 Merry Electronics Co. Ltd. 8,044 3,762,000 Realtek Semiconductor Corp. 9,623 545,000 Richtek Technology Corp.(1) 6,434 8,182,247 Shin Kong Financial Holding Co. Ltd. 8,645 5,936,000 U-Ming Marine Transport Corp.(1) 10,566 6,210,000 Wistron Corp. 10,489 100,083 -------- - ------ 22 Emerging Markets Shares ($ IN THOUSANDS) Value TURKEY -- 2.2% 966,340 Turk Hava Yollari Anonim Ortakligi(1) $ 6,161 2,308,895 Turkiye Garanti Bankasi AS 12,705 -------- 18,866 -------- TOTAL COMMON STOCKS AND RIGHTS (Cost $613,794) 836,519 -------- Preferred Stocks -- 1.4% BRAZIL -- 1.4% 116,528 Cia Brasileira de Distribuicao Grupo Pao de Acucar ADR(2) 3,929 35,330,000 Companhia de Gas de Sao Paulo Cl A 8,209 -------- TOTAL PREFERRED STOCKS (Cost $8,363) 12,138 -------- Principal Amount Temporary Cash Investments -- 2.6% $7,300 FHLB Discount Notes, 5.05%, 6/1/07(3) 7,300 Repurchase Agreement, Bank of America Securities, LLC, (collateralized by various U.S. Treasury obligations, 1.875%-3.625%, 7/15/14-4/15/28, valued at $16,264), in a joint trading account at 5.00%, dated 5/31/07, due 6/1/07 (Delivery value $15,602) 15,600 -------- TOTAL TEMPORARY CASH INVESTMENTS (Cost $22,900) 22,900 -------- Temporary Cash Investments - Securities Lending Collateral(4) -- 8.4% Repurchase Agreement, Deutsche Bank AG, (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.30%, dated 5/31/07, due 6/1/07 (Delivery value $72,513) (Cost $72,502) 72,502 -------- TOTAL INVESTMENT SECURITIES -- 108.9% (Cost $717,559) 944,059 -------- OTHER ASSETS AND LIABILITIES -- (8.9)% (77,381) -------- TOTAL NET ASSETS -- 100.0% $866,678 ======== Market Sector Diversification (as a % of net assets) Consumer Discretionary 16.2% Financials 15.7% Industrials 12.0% Information Technology 11.6% Materials 10.9% Telecommunication Services 8.9% Consumer Staples 8.6% Energy 8.0% Utilities 4.2% Health Care 1.8% Cash and Equivalents* 2.1% * Includes temporary cash investments, securities lending collateral and other assets and liabilities. Notes to Schedule of Investments ADR = American Depositary Receipt BDR = Brazilian Depositary Receipt FHLB = Federal Home Loan Bank GDR = Global Depositary Receipt OJSC = Open Joint Stock Company (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of May 31, 2007. (3) The rate indicated is the yield to maturity at purchase. (4) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. As of May 31, 2007, securities with an aggregate value of $22,822, which represented 2.6% of total net assets were valued in accordance with alternative pricing procedures adopted by the Board of Directors. See Notes to Financial Statements. - ------ 23 PERFORMANCE International Opportunities Total Returns as of May 31, 2007 Average Annual Returns Since Inception 6 months(1) 1 year 5 years Inception Date INVESTOR CLASS 28.32% 33.53% 29.73% 27.16% 6/1/01 S&P/CITIGROUP EMI GROWTH WORLD EX-US 17.64% 29.45% 22.01% 16.40%(2) -- Institutional Class 28.47% 33.89% -- 40.37% 1/9/03 (1) Total returns for periods less than one year are not annualized. (2) Since 5/31/01, the date nearest the Investor Class's inception for which data are available. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. 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. - ------ 24 International Opportunities Growth of $10,000 Over Life of Class $10,000 investment made June 1, 2001
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One-Year Returns Over Life of Class Periods ended May 31 2002* 2003 2004 2005 2006 2007 Investor Class 15.00% -5.48% 62.50% 22.00% 46.95% 33.53% S&P/Citigroup EMI Growth World ex-US -8.01% -8.73% 42.23% 18.57% 35.69% 29.45% *From 6/1/01, the Investor Class's inception date. Index data from 5/31/01, the date nearest the Investor Class's inception for which data are available. Not annualized. Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. International investing involves special risks, such as political instability and currency fluctuations. 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. - ------ 25 PORTFOLIO COMMENTARY International Opportunities Portfolio Managers: Federico Laffan and Trevor Gurwich PERFORMANCE SUMMARY International Opportunities gained 28.32%* during the six months ended May 31, 2007. By comparison, its benchmark index, the S&P/Citigroup EMI Growth World ex-US, advanced 17.64%. The portfolio also outperformed the 19.18%** average return of Morningstar's Foreign Small/Mid Growth category during the period. Since its inception on June 1, 2001, International Opportunities has provided an average annualized return of 27.16%, compared with 16.40% for the benchmark.*** During the most recent period, economic prosperity around the globe, as described on the Market Perspective on page 2, generally proved advantageous for equities. Small-cap stocks helped lead the broader rally as the portfolio and its benchmark--both comprised entirely of small-cap stocks -- outpaced the MSCI EAFE and MSCI EM indexes. The portfolio's performance versus the benchmark was propelled by very effective stock selection in the consumer discretionary and healthcare sectors, along with solid investments in Japan, Singapore, and Spain. Meanwhile, lagging stocks in Australia, exposure to select securities in India, and underperforming stocks in the utilities sector all weighed on relative returns to some extent. CONSUMER DURABLES FUEL ADVANCE Within the consumer discretionary sector, select holdings from the household durables group significantly enhanced relative performance. Most notably, overweight stakes in Sweden's JM AB and Schulthess Group AG of Switzerland paced gains. JM, a homebuilder that focuses on Sweden, Norway, Denmark, Finland, and Belgium, announced improving revenues and profits in 2006. The stock also received a lift from an encouraging outlook for Europe's housing market. Strong 2006 results similarly boosted Schulthess Group AG, a manufacturer of household appliances. Having immediately benefited from a late-2005 acquisition of a German air conditioning company, management said it is exploring additional acquisition prospects in the heating and cooling industry. Top Ten Holdings as of May 31, 2007 % of % of net assets net assets as of as of 5/31/07 11/30/06 Nexans SA 2.2% 1.9% Southern Cross Healthcare Ltd. 1.9% 0.6% Vossloh AG 1.8% -- Grifols SA 1.6% 1.6% IG Group Holdings plc 1.6% 1.6% Ementor ASA 1.6% 1.1% Azimut Holding SpA 1.6% 1.5% Software AG 1.6% 2.0% China National Building Material Co. Ltd. Cl H 1.6% 1.1% Midas Holdings Ltd. 1.5% -- * All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. ** The one- and five-year average returns as of May 31, 2007, for Morningstar's Foreign Small/Mid Growth category were 28.30% and 23.27%, respectively. © 2007 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. *** Index data are from May 31, 2001, the date nearest the Investor Class's inception for which data are available. - ------ 26 International Opportunities EUROPEAN HEALTHCARE NAMES HELPED Although the healthcare sector was not a top performer within the benchmark, select names within the sector proved advantageous for the portfolio. Two stocks that ranked among the leading individual contributors were Grifols SA of Spain and Southern Cross Healthcare Group Ltd. of the United Kingdom. Grifols, the second-largest plasma collection company in the world, experienced a 23.8% jump in revenues and a 29.2% increase in cash flow levels during 2006. With nearly 75% of the company's business originating in non-Spain markets, management decided to focus on its U.S. business, where 2006 sales rose 62.7%. To help facilitate the U.S. emphasis, the company announced a significant expansion of its capacity in the country. Southern Cross reported positive results, including a 17% gain in six-month revenues, as it extended its reach as the largest nursing home company in the United Kingdom. MINING, REAL ESTATE POSITIONS WEIGHED Positions that detracted from relative returns during the period were overweight stakes in Australian mining company Perilya and Japanese real estate developer Es-Con. Perilya, which produces zinc and lead, dropped despite rising prices for both metals as it reduced its 2007 zinc production forecast following a fatal accident at one of its mines. Es-Con sagged after missing net income expectations for the recently completed fiscal year. STARTING POINT FOR NEXT REPORTING PERIOD 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 May 31, 2007, we continued to see opportunities in Norway, Singapore, Italy, and China, as reflected by our overweight positions in those countries compared with the fund's benchmark. At the same time, we maintained underweight positions in the United Kingdom, Canada, and Australia. On a sector basis, we held an overweight position on a relative basis in industrials and held underweight positions in the materials and financials sectors. Types of Investments in Portfolio % of % of net assets net assets as of as of 5/31/07 11/30/06 Foreign Common Stocks 97.4% 95.4% Foreign Preferred Stocks 1.2% 1.3% TOTAL EQUITY EXPOSURE 98.6% 96.7% Temporary Cash Investments 1.0% 1.1% Other Assets and Liabilities(1) 0.4% 2.2% (1) Includes securities lending collateral and other assets and liabilities. Investments by Country as of May 31, 2007 % of % of net assets net assets as of as of 5/31/07 11/30/06 Germany 10.6% 9.2% United Kingdom 10.5% 13.8% Italy 7.6% 9.0% Japan 6.9% 6.6% Netherlands 6.1% 3.4% Switzerland 5.9% 7.9% People's Republic of China 5.6% 7.2% France 4.9% 3.3% Norway 4.8% 5.5% Sweden 4.3% 1.8% Singapore 4.2% 2.9% Other Countries 27.2% 26.1% Cash and Equivalents(2) 1.4% 3.3% (2) Includes temporary cash investments, securities lending collateral and other assets and liabilities. - ------ 27 SCHEDULE OF INVESTMENTS International Opportunities MAY 31, 2007 (UNAUDITED) Shares ($ IN THOUSANDS) Value Common Stocks -- 97.4% AUSTRALIA -- 1.4% 462,253 Arrow Energy NL(1) $ 1,007 293,302 HFA Holdings Ltd. 576 176,422 Reverse Corp. Ltd. 804 117,993 Sino Gold Mining Ltd.(1)(2) 586 -------- 2,973 -------- BRAZIL -- 0.6% 57,186 Dufry South America Ltd. BDR(1) 1,286 -------- CANADA -- 2.6% 664,400 Bayou Bend Petroleum(1) 1,306 47,542 Canadian Western Bank 1,158 59,251 Forzani Group Ltd. (The) Cl A(1) 1,402 76,811 Petrobank Energy & Resources Ltd.(1)(2) 1,870 -------- 5,736 -------- DENMARK -- 1.9% 32,381 Genmab AS(1)(2) 2,331 67,092 TK Development AS(1) 1,684 -------- 4,015 -------- FRANCE -- 4.9% 58,851 Boursorama(1) 986 21,879 Kaufman & Broad SA 1,762 25,931 Meetic(1)(2) 1,102 29,850 Nexans SA(2) 4,815 11,880 Sechilienne-Sidec 777 24,829 SeLoger.com(1)(2) 1,303 -------- 10,745 -------- GERMANY -- 9.4% 34,443 Bauer AG(1) 2,852 134,110 D+S europe AG(1)(2) 2,192 22,901 Demag Cranes AG 1,465 56,633 Francotyp-Postalia Holding AG(1) 1,341 25,487 Gerry Weber International AG(1) 759 62,219 Kontron AG(2) 1,144 8,160 Schmack Biogas AG(1)(2) 684 36,615 Software AG 3,491 34,094 Vossloh AG(1) 3,972 185,316 Wire Card AG(1) 2,573 -------- 20,473 -------- Shares ($ IN THOUSANDS) Value GREECE -- 3.0% 75,636 Hellenic Exchanges SA $ 2,033 104,159 Michaniki SA 1,107 63,429 Sprider Stores SA 927 102,483 Vivartia SA 2,468 -------- 6,535 -------- HONG KONG -- 2.7% 430,000 EganaGoldpfeil Holdings Ltd. 324 1,875,000 Huabao International Holdings Ltd. 1,357 659,500 Neo-Neon Holdings Ltd.(1) 1,155 1,274,000 Peace Mark Holdings Ltd.(2) 1,549 216,000 Vtech Holdings Ltd. 1,577 -------- 5,962 -------- INDONESIA -- 1.2% 9,944,100 PT Bakrie Sumatera Plantations Tbk 1,712 2,212,200 PT Sumalindo Lestari Jaya Tbk(1) 865 -------- 2,577 -------- ITALY -- 7.6% 150,509 Ansaldo STS SpA(1) 2,167 208,553 Azimut Holding SpA(2) 3,515 104,941 Brembo SpA 1,680 32,331 Digital Multimedia Technologies SpA(1)(2) 3,150 242,182 Gemina SpA(1)(2) 1,102 272,532 Immobiliare Grande Distribuzione SpA 1,401 97,041 MARR SpA(2) 1,037 226,930 Safilo SpA 1,465 101,239 SNAI SpA(1)(2) 1,155 -------- 16,672 -------- JAPAN -- 6.9% 52,600 Advan Co., Ltd.(2) 564 66,800 Capcom Co. Ltd.(2) 1,260 169 Internet Initiative Japan Inc.(2) 603 16,500 Joint Corp. 601 187 MID REIT, Inc. 1,069 114,000 Nichias Corp. 1,129 77,000 Nippon Chemi-Con Corp. 687 201 Nippon Commercial Investment Corp.(2) 1,021 213,000 Ryobi Ltd.(2) 1,383 114,000 Shinko Plantech Co. Ltd. 1,430 - ------ 28 International Opportunities Shares ($ IN THOUSANDS) Value 110,000 Takasago Thermal Engineering Co. Ltd.(2) $ 959 301,000 Tokai Carbon Co. Ltd. 2,629 25,072 Toyo Tanso Co. Ltd.(2) 1,654 -------- 14,989 -------- MALAYSIA -- 0.8% 1,874,600 Malaysian Plantations Bhd(1) 1,599 144,800 Sunway City Bhd 206 -------- 1,805 -------- MEXICO -- 0.6% 676,574 Sare Holding, SAB de CV Cl B(1) 1,197 -------- NETHERLANDS -- 6.1% 26,368 Arcadis N.V. 2,258 68,073 Draka Holding(2) 2,868 31,946 Imtech N.V.(2) 2,826 38,027 Sligro Food Group N.V. 1,637 41,816 TKH Group N.V. CVA 1,151 112,093 Wavin N.V. 2,549 -------- 13,289 -------- NORWAY -- 4.8% 276,873 Acta Holding ASA 1,694 562,979 Deep Sea Supply plc 2,287 52,490 Electromagnetic GeoServices AS(1)(2) 923 415,846 Ementor ASA(1) 3,517 162,620 ODIM ASA(1)(2) 1,996 -------- 10,417 -------- PEOPLE'S REPUBLIC OF CHINA -- 5.6% 2,372,000 China National Building Material Co. Ltd. Cl H 3,433 502,966 Greentown China Holdings Ltd. 1,043 1,735,000 Haitian International Holdings Ltd.(1) 1,289 2,150,000 Hongguo International Holdings Ltd. 1,794 760,000 Li Ning Co. Ltd.(2) 1,678 4,756,000 Shenzhen Investment Ltd. 2,869 -------- 12,106 -------- PHILIPPINES -- 0.5% 27,001,800 Filinvest Land Inc.(1) 1,121 -------- PORTUGAL -- 1.3% 307,922 Mota-Engil SGPS SA(2) 2,929 -------- SINGAPORE -- 4.2% 427,000 Ezra Holdings Ltd. 1,605 1,121,000 Ho Bee Investment Ltd. 1,651 2,232,000 Midas Holdings Ltd.(2) 3,217 Shares ($ IN THOUSANDS) Value 42,000 Raffles Education Corp. Ltd. $ 56 2,269,000 Straits Asia Resources Ltd.(2) 1,770 647,000 Tat Hong Holdings Ltd. 829 -------- 9,128 -------- SOUTH AFRICA -- 2.3% 36,642 Aquarius Platinum Ltd. 1,149 90,389 First Uranium Corp.(1) 1,028 172,707 JSE Ltd. 2,018 115,874 Spar Group Ltd. (The) 854 -------- 5,049 -------- SOUTH KOREA -- 2.0% 100,300 LIG Non-Life Insurance Co., Ltd. 1,945 9,150 MegaStudy Co., Ltd. 1,699 14,950 Osstem Implant Co., Ltd.(1) 818 -------- 4,462 -------- SPAIN -- 3.9% 108,127 Corporacion Dermoestetica(1)(2) 1,586 180,122 Grifols SA(1) 3,586 3,682 Mecalux SA(2) 173 124,983 Tubacex SA(2) 1,093 90,372 Viscofan SA 2,134 -------- 8,572 -------- SWEDEN -- 4.3% 53,788 Hemtex AB 1,010 178,084 Intrum Justitia AB 2,381 78,389 JM AB(2) 2,894 338,898 Rezidor Hotel Group AB 3,134 -------- 9,419 -------- SWITZERLAND -- 5.9% 10,844 Bucher Industries AG 1,637 6,060 Burckhardt Compression Holding AG(1) 1,234 4,562 Galenica Holding AG 1,574 2,697 Georg Fischer AG 2,069 5,953 Inficon Holding AG 1,046 11,073 Partners Group 1,496 23,144 SCHMOLZ+BICKENBACH AG 2,097 12,853 Schulthess Group AG(2) 1,658 -------- 12,811 -------- TAIWAN (REPUBLIC OF CHINA) -- 1.9% 674,000 Gemtek Technology Corp. 1,891 594,000 Merry Electronics Co. Ltd. 2,140 -------- 4,031 -------- TURKEY -- 0.5% 174,178 Asya Katilim Bankasi AS(1) 1,005 -------- - ------ 29 International Opportunities Shares ($ IN THOUSANDS) Value UNITED KINGDOM -- 10.5% 128,008 Babcock International Group plc $ 1,394 45,086 Big Yellow Group plc 541 32,834 Chemring Group plc 1,391 285,137 Gyrus Group plc(1) 2,863 545,479 IG Group Holdings plc 3,572 316,900 MITIE Group plc 1,713 212,996 Restaurant Group plc 1,398 162,939 RPS Group plc 1,176 134,123 Safestore Holdings Ltd.(1) 597 408,598 Southern Cross Healthcare Ltd. 4,232 84,928 SThree plc 859 42,046 Ultra Electronics Holdings plc 1,039 56,097 Unite Group plc 540 250,786 Xchanging Ltd.(1) 1,517 -------- 22,832 -------- TOTAL COMMON STOCKS (Cost $152,093) 212,136 -------- Preferred Stocks -- 1.2% GERMANY -- 1.2% 43,112 Hugo Boss AG(2) (Cost $1,410) 2,646 -------- Principal Amount Temporary Cash Investments -- 1.0% $2,200 FHLB Discount Notes, 5.05%, 6/1/07(3) (Cost $2,200) 2,200 -------- Temporary Cash Investments - Securities Lending Collateral(4) -- 13.8% Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.28%, dated 5/31/07, due 6/1/07 (Delivery value $20,003) 20,000 Repurchase Agreement, Lehman Brothers Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.30%, dated 5/31/07, due 6/1/07 (Delivery value $10,153) 10,152 -------- TOTAL TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL (Cost $30,152) 30,152 -------- Shares ($ IN THOUSANDS) Value TOTAL INVESTMENT SECURITIES -- 113.4% (Cost $185,855) $247,134 -------- OTHER ASSETS AND LIABILITIES -- (13.4)% (29,195) -------- TOTAL NET ASSETS -- 100.0% $217,939 ======== Market Sector Diversification (as a % of net assets) Industrials 30.7% Consumer Discretionary 16.9% Financials 16.2% Information Technology 10.2% Health Care 7.8% Materials 6.5% Energy 5.0% Consumer Staples 4.5% Telecommunication Services 0.4% Utilities 0.4% Cash and Equivalents* 1.4% * Includes temporary cash investments, securities lending collateral and other assets and liabilities. Notes to Schedule of Investments BDR = Brazilian Depositary Receipt CVA = Certificaten Van Aandelen FHLB = Federal Home Loan Bank (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of May 31, 2007. (3) The rate indicated is the yield to maturity at purchase. (4) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. As of May 31, 2007, securities with an aggregate value of $10,922, which represented 5.0% of total net assets were valued in accordance with alternative pricing procedures adopted by the Board of Directors. 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 December 1, 2006 to May 31, 2007. 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. 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. - ------ 31 Beginning Ending Account Account Expenses Paid Annualized Value Value During Period* Expense 12/1/06 5/31/07 12/1/06 - 5/31/07 Ratio* International Stock ACTUAL Investor Class $1,000 $1,136.50 $7.99 1.50% HYPOTHETICAL Investor Class $1,000 $1,017.45 $7.54 1.50% International Discovery ACTUAL Investor Class $1,000 $1,223.40 $7.65 1.38% Institutional Class $1,000 $1,224.00 $6.54 1.18% Advisor Class $1,000 $1,221.30 $9.03 1.63% HYPOTHETICAL Investor Class $1,000 $1,018.05 $6.94 1.38% Institutional Class $1,000 $1,019.05 $5.94 1.18% Advisor Class $1,000 $1,016.80 $8.20 1.63% Emerging Markets ACTUAL Investor Class $1,000 $1,217.20 $9.45 1.71% Institutional Class $1,000 $1,219.50 $8.36 1.51% Advisor Class $1,000 $1,217.60 $10.84 1.96% C Class $1,000 $1,212.00 $14.95 2.71% HYPOTHETICAL Investor Class $1,000 $1,016.40 $8.60 1.71% Institutional Class $1,000 $1,017.40 $7.59 1.51% Advisor Class $1,000 $1,015.16 $9.85 1.96% C Class $1,000 $1,011.42 $13.59 2.71% International Opportunities ACTUAL Investor Class $1,000 $1,283.20 $10.42 1.83% Institutional Class $1,000 $1,284.70 $9.28 1.63% HYPOTHETICAL Investor Class $1,000 $1,015.81 $9.20 1.83% Institutional Class $1,000 $1,016.80 $8.20 1.63% *Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 32 STATEMENT OF ASSETS AND LIABILITIES MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) International International Emerging International Stock Discovery Markets Opportunities ASSETS Investment securities, at value (cost of $112,971, $1,276,622, $645,057 and $155,703, respectively) -- including $15,353, $165,504, $69,600 and $29,032 of securities on loan, respectively $136,164 $1,769,163 $871,557 $216,982 Investments made with cash collateral received for securities on loan, at value (cost of $15,093, $170,660, $72,502 and $30,152, respectively) 15,093 170,660 72,502 30,152 ---------- ---------- -------- ---------- Total investment securities, at value (cost of $128,064, $1,447,282, $717,559 and $185,855, respectively) 151,257 1,939,823 944,059 247,134 Cash 5 -- -- 33 Foreign currency holdings, at value (cost of $27, $3,156, $3,100 and $444, respectively) 27 3,163 3,115 445 Receivable for investments sold 593 23,954 8,806 2,661 Dividends and interest receivable 382 4,055 1,468 405 ---------- ---------- -------- ---------- 152,264 1,970,995 957,448 250,678 ---------- ---------- -------- ---------- LIABILITIES Payable for collateral received for securities on loan 15,093 170,660 72,502 30,152 Disbursements in excess of demand deposit cash -- 565 418 -- Payable for investments purchased 579 9,656 16,672 2,264 Accrued management fees 171 1,984 1,168 323 Distribution fees payable -- -- 6 -- Service fees payable -- -- 4 -- ---------- ---------- -------- ---------- 15,843 182,865 90,770 32,739 ---------- ---------- -------- ---------- NET ASSETS $136,421 $1,788,130 $866,678 $217,939 ========== ========== ======== ========== See Notes to Financial Statements. - ------ 33 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS EXCEPT AS NOTED) International International Emerging International Stock Discovery Markets Opportunities NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $110,374 $1,079,058 $599,372 $129,041 Accumulated undistributed net investment income (loss) 501 2,607 (2,557) (19) Undistributed net realized gain on investment and foreign currency transactions 2,355 214,006 44,235 27,638 Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 23,191 492,459 225,628 61,279 --------- ----------- --------- --------- $136,421 $1,788,130 $866,678 $217,939 ========= =========== ========= ========= INVESTOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) Net assets $136,420,541 $1,661,618,671 $781,362,627 $214,436,658 Shares outstanding 8,877,871 97,591,313 75,257,156 19,646,609 Net asset value per share $15.37 $17.03 $10.38 $10.91 INSTITUTIONAL CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) Net assets N/A $126,356,780 $63,379,420 $3,502,431 Shares outstanding N/A 7,353,099 6,002,695 319,336 Net asset value per share N/A $17.18 $10.56 $10.97 ADVISOR CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) Net assets N/A $154,301 $16,739,967 N/A Shares outstanding N/A 9,210 1,648,364 N/A Net asset value per share N/A $16.75 $10.16 N/A C CLASS, $0.01 PAR VALUE ($ AND SHARES IN FULL) Net assets N/A N/A $5,195,498 N/A Shares outstanding N/A N/A 522,113 N/A Net asset value per share N/A N/A $9.95 N/A See Notes to Financial Statements. - ------ 34 STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) International International Emerging International Stock Discovery Markets Opportunities INVESTMENT INCOME (LOSS) INCOME: Dividends (net of foreign taxes withheld of $182, $1,370, $543 and $187, respectively) $ 1,517 $ 14,670 $ 6,506 $ 1,832 Interest 63 426 687 63 Securities lending 20 160 401 113 -------- --------- -------- -------- 1,600 15,256 7,594 2,008 -------- --------- -------- -------- EXPENSES: Management fees 865 11,150 5,946 1,782 Distribution fees: Advisor Class -- -- 16 -- C Class -- -- 15 -- Service fees: Advisor Class -- -- 16 -- C Class -- -- 5 -- Directors' fees and expenses 1 12 5 1 Other expenses -- 46 6 5 -------- --------- -------- -------- 866 11,208 6,009 1,788 -------- --------- -------- -------- NET INVESTMENT INCOME (LOSS) 734 4,048 1,585 220 -------- --------- -------- -------- REALIZED AND UNREALIZED GAIN (LOSS) NET REALIZED GAIN (LOSS) ON: Investment transactions (net of foreign taxes withheld of $--, $1,387, $-- and $16, respectively) 2,133 194,060 42,327 24,930 Foreign currency transactions 909 22,762 1,938 3,318 -------- --------- -------- -------- 3,042 216,822 44,265 28,248 -------- --------- -------- -------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: Investments (net of foreign taxes accrued of $--, $602, $(579) and $41, respectively) 11,515 124,592 88,057 23,055 Translation of assets and liabilities in foreign currencies (706) (12,222) 8,382 (2,269) -------- --------- -------- -------- 10,809 112,370 96,439 20,786 -------- --------- -------- -------- NET REALIZED AND UNREALIZED GAIN (LOSS) 13,851 329,192 140,704 49,034 -------- --------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $14,585 $333,240 $142,289 $49,254 ======== ========= ======== ======== See Notes to Financial Statements. - ------ 35 STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED MAY 31, 2007 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) International Stock International Discovery Increase (Decrease) in Net Assets 2007 2006 2007 2006 OPERATIONS Net investment income (loss) $ 734 $ 229 $ 4,048 $ (1,254) Net realized gain (loss) 3,042 (508) 216,822 372,416 Change in net unrealized appreciation (depreciation) 10,809 11,102 112,370 90,140 -------- ------- ---------- ---------- Net increase (decrease) in net assets resulting from operations 14,585 10,823 333,240 461,302 -------- ------- ---------- ---------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Investor Class (320) (155) -- (9,106) Institutional Class -- -- -- (2,071) Advisor Class -- -- -- -- From net realized gains: Investor Class -- -- (348,488) (200,178) Institutional Class -- -- (25,425) (36,186) Advisor Class -- -- (3) (12) -------- ------- ---------- ---------- Decrease in net assets from distributions (320) (155) (373,916) (247,553) -------- ------- ---------- ---------- CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions 31,975 59,171 275,995 (12,037) -------- ------- ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS 46,240 69,839 235,319 201,712 NET ASSETS Beginning of period 90,181 20,342 1,552,811 1,351,099 -------- ------- ---------- ---------- End of period $136,421 $90,181 $1,788,130 $1,552,811 ======== ======= ========== ========== Accumulated undistributed net investment income (loss) $501 $87 $2,607 $(54) ======== ======= ========== ========== See Notes to Financial Statements. - ------ 36 SIX MONTHS ENDED MAY 31, 2007 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2006 (AMOUNTS IN THOUSANDS) International Emerging Markets Opportunities Increase (Decrease) in Net Assets 2007 2006 2007 2006 OPERATIONS Net investment income (loss) $ 1,585 $ 6,296 $ 220 $ (122) Net realized gain (loss) 44,265 92,060 28,248 52,034 Change in net unrealized appreciation (depreciation) 96,439 71,275 20,786 (7,653) -------- -------- -------- -------- Net increase (decrease) in net assets resulting from operations 142,289 169,631 $49,254 44,259 -------- -------- -------- -------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income: Investor Class (6,964) (1,354) (46) (213) Institutional Class (1,223) (916) (3) -- Advisor Class (110) (6) -- -- C Class (9) -- -- -- From net realized gains: Investor Class (77,026) (38,795) (52,245) (48,721) Institutional Class (11,255) (18,743) (352) (8) Advisor Class (1,526) (323) -- -- C Class (449) (145) -- -- -------- -------- -------- -------- Decrease in net assets from distributions (98,562) (60,282) (52,646) (48,942) -------- -------- -------- -------- CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions 200,767 175,844 39,500 (11,714) -------- -------- -------- -------- NET INCREASE (DECREASE) IN NET ASSETS 244,494 285,193 36,108 (16,397) NET ASSETS Beginning of period 622,184 336,991 181,831 198,228 -------- -------- -------- -------- End of period $866,678 $622,184 $217,939 $181,831 ======== ======== ======== ======== Accumulated undistributed net investment income (loss) $(2,557) $4,164 $(19) $(174) ======== ======== ======== ======== See Notes to Financial Statements. - ------ 37 NOTES TO FINANCIAL STATEMENTS MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. International Stock Fund (International Stock), International Discovery Fund (International Discovery), Emerging Markets Fund (Emerging Markets) and International Opportunities Fund (International Opportunities) (collectively, the funds) are four funds in a series issued by the corporation. The funds are diversified under the 1940 Act. The funds' investment objective is to seek capital growth. The funds pursue their objective 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. 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 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 as determined by, or in accordance with procedures adopted by, the Board of Directors or its designee if such determination would materially impact a fund's net asset value. Certain other circumstances may cause the funds to use alternative procedures to 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. - ------ 38 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) 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. The funds may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code, in all events in a manner consistent with provisions of the 1940 Act. REDEMPTION -- International Discovery, Emerging Markets and International Opportunities may impose a 2.00% redemption fee on shares held less than 180 days. International Stock may impose a 2.00% 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. - ------ 39 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACGIM (the investment advisor), under which ACGIM provides the funds with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of the funds, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACGIM. The fee is computed and accrued daily based on the daily net assets of each specific class of shares of each fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in each fund's investment strategy (strategy assets) to calculate the appropriate fee rate for each fund. The strategy assets include each fund's assets and the assets of other clients of the investment advisor that are not in the American Century family of funds, but that have the same investment team and investment strategy. The strategy assets of Emerging Markets includes the assets of NT Emerging Markets Fund, one fund in a series issued by the corporation. The annual management fee schedule for International Stock ranges from 1.10% to 1.50% for the Investor Class. The annual management fee schedule for International Discovery ranges from 1.20% to 1.75% for the Investor Class. The annual management fee schedule for Emerging Markets ranges from 1.25% to 1.85% for the Investor Class and C Class. The annual management fee schedule for International Opportunities ranges from 1.60% to 2.00% for the Investor Class. The Institutional Class is 0.20% less and the Advisor Class is 0.25% less at each point within the range. The effective annual management fee for each class of each fund for the six months ended May 31, 2007, was as follows: Investor Institutional Advisor C International Stock 1.50% N/A N/A N/A International Discovery 1.37% 1.17% 1.12% N/A Emerging Markets 1.71% 1.51% 1.46% 1.71% International Opportunities 1.82% 1.62% 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' investment objectives, policies and restrictions under the supervision of ACGIM and the Board of Directors. ACGIM pays all costs associated with retaining ACIM as the subadvisor of the funds. DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a Master Distribution and Shareholder Services Plan for the Advisor Class 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 will pay American Century Investment Services, Inc. (ACIS) an annual distribution fee of 0.25% and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution fee of 0.75% and service fee of 0.25%. The fees are computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The distribution fee provides compensation for expenses incurred by financial intermediaries in connection with distributing shares of the classes including, but not limited to, payments to brokers, dealers, and financial institutions that have entered into sales agreements with respect to shares of the funds. The service fee provides compensation for shareholder and administrative services rendered by ACIS, its affiliates or independent third party providers for Advisor Class shares and for individual shareholder services rendered by broker/dealers or other independent financial intermediaries for C Class shares. Fees incurred under the plans during the six months ended May 31, 2007, 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. Beginning in December 2006, the funds were eligible to invest in a money market fund for temporary purposes, which was managed by J.P. Morgan Investment Management, Inc. (JPMIM). JPMIM is a wholly owned subsidiary of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC. The funds have a bank line of credit agreement and securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the funds and a wholly owned subsidiary of JPM. - ------ 40 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the six months ended May 31, 2007, were as follows: International International Emerging International Stock Discovery Markets Opportunities Purchases $91,517 $1,362,520 $432,653 $146,214 Proceeds from sales $58,876 $1,420,358 $315,670 $156,313 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: Six months Year ended ended May 31, 2007 November 30, 2006 Shares Amount Shares Amount International Stock INVESTOR CLASS/ SHARES AUTHORIZED 100,000 100,000 ======= ======== Sold 3,228 $46,246 6,064 $75,036 Issued in reinvestment of distributions 23 314 14 152 Redeemed (1,019) (14,585)(1) (1,309) (16,017)(2) ------- ------------ -------- ------------ Net increase (decrease) 2,232 $31,975 4,769 $59,171 ======= ============ ======== ============ International Discovery INVESTOR CLASS/ SHARES AUTHORIZED 400,000 400,000 ======== ======= Sold 2,805 $ 44,346 5,524 $ 89,151 Issued in reinvestment of distributions 22,035 328,726 14,024 198,371 Redeemed (7,587) (119,905)(3) (11,071) (179,701)(4) -------- ------------ -------- ------------ 17,253 253,167 8,477 107,821 -------- ------------ -------- ------------ INSTITUTIONAL CLASS/ SHARES AUTHORIZED 75,000 75,000 ======== ======== Sold 589 9,430 5,976 97,632 Issued in reinvestment of distributions 1,690 25,425 2,683 38,220 Redeemed (754) (12,163)(5) (15,621) (255,645)(6) -------- ------------ -------- ------------ 1,525 22,692 (6,962) (119,793) -------- ------------ -------- ------------ ADVISOR CLASS/ SHARES AUTHORIZED 5,000 5,000 ======== ======== Sold 9 133 -- -- Issued in reinvestment of distributions -- 3 1 12 Redeemed -- -- (5) (77) -------- ------------ -------- ------------ 9 136 (4) (65) -------- ------------ -------- ------------ Net increase (decrease) 18,787 $275,995 1,511 $(12,037) ======== ============ ========= ============ (1) Net of redemption fees of $16. (2) Net of redemption fees of $37. (3) Net of redemption fees of $18. (4) Net of redemption fees of $90. (5) Net of redemption fees of $9. (6) Net of redemption fees of $164. - ------ 41 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) Six months Year ended ended May 31, 2007 November 30, 2006 Shares Amount Shares Amount Emerging Markets INVESTOR CLASS/ SHARES AUTHORIZED 200,000 100,000 ======== ======== Sold 23,391 $221,260 35,516 $303,189 Issued in reinvestment of distributions 8,563 74,867 4,400 32,030 Redeemed (8,790) (80,981)(1) (14,582) (122,512)(2) -------- ---------- -------- ----------- 23,164 215,146 25,334 212,707 -------- ---------- -------- ----------- INSTITUTIONAL CLASS/ SHARES AUTHORIZED 50,000 50,000 ======== ======== Sold 940 8,792 3,640 29,912 Issued in reinvestment of distributions 1,405 12,478 2,503 18,363 Redeemed (4,752) (43,839)(3) (11,341) (93,403)(4) -------- ---------- -------- ----------- (2,407) (22,569) (5,198) (45,128) -------- ---------- -------- ----------- ADVISOR CLASS/ SHARES AUTHORIZED 5,000 5,000 ======== ======== Sold 749 6,979 975 8,291 Issued in reinvestment of distributions 190 1,625 43 313 Redeemed (296) (2,691)(5) (232) (1,859)(6) -------- ---------- -------- ----------- 643 5,913 786 6,745 -------- ---------- -------- ----------- C CLASS/ SHARES AUTHORIZED 5,000 5,000 ======== ======== Sold 275 2,492 321 2,649 Issued in reinvestment of distributions 52 442 20 142 Redeemed (73) (657) (165) (1,271) -------- ---------- -------- ----------- 254 2,277 176 1,520 -------- ---------- -------- ----------- Net increase (decrease) 21,654 $200,767 21,098 $175,844 ======== ========== ======== =========== International Opportunities INVESTOR CLASS/ SHARES AUTHORIZED 100,000 100,000 ======== ======== Sold 57 $ 589 96 $ 1,070 Issued in reinvestment of distributions 5,745 51,242 4,719 48,005 Redeemed (1,482) (14,454) (5,636) (61,797) -------- ---------- -------- ----------- 4,320 37,377 (821) (12,722) -------- ---------- -------- ----------- INSTITUTIONAL CLASS/ SHARES AUTHORIZED 10,000 10,000 ======== ======== Sold 187 1,768 90 1,000 Issued in reinvestment of distributions 39 355 1 8 -------- ---------- -------- ----------- 226 2,123 91 1,008 -------- ---------- -------- ----------- Net increase (decrease) 4,546 $39,500 (730) $(11,714) ======== ========== ======== =========== (1) Net of redemption fees of $274. (2) Net of redemption fees of $540. (3) Net of redemption fees of $8. (4) Net of redemption fees of $134. (5) Net of redemption fees of $14. (6) Net of redemption fees of $14. - ------ 42 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) 5. SECURITIES LENDING As of May 31, 2007, securities in International Stock, International Discovery, Emerging Markets and International Opportunities valued at $15,353, $165,504, $69,600 and $29,032, respectively, were on loan through the lending agent, JPMCB, to certain approved borrowers. JPMCB receives and maintains collateral in the form of cash and/or acceptable securities as approved by ACIM or ACGIM. Cash collateral is invested in authorized investments by the lending agent in a pooled account. The value of cash collateral received at period end is disclosed in the Statement of Assets and Liabilities and investments made with the cash by the lending agent are listed in the Schedule of Investments. Any deficiencies or excess of collateral must be delivered or transferred by the member firms no later than the close of business on the next business day. The total value of all collateral received, at this date, was $15,919, $170,660, $72,502 and $30,233, 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 0.40%. The funds did not borrow from the line during the six months ended May 31, 2007. 7. RISK FACTORS There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social, and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions. Investing in emerging markets may accentuate these risks. 8. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of May 31, 2007, the components for federal income tax purposes were as follows: International International Emerging International Stock Discovery Markets Opportunities Federal tax cost of investments $128,522 $1,450,610 $721,734 $186,564 ============ ============ ========= ============ Gross tax appreciation of investments $23,190 $497,302 $227,642 $61,753 Gross tax depreciation of investments (455) (8,089) (5,317) (1,183) ------------ ------------ --------- ------------ Net tax appreciation (depreciation) of investments $22,735 $489,213 $222,325 $60,570 ============ ============ ========= ============ 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. - ------ 43 MAY 31, 2007 (UNAUDITED) (AMOUNTS IN THOUSANDS) Following are the capital loss carryovers and currency loss deferral amounts as of November 30, 2006: International International Emerging International Stock Discovery Markets Opportunities Accumulated capital losses $(386) -- -- -- Currency loss deferrals $(14) $(76) $(40) $(8) The accumulated capital losses listed above represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. Capital loss carryovers of $(60) and $(326) in International Stock expire in 2013 and 2014, 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. 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. - ------ 44 FINANCIAL HIGHLIGHTS International Stock Investor Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005(2) PER-SHARE DATA Net Asset Value, Beginning of Period $13.57 $10.84 $10.00 ------- ------- ------- Income From Investment Operations Net Investment Income (Loss) 0.09 0.06 0.06(3) Net Realized and Unrealized Gain (Loss) 1.76 2.74 0.78 ------- ------- ------- Total From Investment Operations 1.85 2.80 0.84 ------- ------- ------- Distributions From Net Investment Income (0.05) (0.08) -- ------- ------- ------- Redemption Fees(3) --(4) 0.01 -- Net Asset Value, End of Period $15.37 $13.57 $10.84 ======= ======= ======= TOTAL RETURN(5) 13.65% 26.07% 8.40% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.50%(6) 1.50% 1.50%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 1.27%(6) 0.40% 0.91%(6) Portfolio Turnover Rate 52% 109% 109% Net Assets, End of Period (in thousands) $136,421 $90,181 $20,342 (1) Six months ended May 31, 2007 (unaudited). (2) March 31, 2005 (fund inception) through November 30, 2005. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. (6) Annualized. See Notes to Financial Statements. - ------ 45 International Discovery Investor Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $18.01 $15.94 $15.11 $12.75 $9.32 $10.13 --------- --------- --------- --------- --------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.04 (0.02) 0.14 (0.01) 0.03 0.03 Net Realized and Unrealized Gain (Loss) 3.24 5.00 2.97 2.40 3.42 (0.84) --------- --------- --------- --------- --------- -------- Total From Investment Operations 3.28 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 (4.26) (2.78) (2.28) -- -- -- Total Distributions (4.26) (2.91) (2.28) (0.03) (0.02) -- --------- --------- --------- --------- --------- -------- Net Asset Value, End of Period $17.03 $18.01 $15.94 $15.11 $12.75 $9.32 ========= ========= ========= ========= ========= ======== TOTAL RETURN(3) 22.34% 36.41% 24.30% 18.76% 37.05% (8.00)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.38%(4) 1.41% 1.47% 1.49% 1.57% 1.53% Ratio of Net Investment Income (Loss) to Average Net Assets 0.47%(4) (0.11)% 1.02% (0.06)% 0.27% 0.35% Portfolio Turnover Rate 84% 148% 145% 201% 215% 224% Net Assets, End of Period (in thousands) $1,661,619 $1,446,955 $1,145,623 $1,112,870 $1,028,934 $841,706 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 46 International Discovery Institutional Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $18.16 $16.06 $15.21 $12.84 $9.39 $10.18 ------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) 0.06 0.04 0.17 0.02 0.05 0.06 Net Realized and Unrealized Gain (Loss) 3.26 5.00 2.99 2.40 3.43 (0.85) ------- -------- -------- -------- -------- -------- Total From Investment Operations 3.32 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 (4.30) (2.78) (2.31) -- -- -- ------- -------- -------- -------- -------- -------- Total Distributions (4.30) (2.94) (2.31) (0.05) (0.03) -- ------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $17.18 $18.16 $16.06 $15.21 $12.84 $9.39 ======= ======== ======== ======== ======== ======== TOTAL RETURN(3) 22.40% 36.65% 24.56% 18.94% 37.25% (7.76)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.18%(4) 1.21% 1.27% 1.29% 1.37% 1.33% Ratio of Net Investment Income (Loss) to Average Net Assets 0.67%(4) 0.09% 1.22% 0.14% 0.47% 0.55% Portfolio Turnover Rate 84% 148% 145% 201% 215% 224% Net Assets, End of Period (in thousands) $126,357 $105,849 $205,406 $165,600 $147,531 $137,358 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 47 International Discovery Advisor Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $17.76 $15.75 $14.95 $12.63 $9.23 $10.05 ------- ------- ------ ------- ------ ------- Income From Investment Operations Net Investment Income (Loss)(2) 0.08 (0.08) 0.10 (0.05) 0.01 0.01 Net Realized and Unrealized Gain (Loss) 3.12 4.96 2.95 2.37 3.39 (0.83) ------- ------- ------ ------- ------ ------- Total From Investment Operations 3.20 4.88 3.05 2.32 3.40 (0.82) ------- ------- ------ ------- ------ ------- Distributions From Net Investment Income -- (0.09) -- -- -- -- From Net Realized Gains (4.21) (2.78) (2.25) -- -- -- ------- ------- ------ ------- ------ ------- Total Distributions (4.21) (2.87) (2.25) -- -- -- ------- ------- ------ ------- ------ ------- Net Asset Value, End of Period $16.75 $17.76 $15.75 $14.95 $12.63 $9.23 ======= ======= ====== ======= ====== ======= TOTAL RETURN(3) 22.13% 36.08% 24.01% 18.37% 36.84% (8.16)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.63%(4) 1.66% 1.72% 1.74% 1.82% 1.78% Ratio of Net Investment Income (Loss) to Average Net Assets 0.22%(4) (0.36)% 0.77% (0.31)% 0.02% 0.10% Portfolio Turnover Rate 84% 148% 145% 201% 215% 224% Net Assets, End of Period (in thousands) $154 $7 $70 $201 $161 $153 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 48 Emerging Markets Investor Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $10.06 $8.25 $6.28 $5.28 $3.61 $4.06 ------- ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(2) 0.02 0.11 0.01 (0.01) --(3) (0.02) Net Realized and Unrealized Gain (Loss) 1.85 3.11 2.05 1.00 1.66 (0.43) ------- ------- ------- ------- ------- ------- Total From Investment Operations 1.87 3.22 2.06 0.99 1.66 (0.45) ------- ------- ------- ------- ------- ------- Distributions From Net Investment Income (0.13) (0.05) -- -- -- -- From Net Realized Gains (1.42) (1.37) (0.09) -- -- -- ------- ------- ------- ------- ------- ------- Total Distributions (1.55) (1.42) (0.09) -- -- -- ------- ------- ------- ------- ------- ------- Redemption Fees(2) --(3) 0.01 --(3) 0.01 0.01 -- ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $10.38 $10.06 $8.25 $6.28 $5.28 $3.61 ======= ======= ======= ======= ======= ======= TOTAL RETURN(4) 21.72% 46.10% 33.10% 18.94% 46.26% (10.86)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.71%(5) 1.80% 1.94% 2.00% 2.01% 2.05% Ratio of Net Investment Income (Loss) to Average Net Assets 0.44%(5) 1.31% 0.17% (0.22)% 0.03% (0.37)% Portfolio Turnover Rate 46% 115% 153% 208% 286% 387% Net Assets, End of Period (in thousands) $781,363 $523,813 $220,720 $135,355 $103,737 $81,756 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 49 Emerging Markets Institutional Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $10.21 $8.36 $6.35 $5.33 $3.64 $4.08 ------- ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(2) 0.03 0.12 0.03 --(3) 0.01 --(3) Net Realized and Unrealized Gain (Loss) 1.89 3.16 2.07 1.01 1.67 (0.44) ------- ------- ------- ------- ------- ------- Total From Investment Operations 1.92 3.28 2.10 1.01 1.68 (0.44) ------- ------- ------- ------- ------- ------- Distributions From Net Investment Income (0.15) (0.07) -- -- -- -- From Net Realized Gains (1.42) (1.37) (0.09) -- -- -- ------- ------- ------- ------- ------- ------- Total Distributions (1.57) (1.44) (0.09) -- -- -- ------- ------- ------- ------- ------- ------- Redemption Fees(2) --(3) 0.01 --(3) 0.01 0.01 -- ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $10.56 $10.21 $8.36 $6.35 $5.33 $3.64 ======= ======= ======= ======= ======= ======= TOTAL RETURN(4) 21.95% 46.31% 33.37% 19.14% 46.43% (10.78)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.51%(5) 1.60% 1.74% 1.80% 1.81% 1.85% Ratio of Net Investment Income (Loss) to Average Net Assets 0.64%(5) 1.51% 0.37% (0.02)% 0.23% (0.17)% Portfolio Turnover Rate 46% 115% 153% 208% 286% 387% Net Assets, End of Period (in thousands) $63,379 $85,886 $113,765 $92,673 $63,242 $18,969 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 50 Emerging Markets Advisor Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $9.85 $8.11 $6.19 $5.22 $3.58 $4.03 ------- ------ ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(2) 0.01 0.11 (0.01) (0.03) --(3) (0.01) Net Realized and Unrealized Gain (Loss) 1.83 3.02 2.02 0.99 1.63 (0.44) ------- ------ ------- ------- ------- ------- Total From Investment Operations 1.84 3.13 2.01 0.96 1.63 (0.45) ------- ------ ------- ------- ------- ------- Distributions From Net Investment Income (0.11) (0.03) -- -- -- -- From Net Realized Gains (1.42) (1.37) (0.09) -- -- -- ------- ------ ------- ------- ------- ------- Total Distributions (1.53) (1.40) (0.09) -- -- -- ------- ------ ------- ------- ------- ------- Redemption Fees(2) --(3) 0.01 --(3) 0.01 0.01 -- ------- ------ ------- ------- ------- ------- Net Asset Value, End of Period $10.16 $9.85 $8.11 $6.19 $5.22 $3.58 ======= ====== ======= ======= ======= ======= TOTAL RETURN(4) 21.76% 45.59% 32.77% 18.58% 45.81% (11.17)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.96%(5) 2.05% 2.19% 2.25% 2.26% 2.30% Ratio of Net Investment Income (Loss) to Average Net Assets 0.19%(5) 1.06% (0.08)% (0.47)% (0.22)% (0.62)% Portfolio Turnover Rate 46% 115% 153% 208% 286% 387% Net Assets, End of Period (in thousands) $16,740 $9,905 $1,773 $1,178 $597 $1,254 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 51 Emerging Markets C Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002(2) PER-SHARE DATA Net Asset Value, Beginning of Period $9.64 $7.95 $6.12 $5.19 $3.58 $4.24 ------- ------ ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(3) (0.02) 0.03 (0.05) (0.07) (0.04) (0.04) Net Realized and Unrealized Gain (Loss) 1.78 2.99 1.97 0.99 1.64 (0.62) ------- ------ ------- ------- ------- ------- Total From Investment Operations 1.76 3.02 1.92 0.92 1.60 (0.66) ------- ------ ------- ------- ------- ------- Distributions From Net Investment Income (0.03) -- -- -- -- -- From Net Realized Gains (1.42) (1.34) (0.09) -- -- -- ------- ------ ------- ------- ------- ------- Total Distributions (1.45) (1.34) (0.09) -- -- -- ------- ------ ------- ------- ------- ------- Redemption Fees(3) --(4) 0.01 --(4) 0.01 0.01 -- ------- ------ ------- ------- ------- ------- Net Asset Value, End of Period $9.95 $9.64 $7.95 $6.12 $5.19 $3.58 ======= ====== ======= ======= ======= ======= TOTAL RETURN(5) 21.20% 44.59% 31.67% 17.92% 44.97% (15.57)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 2.71%(6) 2.80% 2.94% 3.00% 3.01% 3.05%(6) Ratio of Net Investment Income (Loss) to Average Net Assets (0.56)%(6) 0.31% (0.83)% (1.22)% (0.97)% (1.10)%(6) Portfolio Turnover Rate 46% 115% 153% 208% 286% 387%(7) Net Assets, End of Period (in thousands) $5,195 $2,581 $733 $521 $291 $54 (1) Six months ended May 31, 2007 (unaudited). (2) December 18, 2001 (commencement of sale) through November 30, 2002. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2002. See Notes to Financial Statements. - ------ 52 International Opportunities Investor Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $11.79 $12.27 $9.35 $7.62 $4.73 $4.87 ------- ------- ------- ------- ------- ------- Income From Investment Operations Net Investment Income (Loss)(2) 0.01 (0.01) 0.02 (0.05) (0.01) 0.02 Net Realized and Unrealized Gain (Loss) 2.49 2.53 3.19 2.03 2.90 (0.19) ------- ------- ------- ------- ------- ------- Total From Investment Operations 2.50 2.52 3.21 1.98 2.89 (0.17) ------- ------- ------- ------- ------- ------- Distributions From Net Investment Income --(3) (0.01) -- -- (0.01) -- From Net Realized Gains (3.38) (2.99) (0.29) (0.27) -- -- ------- ------- ------- ------- ------- ------- Total Distributions (3.38) (3.00) (0.29) (0.27) (0.01) -- ------- ------- ------- ------- ------- ------- Redemption Fees(2) -- --(3) --(3) 0.02 0.01 0.03 ------- ------- ------- ------- ------- ------- Net Asset Value, End of Period $10.91 $11.79 $12.27 $9.35 $7.62 $4.73 ======= ======= ======= ======= ======= ======= TOTAL RETURN(4) 28.32% 25.37% 35.28% 27.14% 61.54% (2.87)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.83%(5) 1.85% 1.91% 1.97% 2.00% 2.01% Ratio of Net Investment Income (Loss) to Average Net Assets 0.22%(5) (0.06)% 0.20% (0.63)% (0.23)% 0.30% Portfolio Turnover Rate 75% 160% 112% 139% 219% 257% Net Assets, End of Period (in thousands) $214,437 $180,732 $198,197 $176,100 $72,008 $21,977 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share amount was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 53 International Opportunities Institutional Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003(2) PER-SHARE DATA Net Asset Value, Beginning of Period $11.85 $12.32 $9.37 $7.63 $4.80 ------- ------ ------ ------- ------- Income From Investment Operations Net Investment Income (Loss)(3) 0.04 0.02 0.10 (0.03) 0.01 Net Realized and Unrealized Gain (Loss) 2.49 2.54 3.14 2.04 2.81 ------- ------ ------ ------- ------- Total From Investment Operations 2.53 2.56 3.24 2.01 2.82 ------- ------ ------ ------- ------- Distributions From Net Investment Income (0.03) (0.04) -- -- -- From Net Realized Gains (3.38) (2.99) (0.29) (0.29) -- ------- ------ ------ ------- ------- Total Distributions (3.41) (3.03) (0.29) (0.29) -- ------- ------ ------ ------- ------- Redemption Fees(3) -- --(4) --(4) 0.02 0.01 ------- ------ ------ ------- ------- Net Asset Value, End of Period $10.97 $11.85 $12.32 $9.37 $7.63 ======= ====== ====== ======= ======= TOTAL RETURN(5) 28.47% 25.66% 35.53% 27.50% 58.96% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.63%(6) 1.65% 1.71% 1.77% 1.80%(6) Ratio of Net Investment Income (Loss) to Average Net Assets 0.42%(6) 0.14% 0.40% (0.43)% 0.18%(6) Portfolio Turnover Rate 75% 160% 112% 139% 219%(7) Net Assets, End of Period (in thousands) $3,502 $1,099 $31 $10,868 $8,523 (1) Six months ended May 31, 2007 (unaudited). (2) January 9, 2003 (commencement of sale) through November 30, 2003. (3) Computed using average shares outstanding throughout the period. (4) Per-share amount was less than $0.005. (5) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (6) Annualized. (7) Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2003. See Notes to Financial Statements. - ------ 54 Approval of Management Agreements International Stock, International Discovery, Emerging Markets, 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 agreements. 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 agreements; * reports on the advisor's activities relating to the wide range of programs and services the advisor provides to the funds and its shareholders on a routine and non-routine basis; * data comparing the cost of owning the funds to the cost of owning similar funds; * data comparing the funds' performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the funds to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. In keeping with its practice, the funds' board of directors held two regularly scheduled meetings and 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 agreements, including the setting of the applicable advisory fee. The board also had the benefit of the advice of its independent counsel throughout the period. - ------ 55 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 agreements 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 agreements, 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 agreements, 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 its investment objectives and approved strategies. In providing these services, the advisor utilizes teams of investment professionals (portfolio managers, - ------ 56 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 Stock's and Emerging Market's performance was above the median of its peer group for the one-year period and fell below the median for the three-year period. International Discovery's performance for both the one- and three-year periods was above the median of its peer group. International Opportunities' performance fell below the median for the one-year period and was above the median for the three-year period, during part of the past year. The board discussed the fund's 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 agreements, 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. 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 - ------ 57 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 respective 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 the funds 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. - ------ 58 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 agreements between the funds and the advisor are fair and reasonable in light of the services provided and should be renewed. The board of directors also unanimously approved the renewal of the investment subadvisory agreements by which American Century Investment Management, Inc. (the "subadvisor") is engaged to manage the cash portion of the funds. In approving the subadvisory agreements, 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 agreements. As a part of this review the board 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 agreements were subject to arm's length negotiation between the advisor and the subadvisor and are paid by the advisor out of its unified fee. - ------ 59 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. - ------ 60 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. - ------ 61 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® (Europe, Australasia, Far East) INDEX is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EAFE® GROWTH INDEX is a capitalization-weighted index that monitors the performance of growth stocks from Europe, Australasia, and the Far East. The MSCI EAFE® VALUE INDEX is a capitalization-weighted index that monitors the performance of value stocks from Europe, Australasia, and the Far East. The MSCI EM (Emerging Markets) INDEX represents the gross performance of stocks in global emerging market countries. The MSCI EUROPE INDEX is designed to measure equity market performance in Europe. The MSCI JAPAN INDEX is designed to measure equity market performance in Japan. 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. - ------ 62 NOTES - ------ 63 NOTES - ------ 64 CONTACT US AMERICANCENTURY.COM AUTOMATED INFORMATION LINE: 1-800-345-8765 INVESTOR SERVICES REPRESENTATIVE: 1-800-345-2021 or 816-531-5575 BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS: 1-800-345-3533 BANKS AND TRUST COMPANIES, BROKER-DEALERS, FINANCIAL PROFESSIONALS, INSURANCE COMPANIES: 1-800-345-6488 TELECOMMUNICATIONS DEVICE FOR THE DEAF: 1-800-634-4113 or 816-444-3485 AMERICAN CENTURY WORLD MUTUAL FUNDS, INC. INVESTMENT ADVISOR: American Century Global Investment Management, Inc. New York, New York THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE PROSPECTUS. PRSRT STD U.S. POSTAGE PAID AMERICAN CENTURY COMPANIES American Century Investments P.O. Box 419200 Kansas City, MO 64141-6200 American Century Investment Services, Inc., Distributor ©2007 American Century Proprietary Holdings, Inc. All rights reserved. The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. 0707 SH-SAN-55131S
[front cover] AMERICAN CENTURY INVESTMENTS Semiannual Report May 31, 2007 [photo of summer] NT International Growth Fund NT Emerging Markets Fund [american century investments logo and text logo] OUR MESSAGE TO YOU We have the privilege of providing you with the semiannual report for the American Century® NT International Growth and NT Emerging Markets funds for the six months ended May 31, 2007. We've gathered this information to help you monitor your investment. Another resource is our website, americancentury.com, where we post company news, portfolio commentaries, investment views, and other communications about portfolio strategy, personal finance, government policy, and the markets. Speaking of company news, American Century announced the following leadership changes. Chief Investment Officer Mark Mallon retired in the first quarter of 2007, after nearly a decade at American Century. Effective January 1, 2007, former International Equity CIO Enrique Chang became CIO with responsibilities for the entire investment management operation. Prior to joining American Century in 2006, Enrique worked at Munder Capital Management, serving the last four years as president and CIO. Before that, he held a series of senior investment management positions at Vantage Global Advisors, J. & W. Seligman and Co., and General Reinsurance Corp. In January 2007, President and Chief Executive Officer Bill Lyons announced his retirement after nearly 20 years at American Century. Chief Financial Officer Jonathan Thomas was appointed president and CEO effective March 1, 2007. Since 2005, Jonathan has overseen American Century's financial area, with additional responsibilities in purchasing, facilities, real estate, information technology, operations, and human resources. Before joining American Century, Jonathan was a managing director and global chief operating officer of Morgan Stanley's investment division, and worked in senior leadership roles for Bank of America, Boston Financial Services, and Fidelity Investments. We wish to thank Mark and Bill for their many years of distinguished service - -- American Century is a stronger company as a result of their hard work. And we firmly believe their roles in our firm have transitioned to two talented, committed, and experienced top executives. [photo of Jmaes E. Stowers, Jr.] /s/James E. Stowers, Jr. James E. Stowers, Jr. FOUNDER AND CO-CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. 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 OTHER INFORMATION Approval of Management Agreements for NT International Growth and NT Emerging Markets . . . . . . . . . . . . . . . . . . . . . . . . . . 26 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 Mark On, Chief Investment Officer, International Equity INTERNATIONAL STOCKS HIGHER International equities registered healthy gains for the six months ended May 31, 2007, with most global equity markets posting double-digit returns. Market indexes in the U.S. and most European countries reached six-year highs, and many emerging market indexes in Asia, Europe, and Latin America approached or established record highs. The ride was bumpy, however. Global equity markets sold off sharply in March as investors pondered the implications of trouble in the U.S. subprime mortgage market for the broader economy, and a potential ripple effect from slower consumer spending. However, a number of factors helped international equities bounce back to post solid gains. Steady global growth, massive liquidity, corporate share buybacks, and record merger and acquisition activity all buoyed global asset prices. Emerging market shares, whose performance is most closely tied to global growth and investor appetite for risk, performed best. European stocks were next, while shares of Japanese equities lagged. Looking at performance by style, growth shares narrowly led value, as measured by the MSCI EAFE Growth and Value indexes, breaking a lengthy streak of value outperformance. HEALTHY GLOBAL GROWTH Despite a slowdown in U.S. economic growth, the global economy remained resilient. Strong consumer and corporate demand, reasonably low inflation, improving labor markets, and moderate (though rising) global interest rates have proved steady supports for global growth since the recovery began in 2002. Healthy economic growth led the Euorpean Central Bank to hike short-term interest rates twice during the period in the latest of seven-consecutive rate increases. The Bank of Japan also raised interest rates during the period, as unemployment fell to a nine-year low. 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 international team is dedicated to searching for companies to help drive investment performance. International Equity Total Returns For the six months ended May 31, 2007* (in U.S. dollars) MSCI EM Index 17.34% MSCI Europe Index 16.13% MSCI EAFE Growth Index 14.78% MSCI EAFE Index 14.08% MSCI EAFE Value Index 13.37% MSCI World Free Index 12.25% MSCI Japan Index 5.72% * Total returns for periods less than one year are not annualized. - ------ 2 PERFORMANCE NT International Growth Total Returns as of May 31, 2007 Average Annual Returns Since Inception 6 months(1) 1 year Inception Date INSTITUTIONAL CLASS 13.69% 25.87% 16.62% 5/12/06 MSCI EAFE INDEX 14.08% 26.84% 18.68% -- MSCI EAFE GROWTH INDEX 14.78% 25.13% 16.64% -- (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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One-Year Returns Over Life of Class Periods ended May 31 2006* 2007 Institutional Class -6.60% 25.87% MSCI EAFE Index -5.59% 26.84% MSCI EAFE Growth Index -6.04% 25.13% *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 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 PORTFOLIO COMMENTARY NT International Growth Portfolio Managers: Alex Tedder and Keith Creveling PERFORMANCE SUMMARY NT International Growth gained 13.69%* during the six months ended May 31, 2007. Its benchmark, the MSCI EAFE Index, advanced 14.08%. The portfolio's results reflected operating expenses, while the index returns did not. As we mentioned in the Market Perspective on page 2, economies worldwide enjoyed healthy growth during the period, boosting stock returns and contributing to absolute gains for the portfolio and its benchmark index. Investor optimism was somewhat tempered, however, as central banks moved to cool growth rates with interest rate maneuvers. Within the portfolio, stock selection in the information technology and materials sectors weighed on relative performance, while more effective stock selection in the financials, health care, and telecommunications services sectors helped boost the portfolio's relative returns. From a geographic perspective, underperforming stocks from the Netherlands and Sweden diminished relative returns, while effective security selection in the United Kingdom and an underweight stake in Japan that trailed the benchmark helped the portfolio advance on a relative basis. TECH HOLDINGS WEIGHED Although every sector contributed positively on an absolute basis during the period, five lagged the benchmark on a relative basis, which led to underperformance compared to the benchmark. Two of the poorest performing stocks during the period came from the tech sector -- Samsung Electronics and Hon Hai Precision. A stake in Samsung slumped amid inconsistent pricing in NAND memory chips, found in digital cameras and portable music players. The manufacturer of semiconductor chips and South Korea's largest exporter was also affected by a climb in the value of the won, the country's currency, against the U.S. dollar and the Japanese yen. Another holding that detracted from relative performance was contract manufacturer Hon Hai Precision of Taiwan. Although the company benefits from the popularity of Apple products such as the iPod, Hon Hai's stock drifted as fears of slowing growth in the U.S. grew. INDUSTRIALS SPURRED ADVANCE Enhancing the portfolio's relative returns were two holdings within the industrials sector. Despite a late-period setback due to lower-than-expected quarterly earnings, Denmark's Vestas Wind Systems AS, the largest wind-power system developer in the Top Ten Holdings as of May 31, 2007 % of net % of net assets as of assets as of 5/31/07 11/30/06 National Bank of Greece SA 1.5% 1.1% Groupe Danone 1.5% 1.5% Nintendo Co., Ltd. 1.5% 0.5% Total SA 1.4% 1.4% Roche Holding AG 1.4% 1.8% KDDI Corp. 1.4% -- Burberry Group plc 1.4% 1.1% HSBC Holdings plc 1.4% -- Tesco plc 1.3% 1.4% Credit Suisse Group 1.3% 1.2% * Total returns for periods less than one year are not annualized. - ------ 4 NT International Growth world, advanced significantly, and the portfolio benefited from its overweight position. The company reiterated its 2007 forecast for a 17% increase in annual revenues and a global market share goal of 35% by 2008. Also helping performance was an overweight stake in Hochtief AG, a German construction and engineering firm. To counter lackluster results from its domestic construction division the company has built profitable units across Asia and Australia. SELECT FINANCIALS THRIVED Notable stock selections in the financials sector included overweight positions in Swiss asset manager Julius Baer Holdings AG from the capital markets group and National Bank of Greece, a commercial bank. Julius Baer said operating profits rose 12% -- and net profits by 35% -- in 2006 while operating expenses increased by just 1%. Meanwhile, as it pushes to become the largest bank in southeast Europe and Turkey, National Bank of Greece (an overweight position) announced it expects profits to expand by an average of more than 30% a year for the next three years. Both stocks also received lifts amid merger-and-acquisition speculation. STARTING POINT FOR NEXT REPORTING PERIOD The landscape continues to change for international investors: Although emerging economies continue to be the driver of growth worldwide, many are moving from export-driven growth to internal growth, based on consumption. Against this backdrop, we continue to believe that the outlook for large-cap growth companies remains very good. NT International Growth has broad exposure to high quality growth companies in a number of markets, and we believe that these will deliver solid returns, even in volatile market conditions. Investments by Country as of May 31, 2007 % of net % of net assets as of assets as of 5/31/07 11/30/06 Japan 17.0% 14.6% United Kingdom 14.6% 16.2% Switzerland 11.1% 11.6% Germany 10.0% 5.0% France 8.8% 8.8% Australia 4.4% 3.7% Italy 4.0% 3.3% India 2.4% 2.2% Norway 2.3% 2.1% Finland 2.1% 2.0% Other Countries 19.1% 24.0% Cash and Equivalents(1) 4.2% 6.5% (1) Includes temporary cash investments, securities lending collateral and other assets and liabilities. Types of Investments in Portfolio % of net % of net assets as of assets as of 5/31/07 11/30/06 Foreign Common Stocks 95.4% 93.5% Foreign Preferred Stocks 0.4% -- TOTAL EQUITY EXPOSURE 95.8% 93.5% Temporary Cash Investments 2.5% 1.9% Other Assets and Liabilities(2) 1.7% 4.6% (2) Includes securities lending collateral and other assets and liabilities. - ------ 5 SCHEDULE OF INVESTMENTS NT International Growth MAY 31, 2007 (UNAUDITED) Shares Value Common Stocks -- 95.4% AUSTRALIA -- 4.4% 26,431 BHP Billiton Ltd. $ 690,114 6,100 CSL Ltd. 450,485 15,258 National Australia Bank Ltd. 537,499 22,323 QBE Insurance Group Ltd. 577,123 4,746 Rio Tinto Ltd. 375,173 ----------- 2,630,394 ----------- AUSTRIA -- 0.8% 6,035 Erste Bank der Oesterreichischen Sparkassen AG(1) 473,384 ----------- BELGIUM -- 1.7% 4,155 KBC Groupe 573,290 1,900 Umicore 405,489 ----------- 978,779 ----------- CANADA -- 0.7% 10,400 Rogers Communications Inc. Cl B 431,267 ----------- CZECH REPUBLIC -- 0.8% 8,800 CEZ AS(1) 449,629 ----------- DENMARK -- 0.8% 6,700 Vestas Wind Systems AS(1) 470,740 ----------- FINLAND -- 2.1% 3,600 Kone Oyj 215,493 10,500 Metso Oyj 584,019 17,200 Nokia Oyj 470,934 ----------- 1,270,446 ----------- FRANCE -- 8.8% 6,621 Accor SA(2) 615,652 1,900 ALSTOM Co.(1) 300,883 14,831 AXA SA(2) 648,318 5,641 Groupe Danone(2) 883,667 2,267 PPR SA(2) 413,781 3,600 Schneider Electric SA 519,672 2,578 Societe Generale 502,214 11,424 Total SA 860,744 6,262 Veolia Environnement 524,048 ----------- 5,268,979 ----------- GERMANY -- 9.6% 5,500 adidas AG 351,055 2,500 Allianz SE 554,998 3,800 BASF AG 470,574 2,000 Continental AG 282,841 2,100 DaimlerChrysler AG 192,554 2,770 Deutsche Boerse AG 655,636 Shares Value 3,290 Fresenius Medical Care AG & Co. KGaA $ 482,846 17,152 GEA Group AG(1) 553,160 4,000 Hochtief AG 463,642 12,074 KarstadtQuelle AG(1) 432,115 1,900 Linde AG(1) 209,928 5,300 Q-Cells AG(1) 442,115 3,500 SAP AG 167,502 3,400 Siemens AG 448,029 ----------- 5,706,995 ----------- GREECE -- 1.5% 15,200 National Bank of Greece SA(1) 907,608 ----------- HONG KONG -- 1.7% 55,600 Esprit Holdings Ltd. 684,631 102,000 Li & Fung Ltd. 342,242 ----------- 1,026,873 ----------- INDIA -- 2.4% 8,300 Housing Development Finance Corp. Ltd. 384,586 4,600 Infosys Technologies Ltd. 218,778 40,800 Reliance Communication Ventures Ltd.(1) 510,366 10,100 Tata Consultancy Services Ltd. 302,337 ----------- 1,416,067 ----------- IRELAND -- 1.5% 20,393 Anglo Irish Bank Corp. plc 478,789 9,592 Ryanair Holdings plc ADR(1)(2) 396,054 ----------- 874,843 ----------- ITALY -- 4.0% 17,035 Banco Popolare di Verona e Novara Scrl(2) 517,528 13,511 ENI SpA 477,728 6,200 Fiat SpA 177,513 9,400 Finmeccanica SpA 295,692 7,932 Luxottica Group SpA(2) 278,436 20,962 Saipem SpA 655,162 ----------- 2,402,059 ----------- JAPAN -- 17.0% 35,000 Bank of Yokohama Ltd. (The)(2) 261,443 8,100 Canon, Inc. 476,588 6,800 Daiei Inc. (The)(1) 72,979 7,900 Daikin Industries Ltd.(2) 288,890 3,000 Daito Trust Construction Co., Ltd. 159,011 3,100 Fanuc Ltd. 296,014 2,000 Ibiden Co. Ltd. 107,979 - ------ 6 NT International Growth Shares Value 13,302 iShares MSCI Japan Index Fund(2) $ 194,475 39,000 Isuzu Motors Ltd. 190,048 7,700 JTEKT Corp. 136,992 100 KDDI Corp. 854,631 7,300 LAWSON Inc. 260,350 3,000 Makita Corp. 124,743 45,000 Marubeni Corp. 314,693 62,000 Mitsubishi Electric Corp. 567,064 32 Mitsubishi UFJ Financial Group, Inc. 368,148 1,200 Murata Manufacturing Co. Ltd. 84,806 2,500 Nintendo Co., Ltd. 874,148 40,000 Nippon Yusen Kabushiki Kaisha 369,135 2,700 ORIX Corp. 723,313 37,000 Osaka Gas Co. Ltd. 137,735 14,000 Sharp Corp. 268,058 6,700 Sony Corp. 385,956 47,000 Sumitomo Heavy Industries Ltd. 534,152 94,000 Sumitomo Metal Industries Ltd. 509,048 13,000 Sumitomo Realty & Development Co. Ltd. 491,413 47,000 Taisei Corp.(2) 154,877 23,000 Tokyo Tatemono Co. Ltd. 331,704 10,100 Toyota Motor Corp. 605,884 ----------- 10,144,277 ----------- MEXICO -- 0.9% 9,148 America Movil, SAB de CV ADR 553,911 ----------- NETHERLANDS -- 1.6% 6,600 Heineken N.V. 384,503 9,494 ING Groep N.V. CVA 422,937 2,647 Royal Numico N.V. 131,736 ----------- 939,176 ----------- NORWAY -- 2.3% 13,790 Aker Kvaerner ASA 338,450 24,400 Statoil ASA(2) 666,628 12,863 Telenor ASA 250,106 4,800 Yara International ASA 139,100 ----------- 1,394,284 ----------- PEOPLE'S REPUBLIC OF CHINA -- 0.5% 109,000 China Merchants Bank Co. Ltd. Cl H 281,277 ----------- RUSSIAN FEDERATION -- 0.5% 5,707 Mobile TeleSystems ADR(1) 309,205 ----------- SINGAPORE -- 0.7% 55,000 Keppel Corp. Ltd. 397,651 ----------- Shares Value SOUTH AFRICA -- 0.6% 5,900 Anglo American plc $ 354,926 ----------- SOUTH KOREA -- 0.2% 200 Samsung Electronics 115,277 ----------- SPAIN -- 1.7% 22,600 Banco Bilbao Vizcaya Argentaria SA 571,047 7,101 Inditex SA 448,180 ----------- 1,019,227 ----------- SWEDEN -- 1.6% 11,300 Swedbank AB Cl A 416,414 133,000 Telefonaktiebolaget LM Ericsson Cl B 504,530 ----------- 920,944 ----------- SWITZERLAND -- 11.1% 28,615 ABB Ltd. 611,910 500 Actelion Ltd.(1)(2) 109,268 5,461 Adecco SA 398,254 8,231 Compagnie Financiere Richemont SA Cl A 506,208 10,100 Credit Suisse Group 767,887 6,700 Holcim Ltd. 740,980 9,600 Julius Baer Holding AG 730,264 700 Nestle SA 272,527 7,665 Novartis AG 430,734 4,666 Roche Holding AG 856,118 3,007 Syngenta AG 565,960 2,700 Synthes Inc. 336,508 4,158 UBS AG 271,159 ----------- 6,597,777 ----------- TAIWAN (REPUBLIC OF CHINA) -- 1.1% 74,000 Hon Hai Precision Industry Co., Ltd. 523,051 77,000 Quanta Computer Inc. 116,543 ----------- 639,594 ----------- TURKEY -- 0.2% 22,187 Turkiye Halk Bankasi AS(1) 144,826 ----------- UNITED KINGDOM -- 14.6% 29,651 Barclays plc 423,772 46,631 BG Group plc 712,603 13,959 BP plc 155,982 54,200 BT Group plc 353,517 61,810 Burberry Group plc 836,283 28,878 Capita Group plc 423,586 20,100 Daily Mail and General Trust plc A Shares 335,213 23,700 Experian Group Ltd. 294,855 14,872 GlaxoSmithKline plc 385,653 44,000 HSBC Holdings plc 813,495 - ------ 7 NT International Growth Shares Value 27,200 Informa plc $ 317,939 61,700 International Power plc 554,188 51,916 Man Group plc 604,788 6,100 Punch Taverns plc 162,287 9,707 Reckitt Benckiser plc 527,644 42,253 Royal Bank of Scotland Group plc 524,840 84,982 Tesco plc 771,718 150,200 Vodafone Group plc 469,767 ----------- 8,668,130 ----------- TOTAL COMMON STOCKS (Cost $48,097,419) 56,788,545 ----------- Preferred Stocks -- 0.4% GERMANY -- 0.4% 1,400 Henkel KGaA 217,823 (Cost $223,110) ----------- Temporary Cash Investments -- 2.5% Repurchase Agreement, Credit Suisse First Boston, Inc., (collateralized by various U.S. Treasury obligations, 5.25%-8.125%, 8/15/21-11/15/28, valued at $1,527,990), in a joint trading account at 5.03%, dated 5/31/07, due 6/1/07 (Delivery value $1,500,210) (Cost $1,500,000) 1,500,000 ----------- Temporary Cash Investments -- Securities Lending Collateral(3) -- 7.0% Repurchase Agreement, Lehman Brothers Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.30%, dated 5/31/07, due 6/1/07 (Delivery value $4,188,393) (Cost $4,187,776) 4,187,776 ----------- TOTAL INVESTMENT SECURITIES -- 105.3% (Cost $54,008,305) 62,694,144 ----------- OTHER ASSETS AND LIABILITIES -- (5.3)% (3,147,338) ----------- TOTAL NET ASSETS -- 100.0% $59,546,806 =========== Market Sector Diversification (as a % of net assets) Financials 25.1% Industrials 15.9% Consumer Discretionary 13.8% Materials 7.5% Information Technology 6.7% Energy 6.5% Telecommunication Services 6.3% Consumer Staples 5.8% Health Care 5.1% Utilities 2.8% Diversified 0.3% Cash and Equivalents* 4.2% * Includes temporary cash investments, securities lending collateral and other assets and liabilities. Notes to Schedule of Investments ADR = American Depositary Receipt CVA = Certificaten Van Aandelen MSCI = Morgan Stanley Capital International (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of May 31, 2007. (3) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. As of May 31, 2007, securities with an aggregate value of $397,651, which represented 0.7% of total net assets, were valued in accordance with alternative pricing procedures adopted by the Board of Directors. See Notes to Financial Statements. - ------ 8 PERFORMANCE NT Emerging Markets Total Returns as of May 31, 2007 Average Annual Returns Since Inception 6 months(1) 1 year Inception Date INSTITUTIONAL CLASS 21.95% 46.74% 32.32% 5/12/06 MSCI EM INDEX 17.34% 38.16% 20.14% -- (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
![](https://capedge.com/proxy/N-CSRS/0000872825-07-000080/ntemgmkt0707.gif)
One-Year Returns Over Life of Class Periods ended May 31 2006* 2007 Institutional Class -8.50% 46.74% MSCI EM Index -12.21% 38.16% *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 PORTFOLIO COMMENTARY NT Emerging Markets Portfolio Managers: Mark On and Patricia Ribeiro On May 3, 2007, Mark On joined Patricia Ribeiro as co-manager of NT Emerging Markets. On, who was also appointed chief investment officer of American Century's International Equity discipline, filled the vacancy created when a former portfolio manager left the company on March 9, 2007. PERFORMANCE SUMMARY NT Emerging Markets gained 21.95%* during the six months ended May 31, 2007, compared to the 17.34% advance of its benchmark, the MSCI EM Index. NT Emerging Markets also outperformed the 18.76%** average return of Morningstar's Diversified Emerging Markets category during the period. As we mentioned in the Market Perspective on page 2, expanding economic growth rates in developing countries proved beneficial for stocks in the portfolio and benchmark and led to solid gains. Favorable stock picks in Russia, Mexico, and Taiwan, as well as the energy and information technology sectors, were top contributors to the portfolio's outperformance versus its benchmark. IPOS CONTRIBUTED TO GAINS During the reporting period, the portfolio derived a meaningful portion of its returns from investments in initial public offerings. We participate selectively in initial public offerings, and only if the offering fits our process. Notable contributors included Dufry South America Ltd., an operator of duty-free stores in airports and on cruise ships; China's Yangzijiang Shipbuilding Holdings Ltd., a cargo vessel manufacturer; and PNOC Energy Development Corp., a Philippine producer of geothermal power. ENERGY, UTILITY MOVES PROVED EFFECTIVE The portfolio's relative outperformance in the energy sector stemmed in part from our decision to maintain underweight stakes in two Russian companies -- natural gas producer OAO Gazprom and oil concern Lukoil -- as both stocks slumped. In the utilities sector, we benefited from an overweight stake in Companhia de Gas de Sao Paulo, a Brazilian distributor of natural gas better known as Comgas that reported an 18% increase in annual revenues in 2006. OTHER STOCK-SPECIFIC CONTRIBUTORS Two leading stocks during the period were Axtel, SAB de CV of Mexico and Realtek Semiconductor Corp. of Taiwan. Axtel, SAB de CV, the second-largest wireline Top Ten Holdings as of May 31, 2007 % of net % of net assets as of assets as of 5/31/07 11/30/06 Samsung Electronics 1.9% -- Telkom SA Ltd. 1.7% -- Cia Vale do Rio Doce ADR 1.7% -- POSCO 1.6% 1.3% Nokian Renkaat Oyj 1.6% 1.2% America Movil, SAB de CV ADR 1.5% -- Amorepacific Corp. 1.5% 0.9% Shinsegae Co. Ltd. 1.5% 1.3% Petroleo Brasileiro SA ADR 1.5% 1.0% Turkiye Garanti Bankasi AS 1.4% 0.6% * Total returns for periods less than one year are not annualized. ** The 1-year average return for Morningstar Diversified Emerging Markets category as of May 31, 2007 was 39.99%. © 2007 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. - ------ 10 NT Emerging Markets provider of telecommunication services in Mexico, expanded its reach from 12 to 17 cities during 2006. The company, which derives about 80% of its revenues from corporate clients, is planning to add six to eight markets in 2007. Taiwan-based chipmaker Realtek Semiconductor announced it will supply parts for an Apple Inc. product that enables Internet downloads to be shown on televisions. MATERIALS, APPAREL, TECH NAMES SLOWED ADVANCE The materials sector was the largest detractor to relative performance on a sector basis. Specifically, our underweight position in that sector as well as our underweight position in Cia Vale do Rio Doce of Brazil, a stock that performed well over the period, hindered performance. Another detractor was Win Hanverky Holdings, a Hong Kong-based manufacturer and distributor of sportswear, which reported softening profit margins in 2006. Additionally, the portfolio's overweight stake in Taiwanese notebook computer maker Asustek Computer underperformed amid disappointing sales of Microsoft's Windows Vista operating system. Asustek also slumped after announcing it was suspending a joint venture with a competitor to manufacture motherboard circuits. China was the portfolio's largest country detractor on a relative basis. STARTING POINT FOR NEXT REPORTING PERIOD 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 May 31, 2007, we continued to see opportunities in Chile and Brazil, as reflected by our overweight positions in those countries compared with the fund's benchmark. Conversely, the portfolio held underweight positions in Russia, Israel, and India. From a sector point of view, we continue to find attractive growth opportunities in the consumer discretionary sector, while we maintain our underweight position in the energy and financials sectors. Investments by Country as of May 31, 2007 % of net % of net assets as of assets as of 5/31/07 11/30/06 South Korea 15.2% 9.8% Brazil 13.1% 10.1% Taiwan (Republic of China) 10.8% 9.4% South Africa 8.1% 3.8% Russian Federation 5.8% 8.4% Mexico 5.7% 5.8% People's Republic of China 5.7% 5.2% India 5.0% 1.8% Chile 3.6% 3.8% Hong Kong 3.3% 5.0% Malaysia 3.3% 1.2% Indonesia 2.5% 3.7% Turkey 2.1% 0.6% Singapore 2.1% 0.2% Other Countries 8.2% 20.7% Cash and Equivalents(1) 5.5% 10.5% (1) Includes temporary cash investments, securities lending collateral and other assets and liabilities Types of Investments in Portfolio % of net % of net assets as of assets as of 5/31/07 11/30/06 Foreign Common Stocks and Rights 93.1% 87.1% Foreign Preferred Stocks 1.4% 2.4% TOTAL EQUITY EXPOSURE 94.5% 89.5% Temporary Cash Investments 4.2% 1.5% Other Assets and Liabilities(2) 1.3% 9.0% (2) Includes securities lending collateral and other assets and liabilities. - ------ 11 SCHEDULE OF INVESTMENTS NT Emerging Markets MAY 31, 2007 (UNAUDITED) Shares Value Common Stocks and Rights -- 93.1% ARGENTINA -- 0.5% 3,882 Banco Macro SA ADR $ 138,665 ------------ BRAZIL -- 11.7% 19,600 ALL - America Latina Logistica SA 250,447 Bematech Industria e Comercio de Equipamentos 5,900 Electronicos SA(1) 61,875 8,700 Cia Vale do Rio Doce ADR 395,415 7,549 Dufry South America Ltd. BDR(1) 169,786 12,200 Equatorial Energia SA 123,825 9,700 Gafisa SA 162,742 26,100 JBS SA(1) 110,083 18,500 Lojas Renner SA 307,884 15,233 LPS Brasil - Consultoria de Imoveis SA(1) 182,777 10,000 Lupatech SA 206,420 3,282 Petroleo Brasileiro SA ADR 354,981 17,982 Santos-Brasil SA 251,723 6,100 Totvs SA 209,121 ------------ 2,787,079 ------------ CHILE -- 3.6% 68,100 Cencosud SA 274,680 19,100 Compania Cervecerias Unidas SA 134,456 41,910 La Polar SA 240,010 700 LAN Airlines SA ADR(2) 56,294 43 LAN Airlines SA Rights -- 201,700 Masisa SA 55,068 62,000 Ripley Corp. SA 89,768 ------------ 850,276 ------------ CZECH REPUBLIC -- 1.7% 4,600 CEZ AS(1) 235,033 1,000 Komercni Banka AS 183,064 ------------ 418,097 ------------ FINLAND -- 1.6% 10,678 Nokian Renkaat Oyj 372,098 ------------ HONG KONG -- 3.3% 182,000 China Yurun Food Group Ltd. 219,095 44,000 FU JI Food and Catering Services Holdings Ltd. 150,451 36,000 Parkson Retail Group Ltd. 242,275 25,000 Vtech Holdings Ltd. 182,493 ------------ 794,314 ------------ Shares Value HUNGARY -- 0.5% 900 MOL Hungarian Oil and Gas Nyrt $ 116,074 ------------ INDIA -- 5.0% 1,000 ABB India Ltd. 113,816 1,700 Bharat Heavy Electricals Ltd. 58,901 6,200 ICICI Bank Ltd. ADR(2) 294,810 10,400 JSW Steel Ltd. 156,148 18,100 Reliance Communication Ventures Ltd.(1) 226,413 13,100 Rolta India Ltd. 149,235 6,200 Tata Consultancy Services Ltd. 185,593 ------------ 1,184,916 ------------ INDONESIA -- 2.5% 134,500 PT Astra International Tbk 249,892 648,000 PT Bank Mandiri Tbk 238,586 94,500 PT Telekomunikasi Indonesia Tbk 102,240 ------------ 590,718 ------------ KAZAKHSTAN -- 0.7% 8,369 KazMunaiGas Exploration Production GDR(1) 165,120 ------------ MALAYSIA -- 3.3% 253,000 AirAsia Bhd(1) 145,911 66,000 Bumiputra -- Commerce Holdings Bhd 231,102 57,000 Kuala Lumpur Kepong Bhd 224,746 22,300 Malaysian Plantations Bhd(1) 19,029 20,300 Tanjong plc 108,115 22,000 Top Glove Corporation Bhd(1) 55,995 ------------ 784,898 ------------ MEXICO -- 5.7% 6,100 America Movil, SAB de CV ADR 369,354 53,187 Axtel, SAB de CV(1) 276,814 33,948 Corporacion GEO, SAB de CV Series B(1) 192,646 37,902 Corporacion Moctezuma, SAB de CV 112,923 Grupo Aeroportuario del Pacifico, SAB de CV 2,446 ADR 120,196 37,500 Grupo Financiero Banorte, SAB de CV 175,270 26,975 Urbi Desarrollos Urbanos, SAB de CV(1) 115,504 ------------ 1,362,707 ------------ - ------ 12 NT Emerging Markets Shares Value PAKISTAN -- 0.8% 9,727 Oil & Gas Development Co. Ltd. GDR $ 193,081 ------------ PEOPLE'S REPUBLIC OF CHINA -- 5.7% 94,000 Agile Property Holdings Ltd. 103,649 258,000 China Construction Bank Cl H 154,631 42,000 China Merchants Bank Co. Ltd. Cl H 108,382 50,000 China National Building Material Co. Ltd. Cl H 72,357 206,000 China Petroleum & Chemical Corp. Cl H 230,047 3,672 Focus Media Holding Ltd. ADR(1)(2) 162,413 19,000 Haitian International Holdings Ltd.(1) 14,113 125,000 Nine Dragons Paper Holdings Ltd. 261,574 46,000 PetroChina Co. Ltd. Cl H 60,206 104,000 Wumart Stores Inc. Cl H 73,307 99,000 Yangzijiang Shipbuilding Holdings Ltd.(1) 111,359 ------------ 1,352,038 ------------ PHILIPPINES -- 1.1% 3,847,200 Filinvest Land Inc.(1) 159,710 246,500 Robinsons Land Corp. 106,595 ------------ 266,305 ------------ POLAND -- 1.3% 13,200 Agora SA 215,104 6,120 Globe Trade Centre SA(1) 106,422 ------------ 321,526 ------------ RUSSIAN FEDERATION -- 5.8% 3,800 CTC Media Inc.(1) 97,166 2,000 LUKOIL 151,800 3,300 Mobile TeleSystems ADR(1) 178,794 6,773 OAO TMK GDR(1) 247,215 2,601 OJSC Pharmstandard GDR(1)(2) 43,047 8,885 Sistema Hals GDR(1) 114,172 274,454 Unified Energy System(1) 339,500 7,069 X5 Retail Group N.V. GDR(1) 212,423 ------------ 1,384,117 ------------ SINGAPORE -- 2.1% 164,000 Midas Holdings Ltd. 236,349 140,000 Yanlord Land Group Ltd. 259,143 ------------ 495,492 ------------ Shares Value SOUTH AFRICA -- 8.1% 3,600 Anglo American plc $ 215,214 28,500 Aspen Pharmacare Holdings Ltd. 156,009 7,482 Barloworld Ltd. 207,408 3,600 Impala Platinum Holdings Ltd. 110,159 8,066 Kumba Iron Ore Ltd. 218,502 10,400 Murray & Roberts Holdings Ltd. 98,517 71,600 Network Healthcare Holdings Ltd. 155,770 2,755 Pretoria Portland Cement Co. Ltd. 195,278 9,302 Sappi Ltd. 173,686 16,800 Telkom SA Ltd. 404,402 ------------ 1,934,945 ------------ SOUTH KOREA -- 15.2% 430 Amorepacific Corp. 361,345 5,630 GS Holdings Corp. 288,111 14,400 Hankook Tire Co. Ltd. 231,933 1,100 Hyundai Department Store Co. Ltd. 135,693 600 Hyundai Heavy Industries Co., Ltd. 204,912 2,400 Korean Air Lines Co., Ltd. 142,211 12,000 LG Dacom Corp. 290,886 8,700 LIG Non-Life Insurance Co., Ltd. 168,714 800 MegaStudy Co., Ltd. 148,502 2,800 Modetour Network Inc. 125,189 800 POSCO 384,400 800 Samsung Electronics 461,108 5,520 Shinhan Financial Group Co., Ltd. 340,762 500 Shinsegae Co. Ltd. 358,220 ------------ 3,641,986 ------------ TAIWAN (REPUBLIC OF CHINA) -- 10.8% 124,640 Asia Cement Corp. 139,223 136,220 China Steel Corp. 158,754 117,600 Chinatrust Financial Holding Co. 89,175 39,000 Gemtek Technology Corp. 109,438 15,400 Himax Technologies Inc. ADR(1) 77,924 45,400 Hon Hai Precision Industry Co., Ltd. 320,899 17,000 MediaTek Inc. 269,139 60,000 Merry Electronics Co. Ltd. 216,134 119,000 Realtek Semiconductor Corp. 304,389 - ------ 13 Shares Value 14,000 Richtek Technology Corp.(1) $ 165,279 221,325 Shin Kong Financial Holding Co. Ltd. 233,819 157,000 U-Ming Marine Transport Corp.(1) 279,449 134,000 Wistron Corp. 226,342 ------------ 2,589,964 ------------ TURKEY -- 2.1% 26,100 Turk Hava Yollari Anonim Ortakligi(1) 166,406 62,400 Turkiye Garanti Bankasi AS 343,378 ------------ 509,784 ------------ TOTAL COMMON STOCKS AND RIGHTS (Cost $16,905,644) 22,254,200 ------------ Preferred Stocks -- 1.4% BRAZIL -- 1.4% Cia Brasileira de Distribuicao Grupo Pao de 3,100 Acucar ADR(2) 104,532 960,000 Companhia de Gas de Sao Paulo Cl A 223,046 ------------ TOTAL PREFERRED STOCKS (Cost $224,033) 327,578 ------------ Principal Amount Temporary Cash Investments -- 4.2% $1,000,000 FHLB Discount Notes, 5.05%, 6/1/07(3) 1,000,000 (Cost $1,000,000) ------------ Temporary Cash Investments -- Securities Lending Collateral(4) -- 2.6% Repurchase Agreement, Lehman Brothers Inc., (collateralized by various U.S. Government Agency obligations in a pooled account at the lending agent), 5.30%, dated 5/31/07, due 6/1/07 (Delivery value $613,532) (Cost $613,442) 613,442 ------------ TOTAL INVESTMENT SECURITIES -- 101.3% (Cost $18,743,119) 24,195,220 ------------ OTHER ASSETS AND LIABILITIES -- (1.3)% (308,251) ------------ TOTAL NET ASSETS -- 100.0% $ 23,886,969 ============ Market Sector Diversification (as a % of net assets) Consumer Discretionary 15.9% Financials 14.9% Information Technology 11.4% Industrials 11.1% Materials 11.1% Consumer Staples 8.8% Telecommunication Services 7.7% Energy 7.6% Utilities 4.3% Health Care 1.7% Cash and Equivalents* 5.5% * Includes temporary cash investments, securities lending collateral and other assets and liabilities. Notes to Schedule of Investments ADR = American Depositary Receipt BDR = Brazilian Depositary Receipt FHLB = Federal Home Loan Bank GDR = Global Depositary Receipt OJSC = Open Joint Stock Company (1) Non-income producing. (2) Security, or a portion thereof, was on loan as of May 31, 2007. (3) The rate indicated is the yield to maturity at purchase. (4) Investments represent purchases made by the lending agent with cash collateral received through securities lending transactions. As of May 31, 2007, securities with an aggregate value of $606,851, which represented 2.5% of total net assets, were valued in accordance with alternative pricing procedures adopted by the Board of Directors. See Notes to Financial Statements. - ------ 14 SHAREHOLDER FEE EXAMPLES (UNAUDITED) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from December 1, 2006 to May 31, 2007. 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. 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. - ------ 15 Beginning Ending Expenses Paid Account Value Account Value During Period* Annualized 12/1/06 5/31/07 12/1/06 - 5/31/07 Expense Ratio* NT International Growth -- Institutional Class Actual $1,000 $1,136.90 $5.59 1.05% Hypothetical $1,000 $1,019.70 $5.29 1.05% NT Emerging Markets -- Institutional Class Actual $1,000 $1,219.50 $8.36 1.51% Hypothetical $1,000 $1,017.40 $7.59 1.51% * Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 16 STATEMENT OF ASSETS AND LIABILITIES MAY 31, 2007 (UNAUDITED) NT International NT Emerging Growth Markets ASSETS Investment securities -- at value (cost of $49,820,529 and $18,129,677, respectively) -- including $4,038,207 and $601,028 of securities on loan, respectively $58,506,368 $23,581,778 Investments made with cash collateral received for securities on loan, at value (cost of $4,187,776 and $613,442, respectively) 4,187,776 613,442 ----------- ----------- Total investment securities -- at value (cost of $54,008,305 and $18,743,119, respectively) 62,694,144 24,195,220 Cash 950,082 465,290 Foreign currency holdings, at value (cost of $669 and $28,256, respectively) 668 28,391 Receivable for investments sold 477,495 247,554 Dividends and interest receivable 322,281 40,392 ----------- ----------- 64,444,670 24,976,847 ----------- ----------- LIABILITIES Payable for collateral received for securities on loan 4,187,776 613,442 Payable for investments purchased 659,500 448,632 Accrued management fees 50,588 27,804 ----------- ----------- 4,897,864 1,089,878 ----------- ----------- NET ASSETS $59,546,806 $23,886,969 =========== =========== INSTITUTIONAL CLASS CAPITAL SHARES, $0.01 PAR VALUE Authorized 50,000,000 50,000,000 =========== =========== Outstanding 5,080,481 1,793,671 =========== =========== NET ASSET VALUE PER SHARE $11.72 $13.32 =========== =========== NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $50,711,421 $17,786,253 Undistributed net investment income 337,752 35,447 Accumulated undistributed net realized gain (loss) on investment and foreign currency transactions (155,832) 635,933 Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 8,653,465 5,429,336 ----------- ----------- $59,546,806 $23,886,969 =========== =========== See Notes to Financial Statements. - ------ 17 STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MAY 31, 2007 (UNAUDITED) NT International NT Emerging Growth Markets INVESTMENT INCOME (LOSS) INCOME: Dividends (net of foreign taxes withheld of $71,423 and $15,011, respectively) $617,376 $ 172,297 Interest 21,232 19,439 Securities lending 5,168 78 ---------- ---------- 643,776 191,814 ---------- ---------- EXPENSES: Management fees 263,393 144,889 Directors' fees and expenses 357 138 Other expenses 298 127 ---------- ---------- 264,048 145,154 ---------- ---------- NET INVESTMENT INCOME (LOSS) 379,728 46,660 ---------- ---------- REALIZED AND UNREALIZED GAIN (LOSS) NET REALIZED GAIN (LOSS) ON: Investment transactions (net of foreign taxes withheld of $431 and $--, respectively) 1,136,446 722,554 Foreign currency transactions 266,299 20,475 ---------- ---------- 1,402,745 743,029 ---------- ---------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: Investments (net of foreign taxes accrued of $(10,309) and $(14,558), respectively) 4,900,335 2,851,139 Translation of assets and liabilities in foreign currencies (235,188) 286,399 ---------- ---------- 4,665,147 3,137,538 ---------- ---------- NET REALIZED AND UNREALIZED GAIN (LOSS) 6,067,892 3,880,567 ---------- ---------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $6,447,620 $3,927,227 ========== ========== See Notes to Financial Statements. - ------ 18 STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED MAY 31, 2007 (UNAUDITED) AND PERIOD ENDED NOVEMBER 30, 2006(1) NT International Growth NT Emerging Markets Increase (Decrease) in Net Assets 2007 2006 2007 2006 OPERATIONS Net investment income (loss) $ 379,728 $ 118,808 $ 46,660 $ 134,730 Net realized gain (loss) 1,402,745 (1,581,308) 743,029 (120,093) Change in net unrealized appreciation (depreciation) 4,665,147 3,988,318 3,137,538 2,291,798 ----------- ----------- ----------- ----------- Net increase (decrease) in net assets resulting from operations 6,447,620 2,525,818 3,927,227 2,306,435 ----------- ----------- ----------- ----------- DISTRIBUTIONS TO SHAREHOLDERS From net investment income (138,053) -- (132,946) -- ----------- ----------- ----------- ----------- CAPITAL SHARE TRANSACTIONS Proceeds from shares sold 15,573,857 44,735,507 6,165,235 17,857,562 Payments for shares redeemed (8,716,251) (881,692) (5,916,687) (319,857) ----------- ----------- ----------- ----------- Net increase (decrease) in net assets from capital share transactions 6,857,606 43,853,815 248,548 17,537,705 ----------- ----------- ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS 13,167,173 46,379,633 4,042,829 19,844,140 NET ASSETS Beginning of period 46,379,633 -- 19,844,140 -- ----------- ----------- ----------- ----------- End of period $59,546,806 $46,379,633 $23,886,969 $19,844,140 =========== =========== =========== =========== Undistributed net investment income $337,752 $96,508 $35,447 $121,733 =========== =========== =========== =========== TRANSACTIONS IN SHARES OF THE FUNDS Sold 1,409,918 4,577,398 512,843 1,836,860 Redeemed (812,861) (93,974) (521,728) (34,304) ----------- ----------- ----------- ----------- Net increase (decrease) in shares of the funds 597,057 4,483,424 (8,885) 1,802,556 =========== =========== =========== =========== (1) May 12, 2006 (fund inception) through November 30, 2006. See Notes to Financial Statements. - ------ 19 NOTES TO FINANCIAL STATEMENTS MAY 31, 2007 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. NT International Growth Fund (NT International Growth) and NT Emerging Markets Fund (NT Emerging Markets) (collectively, the funds) are two funds in a series issued by the corporation. The funds are diversified under the 1940 Act. The funds' investment objective is to seek capital growth. The funds pursue this objective by investing primarily in equity securities of foreign companies. NT International Growth primarily invests in companies located in at least three developed countries (excluding United States). NT Emerging Markets invests at least 80% of its assets in securities of issuers in 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 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 as determined by, or in accordance with procedures adopted by, the Board of Directors or its designee if such determination would materially impact a fund's net asset value. Certain other circumstances may cause the funds to use alternative procedures to 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. 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. - ------ 20 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. The funds may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code, in all events in a manner consistent with provisions of the 1940 Act. 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. - ------ 21 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACGIM (the investment advisor), under which ACGIM provides the funds with investment advisory and management services in exchange for a single, unified management fee (the fee). The Agreement provides that all expenses of the funds, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by ACGIM. The fee is computed and accrued daily based on the daily net assets of each fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account all of the investment advisor's assets under management in each fund's investment strategy (strategy assets) to calculate the appropriate fee rate for each fund. The strategy assets include each fund's assets and the assets of other clients of the investment advisor that are not in the American Century family of funds, but that have the same investment team and investment strategy. The strategy assets of NT International Growth and NT Emerging Markets include the assets of International Growth Fund and Emerging Markets Fund, respectively, two funds in a series issued by the corporation. The annual management fee schedule for NT International Growth ranges from 0.90% to 1.30%. The annual management fee schedule for NT Emerging Markets ranges from 1.05% to 1.65%. The effective annual management fee for NT International Growth and NT Emerging Markets for the six months ended May 31, 2007 was 1.05% and 1.51%, 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. Beginning in December 2006, the funds were eligible to invest in a money market fund for temporary purposes, which was managed by J.P. Morgan Investment Management, Inc. (JPMIM). JPMIM is a wholly owned subsidiary of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC. The funds have a bank line of credit agreement and securities lending agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the funds and a wholly owned subsidiary of JPM. 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the six months ended May 31, 2007, were as follows: NT International Growth NT Emerging Markets Purchases $35,091,228 $10,956,315 Proceeds from sales $27,515,302 $10,030,759 4. SECURITIES LENDING As of May 31, 2007, securities in NT International Growth and NT Emerging Markets valued at $4,038,207 and $601,028, 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 $4,187,776 and $613,442, 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. - ------ 22 5. BANK LINE OF CREDIT Effective December 13, 2006, 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 0.40%. The funds did not borrow from the line during the six months ended May 31, 2007. 6. 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. 7. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of May 31, 2007, the components of investments for federal income tax purposes were as follows: NT International NT Emerging Growth Markets Federal tax cost of investments $54,203,440 $18,772,995 =========== =========== Gross tax appreciation of investments $8,917,173 $5,563,091 Gross tax depreciation of investments (426,469) (140,866) ----------- ----------- Net tax appreciation (depreciation) of investments $8,490,704 $5,422,225 =========== =========== 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. As of November 30, 2006, NT International Growth and NT Emerging Markets had accumulated capital losses of $(1,383,858) and $(80,214), respectively, which 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. As of November 30, 2006, NT International Growth had currency loss deferrals of $(10,768), which represent net foreign currency losses incurred in the one-month period ended November 30, 2006. NT International Growth has elected to treat such losses as having been incurred in the following fiscal year for federal income tax purposes. 8. 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 FINANCIAL HIGHLIGHTS NT International Growth For a Share Outstanding Throughout the Periods Indicated 2007(1) 2006(2) PER-SHARE DATA Net Asset Value, Beginning of Period $10.34 $10.00 ------ ------ Income From Investment Operations Net Investment Income (Loss) 0.07 0.03 Net Realized and Unrealized Gain (Loss) 1.34 0.31 ------ ------ Total From Investment Operations 1.41 0.34 ------ ------ Distributions From Net Investment Income (0.03) -- ------ ------ Net Asset Value, End of Period $11.72 $10.34 ====== ====== TOTAL RETURN(3) 13.69% 3.40% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.05%(4) 1.07%(4) Ratio of Net Investment Income (Loss) to Average Net Assets 1.52%(4) 0.59%(4) Portfolio Turnover Rate 56% 65% Net Assets, End of Period (in thousands) $59,547 $46,380 (1) Six months ended May 31, 2007 (unaudited). (2) May 12, 2006 (fund inception) through November 30, 2006. (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. - ------ 24 NT Emerging Markets For a Share Outstanding Throughout the Periods Indicated 2007(1) 2006(2) PER-SHARE DATA Net Asset Value, Beginning of Period $11.01 $10.00 ------ ------ Income From Investment Operations Net Investment Income (Loss) 0.04 0.07 Net Realized and Unrealized Gain (Loss) 2.36 0.94 ------ ------ Total From Investment Operations 2.40 1.01 ------ ------ Distributions From Net Investment Income (0.09) -- ------ ------ Net Asset Value, End of Period $13.32 $11.01 ====== ====== TOTAL RETURN(3) 21.95% 10.10% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.51%(4) 1.60%(4) Ratio of Net Investment Income (Loss) to Average Net Assets 0.49%(4) 1.68%(4) Portfolio Turnover Rate 54% 59% Net Assets, End of Period (in thousands) $23,887 $19,844 (1) Six months ended May 31, 2007 (unaudited). (2) May 12, 2006 (fund inception) through November 30, 2006. (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. - ------ 25 APPROVAL OF MANAGEMENT AGREEMENTS NT International Growth, NT Emerging Markets Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated and approved by a majority of a fund's independent directors 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 NT International Growth and NT Emerging Markets (the "funds") and the services provided to the funds under the management agreements. 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 agreements; * reports on the advisor's activities relating to the wide range of programs and services the advisor provides to the funds and its shareholders on a routine and non-routine basis; * data comparing the cost of owning the funds to the cost of owning similar funds; * data comparing the funds' performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the funds to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. In keeping with its practice, the funds' board of directors held two regularly scheduled meetings and 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 agreements, including the setting of the applicable advisory fee. The board also had the benefit of the advice of its independent counsel throughout the period. - ------ 26 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 agreements 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 agreements, 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 agreements, 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 its 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 - ------ 27 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. The funds' performance was above the median for the one-year period and fell below the median for the three-year period. 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 agreements, 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. 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 reinvestment in its business to provide shareholders additional content and services. - ------ 28 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 NT International Growth was equal to the median of the total expense ratios of its peer group. The unified fee charged to NT Emerging Markets was above 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 the funds 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. - ------ 29 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 agreements between the funds and the advisor are fair and reasonable in light of the services provided and should be renewed. 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 investments of the fund. In approving the subadvisory agreement, the board considered all material factors including the nature, extent, and quality of investment management services provided by the subadvisor to the fund under the agreement. As a part of this review the board 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. - ------ 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® (Europe, Australasia, Far East) INDEX is designed to measure developed market equity performance, excluding the U.S. and Canada. The MSCI EAFE® GROWTH INDEX is a capitalization-weighted index that monitors the performance of growth stocks from Europe, Australasia, and the Far East. The MSCI EAFE® VALUE INDEX is a capitalization-weighted index that monitors the performance of value stocks from Europe, Australasia, and the Far East. The MSCI EM (Emerging Markets) INDEX represents the net performance of stocks in global emerging market countries. The MSCI EUROPE INDEX is designed to measure equity market performance in Europe. The MSCI JAPAN INDEX is designed to measure equity market performance in Japan. 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 [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. American Century Investment Services, Inc., Distributor ©2007 American Century Proprietary Holdings, Inc. All rights reserved. The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. 0707 SH-SAN-55135N
[front cover] AMERICAN CENTURY INVESTMENTS Semiannual Report May 31, 2007 [photo of summer boat] Life Sciences Fund Technology Fund [american century investments logo and text logo] OUR MESSAGE TO YOU We have the privilege of providing you with the semiannual report for the American Century® Life Sciences and Technology funds for the six months ended May 31, 2007. We've gathered this information to help you monitor your investment. Another resource is our website, americancentury.com, where we post company news, portfolio commentaries, investment views, and other communications about portfolio strategy, personal finance, government policy, and the markets. Speaking of company news, American Century Investments announced the following leadership changes. Chief Investment Officer Mark Mallon retired in the first quarter of 2007, after nearly a decade with us. Effective January 1, 2007, former International Equity CIO Enrique Chang became CIO with responsibilities for the entire investment management operation. Prior to joining us in 2006, Enrique worked at Munder Capital Management, serving the last four years as president and CIO. Before that, he held a series of senior investment management positions at Vantage Global Advisors, J. & W. Seligman and Co., and General Reinsurance Corp. In January 2007, President and Chief Executive Officer Bill Lyons announced his retirement after nearly 20 years at American Century Investments. Chief Financial Officer Jonathan Thomas was appointed president and CEO effective March 1, 2007. Since 2005, Jonathan has overseen our financial area, with additional responsibilities in purchasing, facilities, real estate, information technology, operations, and human resources. Before joining us, Jonathan was a managing director and global chief operating officer of Morgan Stanley's investment division, and worked in senior leadership roles for Bank of America, Boston Financial Services, and Fidelity Investments. We wish to thank Mark and Bill for their many years of distinguished service - -- American Century Investments is a stronger company as a result of their hard work. And we firmly believe their roles in our firm have transitioned to two talented, committed, and experienced top executives. [photo of James E. Stowers, Jr.] /s/James E. Stowers, Jr. James E. Stowers, Jr. FOUNDER AND CO-CHAIRMAN OF THE BOARD AMERICAN CENTURY COMPANIES, INC. 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. . . . . . . . . . . . . . . . . . . . . . . . . 25 OTHER INFORMATION Approval of Management Agreements for Life Sciences and Technology. . 32 Share Class Information . . . . . . . . . . . . . . . . . . . . . . . 36 Additional Information. . . . . . . . . . . . . . . . . . . . . . . . 37 Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 38 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, American Century Investments STOCKS RALLIED DESPITE A DIP IN THE ECONOMY The major U.S. stock indexes advanced strongly during the six months ended May 31, 2007. Stocks gained ground despite a slowdown in the U.S. economy, resulting primarily from a slump in the housing market. The U.S. economy grew at an annualized rate of just 0.6% in the first quarter of 2007, its lowest growth rate since the fourth quarter of 2002. However, several other factors contributed to the stock market's solid rally for the reporting period. The Federal Reserve (the Fed) held short-term interest rates steady, maintaining a policy shift that occurred in mid-2006. In addition, corporate earnings continued to exceed expectations; in particular, multinational companies reported strong profit growth, benefiting from improving economic conditions outside of the U.S. Robust merger activity also provided support for stocks. After a total of nearly $4 trillion in mergers and acquisitions worldwide in 2006 -- including $750 billion in takeovers by private equity firms -- the wheeling and dealing continued in 2007 with the largest private-equity buyout on record. Although stocks rose for five of the six months in the reporting period, the market suffered a sharp decline in late February amid a drop in the Chinese stock market and growing financial problems among "subprime" lenders. However, the market quickly recovered in March, and many of the major stock indexes finished the reporting period at their highest levels in more than six years. MID-CAP AND VALUE OUTPERFORMED As the accompanying table shows, mid-cap stocks led the market's advance, followed by large-cap issues, while small-cap shares lagged. Value and growth stocks were mixed -- value modestly outperformed in the large- and mid-cap segments of the market, while small-cap growth stocks outpaced small-cap value. The best-performing sectors in the stock market included the smaller segments of the market -- telecommunication services, materials, and utilities. Energy and industrial stocks also posted double-digit gains for the reporting period. The weakest returns came from the consumer discretionary and information technology sectors. U.S. Stock Index Returns For the six months ended May 31, 2007* RUSSELL 1000 INDEX (LARGE-CAP) 10.67% Russell 1000 Growth Index 10.14% Russell 1000 Value Index 11.21% RUSSELL MIDCAP INDEX 12.43% Russell Midcap Growth Index 11.91% Russell Midcap Value Index 13.01% RUSSELL 2000 INDEX (SMALL-CAP) 8.40% Russell 2000 Growth Index 9.70% Russell 2000 Value Index 7.20% *Total returns for periods less than one year are not annualized. - ------ 2 PERFORMANCE Life Sciences Total Returns as of May 31, 2007 Average Annual Returns 6 Since Inception months(1) 1 year 5 years Inception Date INVESTOR CLASS 11.49% 15.48% 4.50% 2.60% 6/30/00 S&P COMPOSITE 1500 HEALTH CARE INDEX 11.16% 22.10% 6.26% 2.93% -- S&P 500 INDEX(2) 10.29% 22.79% 9.45% 2.44% -- Institutional Class 11.72% 15.88% 4.73% 2.09% 7/17/00 Advisor Class 11.28% 15.09% 4.23% 1.06% 11/14/00 C Class No sales charge* 10.87% 14.32% 3.45% 2.27% With sales charge* 9.87% 14.32% 3.45% 2.27% 11/29/01 * Sales charges include initial sales charges and contingent deferred sales charges (CDSCs), as applicable. C Class shares redeemed within 12 months of purchase are subject to a maximum CDSC of 1.00%. Please see the Share Class Information page for more about the applicable sales charges for each share class. The SEC requires that mutual funds provide performance information net of maximum sales charges in all cases where charges could be applied. (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. - A Reuters Company. © 2007 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. International investing involves special risks, such as political instability and currency fluctuations. Unless otherwise indicated, performance reflects Investor Class shares; performance for other share classes will vary due to differences in fee structure. For information about other share classes available, please consult the prospectus. Data assumes reinvestment of dividends and capital gains, and none of the charts reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns for the indices are provided for comparison. The fund's total returns include operating expenses (such as transaction costs and management fees) that reduce returns, while the total returns of the indices do not. - ------ 3 Life Sciences Growth of $10,000 Over Life of Class $10,000 investment made June 30, 2000
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One-Year Returns Over Life of Class Periods ended May 31 2001* 2002 2003 2004 2005 2006 2007 Investor Class 2.62% -6.60% -18.63% 24.74% 7.17% -0.79% 15.48% S&P Composite 1500 Health Care Index -1.85% -8.21% -5.16% 12.59% 4.31% -0.36% 22.10% S&P 500 Index -12.71% -13.85% -8.06% 18.33% 8.24% 8.64% 22.79% *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. 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 PORTFOLIO COMMENTARY Life Sciences Portfolio Managers: Arnold Douville and Christy Turner PERFORMANCE SUMMARY Life Sciences returned 11.49%* for the six months ended May 31, 2007, compared with an 11.16% gain posted by its benchmark, the S&P Composite 1500 Health Care Index. The broader market, represented by the S&P 500 Index, returned 10.29%. Volatility in global equity markets prompted a renewed appreciation among some investors for companies with more stable earnings prospects. This aided select areas of the life sciences industry and helped generate gains in the portfolio and its benchmark. The portfolio's relative outperformance stemmed in part from an underweight stake and effective stock selection in the biotechnology space and an overweight position and solid security selection in the equipment and supplies area. Hindering relative returns were underperforming stocks in the pharmaceuticals industry. STRATEGIC UNDERWEIGHTS PAID OFF Significantly underweight stakes in three stocks that account for 25% of the benchmark accounted for a share of the portfolio's relative outperformance. Modest positions in biotechnology outfit Amgen and multifaceted industry giant Johnson & Johnson helped as both companies posted losses during the period. The Food and Drug Administration asked Amgen and Johnson & Johnson to place strong warning labels on their anemia drugs, which also face uncertain Medicare and Medicaid reimbursement policies. Relative performance further benefited from the absence in the portfolio of pharmaceutical company Pfizer, which posted a meager gain. SERVICE PROVIDERS LED WAY Among individual holdings, long-term care facility operators Manor Care and Sun Healthcare Group ranked among the best performing relative advancers during the period. Manor Care cited improved Medicare revenues and a focus on patients requiring aggressive rehabilitation while posting improving quarterly revenues. Additionally, the stock jumped when management announced it was exploring strategic options, which could lead to a buyout. Sun Healthcare operates more than 15,000 beds in specialized facilities in 19 states. The company reported improving margins and expected its acquisition of Harborside Healthcare, which was completed in mid-April, to enhance financial performance. *All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. Top Ten Holdings as of May 31, 2007 % of % of net assets net assets as of as of 5/31/07 11/30/06 Thermo Fisher Scientific Inc. 5.1% 3.8% Merck & Co., Inc 4.9% 1.5% Wyeth 4.0% 3.0% Manor Care, Inc. 3.6% 2.5% Abbott Laboratories 3.5% 2.0% Baxter International Inc. 3.2% 2.2% Shire plc ADR 3.1% 2.5% Zimmer Holdings Inc. 3.0% 2.1% Respironics, Inc. 2.8% 2.1% Bard (C.R.), Inc. 2.7% 3.3% - ------ 5 Life Sciences EQUIPMENT OUTFITS BOOSTED PERFORMANCE The largest component of the portfolio's absolute gain came from the equipment and supplies group. Contributors to the rise, which aided relative returns as well, included Alcon of Switzerland, Stryker of the U.S., and China's Mindray Medical International. Alcon develops eye care and treatment products and reported solid quarterly results during the period. Stryker, which manufactures replacement hips and knees, surged to an all-time high after reporting solid results for 2006 and lifting its outlook for 2007. Although it eased from the peak by the period's end, it still aided performance. Mindray Medical, which develops patient monitoring devices for Asian and European markets, bumped up its full-year revenue and profit projections for 2007. PHARMACEUTICAL HOLDINGS DETRACTED The portfolio's stake in the pharmaceutical industry, where previously a general lack of earnings acceleration prompted an underweight position, detracted from relative returns. Our underweight stake in one of the group's leading performers, Schering-Plough, resulted in a relative loss. The company reported strong sales of its Remicade treatment for rheumatoid arthritis and allergy drug Nasonex and announced it was acquiring Organon, a Dutch drugmaker with a number of compounds in late-phase trials. Further, the portfolio's investment in Switzerland's Novartis AG weighed on an absolute and relative basis as the company pulled its Zelnorm treatment for irritable bowel syndrome from the market and trimmed its sales outlook for the year. STARTING POINT FOR NEXT REPORTING PERIOD Regardless of macro conditions, we continue to emphasize accelerating earnings in our efforts to build and maintain a portfolio featuring strong individual companies. Our investment decisions may result in a shift in industry weightings -- such as our expanded exposure to pharmaceuticals and decreased stake in biotech during the period -- but such developments stem from a fundamental, bottom-up assessment of each company on its own merits. Top Five Industries as of May 31, 2007 % of % of net assets net assets as of as of 5/31/07 11/30/06 Pharmaceuticals 29.3% 22.8% Health Care Equipment & Supplies 27.5% 29.7% Health Care Providers & Services 24.3% 21.7% Life Sciences Tools & Services 11.3% 10.6% Biotechnology 4.7% 7.7% Types of Investments in Portfolio % of % of net assets net assets as of as of 5/31/07 11/30/06 Domestic Common Stocks 84.1% 79.3% Foreign Common Stocks(1) 15.1% 16.8% TOTAL COMMON STOCKS 99.2% 96.1% Temporary Cash Investments 0.8% 6.5% Other Assets & Liabilities --(2) (2.6)% (1) Includes depositary shares, dual listed securities and foreign ordinary shares. (2) Category is less than 0.05% of total net assets. - ------ 6 SCHEDULE OF INVESTMENTS Life Sciences MAY 31, 2007 (UNAUDITED) Shares Value Common Stocks -- 99.2% BIOTECHNOLOGY -- 4.7% 35,500 Genzyme Corp.(1) $ 2,290,460 34,000 Gilead Sciences, Inc.(1) 2,814,180 ------------ 5,104,640 ------------ CHEMICALS - 2.1% 53,000 Sigma-Aldrich Corp. 2,293,840 ------------ HEALTH CARE EQUIPMENT & SUPPLIES - 27.5% 20,000 Alcon, Inc. 2,761,200 56,000 Arrow International Inc. 2,150,400 34,400 Bard (C.R.), Inc. 2,903,704 60,925 Baxter International Inc. 3,462,976 20,600 Beckman Coulter, Inc. 1,347,240 28,000 Becton, Dickinson & Co. 2,135,000 52,500 DENTSPLY International Inc. 1,897,350 36,000 Insulet Corp.(1) 533,520 54,250 Medtronic, Inc. 2,884,473 13,837 Mettler-Toledo International, Inc.(1) 1,360,177 50,000 Mindray Medical International Ltd. ADR 1,425,000 68,205 Respironics, Inc.(1) 3,011,251 23,000 TomoTherapy Inc.(1) 519,340 37,000 Zimmer Holdings Inc.(1) 3,258,220 ------------ 29,649,851 ------------ HEALTH CARE PROVIDERS & SERVICES - 24.3% 19,345 Cardinal Health, Inc. 1,401,739 32,000 Community Health Systems Inc.(1) 1,219,840 34,500 Humana Inc.(1) 2,140,725 20,000 Laboratory Corp. of America Holdings(1) 1,574,800 56,500 Manor Care, Inc. 3,841,999 61,000 Owens & Minor Inc. 2,165,500 74,000 Psychiatric Solutions, Inc.(1) 2,887,480 35,000 Skilled Healthcare Group Inc. Cl A(1) 554,050 170,500 Sun Healthcare Group, Inc.(1) 2,438,150 47,000 Sunrise Senior Living, Inc.(1) 1,840,520 39,675 UnitedHealth Group Inc. 2,173,000 40,000 Universal Health Services, Inc. Cl B 2,471,600 18,300 WellPoint Inc.(1) 1,489,803 ------------ 26,199,206 ------------ Shares Value LIFE SCIENCES TOOLS & SERVICES - 11.3% 21,000 Millipore Corp.(1) $ 1,570,170 63,000 Pharmaceutical Product Development, Inc. 2,299,500 100,000 Thermo Fisher Scientific Inc.(1) 5,460,000 48,000 Waters Corp.(1) 2,894,400 ------------ 12,224,070 ------------ PHARMACEUTICALS - 29.3% 66,750 Abbott Laboratories 3,761,363 13,598 Allergan, Inc. 1,693,359 28,500 AstraZeneca plc ORD 1,515,327 44,069 Johnson & Johnson 2,788,246 44,500 Medicis Pharmaceutical Corp. Cl A 1,468,500 100,000 Merck & Co., Inc. 5,245,000 47,500 Novartis AG ADR 2,668,550 15,250 Roche Holding AG ORD 2,798,074 50,000 Schering-Plough Corp. 1,637,000 48,500 Shire plc ADR 3,382,875 2,200,000 Wuyi International Pharmaceutical Co. Ltd. ORD(1) 442,338 74,214 Wyeth 4,292,538 ------------ 31,693,170 ------------ TOTAL COMMON STOCKS (Cost $88,015,364) 107,164,777 ------------ Principal Amount Temporary Cash Investments -- 0.8% $900,000 FHLB Discount Notes, 5.05%, 6/1/07(2) 900,000 (Cost $900,000) ------------ TOTAL INVESTMENT SECURITIES - 100.0% (Cost $88,915,364) 108,064,777 ------------ OTHER ASSETS AND LIABILITIES(3) (52,824) ------------ TOTAL NET ASSETS - 100.0% $108,011,953 ============ - ------ 7 Life Sciences Forward Foreign Currency Exchange Contracts Unrealized Gain Contracts to Sell Settlement Date Value (Loss) 1,732,400 CHF for USD 6/29/07 $1,416,978 $2,684 383,752 GBP for USD 6/29/07 759,500 594 ---------- ---------- $2,176,478 $3,278 ========== ========== (Value on Settlement Date $2,179,756) Notes to Schedule of Investments ADR = American Depositary Receipt CHF = Swiss Franc FHLB = Federal Home Loan Bank GBP = British Pound ORD = Foreign Ordinary Share USD = United States Dollar (1) Non-income producing. (2) The rate indicated is the yield to maturity at purchase. (3) Category is less than 0.05% of total net assets. See Notes to Financial Statements. - ------ 8 PERFORMANCE Technology Total Returns as of May 31, 2007 Average Annual Returns 6 Since Inception months(1) 1 year 5 years Inception Date INVESTOR CLASS 12.61% 15.40% 6.80% -10.19% 6/30/00 S&P COMPOSITE 1500 TECHNOLOGY INDEX 7.93% 22.91% 7.61% -8.72% S&P 500 INDEX(2) 10.29% 22.79% 9.45% 2.44% Institutional Class 12.71% 15.63% 7.12% -11.38% 7/14/00 Advisor Class 12.50% 15.11% 6.64% -10.44% 6/30/00 (1) Total returns for periods less than one year are not annualized. (2) Data provided by Lipper Inc. - A Reuters Company. © 2007 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. The fund's investment process may involve high portfolio turnover and high capital gains distributions. In addition, its investment approach may involve higher volatility and risk. 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. - ------ 9 Technology Growth of $10,000 Over Life of Class $10,000 investment made June 30, 2000
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One-Year Returns Over Life of Class Periods ended May 31 2001* 2002 2003 2004 2005 2006 2007 Investor Class -50.80% -30.49% -10.64% 19.44% -7.12% 21.47% 15.40% S&P Composite 1500 Technology Index -49.39% -27.13% -7.11% 22.54% 0.36% 2.77% 22.91% S&P 500 Index -12.71% -13.85% -8.06% 18.33% 8.24% 8.64% 22.79% *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. The fund's investment process may involve high portfolio turnover and high capital gains distributions. In addition, its investment approach may involve higher volatility and risk. 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. - ------ 10 PORTFOLIO COMMENTARY Technology Portfolio Manager: Tom Telford PERFORMANCE SUMMARY Technology returned 12.61%* for the six months ended May 31, 2007. Its benchmark, the S&P Composite 1500 Technology Index, returned 7.93%. The portfolio's return reflected the solid performance of mid- and small-cap growth stocks, as holdings in every informational technology industry contributed gains (see the Market Perspective on page 2). Relative to the index, Technology's outperformance was driven by holdings in communications equipment and internet software & services firms, as well as several positive out-of-benchmark plays. COMMUNICATION EQUIPMENT LED PERFORMANCE Our stock selection was most effective among communication equipment firms, with this slice of the portfolio and index returning 14.3% and 4.5%, respectively. A leading contributor was Research in Motion, maker of the BlackBerry handheld device and the largest position in the portfolio. The firm benefited from a number of new product rollouts, as well as continued revenue and subscriber growth. In addition, we had no exposure to Motorola, as the cell phone maker struggled with sales, earnings, and margins. INTERNET HOLDINGS DROVE PERFORMANCE During the period we were positive on internet software & services, home to many of the portfolio's leading contributors during the six months. Some overweight positions in this space that contributed to relative performance were ValueClick and Chordiant Software, among others. ValueClick benefited from increasing advertising spending on the internet, while Chordiant swung to profitability during the period on increased sales for its customer relationship software. Finally, the leading contributor in this space was On2 Technologies, up more than 285% for the six months. The firm, which makes video compression software, announced an acquisition that would open up the cell phone market to its technology. KEY CONTRIBUTORS Two of the leading contributors to relative and absolute performance were technology-related firms in the aerospace & defense and wireless communication industries. Specialty metals manufacturer Precision Castparts and wireless telecom services firm Millicom International were top-ten holdings that performed very well--up 59% and 49%, respectively--reaching all-time highs during the period. Precision Castparts benefited from demand for high-performance, lightweight metals used in manufacturing for aerospace and defense, as well as other industrial end-markets. Millicom continued to enjoy strong earnings and subscriber growth. *All fund returns referenced in this commentary are for Investor Class shares. Total returns for periods less than one year are not annualized. Top Ten Holdings as of May 31, 2007 % of % of net assets net assets as of as of 5/31/07 11/30/06 Research In Motion Ltd. 4.6% 4.3% Precision Castparts Corp. 3.5% 2.3% Google Inc. Cl A 3.3% 2.9% Corning Inc. 3.1% -- Cisco Systems Inc. 3.1% 2.9% eBay Inc. 2.9% -- Microsoft Corporation 2.8% 1.6% Adobe Systems Inc. 2.4% 1.3% LG.Philips LCD Co., Ltd. ADR 2.4% -- Accenture Ltd. Cl A 2.4% -- - ------ 11 Technology ELECTRONIC EQUIPMENT DETRACTED The leading detractors from relative results at the industry level were electronic equipment firms, where our shares underperformed. For the six months, the electronic equipment stocks in the portfolio and the index returned 5.6% and 10.7%, respectively. In addition, our computers & peripherals stocks produced positive results, but an underweight position in the shares detracted from performance relative to the benchmark. In terms of individual holdings, the largest detractor from relative returns was semiconductor test equipment manufacturer Credence Systems. We held an overweight position in this stock, which disappointed analysts with the pace of progress on its turnaround. STARTING POINT FOR NEXT REPORTING PERIOD "We build the Technology portfolio stock by stock, looking for technology firms with accelerating earnings and revenue growth rates, and positive share price momentum. As of May 31, 2007, that process pointed us toward companies in the communications equipment industry, where the portfolio held an overweight position relative to the benchmark. Some of the portfolio's largest holdings are focused on this growing segment of the market, including computer & peripherals and electronic equipment names with exposure to this segment," says portfolio manager Tom Telford. "We see a lot of exciting things going on in the information technology sector and think that the Technology portfolio 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," concludes Telford. Top Five Industries as of May 31, 2007 % of % of net assets net assets as of as of 5/31/07 11/30/06 Software 21.2% 14.8% Communications Equipment 17.1% 12.9% Semiconductors & Semiconductor Equipment 15.4% 12.7% Electronic Equipment & Instruments 10.1% 12.4% Computers & Peripherals 8.4% 9.7% Types of Investments in Portfolio % of % of net assets net assets as of as of 5/31/07 11/30/06 Domestic Common Stocks 70.8% 73.1% Foreign Common Stocks(1) 27.9% 25.5% TOTAL COMMON STOCKS 98.7% 98.6% Temporary Cash Investments 0.2% 0.5% Other Assets & Liabilities 1.1% 0.9% (1) Includes depositary shares, dual listed securities and foreign ordinary shares. - ------ 12 SCHEDULE OF INVESTMENTS Technology MAY 31, 2007 (UNAUDITED) Shares Value Common Stocks -- 98.7% AEROSPACE & DEFENSE -- 3.5% 33,759 Precision Castparts Corp. $ 4,036,226 ------------ COMMUNICATIONS EQUIPMENT -- 17.1% 9,731 BigBand Networks, Inc.(1) 168,152 131,882 Cisco Systems Inc.(1) 3,550,263 21,633 CommScope, Inc.(1) 1,183,974 32,110 Comtech Telecommunications Corp.(1) 1,437,565 145,165 Corning Inc.(1) 3,629,125 28,944 NETGEAR, Inc.(1) 1,079,901 40,436 QUALCOMM Inc. 1,736,726 31,906 Research In Motion Ltd.(1) 5,298,948 50,176 Sierra Wireless, Inc.(1) 1,088,317 28,039 Silicom Ltd.(1) 630,317 ------------ 19,803,288 ------------ COMPUTERS & PERIPHERALS -- 8.4% 17,780 Apple Inc.(1) 2,161,337 65,295 Emulex Corp.(1) 1,448,896 54,913 Hewlett-Packard Co. 2,510,073 48,000 High Tech Computer Corp. ORD 895,051 95,115 Novatel Wireless, Inc.(1) 2,209,521 56,262 Super Micro Computer, Inc.(1) 565,996 ------------ 9,790,874 ------------ DIVERSIFIED TELECOMMUNICATION SERVICES -- 1.0% 27,959 Telefonos de Mexico, SAB de CV ADR 1,130,662 ------------ ELECTRICAL EQUIPMENT -- 2.5% 274,500 BYD Co. Ltd. Cl H ORD 1,662,784 24,137 Emerson Electric Co. 1,169,438 ------------ 2,832,222 ------------ ELECTRONIC EQUIPMENT & INSTRUMENTS -- 10.1% 45,314 Agilent Technologies, Inc.(1) 1,729,635 23,578 Amphenol Corp. Cl A 843,621 137,324 LG.Philips LCD Co., Ltd. ADR(1) 2,771,198 169,289 Methode Electronics, Inc. 2,552,878 163,817 SMART Modular Technologies (WWH), Inc.(1) 2,347,498 1,866,000 Universal Scientific Industrial Co., Ltd. ORD 1,514,180 ------------ 11,759,010 ------------ Shares Value INTERNET SOFTWARE & SERVICES -- 8.3% 105,437 Chordiant Software, Inc.(1) $ 1,491,934 231,431 CMGI Inc.(1) 578,578 101,725 eBay Inc.(1) 3,312,166 7,669 Google Inc. Cl A(1) 3,817,244 150 So-net Entertainment Corp. ORD 456,077 ------------ 9,655,999 ------------ IT SERVICES -- 6.7% 67,440 Accenture Ltd. Cl A 2,760,994 24,108 DST Systems, Inc.(1) 2,018,563 13,235 MasterCard Inc. Cl A 1,979,294 27,097 MAXIMUS, Inc. 1,171,132 ------------ 7,929,983 ------------ MACHINERY -- 0.5% 20,915 Force Protection, Inc.(1) 600,679 ------------ OFFICE ELECTRONICS -- 0.9% 750,000 Ability Enterprise Co., Ltd. ORD 1,055,699 ------------ SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 15.4% 13,094 Cavium Networks Inc.(1) 276,938 108,604 Intel Corp. 2,407,750 33,849 Intersil Corp. Cl A 1,018,855 27,809 Linear Technology Corp. 998,065 24,646 MEMC Electronic Materials Inc.(1) 1,497,984 78,974 Microsemi Corp.(1) 1,820,351 29,010 National Semiconductor Corp. 780,949 25,963 Netlogic Microsystems Inc.(1) 800,699 38,617 NVIDIA Corp.(1) 1,338,851 41,352 Power Integrations Inc.(1) 1,178,532 343,400 Realtek Semiconductor Corp. ORD 878,381 69,836 Silicon Motion Technology Corp. ADR(1) 1,615,307 67,535 SRS Labs, Inc.(1) 1,006,947 43,800 Texas Instruments Inc. 1,548,768 197,000 Transcend Information Inc. ORD 727,531 ------------ 17,895,908 ------------ - ------ 13 Technology Shares Value SOFTWARE -- 21.2% 63,288 Adobe Systems Inc.(1) $ 2,789,735 78,932 Aladdin Knowledge Systems Ltd.(1) 1,757,026 17,614 Ansoft Corp.(1) 564,353 128,596 FalconStor Software, Inc.(1) 1,395,267 115,219 Informatica Corp.(1) 1,758,242 66,475 Magma Design Automation, Inc.(1) 985,160 105,833 Microsoft Corporation 3,245,897 5,800 Nintendo Co., Ltd. ORD 2,028,022 140,880 Oracle Corp.(1) 2,730,254 168,434 Sandvine Corp. ORD(1) 700,824 64,306 Shanda Interactive Entertainment Ltd. ADR(1) 1,818,574 49,648 SPSS Inc.(1) 2,185,008 118,041 VASCO Data Security International, Inc.(1) 2,687,794 ------------ 24,646,156 ------------ WIRELESS TELECOMMUNICATION SERVICES -- 3.1% 24,265 America Movil, SAB de CV ADR 1,469,246 24,017 Millicom International Cellular SA(1) 2,043,366 ------------ 3,512,612 ------------ TOTAL COMMON STOCKS (Cost $97,289,228) 114,649,318 ------------ Temporary Cash Investments -- 0.2% Repurchase Agreement, Deutsche Bank Securities, Inc., (collateralized by various U.S. Treasury obligations, 2.00%, 1/15/14, valued at $203,809), in a joint trading account at 5.00%, dated 5/31/07, due 6/1/07 (Delivery value $200,028) (Cost $200,000) 200,000 ------------ TOTAL INVESTMENT SECURITIES -- 98.9% (Cost $97,489,228) 114,849,318 ------------ OTHER ASSETS AND LIABILITIES -- 1.1% 1,316,394 ------------ TOTAL NET ASSETS -- 100.0% $116,165,712 ============ Notes to Schedule of Investments ADR = American Depositary Receipt ORD = Foreign Ordinary Share (1) Non-income producing. As of May 31, 2007, securities with an aggregate value of $1,514,180, which represented 1.3% of total net assets, were valued in accordance with alternative pricing procedures adopted by the Board of Directors. See Notes to Financial Statements. - ------ 14 SHAREHOLDER FEE EXAMPLES (UNAUDITED) Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds. The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from December 1, 2006 to May 31, 2007. 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. 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. - ----- 15 Expenses Paid Beginning Ending During Period* Annualized Account Value Account Value 12/1/06 - Expense 12/1/06 5/31/07 5/31/07 Ratio* Life Sciences ACTUAL Investor Class $1,000 $1,114.90 $7.12 1.35% Institutional Class $1,000 $1,117.20 $6.07 1.15% Advisor Class $1,000 $1,112.80 $8.43 1.60% C Class $1,000 $1,108.70 $12.35 2.35% HYPOTHETICAL Investor Class $1,000 $1,018.20 $6.79 1.35% Institutional Class $1,000 $1,019.20 $5.79 1.15% Advisor Class $1,000 $1,016.95 $8.05 1.60% C Class $1,000 $1,013.21 $11.80 2.35% Technology ACTUAL Investor Class $1,000 $1,126.10 $8.00 1.51% Institutional Class $1,000 $1,127.10 $6.95 1.31% Advisor Class $1,000 $1,125.00 $9.32 1.76% HYPOTHETICAL Investor Class $1,000 $1,017.40 $7.59 1.51% Institutional Class $1,000 $1,018.40 $6.59 1.31% Advisor Class $1,000 $1,016.16 $8.85 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 182, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. - ------ 16 STATEMENT OF ASSETS AND LIABILITIES MAY 31, 2007 (UNAUDITED) Life Sciences Technology ASSETS Investment securities, at value (cost of $88,915,364 and $97,489,228, respectively) $108,064,777 $114,849,318 Cash -- 19,930 Foreign currency holdings, at value (cost of $- and $267, respectively) -- 267 Receivable for investments sold -- 4,047,847 Receivable for forward foreign currency exchange contracts 3,278 -- Dividends and interest receivable 108,428 79,188 ------------ ------------ 108,176,483 118,996,550 ------------ ------------ LIABILITIES Disbursements in excess of demand deposit cash 40,214 -- Payable for investments purchased -- 2,686,371 Accrued management fees 124,241 144,419 Distribution fees payable 46 24 Service fees payable 29 24 ------------ ------------ 164,530 2,830,838 ------------ ------------ NET ASSETS $108,011,953 $116,165,712 ============ ============ NET ASSETS CONSIST OF: Capital (par value and paid-in surplus) $101,866,821 $303,516,443 Accumulated net investment loss (242,652) (678,411) Accumulated net realized loss on investment and foreign currency transactions (12,764,980) (204,030,769) Net unrealized appreciation on investments and translation of assets and liabilities in foreign currencies 19,152,764 17,358,449 ------------ ------------ $108,011,953 $116,165,712 ============ ============ INVESTOR CLASS, $0.01 PAR VALUE Net assets $105,256,102 $111,344,268 Shares outstanding 18,082,284 4,685,616 Net asset value per share $5.82 $23.76 INSTITUTIONAL CLASS, $0.01 PAR VALUE Net assets $2,622,487 $4,701,561 Shares outstanding 444,109 194,901 Net asset value per share $5.91 $24.12 ADVISOR CLASS, $0.01 PAR VALUE Net assets $92,031 $119,883 Shares outstanding 16,082 5,143 Net asset value per share $5.72 $23.31 C CLASS, $0.01 PAR VALUE Net assets $41,333 N/A Shares outstanding 7,502 N/A Net asset value per share $5.51 N/A See Notes to Financial Statements. - ------ 17 STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED MAY 31, 2007 (UNAUDITED) Life Sciences Technology INVESTMENT INCOME (LOSS) INCOME: Dividends (net of foreign taxes withheld of $17,963 and $4,244, respectively) $532,338 $183,320 Interest 68,514 45,531 ----------- ----------- 600,852 228,851 ----------- ----------- EXPENSES: Management fees 742,644 875,711 Distribution fees: Advisor Class 133 139 C Class 142 -- Service fees: Advisor Class 133 139 C Class 47 -- Directors' fees and expenses 833 891 Other expenses 705 6,340 ----------- ----------- 744,637 883,220 ----------- ----------- NET INVESTMENT INCOME (LOSS) (143,785) (654,369) ----------- ----------- REALIZED AND UNREALIZED GAIN (LOSS) NET REALIZED GAIN (LOSS) ON: Investment transactions (net of foreign taxes accrued of $- and $(20,132), respectively) 4,267,277 14,501,767 Foreign currency transactions 54,825 (3,048) ----------- ----------- 4,322,102 14,498,719 ----------- ----------- CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION) ON: Investments (net of foreign tax liability reduction of $- and $23,057) 7,686,451 (122,369) Translation of assets and liabilities in foreign currencies 34,030 (5,819) ----------- ----------- 7,720,481 (128,188) ----------- ----------- NET REALIZED AND UNREALIZED GAIN (LOSS) 12,042,583 14,370,531 ----------- ----------- NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS $11,898,798 $13,716,162 =========== =========== See Notes to Financial Statements. - ------ 18 STATEMENT OF CHANGES IN NET ASSETS SIX MONTHS ENDED MAY 31, 2007 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2006 Life Sciences Technology Increase (Decrease) in Net Assets 2007 2006 2007 2006 OPERATIONS Net investment income (loss) $(143,785) $(930,959) $(654,369) $(1,597,767) Net realized gain (loss) 4,322,102 4,474,185 14,498,719 16,541,436 Change in net unrealized appreciation (depreciation) 7,720,481 (6,266,439) (128,188) (5,347,428) ------------ ------------ ------------ ------------ Net increase (decrease) in net assets resulting from operations 11,898,798 (2,723,213) 13,716,162 9,596,241 ------------ ------------ ------------ ------------ CAPITAL SHARE TRANSACTIONS Net increase (decrease) in net assets from capital share transactions (19,453,391) (41,767,562) (25,094,086) (25,969,525) ------------ ------------ ------------ ------------ NET INCREASE (DECREASE) IN NET ASSETS (7,554,593) (44,490,775) (11,377,924) (16,373,284) NET ASSETS Beginning of period 115,566,546 160,057,321 127,543,636 143,916,920 ------------ ------------ ------------ ------------ End of period $108,011,953 $115,566,546 $116,165,712 $127,543,636 ============ ============ ============ ============ Accumulated net investment loss $(242,652) $(98,867) $(678,411) $(3,910) ============ ============ ============ ============ See Notes to Financial Statements. - ------ 19 NOTES TO FINANCIAL STATEMENTS MAY 31, 2007 (UNAUDITED) 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940 (the 1940 Act) as an open-end management investment company. Life Sciences Fund (Life Sciences) and Technology Fund (Technology) (collectively, the funds) are two funds in a series issued by the corporation. The funds are non-diversified under the 1940 Act. The funds' investment objectives are to seek capital growth. Life Sciences and Technology pursue their objectives by investing primarily in stocks of growing companies in the life sciences and in the technology and telecommunications-related sectors, respectively. Specifically, 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. In addition, 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 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 as determined by, or in accordance with procedures adopted by, the Board of Directors or its designee if such determination would materially impact a fund's net asset value. Certain other circumstances may cause the funds to use alternative procedures to 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. 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. - ------ 20 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. The funds may make distributions on a more frequent basis to comply with the distribution requirements of the Internal Revenue Code, in all events in a manner consistent with provisions of the 1940 Act. INDEMNIFICATIONS -- Under the corporation's organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the funds. In addition, in the normal course of business, the funds enter into contracts that provide general indemnifications. The funds' maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the funds. The risk of material loss from such claims is considered by management to be remote. USE OF ESTIMATES -- The financial statements are prepared in conformity with accounting principles generally accepted in the United States of America, which may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. 2. FEES AND TRANSACTIONS WITH RELATED PARTIES MANAGEMENT FEES -- The corporation has entered into a Management Agreement with ACIM for Technology and ACGIM for Life Sciences (the investment advisor, respectively), under which the investment advisor provides the funds with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The Agreement provides that all expenses of the funds, except brokerage commissions, taxes, interest, fees and expenses of those directors who are not considered "interested persons" as defined in the 1940 Act (including counsel fees) and extraordinary expenses, will be paid by the investment advisor. The fee is computed and accrued daily based on the daily net assets of each specific class of shares of each fund and paid monthly in arrears. For funds with a stepped fee schedule, the rate of the fee is determined by applying a fee - ------ 21 rate calculation formula. This formula takes into account all of the investment advisor's assets under management in each fund's investment strategy (strategy assets) to calculate the appropriate fee rate for each fund. The strategy assets include each fund's assets and the assets of other clients of the investment advisor that are not in the American Century family of funds, but that have the same investment team and investment strategy. The annual management fee schedule for Life Sciences ranges from 1.10% to 1.35% for Investor Class and C Class. The annual management fee schedule for Technology ranges from 1.20% to 1.50% for Investor Class. The Institutional Class is 0.20% less and the Advisor Class is 0.25% less at each point within the range. The effective annual management fee for each class of the funds for the six months ended May 31, 2007, was as follows: Investor Institutional Advisor C Life Sciences 1.35% 1.15% 1.10% 1.35% 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. 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 will pay American Century Investment Services, Inc. (ACIS) an annual distribution fee of 0.25% and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution fee of 0.75% and service fee of 0.25%. The fees are computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The distribution fee provides compensation for expenses incurred by financial intermediaries in connection with distributing shares of the classes including, but not limited to, payments to brokers, dealers, and financial institutions that have entered into sales agreements with respect to shares of the funds. The service fee provides compensation for shareholder and administrative services rendered by ACIS, its affiliates or independent third party providers for Advisor Class shares and for individual shareholder services rendered by broker/dealers or other independent financial intermediaries for C Class shares. Fees incurred under the plans during the six months ended May 31, 2007, 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. Beginning in December 2006, the funds were eligible to invest in a money market fund for temporary purposes, which was managed by J.P. Morgan Investments Management, Inc. (JPMIM). JPMIM is a wholly owned subsidiary of JPMorgan Chase & Co. (JPM). JPM is an equity investor in ACC. The funds have a bank line of credit agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a custodian of the funds and a wholly owned subsidiary of JPM. 3. INVESTMENT TRANSACTIONS Investment transactions, excluding short-term investments, for the six months ended May 31, 2007, were as follows: Life Sciences Technology Purchases $35,670,135 $165,285,801 Proceeds from sales $51,557,537 $190,739,385 - ------ 22 4. CAPITAL SHARE TRANSACTIONS Transactions in shares of the funds were as follows: Six months ended May 31, 2007 Year ended November 30, 2006 Shares Amount Shares Amount Life Sciences INVESTOR CLASS/SHARES AUTHORIZED 100,000,000 100,000,000 =========== =========== Sold 1,026,324 $5,644,110 2,142,299 $11,360,065 Redeemed (4,517,221) (24,629,865) (9,872,777) (51,883,699) ----------- ------------- ----------- ------------- (3,490,897) (18,985,755) (7,730,478) (40,523,634) ----------- ------------- ----------- ------------- INSTITUTIONAL CLASS/SHARES AUTHORIZED 5,000,000 5,000,000 =========== =========== Sold 97,368 532,550 131,154 713,811 Redeemed (171,868) (943,645) (347,592) (1,871,619) ----------- ------------- ----------- ------------- (74,500) (411,095) (216,438) (1,157,808) ----------- ------------- ----------- ------------- ADVISOR CLASS/SHARES AUTHORIZED 5,000,000 5,000,000 =========== =========== Sold 2,246 12,147 15,949 84,134 Redeemed (13,392) (71,513) (20,660) (106,796) ----------- ------------- ----------- ------------- (11,146) (59,366) (4,711) (22,662) ----------- ------------- ----------- ------------- C CLASS/SHARES AUTHORIZED 5,000,000 5,000,000 =========== =========== Sold 543 2,825 5,990 31,096 Redeemed -- -- (18,910) (94,554) ----------- ------------- ----------- ------------- 543 2,825 (12,920) (63,458) ----------- ------------- ----------- ------------- Net increase (decrease) (3,576,000) $(19,453,391) (7,964,547) $(41,767,562) Technology INVESTOR CLASS/SHARES AUTHORIZED 100,000,000 100,000,000 =========== =========== Sold 357,993 $7,733,272 1,661,765 $34,930,608 Redeemed (1,471,646) (31,892,271) (2,886,044) (59,469,218) ----------- ------------- ----------- ------------- (1,113,653) (24,158,999) (1,224,279) (24,538,610) ----------- ------------- ----------- ------------- INSTITUTIONAL CLASS/SHARES AUTHORIZED 5,000,000 5,000,000 =========== =========== Sold 27,881 611,094 69,396 1,474,148 Redeemed (69,053) (1,513,898) (140,648) (2,927,075) ----------- ------------- ----------- ------------- (41,172) (902,804) (71,252) (1,452,927) ----------- ----------- ----------- ----------- ADVISOR CLASS/SHARES AUTHORIZED 5,000,000 5,000,000 =========== =========== Sold 498 10,841 3,675 72,810 Redeemed (2,082) (43,124) (2,582) (50,798) ----------- ------------- ----------- ------------- (1,584) (32,283) 1,093 22,012 ----------- ------------- ----------- ------------- Net increase (decrease) (1,156,409) $(25,094,086) (1,294,438) $(25,969,525) =========== ============= =========== ============= 5. 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 0.40%. The funds did not borrow from the line during the six months ended May 31, 2007. - ------ 23 6. 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. In addition, its investment approach may involve higher volatility and risk. 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. Technology's investment process may result in high portfolio turnover, high commission costs and high capital gains distributions. 7. FEDERAL TAX INFORMATION The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements. As of May 31, 2007, the components of investments for federal income tax purposes were as follows: Life Sciences Technology Federal tax cost of investments $88,956,153 $97,818,685 =========== =========== Gross tax appreciation of investments $19,472,062 $17,425,794 Gross tax depreciation of investments (363,438) (395,161) ----------- ----------- Net tax appreciation (depreciation) of investments $19,108,624 $17,030,633 =========== =========== The difference between book-basis and tax-basis cost and unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales. Following are the capital loss carryovers and currency loss deferral amounts as of November 30, 2006: Life Sciences Technology Accumulated capital losses $(17,046,292) $(218,274,205) Currency loss deferral $(130,794) -- 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. 8. 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. - ------ 24 FINANCIAL HIGHLIGHTS Life Sciences Investor Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $5.22 $5.32 $4.69 $4.36 $3.54 $4.87 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) (0.01) (0.04) (0.04) (0.04) (0.03) (0.04) Net Realized and Unrealized Gain (Loss) 0.61 (0.06) 0.67 0.37 0.85 (1.29) -------- -------- -------- -------- -------- -------- Total From Investment Operations 0.60 (0.10) 0.63 0.33 0.82 (1.33) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $5.82 $5.22 $5.32 $4.69 $4.36 $3.54 ======== ======== ======== ======== ======== ======== TOTAL RETURN(3) 11.49% (1.88)% 13.43% 7.57% 23.16% (27.31)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.35%(4) 1.46% 1.50% 1.50% 1.50% 1.50% Ratio of Net Investment Income (Loss) to Average Net Assets (0.26)%(4) (0.67)% (0.81)% (0.85)% (0.89)% (0.88)% Portfolio Turnover Rate 33% 151% 162% 215% 138% 272% Net Assets, End of Period (in thousands) $105,256 $112,648 $155,835 $155,530 $160,187 $146,324 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 25 Life Sciences Institutional Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $5.29 $5.38 $4.74 $4.40 $3.56 $4.89 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) --(3) (0.02) (0.03) (0.03) (0.03) (0.03) Net Realized and Unrealized Gain (Loss) 0.62 (0.07) 0.67 0.37 0.87 (1.30) -------- -------- -------- -------- -------- -------- Total From Investment Operations 0.62 (0.09) 0.64 0.34 0.84 (1.33) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $5.91 $5.29 $5.38 $4.74 $4.40 $3.56 ======== ======== ======== ======== ======== ======== TOTAL RETURN(4) 11.72% (1.67)% 13.50% 7.73% 23.60% (27.20)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.15%(5) 1.26% 1.30% 1.30% 1.30% 1.30% Ratio of Net Investment Income (Loss) to Average Net Assets (0.06)%(5) (0.47)% (0.61)% (0.65)% (0.69)% (0.68)% Portfolio Turnover Rate 33% 151% 162% 215% 138% 272% Net Assets, End of Period (in thousands) $2,622 $2,744 $3,953 $3,510 $4,019 $3,365 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Per-share was less than $0.005. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 26 Life Sciences Advisor Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $5.14 $5.25 $4.64 $4.33 $3.51 $4.86 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) (0.02) (0.05) (0.05) (0.05) (0.04) (0.05) Net Realized and Unrealized Gain (Loss) 0.60 (0.06) 0.66 0.36 0.86 (1.30) -------- -------- -------- -------- -------- -------- Total From Investment Operations 0.58 (0.11) 0.61 0.31 0.82 (1.35) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $5.72 $5.14 $5.25 $4.64 $4.33 $3.51 ======== ======== ======== ======== ======== ======== TOTAL RETURN(3) 11.28% (2.10)% 13.15% 7.16% 23.36% (27.78)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.60%(4) 1.71% 1.75% 1.75% 1.75% 1.75% Ratio of Net Investment Income (Loss) to Average Net Assets (0.51)%(4) (0.92)% (1.06)% (1.10)% (1.14)% (1.13)% Portfolio Turnover Rate 33% 151% 162% 215% 138% 272% Net Assets, End of Period (in thousands) $92 $140 $168 $107 $46 $25 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 27 Life Sciences C Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003 2002 PER-SHARE DATA Net Asset Value, Beginning of Period $4.97 $5.11 $4.56 $4.28 $3.49 $4.87 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(2) (0.03) (0.09) (0.09) (0.08) (0.07) (0.08) Net Realized and Unrealized Gain (Loss) 0.57 (0.05) 0.64 0.36 0.86 (1.30) -------- -------- -------- -------- -------- -------- Total From Investment Operations 0.54 (0.14) 0.55 0.28 0.79 (1.38) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $5.51 $4.97 $5.11 $4.56 $4.28 $3.49 ======== ======== ======== ======== ======== ======== TOTAL RETURN(3) 10.87% (2.74)% 12.06% 6.54% 22.64% (28.34)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 2.35%(4) 2.46% 2.50% 2.50% 2.50% 2.50% Ratio of Net Investment Income (Loss) to Average Net Assets (1.26)%(4) (1.67)% (1.81)% (1.85)% (1.89)% (1.88)% Portfolio Turnover Rate 33% 151% 162% 215% 138% 272% Net Assets, End of Period (in thousands) $41 $35 $102 $25 $10 $6 (1) Six months ended May 31, 2007 (unaudited). (2) Computed using average shares outstanding throughout the period. (3) Total return assumes reinvestment of net investment income and capital gains distributions, if any, and does not reflect applicable sales charges. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (4) Annualized. See Notes to Financial Statements. - ------ 28 Technology Investor Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003(2) 2002(2) PER-SHARE DATA Net Asset Value, Beginning of Period $21.10 $19.61 $18.20 $19.58 $14.40 $20.90 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) (0.12) (0.24) (0.19) (0.24) (0.19) (0.20) Net Realized and Unrealized Gain (Loss) 2.78 1.73 1.60 (1.14) 5.37 (6.30) -------- -------- -------- -------- -------- -------- Total From Investment Operations 2.66 1.49 1.41 (1.38) 5.18 (6.50) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $23.76 $21.10 $19.61 $18.20 $19.58 $14.40 ======== ======== ======== ======== ======== ======== TOTAL RETURN(4) 12.61% 7.60% 7.75% (7.05)% 35.97% (31.10)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.51%(5) 1.51% 1.51% 1.50% 1.50% 1.50% Ratio of Net Investment Income (Loss) to Average Net Assets (1.12)%(5) (1.15)% (1.06)% (1.30)% (1.25)% (1.20)% Portfolio Turnover Rate 143% 385% 388% 279% 218% 251% Net Assets, End of Period (in thousands) $111,344 $122,353 $137,710 $166,986 $202,884 $127,767 (1) Six months ended May 31, 2007 (unaudited). (2) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 29 Technology Institutional Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003(2) 2002(2) PER-SHARE DATA Net Asset Value, Beginning of Period $21.40 $19.84 $18.38 $19.74 $14.50 $21.00 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) (0.10) (0.20) (0.15) (0.20) (0.16) (0.20) Net Realized and Unrealized Gain (Loss) 2.82 1.76 1.61 (1.16) 5.40 (6.30) -------- -------- -------- -------- -------- -------- Total From Investment Operations 2.72 1.56 1.46 (1.36) 5.24 (6.50) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $24.12 $21.40 $19.84 $18.38 $19.74 $14.50 ======== ======== ======== ======== ======== ======== TOTAL RETURN(4) 12.71% 7.86% 7.94% (6.89)% 36.14% (30.95)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.31%(5) 1.31% 1.31% 1.30% 1.30% 1.30% Ratio of Net Investment Income (Loss) to Average Net Assets (0.92)%(5) (0.95)% (0.86)% (1.10)% (1.05)% (1.00)% Portfolio Turnover Rate 143% 385% 388% 279% 218% 251% Net Assets, End of Period (in thousands) $4,702 $5,051 $6,099 $7,805 $10,191 $8,444 (1) Six months ended May 31, 2007 (unaudited). (2) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 30 Technology Advisor Class For a Share Outstanding Throughout the Years Ended November 30 (except as noted) 2007(1) 2006 2005 2004 2003(2) 2002(2) PER-SHARE DATA Net Asset Value, Beginning of Period $20.72 $19.30 $17.96 $19.37 $14.30 $20.80 -------- -------- -------- -------- -------- -------- Income From Investment Operations Net Investment Income (Loss)(3) (0.15) (0.28) (0.24) (0.27) (0.20) (0.20) Net Realized and Unrealized Gain (Loss) 2.74 1.70 1.58 (1.14) 5.27 (6.30) -------- -------- -------- -------- -------- -------- Total From Investment Operations 2.59 1.42 1.34 (1.41) 5.07 (6.50) -------- -------- -------- -------- -------- -------- Net Asset Value, End of Period $23.31 $20.72 $19.30 $17.96 $19.37 $14.30 ======== ======== ======== ======== ======== ======== TOTAL RETURN(4) 12.50% 7.36% 7.46% (7.28)% 35.45% (31.25)% RATIOS/SUPPLEMENTAL DATA Ratio of Operating Expenses to Average Net Assets 1.76%(5) 1.76% 1.76% 1.75% 1.75% 1.75% Ratio of Net Investment Income (Loss) to Average Net Assets (1.37)%(5) (1.40)% (1.31)% (1.55)% (1.50)% (1.45)% Portfolio Turnover Rate 143% 385% 388% 279% 218% 251% Net Assets, End of Period (in thousands) $120 $139 $109 $78 $18 $54 (1) Six months ended May 31, 2007 (unaudited). (2) Per-share data has been restated, as applicable, to reflect a 1-for-10 reverse share split that occurred on the close of business on May 16, 2003. (3) Computed using average shares outstanding throughout the period. (4) Total return assumes reinvestment of net investment income and capital gains distributions, if any. Total returns for periods less than one year are not annualized. The total return of the classes may not precisely reflect the class expense differences because of the impact of calculating the net asset values to two decimal places. If net asset values were calculated to three decimal places, the total return differences would more closely reflect the class expense differences. The calculation of net asset values to two decimal places is made in accordance with SEC guidelines and does not result in any gain or loss of value between one class and another. (5) Annualized. See Notes to Financial Statements. - ------ 31 APPROVAL OF MANAGEMENT AGREEMENTS 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 agreements. 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 agreements; * reports on the advisor's activities relating to the wide range of programs and services the advisor provides to the funds and its shareholders on a routine and non-routine basis; * data comparing the cost of owning the funds to the cost of owning similar funds; * data comparing the funds' performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; * financial data showing the profitability of the funds to the advisor and the overall profitability of the advisor; and * data comparing services provided and charges to other investment management clients of the advisor. In keeping with its practice, the funds' board of directors held two regularly scheduled meetings and 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 agreements, including the setting of the applicable advisory fee. The board also had the benefit of the advice of its independent counsel throughout the period. - ------ 32 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 agreements 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 agreements, 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 agreements, 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 its 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 - ------ 33 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. The funds' performance fell below the median for both the one- and three-year periods during 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 agreements, 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. 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 reinvestment in its business to provide shareholders additional content and services. - ------ 34 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 respective 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 the funds 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, 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 agreements between the funds and the advisor are fair and reasonable in light of the services provided and should be renewed. - ------ 35 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 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. - ------ 36 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. - ------ 37 INDEX DEFINITIONS The following indices are used to illustrate investment market, sector, or style performance or to serve as indices fund performance comparisons. They are not investment products available for purchase. The RUSSELL 1000® 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® 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 values. The RUSSELL 1000® 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 values. The RUSSELL 2000® 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® 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 values. The RUSSELL 2000® 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 values. The RUSSELL MIDCAP® 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® 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® VALUE INDEX measures the performance of those Russell Midcap Index 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. - ------ 38 The S&P COMPOSITE 1500 INDEX combines the S&P 500, MidCap 400 and SmallCap 600 indices. The S&P COMPOSITE 1500 HEALTH CARE INDEX represents those S&P Composite 1500 companies in two main industry groups: Health care equipment and supplies companies or companies that provide health care related services, and companies that provide research, development, production and marketing of pharmaceuticals and biotechnology products. The S&P COMPOSITE 1500 TECHNOLOGY INDEX represents those S&P Composite 1500 companies in two main industry groups: Technology software and services companies, and technology hardware and equipment companies. - ------ 39 NOTES - ------ 40 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. PRSRT STD American Century Investments U.S. POSTAGE PAID P.O. Box 419200 AMERICAN CENTURY Kansas City, MO 64141-6200 COMPANIES American Century Investment Services, Inc., Distributor ©2007 American Century Proprietary Holdings, Inc. All rights reserved. The American Century Investments logo, American Century and American Century Investments are service marks of American Century Proprietary Holdings, Inc. 0707 SH-SAN-55133S
ITEM 2. CODE OF ETHICS. Not applicable for semiannual report filings. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not applicable for semiannual report filings. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not applicable for semiannual report filings. ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS. Not applicable. ITEM 6. SCHEDULE OF INVESTMENTS. The schedule of investments is included as part of the report to stockholders filed under Item 1 of this Form. ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES. Not applicable. ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT COMPANY AND AFFILIATED PURCHASERS. Not applicable. ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. During the reporting period, there were no material changes to the procedures by which shareholders may recommend nominees to the registrant's board. ITEM 11. CONTROLS AND PROCEDURES. (a) The registrant's principal executive officer and principal financial officer have concluded that the registrant's disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940) are effective based on their evaluation of these controls and procedures as of a date within 90 days of the filing date of this report. (b) There were no changes in the registrant's internal control over financial reporting (as defined in Rule 30a-3(d) under the Investment Company Act of 1940) that occurred during the registrant's second fiscal quarter of the period covered by this report that have materially affected, or are reasonably likely to materially affect, the registrant's internal control over financial reporting. ITEM 12. EXHIBITS. (a)(1) Not applicable for semiannual report filings. (a)(2) Separate certifications by the registrant's principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as Exhibit 99.302CERT. (a)(3) Not applicable. (b) A certification by the registrant's chief executive officer and chief financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, is furnished and attached hereto as Exhibit 99.906CERT.
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: AMERICAN CENTURY WORLD MUTUAL FUNDS, INC. By: /s/ Jonathan S. Thomas -------------------------------------------------- Name: Jonathan S. Thomas Title: President Date: July 20, 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/ Jonathan S. Thomas --------------------------------------------------- Name: Jonathan S. Thomas Title: President (principal executive officer) Date: July 20, 2007 By: /s/ Robert J. Leach --------------------------------------------------- Name: Robert J. Leach Title: Vice President, Treasurer, and Chief Financial Officer (principal financial officer) Date: July 20, 2007