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
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AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
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(Exact name of registrant as specified in charter)
4500 MAIN STREET, KANSAS CITY, MISSOURI 64111
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(Address of principal executive offices) (Zip code)
CHARLES A. ETHERINGTON, 4500 MAIN STREET, KANSAS CITY, MISSOURI 64111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 816-531-5575
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Date of fiscal year end: 11-30
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Date of reporting period: 05-31-2008
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ITEM 1. REPORTS TO STOCKHOLDERS.
[front cover]
SEMIANNUAL REPORT
MAY 31, 2008
[american century investments logo and text logo ®]
AMERICAN CENTURY INVESTMENTS
INTERNATIONAL GROWTH FUND
GLOBAL GROWTH FUND
EMERGING MARKETS FUND
INTERNATIONAL VALUE FUND
PRESIDENT'S LETTER
[photo of Jonathan Thomas]
JONATHAN THOMAS
Dear Investor,
At American Century Investments®, we are committed to helping you reach your
financial goals. Your success is the ultimate measure of our performance.
That's why we focus on achieving superior investment results and building
long-term relationships with investors like you.
Part of that relationship is to clearly communicate investment results and
what influenced them. To help you monitor your investment with us, we take
pride in providing you with the semiannual report for the American Century®
International Growth, Global Growth, Emerging Markets, and International Value
funds for the six months ended May 31, 2008. We also recommend
americancentury.com, where we provide company news, quarterly portfolio
commentaries, investment views, and other useful information.
As noted on the website, 2008 marks the 50th anniversary of American Century
Investments. Since 1958, we've worked to make wise decisions with your
interests as our guide. Fifty years also means that we've met the challenges
of previous economic downturns. As we've crossed those hurdles and earned your
trust, our assets under management have grown to nearly $100 billion, putting
us in the top 5% of our industry. This growth has given us the resources to
offer a wide array of financial products and services, including a
well-diversified line-up of portfolios that provide you with many choices in
these uncertain times.
Though our offerings are diverse, they share several key qualities, including
our disciplined investment approach and active, team-based management. Strict
adherence to our processes and long-term strategies allows us to stay focused
during volatile periods. Investors in our portfolios also benefit from the sum
of our investment teams' expertise as they share research and information.
We'll continue to work hard to earn your trust. Thank you for your continued
support.
Sincerely,
/s/ Jonathan Thomas
Jonathan S. Thomas
President and Chief Executive Officer
American Century Investments
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
EMERGING MARKETS
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 19
Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Types of Investments in Portfolio. . . . . . . . . . . . . . . . . . 20
Investments by Country . . . . . . . . . . . . . . . . . . . . . . . 20
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 21
INTERNATIONAL VALUE
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 26
Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Types of Investments in Portfolio. . . . . . . . . . . . . . . . . . 27
Investments by Country . . . . . . . . . . . . . . . . . . . . . . . 27
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 28
Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . 31
FINANCIAL STATEMENTS
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . 34
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . 36
Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . 37
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 39
Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . 50
OTHER INFORMATION
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . 74
Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 75
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
Investments or any other person in the American Century Investments
organization. Any such opinions are subject to change at any time based upon
market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied
upon as an indication of trading intent on behalf of any American Century
Investments 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 Investments by third party vendors. To the best of American
Century Investments' 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 RETREAT
Stock performance in both developed and emerging international stock markets
turned negative for the six months ended May 31, 2008. Solid results in April
and May were not enough to offset the sharp downturn that occurred from
December 2007, through March 2008. Global credit market woes, rising
inflationary pressures and slowing economic growth rates combined to drag down
stocks. Soaring prices for oil and other commodities added to investors'
malaise, while a weak U.S. dollar complicated outlooks for companies that rely
on exports to the United States.
Meanwhile, strong performance from Latin America helped emerging markets
outperform the developed markets during the six months.
CREDIT CRUNCH PROMPTS CENTRAL BANK ACTION
Europe couldn't escape the fallout from the U.S. credit crisis; its large
banks were investors and players in the U.S. subprime credit market. But
coordinated efforts between the European Central Bank (ECB) and the U.S.
Federal Reserve to inject liquidity and ease conditions in short-term money
markets limited the risk of a severe global credit crisis.
RATES DROP IN BRITAIN
In Europe, the euro continued to reach record highs versus the U.S. dollar.
Despite increasingly sluggish economic growth throughout Europe, rising
inflation caused the ECB to leave its key interest rate unchanged during the
six-month period. On the other hand, the Bank of England responded to slower
economic growth by cutting its key rate by 75 basis points.
Japan's economic growth remained positive, but the government scaled back its
fiscal-year growth forecast, citing rising raw materials prices and turmoil in
the global financial markets as obstacles to economic expansion. Japan's
benchmark interest rate remained steady at 0.5% -- the lowest among the
world's major economies.
VOLATILITY OFFERS OPPORTUNITY
The weak U.S. economy, with its ongoing credit problems, remains an important
factor in the outlook for international stocks. Nevertheless, we believe that
turbulent times always present the potential for long-term investment gains,
and there is no shortage of companies with accelerating earnings that may
provide attractive investment opportunities in the months ahead.
International Equity Total Returns
For the six months ended May 31, 2008 (in U.S. dollars)*
MSCI EM Index -1.52%
MSCI EAFE Growth Index -3.51%
MSCI Europe Index -5.74%
MSCI EAFE Index -5.21%
MSCI World Free Index -4.07%
MSCI EAFE Value Index -6.94%
MSCI Japan Index -2.64%
*Total returns for periods less than one year are not annualized.
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2
PERFORMANCE
International Growth
Total Returns as of May 31, 2008
Average Annual Returns
6 10 Since Inception
months(1) 1 year 5 years years Inception Date
INVESTOR CLASS -2.80% 5.05% 17.89% 6.45% 10.61% 5/9/91
MSCI EAFE INDEX -5.21% -2.53% 19.24% 6.82% 7.54%(2) --
MSCI EAFE
GROWTH INDEX -3.51% 2.83% 18.32% 4.99% 5.74%(2) --
Institutional Class -2.69% 5.29% 18.09% 6.67% 8.86% 11/20/97
A Class(3)
No sales charge* -2.90% 4.81% 17.58% 6.19% 9.44%
With sales charge* -8.46% -1.24% 16.21% 5.56% 8.89% 10/2/96
B Class
No sales charge* -3.34% 4.03% 16.71% -- 17.32%
With sales charge* -8.34% 0.03% 16.60% -- 17.23% 1/31/03
C Class
No sales charge* -3.29% 4.05% 16.74% -- 6.51%
With sales charge* -4.20% 4.05% 16.74% -- 6.51% 6/4/01
R Class -3.00% 4.55% -- -- 16.89% 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%. 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) Prior to December 3, 2007, the A Class was referred to as the Advisor
Class. Performance, with sales charge, prior to that date has been adjusted to
reflect the A Class's current sales charge.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the
performance shown. Investment return and principal value will fluctuate, and
redemption value may be more or less than original cost. To obtain performance
data current to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. International investing involves special risks, such as
political instability and currency fluctuations. 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.
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3
International Growth
Growth of $10,000 Over 10 Years
$10,000 investment made May 31, 1998
One-Year Returns Over 10 Years
Periods ended May 31
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Investor
Class -2.85% 48.27% -22.48% -13.34% -15.25% 22.36% 10.36% 26.80% 26.71% 5.05%
MSCI
EAFE
Index 4.36% 17.14% -17.23% -9.60% -12.30% 32.66% 14.62% 28.24% 26.84% -2.53%
MSCI
EAFE
Growth
Index 2.75% 20.82% -27.39% -11.58% -11.92% 27.01% 11.88% 26.83% 25.13% 2.83%
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the
performance shown. Investment return and principal value will fluctuate, and
redemption value may be more or less than original cost. To obtain performance
data current to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. International investing involves special risks, such as
political instability and currency fluctuations. 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.
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4
PORTFOLIO COMMENTARY
International Growth
Portfolio Managers: Alex Tedder and Raj Gandhi
PERFORMANCE SUMMARY
International Growth returned -2.80%* for the six months ended May 31, 2008.
The portfolio's benchmark, the MSCI EAFE Index, returned -5.21%.
The combination of rising inflationary pressures (triggered by soaring oil and
food prices), ongoing global credit-market concerns and slowing economic
growth rates led to a sharp downturn among most international stock markets.
Overall, our favorable stock selection and effective allocation decisions
accounted for the portfolio's outperformance relative to the benchmark.
CANADA LEADS ALL COUNTRIES
From a country perspective, Canada, which was not represented in the
benchmark, along with Germany and Italy made the greatest positive
contributions to the portfolio's relative performance. Within each country,
strong stock selection led to solid results. On the other hand, our positions
in Japan, France and India detracted from relative results. Stock selection
was the primary culprit in Japan and France. Our holdings in India posted a
negative return for the reporting period, and the benchmark had no exposure to
India.
MATERIALS, INDUSTRIALS WERE TOP SECTORS
The portfolio's materials sector made the greatest positive contribution to
relative performance, due to our overweight to the sector and good stock
selection. In particular, our stock picks in the chemicals industry -- along
with an overweight -- generated strong performance. Our position in Germany's
K+S AG, a producer of potash for use in fertilizers, represented the fund's
top contributor for the reporting period. The company's stock benefited from
the extended agriculture boom, greater-than-expected earnings and soaring
demand for potash.
In the industrials sector, our stock selections contributed positively to fund
performance. In particular, an overweight position and good stock selection in
the electrical equipment industry were effective, as the industry continued to
benefit from growing worldwide demand. Our positions in Vestas Wind Systems, a
Danish supplier of wind power solutions, and ALSTOM, the France-based provider
of equipment and services for power generation and rail transport, led the
industrials sector's performance.
Top Ten Holdings as of May 31, 2008
% of net % of net
assets as of assets as of
5/31/08 11/30/07
ENI SpA 2.0% 0.4%
BG Group plc 2.0% 1.6%
Total SA 1.8% 1.3%
Tesco plc 1.8% 1.6%
Rio Tinto Ltd. 1.8% 0.6%
Julius Baer Holding AG 1.7% 1.8%
CEZ AS 1.7% 1.1%
Nintendo Co., Ltd. 1.6% 1.6%
Saipem SpA 1.6% 1.6%
BHP Billiton Ltd. 1.6% 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.
- ------
5
International Growth
Our health care stocks also were strong contributors to relative performance.
Specifically, overweights to Denmark's Novo Nordisk AS, a pharmaceutical
company specializing in insulin treatments for diabetes, and Australia's CSL
Ltd., a biotechnology company specializing in vaccines, contributed favorably.
CONSUMER SECTORS LAGGED
The consumer discretionary and consumer staples sectors represented the
largest detractors from the portfolio's relative performance, primarily due to
unfavorable stock selection. In the discretionary sector, our holdings among
specialty retailers and textiles, apparel and luxury goods companies generated
disappointing performance. In particular, our position in Burberry Group, the
British clothing company, was among the fund's largest detractors. In the
staples sector, poor performance from food and staples retailers accounted for
the bulk of the decline.
OUTLOOK
International Growth invests in companies located throughout the world
exhibiting accelerating earnings and revenue growth. Our analysis indicates
the long-term outlook for large-cap growth companies remains positive. The
portfolio has broad exposure to high-quality growth companies in numerous
markets, and although economic uncertainty and market volatility characterize
the current climate, we believe these companies will deliver solid long-term
returns.
Types of Investments in Portfolio
% of net % of net
assets as of assets as of
5/31/08 11/30/07
Foreign Common Stocks & Rights 99.9% 99.6%
Temporary Cash Investments 0.1% 0.4%
Other Assets and Liabilities(1) --(2) --(2)
(1) Includes securities lending collateral and other assets and liabilities.
(2) Category is less than 0.05% of total net assets.
Investments by Country as of May 31, 2008
% of net % of net
assets as of assets as of
5/31/08 11/30/07
United Kingdom 20.3% 13.0%
Japan 13.4% 15.0%
Switzerland 8.9% 11.4%
Germany 8.2% 9.1%
France 7.6% 8.7%
Australia 5.7% 5.4%
Italy 4.3% 2.8%
Spain 3.8% 3.9%
Canada 3.2% 3.5%
Hong Kong 3.2% 1.9%
Denmark 2.8% 2.5%
Belgium 2.3% 2.2%
Greece 2.2% 1.6%
Other Countries 14.0% 18.6%
Cash and Equivalents(3) 0.1% 0.4%
(3) Includes temporary cash investments, securities lending collateral and other
assets and liabilities.
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6
SCHEDULE OF INVESTMENTS
International Growth
MAY 31, 2008 (UNAUDITED)
Shares Value
Common Stocks & Rights -- 99.9%
AUSTRALIA -- 5.7%
907,414 BHP Billiton Ltd. $ 37,751,508
5,177,194 Boart Longyear Group 10,249,539
942,860 CSL Ltd. 35,889,702
451,450 QBE Insurance Group Ltd. 10,552,380
320,344 Rio Tinto Ltd.(1) 42,280,026
--------------
136,723,155
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BELGIUM -- 2.3%
203,175 KBC Groupe(1) 25,068,253
1,192,347 SES SA Fiduciary Depositary Receipt 31,533,882
--------------
56,602,135
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BERMUDA -- 0.8%
808,717 Aquarius Platinum Ltd. 13,247,099
193,380 Seadrill Ltd. 6,312,422
--------------
19,559,521
--------------
BRAZIL -- 1.7%
1,187,900 Bolsa de Mercadorias e Futuros--BM&F SA 13,603,524
315,700 Net Servicos de Comunicacao SA(2) 4,509,446
1,069,200 Redecard SA 22,498,065
--------------
40,611,035
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CANADA -- 3.2%
78,510 Agnico-Eagle Mines Ltd. 5,549,872
133,180 EnCana Corp. 12,035,477
63,914 Potash Corp. of Saskatchewan 12,695,304
192,180 Research In Motion Ltd.(2) 26,688,036
286,270 Suncor Energy Inc. 19,539,955
--------------
76,508,644
--------------
CZECH REPUBLIC -- 1.7%
491,480 CEZ AS 40,608,088
--------------
DENMARK -- 2.8%
538,576 Novo Nordisk AS B Shares(1) 35,042,482
232,680 Vestas Wind Systems AS(2) 32,025,526
--------------
67,068,008
--------------
FINLAND -- 0.6%
535,200 Nokia Oyj 15,428,275
--------------
FRANCE -- 7.6%
131,170 ALSTOM Co. 33,064,031
867,165 AXA SA 30,636,893
188,240 Carrefour SA 13,198,523
189,838 Groupe Danone 16,618,274
45,600 Lafarge SA 8,246,766
Shares Value
66,076 Societe Generale(1) $ 6,866,668
24,729 Societe Generale -- new shares(2) 2,531,386
511,376 Total SA(1) 44,622,267
122,217 Ubisoft Entertainment SA(2) 11,845,285
209,000 Vinci SA(1) 15,746,593
--------------
183,376,686
--------------
GERMANY -- 8.2%
211,100 adidas AG 14,883,463
91,640 BASF SE 13,738,926
190,340 Deutsche Boerse AG(1) 27,310,404
386,233 Fresenius Medical Care AG & Co. KGaA(1) 21,522,901
483,097 GEA Group AG 18,811,397
65,755 K+S AG 30,825,591
236,600 Linde AG(1) 35,552,752
147,268 Q-Cells AG(2) 17,904,542
124,569 SGL Carbon AG(2) 9,263,257
79,270 Siemens AG 8,992,519
--------------
198,805,752
--------------
GREECE -- 2.2%
345,940 Coca-Cola Hellenic Bottling Co. SA 15,725,586
640,681 National Bank of Greece SA 36,379,821
--------------
52,105,407
--------------
HONG KONG -- 3.2%
955,500 China Mobile Ltd. 14,044,358
574,500 Esprit Holdings Ltd. 6,714,175
795,100 Hang Seng Bank Ltd. 16,108,734
4,912,000 Li & Fung Ltd. 18,568,985
1,234,756 Melco PBL Entertainment (Macau) Ltd. ADR(2) 14,681,249
388,000 Sun Hung Kai Properties Ltd. 6,235,008
--------------
76,352,509
--------------
INDIA -- 1.2%
513,826 Bharti Airtel Ltd.(2) 10,675,661
264,600 Housing Development Finance Corp. Ltd. 16,147,441
--------------
26,823,102
--------------
IRELAND -- 0.1%
253,560 Anglo Irish Bank Corp. plc 3,313,492
--------------
ITALY -- 4.3%
1,198,429 ENI SpA(1) 48,809,887
507,840 Finmeccanica SpA 15,390,109
861,234 Saipem SpA 39,551,538
--------------
103,751,534
--------------
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7
International Growth
Shares Value
JAPAN -- 13.4%
326,500 Canon, Inc. $ 17,617,686
1,710 Central Japan Railway Co. 16,702,699
273,600 Daikin Industries Ltd. 14,114,595
109,800 Fanuc Ltd. 11,922,333
64,200 FAST RETAILING CO., LTD. 5,552,432
280 INPEX Holdings Inc. 3,531,531
1,561,280 iShares MSCI Japan Index Fund 21,186,570
717,000 Japan Steel Works Ltd. (The) 14,890,754
512,700 Konami Corp. 18,718,777
959,500 Kuraray Co. Ltd. 12,110,901
1,593,000 Marubeni Corp. 14,200,284
717,700 Mitsubishi Corp. 24,774,092
1,563,000 Mitsui O.S.K. Lines, Ltd. 23,582,105
72,300 Nintendo Co., Ltd. 39,766,714
440,000 Shiseido Co., Ltd. 10,786,155
251,600 Sony Corp. 12,597,895
5,570 Sony Financial Holdings Inc. 22,765,955
456,000 Sumitomo Realty & Development Co. Ltd. 11,675,676
236,300 Terumo Corp. 11,764,580
311,000 Toyota Motor Corp. 15,837,553
--------------
324,099,287
--------------
LUXEMBOURG -- 0.9%
192,920 Millicom International Cellular SA(1) 22,351,711
--------------
NETHERLANDS -- 0.9%
500,390 ASML Holding N.V. 14,969,723
403,740 Koninklijke KPN N.V. 7,348,750
--------------
22,318,473
--------------
NORWAY -- 1.9%
534,480 Aker Solutions ASA 15,089,129
1,097,070 Norsk Hydro ASA(1) 17,421,661
166,190 Yara International ASA 12,609,158
--------------
45,119,948
--------------
PEOPLE'S REPUBLIC OF CHINA -- 1.3%
2,739,000 China Communications Construction Co. Ltd. H
Shares 6,023,059
5,659,500 China Merchants Bank Co., Ltd. H Shares 20,270,649
86,943 Ctrip.com International, Ltd. ADR 5,075,732
--------------
31,369,440
--------------
RUSSIAN FEDERATION -- 0.9%
79,960 OAO LUKOIL 8,947,524
3,661,100 Sberbank 13,253,182
--------------
22,200,706
--------------
Shares Value
SINGAPORE -- 0.4%
636,000 United Overseas Bank Ltd. $ 9,426,374
--------------
SOUTH KOREA -- 0.5%
17,430 Samsung Electronics 12,560,788
--------------
SPAIN -- 3.8%
1,590,910 Banco Santander SA 33,139,964
1,151,765 Cintra Concesiones de Infraestructuras de
Transporte(1) 17,720,910
365,880 Gamesa Corporacion Tecnologica SA 18,937,268
786,310 Telefonica SA 22,569,193
--------------
92,367,335
--------------
SWEDEN -- 0.7%
126,199 Oriflame Cosmetics SA SDR 8,962,220
2,877,810 Telefonaktiebolaget LM Ericsson Cl B 7,829,470
--------------
16,791,690
--------------
SWITZERLAND -- 8.9%
977,235 ABB Ltd.(2) 31,737,174
285,499 Compagnie Financiere Richemont SA Cl A 17,785,498
503,810 Julius Baer Holding AG 41,219,060
71,380 Nestle SA 35,087,522
420,720 Novartis AG 22,093,248
91,159 Roche Holding AG 15,711,944
9,340 SGS SA(1) 14,028,813
122,863 Syngenta AG 37,415,118
6,761 UBS AG(2) 162,767
6,761 UBS AG Rights(2) 9,014
--------------
215,250,158
--------------
TAIWAN (REPUBLIC OF CHINA) -- 0.4%
4,785,000 AU Optronics Corp. 9,188,459
--------------
UNITED KINGDOM -- 20.3%
280,950 Admiral Group plc 4,852,485
1,129,930 AMEC plc 18,676,547
346,929 Anglo American plc 23,494,078
1,899,079 BG Group plc 47,620,664
558,040 British American Tobacco plc 20,868,250
471,394 Burberry Group plc 4,668,450
1,303,950 Cadbury plc 17,407,626
1,304,131 Capita Group plc 17,474,619
2,743,350 Compass Group plc 20,376,575
1,042,092 GlaxoSmithKline plc 22,983,438
1,976,394 HSBC Holdings plc(1) 33,355,472
932,830 ICAP plc 11,381,563
2,068,940 International Power plc 18,215,385
189,800 Johnson Matthey plc 7,575,128
- ------
8
International Growth
Shares Value
2,389,267 Man Group plc $ 29,388,335
596,393 Reckitt Benckiser Group plc 35,131,137
1,070,243 Reed Elsevier plc 13,482,121
1,288,610 Scottish and Southern Energy plc 37,570,589
522,430 Standard Chartered plc 19,412,418
5,393,509 Tesco plc 44,237,985
2,514,120 TUI Travel plc 12,162,960
9,445,050 Vodafone Group plc 30,353,423
--------------
490,689,248
--------------
TOTAL COMMON STOCKS & RIGHTS
(Cost $1,831,764,706) 2,411,370,960
--------------
Principal Amount
Temporary Cash Investments -- 0.1%
FHLB Discount Notes, 1.90%, 6/2/08(3)
$1,600,000
(Cost $1,599,916) 1,600,000
--------------
Temporary Cash Investments -- Securities Lending Collateral(4) -- 8.3%
Repurchase Agreement, Barclays Capital Inc., (collateralized by
various U.S. Government Agency obligations in a pooled account at
the lending agent), 2.30%, dated 5/30/08, due 6/2/08 (Delivery
value $40,007,667) 40,000,000
Repurchase Agreement, BNP Paribas Securities Corp.,
(collateralized by various U.S. Government Agency obligations in
a pooled account at the lending agent), 2.35%, dated 5/30/08, due
6/2/08 (Delivery value $40,007,833) 40,000,000
Repurchase Agreement, Credit Suisse Securities USA LLC,
(collateralized by various U.S. Government Agency obligations in
a pooled account at the lending agent), 2.35%, dated 5/30/08, due
6/2/08 (Delivery value $40,007,833) 40,000,000
Repurchase Agreement, Deutsche Bank Securities Inc.,
(collateralized by various U.S. Government Agency obligations in
a pooled account at the lending agent), 2.30%, dated 5/30/08, due
6/2/08 (Delivery value $39,123,647) 39,116,150
Repurchase Agreement, Lehman Brothers Inc./Lehman Brothers
Commercial Paper Inc., (collateralized by various U.S. Government
Agency obligations in a pooled account at the lending agent),
2.30%, dated 5/30/08, due 6/2/08 (Delivery value $40,007,667) 40,000,000
--------------
TOTAL TEMPORARY CASH INVESTMENTS -- SECURITIES LENDING COLLATERAL
(Cost $199,116,150) 199,116,150
--------------
Value
TOTAL INVESTMENT SECURITIES -- 108.3%
(Cost $2,032,480,772) $2,612,087,110
--------------
OTHER ASSETS AND LIABILITIES -- (8.3)% (199,647,979)
--------------
TOTAL NET ASSETS -- 100.0% $2,412,439,131
==============
Market Sector Diversification
(as a % of net assets)
Financials 19.4%
Industrials 16.5%
Materials 13.3%
Energy 10.2%
Consumer Staples 9.0%
Consumer Discretionary 8.2%
Information Technology 7.2%
Health Care 6.8%
Telecommunication Services 4.4%
Utilities 4.0%
Diversified 0.9%
Cash and Equivalents* 0.1%
* 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
MSCI = Morgan Stanley Capital International
SDR = Swedish Depositary Receipt
(1) Security, or a portion thereof, was on loan as of May 31, 2008.
(2) Non-income producing.
(3) The rate indicated is the yield to maturity at purchase.
(4) Investments represent purchases made by the lending agent with cash
collateral received through securities lending transactions.
See Notes to Financial Statements.
- ------
9
PERFORMANCE
Global Growth
Total Returns as of May 31, 2008
Average Annual
Returns
Since Inception
6 months(1) 1 year 5 years Inception Date
INVESTOR CLASS -1.69% 6.00% 18.73% 11.83% 12/1/98
MSCI WORLD FREE INDEX -4.07% -3.68% 14.26% 5.15%(2) --
Institutional Class -1.58% 6.22% 18.93% 4.92% 8/1/00
A Class(3)
No sales charge* -1.89% 5.59% 18.40% 10.48%
With sales charge* -7.56% -0.47% 17.01% 9.78% 2/5/99
B Class
No sales charge* -2.19% 4.95% -- 14.20%
With sales charge* -7.19% 0.95% -- 13.21% 12/1/05
C Class
No sales charge* -2.16% 4.91% 17.56% 11.54%
With sales charge* -2.97% 4.91% 17.56% 11.54% 3/1/02
R Class -1.89% 5.47% -- 15.84% 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%. 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.
(3) Prior to September 4, 2007, the A Class was referred to as the Advisor
Class. Performance, with sales charge, prior to that date has been adjusted to
reflect the A Class's current sales charge.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the
performance shown. Investment return and principal value will fluctuate, and
redemption value may be more or less than original cost. To obtain performance
data current to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. International investing involves special risks, such as
political instability and currency fluctuations. 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
One-Year Returns Over Life of Class
Periods ended May 31
1999* 2000 2001 2002 2003 2004 2005 2006 2007 2008
Investor
Class 18.60% 61.77% -15.57% -12.17% -13.86% 26.69% 12.61% 24.97% 24.97% 6.00%
MSCI
World
Free
Index 8.68% 13.56% -14.95% -12.56% -9.86% 23.60% 11.35% 17.98% 24.51% -3.68%
* 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 Brent Puff
Helen O'Donnell has decided to transition from portfolio manager to senior
investment analyst as of July 2008.
PERFORMANCE SUMMARY
Global growth returned -1.69%* for the six months ended May 31, 2008. The
portfolio's benchmark, the MSCI World Free Index, returned -4.07%.
The combination of rising inflationary pressures (triggered by soaring oil and
food prices), ongoing global credit-market concerns and slowing economic
growth rates led to a sharp downturn among most international stock markets.
Overall, favorable stock selection accounted for the majority of the
portfolio's outperformance relative to the benchmark, while effective
allocation decisions also helped.
From a regional perspective, our holdings in the United States (the fund's
largest country weighting), Australia and the United Kingdom made the greatest
positive contributions to the portfolio's relative performance. In each
country, stock selection was the overriding contributor. In contrast, our
stock selection in Japan, Germany and France led to lagging relative results
for those countries.
ENERGY LED ALL SECTORS
On an absolute basis, four of the portfolio's 10 sectors posted a positive
return for the reporting period, while only two of the benchmark's sectors
showed positive results. Relative to the benchmark, the fund's energy,
financials and materials sectors made the greatest contributions to
performance.
Stock selection was particularly effective in the energy sector's oil, gas and
consumable fuels industry, where our position in Southwestern Energy Co., a
natural gas producer, yielded strong results and finished the reporting period
as the portfolio's top contributor. The U.S.-based company benefited from
rising natural gas prices, which led to strong earnings results.
The financials sector struggled throughout most of the reporting period, due
to credit-related issues and liquidity problems around the world. As such, our
significant underweight relative to the benchmark, particularly in the
insurance industry, helped performance. Overall, stock selection detracted
from results in the financials sector, despite having positive effects in the
capital markets industry.
Top Ten Holdings as of May 31, 2008
% of net % of net
assets as of assets as of
5/31/08 11/30/07
Apple Inc. 1.8% 1.2%
Weatherford International Ltd. 1.8% --
Julius Baer Holding AG 1.8% 1.7%
SES SA Fiduciary Depositary Receipt 1.8% 0.5%
Hewlett-Packard Co. 1.7% 1.5%
American Tower Corp. Cl A 1.7% 1.0%
Tesco plc 1.7% 1.5%
Compass Group plc 1.7% 0.5%
Deutsche Boerse AG 1.7% 2.5%
Bank of New York Mellon Corp. (The) 1.6% 0.4%
*All fund returns referenced in this commentary are for Investor Class shares.
Total returns for periods less than one year are not annualized.
- ------
12
Global Growth
The portfolio's relative performance also benefited from an overweight and
strong stock selection in the materials sector. Glassmaker Owens-Illinois
ranked among the portfolio's top contributors for the period, as its
turnaround efforts continued to gain traction. In addition, Monsanto Co., a
St. Louis-based provider of agricultural products, also ranked among the top
performers, benefiting from the ongoing worldwide agriculture boom.
CONSUMER, TECHNOLOGY HOLDINGS DETRACTED
The fund's consumer discretionary, information technology and health care
sectors detracted the most from relative performance. Poor stock selection led
to the lagging results in the consumer discretionary and technology areas,
while an overweight position drove the underperformance in the health care
sector. A significant detractor in the consumer area was for-profit educator
Apollo Group. As credit-market woes hindered the ability of some students to
secure student loans, the U.S.-based company reported an earnings loss
primarily due to higher marketing costs and a court settlement. We
subsequently exited our position in the stock.
OUTLOOK
Global Growth primarily invests in companies located in developed countries
throughout the world, including the United States, exhibiting accelerating
growth characteristics. The portfolio has broad exposure to high-quality
growth companies in numerous markets, and, despite the current market
volatility, we believe these companies will deliver superior long-term returns.
Types of Investments in Portfolio
% of net % of net
assets as of assets as of
5/31/08 11/30/07
Foreign Common Stocks 54.9% 57.0%
Domestic Common Stocks 43.4% 41.6%
TOTAL EQUITY EXPOSURE 98.3% 98.6%
Temporary Cash Investments 1.5% 0.4%
Other Assets and Liabilities(1) 0.2% 1.0%
(1) Includes securities lending collateral and other assets and liabilities.
Investments by Country as of May 31, 2008
% of net % of net
assets as of assets as of
5/31/08 11/30/07
United States 43.4% 41.6%
United Kingdom 9.9% 7.9%
Switzerland 4.6% 5.3%
Australia 4.2% 2.5%
Germany 3.9% 4.9%
Japan 3.6% 6.5%
France 3.1% 7.0%
Canada 2.8% 3.6%
Belgium 2.6% 1.8%
Other Countries 20.2% 17.5%
Cash and Equivalents(2) 1.7% 1.4%
(2) Includes temporary cash investments, securities lending collateral and other
assets and liabilities.
- ------
13
SCHEDULE OF INVESTMENTS
Global Growth
MAY 31, 2008 (UNAUDITED)
Shares Value
Common Stocks -- 98.3%
AUSTRALIA -- 4.2%
187,250 BHP Billiton Ltd. $ 7,790,237
666,090 Boart Longyear Group 1,318,690
115,570 CSL Ltd. 4,399,140
63,170 Rio Tinto Ltd. 8,337,378
------------
21,845,445
------------
BELGIUM -- 2.6%
33,890 KBC Groupe 4,181,435
347,787 SES SA Fiduciary Depositary Receipt 9,197,888
------------
13,379,323
------------
BERMUDA -- 2.3%
58,330 Covidien Ltd. 2,921,750
209,360 Weatherford International Ltd.(1) 9,553,096
------------
12,474,846
------------
BRAZIL -- 2.2%
341,300 Bovespa Holding SA 5,615,294
289,100 Redecard SA 6,083,231
------------
11,698,525
------------
CANADA -- 2.8%
13,890 Potash Corp. of Saskatchewan 2,765,082
114,660 Shoppers Drug Mart Corp. 6,434,441
79,442 Suncor Energy Inc. 5,422,479
------------
14,622,002
------------
CHANNEL ISLANDS -- 0.5%
74,820 Amdocs Ltd.(1) 2,417,434
------------
DENMARK -- 1.8%
2,650 FLSmidth & Co. AS B Shares 317,766
22,930 Novo Nordisk AS B Shares 1,491,942
55,825 Vestas Wind Systems AS(1) 7,683,620
------------
9,493,328
------------
FRANCE -- 3.1%
28,990 ALSTOM Co. 7,307,511
30,970 Pernod-Ricard SA 3,517,142
29,950 Total SA(2) 2,613,413
34,780 Vinci SA(2) 2,620,414
------------
16,058,480
------------
GERMANY -- 3.9%
61,130 Deutsche Boerse AG(2) 8,771,068
93,140 Fresenius Medical Care AG & Co. KGaA 5,190,243
25,100 Linde AG(2) 3,771,653
23,460 Q-Cells AG(1) 2,852,219
------------
20,585,183
------------
Shares Value
GREECE -- 1.9%
84,810 Coca-Cola Hellenic Bottling Co. SA $ 3,855,255
105,406 National Bank of Greece SA 5,985,275
------------
9,840,530
------------
HONG KONG -- 1.9%
31,980 China Mobile Ltd. ADR 2,359,804
261,600 Esprit Holdings Ltd. 3,057,316
1,148,000 Li & Fung Ltd. 4,339,820
------------
9,756,940
------------
INDIA -- 0.3%
74,620 Bharti Airtel Ltd.(1) 1,550,365
------------
ITALY -- 1.5%
171,950 Saipem SpA 7,896,676
------------
JAPAN -- 3.6%
89,000 NGK Insulators Ltd. 1,626,392
13,500 Nintendo Co., Ltd. 7,425,320
995 Sony Financial Holdings Inc. 4,066,809
141,000 Sumitomo Realty & Development Co. Ltd. 3,610,242
43,300 Terumo Corp. 2,155,761
------------
18,884,524
------------
LUXEMBOURG -- 0.5%
23,600 Millicom International Cellular SA(2) 2,734,296
------------
MEXICO -- 0.5%
41,790 America Movil, SAB de CV ADR 2,497,788
------------
NETHERLANDS -- 1.8%
83,680 ASML Holding N.V. New York Shares 2,507,053
69,060 Schlumberger Ltd. 6,984,038
------------
9,491,091
------------
NORWAY -- 0.7%
230,750 Norsk Hydro ASA(2) 3,664,350
------------
PEOPLE'S REPUBLIC OF CHINA -- 0.3%
501,000 China Merchants Bank Co., Ltd. H Shares 1,794,433
------------
SOUTH AFRICA -- 0.8%
100,210 Impala Platinum Holdings Ltd. 4,282,470
------------
SPAIN -- 2.2%
424,937 Cintra Concesiones de Infraestructuras de
Transporte SA(2) 6,538,027
102,150 Gamesa Corporacion Tecnologica SA 5,287,094
------------
11,825,121
------------
- ------
14
Global Growth
Shares Value
SWEDEN -- 0.3%
20,111 Oriflame Cosmetics SA SDR $ 1,428,214
------------
SWITZERLAND -- 4.6%
190,790 ABB Ltd.(1) 6,196,192
112,820 Julius Baer Holding AG 9,230,334
11,540 Nestle SA 5,672,598
1,940 SGS SA 2,913,907
------------
24,013,031
------------
TAIWAN (REPUBLIC OF CHINA) -- 0.7%
339,380 Taiwan Semiconductor Manufacturing Co. Ltd. ADR 3,885,901
------------
UNITED KINGDOM -- 9.9%
162,800 AMEC plc 2,690,912
224,720 BG Group plc 5,635,003
306,870 Cadbury plc 4,096,689
170,219 Capita Group plc 2,280,839
1,183,120 Compass Group plc 8,787,771
774,760 International Power plc 6,821,151
287,760 Man Group plc 3,539,490
109,045 Reckitt Benckiser Group plc 6,423,407
78,850 Standard Chartered plc 2,929,903
1,075,650 Tesco plc 8,822,566
------------
52,027,731
------------
UNITED STATES -- 43.4%
97,770 Abbott Laboratories 5,509,340
122,520 Activision, Inc.(1) 4,135,050
61,170 Air Products and Chemicals, Inc. 6,234,447
61,860 Akamai Technologies, Inc.(1) 2,415,633
101,880 Allergan, Inc. 5,870,325
22,340 Amazon.com, Inc.(1) 1,823,390
45,040 American Express Co. 2,087,604
193,140 American Tower Corp. Cl A(1) 8,830,361
51,320 Apple Inc.(1) 9,686,650
86,270 Automatic Data Processing, Inc. 3,713,924
192,300 Bank of New York Mellon Corp. (The) 8,563,125
81,930 Becton, Dickinson & Co. 6,918,989
365,380 Charles Schwab Corp. (The) 8,104,128
Shares Value
300,270 Cisco Systems Inc.(1) $ 8,023,214
3,200 CME Group Inc. 1,376,960
68,090 Coach Inc.(1) 2,471,667
95,250 Coca-Cola Co. (The) 5,454,015
96,970 Corrections Corp. of America(1) 2,499,887
178,460 CVS/Caremark Corp. 7,636,303
44,640 Deere & Co. 3,631,018
52,180 Devon Energy Corp. 6,049,749
120,940 DIRECTV Group, Inc. (The)(1) 3,398,414
57,040 Exelon Corp. 5,019,520
48,470 FMC Technologies Inc.(1) 3,482,570
191,420 Hewlett-Packard Co. 9,008,225
284,850 Hudson City Bancorp, Inc. 5,070,330
339,150 Intel Corp. 7,861,497
5,660 Intuitive Surgical Inc.(1) 1,661,719
20,110 MasterCard Inc. Cl A 6,206,951
75,310 McDermott International, Inc.(1) 4,671,479
139,440 McDonald's Corp. 8,271,581
254,000 Microsoft Corp. 7,193,281
44,670 Monsanto Co. 5,690,958
83,230 Occidental Petroleum Corp. 7,651,334
169,810 Oracle Corp.(1) 3,878,460
109,050 Owens-Illinois Inc.(1) 6,239,841
5,520 priceline.com Inc.(1)(2) 742,606
175,630 Southwestern Energy Co.(1) 7,787,434
173,920 St. Jude Medical, Inc.(1) 7,087,240
128,480 Thermo Fisher Scientific Inc.(1) 7,582,890
54,160 Union Pacific Corp. 4,457,910
86,640 VeriSign, Inc.(1) 3,469,066
------------
227,469,085
------------
TOTAL COMMON STOCKS
(Cost $416,095,506) 515,617,112
------------
Principal Amount
Temporary Cash Investments -- 1.5%
$7,900,000 FHLB Discount Notes, 1.90%, 6/2/08(3)
(Cost $7,899,583) 7,900,000
------------
- ------
15
Global Growth
Value
Temporary Cash Investments -- Securities Lending Collateral(4) -- 4.7%
Repurchase Agreement, Barclays Capital Inc., (collateralized by
various U.S. Government Agency obligations in a pooled account at
the lending agent), 2.30%, dated 5/30/08, due 6/2/08 (Delivery
value $5,501,054) $ 5,500,000
Repurchase Agreement, BNP Paribas Securities Corp.,
(collateralized by various U.S. Government Agency obligations in a
pooled account at the lending agent), 2.35%, dated 5/30/08, due
6/2/08 (Delivery value $5,501,077) 5,500,000
Repurchase Agreement, Credit Suisse Securities USA LLC,
(collateralized by various U.S. Government Agency obligations in a
pooled account at the lending agent), 2.35%, dated 5/30/08, due
6/2/08 (Delivery value $4,634,926) 4,634,019
Repurchase Agreement, Deutsche Bank Securities Inc.,
collateralized by various U.S. Government Agency obligations in a
pooled account at the lending agent), 2.30%, dated 5/30/08, due
6/2/08 (Delivery value $3,798,918) 3,798,190
Repurchase Agreement, Lehman Brothers Inc./Lehman Brothers
Commercial Paper Inc., (collateralized by various U.S. Government
Agency obligations in a pooled account at the lending agent),
2.30%, dated 5/30/08, due 6/2/08 (Delivery value $5,501,054) 5,500,000
------------
TOTAL TEMPORARY CASH INVESTMENTS -- SECURITIES LENDING COLLATERAL
(Cost $24,932,209) 24,932,209
------------
TOTAL INVESTMENT SECURITIES -- 104.5%
(Cost $448,927,298) 548,449,321
------------
OTHER ASSETS AND LIABILITIES -- (4.5)% (23,821,415)
------------
TOTAL NET ASSETS -- 100.0% $524,627,906
============
Market Sector Diversification
(as a % of net assets)
Information Technology 15.6%
Financials 15.4%
Industrials 12.1%
Energy 12.0%
Consumer Staples 10.2%
Health Care 9.7%
Materials 9.3%
Consumer Discretionary 8.3%
Telecommunication Services 3.4%
Utilities 2.3%
Cash and Equivalents* 1.7%
*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
SDR = Swedish Depositary Receipt
(1) Non-income producing.
(2) Security, or a portion thereof, was on loan as of May 31, 2008.
(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
Emerging Markets
Total Returns as of May 31, 2008
Average Annual Returns
Since Inception
6 months(1) 1 year 5 years 10 years Inception Date
INVESTOR CLASS -6.21% 14.66% 34.61% 15.30% 12.55% 9/30/97
MSCI EM INDEX -1.52% 22.00% 34.39% 15.44% 11.33% --
Institutional Class -6.14% 14.83% 34.82% -- 19.55% 1/28/99
A Class(2)
No sales charge* -6.36% 14.29% 34.27% -- 16.17%
With sales charge* -11.77% 7.71% 32.70% -- 15.42% 5/12/99
B Class
No sales charge* -6.62% -- -- -- -2.63%(1)
With sales charge* -11.62% -- -- -- -7.63%(1) 9/28/07
C Class
No sales charge* -6.70% 13.46% 33.31% -- 22.87%
With sales charge* -7.53% 13.46% 33.31% -- 22.87% 12/18/01
R Class -6.46% -- -- -- -2.38%(1) 9/28/07
* 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%. 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) Prior to September 4, 2007, the A Class was referred to as the Advisor
Class. Performance, with sales charge, prior to that date has been adjusted to
reflect the A Class's current sales charge.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the
performance shown. Investment return and principal value will fluctuate, and
redemption value may be more or less than original cost. To obtain performance
data current to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. International investing involves special risks, such as
political instability and currency fluctuations. Investing in emerging markets
may accentuate these risks. The fund's performance may be affected by
investments in initial public offerings.
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 10 Years
$10,000 investment made May 31, 1998
One-Year Returns Over 10 Years
Periods ended May 31
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Investor
Class 1.88% 44.57% -22.82% -0.43% -17.03% 41.04% 23.34% 51.35% 46.65% 14.66%
MSCI EM
Index 3.46% 17.75% -21.60% 7.28% -6.40% 40.48% 30.99% 40.90% 38.59% 22.00%
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. The fund's performance may be affected by
investments in initial public offerings.
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
PERFORMANCE SUMMARY
Emerging Markets returned -6.21%* for the six months ended May 31, 2008. The
portfolio's benchmark, the MSCI Emerging Markets Index, returned -1.52%.
The combination of rising inflationary pressures (triggered by soaring oil and
food prices), ongoing global credit-market concerns and slowing economic
growth rates led to a sharp downturn among most international stock markets.
Emerging market stocks outperformed the developed markets, which, as measured
by the MSCI EAFE Index, returned -5.21% for the reporting period.
As investors sought protection from a slowing economy, the value segments of
the emerging markets outperformed the growth segments, demonstrated by the
MSCI Emerging Markets Value Index return of 0.57% and the MSCI Emerging
Markets Growth Index return of -3.60%. As such, our focus on growth factors
and growth stocks weighed significantly on the portfolio's return and
accounted for the bulk of the performance shortfall relative to the benchmark.
LARGEST COUNTRY WEIGHTINGS DETRACTED
From a regional perspective, the portfolio's three largest-weighted countries
- -- China, Brazil and Korea -- were the greatest detractors to relative
performance despite underweight positions relative to the benchmark. Our
growth-oriented stock selection led to lagging results in China and Korea. The
portfolio's absolute return in the Brazilian market was positive, but currency
effects primarily accounted for the country's poor relative performance.
On the positive side, Russia, Israel and the Czech Republic had the greatest
positive influence on portfolio performance. Stock selection was helpful in
Russia, while overweights contributed favorably in Israel and the Czech
Republic. Russia's Uralkaliy OAO, a producer of potash, was the portfolio's
top contributor for the reporting period, benefiting from strong
emerging-market demand for fertilizers.
TECHNOLOGY, CONSUMER SECTORS LAGGED
On an absolute basis, seven out of the portfolio's 10 sectors posted negative
returns for the reporting period; only the materials, health care and energy
sectors posted positive returns. The information technology, consumer
discretionary and consumer staples sectors represented the largest detractors
from relative performance, primarily due to our preference for growth stocks.
In the consumer discretionary sector, stock selection and an overweight in the
media industry accounted for the bulk of the shortfall. China's Focus Media
was among the portfolio's largest detractors, suffering
Top Ten Holdings as of May 31, 2008
% of net % of net
assets as of assets as of
5/31/08 11/30/07
Petroleo Brasileiro SA ADR 5.0% 3.0%
Samsung Electronics 3.5% 1.6%
OAO Gazprom ADR 3.2% 0.9%
Cia Vale do Rio Doce ADR 3.0% 2.1%
OAO LUKOIL 2.4% 0.9%
Israel Chemicals Ltd. 2.3% 0.3%
China Mobile Ltd. ADR 2.3% 2.3%
America Movil, SAB de CV ADR 1.8% 1.8%
Uralkali GDR 1.7% 0.4%
KNM Group Bhd 1.7% --
*All fund returns referenced in this commentary are for Investor Class shares.
Total returns for periods less than one year are not annualized.
- ------
19
Emerging Markets
from the general downdraft in China's equities and primarily from charges the
company spammed wireless phone users. We subsequently exited our position.
The portfolio's top relative contributors from a sector perspective included
materials, industrials and financials. Stock selection was strong in the
materials and industrials sectors, while an underweight helped the portfolio's
relative performance in the troubled financials sector.
Within the materials sector, stock selection in the chemicals industry was
particularly strong. Similar to its position in Russia's Uralkaliy, the
portfolio benefited from an overweight position in Israel Chemicals, which
advanced on soaring fertilizer demand and the limited supply of potash and
phosphate. The Tel Aviv-based company also realized positive results from
acquisitions completed during the past year.
OUTLOOK
Focusing on equity securities of companies located in emerging-market
countries, we will continue to seek companies exhibiting improving earnings-
and revenue-growth rates. Additionally, we will continue to select stocks
based on extensive company-level research that focuses on identifying
accelerating growth characteristics.
Types of Investments in Portfolio
% of net % of net
assets as of assets as of
5/31/08 11/30/07
Foreign Common Stocks and Rights 97.9% 97.9%
Foreign Preferred Stocks 1.3% --
TOTAL EQUITY EXPOSURE 99.2% 97.9%
Temporary Cash Investments 0.3% 1.4%
Other Assets and Liabilities(1) 0.5% 0.7%
(1) Includes securities lending collateral and other assets and liabilities.
Investments by Country as of May 31, 2008
% of net % of net
assets as of assets as of
5/31/08 11/30/07
Brazil 17.8% 11.7%
People's Republic of China 11.4% 15.0%
Russian Federation 10.8% 7.5%
South Korea 10.6% 13.1%
Taiwan (Republic of China) 10.3% 6.9%
India 5.2% 9.2%
South Africa 5.1% 7.0%
Mexico 3.4% 4.7%
Malaysia 3.3% 2.0%
Israel 3.1% 0.6%
Czech Republic 2.9% 2.1%
Indonesia 2.6% 4.4%
Hong Kong 2.5% 3.1%
Other Countries 10.2% 10.6%
Cash and Equivalents(2) 0.8% 2.1%
(2) Includes temporary cash investments, securities lending collateral and other
assets and liabilities.
- ------
20
SCHEDULE OF INVESTMENTS
Emerging Markets
MAY 31, 2008 (UNAUDITED)
Shares Value
Common Stocks -- 97.9%
BRAZIL -- 16.5%
517,300 Banco do Brasil SA $ 10,347,907
527,800 Bolsa de Mercadorias e Futuros - BM&F SA 6,044,229
815,633 Cia Vale do Rio Doce ADR 32,445,881
364,552 Dufry South America Ltd. BDR(1) 8,656,346
232,900 GVT Holding SA(1) 5,322,774
358,540 Lojas Renner SA 8,857,218
231,464 LPS Brasil - Consultoria de Imoveis SA 4,598,849
328,300 Lupatech SA(1) 12,823,809
763,724 Petroleo Brasileiro SA ADR 53,842,543
653,400 Redecard SA 13,748,817
752,500 Rossi Residencial SA 7,359,956
571,800 Unibanco-Uniao de Bancos Brasileiros SA 8,947,439
735,203 Vivo Participacoes SA ADR(1)(2) 5,153,773
--------------
178,149,541
--------------
CHILE -- 0.5%
709,607 Compania Cervecerias Unidas SA 5,110,293
--------------
CZECH REPUBLIC -- 2.9%
217,078 CEZ AS 17,935,873
50,689 Komercni Banka AS 13,153,255
--------------
31,089,128
--------------
EGYPT -- 0.8%
112,116 Orascom Construction Industries 8,257,689
--------------
HONG KONG -- 2.5%
2,572,000 AAC Acoustic Technology Holdings Inc.(1) 2,330,227
329,834 China Mobile Ltd. ADR 24,338,451
--------------
26,668,678
--------------
INDIA -- 5.2%
125,693 Aban Offshore Ltd.(1) 11,930,102
224,518 Jindal Steel & Power Ltd. 12,458,193
1,190,400 Power Finance Corp. Ltd.(1) 3,960,000
123,787 Reliance Industries Ltd. 7,056,975
1,225,000 Rolta India Ltd. 8,828,659
113,904 Sesa GOA Ltd. 11,595,865
--------------
55,829,794
--------------
INDONESIA -- 2.6%
18,333,500 PT Bumi Resources Tbk 15,843,765
8,118,500 PT United Tractors Tbk 12,593,916
--------------
28,437,681
--------------
Shares Value
ISRAEL -- 3.1%
471,650 Delek Automotive Systems Ltd. $ 8,816,846
1,062,205 Israel Chemicals Ltd. 24,342,301
--------------
33,159,147
--------------
LUXEMBOURG -- 1.1%
193,900 Tenaris SA ADR 11,886,070
--------------
MALAYSIA -- 3.3%
6,192,200 AMMB Holdings Bhd 7,606,468
8,435,750 KNM Group Bhd 18,095,205
22,231,700 SapuraCrest Petroleum Bhd 9,606,290
--------------
35,307,963
--------------
MEXICO -- 3.4%
323,291 America Movil, SAB de CV ADR 19,323,103
3,157,609 Axtel, SAB de CV(1)(2) 6,329,566
2,189,803 Grupo Financiero Banorte, SAB de CV 10,629,133
--------------
36,281,802
--------------
PAKISTAN -- 0.6%
316,053 Oil & Gas Development Co. Ltd. GDR 6,084,020
--------------
PEOPLE'S REPUBLIC OF CHINA -- 11.4%
6,808,000 Agile Property Holdings Ltd. 8,898,719
7,512,000 Asia Cement China Holdings Corp. (1) 6,815,483
37,740,000 China Gas Holdings Ltd.(2) 13,396,442
5,802,000 China High Speed Transmission Equipment Group
Co., Ltd.(1) 10,186,056
3,295,500 China Merchants Bank Co., Ltd. H Shares 11,803,503
4,440,000 China Oilfield Services Ltd.(1) 8,625,613
3,562,000 China Resources Power Holdings Co. 9,882,336
1,915,500 China Shenhua Energy Co. Ltd. H Shares 8,542,189
8,505,000 CNOOC Ltd. 14,822,485
17,633,000 Industrial and Commercial Bank of China Ltd. H
Shares 13,173,541
1,332,000 Parkson Retail Group Ltd.(2) 11,436,333
13,021,000 Want Want China Holdings Ltd. (2) 5,639,866
--------------
123,222,566
--------------
PERU -- 1.0%
130,240 Credicorp Ltd. 10,869,830
--------------
PHILIPPINES -- 0.3%
48,033,000 Alliance Global Group Inc.(1) 3,754,735
--------------
- ------
21
Emerging Markets
Shares Value
POLAND -- 2.0%
60,897 BRE Bank SA(1) $ 11,516,233
466,480 Powszechna Kasa Oszczednosci Bank Polski SA 10,833,361
--------------
22,349,594
--------------
RUSSIAN FEDERATION -- 10.8%
393,022 Globaltrans Investment plc GDR (Acquired
4/30/08 - 5/7/08, Cost $5,276,084)(1)(3) 6,044,678
239,289 Mechel OAO ADR(1) 13,787,832
580,568 OAO Gazprom ADR(1) 35,066,308
230,703 OAO LUKOIL 25,815,666
205,495 OJSC Pharmstandard GDR(1) 5,959,355
311,002 Uralkali GDR (Acquired 10/15/07 - 12/7/07, Cost
$7,201,603)(3) 18,722,320
311,360 X5 Retail Group N.V. GDR(1) 11,520,320
--------------
116,916,479
--------------
SOUTH AFRICA -- 5.1%
470,572 Exxaro Resources Ltd. 9,745,254
254,334 Impala Platinum Holdings Ltd. 10,868,951
245,516 Kumba Iron Ore Ltd.(2) 10,975,706
228,504 Naspers Ltd. 5,333,087
290,703 Sasol Ltd. 18,079,947
--------------
55,002,945
--------------
SOUTH KOREA -- 10.6%
59,035 Daelim Industrial Co., Ltd. 7,090,515
400,130 Doosan Infracore Co., Ltd. 13,152,827
51,142 MegaStudy Co., Ltd. 17,805,821
41,828 NHN Corp.(1) 8,668,657
52,919 Samsung Electronics 38,135,647
458,395 Sung Kwang Bend Co., Ltd.(1) 16,026,550
127,778 Taewoong Co. Ltd.(1) 13,980,087
--------------
114,860,104
--------------
Shares Value
SWITZERLAND -- 0.5%
36,126 Orascom Development Holding AG(1) $ 5,578,636
--------------
TAIWAN (REPUBLIC OF CHINA) -- 10.3%
7,653,409 Asia Cement Corp. 14,218,417
3,308,000 Cathay Financial Holding Co., Ltd. 8,451,512
953,000 MediaTek Inc. 11,907,604
2,011,000 Taiwan Fertilizer Co., Ltd. 9,720,247
8,152,000 Taiwan Semiconductor Manufacturing Co. Ltd. 17,583,927
6,317,000 Tung Ho Steel Enterprise Corp. 13,189,626
5,511,000 U-Ming Marine Transport Corp. 17,794,663
2,708,979 Wistron Corp. 4,631,875
15,219,000 Yuanta Financial Holding Co., Ltd.(1) 14,161,864
--------------
111,659,735
--------------
THAILAND -- 2.2%
3,535,200 Kasikornbank PCL Receipt 9,247,330
2,062,900 PTT Chemical PCL(1) 6,983,197
4,891,400 Thoresen Thai Agencies Public Co. Ltd. 7,676,916
--------------
23,907,443
--------------
TURKEY -- 0.8%
734,040 Enka Insaat ve Sanayi AS 8,807,515
--------------
UNITED KINGDOM -- 0.4%
329,387 Antofagasta plc 4,498,437
--------------
TOTAL COMMON STOCKS
(Cost $848,241,574) 1,057,689,825
--------------
Preferred Stocks -- 1.3%
BRAZIL -- 1.3%
276,000 Gerdau SA
(Cost $11,602,659) 13,772,022
--------------
- ------
22
Emerging Markets
Principal Amount Value
Temporary Cash Investments -- 0.3%
$ 2,800,000 FHLB Discount Notes, 1.90%, 6/2/08(4)
(Cost $2,799,852) $ 2,800,000
--------------
Temporary Cash Investments -- Securities Lending Collateral(5) -- 2.3%
Repurchase Agreement, Barclays Capital Inc., (collateralized
by various U.S. Government Agency obligations in a pooled
account at the lending agent), 2.30%, dated 5/30/08, due
6/2/08 (Delivery value $5,000,958) 5,000,000
Repurchase Agreement, BNP Paribas Securities Corp.,
(collateralized by various U.S. Government Agency obligations
in a pooled account at the lending agent), 2.35%, dated
5/30/08, due 6/2/08 (Delivery value $5,000,979) 5,000,000
Repurchase Agreement, Credit Suisse Securities USA LLC,
(collateralized by various U.S. Government Agency obligations
in a pooled account at the lending agent), 2.35%, dated
5/30/08, due 6/2/08 (Delivery value $5,423,669) 5,422,607
Repurchase Agreement, Deutsche Bank Securities Inc.,
(collateralized by various U.S. Government Agency obligations
in a pooled account at the lending agent), 2.30%, dated
5/30/08, due 6/2/08 (Delivery value $4,849,621) 4,848,692
Repurchase Agreement, Lehman Brothers Inc./Lehman Brothers
Commercial Paper Inc., (collateralized by various U.S.
Government Agency obligations in a pooled account at the
lending agent), 2.30%, dated 5/30/08, due 6/2/08 (Delivery
value $5,000,958) 5,000,000
--------------
TOTAL TEMPORARY CASH INVESTMENTS -- SECURITIES LENDING
COLLATERAL
(Cost $25,271,299) 25,271,299
--------------
TOTAL INVESTMENT SECURITIES -- 101.8%
(Cost $887,915,384) 1,099,533,146
--------------
OTHER ASSETS AND LIABILITIES -- (1.8)% (19,914,517)
--------------
TOTAL NET ASSETS -- 100.0% $1,079,618,629
==============
Market Sector Diversification
(as a % of net assets)
Energy 22.7%
Materials 19.8%
Financials 16.5%
Industrials 12.5%
Information Technology 8.5%
Consumer Discretionary 6.8%
Telecommunication Services 5.6%
Utilities 3.8%
Consumer Staples 2.4%
Health Care 0.6%
Cash and Equivalents* 0.8%
*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
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, 2008.
(3) Security was purchased under Rule 144A of the Securities Act of 1933 or is
a private placement and, unless registered under the Act or exempted from
registration, may only be sold to qualified institutional investors. The
aggregate value of restricted securities at May 31, 2008 was $24,766,998,
which represented 2.3% of total net assets.
(4) Rate indicated is the yield to maturity at purchase.
(5) Investments represent purchases made by the lending agent with cash
collateral received through securities lending transactions.
See Notes to Financial Statements.
- ------
23
PERFORMANCE
International Value
Total Returns as of May 31, 2008
Average Annual Returns
10 Since Inception
6 months(1) 1 year 5 years years Inception Date
A CLASS(2)
No sales charge* -7.02% -2.43% 18.98% 6.87% 6.68%
With sales charge* -12.36% -8.06% 17.58% 6.24% 6.12% 3/31/97
MSCI EAFE INDEX -5.21% -2.53% 19.24% 6.82% 7.75% --
Investor Class -6.87% -2.18% -- -- 12.33% 4/3/06
Institutional Class -6.85% -2.08% -- -- 12.51% 4/3/06
B Class(2)
No sales charge* -7.35% -3.10% 18.16% 6.15% 5.96%
With sales charge* -12.35% -7.10% 18.06% 6.15% 5.96% 3/31/97
C Class
No sales charge* -7.39% -3.22% -- -- 11.19%
With sales charge* -8.24% -3.22% -- -- 11.19% 4/3/06
R Class -7.14% -2.80% -- -- 11.73% 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%. 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 would 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.
- ------
24
International Value
Growth of $10,000 Over 10 Years
$10,000 investment made May 31, 1998*
One-Year Returns Over 10 Years
Periods ended May 31
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
A Class
(no sales
charge)** -3.43% 8.40% -1.91% -4.88% -16.59% 30.27% 14.87% 24.74% 31.07% -2.43%
MSCI EAFE
Index 4.36% 17.14% -17.23% -9.60% -12.30% 32.66% 14.62% 28.24% 26.84% -2.53%
* International Value A Class's initial investment is $9,425 to reflect the
maximum 5.75% initial sales charge.
** Class returns would have been lower 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.
- ------
25
PORTFOLIO COMMENTARY
International Value
Portfolio Managers: Gary Motyl and Guang Yang
PERFORMANCE SUMMARY
International Value returned -7.02%* for the six months ended March 31, 2008.
Its benchmark, the MSCI EAFE Index, returned -5.21%.
The portfolio's performance reflected the difficult investment climate over
the six months, as worries about inflation and the effect of slower U.S.
growth weighed on international stock returns despite the fact that economies
in Europe and Asia appeared to be relatively healthy (see the Market
Perspective on page 2). In that environment, financial shares detracted most
from performance on an absolute basis; only energy and materials shares
contributed positively. Relative to the benchmark, the materials and health
care sectors led detractors. Good stock picks and an underweight position in
financials contributed most.
MATERIALS DETRACTED MOST
The portfolio's performance relative to the benchmark was limited by
positioning among materials shares. We were significantly underweight one of
only two sectors in the index to produce a positive return for the six months.
Stock selection also detracted, as we had no exposure to shares of
ArcelorMittal, the world's largest steel producer, which performed well. The
company benefited from expansion into growing emerging-market economies;
nevertheless, we were worried about a number of dilutive acquisitions,
operational issues, and slower demand in North America and Europe. Similarly,
we had no exposure to BHP Billiton and Rio Tinto, which benefited from
takeover talk.
Stock picks also detracted among paper & forest products companies, which
continued to struggle with poor pricing and demand trends. The leading
detractor in this space was Finnish firm Stora Enso, the world's largest paper
producer, which has been hurt by rising input costs and currency effects from
the weaker dollar. Norwegian paper products firm Norske Skogsindustrier was
another notable detractor.
HEALTH CARE UNDERPERFORMED
Stock selection in the health care sector was another source of
underperformance. The leading detractor in the space by far was medical
imaging company AGFA-Gevaert. The company reported disappointing results amid
an ongoing restructuring and cost-cutting initiative. Pharmaceuticals were
another weak spot in the portfolio, led by an overweight position in
Sanofi-Aventis. The stock detracted from relative results as a generic
manufacturer threatened to launch a patent challenge on Lovenox, one of
Sanofi's leading drugs, which accounts for about 10% of revenues.
Top Ten Holdings as of May 31, 2008
% of net % of net
assets as of assets as of
5/31/08 11/30/07
Samsung Electronics 2.5% 1.1%
Nintendo Co., Ltd. 2.4% 2.7%
E.On AG 1.9% 1.8%
HSBC Holdings plc 1.8% 1.3%
Cia Vale do Rio Doce ADR 1.8% 1.6%
Telenor ASA 1.8% 1.9%
Royal Dutch Shell plc Cl B 1.5% 1.1%
Telefonica SA ADR 1.5% 1.8%
Repsol YPF, SA 1.5% 1.3%
Novartis AG 1.4% 1.2%
* All fund returns referenced in this commentary are for A Class shares and
are not reduced by sales charges. A Class shares are subject to a maximum
sales charge of 5.75%. Had the sales charge been applied, returns would have
been lower than those shown. Total returns for periods less than one year are
not annualized.
- ------
26
International Value
KEY CONTRIBUTORS
The leading contribution to portfolio performance at the sector level was
stock selection and an underweight position in poorly-performing financials
shares. We've been under-represented in these shares for some time because of
concerns about earnings and valuations for companies so close to the epicenter
of the credit crisis. In particular, it helped to underweight banks,
diversified financial services firms, and real estate investment trusts.
Information technology stocks also contributed to relative results, thanks to
stock selection. Here the leading contributor was Samsung Electronic. The
world's largest chip maker rode out record-low DRAM prices thanks to strength
in its other business units.
In terms of individual contributors to relative results, the leading source of
strength was our long-held overweight position in Danish firm Vestas
Windsystems. The alternative energy company -- a leading provider of wind
turbines -- continues to benefit from demand as a result of the dramatic
increase in oil prices.
OUTLOOK
"We build the International Value portfolio stock by stock, looking for
companies trading at a discount to our estimate of their worth," said
portfolio manager Guang Yang, explaining his investment process. "We have a
long-term focus, which allows us to wait patiently for the opportunity to
purchase stocks at bargain levels, and to wait for the market to reflect the
fair value of a stock once it is added to our portfolio. We believe these
elements of value, patience, and bottom-up stock selection are critical to
successful long-term investing," said Yang.
"As a result," he concluded, "our sector allocation decisions reflect where
we're finding the best values. As of May 31, we saw opportunity in the
telecommunication and information technology sectors, which were our largest
overweight positions. Our most significant underweight positions were in
materials and financials shares."
Types of Investments in Portfolio
% of net % of net
assets as of assets as of
5/31/08 11/30/07
Foreign Common Stocks & Rights 86.1% 84.5%
Foreign Preferred Stocks 2.6% 2.0%
TOTAL EQUITY EXPOSURE 88.7% 86.5%
Temporary Cash Investments 10.6% 12.9%
Other Assets and Liabilities 0.7% 0.6%
Investments by Country as of May 31, 2008
% of net % of net
assets as of assets as of
5/31/08 11/30/07
United Kingdom 18.8% 18.3%
Japan 8.2% 8.5%
France 7.5% 8.2%
Germany 7.2% 6.8%
Switzerland 5.8% 3.8%
South Korea 5.7% 4.8%
Netherlands 5.1% 6.2%
Spain 4.6% 4.8%
Hong Kong 2.9% 3.4%
Sweden 2.8% 2.8%
Brazil 2.6% 2.0%
Other Countries 17.5% 16.9%
Cash and Equivalents(1) 11.3% 13.5%
(1) Includes temporary cash investments and other assets and liabilities.
- ------
27
SCHEDULE OF INVESTMENTS
International Value
MAY 31, 2008 (UNAUDITED)
Shares Value
Common Stocks & Rights -- 86.1%
AUSTRALIA -- 2.0%
113,610 Alumina Ltd. $ 617,170
4,630 Australia and New Zealand Banking Group Ltd. 96,002
26,912 National Australia Bank Ltd. 805,877
-----------
1,519,049
-----------
BELGIUM -- 0.5%
49,880 AGFA-Gevaert N.V.(1) 382,948
-----------
BERMUDA -- 1.1%
11,760 Ace, Ltd. 706,423
4,700 XL Capital Ltd. Cl A 164,077
-----------
870,500
-----------
CANADA -- 0.4%
49,300 Domtar Corp.(1) 337,947
-----------
DENMARK -- 1.2%
6,874 Vestas Wind Systems AS(1) 946,121
-----------
FINLAND -- 1.1%
34,110 Stora Enso Oyj R Shares 414,437
20,660 UPM-Kymmene Oyj 401,760
-----------
816,197
-----------
FRANCE -- 7.5%
4,160 Accor SA 317,437
24,219 AXA SA 855,656
8,110 Compagnie Generale des Etablissements Michelin Cl B 725,462
6,680 Electricite de France 723,081
21,700 France Telecom SA 658,463
12,523 Sanofi-Aventis 933,384
12,420 Suez SA 925,514
15,920 Thomson 101,296
3,880 Total SA 338,566
5,032 Valeo SA 200,639
-----------
5,779,498
-----------
GERMANY -- 7.2%
4,310 BASF SE 646,167
15,080 Bayerische Motoren Werke AG 893,121
30,710 Deutsche Post AG 977,010
6,950 E.On AG 1,478,665
97,940 Infineon Technologies AG(1) 882,195
6,300 Siemens AG ADR 716,877
-----------
5,594,035
-----------
Shares Value
HONG KONG -- 2.9%
54,300 Cheung Kong Holdings Ltd. $ 834,309
56,900 Hutchison Whampoa Ltd. 615,043
40,500 Swire Pacific Ltd. A Shares 462,165
146,000 Swire Pacific Ltd. B Shares 334,150
-----------
2,245,667
-----------
ISRAEL -- 0.6%
19,490 Check Point Software Technologies Ltd.(1) 483,937
-----------
ITALY -- 1.8%
21,370 ENI SpA 870,362
26,230 Mediaset SpA 213,824
42,150 UniCredito Italiano SpA 294,586
-----------
1,378,772
-----------
JAPAN -- 8.2%
8,200 FUJIFILM Holdings Corp. 301,716
62,400 Hitachi Ltd. 448,546
6,600 Mabuchi Motor Co. Ltd. 354,253
22,000 Mitsubishi UFJ Financial Group, Inc. 224,903
9,000 Mitsubishi UFJ Financial Group, Inc. ADR 91,350
22,000 NGK Spark Plug Co., Ltd. 273,722
3,400 Nintendo Co., Ltd. 1,870,080
101 Nippon Telegraph & Telephone Corp. 490,394
17,600 Nomura Holdings, Inc. 298,925
11,900 Olympus Corp. 388,203
32,600 Sompo Japan Insurance Inc. 352,123
12,300 Sony Corp. 615,875
10,600 Takeda Pharmaceutical Co Ltd. 614,187
300 Toshiba Corp. 2,643
-----------
6,326,920
-----------
MEXICO -- 1.2%
22,820 Telefonos de Mexico, SAB de CV ADR 940,640
-----------
NETHERLANDS -- 5.1%
4,410 Akzo Nobel N.V. 373,287
27,040 ING Groep N.V. CVA 1,032,303
23,417 Koninklijke Philips Electronics N.V. 899,088
29,199 Reed Elsevier N.V. 544,644
23,440 SBM Offshore N.V. 930,602
5,240 Wolters Kluwer N.V. 147,712
-----------
3,927,636
-----------
- ------
28
International Value
Shares Value
NORWAY -- 2.0%
23,899 Norske Skogindustrier ASA(1) $ 120,884
62,970 Telenor ASA 1,367,249
-----------
1,488,133
-----------
PEOPLE'S REPUBLIC OF CHINA -- 2.0%
63,500 China Shenhua Energy Co. Ltd. H Shares 283,179
824,000 China Telecom Corp. Ltd. H Shares 598,712
990,000 Shanghai Electric Group Corp. H Shares(1) 586,118
-----------
1,468,009
-----------
PORTUGAL -- 0.6%
32,950 Portugal Telecom SGPS SA 402,906
4,641 ZON Multimedia-Servicos de Telecomunicacoes e
Multimedia, SGPS, SA 50,468
-----------
453,374
-----------
RUSSIAN FEDERATION -- 0.5%
6,610 OAO Gazprom ADR(1) 399,244
-----------
SINGAPORE -- 1.1%
61,500 DBS Group Holdings Ltd. 880,798
-----------
SOUTH KOREA -- 5.7%
10,360 Hyundai Motor Company 846,331
6,890 Kookmin Bank 428,175
13,780 Korea Electric Power Corp. 446,937
19,660 KT Corp. ADR 444,513
2,630 Samsung Electronics 1,895,287
16,530 SK Telecom Co. Ltd. ADR 375,562
-----------
4,436,805
-----------
SPAIN -- 4.6%
41,710 Banco Santander SA 868,854
27,680 Iberdrola SA 399,613
27,430 Repsol YPF, SA 1,135,098
13,460 Telefonica SA ADR 1,157,964
-----------
3,561,529
-----------
SWEDEN -- 2.8%
50,980 Atlas Copco AB A Shares 902,982
12,900 Nordea Bank AB 209,674
47,630 Nordea Bank AB FDR 773,583
18,570 Securitas AB B Shares 232,179
18,570 Securitas Systems AB B Shares 47,984
-----------
2,166,402
-----------
SWITZERLAND -- 5.8%
6,580 Lonza Group AG 911,329
2,030 Nestle SA 997,866
Shares Value
21,250 Novartis AG $ 1,115,900
9,307 Swiss Reinsurance 722,618
30,523 UBS AG(1) 734,824
30,523 UBS AG Rights(1) 40,693
-----------
4,523,230
-----------
TAIWAN (REPUBLIC OF CHINA) -- 1.1%
14,585 Chunghwa Telecom Co. Ltd. ADR 361,270
302,082 Compal Electronics Inc. 335,729
148,733 Lite-On Technology Corp. 176,059
-----------
873,058
-----------
TURKEY -- 0.3%
10,400 Turkcell Iletisim Hizmetleri AS ADR 201,864
-----------
UNITED KINGDOM -- 18.8%
69,640 Aviva plc 869,686
92,850 BAE Systems plc 833,563
54,390 BP plc 655,000
75,080 British Sky Broadcasting Group plc 807,500
30,150 Burberry Group plc 298,591
36,243 Cadbury plc 483,841
76,750 Compass Group plc 570,070
45,210 GKN plc 260,807
45,840 GlaxoSmithKline plc 1,011,006
83,400 HSBC Holdings plc 1,407,535
145,040 Kingfisher plc 394,149
32,590 Lloyds TSB Group plc 247,876
35,602 National Grid plc 526,056
195,070 Old Mutual plc 452,059
40,140 Pearson plc 542,624
139,260 Rentokil Initial plc 275,143
99,630 Rolls-Royce Group plc 834,243
74,010 Royal Bank of Scotland Group plc 334,962
45,228 Royal Bank of Scotland Group plc Rights(1) 25,307
28,585 Royal Dutch Shell plc Cl B 1,191,814
16,746 Smiths Group plc 333,678
19,350 Standard Chartered plc 719,006
18,085 Unilever plc 598,568
230,903 Vodafone Group plc 742,050
61,640 Yell Group plc 154,139
-----------
14,569,273
-----------
TOTAL COMMON STOCKS & RIGHTS
(Cost $46,870,531) 66,571,586
-----------
- ------
29
International Value
Shares Value
Preferred Stocks -- 2.6%
BRAZIL -- 2.6%
41,720 Cia Vale do Rio Doce ADR $ 1,373,842
16,760 Empresa Brasiliera de Aeronautica SA ADR 628,835
-----------
TOTAL PREFERRED STOCKS
(Cost $742,759) 2,002,677
-----------
Principal Amount
Temporary Cash Investments -- 10.6%
$8,200,000 FHLB Discount Notes, 1.90%, 6/2/08(2)
(Cost $8,199,567) 8,200,000
-----------
TOTAL INVESTMENT SECURITIES -- 99.3%
(Cost $55,812,857) 76,774,263
-----------
OTHER ASSETS AND LIABILITIES -- 0.7% 554,029
-----------
TOTAL NET ASSETS -- 100.0% $77,328,292
===========
Market Sector Diversification
(as a % of net assets)
Financials 19.8%
Industrials 11.4%
Consumer Discretionary 10.3%
Telecommunication Services 10.0%
Information Technology 8.7%
Energy 7.5%
Health Care 6.9%
Utilities 5.8%
Materials 5.6%
Consumer Staples 2.7%
Cash and Equivalents* 11.3%
*Includes temporary cash investments and other assets and liabilities.
Notes to Schedule of Investments
ADR = American Depositary Receipt
CVA = Certificaten Van Aandelen
FDR = Finnish Depository Receipt
(1) Non-income producing.
(2) Rate indicated is the yield to maturity at purchase.
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, 2007 to May 31, 2008.
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 Investments fund, or
Institutional Class shares of the American Century Diversified Bond Fund, in
an American Century Investments account (i.e., not a financial intermediary or
retirement plan account), American Century Investments 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
Investments 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 Investments 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
Expenses Paid
Beginning Ending During
Account Account Period(1) Annualized
Value Value 12/1/07 - Expense
12/1/07 5/31/08 5/31/08 Ratio(1)
International Growth
ACTUAL
Investor Class $1,000 $972.00 $6.36 1.29%
Institutional Class $1,000 $973.10 $5.38 1.09%
A Class $1,000 $971.00 $7.59 1.54%
B Class $1,000 $966.60 $11.26 2.29%
C Class $1,000 $967.10 $11.26 2.29%
R Class $1,000 $970.00 $8.82 1.79%
HYPOTHETICAL
Investor Class $1,000 $1,018.55 $6.51 1.29%
Institutional Class $1,000 $1,019.55 $5.50 1.09%
A Class $1,000 $1,017.30 $7.77 1.54%
B Class $1,000 $1,013.55 $11.53 2.29%
C Class $1,000 $1,013.55 $11.53 2.29%
R Class $1,000 $1,016.05 $9.02 1.79%
Global Growth
ACTUAL
Investor Class $1,000 $983.10 $6.40 1.29%
Institutional Class $1,000 $984.20 $5.41 1.09%
A Class $1,000 $981.10 $7.63 1.54%
B Class $1,000 $978.10 $11.32 2.29%
C Class $1,000 $978.40 $11.33 2.29%
R Class $1,000 $981.10 $8.87 1.79%
HYPOTHETICAL
Investor Class $1,000 $1,018.55 $6.51 1.29%
Institutional Class $1,000 $1,019.55 $5.50 1.09%
A Class $1,000 $1,017.30 $7.77 1.54%
B Class $1,000 $1,013.55 $11.53 2.29%
C Class $1,000 $1,013.55 $11.53 2.29%
R Class $1,000 $1,016.05 $9.02 1.79%
(1) Expenses are equal to the class's annualized expense ratio listed in the
table above, multiplied by the average account value over the period,
multiplied by 183, the number of days in the most recent fiscal half-year,
divided by 366, to reflect the one-half year period.
- ------
32
Expenses Paid
Beginning Ending During
Account Account Period(1) Annualized
Value Value 12/1/07 - Expense
12/1/07 5/31/08 5/31/08 Ratio(1)
Emerging Markets
ACTUAL
Investor Class $1,000 $937.90 $7.90 1.63%
Institutional Class $1,000 $938.60 $6.93 1.43%
A Class $1,000 $936.40 $9.10 1.88%
B Class $1,000 $933.80 $12.71 2.63%
C Class $1,000 $933.00 $12.71 2.63%
R Class $1,000 $935.40 $10.31 2.13%
HYPOTHETICAL
Investor Class $1,000 $1,016.85 $8.22 1.63%
Institutional Class $1,000 $1,017.85 $7.21 1.43%
A Class $1,000 $1,015.60 $9.47 1.88%
B Class $1,000 $1,011.85 $13.23 2.63%
C Class $1,000 $1,011.85 $13.23 2.63%
R Class $1,000 $1,014.35 $10.73 2.13%
International Value
ACTUAL
Investor Class $1,000 $931.30 $6.28 1.30%
Institutional Class $1,000 $931.50 $5.31 1.10%
A Class (after waiver)(2) $1,000 $929.80 $7.00 1.45%
A Class (before waiver) $1,000 $929.80(3) $7.48 1.55%
B Class (after waiver)(2) $1,000 $926.50 $10.40 2.16%
B Class (before waiver) $1,000 $926.50(3) $11.08 2.30%
C Class $1,000 $926.10 $11.08 2.30%
R Class $1,000 $928.60 $8.68 1.80%
HYPOTHETICAL
Investor Class $1,000 $1,018.50 $6.56 1.30%
Institutional Class $1,000 $1,019.50 $5.55 1.10%
A Class (after waiver)(2) $1,000 $1,017.75 $7.31 1.45%
A Class (before waiver) $1,000 $1,017.25 $7.82 1.55%
B Class (after waiver)(2) $1,000 $1,014.20 $10.88 2.16%
B Class (before waiver) $1,000 $1,013.50 $11.58 2.30%
C Class $1,000 $1,013.50 $11.58 2.30%
R Class $1,000 $1,016.00 $9.07 1.80%
(1) Expenses are equal to the class's annualized expense ratio listed in the
table above, multiplied by the average account value over the period,
multiplied by 183, the number of days in the most recent fiscal half-year,
divided by 366, to reflect the one-half year period.
(2) During the six months ended May 31, 2008, the class received a partial
reimbursement 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.
- ------
33
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2008 (UNAUDITED)
International Global Emerging International
Growth Growth Markets Value
ASSETS
Investment
securities, at
value (cost of
$1,833,364,622,
$423,995,089,
$862,644,085 and
$55,812,857,
respectively) --
including
$190,847,779,
$23,878,297,
$24,546,269
and $- of
securities on loan,
respectively $2,412,970,960 $523,517,112 $1,074,261,847 $76,774,263
Investments made
with cash
collateral
received for
securities on
loan, at value
(cost of
$199,116,150,
$24,932,209,
$25,271,299
and $-,
respectively) 199,116,150 24,932,209 25,271,299 --
-------------- ------------ -------------- -------------
Total investment
securities, at
value (cost of
$2,032,480,772,
$448,927,298,
$887,915,384 and
$55,812,857,
respectively) 2,612,087,110 548,449,321 1,099,533,146 76,774,263
Cash -- 871,320 -- 250,809
Foreign currency
holdings, at value
(cost of
$3,739,299,
$654,677,
$4,438,956 and
$5,533,
respectively) 3,799,572 654,730 4,438,957 5,828
Receivable for
investments sold 25,530,315 7,495,722 8,064,257 17,634
Receivable for
capital shares
sold 69,766 135,181 18,496 24,744
Dividends and
interest
receivable 8,108,984 1,392,966 3,212,935 342,592
-------------- ------------ -------------- -------------
2,649,595,747 558,999,240 1,115,267,791 77,415,870
-------------- ------------ -------------- -------------
LIABILITIES
Disbursements in
excess of demand
deposit cash 10,681,577 -- 637,314 --
Payable for
collateral
received for
securities on loan 199,116,150 24,932,209 25,271,299 --
Payable for
investments
purchased 24,681,822 8,906,329 8,190,135 --
Payable for
capital shares
redeemed 14,976 -- 85,936 629
Accrued management
fees 2,594,067 524,148 1,446,598 77,930
Distribution fees
payable 6,238 2,611 6,228 2,462
Service fees
(and distribution
fees -- A Class
and R Class)
payable 61,786 6,037 11,652 6,557
-------------- ------------ -------------- -------------
237,156,616 34,371,334 35,649,162 87,578
-------------- ------------ -------------- -------------
NET ASSETS $2,412,439,131 $524,627,906 $1,079,618,629 $77,328,292
============== ============ ============== =============
See Notes to Financial Statements.
- ------
34
MAY 31, 2008 (UNAUDITED)
International International
Growth Global Growth Emerging Markets Value
NET ASSETS CONSIST OF:
Capital (par
value and
paid-in
surplus) $1,791,560,857 $416,060,534 $829,585,793 $55,697,230
Accumulated
undistributed
net investment
income (loss) 15,998,193 1,184,096 (1,815,964) 477,140
Undistributed
net realized
gain on
investment
and foreign
currency
transactions 25,299,737 7,862,023 41,491,896 190,116
Net unrealized
appreciation
on investments
and
translation
of assets and
liabilities
in foreign
currencies 579,580,344 99,521,253 210,356,904 20,963,806
-------------- ------------ -------------- -------------
$2,412,439,131 $524,627,906 $1,079,618,629 $77,328,292
============== ============ ============== =============
INVESTOR CLASS, $0.01 PAR VALUE
Net assets $2,053,265,839 $448,289,357 $949,099,399 $4,032,553
Shares
outstanding 151,650,872 43,279,533 90,396,507 416,340
Net asset
value per
share $13.54 $10.36 $10.50 $9.69
INSTITUTIONAL CLASS, $0.01 PAR VALUE
Net assets $74,776,631 $47,213,812 $74,662,386 $42,481,361
Shares
outstanding 5,514,849 4,509,484 6,977,795 4,383,055
Net asset
value per
share $13.56 $10.47 $10.70 $9.69
A CLASS, $0.01 PAR VALUE
Net assets $268,885,440 $24,446,198 $45,745,897 $26,892,468
Shares
outstanding 19,893,855 2,393,232 4,467,265 2,769,324
Net asset
value per
share $13.52 $10.21 $10.24 $9.71
Maximum
offering price
(net asset
value divided
by 0.9425) $14.34 $10.83 $10.86 $10.30
B CLASS, $0.01 PAR VALUE
Net assets $2,786,321 $850,871 $242,595 $3,207,285
Shares
outstanding 208,055 84,074 23,006 339,229
Net asset
value per
share $13.39 $10.12 $10.54 $9.45
C CLASS, $0.01 PAR VALUE
Net assets $7,004,383 $3,440,847 $9,652,217 $550,286
Shares
outstanding 525,868 351,523 963,965 57,080
Net asset
value per
share $13.32 $9.79 $10.01 $9.64
R CLASS, $0.01 PAR VALUE
Net assets $5,720,517 $386,821 $216,135 $164,339
Shares
outstanding 422,593 37,681 20,541 17,010
Net asset
value per
share $13.54 $10.27 $10.52 $9.66
See Notes to Financial Statements.
- ------
35
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 2008 (UNAUDITED)
International Global Emerging International
Growth Growth Markets Value
INVESTMENT INCOME (LOSS)
INCOME:
Dividends (net
of foreign
taxes withheld
of $3,304,191,
$283,314,
$813,238 and
$154,475,
respectively) $ 31,297,896 $ 4,266,715 $ 14,088,162 $ 1,518,897
Interest 135,305 60,112 256,490 84,694
Securities
lending, net 657,062 43,395 297,695 --
------------- ------------ ------------- -------------
32,090,263 4,370,222 14,642,347 1,603,591
------------- ------------ ------------- -------------
EXPENSES:
Management fees 15,119,548 3,078,664 8,584,521 437,351
Distribution
fees:
B Class 10,797 2,821 679 13,291
C Class 25,633 10,657 34,218 1,423
Service fees:
B Class 3,599 940 226 4,430
C Class 8,544 3,552 11,406 474
Distribution
and service
fees:
A Class 324,259 25,725 50,010 30,308
A Class (old)
(Note 10) 463 -- -- --
R Class 12,089 815 218 425
Directors' fees
and expenses 29,149 5,555 12,384 1,143
Other expenses 144,689 13,995 20,560 305
------------- ------------ ------------- -------------
15,678,770 3,142,724 8,714,222 489,150
------------- ------------ ------------- -------------
Amount waived -- -- -- (14,178)
------------- ------------ ------------- -------------
15,678,770 3,142,724 8,714,222 474,972
------------- ------------ ------------- -------------
NET INVESTMENT
INCOME (LOSS) 16,411,493 1,227,498 5,928,125 1,128,619
------------- ------------ ------------- -------------
REALIZED AND
UNREALIZED
GAIN (LOSS)
NET REALIZED
GAIN (LOSS) ON:
Investment
transactions
(net of foreign
taxes accrued
of $(190,671),
$1,875,
$1,124,113
and $--,
respectively) (56,499,168) 323,011 35,563,698 519,371
Foreign
currency
transactions 92,337,150 8,987,989 4,831,485 10,646
------------- ------------ ------------- -------------
35,837,982 9,311,000 40,395,183 530,017
------------- ------------ ------------- -------------
CHANGE IN NET
UNREALIZED
APPRECIATION
(DEPRECIATION)
ON:
Investments
(net of foreign
taxes accrued
of $1,341,551,
$10,003,
$2,409,879
and $--,
respectively) (123,653,819) (20,050,807) (120,956,751) (8,002,080)
Translation of
assets and
liabilities
in foreign
currencies (11,244,741) (160,615) (6,723,451) 1,094,305
------------- ------------ ------------- -------------
(134,898,560) (20,211,422) (127,680,202) (6,907,775)
------------- ------------ ------------- -------------
NET REALIZED
AND UNREALIZED
GAIN (LOSS) (99,060,578) (10,900,422) (87,285,019) (6,377,758)
------------- ------------ ------------- -------------
NET INCREASE
(DECREASE) IN
NET ASSETS
RESULTING FROM
OPERATIONS $(82,649,085) $(9,672,924) $(81,356,894) $(5,249,139)
============= ============ ============= =============
See Notes to Financial Statements.
- ------
36
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED MAY 31, 2008 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2007
International Growth Global Growth
Increase
(Decrease) in
Net Assets 2008 2007 2008 2007
OPERATIONS
Net investment
income (loss) $ 16,411,493 $ 24,918,970 $ 1,227,498 $ 1,320,328
Net realized
gain (loss) 35,837,982 585,292,428 9,311,000 88,372,880
Change in net
unrealized
appreciation
(depreciation) (134,898,560) (39,782,254) (20,211,422) 10,750,501
-------------- -------------- ------------ ------------
Net increase
(decrease) in
net assets
resulting from
operations (82,649,085) 570,429,144 (9,672,924) 100,443,709
-------------- -------------- ------------ ------------
DISTRIBUTIONS
TO
SHAREHOLDERS
From net
investment
income:
Investor
Class (16,396,751) (16,995,018) -- (1,907,837)
Institutional
Class (741,676) (1,199,068) -- (55,863)
A Class (1,249,007) (1,633,677) -- (11,280)
A Class (old)
(Note 10) -- (140,453) -- (10,690)
R Class (7,882) (5,159) -- --
From net
realized
gains:
Investor
Class (119,741,515) -- (79,511,253) (8,547,373)
Institutional
Class (4,054,455) -- (2,837,675) (265,718)
A Class (14,778,847) -- (3,126,404) (112,783)
A Class (old)
(Note 10) -- -- -- (135,753)
B Class (175,930) -- (115,751) (8,236)
C Class (399,617) -- (473,318) (28,324)
R Class (233,277) -- (56,481) (689)
-------------- -------------- ------------ ------------
Decrease in
net assets
from
distributions (157,778,957) (19,973,375) (86,120,882) (11,084,546)
-------------- -------------- ------------ ------------
CAPITAL SHARE
TRANSACTIONS
Net increase
(decrease) in
net assets
from capital
share
transactions 14,924,015 (767,213,958) 100,703,734 (8,664,280)
-------------- -------------- ------------ ------------
NET INCREASE
(DECREASE) IN
NET ASSETS (225,504,027) (216,758,189) 4,909,928 80,694,883
NET ASSETS
Beginning of
period 2,637,943,158 2,854,701,347 519,717,978 439,023,095
-------------- -------------- ------------ ------------
End of period $2,412,439,131 $2,637,943,158 $524,627,906 $519,717,978
============== ============== ============ ============
Accumulated
undistributed
net investment
income (loss) $15,998,193 $17,791,345 $1,184,096 $(41,527)
============== ============== ============ ============
See Notes to Financial Statements.
- ------
37
SIX MONTHS ENDED MAY 31, 2008 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2007
Emerging Markets International Value
Increase
(Decrease) in
Net Assets 2008 2007 2008 2007
OPERATIONS
Net investment
income (loss) $ 5,928,125 $ 8,433,399 $ 1,128,619 $ 1,368,508
Net realized
gain (loss) 40,395,183 123,939,548 530,017 5,470,436
Change in net
unrealized
appreciation
(depreciation) (127,680,202) 208,848,032 (6,907,775) 7,337,645
-------------- -------------- ----------- ------------
Net increase
(decrease) in
net assets
resulting from
operations (81,356,894) 341,220,979 (5,249,139) 14,176,589
-------------- -------------- ----------- ------------
DISTRIBUTIONS
TO
SHAREHOLDERS
From net
investment
income:
Investor
Class (8,696,244) (6,964,184) (67,236) (14,565)
Institutional
Class (738,636) (1,222,688) (1,019,740) (1,222,424)
A Class (227,182) (110,402) (452,102) (613,919)
B Class -- -- (44,990) (112,516)
C Class -- (8,637) (2,646) (1,079)
R Class (93) -- (3,223) (821)
From net
realized
gains:
Investor
Class (112,116,560) (77,025,838) (243,350) (145,468)
Institutional
Class (7,840,573) (11,255,250) (3,150,452) (11,690,344)
A Class (4,290,167) (1,525,885) (1,754,896) (6,475,931)
B Class (18,131) -- (284,309) (1,431,502)
C Class (1,035,923) (448,699) (20,803) (13,776)
R Class (3,805) -- (14,258) (9,206)
-------------- -------------- ----------- ------------
Decrease in
net assets
from
distributions (134,967,314) (98,561,583) (7,058,005) (21,731,551)
-------------- -------------- ----------- ------------
CAPITAL SHARE
TRANSACTIONS
Net increase
(decrease) in
net assets
from capital
share
transactions 104,934,121 326,165,583 12,288,625 24,618,585
-------------- -------------- ----------- ------------
NET INCREASE
(DECREASE) IN
NET ASSETS (111,390,087) 568,824,979 (18,519) 17,063,623
NET ASSETS
Beginning
of period 1,191,008,716 622,183,737 77,346,811 60,283,188
-------------- -------------- ----------- ------------
End of period $1,079,618,629 $1,191,008,716 $77,328,292 $ 77,346,811
============== ============== =========== =============
Accumulated
undistributed
net investment
income (loss) $(1,815,964) $3,041,951 $477,140 $938,458
============== ============== =========== =============
See Notes to Financial Statements.
- ------
38
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2008 (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. International Growth Fund
(International Growth), Global Growth Fund (Global Growth), Emerging Markets
Fund (Emerging Markets) and International Value Fund (International Value)
(collectively, the funds) are four funds in a series issued by the
corporation. The funds are diversified under the 1940 Act. International
Growth, Global Growth and Emerging Markets' 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. 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 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 is authorized to issue the Investor
Class, the Institutional Class, the A Class (formerly Advisor Class) (see Note
10), the B Class, the C Class and the R Class. Global Growth is authorized to
issue the Investor Class, the Institutional Class, the A Class (formerly
Advisor Class) (see Note 10), the B Class, the C Class and the R Class.
Emerging Markets is authorized to issue the Investor Class, the Institutional
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 Emerging Market's B Class and R Class commenced on September 28, 2007.
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 the Board of Directors or its designee, in accordance
with procedures adopted by the Board of Directors, 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.
- ------
39
SECURITY TRANSACTIONS -- For financial reporting purposes, security
transactions are accounted for as of the trade date. Net realized gains and
losses are determined on the identified cost basis, which is also used for
federal income tax purposes. Certain countries impose taxes on realized gains
on the sale of securities registered in their country. The funds record the
foreign tax expense, if any, on an accrual basis. The realized and unrealized
tax provision reduces the net realized gain (loss) on investment transactions
and net unrealized appreciation (depreciation) on investments, respectively.
INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is
recorded as of the ex-dividend date. Interest income is recorded on the
accrual basis and includes accretion of discounts and amortization of premiums.
SECURITIES ON LOAN -- International Growth, Global Growth and Emerging Markets
may lend portfolio securities through their lending agent to certain approved
borrowers in order to earn additional income. The income earned, net of any
rebates or fees, is included in the Statement of Operations. International
Growth, Global Growth and Emerging Markets 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. The funds are no longer subject to examination by tax
authorities for years prior to 2004. At this time, management has not
identified any uncertain tax positions for which it is reasonably possible
that the total amounts of unrecognized tax benefits will significantly change
in the next twelve months. Accordingly, no provision has been made for federal
or state income taxes. Interest and penalties associated with any federal or
state income tax obligations, if any, are recorded as interest expense.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on
the ex-dividend date. Distributions from net investment income, if any, are
generally declared and paid annually. Distributions from net realized gains,
if any, are generally declared and paid twice per year.
REDEMPTION -- The funds may impose a 2.00% redemption fee on shares held less
than 60 days. The fee may not be applicable to all classes. The redemption fee
is recorded as a reduction in the cost of shares redeemed. The redemption fee
is retained by the funds and helps cover transaction costs that long-term
investors may bear when a fund sells securities to meet investor redemptions.
- ------
40
INDEMNIFICATIONS -- Under the corporation's organizational documents, its
officers and directors are indemnified against certain liabilities arising out
of the performance of their duties to the funds. In addition, in the normal
course of business, the funds enter into contracts that provide general
indemnifications. The funds' maximum exposure under these arrangements is
unknown as this would involve future claims that may be made against the
funds. The risk of material loss from such claims is considered by management
to be remote.
USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America,
which may require management to make certain estimates and assumptions at the
date of the financial statements. Actual results could differ from these
estimates.
2. FEES AND TRANSACTIONS WITH RELATED PARTIES
MANAGEMENT FEES -- The corporation has entered into a Management Agreement
with ACGIM (the investment advisor), under which ACGIM provides the funds with
investment advisory and management services in exchange for a single, unified
management fee (the fee) 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
Investments 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 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 Emerging Markets ranges from 1.25% to 1.85% 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 of each fund is 0.20% 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, 2008 was as follows:
Investor, A, B, C & R Institutional
International Growth 1.28% 1.08%
Global Growth 1.28% 1.08%
Emerging Markets 1.62% 1.42%
International Value 1.30% 1.10%
ACGIM has entered into a Subadvisory Agreement with ACIM (the subadvisor) on
behalf of International Growth, Global Growth and Emerging Markets. The
subadvisor makes investment decisions for the cash portion of International
Growth, Global Growth and Emerging Markets 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, Global Growth and Emerging Markets.
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. Templeton has entered into a
Subadvisory Agreement with Franklin Templeton Investments (Asia) Limited on
behalf of International Value.
- ------
41
DISTRIBUTION AND SERVICE FEES -- The Board of Directors has adopted a separate
Master Distribution and Individual Shareholder Services Plan for each of the A
Class, B Class, C Class and R Class (collectively the plans), pursuant to Rule
12b-1 of the 1940 Act. The plans provide that the A Class will pay American
Century Investment Services, Inc. (ACIS) an annual distribution and service
fee of 0.25%. The plans provide that the B Class and the C Class will each 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 fees are used to pay financial
intermediaries for distribution and individual shareholder services. ACIS
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, 2008, the A Class and B
Class of International Value waived $11,641 and $2,537, respectively, of
distribution and service fees. Fees incurred under the plans during the six
months ended May 31, 2008, are detailed in the Statement of Operations.
RELATED PARTIES -- Certain officers and directors of the corporation are also
officers and/or directors, and, as a group, controlling stockholders of
American Century Companies, Inc. (ACC), the parent of the corporation's
investment advisor, ACGIM, the corporation's subadvisor, ACIM, the distributor
of the corporation, ACIS, and the corporation's transfer agent, American
Century Services, LLC.
The funds are eligible to invest in a money market fund for temporary
purposes, which is 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. International Growth, Global Growth and Emerging
Markets have a securities lending agreement with JPMorgan Chase Bank (JPMCB).
Prior to December 12, 2007, the funds had a bank line of credit 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, 2008, were as follows:
International Global Emerging International
Growth Growth Markets Value
Purchases $1,738,635,411 $300,173,581 $664,143,876 $8,788,629
Proceeds
from sales $1,856,135,216 $286,495,747 $671,709,504 $746,567
- ------
42
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the funds were as follows:
Six months Year ended
ended May 31, 2008 November 30, 2007
Shares Amount Shares Amount
International Growth
INVESTOR
CLASS/SHARES
AUTHORIZED 1,000,000,000 1,000,000,000
============= =============
Sold 8,816,910 $ 116,088,249 22,606,111 $ 302,364,123
Issued in
reinvestment of
distributions 9,115,075 121,417,039 1,168,152 14,426,682
Redeemed (18,716,603) (243,475,790)(1) (64,757,153) (860,556,588)(2)
------------- ---------------- ------------- ----------------
(784,618) (5,970,502) (40,982,890) (543,765,783)
------------- ---------------- ------------- ----------------
INSTITUTIONAL
CLASS/SHARES
AUTHORIZED 150,000,000 150,000,000
============= =============
Sold 1,617,799 21,215,824 1,730,907 22,661,181
Issued in
reinvestment of
distributions 336,457 4,483,545 90,347 1,116,690
Redeemed (1,833,742) (23,750,358)(3) (6,740,406) (89,101,012)(4)
------------- ---------------- ------------- ----------------
120,514 1,949,011 (4,919,152) (65,323,141)
------------- ---------------- ------------- ----------------
A CLASS/SHARES
AUTHORIZED 125,000,000 100,000,000
============= =============
Sold 4,384,423 56,355,534 7,416,480 98,766,265
Issued in
connection with
reclassification
(Note 10) 2,300,787 34,138,899 -- --
Issued in
reinvestment of
distributions 994,597 13,237,814 120,671 1,489,085
Redeemed (4,085,528) (52,713,216)(5) (18,992,329) (259,071,470)(6)
------------- ---------------- ------------- ----------------
3,594,279 51,019,031 (11,455,178) (158,816,120)
------------- ---------------- ------------- ----------------
A CLASS
(OLD)/SHARES
AUTHORIZED N/A 25,000,000
============= =============
Sold -- -- 506,564 6,888,111
Redeemed in
connection with
reclassification
(Note 10) (2,300,787) (34,138,899) 10,882 134,000
Redeemed -- -- (553,678) (7,489,659)
------------- ---------------- ------------- ----------------
(2,300,787) (34,138,899) (36,232) (467,548)
------------- ---------------- ------------- ----------------
B CLASS/SHARES
AUTHORIZED 10,000,000 10,000,000
============= =============
Sold 12,514 160,331 32,050 425,268
Issued in
reinvestment of
distributions 8,547 113,065 -- --
Redeemed (39,200) (496,732) (30,115) (398,007)
------------- ---------------- ------------- ----------------
(18,139) (223,336) 1,935 27,261
------------- ---------------- ------------- ----------------
C CLASS/SHARES
AUTHORIZED 10,000,000 10,000,000
============= =============
Sold 73,702 973,720 108,359 1,470,351
Issued in
reinvestment of
distributions 21,431 281,955 -- --
Redeemed (70,511) (889,250) (129,074) (1,700,384)
------------- ---------------- ------------- ----------------
24,622 366,425 (20,715) (230,033)
------------- ---------------- ------------- ----------------
R CLASS/SHARES
AUTHORIZED 5,000,000 5,000,000
============= =============
Sold 186,842 2,392,641 165,196 2,252,980
Issued in
reinvestment of
distributions 16,312 217,298 292 3,609
Redeemed (53,432) (687,654) (66,454) (895,183)(7)
------------- ---------------- ------------- ----------------
149,722 1,922,285 99,034 1,361,406
------------- ---------------- ------------- ----------------
Net increase
(decrease) 785,593 $ 14,924,015 (57,313,198) $(767,213,958)
============= ================ ============= ================
(1) Net of redemption fees of $112,620.
(2) Net of redemption fees of $182,531.
(3) Net of redemption fees of $2,096.
(4) Net of redemption fees of $6,427.
(5) Net of redemption fees of $4,001.
(6) Net of redemption fees of $87,001.
(7) Net of redemption fees of $32.
- ------
43
Six months Year ended
ended May 31, 2008 November 30, 2007
Shares Amount Shares Amount
Global Growth
INVESTOR
CLASS/SHARES
AUTHORIZED 150,000,000 150,000,000
=========== ===========
Sold 3,246,394 $ 32,775,841 3,826,678 $ 44,774,309
Issued in
reinvestment of
distributions 7,562,705 77,627,963 962,202 10,090,119
Redeemed (5,475,449) (53,548,310)(1) (6,604,834) (75,173,166)(2)
----------- --------------- ----------- ---------------
5,333,650 56,855,494 (1,815,954) (20,308,738)
----------- --------------- ----------- ---------------
INSTITUTIONAL
CLASS/SHARES
AUTHORIZED 35,000,000 5,000,000
=========== ===========
Sold 3,209,369 32,113,770 663,656 7,441,129
Issued in
reinvestment of
distributions 274,955 2,837,675 30,474 321,581
Redeemed (248,832) (2,460,803)(3) (225,832) (2,605,204)(4)
----------- --------------- ----------- ---------------
3,235,492 32,490,642 468,298 5,157,506
----------- --------------- ----------- ---------------
A CLASS/SHARES
AUTHORIZED 15,000,000 15,000,000
=========== ===========
Sold 1,238,452 12,125,282 258,175 3,045,479
Issued in
connection with
reclassification
(Note 10) -- -- 844,849 9,865,842
Issued in
reinvestment of
distributions 295,381 2,989,742 11,949 124,159
Redeemed (606,002) (5,660,358) (185,018) (2,159,416)(5)
----------- --------------- ----------- ---------------
927,831 9,454,666 929,955 10,876,064
----------- --------------- ----------- ---------------
A CLASS
(OLD)/SHARES
AUTHORIZED N/A N/A
=========== ===========
Sold 427,188 4,824,126
Issued in
reinvestment of
distributions 12,880 134,409
Redeemed in
connections with
reclassification
(Note 10) (844,849) (9,865,842)
Redeemed (99,736) (1,127,473)
----------- ---------------
(504,517) (6,034,780)
----------- ---------------
B CLASS/SHARES
AUTHORIZED 10,000,000 10,000,000
=========== ===========
Sold 25,986 259,778 20,190 243,639
Issued in
reinvestment of
distributions 10,224 102,885 795 8,236
Redeemed (3,244) (31,848) (4,124) (46,264)
----------- --------------- ----------- ---------------
32,966 330,815 16,861 205,611
----------- --------------- ----------- ---------------
C CLASS/SHARES
AUTHORIZED 10,000,000 10,000,000
=========== ===========
Sold 137,471 1,321,743 133,552 1,518,392
Issued in
reinvestment of
distributions 30,561 297,645 2,206 22,237
Redeemed (32,313) (293,000) (23,661) (263,194)
----------- --------------- ----------- ---------------
135,719 1,326,388 112,097 1,277,435
----------- --------------- ----------- ---------------
R CLASS/SHARES
AUTHORIZED 5,000,000 5,000,000
=========== ===========
Sold 18,236 209,467 15,584 199,655
Issued in
reinvestment of
distributions 5,543 56,481 66 689
Redeemed (2,094) (20,219) (3,070) (37,722)
----------- --------------- ----------- ---------------
21,685 245,729 12,580 162,622
----------- --------------- ----------- ---------------
Net increase
(decrease) 9,687,343 $ 100,703,734 (780,680) $ (8,664,280)
=========== =============== =========== ===============
(1) Net of redemption fees of $13,570.
(2) Net of redemption fees of $17,554.
(3) Net of redemption fees of $2,174.
(4) Net of redemption fees of $2,094.
(5) Net of redemption fees of $231.
- ------
44
Six months Year ended
ended May 31, 2008 November 30, 2007(1)
Shares Amount Shares Amount
Emerging Markets
INVESTOR
CLASS/SHARES
AUTHORIZED 235,000,000 185,000,000
============ ============
Sold 12,575,338 $134,252,702 47,827,289 $ 504,521,421
Issued in
reinvestment
of
distributions 10,190,898 109,760,207 8,562,770 74,867,377
Redeemed (16,703,703) (170,525,873)(2) (24,149,223) (254,670,365)(3)
------------ ---------------- ------------ ----------------
6,062,533 73,487,036 32,240,836 324,718,433
------------ ---------------- ------------ ----------------
INSTITUTIONAL
CLASS/SHARES
AUTHORIZED 40,000,000 40,000,000
============ ============
Sold 880,458 9,314,905 1,338,242 13,765,385
Issued in
reinvestment
of
distributions 783,602 8,579,209 1,404,698 12,477,840
Redeemed (484,555) (5,037,028)(4) (5,355,131) (51,169,209)(5)
------------ ---------------- ------------ ----------------
1,179,505 12,857,086 (2,612,191) (24,925,984)
------------ ---------------- ------------ ----------------
A
CLASS/SHARES
AUTHORIZED 40,000,000 10,000,000
============ ============
Sold 2,043,042 21,139,859 2,413,803 26,233,978
Issued in
reinvestment
of
distributions 423,942 4,440,312 189,795 1,625,143
Redeemed (967,831) (9,670,189)(6) (640,659) (6,493,843)(7)
------------ ---------------- ------------ ----------------
1,499,153 15,909,982 1,962,939 21,365,278
------------ ---------------- ------------ ----------------
B CLASS/SHARES
AUTHORIZED 10,000,000 10,000,000
============ ============
Sold 24,431 275,753 4,249 51,736
Issued in
reinvestment
of
distributions 1,335 14,264 -- --
Redeemed (7,009) (79,177) -- --
------------ ---------------- ------------ ----------------
18,757 210,840 4,249 51,736
------------ ---------------- ------------ ----------------
C
CLASS/SHARES
AUTHORIZED 5,000,000 5,000,000
============ ============
Sold 376,790 3,841,349 651,145 6,763,060
Issued in
reinvestment
of
distributions 96,421 990,913 52,429 441,564
Redeemed (261,074) (2,550,209) (219,404) (2,274,103)
------------ ---------------- ------------ ----------------
212,137 2,282,053 484,170 4,930,521
------------ ---------------- ------------ ----------------
R
CLASS/SHARES
AUTHORIZED 10,000,000 10,000,000
============ ============
Sold 18,423 187,017 2,120 25,599
Issued in
reinvestment
of
distributions 369 3,898 -- --
Redeemed (371) (3,791) -- --
------------ ---------------- ------------ ----------------
18,421 187,124 2,120 25,599
------------ ---------------- ------------ ----------------
Net increase
(decrease) 8,990,506 $104,934,121 32,082,123 $ 326,165,583
============ ================ ============ ================
(1) September 28, 2007 (commencement of sale) through November 30, 2007 for
the B Class and R Class.
(2) Net of redemption fees of $559,430.
(3) Net of redemption fees of $1,726,189.
(4) Net of redemption fees of $16,337.
(5) Net of redemption fees of $20,209.
(6) Net of redemption fees of $217.
(7) Net of redemption fees of $30,011.
- ------
45
Six months Year ended
ended May 31, 2008 November 30, 2007
Shares Amount Shares Amount
International Value
INVESTOR
CLASS/SHARES
AUTHORIZED 55,000,000 55,000,000
========== ==========
Sold 187,717 $ 1,860,409 247,506 $ 2,766,272
Issued in
reinvestment of
distributions 30,784 306,033 16,462 156,887
Redeemed (67,305) (638,722)(1) (28,628) (313,938)(2)
---------- ------------ ---------- --------------
151,196 1,527,720 235,340 2,609,221
---------- ------------ ---------- --------------
INSTITUTIONAL
CLASS/SHARES
AUTHORIZED 55,000,000 55,000,000
========== ==========
Sold 50,288 504,097 158,819 1,649,947
Issued in
reinvestment of
distributions 417,026 4,170,192 1,354,833 12,911,767
Redeemed (20,111) (192,052)(3) (51,566) (549,566)(4)
---------- ------------ ---------- --------------
447,203 4,482,237 1,462,086 14,012,148
---------- ------------ ---------- --------------
A CLASS/SHARES
AUTHORIZED 55,000,000 55,000,000
========== ==========
Sold 779,082 7,486,473 737,020 7,784,530
Issued in
reinvestment of
distributions 217,383 2,174,640 696,873 6,655,394
Redeemed (365,172) (3,512,302) (681,781) (7,200,516)(5)
---------- ------------ ---------- --------------
631,293 6,148,811 752,112 7,239,408
---------- ------------ ---------- --------------
B CLASS/SHARES
AUTHORIZED 5,000,000 5,000,000
========== ==========
Sold 13,353 125,672 54,583 547,404
Issued in
reinvestment of
distributions 33,502 327,311 161,195 1,505,575
Redeemed (71,296) (673,567) (157,823) (1,631,301)
---------- ------------ ---------- --------------
(24,441) (220,584) 57,955 421,678
---------- ------------ ---------- --------------
C CLASS/SHARES
AUTHORIZED 50,000,000 50,000,000
========== ==========
Sold 36,912 346,653 18,630 198,895
Issued in
reinvestment of
distributions 2,136 20,888 1,559 14,855
Redeemed (1,472) (14,059) (3,594) (38,189)
---------- ------------ ---------- --------------
37,576 353,482 16,595 175,561
---------- ------------ ---------- --------------
R CLASS/SHARES
AUTHORIZED 5,000,000 5,000,000
========== ==========
Sold 4,390 42,678 18,039 188,013
Issued in
reinvestment of
distributions 1,753 17,481 1,052 10,027
Redeemed (6,801) (63,200)(6) (3,369) (37,471)
---------- ------------ ---------- --------------
(658) (3,041) 15,722 160,569
---------- ------------ ---------- --------------
Net increase
(decrease) 1,242,169 $12,288,625 2,539,810 $24,618,585
========== ============ ========== ==============
(1) Net of redemption fees of $884.
(2) Net of redemption fees of $2,570.
(3) Net of redemption fees of $26.
(4) Net of redemption fees of $625.
(5) Net of redemption fees of $24.
(6) Net of redemption fees of $35.
- ------
46
5. SECURITIES LENDING
As of May 31, 2008, securities in International Growth, Global Growth and
Emerging Markets valued at $190,847,779, $23,878,297 and $24,546,269,
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 market value of all collateral received for International Growth, Global
Growth and Emerging Markets, at this date, was $199,116,150, $24,932,209 and
$25,271,299, 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. FAIR VALUE MEASUREMENTS
The funds' securities valuation process is based on several considerations and
may use multiple inputs to determine the fair value of the positions held by
the funds. In conformity with accounting principles generally accepted in the
United States of America, the inputs used to determine a valuation are
classified into three broad levels as follows:
* Level 1 valuation inputs consist of actual quoted prices based on an active
market;
* Level 2 valuation inputs consist of significant direct or indirect
observable market data; or
* Level 3 valuation inputs consist of significant unobservable inputs such as
the fund's own assumptions.
The level classification is based on the lowest level input that is
significant to the fair valuation measurement. The valuation inputs are not an
indication of the risks associated with investing in these securities.
The following is a summary of the valuation inputs used to determine the fair
value of the funds' securities as of May 31, 2008:
Value of
Investment
Fund/Valuation Inputs Securities
INTERNATIONAL GROWTH
Level 1 -- Quoted Prices $ 107,568,647
Level 2 -- Other Significant Observable Inputs 2,504,518,463
Level 3 -- Significant Unobservable Inputs --
---------------
$2,612,087,110
===============
GLOBAL GROWTH
Level 1 -- Quoted Prices $266,095,327
Level 2 -- Other Significant Observable Inputs 282,353,994
Level 3 -- Significant Unobservable Inputs --
---------------
$548,449,321
===============
EMERGING MARKETS
Level 1 -- Quoted Prices $ 171,647,483
Level 2 -- Other Significant Observable Inputs 927,885,663
Level 3 -- Significant Unobservable Inputs --
---------------
$1,099,533,146
===============
INTERNATIONAL VALUE
Level 1 -- Quoted Prices $ 7,647,154
Level 2 -- Other Significant Observable Inputs 69,127,109
Level 3 -- Significant Unobservable Inputs --
---------------
$76,774,263
===============
- ------
47
7. BANK LINE OF CREDIT
Effective December 12, 2007, the funds, along with certain other funds managed
by ACIM or ACGIM, have a $500,000,000 unsecured bank line of credit agreement
with Bank of America, N.A. Prior to December 12, 2007, the funds, along with
certain other funds managed by ACIM or ACGIM, had 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, which is subject to annual renewal, 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, 2008.
8. 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.
Emerging Market's performance may be affected by investments in initial public
offerings (IPOs). The impact of IPOs on a fund's performance depends on the
strength of the IPO market and the size of the fund. IPOs may have less impact
on a fund's performance as its assets grow.
9. 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, 2008, the components of investments for federal income tax
purposes were as follows:
International Global Emerging International
Growth Growth Markets Value
Federal tax
cost of
investments $2,051,853,924 $449,396,036 $893,204,271 $56,424,732
============== ============ ============ ============
Gross tax
appreciation of
investments $580,589,614 $104,438,347 $231,548,291 $25,215,599
Gross tax
depreciation of
investments (20,356,428) (5,385,062) (25,219,416) (4,866,068)
-------------- ------------ ------------ ------------
Net tax
appreciation
(depreciation)
of investments $560,233,186 $99,053,285 $206,328,875 $20,349,531
============== ============ ============ ============
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.
Following are the currency loss deferral amounts as of November 30, 2007:
International Global Emerging International
Growth Growth Markets Value
Currency loss deferrals $(104,419) $(5,724) $(74,949) $(11,900)
The currency loss deferrals represent net foreign currency losses incurred in
the one-month period ended November 30, 2007. The funds have elected to treat
such losses as having been incurred in the following fiscal year for federal
income tax purposes.
- ------
48
10. CORPORATE EVENT
On July 27, 2007, the A Class (old) shareholders of Global Growth approved a
reclassification of A Class (old) shares into Advisor Class shares. The change
was approved by the Board of Directors on November 29, 2006 and March 7, 2007.
The reclassification was effective on September 4, 2007. Subsequent to the
reclassification, the Advisor Class was renamed A Class.
On September 25, 2007, the A Class (old) shareholders of International Growth
approved a reclassification of A Class (old) shares into Advisor Class shares.
The change was approved by the Board of Directors on November 29, 2006 and
March 7, 2007. The reclassification was effective on December 3, 2007.
Subsequent to the reclassification, the Advisor Class was renamed A Class.
11. RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board (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. The adoption of FAS 157 does not materially impact the
determination of fair value.
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161, "Disclosures about Derivative Instruments and Hedging Activities -- an
amendment of FASB Statement No. 133" (FAS 161). FAS 161 is effective for
fiscal years beginning after November 15, 2008. FAS 161 amends and expands
disclosures about derivative instruments and hedging activities. FAS 161
requires qualitative disclosures about the objectives and strategies of
derivative instruments, quantitative disclosures about the fair value amounts
of and gains and losses on derivative instruments, and disclosures of
credit-risk-related contingent features in hedging activities. Management is
currently evaluating the impact that adopting FAS 161 will have on the
financial statement disclosures.
- ------
49
FINANCIAL HIGHLIGHTS
International Growth
Investor Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset
Value,
Beginning
of Period $14.87 $12.17 $9.75 $8.79 $7.54 $6.69
-------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net
Investment
Income
(Loss)(2) 0.09 0.13 0.06 0.11 0.05 0.06
Net Realized
and
Unrealized
Gain (Loss) (0.52) 2.66 2.54 0.94 1.26 0.85
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations (0.43) 2.79 2.60 1.05 1.31 0.91
-------- -------- -------- -------- -------- --------
Distributions
From Net
Investment
Income (0.11) (0.09) (0.18) (0.09) (0.06) (0.06)
From Net
Realized
Gains (0.79) -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total
Distributions (0.90) (0.09) (0.18) (0.09) (0.06) (0.06)
-------- -------- -------- -------- -------- --------
Net Asset
Value,
End of Period $13.54 $14.87 $12.17 $9.75 $8.79 $7.54
======== ======== ======== ======== ======== ========
TOTAL
RETURN(3) (2.80)% 23.09% 27.03% 12.09% 17.45% 13.70%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses
to Average
Net Assets 1.29%(4) 1.27% 1.26% 1.23% 1.26% 1.28%
Ratio of Net
Investment
Income (Loss)
to Average
Net Assets 1.41%(4) 0.94% 0.52% 1.22% 0.57% 0.84%
Portfolio
Turnover Rate 73% 133% 95% 89% 118% 169%
Net Assets,
End of Period
(in thousands) $2,053,266 $2,267,093 $2,352,967 $2,249,430 $2,395,249 $2,502,831
(1) Six months ended May 31, 2008 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year are
not annualized. The total return of the classes may not precisely reflect the
class expense differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.
(4) Annualized.
See Notes to Financial Statements.
- ------
50
International Growth
Institutional Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset
Value,
Beginning
of Period $14.91 $12.20 $9.78 $8.82 $7.56 $6.71
-------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net
Investment
Income
(Loss)(2) 0.10 0.17 0.07 0.13 0.06 0.07
Net Realized
and
Unrealized
Gain (Loss) (0.52) 2.66 2.55 0.94 1.27 0.85
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations (0.42) 2.83 2.62 1.07 1.33 0.92
-------- -------- -------- -------- -------- --------
Distributions
From Net
Investment
Income (0.14) (0.12) (0.20) (0.11) (0.07) (0.07)
From Net
Realized
Gains (0.79) -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total
Distributions (0.93) (0.12) (0.20) (0.11) (0.07) (0.07)
-------- -------- -------- -------- -------- --------
Net Asset
Value,
End of Period $13.56 $14.91 $12.20 $9.78 $8.82 $7.56
======== ======== ======== ======== ======== ========
TOTAL
RETURN(3) (2.69)% 23.36% 27.19% 12.28% 17.78% 13.89%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses
to Average
Net Assets 1.09%(4) 1.07% 1.06% 1.03% 1.06% 1.08%
Ratio of Net
Investment
Income (Loss)
to Average
Net Assets 1.61%(4) 1.14% 0.72% 1.42% 0.77% 1.04%
Portfolio
Turnover Rate 73% 133% 95% 89% 118% 169%
Net Assets,
End of Period
(in thousands) $74,777 $80,452 $125,814 $247,077 $283,330 $301,854
(1) Six months ended May 31, 2008 (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.
- ------
51
International Growth
A Class(1)
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(2) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset
Value,
Beginning
of Period $14.82 $12.12 $9.72 $8.76 $7.52 $6.66
-------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net
Investment
Income
(Loss)(3) 0.08 0.08 0.03 0.09 0.03 0.03
Net Realized
and
Unrealized
Gain (Loss) (0.52) 2.68 2.52 0.94 1.25 0.87
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations (0.44) 2.76 2.55 1.03 1.28 0.90
-------- -------- -------- -------- -------- --------
Distributions
From Net
Investment
Income (0.07) (0.06) (0.15) (0.07) (0.04) (0.04)
From Net
Realized
Gains (0.79) -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total
Distributions (0.86) (0.06) (0.15) (0.07) (0.04) (0.04)
-------- -------- -------- -------- -------- --------
Net Asset
Value,
End of Period $13.52 $14.82 $12.12 $9.72 $8.76 $7.52
======== ======== ======== ======== ======== ========
TOTAL
RETURN(4) (2.90)% 22.87% 26.57% 11.85% 17.07% 13.62%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses
to Average
Net Assets 1.54%(5) 1.52% 1.51% 1.48% 1.51% 1.53%
Ratio of Net
Investment
Income (Loss)
to Average
Net Assets 1.16%(5) 0.69% 0.27% 0.97% 0.32% 0.59%
Portfolio
Turnover Rate 73% 133% 95% 89% 118% 169%
Net Assets,
End of Period
(in thousands) $268,885 $241,579 $336,497 $259,651 $275,195 $239,256
(1) Prior to December 3, 2007, the A Class was referred to as the Advisor
Class.
(2) Six months ended May 31, 2008 (unaudited).
(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 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.
- ------
52
International Growth
B Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006 2005 2004 2003(2)
PER-SHARE DATA
Net Asset
Value,
Beginning
of Period $14.68 $12.04 $9.65 $8.70 $7.48 $6.10
-------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net Investment
Income
(Loss)(3) 0.02 --(4) (0.05) 0.02 (0.03) (0.03)
Net Realized
and
Unrealized
Gain (Loss) (0.52) 2.64 2.52 0.93 1.25 1.41
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations (0.50) 2.64 2.47 0.95 1.22 1.38
-------- -------- -------- -------- -------- --------
Distributions
From Net
Investment
Income -- -- (0.08) --(4) -- --
From Net
Realized Gains (0.79) -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total
Distributions (0.79) -- (0.08) -- -- --
-------- -------- -------- -------- -------- --------
Net Asset
Value,
End of Period $13.39 $14.68 $12.04 $9.65 $8.70 $7.48
======== ======== ======== ======== ======== ========
TOTAL RETURN(5) (3.34)% 21.93% 25.71% 10.97% 16.31% 22.62%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses
to Average
Net Assets 2.29%(6) 2.27% 2.26% 2.23% 2.26% 2.28%(6)
Ratio of Net
Investment
Income (Loss)
to Average
Net Assets 0.41%(6) (0.06)% (0.48)% 0.22% (0.43)% (0.51)%(6)
Portfolio
Turnover Rate 73% 133% 95% 89% 118% 169%(7)
Net Assets, End
of Period
(in thousands) $2,786 $3,320 $2,699 $1,676 $1,107 $513
(1) Six months ended May 31, 2008 (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.
- ------
53
International Growth
C Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset Value,
Beginning
of Period $14.60 $11.97 $9.60 $8.66 $7.45 $6.60
-------- -------- -------- -------- -------- --------
Income From
Investment Operations
Net Investment
Income (Loss)(2) 0.03 --(3) (0.05) 0.02 (0.03) (0.01)
Net Realized and
Unrealized Gain
(Loss) (0.52) 2.63 2.50 0.92 1.24 0.86
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations (0.49) 2.63 2.45 0.94 1.21 0.85
-------- -------- -------- -------- -------- --------
Distributions
From Net
Investment
Income -- -- (0.08) --(3) -- --
From Net
Realized Gains (0.79) -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total
Distributions (0.79) -- (0.08) -- -- --
-------- -------- -------- -------- -------- --------
Net Asset Value,
End of Period $13.32 $14.60 $11.97 $9.60 $8.66 $7.45
======== ======== ======== ======== ======== ========
TOTAL RETURN(4) (3.29)% 21.97% 25.64% 10.91% 16.24% 12.88%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses
to Average
Net Assets 2.29%(5) 2.27% 2.26% 2.23% 2.26% 2.28%
Ratio of Net
Investment
Income (Loss)
to Average
Net Assets 0.41%(5) (0.06)% (0.48)% 0.22% (0.43)% (0.16)%
Portfolio
Turnover Rate 73% 133% 95% 89% 118% 169%
Net Assets, End
of Period
(in thousands) $7,004 $7,318 $6,250 $5,246 $5,070 $1,933
(1) Six months ended May 31, 2008 (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.
- ------
54
International Growth
R Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006 2005 2004 2003(2)
PER-SHARE DATA
Net Asset Value,
Beginning of Period $14.81 $12.12 $9.71 $8.75 $7.53 $7.02
-------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net Investment
Income
(Loss)(3) 0.08 0.07 0.01 0.07 0.02 (0.01)
Net Realized
and
Unrealized
Gain (Loss) (0.54) 2.65 2.53 0.94 1.25 0.52
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations (0.46) 2.72 2.54 1.01 1.27 0.51
-------- -------- -------- -------- -------- --------
Distributions
From Net
Investment
Income (0.02) (0.03) (0.13) (0.05) (0.05) --
From Net
Realized Gains (0.79) -- -- -- -- --
-------- -------- -------- -------- -------- --------
Total
Distributions (0.81) (0.03) (0.13) (0.05) (0.05) --
-------- -------- -------- -------- -------- --------
Net Asset
Value,
End of Period $13.54 $14.81 $12.12 $9.71 $8.75 $7.53
======== ======== ======== ======== ======== ========
TOTAL RETURN(4) (3.00)% 22.48% 26.39% 11.58% 16.92% 7.26%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses
to Average
Net Assets 1.79%(5) 1.77% 1.76% 1.69%(6) 1.76% 1.78%(5)
Ratio of Net
Investment
Income (Loss)
to Average
Net Assets 0.91%(5) 0.44% 0.02% 0.76%(6) 0.07% (0.74)%(5)
Portfolio
Turnover Rate 73% 133% 95% 89% 118% 169%(7)
Net Assets, End
of Period
(in thousands) $5,721 $4,042 $2,106 $1,809 $376 $3
(1) Six months ended May 31, 2008 (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.
- ------
55
Global Growth
Investor Class
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
2008(1) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset
Value,
Beginning
of Period $12.69 $10.52 $8.88 $7.49 $6.48 $5.39
-------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net
Investment
Income
(Loss)(2) 0.02 0.03 --(3) --(3) (0.01) --(3)
Net Realized
and
Unrealized
Gain (Loss) (0.27) 2.41 1.70 1.41 1.02 1.09
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations (0.25) 2.44 1.70 1.41 1.01 1.09
-------- -------- -------- -------- -------- --------
Distributions
From Net
Investment
Income -- (0.05) (0.06) (0.02) -- --
From Net
Realized
Gains (2.08) (0.22) -- -- -- --
-------- -------- -------- -------- -------- --------
Total
Distributions (2.08) (0.27) (0.06) (0.02) -- --
-------- -------- -------- -------- -------- --------
Net Asset
Value,
End of Period $10.36 $12.69 $10.52 $8.88 $7.49 $6.48
======== ======== ======== ======== ======== ========
TOTAL RETURN(4) (1.69)% 23.73% 19.30% 18.87% 15.59% 20.22%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses
to Average
Net Assets 1.29%(5) 1.30% 1.31% 1.30% 1.30% 1.31%
Ratio of Net
Investment
Income (Loss)
to Average
Net Assets 0.51%(5) 0.29% (0.05)% (0.01)% (0.12)% 0.00%
Portfolio
Turnover Rate 60% 108% 95% 36% 79% 152%
Net Assets,
End of Period
(in thousands) $448,289 $481,553 $418,185 $378,976 $299,807 $250,306
(1) Six months ended May 31, 2008 (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.
- ------
56
Global Growth
Institutional Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset Value,
Beginning
of Period $12.79 $10.60 $8.95 $7.55 $6.52 $5.41
-------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net Investment
Income (Loss)(2) 0.06 0.06 0.01 0.01 --(3) 0.01
Net Realized and
Unrealized Gain
(Loss) (0.30) 2.42 1.72 1.43 1.03 1.10
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations (0.24) 2.48 1.73 1.44 1.03 1.11
-------- -------- -------- -------- -------- --------
Distributions
From Net
Investment Income -- (0.07) (0.08) (0.04) -- --
From Net
Realized Gains (2.08) (0.22) -- -- -- --
-------- -------- -------- -------- -------- --------
Total
Distributions (2.08) (0.29) (0.08) (0.04) -- --
-------- -------- -------- -------- -------- --------
Net Asset Value,
End of Period $10.47 $12.79 $10.60 $8.95 $7.55 $6.52
======== ======== ======== ======== ======== ========
TOTAL RETURN(4) (1.58)% 23.99% 19.50% 19.22% 15.80% 20.52%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses
to Average Net
Assets 1.09%(5) 1.10% 1.11% 1.10% 1.10% 1.11%
Ratio of Net
Investment
Income (Loss)
to Average
Net Assets 0.71%(5) 0.49% 0.15% 0.19% 0.08% 0.20%
Portfolio Turnover
Rate 60% 108% 95% 36% 79% 152%
Net Assets, End
of Period
(in thousands) $47,214 $16,298 $8,540 $8,669 $6,774 $7,901
(1) Six months ended May 31, 2008 (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.
- ------
57
Global Growth
A Class(1)
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(2) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset Value,
Beginning
of Period $12.56 $10.41 $8.79 $7.41 $6.43 $5.36
------- ------- ------- ------- ------- -------
Income From
Investment Operations
Net Investment
Income (Loss)(3) 0.02 0.01 (0.03) (0.02) (0.02) (0.02)
Net Realized and
Unrealized Gain
(Loss) (0.29) 2.38 1.69 1.40 1.00 1.09
------- ------- ------- ------- ------- -------
Total From
Investment
Operations (0.27) 2.39 1.66 1.38 0.98 1.07
------- ------- ------- ------- ------- -------
Distributions
From Net
Investment Income -- (0.02) (0.04) -- -- --
From Net
Realized Gains (2.08) (0.22) -- -- -- --
------- ------- ------- ------- ------- -------
Total
Distributions (2.08) (0.24) (0.04) -- -- --
------- ------- ------- ------- ------- -------
Net Asset Value,
End of Period $10.21 $12.56 $10.41 $8.79 $7.41 $6.43
======= ======= ======= ======= ======= =======
TOTAL RETURN(4) (1.89)% 23.47% 18.97% 18.62% 15.24% 19.96%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses
to Average Net
Assets 1.54%(5) 1.55% 1.56% 1.55% 1.55% 1.56%
Ratio of Net
Investment
Income (Loss)
to Average
Net Assets 0.26%(5) 0.04% (0.30)% (0.26)% (0.37)% (0.25)%
Portfolio Turnover
Rate 60% 108% 95% 36% 79% 152%
Net Assets, End
of Period
(in thousands) $24,446 $18,402 $5,571 $3,664 $2,475 $1,044
(1) Prior to September 4, 2007, the A Class was referred to as the Advisor
Class.
(2) Six months ended May 31, 2008 (unaudited).
(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.
See Notes to Financial Statements.
- ------
58
Global Growth
B Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006
PER-SHARE DATA
Net Asset Value, Beginning of Period $12.50 $10.42 $9.02
-------- -------- --------
Income From Investment Operations
Net Investment Income (Loss)(2) (0.02) (0.08) (0.11)
Net Realized and Unrealized Gain (Loss) (0.28) 2.38 1.57
-------- -------- --------
Total From Investment Operations (0.30) 2.30 1.46
-------- -------- --------
Distributions
From Net Investment Income -- -- (0.06)
From Net Realized Gains (2.08) (0.22) --
-------- -------- --------
Total Distributions (2.08) (0.22) (0.06)
-------- -------- --------
Net Asset Value, End of Period $10.12 $12.50 $10.42
======== ======== ========
TOTAL RETURN(3) (2.19)% 22.51% 16.29%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets 2.29%(4) 2.30% 2.31%
Ratio of Net Investment Income (Loss)
to Average Net Assets (0.49)%(4) (0.71)% (1.05)%
Portfolio Turnover Rate 60% 108% 95%
Net Assets, End of Period (in thousands) $851 $639 $352
(1) Six months ended May 31, 2008 (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.
- ------
59
Global Growth
C Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset Value,
Beginning of
Period $12.16 $10.14 $8.59 $7.29 $6.37 $5.35
------- ------- ------- ------- ------- -------
Income From
Investment
Operations
Net Investment
Income
(Loss)(2) (0.02) (0.07) (0.10) (0.08) (0.08) (0.05)
Net Realized
and
Unrealized
Gain (Loss) (0.27) 2.31 1.65 1.38 1.00 1.07
------- ------- ------- ------- ------- -------
Total From
Investment
Operations (0.29) 2.24 1.55 1.30 0.92 1.02
------- ------- ------- ------- ------- -------
Distributions
From Net
Realized Gains (2.08) (0.22) -- -- -- --
------- ------- ------- ------- ------- -------
Net Asset Value,
End of Period $9.79 $12.16 $10.14 $8.59 $7.29 $6.37
======= ======= ======= ======= ======= =======
TOTAL RETURN(3) (2.16)% 22.54% 18.04% 17.83% 14.44% 19.07%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating Expenses
to Average
Net Assets 2.29%(4) 2.30% 2.31% 2.30% 2.30% 2.31%
Ratio of Net
Investment
Income (Loss)
to Average
Net Assets (0.49)%(4) (0.71)% (1.05)% (1.01)% (1.12)% (1.00)%
Portfolio
Turnover Rate 60% 108% 95% 36% 79% 152%
Net Assets, End of
Period
(in thousands) $3,441 $2,625 $1,050 $454 $184 $56
(1) Six months ended May 31, 2008 (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.
- ------
60
Global Growth
R Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006 2005(2)
PER-SHARE DATATrtlch
Net Asset Value, Beginning
of Period $12.62 $10.47 $8.86 $8.37
------- ------- ------- -------
Income From Investment Operations
Net Investment Income (Loss)(3) 0.01 0.02 (0.05) (0.02)
Net Realized and Unrealized
Gain (Loss) (0.28) 2.35 1.71 0.51
------- ------- ------- -------
Total From Investment Operations (0.27) 2.37 1.66 0.49
------- ------- ------- -------
Distributions
From Net Investment Income -- -- (0.05) --
From Net Realized Gains (2.08) (0.22) -- --
------- ------- ------- -------
Total Distributions (2.08) (0.22) (0.05) --
------- ------- ------- -------
Net Asset Value, End of Period $10.27 $12.62 $10.47 $8.86
======= ======= ======= =======
TOTAL RETURN(4) (1.89)% 23.08% 18.79% 5.85%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets 1.79%(5) 1.80% 1.81% 1.80%(5)
Ratio of Net Investment Income
(Loss) to Average Net Assets 0.01%(5) (0.21)% (0.55)% (0.71)%(5)
Portfolio Turnover Rate 60% 108% 95% 36%(6)
Net Assets, End of Period
(in thousands) $387 $202 $32 $26
(1) Six months ended May 31, 2008 (unaudited).
(2) July 29, 2005 (commencement of sale) through November 30, 2005.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year are
not annualized. The total return of the classes may not precisely reflect the
class expense differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.
(5) Annualized.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended November 30, 2005.
See Notes to Financial Statements.
- -------
61
Emerging Markets
Investor Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset
Value,
Beginning of
Period $12.69 $10.06 $8.25 $6.28 $5.28 $3.61
-------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net
Investment
Income
(Loss)(2) 0.06 0.10 0.11 0.01 (0.01) --(3)
Net
Realized
and
Unrealized
Gain (Loss) (0.85) 4.06 3.11 2.05 1.00 1.66
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations (0.79) 4.16 3.22 2.06 0.99 1.66
-------- -------- -------- -------- -------- --------
Distributions
From Net
Investment
Income (0.10) (0.13) (0.05) -- -- --
From Net
Realized
Gains (1.31) (1.42) (1.37) (0.09) -- --
-------- -------- -------- -------- -------- --------
Total
Distributions (1.41) (1.55) (1.42) (0.09) -- --
-------- -------- -------- -------- -------- --------
Redemption
Fees(2) 0.01 0.02 0.01 --(3) 0.01 0.01
-------- -------- -------- -------- -------- --------
Net Asset
Value,
End of Period $10.50 $12.69 $10.06 $8.25 $6.28 $5.28
======== ======== ======== ======== ======== ========
TOTAL
RETURN(4) (6.21)% 48.81% 46.10% 33.10% 18.94% 46.26%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses
to Average
Net Assets 1.63%(5) 1.66% 1.80% 1.94% 2.00% 2.01%
Ratio of Net
Investment
Income (Loss)
to Average
Net Assets 1.10%(5) 0.96% 1.31% 0.17% (0.22)% 0.03%
Portfolio
Turnover Rate 63% 85% 115% 153% 208% 286%
Net Assets,
End of Period
(in thousands) $949,099 $1,070,138 $523,813 $220,720 $135,355 $103,737
(1) Six months ended May 31, 2008 (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.
- ------
62
Emerging Markets
Institutional Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset Value,
Beginning of
Period $12.92 $10.21 $8.36 $6.35 $5.33 $3.64
------- ------- ------- ------- ------- -------
Income From
Investment
Operations
Net Investment
Income (Loss)(2) 0.07 0.12 0.12 0.03 --(3) 0.01
Net Realized and
Unrealized Gain
(Loss) (0.86) 4.14 3.16 2.07 1.01 1.67
------- ------- ------- ------- ------- -------
Total From
Investment
Operations (0.79) 4.26 3.28 2.10 1.01 1.68
------- ------- ------- ------- ------- -------
Distributions
From Net
Investment
Income (0.13) (0.15) (0.07) -- -- --
From Net
Realized Gains (1.31) (1.42) (1.37) (0.09) -- --
------- ------- ------- ------- ------- -------
Total
Distributions (1.44) (1.57) (1.44) (0.09) -- --
------- ------- ------- ------- ------- -------
Redemption
Fees(2) 0.01 0.02 0.01 --(3) 0.01 0.01
------- ------- ------- ------- ------- -------
Net Asset Value,
End of Period $10.70 $12.92 $10.21 $8.36 $6.35 $5.33
======= ======= ======= ======= ======= =======
TOTAL RETURN(4) (6.14)% 49.21% 46.31% 33.37% 19.14% 46.43%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses
to Average
Net Assets 1.43%(5) 1.46% 1.60% 1.74% 1.80% 1.81%
Ratio of Net
Investment
Income (Loss)
to Average
Net Assets 1.30%(5) 1.16% 1.51% 0.37% (0.02)% 0.23%
Portfolio
Turnover Rate 63% 85% 115% 153% 208% 286%
Net Assets, End
of Period
(in thousands) $74,662 $74,897 $85,886 $113,765 $92,673 $63,242
(1) Six months ended May 31, 2008 (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.
- ------
63
Emerging Markets
A Class(1)
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(2) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset Value,
Beginning of
Period $12.40 $9.85 $8.11 $6.19 $5.22 $3.58
------- ------- ------- ------- ------- -------
Income From
Investment
Operations
Net Investment
Income (Loss)(3) 0.05 0.07 0.11 (0.01) (0.03) --(4)
Net Realized and
Unrealized Gain
(Loss) (0.84) 3.99 3.02 2.02 0.99 1.63
------- ------- ------- ------- ------- -------
Total From
Investment
Operations (0.79) 4.06 3.13 2.01 0.96 1.63
------- ------- ------- ------- ------- -------
Distributions
From Net
Investment Income (0.07) (0.11) (0.03) -- -- --
From Net
Realized Gains (1.31) (1.42) (1.37) (0.09) -- --
------- ------- ------- ------- ------- -------
Total
Distributions (1.38) (1.53) (1.40) (0.09) -- --
------- ------- ------- ------- ------- -------
Redemption Fees(3) 0.01 0.02 0.01 --(4) 0.01 0.01
------- ------- ------- ------- ------- -------
Net Asset Value,
End of Period $10.24 $12.40 $9.85 $8.11 $6.19 $5.22
======= ======= ======= ======= ======= =======
TOTAL RETURN(5) (6.36)% 48.61% 45.59% 32.77% 18.58% 45.81%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses
to Average Net
Assets 1.88%(6) 1.91% 2.05% 2.19% 2.25% 2.26%
Ratio of Net
Investment
Income (Loss)
to Average
Net Assets 0.85%(6) 0.71% 1.06% (0.08)% (0.47)% (0.22)%
Portfolio Turnover
Rate 63% 85% 115% 153% 208% 286%
Net Assets, End of
Period
(in thousands) $45,746 $36,795 $9,905 $1,773 $1,178 $597
(1) Prior to September 4, 2007, the A Class was referred to as the Advisor
Class.
(2) Six months ended May 31, 2008 (unaudited).
(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.
See Notes to Financial Statements.
- ------
64
Emerging Markets
B Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2007(1) 2007(2)
PER-SHARE DATA
Net Asset Value, Beginning of Period $12.67 $12.15
-------- --------
Income From Investment Operations
Net Investment Income (Loss)(3) 0.03 (0.03)
Net Realized and Unrealized Gain (Loss) (0.88) 0.53
-------- --------
Total From Investment Operations (0.85) 0.50
-------- --------
Distributions
From Net Realized Gains (1.29) --
-------- --------
Redemption Fees(3) 0.01 0.02
-------- --------
Net Asset Value, End of Period $10.54 $12.67
======== ========
TOTAL RETURN(4) (6.62)% 4.28%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets 2.63%(5) 2.58%(5)
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.10%(5) (1.30)%(5)
Portfolio Turnover Rate 63% 85%(6)
Net Assets, End of Period (in thousands) $243 $54
(1) Six months ended May 31, 2008 (unaudited).
(2) September 28, 2007 (commencement of sale) through November 30, 2007.
(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, 2007.
See Notes to Financial Statements.
- ------
65
Emerging Markets
C Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted) (except as noted)
2008(1) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset Value,
Beginning of
Period $12.10 $9.64 $7.95 $6.12 $5.19 $3.58
------- ------- ------- ------- ------- -------
Income From
Investment
Operations
Net Investment
Income (Loss)(2) 0.01 (0.01) 0.03 (0.05) (0.07) (0.04)
Net Realized and
Unrealized Gain
(Loss) (0.82) 3.90 2.99 1.97 0.99 1.64
------- ------- ------- ------- ------- -------
Total From
Investment
Operations (0.81) 3.89 3.02 1.92 0.92 1.60
------- ------- ------- ------- ------- -------
Distributions
From Net
Investment Income -- (0.03) -- -- -- --
From Net
Realized Gains (1.29) (1.42) (1.34) (0.09) -- --
------- ------- ------- ------- ------- -------
Total
Distributions (1.29) (1.45) (1.34) (0.09) -- --
------- ------- ------- ------- ------- -------
Redemption Fees(2) 0.01 0.02 0.01 --(3) 0.01 0.01
------- ------- ------- ------- ------- -------
Net Asset Value,
End of Period $10.01 $12.10 $9.64 $7.95 $6.12 $5.19
======= ======= ======= ======= ======= =======
TOTAL RETURN(4) (6.70)% 47.39% 44.59% 31.67% 17.92% 44.97%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses
to Average Net
Assets 2.63%(5) 2.66% 2.80% 2.94% 3.00% 3.01%
Ratio of Net
Investment
Income (Loss)
to Average
Net Assets 0.10%(5) (0.04)% 0.31% (0.83)% (1.22)% (0.97)%
Portfolio Turnover
Rate 63% 85% 115% 153% 208% 286%
Net Assets, End
of Period
(in thousands) $9,652 $9,098 $2,581 $733 $521 $291
(1) Six months ended May 31, 2008 (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.
- ------
66
Emerging Markets
R Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007(2)
PER-SHARE DATA
Net Asset Value, Beginning of Period $12.68 $12.15
-------- --------
Income From Investment Operations
Net Investment Income (Loss)(3) 0.05 (0.01)
Net Realized and Unrealized Gain (Loss) (0.87) 0.52
-------- --------
Total From Investment Operations (0.82) 0.51
-------- --------
Distributions
From Net Investment Income (0.04) --
From Net Realized Gains (1.31) --
-------- --------
Total Distributions (1.35) --
-------- --------
Redemption Fees(3) 0.01 0.02
-------- --------
Net Asset Value, End of Period $10.52 $12.68
======== ========
TOTAL RETURN(4) (6.46)% 4.36%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets 2.13%(5) 2.08%(5)
Ratio of Net Investment Income (Loss)
to Average Net Assets 0.60%(5) (0.68)%(5)
Portfolio Turnover Rate 63% 85%(6)
Net Assets, End of Period (in thousands) $216 $27
(1) Six months ended May 31, 2008 (unaudited).
(2) September 28, 2007 (commencement of sale) through November 30, 2007.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year are
not annualized. The total return of the classes may not precisely reflect the
class expense differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely reflect the
class expense differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not result in any
gain or loss of value between one class and another.
(5) Annualized.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended November 30, 2007.
See Notes to Financial Statements.
- ------
67
International Value
Investor Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006(2)
PER-SHARE DATA
Net Asset Value, Beginning of Period $11.48 $14.36 $12.85
-------- -------- --------
Income From Investment Operations
Net Investment Income (Loss)(3) 0.15 0.22 0.15
Net Realized and Unrealized Gain (Loss) (0.92) 2.09 1.36
-------- -------- --------
Total From Investment Operations (0.77) 2.31 1.51
-------- -------- --------
Distributions
From Net Investment Income (0.24) (0.47) --
From Net Realized Gains (0.78) (4.72) --
-------- -------- --------
Total Distributions (1.02) (5.19) --
-------- -------- --------
Net Asset Value, End of Period $9.69 $11.48 $14.36
======== ======== ========
TOTAL RETURN(4) (6.87)% 23.55% 11.75%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets 1.30%(5) 1.30% 1.30%(5)
Ratio of Net Investment Income (Loss)
to Average Net Assets 3.05%(5) 1.96% 2.77%(5)(6)
Portfolio Turnover Rate 1% 11% 17%
Net Assets, End of Period (in thousands) $4,033 $3,044 $437
(1) Six months ended May 31, 2008 (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 and the eight-month period ended November 30,
2006, the annualized ratio of net investment income (loss) to average net
assets is higher than expected.
See Notes to Financial Statements.
- ------
68
International Value
Institutional Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006(2)
PER-SHARE DATA
Net Asset Value, Beginning of Period $11.50 $14.38 $12.85
-------- -------- --------
Income From Investment Operations
Net Investment Income (Loss)(3) 0.15 0.23 0.25
Net Realized and Unrealized Gain (Loss) (0.92) 2.10 1.28
-------- -------- --------
Total From Investment Operations (0.77) 2.33 1.53
-------- -------- --------
Distributions
From Net Investment Income (0.26) (0.49) --
From Net Realized Gains (0.78) (4.72) --
-------- -------- --------
Total Distributions (1.04) (5.21) --
-------- -------- --------
Net Asset Value, End of Period $9.69 $11.50 $14.38
======== ======== ========
TOTAL RETURN(4) (6.85)% 23.77% 11.91%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets 1.10%(5) 1.10% 1.10%(5)
Ratio of Net Investment Income (Loss)
to Average Net Assets 3.25%(5) 2.16% 2.97%(5)(6)
Portfolio Turnover Rate 1% 11% 17%
Net Assets, End of Period (in thousands) $42,481 $45,262 $35,574
(1) Six months ended May 31, 2008 (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 and the eight-month period ended November 30,
2006, the annualized ratio of net investment income (loss) to average net
assets is higher than expected.
See Notes to Financial Statements.
- ------
69
International Value
A Class
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
2008(1) 2007 2006(2) 2006 2005 2004 2003
PER-SHARE DATA
Net Asset
Value,
Beginning
of Period $11.49 $14.35 $12.70 $10.91 $9.64 $6.22 $8.70
-------- -------- -------- -------- -------- -------- --------
Income
From
Investment
Operations
Net
Investment
Income
(Loss)(3) 0.15 0.20 0.25 0.18 0.13 0.10 0.07
Net Realized
and
Unrealized
Gain (Loss) (0.94) 2.11 1.40 1.97 1.37 3.42 (2.51)
-------- -------- -------- -------- -------- -------- --------
Total From
Investment
Operations (0.79) 2.31 1.65 2.15 1.50 3.52 (2.44)
-------- -------- -------- -------- -------- -------- --------
Distributions
From Net
Investment
Income (0.21) (0.45) -- (0.15) (0.11) (0.10) (0.04)
From Net
Realized
Gains (0.78) (4.72) -- (0.21) (0.12) -- --
-------- -------- -------- -------- -------- -------- --------
Total
Distributions (0.99) (5.17) -- (0.36) (0.23) (0.10) (0.04)
-------- -------- -------- -------- -------- -------- --------
Net Asset
Value, End
of Period $9.71 $11.49 $14.35 $12.70 $10.91 $9.64 $6.22
======== ======== ======== ======== ======== ======== ========
TOTAL
RETURN(4) (7.02)% 23.44% 12.99% 19.95% 15.58% 56.65% (28.10)%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses
to Average
Net Assets 1.45%(5)(6) 1.40%(5) 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% 1.55%(6) 1.35% 1.41% 1.47% 1.66%
Ratio of Net
Investment
Income
(Loss) to
Average Net
Assets 2.90%(5)(6) 1.86%(5) 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) 2.80%(6) 1.71% 2.52%(6)(8) 1.52% 1.28% 1.13% 0.90%
Portfolio
Turnover Rate 1% 11% 17% 7% 18% 10% 18%
Net Assets,
End of
Period (in
thousands) $26,892 $24,558 $19,890 $54,617 $203,215 $174,387 $105,862
(1) Six months ended May 31, 2008 (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.
(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, 2008, November 30, 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 and the eight-month period ended November 30,
2006, the annualized ratio of net investment income (loss) to average net
assets is higher than expected.
See Notes to Financial Statements.
- ------
70
International Value
B Class
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
2008(1) 2007 2006(2) 2006 2005 2004 2003
PER-SHARE DATA
Net Asset
Value,
Beginning
of Period $11.16 $14.08 $12.51 $10.75 $9.52 $6.14 $8.61
------- ------- ------- ------- ------- ------- -------
Income
From
Investment
Operations
Net
Investment
Income
(Loss)(3) 0.10 0.12 0.17 0.10 0.06 0.04 0.01
Net Realized
and
Unrealized
Gain (Loss) (0.91) 2.05 1.40 1.93 1.34 3.39 (2.48)
------- ------- ------- ------- ------- ------- -------
Total From
Investment
Operations (0.81) 2.17 1.57 2.03 1.40 3.43 (2.47)
------- ------- ------- ------- ------- ------- -------
Distributions
From Net
Investment
Income (0.12) (0.37) -- (0.06) (0.05) (0.05) --
From Net
Realized
Gains (0.78) (4.72) -- (0.21) (0.12) -- --
------- ------- ------- ------- ------- ------- -------
Total
Distributions (0.90) (5.09) -- (0.27) (0.17) (0.05) --
------- ------- ------- ------- ------- ------- -------
Net Asset
Value, End
of Period $9.45 $11.16 $14.08 $12.51 $10.75 $9.52 $6.14
======= ======= ======= ======= ======= ======= =======
TOTAL
RETURN(4) (7.35)% 22.51% 12.55% 19.07% 14.69% 55.86% (28.69)%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses
to Average
Net Assets 2.16%(5)(6) 2.09%(5) 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% 2.30%(6) 2.08% 2.09% 2.11% 2.31%
Ratio of Net
Investment
Income
(Loss) to
Average Net
Assets 2.19%(5)(6) 1.17%(5) 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) 2.05%(6) 0.96% 1.77%(6)(8) 0.90% 0.61% 0.52% 0.09%
Portfolio
Turnover Rate 1% 11% 17% 7% 18% 10% 18%
Net Assets,
End of Period
(in thousands) $3,207 $4,059 $4,313 $4,917 $5,165 $4,491 $3,011
(1) Six months ended May 31, 2008 (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.
(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, 2008, November 30, 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 and the eight-month period ended November 30,
2006, the annualized ratio of net investment income (loss) to average net
assets is higher than expected.
See Notes to Financial Statements.
- ------
71
International Value
C Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006(2)
PER-SHARE DATA
Net Asset Value, Beginning of Period $11.37 $14.27 $12.85
-------- -------- --------
Income From Investment Operations
Net Investment Income (Loss)(3) 0.14 0.12 0.14
Net Realized and Unrealized Gain (Loss) (0.97) 2.07 1.28
-------- -------- --------
Total From Investment Operations (0.83) 2.19 1.42
-------- -------- --------
Distributions
From Net Investment Income (0.12) (0.37) --
From Net Realized Gains (0.78) (4.72) --
-------- -------- --------
Total Distributions (0.90) (5.09) --
-------- -------- --------
Net Asset Value, End of Period $9.64 $11.37 $14.27
======== ======== ========
TOTAL RETURN(4) (7.39)% 22.28% 11.05%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets 2.30%(5) 2.30% 2.30%(5)
Ratio of Net Investment Income (Loss)
to Average Net Assets 2.05%(5) 0.96% 1.77%(5)(6)
Portfolio Turnover Rate 1% 11% 17%
Net Assets, End of Period (in thousands) $550 $222 $41
(1) Six months ended May 31, 2008 (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 and the eight-month period ended November 30,
2006, the annualized ratio of net investment income (loss) to average net
assets is higher than expected.
See Notes to Financial Statements.
- ------
72
International Value
R Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006(2)
PER-SHARE DATA
Net Asset Value, Beginning of Period $11.42 $14.31 $12.85
-------- -------- --------
Income From Investment Operations
Net Investment Income (Loss)(3) 0.11 0.11 0.19
Net Realized and Unrealized Gain (Loss) (0.91) 2.14 1.27
-------- -------- --------
Total From Investment Operations (0.80) 2.25 1.46
-------- -------- --------
Distributions
From Net Investment Income (0.18) (0.42) --
From Net Realized Gains (0.78) (4.72) --
-------- -------- --------
Total Distributions (0.96) (5.14) --
-------- -------- --------
Net Asset Value, End of Period $9.66 $11.42 $14.31
======== ======== ========
TOTAL RETURN(4) (7.14)% 22.91% 11.36%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets 1.80%(5) 1.80% 1.80%(5)
Ratio of Net Investment Income (Loss)
to Average Net Assets 2.55%(5) 1.46% 2.27%(5)(6)
Portfolio Turnover Rate 1% 11% 17%
Net Assets, End of Period (in thousands) $164 $202 $28
(1) Six months ended May 31, 2008 (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 and the eight-month period ended November 30,
2006, the annualized ratio of net investment income (loss) to average net
assets is higher than expected.
See Notes to Financial Statements.
- ------
73
ADDITIONAL 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., 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 Investments' 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.
- ------
74
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 gross performance of
stocks in global emerging market countries.
The MSCI EM (EMERGING MARKETS) GROWTH INDEX represents the gross performance
of growth stocks in global emerging market countries.
The MSCI EM (EMERGING MARKETS) VALUE INDEX represents the gross performance of
value 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.
- ------
75
NOTES
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76
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©2008 American Century Proprietary Holdings, Inc. All rights reserved.
0807
CL-SAN-60825S-SUP
[front cover]
SEMIANNUAL REPORT
MAY 31, 2008
[american century investments logo and text logo ®]
AMERICAN CENTURY INVESTMENTS
INTERNATIONAL STOCK FUND
INTERNATIONAL DISCOVERY FUND
INTERNATIONAL OPPORTUNITIES FUND
PRESIDENT'S LETTER
JONATHAN THOMAS
[photo of Jonathan Thomas]
Dear Investor,
At American Century Investments®, we are committed to helping you reach your
financial goals. Your success is the ultimate measure of our performance.
That's why we focus on achieving superior investment results and building
long-term relationships with investors like you.
Part of that relationship is to clearly communicate investment results and
what influenced them. To help you monitor your investment with us, we take
pride in providing you with the semiannual report for the American Century®
International Stock, International Discovery and International Opportunities
funds for the six months ended May 31, 2008. We also recommend
americancentury.com, where we provide company news, quarterly portfolio
commentaries, investment views, and other useful information.
As noted on the website, 2008 marks the 50th anniversary of American Century
Investments. Since 1958, we've worked to make wise decisions with your
interests as our guide. Fifty years also means that we've met the challenges
of previous economic downturns. As we've crossed those hurdles and earned your
trust, our assets under management have grown to nearly $100 billion, putting
us in the top 5% of our industry. This growth has given us the resources to
offer a wide array of financial products and services, including a
well-diversified line-up of portfolios that provide you with many choices in
these uncertain times.
Though our offerings are diverse, they share several key qualities, including
our disciplined investment approach and active, team-based management. Strict
adherence to our processes and long-term strategies allows us to stay focused
during volatile periods. Investors in our portfolios also benefit from the sum
of our investment teams' expertise as they share research and information.
We'll continue to work hard to earn your trust. Thank you for your continued
support.
Sincerely,
/s/Jonathan S. Thomas
Jonathan S. Thomas
President and Chief Executive Officer
American Century Investments
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. . . . . . . . . . . . . . . . . . 6
Investments by Country . . . . . . . . . . . . . . . . . . . . . . . 6
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 7
INTERNATIONAL DISCOVERY
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 13
Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Types of Investments in Portfolio. . . . . . . . . . . . . . . . . . 14
Investments by Country . . . . . . . . . . . . . . . . . . . . . . . 14
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 15
INTERNATIONAL OPPORTUNITIES
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 20
Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Types of Investments in Portfolio. . . . . . . . . . . . . . . . . . 21
Investments by Country . . . . . . . . . . . . . . . . . . . . . . . 21
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 22
Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . 25
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. . . . . . . . . . . . . . . . . . . . . . . . . 39
OTHER INFORMATION
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . 45
Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 46
The opinions expressed in the Market Perspective and each of the Portfolio
Commentaries reflect those of the portfolio management team as of the date of
the report, and do not necessarily represent the opinions of American Century
Investments or any other person in the American Century Investments
organization. Any such opinions are subject to change at any time based upon
market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied
upon as an indication of trading intent on behalf of any American Century
Investments 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 Investments by third party vendors. To the best of American
Century Investments' 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 RETREAT
Stock performance in both developed and emerging international stock markets
turned negative for the six months ended May 31, 2008. Solid results in April
and May were not enough to offset the sharp downturn that occurred from
December 2007 through March 2008. Global credit market woes, rising
inflationary pressures and slowing economic growth rates combined to drag down
stocks. Soaring prices for oil and other commodities added to investors'
malaise, while a weak U.S. dollar complicated outlooks for companies that rely
on exports to the United States.
Meanwhile, strong performance from Latin America helped emerging markets
outperform the developed markets during the six months.
CREDIT CRUNCH PROMPTS CENTRAL BANK ACTION
Europe couldn't escape the fallout from the U.S. credit crisis; its large
banks were investors and players in the U.S. subprime credit market. But
coordinated efforts between the European Central Bank (ECB) and the U.S.
Federal Reserve to inject liquidity and ease conditions in short-term money
markets limited the risk of a severe global credit crisis.
RATES DROP IN BRITAIN
In Europe, the euro continued to reach record highs versus the U.S. dollar.
Despite increasingly sluggish economic growth throughout Europe, rising
inflation caused the ECB to leave its key interest rate unchanged during the
six-month period. On the other hand, the Bank of England responded to slower
economic growth by cutting its key rate by 75 basis points.
Japan's economic growth remained positive, but the government scaled back its
fiscal-year growth forecast, citing rising raw materials prices and turmoil in
the global financial markets as obstacles to economic expansion. Japan's
benchmark interest rate remained steady at 0.5%--the lowest among the world's
major economies.
VOLATILITY OFFERS OPPORTUNITY
The weak U.S. economy, with its ongoing credit problems, remains an important
factor in the outlook for international stocks. Nevertheless, we believe that
turbulent times always present the potential for long-term investment gains,
and there is no shortage of companies with accelerating earnings that may
provide attractive investment opportunities in the months ahead.
International Equity Total Returns
For the six months ended May 31, 2008 (in U.S. dollars)*
MSCI EM Index -1.52%
MSCI EAFE Growth Index -3.51%
MSCI Europe Index -5.74%
MSCI EAFE Index -5.21%
MSCI World Free Index -4.07%
MSCI EAFE Value Index -6.94%
MSCI Japan Index -2.64%
* Total returns for periods less than one year are not annualized.
- ------
2
PERFORMANCE
International Stock
Total Returns as of May 31, 2008
Average Annual Returns
Since Inception
6 months(1) 1 year Inception Date
INVESTOR CLASS -2.98% 4.34% 16.45% 3/31/05
MSCI EAFE INDEX -5.21% -2.53% 14.82% --
(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
One-Year Returns Over Life of Class
Periods ended May 31
2005* 2006 2007 2008
Investor Class -2.10% 25.91% 25.99% 4.34%
MSCI EAFE Index -2.30% 28.24% 26.84% -2.53%
* 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 Raj Gandhi
PERFORMANCE SUMMARY
International Stock returned -2.98%* for the six months ended May 31, 2008.
The portfolio's benchmark, the MSCI EAFE Index, returned -5.21%.
The combination of rising inflationary pressures (triggered by soaring oil and
food prices), ongoing global credit-market concerns and slowing economic
growth rates led to a sharp downturn among most international stock markets.
Overall, our favorable stock selection and effective allocation decisions
accounted for the portfolio's outperformance relative to the benchmark.
CANADA LED ALL COUNTRIES
From a geographic perspective, our out-of-benchmark position in Canada made
the greatest positive contribution to the portfolio's relative performance,
led by holdings in Suncor Energy, an oil and natural gas company, and Research
In Motion, maker of the BlackBerry handheld device. Both stocks were among the
portfolio's top contributors for the reporting period. Stock selection in
Germany and Italy also boosted the portfolio's relative performance.
Countries detracting from relative performance included Japan, India and
China. Stock selection was a negative factor in Japan and China, while our
small, out-of-benchmark position in India lagged primarily due to poor
performance from Bharat Heavy Electricals. The stock of the engineering and
manufacturing company declined in the wake of rising raw materials costs.
MATERIALS POSTED TOP RESULTS
The portfolio's materials, health care and energy holdings made the greatest
positive contributions to relative performance from a sector perspective. On
an absolute basis, these were the only sectors posting positive returns for
the reporting period. In particular, our stock picks in the chemicals
industry--along with an overweight--generated strong performance for the
materials sector. Our position in Germany's K+S AG, a producer of potash for
use in fertilizers, represented the fund's top contributor for the reporting
period. The company's stock benefited from the extended agriculture boom,
greater-than-expected earnings and soaring demand for potash.
Top Ten Holdings as of May 31, 2008
% of net % of net
assets as of assets as of
5/31/08 11/30/07
ENI SpA 2.0% 0.4%
Saipem SpA 1.9% 1.6%
BG Group plc 1.9% 1.5%
Total SA 1.9% 1.3%
Tesco plc 1.8% 1.4%
Julius Baer Holding AG 1.8% 1.7%
Rio Tinto Ltd. 1.8% 0.7%
Syngenta AG 1.5% 1.3%
CEZ AS 1.5% 1.1%
CSL Ltd. 1.5% 1.0%
* Total returns for periods less than one year are not annualized.
- ------
5
International Stock
Our health care stocks also were strong contributors to relative performance.
Specifically, overweights to Denmark's Novo Nordisk AS, a pharmaceutical
company specializing in insulin treatments for diabetes, and Australia's CSL
Limited, a biotechnology company specializing in vaccines, contributed
favorably.
CONSUMER SECTORS LAGGED
Stock selection led to poor relative performance for the portfolio's consumer
discretionary and consumer staples sectors. In the discretionary sector, our
holdings among specialty retailers and textiles, apparel and luxury goods
companies generated disappointing performance. In particular, our positions in
Burberry Group, the high-end British clothing company, and Esprit Holdings,
the Hong Kong-based fashion retailer, were among the fund's largest
detractors. In the staples sector, poor performance from food and staples
retailers, including the United Kingdom's Tesco plc, accounted for the bulk of
the decline.
OUTLOOK
International Stock invests in companies located throughout the world,
excluding the United States, exhibiting accelerating growth characteristics.
Our analysis indicates the long-term outlook for large-cap growth companies
remains positive. The portfolio has broad exposure to high-quality growth
companies in numerous markets, and we believe our focus on company
fundamentals, rather than economic developments, should help deliver solid
long-term performance.
Types of Investments in Portfolio
% of net % of net
assets as assets
of as of
5/31/08 11/30/07
Foreign Common Stocks & Rights 98.5% 99.9%
Temporary Cash Investments 1.0% --
Other Assets and Liabilities(1) 0.5% 0.1%
(1) Includes securities lending collateral and other assets and liabilities.
Investments by Country as of May 31, 2008
% of net % of net
assets assets
as of as of
5/31/08 11/30/07
United Kingdom 19.8% 13.6%
Japan 12.4% 15.5%
Switzerland 9.5% 10.8%
France 8.5% 8.6%
Germany 7.8% 10.0%
Australia 5.3% 5.4%
Italy 4.9% 2.7%
Spain 3.6% 3.9%
Canada 3.1% 3.7%
Hong Kong 3.0% 1.5%
Denmark 2.7% 2.2%
Belgium 2.3% 2.1%
Greece 2.1% 1.7%
Other Countries 13.5% 18.2%
Cash and Equivalents(2) 1.5% 0.1%
(2) Includes temporary cash investments, securities lending collateral and
other assets and liabilities.
- ------
6
SCHEDULE OF INVESTMENTS
International Stock
MAY 31, 2008 (UNAUDITED)
Shares Value
Common Stocks & Rights -- 98.5%
AUSTRALIA -- 5.3%
43,013 BHP Billiton Ltd. $ 1,789,487
137,157 Boart Longyear Group 271,536
52,912 CSL Ltd. 2,014,081
24,514 QBE Insurance Group Ltd. 573,000
17,786 Rio Tinto Ltd.(1) 2,347,453
-----------
6,995,557
-----------
BELGIUM -- 2.3%
11,033 KBC Groupe 1,361,280
64,746 SES SA Fiduciary Depositary Receipt 1,712,331
-----------
3,073,611
-----------
BERMUDA -- 0.8%
43,993 Aquarius Platinum Ltd. 720,622
10,502 Seadrill Ltd. 342,812
-----------
1,063,434
-----------
BRAZIL -- 1.6%
65,100 Bolsa de Mercadorias e Futuros - BM&F SA 745,508
17,100 Net Servicos de Comunicacao SA(2) 244,256
53,000 Redecard SA 1,115,224
-----------
2,104,988
-----------
CANADA -- 3.1%
8,014 EnCana Corp. 724,225
4,202 Potash Corp. of Saskatchewan 834,648
10,446 Research In Motion Ltd.(2) 1,450,636
15,559 Suncor Energy Inc. 1,062,012
-----------
4,071,521
-----------
CZECH REPUBLIC -- 1.5%
24,385 CEZ AS 2,014,788
-----------
DENMARK -- 2.7%
29,298 Novo Nordisk AS B Shares 1,906,276
12,504 Vestas Wind Systems AS(2) 1,721,021
-----------
3,627,297
-----------
FINLAND -- 0.6%
29,062 Nokia Oyj 837,774
-----------
FRANCE -- 8.5%
7,113 ALSTOM Co. 1,792,975
33,181 AXA SA 1,172,283
10,240 Carrefour SA 717,982
10,308 Groupe Danone 902,354
2,479 Lafarge SA 448,327
Shares Value
3,296 Schneider Electric SA $ 414,001
3,320 Societe Generale(1) 345,017
1,327 Societe Generale - new shares(2) 135,838
17,627 Suez SA 1,313,529
28,485 Total SA(1) 2,485,579
6,637 Ubisoft Entertainment SA(2) 643,259
11,358 Vinci SA(1) 855,741
-----------
11,226,885
-----------
GERMANY -- 7.8%
12,934 adidas AG 911,903
4,387 BASF SE 657,711
10,348 Deutsche Boerse AG(1) 1,484,754
20,957 Fresenius Medical Care AG & Co. KGaA(1) 1,167,832
25,919 GEA Group AG 1,009,264
3,571 K+S AG 1,674,067
9,422 Linde AG(1) 1,415,798
8,000 Q-Cells AG(2) 972,624
6,730 SGL Carbon AG(2) 500,459
4,299 Siemens AG 487,686
-----------
10,282,098
-----------
GREECE -- 2.1%
18,793 Coca-Cola Hellenic Bottling Co. SA 854,284
34,783 National Bank of Greece SA 1,975,105
-----------
2,829,389
-----------
HONG KONG -- 3.0%
43,000 China Mobile Ltd. 632,033
31,200 Esprit Holdings Ltd. 364,634
43,100 Hang Seng Bank Ltd. 873,207
244,000 Li & Fung Ltd. 922,401
67,045 Melco PBL Entertainment (Macau) Ltd. ADR(2) 797,165
22,000 Sun Hung Kai Properties Ltd. 353,531
-----------
3,942,971
-----------
INDIA -- 0.7%
4,116 Bharat Heavy Electricals Ltd. 162,360
22,346 Bharti Airtel Ltd.(2) 464,278
3,723 Housing Development Finance Corp. Ltd. 227,199
-----------
853,837
-----------
IRELAND -- 0.2%
18,928 Anglo Irish Bank Corp. plc 247,349
-----------
- ------
7
International Stock
Shares Value
ITALY -- 4.9%
65,066 ENI SpA $ 2,650,022
19,905 Fiat SpA(1) 443,436
27,587 Finmeccanica SpA 836,025
54,432 Saipem SpA 2,499,750
-----------
6,429,233
-----------
JAPAN -- 12.4%
17,800 Canon, Inc. 960,474
93 Central Japan Railway Co. 908,392
14,900 Daikin Industries Ltd. 768,668
5,300 Daito Trust Construction Co., Ltd. 272,916
5,900 Fanuc Ltd. 640,635
3,400 FAST RETAILING CO. LTD. 294,054
39,210 iShares MSCI Japan Index Fund 532,080
21,000 Japan Steel Works Ltd. (The) 436,131
96,000 Kobe Steel Ltd. 315,903
24,600 Konami Corp. 898,151
52,000 Kuraray Co. Ltd. 656,349
86,000 Marubeni Corp. 766,619
17,600 Mitsubishi Corp. 607,530
33,000 Mitsubishi Electric Corp. 373,343
76,000 Mitsui O.S.K. Lines, Ltd. 1,146,666
3,600 Nintendo Co., Ltd. 1,980,085
23,000 Shiseido Co., Ltd. 563,822
11,200 Sony Corp. 560,797
302 Sony Financial Holdings Inc. 1,234,348
25,000 Sumitomo Realty & Development Co. Ltd. 640,114
14,800 Terumo Corp. 736,842
16,900 Toyota Motor Corp. 860,626
2,880 Yamada Denki Co. Ltd. 223,681
-----------
16,378,226
-----------
LUXEMBOURG -- 0.8%
8,654 Millicom International Cellular SA(1) 1,002,652
-----------
MALAYSIA -- 0.1%
66,700 Bumiputra - Commerce Holdings Bhd 195,571
-----------
NETHERLANDS -- 0.9%
27,134 ASML Holding N.V. 811,744
21,924 Koninklijke KPN N.V. 399,054
-----------
1,210,798
-----------
NORWAY -- 1.9%
33,649 Aker Solutions ASA 949,959
59,580 Norsk Hydro ASA(1) 946,140
7,836 Yara International ASA 594,533
-----------
2,490,632
-----------
Shares Value
PEOPLE'S REPUBLIC OF CHINA -- 1.3%
148,000 China Communications Construction Co. Ltd. H Shares $ 325,452
307,500 China Merchants Bank Co., Ltd. H Shares 1,101,374
4,722 Ctrip.com International, Ltd. ADR 275,670
-----------
1,702,496
-----------
RUSSIAN FEDERATION -- 0.9%
4,338 OAO LUKOIL 485,422
199,159 Sberbank 720,956
-----------
1,206,378
-----------
SINGAPORE -- 0.5%
38,000 Keppel Corp. Ltd. 338,262
24,000 United Overseas Bank Ltd. 355,712
-----------
693,974
-----------
SOUTH KOREA -- 0.5%
995 Samsung Electronics 717,039
-----------
SPAIN -- 3.6%
71,511 Banco Santander SA 1,489,633
61,741 Cintra Concesiones de Infraestructuras de Transporte
SA(1) 949,939
19,486 Gamesa Corporacion Tecnologica SA 1,008,559
45,989 Telefonica SA 1,320,007
-----------
4,768,138
-----------
SWEDEN -- 0.8%
6,847 Oriflame Cosmetics SA SDR 486,250
218,817 Telefonaktiebolaget LM Ericsson Cl B 595,321
-----------
1,081,571
-----------
SWITZERLAND -- 9.5%
43,597 ABB Ltd.(2) 1,415,878
12,148 Actelion Ltd.(2) 663,561
15,503 Compagnie Financiere Richemont SA Cl A 965,778
28,956 Julius Baer Holding AG 2,369,026
3,874 Nestle SA 1,904,302
22,886 Novartis AG 1,201,812
4,955 Roche Holding AG 854,032
507 SGS SA(1) 761,521
3,367 Sonova Holding AG(1) 305,988
6,681 Syngenta AG 2,034,546
504 UBS AG(2) 12,134
504 UBS AG Rights(2) 672
-----------
12,489,250
-----------
- ------
8
International Stock
Shares Value
TAIWAN (REPUBLIC OF CHINA) -- 0.4%
260,000 AU Optronics Corp. $ 499,268
-----------
UNITED KINGDOM -- 19.8%
15,274 Admiral Group plc 263,808
67,912 AMEC plc 1,122,513
18,845 Anglo American plc 1,276,186
99,371 BG Group plc 2,491,794
30,302 British American Tobacco plc 1,133,162
37,160 Burberry Group plc 368,014
58,745 Cadbury plc 784,241
85,084 Capita Group plc 1,140,078
148,967 Compass Group plc 1,106,470
56,543 GlaxoSmithKline plc 1,247,061
95,130 HSBC Holdings plc(1) 1,605,503
40,417 ICAP plc 493,132
114,230 International Power plc 1,005,705
10,310 Johnson Matthey plc 411,483
129,846 Man Group plc 1,597,125
32,429 Reckitt Benckiser Group plc 1,910,263
57,285 Reed Elsevier plc 721,634
57,479 Scottish and Southern Energy plc 1,675,853
28,364 Standard Chartered plc 1,053,948
292,874 Tesco plc 2,402,176
136,671 TUI Travel plc 661,195
513,014 Vodafone Group plc 1,648,666
-----------
26,120,010
-----------
TOTAL COMMON STOCKS & RIGHTS
(Cost $104,716,687) 130,156,735
-----------
Principal Amount Value
Temporary Cash Investments -- 1.0%
$1,300,000 FHLB Discount Notes, 1.90%, 6/2/08(3)
(Cost $1,299,931) $1,300,000
------------
Temporary Cash Investments - Securities Lending Collateral(4) -- 8.5%
Repurchase Agreement, Barclays Capital Inc., (collateralized by
various U.S. Government Agency obligations in a pooled account at
the lending agent), 2.30%, dated 5/30/08, due 6/2/08 (Delivery
value $2,500,479) 2,500,000
Repurchase Agreement, BNP Paribas Securities Corp.,
(collateralized by various U.S. Government Agency obligations in a
pooled account at the lending agent), 2.35%, dated 5/30/08, due
6/2/08 (Delivery value $2,500,490) 2,500,000
Repurchase Agreement, Credit Suisse Securities USA LLC,
(collateralized by various U.S. Government Agency obligations in a
pooled account at the lending agent), 2.35%, dated 5/30/08, due
6/2/08 (Delivery value $1,234,917) 1,234,675
Repurchase Agreement, Deutsche Bank Securities Inc.,
(collateralized by various U.S. Government Agency obligations in a
pooled account at the lending agent), 2.30%, dated 5/30/08, due
6/2/08 (Delivery value $2,427,258) 2,426,793
Repurchase Agreement, Lehman Brothers Inc./Lehman Brothers
Commercial Paper Inc., (collateralized by various U.S. Government
Agency obligations in a pooled account at the lending agent),
2.30%, dated 5/30/08, due 6/2/08 (Delivery value $2,500,479) 2,500,000
------------
TOTAL TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL
(Cost $11,161,468) 11,161,468
------------
TOTAL INVESTMENT SECURITIES -- 108.0%
(Cost $117,178,086) 142,618,203
------------
OTHER ASSETS AND LIABILITIES -- (8.0)% (10,592,121)
------------
TOTAL NET ASSETS -- 100.0% $132,026,082
============
- ------
9
International Stock
Market Sector Diversification
(as a % of net assets)
Financials 17.9%
Industrials 16.1%
Materials 12.6%
Energy 10.4%
Consumer Discretionary 8.9%
Consumer Staples 8.8%
Health Care 7.6%
Information Technology 7.1%
Utilities 4.6%
Telecommunication Services 4.1%
Diversified 0.4%
Cash and Equivalents* 1.5%
*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
MSCI = Morgan Stanley Capital International
SDR = Swedish Depositary Receipt
(1) Security, or a portion thereof, was on loan as of May 31, 2008.
(2) Non-income producing.
(3) The rate indicated is the yield to maturity at purchase.
(4) Investments represent purchases made by the lending agent with cash
collateral received through securities lending transactions.
See Notes to Financial Statements.
- ------
10
PERFORMANCE
International Discovery
Total Returns as of May 31, 2008
Average Annual Returns
6 10 Since Inception
months(1) 1 year 5 years years Inception Date
INVESTOR CLASS -5.20% 2.43% 26.52% 13.49% 16.35% 4/1/94
MSCI AC WORLD
EX-US MID CAP
GROWTH INDEX(2) -4.55% -3.15% 23.17% 6.93% N/A(3) --
S&P/CITIGROUP EMI
GROWTH WORLD EX-US -5.17% -7.44% 22.35% 7.93% 7.23%(4) --
Institutional
Class -5.12% 2.67% 26.76% 13.70% 16.17% 1/2/98
Advisor Class -5.25% 2.27% 26.23% 13.21% 13.82% 4/28/98
(1) Total returns for periods less than one year are not annualized.
(2) In February of 2008, the fund's benchmark changed from the S&P/Citigroup
EMI Growth World ex-US to the MSCI AC World ex-US Mid Cap Growth Index. The
fund's investment advisor believes this index better represents the fund's
portfolio composition.
(3) Benchmark data first available June 1994.
(4) 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
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.
- ------
11
International Discovery
Growth of $10,000 Over 10 Years
$10,000 investment made May 31, 1998
One-Year Returns Over 10 Years
Periods ended May 31
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Investor
Class -0.37% 63.12% -20.05% -7.80% -8.75% 40.25% 9.25% 58.75% 30.29% 2.43%
MSCI AC
World
ex-US
Mid Cap
Growth
Index -0.41% 25.69% -30.23% -9.66% -12.63% 39.90% 16.88% 35.21% 32.39% -3.15%
S&P/
Citigroup
EMI Growth
World
ex-US -1.85% 21.21% -21.65% -8.01% -8.73% 42.23% 18.57% 35.69% 29.45% -7.44%
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.
- ------
12
PORTFOLIO COMMENTARY
International Discovery
Portfolio Managers: Mark Kopinski and Brian Brady
PERFORMANCE SUMMARY
International Discovery returned -5.20%* for the six months ended May 31,
2008. The portfolio's benchmark, the MSCI AC World ex-US Mid Cap Growth Index,
returned -4.55%.
The combination of rising inflationary pressures (triggered by soaring oil and
food prices), ongoing global credit-market concerns and slowing economic
growth rates led to a sharp downturn among most international stock markets.
Overall, our stock selection accounted for the portfolio's underperformance
relative to the benchmark.
CHINA LED DETRACTORS
From a regional perspective, investments in China, Japan and Australia
represented the biggest detractors from relative performance. Equities in
China struggled, as signs of strength in the Chinese yuan versus the U.S.
dollar stoked concerns regarding future corporate profits. In addition, a glut
of initial public offerings helped sap broader demand for equities. A
portfolio holding caught in the downdraft was advertising company Focus Media,
which also faced charges of spamming wireless phone users. We subsequently
exited our position.
Japan's Ngk Insulators, a manufacturer of electrical insulators and industrial
ceramic products, was the portfolio's largest detractor for the reporting
period. The stock declined on sagging profit and sales forecasts.
On a positive note, stock selection led to good relative results in the United
Kingdom, Korea and Germany. In addition, an underweight in Korea and an
overweight in Germany helped performance. Our position in Germany's K+S AG, a
producer of potash for use in fertilizers, represented the fund's top
contributor for the reporting period. The company's stock benefited from the
extended agriculture boom, greater-than-expected earnings and soaring demand
for potash.
Top Ten Holdings as of May 31, 2008
% of net % of net
assets assets
as of as of
5/31/08 11/30/07
Lonza Group AG 2.7% 1.9%
CSL Ltd. 2.6% 3.1%
FLSmidth & Co. AS B Shares 2.5% 1.9%
Nokian Renkaat Oyj 2.2% 1.8%
Millicom International Cellular SA 2.1% 2.0%
Japan Steel Works Ltd. (The) 2.0% 1.3%
Tecnicas Reunidas SA 2.0% 1.6%
Fugro N.V. CVA 1.8% 1.4%
United Internet AG 1.8% 1.5%
K+S AG 1.8% 1.2%
* All fund returns referenced in this commentary are for Investor Class
shares. Total returns for periods less than one year are not annualized.
- ------
13
International Discovery
FINANCIALS LAGGED
On an absolute basis, most sectors in the benchmark and portfolio generated
negative returns during the reporting period. Stock selection in the
financials, consumer discretionary and utilities sectors led to lagging
results for the portfolio. Within the beleaguered financials sector, the
diversified financial services industry accounted for the bulk of the
performance shortfall, with our overweight position in Australia's Babcock &
Brown Limited leading the decline. In the consumer discretionary sector, stock
selection in the media industry was the primary performance detractor.
The portfolio realized positive absolute and relative performance in the
materials, health care and energy sectors. In the materials sector, stock
selection and an overweight in the chemicals industry contributed strongly to
performance. In particular, surging worldwide crop prices served as a catalyst
for agrichemical companies, including K+S AG and Australia's Incitec Pivot.
Our health care stocks also were strong contributors to relative performance.
Specifically, our out-of-benchmark position in Australia's CSL Limited, a
biotechnology company specializing in vaccines, contributed favorably due to
strong profits and soaring royalties for its cervical cancer vaccine, Gardasil.
OUTLOOK
We remain committed to our investment strategy of seeking the stocks of small-
to mid-sized foreign companies we believe have a high likelihood of growing
earnings and revenues at an improving rate. We select these stocks with the
assistance of extensive company-level research that focuses on identifying
accelerating growth characteristics.
Types of Investments in Portfolio
% of net % of net
assets assets
as of as of
5/31/08 11/30/07
Foreign Common Stocks 98.5% 96.9%
Temporary Cash Investments 1.4% 3.6%
Other Assets and Liabilities(1) 0.1% (0.5)%
(1) Includes securities lending collateral and other assets and liabilities.
Investments by Country as of May 31, 2008
% of net % of net
assets assets
as of as of
5/31/08 11/30/07
Japan 15.0% 10.6%
United Kingdom 12.3% 15.1%
Canada 9.2% 5.6%
Germany 8.1% 6.6%
Australia 5.7% 12.4%
Switzerland 5.3% 4.0%
Netherlands 3.4% 1.4%
Hong Kong 3.3% 2.5%
Bermuda 3.3% 0.6%
Denmark 2.9% 1.9%
Spain 2.8% 3.5%
Greece 2.6% 1.5%
Italy 2.6% 1.4%
Finland 2.2% 2.2%
Norway 2.1% 2.8%
Luxembourg 2.1% 2.0%
Other Countries 15.6% 22.8%
Cash and Equivalents(2) 1.5% 3.1%
(2) Includes temporary cash investments, securities lending collateral and
other assets and liabilities.
- ------
14
SCHEDULE OF INVESTMENTS
International Discovery
MAY 31, 2008 (UNAUDITED
Shares Value
Common Stocks -- 98.5%
AUSTRALIA -- 5.7%
7,384,700 Boart Longyear Group $14,619,869
1,251,500 CSL Ltd. 47,637,997
67,600 Incitec Pivot Ltd. 11,249,559
1,846,200 OneSteel Ltd. 12,748,395
5,551,000 Oxiana Ltd.(1) 16,404,737
-------------
102,660,557
-------------
AUSTRIA -- 0.5%
140,500 Andritz AG 9,505,864
-------------
BELGIUM -- 0.3%
27,600 Bekaert SA 4,431,561
-------------
BERMUDA -- 3.3%
1,433,900 Aquarius Platinum Ltd. 23,487,840
85,100 Central European Media Enterprises Ltd. Cl A(2) 9,052,938
826,200 Seadrill Ltd. 26,969,298
-------------
59,510,076
-------------
BRAZIL -- 1.7%
841,000 GVT Holding SA(2) 19,220,495
471,300 Lojas Renner SA 11,642,792
-------------
30,863,287
-------------
CANADA -- 9.2%
176,000 Agnico-Eagle Mines Ltd. 12,463,234
256,100 Agrium Inc. 22,388,262
310,800 Fording Canadian Coal Trust 24,864,000
512,500 Gildan Activewear Inc.(2) 15,141,049
575,400 Oilexco Inc.(2) 9,099,133
626,300 Open Text Corp.(1)(2) 22,490,433
249,100 Petrobank Energy & Resources Ltd.(2) 14,392,612
1,101,100 Precision Drilling Trust 29,349,366
203,900 Timminco Ltd.(2) 6,259,953
202,800 TSX Group Inc. 9,184,128
-------------
165,632,170
-------------
CAYMAN ISLANDS(3)
9,762 Herbalife Ltd. 376,227
-------------
DENMARK -- 2.9%
375,200 FLSmidth & Co. AS B Shares(1) 44,990,824
143,500 Genmab AS(2) 7,690,920
-------------
52,681,744
-------------
FINLAND -- 2.2%
764,700 Nokian Renkaat Oyj 39,282,038
-------------
Shares Value
FRANCE -- 1.6%
206,500 Nexans SA $28,170,592
-------------
GERMANY -- 8.1%
113,100 ElringKlinger AG(2) 12,773,946
67,500 K+S AG 31,643,638
324,800 Kloeckner & Co. AG 19,600,252
258,800 SGL Carbon AG(2) 19,245,005
263,500 SolarWorld AG(1) 13,601,376
1,497,300 United Internet AG 32,797,243
116,600 Vossloh AG(1) 16,887,839
-------------
146,549,299
-------------
GREECE -- 2.6%
1,052,700 Intralot SA 19,947,008
804,000 Piraeus Bank SA 27,016,908
-------------
46,963,916
-------------
HONG KONG -- 3.3%
3,722,500 Kingboard Chemical Holdings Ltd. 17,220,656
7,275,000 Link Real Estate Investment Trust (The) 18,235,162
5,820,000 Melco International Development Ltd. 7,308,981
9,916,000 Pacific Basin Shipping Ltd. (Acquired
5/8/08-5/30/08, Cost $17,339,681)(4) 17,179,914
-------------
59,944,713
-------------
INDIA -- 0.7%
394,100 Sun Pharmaceutical Industries Ltd.(2) 13,112,051
-------------
IRELAND -- 1.4%
341,700 ICON plc ADR(2) 24,089,850
-------------
ITALY -- 2.6%
140,300 Danieli & C. Officine Meccaniche SpA 5,816,755
408,100 ERG SpA(1) 9,332,753
1,180,800 Prysmian SpA 31,228,499
-------------
46,378,007
-------------
JAPAN -- 15.0%
465,000 AEON Mall Co., Ltd. 15,036,984
698,000 Capcom Co. Ltd. 23,167,377
610,500 Hosiden Corp. 13,113,158
404,900 iShares MSCI Japan Index Fund 5,494,493
1,754,000 Japan Steel Works Ltd. (The) 36,427,312
- ------
15
International Discovery
Shares Value
665,000 JGC Corp. $14,662,162
5,513 Jupiter Telecommunications Co.(2) 4,647,754
1,480,000 Kawasaki Kisen Kaisha, Ltd. 16,350,877
596,300 Konami Corp. 21,771,029
1,532,000 Kuraray Co. Ltd. 19,337,051
241,400 Kurita Water Industries Ltd. 8,905,130
270,200 Mitsumi Electric Co., Ltd. 7,840,797
171,700 Nitori Co. Ltd. 8,987,994
3,953,000 Oki Electric Industry Co., Ltd.(2) 6,935,088
251,700 Shimano Inc. 12,030,043
1,586,000 Tokyo Steel Manufacturing Co. Ltd. 21,973,883
1,768,000 Tokyo Tatemono Co. Ltd. 15,039,318
238,800 Toyo Tanso Co. Ltd.(1) 18,433,685
-------------
270,154,135
-------------
LUXEMBOURG -- 2.1%
328,600 Millicom International Cellular SA(1) 38,071,596
-------------
MALAYSIA -- 0.6%
4,908,250 KNM Group Bhd 10,528,499
-------------
NETHERLANDS -- 3.4%
213,600 ASML Holding N.V. New York Shares 6,399,456
375,500 Fugro N.V. CVA 33,069,600
412,400 Qiagen N.V.(2) 8,186,442
327,100 SBM Offshore N.V.(1) 12,986,349
-------------
60,641,847
-------------
NORWAY -- 2.1%
2,194,500 Pronova BioPharma AS(2) 7,443,067
1,326,600 Sevan Marine ASA(2) 21,131,659
339,900 Subsea 7 Inc.(2) 9,729,135
-------------
38,303,861
-------------
PEOPLE'S REPUBLIC OF CHINA -- 1.2%
4,862,000 China High Speed Transmission Equipment Group Co.,
Ltd.(2) 8,535,782
7,595,500 KWG Property Holding Ltd. 7,241,642
6,425,500 Sino-Ocean Land Holdings Ltd. 5,722,681
-------------
21,500,105
-------------
SINGAPORE -- 1.7%
16,414,320 Noble Group Ltd. 30,139,033
-------------
SOUTH KOREA -- 1.1%
254,800 Hyundai Steel Co. 20,493,032
-------------
Shares Value
SPAIN -- 2.8%
506,100 Enagas $16,101,098
421,800 Tecnicas Reunidas SA 35,270,441
-------------
51,371,539
-------------
SWEDEN -- 1.1%
593,000 SSAB Svenskt Stal AB Series A 20,562,131
-------------
SWITZERLAND -- 5.3%
116,847 Basilea Pharmaceutica AG(2) 18,716,141
349,000 Lonza Group AG 48,336,467
56,800 Orascom Development Holding AG(2) 8,771,149
65,900 Sulzer AG 8,855,352
367,400 Temenos Group AG(2) 11,294,044
-------------
95,973,153
-------------
TAIWAN (REPUBLIC OF CHINA) -- 1.8%
9,282,000 Quanta Computer Inc. 14,649,766
19,475,000 Yuanta Financial Holding Co., Ltd.(2) 18,122,236
-------------
32,772,002
-------------
THAILAND -- 1.1%
7,171,100 Bank of Ayudhya PCL(2) 5,903,275
905,000 Banpu PCL 13,368,210
89,500 Banpu PCL NVDR 1,322,050
-------------
20,593,535
-------------
UNITED ARAB EMIRATES -- 0.8%
1,370,821 Lamprell plc 14,254,722
-------------
UNITED KINGDOM -- 12.3%
1,980,600 Aggreko plc 23,714,381
855,900 AVEVA Group plc 25,276,642
275,400 Dana Petroleum plc(2) 9,982,371
282,700 Expro International Group plc 9,048,693
2,415,400 Ferrexpo plc 18,407,143
253,600 Homeserve plc 9,172,099
1,046,700 Imperial Energy Corp. plc(2) 20,317,347
453,900 Intertek Group plc 9,197,176
191,700 Johnson Matthey plc 7,650,959
690,300 Rotork plc 15,518,596
2,954,500 Serco Group plc 26,129,083
1,797,900 VT Group plc 23,289,597
888,000 Wellstream Holdings plc(2) 23,973,285
-------------
221,677,372
-------------
TOTAL COMMON STOCKS
(Cost $1,406,303,182) 1,777,188,514
-------------
- ------
16
International Discovery
Principal Amount Value
Temporary Cash Investments -- 1.4%
$25,300,000 FHLB Discount Notes, 1.90%, 6/2/08(5) $25,300,000
(Cost $25,298,665)
-------------
Temporary Cash Investments - Securities
Lending Collateral(6) -- 5.3%
Repurchase Agreement, Barclays Capital Inc., (collateralized by
various U.S. Government Agency obligations in a pooled account
at the lending agent), 2.30%, dated 5/30/08, due 6/2/08
(Delivery value $22,504,313) 22,500,000
Repurchase Agreement, BNP Paribas Securities Corp.,
(collateralized by various U.S. Government Agency obligations in
a pooled account at the lending agent), 2.35%, dated 5/30/08,
due 6/2/08 (Delivery value $18,003,525) 18,000,000
Repurchase Agreement, Credit Suisse Securities USA LLC,
(collateralized by various U.S. Government Agency obligations in
a pooled account at the lending agent), 2.35%, dated 5/30/08,
due 6/2/08 (Delivery value $20,003,917) 20,000,000
Repurchase Agreement, Deutsche Bank Securities Inc.,
(collateralized by various U.S. Government Agency obligations in
a pooled account at the lending agent), 2.30%, dated 5/30/08,
due 6/2/08 (Delivery value $18,003,450) 18,000,000
Repurchase Agreement, Lehman Brothers Inc./Lehman Brothers
Commercial Paper Inc., (collateralized by various U.S.
Government Agency obligations in a pooled account at the lending
agent), 2.30%, dated 5/30/08, due 6/2/08 (Delivery value
$17,818,427) 17,815,012
--------------
TOTAL TEMPORARY CASH INVESTMENTS - SECURITIES
LENDING COLLATERAL
(Cost $96,315,012) 96,315,012
--------------
TOTAL INVESTMENT SECURITIES -- 105.2%
(Cost $1,527,916,859) 1,898,803,526
--------------
OTHER ASSETS AND LIABILITIES -- (5.2)% (94,451,739)
--------------
TOTAL NET ASSETS -- 100.0% $1,804,351,787
==============
Market Sector Diversification
(as a % of net assets)
Industrials 26.3%
Materials 16.1%
Energy 14.9%
Information Technology 12.1%
Health Care 9.7%
Consumer Discretionary 7.9%
Financials 5.7%
Telecommunication Services 3.2%
Real Estate Investment Trusts (REITs) 1.4%
Utilities 0.9%
Diversified 0.3%
Cash and Equivalents* 1.5%
*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
NVDR = Non-Voting Depositary Receipt
(1) Security, or a portion thereof, was on loan as of May 31, 2008.
(2) Non-income producing.
(3) Investments in country were less than 0.05% of total net assets.
(4) Security was purchased under Rule 144A of the Securities Act of 1933 or is
a private placement and, unless registered under the Act or exempted from
registration, may only be sold to qualified institutional investors. The
aggregate value of restricted securities at May 31, 2008 was $17,179,914,
which represented 1.0% of total net assets.
(5) The rate indicated is the yield to maturity at purchase.
(6) Investments represent purchases made by the lending agent with cash
collateral received through securities lending transactions.
See Notes to Financial Statements.
- ------
17
PERFORMANCE
International Opportunities
Total Returns as of May 31, 2008
Average Annual Returns
6 1 Since Inception
months(1) year 5 years Inception Date
INVESTOR CLASS -13.03% -9.36% 28.63% 21.15% 6/1/01
MSCI AC WORLD EX-US
SMALL CAP GROWTH
INDEX(2) -5.92% -5.56% 23.24% 13.19%(3) --
S&P/CITIGROUP EMI
GROWTH WORLD EX-US -5.17% -7.44% 22.35% 12.65%(3) --
Institutional Class -13.00% -9.27% 28.90% 29.44% 1/9/03
(1) Total returns for periods less than one year are not annualized.
(2) In February of 2008, the fund's benchmark changed from the S&P/Citigroup
EMI Growth World ex-US to the MSCI AC World ex-US Small Cap Growth Index. The
fund's investment advisor believes this index better represents the fund's
portfolio composition.
(3) Since 5/31/01, the date nearest the Investor Class's inception for which
data is 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
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.
- ------
18
International Opportunities
Growth of $10,000 Over Life of Class
$10,000 investment made June 1, 2001
One-Year Returns Over Life of Class
Periods ended May 31
2002* 2003 2004 2005 2006 2007 2008
Investor
Class 15.00% -5.48% 62.50% 22.00% 46.95% 33.53% -9.36%
MSCI AC
World
ex-US
Small Cap
Growth Index -7.33% -9.59% 42.23% 18.57% 37.89% 29.43% -5.56%
S&P/Citigroup
EMI Growth
World ex-US -8.01% -8.73% 42.23% 18.57% 35.69% 29.45% -7.44%
* 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
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.
- ------
19
PORTFOLIO COMMENTARY
International Opportunities
Portfolio Managers: Federico Laffan and Trevor Gurwich
PERFORMANCE SUMMARY
International Opportunities returned -13.03%* for the six months ended May 31,
2008. The portfolio's benchmark, the MSCI AC World ex-US Small Cap Growth
Index returned -5.92%.
The combination of rising inflationary pressures (triggered by soaring oil and
food prices), ongoing global credit-market concerns and slowing economic
growth rates led to a sharp downturn among most international stock markets.
The first quarter of 2008 was a particularly challenging period for the
portfolio, as liquidity concerns and higher energy costs caused market
sentiment to turn quickly. Investors indiscriminately sold the quality-growth
names that had performed strongly in the second half of 2007, and replaced
them with market laggards. Such periods of market transition have proven to be
challenging for our investment style.
HONG KONG STOCKS LAG
Hong Kong, Australia and Canada represented the largest detractors from
relative performance from a regional perspective. Stock selection was negative
in each market, while an overweight in Hong Kong and underweights in Australia
and Canada added to the negative results. Australia's Bradken Limited, a
manufacturer of mining and freight components, Hong Kong's Midland Holdings, a
property brokerage and leasing company, and Canada's Jaguar Mining, a gold
mining operation, were among the largest detractors from the fund's relative
performance.
The portfolio realized positive relative performance from Spain, Italy and
Korea, with stock selection driving the positive results. Blood plasma
processor Grifols SA of Spain was among the portfolio's top contributors, due
to improved margins and cash flow and the announcement it would build 10 new
plasma collection centers in the United States.
SECTOR RETURNS BROADLY NEGATIVE
Sector results were negative for the benchmark and the portfolio during the
reporting period, with the health care, financials and consumer staples
sectors representing the largest detractors from the fund's relative
performance. In each sector, stock selection was the primary culprit.
Top Ten Holdings as of May 31, 2008
% of net % of net
assets assets
as of as of
5/31/08 11/30/07
Grifols SA 2.6% 1.8%
Smit Internationale N.V. 2.1% 1.1%
Songa Offshore ASA 2.1% --
Hosiden Corp. 1.9% 2.2%
Mount Gibson Iron Ltd. 1.9% 1.6%
TREVI - Finanziaria Industriale SpA 1.8% --
Vossloh AG 1.8% 0.5%
Tubacex SA 1.8% 1.9%
So-net Entertainment Corp. 1.7% 1.4%
PT Timah Tbk 1.7% 0.2%
* All fund returns referenced in this commentary are for Investor Class
shares. Total returns for periods less than one year are not annualized.
- ------
20
International Opportunities
Southern Cross Healthcare Group, a United Kingdom-based provider of care homes
for the elderly, was the portfolio's poorest-performing security for the
reporting period. The company's stock price slid on higher operating costs. In
the financials sector, the diversified financial services industry was the
worst performer, led by our overweighted position in Japanese financial market
operator Osaka Securities Exchange. The company sought to expand its footprint
by acquiring Jasdaq Securities Exchange, but negotiations stopped in late
March when Jasdaq officials announced their opposition to the deal.
On an absolute basis, only the portfolio's telecommunication services sector
posted a positive return. Relative to the benchmark, telecommunication
services and information technology were the only positive contributors to
performance. Germany's Wire Card AG, a provider of electronic payment and risk
management applications, was among the portfolio's top contributors for the
reporting period. The company's stock advanced on growing revenues and
earnings and due to a significant increase in the company's core business and
successful new-product launches.
OUTLOOK
We remain committed to our investment strategy of seeking the stocks of small,
high-quality foreign companies that have a high likelihood of growing earnings
and revenues at an improving rate. Although the portfolio recently has
underperformed, its strong long-term results versus its peers and benchmark
remain intact. History indicates previous periods of strong underperformance
have led to attractive opportunities. We hope to take advantage of such
opportunities by selectively adding exposure to companies in which we believe
fundamentals remain solid.
Types of Investments in Portfolio
% of net % of net
assets assets
as of as of
5/31/08 11/30/07
Foreign Common Stocks 98.3% 96.9%
Foreign Preferred Stocks -- 0.6%
TOTAL EQUITY EXPOSURE 98.3% 97.5%
Temporary Cash Investments 0.5% 2.1%
Other Assets and Liabilities(1) 1.2% 0.4%
(1) Includes securities lending collateral and other assets and liabilities.
Investments by Country as of May 31, 2008
% of net % of net
assets assets
as of as of
5/31/08 11/30/07
United Kingdom 14.3% 11.0%
Japan 13.2% 11.5%
Canada 6.6% 5.7%
Germany 6.5% 6.7%
Spain 6.0% 4.7%
Australia 5.4% 5.2%
Italy 5.2% 0.9%
Netherlands 4.7% 2.8%
Norway 4.1% 3.7%
France 3.8% 3.3%
Sweden 2.7% 1.1%
Indonesia 2.2% 2.3%
Taiwan (Republic of China) 2.1% 0.9%
Other Countries 21.5% 37.7%
Cash and Equivalents(2) 1.7% 2.5%
(2) Includes temporary cash investments, securities lending collateral and
other assets and liabilities.
- ------
21
SCHEDULE OF INVESTMENTS
International Opportunities
MAY 31, 2008 (UNAUDITED)
Shares Value
Common Stocks -- 98.3%
AUSTRALIA -- 5.4%
1,023,980 Mount Gibson Iron Ltd.(1) $3,202,424
127,595 Nufarm Ltd. 2,056,260
1,460,426 Pan Australian Resources Ltd.(1) 1,487,540
353,076 Platinum Australia Ltd.(1) 918,495
164,420 Western Areas NL(1)(2) 1,583,520
------------
9,248,239
------------
BELGIUM -- 1.2%
20,980 EVS Broadcast Equipment SA(2) 1,979,530
------------
BERMUDA -- 0.7%
75,582 Aquarius Platinum Ltd. 1,238,063
------------
BRAZIL -- 1.6%
1,600 Brasil Brokers Participacoes SA(1) 1,612,091
110,800 Drogasil SA 1,027,880
------------
2,639,971
------------
BRITISH VIRGIN ISLANDS -- 0.9%
136,851 Playtech Ltd. 1,490,834
------------
CANADA -- 6.6%
114,636 5N Plus Inc.(1) 1,228,923
27,547 AG Growth Income Fund 798,030
69,687 Alamos Gold Inc.(1) 464,370
241,281 Compton Petroleum Corp.(1) 2,756,594
197,240 Gran Tierra Energy Inc.(1) 1,131,681
27,333 Labrador Iron Ore Royalty Income Fund 1,582,009
7,699 Major Drilling Group International Inc.(1) 426,237
18,562 Petrobank Energy & Resources Ltd.(1)(2) 1,072,484
129,267 Trinidad Drilling Ltd. 1,808,657
------------
11,268,985
------------
DENMARK -- 0.6%
14,255 East Asiatic Co. Ltd. AS (The) 1,061,277
------------
FINLAND -- 0.8%
19,203 Outotec Oyj 1,312,071
------------
FRANCE -- 3.8%
138,152 Altran Technologies SA(1) 1,259,449
7,478 bioMerieux 805,738
48,262 Etablissements Maurel et Prom 1,205,804
Shares Value
12,743 Nexans SA $1,738,392
16,467 Sechilienne-Sidec 1,391,298
150 Virbac SA 13,892
------------
6,414,573
------------
GERMANY -- 6.5%
15,678 Bauer AG 1,645,367
25,643 Demag Cranes AG 1,482,018
22,134 Medion AG(2) 471,744
26,260 Nordex AG(1) 1,194,532
12,716 Stada Arzneimittel AG(2) 833,823
20,712 Vossloh AG(2) 2,999,837
126,881 Wire Card AG(1) 2,487,099
------------
11,114,420
------------
GREECE -- 1.8%
509,756 Alapis SA 1,665,357
25,016 Sarantis SA 467,008
84,680 Thessaloniki Water Supply and Sewerage Co. SA 885,270
------------
3,017,635
------------
HONG KONG -- 1.0%
910,000 Huabao International Holdings Ltd. 921,247
722,000 Peace Mark Holdings Ltd. 832,698
------------
1,753,945
------------
INDIA -- 1.4%
56,916 Everest Kanto Cylinder Ltd.(1) 424,845
93,064 ICSA India Ltd.(1) 896,094
41,595 Tulip Telecom Ltd. 1,011,461
------------
2,332,400
------------
INDONESIA -- 2.2%
2,136,000 PT Sampoerna Agro Tbk 928,696
792,000 PT Timah Tbk(1) 2,886,570
------------
3,815,266
------------
IRELAND -- 0.5%
145,736 United Drug plc 879,679
------------
ISRAEL -- 0.8%
67,427 Delek Automotive Systems Ltd. 1,260,455
------------
ITALY -- 5.2%
58,276 Ansaldo STS SpA 895,721
181,456 Astaldi SpA 1,697,981
65,991 Danieli & C. Officine Meccaniche SpA 1,729,857
220,441 Maire Tecnimont SpA 1,443,778
117,132 TREVI - Finanziaria Industriale SpA 3,006,666
------------
8,774,003
------------
- ------
22
International Opportunities
Shares Value
JAPAN -- 13.2%
78,000 Capcom Co. Ltd. $2,588,905
151,400 Hosiden Corp.(2) 3,251,976
315 Kakaku.com, Inc. 1,795,306
14,500 Mandom Corp. 378,141
151,000 Nippon Synthetic Chemical Industry Co., Ltd. (The) 860,607
220,000 Nisshin Oillio Group, Ltd. (The) 1,022,286
304 Osaka Securities Exchange Co. Ltd.(2) 1,703,784
106,500 Shinko Plantech Co. Ltd.(2) 1,799,744
753 So-net Entertainment Corp. 2,949,161
205,000 Tokai Carbon Co. Ltd.(2) 2,389,237
13,772 Toyo Tanso Co. Ltd.(2) 1,063,102
68,500 Tsumura & Co. 1,688,952
41,500 Yushin Precision Equipment Co., Ltd. 948,459
------------
22,439,660
------------
MALAYSIA -- 1.6%
1,437,800 Alliance Financial Group Bhd 1,393,423
318,400 Asiatic Development Bhd 815,654
415,400 IJM Plantations Bhd 505,147
------------
2,714,224
------------
NETHERLANDS -- 4.7%
57,420 Draka Holding N.V. 2,218,022
8,236 Koninklijke Vopak N.V. 599,893
31,468 Smit Internationale N.V. 3,519,847
132,759 Super De Boer N.V.(1) 883,962
29,919 Unit 4 Agresso N.V. 810,814
------------
8,032,538
------------
NORWAY -- 4.1%
500,549 Deep Sea Supply plc 2,011,735
61,579 Golden Ocean Group Ltd.(2) 406,849
61,401 ODIM ASA(1) 1,056,313
219,489 Songa Offshore ASA(1)(2) 3,485,523
------------
6,960,420
------------
PAPUA-NEW GUINEA -- 0.6%
81,071 New Britain Palm Oil Ltd. 987,551
------------
PEOPLE'S REPUBLIC OF CHINA -- 0.6%
144,500 Li Ning Co. Ltd. 406,453
1,544,000 Shenzhen Investment Ltd. 637,105
------------
1,043,558
------------
SINGAPORE -- 1.6%
923,000 Straits Asia Resources Ltd.(2) 2,772,627
------------
Shares Value
SOUTH AFRICA -- 1.5%
2,665,097 Merafe Resources Ltd.(1) $1,331,628
131,014 Northam Platinum Ltd.(2) 1,178,829
------------
2,510,457
------------
SOUTH KOREA -- 1.1%
5,209 MegaStudy Co., Ltd. 1,813,588
------------
SPAIN -- 6.0%
152,068 Grifols SA 4,367,123
28,166 Prosegur Cia de Seguridad SA 1,241,360
263,603 Tubacex SA 2,997,737
69,811 Viscofan SA 1,646,451
------------
10,252,671
------------
SWEDEN -- 2.7%
126,026 Intrum Justitia AB 2,195,465
44,575 Kungsleden AB(2) 414,273
28,050 Oriflame Cosmetics SA SDR 1,992,015
------------
4,601,753
------------
SWITZERLAND -- 1.6%
1,213 Bank Sarasin & Compagnie AG B Shares 59,684
5,449 Bucher Industries AG 1,425,489
1,181 Galenica Holding AG 420,248
13,538 PSP Swiss Property AG 834,926
------------
2,740,347
------------
TAIWAN (REPUBLIC OF CHINA) -- 2.1%
113,000 Huaku Development Co., Ltd.(1) 427,291
233,000 Hung Poo Real Estate Development Corp. 370,042
1,311,000 Tung Ho Steel Enterprise Corp. 2,737,312
------------
3,534,645
------------
THAILAND -- 1.6%
1,134,800 BEC World PCL 1,047,669
11,698,600 Quality Houses PCL 936,032
1,004,500 TISCO Bank PCL 744,990
------------
2,728,691
------------
UNITED KINGDOM -- 14.3%
314,791 888 Holdings plc 916,555
825,226 Aegis Group plc 2,051,328
77,555 ASOS plc(1) 497,323
217,952 Babcock International Group plc 2,693,792
35,532 Chemring Group plc 1,720,748
146,993 Connaught plc 1,239,567
92,186 Croda International plc 1,203,287
15,927 Dana Petroleum plc(1) 577,303
------------
- ------
23
International Opportunities
Shares Value
91,877 Hikma Pharmaceuticals plc $ 864,864
133,560 IG Group Holdings plc 1,011,213
431,586 International Personal Finance plc 2,203,356
76,107 Intertek Group plc 1,542,123
317,090 John Wood Group plc 2,801,149
96,246 MITIE Group plc 440,366
198,762 Regal Petroleum plc(1) 1,133,821
44,293 Shaftesbury plc 401,809
39,843 Wellstream Holdings plc(1) 1,075,639
95,572 WSP Group plc 1,075,221
172,919 Xchanging Ltd. 839,983
------------
24,289,447
------------
TOTAL COMMON STOCKS
(Cost $138,912,456) 167,023,523
------------
Principal Amount
Temporary Cash Investments -- 0.5%
$900,000 FHLB Discount Notes, 1.90%, 6/2/08(3) 900,000
(Cost $899,953)
------------
Temporary Cash Investments - Securities Lending Collateral(4) -- 11.5%
Repurchase Agreement, Barclays Capital Inc., (collateralized by
various U.S. Government Agency obligations in a pooled account at
the lending agent), 2.30%, dated 5/30/08, due 6/2/08 (Delivery
value $4,000,767) 4,000,000
Repurchase Agreement, BNP Paribas Securities Corp.,
(collateralized by various U.S. Government Agency obligations in
a pooled account at the lending agent), 2.35%, dated 5/30/08, due
6/2/08 (Delivery value $4,000,783) 4,000,000
Repurchase Agreement, Credit Suisse Securities USA LLC,
(collateralized by various U.S. Government Agency obligations in
a pooled account at the lending agent), 2.35%, dated 5/30/08, due
6/2/08 (Delivery value $4,816,376) 4,815,433
Repurchase Agreement, Deutsche Bank Securities Inc.,
(collateralized by various U.S. Government Agency obligations in
a pooled account at the lending agent), 2.30%, dated 5/30/08, due
6/2/08 (Delivery value $2,726,075) 2,725,553
Value
Repurchase Agreement, Lehman Brothers Inc./Lehman Brothers
Commercial Paper Inc., (collateralized by various U.S. Government
Agency obligations in a pooled account at the lending agent),
2.30%, dated 5/30/08, due 6/2/08 (Delivery value $4,000,767) $ 4,000,000
------------
TOTAL TEMPORARY CASH INVESTMENTS - SECURITIES
LENDING COLLATERAL
(Cost $19,540,986) 19,540,986
------------
TOTAL INVESTMENT SECURITIES -- 110.3%
(Cost $159,353,395) 187,464,509
------------
OTHER ASSETS AND LIABILITIES -- (10.3)% (17,448,068)
------------
TOTAL NET ASSETS -- 100.0% $170,016,441
============
Market Sector Diversification
(as a % of net assets)
Industrials 25.5%
Materials 17.6%
Energy 13.9%
Information Technology 12.7%
Consumer Staples 7.9%
Financials 6.8%
Consumer Discretionary 6.0%
Health Care 5.8%
Utilities 1.3%
Telecommunication Services 0.6%
Real Estate Investment Trusts (REITs) 0.2%
Cash and Equivalents* 1.7%
*Includes temporary cash investments, securities lending collateral and other
assets and liabilities.
Notes to Schedule of Investments
FHLB = Federal Home Loan Bank
SDR = Swedish Depositary Receipt
(1) Non-income producing.
(2) Security, or a portion thereof, was on loan as of May 31, 2008.
(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.
- ------
24
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, 2007 to May 31, 2008.
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 Investments fund, or
Institutional Class shares of the American Century Diversified Bond Fund, in
an American Century Investments account (i.e., not a financial intermediary or
retirement plan account), American Century Investments 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
Investments 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 Investments 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.
- ------
25
Expenses Paid
Beginning Ending During Period* Annualized
Account Account Value 12/1/07 - Expense
Value 12/1/07 5/31/08 5/31/08 Ratio*
International Stock
ACTUAL
Investor Class $1,000 $970.20 $7.44 1.51%
HYPOTHETICAL
Investor Class $1,000 $1,017.45 $7.62 1.51%
International Discovery
ACTUAL
Investor Class $1,000 $948.00 $6.57 1.35%
Institutional
Class $1,000 $948.80 $5.60 1.15%
Advisor Class $1,000 $947.50 $7.79 1.60%
HYPOTHETICAL
Investor Class $1,000 $1,018.25 $6.81 1.35%
Institutional
Class $1,000 $1,019.25 $5.81 1.15%
Advisor Class $1,000 $1,017.00 $8.07 1.60%
International Opportunities
ACTUAL
Investor Class $1,000 $869.70 $8.60 1.84%
Institutional
Class $1,000 $870.00 $7.67 1.64%
HYPOTHETICAL
Investor Class $1,000 $1,015.80 $9.27 1.84%
Institutional
Class $1,000 $1,016.80 $8.27 1.64%
* Expenses are equal to the class's annualized expense ratio listed in the
table above, multiplied by the average account value over the period,
multiplied by 183, the number of days in the most recent fiscal half-year,
divided by 366, to reflect the one-half year period.
- ------
26
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2008 (UNAUDITED)
International International International
Stock Discovery Opportunities
ASSETS
Investment securities, at
value (cost of $106,016,618,
$1,431,601,847 and
$139,812,409, respectively) -
including $10,663,580,
$97,173,340 and $18,616,215
of securities on loan,
respectively $131,456,735 $1,802,488,514 $167,923,523
Investments made with cash
collateral received for
securities on loan, at value
(cost of $11,161,468,
$96,315,012 and $19,540,986,
respectively) 11,161,468 96,315,012 19,540,986
------------- -------------- -------------
Total investment securities,
at value
(cost of $117,178,086,
$1,527,916,859 and
$159,353,395, respectively) 142,618,203 1,898,803,526 187,464,509
Cash 188,678 1,402,014 --
Cash collateral received for
securities on loan -- 2,105,000 --
Foreign currency holdings, at
value (cost of $78,
$5,106,331 and $114,613,
respectively) 78 5,120,837 114,595
Receivable for investments
sold 1,164,682 20,928,996 4,476,629
Dividends and interest
receivable 461,064 3,554,320 822,997
------------- -------------- -------------
144,432,705 1,931,914,693 192,878,730
------------- -------------- -------------
LIABILITIES
Disbursements in excess of
demand deposit cash -- -- 46,789
Payable for collateral
received for securities on
loan 11,161,468 98,420,012 19,540,986
Payable for investments
purchased 1,078,222 27,139,832 3,003,807
Accrued management fees 166,933 1,999,392 270,707
Distribution and service fees
payable -- 3,670 --
------------- -------------- -------------
12,406,623 127,562,906 22,862,289
------------- -------------- -------------
NET ASSETS $132,026,082 $1,804,351,787 $170,016,441
============== ============== =============
See Notes to Financial Statements.
- ------
27
MAY 31, 2008 (UNAUDITED)
International International International
Stock Discovery Opportunities
NET ASSETS CONSIST OF:
Capital (par value and
paid-in surplus) $108,055,790 $1,493,265,826 $151,560,839
Undistributed net
investment income 670,393 3,495,139 852,679
Accumulated net realized
loss on investment and
foreign currency
transactions (2,139,038) (63,277,125) (10,496,039)
Net unrealized
appreciation on
investments and
translation of assets and
liabilities in foreign
currencies 25,438,937 370,867,947 28,098,962
------------- --------------- --------------
$132,026,082 $1,804,351,787 $170,016,441
============== =============== ==============
INVESTOR CLASS, $0.01 PAR
VALUE
Net assets $132,026,082 $1,636,606,703 $164,254,933
Shares outstanding 8,663,230 122,783,978 22,241,446
Net asset value per share $15.24 $13.33 $7.39
INSTITUTIONAL CLASS, $0.01
PAR VALUE
Net assets N/A $149,113,784 $5,761,508
Shares outstanding N/A 11,061,206 775,659
Net asset value per share N/A $13.48 $7.43
ADVISOR CLASS, $0.01 PAR
VALUE
Net assets N/A $18,631,300 N/A
Shares outstanding N/A 1,426,026 N/A
Net asset value per share N/A $13.07 N/A
See Notes to Financial Statements.
- ------
28
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 2008 (UNAUDITED)
International International International
Stock Discovery Opportunities
INVESTMENT INCOME (LOSS)
INCOME:
Dividends (net of foreign
taxes withheld of $183,104,
$1,250,403 and $190,260,
respectively) $1,751,505 $14,637,539 $2,279,311
Interest 12,798 420,703 79,971
Securities lending, net 30,796 338,174 163,155
------------- -------------- --------------
1,795,099 15,396,416 2,522,437
------------- -------------- --------------
EXPENSES:
Management fees 968,977 11,607,026 1,649,526
Distribution and service
fees -- Advisor Class -- 12,681 --
Directors' fees and expenses 1,416 19,258 2,031
Other expenses 7,001 9,822 1,795
------------- -------------- --------------
977,394 11,648,787 1,653,352
------------- -------------- --------------
NET INVESTMENT INCOME (LOSS) 817,705 3,747,629 869,085
------------- -------------- --------------
REALIZED AND UNREALIZED
GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
Investment transactions
(net of foreign taxes
accrued of $(416), $1,154
and $-, respectively) (6,770,623) (107,491,039) (15,820,410)
Foreign currency
transactions 5,231,510 48,653,273 6,935,998
------------- -------------- --------------
(1,539,113) (58,837,766) (8,884,412)
------------- -------------- --------------
CHANGE IN NET UNREALIZED
APPRECIATION (DEPRECIATION)
ON:
Investments (net of foreign
taxes accrued of $12,541,
$571,796 and $55,966,
respectively) (4,068,089) (31,773,137) (17,625,372)
Translation of assets and
liabilities in foreign
currencies (308,810) (13,127,822) (2,652,689)
------------- -------------- --------------
(4,376,899) (44,900,959) (20,278,061)
------------- -------------- --------------
NET REALIZED AND UNREALIZED
GAIN (LOSS) (5,916,012) (103,738,725) (29,162,473)
------------- -------------- --------------
NET INCREASE (DECREASE) IN
NET ASSETS RESULTING FROM
OPERATIONS $(5,098,307) $(99,991,096) $(28,293,388)
============= ============== ==============
See Notes to Financial Statements.
- ------
29
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED MAY 31, 2008 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2007
International Stock International Discovery
Increase
(Decrease) in Net
Assets 2008 2007 2008 2007
OPERATIONS
Net investment
income (loss) $ 817,705 $ 1,071,359 $ 3,747,629 $ 5,449,656
Net realized gain
(loss) (1,539,113) 5,989,515 (58,837,766) 430,556,176
Change in net
unrealized
appreciation
(depreciation) (4,376,899) 17,434,439 (44,900,959) 35,680,142
------------ ------------ -------------- --------------
Net increase
(decrease) in net
assets resulting
from operations (5,098,307) 24,495,313 (99,991,096) 471,685,974
------------ ------------ -------------- --------------
DISTRIBUTIONS TO SHAREHOLDERS
From net
investment income:
Investor
Class (1,082,682) (320,168) (6,356,563) --
Institutional
Class -- -- (874,387) --
Advisor
Class -- -- (6,979) --
From net
realized gains:
Investor
Class (5,805,544) -- (394,844,373) (348,487,918)
Institutional
Class -- -- (32,915,911) (25,425,423)
Advisor
Class -- -- (1,442,399) (2,581)
------------ ------------ -------------- --------------
Decrease in net
assets from
distributions (6,888,226) (320,168) (436,440,612) (373,915,922)
------------ ------------ -------------- --------------
CAPITAL SHARE TRANSACTIONS
Net increase
(decrease) in net
assets from
capital share
transactions (799,438) 30,456,260 434,231,499 255,971,291
------------ ------------ -------------- --------------
NET INCREASE
(DECREASE) IN NET
ASSETS (12,785,971) 54,631,405 (102,200,209) 353,741,343
NET ASSETS
Beginning of
period 144,812,053 90,180,648 1,906,551,996 1,552,810,653
------------ ------------ -------------- --------------
End of period $132,026,082 $144,812,053 $1,804,351,787 $1,906,551,996
============ ============ ============== ==============
Undistributed net
investment income $670,393 $934,954 $3,495,139 $6,986,593
============ ============ ============== ==============
See Notes to Financial Statements.
- ------
30
SIX MONTHS ENDED MAY 31, 2008 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2007
International Opportunities
Increase (Decrease) in Net Assets 2008 2007
OPERATIONS
Net investment income (loss) $ 869,085 $ 410,877
Net realized gain (loss) (8,884,412) 49,869,818
Change in net unrealized appreciation
(depreciation) (20,278,061) 7,884,112
------------ ------------
Net increase (decrease) in net assets resulting
from operations (28,293,388) 58,164,807
------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income:
Investor Class (1,005,979) (45,647)
Institutional Class (33,311) (2,514)
From net realized gains:
Investor Class (48,940,313) (52,245,138)
Institutional Class (1,080,457) (352,248)
------------ ------------
Decrease in net assets from distributions (51,060,060) (52,645,547)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Net increase (decrease) in net assets from capital
share transactions 32,699,716 29,319,513
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS (46,653,732) 34,838,773
------------ ------------
NET ASSETS
Beginning of period 216,670,173 181,831,400
------------ ------------
End of period $170,016,441 $216,670,173
============ ============
Undistributed net investment income $852,679 $1,022,884
============ ============
See Notes to Financial Statements.
- ------
31
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2008 (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. International Stock Fund
(International Stock), International Discovery Fund (International Discovery)
and International Opportunities Fund (International Opportunities)
(collectively, the funds) are three 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 primarily invests in securities of issuers in developed
foreign countries that are large-sized companies. International Discovery
primarily invests in securities of issuers in developed or emerging market
countries that are small- to medium-sized companies at the time of purchase.
International Opportunities primarily 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. International Opportunities is
authorized to issue the Investor Class and the Institutional Class. The share
classes differ principally in their respective 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.
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 the Board of Directors or its designee, in accordance
with procedures adopted by the Board of Directors, 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 -- For financial reporting purposes, 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 income earned, net of any rebates or fees, is included in the
Statement of Operations. 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.
- ------
32
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. The funds are no longer subject to examination by tax
authorities for years prior to 2004. At this time, management has not
identified any uncertain tax positions for which it is reasonably possible
that the total amounts of unrecognized tax benefits will significantly change
in the next twelve months. Accordingly, no provision has been made for federal
or state income taxes. Interest and penalties associated with any federal or
state income tax obligations, if any, are recorded as interest expense.
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 Stock may impose a 2.00% redemption fee on shares
held less than 60 days. International Discovery and International
Opportunities may impose a 2.00% redemption fee on shares held less than 180
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.
- ------
33
USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America,
which may require management to make certain estimates and assumptions at the
date of the financial statements. Actual results could differ from these
estimates.
2. FEES AND TRANSACTIONS WITH RELATED PARTIES
MANAGEMENT FEES -- The corporation has entered into a Management Agreement
with ACGIM (the investment advisor), under which ACGIM provides the funds with
investment advisory and management services in exchange for a single, unified
management fee (the fee) 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
Investments family of funds, but that have the same investment team and
investment strategy. 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 and the Advisor 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 at each point within the range.
The effective annual management fee for each class of each fund for the six
months ended May 31, 2008, was as follows:
Investor Institutional Advisor
International Stock 1.50% N/A N/A
International Discovery 1.35% 1.15% 1.35%
International Opportunities 1.84% 1.64% 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 Individual Shareholder Services Plan (the plan) for the
Advisor Class, pursuant to Rule 12b-1 of the 1940 Act. The plan provides that
the Advisor Class will pay American Century Investment Services, Inc. (ACIS)
an annual distribution and service fee of 0.25%. The fees are computed and
accrued daily based on the Advisor Class's daily net assets and paid monthly
in arrears. The fees are used to pay financial intermediaries for distribution
and individual shareholder services. Fees incurred under the plan during the
six months ended May 31, 2008, are detailed in the Statement of Operations.
RELATED PARTIES -- Certain officers and directors of the corporation are also
officers and/or directors, and, as a group, controlling stockholders of
American Century Companies, Inc. (ACC), the parent of the corporation's
investment advisor, ACGIM, the corporation's subadvisor, ACIM, the distributor
of the corporation, ACIS, and the corporation's transfer agent, American
Century Services, LLC.
The funds are eligible to invest in a money market fund for temporary
purposes, which is 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 securities lending agreement with
JPMorgan Chase Bank (JPMCB). Prior to December 12, 2007, the funds had a bank
line of credit agreement with JPMCB. JPMCB is a custodian of the funds and a
wholly owned subsidiary of JPM.
- ------
34
3. INVESTMENT TRANSACTIONS
Investment transactions, excluding short-term investments, for the six months
ended May 31, 2008, were as follows:
International International International
Stock Discovery Opportunities
Purchases $66,606,569 $1,534,082,884 $174,355,745
Proceeds from sales $75,335,514 $1,501,228,908 $189,320,245
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the funds were as follows:
Six months ended Year ended
May 31, 2008 November 30, 2007
Shares Amount Shares Amount
International Stock
INVESTOR
CLASS/SHARES
AUTHORIZED 50,000,000 100,000,000
=========== ===========
Sold 841,475 $ 12,424,647 4,667,303 $ 69,025,896
Issued in
reinvestment of
distributions 450,577 6,757,448 22,704 314,002
Redeemed (1,387,814) (19,981,533)(1) (2,576,619) (38,883,638)(2)
----------- --------------- ----------- ---------------
Net increase
(decrease) (95,762) (799,438) 2,113,388 30,456,260
=========== =============== =========== ===============
International Discovery
INVESTOR
CLASS/SHARES
AUTHORIZED 400,000,000 400,000,000
=========== ===========
Sold 9,012,028 120,955,669 8,720,352 151,608,309
Issued in
reinvestment of
distributions 28,325,967 386,169,151 22,034,751 328,726,897
Redeemed (10,134,881) (134,620,642)(3) (15,512,121) (258,448,133)(4)
----------- --------------- ----------- ---------------
27,203,114 372,504,178 15,242,982 221,887,073
----------- --------------- ----------- ---------------
INSTITUTIONAL
CLASS/SHARES
AUTHORIZED 75,000,000 75,000,000
=========== ===========
Sold 2,781,189 36,915,290 1,808,129 31,398,024
Issued in
reinvestment of
distributions 2,453,486 33,751,832 1,690,068 25,425,423
Redeemed (2,014,149) (26,102,722)(5) (1,485,143) (25,231,865)(6)
----------- --------------- ----------- ---------------
3,220,526 44,564,400 2,013,054 31,591,582
----------- --------------- ----------- ---------------
ADVISOR
CLASS/SHARES
AUTHORIZED 5,000,000 5,000,000
=========== ===========
Sold 1,250,021 16,622,724 141,592 2,568,299
Issued in
reinvestment of
distributions 109,343 1,447,972 177 2,581
Redeemed (71,270) (907,775)(7) (4,218) (78,244)(8)
----------- --------------- ----------- ---------------
1,288,094 17,162,921 137,551 2,492,636
----------- --------------- ----------- ---------------
Net increase
(decrease) 31,711,734 $434,231,499 17,393,587 $255,971,291
=========== =============== =========== ===============
(1) Net of redemption fees of $13,011.
(2) Net of redemption fees of $30,038.
(3) Net of redemption fees of $239,877.
(4) Net of redemption fees of $101,600.
(5) Net of redemption fees of $20,710.
(6) Net of redemption fees of $22,764.
(7) Net of redemption fees of $5,166.
(8) Net of redemption fees of $1,595.
- ------
35
Six months ended Year ended
May 31, 2008 November 30, 2007
Shares Amount Shares Amount
International Opportunities
INVESTOR
CLASS/SHARES
AUTHORIZED 100,000,000 100,000,000
============ ============
Sold 696,847 $5,025,002 108,195 $ 1,144,613
Issued in
reinvestment of
distributions 6,031,614 48,303,707 5,744,532 51,241,065
Redeemed (3,139,526) (23,592,572) (2,526,820) (26,038,993)(1)
------------ ------------ ------------ ---------------
3,588,935 29,736,137 3,325,907 26,346,685
------------ ------------ ------------ ---------------
INSTITUTIONAL
CLASS/SHARES
AUTHORIZED 10,000,000 10,000,000
============ ============
Sold 242,328 1,849,811 261,114 2,618,066
Issued in
reinvestment of
distributions 138,903 1,113,768 40,239 354,762
------------ ------------ ------------ ---------------
381,231 2,963,579 301,353 2,972,828
------------ ------------ ------------ ---------------
Net increase
(decrease) 3,970,166 $32,699,716 3,627,260 $29,319,513
============ ============ ============ ===============
(1) Net of redemption fees of $610.
5. SECURITIES LENDING
As of May 31, 2008, securities in International Stock, International Discovery
and International Opportunities valued at $10,663,580, $97,173,340 and
$18,616,215, 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 market value of all collateral received, at this date, was $11,161,468,
$98,420,012 and $19,540,986, 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. FAIR VALUE MEASUREMENTS
The funds' securities valuation process is based on several considerations and
may use multiple inputs to determine the fair value of the positions held by
the funds. In conformity with accounting principles generally accepted in the
United States of America, the inputs used to determine a valuation are
classified into three broad levels as follows:
* Level 1 valuation inputs consist of actual quoted prices based on an active
market;
* Level 2 valuation inputs consist of significant direct or indirect
observable market data; or
* Level 3 valuation inputs consist of significant unobservable inputs such as
the fund's own assumptions.
The level classification is based on the lowest level input that is
significant to the fair valuation measurement. The valuation inputs are not an
indication of the risks associated with investing in these securities or other
financial instruments.
- ------
36
The following is a summary of the valuation inputs used to determine the fair
value of the funds' securities as of May 31, 2008:
Value of
Fund/Valuation Inputs Investment Securities
INTERNATIONAL STOCK
Level 1 -- Quoted Prices $4,782,428
Level 2 -- Other Significant Observable Inputs 137,835,775
Level 3 -- Significant Unobservable Inputs --
--------------
$142,618,203
==============
INTERNATIONAL DISCOVERY
Level 1 -- Quoted Prices $153,227,255
Level 2 -- Other Significant Observable Inputs 1,745,576,271
Level 3 -- Significant Unobservable Inputs --
--------------
$1,898,803,526
==============
INTERNATIONAL OPPORTUNITIES
Level 1 -- Quoted Prices --
Level 2 -- Other Significant Observable Inputs $187,464,509
Level 3 -- Significant Unobservable Inputs --
--------------
$187,464,509
==============
7. BANK LINE OF CREDIT
Effective December 12, 2007, the funds, along with certain other funds managed
by ACIM or ACGIM, have a $500,000,000 unsecured bank line of credit agreement
with Bank of America, N.A. Prior to December 12, 2007, the funds, along with
certain other funds managed by ACIM or ACGIM, had 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, which is subject to annual renewal, 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, 2008.
8. 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.
9. 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.
- ------
37
As of May 31, 2008, the components of investments for federal income tax
purposes were as follows:
International International International
Stock Discovery Opportunities
Federal tax cost of investments $117,702,232 $1,534,701,201 $160,170,244
============= ============== =============
Gross tax appreciation of
investments $26,608,507 $389,020,528 $30,146,497
Gross tax depreciation of
investments (1,692,536) (24,918,203) (2,852,232)
------------- -------------- -------------
Net tax appreciation
(depreciation) of investments $24,915,971 $364,102,325 $27,294,265
============= ============== =============
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, 2007, International Stock had capital loss deferrals of
$(233,039) and International Discovery had currency loss deferrals of
$(377,932). These capital and currency loss deferrals represent net capital
and foreign currency losses incurred in the one-month period ended November
30, 2007. The funds have elected to treat such losses as having been incurred
in the following fiscal year for federal income tax purposes.
10. RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board (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. The adoption of FAS 157 does not materially impact the
determination of fair value.
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161, "Disclosures about Derivative Instruments and Hedging Activities -- an
amendment of FASB Statement No. 133" (FAS 161). FAS 161 is effective for
fiscal years beginning after November 15, 2008. FAS 161 amends and expands
disclosures about derivative instruments and hedging activities. FAS 161
requires qualitative disclosures about the objectives and strategies of
derivative instruments, quantitative disclosures about the fair value amounts
of and gains and losses on derivative instruments, and disclosures of
credit-risk-related contingent features in hedging activities. Management is
currently evaluating the impact that adopting FAS 161 will have on the
financial statement disclosures.
- ------
38
FINANCIAL HIGHLIGHTS
International Stock
Investor Class
For a Share Outstanding Throughout the Years Ended November 30
(except as noted)
2008(1) 2007 2006 2005(2)
PER-SHARE DATA
Net Asset Value, Beginning of Period $16.53 $13.57 $10.84 $10.00
-------- -------- ------- --------
Income From Investment Operations
Net Investment Income (Loss) 0.09 0.13 0.06 0.06(3)
Net Realized and
Unrealized Gain (Loss) (0.60) 2.88 2.74 0.78
-------- -------- ------- --------
Total From Investment Operations (0.51) 3.01 2.80 0.84
-------- -------- ------- --------
Distributions
From Net Investment Income (0.12) (0.05) (0.08) --
From Net Realized Gains (0.66) -- -- --
-------- -------- ------- --------
Total Distributions (0.78) (0.05) (0.08) --
-------- -------- ------- --------
Redemption Fees(3) --(4) --(4) 0.01 --
-------- -------- ------- --------
Net Asset Value, End of Period $15.24 $16.53 $13.57 $10.84
======== ======== ======= ========
TOTAL RETURN(5) (2.98)% 22.22% 26.07% 8.40%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average
Net Assets 1.51%(6) 1.50% 1.50% 1.50%(6)
Ratio of Net Investment Income (Loss)
to Average Net Assets 1.27%(6) 0.83% 0.40% 0.91%(6)
Portfolio Turnover Rate 52% 103% 109% 109%
Net Assets, End of Period (in thousands) $132,026 $144,812 $90,181 $20,342
(1) Six months ended May 31, 2008 (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.
- ------
39
International Discovery
Investor Class
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
2008(1) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset Value,
Beginning of Period $18.40 $18.01 $15.94 $15.11 $12.75 $9.32
-------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net Investment
Income
(Loss)(2) 0.03 0.05 (0.02) 0.14 (0.01) 0.03
Net Realized
and
Unrealized
Gain (Loss) (0.99) 4.60 5.00 2.97 2.40 3.42
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations (0.96) 4.65 4.98 3.11 2.39 3.45
-------- -------- -------- -------- -------- --------
Distributions
From Net
Investment
Income (0.06) -- (0.13) -- (0.03) (0.02)
From Net
Realized Gains (4.05) (4.26) (2.78) (2.28) -- --
-------- -------- -------- -------- -------- --------
Total
Distributions (4.11) (4.26) (2.91) (2.28) (0.03) (0.02)
-------- -------- -------- -------- -------- --------
Net Asset Value,
End of Period $13.33 $18.40 $18.01 $15.94 $15.11 $12.75
======== ======== ======== ======== ======== ========
TOTAL RETURN(3) (5.20)% 32.18% 36.41% 24.30% 18.76% 37.05%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to Average
Net Assets 1.35%(4) 1.36% 1.41% 1.47% 1.49% 1.57%
Ratio of Net
Investment Income
(Loss) to Average
Net Assets 0.42%(4) 0.30% (0.11)% 1.02% (0.06)% 0.27%
Portfolio Turnover
Rate 88% 162% 148% 145% 201% 215%
Net Assets, End of $1,636,607 $1,758,335 $1,446,955 $1,145,623 $1,112,870 $1,028,934
Period (in
thousands)
(1) Six months ended May 31, 2008 (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.
- ------
40
International Discovery
Institutional Class
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
2008(1) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset Value,
Beginning of
Period $18.59 $18.16 $16.06 $15.21 $12.84 $9.39
------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net
Investment
Income
(Loss)(2) 0.04 0.09 0.04 0.17 0.02 0.05
Net Realized
and
Unrealized
Gain (Loss) (1.00) 4.64 5.00 2.99 2.40 3.43
------- -------- -------- -------- -------- --------
Total From
Investment
Operations (0.96) 4.73 5.04 3.16 2.42 3.48
------- -------- -------- -------- -------- --------
Distributions
From Net
Investment
Income (0.10) -- (0.16) -- (0.05) (0.03)
From Net
Realized
Gains (4.05) (4.30) (2.78) (2.31) -- --
------- -------- -------- -------- -------- --------
Total
Distributions (4.15) (4.30) (2.94) (2.31) (0.05) (0.03)
------- -------- -------- -------- -------- --------
Net Asset Value,
End of Period $13.48 $18.59 $18.16 $16.06 $15.21 $12.84
======= ======== ======== ======== ======== ========
TOTAL RETURN(3) (5.12)% 32.45% 36.65% 24.56% 18.94% 37.25%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses to
Average Net
Assets 1.15%(4) 1.16% 1.21% 1.27% 1.29% 1.37%
Ratio of Net
Investment
Income (Loss) to
Average Net
Assets 0.62%(4) 0.50% 0.09% 1.22% 0.14% 0.47%
Portfolio
Turnover Rate 88% 162% 148% 145% 201% 215%
Net Assets, End
of Period (in
thousands) $149,114 $145,723 $105,849 $205,406 $165,600 $147,531
(1) Six months ended May 31, 2008 (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 Discovery
Advisor Class
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
2008(1) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset Value,
Beginning of Period $18.08 $17.76 $15.75 $14.95 $12.63 $9.23
-------- ------ ------- ------ ------- ------
Income From Investment
Operations
Net Investment
Income (Loss)(2) 0.05 0.07 (0.08) 0.10 (0.05) 0.01
Net Realized and
Unrealized Gain
(Loss) (1.00) 4.46 4.96 2.95 2.37 3.39
-------- ------ ------- ------ ------- ------
Total From
Investment
Operations (0.95) 4.53 4.88 3.05 2.32 3.40
-------- ------ ------- ------ ------- ------
Distributions
From Net
Investment Income (0.01) -- (0.09) -- -- --
From Net
Realized Gains (4.05) (4.21) (2.78) (2.25) -- --
-------- ------ ------- ------ ------- ------
Total Distributions (4.06) (4.21) (2.87) (2.25) -- --
-------- ------ ------- ------ ------- ------
Net Asset Value,
End of Period $13.07 $18.08 $17.76 $15.75 $14.95 $12.63
======== ====== ======= ====== ======= ======
TOTAL RETURN(3) (5.25)% 31.83% 36.08% 24.01% 18.37% 36.84%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to Average Net
Assets 1.60%(4) 1.61% 1.66% 1.72% 1.74% 1.82%
Ratio of Net Investment
Income (Loss) to Average
Net Assets 0.17%(4) 0.05% (0.36)% 0.77% (0.31)% 0.02%
Portfolio Turnover Rate 88% 162% 148% 145% 201% 215%
Net Assets, End of
Period (in thousands) $18,631 $2,494 $7 $70 $201 $161
(1) Six months ended May 31, 2008 (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 Opportunities
Investor Class
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
2008(1) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset Value,
Beginning of
Period $11.37 $11.79 $12.27 $9.35 $7.62 $4.73
-------- -------- -------- -------- -------- -------
Income From
Investment
Operations
Net
Investment
Income
(Loss)(2) 0.04 0.02 (0.01) 0.02 (0.05) (0.01)
Net Realized
and
Unrealized
Gain (Loss) (1.36) 2.94 2.53 3.19 2.03 2.90
-------- -------- -------- -------- -------- -------
Total From
Investment
Operations (1.32) 2.96 2.52 3.21 1.98 2.89
-------- -------- -------- -------- -------- -------
Distributions
From Net
Investment
Income (0.05) --(3) (0.01) -- -- (0.01)
From Net
Realized
Gains (2.61) (3.38) (2.99) (0.29) (0.27) --
-------- -------- -------- -------- -------- -------
Total
Distributions (2.66) (3.38) (3.00) (0.29) (0.27) (0.01)
-------- -------- -------- -------- -------- -------
Redemption Fees(2) -- --(3) --(3) --(3) 0.02 0.01
-------- -------- -------- -------- -------- -------
Net Asset Value,
End of Period $7.39 $11.37 $11.79 $12.27 $9.35 $7.62
======== ======== ======== ======== ======== =======
TOTAL RETURN(4) (13.03)% 33.73% 25.37% 35.28% 27.14% 61.54%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses to
Average Net Assets 1.84%(5) 1.81% 1.85% 1.91% 1.97% 2.00%
Ratio of Net
Investment Income
(Loss) to Average
Net Assets 0.96%(5) 0.19% (0.06)% 0.20% (0.63)% (0.23)%
Portfolio
Turnover Rate 99% 149% 160% 112% 139% 219%
Net Assets, End
of Period (in
thousands) $164,255 $212,157 $180,732 $198,197 $176,100 $72,008
(1) Six months ended May 31, 2008 (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.
- ------
43
International Opportunities
Institutional Class
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
2008(1) 2007 2006 2005 2004 2003(2)
PER-SHARE DATA
Net Asset Value,
Beginning of Period $11.44 $11.85 $12.32 $9.37 $7.63 $4.80
-------- ------ ------ ------ ------- --------
Income From
Investment Operations
Net Investment
Income (Loss)(3) 0.05 0.06 0.02 0.10 (0.03) 0.01
Net Realized
and Unrealized
Gain (Loss) (1.37) 2.94 2.54 3.14 2.04 2.81
-------- ------ ------ ------ ------- --------
Total From
Investment
Operations (1.32) 3.00 2.56 3.24 2.01 2.82
-------- ------ ------ ------ ------- --------
Distributions
From Net
Investment
Income (0.08) (0.03) (0.04) -- -- --
From Net
Realized Gains (2.61) (3.38) (2.99) (0.29) (0.29) --
-------- ------ ------ ------ ------- --------
Total
Distributions (2.69) (3.41) (3.03) (0.29) (0.29) --
-------- ------ ------ ------ ------- --------
Redemption Fees(3) -- --(4) --(4) --(4) 0.02 0.01
-------- ------ ------ ------ ------- --------
Net Asset Value,
End of Period $7.43 $11.44 $11.85 $12.32 $9.37 $7.63
======== ====== ====== ====== ======= ========
TOTAL RETURN(5) (13.00)% 33.97% 25.66% 35.53% 27.50% 58.96%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to Average Net
Assets 1.64%(6) 1.61% 1.65% 1.71% 1.77% 1.80%(6)
Ratio of Net Investment
Income (Loss) to
Average Net Assets 1.16%(6) 0.39% 0.14% 0.40% (0.43)% 0.18%(6)
Portfolio Turnover Rate 99% 149% 160% 112% 139% 219%(7)
Net Assets, End of
Period
(in thousands) $5,762 $4,513 $1,099 $31 $10,868 $8,523
(1) Six months ended May 31, 2008 (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.
- ------
44
ADDITIONAL INFORMATION
RETIREMENT ACCOUNT INFORMATION
As required by law, any distributions you receive from an IRA or certain
403(b), 457 and qualified plans [those not eligible for rollover to an IRA or
to another qualified plan] are subject to federal income tax withholding,
unless you elect not to have withholding apply. Tax will be withheld on the
total amount withdrawn even though you may be receiving amounts that are not
subject to withholding, such as nondeductible contributions. In such case,
excess amounts of withholding could occur. You may adjust your withholding
election so that a greater or lesser amount will be withheld.
If you don't want us to withhold on this amount, you must notify us to not
withhold the federal income tax. Even if you plan to roll over the amount you
withdraw to another tax-deferred account, the withholding rate still applies
to the withdrawn amount unless we have received notice not to withhold federal
income tax prior to the withdrawal. You may notify us in writing or in certain
situations by telephone or through other electronic means. You have the right
to revoke your withholding election at any time and any election you make may
remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable
for paying income tax on the taxable portion of your withdrawal. If you elect
not to have income tax withheld or you don't have enough income tax withheld,
you may be responsible for payment of estimated tax. You may incur penalties
under the estimated tax rules if your withholding and estimated tax payments
are not sufficient.
State tax will be withheld if, at the time of your distribution, your address
is within one of the mandatory withholding states and you have federal income
tax withheld. State taxes will be withheld from your distribution in
accordance with the respective state rules.
PROXY VOTING GUIDELINES
American Century 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 Investments' website at americancentury.com and on the
Securities and Exchange Commission's website at sec.gov. Information regarding
how the investment advisor voted proxies relating to portfolio securities
during the most recent 12-month period ended June 30 is available on the
"About Us" page at americancentury.com. It is also available at sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The funds file their complete schedule of portfolio holdings with the
Securities and Exchange Commission (SEC) for the first and third quarters of
each fiscal year on Form N-Q. The funds' Forms N-Q are available on the SEC's
website at sec.gov, and may be reviewed and copied at the SEC's Public
Reference Room in Washington, DC. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330. The funds also make
their complete schedule of portfolio holdings for the most recent quarter of
their fiscal year available on their website at americancentury.com and, upon
request, by calling 1-800-345-2021.
- ------
45
INDEX DEFINITIONS
The following indices are used to illustrate investment market, sector, or
style performance or to serve as fund performance comparisons. They are not
investment products available for purchase.
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 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 EX-US INDEX comprises the entire developed world, excluding the
United States. The designation of a country as developed arises primarily as a
measurement of GDP per capita. There are 21 countries within this index.
The MSCI AC (ALL COUNTRY) WORLD EX-US MID CAP GROWTH INDEX represents the
performance of mid cap growth stocks in developed countries, excluding the
United States.
The MSCI AC (ALL COUNTRY) WORLD EX-US SMALL CAP GROWTH INDEX represents the
performance of small cap growth stocks in developed countries, excluding the
United States.
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.
- ------
46
NOTES
- ------
47
NOTES
- ------
48
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CONTACT US
AMERICANCENTURY.COM
1-800-345-8765
AUTOMATED INFORMATION LINE . . . . . . . . . . . . . .
INVESTOR SERVICES REPRESENTATIVE . . . . . . . . . . . 1-800-345-2021 or
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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
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
©2008 American Century Proprietary Holdings, Inc. All rights reserved.
0807
CL-SAN-60826S
[front cover]
SEMIANNUAL REPORT
MAY 31, 2008
[american century investments logo and text logo ®]
AMERICAN CENTURY INVESTMENTS
LIFE SCIENCES FUND
TECHNOLOGY FUND
PRESIDENT'S LETTER
JONATHAN THOMAS
[photo of Jonathan Thomas]
Dear Investor,
At American Century Investments®, we are committed to helping you reach your
financial goals. Your success is the ultimate measure of our performance.
That's why we focus on achieving superior investment results and building
long-term relationships with investors like you.
Part of that relationship is to clearly communicate investment results and
what influenced them. To help you monitor your investment with us, we take
pride in providing you with the semiannual report for the American Century®
Life Sciences and Technology funds for the six months ended May 31, 2008. We
also recommend americancentury.com, where we provide company news, quarterly
portfolio commentaries, investment views, and other useful information.
As noted on the website, 2008 marks the 50th anniversary of American Century
Investments. Since 1958, we've worked to make wise decisions with your
interests as our guide. Fifty years also means that we've met the challenges
of previous economic downturns. As we've crossed those hurdles and earned your
trust, our assets under management have grown to nearly $100 billion, putting
us in the top 5% of our industry. This growth has given us the resources to
offer a wide array of financial products and services, including a
well-diversified line-up of portfolios that provide you with many choices in
these uncertain times.
Though our offerings are diverse, they share several key qualities, including
our disciplined investment approach and active, team-based management. Strict
adherence to our processes and long-term strategies allows us to stay focused
during volatile periods. Investors in our portfolios also benefit from the sum
of our investment teams' expertise as they share research and information.
We'll continue to work hard to earn your trust. Thank you for your continued
support.
Sincerely,
/s/Jonathan S. Thomas
Jonathan S. Thomas
President and Chief Executive Officer
American Century Investments
TABLE OF CONTENTS
Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . 2
Market 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. . . . . . . . . . . . . . . . . . . . . . . . . 26
OTHER INFORMATION
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . 30
Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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
Investments or any other person in the American Century Investments
organization. Any such opinions are subject to change at any time based upon
market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied
upon as an indication of trading intent on behalf of any American Century
Investments 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 Investments by third party vendors. To the best of American
Century Investments' 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
ECONOMIC AND SUBPRIME TURMOIL WEIGHED ON STOCKS
The broad U.S. equity indexes declined for the six months ended May 31, 2008,
in an increasingly volatile market environment. Stocks began the period on a
downward trajectory as continuing fallout from the subprime lending meltdown
and a liquidity crunch in the credit markets threatened to tip the U.S.
economy into recession. These events triggered exceptionally high levels of
financial market volatility, leading to the worst quarterly performance for
the major stock indexes in nearly six years in the first quarter of 2008.
The Federal Reserve (the Fed) responded by cutting short-term interest rates
aggressively, lowering its federal funds rate target from 4.5% to 2.0% during
the six-month period. The Fed's efforts to inject liquidity into the financial
system provided some relief to the credit markets, but the Fed's game plan was
complicated by persistently high energy and food prices, which led to concerns
about rising inflation.
The stock market hit its low point for the period in mid-March when Bear
Stearns, a major investment bank, narrowly averted bankruptcy when the Fed
intervened to broker a buyout by JPMorgan Chase. The Bear Stearns rescue, as
well as improving economic data and better-than-expected corporate earnings
reports, helped restore a measure of investor confidence, easing credit and
economic fears. Consequently, stocks staged an uneven but solid recovery
during the last two months of the period.
INTERNATIONAL STOCKS RETREATED
Returns for both developed and emerging international markets were negative
for the six months. Global credit market woes, rising inflation and slowing
economic growth rates combined to drag stocks down. In spite of negative
pressures, strong performance from Latin America helped emerging markets
outperform developed foreign markets during the six months.
Market Returns
For the six months ended May 31, 2008*
U.S. STOCKS
Russell 1000 Index (Large-Cap) -3.78%
Russell Midcap Index 0.14%
Russell 2000 Index (Small-Cap) -1.87%
FOREIGN STOCKS
MSCI EAFE Index -5.21%
MSCI EM Index -1.52%
* Total returns for periods less than one year are not annualized.
- ------
2
PERFORMANCE
Life Sciences
Total Returns as of May 31, 2008
Average Annual
Returns
Since Inception
6 months(1) 1 year 5 years Inception Date
INVESTOR CLASS -7.00% -4.12% 7.98% 1.73% 6/30/00
S&P COMPOSITE 1500 HEALTH
CARE INDEX -10.31% -9.69% 5.23% 1.24% --
S&P 500 INDEX(2) -4.47% -6.70% 9.77% 1.24% --
Institutional Class -6.73% -3.89% 8.19% 1.31% 7/17/00
(1) Total returns for periods less than one year are not annualized.
(2) Data provided by Lipper Inc. - A Reuters Company. ©2008 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
One-Year Returns Over Life of Class
Periods ended May 31
2001* 2002 2003 2004 2005 2006 2007 2008
Investor
Class 2.62% -6.60% -18.63% 24.74% 7.17% -0.79% 15.48% -4.12%
S&P Composite
1500 Health
Care Index -1.85% -8.21% -5.16% 12.59% 4.31% -0.36% 22.10% -9.69%
S&P 500
Index -12.71% -13.85% -8.06% 18.33% 8.24% 8.64% 22.79% -6.70%
* From 6/30/00, the Investor's 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 -7.00%* for the six months ended May 31, 2008. The
portfolio's benchmark, the S&P Composite 1500 Health Care Index, returned
- -10.31%. The broader equity market, represented by the S&P 500 Index, returned
- -4.47%.
U.S. equities struggled throughout most of the six-month period, as turbulence
in the credit markets and fears of recession sapped investor enthusiasm.
Mounting inflationary pressures, soaring oil prices and a falling U.S. dollar
added to the malaise, despite aggressive Federal Reserve action.
STOCK SELECTION HELPED
Stock selection throughout most of the health care industry accounted for the
majority of the portfolio's outperformance compared to the benchmark.
Additionally, overweights in health care equipment and life sciences tools and
services and an underweight in health care providers contributed positively to
the portfolio's relative performance. Small, out-of-benchmark allocations to
chemicals companies and food and staples retailers also helped relative
performance.
Our underweight in the biotechnology segment of the health care industry
detracted slightly from relative results. Our stock selection in the
pharmaceuticals industry was a negative influence on performance, but our
underweight to the area helped offset the negative effects from the lagging
stocks.
SLEEP DISORDER COMPANY WAS TOP STOCK
In the health care equipment category, our overweight position in Respironics
(a manufacturer of respiratory products that treat sleep disorders) and our
out-of-benchmark position in Alcon (a producer of ophthalmic pharmaceutical
products), boosted performance. Respironics, which reported record earnings
and revenue growth before being acquired by Royal Philips Electronics, was the
portfolio's top contributor for the reporting period.
Top Ten Holdings as of May 31, 2008
% of % of
net assets net assets
as of as of
5/31/08 11/30/07
Thermo Fisher Scientific Inc. 6.6% 5.6%
Johnson & Johnson 5.7% 5.1%
Abbott Laboratories 5.5% 4.3%
Gilead Sciences, Inc. 5.1% 3.7%
Baxter International Inc. 4.2% 3.6%
iShares Dow Jones U.S.
Healthcare Sector Index Fund 3.9% 1.0%
Medtronic, Inc. 3.7% 2.2%
Alcon, Inc. 3.5% 2.7%
Teva Pharmaceutical Industries Ltd. ADR 3.3% 2.0%
Becton, Dickinson & Co. 3.1% 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.
- ------
5
Life Sciences
In the chemicals segment, Sigma-Aldrich, a supplier of biochemicals and
organic chemicals to the life sciences industry, was a top contributor to
relative performance. The company reported improved margins, cash flow and
sales combined with a steady increase in its emerging-markets business.
Another top contributor was Thermo Fisher Scientific, which has prospered
since the merger of Thermo Electron and Fisher Scientific International
created the company in late 2006. The supplier of laboratory devices reported
soaring earnings in April 2008 and raised its full-year expectations.
DRUG COMPANY UNDERWEIGHT EFFECTIVE
The pharmaceuticals industry continued to represent the largest sector
weighting in the portfolio. But the industry struggled during the reporting
period, and the fund's underweighted position of 31% compared with the
benchmark's 47% was a positive influence on relative performance. Stock
selection detracted, though, as three of our pharmaceutical stocks--Johnson &
Johnson, Shire Ltd. and Schering-Plough--were among the portfolio's 10 worst
performers for the period.
OUTLOOK
Regardless of the macroeconomic environment, we will continue to emphasize
companies exhibiting accelerating earnings in our attempt to build and
maintain a portfolio of strong individual companies. Our investment decisions
may result in shifts in industry weightings, but any such developments stem
from a fundamental, bottom-up assessment of each company's merits.
Top Five Industries as of May 31, 2008
% of % of
net assets net assets
as of as of
5/31/08 11/30/07
Pharmaceuticals 30.7% 34.8%
Health Care Equipment & Supplies 27.1% 24.1%
Biotechnology 11.7% 8.3%
Health Care Providers & Services 11.4% 16.8%
Life Sciences Tools & Services 10.6% 9.9%
Types of Investments in Portfolio
% of % of
net assets net assets
as of as of
5/31/08 11/30/07
Domestic Common Stocks 81.9% 82.6%
Foreign Common Stocks(1) 17.2% 16.2%
TOTAL COMMON STOCKS 99.1% 98.8%
Temporary Cash Investments 1.3% 1.4%
Other Assets and Liabilities (0.4)% (0.2)%
(1) Includes depositary shares, dual listed securities and foreign ordinary
shares.
- ------
6
SCHEDULE OF INVESTMENTS
Life Sciences
MAY 31, 2008 (UNAUDITED)
Shares Value
Common Stocks -- 99.1%
BIOTECHNOLOGY -- 11.7%
7,000 Alexion Pharmaceuticals Inc.(1) $ 499,450
16,800 Biogen Idec Inc.(1) 1,054,200
37,500 Celgene Corp.(1) 2,282,250
12,000 Genzyme Corp.(1) 821,520
82,542 Gilead Sciences, Inc.(1) 4,566,223
6,200 ImClone Systems Inc.(1) 270,196
13,250 OSI Pharmaceuticals Inc.(1) 467,725
18,200 Vertex Pharmaceuticals Inc.(1) 521,066
-----------
10,482,630
-----------
CHEMICALS -- 1.0%
15,250 Sigma-Aldrich Corp. 896,090
-----------
FOOD & STAPLES RETAILING -- 2.6%
54,000 CVS/Caremark Corp. 2,310,660
-----------
HEALTH CARE EQUIPMENT & SUPPLIES -- 27.1%
20,000 Alcon, Inc. 3,140,000
7,500 Arthrocare Corp.(1) 330,825
62,068 Baxter International Inc. 3,792,354
20,000 Beckman Coulter, Inc. 1,387,800
33,359 Becton, Dickinson & Co. 2,817,168
10,000 C.R. Bard, Inc. 912,000
5,600 Cooper Companies, Inc. (The) 226,520
41,122 Covidien Ltd. 2,059,801
8,500 DENTSPLY International Inc. 344,590
22,000 Hospira Inc.(1) 922,680
28,000 Inverness Medical Innovations, Inc.(1) 1,023,680
65,000 Medtronic, Inc. 3,293,550
26,323 Smith & Nephew plc ADR 1,417,494
45,000 St. Jude Medical, Inc.(1) 1,833,750
11,000 Wright Medical Group, Inc.(1) 326,590
6,250 Zimmer Holdings Inc.(1) 455,000
-----------
24,283,802
-----------
HEALTH CARE PROVIDERS & SERVICES -- 11.4%
40,000 Aetna Inc. 1,886,399
16,250 AmerisourceBergen Corp. 671,613
24,000 Express Scripts, Inc.(1) 1,730,640
6,500 Laboratory Corp. of America Holdings(1) 479,635
Shares Value
16,700 McKesson Corp. $ 962,755
22,200 Owens & Minor Inc. 1,054,056
24,317 Psychiatric Solutions, Inc.(1) 886,841
33,000 Skilled Healthcare Group Inc. Cl A(1) 444,180
60,000 Sun Healthcare Group, Inc.(1) 861,600
47,000 Sunrise Senior Living, Inc.(1) 1,244,560
-----------
10,222,279
-----------
LIFE SCIENCES TOOLS & SERVICES -- 10.6%
15,000 Charles River Laboratories(1) 964,200
17,500 Covance Inc.(1) 1,434,650
10,000 Invitrogen Corp.(1) 459,600
3,000 Millipore Corp.(1) 217,950
100,000 Thermo Fisher Scientific Inc.(1) 5,902,000
8,100 Waters Corp.(1) 498,312
-----------
9,476,712
-----------
MULTI-INDUSTRY -- 3.9%
54,500 iShares Dow Jones U.S. Healthcare Sector Index Fund 3,528,875
-----------
PHARMACEUTICALS -- 30.7%
87,500 Abbott Laboratories 4,930,625
33,480 Allergan, Inc. 1,929,118
71,005 Bristol-Myers Squibb Co. 1,618,204
50,873 Elan Corp. plc ADR(1) 1,273,860
76,500 Johnson & Johnson 5,105,610
72,277 Merck & Co., Inc. 2,815,912
26,500 Novartis AG ADR 1,387,275
13,000 Pharmaceutical HOLDRsSM Trust 922,220
11,250 Roche Holding AG ORD 1,939,023
62,833 Schering-Plough Corp. 1,281,793
4,600 Sciele Pharma Inc. 100,786
22,500 Shire Ltd. ADR 1,160,100
64,994 Teva Pharmaceutical Industries Ltd. ADR 2,972,176
-----------
27,436,702
-----------
TOTAL COMMON STOCKS
(Cost $79,692,129) 88,637,750
-----------
- ------
7
Life Sciences
Principal Amount
Temporary Cash Investments -- 1.3%
$1,200,000 FHLB Discount Notes, 1.90%, 6/2/08(2) $ 1,200,000
(Cost $1,199,810)
-----------
TOTAL INVESTMENT SECURITIES -- 100.4%
(Cost $80,891,939) 89,837,750
-----------
OTHER ASSETS AND LIABILITIES -- (0.4)% (371,770)
-----------
TOTAL NET ASSETS -- 100.0% $89,465,980
===========
Forward Foreign Currency Exchange Contracts
Contracts to Sell Settlement Date Value Unrealized Gain (Loss)
990,000 CHF for USD 6/30/08 $949,775 $4,672
========= ==============
(Value on Settlement Date $954,447)
Notes to Schedule of Investments
ADR = American Depositary Receipt
CHF = Swiss Franc
FHLB = Federal Home Loan Bank
HOLDRs = Holding Company Depositary Receipts
ORD = Foreign Ordinary Share
USD = United States Dollar
(1) Non-income producing.
(2) The rate indicated is the yield to maturity at purchase.
See Notes to Financial Statements.
- ------
8
PERFORMANCE
Technology
Total Returns as of May 31, 2008
Average Annual
Returns
Since Inception
6 months(1) 1 year 5 years Inception Date
INVESTOR CLASS -7.70% -0.55% 9.10% -9.03% 6/30/00
S&P COMPOSITE 1500
TECHNOLOGY INDEX -2.78% 1.34% 9.50% -7.50% --
S&P 500 INDEX(2) -4.47% -6.70% 9.77% 1.24% --
Institutional Class -7.61% -0.37% 9.31% -10.05% 7/14/00
(1) Total returns for periods less than one year are not annualized.
(2) Data provided by Lipper Inc. - A Reuters Company. ©2008 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. 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.
- ------
9
Technology
Growth of $10,000 Over Life of Class
$10,000 investment made June 30, 2000
One-Year Returns Over Life of Class
Periods ended May 31
2001* 2002 2003 2004 2005 2006 2007 2008
Investor Class -50.80% -30.49% -10.64% 19.44% -7.12% 21.47% 15.40% -0.55%
S&P Composite
1500 Technology
Index -49.39% -27.13% -7.11% 22.54% 0.36% 2.77% 22.91% 1.34%
S&P 500 Index -12.71% -13.85% -8.06% 18.33% 8.24% 8.64% 22.79% -6.70%
* From 6/30/00, the Investor's 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. 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.
- ------
10
PORTFOLIO COMMENTARY
Technology
Portfolio Manager: Tom Telford
PERFORMANCE SUMMARY
Technology returned -7.70%* for the six months ended May 31, 2008. The
portfolio's benchmark, the S&P Composite 1500 Technology Index, returned
- -2.78%. The broader equity market, represented by the S&P 500 Index, returned
- -4.47%.
U.S. equities struggled throughout most of the six-month period, as turbulence
in the credit markets and fears of recession sapped investor enthusiasm.
Mounting inflationary pressures, soaring oil prices and a falling U.S. dollar
added to the malaise, despite aggressive Federal Reserve action. The
technology sector, which was particularly hard-hit early in the reporting
period, rebounded later in the period on signs of better-than-expected
economic growth and renewed market optimism.
STOCK SELECTION HINDERED RESULTS
Stock selection throughout most of the information technology sector accounted
for the bulk of the portfolio's underperformance relative to the benchmark.
Specifically, our overweight to smaller-cap technology stocks had a negative
influence on relative performance. As is typical of challenging equity
markets, smaller-cap stocks suffered more than larger-cap stocks during the
reporting period. For example, the technology stocks in the Russell 1000 Index
of large-cap stocks returned -1.58% for the six months, while the technology
stocks in the small-cap Russell 2000 Index returned -8.58%.
IBM UNDERWEIGHT DETRACTED
Additionally, an underweight to the IT services industry detracted from
results. In particular, our significant underweight to International Business
Machines (IBM), the benchmark's top contributor to performance during the
period, made IBM the portfolio's largest detractor in terms of relative
performance. The company posted healthy gains due to its stable business
model, solid earnings reports and the announcement of a stock repurchase plan.
Our holdings in the software industry, the portfolio's largest weighting, also
hurt relative performance, as earnings disappointments and lower profit
estimates caused stock prices to decline.
Top Ten Holdings as of May 31, 2008
% of % of
net assets net assets
as of as of
5/31/08 11/30/07
Research In Motion Ltd. 6.9% 8.0%
Intel Corp. 4.6% 5.4%
Cisco Systems Inc. 4.5% 4.5%
Corning Inc. 3.7% 3.2%
MEMC Electronic Materials Inc. 3.7% 3.3%
Google Inc. Cl A 3.3% 6.4%
Apple Inc. 3.2% 3.1%
High Tech Computer Corp. ORD 3.1% 1.9%
International Business Machines Corp. 3.0% 1.4%
Syniverse Holdings, Inc. 3.0% --
* All fund returns referenced in this commentary are for Investor Class
shares. Total returns for periods less than one year are not annualized.
- ------
11
Technology
In the electronic equipment industry, our overweighted position in
Brightpoint, a distributor of wireless devices and accessories, dragged down
performance. Despite showing a jump in fourth-quarter 2007 profits, the
company's results missed analysts' expectations.
RIM KEEPS TOP SPOT
Stock selection in the computers and peripherals and communications equipment
industries contributed positively to the portfolio's relative performance.
Once again, Canada's Research in Motion (RIM), the maker of the BlackBerry
handheld device, drove performance in the communications equipment area and
finished the reporting period as the portfolio's top-contributing stock and
largest overweight. RIM's stock continued to benefit from multiple new product
cycles, expanding market share and robust subscriber growth.
Among our computers and peripherals holdings, Taiwan's High Tech Computer
Corp., a designer and manufacturer of mobile computing devices, performed
well, ending the reporting period as one of the portfolio's top contributors.
Growing demand for the company's new line of smart phones drove solid
financial results and stock performance.
OUTLOOK
We will continue to focus on technology firms with accelerating earnings and
revenue growth rates and positive share-price momentum, as we believe such
stocks will generate superior returns over time. As recent results
demonstrate, sector funds can show strong volatility to the up- and downsides.
Therefore, it may be best to use such funds in the context of a larger,
long-term, growth-oriented strategy.
Top Five Industries as of May 31, 2008
% of % of
net assets net assets
as of as of
5/31/08 11/30/07
Semiconductors &
Semiconductor Equipment 30.3% 15.6%
Communications Equipment 17.0% 21.4%
Software 13.2% 21.4%
Internet Software & Services 11.6% 8.8%
IT Services 9.3% 2.7%
Types of Investments in Portfolio
% of % of
net assets net assets
as of as of
5/31/08 11/30/07
Domestic Common Stocks 72.7% 73.9%
Foreign Common Stocks(1) 24.6% 23.2%
TOTAL COMMON STOCKS 97.3% 97.1%
Temporary Cash Investments 1.6% 3.2%
Other Assets and Liabilities 1.1% (0.3)%
(1) Includes depositary shares, dual listed securities and foreign ordinary
shares.
- ------
12
SCHEDULE OF INVESTMENTS
Technology
MAY 31, 2008 (UNAUDITED)
Shares Value
Common Stocks -- 97.3%
COMMERCIAL SERVICES & SUPPLIES -- 1.3%
29,500 Nissha Printing Co., Ltd. ORD $1,521,860
------------
COMMUNICATIONS EQUIPMENT -- 17.0%
73,832 Adtran, Inc. 1,837,678
40,020 BigBand Networks, Inc.(1) 212,106
194,868 Cisco Systems Inc.(1) 5,206,873
156,763 Corning Inc. 4,285,900
10,089 Nokia Oyj ADR 286,528
57,769 Research In Motion Ltd.(1) 8,022,381
------------
19,851,466
------------
COMPUTERS & PERIPHERALS -- 6.7%
19,804 Apple Inc.(1) 3,738,004
137,900 High Tech Computer Corp. ORD 3,668,265
577,000 Micro-Star International Co. Ltd. ORD 436,367
------------
7,842,636
------------
ELECTRONIC EQUIPMENT & INSTRUMENTS -- 3.9%
202,141 Celestica Inc.(1) 1,795,012
73,677 Cognex Corp. 2,052,641
812,000 Yosun Industrial Corp. ORD 787,637
------------
4,635,290
------------
INTERNET & CATALOG RETAIL -- 1.0%
8,510 priceline.com Inc.(1) 1,144,850
------------
INTERNET SOFTWARE & SERVICES -- 11.6%
132,108 AsiaInfo Holdings, Inc.(1) 1,816,485
19,481 Equinix Inc.(1) 1,860,241
6,502 Google Inc. Cl A(1) 3,808,871
75,582 Netease.com ADR(1) 1,719,491
50,703 VeriSign, Inc.(1) 2,030,148
127,998 Websense Inc.(1) 2,251,485
------------
13,486,721
------------
IT SERVICES -- 9.3%
46,621 Accenture Ltd. Cl A 1,903,069
31,769 Affiliated Computer Services Inc. Cl A(1) 1,721,880
31,526 Alliance Data Systems Corp.(1) 1,892,821
27,368 International Business Machines Corp. 3,542,241
74,732 Western Union Co. (The) 1,766,664
------------
10,826,675
------------
Shares Value
SEMICONDUCTORS & SEMICONDUCTOR EQUIPMENT -- 30.3%
78,208 Altera Corp. $1,809,733
146,345 Amkor Technology Inc.(1) 1,560,038
52,598 Analog Devices, Inc. 1,846,716
59,916 ASML Holding N.V. New York Shares 1,795,083
223 Axell Corp. ORD 879,734
82,765 Eagle Test Systems Inc.(1) 954,280
229,457 Intel Corp. 5,318,814
62,084 MEMC Electronic Materials Inc.(1) 4,262,687
56,753 Microchip Technology Inc. 2,090,781
25,200 Micronics Japan Co. Ltd. ORD 929,616
69,745 MKS Instruments, Inc.(1) 1,643,192
78,979 Monolithic Power Systems, Inc.(1) 1,913,661
48,393 Netlogic Microsystems Inc.(1) 1,827,320
118,330 Pericom Semiconductor Corp.(1) 2,217,504
67,758 Semtech Corp.(1) 1,187,120
74,740 Ultratech, Inc.(1) 1,196,587
31,317 Varian Semiconductor Equipment Associates, Inc.(1) 1,190,986
110,348 Volterra Semiconductor Corp.(1) 1,754,533
33,133 Xilinx, Inc. 901,218
------------
35,279,603
------------
SOFTWARE -- 13.2%
57,873 Activision, Inc.(1) 1,953,214
50,654 Amdocs Ltd.(1) 1,636,631
33,700 Hitachi Software Engineering Co., Ltd. ORD 827,719
2,410,000 Kingdee International Software Group Co. Ltd. ORD 639,286
117,035 Microsoft Corp. 3,314,431
115,529 Oracle Corp.(1) 2,638,682
65,540 Sybase, Inc.(1) 2,098,591
102,212 Symantec Corp.(1) 2,221,067
------------
15,329,621
------------
WIRELESS TELECOMMUNICATION SERVICES -- 3.0%
161,998 Syniverse Holdings, Inc.(1) 3,492,677
------------
TOTAL COMMON STOCKS
(Cost $96,873,464) 113,411,399
------------
- ------
13
Technology
Value
Temporary Cash Investments -- 1.6%
Repurchase Agreement, Credit Suisse First Boston, Inc.,
(collateralized by various U.S. Treasury obligations, 6.125%,
11/15/27, valued at $1,939,528), in a joint trading account at
2.20%, dated 5/30/08, due 6/2/08 (Delivery value $1,900,348) (Cost
$1,900,000) $1,900,000
------------
TOTAL INVESTMENT SECURITIES -- 98.9%
(Cost $98,773,464) 115,311,399
------------
OTHER ASSETS AND LIABILITIES -- 1.1% 1,254,607
------------
TOTAL NET ASSETS -- 100.0% $116,566,006
============
Notes to Schedule of Investments
ADR = American Depositary Receipt
ORD = Foreign Ordinary Share
(1) Non-income producing.
See Notes to Financial Statements.
- ------
14
SHAREHOLDER FEE EXAMPLES (UNAUDITED)
Fund shareholders may incur two types of costs: (1) transaction costs,
including sales charges (loads) on purchase payments and redemption/exchange
fees; and (2) ongoing costs, including management fees; distribution and
service (12b-1) fees; and other fund expenses. This example is intended to
help you understand your ongoing costs (in dollars) of investing in your fund
and to compare these costs with the ongoing cost of investing in other mutual
funds.
The example is based on an investment of $1,000 made at the beginning of the
period and held for the entire period from December 1, 2007 to May 31, 2008.
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 Investments fund, or
Institutional Class shares of the American Century Diversified Bond Fund, in
an American Century Investments account (i.e., not a financial intermediary or
retirement plan account), American Century Investments 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
Investments 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 Investments 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 Account Value 12/1/07 - Expense
Value 12/1/07 5/31/08 5/31/08 Ratio*
Life Sciences
ACTUAL
Investor Class $1,000 $930.00 $6.51 1.35%
Institutional
Class $1,000 $932.70 $5.56 1.15%
HYPOTHETICAL
Investor Class $1,000 $1,018.25 $6.81 1.35%
Institutional
Class $1,000 $1,019.25 $5.81 1.15%
Technology
ACTUAL
Investor Class $1,000 $923.00 $7.21 1.50%
Institutional
Class $1,000 $923.90 $6.25 1.30%
HYPOTHETICAL
Investor Class $1,000 $1,017.50 $7.57 1.50%
Institutional
Class $1,000 $1,018.50 $6.56 1.30%
* Expenses are equal to the class's annualized expense ratio listed in the
table above, multiplied by the average account value over the period,
multiplied by 183, the number of days in the most recent fiscal half-year,
divided by 366, to reflect the one-half year period.
- ------
16
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2008 (UNAUDITED)
Life
Sciences Technology
ASSETS
Investment securities, at value (cost of
$80,891,939 and $98,773,464, respectively) $89,837,750 $115,311,399
Cash 25,673 138,937
Foreign currency holdings, at value (cost of $- and
$86, respectively) -- 85
Receivable for investments sold 219,287 1,138,105
Receivable for forward foreign currency exchange
contracts 4,672 --
Dividends and interest receivable 84,058 123,535
----------- -------------
90,171,440 116,712,061
----------- -------------
LIABILITIES
Payable for investments purchased 604,706 --
Accrued management fees 100,754 146,055
----------- -------------
705,460 146,055
----------- -------------
NET ASSETS $89,465,980 $116,566,006
=========== =============
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus) $87,126,524 $304,957,070
Accumulated net investment loss (95,078) (552,891)
Accumulated net realized loss on investment and
foreign currency transactions (6,517,559) (204,374,044)
Net unrealized appreciation on investments and
translation of assets and liabilities in foreign
currencies 8,952,093 16,535,871
----------- -------------
$89,465,980 $116,566,006
=========== =============
INVESTOR CLASS, $0.01 PAR VALUE
Net assets $87,304,246 $111,486,855
Shares outstanding 15,634,630 4,718,392
Net asset value per share $5.58 $23.63
INSTITUTIONAL CLASS, $0.01 PAR VALUE
Net assets $2,161,734 $5,079,151
Shares outstanding 380,851 211,331
Net asset value per share $5.68 $24.03
See Notes to Financial Statements.
- ------
17
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 2008 (UNAUDITED)
Life Sciences Technology
INVESTMENT INCOME (LOSS)
INCOME:
Dividends (net of foreign taxes withheld of
$23,657 and $6,118, respectively) $ 550,135 $ 290,421
Interest 27,863 27,243
------------ -------------
577,998 317,664
------------ -------------
EXPENSES:
Management fees 639,406 868,716
Directors' fees and expenses 1,052 1,285
Other expenses 105 554
------------ -------------
640,563 870,555
------------ -------------
NET INVESTMENT INCOME (LOSS) (62,565) (552,891)
------------ -------------
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
Investment transactions 3,114,782 (8,358,750)
Foreign currency transactions (115,557) 5,641
------------ -------------
2,999,225 (8,353,109)
------------ -------------
CHANGE IN NET UNREALIZED APPRECIATION
(DEPRECIATION) ON:
Investments (10,176,881) (2,046,120)
Translation of assets and liabilities in foreign
currencies (8,185) (3,149)
------------ -------------
(10,185,066) (2,049,269)
------------ -------------
NET REALIZED AND UNREALIZED GAIN (LOSS) (7,185,841) (10,402,378)
------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING
FROM OPERATIONS $(7,248,406) $(10,955,269)
============ =============
See Notes to Financial Statements.
- ------
18
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED MAY 31, 2008 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2007
Life Sciences Technology
Increase (Decrease)
in
Net Assets 2008 2007 2008 2007
OPERATIONS
Net investment income
(loss) $(62,565) $(419,188) $(552,891) $(1,103,646)
Net realized gain
(loss) 2,999,225 7,543,213 (8,353,109) 22,515,205
Change in net
unrealized
appreciation
(depreciation) (10,185,066) 7,704,876 (2,049,269) 1,098,503
------------ ------------ ------------ ------------
Net increase
(decrease) in net
assets resulting from
operations (7,248,406) 14,828,901 (10,955,269) 22,510,062
------------ ------------ ------------ ------------
CAPITAL SHARE
TRANSACTIONS
Net increase
(decrease) in net
assets from capital
share transactions (5,850,642) (27,830,419) (9,177,863) (13,354,560)
NET INCREASE
(DECREASE) IN NET
ASSETS (13,099,048) (13,001,518) (20,133,132) 9,155,502
NET ASSETS
Beginning of period 102,565,028 115,566,546 136,699,138 127,543,636
------------ ------------ ------------ ------------
End of period $89,465,980 $102,565,028 $116,566,006 $136,699,138
============ ============ ============ ============
Accumulated net
investment loss $(95,078) $(32,513) $(552,891) --
============ ============ ============ ============
See Notes to Financial Statements.
- ------
19
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2008 (UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- American Century World Mutual Funds, Inc. (the corporation) is
registered under the Investment Company Act of 1940 (the 1940 Act) as an
open-end management investment company. Life Sciences Fund (Life Sciences) and
Technology Fund (Technology) (collectively, the funds) are two funds in a
series issued by the corporation. The funds are nondiversified under the 1940
Act. The funds' investment objectives are to seek capital growth. Life
Sciences and Technology pursue their objectives by seeking to invest 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 -- The funds are authorized to issue the Investor Class and the
Institutional Class. Prior to December 3, 2007, the funds were authorized to
issue the Advisor Class and Life Sciences was authorized to issue the C Class
(see Note 9). 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 the Board of Directors or its designee, in accordance
with procedures adopted by the Board of Directors, 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 -- For financial reporting purposes, security
transactions are accounted for as of the trade date. Net realized gains and
losses are determined on the identified cost basis, which is also used for
federal income tax purposes. Certain countries impose taxes on realized gains
on the sale of securities registered in their country. The funds record the
foreign tax expense, if any, on an accrual basis. The realized and unrealized
tax provision reduces the net realized gain (loss) on investment transactions
and net unrealized appreciation (depreciation) on investments, respectively.
INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is
recorded as of the ex-dividend date. Interest income is recorded on the
accrual basis and includes accretion of discounts and amortization of
premiums.
EXCHANGE TRADED FUNDS -- The funds may invest in exchange traded funds (ETFs).
ETFs are a type of index fund bought and sold on a securities exchange. An ETF
trades like common stock and represents a fixed portfolio of securities
designed to track the performance and dividend yield of a particular domestic
or foreign market index. A fund may purchase an ETF to temporarily gain
exposure to a portion of the U.S. or a foreign market while awaiting purchase
of underlying securities. The risks of owning an ETF generally reflect the
risks of owning the underlying securities they are designed to track, although
the lack of liquidity on an ETF could result in it being more volatile.
Additionally, ETFs have management fees, which increase their cost.
- ------
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. For
assets and liabilities, other than investments in securities, net realized and
unrealized gains and losses from foreign currency translations arise from
changes in currency exchange rates.
Net realized and unrealized foreign currency exchange gains or losses
occurring during the holding period of investment securities are a component
of realized gain (loss) on investment transactions and unrealized appreciation
(depreciation) on investments, respectively. Certain countries may impose
taxes on the contract amount of purchases and sales of foreign currency
contracts in their currency. The funds record the foreign tax expense, if any,
as a reduction to the net realized gain (loss) on foreign currency
transactions.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The funds may enter into
forward foreign currency exchange contracts to facilitate transactions of
securities denominated in a foreign currency or to hedge the funds' exposure
to foreign currency exchange rate fluctuations. The net U.S. dollar value of
foreign currency underlying all contractual commitments held by the funds and
the resulting unrealized appreciation or depreciation are determined daily
using prevailing exchange rates. The funds bear the risk of an unfavorable
change in the foreign currency exchange rate underlying the forward contract.
Additionally, losses may arise if the counterparties do not perform under the
contract terms.
REPURCHASE AGREEMENTS -- The funds may enter into repurchase agreements with
institutions that American Century Investment Management, Inc. (ACIM) has
determined are creditworthy pursuant to criteria adopted by the Board of
Directors. Each repurchase agreement is recorded at cost. Each fund requires
that the collateral, represented by securities, received in a repurchase
transaction be transferred to the custodian in a manner sufficient to enable
each fund to obtain those securities in the event of a default under the
repurchase agreement. ACIM monitors, on a daily basis, the securities
transferred to ensure the value, including accrued interest, of the securities
under each repurchase agreement is equal to or greater than amounts owed to
each fund under each repurchase agreement.
JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, each fund, along with other registered
investment companies having management agreements with ACIM or American
Century Global Investment Management, Inc. (ACGIM), may transfer uninvested
cash balances into a joint trading account. These balances are invested in one
or more repurchase agreements that are collateralized by U.S. Treasury or
Agency obligations.
INCOME TAX STATUS -- It is each fund's policy to distribute substantially all
net investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under provisions of the Internal
Revenue Code. The funds are no longer subject to examination by tax
authorities for years prior to 2004. At this time, management has not
identified any uncertain tax positions for which it is reasonably possible
that the total amounts of unrecognized tax benefits will significantly change
in the next twelve months. Accordingly, no provision has been made for federal
or state income taxes. Interest and penalties associated with any federal or
state income tax obligations, if any, are recorded as interest expense.
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 ACIM for Technology and ACGIM for Life Sciences (the investment advisor,
respectively), under which the investment advisor provides the funds with
investment advisory and management services in exchange for a single, unified
management fee (the fee) per class. The Agreement provides that all expenses
of the funds, except brokerage commissions, taxes, interest, fees and expenses
of those directors who are not considered "interested persons" as defined in
the 1940 Act (including counsel fees) and extraordinary expenses, will be paid
by the investment advisor. The fee is computed and accrued daily based on the
daily net assets of each specific class of shares of each fund and paid
monthly in arrears. For funds with a stepped fee schedule, the rate of the fee
is determined by applying a fee rate calculation formula. This formula takes
into account all of the investment advisor's assets under management in each
fund's investment strategy (strategy assets) to calculate the appropriate fee
rate for each fund. The strategy assets include each fund's assets and the
assets of other clients of the investment advisor that are not in the American
Century Investments 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. The annual management fee
schedule for Technology ranges from 1.20% to 1.50% for Investor Class. The
Institutional Class is 0.20% less at each point within the range. Prior to
December 3, 2007, the Advisor Class was 0.25% less at each point within the
range for the funds and the C Class was the same as Investor Class for Life
Sciences.
The effective annual management fee for each class of each fund for the six
months ended May 31, 2008, was as follows:
Investor Institutional
Life Sciences 1.35% 1.15%
Technology 1.50% 1.30%
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.
RELATED PARTIES -- Certain officers and directors of the corporation are also
officers and/or directors, and, as a group, controlling stockholders of
American Century Companies, Inc. (ACC), the parent of the corporation's
investment advisor, ACIM or ACGIM, the distributor of the corporation, ACIS,
and the corporation's transfer agent, American Century Services, LLC.
The funds are eligible to invest in a money market fund for temporary
purposes, which is 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. Prior to December 12, 2007, the funds had a bank line
of credit 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, 2008, were as follows:
Life Sciences Technology
Purchases $29,269,802 $91,737,404
Proceeds from sales $34,851,384 $100,037,152
- ------
22
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the funds were as follows:
Six months Year ended
ended May 31, 2008 November 30, 2007
Shares Amount Shares Amount
Life Sciences
INVESTOR
CLASS/SHARES
AUTHORIZED 110,000,000 100,000,000
============ ============
Sold 1,078,993 $6,217,643 1,584,191 $8,866,913
Issued in connection
with
reclassification
(Note 9) 23,433 136,104 -- --
Redeemed (2,165,273) (12,082,191) (6,459,895) (35,850,490)
------------ ------------ ------------ ------------
(1,062,847) (5,728,444) (4,875,704) (26,983,577)
------------ ------------ ------------ ------------
INSTITUTIONAL
CLASS/SHARES
AUTHORIZED 5,000,000 5,000,000
============ ============
Sold 37,635 219,589 107,059 588,684
Redeemed (35,943) (205,683) (246,509) (1,377,285)
------------ ------------ ------------ ------------
1,692 13,906 (139,450) (788,601)
------------ ------------ ------------ ------------
ADVISOR CLASS/SHARES
AUTHORIZED N/A 5,000,000
============ ============
Sold -- -- 5,964 32,965
Redeemed in
connection with
reclassification
(Note 9) (15,724) (92,570) -- --
Redeemed -- -- (17,468) (95,202)
------------ ------------ ------------ ------------
(15,724) (92,570) (11,504) (62,237)
------------ ------------ ------------ ------------
C CLASS/SHARES
AUTHORIZED N/A 5,000,000
============ ============
Sold -- -- 750 3,996
Redeemed in
connection with
reclassification
(Note 9) (7,709) (43,534) -- --
------------ ------------ ------------ ------------
(7,709) (43,534) 750 3,996
------------ ------------ ------------ ------------
Net increase
(decrease) (1,084,588) $(5,850,642) (5,025,908) $(27,830,419)
============ ============ ============ =============
Technology
INVESTOR
CLASS/SHARES
AUTHORIZED 50,000,000 100,000,000
============ ============
Sold 608,017 $13,758,202 1,561,495 $38,575,501
Issued in connection
with
reclassification
(Note 9) 14,547 364,793 -- --
Redeemed (1,015,826) (22,968,360) (2,249,110) (51,673,565)
------------ ------------ ------------ ------------
(393,262) (8,845,365) (687,615) (13,098,064)
------------ ------------ ------------ ------------
INSTITUTIONAL
CLASS/SHARES
AUTHORIZED 5,000,000 5,000,000
============ ============
Sold 36,107 815,251 80,907 2,000,214
Redeemed (35,464) (782,956) (106,292) (2,480,039)
------------ ------------ ------------ ------------
643 32,295 (25,385) (479,825)
------------ ------------ ------------ ------------
ADVISOR CLASS/SHARES
AUTHORIZED N/A 10,000,000
============ ============
Sold -- -- 15,122 393,853
Redeemed in
connection with
reclassification
(Note 9) (14,547) (364,793) -- --
Redeemed -- -- (7,302) (170,524)
------------ ------------ ------------ ------------
(14,547) (364,793) 7,820 223,329
------------ ------------ ------------ ------------
Net increase
(decrease) (407,166) $(9,177,863) (705,180) $(13,354,560)
============ ============ ============ =============
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23
5. FAIR VALUE MEASUREMENTS
The funds' securities valuation process is based on several considerations and
may use multiple inputs to determine the fair value of the positions held by
the funds. In conformity with accounting principles generally accepted in the
United States of America, the inputs used to determine a valuation are
classified into three broad levels as follows:
* Level 1 valuation inputs consist of actual quoted prices based on an active
market;
* Level 2 valuation inputs consist of significant direct or indirect
observable market data; or
* Level 3 valuation inputs consist of significant unobservable inputs such as
the fund's own assumptions.
The level classification is based on the lowest level input that is
significant to the fair valuation measurement. The valuation inputs are not an
indication of the risks associated with investing in these securities or other
financial instruments.
The following is a summary of the valuation inputs used to determine the fair
value of the funds' securities and other financial instruments as of May 31,
2008:
Unrealized Gain
Value of (Loss) on Other
Investment Financial
Fund/Valuation Inputs Securities Instruments*
LIFE SCIENCES
Level 1 -- Quoted Prices $86,698,727 --
Level 2 -- Other Significant
Observable Inputs 3,139,023 $4,672
Level 3 -- Significant Unobservable
Inputs -- --
------------- -----------
$89,837,750 $4,672
============= ===========
TECHNOLOGY
Level 1 -- Quoted Prices $103,720,915 --
Level 2 -- Other Significant
Observable Inputs 11,590,484 --
Level 3 -- Significant Unobservable
Inputs -- --
------------- -----------
$115,311,399 --
============= ===========
* Includes forward foreign currency exchange contracts.
6. BANK LINE OF CREDIT
Effective December 12, 2007, the funds, along with certain other funds managed
by ACIM or ACGIM, have a $500,000,000 unsecured bank line of credit agreement
with Bank of America, N.A. Prior to December 12, 2007, the funds, along with
certain other funds managed by ACIM or ACGIM, had 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, which is subject to annual renewal, 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, 2008.
7. RISK FACTORS
The funds concentrate their investments in a narrow segment of the total
market. Because of this, the funds may be subject to greater risks and market
fluctuations than a portfolio representing a broader range of industries. 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. Investing in emerging
markets may accentuate these risks.
- ------
24
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, 2008, the components of investments for federal income tax
purposes were as follows:
Life Sciences Technology
Federal tax cost of investments $80,907,736 $98,844,874
============ ============
Gross tax appreciation of investments $13,012,753 $18,401,853
Gross tax depreciation of investments (4,082,739) (1,935,328)
------------ ------------
Net tax appreciation (depreciation) of investments $8,930,014 $16,466,525
============ ============
The difference between book-basis and tax-basis cost and unrealized
appreciation (depreciation) is attributable primarily to the tax deferral of
losses on wash sales.
As of November 30, 2007, Life Sciences and Technology had accumulated capital
losses of $(9,361,643) and $(195,624,136), 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 expire as
follows:
2009 2010
Life Sciences -- $(9,361,643)
Technology $(142,889,307) $(52,734,829)
As of November 30, 2007, Life Sciences had capital and currency loss deferrals
of $(134,074) and $(18,958), respectively, which represent net capital and
foreign currency losses incurred in the one-month period ended November 30,
2007. Life Sciences has elected to treat such losses as having been incurred
in the following fiscal year for federal income tax purposes.
9. CORPORATE EVENT
On July 27, 2007 the Advisor Class and C Class shareholders of Life Sciences
approved a reclassification of Advisor Class and C Class shares into Investor
Class shares. On July 27, 2007, the Advisor Class shareholders of Technology
approved a reclassification of Advisor Class shares into Investor Class
shares. Each change was approved by the Board of Directors on November 29,
2006 and March 7, 2007. The reclassification was effective December 3, 2007.
10. RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board (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. The adoption of FAS 157 does not materially impact the
determination of fair value.
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161, "Disclosures about Derivative Instruments and Hedging Activities -- an
amendment of FASB Statement No. 133" (FAS 161). FAS 161 is effective for
fiscal years beginning after November 15, 2008. FAS 161 amends and expands
disclosures about derivative instruments and hedging activities. FAS 161
requires qualitative disclosures about the objectives and strategies of
derivative instruments, quantitative disclosures about the fair value amounts
of and gains and losses on derivative instruments, and disclosures of
credit-risk-related contingent features in hedging activities. Management is
currently evaluating the impact that adopting FAS 161 will have on the
financial statement disclosures.
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25
FINANCIAL HIGHLIGHTS
Life Sciences
Investor Class
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
2008(1) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset
Value,
Beginning of
Period $6.00 $5.22 $5.32 $4.69 $4.36 $3.54
---------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net
Investment
Income
(Loss)(2) --(3) (0.02) (0.04) (0.04) (0.04) (0.03)
Net
Realized
and
Unrealized
Gain
(Loss) (0.42) 0.80 (0.06) 0.67 0.37 0.85
---------- -------- -------- -------- -------- --------
Total From
Investment
Operations (0.42) 0.78 (0.10) 0.63 0.33 0.82
---------- -------- -------- -------- -------- --------
Net Asset
Value, End of
Period $5.58 $6.00 $5.22 $5.32 $4.69 $4.36
========== ======== ======== ======== ======== ========
TOTAL RETURN(4) (7.00)% 14.94% (1.88)% 13.43% 7.57% 23.16%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses to
Average Net
Assets 1.35%(5) 1.35% 1.46% 1.50% 1.50% 1.50%
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets (0.13)%(5) (0.39)% (0.67)% (0.81)% (0.85)% (0.89)%
Portfolio
Turnover Rate 32% 73% 151% 162% 215% 138%
Net Assets,
End of Period
(in thousands) $87,304 $100,120 $112,648 $155,835 $155,530 $160,187
(1) Six months ended May 31, 2008 (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.
- ------
26
Life Sciences
Institutional Class
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
2008(1) 2007 2006 2005 2004 2003
PER-SHARE DATA
Net Asset Value,
Beginning of Period $6.09 $5.29 $5.38 $4.74 $4.40 $3.56
-------- ------- ------- ------- ------- -------
Income From
Investment Operations
Net Investment
Income (Loss)(2) --(3) (0.01) (0.02) (0.03) (0.03) (0.03)
Net Realized
and Unrealized
Gain (Loss) (0.41) 0.81 (0.07) 0.67 0.37 0.87
-------- ------- ------- ------- ------- -------
Total From
Investment
Operations (0.41) 0.80 (0.09) 0.64 0.34 0.84
-------- ------- ------- ------- ------- -------
Net Asset Value, End
of Period $5.68 $6.09 $5.29 $5.38 $4.74 $4.40
======== ======= ======= ======= ======= =======
TOTAL RETURN(4) (6.73)% 15.12% (1.67)% 13.50% 7.73% 23.60%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to Average
Net Assets 1.15%(5) 1.15% 1.26% 1.30% 1.30% 1.30%
Ratio of Net
Investment Income
(Loss) to Average Net
Assets 0.07%(5) (0.19)% (0.47)% (0.61)% (0.65)% (0.69)%
Portfolio Turnover
Rate 32% 73% 151% 162% 215% 138%
Net Assets, End of
Period (in thousands) $2,162 $2,309 $2,744 $3,953 $3,510 $4,019
(1) Six months ended May 31, 2008 (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.
- ------
27
Technology
Investor Class
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
2008(1) 2007 2006 2005 2004 2003(2)
PER-SHARE DATA
Net Asset
Value,
Beginning of
Period $25.60 $21.10 $19.61 $18.20 $19.58 $14.40
---------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net
Investment
Income
(Loss)(3) (0.11) (0.21) (0.24) (0.19) (0.24) (0.19)
Net
Realized
and
Unrealized
Gain
(Loss) (1.86) 4.71 1.73 1.60 (1.14) 5.37
---------- -------- -------- -------- -------- --------
Total From
Investment
Operations (1.97) 4.50 1.49 1.41 (1.38) 5.18
---------- -------- -------- -------- -------- --------
Net Asset
Value, End of
Period $23.63 $25.60 $21.10 $19.61 $18.20 $19.58
========== ======== ======== ======== ======== ========
TOTAL RETURN(4) (7.70)% 21.33% 7.60% 7.75% (7.05)% 35.97%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses to
Average Net
Assets 1.50%(5) 1.51% 1.51% 1.51% 1.50% 1.50%
Ratio of Net
Investment
Income (Loss)
to Average Net
Assets (0.95)%(5) (0.91)% (1.15)% (1.06)% (1.30)% (1.25)%
Portfolio
Turnover Rate 80% 260% 385% 388% 279% 218%
Net Assets,
End of Period
(in thousands) $111,487 $130,854 $122,353 $137,710 $166,986 $202,884
(1) Six months ended May 31, 2008 (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.
- ------
28
Technology
Institutional Class
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
2008(1) 2007 2006 2005 2004 2003(2)
PER-SHARE DATA
Net Asset Value,
Beginning of Period $26.01 $21.40 $19.84 $18.38 $19.74 $14.50
---------- ------- ------- ------- ------- -------
Income From
Investment
Operations
Net Investment
Income
(Loss)(3) (0.09) (0.17) (0.20) (0.15) (0.20) (0.16)
Net Realized
and Unrealized
Gain (Loss) (1.89) 4.78 1.76 1.61 (1.16) 5.40
---------- ------- ------- ------- ------- -------
Total From
Investment
Operations (1.98) 4.61 1.56 1.46 (1.36) 5.24
---------- ------- ------- ------- ------- -------
Net Asset Value,
End of Period $24.03 $26.01 $21.40 $19.84 $18.38 $19.74
========== ======= ======= ======= ======= =======
TOTAL RETURN(4) (7.61)% 21.54% 7.86% 7.94% (6.89)% 36.14%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to Average
Net Assets 1.30%(5) 1.31% 1.31% 1.31% 1.30% 1.30%
Ratio of Net
Investment Income
(Loss) to Average
Net Assets (0.75)%(5) (0.71)% (0.95)% (0.86)% (1.10)% (1.05)%
Portfolio Turnover
Rate 80% 260% 385% 388% 279% 218%
Net Assets, End of
Period (in
thousands) $5,079 $5,481 $5,051 $6,099 $7,805 $10,191
(1) Six months ended May 31, 2008 (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
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 Investments' 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.
- ------
30
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 EM (EMERGING MARKETS) INDEX represents the gross performance of
stocks in global emerging market countries.
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 publicly traded U.S. companies, based on total market capitalization.
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 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 S&P 500 INDEX is a market value-weighted index of the stocks of 500
publicly traded U.S. companies chosen for market size, liquidity, and industry
group representation that are considered to be leading firms in dominant
industries. Each stock's weight in the index is proportionate to its market
value. Created by Standard & Poor's, it is considered to be a broad measure of
U.S. stock market performance.
The S&P COMPOSITE 1500 INDEX combines the S&P 500, MidCap 400 and SmallCap 600
indices. The S&P COMPOSITE 1500 HEALTH CARE INDEX represents those S&P
Composite 1500 companies in two main industry groups: Health care equipment
and supplies companies or companies that provide health care related services,
and companies that provide research, development, production and marketing of
pharmaceuticals and biotechnology products. The S&P COMPOSITE 1500 TECHNOLOGY
INDEX represents those S&P Composite 1500 companies in two main industry
groups: Technology software and services companies, and technology hardware
and equipment companies.
- ------
31
NOTES
- ------
32
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CONTACT US
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INVESTMENT ADVISOR:
American Century Investment Management, Inc.
Kansas City, Missouri
American Century Global Investment Management, Inc.
New York, New York
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American Century Investment Services, Inc., Distributor
©2008 American Century Proprietary Holdings, Inc. All rights reserved.
0807
CL-SAN-60824S
[front cover]
SEMIANNUAL REPORT
MAY 31, 2008
[american century investments logo and text logo ®]
AMERICAN CENTURY INVESTMENTS
NT INTERNATIONAL GROWTH FUND
NT EMERGING MARKETS FUND
PRESIDENT'S LETTER
[photo of Jonathan Thomas]
JONATHAN THOMAS
Dear Investor,
At American Century Investments®, we are committed to helping you reach your
financial goals. Your success is the ultimate measure of our performance.
That's why we focus on achieving superior investment results and building
long-term relationships with investors like you.
Part of that relationship is to clearly communicate investment results and
what influenced them. To help you monitor your investment with us, we take
pride in 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, 2008. We also recommend americancentury.com, where we provide company
news, quarterly portfolio commentaries, investment views, and other useful
information.
As noted on the website, 2008 marks the 50th anniversary of American Century
Investments. Since 1958, we've worked to make wise decisions with your
interests as our guide. Fifty years also means that we've met the challenges
of previous economic downturns. As we've crossed those hurdles and earned your
trust, our assets under management have grown to nearly $100 billion, putting
us in the top 5% of our industry. This growth has given us the resources to
offer a wide array of financial products and services, including a
well-diversified line-up of portfolios that provide you with many choices in
these uncertain times.
Though our offerings are diverse, they share several key qualities, including
our disciplined investment approach and active, team-based management. Strict
adherence to our processes and long-term strategies allows us to stay focused
during volatile periods. Investors in our portfolios also benefit from the sum
of our investment teams' expertise as they share research and information.
We'll continue to work hard to earn your trust. Thank you for your continued
support.
Sincerely,
/s/ Jonathan Thomas
Jonathan S. Thomas
President and Chief Executive Officer
American Century Investments
TABLE OF CONTENTS
Market Perspective. . . . . . . . . . . . . . . . . . . . . . . . . . 2
International Equity Total Returns . . . . . . . . . . . . . . . . . 2
NT INTERNATIONAL GROWTH
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 4
Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Investments by Country . . . . . . . . . . . . . . . . . . . . . . . 5
Types of Investments in Portfolio. . . . . . . . . . . . . . . . . . 5
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 6
NT EMERGING MARKETS
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . 11
Top Ten Holdings . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Investments by Country . . . . . . . . . . . . . . . . . . . . . . . 12
Types of Investments in Portfolio. . . . . . . . . . . . . . . . . . 12
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . 13
Shareholder Fee Examples. . . . . . . . . . . . . . . . . . . . . . . 16
FINANCIAL STATEMENTS
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . 18
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . 19
Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . 20
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . 21
Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . 26
OTHER INFORMATION
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . 28
Index Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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
Investments or any other person in the American Century Investments
organization. Any such opinions are subject to change at any time based upon
market or other conditions and American Century Investments 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 Investments funds are based on numerous factors, may not be relied
upon as an indication of trading intent on behalf of any American Century
Investments 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 Investments by third party vendors. To the best of American
Century Investments' 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 RETREAT
Stock performance in both developed and emerging international stock markets
turned negative for the six months ended May 31, 2008. Solid results in April
and May were not enough to offset the sharp downturn that occurred from
December 2007 through March 2008. Global credit market woes, rising
inflationary pressures and slowing economic growth rates combined to drag down
stocks. Soaring prices for oil and other commodities added to investors'
malaise, while a weak U.S. dollar complicated outlooks for companies that rely
on exports to the United States.
Meanwhile, strong performance from Latin America helped emerging markets
outperform the developed markets during the six months.
CREDIT CRUNCH PROMPTS CENTRAL BANK ACTION
Europe couldn't escape the fallout from the U.S. credit crisis; its large
banks were investors and players in the U.S. subprime credit market. But
coordinated efforts between the European Central Bank (ECB) and the U.S.
Federal Reserve to inject liquidity and ease conditions in short-term money
markets limited the risk of a severe global credit crisis.
RATES DROP IN BRITAIN
In Europe, the euro continued to reach record highs versus the U.S. dollar.
Despite increasingly sluggish economic growth throughout Europe, rising
inflation caused the ECB to leave its key interest rate unchanged during the
six-month period. On the other hand, the Bank of England responded to slower
economic growth by cutting its key rate by 75 basis points.
Japan's economic growth remained positive, but the government scaled back its
fiscal-year growth forecast, citing rising raw materials prices and turmoil in
the global financial markets as obstacles to economic expansion. Japan's
benchmark interest rate remained steady at 0.5% -- the lowest among the
world's major economies.
VOLATILITY OFFERS OPPORTUNITY
The weak U.S. economy, with its ongoing credit problems, remains an important
factor in the outlook for international stocks. Nevertheless, we believe that
turbulent times always present the potential for long-term investment gains,
and there is no shortage of companies with accelerating earnings that may
provide attractive investment opportunities in the months ahead.
International Equity Total Returns
For the six months ended May 31, 2008* (in U.S. dollars)
MSCI EM Index -1.64%
MSCI EAFE Growth Index -3.51%
MSCI Europe Index -5.74%
MSCI EAFE Index -5.21%
MSCI World Free Index -4.07%
MSCI EAFE Value Index -6.94%
MSCI Japan Index -2.64%
*Total returns for periods less than one year are not annualized.
- ------
2
PERFORMANCE
NT International Growth
Total Returns as of May 31, 2008
Average Annual
Returns
Since Inception
6 months(1) 1 year Inception Date
INSTITUTIONAL CLASS -2.92% 5.36% 10.98% 5/12/06
MSCI EAFE INDEX -5.21% -2.53% 7.81% --
MSCI EAFE GROWTH INDEX -3.51% 2.83% 9.68% --
(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
One-Year Returns Over Life of Class
Periods ended May 31
2006* 2007 2008
Institutional Class -6.60% 25.87% 5.36%
MSCI EAFE Index -5.59% 26.84% -2.53%
MSCI EAFE Growth Index -6.04% 25.13% 2.83%
*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 Raj Gandhi
PERFORMANCE SUMMARY
NT International Growth returned -2.92%* for the six months ended May 31,
2008. The portfolio's benchmark, the MSCI EAFE Index, returned -5.21%.
The combination of rising inflationary pressures (triggered by soaring oil and
food prices), ongoing global credit-market concerns and slowing economic
growth rates led to a sharp downturn among most international stock markets.
Overall, our favorable stock selection and effective allocation decisions
accounted for the portfolio's outperformance relative to the benchmark.
CANADA LED ALL COUNTRIES
From a country perspective, Canada (which was not represented in the
benchmark), along with Germany and Italy made the greatest positive
contributions to the portfolio's relative performance. Within each country,
strong stock selection led to solid results.
On the other hand, our positions in Japan, India and France detracted from
relative results. Stock selection was the primary culprit in Japan and France.
Our small position in India posted a negative return for the reporting period,
and the benchmark had no exposure to India.
MATERIALS, HEALTH CARE WERE TOP SECTORS
The portfolio's materials sector made the greatest positive contribution to
relative performance, due to our overweight to the sector and good stock
selection. In particular, our stock picks in the chemicals industry -- along
with an overweight -- generated strong performance. Our position in Germany's
K+S AG, a producer of potash for use in fertilizers, represented the fund's
top contributor for the reporting period. The company's stock benefited from
the extended agriculture boom, greater-than-expected earnings and soaring
demand for potash.
Our health care stocks also were strong contributors to relative performance.
Specifically, overweights to Denmark's Novo Nordisk AS, a pharmaceutical
company specializing in insulin treatments for diabetes, and Australia's CSL
Limited, a biotechnology company specializing in vaccines, contributed
favorably.
Stock selection and an overweight also led to good relative performance in the
energy sector. In particular, Italy's Saipem, an oil field services company,
was the energy sector's top contributor, advancing on rising offshore revenues
stemming from increased activity in the Middle East.
Top Ten Holdings as of May 31, 2008
% of net % of net
assets as of assets as of
5/31/08 11/30/07
Tesco plc 1.9% 1.3%
BG Group plc 1.8% 1.5%
ENI SpA 1.8% 0.4%
Total SA 1.8% 1.3%
Rio Tinto Ltd. 1.7% 0.8%
CEZ AS 1.7% 1.0%
Nintendo Co., Ltd. 1.6% 1.7%
Saipem SpA 1.6% 1.6%
Julius Baer Holding AG 1.5% 1.7%
Scottish and Southern Energy plc 1.5% 1.1%
*Total returns for periods less than one year are not annualized.
- ------
4
NT International Growth
CONSUMER SECTORS LAGGED
The consumer discretionary and consumer staples sectors represented the
largest detractors from the portfolio's relative performance despite
underweight positions, primarily due to unfavorable stock selection. In the
discretionary sector, our holdings among specialty retailers and textiles,
apparel and luxury goods companies generated disappointing performance. In
particular, our position in Burberry Group, the British high-end clothing
company, and Hong Kong's Esprit Holdings, a fashion retailer, were among the
fund's largest detractors. In the staples sector, poor performance from food
and staples retailers accounted for the bulk of the decline.
OUTLOOK
NT International Growth invests in companies located throughout the world
exhibiting accelerating earnings and revenue growth. Our analysis indicates
the long-term outlook for large-cap growth companies remains positive. The
portfolio has broad exposure to high-quality growth companies in numerous
markets, and although economic uncertainty and market volatility characterize
the current climate, we believe these companies will deliver solid long-term
returns.
Investments by Country as of May 31, 2008
% of net % of net
assets as of assets as of
5/31/08 11/30/07
United Kingdom 19.3% 13.6%
Japan 12.5% 13.3%
Germany 8.9% 10.5%
Switzerland 8.2% 10.3%
France 7.6% 8.7%
Australia 5.2% 5.8%
Italy 3.9% 3.3%
Spain 3.5% 3.4%
Canada 3.1% 3.6%
Hong Kong 3.1% 1.5%
Denmark 2.6% 2.2%
Belgium 2.3% 2.0%
Norway 2.1% 2.0%
Greece 2.1% 1.6%
Other Countries 12.7% 17.6%
Cash and Equivalents(1) 2.9% 0.6%
(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
5/31/08 11/30/07
Foreign Common Stocks & Rights 97.1% 99.0%
Foreign Preferred Stocks -- 0.4%
TOTAL EQUITY EXPOSURE 97.1% 99.4%
Temporary Cash Investments 2.2% 1.2%
Other Assets and Liabilities(2) 0.7% (0.6)%
(2) Includes securities lending collateral and other assets and liabilities.
- ------
5
SCHEDULE OF INVESTMENTS
NT International Growth
MAY 31, 2008 (UNAUDITED)
Shares Value
Common Stocks & Rights -- 97.1%
AUSTRALIA -- 5.2%
20,931 BHP Billiton Ltd. $ 870,801
125,234 Boart Longyear Group 247,932
23,200 CSL Ltd. 883,102
48,600 Oxiana Ltd.(1) 143,626
9,723 QBE Insurance Group Ltd. 227,269
9,546 Rio Tinto Ltd.(1) 1,259,911
8,400 Westpac Banking Corp. 186,785
-----------
3,819,426
-----------
BELGIUM -- 2.3%
6,055 KBC Groupe 747,081
37,230 SES SA Fiduciary Depositary Receipt 984,630
-----------
1,731,711
-----------
BRAZIL -- 1.7%
37,000 Bolsa de Mercadorias e Futuros -- BM&F SA 423,714
10,200 Net Servicos de Comunicacao SA(2) 145,696
34,400 Redecard SA 723,843
-----------
1,293,253
-----------
CANADA -- 3.1%
2,300 Agnico-Eagle Mines Ltd. 162,587
4,600 EnCana Corp. 415,702
2,200 Potash Corp. of Saskatchewan 436,988
3,700 Research In Motion Ltd.(2) 513,819
10,800 Suncor Energy Inc. 737,177
-----------
2,266,273
-----------
CZECH REPUBLIC -- 1.7%
14,900 CEZ AS 1,231,099
-----------
DENMARK -- 2.6%
15,900 Novo Nordisk AS B Shares 1,034,535
6,200 Vestas Wind Systems AS(2) 853,353
-----------
1,887,888
-----------
FINLAND -- 0.6%
16,000 Nokia Oyj 461,234
-----------
FRANCE -- 7.6%
3,700 ALSTOM Co. 932,659
14,165 AXA SA 500,449
6,000 Carrefour SA 420,692
5,982 Groupe Danone 523,660
1,400 Lafarge SA 253,190
1,600 Schneider Electric SA 200,972
Shares Value
1,778 Societe Generale(1) $ 184,771
744 Societe Generale -- new shares(2) 76,160
5,000 Suez SA 372,590
14,924 Total SA 1,302,256
3,980 Ubisoft Entertainment SA(2) 385,742
6,200 Vinci SA(1) 467,124
-----------
5,620,265
-----------
GERMANY -- 8.9%
7,000 adidas AG 493,530
1,100 Allianz SE(1) 208,244
2,600 BASF SE 389,799
5,640 Deutsche Boerse AG(1) 809,240
9,270 Fresenius Medical Care AG & Co. KGaA(1) 516,572
12,843 GEA Group AG 500,096
3,700 Hochtief AG 428,253
1,983 K+S AG 929,620
7,100 Linde AG(1) 1,066,883
4,744 Q-Cells AG(1)(2) 576,766
3,777 SGL Carbon AG(2) 280,867
3,200 Siemens AG 363,013
-----------
6,562,883
-----------
GREECE -- 2.1%
11,000 Coca-Cola Hellenic Bottling Co. SA 500,033
18,884 National Bank of Greece SA 1,072,291
-----------
1,572,324
-----------
HONG KONG -- 3.1%
29,500 China Mobile Ltd. 433,604
18,300 Esprit Holdings Ltd. 213,872
25,600 Hang Seng Bank Ltd. 518,656
116,000 Li & Fung Ltd. 438,518
37,471 Melco PBL Entertainment (Macau) Ltd. ADR(2) 445,530
13,000 Sun Hung Kai Properties Ltd. 208,905
-----------
2,259,085
-----------
INDIA -- 1.3%
2,400 Bharat Heavy Electricals Ltd. 94,671
15,900 Bharti Airtel Ltd.(2) 330,351
8,500 Housing Development Finance Corp. Ltd. 518,720
-----------
943,742
-----------
IRELAND -- 0.1%
8,093 Anglo Irish Bank Corp. plc 105,758
-----------
- ------
6
NT International Growth
Shares Value
ITALY -- 3.9%
32,011 ENI SpA $ 1,303,751
15,000 Finmeccanica SpA 454,576
25,262 Saipem SpA(1) 1,160,139
-----------
2,918,466
-----------
JAPAN -- 12.5%
9,700 Canon, Inc. 523,404
8,800 Daikin Industries Ltd. 453,978
3,500 Fanuc Ltd. 380,037
2,100 FAST RETAILING CO. LTD. 181,622
29,000 iShares MSCI Japan Index Fund 393,530
13,000 Japan Steel Works Ltd. (The) 269,986
14,500 Konami Corp. 529,398
30,500 Kuraray Co. Ltd. 384,974
51,000 Marubeni Corp. 454,623
23,500 Mitsubishi Corp. 811,190
19,000 Mitsubishi Electric Corp. 214,955
41,000 Mitsui O.S.K. Lines, Ltd. 618,596
2,200 Nintendo Co., Ltd. 1,210,052
14,000 Shiseido Co., Ltd. 343,196
6,600 Sony Corp.(1) 330,469
224 Sony Financial Holdings Inc. 915,544
15,000 Sumitomo Realty & Development Co. Ltd. 384,068
7,400 Terumo Corp. 368,421
10,000 Toyota Motor Corp. 509,246
-----------
9,277,289
-----------
LUXEMBOURG -- 0.8%
5,400 Millicom International Cellular SA(1) 625,644
-----------
MULTI-NATIONAL -- 1.2%
11,100 iShares MSCI EAFE Index Fund 852,480
-----------
NETHERLANDS -- 0.9%
15,500 ASML Holding N.V. 463,699
13,000 Koninklijke KPN N.V. 236,622
-----------
700,321
-----------
NORWAY -- 2.1%
17,690 Aker Solutions ASA 499,414
34,800 Norsk Hydro ASA(1) 552,630
6,200 Seadrill Ltd. 202,384
4,400 Yara International ASA 333,837
-----------
1,588,265
-----------
Shares Value
PEOPLE'S REPUBLIC OF CHINA -- 1.2%
88,000 China Communications Construction Co. Ltd. H
Shares $ 193,512
162,500 China Merchants Bank Co., Ltd. H Shares 582,027
2,768 Ctrip.com International, Ltd. ADR 161,596
-----------
937,135
-----------
RUSSIAN FEDERATION -- 1.0%
2,600 OAO LUKOIL 290,940
117,200 Sberbank 424,264
-----------
715,204
-----------
SINGAPORE -- 0.7%
35,000 Keppel Corp. Ltd. 311,557
14,000 United Overseas Bank Ltd. 207,499
-----------
519,056
-----------
SOUTH KOREA -- 0.4%
400 Samsung Electronics 288,257
-----------
SPAIN -- 3.5%
45,900 Banco Santander SA 956,135
31,230 Cintra Concesiones de Infraestructuras de
Transporte SA(1) 480,501
10,300 Gamesa Corporacion Tecnologica SA 533,109
21,700 Telefonica SA 622,848
-----------
2,592,593
-----------
SWEDEN -- 0.7%
4,000 Oriflame Cosmetics SA SDR 284,066
87,900 Telefonaktiebolaget LM Ericsson Cl B 239,144
-----------
523,210
-----------
SWITZERLAND -- 8.2%
22,615 ABB Ltd.(2) 734,456
8,331 Compagnie Financiere Richemont SA Cl A 518,989
14,000 Julius Baer Holding AG 1,145,405
2,200 Nestle SA 1,081,431
12,465 Novartis AG 654,574
2,866 Roche Holding AG 493,977
200 SGS SA 300,403
3,607 Syngenta AG 1,098,429
245 UBS AG(2) 5,898
245 UBS AG Rights(2) 327
-----------
6,033,889
-----------
- ------
7
NT International Growth
Shares Value
TAIWAN (REPUBLIC OF CHINA) -- 0.4%
147,000 AU Optronics Corp. $ 282,279
-----------
UNITED KINGDOM -- 19.3%
9,000 Admiral Group plc 155,445
14,900 Aggreko plc 178,403
35,500 AMEC plc 586,777
10,299 Anglo American plc 697,450
25,878 Aquarius Platinum Ltd. 423,892
54,031 BG Group plc 1,354,864
23,786 Burberry Group plc 235,565
34,900 Cadbury plc 465,912
42,201 Capita Group plc 565,469
71,000 Compass Group plc 527,362
30,972 GlaxoSmithKline plc 683,090
61,208 HSBC Holdings plc(1) 1,033,004
20,600 ICAP plc 251,343
83,200 International Power plc 732,510
43,514 Man Group plc 535,229
18,108 Reckitt Benckiser Group plc 1,066,670
29,098 Reed Elsevier plc 366,555
38,600 Scottish and Southern Energy plc 1,125,418
15,400 Standard Chartered plc 572,233
173,982 Tesco plc 1,427,014
77,800 TUI Travel plc 376,385
281,900 Vodafone Group plc 905,938
-----------
14,266,528
-----------
TOTAL COMMON STOCKS & RIGHTS
(Cost $59,524,061) 71,875,557
-----------
Temporary Cash Investments -- 2.2%
Repurchase Agreement, Deutsche Bank Securities, Inc.,
(collateralized by various U.S. Treasury obligations, 2.00%,
1/15/16, valued at $1,633,060), in a joint trading account at
2.20%, dated 5/30/08, due 6/2/08 (Delivery value $1,600,293)
(Cost $1,600,000) 1,600,000
-----------
Value
Temporary Cash Investments -- Securities Lending Collateral(3) -- 6.1%
Repurchase Agreement, Barclays Capital Inc., (collateralized by
various U.S. Government Agency obligations in a pooled account
at the lending agent), 2.30%, dated 5/30/08, due 6/2/08
(Delivery value $1,000,192) $ 1,000,000
Repurchase Agreement, BNP Paribas Securities Corp.,
(collateralized by various U.S. Government Agency obligations in
a pooled account at the lending agent), 2.35%, dated 5/30/08,
due 6/2/08 (Delivery value $1,000,196) 1,000,000
Repurchase Agreement, Credit Suisse Securities USA LLC,
(collateralized by various U.S. Government Agency obligations in
a pooled account at the lending agent), 2.35%, dated 5/30/08,
due 6/2/08 (Delivery value $1,000,196) 1,000,000
Repurchase Agreement, Deutsche Bank Securities Inc.,
(collateralized by various U.S. Government Agency obligations in
a pooled account at the lending agent), 2.30%, dated 5/30/08,
due 6/2/08 (Delivery value $558,875) 558,768
Repurchase Agreement, Lehman Brothers Inc./Lehman Brothers
Commercial Paper Inc., (collateralized by various U.S.
Government Agency obligations in a pooled account at the lending
agent), 2.30%, dated 5/30/08, due 6/2/08 (Delivery value
$1,000,192) 1,000,000
-----------
TOTAL TEMPORARY CASH INVESTMENTS -- SECURITIES LENDING COLLATERAL
(Cost $4,558,768) 4,558,768
-----------
TOTAL INVESTMENT SECURITIES -- 105.4%
(Cost $65,682,829) 78,034,325
-----------
OTHER ASSETS AND LIABILITIES -- (5.4)% (4,004,505)
-----------
TOTAL NET ASSETS -- 100.0% $74,029,820
===========
- ------
8
NT International Growth
Market Sector Diversification
(as a % of net assets)
Financials 18.5%
Industrials 16.5%
Materials 12.5%
Energy 9.8%
Consumer Staples 8.2%
Consumer Discretionary 8.0%
Information Technology 6.6%
Health Care 6.3%
Utilities 4.7%
Telecommunication Services 4.3%
Diversified 1.7%
Cash and Equivalents* 2.9%
*Includes temporary cash investments, securities lending collateral and other
assets and liabilities.
Notes to Schedule of Investments
ADR = American Depositary Receipt
EAFE = Europe, Australasia, and Far East
MSCI = Morgan Stanley Capital International
SDR = Swedish Depositary Receipt
(1) Security, or a portion thereof, was on loan as of May 31, 2008.
(2) Non-income producing.
(3) Investments represent purchases made by the lending agent with cash
collateral received through securities lending transactions.
See Notes to Financial Statements.
- ------
9
PERFORMANCE
NT Emerging Markets
Total Returns as of May 31, 2008
Average Annual
Returns
Since Inception
6 months(1) 1 year Inception Date
INSTITUTIONAL CLASS -6.09% 14.15% 23.09% 5/12/06
MSCI EM INDEX -1.64% 21.67% 20.85% --
(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
One-Year Returns Over Life of Class
Periods ended May 31
2006* 2007 2008
NT Emerging Markets -8.50% 46.74% 14.15%
MSCI EM Index -12.21% 38.16% 21.67%
*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.
- ------
10
PORTFOLIO COMMENTARY
NT Emerging Markets
Portfolio Managers: Mark On and Patricia Ribeiro
PERFORMANCE SUMMARY
NT Emerging Markets returned -6.09%* for the six months ended May 31, 2008.
The portfolio's benchmark, the MSCI EM Index, returned -1.64%.
The combination of rising inflationary pressures (triggered by soaring oil and
food prices), ongoing global credit-market concerns and slowing economic
growth rates led to a sharp downturn among most international stock markets.
Emerging-market stocks outperformed the developed markets, which, as measured
by the MSCI EAFE Index, returned -5.21% for the reporting period.
As investors sought protection from a slowing economy, the value segments of
the emerging markets outperformed the growth segments: the MSCI Emerging
Markets Value Index returned 0.41%, while the MSCI Emerging Markets Growth
Index returned -3.69%. As such, our focus on growth factors and growth stocks
weighed significantly on the portfolio's return and accounted for the bulk of
the performance shortfall relative to the benchmark.
LARGEST COUNTRY WEIGHTINGS DETRACTED
From a regional perspective, three of the portfolio's largest-weighted
countries -- China, Brazil and Korea -- were the greatest detractors from
relative performance despite underweight positions relative to the benchmark.
Our growth-oriented stock selection led to lagging results in China and Korea.
The portfolio's absolute return in the Brazilian market was positive, but
currency effects and an underweight primarily accounted for the country's poor
relative performance.
On the positive side, Russia, Israel and the Czech Republic had the greatest
positive influence on portfolio performance. Stock selection was helpful in
Russia, while overweights contributed favorably in Israel and the Czech
Republic. Russia's Uralkali, a producer of potash, was the portfolio's top
contributor for the reporting period, benefiting from strong emerging-market
demand for fertilizers.
TECHNOLOGY, CONSUMER SECTORS LAGGED
On an absolute basis, seven out of the portfolio's 10 sectors posted negative
returns for the reporting period; only the materials, health care and energy
sectors posted positive returns. The information technology, consumer
discretionary and consumer staples sectors represented the largest detractors
from relative performance, primarily due to our preference for growth stocks.
In the consumer discretionary sector, stock selection and an overweight in the
media industry accounted for the bulk of the shortfall.
Top Ten Holdings as of May 31, 2008
% of net % of net
assets as of assets as of
5/31/08 11/30/07
Petroleo Brasileiro SA ADR 4.7% 3.0%
Samsung Electronics 3.5% 1.5%
OAO Gazprom ADR 3.2% 0.9%
Cia Vale do Rio Doce ADR 3.0% 2.1%
OAO LUKOIL 2.3% 0.9%
China Mobile Ltd. ADR 2.3% 2.3%
Israel Chemicals Ltd. 2.2% 0.3%
Uralkali GDR 1.7% 0.4%
MegaStudy Co., Ltd. 1.7% 1.3%
Sasol Ltd. 1.7% --
*Total returns for periods less than one year are not annualized.
- ------
11
NT Emerging Markets
China's Focus Media was among the portfolio's largest detractors, suffering
from the general downdraft in China's equities, and primarily from charges
that the company spammed wireless phone users. We subsequently exited our
position.
The portfolio's top relative contributors from a sector perspective included
industrials, materials and financials. Stock selection was strong in the
industrials and materials sectors, while an underweight helped the portfolio's
relative performance in the troubled financials sector.
Within the materials sector, stock selection in the chemicals industry was
particularly strong. Similar to its position in Russia's Uralkali, the
portfolio benefited from an overweight position in Israel Chemicals, which
advanced on soaring fertilizer demand and the limited supply of potash and
phosphate. The Tel Aviv-based company also realized positive results from
acquisitions completed during the past year.
OUTLOOK
Focusing on equity securities of companies located in emerging-market
countries, we will continue to seek companies exhibiting improving earnings
and revenue growth rates. Additionally, we will continue to select stocks
based on extensive company-level research that focuses on identifying
accelerating growth characteristics.
Investments by Country as of May 31, 2008
% of net % of net
assets as of assets as of
5/31/08 11/30/07
Brazil 17.0% 11.5%
People's Republic of China 10.9% 14.6%
Russian Federation 10.6% 7.4%
South Korea 10.5% 12.9%
Taiwan (Republic of China) 10.2% 6.8%
South Africa 5.0% 6.8%
India 5.0% 9.0%
Malaysia 3.1% 2.0%
Isreal 3.0% 0.6%
Czech Republic 2.9% 2.1%
Mexico 2.9% 4.7%
Indonesia 2.5% 4.3%
Hong Kong 2.5% 3.0%
Thailand 2.1% --
Poland 2.0% 0.7%
Other Countries 5.6% 9.7%
Cash and Equivalents(1) 4.2% 3.9%
(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
5/31/08 11/30/07
Foreign Common Stocks 94.6% 96.1%
Foreign Preferred Stocks 1.2% --
TOTAL EQUITY EXPOSURE 95.8% 96.1%
Temporary Cash Investments 2.8% 3.5%
Other Assets and Liabilities(2) 1.4% 0.4%
(2) Includes securities lending collateral and other assets and liabilities.
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12
SCHEDULE OF INVESTMENTS
NT Emerging Markets
MAY 31, 2008 (UNAUDITED)
Shares Value
Common Stocks -- 94.6%
BRAZIL -- 15.8%
12,400 Banco do Brasil SA $ 248,046
13,500 Bolsa de Mercadorias e Futuros -- BM&F SA 154,599
21,800 Cia Vale do Rio Doce ADR 867,203
8,449 Dufry South America Ltd. BDR(1) 200,623
5,600 GVT Holding SA(1) 127,985
9,600 Lojas Renner SA 237,154
5,921 LPS Brasil -- Consultoria de Imoveis SA 117,642
8,800 Lupatech SA(1) 343,739
19,328 Petroleo Brasileiro SA ADR 1,362,624
17,550 Redecard SA 369,286
18,000 Rossi Residencial SA 176,052
14,400 Unibanco-Uniao de Bancos Brasileiros SA 225,329
18,800 Vivo Participacoes SA ADR(1)(2) 131,788
-----------
4,562,070
-----------
CHILE -- 0.4%
16,400 Compania Cervecerias Unidas SA 118,106
-----------
CZECH REPUBLIC -- 2.9%
5,800 CEZ AS 479,220
1,400 Komercni Banka AS 363,285
-----------
842,505
-----------
EGYPT -- 0.7%
2,700 Orascom Construction Industries 198,863
-----------
HONG KONG -- 2.5%
62,000 AAC Acoustic Technology Holdings Inc.(1) 56,172
8,900 China Mobile Ltd. ADR 656,738
-----------
712,910
-----------
INDIA -- 5.0%
3,300 Aban Offshore Ltd.(1) 313,218
5,800 Jindal Steel & Power Ltd. 321,834
29,400 Power Finance Corp. Ltd.(1) 97,802
3,000 Reliance Industries Ltd. 171,027
32,800 Rolta India Ltd. 236,392
3,000 Sesa GOA Ltd. 305,412
-----------
1,445,685
-----------
INDONESIA -- 2.5%
449,500 PT Bumi Resources Tbk 388,457
214,000 PT United Tractors Tbk 331,970
-----------
720,427
-----------
Shares Value
ISRAEL -- 3.0%
12,700 Delek Automotive Systems Ltd. $ 237,409
27,800 Israel Chemicals Ltd. 637,086
-----------
874,495
-----------
LUXEMBOURG -- 1.0%
4,900 Tenaris SA ADR(2) 300,370
-----------
MALAYSIA -- 3.1%
161,900 AMMB Holdings Bhd 198,877
209,875 KNM Group Bhd 450,195
596,000 SapuraCrest Petroleum Bhd 257,531
-----------
906,603
-----------
MEXICO -- 2.9%
7,000 America Movil, SAB de CV ADR 418,390
62,561 Axtel, SAB de CV(1) 125,406
58,700 Grupo Financiero Banorte, SAB de CV(2) 284,925
-----------
828,721
-----------
PAKISTAN -- 0.5%
7,327 Oil & Gas Development Co. Ltd. GDR 141,045
-----------
PEOPLE'S REPUBLIC OF CHINA -- 10.9%
172,000 Agile Property Holdings Ltd.(2) 224,820
197,000 Asia Cement China Holdings Corp.(1) 178,734
916,000 China Gas Holdings Ltd. 325,149
148,000 China High Speed Transmission Equipment Group Co.,
Ltd.(1) 259,830
83,500 China Merchants Bank Co., Ltd. H Shares 299,072
112,000 China Oilfield Services Ltd.(1) 217,583
90,000 China Resources Power Holdings Co. 249,694
51,000 China Shenhua Energy Co. Ltd. H Shares(2) 227,435
227,000 CNOOC Ltd. 395,615
444,000 Industrial and Commercial Bank of China Ltd. H
Shares 331,711
35,000 Parkson Retail Group Ltd.(2) 300,505
321,000 Want Want China Holdings Ltd.(2) 139,037
-----------
3,149,185
-----------
PERU -- 1.0%
3,300 Credicorp Ltd. 275,418
-----------
PHILIPPINES -- 0.3%
957,000 Alliance Global Group Inc.(1) 74,809
-----------
- ------
13
NT Emerging Markets
Shares Value
POLAND -- 2.0%
1,600 BRE Bank SA(1) $ 302,576
12,200 Powszechna Kasa Oszczednosci Bank Polski SA 283,328
-----------
585,904
-----------
RUSSIAN FEDERATION -- 10.6%
10,183 Globaltrans Investment plc GDR (Acquired
4/30/08-5/7/08, Cost $136,710)(1)(3) 156,615
6,300 Mechel OAO ADR(1) 363,006
15,100 OAO Gazprom ADR(1) 912,039
6,000 OAO LUKOIL 671,400
5,401 OJSC Pharmstandard GDR(1) 156,629
8,100 Uralkali GDR (Acquired 10/15/07-1/30/08, Cost
$209,278)(3) 487,620
8,173 X5 Retail Group N.V. GDR(1) 302,401
-----------
3,049,710
-----------
SOUTH AFRICA -- 5.0%
11,300 Exxaro Resources Ltd. 234,016
6,900 Impala Platinum Holdings Ltd. 294,871
6,566 Kumba Iron Ore Ltd.(2) 293,531
6,000 Naspers Ltd. 140,035
7,800 Sasol Ltd. 485,112
-----------
1,447,565
-----------
SOUTH KOREA -- 10.5%
1,400 Daelim Industrial Co., Ltd. 168,150
10,600 Doosan Infracore Co., Ltd. 348,437
1,400 MegaStudy Co., Ltd. 487,430
1,100 NHN Corp.(1) 227,970
1,400 Samsung Electronics 1,008,899
12,000 Sung Kwang Bend Co., Ltd.(1) 419,548
3,400 Taewoong Co. Ltd.(1) 371,991
-----------
3,032,425
-----------
SWITZERLAND -- 0.5%
840 Orascom Development Holding AG(1) 129,714
-----------
TAIWAN (REPUBLIC OF CHINA) -- 10.2%
204,611 Asia Cement Corp. 380,124
88,000 Cathay Financial Holding Co., Ltd. 224,829
24,000 MediaTek Inc. 299,877
Shares Value
53,000 Taiwan Fertilizer Co., Ltd. $ 256,178
215,000 Taiwan Semiconductor Manufacturing Co. Ltd. 463,756
166,000 Tung Ho Steel Enterprise Corp. 346,601
147,000 U-Ming Marine Transport Corp. 474,654
86,565 Wistron Corp. 148,011
374,000 Yuanta Financial Holding Co., Ltd.(1) 348,021
-----------
2,942,051
-----------
THAILAND -- 2.1%
89,200 Kasikornbank PCL Receipt 233,328
54,400 PTT Chemical PCL(1) 184,151
128,100 Thoresen Thai Agencies PCL 201,049
-----------
618,528
-----------
TURKEY -- 0.8%
18,665 Enka Insaat ve Sanayi AS 223,955
-----------
UNITED KINGDOM -- 0.4%
7,900 Antofagasta plc 107,890
-----------
TOTAL COMMON STOCKS
(Cost $22,547,120) 27,288,954
-----------
Preferred Stocks -- 1.2%
BRAZIL -- 1.2%
7,200 Gerdau SA 359,270
(Cost $302,718)
-----------
Temporary Cash Investments -- 2.8%
Repurchase Agreement, Deutsche Bank Securities, Inc.,
(collateralized by various U.S. Treasury obligations, 2.00%,
1/15/16, valued at $816,530), in a joint trading account at
2.20%, dated 5/30/08, due 6/2/08 (Delivery value $800,147)
(Cost $800,000) 800,000
-----------
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14
NT Emerging Markets
Value
Temporary Cash Investments -- Securities Lending Collateral(4) -- 4.4%
Repurchase Agreement, Barclays Capital Inc., (collateralized
by various U.S. Government Agency obligations in a pooled
account at the lending agent), 2.30%, dated 5/30/08, due
6/2/08 (Delivery value $250,048) $ 250,000
Repurchase Agreement, BNP Paribas Securities Corp.,
(collateralized by various U.S. Government Agency obligations
in a pooled account at the lending agent), 2.35%, dated
5/30/08, due 6/2/08 (Delivery value $250,049) 250,000
Repurchase Agreement, Credit Suisse Securities USA LLC,
(collateralized by various U.S. Government Agency obligations
in a pooled account at the lending agent), 2.35%, dated
5/30/08, due 6/2/08 (Delivery value $246,604) 246,556
Repurchase Agreement, Deutsche Bank Securities Inc.,
(collateralized by various U.S. Government Agency obligations
in a pooled account at the lending agent), 2.30%, dated
5/30/08, due 6/2/08 (Delivery value $260,594) 260,544
Repurchase Agreement, Lehman Brothers Inc./Lehman Brothers
Commercial Paper Inc., (collateralized by various U.S.
Government Agency obligations in a pooled account at the
lending agent), 2.30%, dated 5/30/08, due 6/2/08 (Delivery
value $250,048) 250,000
-----------
TOTAL TEMPORARY CASH INVESTMENTS -- SECURITIES LENDING
COLLATERAL
(Cost $1,257,100) 1,257,100
-----------
TOTAL INVESTMENT SECURITIES -- 103.0%
(Cost $24,906,938) 29,705,324
-----------
OTHER ASSETS AND LIABILITIES -- (3.0)% (852,240)
-----------
TOTAL NET ASSETS -- 100.0% $28,853,084
===========
\
Market Sector Diversification
(as a % of net assets)
Energy 21.8%
Materials 19.5%
Financials 15.9%
Industrials 12.1%
Information Technology 8.5%
Consumer Discretionary 6.6%
Telecommunication Services 5.1%
Utilities 3.6%
Consumer Staples 2.2%
Health Care 0.5%
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
BDR = Brazilian Depositary Receipt
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, 2008.
(3) Security was purchased under Rule 144A of the Securities Act of 1933 or is
a private placement and, unless registered under the Act or exempted from
registration, may only be sold to qualified institutional investors. The
aggregate value of restricted securities at May 31, 2008 was $644,235, which
represented 2.2% of total net assets.
(4) Investments represent purchases made by the lending agent with cash
collateral received through securities lending transactions.
See Notes to Financial Statements.
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15
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, 2007 to May 31, 2008.
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 Investments fund, or
Institutional Class shares of the American Century Diversified Bond Fund, in
an American Century Investments account (i.e., not a financial intermediary or
retirement plan account), American Century Investments 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
Investments 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 Investments 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.
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16
Expenses Paid
Beginning Ending During Period*
Account Value Account Value 12/1/07 - Annualized
12/1/07 5/31/08 5/31/08 Expense Ratio*
NT International Growth -- Institutional Class
Actual $1,000 $970.80 $5.42 1.10%
Hypothetical $1,000 $1,019.50 $5.55 1.10%
NT Emerging Markets -- Institutional Class
Actual $1,000 $939.10 $7.42 1.53%
Hypothetical $1,000 $1,017.35 $7.72 1.53%
*Expenses are equal to the class's annualized expense ratio listed in the
table above, multiplied by the average account value over the period,
multiplied by 183, the number of days in the most recent fiscal half-year,
divided by 366, to reflect the one-half year period.
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17
STATEMENT OF ASSETS AND LIABILITIES
MAY 31, 2008 (UNAUDITED)
NT
International NT Emerging
Growth Markets
ASSETS
Investment securities, at value (cost of
$61,124,061 and $23,649,838, respectively) --
including $4,344,354 and $1,232,581 of
securities on loan, respectively $73,475,557 $28,448,224
Investments made with cash collateral received
for securities on loan, at value (cost of
$4,558,768 and $1,257,100, respectively) 4,558,768 1,257,100
----------- -----------
Total investment securities, at value (cost of
$65,682,829 and $24,906,938, respectively) 78,034,325 29,705,324
Cash -- 281,235
Foreign currency holdings, at value (cost of
$232,271 and $87,997, respectively) 232,271 87,999
Receivable for investments sold 4,590,937 188,476
Dividends and interest receivable 333,819 83,514
----------- -----------
83,191,352 30,346,548
----------- -----------
LIABILITIES
Disbursements in excess of demand deposit cash 4,323,976 --
Payable for collateral received for securities
on loan 4,558,768 1,257,100
Payable for investments purchased 208,802 202,951
Accrued management fees 69,986 33,413
----------- -----------
9,161,532 1,493,464
----------- -----------
NET ASSETS $74,029,820 $28,853,084
=========== ===========
INSTITUTIONAL CLASS CAPITAL SHARES, $0.01 PAR VALUE
Authorized 50,000,000 50,000,000
=========== ===========
Outstanding 6,205,659 2,295,745
=========== ===========
NET ASSET VALUE PER SHARE $11.93 $12.57
=========== ===========
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus) $62,091,569 $22,564,388
Undistributed net investment income 608,490 55,949
Accumulated undistributed net realized gain
(loss) on investment and foreign currency
transactions (1,006,215) 1,453,852
Net unrealized appreciation on investments and
translation of assets and liabilities in
foreign currencies 12,335,976 4,778,895
----------- -----------
$74,029,820 $28,853,084
=========== ===========
See Notes to Financial Statements.
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18
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED MAY 31, 2008 (UNAUDITED)
NT International NT Emerging
Growth Markets
INVESTMENT INCOME (LOSS)
INCOME:
Dividends (net of foreign taxes withheld of
$102,686 and $18,776, respectively) $ 975,973 $ 334,090
Interest 14,507 12,016
Securities lending, net 13,003 8,362
----------- -----------
1,003,483 354,468
----------- -----------
EXPENSES:
Management fees 354,881 172,923
Custody fees 7,329 12,892
Directors' fees and expenses 702 265
Other expenses 98 36
----------- -----------
363,010 186,116
----------- -----------
NET INVESTMENT INCOME (LOSS) 640,473 168,352
----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
Investment transactions (net of foreign taxes
accrued of $15,904 and $38,252, respectively) (3,099,230) 1,284,545
Foreign currency transactions 2,331,512 156,896
----------- -----------
(767,718) 1,441,441
----------- -----------
CHANGE IN NET UNREALIZED APPRECIATION
(DEPRECIATION) ON:
Investments (net of foreign taxes accrued of
$51,314 and $63,246, respectively) (357,275) (2,333,826)
Translation of assets and liabilities in
foreign currencies 7,583 (190,241)
----------- -----------
(349,692) (2,524,067)
----------- -----------
NET REALIZED AND UNREALIZED GAIN (LOSS) (1,117,410) (1,082,626)
----------- -----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS $(476,937) $(914,274)
=========== ===========
See Notes to Financial Statements.
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19
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED MAY 31, 2008 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 2007
NT International Growth NT Emerging Markets
Increase (Decrease) in
Net Assets 2008 2007 2008 2007
OPERATIONS
Net investment income
(loss) $ 640,473 $ 643,847 $ 168,352 $ 249,461
Net realized gain
(loss) (767,718) 2,689,810 1,441,441 3,942,328
Change in net
unrealized
appreciation
(depreciation) (349,692) 8,697,350 (2,524,067) 5,011,164
------------ ------------ ----------- ------------
Net increase
(decrease) in net
assets resulting from
operations (476,937) 12,031,007 (914,274) 9,202,953
------------ ------------ ----------- ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment
income (585,193) (138,053) (292,689) (132,946)
From net realized gains (1,418,391) -- (3,880,783) --
------------ ------------ ----------- ------------
Decrease in net assets
from distributions (2,003,584) (138,053) (4,173,472) (132,946)
------------ ------------ ----------- ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares
sold 21,325,478 25,863,755 11,023,791 10,699,873
Payments for shares
redeemed (12,518,049) (16,433,430) (5,461,332) (11,235,649)
------------ ------------ ----------- ------------
Net increase
(decrease) in net
assets from capital
share transactions 8,807,429 9,430,325 5,562,459 (535,776)
------------ ------------ ----------- ------------
NET INCREASE
(DECREASE) IN NET
ASSETS 6,326,908 21,323,279 474,713 8,534,231
NET ASSETS
Beginning of period 67,702,912 46,379,633 28,378,371 19,844,140
------------ ------------ ----------- ------------
End of period $74,029,820 $67,702,912 $28,853,084 $28,378,371
============ ============ =========== ============
Undistributed net
investment income $608,490 $569,114 $55,949 $218,538
============ ============ =========== ============
TRANSACTIONS IN SHARES OF THE FUNDS
Sold 1,900,657 2,284,414 884,509 836,418
Redeemed (1,018,211) (1,444,625) (341,221) (886,517)
------------ ------------ ----------- ------------
Net increase
(decrease) in shares
of the funds 882,446 839,789 543,288 (50,099)
============ ============ =========== ============
See Notes to Financial Statements.
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20
NOTES TO FINANCIAL STATEMENTS
MAY 31, 2008 (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 and companies
that derive a significant portion of their business from emerging market
countries. The funds are not permitted to invest in any securities issued by
companies assigned by the Global Industry Classification Standard to the
tobacco industry. The 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 the Board of Directors or its designee, in accordance
with procedures adopted by the Board of Directors, 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 -- For financial reporting purposes, security
transactions are accounted for as of the trade date. Net realized gains and
losses are determined on the identified cost basis, which is also used for
federal income tax purposes. Certain countries impose taxes on realized gains
on the sale of securities registered in their country. The funds record the
foreign tax expense, if any, on an accrual basis. The realized and unrealized
tax provision reduces the net realized gain (loss) on investment transactions
and net unrealized appreciation (depreciation) on investments, respectively.
INVESTMENT INCOME -- Dividend income less foreign taxes withheld, if any, is
recorded as of the ex-dividend date. Interest income is recorded on the
accrual basis and includes accretion of discounts and amortization of premiums.
EXCHANGE TRADED FUNDS -- The funds may invest in exchange traded funds (ETFs).
ETFs are a type of index fund bought and sold on a securities exchange. An ETF
trades like common stock and represents a fixed portfolio of securities
designed to track the performance and dividend yield of a particular domestic
or foreign market index. A fund may purchase an ETF to temporarily gain
exposure to a portion of the U.S. or a foreign market while awaiting purchase
of underlying securities. The risks of owning an ETF generally reflect the
risks of owning the underlying securities they are designed to track, although
the lack of liquidity on an ETF could result in it being more volatile.
Additionally, ETFs have management fees, which increase their cost.
FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially
expressed in foreign currencies are translated into U.S. dollars at prevailing
exchange rates at period end. Purchases and sales of investment securities,
dividend and interest income, and certain expenses are translated at the rates
of exchange prevailing on the respective dates of such transactions. Realized
and unrealized gains and losses from foreign currency translations arise from
changes in currency exchange rates.
- ------
21
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.
SECURITIES ON LOAN -- The funds may lend portfolio securities through their
lending agent to certain approved borrowers in order to earn additional
income. The income earned, net of any rebates or fees, is included in the
Statement of Operations. 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.
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. At this time, management has not identified any uncertain tax
positions for which it is reasonably possible that the total amounts of
unrecognized tax benefits will significantly change in the next twelve months.
Accordingly, no provision has been made for federal or state income taxes.
Interest and penalties associated with any federal or state income tax
obligations, if any, are recorded as interest expense.
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.
- ------
22
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
ACIM. 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 Investments 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, 2008 was 1.08% and 1.42%, 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.
OTHER EXPENSES -- The impact of total other expenses, including custody fees
and directors' fees and expenses, to the annualized ratio of operating
expenses to average net assets was 0.02% for NT International Growth and 0.11%
for NT Emerging Markets.
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, in aggregate, by various funds in a series issued by American
Century Asset Allocation Portfolios, Inc. (ACAAP). ACAAP does not invest in
the funds for the purpose of exercising management or control.
The funds are eligible to invest in a money market fund for temporary
purposes, which is 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 securities lending agreement with
JPMorgan Chase Bank (JPMCB). Prior to December 12, 2007, the funds had a bank
line of credit 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, 2008, were as follows:
NT International Growth NT Emerging Markets
Purchases $47,166,194 $22,533,357
Proceeds from sales $41,516,604 $21,104,511
4. SECURITIES LENDING
As of May 31, 2008, securities in NT International Growth and NT Emerging
Markets valued at $4,344,354 and $1,232,581, 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. 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
- ------
23
by the member firms no later than the close of business on the next business
day. The total market value of all collateral received, at this date, was
$4,558,768 and $1,257,100, 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.
5. FAIR VALUE MEASUREMENTS
The funds' securities valuation process is based on several considerations and
may use multiple inputs to determine the fair value of the positions held by
the funds. In conformity with accounting principles generally accepted in the
United States of America, the inputs used to determine a valuation are
classified into three broad levels as follows:
* Level 1 valuation inputs consist of actual quoted prices based on an active
market;
* Level 2 valuation inputs consist of significant direct or indirect
observable market data; or
* Level 3 valuation inputs consist of significant unobservable inputs such as
the fund's own assumptions.
The level classification is based on the lowest level input that is
significant to the fair valuation measurement. The valuation inputs are not an
indication of the risks associated with investing in these securities or other
financial instruments.
The following is a summary of the valuation inputs used to determine the fair
value of the funds' securities as of May 31, 2008:
Value of Investment
Fund/Valuation Inputs Securities
NT INTERNATIONAL GROWTH
Level 1 -- Quoted Prices $ 3,570,888
Level 2 -- Other Significant Observable Inputs 74,463,437
Level 3 -- Significant Unobservable Inputs --
-----------
$78,034,325
===========
NT EMERGING MARKETS
Level 1 -- Quoted Prices $ 4,375,537
Level 2 -- Other Significant Observable Inputs 25,329,787
Level 3 -- Significant Unobservable Inputs --
-----------
$29,705,324
===========
6. BANK LINE OF CREDIT
Effective December 12, 2007, the funds, along with certain other funds managed
by ACIM or ACGIM, have a $500,000,000 unsecured bank line of credit agreement
with Bank of America, N.A. Prior to December 12, 2007, the funds, along with
certain other funds managed by ACIM or ACGIM, had 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, which is subject to annual renewal, 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, 2008.
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.
NT Emerging Market's performance may be affected by investments in initial
public offerings (IPOs). The impact of IPOs on a fund's performance depends on
the strength of the IPO market and the size of the fund. IPOs may have less
impact on a fund's performance as assets grow.
- ------
24
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, 2008, the components of investments for federal income tax
purposes were as follows:
NT International NT Emerging
Growth Markets
Federal tax cost of investments $66,036,615 $24,994,695
=========== ===========
Gross tax appreciation of investments $12,775,740 $5,286,184
Gross tax depreciation of investments (778,030) (575,555)
----------- -----------
Net tax appreciation (depreciation) of
investments $11,997,710 $4,710,629
=========== ===========
The difference between book-basis and tax-basis cost and unrealized
appreciation (depreciation) is attributable primarily to the tax deferral of
losses on wash sales.
As of November 30, 2007, NT International Growth had capital loss deferrals of
$(61,065) and NT Emerging Markets had currency loss deferrals of $(4,715).
These capital and currency loss deferrals represent net capital and foreign
currency losses incurred in the one-month period ended November 30, 2007. 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
The Financial Accounting Standards Board (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. The adoption of FAS 157 does not materially impact the
determination of fair value.
In March 2008, the FASB issued Statement of Financial Accounting Standards No.
161, "Disclosures about Derivative Instruments and Hedging Activities -- an
amendment of FASB Statement No. 133" (FAS 161). FAS 161 is effective for
fiscal years beginning after November 15, 2008. FAS 161 amends and expands
disclosures about derivative instruments and hedging activities. FAS 161
requires qualitative disclosures about the objectives and strategies of
derivative instruments, quantitative disclosures about the fair value amounts
of and gains and losses on derivative instruments, and disclosures of
credit-risk-related contingent features in hedging activities. Management is
currently evaluating the impact that adopting FAS 161 will have on the
financial statement disclosures.
- ------
25
FINANCIAL HIGHLIGHTS
NT International Growth
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
2008(1) 2007 2006(2)
PER-SHARE DATA
Net Asset Value, Beginning of Period $12.72 $10.34 $10.00
-------- ------- --------
Income From Investment Operations
Net Investment Income (Loss) 0.11 0.12 0.03
Net Realized and Unrealized Gain (Loss) (0.49) 2.29 0.31
-------- ------- --------
Total From Investment Operations (0.38) 2.41 0.34
-------- ------- --------
Distributions
From Net Investment Income (0.12) (0.03) --
From Net Realized Gains (0.29) -- --
-------- ------- --------
Total Distributions (0.41) (0.03) --
-------- ------- --------
Net Asset Value, End of Period $11.93 $12.72 $10.34
======== ======= ========
TOTAL RETURN(3) (2.92)% 23.40% 3.40%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets 1.10%(4) 1.07% 1.07%(4)
Ratio of Net Investment Income (Loss) to Average
Net Assets 1.94%(4) 1.15% 0.59%(4)
Portfolio Turnover Rate 64% 104% 65%
Net Assets, End of Period (in thousands) $74,030 $67,703 $46,380
(1) Six months ended May 31, 2008 (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.
- ------
26
NT Emerging Markets
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
2008(1) 2007 2006(2)
PER-SHARE DATA
Net Asset Value, Beginning of Period $16.19 $11.01 $10.00
-------- ------- --------
Income From Investment Operations
Net Investment Income (Loss) 0.10 0.15 0.07
Net Realized and Unrealized Gain (Loss) (1.06) 5.12 0.94
-------- ------- --------
Total From Investment Operations (0.96) 5.27 1.01
-------- ------- --------
Distributions
From Net Investment Income (0.20) (0.09) --
From Net Realized Gains (2.46) -- --
-------- ------- --------
Total Distributions (2.66) (0.09) --
-------- ------- --------
Net Asset Value, End of Period $12.57 $16.19 $11.01
======== ======= ========
TOTAL RETURN(3) (6.09)% 48.22% 10.10%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets 1.53%(4) 1.46% 1.60%(4)
Ratio of Net Investment Income (Loss) to Average
Net Assets 1.38%(4) 1.12% 1.68%(4)
Portfolio Turnover Rate 90% 113% 59%
Net Assets, End of Period (in thousands) $28,853 $28,378 $19,844
(1) Six months ended May 31, 2008 (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.
- ------
27
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 Investments' 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.
- ------
28
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 EM GROWTH INDEX represents the net performance of growth stocks in
global emerging market countries.
The MSCI EM VALUE INDEX represents the net performance of value 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.
- ------
29
NOTES
- ------
30
NOTES
- ------
31
NOTES
- ------
32
[back cover]
[american century investments logo and text logo ®]
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
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
©2008 American Century Proprietary Holdings, Inc. All rights reserved.
0807
CL-SAN-60822N
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. INVESTMENTS.
(a) The schedule of investments is included as part of the report to
stockholders filed under Item 1 of this Form.
(b) Not applicable.
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 30, 2008
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 30, 2008
By: /s/ Robert J. Leach
---------------------------------------------------
Name: Robert J. Leach
Title: Vice President, Treasurer, and
Chief Financial Officer
(principal financial officer)
Date: July 30, 2008
