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 | 811-06247 | |||||
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC. | ||||||
(Exact name of registrant as specified in charter) | ||||||
4500 MAIN STREET, KANSAS CITY, MISSOURI | 64111 | |||||
(Address of principal executive offices) | (Zip Code) | |||||
CHARLES A. ETHERINGTON 4500 MAIN STREET, KANSAS CITY, MISSOURI 64111 | ||||||
(Name and address of agent for service) | ||||||
Registrant’s telephone number, including area code: | 816-531-5575 | |||||
Date of fiscal year end: | 11-30 | |||||
Date of reporting period: | 11-30-2017 |
ITEM 1. REPORTS TO STOCKHOLDERS.
Annual Report | |
November 30, 2017 | |
Emerging Markets Fund |
Table of Contents |
President’s Letter | 2 | |
Performance | 3 | |
Portfolio Commentary | ||
Fund Characteristics | ||
Shareholder Fee Example | ||
Schedule of Investments | ||
Statement of Assets and Liabilities | ||
Statement of Operations | ||
Statement of Changes in Net Assets | ||
Notes to Financial Statements | ||
Financial Highlights | ||
Report of Independent Registered Public Accounting Firm | ||
Management | ||
Approval of Management Agreement | ||
Proxy Voting Results | ||
Additional Information |
Any opinions expressed in this report reflect those of the author 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.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2017. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional, updated investment and market insights, we encourage you to visit our website, americancentury.com.
Upbeat Earnings, Economic Data Sparked Strong Gains for Global Stocks
Throughout the world, improving economic activity, healthy corporate earnings growth, and supportive central bank policies helped fuel robust double-digit gains for global stocks. The rally began early in the period, largely in response to the economic-growth implications of Donald Trump’s presidential election victory, and it forged ahead with few interruptions through November 2017. The 12-month period included several potential sources of financial market disruption, including acts of terrorism, North Korean saber-rattling, and an active and destructive hurricane season. Yet any resulting volatility was short-lived, as investors remained focused on positive economic and earnings news. Furthermore, in the U.S., the prospect for pro-growth tax reform propelled major stock indices to several record-high levels.
Among the developed markets, equity performance was notably strong in Europe, where solid corporate profits, improving economic growth rates, declining unemployment, and perceived market-friendly election results in France and Germany supported gains. In addition, the European Central Bank continued to provide stimulus support in the wake of persistently low inflation, which also helped stocks advance. Returns for emerging markets stocks were even stronger, bolstered by improving global and local economic and business fundamentals and rising oil prices.
The broad “risk-on” sentiment also extended to the global fixed-income market, where emerging markets bonds and high-yield corporate bonds were top performers. These securities satisfied investor demand for yield as interest rates remained relatively low throughout the world.
With global growth synchronizing and strengthening and central banks pursuing varying degrees of policy normalization, investors likely will face new opportunities and challenges in the months ahead. We believe this scenario warrants a disciplined, diversified, and risk-aware approach, using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of November 30, 2017 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWMIX | 40.46% | 7.76% | 0.89% | — | 9/30/97 |
MSCI Emerging Markets Index | — | 32.82% | 4.61% | 1.36% | — | — |
I Class | AMKIX | 40.86% | 7.99% | 1.09% | — | 1/28/99 |
Y Class | AEYMX | — | — | — | 26.05% | 4/10/17 |
A Class | AEMMX | 5/12/99 | ||||
No sales charge | 40.16% | 7.52% | 0.66% | — | ||
With sales charge | 32.16% | 6.26% | 0.06% | — | ||
C Class | ACECX | 39.06% | 6.72% | -0.10% | — | 12/18/01 |
R Class | AEMRX | 39.74% | 7.22% | 0.39% | — | 9/28/07 |
R5 Class | AEGMX | — | — | — | 25.97% | 4/10/17 |
R6 Class | AEDMX | 40.98% | — | — | 9.57% | 7/26/13 |
Average annual returns since inception are presented when ten years of performance history is not available. Fund returns would have been lower if a portion of the fees had not been waived. Prior to April 10, 2017, the
I Class was referred to as the Institutional Class. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
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 and may be subject to a maximum CDSC of 1.00%. 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.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years |
$10,000 investment made November 30, 2007 |
Performance for other share classes will vary due to differences in fee structure. |
Value on November 30, 2017 | |
Investor Class — $10,928 | |
MSCI Emerging Markets Index — $11,447 | |
Ending value of Investor Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | |||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class |
1.64% | 1.44% | 1.29% | 1.89% | 2.64% | 2.14% | 1.44% | 1.29% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Patricia Ribeiro and Sherwin Soo
In June 2017, portfolio manager Anthony Han left the fund's management team.
Performance Summary
Emerging Markets gained 40.46%* for the 12 months ended November 30, 2017. The portfolio’s benchmark, the MSCI Emerging Markets Index, gained 32.82% for the same period.
The fund outperformed its benchmark during the period, primarily due to positive stock selection in the information technology and consumer discretionary sectors. Conversely, investments in the energy and real estate sectors limited relative gains. Regionally, stock selection in China lifted relative performance, while negative stock selection in Brazil hindered results.
Information Technology Holdings Contributed
Leading sector contribution came primarily from the information technology sector, where standout performers included optical components manufacturer Sunny Optical Technology Group, electronic components maker AAC Technologies Holdings, and IT services company Vakrangee.
Sunny Optical Technology Group benefited from better-than-expected first-half 2017 earnings-per-share growth driven by shipments of camera modules, handset lenses, and automobile lenses. Management raised guidance for growth, particularly with the solid outlook from China smartphone manufacturers. AAC Technologies Holdings also posted solid gains. The company’s management team maintained its full-year guidance and positive outlook for the second half of 2017. In addition, new growth drivers (handset lens) led analysts to upgrade the stock. We believe AAC Technologies’ current business continues to have upside. The company is a leading beneficiary of an acoustics upgrade trend. Strong contributors also included Vakrangee, which started as an e-governance player doing systems integration and providing end-to-end services for various e-governance projects. The company then leveraged this into a role as a business correspondence player providing financial services, e-commerce, and logistics. It aims to expand its network of small outlets (Kendras) in rural and urban areas with the goal of providing last-mile retail touch points for products and services to the unserved and underserved regions of India. Vakrangee’s revenue growth continues to accelerate, supported by the central government’s emphasis on financial inclusion and the addition of new e-commerce, insurance, and other sellers on the network on a regular basis.
The fund’s outperformance in the consumer discretionary sector was driven primarily by K-12 after-school tutoring services provider TAL Education Group and hotel group China Lodging Group. TAL Education Group, a China-based company focusing on premium high-achieving students, continued to benefit from a rapidly growing market for K-12 education in China. Other positives for the stock include its increased course offerings, expansion into more cities, and new services. China Lodging reported stronger-than-expected quarterly sales and margins growth. Visibility into future sales and earnings has led to upward revisions of consensus estimates. The market continues to improve, helping overall room rates.
* All fund returns referenced in this commentary are for Investor Class shares. Fund returns would have been lower if a portion of the fees had not been waived. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund's benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Investments in the Energy Sector Detracted
Areas of relative weakness included the energy sector. Tullow Oil, a multinational oil and gas company, continued to deleverage its balance sheet. However, we sold the stock on our belief that it has limited upside due to risks associated with its Ghana assets and its 2018 exploration program.
On an individual stock basis, Brazil-based financial services company Banco do Brasil detracted. The bank’s share price declined in response to government corruption allegations in Brazil. Despite political concerns, our fundamental investment thesis for Banco do Brasil remains intact. While it may take longer, profitability continues to turn around and the bank is expected to deliver earnings growth.
Other notable detractors included China Railway Construction, which traded lower after reporting disappointing first-half 2017 financial results. Management reported a weaker-than-expected operating profit and higher-than-expected operating costs. The stock was also pressured by a slowdown in fixed-asset railway expenditures.
The weak performance of CJ Logistics also weighed on relative performance. Despite reporting financial results in-line with expectations and expanding its domestic parcel market share, the logistics company’s average selling price and margin continued to deteriorate due to intense competition.
Other notable detractors included electronic circuit manufacturer KCE Electronics. The company’s stock was pressured by lower-than-expected earnings and concerns about the rising price of copper, which is a key material in KCE’s products. We consequently eliminated the fund's position in the stock.
Outlook
We continue to believe emerging markets stocks will perform well in 2018. The global macro drivers that supported emerging markets assets in 2017—a synchronized global growth recovery and generally muted but bottoming inflation pressures—remain favorable. The domestic foundation for growth in emerging markets is strong.
The fund continues to invest in companies where fundamentals are strong and improving but share price performance does not fully reflect these factors. Our process is based on individual security selection, but broad themes have emerged.
Consumer discretionary is the largest relative sector position as of period end. Information technology is also an important position. While large in absolute size, information technology is our second-largest relative overweight following consumer discretionary. Within consumer discretionary, we are focused on companies benefiting from increasing discretionary spending, including stronger demand for luxury and quality-of-life goods and services. In information technology, we continue to identify opportunities in consumer-facing technology as well as companies we believe are positioned to benefit from the smartphone component upgrade.
We remain underweight the financials sector. This is our largest relative underweight as of period end.
Geographically, China remains our largest absolute and relative position, while India is our largest relative underweight.
6
Fund Characteristics |
NOVEMBER 30, 2017 | |
Top Ten Holdings | % of net assets |
Tencent Holdings Ltd. | 5.9% |
Samsung Electronics Co. Ltd. | 5.9% |
Taiwan Semiconductor Manufacturing Co. Ltd. | 4.6% |
Alibaba Group Holding Ltd. ADR | 4.4% |
Naspers Ltd., N Shares | 2.8% |
Ping An Insurance Group Co., H Shares | 2.0% |
SK Hynix, Inc. | 1.7% |
AAC Technologies Holdings, Inc. | 1.7% |
Sunny Optical Technology Group Co. Ltd. | 1.6% |
Industrial & Commercial Bank of China Ltd., H Shares | 1.6% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 95.8% |
Exchange-Traded Funds | 1.2% |
Total Equity Exposure | 97.0% |
Temporary Cash Investments | 5.7% |
Other Assets and Liabilities | (2.7)% |
Investments by Country | % of net assets |
China | 32.0% |
South Korea | 13.0% |
Taiwan | 9.7% |
Brazil | 8.7% |
India | 5.7% |
Thailand | 4.8% |
South Africa | 4.8% |
Russia | 4.4% |
Indonesia | 3.0% |
Other Countries | 9.7% |
Exchange-Traded Funds* | 1.2% |
Cash and Equivalents** | 3.0% |
*Category may increase exposure to the countries indicated. The Schedule of Investments provides additional information on the fund's portfolio holdings. | |
**Includes temporary cash investments and other assets and liabilities. |
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2017 to November 30, 2017.
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 I 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. 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.
8
Beginning Account Value 6/1/17 | Ending Account Value 11/30/17 | Expenses Paid During Period(1) 6/1/17 - 11/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,189.30 | $6.04 | 1.10% |
I Class | $1,000 | $1,191.50 | $4.94 | 0.90% |
Y Class | $1,000 | $1,191.10 | $4.12 | 0.75% |
A Class | $1,000 | $1,187.90 | $7.40 | 1.35% |
C Class | $1,000 | $1,182.80 | $11.49 | 2.10% |
R Class | $1,000 | $1,186.50 | $8.77 | 1.60% |
R5 Class | $1,000 | $1,190.30 | $4.94 | 0.90% |
R6 Class | $1,000 | $1,192.30 | $4.12 | 0.75% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.55 | $5.57 | 1.10% |
I Class | $1,000 | $1,020.56 | $4.56 | 0.90% |
Y Class | $1,000 | $1,021.31 | $3.80 | 0.75% |
A Class | $1,000 | $1,018.30 | $6.83 | 1.35% |
C Class | $1,000 | $1,014.54 | $10.61 | 2.10% |
R Class | $1,000 | $1,017.05 | $8.09 | 1.60% |
R5 Class | $1,000 | $1,020.56 | $4.56 | 0.90% |
R6 Class | $1,000 | $1,021.31 | $3.80 | 0.75% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
9
Schedule of Investments |
NOVEMBER 30, 2017
Shares | Value | ||||
COMMON STOCKS — 95.8% | |||||
Argentina — 0.5% | |||||
Banco Macro SA ADR | 80,697 | $ | 8,193,973 | ||
Brazil — 8.7% | |||||
Banco do Brasil SA | 1,617,700 | 14,791,049 | |||
Itau Unibanco Holding SA ADR | 1,300,332 | 16,319,167 | |||
Klabin SA | 1,465,900 | 7,993,498 | |||
Kroton Educacional SA | 2,675,800 | 14,811,742 | |||
Localiza Rent a Car SA | 1,956,300 | 11,970,456 | |||
Lojas Renner SA | 1,671,000 | 17,320,268 | |||
Magazine Luiza SA | 726,000 | 12,601,787 | |||
Multiplan Empreendimentos Imobiliarios SA | 811,619 | 17,241,743 | |||
Petroleo Brasileiro SA ADR(1) | 1,040,689 | 10,115,497 | |||
Vale SA ADR | 1,289,875 | 13,801,662 | |||
136,966,869 | |||||
Chile — 0.5% | |||||
Sociedad Quimica y Minera de Chile SA ADR | 136,247 | 7,400,937 | |||
China — 32.0% | |||||
AAC Technologies Holdings, Inc. | 1,287,000 | 25,963,783 | |||
Alibaba Group Holding Ltd. ADR(1) | 389,164 | 68,913,161 | |||
Anhui Conch Cement Co. Ltd., H Shares | 3,120,500 | 15,014,431 | |||
Beijing Enterprises Water Group Ltd. | 13,990,000 | 10,956,059 | |||
Brilliance China Automotive Holdings Ltd. | 7,664,000 | 20,275,830 | |||
China Gas Holdings Ltd. | 6,686,000 | 20,640,246 | |||
China Lodging Group Ltd. ADR | 174,770 | 18,649,707 | |||
China Railway Construction Corp. Ltd., H Shares | 6,384,000 | 7,586,479 | |||
China Resources Beer Holdings Co. Ltd. | 3,440,000 | 9,502,153 | |||
CNOOC Ltd. | 7,709,000 | 10,548,482 | |||
Ctrip.com International Ltd. ADR(1) | 241,280 | 11,118,182 | |||
Geely Automobile Holdings Ltd. | 7,213,000 | 25,384,301 | |||
Haier Electronics Group Co. Ltd. | 2,600,000 | 6,973,900 | |||
Industrial & Commercial Bank of China Ltd., H Shares | 32,673,645 | 25,622,753 | |||
Maanshan Iron & Steel Co. Ltd., H Shares(1) | 11,644,000 | 5,742,459 | |||
New Oriental Education & Technology Group, Inc. ADR | 193,969 | 16,460,209 | |||
Nine Dragons Paper Holdings Ltd. | 7,523,000 | 12,513,956 | |||
Ping An Insurance Group Co., H Shares | 3,141,500 | 31,062,347 | |||
Shenzhou International Group Holdings Ltd. | 1,224,000 | 11,102,794 | |||
Sunny Optical Technology Group Co. Ltd. | 1,510,000 | 25,629,904 | |||
TAL Education Group ADR | 510,373 | 14,229,199 | |||
Tencent Holdings Ltd. | 1,790,800 | 92,439,483 | |||
Weibo Corp. ADR(1) | 93,542 | 10,154,920 | |||
Weichai Power Co. Ltd., H Shares | 5,578,000 | 6,228,541 | |||
502,713,279 |
10
Shares | Value | ||||
Czech Republic— 0.4% | |||||
Moneta Money Bank AS | 1,562,583 | $ | 5,638,176 | ||
Egypt — 0.4% | |||||
Commercial International Bank Egypt S.A.E. | 587,884 | 2,523,421 | |||
Commercial International Bank Egypt S.A.E. GDR | 972,720 | 4,225,826 | |||
6,749,247 | |||||
Hungary — 1.6% | |||||
OTP Bank plc | 486,875 | 18,615,419 | |||
Richter Gedeon Nyrt | 229,855 | 5,941,650 | |||
24,557,069 | |||||
India — 5.7% | |||||
Bharat Financial Inclusion Ltd.(1) | 450,157 | 6,881,004 | |||
Future Retail Ltd.(1) | 1,027,631 | 8,785,202 | |||
Godrej Consumer Products Ltd. | 622,916 | 9,336,966 | |||
HDFC Bank Ltd. | 759,300 | 21,882,881 | |||
InterGlobe Aviation Ltd. | 396,235 | 6,894,410 | |||
Larsen & Toubro Ltd. | 351,603 | 6,633,852 | |||
Motherson Sumi Systems Ltd. | 2,804,727 | 15,959,169 | |||
Praxis Home Retail Ltd.(1) | 51,382 | 15,937 | |||
Vakrangee Ltd. | 1,203,587 | 13,356,837 | |||
89,746,258 | |||||
Indonesia — 3.0% | |||||
Bank Rakyat Indonesia Persero Tbk PT | 52,552,000 | 12,473,087 | |||
Indofood Sukses Makmur Tbk PT | 14,082,900 | 7,649,431 | |||
Telekomunikasi Indonesia Persero Tbk PT | 29,924,800 | 9,243,755 | |||
United Tractors Tbk PT | 7,092,600 | 17,659,338 | |||
47,025,611 | |||||
Malaysia — 0.5% | |||||
My EG Services Bhd | 14,307,350 | 7,416,798 | |||
Mexico — 1.0% | |||||
Cemex SAB de CV ADR(1) | 621,278 | 4,715,500 | |||
Mexichem SAB de CV | 4,553,877 | 11,849,515 | |||
16,565,015 | |||||
Peru — 1.4% | |||||
Credicorp Ltd. | 104,381 | 22,027,523 | |||
Philippines — 0.8% | |||||
Ayala Land, Inc. | 14,298,600 | 12,235,450 | |||
Russia — 4.4% | |||||
Novatek PJSC GDR | 132,542 | 15,031,425 | |||
Sberbank of Russia PJSC ADR (London) | 1,376,633 | 22,467,478 | |||
Sberbank of Russia PJSC ADR | 14,827 | 245,832 | |||
X5 Retail Group NV GDR(1) | 403,898 | 14,965,975 | |||
Yandex NV, A Shares(1) | 520,904 | 17,247,131 | |||
69,957,841 | |||||
South Africa — 4.8% | |||||
Capitec Bank Holdings Ltd. | 148,715 | 10,690,432 | |||
Discovery Ltd. | 835,596 | 10,041,615 |
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Shares | Value | ||||
Foschini Group Ltd. (The) | 277,741 | $ | 3,199,641 | ||
Naspers Ltd., N Shares | 161,247 | 43,260,607 | |||
Sappi Ltd. | 1,074,432 | 7,615,471 | |||
74,807,766 | |||||
South Korea — 13.0% | |||||
CJ Logistics Corp.(1) | 54,990 | 7,680,877 | |||
Doosan Infracore Co. Ltd.(1) | 1,370,263 | 11,264,640 | |||
Hana Financial Group, Inc. | 437,614 | 19,072,385 | |||
LG Innotek Co. Ltd. | 56,366 | 8,434,699 | |||
Mando Corp. | 51,450 | 15,728,857 | |||
Medy-Tox, Inc. | 17,916 | 7,670,146 | |||
NAVER Corp. | 7,976 | 5,878,568 | |||
Samsung Electronics Co. Ltd. | 39,179 | 92,051,586 | |||
Seegene, Inc.(1) | 324,601 | 9,726,364 | |||
SK Hynix, Inc. | 385,210 | 27,451,216 | |||
204,959,338 | |||||
Taiwan — 9.7% | |||||
Airtac International Group | 1,481,357 | 25,333,170 | |||
ASPEED Technology, Inc. | 366,000 | 8,590,145 | |||
Hota Industrial Manufacturing Co. Ltd. | 1,572,434 | 6,986,741 | |||
Land Mark Optoelectronics Corp. | 579,000 | 7,333,416 | |||
Largan Precision Co. Ltd. | 27,000 | 4,674,698 | |||
Powertech Technology, Inc. | 2,484,000 | 7,555,758 | |||
President Chain Store Corp. | 993,000 | 9,439,702 | |||
Taiwan Paiho Ltd. | 2,875,000 | 11,017,629 | |||
Taiwan Semiconductor Manufacturing Co. Ltd. | 9,563,939 | 72,001,860 | |||
152,933,119 | |||||
Thailand — 4.8% | |||||
Airports of Thailand PCL | 8,567,400 | 16,179,890 | |||
CP ALL PCL | 8,297,500 | 18,546,139 | |||
Kasikornbank PCL | 1,222,800 | 8,791,727 | |||
Kasikornbank PCL NVDR | 814,100 | 5,673,234 | |||
Minor International PCL | 13,927,700 | 18,553,279 | |||
Srisawad Corp. PCL | 3,779,780 | 7,298,333 | |||
75,042,602 | |||||
Turkey — 1.7% | |||||
BIM Birlesik Magazalar AS | 822,913 | 15,211,981 | |||
Tofas Turk Otomobil Fabrikasi AS | 1,546,123 | 12,323,763 | |||
27,535,744 | |||||
United Kingdom — 0.9% | |||||
NMC Health plc | 372,542 | 14,372,963 | |||
TOTAL COMMON STOCKS (Cost $1,214,048,725) | 1,506,845,578 | ||||
EXCHANGE-TRADED FUNDS — 1.2% | |||||
iShares MSCI Emerging Markets ETF | 85,494 | 3,941,273 | |||
iShares MSCI South Korea Capped ETF | 192,853 | 14,492,903 | |||
TOTAL EXCHANGE-TRADED FUNDS (Cost $17,976,811) | 18,434,176 |
12
Shares | Value | ||||
TEMPORARY CASH INVESTMENTS — 5.7% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 3.75%, 4/15/18 - 2/15/47, valued at $49,873,547), in a joint trading account at 0.88%, dated 11/30/17, due 12/1/17 (Delivery value $48,996,034) | $ | 48,994,836 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 1.375%, 2/15/44, valued at $41,652,653), at 0.34%, dated 11/30/17, due 12/1/17 (Delivery value $40,832,386) | 40,832,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 145,735 | 145,735 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $89,972,571) | 89,972,571 | ||||
TOTAL INVESTMENT SECURITIES — 102.7% (Cost $1,321,998,107) | 1,615,252,325 | ||||
OTHER ASSETS AND LIABILITIES — (2.7)% | (42,926,610 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 1,572,325,715 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Information Technology | 31.6 | % |
Consumer Discretionary | 18.7 | % |
Financials | 17.3 | % |
Industrials | 6.3 | % |
Consumer Staples | 5.9 | % |
Materials | 5.6 | % |
Energy | 3.5 | % |
Health Care | 2.4 | % |
Utilities | 2.0 | % |
Real Estate | 1.9 | % |
Telecommunication Services | 0.6 | % |
Exchange-Traded Funds | 1.2 | % |
Cash and Equivalents* | 3.0 | % |
*Includes temporary cash investments and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
GDR | - | Global Depositary Receipt |
NVDR | - | Non-Voting Depositary Receipt |
(1) Non-income producing.
See Notes to Financial Statements.
13
Statement of Assets and Liabilities |
NOVEMBER 30, 2017 | |||
Assets | |||
Investment securities, at value (cost of $1,321,998,107) | $ | 1,615,252,325 | |
Foreign currency holdings, at value (cost of $94,591) | 93,783 | ||
Receivable for investments sold | 8,287,310 | ||
Receivable for capital shares sold | 8,542,228 | ||
Dividends and interest receivable | 169,959 | ||
1,632,345,605 | |||
Liabilities | |||
Payable for investments purchased | 53,883,767 | ||
Payable for capital shares redeemed | 1,889,712 | ||
Accrued management fees | 1,222,351 | ||
Distribution and service fees payable | 34,735 | ||
Accrued foreign taxes | 2,982,829 | ||
Accrued other expenses | 6,496 | ||
60,019,890 | |||
Net Assets | $ | 1,572,325,715 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 1,268,151,578 | |
Undistributed net investment income | 2,825,932 | ||
Undistributed net realized gain | 11,070,080 | ||
Net unrealized appreciation | 290,278,125 | ||
$ | 1,572,325,715 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $883,435,534 | 73,614,813 | $12.00 | |||
I Class, $0.01 Par Value | $504,999,816 | 41,000,521 | $12.32 | |||
Y Class, $0.01 Par Value | $6,304 | 511 | $12.34 | |||
A Class, $0.01 Par Value | $61,585,849 | 5,324,366 | $11.57* | |||
C Class, $0.01 Par Value | $24,972,177 | 2,352,828 | $10.61 | |||
R Class, $0.01 Par Value | $4,810,873 | 413,242 | $11.64 | |||
R5 Class, $0.01 Par Value | $45,613 | 3,703 | $12.32 | |||
R6 Class, $0.01 Par Value | $92,469,549 | 7,494,786 | $12.34 |
*Maximum offering price $12.28 (net asset value divided by 0.9425).
See Notes to Financial Statements.
14
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2017 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $1,626,732) | $ | 12,410,332 | |
Interest | 208,093 | ||
12,618,425 | |||
Expenses: | |||
Management fees | 13,092,609 | ||
Distribution and service fees: | |||
A Class | 104,098 | ||
C Class | 119,795 | ||
R Class | 15,647 | ||
Directors' fees and expenses | 26,999 | ||
Other expenses | 54,510 | ||
13,413,658 | |||
Fees waived(1) | (3,011,658 | ) | |
10,402,000 | |||
Net investment income (loss) | 2,216,425 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 81,824,776 | ||
Foreign currency translation transactions | (341,272 | ) | |
81,483,504 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments (includes (increase) decrease in accrued foreign taxes of $(2,982,829)) | 206,796,499 | ||
Translation of assets and liabilities in foreign currencies | 33,322 | ||
206,829,821 | |||
Net realized and unrealized gain (loss) | 288,313,325 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 290,529,750 |
(1) | Amount consists of $2,049,774, $604,184, $13, $133,616, $39,753, $10,097, $18 and $174,203 for Investor Class, I Class, Y Class, A Class, C Class, R Class, R5 Class and R6 Class, respectively. |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2017 AND NOVEMBER 30, 2016 | ||||||
Increase (Decrease) in Net Assets | November 30, 2017 | November 30, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 2,216,425 | $ | 1,592,402 | ||
Net realized gain (loss) | 81,483,504 | (7,224,748 | ) | |||
Change in net unrealized appreciation (depreciation) | 206,829,821 | 37,695,499 | ||||
Net increase (decrease) in net assets resulting from operations | 290,529,750 | 32,063,153 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (1,705,705 | ) | (550,390 | ) | ||
I Class | (210,725 | ) | (88,977 | ) | ||
A Class | (23,887 | ) | — | |||
R6 Class | (256,448 | ) | (128,912 | ) | ||
Decrease in net assets from distributions | (2,196,765 | ) | (768,279 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 696,574,962 | 96,278,777 | ||||
Redemption Fees | ||||||
Increase in net assets from redemption fees | 114,873 | 66,323 | ||||
Net increase (decrease) in net assets | 985,022,820 | 127,639,974 | ||||
Net Assets | ||||||
Beginning of period | 587,302,895 | 459,662,921 | ||||
End of period | $ | 1,572,325,715 | $ | 587,302,895 | ||
Undistributed net investment income | $ | 2,825,932 | $ | 1,016,341 |
See Notes to Financial Statements.
16
Notes to Financial Statements |
NOVEMBER 30, 2017
1. Organization
American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Emerging Markets Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek capital growth.
The fund offers the Investor Class, I Class (formerly Institutional Class), Y Class, A Class, C Class, R Class, R5 Class and R6 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. Sale of the Y Class and R5 Class commenced on April 10, 2017.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of
17
Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. Certain countries impose taxes on realized gains on the sale of securities registered in their country. The fund records the foreign tax expense, if any, on an accrual basis. The foreign tax expense on realized gains and unrealized appreciation 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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund 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.
18
Redemption Fees — Prior to October 9, 2017, the fund may have imposed a 2.00% redemption fee on shares held less than 60 days. The fee was not applicable to all classes. The redemption fee was retained by the fund to help cover transaction costs that long-term investors may bear when the fund sells securities to meet investor redemptions.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. Various funds issued by American Century Asset Allocation Portfolios, Inc. own, in aggregate, 11% of the shares of the fund.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that use very similar investment teams and strategies (strategy assets). The strategy assets of the fund also include the assets of NT Emerging Markets Fund, one fund in a series issued by the corporation. From December 1, 2016 through March 31, 2017, the investment advisor agreed to waive 0.250% of the fund's management fee. Effective April 1, 2017, the investment advisor agreed to waive 0.350% of the fund's management fee. The investment advisor expects this waiver to continue until July 31, 2018 and cannot terminate it prior to such date without the approval of the Board of Directors.
The management fee schedule range and the effective annual management fee before and after waiver for each class for the period ended November 30, 2017 are as follows:
Effective Annual Management Fee | |||
Management Fee Schedule Range | Before Waiver | After Waiver | |
Investor Class | 1.250% to 1.850% | 1.49% | 1.17% |
I Class | 1.050% to 1.650% | 1.25% | 0.93% |
Y Class | 0.900% to 1.500% | 1.11% | 0.76% |
A Class | 1.250% to 1.850% | 1.49% | 1.17% |
C Class | 1.250% to 1.850% | 1.47% | 1.15% |
R Class | 1.250% to 1.850% | 1.49% | 1.17% |
R5 Class | 1.050% to 1.650% | 1.26% | 0.91% |
R6 Class | 0.900% to 1.500% | 1.14% | 0.82% |
19
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, 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 ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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. Fees incurred under the plans during the period ended November 30, 2017 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases were $2,225,931 and there were no interfund sales.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended November 30, 2017 were $1,090,961,770 and $423,043,213, respectively.
20
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2017(1) | Year ended November 30, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 500,000,000 | 380,000,000 | ||||||||
Sold | 51,102,270 | $ | 545,843,887 | 18,596,256 | $ | 153,561,388 | ||||
Issued in reinvestment of distributions | 170,927 | 1,625,512 | 70,047 | 535,859 | ||||||
Redeemed | (32,531,459 | ) | (341,641,540 | ) | (13,125,822 | ) | (108,549,360 | ) | ||
18,741,738 | 205,827,859 | 5,540,481 | 45,547,887 | |||||||
I Class/Shares Authorized | 210,000,000 | 35,000,000 | ||||||||
Sold | 40,142,662 | 459,185,069 | 4,559,594 | 37,876,044 | ||||||
Issued in reinvestment of distributions | 21,610 | 210,697 | 11,337 | 88,884 | ||||||
Redeemed | (3,375,540 | ) | (38,606,224 | ) | (936,195 | ) | (8,059,380 | ) | ||
36,788,732 | 420,789,542 | 3,634,736 | 29,905,548 | |||||||
Y Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 511 | 5,000 | ||||||||
A Class/Shares Authorized | 50,000,000 | 30,000,000 | ||||||||
Sold | 5,641,981 | 58,277,889 | 3,099,527 | 24,741,141 | ||||||
Issued in reinvestment of distributions | 2,219 | 20,367 | — | |||||||
Redeemed | (4,890,160 | ) | (47,362,727 | ) | (1,808,554 | ) | (14,483,730 | ) | ||
754,040 | 10,935,529 | 1,290,973 | 10,257,411 | |||||||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 1,827,106 | 17,797,424 | 446,258 | 3,315,528 | ||||||
Redeemed | (239,477 | ) | (2,152,216 | ) | (113,764 | ) | (851,314 | ) | ||
1,587,629 | 15,645,208 | 332,494 | 2,464,214 | |||||||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 296,970 | 3,157,947 | 158,468 | 1,280,298 | ||||||
Redeemed | (164,675 | ) | (1,695,228 | ) | (57,800 | ) | (468,776 | ) | ||
132,295 | 1,462,719 | 100,668 | 811,522 | |||||||
R5 Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 3,703 | 44,866 | ||||||||
R6 Class/Shares Authorized | 50,000,000 | 40,000,000 | ||||||||
Sold | 5,856,775 | 66,206,392 | 1,486,340 | 12,613,520 | ||||||
Issued in reinvestment of distributions | 26,302 | 256,448 | 16,443 | 128,912 | ||||||
Redeemed | (2,255,306 | ) | (24,598,601 | ) | (633,883 | ) | (5,450,237 | ) | ||
3,627,771 | 41,864,239 | 868,900 | 7,292,195 | |||||||
Net increase (decrease) | 61,636,419 | $ | 696,574,962 | 11,768,252 | $ | 96,278,777 |
(1) | April 10, 2017 (commencement of sale) through November 30, 2017 for the Y Class and R5 Class. |
21
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. 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.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a 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 necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | ||||||||
Argentina | $ | 8,193,973 | — | — | ||||
Brazil | 40,236,326 | $ | 96,730,543 | — | ||||
Chile | 7,400,937 | — | — | |||||
China | 139,525,378 | 363,187,901 | — | |||||
Mexico | 4,715,500 | 11,849,515 | — | |||||
Peru | 22,027,523 | — | — | |||||
Russia | 17,492,963 | 52,464,878 | — | |||||
Other Countries | — | 743,020,141 | — | |||||
Exchange-Traded Funds | 18,434,176 | — | — | |||||
Temporary Cash Investments | 145,735 | 89,826,836 | — | |||||
$ | 258,172,511 | $ | 1,357,079,814 | — |
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.
22
8. Federal Tax Information
The tax character of distributions paid during the years ended November 30, 2017 and November 30, 2016 were as follows:
2017 | 2016 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 2,196,765 | $ | 768,279 | ||
Long-term capital gains | — | — |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 1,327,202,704 | |
Gross tax appreciation of investments | $ | 312,619,566 | |
Gross tax depreciation of investments | (24,569,945 | ) | |
Net tax appreciation (depreciation) of investments | 288,049,621 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (2,970,433 | ) | |
Net tax appreciation (depreciation) | $ | 285,079,188 | |
Undistributed ordinary income | $ | 7,725,343 | |
Accumulated long-term gains | $ | 11,369,606 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the realization to ordinary income for tax purposes of unrealized gains on investments in passive foreign investment companies.
23
Financial Highlights |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||
2017 | $8.57 | 0.02 | 3.44 | 3.46 | (0.03) | $12.00 | 40.46% | 1.18% | 1.50% | 0.19% | (0.13)% | 47% | $883,436 | ||
2016 | $8.10 | 0.02 | 0.46 | 0.48 | (0.01) | $8.57 | 5.95% | 1.38% | 1.63% | 0.30% | 0.05% | 59% | $470,280 | ||
2015 | $9.00 | 0.03 | (0.92) | (0.89) | (0.01) | $8.10 | (9.93)% | 1.43% | 1.68% | 0.30% | 0.05% | 58% | $399,694 | ||
2014 | $8.87 | 0.03 | 0.13 | 0.16 | (0.03) | $9.00 | 1.84% | 1.45% | 1.70% | 0.29% | 0.04% | 74% | $393,357 | ||
2013 | $8.36 | 0.01 | 0.53 | 0.54 | (0.03) | $8.87 | 6.48% | 1.63% | 1.72% | 0.17% | 0.08% | 68% | $421,274 | ||
I Class(3) | |||||||||||||||
2017 | $8.79 | 0.04 | 3.54 | 3.58 | (0.05) | $12.32 | 40.86% | 0.94% | 1.26% | 0.43% | 0.11% | 47% | $505,000 | ||
2016 | $8.31 | 0.04 | 0.47 | 0.51 | (0.03) | $8.79 | 6.13% | 1.18% | 1.43% | 0.50% | 0.25% | 59% | $37,036 | ||
2015 | $9.24 | 0.02 | (0.93) | (0.91) | (0.02) | $8.31 | (9.83)% | 1.23% | 1.48% | 0.50% | 0.25% | 58% | $4,797 | ||
2014 | $9.09 | 0.05 | 0.14 | 0.19 | (0.04) | $9.24 | 2.07% | 1.25% | 1.50% | 0.49% | 0.24% | 74% | $16,300 | ||
2013 | $8.56 | 0.03 | 0.55 | 0.58 | (0.05) | $9.09 | 6.77% | 1.43% | 1.52% | 0.37% | 0.28% | 68% | $32,452 | ||
Y Class | |||||||||||||||
2017(4) | $9.79 | 0.07 | 2.48 | 2.55 | — | $12.34 | 26.05% | 0.77%(5) | 1.12%(5) | 0.91%(5) | 0.56%(5) | 47%(6) | $6 |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
A Class | |||||||||||||||
2017 | $8.26 | —(7) | 3.32 | 3.32 | (0.01) | $11.57 | 40.16% | 1.43% | 1.75% | (0.06)% | (0.38)% | 47% | $61,586 | ||
2016 | $7.82 | 0.01 | 0.43 | 0.44 | — | $8.26 | 5.63% | 1.63% | 1.88% | 0.05% | (0.20)% | 59% | $37,743 | ||
2015 | $8.70 | 0.01 | (0.89) | (0.88) | — | $7.82 | (10.11)% | 1.68% | 1.93% | 0.05% | (0.20)% | 58% | $25,632 | ||
2014 | $8.59 | 0.01 | 0.12 | 0.13 | (0.02) | $8.70 | 1.59% | 1.70% | 1.95% | 0.04% | (0.21)% | 74% | $9,278 | ||
2013 | $8.09 | (0.01) | 0.52 | 0.51 | (0.01) | $8.59 | 6.30% | 1.88% | 1.97% | (0.08)% | (0.17)% | 68% | $11,575 | ||
C Class | |||||||||||||||
2017 | $7.63 | (0.08) | 3.06 | 2.98 | — | $10.61 | 39.06% | 2.16% | 2.48% | (0.79)% | (1.11)% | 47% | $24,972 | ||
2016 | $7.28 | (0.05) | 0.40 | 0.35 | — | $7.63 | 4.81% | 2.38% | 2.63% | (0.70)% | (0.95)% | 59% | $5,840 | ||
2015 | $8.15 | (0.05) | (0.82) | (0.87) | — | $7.28 | (10.67)% | 2.43% | 2.68% | (0.70)% | (0.95)% | 58% | $3,149 | ||
2014 | $8.09 | (0.06) | 0.13 | 0.07 | (0.01) | $8.15 | 0.82% | 2.45% | 2.70% | (0.71)% | (0.96)% | 74% | $3,129 | ||
2013 | $7.67 | (0.06) | 0.48 | 0.42 | — | $8.09 | 5.48% | 2.63% | 2.72% | (0.83)% | (0.92)% | 68% | $3,571 |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R Class | |||||||||||||||
2017 | $8.33 | (0.02) | 3.33 | 3.31 | — | $11.64 | 39.74% | 1.68% | 2.00% | (0.31)% | (0.63)% | 47% | $4,811 | ||
2016 | $7.90 | (0.02) | 0.45 | 0.43 | — | $8.33 | 5.44% | 1.88% | 2.13% | (0.20)% | (0.45)% | 59% | $2,340 | ||
2015 | $8.82 | (0.02) | (0.90) | (0.92) | — | $7.90 | (10.43)% | 1.93% | 2.18% | (0.20)% | (0.45)% | 58% | $1,425 | ||
2014 | $8.72 | (0.02) | 0.14 | 0.12 | (0.02) | $8.82 | 1.38% | 1.95% | 2.20% | (0.21)% | (0.46)% | 74% | $1,712 | ||
2013 | $8.23 | (0.02) | 0.51 | 0.49 | — | $8.72 | 5.95% | 2.13% | 2.22% | (0.33)% | (0.42)% | 68% | $1,133 | ||
R5 Class | |||||||||||||||
2017(4) | $9.78 | 0.03 | 2.51 | 2.54 | — | $12.32 | 25.97% | 0.92%(5) | 1.27%(5) | 0.78%(5) | 0.43%(5) | 47%(6) | $46 | ||
R6 Class | |||||||||||||||
2017 | $8.81 | 0.06 | 3.53 | 3.59 | (0.06) | $12.34 | 40.98% | 0.83% | 1.15% | 0.54% | 0.22% | 47% | $92,470 | ||
2016 | $8.33 | 0.06 | 0.46 | 0.52 | (0.04) | $8.81 | 6.27% | 1.03% | 1.28% | 0.65% | 0.40% | 59% | $34,065 | ||
2015 | $9.25 | 0.07 | (0.95) | (0.88) | (0.04) | $8.33 | (9.58)% | 1.08% | 1.33% | 0.65% | 0.40% | 58% | $24,965 | ||
2014 | $9.09 | —(7) | 0.20 | 0.20 | (0.04) | $9.25 | 2.23% | 1.10% | 1.35% | 0.64% | 0.39% | 74% | $15,174 | ||
2013(8) | $8.46 | —(7) | 0.63 | 0.63 | — | $9.09 | 7.45% | 1.12%(5) | 1.37%(5) | 0.14%(5) | (0.11)%(5) | 68%(9) | $27 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(4) | April 10, 2017 (commencement of sale) through November 30, 2017. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2017. |
(7) | Per-share amount was less than $0.005. |
(8) | July 26, 2013 (commencement of sale) through November 30, 2013. |
(9) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2013. |
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century World Mutual Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Emerging Markets Fund (the “Fund”), one of the funds constituting American Century World Mutual Funds, Inc., as of November 30, 2017, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2017, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Emerging Markets Fund of American Century World Mutual Funds, Inc. as of November 30, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2018
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Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Mr. Thomas, 15) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 69 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired; Executive Vice President, ACC (2007 to 2013); President, ACS (2007 to 2013); Chief Operating Officer, ACC (2007 to 2012) | 69 | None |
Andrea C. Hall (1945) | Director | Since 1997 | Retired | 69 | None |
Jan M. Lewis (1957) | Director | Since 2011 | Retired; President and Chief Executive Officer, Catholic Charities of Northeast Kansas (human services organization) (2006 to 2013) | 69 | None |
James A. Olson (1942) | Director and Chairman of the Board | Since 2007 (Chairman since 2014) | Member, Plaza Belmont LLC (private equity fund manager) (1999 to present) | 69 | Saia, Inc. (2002 to 2012) and EPR Properties (2003 to 2013) |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
M. Jeannine Strandjord (1945) | Director | Since 1994 | Retired | 69 | Euronet Worldwide Inc. and MGP Ingredients, Inc. |
John R. Whitten (1946) | Director | Since 2008 | Retired | 69 | Rudolph Technologies, Inc. |
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 69 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director and President | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 114 | BioMed Valley Discoveries, Inc. |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 15 investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years |
Jonathan S. Thomas (1963) | Director and President since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries |
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present); Vice President, Client Interactions and Marketing, ACIS (2013 to 2014); Director, Client Interactions and Marketing, ACIS (2007 to 2013). Also serves as Vice President, ACIS |
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS |
C. Jean Wade (1964) | Vice President,Treasurer and Chief Financial Officer since 2012 | Vice President, ACS (2000 to present) |
Robert J. Leach (1966) | Vice President since 2006 and Assistant Treasurer since 2012 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present); Associate General Counsel, ACC (2001 to present). Also serves as Vice President, ACIM and ACS |
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
31
Approval of Management Agreement |
At a meeting held on June 29, 2017, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
• | the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund; |
• | the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis; |
• | the investment performance of the Fund, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; |
• | the cost of owning the Fund compared to the cost of owning similar funds; |
• | the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers; |
• | financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor; |
• | strategic plans of the Advisor |
• | possible economies of scale associated with the Advisor’s management of the Fund and other accounts under its management; |
• | data comparing services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices by the Fund and the Advisor regarding financial intermediaries, the nature of services provided by intermediaries, and the terms of share classes utilized; and |
• | any collateral benefits derived by the Advisor from the management of the Fund. |
The Directors held three in-person meetings and one telephonic meeting to review and discuss the information provided. The independent Directors also reviewed responses to supplemental information requests and held active discussions with the Advisor regarding the renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In
32
connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services - Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including without limitation the following:
• | portfolio research and security selection |
• | securities trading |
• | Fund administration |
• | custody of Fund assets |
• | daily valuation of the Fund’s portfolio |
• | shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications |
• | legal services (except the independent Directors’ counsel) |
• | regulatory and portfolio compliance |
• | financial reporting |
• | marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans) |
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment. The Board noted specifically the resources the Advisor has committed during the year to compliance with the Department of Labor fiduciary rule and share class modernization.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review detailed performance information provided by the Advisor during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board receives a report from the Advisor regarding the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the three-, five-, and ten-year periods and below its benchmark for the one-year period reviewed by the Board. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through various committees of the Board, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to,
33
information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the Advisor. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, and the fees and expenses of the Fund’s independent Directors (including their independent legal counsel) and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was above the median of the total expense ratios of the Fund’s peer expense universe and was within the range of its peer expense group. The Board discussed with the Advisor the factors that impacted the level of the fee in relation to its peers. The Board and the Advisor agreed to a temporary reduction of the Fund's annual unified management fee of 0.35% (e.g., the Investor
34
Class unified fee will be reduced from 1.62% to 1.27%) for at least one year, beginning August 1, 2017. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Directors also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Board reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor's resources and reasonable profits. The Board found the payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor receives proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
35
Proxy Voting Results |
A special meeting of shareholders was held on October 18, 2017, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect four directors to the Board of Directors of American Century World Mutual Funds, Inc.:
Affirmative | Withhold | ||||||
Thomas W. Bunn | $ | 5,482,015,298 | $ | 72,735,781 | |||
Barry Fink | $ | 5,485,170,607 | $ | 69,580,472 | |||
Jan M. Lewis | $ | 5,489,025,901 | $ | 65,725,178 | |||
Stephen E. Yates | $ | 5,481,872,069 | $ | 72,879,010 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Andrea C. Hall, James A. Olson, M. Jeannine Strandjord, and John R. Whitten.
36
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of 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 fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s 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 fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
37
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended November 30, 2017.
For the fiscal year ended November 30, 2017, the fund intends to pass through to shareholders foreign source income of $13,862,101 and foreign taxes paid of $1,451,768, or up to the maximum amount allowable, as a foreign tax credit. Foreign source income and foreign tax expense per outstanding share on November 30, 2017 are $0.1065 and $0.0111, respectively.
38
Notes |
39
Notes |
40
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century World Mutual Funds, Inc. | ||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||
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. | ||
©2018 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91030 1801 |
Annual Report | |
November 30, 2017 | |
Emerging Markets Small Cap Fund |
Table of Contents |
President’s Letter | |
Performance | |
Portfolio Commentary | |
Fund Characteristics | |
Shareholder Fee Example | |
Schedule of Investments | |
Statement of Assets and Liabilities | |
Statement of Operations | |
Statement of Changes in Net Assets | |
Notes to Financial Statements | |
Financial Highlights | |
Report of Independent Registered Public Accounting Firm | |
Management | |
Approval of Management Agreement | |
Proxy Voting Results | |
Additional Information |
Any opinions expressed in this report reflect those of the author 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.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2017. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional, updated investment and market insights, we encourage you to visit our website, americancentury.com.
Upbeat Earnings, Economic Data Sparked Strong Gains for Global Stocks
Throughout the world, improving economic activity, healthy corporate earnings growth, and supportive central bank policies helped fuel robust double-digit gains for global stocks. The rally began early in the period, largely in response to the economic-growth implications of Donald Trump’s presidential election victory, and it forged ahead with few interruptions through November 2017. The 12-month period included several potential sources of financial market disruption, including acts of terrorism, North Korean saber-rattling, and an active and destructive hurricane season. Yet any resulting volatility was short-lived, as investors remained focused on positive economic and earnings news. Furthermore, in the U.S., the prospect for pro-growth tax reform propelled major stock indices to several record-high levels.
Among the developed markets, equity performance was notably strong in Europe, where solid corporate profits, improving economic growth rates, declining unemployment, and perceived market-friendly election results in France and Germany supported gains. In addition, the European Central Bank continued to provide stimulus support in the wake of persistently low inflation, which also helped stocks advance. Returns for emerging markets stocks were even stronger, bolstered by improving global and local economic and business fundamentals and rising oil prices.
The broad “risk-on” sentiment also extended to the global fixed-income market, where emerging markets bonds and high-yield corporate bonds were top performers. These securities satisfied investor demand for yield as interest rates remained relatively low throughout the world.
With global growth synchronizing and strengthening and central banks pursuing varying degrees of policy normalization, investors likely will face new opportunities and challenges in the months ahead. We believe this scenario warrants a disciplined, diversified, and risk-aware approach, using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of November 30, 2017 | ||||
Average Annual Returns | ||||
Ticker Symbol | 1 year | Since Inception | Inception Date | |
Investor Class | AECVX | 31.85% | 21.45% | 4/7/16 |
MSCI Emerging Markets Small Cap Index | — | 28.85% | 18.29% | — |
I Class | AECSX | 32.18% | 21.70% | 4/7/16 |
A Class | AECLX | 4/7/16 | ||
No sales charge | 31.57% | 21.15% | ||
With sales charge | 23.97% | 16.88% | ||
C Class | AECHX | 30.54% | 20.23% | 4/7/16 |
R Class | AECMX | 31.30% | 20.86% | 4/7/16 |
R6 Class | AECTX | 32.35% | 21.87% | 4/7/16 |
Prior to April 10, 2017, the I Class was referred to as the Institutional Class. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
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 and may be subject to a maximum CDSC of 1.00%. 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.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over Life of Class |
$10,000 investment made April 7, 2016 |
Performance for other share classes will vary due to differences in fee structure. |
Value on November 30, 2017 | |
Investor Class — $13,778 | |
MSCI Emerging Markets Small Cap Index — $13,193 | |
Total Annual Fund Operating Expenses | |||||
Investor Class | I Class | A Class | C Class | R Class | R6 Class |
1.66% | 1.46% | 1.91% | 2.66% | 2.16% | 1.31% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Patricia Ribeiro and Sherwin Soo
In June 2017, portfolio manager Anthony Han left the fund's management team.
Performance Summary
Emerging Markets Small Cap gained 31.85%* for the 12 months ended November 30, 2017. The portfolio’s benchmark, the MSCI Emerging Markets Small Cap Index, gained 28.85% for the same period.
The fund outperformed its benchmark during the period, primarily due to positive stock selection in the information technology and consumer discretionary sectors. Conversely, investments in the materials and energy sectors limited relative gains. Regionally, stock selection in China and South Africa lifted relative performance, while negative stock selection in Brazil hindered performance. An underweight position and negative stock selection in South Korea also detracted.
Information Technology Holdings Contributed
Leading sector contribution came primarily from the information technology sector, where standout performers included optical components manufacturer Sunny Optical Technology Group and IT services company Vakrangee.
Sunny Optical Technology Group benefited from better-than-expected first-half 2017 earnings-per-share growth driven by shipments of camera modules, handset lenses, and automobile lenses. Management raised guidance for growth, particularly with the solid outlook from China smartphone manufacturers. Strong contributors also included Vakrangee, which started as an e-governance player doing systems integration and providing end-to-end services for various e-governance projects. The company then leveraged this into a role as a business correspondence player providing financial services, e-commerce, and logistics. It aims to expand its network of small outlets (Kendras) in rural and urban areas with the goal of providing last-mile retail touch points for products and services to the unserved and underserved regions of India. Vakrangee’s revenue growth continues to accelerate, supported by the central government’s emphasis on financial inclusion and the addition of new e-commerce, insurance, and other sellers on the network on a regular basis.
The fund’s outperformance in the consumer discretionary sector was driven primarily by K-12 after-school tutoring services provider TAL Education Group and hotel group China Lodging Group. TAL Education Group, a China-based company focusing on premium high-achieving students, continued to benefit from a rapidly growing market for K-12 education in China. Other positives for the stock include its increased course offerings, expansion into more cities, and new services. China Lodging reported stronger-than-expected quarterly sales and margins growth. Visibility into future sales and earnings has led to upward revisions of consensus estimates. The market continues to improve, helping overall room rates.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund's benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Stock Selection in the Materials Sector Detracted
Areas of relative weakness included the materials sector, where diamond mining company Petra Diamonds weighed on performance. Despite reporting financial results in line with expectations, operational issues combined with uncertainty about the direction of diamond prices clouded the market’s outlook for Petra’s growth. We consequently liquidated our position.
The fund’s underperformance in the energy sector was due primarily to Tullow Oil. Although the multinational oil and gas company continued to deleverage its balance sheet, we sold the stock on our belief that it has limited upside due to risks associated with its Ghana assets and its 2018 exploration program.
Notable individual detractors included China-based Pou Sheng International Holdings, a sportswear retailer that sells popular brands such as Nike and Adidas. The company has invested aggressively in store openings and promotions, which pressured margins and led to an earnings miss. We consequently liquidated our position in the stock.
Detractors also included Egis Technology, a company that specializes in fingerprint biometrics and data encryption solutions. Disappointing second-quarter financial results triggered a decline in the stock. Weaker-than-expected sales, due primarily to lower fingerprint sensor shipments to Samsung, dimmed our outlook for Egis Technology, prompting us to sell our position.
Relative performance was hindered by not owning South Korea-based SillaJen, a provider of medical research and development services with a focus on cancer treatments. The continued progress of clinical trials for advanced liver cancer supported stock gains. Other positives included news that SillaJen had entered into a cooperative research and development agreement with the U.S. National Cancer Institute and increasing interest in South Korean drug developers.
Outlook
We continue to believe emerging markets stocks will perform well in 2018. The global macro drivers that supported emerging markets assets in 2017—a synchronized global growth recovery and generally muted but bottoming inflation pressures—remain favorable. The domestic foundation for growth in emerging markets is strong.
We continue to invest in companies where fundamentals are strong and improving but share price performance does not fully reflect these factors. Our process is based on individual security selection, but broad themes have emerged.
Consumer discretionary was the largest relative sector position at period end. Information technology is also an important position. While large in absolute size, information technology is our second-largest relative overweight following consumer discretionary. Within consumer discretionary, we are focused on companies benefiting from increasing discretionary spending, including stronger demand for luxury and quality-of-life goods and services. In information technology, we continue to identify opportunities in consumer-facing technology as well as companies we believe are positioned to benefit from the smartphone component upgrade.
At period end, the fund’s largest sector underweights relative to the benchmark were real estate and health care. Geographically, Brazil remains the fund's largest relative overweight, followed by China. The fund’s largest relative underweights were South Korea and India.
6
Fund Characteristics |
NOVEMBER 30, 2017 | |
Top Ten Holdings | % of net assets |
iShares MSCI India Small-Cap ETF | 4.8% |
Vakrangee Ltd. | 2.3% |
Macronix International | 2.0% |
Chroma ATE, Inc. | 2.0% |
TCI Co. Ltd. | 1.8% |
Sunny Optical Technology Group Co. Ltd. | 1.8% |
Gourmet Master Co. Ltd. | 1.7% |
Erawan Group PCL (The) | 1.7% |
CVC Brasil Operadora e Agencia de Viagens SA | 1.7% |
China Lodging Group Ltd. ADR | 1.6% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 93.9% |
Exchange-Traded Funds | 4.8% |
Total Equity Exposure | 98.7% |
Temporary Cash Investments | 2.1% |
Other Assets and Liabilities | (0.8)% |
Investments by Country | % of net assets |
China | 25.0% |
Taiwan | 17.4% |
South Korea | 11.9% |
Brazil | 10.9% |
Thailand | 5.9% |
India | 4.4% |
South Africa | 4.4% |
Russia | 2.6% |
Other Countries | 11.4% |
Exchange-Traded Funds* | 4.8% |
Cash and Equivalents** | 1.3% |
* Category may increase exposure to the countries indicated. The Schedule of Investments provides additional information on the fund's portfolio holdings. | |
** Includes temporary cash investments and other assets and liabilities. |
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2017 to November 30, 2017.
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 I 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. 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.
8
Beginning Account Value 6/1/17 | Ending Account Value 11/30/17 | Expenses Paid During Period(1) 6/1/17 - 11/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,162.60 | $8.73 | 1.61% |
I Class | $1,000 | $1,164.30 | $7.65 | 1.41% |
A Class | $1,000 | $1,160.90 | $10.08 | 1.86% |
C Class | $1,000 | $1,156.10 | $14.11 | 2.61% |
R Class | $1,000 | $1,160.10 | $11.43 | 2.11% |
R6 Class | $1,000 | $1,164.10 | $6.84 | 1.26% |
Hypothetical | ||||
Investor Class | $1,000 | $1,017.00 | $8.14 | 1.61% |
I Class | $1,000 | $1,018.00 | $7.13 | 1.41% |
A Class | $1,000 | $1,015.74 | $9.40 | 1.86% |
C Class | $1,000 | $1,011.98 | $13.16 | 2.61% |
R Class | $1,000 | $1,014.49 | $10.66 | 2.11% |
R6 Class | $1,000 | $1,018.75 | $6.38 | 1.26% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
9
Schedule of Investments |
NOVEMBER 30, 2017
Shares | Value | ||||
COMMON STOCKS — 93.9% | |||||
Argentina — 0.5% | |||||
Banco Macro SA ADR | 608 | $ | 61,736 | ||
Brazil — 10.9% | |||||
Arezzo Industria e Comercio SA | 10,100 | 142,578 | |||
Azul SA ADR(1) | 5,080 | 127,813 | |||
Banco ABC Brasil SA Preference Shares | 27,158 | 134,983 | |||
Bradespar SA Preference Shares | 20,200 | 156,184 | |||
CVC Brasil Operadora e Agencia de Viagens SA | 14,000 | 192,329 | |||
Fleury SA | 15,500 | 124,201 | |||
Localiza Rent a Car SA | 23,400 | 143,183 | |||
Magazine Luiza SA | 6,400 | 111,090 | |||
Multiplan Empreendimentos Imobiliarios SA | 6,153 | 130,712 | |||
1,263,073 | |||||
Chile — 1.0% | |||||
Itau CorpBanca | 14,258,415 | 113,433 | |||
China — 25.0% | |||||
Baozun, Inc. ADR(1) | 4,217 | 119,552 | |||
Beijing Enterprises Water Group Ltd. | 100,000 | 78,314 | |||
Brilliance China Automotive Holdings Ltd. | 32,000 | 84,659 | |||
China Agri-Industries Holdings Ltd. | 216,000 | 89,686 | |||
China Lodging Group Ltd. ADR | 1,724 | 183,968 | |||
China Resources Cement Holdings Ltd. | 176,000 | 117,653 | |||
China Suntien Green Energy Corp. Ltd., H Shares | 379,000 | 93,847 | |||
China Yongda Automobiles Services Holdings Ltd. | 85,500 | 107,030 | |||
China ZhengTong Auto Services Holdings Ltd. | 130,500 | 137,388 | |||
Far East Horizon Ltd. | 103,000 | 94,078 | |||
Huaneng Renewables Corp. Ltd., H Shares | 166,000 | 53,150 | |||
Kingboard Chemical Holdings Ltd. | 24,500 | 140,786 | |||
Kingboard Laminates Holdings Ltd. | 36,500 | 60,962 | |||
KWG Property Holding Ltd. | 109,000 | 116,126 | |||
Lee & Man Paper Manufacturing Ltd. | 74,000 | 86,818 | |||
Li Ning Co. Ltd.(1) | 150,000 | 117,035 | |||
Lonking Holdings Ltd. | 281,000 | 100,811 | |||
Maanshan Iron & Steel Co. Ltd., H Shares(1) | 180,000 | 88,770 | |||
Minth Group Ltd. | 22,000 | 123,390 | |||
Nine Dragons Paper Holdings Ltd. | 32,000 | 53,230 | |||
SINA Corp.(1) | 991 | 96,890 | |||
Sunny Optical Technology Group Co. Ltd. | 12,000 | 203,681 | |||
TAL Education Group ADR | 4,238 | 118,155 | |||
Uni-President China Holdings Ltd. | 173,000 | 134,388 | |||
Weibo Corp. ADR(1) | 1,085 | 117,788 |
10
Shares | Value | ||||
West China Cement Ltd.(1) | 640,000 | $ | 96,762 | ||
Zhongsheng Group Holdings Ltd. | 43,000 | 89,082 | |||
2,903,999 | |||||
Czech Republic — 0.9% | |||||
Moneta Money Bank AS | 28,285 | 102,059 | |||
Greece — 0.6% | |||||
JUMBO SA | 4,936 | 73,887 | |||
Hungary — 0.7% | |||||
Richter Gedeon Nyrt | 3,178 | 82,150 | |||
India — 4.4% | |||||
Bharat Financial Inclusion Ltd.(1) | 5,877 | 89,835 | |||
Future Retail Ltd.(1) | 17,864 | 152,719 | |||
Praxis Home Retail Ltd.(1) | 893 | 277 | |||
Vakrangee Ltd. | 24,572 | 272,688 | |||
515,519 | |||||
Indonesia — 1.3% | |||||
AKR Corporindo Tbk PT | 149,900 | 70,646 | |||
Indofood Sukses Makmur Tbk PT | 147,100 | 79,901 | |||
150,547 | |||||
Malaysia — 1.6% | |||||
Carlsberg Brewery Malaysia Bhd | 15,600 | 57,707 | |||
My EG Services Bhd | 260,500 | 135,041 | |||
192,748 | |||||
Mexico — 1.5% | |||||
Alsea SAB de CV | 23,075 | 76,301 | |||
Banregio Grupo Financiero SAB de CV | 18,272 | 99,816 | |||
176,117 | |||||
Philippines — 0.7% | |||||
Puregold Price Club, Inc. | 81,600 | 79,692 | |||
Poland — 0.9% | |||||
CCC SA | 1,551 | 105,623 | |||
Russia — 2.6% | |||||
TMK PJSC | 75,675 | 101,980 | |||
X5 Retail Group NV GDR(1) | 2,880 | 106,715 | |||
Yandex NV, A Shares(1) | 2,813 | 93,138 | |||
301,833 | |||||
South Africa — 4.4% | |||||
Capitec Bank Holdings Ltd. | 1,815 | 130,472 | |||
Dis-Chem Pharmacies Ltd. | 66,094 | 178,203 | |||
Discovery Ltd. | 7,362 | 88,471 | |||
Sappi Ltd. | 15,644 | 110,883 | |||
508,029 | |||||
South Korea — 11.9% | |||||
CJ Logistics Corp.(1) | 502 | 70,118 | |||
Cosmax, Inc. | 671 | 77,281 | |||
Doosan Infracore Co. Ltd.(1) | 17,102 | 140,592 | |||
Duk San Neolux Co. Ltd.(1) | 8,587 | 181,460 |
11
Shares | Value | ||||
Hyundai Mipo Dockyard Co. Ltd.(1) | 1,063 | $ | 90,941 | ||
Koh Young Technology, Inc. | 1,536 | 124,116 | |||
Kumho Petrochemical Co. Ltd. | 1,074 | 88,511 | |||
LG Innotek Co. Ltd. | 666 | 99,661 | |||
Mando Corp. | 529 | 161,721 | |||
Medy-Tox, Inc. | 213 | 91,189 | |||
Seegene, Inc.(1) | 4,819 | 144,397 | |||
SK Materials Co. Ltd. | 660 | 110,977 | |||
1,380,964 | |||||
Taiwan — 17.4% | |||||
Airtac International Group | 10,446 | 178,641 | |||
ASPEED Technology, Inc. | 7,000 | 164,293 | |||
Chroma ATE, Inc. | 39,000 | 230,761 | |||
Global PMX Co. Ltd. | 17,000 | 97,303 | |||
Globalwafers Co. Ltd. | 12,000 | 164,035 | |||
Gourmet Master Co. Ltd. | 16,100 | 202,863 | |||
Hota Industrial Manufacturing Co. Ltd. | 14,829 | 65,889 | |||
Land Mark Optoelectronics Corp. | 11,000 | 139,322 | |||
Macronix International(1) | 148,225 | 237,453 | |||
Nien Made Enterprise Co. Ltd. | 9,000 | 82,964 | |||
Powertech Technology, Inc. | 22,000 | 66,919 | |||
Taiwan Paiho Ltd. | 28,000 | 107,302 | |||
TCI Co. Ltd. | 21,411 | 207,805 | |||
Vanguard International Semiconductor Corp. | 32,000 | 76,792 | |||
2,022,342 | |||||
Thailand — 5.9% | |||||
CH Karnchang PCL | 44,900 | 35,716 | |||
Digital Telecommunications Infrastructure Fund | 139,300 | 60,992 | |||
Erawan Group PCL (The) | 766,700 | 193,651 | |||
Minor International PCL | 90,400 | 120,423 | |||
Sino-Thai Engineering & Construction PCL | 107,000 | 80,610 | |||
Srisawad Corp. PCL | 40,212 | 77,645 | |||
Workpoint Entertainment PCL | 47,000 | 120,934 | |||
689,971 | |||||
Turkey — 1.7% | |||||
TAV Havalimanlari Holding AS | 20,289 | 101,170 | |||
Tofas Turk Otomobil Fabrikasi AS | 12,378 | 98,662 | |||
199,832 | |||||
TOTAL COMMON STOCKS (Cost $8,655,175) | 10,923,554 | ||||
EXCHANGE-TRADED FUNDS — 4.8% | |||||
iShares MSCI India Small-Cap ETF (Cost $387,039) | 11,099 | 561,942 | |||
TEMPORARY CASH INVESTMENTS — 2.1% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 3.75%, 4/15/18 - 2/15/47, valued at $135,961), in a joint trading account at 0.88%, dated 11/30/17, due 12/1/17 (Delivery value $133,568) | 133,565 |
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Shares | Value | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.125%, 8/15/44, valued at $117,657), at 0.34%, dated 11/30/17, due 12/1/17 (Delivery value $111,001) | $ | 111,000 | |||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 498 | 498 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $245,063) | 245,063 | ||||
TOTAL INVESTMENT SECURITIES — 100.8% (Cost $9,287,277) | 11,730,559 | ||||
OTHER ASSETS AND LIABILITIES — (0.8)% | (97,497 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 11,633,062 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Consumer Discretionary | 24.0 | % |
Information Technology | 21.9 | % |
Consumer Staples | 10.0 | % |
Industrials | 9.8 | % |
Materials | 9.4 | % |
Financials | 8.5 | % |
Health Care | 3.8 | % |
Real Estate | 2.1 | % |
Energy | 1.7 | % |
Telecommunication Services | 1.6 | % |
Utilities | 1.1 | % |
Exchange-Traded Funds | 4.8 | % |
Cash and Equivalents* | 1.3 | % |
*Includes temporary cash investments and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
GDR | - | Global Depositary Receipt |
(1) | Non-income producing. |
See Notes to Financial Statements.
13
Statement of Assets and Liabilities |
NOVEMBER 30, 2017 | |||
Assets | |||
Investment securities, at value (cost of $9,287,277) | $ | 11,730,559 | |
Receivable for capital shares sold | 3,500 | ||
Dividends and interest receivable | 3,209 | ||
11,737,268 | |||
Liabilities | |||
Payable for investments purchased | 57,406 | ||
Accrued management fees | 15,118 | ||
Distribution and service fees payable | 1,656 | ||
Accrued foreign taxes | 29,970 | ||
Accrued other expenses | 56 | ||
104,206 | |||
Net Assets | $ | 11,633,062 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 9,236,550 | |
Distributions in excess of net investment income | (29,939 | ) | |
Undistributed net realized gain | 13,164 | ||
Net unrealized appreciation | 2,413,287 | ||
$ | 11,633,062 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $6,883,585 | 503,890 | $13.66 | |||
I Class, $0.01 Par Value | $829,447 | 60,639 | $13.68 | |||
A Class, $0.01 Par Value | $1,956,221 | 143,430 | $13.64* | |||
C Class, $0.01 Par Value | $1,355,360 | 100,000 | $13.55 | |||
R Class, $0.01 Par Value | $331,284 | 24,328 | $13.62 | |||
R6 Class, $0.01 Par Value | $277,165 | 20,244 | $13.69 |
*Maximum offering price $14.47 (net asset value divided by 0.9425).
See Notes to Financial Statements.
14
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2017 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $13,037) | $ | 119,173 | |
Interest | 1,719 | ||
120,892 | |||
Expenses: | |||
Management fees | 131,202 | ||
Distribution and service fees: | |||
A Class | 4,168 | ||
C Class | 11,925 | ||
R Class | 1,320 | ||
Directors' fees and expenses | 247 | ||
Other expenses | 287 | ||
149,149 | |||
Net investment income (loss) | (28,257 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions (net of foreign tax expenses paid (refunded) of $2,124) | 237,753 | ||
Foreign currency translation transactions | (4,027 | ) | |
233,726 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments (includes (increase) decrease in accrued foreign taxes of $(29,970)) | 2,011,201 | ||
Translation of assets and liabilities in foreign currencies | 411 | ||
2,011,612 | |||
Net realized and unrealized gain (loss) | 2,245,338 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 2,217,081 |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
YEAR ENDED NOVEMBER 30, 2017 AND PERIOD ENDED NOVEMER 30, 2016 | ||||||
Increase (Decrease) in Net Assets | November 30, 2017 | November 30, 2016(1) | ||||
Operations | ||||||
Net investment income (loss) | $ | (28,257 | ) | $ | 12,647 | |
Net realized gain (loss) | 233,726 | (199,836 | ) | |||
Change in net unrealized appreciation (depreciation) | 2,011,612 | 401,675 | ||||
Net increase (decrease) in net assets resulting from operations | 2,217,081 | 214,486 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (20,088 | ) | — | |||
I Class | (6,486 | ) | — | |||
A Class | (8,573 | ) | — | |||
R Class | (737 | ) | — | |||
R6 Class | (2,472 | ) | — | |||
Decrease in net assets from distributions | (38,356 | ) | — | |||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 3,950,648 | 5,289,203 | ||||
Net increase (decrease) in net assets | 6,129,373 | 5,503,689 | ||||
Net Assets | ||||||
Beginning of period | 5,503,689 | — | ||||
End of period | $ | 11,633,062 | $ | 5,503,689 | ||
Undistributed (distributions in excess of) net investment income | $ | (29,939 | ) | $ | 4,335 |
(1) | April 7, 2016 (fund inception) through November 30, 2016. |
See Notes to Financial Statements.
16
Notes to Financial Statements |
NOVEMBER 30, 2017
1. Organization
American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Emerging Markets Small Cap Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek capital growth.
The fund offers the Investor Class, I Class (formerly Institutional Class), A Class, C Class, R Class and R6 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. All classes of the fund commenced sale on April 7, 2016, the fund’s inception date.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the
17
fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. Certain countries impose taxes on realized gains on the sale of securities registered in their country. The fund records the foreign tax expense, if any, on an accrual basis. The foreign tax expense on realized gains and unrealized appreciation 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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund 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.
18
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. ACIM owns 59% of the shares of the fund. Related parties do not invest in the fund for the purpose of exercising management or control.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class.
The annual management fee for each class is as follows:
Investor Class | I Class | A Class | C Class | R Class | R6 Class |
1.60% | 1.40% | 1.60% | 1.60% | 1.60% | 1.25% |
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, 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 ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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. Fees incurred under the plans during the period ended November 30, 2017 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Acquired Fund Fees and Expenses — The fund may invest in mutual funds, exchange-traded funds, and business development companies (the acquired funds). The fund will indirectly realize its pro rata share of the fees and expenses of the acquired funds in which it invests. These indirect fees and expenses are not paid out of the fund's assets but are reflected in the return realized by the fund on its investment in the acquired funds.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended November 30, 2017 were $7,803,079 and $3,921,534, respectively.
19
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2017 | Period ended November 30, 2016(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 426,322 | $ | 5,355,178 | 236,567 | $ | 2,387,142 | ||||
Issued in reinvestment of distributions | 1,979 | 20,088 | — | — | ||||||
Redeemed | (151,549 | ) | (1,951,627 | ) | (9,429 | ) | (101,758 | ) | ||
276,752 | 3,423,639 | 227,138 | 2,285,384 | |||||||
I Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | — | — | 60,000 | 600,000 | ||||||
Issued in reinvestment of distributions | 639 | 6,486 | — | — | ||||||
639 | 6,486 | 60,000 | 600,000 | |||||||
A Class/Shares Authorized | 40,000,000 | 50,000,000 | ||||||||
Sold | 42,584 | 460,431 | 100,028 | 1,000,309 | ||||||
Issued in reinvestment of distributions | 844 | 8,573 | — | — | ||||||
Redeemed | (26 | ) | (328 | ) | — | — | ||||
43,402 | 468,676 | 100,028 | 1,000,309 | |||||||
C Class/Shares Authorized | 30,000,000 | 50,000,000 | ||||||||
Sold | — | — | 100,000 | 1,000,000 | ||||||
R Class/Shares Authorized | 30,000,000 | 50,000,000 | ||||||||
Sold | 4,209 | 52,231 | 20,378 | 203,997 | ||||||
Issued in reinvestment of distributions | 73 | 737 | — | — | ||||||
Redeemed | (287 | ) | (3,593 | ) | (45 | ) | (487 | ) | ||
3,995 | 49,375 | 20,333 | 203,510 | |||||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | — | — | 20,000 | 200,000 | ||||||
Issued in reinvestment of distributions | 244 | 2,472 | — | — | ||||||
244 | 2,472 | 20,000 | 200,000 | |||||||
Net increase (decrease) | 325,032 | $ | 3,950,648 | 527,499 | $ | 5,289,203 |
(1) | April 7, 2016 (fund inception) through November 30, 2016. |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. 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.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a 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 necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
20
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | ||||||||
Argentina | $ | 61,736 | — | — | ||||
Brazil | 127,813 | $ | 1,135,260 | — | ||||
China | 636,353 | 2,267,646 | — | |||||
Russia | 93,138 | 208,695 | — | |||||
Other Countries | — | 6,392,913 | — | |||||
Exchange-Traded Funds | 561,942 | — | — | |||||
Temporary Cash Investments | 498 | 244,565 | — | |||||
$ | 1,481,480 | $ | 10,249,079 | — |
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.
The fund invests in common stocks of small companies. Because of this, the fund may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
8. Federal Tax Information
On December 19, 2017, the fund declared and paid a per-share distribution from net realized gains to shareholders of record on December 18, 2017 of $0.0155 for the Investor Class, I Class, A Class, C Class,
R Class and R6 Class.
On December 19, 2017, the fund declared and paid the following per-share distributions from net investment income to shareholders of record on December 18, 2017:
Investor Class | I Class | A Class | C Class | R Class | R6 Class |
$0.1415 | $0.1689 | $0.1072 | $0.0043 | $0.0729 | $0.1895 |
The tax character of distributions paid during the year ended November 30, 2017 and the period ended November 30, 2016 were as follows:
2017 | 2016(1) | ||||
Distributions Paid From | |||||
Ordinary income | $ | 38,356 | — | ||
Long-term capital gains | — | — |
(1) April 7, 2016 (fund inception) through November 30, 2016.
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.
21
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 9,397,293 | |
Gross tax appreciation of investments | $ | 2,522,116 | |
Gross tax depreciation of investments | (188,850 | ) | |
Net tax appreciation (depreciation) of investments | 2,333,266 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (29,995 | ) | |
Net tax appreciation (depreciation) | $ | 2,303,271 | |
Undistributed ordinary income | $ | 80,077 | |
Accumulated long-term gains | $ | 13,164 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the realization to ordinary income for tax purposes of unrealized gains on investments in passive foreign investment companies.
22
Financial Highlights |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses(3) | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |
Investor Class | |||||||||||
2017 | $10.45 | (0.03) | 3.33 | 3.30 | (0.09) | $13.66 | 31.85% | 1.61% | (0.16)% | 49% | $6,884 |
2016(4) | $10.00 | 0.04 | 0.41 | 0.45 | — | $10.45 | 4.50% | 1.60%(5) | 0.59%(5) | 51% | $2,373 |
I Class(6) | |||||||||||
2017 | $10.46 | 0.01 | 3.32 | 3.33 | (0.11) | $13.68 | 32.18% | 1.41% | 0.04% | 49% | $829 |
2016(4) | $10.00 | 0.05 | 0.41 | 0.46 | — | $10.46 | 4.60% | 1.40%(5) | 0.79%(5) | 51% | $628 |
A Class | |||||||||||
2017 | $10.43 | (0.04) | 3.31 | 3.27 | (0.06) | $13.64 | 31.57% | 1.86% | (0.41)% | 49% | $1,956 |
2016(4) | $10.00 | 0.02 | 0.41 | 0.43 | — | $10.43 | 4.30% | 1.85%(5) | 0.34%(5) | 51% | $1,043 |
C Class | |||||||||||
2017 | $10.38 | (0.13) | 3.30 | 3.17 | — | $13.55 | 30.54% | 2.61% | (1.16)% | 49% | $1,355 |
2016(4) | $10.00 | (0.03) | 0.41 | 0.38 | — | $10.38 | 3.80% | 2.60%(5) | (0.41)%(5) | 51% | $1,038 |
R Class | |||||||||||
2017 | $10.41 | (0.07) | 3.32 | 3.25 | (0.04) | $13.62 | 31.30% | 2.11% | (0.66)% | 49% | $331 |
2016(4) | $10.00 | 0.01 | 0.40 | 0.41 | — | $10.41 | 4.10% | 2.10%(5) | 0.09%(5) | 51% | $212 |
R6 Class | |||||||||||
2017 | $10.47 | 0.03 | 3.31 | 3.34 | (0.12) | $13.69 | 32.35% | 1.26% | 0.19% | 49% | $277 |
2016(4) | $10.00 | 0.06 | 0.41 | 0.47 | — | $10.47 | 4.70% | 1.25%(5) | 0.94%(5) | 51% | $209 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Ratio of operating expenses to average net assets does not include any fees and expenses of the acquired funds. |
(4) | April 7, 2016 (fund inception) through November 30, 2016. |
(5) | Annualized. |
(6) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century World Mutual Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Emerging Markets Small Cap Fund (the “Fund”), one of the funds constituting American Century World Mutual Funds, Inc., as of November 30, 2017, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for year then ended and for the period from April 7, 2016 (commencement date) through November 30, 2016. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2017, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Emerging Markets Small Cap Fund of American Century World Mutual Funds, Inc. as of November 30, 2017, the results of its operations for the year then ended and the changes in its net assets and the financial highlights for year then ended and for the period from April 7, 2016 (commencement date) through November 30, 2016, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2018
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Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Mr. Thomas, 15) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 69 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired; Executive Vice President, ACC (2007 to 2013); President, ACS (2007 to 2013); Chief Operating Officer, ACC (2007 to 2012) | 69 | None |
Andrea C. Hall (1945) | Director | Since 1997 | Retired | 69 | None |
Jan M. Lewis (1957) | Director | Since 2011 | Retired; President and Chief Executive Officer, Catholic Charities of Northeast Kansas (human services organization) (2006 to 2013) | 69 | None |
James A. Olson (1942) | Director and Chairman of the Board | Since 2007 (Chairman since 2014) | Member, Plaza Belmont LLC (private equity fund manager) (1999 to present) | 69 | Saia, Inc. (2002 to 2012) and EPR Properties (2003 to 2013) |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
M. Jeannine Strandjord (1945) | Director | Since 1994 | Retired | 69 | Euronet Worldwide Inc. and MGP Ingredients, Inc. |
John R. Whitten (1946) | Director | Since 2008 | Retired | 69 | Rudolph Technologies, Inc. |
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 69 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director and President | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 114 | BioMed Valley Discoveries, Inc. |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 15 investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years |
Jonathan S. Thomas (1963) | Director and President since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries |
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present); Vice President, Client Interactions and Marketing, ACIS (2013 to 2014); Director, Client Interactions and Marketing, ACIS (2007 to 2013). Also serves as Vice President, ACIS |
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS |
C. Jean Wade (1964) | Vice President,Treasurer and Chief Financial Officer since 2012 | Vice President, ACS (2000 to present) |
Robert J. Leach (1966) | Vice President since 2006 and Assistant Treasurer since 2012 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present); Associate General Counsel, ACC (2001 to present). Also serves as Vice President, ACIM and ACS |
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Approval of Management Agreement |
At a meeting held on June 29, 2017, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
• | the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund; |
• | the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis; |
• | the investment performance of the Fund, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; |
• | the cost of owning the Fund compared to the cost of owning similar funds; |
• | the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers; |
• | financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor; |
• | strategic plans of the Advisor |
• | possible economies of scale associated with the Advisor’s management of the Fund and other accounts under its management; |
• | data comparing services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices by the Fund and the Advisor regarding financial intermediaries, the nature of services provided by intermediaries, and the terms of share classes utilized; and |
• | any collateral benefits derived by the Advisor from the management of the Fund. |
The Directors held three in-person meetings and one telephonic meeting to review and discuss the information provided. The independent Directors also reviewed responses to supplemental information requests and held active discussions with the Advisor regarding the renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In
29
connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services - Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including without limitation the following:
• | portfolio research and security selection |
• | securities trading |
• | Fund administration |
• | custody of Fund assets |
• | daily valuation of the Fund’s portfolio |
• | shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications |
• | legal services (except the independent Directors’ counsel) |
• | regulatory and portfolio compliance |
• | financial reporting |
• | marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans) |
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment. The Board noted specifically the resources the Advisor has committed during the year to compliance with the Department of Labor fiduciary rule and share class modernization.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement. More detailed information about the Fund's performance can be found in the Performance and Portfolio Commentary sections of this report.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through various committees of the Board, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the Advisor. The Board
30
found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business to provide shareholders additional content and services.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, and the fees and expenses of the Fund’s independent Directors (including their independent legal counsel) and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was above the median of the total expense ratios of the Fund’s peer expense universe and was within the range of its peer expense group. The Board discussed with the Advisor the factors that impacted the level of the fee in relation to its peers and accepted the Advisor's explanation of such factors. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Directors also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
31
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Board reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor's resources and reasonable profits. The Board found the payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor receives proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
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Proxy Voting Results |
A special meeting of shareholders was held on October 18, 2017, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect four directors to the Board of Directors of American Century World Mutual Funds, Inc.:
Affirmative | Withhold | ||||||
Thomas W. Bunn | $ | 5,482,015,298 | $ | 72,735,781 | |||
Barry Fink | $ | 5,485,170,607 | $ | 69,580,472 | |||
Jan M. Lewis | $ | 5,489,025,901 | $ | 65,725,178 | |||
Stephen E. Yates | $ | 5,481,872,069 | $ | 72,879,010 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Andrea C. Hall, James A. Olson, M. Jeannine Strandjord, and John R. Whitten.
33
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of 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 fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s 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 fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
34
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended November 30, 2017.
For the fiscal year ended November 30, 2017, the fund intends to pass through to shareholders foreign source income of $129,042 and foreign taxes paid of $12,868, or up to the maximum amount allowable, as a foreign tax credit. Foreign source income and foreign tax expense per outstanding share on November 30, 2017 are $0.1514 and $0.0151, respectively.
35
Notes |
36
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century World Mutual Funds, Inc. | ||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||
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. | ||
©2018 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91033 1801 |
Annual Report | |
November 30, 2017 | |
Focused International Growth Fund |
Table of Contents |
President’s Letter | |
Performance | |
Portfolio Commentary | |
Fund Characteristics | |
Shareholder Fee Example | |
Schedule of Investments | |
Statement of Assets and Liabilities | |
Statement of Operations | |
Statement of Changes in Net Assets | |
Notes to Financial Statements | |
Financial Highlights | |
Report of Independent Registered Public Accounting Firm | |
Management | |
Approval of Management Agreement | |
Proxy Voting Results | |
Additional Information |
Any opinions expressed in this report reflect those of the author 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.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2017. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional, updated investment and market insights, we encourage you to visit our website, americancentury.com.
Upbeat Earnings, Economic Data Sparked Strong Gains for Global Stocks
Throughout the world, improving economic activity, healthy corporate earnings growth, and supportive central bank policies helped fuel robust double-digit gains for global stocks. The rally began early in the period, largely in response to the economic-growth implications of Donald Trump’s presidential election victory, and it forged ahead with few interruptions through November 2017. The 12-month period included several potential sources of financial market disruption, including acts of terrorism, North Korean saber-rattling, and an active and destructive hurricane season. Yet any resulting volatility was short-lived, as investors remained focused on positive economic and earnings news. Furthermore, in the U.S., the prospect for pro-growth tax reform propelled major stock indices to several record-high levels.
Among the developed markets, equity performance was notably strong in Europe, where solid corporate profits, improving economic growth rates, declining unemployment, and perceived market-friendly election results in France and Germany supported gains. In addition, the European Central Bank continued to provide stimulus support in the wake of persistently low inflation, which also helped stocks advance. Returns for emerging markets stocks were even stronger, bolstered by improving global and local economic and business fundamentals and rising oil prices.
The broad “risk-on” sentiment also extended to the global fixed-income market, where emerging markets bonds and high-yield corporate bonds were top performers. These securities satisfied investor demand for yield as interest rates remained relatively low throughout the world.
With global growth synchronizing and strengthening and central banks pursuing varying degrees of policy normalization, investors likely will face new opportunities and challenges in the months ahead. We believe this scenario warrants a disciplined, diversified, and risk-aware approach, using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of November 30, 2017 | ||||
Average Annual Returns | ||||
Ticker Symbol | 1 year | Since Inception | Inception Date | |
Investor Class | AFCNX | 32.40% | 16.48% | 3/29/16 |
MSCI ACWI ex-U.S. Index | — | 27.59% | 18.44% | — |
I Class | AFCSX | 32.74% | 16.73% | 3/29/16 |
A Class | AFCLX | 3/29/16 | ||
No sales charge | 32.13% | 16.20% | ||
With sales charge | 24.58% | 12.16% | ||
C Class | AFCHX | 31.20% | 15.35% | 3/29/16 |
R Class | AFCWX | 31.73% | 15.91% | 3/29/16 |
R6 Class | AFCMX | 32.90% | 16.89% | 3/29/16 |
Prior to April 10, 2017, the I Class was referred to as the Institutional Class. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
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 and may be subject to a maximum CDSC of 1.00%. 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.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over Life of Class |
$10,000 investment made March 29, 2016 |
Performance for other share classes will vary due to differences in fee structure. |
Value on November 30, 2017 | |
Investor Class — $12,909 | |
MSCI ACWI ex-U.S. Index — $13,275 | |
Total Annual Fund Operating Expenses | |||||
Investor Class | I Class | A Class | C Class | R Class | R6 Class |
1.24% | 1.04% | 1.49% | 2.24% | 1.74% | 0.89% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
In December 2017, Jim Zhao was promoted from analyst to co-portfolio manager for Non-U.S. Growth strategies.
Focused International Growth gained 32.40%* for the 12 months ended November 30, 2017. The portfolio’s benchmark, the MSCI ACWI ex-US Index, increased 27.59% for the same period.
Non-U.S. developed market stocks produced strong gains during the 12-month period, outperforming U.S.-based equities, and growth stocks outpaced their value counterparts. Among non-U.S. developed market stocks, those based in Europe fared the best, followed by Japan and the Far East. The strength in non-U.S. growth equity performance was supported by increasing evidence of a long-duration earnings recovery.
Growth in non-U.S. markets was driven by improved global earnings growth. Growth in Europe was supported by strong revenue and earnings growth. Rising consumer and business confidence, coupled with improved corporate profits, have also led to increased capital spending and employment growth.
Japanese stocks have benefited from better-than-expected earnings, driven by improved capital spending, consumer confidence and export growth. In addition, the Japanese economy grew at a 2.5% annualized real rate in the third quarter of the year and has now expanded for seven consecutive quarters, the longest growth streak on record.
Overall, the fund surpassed its benchmark primarily due to stock selection in the information technology, financials, and consumer discretionary sectors; positioning in information technology stocks also helped to a lesser extent. Regionally, stock selection in China, and an underweight in Canada contributed to the fund’s outperformance.
Information technology returns were driven by strong stock decisions. A sector overweight also proved beneficial, though to a lesser extent. Stock selection in financials also helped. Geographically, stock decisions in China as well as an underweight in Canada added value.
Internet firms Alibaba Group Holding and Tencent Holdings drove returns in information technology. Alibaba continues to be a strong performer driven by better-than-expected revenue and earnings growth. The company continues to report greater-than-anticipated quarterly results, resulting in upward revisions to revenue and earnings estimates. Tencent rallied after the company announced it had secured the exclusive rights for the popular Playerunknown’s Battlegrounds (PUBG) game in China. It also reported better-than-expected revenue and earnings throughout the period.
In financials, London Stock Exchange, an owner of financial exchanges around the world, reported strong results driven by the continued changes in its product mix away from capital markets toward higher-margin, subscription-based, post-trade data and information. In addition, new security types are being added to the company’s clearing business.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund's benchmark, other share classes may not. See page 3 for returns for all share classes.
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In consumer discretionary, luxury goods firm Kering reported strong results driven by strength in its Gucci brand, which continues to benefit from new designs, new store formats, and increased luxury-goods demand.
Stock selection in materials hurt returns. Regionally, an overweight in Brazil and an underweight in South Korea as well as stock selection in the latter hampered results.
In materials, iron ore producer Fortescue Metals Group, which suffered amid supply/demand imbalances that resulted in weak iron ore prices, detracted from relative returns. We exited the position.
Automotive manufacturer Tata Motors’ stock was weak after reporting disappointing results, particularly for Jaguar. We exited the position on this news.
Oil and gas exploration and production firm Tullow Oil, whose performance is closely tied to oil prices, was a victim of weakness in the commodity, particularly earlier in the period. We eliminated the position.
We remain focused on our disciplined, bottom-up fundamental process of identifying opportunities with accelerating, sustainable growth, where we see upside to consensus estimates. The portfolio is built through bottom-up stock selection within a risk aware framework. We do not make top down sector or regional allocations. Confidence in sustained earnings growth continues to improve supported by a strong global economic backdrop and confirmed by this strong earnings season and outlook. We expect earnings to continue to be the key driver of stock price performance. Information technology remains the largest sector overweight supported by multiple trends, including the shift from online to digital, strong demand for factory automation solutions, and broad-based improvement in semiconductor demand, supported by increased complexity and proliferation into end markets. Consumer discretionary remains a large overweight. Factors supporting our positive view for the sector include the shift in shopping from bricks and mortar to online as well as a general recovery in luxury goods demand. The portfolio has no exposure in the utilities and telecommunication services sectors, where we have not seen examples of companies exhibiting accelerating, sustainable growth that fit our investment process.
Europe remains our largest regional weighting. While the recovery in European earnings is behind that of the U.S., European earnings are the strongest in seven years with evidence of sustainability. Companies in Europe are benefiting from improved revenue growth combined with strong operating leverage. We expect foreign exchange to be less of a headwind going forward as the euro/dollar exchange rate stabilizes.
6
Fund Characteristics |
NOVEMBER 30, 2017 | |
Top Ten Holdings | % of net assets |
Alibaba Group Holding Ltd. ADR | 3.7% |
Lonza Group AG | 3.6% |
Tencent Holdings Ltd. | 3.4% |
AIA Group Ltd. | 3.4% |
London Stock Exchange Group plc | 3.2% |
Kering | 3.1% |
CSL Ltd. | 3.1% |
Treasury Wine Estates Ltd. | 3.0% |
adidas AG | 3.0% |
Nintendo Co. Ltd. | 2.9% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 95.0% |
Temporary Cash Investments | 4.3% |
Other Assets and Liabilities | 0.7% |
Investments by Country | % of net assets |
United Kingdom | 15.1% |
Japan | 12.9% |
Switzerland | 7.3% |
China | 7.1% |
Germany | 7.0% |
Australia | 6.1% |
Brazil | 5.3% |
France | 5.2% |
Denmark | 4.0% |
Hong Kong | 3.4% |
Ireland | 2.9% |
Austria | 2.8% |
Indonesia | 2.6% |
Russia | 2.4% |
Belgium | 2.1% |
India | 2.1% |
Taiwan | 2.1% |
Other Countries | 4.6% |
Cash and Equivalents* | 5.0% |
*Includes temporary cash investments and other assets and liabilities.
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2017 to November 30, 2017.
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 I 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. 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.
8
Beginning Account Value 6/1/17 | Ending Account Value 11/30/17 | Expenses Paid During Period(1) 6/1/17 - 11/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,143.80 | $6.66 | 1.24% |
I Class | $1,000 | $1,145.50 | $5.59 | 1.04% |
A Class | $1,000 | $1,143.00 | $8.00 | 1.49% |
C Class | $1,000 | $1,139.00 | $12.01 | 2.24% |
R Class | $1,000 | $1,141.20 | $9.34 | 1.74% |
R6 Class | $1,000 | $1,146.40 | $4.79 | 0.89% |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.85 | $6.28 | 1.24% |
I Class | $1,000 | $1,019.85 | $5.27 | 1.04% |
A Class | $1,000 | $1,017.60 | $7.54 | 1.49% |
C Class | $1,000 | $1,013.84 | $11.31 | 2.24% |
R Class | $1,000 | $1,016.35 | $8.80 | 1.74% |
R6 Class | $1,000 | $1,020.61 | $4.51 | 0.89% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
9
Schedule of Investments |
NOVEMBER 30, 2017
Shares | Value | ||||
COMMON STOCKS — 95.0% | |||||
Australia — 6.1% | |||||
CSL Ltd. | 2,730 | $ | 297,044 | ||
Treasury Wine Estates Ltd. | 24,850 | 296,794 | |||
593,838 | |||||
Austria — 2.8% | |||||
Erste Group Bank AG | 6,350 | 276,233 | |||
Belgium — 2.1% | |||||
KBC Group NV | 2,560 | 209,595 | |||
Brazil — 5.3% | |||||
Itau Unibanco Holding SA Preference Shares | 12,300 | 155,072 | |||
Localiza Rent a Car SA | 33,900 | 207,432 | |||
Lojas Renner SA | 14,900 | 154,442 | |||
516,946 | |||||
China — 7.1% | |||||
Alibaba Group Holding Ltd. ADR(1) | 2,050 | 363,014 | |||
Tencent Holdings Ltd. | 6,500 | 335,524 | |||
698,538 | |||||
Denmark — 4.0% | |||||
AP Moller - Maersk A/S, B Shares | 90 | 161,464 | |||
DSV A/S | 3,020 | 232,613 | |||
394,077 | |||||
France — 5.2% | |||||
Kering | 690 | 306,295 | |||
TOTAL SA | 3,550 | 200,433 | |||
506,728 | |||||
Germany — 7.0% | |||||
adidas AG | 1,390 | 289,850 | |||
Infineon Technologies AG | 6,980 | 192,801 | |||
Zalando SE(1) | 4,010 | 205,321 | |||
687,972 | |||||
Hong Kong — 3.4% | |||||
AIA Group Ltd. | 40,400 | 329,297 | |||
India — 2.1% | |||||
HDFC Bank Ltd. ADR | 2,140 | 207,794 | |||
Indonesia — 2.6% | |||||
Bank Mandiri Persero Tbk PT | 455,300 | 249,832 | |||
Ireland — 2.9% | |||||
CRH plc | 3,190 | 110,078 | |||
Ryanair Holdings plc ADR(1) | 1,460 | 178,032 | |||
288,110 | |||||
Japan — 12.9% | |||||
Komatsu Ltd. | 7,000 | 218,205 |
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Shares | Value | ||||
MonotaRO Co. Ltd. | 5,500 | $ | 157,168 | ||
Nintendo Co. Ltd. | 700 | 284,200 | |||
Pola Orbis Holdings, Inc. | 6,200 | 227,018 | |||
Recruit Holdings Co. Ltd. | 8,500 | 199,519 | |||
Start Today Co. Ltd. | 5,600 | 172,577 | |||
1,258,687 | |||||
Mexico — 1.5% | |||||
Grupo Financiero Banorte SAB de CV | 24,630 | 144,660 | |||
Portugal — 1.4% | |||||
Jeronimo Martins SGPS SA | 6,720 | 131,913 | |||
Russia — 2.4% | |||||
Yandex NV, A Shares(1) | 6,990 | 231,439 | |||
Sweden — 1.7% | |||||
Lundin Petroleum AB(1) | 7,410 | 170,629 | |||
Switzerland — 7.3% | |||||
ABB Ltd. | 7,290 | 186,599 | |||
Lonza Group AG | 1,350 | 352,695 | |||
Roche Holding AG | 710 | 179,163 | |||
718,457 | |||||
Taiwan — 2.1% | |||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 27,000 | 203,269 | |||
United Kingdom — 15.1% | |||||
Ashtead Group plc | 7,380 | 189,701 | |||
B&M European Value Retail SA | 29,920 | 154,606 | |||
Diageo plc | 7,900 | 272,939 | |||
Ferguson plc | 2,660 | 192,045 | |||
London Stock Exchange Group plc | 6,170 | 315,708 | |||
St. James's Place plc | 9,970 | 163,774 | |||
Weir Group plc (The) | 6,960 | 183,730 | |||
1,472,503 | |||||
TOTAL COMMON STOCKS (Cost $7,448,795) | 9,290,517 | ||||
TEMPORARY CASH INVESTMENTS — 4.3% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 3.75%, 4/15/18 - 2/15/47, valued at $236,074), in a joint trading account at 0.88%, dated 11/30/17, due 12/1/17 (Delivery value $231,921) | 231,915 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.125%, 8/15/44, valued at $197,877), at 0.34%, dated 11/30/17, due 12/1/17 (Delivery value $193,002) | 193,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 599 | 599 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $425,514) | 425,514 | ||||
TOTAL INVESTMENT SECURITIES — 99.3% (Cost $7,874,309) | 9,716,031 | ||||
OTHER ASSETS AND LIABILITIES — 0.7% | 65,399 | ||||
TOTAL NET ASSETS — 100.0% | $ | 9,781,430 |
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MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Industrials | 21.5 | % |
Financials | 21.0 | % |
Information Technology | 16.5 | % |
Consumer Discretionary | 13.1 | % |
Consumer Staples | 9.5 | % |
Health Care | 8.5 | % |
Energy | 3.8 | % |
Materials | 1.1 | % |
Cash and Equivalents* | 5.0 | % |
*Includes temporary cash investments and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
(1) | Non-income producing. |
See Notes to Financial Statements.
12
Statement of Assets and Liabilities |
NOVEMBER 30, 2017 | |||
Assets | |||
Investment securities, at value (cost of $7,874,309) | $ | 9,716,031 | |
Foreign currency holdings, at value (cost of $2,179) | 2,166 | ||
Receivable for capital shares sold | 95,761 | ||
Dividends and interest receivable | 10,668 | ||
9,824,626 | |||
Liabilities | |||
Payable for investments purchased | 3,931 | ||
Payable for capital shares redeemed | 28,297 | ||
Accrued management fees | 9,492 | ||
Distribution and service fees payable | 1,428 | ||
Accrued other expenses | 48 | ||
43,196 | |||
Net Assets | $ | 9,781,430 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 8,072,224 | |
Accumulated net realized loss | (132,903 | ) | |
Net unrealized appreciation | 1,842,109 | ||
$ | 9,781,430 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $5,882,175 | 459,177 | $12.81 | |||
I Class, $0.01 Par Value | $777,305 | 60,585 | $12.83 | |||
A Class, $0.01 Par Value | $1,294,687 | 101,216 | $12.79* | |||
C Class, $0.01 Par Value | $1,269,929 | 100,012 | $12.70 | |||
R Class, $0.01 Par Value | $297,583 | 23,305 | $12.77 | |||
R6 Class, $0.01 Par Value | $259,751 | 20,225 | $12.84 |
*Maximum offering price $13.57 (net asset value divided by 0.9425).
See Notes to Financial Statements.
13
Statement of Operations |
FOR THE YEAR ENDED NOVEMBER 30, 2017 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $8,597) | $ | 92,969 | |
Interest | 1,390 | ||
94,359 | |||
Expenses: | |||
Management fees | 82,194 | ||
Distribution and service fees: | |||
A Class | 2,830 | ||
C Class | 11,153 | ||
R Class | 1,181 | ||
Directors' fees and expenses | 205 | ||
Other expenses | 189 | ||
97,752 | |||
Net investment income (loss) | (3,393 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 30,106 | ||
Foreign currency translation transactions | (1,210 | ) | |
28,896 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 1,839,905 | ||
Translation of assets and liabilities in foreign currencies | 736 | ||
1,840,641 | |||
Net realized and unrealized gain (loss) | 1,869,537 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,866,144 |
See Notes to Financial Statements.
14
Statement of Changes in Net Assets |
YEAR ENDED NOVEMBER 30, 2017 AND PERIOD ENDED NOVEMBER 30, 2016 | ||||||
Increase (Decrease) in Net Assets | November 30, 2017 | November 30, 2016(1) | ||||
Operations | ||||||
Net investment income (loss) | $ | (3,393 | ) | $ | 11,526 | |
Net realized gain (loss) | 28,896 | (150,814 | ) | |||
Change in net unrealized appreciation (depreciation) | 1,840,641 | 1,468 | ||||
Net increase (decrease) in net assets resulting from operations | 1,866,144 | (137,820 | ) | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (15,998 | ) | — | |||
I Class | (5,676 | ) | — | |||
A Class | (5,085 | ) | — | |||
R Class | (529 | ) | — | |||
R6 Class | (2,184 | ) | — | |||
Decrease in net assets from distributions | (29,472 | ) | — | |||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 2,946,598 | 5,135,980 | ||||
Net increase (decrease) in net assets | 4,783,270 | 4,998,160 | ||||
Net Assets | ||||||
Beginning of period | 4,998,160 | — | ||||
End of period | $ | 9,781,430 | $ | 4,998,160 | ||
Undistributed net investment income | — | $ | 16,781 |
(1) | March 29, 2016 (fund inception) through November 30, 2016. |
See Notes to Financial Statements.
15
Notes to Financial Statements |
NOVEMBER 30, 2017
1. Organization
American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Focused International Growth Fund (the fund) is one fund in a series issued by the corporation. The fund's investment objective is to seek capital growth.
The fund offers the Investor Class, I Class (formerly Institutional Class), A Class, C Class, R Class and R6 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. All classes of the fund commenced sale on March 29, 2016, the fund's inception date.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the
16
fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund 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 fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
17
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. ACIM owns 66% of the shares of the fund. Related parties do not invest in the fund for the purpose of exercising management or control.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class.
The annual management fee for each class is as follows:
Investor Class | I Class | A Class | C Class | R Class | R6 Class |
1.23% | 1.03% | 1.23% | 1.23% | 1.23% | 0.88% |
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, 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 ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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. Fees incurred under the plans during the period ended November 30, 2017 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended November 30, 2017 were $7,551,980 and $5,048,406, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2017 | Period ended November 30, 2016(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 312,694 | $ | 3,673,401 | 220,924 | $ | 2,212,252 | ||||
Issued in reinvestment of distributions | 1,649 | 15,998 | — | — | ||||||
Redeemed | (67,881 | ) | (795,766 | ) | (8,209 | ) | (83,202 | ) | ||
246,462 | 2,893,633 | 212,715 | 2,129,050 | |||||||
I Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | — | — | 60,000 | 600,000 | ||||||
Issued in reinvestment of distributions | 585 | 5,676 | — | — | ||||||
585 | 5,676 | 60,000 | 600,000 | |||||||
A Class/Shares Authorized | 40,000,000 | 50,000,000 | ||||||||
Sold | 201 | 2,367 | 100,491 | 1,005,000 | ||||||
Issued in reinvestment of distributions | 524 | 5,085 | — | — | ||||||
725 | 7,452 | 100,491 | 1,005,000 | |||||||
C Class/Shares Authorized | 30,000,000 | 50,000,000 | ||||||||
Sold | 12 | 147 | 100,000 | 1,000,000 | ||||||
R Class/Shares Authorized | 30,000,000 | 50,000,000 | ||||||||
Sold | 3,495 | 42,262 | 20,203 | 202,104 | ||||||
Issued in reinvestment of distributions | 54 | 529 | — | — | ||||||
Redeemed | (430 | ) | (5,285 | ) | (17 | ) | (174 | ) | ||
3,119 | 37,506 | 20,186 | 201,930 | |||||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | — | — | 20,000 | 200,000 | ||||||
Issued in reinvestment of distributions | 225 | 2,184 | — | — | ||||||
225 | 2,184 | 20,000 | 200,000 | |||||||
Net increase (decrease) | 251,128 | $ | 2,946,598 | 513,392 | $ | 5,135,980 |
(1) | March 29, 2016 (fund inception) through November 30, 2016. |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. 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.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a 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 necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
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The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | ||||||||
China | $ | 363,014 | $ | 335,524 | — | |||
India | 207,794 | — | — | |||||
Ireland | 178,032 | 110,078 | — | |||||
Russia | 231,439 | — | — | |||||
Other Countries | — | 7,864,636 | — | |||||
Temporary Cash Investments | 599 | 424,915 | — | |||||
$ | 980,878 | $ | 8,735,153 | — |
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions. Investing in emerging markets may accentuate these risks.
8. Federal Tax Information
The tax character of distributions paid during the year ended November 30, 2017 and period ended November 30, 2016 were as follows:
2017 | 2016(1) | ||||
Distributions Paid From | |||||
Ordinary income | $ | 29,472 | — | ||
Long-term capital gains | — | — |
(1) April 7, 2016 (fund inception) through November 30, 2016.
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 period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 7,880,775 | |
Gross tax appreciation of investments | $ | 1,883,442 | |
Gross tax depreciation of investments | (48,186 | ) | |
Net tax appreciation (depreciation) of investments | 1,835,256 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | 387 | ||
Net tax appreciation (depreciation) | $ | 1,835,643 | |
Undistributed ordinary income | — | ||
Accumulated short-term capital losses | $ | (126,437 | ) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
Accumulated capital losses represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers may be carried forward for an unlimited period. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations.
20
Financial Highlights |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||
2017 | $9.75 | 0.01 | 3.13 | 3.14 | (0.08) | $12.81 | 32.40% | 1.24% | 0.14% | 76% | $5,882 | ||
2016(3) | $10.00 | 0.04 | (0.29) | (0.25) | — | $9.75 | (2.50)% | 1.23%(4) | 0.56%(4) | 47% | $2,074 | ||
I Class(5) | |||||||||||||
2017 | $9.76 | 0.05 | 3.11 | 3.16 | (0.09) | $12.83 | 32.74% | 1.04% | 0.34% | 76% | $777 | ||
2016(3) | $10.00 | 0.05 | (0.29) | (0.24) | — | $9.76 | (2.40)% | 1.03%(4) | 0.76%(4) | 47% | $586 | ||
A Class | |||||||||||||
2017 | $9.73 | (0.01) | 3.12 | 3.11 | (0.05) | $12.79 | 32.13% | 1.49% | (0.11)% | 76% | $1,295 | ||
2016(3) | $10.00 | 0.02 | (0.29) | (0.27) | — | $9.73 | (2.70)% | 1.48%(4) | 0.31%(4) | 47% | $978 | ||
C Class | |||||||||||||
2017 | $9.68 | (0.09) | 3.11 | 3.02 | — | $12.70 | 31.20% | 2.24% | (0.86)% | 76% | $1,270 | ||
2016(3) | $10.00 | (0.03) | (0.29) | (0.32) | — | $9.68 | (3.20)% | 2.23%(4) | (0.44)%(4) | 47% | $968 | ||
R Class | |||||||||||||
2017 | $9.72 | (0.04) | 3.12 | 3.08 | (0.03) | $12.77 | 31.73% | 1.74% | (0.36)% | 76% | $298 | ||
2016(3) | $10.00 | —(6) | (0.28) | (0.28) | — | $9.72 | (2.80)% | 1.73%(4) | 0.06%(4) | 47% | $196 | ||
R6 Class | |||||||||||||
2017 | $9.77 | 0.06 | 3.12 | 3.18 | (0.11) | $12.84 | 32.90% | 0.89% | 0.49% | 76% | $260 | ||
2016(3) | $10.00 | 0.06 | (0.29) | (0.23) | — | $9.77 | (2.30)% | 0.88%(4) | 0.91%(4) | 47% | $195 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | March 29, 2016 (fund inception) through November 30, 2016. |
(4) | Annualized. |
(5) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(6) | Per-share amount was less than $0.005. |
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century World Mutual Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Focused International Growth Fund (the “Fund”), one of the funds constituting American Century World Mutual Funds, Inc., as of November 30, 2017, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for year then ended and for the period from March 29, 2016 (commencement date) through November 30, 2016. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2017, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Focused International Growth Fund of American Century World Mutual Funds, Inc. as of November 30, 2017, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for year then ended and for the period from March 29, 2016 (commencement date) through November 30, 2016, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2018
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Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Mr. Thomas, 15) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 69 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired; Executive Vice President, ACC (2007 to 2013); President, ACS (2007 to 2013); Chief Operating Officer, ACC (2007 to 2012) | 69 | None |
Andrea C. Hall (1945) | Director | Since 1997 | Retired | 69 | None |
Jan M. Lewis (1957) | Director | Since 2011 | Retired; President and Chief Executive Officer, Catholic Charities of Northeast Kansas (human services organization) (2006 to 2013) | 69 | None |
James A. Olson (1942) | Director and Chairman of the Board | Since 2007 (Chairman since 2014) | Member, Plaza Belmont LLC (private equity fund manager) (1999 to present) | 69 | Saia, Inc. (2002 to 2012) and EPR Properties (2003 to 2013) |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
M. Jeannine Strandjord (1945) | Director | Since 1994 | Retired | 69 | Euronet Worldwide Inc. and MGP Ingredients, Inc. |
John R. Whitten (1946) | Director | Since 2008 | Retired | 69 | Rudolph Technologies, Inc. |
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 69 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director and President | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 114 | BioMed Valley Discoveries, Inc. |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 15 investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years |
Jonathan S. Thomas (1963) | Director and President since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries |
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present); Vice President, Client Interactions and Marketing, ACIS (2013 to 2014); Director, Client Interactions and Marketing, ACIS (2007 to 2013). Also serves as Vice President, ACIS |
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS |
C. Jean Wade (1964) | Vice President,Treasurer and Chief Financial Officer since 2012 | Vice President, ACS (2000 to present) |
Robert J. Leach (1966) | Vice President since 2006 and Assistant Treasurer since 2012 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present); Associate General Counsel, ACC (2001 to present). Also serves as Vice President, ACIM and ACS |
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
26
Approval of Management Agreement |
At a meeting held on June 29, 2017, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
• | the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund; |
• | the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis; |
• | the investment performance of the Fund, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; |
• | the cost of owning the Fund compared to the cost of owning similar funds; |
• | the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers; |
• | financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor; |
• | strategic plans of the Advisor |
• | possible economies of scale associated with the Advisor’s management of the Fund and other accounts under its management; |
• | data comparing services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices by the Fund and the Advisor regarding financial intermediaries, the nature of services provided by intermediaries, and the terms of share classes utilized; and |
• | any collateral benefits derived by the Advisor from the management of the Fund. |
The Directors held three in-person meetings and one telephonic meeting to review and discuss the information provided. The independent Directors also reviewed responses to supplemental information requests and held active discussions with the Advisor regarding the renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In
27
connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services - Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including without limitation the following:
• | portfolio research and security selection |
• | securities trading |
• | Fund administration |
• | custody of Fund assets |
• | daily valuation of the Fund’s portfolio |
• | shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications |
• | legal services (except the independent Directors’ counsel) |
• | regulatory and portfolio compliance |
• | financial reporting |
• | marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans) |
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment. The Board noted specifically the resources the Advisor has committed during the year to compliance with the Department of Labor fiduciary rule and share class modernization.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement. More detailed information about the Fund's performance can be found in the Performance and Portfolio Commentary sections of this report.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through various committees of the Board, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the Advisor. The Board
28
found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business to provide shareholders additional content and services.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, and the fees and expenses of the Fund’s independent Directors (including their independent legal counsel) and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was above the median of the total expense ratios of the Fund’s peer expense universe and was within the range of its peer expense group. The Board discussed with the Advisor the factors that impacted the level of the fee in relation to its peers and accepted the Advisor's explanation of such factors. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Directors also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
29
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Board reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor's resources and reasonable profits. The Board found the payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor receives proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
30
Proxy Voting Results |
A special meeting of shareholders was held on October 18, 2017, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect four directors to the Board of Directors of American Century World Mutual Funds, Inc.:
Affirmative | Withhold | ||||||
Thomas W. Bunn | $ | 5,482,015,298 | $ | 72,735,781 | |||
Barry Fink | $ | 5,485,170,607 | $ | 69,580,472 | |||
Jan M. Lewis | $ | 5,489,025,901 | $ | 65,725,178 | |||
Stephen E. Yates | $ | 5,481,872,069 | $ | 72,879,010 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Andrea C. Hall, James A. Olson, M. Jeannine Strandjord, and John R. Whitten.
31
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of 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 fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s 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 fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
32
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended November 30, 2017.
33
Notes |
34
Notes |
35
Notes |
36
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century World Mutual Funds, Inc. | ||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||
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. | ||
©2018 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91034 1801 |
Annual Report | |
November 30, 2017 | |
Global Growth Fund |
Table of Contents |
President’s Letter | 2 | |
Performance | 3 | |
Portfolio Commentary | ||
Fund Characteristics | ||
Shareholder Fee Example | ||
Schedule of Investments | ||
Statement of Assets and Liabilities | ||
Statement of Operations | ||
Statement of Changes in Net Assets | ||
Notes to Financial Statements | ||
Financial Highlights | ||
Report of Independent Registered Public Accounting Firm | ||
Management | ||
Approval of Management Agreement | ||
Proxy Voting Results | ||
Additional Information |
Any opinions expressed in this report reflect those of the author 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.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2017. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional, updated investment and market insights, we encourage you to visit our website, americancentury.com.
Upbeat Earnings, Economic Data Sparked Strong Gains for Global Stocks
Throughout the world, improving economic activity, healthy corporate earnings growth, and supportive central bank policies helped fuel robust double-digit gains for global stocks. The rally began early in the period, largely in response to the economic-growth implications of Donald Trump’s presidential election victory, and it forged ahead with few interruptions through November 2017. The 12-month period included several potential sources of financial market disruption, including acts of terrorism, North Korean saber-rattling, and an active and destructive hurricane season. Yet any resulting volatility was short-lived, as investors remained focused on positive economic and earnings news. Furthermore, in the U.S., the prospect for pro-growth tax reform propelled major stock indices to several record-high levels.
Among the developed markets, equity performance was notably strong in Europe, where solid corporate profits, improving economic growth rates, declining unemployment, and perceived market-friendly election results in France and Germany supported gains. In addition, the European Central Bank continued to provide stimulus support in the wake of persistently low inflation, which also helped stocks advance. Returns for emerging markets stocks were even stronger, bolstered by improving global and local economic and business fundamentals and rising oil prices.
The broad “risk-on” sentiment also extended to the global fixed-income market, where emerging markets bonds and high-yield corporate bonds were top performers. These securities satisfied investor demand for yield as interest rates remained relatively low throughout the world.
With global growth synchronizing and strengthening and central banks pursuing varying degrees of policy normalization, investors likely will face new opportunities and challenges in the months ahead. We believe this scenario warrants a disciplined, diversified, and risk-aware approach, using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of November 30, 2017 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWGGX | 27.99% | 11.75% | 4.93% | — | 12/1/98 |
MSCI World Index | — | 23.66% | 11.75% | 4.75% | — | — |
I Class | AGGIX | 28.25% | 11.96% | 5.14% | — | 8/1/00 |
Y Class | AGYGX | — | — | — | 16.99% | 4/10/17 |
A Class | AGGRX | 2/5/99 | ||||
No sales charge | 27.65% | 11.46% | 4.66% | — | ||
With sales charge | 20.26% | 10.15% | 4.04% | — | ||
C Class | AGLCX | 26.77% | 10.66% | 3.89% | — | 3/1/02 |
R Class | AGORX | 27.29% | 11.19% | 4.40% | — | 7/29/05 |
R5 Class | AGFGX | — | — | — | 16.81% | 4/10/17 |
R6 Class | AGGDX | 28.46% | — | — | 10.24% | 7/26/13 |
Average annual returns since inception are presented when ten years of performance history is not available.
Prior to April 10, 2017, the I Class was referred to as the Institutional Class.
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 and may be subject to a maximum CDSC of 1.00%. 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.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years |
$10,000 investment made November 30, 2007 |
Performance for other share classes will vary due to differences in fee structure. |
Value on November 30, 2017 | |
Investor Class — $16,182 | |
MSCI World Index — $15,915 | |
Total Annual Fund Operating Expenses | |||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class |
1.08% | 0.88% | 0.73% | 1.33% | 2.08% | 1.58% | 0.88% | 0.73% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Keith Creveling, Brent Puff, and Ted Harlan
Performance Summary
Global Growth returned 27.99%* for the 12 months ended November 30, 2017, outperforming its benchmark, the MSCI World Index, which returned 23.66%.
The fund’s outperformance was driven primarily by strong stock selection in the information technology and financials sectors. Conversely, gains were limited by materials and energy holdings. Geographically, investments in the U.S. and exposure in China, a country not represented in the fund’s benchmark, lifted returns. Meanwhile, negative stock selection in Germany hindered relative performance. An overweight position and stock selection in Ireland also detracted. Notably, the fund’s only investment in Ireland was building materials company CRH.
Information Technology Holdings Contributed
Leading sector contribution came primarily from information technology, where internet company Tencent Holdings, e-commerce business Alibaba Group Holding, and software firm Adobe Systems delivered strong performance. Tencent’s stock was lifted by better-than-expected revenue and earnings growth driven by strength in online gaming and online advertising. The company also has been realizing success in its cloud and payments businesses. Similarly, Alibaba Group Holding’s share price gained after management reported revenue and earnings growth that exceeded consensus estimates. The company also announced that margins had expanded. Alibaba continues to dominate online retailing in China. Adobe Systems’ stock gains were driven by increasing demand for its Creative Cloud software tools and strong customer growth and adoption.
Sector contribution also came from financials, where payment processing company PayPal Holdings was a top performer. The stock advanced on news of strong quarterly results, including better-than-expected earnings. Growth in online e-commerce and increasing adoption of digital payment systems continues to bode well for the company.
Key individual performers included Kering. Shares in the luxury goods company rose on the back of a successful product and store restructuring initiative for its core Gucci brand. Sales growth for stores in existence for at least a year have accelerated. We believe that the improving trends at Kering remain sustainable.
Materials Holdings Detracted From Relative Gains
Sector detraction came primarily from the materials sector. Martin Marietta Materials, a manufacturer of cement and aggregates, reported slower aggregate volume growth due to weather-related issues. The third quarter of 2017 was the fourth wettest quarter in Texas for more than 100 years. Aggregate and cement pricing, however, was solid.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund's benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Another area of relative weakness in the fund was the energy sector, where oil and gas company Pioneer Natural Resources and natural gas producer EQT delivered disappointing returns. Pioneer Natural Resources traded lower after management reduced full-year production growth forecasts. We believe the production issues are transitory and in no way represent a fundamental problem with regards to the company’s principal oil-producing reservoir. We reduced our position in natural gas producer EQT due to our less-than-favorable view on the medium-term supply and demand fundamentals for natural gas in the U.S. Increased oil production in the U.S. also serves to increase the supply of natural gas, because producing crude oil from shale also yields natural gas byproduct.
On an individual stock basis, Newell Brands was a key detractor. Although the consumer goods company has been delivering on cost synergies from its merger with Jarden Industries, gains have been offset by inconsistent top-line growth. Revenue growth has been negatively impacted by weak demand from large distribution partners. Overall, the company’s financial performance has been weaker than anticipated, and we fully exited our position.
Relative performance also was hindered by not owning Apple, a stock that does not fit our investment process. Share price appreciation was supported by better-than-expected financial results as well as strong orders and positive media reviews for the new iPhone X.
Outlook
Our process continues to be based on fundamental analysis and bottom-up security selection, however, certain broad themes have emerged. For example, the secular shift to online platforms and e-commerce has led to a large absolute position in information technology. We also maintain large absolute positions in the financials and health care sectors. Within financials services, we own select emerging markets banks positioned to sustain growth given a combination of low credit penetration and improving economic activity, nonbank financial companies providing mission-critical data and analytics, and U.S. regional banks expected to benefit from a gradual rise in U.S. interest rate policy. Our focus within health care is on medical device, equipment, and technology companies benefiting from increased research and development spending by end customers.
The fund’s lack of exposure in the utilities sector signifies our belief that there currently are no companies in this sector exhibiting accelerating, sustainable growth that fit our investment process.
Regionally, North America and Europe remain large absolute positions in the fund, while our exposure in Asia and emerging markets is modest. However, we are seeing reasons for optimism about Japan, where we are finding companies we believe are positioned to take advantage of improvements in economic activity, particularly in domestic consumption.
6
Fund Characteristics |
NOVEMBER 30, 2017 | |
Top Ten Holdings | % of net assets |
Alphabet, Inc.* | 3.0% |
Facebook, Inc., Class A | 2.8% |
UnitedHealth Group, Inc. | 2.1% |
Home Depot, Inc. (The) | 2.1% |
Pioneer Natural Resources Co. | 2.0% |
Equinix, Inc. | 1.9% |
Visa, Inc., Class A | 1.9% |
American Express Co. | 1.9% |
Roper Technologies, Inc. | 1.8% |
AIA Group Ltd. | 1.8% |
*Includes all classes of the issuer held by the fund. | |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 62.4% |
Foreign Common Stocks | 36.8% |
Total Common Stocks | 99.2% |
Temporary Cash Investments | 0.9% |
Other Assets and Liabilities | (0.1)% |
Investments by Country | % of net assets |
United States | 62.4% |
France | 6.4% |
Japan | 5.5% |
United Kingdom | 4.6% |
China | 3.1% |
Hong Kong | 2.5% |
Netherlands | 2.3% |
Other Countries | 12.4% |
Cash and Equivalents** | 0.8% |
**Includes temporary cash investments and other assets and liabilities.
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2017 to November 30, 2017.
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 I 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. 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.
8
Beginning Account Value 6/1/17 | Ending Account Value 11/30/17 | Expenses Paid During Period(1) 6/1/17 - 11/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,101.50 | $5.69 | 1.08% |
I Class | $1,000 | $1,103.10 | $4.64 | 0.88% |
Y Class | $1,000 | $1,104.30 | $3.85 | 0.73% |
A Class | $1,000 | $1,100.00 | $7.00 | 1.33% |
C Class | $1,000 | $1,096.90 | $10.93 | 2.08% |
R Class | $1,000 | $1,098.70 | $8.31 | 1.58% |
R5 Class | $1,000 | $1,102.30 | $4.64 | 0.88% |
R6 Class | $1,000 | $1,104.30 | $3.85 | 0.73% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.65 | $5.47 | 1.08% |
I Class | $1,000 | $1,020.66 | $4.46 | 0.88% |
Y Class | $1,000 | $1,021.41 | $3.70 | 0.73% |
A Class | $1,000 | $1,018.40 | $6.73 | 1.33% |
C Class | $1,000 | $1,014.64 | $10.51 | 2.08% |
R Class | $1,000 | $1,017.15 | $7.99 | 1.58% |
R5 Class | $1,000 | $1,020.66 | $4.46 | 0.88% |
R6 Class | $1,000 | $1,021.41 | $3.70 | 0.73% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
9
Schedule of Investments |
NOVEMBER 30, 2017
Shares | Value | ||||
COMMON STOCKS — 99.2% | |||||
Austria — 0.8% | |||||
Erste Group Bank AG | 103,750 | $ | 4,513,254 | ||
Brazil — 1.7% | |||||
B3 SA - Brasil Bolsa Balcao | 803,300 | 5,703,063 | |||
CCR SA | 143,200 | 692,498 | |||
Lojas Renner SA | 276,200 | 2,862,871 | |||
9,258,432 | |||||
China — 3.1% | |||||
Alibaba Group Holding Ltd. ADR(1) | 47,640 | 8,436,091 | |||
Tencent Holdings Ltd. | 163,400 | 8,434,561 | |||
16,870,652 | |||||
Denmark — 0.9% | |||||
AP Moller - Maersk A/S, B Shares | 2,850 | 5,113,011 | |||
France — 6.4% | |||||
Danone SA | 96,885 | 8,179,237 | |||
Kering | 19,830 | 8,802,655 | |||
Legrand SA | 72,550 | 5,439,375 | |||
TOTAL SA | 141,366 | 7,981,524 | |||
Valeo SA | 69,950 | 5,078,461 | |||
35,481,252 | |||||
Germany — 0.8% | |||||
Zalando SE(1) | 86,050 | 4,405,951 | |||
Hong Kong — 2.5% | |||||
AIA Group Ltd. | 1,225,400 | 9,988,140 | |||
Hang Seng Bank Ltd. | 148,100 | 3,667,438 | |||
13,655,578 | |||||
Hungary — 0.8% | |||||
OTP Bank plc | 114,623 | 4,382,552 | |||
India — 1.0% | |||||
HDFC Bank Ltd. | 191,220 | 5,510,924 | |||
Indonesia — 0.5% | |||||
Bank Central Asia Tbk PT | 1,945,700 | 2,928,212 | |||
Ireland — 1.6% | |||||
CRH plc | 251,475 | 8,677,664 | |||
Japan — 5.5% | |||||
Keyence Corp. | 11,800 | 6,877,394 | |||
ORIX Corp. | 384,800 | 6,638,534 | |||
Pola Orbis Holdings, Inc. | 105,300 | 3,855,649 | |||
Rakuten, Inc. | 445,900 | 4,584,560 | |||
Start Today Co. Ltd. | 143,800 | 4,431,519 | |||
Sysmex Corp. | 48,100 | 3,662,069 | |||
30,049,725 |
10
Shares | Value | ||||
Mexico — 0.4% | |||||
Grupo Financiero Banorte SAB de CV | 381,740 | $ | 2,242,077 | ||
Netherlands — 2.3% | |||||
ASML Holding NV | 20,190 | 3,549,880 | |||
Unilever NV CVA | 160,340 | 9,241,246 | |||
12,791,126 | |||||
Peru — 0.5% | |||||
Credicorp Ltd. | 13,460 | 2,840,464 | |||
Poland — 0.4% | |||||
Powszechny Zaklad Ubezpieczen SA | 179,130 | 2,253,085 | |||
Portugal — 0.8% | |||||
Jeronimo Martins SGPS SA | 230,630 | 4,527,241 | |||
Switzerland — 1.8% | |||||
Julius Baer Group Ltd. | 75,490 | 4,439,380 | |||
Lonza Group AG | 21,360 | 5,580,421 | |||
10,019,801 | |||||
Turkey — 0.4% | |||||
Turkiye Garanti Bankasi AS | 930,880 | 2,283,070 | |||
United Kingdom — 4.6% | |||||
Ashtead Group plc | 247,108 | 6,351,858 | |||
B&M European Value Retail SA | 520,970 | 2,692,017 | |||
Diageo plc | 167,500 | 5,787,004 | |||
London Stock Exchange Group plc | 116,620 | 5,967,233 | |||
RPC Group plc | 384,810 | 4,797,854 | |||
25,595,966 | |||||
United States — 62.4% | |||||
ABIOMED, Inc.(1) | 13,079 | 2,548,312 | |||
Adobe Systems, Inc.(1) | 54,237 | 9,842,388 | |||
Agilent Technologies, Inc. | 87,970 | 6,091,043 | |||
Allegion plc | 83,546 | 7,029,561 | |||
Alliance Data Systems Corp. | 20,897 | 5,000,025 | |||
Alphabet, Inc., Class A(1) | 11,925 | 12,356,327 | |||
Alphabet, Inc., Class C(1) | 3,954 | 4,038,655 | |||
American Express Co. | 104,620 | 10,222,420 | |||
American Tower Corp. | 40,860 | 5,880,980 | |||
AMETEK, Inc. | 107,560 | 7,818,536 | |||
Autodesk, Inc.(1) | 71,360 | 7,828,192 | |||
Bank of America Corp. | 142,850 | 4,024,085 | |||
Becton Dickinson and Co. | 35,880 | 8,188,175 | |||
Bio-Rad Laboratories, Inc., Class A(1) | 18,464 | 5,009,283 | |||
Boston Scientific Corp.(1) | 190,890 | 5,016,589 | |||
Catalent, Inc.(1) | 76,060 | 3,026,427 | |||
Cerner Corp.(1) | 73,790 | 5,216,215 | |||
Danaher Corp. | 88,710 | 8,370,676 | |||
EOG Resources, Inc. | 82,820 | 8,474,143 | |||
EQT Corp. | 73,050 | 4,353,780 | |||
Equinix, Inc. | 23,006 | 10,686,057 |
11
Shares | Value | ||||
Facebook, Inc., Class A(1) | 86,341 | $ | 15,297,898 | ||
Fortune Brands Home & Security, Inc. | 103,103 | 7,054,307 | |||
Home Depot, Inc. (The) | 63,284 | 11,379,729 | |||
IHS Markit Ltd.(1) | 130,150 | 5,807,293 | |||
Ingersoll-Rand plc | 21,226 | 1,859,822 | |||
Intercontinental Exchange, Inc. | 130,440 | 9,319,938 | |||
Keysight Technologies, Inc.(1) | 77,973 | 3,391,826 | |||
MarketAxess Holdings, Inc. | 17,413 | 3,400,237 | |||
Martin Marietta Materials, Inc. | 37,880 | 7,893,813 | |||
MasterCard, Inc., Class A | 42,400 | 6,379,928 | |||
Medidata Solutions, Inc.(1) | 52,930 | 3,527,255 | |||
Monster Beverage Corp.(1) | 87,120 | 5,459,810 | |||
MSCI, Inc. | 35,870 | 4,616,469 | |||
PayPal Holdings, Inc.(1) | 93,200 | 7,058,036 | |||
Pioneer Natural Resources Co. | 70,258 | 10,963,058 | |||
Roper Technologies, Inc. | 37,970 | 10,145,964 | |||
SBA Communications Corp.(1) | 22,250 | 3,776,938 | |||
ServiceNow, Inc.(1) | 24,230 | 2,980,290 | |||
Sirius XM Holdings, Inc. | 1,064,720 | 5,855,960 | |||
Stanley Black & Decker, Inc. | 35,500 | 6,021,865 | |||
Sysco Corp. | 74,240 | 4,285,875 | |||
Tapestry, Inc. | 125,480 | 5,231,261 | |||
Teleflex, Inc. | 20,728 | 5,503,699 | |||
Texas Capital Bancshares, Inc.(1) | 45,040 | 4,069,364 | |||
Texas Instruments, Inc. | 57,160 | 5,561,096 | |||
UnitedHealth Group, Inc. | 50,066 | 11,423,559 | |||
Vantiv, Inc., Class A(1) | 78,743 | 5,905,725 | |||
Visa, Inc., Class A | 92,142 | 10,374,268 | |||
Webster Financial Corp. | 67,870 | 3,893,702 | |||
Zions Bancorporation | 143,859 | 7,128,214 | |||
Zoetis, Inc. | 109,848 | 7,940,912 | |||
344,529,980 | |||||
TOTAL COMMON STOCKS (Cost $372,504,896) | 547,930,017 | ||||
TEMPORARY CASH INVESTMENTS — 0.9% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 3.75%, 4/15/18 - 2/15/47, valued at $2,635,318), in a joint trading account at 0.88%, dated 11/30/17, due 12/1/17 (Delivery value $2,588,951) | 2,588,888 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.375%, 5/15/44, valued at $2,201,554), at 0.34%, dated 11/30/17, due 12/1/17 (Delivery value $2,157,020) | 2,157,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 4,166 | 4,166 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $4,750,054) | 4,750,054 | ||||
TOTAL INVESTMENT SECURITIES — 100.1% (Cost $377,254,950) | 552,680,071 | ||||
OTHER ASSETS AND LIABILITIES — (0.1)% | (575,590 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 552,104,481 |
12
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Information Technology | 22.4 | % |
Financials | 19.9 | % |
Health Care | 14.7 | % |
Industrials | 11.4 | % |
Consumer Discretionary | 10.0 | % |
Consumer Staples | 7.5 | % |
Energy | 5.7 | % |
Materials | 3.9 | % |
Real Estate | 3.7 | % |
Cash and Equivalents* | 0.8 | % |
*Includes temporary cash investments and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
CVA | - | Certificaten Van Aandelen |
(1) | Non-income producing. |
See Notes to Financial Statements.
13
Statement of Assets and Liabilities |
NOVEMBER 30, 2017 | |||
Assets | |||
Investment securities, at value (cost of $377,254,950) | $ | 552,680,071 | |
Foreign currency holdings, at value (cost of $8) | 8 | ||
Receivable for investments sold | 1,577,186 | ||
Receivable for capital shares sold | 107,029 | ||
Dividends and interest receivable | 747,658 | ||
Other assets | 1,361 | ||
555,113,313 | |||
Liabilities | |||
Payable for investments purchased | 1,648,644 | ||
Payable for capital shares redeemed | 876,289 | ||
Accrued management fees | 466,072 | ||
Distribution and service fees payable | 14,457 | ||
Accrued other expenses | 3,370 | ||
3,008,832 | |||
Net Assets | $ | 552,104,481 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 325,878,765 | |
Distributions in excess of net investment income | (2,290,092 | ) | |
Undistributed net realized gain | 53,084,895 | ||
Net unrealized appreciation | 175,430,913 | ||
$ | 552,104,481 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $437,821,836 | 32,029,444 | $13.67 | |||
I Class, $0.01 Par Value | $32,497,913 | 2,336,119 | $13.91 | |||
Y Class, $0.01 Par Value | $5,845 | 418 | $13.98 | |||
A Class, $0.01 Par Value | $30,622,077 | 2,299,896 | $13.31* | |||
C Class, $0.01 Par Value | $5,977,292 | 507,913 | $11.77 | |||
R Class, $0.01 Par Value | $7,925,466 | 603,111 | $13.14 | |||
R5 Class, $0.01 Par Value | $5,840 | 420 | $13.90 | |||
R6 Class, $0.01 Par Value | $37,248,212 | 2,665,046 | $13.98 |
*Maximum offering price $14.12 (net asset value divided by 0.9425).
See Notes to Financial Statements.
14
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2017 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $548,969) | $ | 6,291,195 | |
Interest | 16,331 | ||
6,307,526 | |||
Expenses: | |||
Management fees | 5,375,337 | ||
Distribution and service fees: | |||
A Class | 81,973 | ||
C Class | 60,243 | ||
R Class | 38,953 | ||
Directors' fees and expenses | 15,706 | ||
Other expenses | 23,587 | ||
5,595,799 | |||
Net investment income (loss) | 711,727 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 59,975,046 | ||
Foreign currency translation transactions | (53,057 | ) | |
59,921,989 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 66,350,875 | ||
Translation of assets and liabilities in foreign currencies | 26,800 | ||
66,377,675 | |||
Net realized and unrealized gain (loss) | 126,299,664 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 127,011,391 |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2017 AND NOVEMBER 30, 2016 | ||||||
Increase (Decrease) in Net Assets | November 30, 2017 | November 30, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 711,727 | $ | 1,269,097 | ||
Net realized gain (loss) | 59,921,989 | 5,171,444 | ||||
Change in net unrealized appreciation (depreciation) | 66,377,675 | (24,819,740 | ) | |||
Net increase (decrease) in net assets resulting from operations | 127,011,391 | (18,379,199 | ) | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (1,172,124 | ) | (479,702 | ) | ||
I Class | (138,636 | ) | (98,254 | ) | ||
A Class | (88,871 | ) | — | |||
C Class | (5,519 | ) | — | |||
R Class | (15,751 | ) | — | |||
R6 Class | (66,880 | ) | (70,054 | ) | ||
From net realized gains: | ||||||
Investor Class | (4,516,594 | ) | (28,545,970 | ) | ||
I Class | (453,950 | ) | (2,099,704 | ) | ||
A Class | (430,288 | ) | (3,017,077 | ) | ||
C Class | (85,683 | ) | (622,424 | ) | ||
R Class | (92,080 | ) | (412,601 | ) | ||
R6 Class | (199,745 | ) | (1,009,189 | ) | ||
Decrease in net assets from distributions | (7,266,121 | ) | (36,354,975 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (58,600,370 | ) | (7,759,236 | ) | ||
Redemption Fees | ||||||
Increase in net assets from redemption fees | 7,665 | 16,755 | ||||
Net increase (decrease) in net assets | 61,152,565 | (62,476,655 | ) | |||
Net Assets | ||||||
Beginning of period | 490,951,916 | 553,428,571 | ||||
End of period | $ | 552,104,481 | $ | 490,951,916 | ||
Distributions in excess of net investment income | $ | (2,290,092 | ) | $ | (1,600,589 | ) |
See Notes to Financial Statements.
16
Notes to Financial Statements |
NOVEMBER 30, 2017
1. Organization
American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Global Growth Fund (the fund) is one fund in a series issued by the corporation. The fund's investment objective is to seek capital growth.
The fund offers the Investor Class, I Class (formerly Institutional Class), Y Class, A Class, C Class, R Class, R5 Class and R6 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. Sale of the Y Class and R5 Class commenced on April 10, 2017.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
17
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund 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. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
Redemption Fees — Prior to October 9, 2017, the fund may have imposed a 2.00% redemption fee on shares held less than 60 days. The fee was not applicable to all classes. The redemption fee was retained by the fund to help cover transaction costs that long-term investors may bear when the fund sells securities to meet investor redemptions.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
18
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that use very similar investment teams and strategies (strategy assets).
The management fee schedule range and the effective annual management fee for each class for the period ended November 30, 2017 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |
Investor Class | 1.050% to 1.300% | 1.07% |
I Class | 0.850% to 1.100% | 0.87% |
Y Class | 0.700% to 0.950% | 0.72% |
A Class | 1.050% to 1.300% | 1.07% |
C Class | 1.050% to 1.300% | 1.07% |
R Class | 1.050% to 1.300% | 1.07% |
R5 Class | 0.850% to 1.100% | 0.87% |
R6 Class | 0.700% to 0.950% | 0.72% |
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, 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 ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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. Fees incurred under the plans during the period ended November 30, 2017 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $601,144 and $1,312,479, respectively. The effect of interfund transactions on the Statement of Operations was $292,779 in net realized gain (loss) on investment transactions.
19
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended November 30, 2017 were $275,891,832 and $343,399,635, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2017(1) | Year ended November 30, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 340,000,000 | 300,000,000 | ||||||||
Sold | 3,498,175 | $ | 43,157,809 | 2,727,985 | $ | 29,305,976 | ||||
Issued in reinvestment of distributions | 489,710 | 5,515,330 | 2,586,515 | 28,244,747 | ||||||
Redeemed | (7,677,343 | ) | (92,524,581 | ) | (6,568,047 | ) | (70,685,855 | ) | ||
(3,689,458 | ) | (43,851,442 | ) | (1,253,547 | ) | (13,135,132 | ) | |||
I Class/Shares Authorized | 55,000,000 | 40,000,000 | ||||||||
Sold | 1,918,465 | 23,107,508 | 1,238,720 | 13,699,629 | ||||||
Issued in reinvestment of distributions | 50,829 | 582,556 | 198,510 | 2,197,504 | ||||||
Redeemed | (2,996,276 | ) | (37,375,484 | ) | (799,663 | ) | (8,646,207 | ) | ||
(1,026,982 | ) | (13,685,420 | ) | 637,567 | 7,250,926 | |||||
Y Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 418 | 5,000 | ||||||||
A Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 410,718 | 4,855,728 | 629,395 | 6,620,405 | ||||||
Issued in reinvestment of distributions | 46,105 | 505,916 | 272,105 | 2,906,077 | ||||||
Redeemed | (1,595,257 | ) | (18,764,878 | ) | (1,363,917 | ) | (14,333,551 | ) | ||
(1,138,434 | ) | (13,403,234 | ) | (462,417 | ) | (4,807,069 | ) | |||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 83,626 | 894,854 | 148,416 | 1,403,670 | ||||||
Issued in reinvestment of distributions | 7,178 | 69,813 | 44,341 | 424,787 | ||||||
Redeemed | (312,267 | ) | (3,208,186 | ) | (265,093 | ) | (2,518,810 | ) | ||
(221,463 | ) | (2,243,519 | ) | (72,336 | ) | (690,353 | ) | |||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 131,343 | 1,517,519 | 261,294 | 2,727,028 | ||||||
Issued in reinvestment of distributions | 9,907 | 107,628 | 38,905 | 412,005 | ||||||
Redeemed | (207,598 | ) | (2,484,860 | ) | (148,521 | ) | (1,562,953 | ) | ||
(66,348 | ) | (859,713 | ) | 151,678 | 1,576,080 | |||||
R5 Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 420 | 5,000 | ||||||||
R6 Class/Shares Authorized | 50,000,000 | 40,000,000 | ||||||||
Sold | 1,567,880 | 20,550,216 | 470,512 | 5,062,149 | ||||||
Issued in reinvestment of distributions | 23,164 | 266,625 | 97,317 | 1,079,243 | ||||||
Redeemed | (420,129 | ) | (5,383,883 | ) | (373,215 | ) | (4,095,080 | ) | ||
1,170,915 | 15,432,958 | 194,614 | 2,046,312 | |||||||
Net increase (decrease) | (4,970,932 | ) | $ | (58,600,370 | ) | (804,441 | ) | $ | (7,759,236 | ) |
(1) | April 10, 2017 (commencement of sale) through November 30, 2017 for the Y Class and R5 Class. |
20
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. 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.
• Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
• Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
• Level 3 valuation inputs consist of unobservable data (including a 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 necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | ||||||||
Austria | — | $ | 4,513,254 | — | ||||
Brazil | — | 9,258,432 | — | |||||
China | $ | 8,436,091 | 8,434,561 | — | ||||
Denmark | — | 5,113,011 | — | |||||
France | — | 35,481,252 | — | |||||
Germany | — | 4,405,951 | — | |||||
Hong Kong | — | 13,655,578 | — | |||||
Hungary | — | 4,382,552 | — | |||||
India | — | 5,510,924 | — | |||||
Indonesia | — | 2,928,212 | — | |||||
Ireland | — | 8,677,664 | — | |||||
Japan | — | 30,049,725 | — | |||||
Mexico | — | 2,242,077 | — | |||||
Netherlands | — | 12,791,126 | — | |||||
Poland | — | 2,253,085 | — | |||||
Portugal | — | 4,527,241 | — | |||||
Switzerland | — | 10,019,801 | — | |||||
Turkey | — | 2,283,070 | — | |||||
United Kingdom | — | 25,595,966 | — | |||||
Other Countries | 347,370,444 | — | — | |||||
Temporary Cash Investments | 4,166 | 4,745,888 | — | |||||
$ | 355,810,701 | $ | 196,869,370 | — |
21
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions. Investing in emerging markets may accentuate these risks.
8. Federal Tax Information
On December 19, 2017, the fund declared and paid a per-share distribution from net realized gains to shareholders of record on December 18, 2017 of $1.4708 for the Investor Class, I Class, Y Class, A Class, C Class, R Class, R5 Class and R6 Class.
The tax character of distributions paid during the years ended November 30, 2017 and November 30, 2016 were as follows:
2017 | 2016 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 1,487,781 | $ | 648,010 | ||
Long-term capital gains | $ | 5,778,340 | $ | 35,706,965 |
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 period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 381,968,016 | |
Gross tax appreciation of investments | $ | 173,673,003 | |
Gross tax depreciation of investments | (2,960,948 | ) | |
Net tax appreciation (depreciation) of investments | 170,712,055 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | 5,792 | ||
Net tax appreciation (depreciation) | $ | 170,717,847 | |
Undistributed ordinary income | $ | 6,662,837 | |
Accumulated long-term gains | $ | 48,845,032 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the realization to ordinary income for tax purposes of unrealized gains on investments in passive foreign investment companies.
22
Financial Highlights |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||
2017 | $10.84 | 0.02 | 2.98 | 3.00 | (0.04) | (0.13) | (0.17) | $13.67 | 27.99% | 1.08% | 0.14% | 54% | $437,822 | ||
2016 | $12.01 | 0.03 | (0.42) | (0.39) | (0.01) | (0.77) | (0.78) | $10.84 | (3.24)% | 1.08% | 0.27% | 57% | $387,155 | ||
2015 | $12.94 | —(3) | 0.12 | 0.12 | — | (1.05) | (1.05) | $12.01 | 1.37% | 1.08% | 0.04% | 50% | $443,915 | ||
2014 | $12.39 | —(3) | 0.91 | 0.91 | (0.08) | (0.28) | (0.36) | $12.94 | 7.53% | 1.08% | 0.03% | 46% | $462,889 | ||
2013 | $9.63 | 0.01 | 2.79 | 2.80 | (0.04) | — | (0.04) | $12.39 | 29.15% | 1.09% | 0.11% | 64% | $437,599 | ||
I Class(4) | |||||||||||||||
2017 | $11.01 | 0.05 | 3.02 | 3.07 | (0.04) | (0.13) | (0.17) | $13.91 | 28.25% | 0.88% | 0.34% | 54% | $32,498 | ||
2016 | $12.19 | 0.05 | (0.42) | (0.37) | (0.04) | (0.77) | (0.81) | $11.01 | (3.07)% | 0.88% | 0.47% | 57% | $37,028 | ||
2015 | $13.09 | 0.03 | 0.12 | 0.15 | — | (1.05) | (1.05) | $12.19 | 1.60% | 0.88% | 0.24% | 50% | $33,211 | ||
2014 | $12.52 | 0.03 | 0.91 | 0.94 | (0.09) | (0.28) | (0.37) | $13.09 | 7.68% | 0.88% | 0.23% | 46% | $78,802 | ||
2013 | $9.73 | 0.03 | 2.82 | 2.85 | (0.06) | — | (0.06) | $12.52 | 29.42% | 0.89% | 0.31% | 64% | $80,968 | ||
Y Class | |||||||||||||||
2017(5) | $11.95 | 0.04 | 1.99 | 2.03 | — | — | — | $13.98 | 16.99% | 0.73%(6) | 0.49%(6) | 54%(7) | $6 |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
A Class | |||||||||||||||
2017 | $10.58 | (0.01) | 2.90 | 2.89 | (0.03) | (0.13) | (0.16) | $13.31 | 27.65% | 1.33% | (0.11)% | 54% | $30,622 | ||
2016 | $11.76 | —(3) | (0.41) | (0.41) | — | (0.77) | (0.77) | $10.58 | (3.52)% | 1.33% | 0.02% | 57% | $36,382 | ||
2015 | $12.72 | (0.02) | 0.11 | 0.09 | — | (1.05) | (1.05) | $11.76 | 1.14% | 1.33% | (0.21)% | 50% | $45,855 | ||
2014 | $12.21 | (0.03) | 0.89 | 0.86 | (0.07) | (0.28) | (0.35) | $12.72 | 7.23% | 1.33% | (0.22)% | 46% | $54,091 | ||
2013 | $9.49 | (0.02) | 2.75 | 2.73 | (0.01) | — | (0.01) | $12.21 | 28.83% | 1.34% | (0.14)% | 64% | $51,351 | ||
C Class | |||||||||||||||
2017 | $9.42 | (0.09) | 2.58 | 2.49 | (0.01) | (0.13) | (0.14) | $11.77 | 26.77% | 2.08% | (0.86)% | 54% | $5,977 | ||
2016 | $10.63 | (0.07) | (0.37) | (0.44) | — | (0.77) | (0.77) | $9.42 | (4.23)% | 2.08% | (0.73)% | 57% | $6,872 | ||
2015 | $11.68 | (0.10) | 0.10 | —(3) | — | (1.05) | (1.05) | $10.63 | 0.40% | 2.08% | (0.96)% | 50% | $8,520 | ||
2014 | $11.30 | (0.11) | 0.81 | 0.70 | (0.04) | (0.28) | (0.32) | $11.68 | 6.39% | 2.08% | (0.97)% | 46% | $7,234 | ||
2013 | $8.84 | (0.09) | 2.55 | 2.46 | — | — | — | $11.30 | 27.97% | 2.09% | (0.89)% | 64% | $5,615 | ||
R Class | |||||||||||||||
2017 | $10.47 | (0.04) | 2.86 | 2.82 | (0.02) | (0.13) | (0.15) | $13.14 | 27.29% | 1.58% | (0.36)% | 54% | $7,925 | ||
2016 | $11.67 | (0.03) | (0.40) | (0.43) | — | (0.77) | (0.77) | $10.47 | (3.73)% | 1.58% | (0.23)% | 57% | $7,007 | ||
2015 | $12.66 | (0.05) | 0.11 | 0.06 | — | (1.05) | (1.05) | $11.67 | 0.89% | 1.58% | (0.46)% | 50% | $6,040 | ||
2014 | $12.18 | (0.06) | 0.88 | 0.82 | (0.06) | (0.28) | (0.34) | $12.66 | 7.00% | 1.58% | (0.47)% | 46% | $5,632 | ||
2013 | $9.47 | (0.04) | 2.75 | 2.71 | — | — | — | $12.18 | 28.51% | 1.59% | (0.39)% | 64% | $4,489 | ||
R5 Class | |||||||||||||||
2017(5) | $11.90 | 0.03 | 1.97 | 2.00 | — | — | — | $13.90 | 16.81% | 0.88%(6) | 0.34%(6) | 54%(7) | $6 |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R6 Class | |||||||||||||||
2017 | $11.05 | 0.05 | 3.05 | 3.10 | (0.04) | (0.13) | (0.17) | $13.98 | 28.46% | 0.73% | 0.49% | 54% | $37,248 | ||
2016 | $12.23 | 0.07 | (0.43) | (0.36) | (0.05) | (0.77) | (0.82) | $11.05 | (2.91)% | 0.73% | 0.62% | 57% | $16,508 | ||
2015 | $13.11 | 0.05 | 0.12 | 0.17 | — | (1.05) | (1.05) | $12.23 | 1.76% | 0.73% | 0.39% | 50% | $15,887 | ||
2014 | $12.53 | 0.02 | 0.93 | 0.95 | (0.09) | (0.28) | (0.37) | $13.11 | 7.80% | 0.73% | 0.38% | 46% | $16,992 | ||
2013(8) | $11.22 | —(3) | 1.31 | 1.31 | — | — | — | $12.53 | 11.68% | 0.74%(6) | 0.00%(6)(9) | 64%(10) | $28 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Per-share amount was less than $0.005. |
(4) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(5) | April 10, 2017 (commencement of sale) through November 30, 2017. |
(6) | Annualized. |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2017. |
(8) | July 26, 2013 (commencement of sale) through November 30, 2013. |
(9) | Ratio was less than 0.005%. |
(10) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2013. |
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century World Mutual Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Global Growth Fund (the “Fund”), one of the funds constituting American Century World Mutual Funds, Inc., as of November 30, 2017, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2017, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Global Growth Fund of American Century World Mutual Funds, Inc. as of November 30, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2018
26
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Mr. Thomas, 15) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 69 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired; Executive Vice President, ACC (2007 to 2013); President, ACS (2007 to 2013); Chief Operating Officer, ACC (2007 to 2012) | 69 | None |
Andrea C. Hall (1945) | Director | Since 1997 | Retired | 69 | None |
Jan M. Lewis (1957) | Director | Since 2011 | Retired; President and Chief Executive Officer, Catholic Charities of Northeast Kansas (human services organization) (2006 to 2013) | 69 | None |
James A. Olson (1942) | Director and Chairman of the Board | Since 2007 (Chairman since 2014) | Member, Plaza Belmont LLC (private equity fund manager) (1999 to present) | 69 | Saia, Inc. (2002 to 2012) and EPR Properties (2003 to 2013) |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
M. Jeannine Strandjord (1945) | Director | Since 1994 | Retired | 69 | Euronet Worldwide Inc. and MGP Ingredients, Inc. |
John R. Whitten (1946) | Director | Since 2008 | Retired | 69 | Rudolph Technologies, Inc. |
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 69 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director and President | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 114 | BioMed Valley Discoveries, Inc. |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 15 investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years |
Jonathan S. Thomas (1963) | Director and President since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries |
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present); Vice President, Client Interactions and Marketing, ACIS (2013 to 2014); Director, Client Interactions and Marketing, ACIS (2007 to 2013). Also serves as Vice President, ACIS |
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS |
C. Jean Wade (1964) | Vice President,Treasurer and Chief Financial Officer since 2012 | Vice President, ACS (2000 to present) |
Robert J. Leach (1966) | Vice President since 2006 and Assistant Treasurer since 2012 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present); Associate General Counsel, ACC (2001 to present). Also serves as Vice President, ACIM and ACS |
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
29
Approval of Management Agreement |
At a meeting held on June 29, 2017, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
• | the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund; |
• | the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis; |
• | the investment performance of the Fund, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; |
• | the cost of owning the Fund compared to the cost of owning similar funds; |
• | the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers; |
• | financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor; |
• | strategic plans of the Advisor |
• | possible economies of scale associated with the Advisor’s management of the Fund and other accounts under its management; |
• | data comparing services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices by the Fund and the Advisor regarding financial intermediaries, the nature of services provided by intermediaries, and the terms of share classes utilized; and |
• | any collateral benefits derived by the Advisor from the management of the Fund. |
The Directors held three in-person meetings and one telephonic meeting to review and discuss the information provided. The independent Directors also reviewed responses to supplemental information requests and held active discussions with the Advisor regarding the renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In
30
connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services - Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including without limitation the following:
• | portfolio research and security selection |
• | securities trading |
• | Fund administration |
• | custody of Fund assets |
• | daily valuation of the Fund’s portfolio |
• | shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications |
• | legal services (except the independent Directors’ counsel) |
• | regulatory and portfolio compliance |
• | financial reporting |
• | marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans) |
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment. The Board noted specifically the resources the Advisor has committed during the year to compliance with the Department of Labor fiduciary rule and share class modernization.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review detailed performance information provided by the Advisor during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board receives a report from the Advisor regarding the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the five- and ten-year periods and below its benchmark for the one- and three-year periods reviewed by the Board. The Board discussed the Fund's performance with the Advisor and was satisfied with the efforts being undertaken by the Advisor. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The
31
Board, directly and through various committees of the Board, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the Advisor. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, and the fees and expenses of the Fund’s independent Directors (including their independent legal counsel) and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was below the median of the total expense ratios of the Fund’s peer expense universe and was within the range of its peer expense group. The Board concluded that the management fee paid by the
32
Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Directors also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Board reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor's resources and reasonable profits. The Board found the payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor receives proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
33
Proxy Voting Results |
A special meeting of shareholders was held on October 18, 2017, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect four directors to the Board of Directors of American Century World Mutual Funds, Inc.:
Affirmative | Withhold | ||||||
Thomas W. Bunn | $ | 5,482,015,298 | $ | 72,735,781 | |||
Barry Fink | $ | 5,485,170,607 | $ | 69,580,472 | |||
Jan M. Lewis | $ | 5,489,025,901 | $ | 65,725,178 | |||
Stephen E. Yates | $ | 5,481,872,069 | $ | 72,879,010 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Andrea C. Hall, James A. Olson, M. Jeannine Strandjord, and John R. Whitten.
34
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of 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 fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s 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 fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
35
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended November 30, 2017.
For corporate taxpayers, the fund hereby designates $1,487,781, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended November 30, 2017 as qualified for the corporate dividends received deduction.
The fund hereby designates $515,144 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended November 30, 2017.
The fund hereby designates $10,540,910, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended November 30, 2017.
The fund utilized earnings and profits of $5,412,492 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
36
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century World Mutual Funds, Inc. | ||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||
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. | ||
©2018 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91028 1801 |
Annual Report | |
November 30, 2017 | |
Global Small Cap Fund |
Table of Contents |
President’s Letter | |
Performance | |
Portfolio Commentary | |
Fund Characteristics | |
Shareholder Fee Example | |
Schedule of Investments | |
Statement of Assets and Liabilities | |
Statement of Operations | |
Statement of Changes in Net Assets | |
Notes to Financial Statements | |
Financial Highlights | |
Report of Independent Registered Public Accounting Firm | |
Management | |
Approval of Management Agreement | |
Proxy Voting Results | |
Additional Information |
Any opinions expressed in this report reflect those of the author 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.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2017. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional, updated investment and market insights, we encourage you to visit our website, americancentury.com.
Upbeat Earnings, Economic Data Sparked Strong Gains for Global Stocks
Throughout the world, improving economic activity, healthy corporate earnings growth, and supportive central bank policies helped fuel robust double-digit gains for global stocks. The rally began early in the period, largely in response to the economic-growth implications of Donald Trump’s presidential election victory, and it forged ahead with few interruptions through November 2017. The 12-month period included several potential sources of financial market disruption, including acts of terrorism, North Korean saber-rattling, and an active and destructive hurricane season. Yet any resulting volatility was short-lived, as investors remained focused on positive economic and earnings news. Furthermore, in the U.S., the prospect for pro-growth tax reform propelled major stock indices to several record-high levels.
Among the developed markets, equity performance was notably strong in Europe, where solid corporate profits, improving economic growth rates, declining unemployment, and perceived market-friendly election results in France and Germany supported gains. In addition, the European Central Bank continued to provide stimulus support in the wake of persistently low inflation, which also helped stocks advance. Returns for emerging markets stocks were even stronger, bolstered by improving global and local economic and business fundamentals and rising oil prices.
The broad “risk-on” sentiment also extended to the global fixed-income market, where emerging markets bonds and high-yield corporate bonds were top performers. These securities satisfied investor demand for yield as interest rates remained relatively low throughout the world.
With global growth synchronizing and strengthening and central banks pursuing varying degrees of policy normalization, investors likely will face new opportunities and challenges in the months ahead. We believe this scenario warrants a disciplined, diversified, and risk-aware approach, using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of November 30, 2017 | ||||
Average Annual Returns | ||||
Ticker Symbol | 1 year | Since Inception | Inception Date | |
Investor Class | AGCVX | 36.41% | 26.39% | 3/29/16 |
MSCI ACWI Small Cap Index | — | 24.26% | 20.35% | — |
I Class | AGCSX | 36.74% | 26.64% | 3/29/16 |
A Class | AGCLX | 3/29/16 | ||
No sales charge | 36.10% | 26.08% | ||
With sales charge | 28.29% | 21.70% | ||
C Class | AGCHX | 35.06% | 25.16% | 3/29/16 |
R Class | AGCWX | 35.80% | 25.78% | 3/29/16 |
R6 Class | AGCTX | 36.86% | 26.85% | 3/29/16 |
Prior to April 10, 2017, the I Class was referred to as the Institutional Class. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
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 and may be subject to a maximum CDSC of 1.00%. 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.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over Life of Class |
$10,000 investment made March 29, 2016 |
Performance for other share classes will vary due to differences in fee structure. |
Value on November 30, 2017 | |
Investor Class — $14,800 | |
MSCI ACWI Small Cap Index — $13,636 | |
Total Annual Fund Operating Expenses | |||||
Investor Class | I Class | A Class | C Class | R Class | R6 Class |
1.51% | 1.31% | 1.76% | 2.51% | 2.01% | 1.16% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Trevor Gurwich and Federico Laffan
Performance Summary
Global Small Cap advanced 36.41%* for the 12-month period ended November 30, 2017. The portfolio’s benchmark, the MSCI ACWI Small Cap Index, advanced 24.26% for the same period.
A global recovery in corporate earnings growth fueled strong gains for small-cap stocks. Small-cap stocks outperformed their large-cap peers in Europe and the developed markets in Asia, but lagged in the emerging markets and North America. In this environment, our focus on companies demonstrating accelerating and sustainable earnings growth helped fuel the portfolio’s outperformance. Stock selection was especially favorable in the consumer discretionary, information technology, and consumer staples sectors. An overweight in information technology also supported relative outperformance. Stock selection in materials, an overweight in energy, and an underweight in utilities detracted from relative performance. Stock selection in energy and utilities subtracted modestly from relative returns.
Regionally, stock selection among U.S.-based holdings was a significant positive contributor to relative performance. An underweight in the U.S. also contributed moderately to relative results, as non-U.S. stocks generally outperformed their U.S. counterparts. Stock selection in China and New Zealand also boosted relative returns. Stock selection in France, South Korea, and Australia detracted.
Contributors Included Innovative Consumer Discretionary and Technology Companies
Stock selection in the household durables industry helped drive outperformance in the consumer discretionary sector. A top contributor, Q Technology Group makes camera modules for smartphones, tablets, and PCs. The stock rallied on the company’s strong financial results, improved pricing, and an industry shift to higher megapixel cameras. We opted to sell the position and take our profits in the third quarter of 2017, as we concluded the risk/reward profile was no longer attractive following the stock’s rally.
Strong earnings performance also helped lift a number of the portfolio’s technology stocks. Shopify, a top performer, is a provider of cloud-based e-commerce platforms for small- and medium-sized enterprises. The stock surged higher in the third quarter of 2017 on the company’s strong financial results and optimistic full-year guidance. Following this strong performance, Shopify’s market capitalization surpassed $10 billion. We decided to sell the stock as we are finding more attractive risk/reward trade-offs among smaller-cap companies. Mobile payments technology company Square was another top contributor. The stock rallied late in the reporting period as investor sentiment turned increasingly positive towards the company’s revenue growth outlook. Square’s new products, including its omni-channel payments platform, have met with positive market receptions.
A notable contributor in the consumer staples sector, a2 Milk produces milk free from the beta casein a1 protein. The stock generated robust earnings performance, driven by strong sales trends in Australia and continued strong demand for its infant formula products from online consumers in China.
* All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund's benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Health Care Stocks Detracted
Stock-specific news weighed on several health care holdings. Collegium Pharmaceutical won approval for its non-addictive alternative to pain reliever oxycontin, but sales of this new drug have not kept pace with expectations. We decided to liquidate our investment. Another detractor, RaySearch Laboratories develops software used in radiation therapy. While the stock gained ground in the first half of the reporting period, it sold off after the company’s second-quarter financial performance fell short of forecasts due to higher selling costs. A weakening U.S. dollar also hurt the company’s earnings. Given reduced visibility on the company's sales outlook and our concerns about its profitability, we exited the position.
Outside of the health care sector, energy exploration company Parex Resources was another detractor. The stock declined in the first half of the period as concerns about oversupplied oil markets drove oil prices lower. Nonetheless, in our view the fundamentals of the stock remained positive, and we held onto the position. The stock recovered somewhat late in the period as oil prices trended higher on hopes for reduced Saudi production.
Outlook
We will continue to focus on global small-cap companies we believe demonstrate improving, sustainable earnings growth. Stock selection continues to drive our industry weightings. We continue to find attractive growth opportunities in the information technology sector, which remains a key sector overweight. In particular, holdings within the semiconductor industry are benefiting from strengthening demand, while select companies in the internet, software, and online payment industries are showing accelerating earnings growth. Stock selection also drives our overweight in the health care sector, where we have found companies exhibiting strong and accelerating earnings growth.
By contrast, the real estate sector remains a prominent underweight, as stretched valuations and expectations for higher interest rates may pressure property stocks. However, we are exploring opportunities among data-center real estate investment trusts (REITs) due to favorable longer-term trends associated with cloud computing and data storage.
From a regional standpoint, Europe remains the portfolio’s largest sector overweight, driven by bottom-up stock selection. We also believe Europe’s improving economic backdrop bodes well for earnings growth.
6
Fund Characteristics |
NOVEMBER 30, 2017 | |
Top Ten Holdings | % of net assets |
Venture Corp. Ltd. | 1.5% |
Vakrangee Ltd. | 1.4% |
ASR Nederland NV | 1.4% |
a2 Milk Co. Ltd. | 1.3% |
Rheinmetall AG | 1.2% |
Malibu Boats, Inc., Class A | 1.2% |
American Eagle Outfitters, Inc. | 1.2% |
Rentokil Initial plc | 1.1% |
Western Alliance Bancorp | 1.1% |
Euronet Worldwide, Inc. | 1.1% |
Types of Investments in Portfolio | % of net assets |
Foreign Common Stocks | 56.1% |
Domestic Common Stocks | 43.9% |
Total Common Stocks | 100.0% |
Temporary Cash Investments | 4.0% |
Other Assets and Liabilities | (4.0)% |
Investments by Country | % of net assets |
United States | 43.9% |
Japan | 11.2% |
Switzerland | 4.6% |
Canada | 3.6% |
Germany | 3.4% |
United Kingdom | 3.2% |
Taiwan | 3.0% |
Italy | 3.0% |
India | 2.8% |
China | 2.2% |
France | 2.1% |
South Korea | 2.0% |
Other Countries | 15.0% |
Cash and Equivalents** | —* |
*Category is less than 0.05% of total net assets.
**Includes temporary cash investments and other assets and liabilities.
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2017 to November 30, 2017.
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 I 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. 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.
8
Beginning Account Value 6/1/17 | Ending Account Value 11/30/17 | Expenses Paid During Period(1) 6/1/17 - 11/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,171.80 | $8.22 | 1.51% |
I Class | $1,000 | $1,173.00 | $7.14 | 1.31% |
A Class | $1,000 | $1,170.80 | $9.58 | 1.76% |
C Class | $1,000 | $1,166.70 | $13.63 | 2.51% |
R Class | $1,000 | $1,168.80 | $10.93 | 2.01% |
R6 Class | $1,000 | $1,174.30 | $6.32 | 1.16% |
Hypothetical | ||||
Investor Class | $1,000 | $1,017.50 | $7.64 | 1.51% |
I Class | $1,000 | $1,018.50 | $6.63 | 1.31% |
A Class | $1,000 | $1,016.24 | $8.90 | 1.76% |
C Class | $1,000 | $1,012.48 | $12.66 | 2.51% |
R Class | $1,000 | $1,014.99 | $10.15 | 2.01% |
R6 Class | $1,000 | $1,019.25 | $5.87 | 1.16% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
9
Schedule of Investments |
NOVEMBER 30, 2017
Shares | Value | ||||
COMMON STOCKS — 100.0% | |||||
Australia — 1.8% | |||||
ALS Ltd. | 19,956 | $ | 102,402 | ||
NEXTDC Ltd.(1) | 16,302 | 72,099 | |||
Northern Star Resources Ltd. | 19,484 | 85,639 | |||
260,140 | |||||
Belgium — 0.4% | |||||
Galapagos NV(1) | 680 | 59,526 | |||
Brazil — 1.3% | |||||
CVC Brasil Operadora e Agencia de Viagens SA | 9,400 | 129,135 | |||
EcoRodovias Infraestrutura e Logistica SA | 16,000 | 58,801 | |||
187,936 | |||||
Canada — 3.6% | |||||
CES Energy Solutions Corp. | 22,339 | 106,314 | |||
Descartes Systems Group, Inc. (The)(1) | 2,246 | 62,341 | |||
FirstService Corp. | 1,816 | 123,685 | |||
Interfor Corp.(1) | 4,011 | 66,531 | |||
Parex Resources, Inc.(1) | 9,098 | 121,575 | |||
Raging River Exploration, Inc.(1) | 8,965 | 52,255 | |||
532,701 | |||||
China — 2.2% | |||||
Baozun, Inc. ADR(1) | 3,391 | 96,135 | |||
Kingboard Laminates Holdings Ltd. | 73,000 | 121,924 | |||
Wisdom Education International Holdings Co. Ltd. | 182,000 | 108,918 | |||
326,977 | |||||
Finland — 0.4% | |||||
Terveystalo Oyj(1) | 5,478 | 61,616 | |||
France — 2.1% | |||||
Maisons du Monde SA | 3,189 | 131,784 | |||
Solutions 30 SE(1) | 3,532 | 111,354 | |||
Trigano SA | 404 | 63,915 | |||
307,053 | |||||
Germany — 3.4% | |||||
AIXTRON SE(1) | 6,572 | 96,557 | |||
MorphoSys AG(1) | 1,495 | 141,242 | |||
Rheinmetall AG | 1,403 | 178,528 | |||
Stabilus SA | 852 | 73,418 | |||
489,745 | |||||
Hong Kong — 1.0% | |||||
Melco International Development Ltd. | 51,000 | 147,937 | |||
India — 2.8% | |||||
Dewan Housing Finance Corp. Ltd. | 10,573 | 101,715 | |||
Future Retail Ltd.(1) | 10,817 | 92,474 |
10
Shares | Value | ||||
Praxis Home Retail Ltd.(1) | 541 | $ | 168 | ||
Vakrangee Ltd. | 19,101 | 211,974 | |||
406,331 | |||||
Indonesia — 1.0% | |||||
PT Bank Tabungan Negara Persero Tbk | 615,700 | 145,689 | |||
Italy — 3.0% | |||||
Banca Generali SpA | 3,992 | 140,297 | |||
Biesse SpA | 1,418 | 73,699 | |||
Davide Campari-Milano SpA | 10,502 | 81,706 | |||
Gima TT SpA(1) | 3,511 | 70,415 | |||
Moncler SpA | 2,505 | 68,700 | |||
434,817 | |||||
Japan — 11.2% | |||||
Cosmos Pharmaceutical Corp. | 600 | 135,540 | |||
Denka Co. Ltd. | 2,800 | 103,459 | |||
DMG Mori Co. Ltd. | 3,400 | 68,497 | |||
Hosiden Corp. | 6,100 | 97,249 | |||
Investors Cloud Co. Ltd. | 1,800 | 106,824 | |||
Itochu Techno-Solutions Corp. | 3,000 | 126,712 | |||
Nippon Shokubai Co. Ltd. | 1,700 | 119,039 | |||
Outsourcing, Inc. | 7,600 | 133,855 | |||
Pigeon Corp. | 2,800 | 107,454 | |||
Rohto Pharmaceutical Co. Ltd. | 4,300 | 110,877 | |||
Sanwa Holdings Corp. | 10,600 | 140,230 | |||
SHO-BOND Holdings Co. Ltd. | 2,000 | 127,367 | |||
SMS Co. Ltd. | 1,800 | 57,702 | |||
Tokyo Base Co. Ltd.(1) | 1,900 | 78,219 | |||
Toyo Tire & Rubber Co. Ltd. | 3,200 | 65,709 | |||
Ulvac, Inc. | 900 | 60,841 | |||
1,639,574 | |||||
Malaysia — 0.5% | |||||
My EG Services Bhd | 132,300 | 68,583 | |||
Netherlands — 1.8% | |||||
AMG Advanced Metallurgical Group NV | 1,390 | 61,935 | |||
ASR Nederland NV | 5,021 | 204,865 | |||
266,800 | |||||
New Zealand — 1.5% | |||||
a2 Milk Co. Ltd.(1) | 32,122 | 186,502 | |||
Fisher & Paykel Healthcare Corp. Ltd. | 3,795 | 33,867 | |||
220,369 | |||||
Norway — 0.1% | |||||
Asetek A/S | 1,898 | 19,648 | |||
Singapore — 1.5% | |||||
Venture Corp. Ltd. | 14,300 | 223,295 | |||
South Africa — 0.6% | |||||
Dis-Chem Pharmacies Ltd. | 31,623 | 85,262 |
11
Shares | Value | ||||
South Korea — 2.0% | |||||
InBody Co. Ltd. | 2,395 | $ | 79,123 | ||
Mando Corp. | 347 | 106,082 | |||
Modetour Network, Inc. | 3,375 | 109,947 | |||
295,152 | |||||
Spain — 1.4% | |||||
Inmobiliaria Colonial Socimi SA | 7,256 | 68,615 | |||
Masmovil Ibercom SA(1) | 1,055 | 96,767 | |||
NH Hotel Group SA | 4,603 | 33,867 | |||
199,249 | |||||
Sweden — 1.7% | |||||
Saab AB, B Shares | 2,018 | 98,105 | |||
SSAB AB, A Shares(1) | 13,015 | 61,268 | |||
Vitrolife AB | 1,233 | 93,308 | |||
252,681 | |||||
Switzerland — 4.6% | |||||
Georg Fischer AG | 103 | 135,445 | |||
Idorsia Ltd.(1) | 3,922 | 84,380 | |||
Leonteq AG(1) | 727 | 43,027 | |||
Logitech International SA | 1,786 | 62,209 | |||
Straumann Holding AG | 173 | 129,085 | |||
Tecan Group AG | 446 | 91,875 | |||
Temenos Group AG | 1,043 | 128,846 | |||
674,867 | |||||
Taiwan — 3.0% | |||||
Airtac International Group | 8,402 | 143,685 | |||
Merry Electronics Co. Ltd. | 15,000 | 111,348 | |||
Silergy Corp. | 5,000 | 106,070 | |||
TCI Co. Ltd. | 8,000 | 77,644 | |||
438,747 | |||||
United Kingdom — 3.2% | |||||
Bellway plc | 2,114 | 99,006 | |||
Burford Capital Ltd. | 4,839 | 80,345 | |||
CVS Group plc | 3,714 | 50,770 | |||
Rentokil Initial plc | 37,909 | 163,114 | |||
SSP Group plc | 4,344 | 37,718 | |||
UDG Healthcare plc | 3,289 | 37,319 | |||
468,272 | |||||
United States — 43.9% | |||||
2U, Inc.(1) | 1,496 | 95,894 | |||
AAR Corp. | 2,403 | 99,917 | |||
ABIOMED, Inc.(1) | 379 | 73,844 | |||
Amedisys, Inc.(1) | 1,077 | 58,158 | |||
American Eagle Outfitters, Inc. | 10,762 | 173,053 | |||
At Home Group, Inc.(1) | 3,010 | 83,166 | |||
Boingo Wireless, Inc.(1) | 5,821 | 143,779 | |||
Brink's Co. (The) | 1,478 | 119,496 |
12
Shares | Value | ||||
Burlington Stores, Inc.(1) | 1,346 | $ | 143,174 | ||
BWX Technologies, Inc. | 1,547 | 96,610 | |||
Callidus Software, Inc.(1) | 4,408 | 129,044 | |||
Callon Petroleum Co.(1) | 6,660 | 73,526 | |||
Catalent, Inc.(1) | 2,477 | 98,560 | |||
Central Garden & Pet Co.(1) | 2,736 | 108,428 | |||
Chegg, Inc.(1) | 4,663 | 70,924 | |||
Copart, Inc.(1) | 2,056 | 88,737 | |||
Essent Group Ltd.(1) | 3,219 | 142,441 | |||
Euronet Worldwide, Inc.(1) | 1,712 | 156,391 | |||
Evoqua Water Technologies Corp.(1) | 581 | 12,573 | |||
Fair Isaac Corp. | 881 | 138,370 | |||
First Industrial Realty Trust, Inc. | 3,605 | 117,343 | |||
Flexion Therapeutics, Inc.(1) | 3,245 | 84,078 | |||
Green Dot Corp., Class A(1) | 988 | 61,058 | |||
GrubHub, Inc.(1) | 1,020 | 68,911 | |||
Hamilton Lane, Inc., Class A | 4,437 | 152,943 | |||
HealthEquity, Inc.(1) | 2,006 | 104,051 | |||
HEICO Corp. | 1,343 | 121,354 | |||
Heritage Financial Corp. | 3,918 | 127,531 | |||
Installed Building Products, Inc.(1) | 1,784 | 137,457 | |||
Kadant, Inc. | 1,194 | 122,146 | |||
Kennametal, Inc. | 2,407 | 112,214 | |||
Kinsale Capital Group, Inc. | 3,157 | 140,771 | |||
LendingTree, Inc.(1) | 289 | 87,264 | |||
LogMeIn, Inc. | 1,050 | 124,950 | |||
Malibu Boats, Inc., Class A(1) | 5,655 | 176,775 | |||
Masimo Corp.(1) | 1,305 | 115,936 | |||
Medifast, Inc. | 1,050 | 71,957 | |||
MGP Ingredients, Inc. | 2,032 | 151,079 | |||
Mimecast Ltd.(1) | 3,009 | 91,474 | |||
Monolithic Power Systems, Inc. | 927 | 109,710 | |||
National Instruments Corp. | 1,458 | 64,079 | |||
National Vision Holdings, Inc.(1) | 445 | 14,503 | |||
Navistar International Corp.(1) | 2,608 | 106,172 | |||
Ollie's Bargain Outlet Holdings, Inc.(1) | 757 | 35,920 | |||
PGT Innovations, Inc.(1) | 8,569 | 140,103 | |||
RH(1) | 1,096 | 111,123 | |||
RSP Permian, Inc.(1) | 3,310 | 121,576 | |||
SiteOne Landscape Supply, Inc.(1) | 1,988 | 148,663 | |||
Square, Inc., Class A(1) | 1,954 | 76,636 | |||
Summit Materials, Inc., Class A(1) | 2,902 | 89,266 | |||
SVB Financial Group(1) | 649 | 147,738 | |||
Teladoc, Inc.(1) | 1,992 | 73,903 | |||
Terex Corp. | 3,176 | 148,510 | |||
Trupanion, Inc.(1) | 4,840 | 144,135 | |||
Varex Imaging Corp.(1) | 971 | 35,995 |
13
Shares | Value | ||||
Vocera Communications, Inc.(1) | 4,854 | $ | 142,222 | ||
Western Alliance Bancorp(1) | 2,731 | 158,890 | |||
Wintrust Financial Corp. | 1,461 | 122,505 | |||
XPO Logistics, Inc.(1) | 1,946 | 153,792 | |||
6,420,818 | |||||
TOTAL COMMON STOCKS (Cost $11,994,318) | 14,633,785 | ||||
TEMPORARY CASH INVESTMENTS — 4.0% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 3.75%, 4/15/18 - 2/15/47, valued at $328,789), in a joint trading account at 0.88%, dated 11/30/17, due 12/1/17 (Delivery value $323,004) | 322,996 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.125%, 8/15/44, valued at $278,098), at 0.34%, dated 11/30/17, due 12/1/17 (Delivery value $269,003) | 269,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 632 | 632 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $592,628) | 592,628 | ||||
TOTAL INVESTMENT SECURITIES — 104.0% (Cost $12,586,946) | 15,226,413 | ||||
OTHER ASSETS AND LIABILITIES — (4.0)% | (586,843 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 14,639,570 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Industrials | 20.8 | % |
Information Technology | 19.9 | % |
Consumer Discretionary | 14.5 | % |
Financials | 13.7 | % |
Health Care | 12.0 | % |
Consumer Staples | 7.3 | % |
Materials | 4.0 | % |
Energy | 3.2 | % |
Real Estate | 2.8 | % |
Telecommunication Services | 1.7 | % |
Utilities | 0.1 | % |
Cash and Equivalents* | —** |
*Includes temporary cash investments and other assets and liabilities.
**Category is less than 0.05% of total net assets.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
(1) | Non-income producing. |
See Notes to Financial Statements.
14
Statement of Assets and Liabilities |
NOVEMBER 30, 2017 | |||
Assets | |||
Investment securities, at value (cost of $12,586,946) | $ | 15,226,413 | |
Foreign currency holdings, at value (cost of $125,845) | 125,845 | ||
Receivable for investments sold | 110,378 | ||
Receivable for capital shares sold | 8,905 | ||
Dividends and interest receivable | 13,445 | ||
15,484,986 | |||
Liabilities | |||
Payable for investments purchased | 756,150 | ||
Payable for capital shares redeemed | 55,638 | ||
Accrued management fees | 16,642 | ||
Distribution and service fees payable | 1,621 | ||
Accrued foreign taxes | 15,295 | ||
Accrued other expenses | 70 | ||
845,416 | |||
Net Assets | $ | 14,639,570 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 11,288,581 | |
Accumulated net investment loss | (10,601 | ) | |
Undistributed net realized gain | 736,761 | ||
Net unrealized appreciation | 2,624,829 | ||
$ | 14,639,570 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $10,059,384 | 679,634 | $14.80 | |||
I Class, $0.01 Par Value | $891,088 | 60,000 | $14.85 | |||
A Class, $0.01 Par Value | $1,516,666 | 102,893 | $14.74* | |||
C Class, $0.01 Par Value | $1,467,842 | 100,836 | $14.56 | |||
R Class, $0.01 Par Value | $338,475 | 23,059 | $14.68 | |||
R6 Class, $0.01 Par Value | $366,115 | 24,589 | $14.89 |
*Maximum offering price $15.64 (net asset value divided by 0.9425).
See Notes to Financial Statements.
15
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2017 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $6,348) | $ | 99,421 | |
Interest | 815 | ||
100,236 | |||
Expenses: | |||
Management fees | 137,469 | ||
Distribution and service fees: | |||
A Class | 3,148 | ||
C Class | 12,546 | ||
R Class | 1,321 | ||
Directors' fees and expenses | 277 | ||
Other expenses | 337 | ||
155,098 | |||
Net investment income (loss) | (54,862 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions (net of foreign tax expenses paid (refunded) of $4,990) | 945,896 | ||
Foreign currency translation transactions | (2,180 | ) | |
943,716 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments (includes (increase) decrease in accrued foreign taxes of $(15,295)) | 2,035,817 | ||
Translation of assets and liabilities in foreign currencies | 945 | ||
2,036,762 | |||
Net realized and unrealized gain (loss) | 2,980,478 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 2,925,616 |
See Notes to Financial Statements.
16
Statement of Changes in Net Assets |
YEAR ENDED NOVEMBER 30, 2017 AND PERIOD ENDED NOVEMBER 30, 2016 | ||||||
Increase (Decrease) in Net Assets | November 30, 2017 | November 30, 2016(1) | ||||
Operations | ||||||
Net investment income (loss) | $ | (54,862 | ) | $ | (22,670 | ) |
Net realized gain (loss) | 943,716 | (143,383 | ) | |||
Change in net unrealized appreciation (depreciation) | 2,036,762 | 588,067 | ||||
Net increase (decrease) in net assets resulting from operations | 2,925,616 | 422,014 | ||||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 6,108,864 | 5,183,076 | ||||
Net increase (decrease) in net assets | 9,034,480 | 5,605,090 | ||||
Net Assets | ||||||
Beginning of period | 5,605,090 | — | ||||
End of period | $ | 14,639,570 | $ | 5,605,090 | ||
Accumulated net investment loss | $ | (10,601 | ) | $ | (16,565 | ) |
(1) | March 29, 2016 (fund inception) through November 30, 2016. |
See Notes to Financial Statements.
17
Notes to Financial Statements |
NOVEMBER 30, 2017
1. Organization
American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. Global Small Cap Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek capital growth.
The fund offers the Investor Class, I Class (formerly Institutional Class), A Class, C Class, R Class and R6 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. All classes of the fund commenced sale on March 29, 2016, the fund’s inception date.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the
18
fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. Certain countries impose taxes on realized gains on the sale of securities registered in their country. The fund records the foreign tax expense, if any, on an accrual basis. The foreign tax expense on realized gains and unrealized appreciation 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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund 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 fund. In addition, in
19
the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. ACIM owns 50% of the shares of the fund. Related parties do not invest in the fund for the purpose of exercising management or control.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class.
The annual management fee for each class is as follows:
Investor Class | I Class | A Class | C Class | R Class | R6 Class |
1.50% | 1.30% | 1.50% | 1.50% | 1.50% | 1.15% |
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, 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 ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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. Fees incurred under the plans during the period ended November 30, 2017 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended November 30, 2017 were $18,196,964 and $12,142,833, respectively.
20
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2017 | Period ended November 30, 2016(1) | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 603,903 | $ | 7,813,445 | 222,420 | $ | 2,237,196 | ||||
Redeemed | (141,558 | ) | (1,850,032 | ) | (5,131 | ) | (55,668 | ) | ||
462,345 | 5,963,413 | 217,289 | 2,181,528 | |||||||
I Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | — | — | 60,000 | 600,000 | ||||||
A Class/Shares Authorized | 40,000,000 | 50,000,000 | ||||||||
Sold | 2,893 | 41,378 | 100,000 | 1,000,000 | ||||||
C Class/Shares Authorized | 30,000,000 | 50,000,000 | ||||||||
Sold | 836 | 8,999 | 100,000 | 1,000,000 | ||||||
R Class/Shares Authorized | 30,000,000 | 50,000,000 | ||||||||
Sold | 3,309 | 43,878 | 20,190 | 202,067 | ||||||
Redeemed | (392 | ) | (5,127 | ) | (48 | ) | (519 | ) | ||
2,917 | 38,751 | 20,142 | 201,548 | |||||||
R6 Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 4,797 | 59,181 | 20,000 | 200,000 | ||||||
Redeemed | (208 | ) | (2,858 | ) | — | — | ||||
4,589 | 56,323 | 20,000 | 200,000 | |||||||
Net increase (decrease) | 473,580 | $ | 6,108,864 | 517,431 | $ | 5,183,076 |
(1) | March 29, 2016 (fund inception) through November 30, 2016. |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. 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.
• Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
• Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
• Level 3 valuation inputs consist of unobservable data (including a 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 necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
21
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | ||||||||
China | $ | 96,135 | $ | 230,842 | — | |||
United States | 6,420,818 | — | — | |||||
Other Countries | — | 7,885,990 | — | |||||
Temporary Cash Investments | 632 | 591,996 | — | |||||
$ | 6,517,585 | $ | 8,708,828 | — |
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.
The fund invests in common stocks of small companies. Because of this, the fund may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
8. Federal Tax Information
On December 19, 2017, the fund declared and paid a per-share distribution from net realized gains to shareholders of record on December 18, 2017 of $0.7214 for the Investor Class, I Class, A Class, C Class, R Class and R6 Class.
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
There were no distributions paid by the fund during the year ended November 30, 2017 and the period March 29, 2016 (fund inception) through November 30, 2016.
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 12,634,706 | |
Gross tax appreciation of investments | $ | 2,671,737 | |
Gross tax depreciation of investments | (80,030 | ) | |
Net tax appreciation (depreciation) of investments | 2,591,707 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (14,137 | ) | |
Net tax appreciation (depreciation) | $ | 2,577,570 | |
Undistributed ordinary income | $ | 435,143 | |
Accumulated long-term gains | $ | 338,276 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
22
Financial Highlights |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | ||||||||||||
Per-Share Data | Ratios and Supplemental Data | |||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | |||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | ||||||||||||
2017 | $10.85 | (0.06) | 4.01 | 3.95 | $14.80 | 36.41% | 1.51% | (0.44)% | 130% | $10,059 | ||
2016(3) | $10.00 | (0.03) | 0.88 | 0.85 | $10.85 | 8.50% | 1.50%(4) | (0.40)%(4) | 95% | $2,357 | ||
I Class(5) | ||||||||||||
2017 | $10.86 | (0.02) | 4.01 | 3.99 | $14.85 | 36.74% | 1.31% | (0.24)% | 130% | $891 | ||
2016(3) | $10.00 | (0.01) | 0.87 | 0.86 | $10.86 | 8.60% | 1.30%(4) | (0.20)%(4) | 95% | $652 | ||
A Class | ||||||||||||
2017 | $10.83 | (0.08) | 3.99 | 3.91 | $14.74 | 36.10% | 1.76% | (0.69)% | 130% | $1,517 | ||
2016(3) | $10.00 | (0.05) | 0.88 | 0.83 | $10.83 | 8.30% | 1.75%(4) | (0.65)%(4) | 95% | $1,083 | ||
C Class | ||||||||||||
2017 | $10.78 | (0.17) | 3.95 | 3.78 | $14.56 | 35.06% | 2.51% | (1.44)% | 130% | $1,468 | ||
2016(3) | $10.00 | (0.10) | 0.88 | 0.78 | $10.78 | 7.80% | 2.50%(4) | (1.40)%(4) | 95% | $1,078 | ||
R Class | ||||||||||||
2017 | $10.81 | (0.11) | 3.98 | 3.87 | $14.68 | 35.80% | 2.01% | (0.94)% | 130% | $338 | ||
2016(3) | $10.00 | (0.06) | 0.87 | 0.81 | $10.81 | 8.10% | 2.00%(4) | (0.90)%(4) | 95% | $218 | ||
R6 Class | ||||||||||||
2017 | $10.87 | (0.01) | 4.03 | 4.02 | $14.89 | 36.86% | 1.16% | (0.09)% | 130% | $366 | ||
2016(3) | $10.00 | —(6) | 0.87 | 0.87 | $10.87 | 8.80% | 1.15%(4) | (0.05)%(4) | 95% | $217 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | March 29, 2016 (fund inception) through November 30, 2016. |
(4) | Annualized. |
(5) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(6) | Per-share amount was less than $0.005. |
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century World Mutual Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Global Small Cap Fund (the “Fund”), one of the funds constituting American Century World Mutual Funds, Inc., as of November 30, 2017, and the related statement of operations for the year then ended, and the statements of changes in net assets and the financial highlights for year then ended and for the period from March 29, 2016 (commencement date) through November 30, 2016. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2017, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of Global Small Cap Fund of American Century World Mutual Funds, Inc. as of November 30, 2017, the results of its operations for the year then ended, and the changes in its net assets and the financial highlights for year then ended and for the period from March 29, 2016 (commencement date) through November 30, 2016, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2018
25
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Mr. Thomas, 15) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 69 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired; Executive Vice President, ACC (2007 to 2013); President, ACS (2007 to 2013); Chief Operating Officer, ACC (2007 to 2012) | 69 | None |
Andrea C. Hall (1945) | Director | Since 1997 | Retired | 69 | None |
Jan M. Lewis (1957) | Director | Since 2011 | Retired; President and Chief Executive Officer, Catholic Charities of Northeast Kansas (human services organization) (2006 to 2013) | 69 | None |
James A. Olson (1942) | Director and Chairman of the Board | Since 2007 (Chairman since 2014) | Member, Plaza Belmont LLC (private equity fund manager) (1999 to present) | 69 | Saia, Inc. (2002 to 2012) and EPR Properties (2003 to 2013) |
26
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
M. Jeannine Strandjord (1945) | Director | Since 1994 | Retired | 69 | Euronet Worldwide Inc. and MGP Ingredients, Inc. |
John R. Whitten (1946) | Director | Since 2008 | Retired | 69 | Rudolph Technologies, Inc. |
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 69 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director and President | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 114 | BioMed Valley Discoveries, Inc. |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
27
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 15 investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years |
Jonathan S. Thomas (1963) | Director and President since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries |
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present); Vice President, Client Interactions and Marketing, ACIS (2013 to 2014); Director, Client Interactions and Marketing, ACIS (2007 to 2013). Also serves as Vice President, ACIS |
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS |
C. Jean Wade (1964) | Vice President,Treasurer and Chief Financial Officer since 2012 | Vice President, ACS (2000 to present) |
Robert J. Leach (1966) | Vice President since 2006 and Assistant Treasurer since 2012 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present); Associate General Counsel, ACC (2001 to present). Also serves as Vice President, ACIM and ACS |
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
28
Approval of Management Agreement |
At a meeting held on June 29, 2017, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
• | the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund; |
• | the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis; |
• | the investment performance of the Fund, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; |
• | the cost of owning the Fund compared to the cost of owning similar funds; |
• | the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers; |
• | financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor; |
• | strategic plans of the Advisor |
• | possible economies of scale associated with the Advisor’s management of the Fund and other accounts under its management; |
• | data comparing services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices by the Fund and the Advisor regarding financial intermediaries, the nature of services provided by intermediaries, and the terms of share classes utilized; and |
• | any collateral benefits derived by the Advisor from the management of the Fund. |
The Directors held three in-person meetings and one telephonic meeting to review and discuss the information provided. The independent Directors also reviewed responses to supplemental information requests and held active discussions with the Advisor regarding the renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In
29
connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services - Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including without limitation the following:
• | portfolio research and security selection |
• | securities trading |
• | Fund administration |
• | custody of Fund assets |
• | daily valuation of the Fund’s portfolio |
• | shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications |
• | legal services (except the independent Directors’ counsel) |
• | regulatory and portfolio compliance |
• | financial reporting |
• | marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans) |
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment. The Board noted specifically the resources the Advisor has committed during the year to compliance with the Department of Labor fiduciary rule and share class modernization.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process.The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement. More detailed information about the Fund's performance can be found in the Performance and Portfolio Commentary sections of this report.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through various committees of the Board, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the Advisor. The Board
30
found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business to provide shareholders additional content and services.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, and the fees and expenses of the Fund’s independent Directors (including their independent legal counsel) and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was at the median of the total expense ratios of the Fund’s peer expense universe and was within the range of its peer expense group.The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Directors also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
31
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Board reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor's resources and reasonable profits. The Board found the payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor receives proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
32
Proxy Voting Results |
A special meeting of shareholders was held on October 18, 2017, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect four directors to the Board of Directors of American Century World Mutual Funds, Inc.:
Affirmative | Withhold | ||||||
Thomas W. Bunn | $ | 5,482,015,298 | $ | 72,735,781 | |||
Barry Fink | $ | 5,485,170,607 | $ | 69,580,472 | |||
Jan M. Lewis | $ | 5,489,025,901 | $ | 65,725,178 | |||
Stephen E. Yates | $ | 5,481,872,069 | $ | 72,879,010 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Andrea C. Hall, James A. Olson, M. Jeannine Strandjord, and John R. Whitten.
33
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of 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 fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s 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 fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
34
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended November 30, 2017.
The fund hereby designates $6,348 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended November 30, 2017.
For the fiscal year ended November 30, 2017, the fund intends to pass through to shareholders foreign source income of $79,517 and foreign taxes paid of $6,348, or up to the maximum amount allowable, as a foreign tax credit. Foreign source income and foreign tax expense per outstanding share on November 30, 2017 are $0.0802 and $0.0064, respectively.
35
Notes |
36
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century World Mutual Funds, Inc. | ||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||
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. | ||
©2018 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91035 1801 |
Annual Report | |
November 30, 2017 | |
International Discovery Fund |
Table of Contents |
President’s Letter | 2 | |
Performance | 3 | |
Portfolio Commentary | ||
Fund Characteristics | ||
Shareholder Fee Example | ||
Schedule of Investments | ||
Statement of Assets and Liabilities | ||
Statement of Operations | ||
Statement of Changes in Net Assets | ||
Notes to Financial Statements | ||
Financial Highlights | ||
Report of Independent Registered Public Accounting Firm | ||
Management | ||
Approval of Management Agreement | ||
Proxy Voting Results | ||
Additional Information |
Any opinions expressed in this report reflect those of the author 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.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2017. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional, updated investment and market insights, we encourage you to visit our website, americancentury.com.
Upbeat Earnings, Economic Data Sparked Strong Gains for Global Stocks
Throughout the world, improving economic activity, healthy corporate earnings growth, and supportive central bank policies helped fuel robust double-digit gains for global stocks. The rally began early in the period, largely in response to the economic-growth implications of Donald Trump’s presidential election victory, and it forged ahead with few interruptions through November 2017. The 12-month period included several potential sources of financial market disruption, including acts of terrorism, North Korean saber-rattling, and an active and destructive hurricane season. Yet any resulting volatility was short-lived, as investors remained focused on positive economic and earnings news. Furthermore, in the U.S., the prospect for pro-growth tax reform propelled major stock indices to several record-high levels.
Among the developed markets, equity performance was notably strong in Europe, where solid corporate profits, improving economic growth rates, declining unemployment, and perceived market-friendly election results in France and Germany supported gains. In addition, the European Central Bank continued to provide stimulus support in the wake of persistently low inflation, which also helped stocks advance. Returns for emerging markets stocks were even stronger, bolstered by improving global and local economic and business fundamentals and rising oil prices.
The broad “risk-on” sentiment also extended to the global fixed-income market, where emerging markets bonds and high-yield corporate bonds were top performers. These securities satisfied investor demand for yield as interest rates remained relatively low throughout the world.
With global growth synchronizing and strengthening and central banks pursuing varying degrees of policy normalization, investors likely will face new opportunities and challenges in the months ahead. We believe this scenario warrants a disciplined, diversified, and risk-aware approach, using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of November 30, 2017 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWEGX | 37.12% | 11.32% | 2.19% | — | 4/1/94 |
MSCI ACWI ex-U.S. Mid Cap Growth Index | — | 29.48% | 8.67% | 1.97% | — | — |
I Class | TIDIX | 37.40% | 11.53% | 2.39% | — | 1/2/98 |
Y Class | AIYDX | — | — | — | 24.32% | 4/10/17 |
A Class | ACIDX | 4/28/98 | ||||
No sales charge | 36.77% | 11.06% | 1.94% | — | ||
With sales charge | 28.92% | 9.75% | 1.34% | — | ||
C Class | TWECX | 35.82% | 10.22% | — | 8.49% | 3/1/10 |
R Class | TWERX | 36.36% | 10.76% | — | 9.02% | 3/1/10 |
Average annual returns since inception are presented when ten years of performance history is not available.
Prior to March 1, 2010, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. Prior to April 10, 2017, the I Class was referred to as the Institutional Class. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
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 and may be subject to a maximum CDSC of 1.00%. 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.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years |
$10,000 investment made November 30, 2007 |
Performance for other share classes will vary due to differences in fee structure. |
Value on November 30, 2017 | |
Investor Class — $12,420 | |
MSCI ACWI ex-U.S. Mid Cap Growth Index — $12,151 | |
Total Annual Fund Operating Expenses | |||||
Investor Class | I Class | Y Class | A Class | C Class | R Class |
1.65% | 1.45% | 1.30% | 1.90% | 2.65% | 2.15% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Brian Brady and Pratik Patel
Performance Summary
International Discovery returned 37.12%* for the 12 months ended November 30, 2017. The portfolio outperformed its benchmark, the MSCI ACWI ex-U.S. Mid Cap Growth Index, which returned 29.48% for the same period.
A global recovery in corporate earnings growth fueled strong gains for non-U.S. stocks, especially among non-U.S. small- and mid-cap stocks, which generally outperformed their large-cap counterparts. In this environment, our focus on companies demonstrating accelerating and sustainable earnings growth helped drive our outperformance. This was especially the case in sectors such as information technology and industrials, where several of our holdings benefited from the growing digital migration of media and commerce as well as rising demand for automation.
Within the portfolio, stock selection drove relative outperformance, particularly in the information technology, industrials, and health care sectors. A portfolio overweight in the outperforming information technology sector also aided relative results. Investments in the materials sector were notable detractors, due to both stock selection and a portfolio underweight, especially in the chemicals industry. From a regional standpoint, investments in Japan, China, and Denmark contributed strongly to relative performance, while holdings in Brazil, Sweden, and the U.K. detracted.
Information Technology Stocks Boosted Returns
Strong earnings performance helped lift the portfolio’s technology stocks, notably Vakrangee, an IT services company that has partnered with Amazon to solve the “last mile” problem for rural consumers in India. The company operates a network of small rural-area consumer outlets that provide one-stop shopping for banking and other services. These outlets also offer computers that rural consumers can use to shop with Amazon, and these stores then serve as delivery locations for online purchases. The company’s retail footprint continues to expand across India, helping to drive the stock price higher. Another strong contributor, Sunny Optical Technology Group supplies optical instruments and high-performance lenses used in smartphone cameras. Accelerating revenue growth and expanding profit margins drove the company’s strong stock performance. The company also continues to gain market share as it capitalizes on rising demand for high-end dual-lens smartphone cameras.
In the industrials sector, global transport and logistics company DSV was another strong contributor. The stock rose on optimism that the transportation company’s air and sea business is accelerating, and that its profitability is improving. Elsewhere, an investment in Brilliance China Automotive Holdings boosted performance. The automobile manufacturer, which is involved in a joint venture with BMW, is benefiting from strong demand following a recent product launch. A consumer shift toward purchasing higher-priced, upgraded cars is also helping the stock.
* All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund's benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Materials Stock Detracted
Plastic products manufacturer RPC Group was a significant detractor in the materials sector. Early in the reporting period, the stock declined due to investor concerns over the pace of the company’s acquisitions after RPC announced its purchase of plastic foods manufacturer Letica. Investors were also concerned that a planned rights offering might dilute value for existing shareholders. In our view, these concerns were out of line with fundamentals, and we held onto the position. While the stock subsequently regained some ground, it struggled later in the period after the company issued a cautious growth outlook.
In the first half of the reporting period, declining crude oil prices weighed on energy stocks, and several energy holdings were notable detractors. These included oil and natural gas production company Seven Generations Energy and oil producer Tullow Oil. Tullow Oil’s stock performance also declined due to concerns over a planned rights issue and higher short-term capital requirements to fund new projects in Africa. Because of these higher capital requirements, the company extended the timeline for its anticipated cash-flow improvement. We decided to sell our positions in both stocks due to increasing uncertainty for their businesses.
Outlook
The portfolio continues to invest in non-U.S. small- and mid-cap companies that we believe are demonstrating accelerating and sustainable growth. Our stock selection process continues to drive our sector and country allocations. We continue to find solid earnings growth opportunities in the information technology sector, which remains a significant sector overweight. In particular, companies capitalizing on innovation in the smartphone components market and companies driving the shift to online entertainment in China offer attractive earnings growth potential. Materials ended the period as a notable underweight, as we found more attractive earnings growth opportunities in other sectors. Our largest underweight within materials is in the chemicals industry, where it remains a challenge to find companies with sustainable accelerations in earnings growth. From a regional standpoint, our bottom-up stock selection has led us to an overweight in the emerging markets. In particular, we are finding companies with accelerating earnings growth in Taiwan and China.
6
Fund Characteristics |
NOVEMBER 30, 2017 | |
Top Ten Holdings | % of net assets |
Lonza Group AG | 2.8% |
Treasury Wine Estates Ltd. | 2.3% |
DSV A/S | 2.1% |
Teleperformance | 1.7% |
London Stock Exchange Group plc | 1.6% |
Kose Corp. | 1.5% |
Ashtead Group plc | 1.5% |
Samsung SDI Co. Ltd. | 1.5% |
THK Co. Ltd. | 1.4% |
Wirecard AG | 1.4% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 97.3% |
Temporary Cash Investments | 2.9% |
Other Assets and Liabilities | (0.2)% |
Investments by Country | % of net assets |
Japan | 16.5% |
United Kingdom | 11.5% |
France | 10.0% |
Switzerland | 8.4% |
China | 7.5% |
Canada | 5.8% |
Australia | 4.9% |
Germany | 4.7% |
Taiwan | 4.0% |
India | 3.5% |
Italy | 3.2% |
Denmark | 2.1% |
Other Countries | 15.2% |
Cash and Equivalents* | 2.7% |
*Includes temporary cash investments and other assets and liabilities.
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2017 to November 30, 2017.
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 I 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. 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.
8
Beginning Account Value 6/1/17 | Ending Account Value 11/30/17 | Expenses Paid During Period(1) 6/1/17 - 11/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,155.30 | $8.91 | 1.65% |
I Class | $1,000 | $1,156.00 | $7.84 | 1.45% |
Y Class | $1,000 | $1,157.30 | $7.03 | 1.30% |
A Class | $1,000 | $1,154.10 | $10.26 | 1.90% |
C Class | $1,000 | $1,149.40 | $14.28 | 2.65% |
R Class | $1,000 | $1,152.20 | $11.60 | 2.15% |
Hypothetical | ||||
Investor Class | $1,000 | $1,016.80 | $8.34 | 1.65% |
I Class | $1,000 | $1,017.80 | $7.33 | 1.45% |
Y Class | $1,000 | $1,018.55 | $6.58 | 1.30% |
A Class | $1,000 | $1,015.54 | $9.60 | 1.90% |
C Class | $1,000 | $1,011.78 | $13.36 | 2.65% |
R Class | $1,000 | $1,014.29 | $10.86 | 2.15% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
9
Schedule of Investments |
NOVEMBER 30, 2017
Shares | Value | ||||
COMMON STOCKS — 97.3% | |||||
Australia — 4.9% | |||||
ALS Ltd. | 902,710 | $ | 4,632,166 | ||
Aristocrat Leisure Ltd. | 407,640 | 6,849,965 | |||
Challenger Ltd. | 255,380 | 2,728,583 | |||
Treasury Wine Estates Ltd. | 1,050,070 | 12,541,438 | |||
26,752,152 | |||||
Belgium — 1.2% | |||||
Galapagos NV(1) | 41,140 | 3,601,332 | |||
Umicore SA | 71,040 | 3,307,524 | |||
6,908,856 | |||||
Brazil — 1.2% | |||||
Fleury SA | 285,000 | 2,283,691 | |||
Magazine Luiza SA | 235,600 | 4,089,506 | |||
6,373,197 | |||||
Canada — 5.8% | |||||
BRP, Inc. | 118,270 | 4,324,145 | |||
Franco-Nevada Corp. (New York) | 47,530 | 3,857,060 | |||
Kirkland Lake Gold Ltd. | 261,070 | 3,761,804 | |||
Lundin Mining Corp. | 467,690 | 2,726,062 | |||
Premium Brands Holdings Corp. | 77,110 | 6,366,513 | |||
Sleep Country Canada Holdings, Inc. | 138,350 | 3,499,097 | |||
Trican Well Service Ltd.(1) | 1,979,975 | 7,182,330 | |||
31,717,011 | |||||
China — 7.5% | |||||
58.com, Inc. ADR(1) | 51,580 | 3,700,349 | |||
Beijing Enterprises Water Group Ltd. | 5,872,000 | 4,598,569 | |||
Brilliance China Automotive Holdings Ltd. | 1,808,000 | 4,783,233 | |||
China Gas Holdings Ltd. | 1,212,000 | 3,741,546 | |||
China Lodging Group Ltd. ADR | 51,701 | 5,517,014 | |||
China Resources Beer Holdings Co. Ltd. | 1,796,000 | 4,961,008 | |||
Momo, Inc. ADR(1) | 59,860 | 1,436,640 | |||
Shenzhou International Group Holdings Ltd. | 502,000 | 4,553,597 | |||
SINA Corp.(1) | 31,967 | 3,125,414 | |||
Sunny Optical Technology Group Co. Ltd. | 274,000 | 4,650,724 | |||
41,068,094 | |||||
Denmark — 2.1% | |||||
DSV A/S | 148,250 | 11,418,855 | |||
Finland — 1.7% | |||||
Konecranes Oyj | 120,497 | 5,351,269 | |||
Nokian Renkaat Oyj | 88,610 | 3,872,833 | |||
9,224,102 |
10
Shares | Value | ||||
France — 10.0% | |||||
Amundi SA | 85,450 | $ | 7,630,743 | ||
Arkema SA | 45,430 | 5,561,471 | |||
BioMerieux | 33,930 | 2,830,913 | |||
Eiffage SA | 66,150 | 7,262,122 | |||
Euronext NV | 95,400 | 5,824,423 | |||
SEB SA | 32,860 | 6,057,242 | |||
SOITEC(1) | 50,690 | 3,880,837 | |||
Teleperformance | 64,100 | 9,495,498 | |||
Ubisoft Entertainment SA(1) | 82,840 | 6,355,496 | |||
54,898,745 | |||||
Germany — 4.7% | |||||
Drillisch AG | 70,650 | 5,392,980 | |||
KION Group AG | 35,510 | 2,890,959 | |||
Salzgitter AG | 61,950 | 3,192,358 | |||
United Internet AG | 96,620 | 6,511,575 | |||
Wirecard AG | 73,420 | 7,828,906 | |||
25,816,778 | |||||
Hong Kong — 1.7% | |||||
ASM Pacific Technology Ltd. | 356,000 | 5,169,599 | |||
Samsonite International SA | 1,056,600 | 4,373,084 | |||
9,542,683 | |||||
India — 3.5% | |||||
Dalmia Bharat Ltd. | 90,660 | 4,459,096 | |||
Indiabulls Housing Finance Ltd. | 252,980 | 4,737,938 | |||
Vakrangee Ltd. | 549,700 | 6,100,310 | |||
Yes Bank Ltd. | 891,250 | 4,255,565 | |||
19,552,909 | |||||
Indonesia — 1.3% | |||||
United Tractors Tbk PT | 2,807,600 | 6,990,435 | |||
Israel — 0.3% | |||||
Frutarom Industries Ltd. | 20,470 | 1,803,834 | |||
Italy — 3.2% | |||||
CNH Industrial NV | 553,040 | 7,166,633 | |||
Davide Campari-Milano SpA | 418,500 | 3,255,932 | |||
FinecoBank Banca Fineco SpA | 442,070 | 4,459,765 | |||
Industria Macchine Automatiche SpA | 33,020 | 2,789,035 | |||
17,671,365 | |||||
Japan — 16.5% | |||||
Coca-Cola Bottlers Japan, Inc. | 203,600 | 7,742,235 | |||
Daifuku Co. Ltd. | 56,600 | 3,094,358 | |||
Don Quijote Holdings Co. Ltd. | 114,900 | 5,536,215 | |||
Hitachi Construction Machinery Co. Ltd. | 170,000 | 5,654,921 | |||
Kose Corp. | 55,000 | 8,469,815 | |||
LIXIL Group Corp. | 206,200 | 5,444,069 | |||
MISUMI Group, Inc. | 170,500 | 4,986,103 | |||
Nippon Shinyaku Co. Ltd. | 82,400 | 5,908,132 |
11
Shares | Value | ||||
Omron Corp. | 40,700 | $ | 2,410,050 | ||
Outsourcing, Inc. | 198,900 | 3,503,130 | |||
Penta-Ocean Construction Co. Ltd. | 638,100 | 4,764,686 | |||
Persol Holdings Co. Ltd. | 71,800 | 1,684,920 | |||
Sanwa Holdings Corp. | 305,900 | 4,046,821 | |||
Seria Co. Ltd. | 63,500 | 4,021,292 | |||
Sumco Corp. | 285,300 | 7,217,695 | |||
THK Co. Ltd. | 213,800 | 7,977,579 | |||
Topcon Corp. | 76,719 | 1,708,247 | |||
Tsubaki Nakashima Co. Ltd. | 238,500 | 5,331,021 | |||
Vector, Inc. | 98,000 | 1,382,593 | |||
90,883,882 | |||||
New Zealand — 0.5% | |||||
a2 Milk Co. Ltd.(1) | 527,870 | 3,064,841 | |||
Norway — 0.7% | |||||
Borr Drilling Ltd.(1) | 828,443 | 3,694,822 | |||
Poland — 0.7% | |||||
CCC SA | 53,880 | 3,669,209 | |||
Russia — 1.4% | |||||
Yandex NV, A Shares(1) | 231,940 | 7,679,533 | |||
Singapore — 1.2% | |||||
Venture Corp. Ltd. | 442,900 | 6,915,915 | |||
South Africa — 0.5% | |||||
Capitec Bank Holdings Ltd. | 38,910 | 2,797,059 | |||
South Korea — 1.9% | |||||
Hyundai Mipo Dockyard Co. Ltd.(1) | 27,850 | 2,382,607 | |||
Samsung SDI Co. Ltd. | 42,210 | 8,273,843 | |||
10,656,450 | |||||
Sweden — 0.9% | |||||
Tele2 AB, B Shares | 388,710 | 4,976,469 | |||
Switzerland — 8.4% | |||||
ams AG | 48,200 | 4,691,375 | |||
Logitech International SA | 224,460 | 7,818,308 | |||
Lonza Group AG | 59,530 | 15,552,551 | |||
Partners Group Holding AG | 8,010 | 5,502,431 | |||
Sika AG | 730 | 5,637,625 | |||
Straumann Holding AG | 9,440 | 7,043,702 | |||
46,245,992 | |||||
Taiwan — 4.0% | |||||
Airtac International Group | 340,309 | 5,819,736 | |||
Chailease Holding Co. Ltd. | 1,437,000 | 4,187,899 | |||
Gourmet Master Co. Ltd. | 364,800 | 4,596,543 | |||
Macronix International(1) | 4,803,845 | 7,695,651 | |||
22,299,829 | |||||
United Kingdom — 11.5% | |||||
Acacia Mining plc | 679,920 | 1,585,602 | |||
Ashtead Group plc | 323,510 | 8,315,755 |
12
Shares | Value | ||||
B&M European Value Retail SA | 1,313,340 | $ | 6,786,443 | ||
DCC plc | 44,500 | 4,309,902 | |||
Intermediate Capital Group plc | 367,400 | 5,282,346 | |||
Just Eat plc(1) | 585,460 | 6,330,483 | |||
Keywords Studios plc | 134,530 | 2,676,492 | |||
London Stock Exchange Group plc | 175,290 | 8,969,270 | |||
Melrose Industries plc | 1,079,790 | 2,905,917 | |||
Rentokil Initial plc | 1,104,520 | 4,752,507 | |||
RPC Group plc | 511,240 | 6,374,197 | |||
Segro plc | 658,050 | 4,879,426 | |||
63,168,340 | |||||
TOTAL COMMON STOCKS (Cost $450,153,984) | 535,791,357 | ||||
TEMPORARY CASH INVESTMENTS — 2.9% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 3.75%, 4/15/18 - 2/15/47, valued at $8,949,794), in a joint trading account at 0.88%, dated 11/30/17, due 12/1/17 (Delivery value $8,792,324) | 8,792,109 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.125%, 8/15/44, valued at $7,476,560), at 0.34%, dated 11/30/17, due 12/1/17 (Delivery value $7,327,069) | 7,327,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 12,539 | 12,539 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $16,131,648) | 16,131,648 | ||||
TOTAL INVESTMENT SECURITIES — 100.2% (Cost $466,285,632) | 551,923,005 | ||||
OTHER ASSETS AND LIABILITIES — (0.2)% | (1,182,126 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 550,740,879 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Industrials | 22.8 | % |
Information Technology | 20.3 | % |
Consumer Discretionary | 13.5 | % |
Financials | 10.3 | % |
Consumer Staples | 8.4 | % |
Materials | 7.7 | % |
Health Care | 6.7 | % |
Energy | 3.3 | % |
Telecommunication Services | 1.9 | % |
Utilities | 1.5 | % |
Real Estate | 0.9 | % |
Cash and Equivalents* | 2.7 | % |
*Includes temporary cash investments and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
(1) | Non-income producing. |
See Notes to Financial Statements.
13
Statement of Assets and Liabilities |
NOVEMBER 30, 2017 | |||
Assets | |||
Investment securities, at value (cost of $466,285,632) | $ | 551,923,005 | |
Foreign currency holdings, at value (cost of $876,443) | 876,146 | ||
Receivable for investments sold | 8,510,841 | ||
Receivable for capital shares sold | 76,623 | ||
Dividends and interest receivable | 763,308 | ||
Other assets | 117,376 | ||
562,267,299 | |||
Liabilities | |||
Payable for investments purchased | 10,116,224 | ||
Payable for capital shares redeemed | 243,059 | ||
Accrued management fees | 728,644 | ||
Distribution and service fees payable | 1,848 | ||
Accrued foreign taxes | 433,426 | ||
Accrued other expenses | 3,219 | ||
11,526,420 | |||
Net Assets | $ | 550,740,879 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 468,103,428 | |
Accumulated net investment loss | (2,501,654 | ) | |
Accumulated net realized loss | (21,402 | ) | |
Net unrealized appreciation | 85,160,507 | ||
$ | 550,740,879 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $517,258,963 | 31,049,325 | $16.66 | |||
I Class, $0.01 Par Value | $27,863,969 | 1,648,690 | $16.90 | |||
Y Class, $0.01 Par Value | $6,211 | 367 | $16.92 | |||
A Class, $0.01 Par Value | $4,660,931 | 288,102 | $16.18* | |||
C Class, $0.01 Par Value | $880,633 | 55,574 | $15.85 | |||
R Class, $0.01 Par Value | $70,172 | 4,291 | $16.35 |
*Maximum offering price $17.17 (net asset value divided by 0.9425).
See Notes to Financial Statements.
14
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2017 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $431,331) | $ | 6,350,612 | |
Interest | 29,779 | ||
6,380,391 | |||
Expenses: | |||
Management fees | 8,009,051 | ||
Distribution and service fees: | |||
A Class | 12,920 | ||
C Class | 9,753 | ||
R Class | 664 | ||
Directors' fees and expenses | 14,814 | ||
Other expenses | 22,938 | ||
8,070,140 | |||
Net investment income (loss) | (1,689,749 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 98,518,194 | ||
Foreign currency translation transactions | (253,315 | ) | |
98,264,879 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments (includes (increase) decrease in accrued foreign taxes of $(433,426)) | 57,381,849 | ||
Translation of assets and liabilities in foreign currencies | 76,756 | ||
57,458,605 | |||
Net realized and unrealized gain (loss) | 155,723,484 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 154,033,735 |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2017 AND NOVEMBER 30, 2016 | ||||||
Increase (Decrease) in Net Assets | November 30, 2017 | November 30, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | (1,689,749 | ) | $ | (1,228,563 | ) |
Net realized gain (loss) | 98,264,879 | (16,140,832 | ) | |||
Change in net unrealized appreciation (depreciation) | 57,458,605 | (9,168,454 | ) | |||
Net increase (decrease) in net assets resulting from operations | 154,033,735 | (26,537,849 | ) | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | — | (2,556,611 | ) | |||
I Class | — | (154,815 | ) | |||
A Class | — | (18,092 | ) | |||
R Class | — | (75 | ) | |||
Decrease in net assets from distributions | — | (2,729,593 | ) | |||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (50,054,022 | ) | (60,707,535 | ) | ||
Redemption Fees | ||||||
Increase in net assets from redemption fees | 4,236 | 4,955 | ||||
Net increase (decrease) in net assets | 103,983,949 | (89,970,022 | ) | |||
Net Assets | ||||||
Beginning of period | 446,756,930 | 536,726,952 | ||||
End of period | $ | 550,740,879 | $ | 446,756,930 | ||
Accumulated net investment loss | $ | (2,501,654 | ) | $ | (860,832 | ) |
See Notes to Financial Statements.
16
Notes to Financial Statements |
NOVEMBER 30, 2017
1. Organization
American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. International Discovery Fund (the fund) is one fund in a series issued by the corporation. The fund's investment objective is to seek capital growth.
The fund offers the Investor Class, I Class (formerly Institutional Class), Y Class, A Class, C Class, and R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. Sale of the Y Class commenced on April 10, 2017.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the
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fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. Certain countries impose taxes on realized gains on the sale of securities registered in their country. The fund records the foreign tax expense, if any, on an accrual basis. The foreign tax expense on realized gains and unrealized appreciation 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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund 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 Fees — Prior to October 9, 2017, the fund may have imposed a 2.00% redemption fee on shares held less than 60 days. The fee was not applicable to all classes. The redemption fee was retained by
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the fund to help cover transaction costs that long-term investors may bear when the fund sells securities to meet investor redemptions.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that use very similar investment teams and strategies (strategy assets).
The management fee schedule range and the effective annual management fee for each class for the period ended November 30, 2017 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |
Investor Class | 1.200% to 1.750% | 1.64% |
I Class | 1.000% to 1.550% | 1.44% |
Y Class | 0.850% to 1.400% | 1.29% |
A Class | 1.200% to 1.750% | 1.64% |
C Class | 1.200% to 1.750% | 1.64% |
R Class | 1.200% to 1.750% | 1.64% |
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, 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 ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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. Fees incurred under the plans during the period ended November 30, 2017 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules
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and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases were $203,915 and there were no interfund sales.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended November 30, 2017 were $604,539,753 and $661,524,078, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2017(1) | Year ended November 30, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 340,000,000 | 380,000,000 | ||||||||
Sold | 1,032,656 | $ | 14,967,943 | 596,121 | $ | 7,445,535 | ||||
Issued in reinvestment of distributions | — | — | 204,271 | 2,418,572 | ||||||
Redeemed | (4,656,519 | ) | (64,073,784 | ) | (5,416,519 | ) | (67,763,718 | ) | ||
(3,623,863 | ) | (49,105,841 | ) | (4,616,127 | ) | (57,899,611 | ) | |||
I Class/Shares Authorized | 50,000,000 | 40,000,000 | ||||||||
Sold | 386,641 | 5,886,834 | 159,528 | 2,008,154 | ||||||
Issued in reinvestment of distributions | — | — | 12,934 | 154,815 | ||||||
Redeemed | (299,960 | ) | (4,256,349 | ) | (326,816 | ) | (4,131,076 | ) | ||
86,681 | 1,630,485 | (154,354 | ) | (1,968,107 | ) | |||||
Y Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 367 | 5,000 | ||||||||
A Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 39,572 | 539,675 | 68,647 | 841,403 | ||||||
Issued in reinvestment of distributions | — | — | 1,566 | 18,092 | ||||||
Redeemed | (190,435 | ) | (2,697,895 | ) | (156,499 | ) | (1,909,517 | ) | ||
(150,863 | ) | (2,158,220 | ) | (86,286 | ) | (1,050,022 | ) | |||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 9,008 | 128,587 | 55,435 | 678,052 | ||||||
Redeemed | (28,165 | ) | (420,180 | ) | (38,509 | ) | (459,546 | ) | ||
(19,157 | ) | (291,593 | ) | 16,926 | 218,506 | |||||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 2,625 | 37,296 | 2,380 | 29,452 | ||||||
Issued in reinvestment of distributions | — | — | 6 | 75 | ||||||
Redeemed | (11,805 | ) | (171,149 | ) | (3,003 | ) | (37,828 | ) | ||
(9,180 | ) | (133,853 | ) | (617 | ) | (8,301 | ) | |||
Net increase (decrease) | (3,716,015 | ) | $ | (50,054,022 | ) | (4,840,458 | ) | $ | (60,707,535 | ) |
(1) | April 10, 2017 (commencement of sale) through November 30, 2017 for the Y Class. |
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6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. 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.
• Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
• Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
• Level 3 valuation inputs consist of unobservable data (including a 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 necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 25,316,010 | $ | 510,475,347 | — | |||
Temporary Cash Investments | 12,539 | 16,119,109 | — | |||||
$ | 25,328,549 | $ | 526,594,456 | — |
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.
The fund invests in common stocks of small companies. Because of this, the fund may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
8. Federal Tax Information
The tax character of distributions paid during the years ended November 30, 2017 and November 30, 2016 were as follows:
2017 | 2016 | ||||
Distributions Paid From | |||||
Ordinary income | — | $ | 2,729,593 | ||
Long-term capital gains | — | — |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
The reclassifications, which are primarily due to the expiration of capital loss carryovers, were made to capital $(34,287,586), accumulated net investment loss $48,927, and accumulated net realized loss $34,238,659.
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As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 470,668,566 | |
Gross tax appreciation of investments | $ | 87,011,557 | |
Gross tax depreciation of investments | (5,757,118 | ) | |
Net tax appreciation (depreciation) of investments | 81,254,439 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (493,958 | ) | |
Net tax appreciation (depreciation) | $ | 80,760,481 | |
Undistributed ordinary income | $ | 1,876,970 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the realization to ordinary income for tax purposes of unrealized gains on investments in passive foreign investment companies.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||
2017 | $12.15 | (0.05) | 4.56 | 4.51 | — | $16.66 | 37.12% | 1.65% | (0.35)% | 125% | $517,259 | ||
2016 | $12.90 | (0.03) | (0.65) | (0.68) | (0.07) | $12.15 | (5.21)% | 1.64% | (0.25)% | 139% | $421,314 | ||
2015 | $12.35 | —(3) | 0.58 | 0.58 | (0.03) | $12.90 | 4.61% | 1.67% | 0.00%(4) | 171% | $506,817 | ||
2014 | $12.70 | 0.03 | (0.24) | (0.21) | (0.14) | $12.35 | (1.73)% | 1.61% | 0.20% | 134% | $541,410 | ||
2013 | $10.08 | —(3) | 2.79 | 2.79 | (0.17) | $12.70 | 27.97% | 1.56% | 0.03% | 157% | $620,359 | ||
I Class(5) | |||||||||||||
2017 | $12.30 | (0.02) | 4.62 | 4.60 | — | $16.90 | 37.40% | 1.45% | (0.15)% | 125% | $27,864 | ||
2016 | $13.06 | (0.01) | (0.66) | (0.67) | (0.09) | $12.30 | (5.03)% | 1.44% | (0.05)% | 139% | $19,217 | ||
2015 | $12.50 | 0.03 | 0.58 | 0.61 | (0.05) | $13.06 | 4.84% | 1.47% | 0.20% | 171% | $22,415 | ||
2014 | $12.86 | 0.06 | (0.25) | (0.19) | (0.17) | $12.50 | (1.55)% | 1.41% | 0.40% | 134% | $22,304 | ||
2013 | $10.20 | 0.05 | 2.80 | 2.85 | (0.19) | $12.86 | 28.16% | 1.36% | 0.23% | 157% | $27,341 | ||
Y Class | |||||||||||||
2017(6) | $13.61 | —(3) | 3.31 | 3.31 | — | $16.92 | 24.32% | 1.30%(7) | 0.02%(7) | 125%(8) | $6 |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
A Class | |||||||||||||
2017 | $11.83 | (0.08) | 4.43 | 4.35 | — | $16.18 | 36.77% | 1.90% | (0.60)% | 125% | $4,661 | ||
2016 | $12.56 | (0.06) | (0.63) | (0.69) | (0.04) | $11.83 | (5.44)% | 1.89% | (0.50)% | 139% | $5,193 | ||
2015 | $12.03 | (0.03) | 0.56 | 0.53 | — | $12.56 | 4.32% | 1.92% | (0.25)% | 171% | $6,596 | ||
2014 | $12.36 | (0.01) | (0.22) | (0.23) | (0.10) | $12.03 | (1.92)% | 1.86% | (0.05)% | 134% | $5,576 | ||
2013 | $9.81 | (0.03) | 2.72 | 2.69 | (0.14) | $12.36 | 27.69% | 1.81% | (0.22)% | 157% | $3,585 | ||
C Class | |||||||||||||
2017 | $11.67 | (0.18) | 4.36 | 4.18 | — | $15.85 | 35.82% | 2.65% | (1.35)% | 125% | $881 | ||
2016 | $12.45 | (0.15) | (0.63) | (0.78) | — | $11.67 | (6.19)% | 2.64% | (1.25)% | 139% | $872 | ||
2015 | $12.01 | (0.12) | 0.56 | 0.44 | — | $12.45 | 3.58% | 2.67% | (1.00)% | 171% | $720 | ||
2014 | $12.39 | (0.10) | (0.23) | (0.33) | (0.05) | $12.01 | (2.74)% | 2.61% | (0.80)% | 134% | $456 | ||
2013 | $9.83 | (0.14) | 2.76 | 2.62 | (0.06) | $12.39 | 26.75% | 2.56% | (0.97)% | 157% | $342 | ||
R Class | |||||||||||||
2017 | $11.98 | (0.11) | 4.48 | 4.37 | — | $16.35 | 36.36% | 2.15% | (0.85)% | 125% | $70 | ||
2016 | $12.73 | (0.10) | (0.64) | (0.74) | (0.01) | $11.98 | (5.69)% | 2.14% | (0.75)% | 139% | $161 | ||
2015 | $12.22 | (0.08) | 0.59 | 0.51 | — | $12.73 | 4.09% | 2.17% | (0.50)% | 171% | $179 | ||
2014 | $12.55 | (0.05) | (0.22) | (0.27) | (0.06) | $12.22 | (2.19)% | 2.11% | (0.30)% | 134% | $374 | ||
2013 | $9.96 | (0.06) | 2.76 | 2.70 | (0.11) | $12.55 | 27.35% | 2.06% | (0.47)% | 157% | $388 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Per-share amount was less than $0.005. |
(4) | Ratio was less than 0.005%. |
(5) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(6) | April 10, 2017 (commencement of sale) through November 30, 2017. |
(7) | Annualized. |
(8) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2017. |
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century World Mutual Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of International Discovery Fund (the “Fund”), one of the funds constituting American Century World Mutual Funds, Inc., as of November 30, 2017, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2017, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of International Discovery Fund of American Century World Mutual Funds, Inc. as of November 30, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2018
26
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Mr. Thomas, 15) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 69 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired; Executive Vice President, ACC (2007 to 2013); President, ACS (2007 to 2013); Chief Operating Officer, ACC (2007 to 2012) | 69 | None |
Andrea C. Hall (1945) | Director | Since 1997 | Retired | 69 | None |
Jan M. Lewis (1957) | Director | Since 2011 | Retired; President and Chief Executive Officer, Catholic Charities of Northeast Kansas (human services organization) (2006 to 2013) | 69 | None |
James A. Olson (1942) | Director and Chairman of the Board | Since 2007 (Chairman since 2014) | Member, Plaza Belmont LLC (private equity fund manager) (1999 to present) | 69 | Saia, Inc. (2002 to 2012) and EPR Properties (2003 to 2013) |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
M. Jeannine Strandjord (1945) | Director | Since 1994 | Retired | 69 | Euronet Worldwide Inc. and MGP Ingredients, Inc. |
John R. Whitten (1946) | Director | Since 2008 | Retired | 69 | Rudolph Technologies, Inc. |
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 69 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director and President | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 114 | BioMed Valley Discoveries, Inc. |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
28
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 15 investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years |
Jonathan S. Thomas (1963) | Director and President since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries |
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present); Vice President, Client Interactions and Marketing, ACIS (2013 to 2014); Director, Client Interactions and Marketing, ACIS (2007 to 2013). Also serves as Vice President, ACIS |
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS |
C. Jean Wade (1964) | Vice President,Treasurer and Chief Financial Officer since 2012 | Vice President, ACS (2000 to present) |
Robert J. Leach (1966) | Vice President since 2006 and Assistant Treasurer since 2012 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present); Associate General Counsel, ACC (2001 to present). Also serves as Vice President, ACIM and ACS |
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
29
Approval of Management Agreement |
At a meeting held on June 29, 2017, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
• | the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund; |
• | the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis; |
• | the investment performance of the Fund, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; |
• | the cost of owning the Fund compared to the cost of owning similar funds; |
• | the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers; |
• | financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor; |
• | strategic plans of the Advisor |
• | possible economies of scale associated with the Advisor’s management of the Fund and other accounts under its management; |
• | data comparing services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices by the Fund and the Advisor regarding financial intermediaries, the nature of services provided by intermediaries, and the terms of share classes utilized; and |
• | any collateral benefits derived by the Advisor from the management of the Fund. |
The Directors held three in-person meetings and one telephonic meeting to review and discuss the information provided. The independent Directors also reviewed responses to supplemental information requests and held active discussions with the Advisor regarding the renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In
30
connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services - Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including without limitation the following:
• | portfolio research and security selection |
• | securities trading |
• | Fund administration |
• | custody of Fund assets |
• | daily valuation of the Fund’s portfolio |
• | shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications |
• | legal services (except the independent Directors’ counsel) |
• | regulatory and portfolio compliance |
• | financial reporting |
• | marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans) |
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment. The Board noted specifically the resources the Advisor has committed during the year to compliance with the Department of Labor fiduciary rule and share class modernization.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review detailed performance information provided by the Advisor during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board receives a report from the Advisor regarding the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the five- and ten-year periods and below its benchmark for the one- and three-year periods reviewed by the Board. The Board discussed the Fund's performance with the Advisor and was satisfied with the efforts being undertaken by the Advisor. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The
31
Board, directly and through various committees of the Board, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the Advisor. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, and the fees and expenses of the Fund’s independent Directors (including their independent legal counsel) and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was above the median of the total expense ratios of the Fund’s peer expense universe and was within the range of its peer expense group. The Board discussed with the Advisor the factors that
32
impacted the level of the fee in relation to its peers and accepted the Advisor's explanation of such factors. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Directors also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Board reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor's resources and reasonable profits. The Board found the payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor receives proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
33
Proxy Voting Results |
A special meeting of shareholders was held on October 18, 2017, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect four directors to the Board of Directors of American Century World Mutual Funds, Inc.:
Affirmative | Withhold | ||||||
Thomas W. Bunn | $ | 5,482,015,298 | $ | 72,735,781 | |||
Barry Fink | $ | 5,485,170,607 | $ | 69,580,472 | |||
Jan M. Lewis | $ | 5,489,025,901 | $ | 65,725,178 | |||
Stephen E. Yates | $ | 5,481,872,069 | $ | 72,879,010 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Andrea C. Hall, James A. Olson, M. Jeannine Strandjord, and John R. Whitten.
34
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of 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 fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s 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 fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
35
Notes |
36
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century World Mutual Funds, Inc. | ||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||
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. | ||
©2018 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91031 1801 |
Annual Report | |
November 30, 2017 | |
International Growth Fund |
Table of Contents |
President’s Letter | 2 | |
Performance | 3 | |
Portfolio Commentary | ||
Fund Characteristics | ||
Shareholder Fee Example | ||
Schedule of Investments | ||
Statement of Assets and Liabilities | ||
Statement of Operations | ||
Statement of Changes in Net Assets | ||
Notes to Financial Statements | ||
Financial Highlights | ||
Report of Independent Registered Public Accounting Firm | ||
Management | ||
Approval of Management Agreement | ||
Proxy Voting Results | ||
Additional Information |
Any opinions expressed in this report reflect those of the author 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.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2017. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional, updated investment and market insights, we encourage you to visit our website, americancentury.com.
Upbeat Earnings, Economic Data Sparked Strong Gains for Global Stocks
Throughout the world, improving economic activity, healthy corporate earnings growth, and supportive central bank policies helped fuel robust double-digit gains for global stocks. The rally began early in the period, largely in response to the economic-growth implications of Donald Trump’s presidential election victory, and it forged ahead with few interruptions through November 2017. The 12-month period included several potential sources of financial market disruption, including acts of terrorism, North Korean saber-rattling, and an active and destructive hurricane season. Yet any resulting volatility was short-lived, as investors remained focused on positive economic and earnings news. Furthermore, in the U.S., the prospect for pro-growth tax reform propelled major stock indices to several record-high levels.
Among the developed markets, equity performance was notably strong in Europe, where solid corporate profits, improving economic growth rates, declining unemployment, and perceived market-friendly election results in France and Germany supported gains. In addition, the European Central Bank continued to provide stimulus support in the wake of persistently low inflation, which also helped stocks advance. Returns for emerging markets stocks were even stronger, bolstered by improving global and local economic and business fundamentals and rising oil prices.
The broad “risk-on” sentiment also extended to the global fixed-income market, where emerging markets bonds and high-yield corporate bonds were top performers. These securities satisfied investor demand for yield as interest rates remained relatively low throughout the world.
With global growth synchronizing and strengthening and central banks pursuing varying degrees of policy normalization, investors likely will face new opportunities and challenges in the months ahead. We believe this scenario warrants a disciplined, diversified, and risk-aware approach, using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of November 30, 2017 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWIEX | 31.32% | 8.08% | 2.36% | — | 5/9/91 |
MSCI EAFE Index | — | 27.27% | 8.23% | 1.55% | — | — |
MSCI EAFE Growth Index | — | 29.54% | 8.92% | 2.28% | — | — |
I Class | TGRIX | 31.64% | 8.31% | 2.57% | — | 11/20/97 |
Y Class | ATYGX | — | — | — | 19.77% | 4/10/17 |
A Class | TWGAX | 10/2/96 | ||||
No sales charge | 30.88% | 7.81% | 2.10% | — | ||
With sales charge | 23.34% | 6.54% | 1.50% | — | ||
C Class | AIWCX | 29.91% | 6.99% | 1.34% | — | 6/4/01 |
R Class | ATGRX | 30.60% | 7.54% | 1.85% | — | 8/29/03 |
R5 Class | ATGGX | — | — | — | 19.60% | 4/10/17 |
R6 Class | ATGDX | 31.68% | — | — | 6.54% | 7/26/13 |
Average annual returns since inception are presented when ten years of performance history is not available. Prior to December 3, 2007, the A Class was referred to as the Advisor Class and did not have a front-end sales charge. Performance prior to that date has been adjusted to reflect this charge. Prior to April 10, 2017, the I Class was referred to as the Institutional Class. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
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 and may be subject to a maximum CDSC of 1.00%. 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.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years |
$10,000 investment made November 30, 2007 |
Performance for other share classes will vary due to differences in fee structure. |
Value on November 30, 2017 | |
Investor Class — $12,633 | |
MSCI EAFE Index — $11,659 | |
MSCI EAFE Growth Index — $12,529 | |
Total Annual Fund Operating Expenses | |||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class |
1.18% | 0.98% | 0.83% | 1.43% | 2.18% | 1.68% | 0.98% | 0.83% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Manager: Raj Gandhi and James Gendelman
In December 2017, Jim Zhao was promoted from analyst to co-portfolio manager for Non-US Growth strategies.
International Growth gained 31.32%* for the 12 months ended November 30, 2017. The portfolio’s benchmark, the MSCI EAFE Index, increased 27.27% for the same period.
Non-U.S. developed market stocks produced strong gains during the 12-month period, outperforming U.S.-based equities, and growth stocks outpaced their value counterparts. Among non-U.S. developed market stocks, those based in Europe fared the best, followed by Japan and the Far East. The strength in non-U.S. growth equity performance was supported by increasing evidence of a long-duration earnings recovery.
Growth in non-U.S. markets was driven by improved global earnings growth. Growth in Europe was supported by strong revenue and earnings growth. Rising consumer and business confidence, coupled with improved corporate profits, have also led to increased capital spending and employment growth.
Japan-based stocks have benefited from better-than-expected earnings, driven by improved capital spending, consumer confidence, and export growth. In addition, the Japanese economy grew at a 1.4% annual rate in the third quarter and has now expanded for seven consecutive quarters, the longest growth streak in more than a decade.
Overall, the portfolio benefited from an improved market environment. After two years of factors other than earnings driving stock prices, the market has returned to differentiating stock price performance based on fundamentals, allowing stock selection to play a more dominant role in fund performance.
Overall, the fund surpassed its benchmark primarily due to stock selection in the information technology, financials, consumer discretionary, and health care sectors. Regionally, owning stocks based in China, which is not part of the fund’s benchmark, and stock selection in Japan contributed to the fund’s outperformance.
Strong stock selection and, to a lesser extent, an overweight in the information technology sector benefited performance. Regionally, a portfolio-only allocation to China as well as stock decisions in Japan added value.
Internet firms Alibaba Group Holding and Tencent Holdings drove returns in information technology. Alibaba was a strong performer for the full-year period as the company consistently beat estimates. Growth is being driven by strength in its core e-commerce business as well as the company’s ability to use data and technology to drive other verticals such as cloud and payments. Tencent also consistently reported better-than-expected results as the social media company is benefiting from the shift in advertising spend to digital. The company is in the early stages of monetizing its vast user base. The company also benefited from strength in its gaming business.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund's benchmark, other share classes may not. See page 3 for returns for all share classes.
5
In consumer discretionary, luxury goods firm Kering posted strong returns driven by the revitalization of its core Gucci brand which continues to benefit from new designs, store refurbishments, and improved demand for luxury goods. The proliferation of internet models helped online retailer Start Today, which was aided by new shop growth and brand diversification. E-commerce penetration in Japan is behind that in the U.S., and the company is capitalizing on the accelerating trend toward online business.
Stock selection in materials and energy hurt returns. Regionally, stock selection in Spain and portfolio-only positions in Brazil hampered results.
Iron ore producer Fortescue Metals Group, which suffered amid supply/demand imbalances that resulted in weak iron ore prices, detracted from relative returns. We exited the position. In energy, Tullow Oil, whose performance is closely tied to oil prices, was a victim of ongoing weakness in the commodity. We subsequently eliminated the position.
Automotive manufacturer Tata Motors’ stock underperformed despite new model launches. Investments in these new model launches led to unexpected margin pressure. We liquidated the position.
Stock of CRH, a cement and aggregates company, was weak despite reporting in line results. The company expects underlying trends in the U.S. to continue to improve but has experienced weather-related delays.
We remain focused on our disciplined, bottom-up fundamental process of identifying opportunities with accelerating, sustainable growth, where we see upside to consensus estimates. The portfolio is built through bottom-up stock selection within a risk-aware framework. We do not make top down sector or regional allocations. Confidence in sustained earnings growth continues to improve, supported by a strong global economic backdrop and confirmed by this strong earnings season and outlook. We expect earnings to continue to be the key driver of stock price performance. Information technology remains the largest sector overweight. This is supported by multiple trends, including the shift from online to digital, strong demand for factory automation solutions, and broad-based improvement in semiconductor demand, due to increased complexity and proliferation into end markets. Consumer discretionary remains a large overweight. Factors supporting our positive view for the sector include the shift in shopping from bricks and mortar to online as well as a general recovery in luxury goods demand. The portfolio has no exposure in the utilities and telecommunication services sectors, where we have not seen examples of companies exhibiting accelerating, sustainable growth that fit our investment process.
Europe remains our largest regional weighting. While the recovery in European earnings is behind that of the U.S., European earnings are the strongest in seven years with evidence of sustainability. Companies in Europe are benefiting from improved revenue growth combined with strong operating leverage. We expect foreign exchange to be less of a headwind going forward as the euro/dollar exchange rate stabilizes.
6
Fund Characteristics |
NOVEMBER 30, 2017 | |
Top Ten Holdings | % of net assets |
British American Tobacco plc | 2.3% |
AIA Group Ltd. | 2.2% |
Unilever NV CVA | 2.0% |
Lonza Group AG | 1.8% |
Alibaba Group Holding Ltd. ADR | 1.8% |
London Stock Exchange Group plc | 1.7% |
Kering | 1.7% |
Treasury Wine Estates Ltd. | 1.7% |
adidas AG | 1.6% |
Roche Holding AG | 1.6% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.5% |
Temporary Cash Investments | 0.3% |
Other Assets and Liabilities | 0.2% |
Investments by Country | % of net assets |
United Kingdom | 23.8% |
Japan | 14.8% |
France | 8.8% |
Germany | 7.6% |
Switzerland | 7.0% |
Netherlands | 5.1% |
China | 4.0% |
Denmark | 3.3% |
Australia | 3.0% |
Sweden | 2.8% |
Hong Kong | 2.5% |
Ireland | 2.2% |
Brazil | 2.2% |
Spain | 2.0% |
Other Countries | 10.4% |
Cash and Equivalents* | 0.5% |
*Includes temporary cash investments and other assets and liabilities.
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2017 to November 30, 2017.
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 I 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. 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.
8
Beginning Account Value 6/1/17 | Ending Account Value 11/30/17 | Expenses Paid During Period(1) 6/1/17 - 11/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,107.50 | $6.18 | 1.17% |
I Class | $1,000 | $1,109.90 | $5.13 | 0.97% |
Y Class | $1,000 | $1,109.80 | $4.34 | 0.82% |
A Class | $1,000 | $1,106.00 | $7.50 | 1.42% |
C Class | $1,000 | $1,101.80 | $11.43 | 2.17% |
R Class | $1,000 | $1,105.00 | $8.81 | 1.67% |
R5 Class | $1,000 | $1,109.00 | $5.13 | 0.97% |
R6 Class | $1,000 | $1,109.80 | $4.34 | 0.82% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.20 | $5.92 | 1.17% |
I Class | $1,000 | $1,020.21 | $4.91 | 0.97% |
Y Class | $1,000 | $1,020.96 | $4.15 | 0.82% |
A Class | $1,000 | $1,017.95 | $7.18 | 1.42% |
C Class | $1,000 | $1,014.19 | $10.96 | 2.17% |
R Class | $1,000 | $1,016.70 | $8.44 | 1.67% |
R5 Class | $1,000 | $1,020.21 | $4.91 | 0.97% |
R6 Class | $1,000 | $1,020.96 | $4.15 | 0.82% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
9
Schedule of Investments |
NOVEMBER 30, 2017
Shares | Value | ||||
COMMON STOCKS — 99.5% | |||||
Australia — 3.0% | |||||
CSL Ltd. | 196,100 | $ | 21,337,125 | ||
Treasury Wine Estates Ltd. | 2,183,160 | 26,074,420 | |||
47,411,545 | |||||
Austria — 1.5% | |||||
Erste Group Bank AG | 530,502 | 23,077,496 | |||
Belgium — 1.1% | |||||
KBC Group NV | 213,820 | 17,506,122 | |||
Brazil — 2.2% | |||||
Banco do Brasil SA | 482,300 | 4,409,794 | |||
Itau Unibanco Holding SA Preference Shares | 632,300 | 7,971,718 | |||
Localiza Rent a Car SA | 1,744,500 | 10,674,467 | |||
Lojas Renner SA | 1,052,300 | 10,907,312 | |||
33,963,291 | |||||
Canada — 0.8% | |||||
Dollarama, Inc. | 102,490 | 12,528,542 | |||
China — 4.0% | |||||
Alibaba Group Holding Ltd. ADR(1) | 159,090 | 28,171,657 | |||
ANTA Sports Products Ltd. | 1,810,000 | 8,128,630 | |||
TAL Education Group ADR | 274,960 | 7,665,885 | |||
Tencent Holdings Ltd. | 379,000 | 19,563,639 | |||
63,529,811 | |||||
Denmark — 3.3% | |||||
AP Moller - Maersk A/S, B Shares | 8,300 | 14,890,524 | |||
Chr Hansen Holding A/S | 174,890 | 15,886,964 | |||
DSV A/S | 276,270 | 21,279,509 | |||
52,056,997 | |||||
France — 8.8% | |||||
Accor SA | 253,900 | 12,739,870 | |||
ArcelorMittal(1) | 142,790 | 4,323,019 | |||
Arkema SA | 135,600 | 16,599,943 | |||
BNP Paribas SA | 248,370 | 18,814,158 | |||
Danone SA | 269,530 | 22,754,293 | |||
Essilor International Cie Generale d'Optique SA | 46,365 | 5,965,426 | |||
Kering | 58,740 | 26,075,036 | |||
TOTAL SA | 284,440 | 16,059,482 | |||
Valeo SA | 196,146 | 14,240,455 | |||
137,571,682 | |||||
Germany — 7.6% | |||||
adidas AG | 123,670 | 25,788,317 | |||
Deutsche Boerse AG | 71,410 | 8,096,506 | |||
Fresenius Medical Care AG & Co. KGaA | 148,200 | 14,728,562 |
10
Shares | Value | ||||
HeidelbergCement AG | 158,360 | $ | 16,852,879 | ||
Infineon Technologies AG | 398,470 | 11,006,523 | |||
SAP SE | 209,810 | 23,635,974 | |||
Zalando SE(1) | 363,380 | 18,605,864 | |||
118,714,625 | |||||
Hong Kong — 2.5% | |||||
AIA Group Ltd. | 4,236,200 | 34,528,936 | |||
Melco Resorts & Entertainment Ltd. ADR | 181,350 | 4,735,048 | |||
39,263,984 | |||||
India — 0.7% | |||||
HDFC Bank Ltd. | 406,700 | 11,721,016 | |||
Indonesia — 1.1% | |||||
Bank Mandiri Persero Tbk PT | 30,269,700 | 16,609,587 | |||
Ireland — 2.2% | |||||
CRH plc | 390,660 | 13,480,530 | |||
Ryanair Holdings plc ADR(1) | 169,551 | 20,675,049 | |||
34,155,579 | |||||
Italy — 1.1% | |||||
UniCredit SpA(1) | 827,820 | 16,669,745 | |||
Japan — 14.8% | |||||
CyberAgent, Inc. | 262,300 | 9,047,765 | |||
Daikin Industries Ltd. | 154,100 | 17,803,336 | |||
Daito Trust Construction Co. Ltd. | 54,200 | 9,926,679 | |||
FANUC Corp. | 57,400 | 14,363,300 | |||
Keyence Corp. | 37,500 | 21,856,126 | |||
Komatsu Ltd. | 644,900 | 20,102,950 | |||
MonotaRO Co. Ltd. | 389,600 | 11,133,183 | |||
Nintendo Co. Ltd. | 46,900 | 19,041,361 | |||
Nitori Holdings Co. Ltd. | 75,500 | 12,355,486 | |||
Pola Orbis Holdings, Inc. | 410,300 | 15,023,482 | |||
Rakuten, Inc. | 803,100 | 8,257,143 | |||
Recruit Holdings Co. Ltd. | 544,700 | 12,785,670 | |||
Rohm Co. Ltd. | 124,800 | 12,869,043 | |||
Ryohin Keikaku Co. Ltd. | 42,100 | 13,173,470 | |||
Start Today Co. Ltd. | 548,000 | 16,887,848 | |||
Sysmex Corp. | 221,500 | 16,863,788 | |||
231,490,630 | |||||
Mexico — 0.6% | |||||
Grupo Financiero Banorte SAB de CV | 1,529,830 | 8,985,165 | |||
Netherlands — 5.1% | |||||
ASML Holding NV | 143,910 | 25,302,782 | |||
Heineken NV | 164,315 | 16,747,806 | |||
InterXion Holding NV(1) | 117,280 | 6,770,575 | |||
Unilever NV CVA | 550,790 | 31,744,954 | |||
80,566,117 | |||||
Norway — 0.6% | |||||
DNB ASA | 556,230 | 10,154,152 |
11
Shares | Value | ||||
Portugal — 0.5% | |||||
Jeronimo Martins SGPS SA | 433,991 | $ | 8,519,194 | ||
Russia — 1.1% | |||||
Yandex NV, A Shares(1) | 504,540 | 16,705,319 | |||
Spain — 2.0% | |||||
Amadeus IT Group SA | 251,200 | 18,136,704 | |||
CaixaBank SA | 1,536,210 | 7,311,102 | |||
Industria de Diseno Textil SA | 151,570 | 5,371,721 | |||
30,819,527 | |||||
Sweden — 2.8% | |||||
Hexagon AB, B Shares | 327,050 | 16,074,256 | |||
Lundin Petroleum AB(1) | 511,340 | 11,774,559 | |||
Sandvik AB | 966,010 | 16,593,551 | |||
44,442,366 | |||||
Switzerland — 7.0% | |||||
ABB Ltd. | 467,810 | 11,974,321 | |||
Cie Financiere Richemont SA | 185,450 | 15,962,002 | |||
Julius Baer Group Ltd. | 322,970 | 18,993,067 | |||
Lonza Group AG | 108,170 | 28,260,027 | |||
Roche Holding AG | 100,434 | 25,343,692 | |||
Swiss Re AG | 98,440 | 9,234,377 | |||
109,767,486 | |||||
Taiwan — 1.0% | |||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 1,995,000 | 15,019,304 | |||
Thailand — 0.3% | |||||
CP ALL PCL | 2,404,000 | 5,373,295 | |||
United Kingdom — 23.8% | |||||
Ashtead Group plc | 605,485 | 15,563,862 | |||
ASOS plc(1) | 178,466 | 14,635,566 | |||
Associated British Foods plc | 380,543 | 15,109,620 | |||
Aviva plc | 2,602,035 | 17,993,203 | |||
B&M European Value Retail SA | 3,019,461 | 15,602,510 | |||
British American Tobacco plc | 567,240 | 36,084,548 | |||
Bunzl plc | 383,450 | 10,974,109 | |||
Carnival plc | 233,390 | 15,116,462 | |||
Coca-Cola HBC AG | 191,010 | 6,101,148 | |||
Compass Group plc | 664,959 | 13,493,876 | |||
Diageo plc | 698,970 | 24,148,908 | |||
Ferguson plc | 266,100 | 19,211,768 | |||
HSBC Holdings plc (Hong Kong) | 1,674,400 | 16,814,379 | |||
Intertek Group plc | 220,160 | 15,580,522 | |||
Just Eat plc(1) | 903,834 | 9,773,009 | |||
London Stock Exchange Group plc | 516,940 | 26,450,879 | |||
RELX plc | 695,510 | 16,169,917 | |||
Rio Tinto plc | 324,850 | 15,397,596 | |||
Royal Dutch Shell plc, A Shares | 590,857 | 18,909,367 | |||
RPC Group plc | 1,445,460 | 18,022,157 |
12
Shares | Value | ||||
St. James's Place plc | 911,951 | $ | 14,980,310 | ||
Weir Group plc (The) | 614,500 | 16,221,539 | |||
372,355,255 | |||||
TOTAL COMMON STOCKS (Cost $1,179,118,610) | 1,558,977,832 | ||||
TEMPORARY CASH INVESTMENTS — 0.3% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 3.75%, 4/15/18 - 2/15/47, valued at $2,674,684), in a joint trading account at 0.88%, dated 11/30/17, due 12/1/17 (Delivery value $2,627,623) | 2,627,559 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.375%, 5/15/44, valued at $2,234,826), at 0.34%, dated 11/30/17, due 12/1/17 (Delivery value $2,189,021) | 2,189,000 | ||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $4,816,559) | 4,816,559 | ||||
TOTAL INVESTMENT SECURITIES — 99.8% (Cost $1,183,935,169) | 1,563,794,391 | ||||
OTHER ASSETS AND LIABILITIES — 0.2% | 2,430,706 | ||||
TOTAL NET ASSETS — 100.0% | $ | 1,566,225,097 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Financials | 18.6 | % |
Consumer Discretionary | 18.1 | % |
Industrials | 16.9 | % |
Information Technology | 15.5 | % |
Consumer Staples | 13.2 | % |
Health Care | 7.1 | % |
Materials | 6.6 | % |
Energy | 2.9 | % |
Real Estate | 0.6 | % |
Cash and Equivalents* | 0.5 | % |
*Includes temporary cash investments and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
CVA | - | Certificaten Van Aandelen |
(1) | Non-income producing. |
See Notes to Financial Statements.
13
Statement of Assets and Liabilities |
NOVEMBER 30, 2017 | |||
Assets | |||
Investment securities, at value (cost of $1,183,935,169) | $ | 1,563,794,391 | |
Cash | 4,450 | ||
Foreign currency holdings, at value (cost of $249,469) | 247,970 | ||
Receivable for investments sold | 2,961,397 | ||
Receivable for capital shares sold | 272,175 | ||
Dividends and interest receivable | 3,523,050 | ||
Other assets | 70,372 | ||
1,570,873,805 | |||
Liabilities | |||
Payable for investments purchased | 2,176,950 | ||
Payable for capital shares redeemed | 901,667 | ||
Accrued management fees | 1,460,452 | ||
Distribution and service fees payable | 23,061 | ||
Accrued foreign taxes | 76,706 | ||
Accrued other expenses | 9,872 | ||
4,648,708 | |||
Net Assets | $ | 1,566,225,097 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 1,106,814,703 | |
Undistributed net investment income | 9,845,039 | ||
Undistributed net realized gain | 69,736,390 | ||
Net unrealized appreciation | 379,828,965 | ||
$ | 1,566,225,097 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $1,357,353,127 | 98,357,415 | $13.80 | |||
I Class, $0.01 Par Value | $90,679,305 | 6,601,052 | $13.74 | |||
Y Class, $0.01 Par Value | $5,993 | 436 | $13.75 | |||
A Class, $0.01 Par Value | $77,982,559 | 5,617,295 | $13.88* | |||
C Class, $0.01 Par Value | $6,742,914 | 502,330 | $13.42 | |||
R Class, $0.01 Par Value | $3,608,734 | 257,802 | $14.00 | |||
R5 Class, $0.01 Par Value | $5,985 | 436 | $13.73 | |||
R6 Class, $0.01 Par Value | $29,846,480 | 2,170,765 | $13.75 |
See Notes to Financial Statements.
14
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2017 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $2,478,307) | $ | 30,157,258 | |
Interest | 34,520 | ||
30,191,778 | |||
Expenses: | |||
Management fees | 17,480,949 | ||
Distribution and service fees: | |||
A Class | 217,645 | ||
C Class | 62,764 | ||
R Class | 16,732 | ||
Directors' fees and expenses | 46,476 | ||
Other expenses | 80,677 | ||
17,905,243 | |||
Net investment income (loss) | 12,286,535 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions (net of foreign tax expenses paid (refunded) of $19,895) | 126,043,368 | ||
Foreign currency translation transactions | (413,367 | ) | |
125,630,001 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments (includes (increase) decrease in accrued foreign taxes of $(76,706)) | 279,734,791 | ||
Translation of assets and liabilities in foreign currencies | 295,885 | ||
280,030,676 | |||
Net realized and unrealized gain (loss) | 405,660,677 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 417,947,212 |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2017 AND NOVEMBER 30, 2016 | ||||||
Increase (Decrease) in Net Assets | November 30, 2017 | November 30, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 12,286,535 | $ | 12,812,320 | ||
Net realized gain (loss) | 125,630,001 | (35,597,694 | ) | |||
Change in net unrealized appreciation (depreciation) | 280,030,676 | (115,941,033 | ) | |||
Net increase (decrease) in net assets resulting from operations | 417,947,212 | (138,726,407 | ) | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (5,994,029 | ) | (7,144,126 | ) | ||
I Class | (404,902 | ) | (467,296 | ) | ||
A Class | (256,085 | ) | (436,078 | ) | ||
R Class | — | (4,047 | ) | |||
R6 Class | (317,212 | ) | (376,203 | ) | ||
From net realized gains: | ||||||
Investor Class | — | (71,718,645 | ) | |||
I Class | — | (3,592,483 | ) | |||
A Class | — | (7,082,263 | ) | |||
C Class | — | (530,306 | ) | |||
R Class | — | (173,171 | ) | |||
R6 Class | — | (2,461,989 | ) | |||
Decrease in net assets from distributions | (6,972,228 | ) | (93,986,607 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (290,117,289 | ) | (28,937,016 | ) | ||
Redemption Fees | ||||||
Increase in net assets from redemption fees | 15,070 | 19,316 | ||||
Net increase (decrease) in net assets | 120,872,765 | (261,630,714 | ) | |||
Net Assets | ||||||
Beginning of period | 1,445,352,332 | 1,706,983,046 | ||||
End of period | $ | 1,566,225,097 | $ | 1,445,352,332 | ||
Undistributed (distributions in excess of) net investment income | $ | 9,845,039 | $ | (5,717,742 | ) |
See Notes to Financial Statements.
16
Notes to Financial Statements |
NOVEMBER 30, 2017
1. Organization
American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. International Growth Fund (the fund) is one fund in a series issued by the corporation. The fund's investment objective is to seek capital growth.
The fund offers the Investor Class, I Class (formerly Institutional Class), Y Class, A Class, C Class, R Class, R5 Class and R6 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge. Sale of the Y Class and R5 Class commenced on April 10, 2017.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
17
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. Certain countries impose taxes on realized gains on the sale of securities registered in their country. The fund records the foreign tax expense, if any, on an accrual basis. The foreign tax expense on realized gains and unrealized appreciation 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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund 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. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
Redemption Fees — Prior to October 9, 2017, the fund may have imposed a 2.00% redemption fee on shares held less than 60 days. The fee was not applicable to all classes. The redemption fee was retained by the fund to help cover transaction costs that long-term investors may bear when the fund sells securities to meet investor redemptions.
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Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. Various funds issued by American Century Asset
Allocation Portfolios, Inc. own, in aggregate, 21% of the shares of the fund.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that use very similar investment teams and strategies (strategy assets). The strategy assets of the fund also include the assets of NT International Growth Fund, one fund in a series issued by the corporation.
The management fee schedule range and the effective annual management fee for each class for the period ended November 30, 2017 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |
Investor Class | 1.050% to 1.500% | 1.16% |
I Class | 0.850% to 1.300% | 0.96% |
Y Class | 0.700% to 1.150% | 0.81% |
A Class | 1.050% to 1.500% | 1.16% |
C Class | 1.050% to 1.500% | 1.16% |
R Class | 1.050% to 1.500% | 1.16% |
R5 Class | 0.850% to 1.300% | 0.96% |
R6 Class | 0.700% to 1.150% | 0.81% |
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, 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 ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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. Fees incurred under the plans during the period ended November 30, 2017 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things,
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that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $706,889 and $341,726, respectively. The effect of interfund transactions on the Statement of Operations was $95,772 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended November 30, 2017 were $863,856,277 and $1,145,897,869, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2017(1) | Year ended November 30, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 900,000,000 | 875,000,000 | ||||||||
Sold | 9,241,163 | $ | 110,317,323 | 10,482,368 | $ | 113,487,463 | ||||
Issued in reinvestment of distributions | 552,236 | 5,837,134 | 6,787,008 | 76,693,189 | ||||||
Redeemed | (27,819,284 | ) | (341,059,230 | ) | (17,865,264 | ) | (197,712,746 | ) | ||
(18,025,885 | ) | (224,904,773 | ) | (595,888 | ) | (7,532,094 | ) | |||
I Class/Shares Authorized | 80,000,000 | 70,000,000 | ||||||||
Sold | 7,040,337 | 84,877,441 | 1,251,989 | 13,630,649 | ||||||
Issued in reinvestment of distributions | 38,562 | 404,902 | 361,512 | 4,059,779 | ||||||
Redeemed | (6,112,035 | ) | (76,557,575 | ) | (1,756,602 | ) | (19,107,397 | ) | ||
966,864 | 8,724,768 | (143,101 | ) | (1,416,969 | ) | |||||
Y Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 436 | 5,000 | ||||||||
A Class/Shares Authorized | 70,000,000 | 185,000,000 | ||||||||
Sold | 853,399 | 10,384,738 | 1,831,048 | 20,171,236 | ||||||
Issued in reinvestment of distributions | 23,420 | 249,663 | 646,908 | 7,374,750 | ||||||
Redeemed | (5,500,584 | ) | (64,648,352 | ) | (3,693,064 | ) | (40,701,226 | ) | ||
(4,623,765 | ) | (54,013,951 | ) | (1,215,108 | ) | (13,155,240 | ) | |||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 100,907 | 1,269,287 | 70,768 | 760,067 | ||||||
Issued in reinvestment of distributions | — | — | 39,978 | 445,758 | ||||||
Redeemed | (251,483 | ) | (2,905,747 | ) | (321,709 | ) | (3,439,340 | ) | ||
(150,576 | ) | (1,636,460 | ) | (210,963 | ) | (2,233,515 | ) | |||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 102,324 | 1,268,493 | 101,622 | 1,141,480 | ||||||
Issued in reinvestment of distributions | — | — | 13,640 | 157,129 | ||||||
Redeemed | (132,853 | ) | (1,636,095 | ) | (93,508 | ) | (1,040,020 | ) | ||
(30,529 | ) | (367,602 | ) | 21,754 | 258,589 | |||||
R5 Class/Shares Authorized | 50,000,000 | N/A | ||||||||
Sold | 436 | 5,000 | ||||||||
R6 Class/Shares Authorized | 50,000,000 | 40,000,000 | ||||||||
Sold | 1,263,843 | 16,186,454 | 1,828,729 | 19,554,531 | ||||||
Issued in reinvestment of distributions | 30,211 | 317,212 | 252,958 | 2,838,192 | ||||||
Redeemed | (2,723,909 | ) | (34,432,937 | ) | (2,488,738 | ) | (27,250,510 | ) | ||
(1,429,855 | ) | (17,929,271 | ) | (407,051 | ) | (4,857,787 | ) | |||
Net increase (decrease) | (23,292,874 | ) | $ | (290,117,289 | ) | (2,550,357 | ) | $ | (28,937,016 | ) |
(1) | April 10, 2017 (commencement of sale) through November 30, 2017 for the Y Class and R5 Class. |
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6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. 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.
• Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
• Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
• Level 3 valuation inputs consist of unobservable data (including a 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 necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | ||||||||
China | $ | 35,837,542 | $ | 27,692,269 | — | |||
Hong Kong | 4,735,048 | 34,528,936 | — | |||||
Ireland | 20,675,049 | 13,480,530 | — | |||||
Netherlands | 6,770,575 | 73,795,542 | — | |||||
Russia | 16,705,319 | — | — | |||||
Other Countries | — | 1,324,757,022 | — | |||||
Temporary Cash Investments | — | 4,816,559 | — | |||||
$ | 84,723,533 | $ | 1,479,070,858 | — |
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions. Investing in emerging markets may accentuate these risks.
8. Federal Tax Information
On December 19, 2017, the fund declared and paid a per-share distribution from net realized gains to shareholders of record on December 18, 2017 of $0.5796 for the Investor Class, I Class, Y Class, A Class, C Class, R Class, R5 Class and R6 Class.
On December 19, 2017, the fund declared and paid the following per-share distributions from net investment income to shareholders of record on December 18, 2017:
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class |
$0.1251 | $0.1527 | $0.1602 | $0.0905 | — | $0.0559 | $0.1451 | $0.1735 |
The tax character of distributions paid during the years ended November 30, 2017 and November 30, 2016 were as follows:
2017 | 2016 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 6,972,228 | $ | 13,905,466 | ||
Long-term capital gains | — | $ | 80,081,141 |
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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 period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 1,192,259,145 | |
Gross tax appreciation of investments | $ | 376,898,023 | |
Gross tax depreciation of investments | (5,362,777 | ) | |
Net tax appreciation (depreciation) of investments | 371,535,246 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (30,257 | ) | |
Net tax appreciation (depreciation) | $ | 371,504,989 | |
Undistributed ordinary income | $ | 14,921,315 | |
Accumulated long-term gains | $ | 72,984,090 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the realization to ordinary income for tax purposes of unrealized gains on investments in passive foreign investment companies.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||
2017 | $10.56 | 0.10 | 3.19 | 3.29 | (0.05) | — | (0.05) | $13.80 | 31.32% | 1.17% | 0.80% | 57% | $1,357,353 | ||
2016 | $12.25 | 0.09 | (1.10) | (1.01) | (0.06) | (0.62) | (0.68) | $10.56 | (8.59)% | 1.18% | 0.83% | 70% | $1,229,531 | ||
2015 | $13.40 | 0.07 | (0.34) | (0.27) | (0.08) | (0.80) | (0.88) | $12.25 | (1.86)% | 1.17% | 0.62% | 62% | $1,432,784 | ||
2014 | $13.78 | 0.10 | —(3) | 0.10 | (0.20) | (0.28) | (0.48) | $13.40 | 0.80% | 1.18% | 0.74% | 75% | $1,521,655 | ||
2013 | $11.27 | 0.11 | 2.58 | 2.69 | (0.18) | — | (0.18) | $13.78 | 24.22% | 1.22% | 0.84% | 110% | $1,499,623 | ||
I Class(4) | |||||||||||||||
2017 | $10.51 | 0.13 | 3.17 | 3.30 | (0.07) | — | (0.07) | $13.74 | 31.64% | 0.97% | 1.00% | 57% | $90,679 | ||
2016 | $12.19 | 0.11 | (1.09) | (0.98) | (0.08) | (0.62) | (0.70) | $10.51 | (8.40)% | 0.98% | 1.03% | 70% | $59,236 | ||
2015 | $13.33 | 0.10 | (0.34) | (0.24) | (0.10) | (0.80) | (0.90) | $12.19 | (1.63)% | 0.97% | 0.82% | 62% | $70,422 | ||
2014 | $13.73 | 0.14 | (0.03) | 0.11 | (0.23) | (0.28) | (0.51) | $13.33 | 0.91% | 0.98% | 0.94% | 75% | $138,527 | ||
2013 | $11.24 | 0.13 | 2.58 | 2.71 | (0.22) | — | (0.22) | $13.73 | 24.54% | 1.02% | 1.04% | 110% | $185,325 | ||
Y Class | |||||||||||||||
2017(5) | $11.48 | 0.09 | 2.18 | 2.27 | — | — | — | $13.75 | 19.77% | 0.82%(6) | 1.14%(6) | 57%(7) | $6 |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
A Class | |||||||||||||||
2017 | $10.63 | 0.06 | 3.22 | 3.28 | (0.03) | — | (0.03) | $13.88 | 30.88% | 1.42% | 0.55% | 57% | $77,983 | ||
2016 | $12.32 | 0.06 | (1.09) | (1.03) | (0.04) | (0.62) | (0.66) | $10.63 | (8.73)% | 1.43% | 0.58% | 70% | $108,847 | ||
2015 | $13.48 | 0.07 | (0.37) | (0.30) | (0.06) | (0.80) | (0.86) | $12.32 | (2.13)% | 1.42% | 0.37% | 62% | $141,175 | ||
2014 | $13.86 | 0.07 | (0.01) | 0.06 | (0.16) | (0.28) | (0.44) | $13.48 | 0.49% | 1.43% | 0.49% | 75% | $301,164 | ||
2013 | $11.33 | 0.07 | 2.61 | 2.68 | (0.15) | — | (0.15) | $13.86 | 23.98% | 1.47% | 0.59% | 110% | $267,979 | ||
C Class | |||||||||||||||
2017 | $10.33 | (0.03) | 3.12 | 3.09 | — | — | — | $13.42 | 29.91% | 2.17% | (0.20)% | 57% | $6,743 | ||
2016 | $12.04 | (0.02) | (1.07) | (1.09) | — | (0.62) | (0.62) | $10.33 | (9.43)% | 2.18% | (0.17)% | 70% | $6,743 | ||
2015 | $13.22 | (0.05) | (0.33) | (0.38) | — | (0.80) | (0.80) | $12.04 | (2.81)% | 2.17% | (0.38)% | 62% | $10,402 | ||
2014 | $13.58 | (0.03) | (0.02) | (0.05) | (0.03) | (0.28) | (0.31) | $13.22 | (0.29)% | 2.18% | (0.26)% | 75% | $10,129 | ||
2013 | $11.14 | (0.03) | 2.57 | 2.54 | (0.10) | — | (0.10) | $13.58 | 23.00% | 2.22% | (0.16)% | 110% | $4,859 | ||
R Class | |||||||||||||||
2017 | $10.72 | 0.03 | 3.25 | 3.28 | — | — | — | $14.00 | 30.60% | 1.67% | 0.30% | 57% | $3,609 | ||
2016 | $12.43 | 0.04 | (1.12) | (1.08) | (0.01) | (0.62) | (0.63) | $10.72 | (9.00)% | 1.68% | 0.33% | 70% | $3,090 | ||
2015 | $13.59 | 0.02 | (0.35) | (0.33) | (0.03) | (0.80) | (0.83) | $12.43 | (2.31)% | 1.67% | 0.12% | 62% | $3,313 | ||
2014 | $13.96 | 0.03 | (0.01) | 0.02 | (0.11) | (0.28) | (0.39) | $13.59 | 0.25% | 1.68% | 0.24% | 75% | $2,195 | ||
2013 | $11.41 | 0.05 | 2.62 | 2.67 | (0.12) | — | (0.12) | $13.96 | 23.59% | 1.72% | 0.34% | 110% | $2,270 | ||
R5 Class | |||||||||||||||
2017(5) | $11.48 | 0.08 | 2.17 | 2.25 | — | — | — | $13.73 | 19.60% | 0.97%(6) | 0.99%(6) | 57%(7) | $6 |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
R6 Class | |||||||||||||||
2017 | $10.53 | 0.15 | 3.16 | 3.31 | (0.09) | — | (0.09) | $13.75 | 31.68% | 0.82% | 1.15% | 57% | $29,846 | ||
2016 | $12.20 | 0.14 | (1.10) | (0.96) | (0.09) | (0.62) | (0.71) | $10.53 | (8.19)% | 0.83% | 1.18% | 70% | $37,903 | ||
2015 | $13.34 | 0.11 | (0.33) | (0.22) | (0.12) | (0.80) | (0.92) | $12.20 | (1.50)% | 0.82% | 0.97% | 62% | $48,887 | ||
2014 | $13.74 | 0.13 | —(3) | 0.13 | (0.25) | (0.28) | (0.53) | $13.34 | 1.10% | 0.83% | 1.09% | 75% | $8,411 | ||
2013(8) | $12.56 | 0.01 | 1.17 | 1.18 | — | — | — | $13.74 | 9.39% | 0.85%(6) | 0.20%(6) | 110%(9) | $5,076 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Per-share amount was less than $0.005. |
(4) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(5) | April 10, 2017 (commencement of sale) through November 30, 2017. |
(6) | Annualized. |
(7) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2017. |
(8) | July 26, 2013 (commencement of sale) through November 30, 2013. |
(9) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2013. |
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Board of Directors and Shareholders of American Century World Mutual Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of International Growth Fund (the “Fund”), one of the funds constituting American Century World Mutual Funds, Inc., as of November 30, 2017, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2017, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of International Growth Fund of American Century World Mutual Funds, Inc. as of November 30, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2018
26
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Mr. Thomas, 15) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 69 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired; Executive Vice President, ACC (2007 to 2013); President, ACS (2007 to 2013); Chief Operating Officer, ACC (2007 to 2012) | 69 | None |
Andrea C. Hall (1945) | Director | Since 1997 | Retired | 69 | None |
Jan M. Lewis (1957) | Director | Since 2011 | Retired; President and Chief Executive Officer, Catholic Charities of Northeast Kansas (human services organization) (2006 to 2013) | 69 | None |
James A. Olson (1942) | Director and Chairman of the Board | Since 2007 (Chairman since 2014) | Member, Plaza Belmont LLC (private equity fund manager) (1999 to present) | 69 | Saia, Inc. (2002 to 2012) and EPR Properties (2003 to 2013) |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
M. Jeannine Strandjord (1945) | Director | Since 1994 | Retired | 69 | Euronet Worldwide Inc. and MGP Ingredients, Inc. |
John R. Whitten (1946) | Director | Since 2008 | Retired | 69 | Rudolph Technologies, Inc. |
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 69 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director and President | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 114 | BioMed Valley Discoveries, Inc. |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 15 investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years |
Jonathan S. Thomas (1963) | Director and President since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries |
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present); Vice President, Client Interactions and Marketing, ACIS (2013 to 2014); Director, Client Interactions and Marketing, ACIS (2007 to 2013). Also serves as Vice President, ACIS |
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS |
C. Jean Wade (1964) | Vice President,Treasurer and Chief Financial Officer since 2012 | Vice President, ACS (2000 to present) |
Robert J. Leach (1966) | Vice President since 2006 and Assistant Treasurer since 2012 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present); Associate General Counsel, ACC (2001 to present). Also serves as Vice President, ACIM and ACS |
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Approval of Management Agreement |
At a meeting held on June 29, 2017, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
• | the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund; |
• | the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis; |
• | the investment performance of the Fund, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; |
• | the cost of owning the Fund compared to the cost of owning similar funds; |
• | the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers; |
• | financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor; |
• | strategic plans of the Advisor |
• | possible economies of scale associated with the Advisor’s management of the Fund and other accounts under its management; |
• | data comparing services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices by the Fund and the Advisor regarding financial intermediaries, the nature of services provided by intermediaries, and the terms of share classes utilized; and |
• | any collateral benefits derived by the Advisor from the management of the Fund. |
The Directors held three in-person meetings and one telephonic meeting to review and discuss the information provided. The independent Directors also reviewed responses to supplemental information requests and held active discussions with the Advisor regarding the renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In
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connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services - Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including without limitation the following:
• | portfolio research and security selection |
• | securities trading |
• | Fund administration |
• | custody of Fund assets |
• | daily valuation of the Fund’s portfolio |
• | shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications |
• | legal services (except the independent Directors’ counsel) |
• | regulatory and portfolio compliance |
• | financial reporting |
• | marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans) |
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment. The Board noted specifically the resources the Advisor has committed during the year to compliance with the Department of Labor fiduciary rule and share class modernization.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review detailed performance information provided by the Advisor during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board receives a report from the Advisor regarding the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the five- and ten-year periods and below its benchmark for the one- and three-year periods reviewed by the Board. The Board discussed the Fund's performance with the Advisor and was satisfied with the efforts being undertaken by the Advisor. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The
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Board, directly and through various committees of the Board, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the Advisor. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, and the fees and expenses of the Fund’s independent Directors (including their independent legal counsel) and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was above the median of the total expense ratios of the Fund’s peer expense universe and was within the range of its peer expense group. The Board discussed with the Advisor the factors that
32
impacted the level of the fee in relation to its peers and accepted the Advisor's explanation of such factors. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Directors also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Board reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor's resources and reasonable profits. The Board found the payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor receives proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
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Proxy Voting Results |
A special meeting of shareholders was held on October 18, 2017, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect four directors to the Board of Directors of American Century World Mutual Funds, Inc.:
Affirmative | Withhold | ||||||
Thomas W. Bunn | $ | 5,482,015,298 | $ | 72,735,781 | |||
Barry Fink | $ | 5,485,170,607 | $ | 69,580,472 | |||
Jan M. Lewis | $ | 5,489,025,901 | $ | 65,725,178 | |||
Stephen E. Yates | $ | 5,481,872,069 | $ | 72,879,010 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Andrea C. Hall, James A. Olson, M. Jeannine Strandjord, and John R. Whitten.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of 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 fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s 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 fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The funds hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended November 30, 2017.
The fund hereby designates $2,348,763, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended November 30, 2017.
For the fiscal year ended November 30, 2017, the fund intends to pass through to shareholders foreign source income of $32,423,141 and foreign taxes paid of $2,374,375, or up to the maximum amount allowable, as a foreign tax credit. Foreign source income and foreign tax expense per outstanding share on November 30, 2017 are $0.2856 and $0.0209, respectively.
The fund utilized earnings and profits of $2,958,677 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
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Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century World Mutual Funds, Inc. | ||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||
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. | ||
©2018 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91027 1801 |
Annual Report | |
November 30, 2017 | |
International Opportunities Fund |
Table of Contents |
President’s Letter | 2 | |
Performance | 3 | |
Portfolio Commentary | ||
Fund Characteristics | ||
Shareholder Fee Example | ||
Schedule of Investments | ||
Statement of Assets and Liabilities | ||
Statement of Operations | ||
Statement of Changes in Net Assets | ||
Notes to Financial Statements | ||
Financial Highlights | ||
Report of Independent Registered Public Accounting Firm | ||
Management | ||
Approval of Management Agreement | ||
Proxy Voting Results | ||
Additional Information |
Any opinions expressed in this report reflect those of the author 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.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2017. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional, updated investment and market insights, we encourage you to visit our website, americancentury.com.
Upbeat Earnings, Economic Data Sparked Strong Gains for Global Stocks
Throughout the world, improving economic activity, healthy corporate earnings growth, and supportive central bank policies helped fuel robust double-digit gains for global stocks. The rally began early in the period, largely in response to the economic-growth implications of Donald Trump’s presidential election victory, and it forged ahead with few interruptions through November 2017. The 12-month period included several potential sources of financial market disruption, including acts of terrorism, North Korean saber-rattling, and an active and destructive hurricane season. Yet any resulting volatility was short-lived, as investors remained focused on positive economic and earnings news. Furthermore, in the U.S., the prospect for pro-growth tax reform propelled major stock indices to several record-high levels.
Among the developed markets, equity performance was notably strong in Europe, where solid corporate profits, improving economic growth rates, declining unemployment, and perceived market-friendly election results in France and Germany supported gains. In addition, the European Central Bank continued to provide stimulus support in the wake of persistently low inflation, which also helped stocks advance. Returns for emerging markets stocks were even stronger, bolstered by improving global and local economic and business fundamentals and rising oil prices.
The broad “risk-on” sentiment also extended to the global fixed-income market, where emerging markets bonds and high-yield corporate bonds were top performers. These securities satisfied investor demand for yield as interest rates remained relatively low throughout the world.
With global growth synchronizing and strengthening and central banks pursuing varying degrees of policy normalization, investors likely will face new opportunities and challenges in the months ahead. We believe this scenario warrants a disciplined, diversified, and risk-aware approach, using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of November 30, 2017 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | AIOIX | 40.69% | 12.72% | 4.57% | — | 6/1/01 |
MSCI ACWI ex-U.S. Small Cap Growth Index | — | 31.97% | 10.16% | 3.73% | — | — |
I Class | ACIOX | 41.01% | 12.91% | 4.77% | — | 1/9/03 |
A Class | AIVOX | 3/1/10 | ||||
No sales charge | 40.45% | 12.45% | — | 11.60% | ||
With sales charge | 32.44% | 11.14% | — | 10.74% | ||
C Class | AIOCX | 39.46% | 11.63% | — | 10.78% | 3/1/10 |
R Class | AIORX | 40.02% | 12.17% | — | 11.32% | 3/1/10 |
Average annual returns since inception are presented when ten years of performance history is not available. Prior to April 10, 2017, the I Class was referred to as the Institutional Class. Fund returns would have been lower if a portion of the fees had not been waived. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
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 and may be subject to a maximum CDSC of 1.00%. 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.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
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Growth of $10,000 Over 10 Years |
$10,000 investment made November 30, 2007 |
Performance for other share classes will vary due to differences in fee structure. |
Value on November 30, 2017 | |
Investor Class — $15,643 | |
MSCI ACWI ex-U.S. Small Cap Growth Index — $14,427 | |
Ending value of Investor Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | ||||
Investor Class | I Class | A Class | C Class | R Class |
1.74% | 1.54% | 1.99% | 2.74% | 2.24% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Trevor Gurwich and Federico Laffan
Performance Summary
International Opportunities returned 40.69%* for the 12 months ended November 30, 2017. The portfolio’s benchmark, the MSCI ACWI ex-U.S. Small Cap Growth Index, returned 31.97% for the same period.
A global recovery in corporate earnings growth fueled strong gains for non-U.S. stocks, especially in non-U.S. small-cap stocks, which generally outperformed their mid- and large-cap counterparts. In this environment, our focus on companies demonstrating accelerating and sustainable earnings growth helped drive our outperformance. This was especially the case in sectors such as information technology and industrials, where several of our holdings benefited from the growing digital migration of media and commerce as well as the rising demand for automation.
Within the portfolio, stock selection drove the outperformance versus the benchmark, especially in the health care, consumer staples, and consumer discretionary sectors. Underweights in the consumer staples and consumer discretionary sectors also lifted relative performance. Stock selection and an overweight in the materials sector, combined with an overweight in the energy sector, weighed moderately on relative performance. Regionally, investments in China, New Zealand, and India added to relative performance, while holdings in South Korea, the U.K., and Germany detracted.
Top Contributors Included IT Services Company and Optical Components Maker
Strong earnings performance helped lift the portfolio’s technology stocks, notably Vakrangee, an IT services company that has partnered with Amazon to solve the “last mile” problem for rural consumers in India. The company operates a network of small rural-area consumer outlets that provide one-stop shopping for banking and other services. These outlets also offer computers that rural consumers can use to shop with Amazon, and the stores then serve as delivery locations for these online purchases. The company’s retail footprint continues to expand across India, helping to drive the stock price higher.
Growing demand for high performance smartphones helped drive earnings growth for another contributor, Q Technology Group, a manufacturer of camera modules for smartphones, tablets, and PCs. The stock rallied on the company’s strong financial results, improved pricing, and an industry shift to higher-megapixel cameras. Following this period of robust performance, we opted to sell the position and take our profits as the risk/reward profile was no longer attractive.
A prominent contributor in the consumer staples sector, a2 Milk produces milk that is free from the beta casein a1 protein. The stock’s robust earnings and stock performance were driven by both strong sales trends in Australia and continued solid demand for its infant formula products from online consumers in China.
*All fund returns referenced in this commentary are for Investor Class shares. Fund returns would have been lower if a portion of the fees had not been waived. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund's benchmark, other share classes may not. See page 3 for returns for all share classes.
5
Packaging Materials Company Was a Key Detractor
Stock selection and a portfolio overweight hurt relative performance in the materials sector, where
RPC Group was a notable detractor. The stock of the plastic products manufacturer fell sharply
early in the reporting period on concerns over the company’s planned acquisition of rigid plastic packing supplier Letica. While the deal made sense strategically, and the valuation appeared reasonable, investors were concerned about the rate and size of the company’s acquisitions. Investors were also concerned that the company’s planned rights issue might dilute value for investors. Given near-term uncertainty for the business, we decided to sell the stock.
Energy exploration company Parex Resources was another detractor. The stock declined in the first half of the reporting period as concerns about oversupplied oil markets drove oil prices lower. Nonetheless, in our view the company’s fundamentals remained positive and we held onto the investment. The stock recovered somewhat later in the reporting period as oil prices trended higher on hopes for reduced Saudi production.
Elsewhere in the portfolio, Tongda Group Holdings was a detractor. The company supplies casing solutions for consumer electronic products. The stock declined in May following market speculation that one of Tongda’s key customers was cutting its orders. Given near-term uncertainty for Tongda’s business, we decided to liquidate our investment.
Outlook
We continue to invest in non-U.S. small-cap companies that we believe are demonstrating accelerating and sustainable growth. Our stock selection process continues to drive our sector and country allocations. We continue to find earnings growth opportunities among several companies in the information technology sector, which remains a large sector overweight. In particular, holdings within the semiconductor industry continue to benefit from strengthening demand, while select companies in the internet, software, and online payment industries are showing accelerating earnings. By contrast, the real estate sector remains a prominent underweight, as stretched valuations and expectations for higher interest rates may pressure property stocks. However, we are exploring opportunities among data center real estate investment trusts due to favorable longer-term trends associated with cloud computing and data storage.
From a regional standpoint, Europe remains the portfolio’s largest weighting in absolute terms, driven by bottom-up stock selection. We also believe Europe’s improving economic backdrop bodes well for earnings growth opportunities in several industries within the consumer discretionary and financials sectors.
6
Fund Characteristics |
NOVEMBER 30, 2017 | |
Top Ten Holdings | % of net assets |
Rentokil Initial plc | 2.4% |
Vakrangee Ltd. | 2.0% |
Rubis SCA | 1.8% |
FinecoBank Banca Fineco SpA | 1.8% |
Straumann Holding AG | 1.7% |
ASR Nederland NV | 1.7% |
Venture Corp. Ltd. | 1.7% |
Teleperformance | 1.7% |
Bellway plc | 1.6% |
a2 Milk Co. Ltd. | 1.4% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.5% |
Other Assets and Liabilities | 0.5% |
Investments by Country | % of net assets |
Japan | 21.3% |
France | 7.8% |
United Kingdom | 7.8% |
Canada | 7.7% |
Germany | 6.8% |
Switzerland | 6.2% |
Italy | 6.0% |
China | 3.9% |
South Korea | 3.8% |
India | 3.4% |
Taiwan | 3.2% |
Spain | 2.8% |
Brazil | 2.5% |
Netherlands | 2.2% |
New Zealand | 2.0% |
Other Countries | 12.1% |
Other Assets and Liabilities | 0.5% |
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2017 to November 30, 2017.
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 I 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. 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.
8
Beginning Account Value 6/1/17 | Ending Account Value 11/30/17 | Expenses Paid During Period(1) 6/1/17 - 11/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,169.40 | $8.21 | 1.51% |
I Class | $1,000 | $1,170.70 | $7.13 | 1.31% |
A Class | $1,000 | $1,168.80 | $9.57 | 1.76% |
C Class | $1,000 | $1,164.80 | $13.62 | 2.51% |
R Class | $1,000 | $1,166.20 | $10.91 | 2.01% |
Hypothetical | ||||
Investor Class | $1,000 | $1,017.50 | $7.64 | 1.51% |
I Class | $1,000 | $1,018.50 | $6.63 | 1.31% |
A Class | $1,000 | $1,016.24 | $8.90 | 1.76% |
C Class | $1,000 | $1,012.48 | $12.66 | 2.51% |
R Class | $1,000 | $1,014.99 | $10.15 | 2.01% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
9
Schedule of Investments |
NOVEMBER 30, 2017
Shares | Value | ||||
COMMON STOCKS — 99.5% | |||||
Australia — 1.8% | |||||
ALS Ltd. | 274,524 | $ | 1,408,692 | ||
NEXTDC Ltd.(1) | 221,730 | 980,643 | |||
Northern Star Resources Ltd. | 230,347 | 1,012,457 | |||
3,401,792 | |||||
Belgium — 0.7% | |||||
Galapagos NV(1) | 15,025 | 1,315,265 | |||
Brazil — 2.5% | |||||
CVC Brasil Operadora e Agencia de Viagens SA | 158,000 | 2,170,572 | |||
EcoRodovias Infraestrutura e Logistica SA | 377,900 | 1,388,791 | |||
Magazine Luiza SA | 72,504 | 1,258,512 | |||
4,817,875 | |||||
Canada — 7.7% | |||||
Arizona Mining, Inc.(1) | 355,732 | 868,547 | |||
BRP, Inc. | 57,606 | 2,106,170 | |||
CES Energy Solutions Corp. | 314,959 | 1,498,933 | |||
Descartes Systems Group, Inc. (The)(1) | 67,360 | 1,869,675 | |||
FirstService Corp. | 27,823 | 1,894,979 | |||
Hudbay Minerals, Inc. | 108,509 | 788,071 | |||
Interfor Corp.(1) | 82,973 | 1,376,291 | |||
New Flyer Industries, Inc. | 11,803 | 448,919 | |||
Parex Resources, Inc.(1) | 126,561 | 1,691,208 | |||
Premium Brands Holdings Corp. | 21,093 | 1,741,523 | |||
Raging River Exploration, Inc.(1) | 56,225 | 327,723 | |||
14,612,039 | |||||
China — 3.9% | |||||
Baozun, Inc. ADR(1) | 51,483 | 1,459,543 | |||
China Resources Cement Holdings Ltd. | 2,940,000 | 1,965,331 | |||
Kingboard Laminates Holdings Ltd. | 1,061,500 | 1,772,913 | |||
Lonking Holdings Ltd. | 2,667,000 | 956,809 | |||
Wisdom Education International Holdings Co. Ltd. | 2,088,000 | 1,249,563 | |||
7,404,159 | |||||
Denmark — 1.1% | |||||
Ambu A/S, B Shares | 2,147 | 179,797 | |||
Topdanmark A/S(1) | 45,267 | 1,946,347 | |||
2,126,144 | |||||
Finland — 0.5% | |||||
Terveystalo Oyj(1) | 77,567 | 872,463 | |||
France — 7.8% | |||||
Alten SA | 5,591 | 464,802 | |||
Maisons du Monde SA | 47,479 | 1,962,050 | |||
Rubis SCA | 49,182 | 3,499,338 |
10
Shares | Value | ||||
SOITEC(1) | 12,599 | $ | 964,582 | ||
Solutions 30 SE(1) | 49,032 | 1,545,833 | |||
Teleperformance | 21,791 | 3,228,025 | |||
Trigano SA | 5,666 | 896,393 | |||
Worldline SA(1) | 47,937 | 2,361,313 | |||
14,922,336 | |||||
Germany — 6.8% | |||||
AIXTRON SE(1) | 119,698 | 1,758,625 | |||
AURELIUS Equity Opportunities SE & Co. KGaA | 18,462 | 1,194,735 | |||
Carl Zeiss Meditec AG | 25,846 | 1,529,222 | |||
CTS Eventim AG & Co. KGaA | 20,399 | 990,668 | |||
Duerr AG | 10,426 | 1,313,040 | |||
Jungheinrich AG Preference Shares | 33,734 | 1,508,601 | |||
MorphoSys AG(1) | 22,613 | 2,136,382 | |||
Rheinmetall AG | 19,380 | 2,466,053 | |||
12,897,326 | |||||
Hong Kong — 1.6% | |||||
Luk Fook Holdings International Ltd. | 289,000 | 1,263,702 | |||
Melco International Development Ltd. | 640,000 | 1,856,466 | |||
3,120,168 | |||||
India — 3.4% | |||||
Dewan Housing Finance Corp. Ltd. | 147,149 | 1,415,617 | |||
Future Retail Ltd.(1) | 154,585 | 1,321,545 | |||
Praxis Home Retail Ltd.(1) | 7,729 | 2,397 | |||
Vakrangee Ltd. | 340,006 | 3,773,225 | |||
6,512,784 | |||||
Indonesia — 1.1% | |||||
PT Bank Tabungan Negara Persero Tbk | 8,640,600 | 2,044,567 | |||
Italy — 6.0% | |||||
Amplifon SpA | 90,970 | 1,422,456 | |||
Biesse SpA | 5,860 | 304,568 | |||
Buzzi Unicem SpA | 41,418 | 1,100,299 | |||
Davide Campari-Milano SpA | 280,349 | 2,181,116 | |||
FinecoBank Banca Fineco SpA | 346,181 | 3,492,402 | |||
Gima TT SpA(1) | 50,478 | 1,012,372 | |||
Moncler SpA | 66,172 | 1,814,775 | |||
11,327,988 | |||||
Japan — 21.3% | |||||
Anritsu Corp. | 145,300 | 1,389,938 | |||
Cosmos Pharmaceutical Corp. | 8,100 | 1,829,790 | |||
Daifuku Co. Ltd. | 19,000 | 1,038,742 | |||
Denka Co. Ltd. | 45,100 | 1,666,430 | |||
DMG Mori Co. Ltd. | 92,200 | 1,857,477 | |||
GMO Payment Gateway, Inc. | 21,000 | 1,551,556 | |||
HIS Co. Ltd. | 50,700 | 1,917,392 | |||
Hosiden Corp. | 94,100 | 1,500,187 | |||
Investors Cloud Co. Ltd. | 24,600 | 1,459,929 |
11
Shares | Value | ||||
Itochu Techno-Solutions Corp. | 48,500 | $ | 2,048,509 | ||
KH Neochem Co. Ltd. | 43,000 | 1,028,648 | |||
Maxell Holdings Ltd. | 75,600 | 1,541,920 | |||
Nihon M&A Center, Inc. | 21,500 | 1,075,487 | |||
Nippon Shinyaku Co. Ltd. | 22,700 | 1,627,604 | |||
Nippon Shokubai Co. Ltd. | 25,500 | 1,785,588 | |||
Outsourcing, Inc. | 113,200 | 1,993,737 | |||
Pigeon Corp. | 38,000 | 1,458,308 | |||
Rohto Pharmaceutical Co. Ltd. | 57,700 | 1,487,815 | |||
Sakata Seed Corp. | 15,100 | 499,652 | |||
Sanwa Holdings Corp. | 146,800 | 1,942,051 | |||
SHO-BOND Holdings Co. Ltd. | 29,500 | 1,878,666 | |||
SMS Co. Ltd. | 27,500 | 881,551 | |||
Tokyo Base Co. Ltd.(1) | 25,700 | 1,058,010 | |||
Topcon Corp. | 45,800 | 1,019,796 | |||
Toyo Tire & Rubber Co. Ltd. | 63,900 | 1,312,115 | |||
Tsubaki Nakashima Co. Ltd. | 81,100 | 1,812,771 | |||
Ulvac, Inc. | 13,700 | 926,139 | |||
Zenkoku Hosho Co. Ltd. | 22,800 | 985,309 | |||
40,575,117 | |||||
Malaysia — 0.5% | |||||
My EG Services Bhd | 1,884,700 | 977,011 | |||
Netherlands — 2.2% | |||||
AMG Advanced Metallurgical Group NV | 19,716 | 878,502 | |||
ASR Nederland NV | 80,429 | 3,281,631 | |||
4,160,133 | |||||
New Zealand — 2.0% | |||||
a2 Milk Co. Ltd.(1) | 445,213 | 2,584,930 | |||
Fisher & Paykel Healthcare Corp. Ltd. | 147,177 | 1,313,419 | |||
3,898,349 | |||||
Norway — 0.6% | |||||
Aker BP ASA | 51,005 | 1,200,644 | |||
Singapore — 1.7% | |||||
Venture Corp. Ltd. | 206,800 | 3,229,197 | |||
South Africa — 1.0% | |||||
Dis-Chem Pharmacies Ltd. | 718,990 | 1,938,543 | |||
South Korea — 3.8% | |||||
InBody Co. Ltd. | 27,247 | 900,154 | |||
ING Life Insurance Korea Ltd. | 43,704 | 2,188,309 | |||
Loen Entertainment, Inc. | 9,936 | 985,771 | |||
Mando Corp. | 4,490 | 1,372,645 | |||
Medy-Tox, Inc. | 1,114 | 476,922 | |||
Modetour Network, Inc. | 30,703 | 1,000,204 | |||
SK Materials Co. Ltd. | 1,755 | 295,097 | |||
7,219,102 | |||||
Spain — 2.8% | |||||
Inmobiliaria Colonial Socimi SA | 188,982 | 1,787,068 |
12
Shares | Value | ||||
Masmovil Ibercom SA(1) | 17,171 | $ | 1,574,957 | ||
NH Hotel Group SA | 266,122 | 1,958,051 | |||
5,320,076 | |||||
Sweden — 1.2% | |||||
Saab AB, B Shares | 27,966 | 1,359,564 | |||
SSAB AB, A Shares(1) | 187,163 | 881,077 | |||
2,240,641 | |||||
Switzerland — 6.2% | |||||
Georg Fischer AG | 1,466 | 1,927,796 | |||
Idorsia Ltd.(1) | 48,361 | 1,040,461 | |||
Leonteq AG(1) | 10,066 | 595,745 | |||
Logitech International SA | 37,590 | 1,309,321 | |||
Straumann Holding AG | 4,420 | 3,298,004 | |||
Tecan Group AG | 6,237 | 1,284,806 | |||
Temenos Group AG | 18,891 | 2,333,689 | |||
11,789,822 | |||||
Taiwan — 3.2% | |||||
Airtac International Group | 133,345 | 2,280,376 | |||
Merry Electronics Co. Ltd. | 196,000 | 1,454,951 | |||
Silergy Corp. | 68,000 | 1,442,546 | |||
TCI Co. Ltd. | 84,000 | 815,263 | |||
5,993,136 | |||||
Thailand — 0.3% | |||||
Taokaenoi Food & Marketing PCL | 1,007,300 | 633,972 | |||
United Kingdom — 7.8% | |||||
Bellway plc | 65,003 | 3,044,311 | |||
Burford Capital Ltd. | 61,280 | 1,017,466 | |||
Greggs plc | 46,635 | 837,881 | |||
Intermediate Capital Group plc | 108,663 | 1,562,318 | |||
Just Eat plc(1) | 189,793 | 2,052,201 | |||
Rentokil Initial plc | 1,057,443 | 4,549,945 | |||
Sanne Group plc | 79,876 | 789,024 | |||
SSP Group plc | 59,135 | 513,462 | |||
UDG Healthcare plc | 43,753 | 496,445 | |||
14,863,053 | |||||
TOTAL INVESTMENT SECURITIES — 99.5% (Cost $140,613,368) | 189,413,702 | ||||
OTHER ASSETS AND LIABILITIES — 0.5% | 902,527 | ||||
TOTAL NET ASSETS — 100.0% | $ | 190,316,229 |
13
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Information Technology | 21.4 | % |
Industrials | 18.7 | % |
Consumer Discretionary | 15.5 | % |
Financials | 10.6 | % |
Health Care | 10.4 | % |
Consumer Staples | 7.8 | % |
Materials | 7.2 | % |
Real Estate | 2.8 | % |
Energy | 2.5 | % |
Utilities | 1.8 | % |
Telecommunication Services | 0.8 | % |
Other Assets and Liabilities | 0.5 | % |
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
(1) | Non-income producing. |
See Notes to Financial Statements.
14
Statement of Assets and Liabilities |
NOVEMBER 30, 2017 | |||
Assets | |||
Investment securities, at value (cost of $140,613,368) | $ | 189,413,702 | |
Foreign currency holdings, at value (cost of $942,032) | 942,032 | ||
Receivable for investments sold | 1,087,484 | ||
Receivable for capital shares sold | 341,998 | ||
Dividends and interest receivable | 312,493 | ||
Other assets | 56,061 | ||
192,153,770 | |||
Liabilities | |||
Disbursements in excess of demand deposit cash | 201,125 | ||
Payable for investments purchased | 1,174,730 | ||
Payable for capital shares redeemed | 93,911 | ||
Accrued management fees | 228,353 | ||
Distribution and service fees payable | 5,079 | ||
Accrued foreign taxes | 133,236 | ||
Accrued other expenses | 1,107 | ||
1,837,541 | |||
Net Assets | $ | 190,316,229 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 124,394,966 | |
Undistributed net investment income | 284,166 | ||
Undistributed net realized gain | 16,978,095 | ||
Net unrealized appreciation | 48,659,002 | ||
$ | 190,316,229 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $163,540,309 | 13,693,868 | $11.94 | |||
I Class, $0.01 Par Value | $10,528,523 | 872,221 | $12.07 | |||
A Class, $0.01 Par Value | $12,855,358 | 1,085,940 | $11.84* | |||
C Class, $0.01 Par Value | $2,452,790 | 214,316 | $11.44 | |||
R Class, $0.01 Par Value | $939,249 | 80,126 | $11.72 |
*Maximum offering price $12.56 (net asset value divided by 0.9425).
See Notes to Financial Statements.
15
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2017 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $227,593) | $ | 2,194,710 | |
Interest | 6,540 | ||
2,201,250 | |||
Expenses: | |||
Management fees | 2,654,596 | ||
Distribution and service fees: | |||
A Class | 35,878 | ||
C Class | 18,084 | ||
R Class | 3,940 | ||
Directors' fees and expenses | 4,696 | ||
Other expenses | 9,260 | ||
2,726,454 | |||
Fees waived(1) | (310,890 | ) | |
2,415,564 | |||
Net investment income (loss) | (214,314 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 19,347,558 | ||
Foreign currency translation transactions | (58,337 | ) | |
19,289,221 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments (includes (increase) decrease in accrued foreign taxes of $(133,236)) | 33,822,554 | ||
Translation of assets and liabilities in foreign currencies | 28,643 | ||
33,851,197 | |||
Net realized and unrealized gain (loss) | 53,140,418 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 52,926,104 |
(1) | Amount consists of $258,274, $18,721, $28,702, $3,617 and $1,576 for Investor Class, I Class, A Class, C Class and R Class, respectively. |
See Notes to Financial Statements.
16
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2017 AND NOVEMBER 30, 2016 | ||||||
Increase (Decrease) in Net Assets | November 30, 2017 | November 30, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | (214,314 | ) | $ | (150,974 | ) |
Net realized gain (loss) | 19,289,221 | 1,245,292 | ||||
Change in net unrealized appreciation (depreciation) | 33,851,197 | (7,284,247 | ) | |||
Net increase (decrease) in net assets resulting from operations | 52,926,104 | (6,189,929 | ) | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (41,869 | ) | (1,126,676 | ) | ||
I Class | (15,442 | ) | (65,585 | ) | ||
A Class | — | (135,676 | ) | |||
C Class | — | (1,467 | ) | |||
R Class | — | (3,245 | ) | |||
From net realized gains: | ||||||
Investor Class | — | (2,032,554 | ) | |||
I Class | — | (100,298 | ) | |||
A Class | — | (315,770 | ) | |||
C Class | — | (25,684 | ) | |||
R Class | — | (10,615 | ) | |||
Decrease in net assets from distributions | (57,311 | ) | (3,817,570 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 6,185,364 | (15,817,396 | ) | |||
Redemption Fees | ||||||
Increase in net assets from redemption fees | 11,161 | 11,338 | ||||
Net increase (decrease) in net assets | 59,065,318 | (25,813,557 | ) | |||
Net Assets | ||||||
Beginning of period | 131,250,911 | 157,064,468 | ||||
End of period | $ | 190,316,229 | $ | 131,250,911 | ||
Undistributed (distributions in excess of) net investment income | $ | 284,166 | $ | (381,933 | ) |
See Notes to Financial Statements.
17
Notes to Financial Statements |
NOVEMBER 30, 2017
1. Organization
American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. International Opportunities Fund (the fund) is one fund in a series issued by the corporation. The fund's investment objective is to seek capital growth.
The fund offers the Investor Class, I Class (formerly Institutional Class), A Class, C Class and R Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the
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fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. Certain countries impose taxes on realized gains on the sale of securities registered in their country. The fund records the foreign tax expense, if any, on an accrual basis. The foreign tax expense on realized gains and unrealized appreciation 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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund 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. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
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Redemption Fees — Prior to October 9, 2017, the fund may have imposed a 2.00% redemption fee on shares held less than 60 days. The fee was not applicable to all classes. The redemption fee was retained by the fund to help cover transaction costs that long-term investors may bear when the fund sells securities to meet investor redemptions.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class’s daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that use very similar investment teams and strategies (strategy assets). During the period ended November 30, 2017, the investment advisor agreed to waive 0.20% of the fund's management fee. The investment advisor expects this waiver to continue until July 31, 2018 and cannot terminate it prior to such date without the approval of the Board of Directors.
The management fee schedule range and the effective annual management fee before and after waiver for each class for the period ended November 30, 2017 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | ||
Before Waiver | After Waiver | ||
Investor Class | 1.400% to 2.000% | 1.72% | 1.52% |
I Class | 1.200% to 1.800% | 1.52% | 1.32% |
A Class | 1.400% to 2.000% | 1.72% | 1.52% |
C Class | 1.400% to 2.000% | 1.72% | 1.52% |
R Class | 1.400% to 2.000% | 1.72% | 1.52% |
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, 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 ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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. Fees incurred under the plans during the period ended November 30, 2017 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
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Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $244,494 and $190,567, respectively. The effect of interfund transactions on the Statement of Operations was $(12,676) in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended November 30, 2017 were $197,928,739 and $191,548,295, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2017 | Year ended November 30, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 120,000,000 | 120,000,000 | ||||||||
Sold | 4,116,295 | $ | 42,533,004 | 2,324,522 | $ | 20,183,544 | ||||
Issued in reinvestment of distributions | 4,880 | 40,599 | 343,807 | 3,039,251 | ||||||
Redeemed | (3,173,740 | ) | (31,170,405 | ) | (4,064,261 | ) | (35,125,896 | ) | ||
947,435 | 11,403,198 | (1,395,932 | ) | (11,903,101 | ) | |||||
I Class/Shares Authorized | 50,000,000 | 35,000,000 | ||||||||
Sold | 853,290 | 8,851,517 | 144,305 | 1,241,192 | ||||||
Issued in reinvestment of distributions | 1,838 | 15,442 | 18,597 | 165,883 | ||||||
Redeemed | (760,870 | ) | (8,148,776 | ) | (113,497 | ) | (1,004,870 | ) | ||
94,258 | 718,183 | 49,405 | 402,205 | |||||||
A Class/Shares Authorized | 40,000,000 | 30,000,000 | ||||||||
Sold | 406,592 | 3,848,170 | 793,313 | 6,858,283 | ||||||
Issued in reinvestment of distributions | — | — | 51,180 | 450,388 | ||||||
Redeemed | (999,803 | ) | (10,089,192 | ) | (1,357,678 | ) | (11,880,126 | ) | ||
(593,211 | ) | (6,241,022 | ) | (513,185 | ) | (4,571,455 | ) | |||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 84,620 | 901,605 | 71,416 | 602,250 | ||||||
Issued in reinvestment of distributions | — | — | 2,651 | 22,907 | ||||||
Redeemed | (62,567 | ) | (612,643 | ) | (49,685 | ) | (418,768 | ) | ||
22,053 | 288,962 | 24,382 | 206,389 | |||||||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 18,549 | 185,040 | 16,014 | 138,491 | ||||||
Issued in reinvestment of distributions | — | — | 1,582 | 13,860 | ||||||
Redeemed | (17,071 | ) | (168,997 | ) | (11,891 | ) | (103,785 | ) | ||
1,478 | 16,043 | 5,705 | 48,566 | |||||||
Net increase (decrease) | 472,013 | $ | 6,185,364 | (1,829,625 | ) | $ | (15,817,396 | ) |
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6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. 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.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a 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 necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 1,459,543 | $ | 187,954,159 | — |
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.
The fund invests in common stocks of small companies. Because of this, the fund may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
8. Federal Tax Information
On December 19, 2017, the fund declared and paid a per-share distribution from net realized gains to shareholders of record on December 18, 2017 of $0.9601 for the Investor Class, I Class, A Class, C Class and R Class.
On December 19, 2017, the fund declared and paid the following per-share distributions from net investment income to shareholders of record on December 18, 2017:
Investor Class | I Class | A Class | C Class | R Class |
$0.0605 | $0.0844 | $0.0305 | — | $0.0005 |
The tax character of distributions paid during the years ended November 30, 2017 and November 30, 2016 were as follows:
2017 | 2016 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 57,311 | $ | 1,266,919 | ||
Long-term capital gains | — | $ | 2,550,651 |
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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 period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 141,784,832 | |
Gross tax appreciation of investments | $ | 48,690,499 | |
Gross tax depreciation of investments | (1,061,629 | ) | |
Net tax appreciation (depreciation) of investments | 47,628,870 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (142,317 | ) | |
Net tax appreciation (depreciation) | $ | 47,486,553 | |
Undistributed ordinary income | $ | 6,195,938 | |
Accumulated long-term gains | $ | 12,238,772 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the realization to ordinary income for tax purposes of unrealized gains on investments in passive foreign investment companies.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||||||
2017 | $8.49 | (0.01) | 3.46 | 3.45 | —(3) | — | —(3) | $11.94 | 40.69% | 1.53% | 1.73% | (0.11)% | (0.31)% | 124% | $163,540 | ||
2016 | $9.08 | (0.01) | (0.36) | (0.37) | (0.08) | (0.14) | (0.22) | $8.49 | (4.14)% | 1.54% | 1.74% | (0.07)% | (0.27)% | 130% | $108,184 | ||
2015 | $8.92 | (0.03) | 0.58 | 0.55 | (0.02) | (0.37) | (0.39) | $9.08 | 6.67% | 1.51% | 1.71% | (0.33)% | (0.53)% | 152% | $128,450 | ||
2014 | $9.20 | 0.01 | (0.26) | (0.25) | (0.03) | — | (0.03) | $8.92 | (2.77)% | 1.55% | 1.75% | 0.11% | (0.09)% | 128% | $123,835 | ||
2013 | $7.14 | —(3) | 2.14 | 2.14 | (0.08) | — | (0.08) | $9.20 | 30.13% | 1.72% | 1.79% | (0.04)% | (0.11)% | 123% | $137,264 | ||
I Class(4) | |||||||||||||||||
2017 | $8.58 | 0.02 | 3.49 | 3.51 | (0.02) | — | (0.02) | $12.07 | 41.01% | 1.33% | 1.53% | 0.09% | (0.11)% | 124% | $10,529 | ||
2016 | $9.18 | 0.01 | (0.38) | (0.37) | (0.09) | (0.14) | (0.23) | $8.58 | (4.05)% | 1.34% | 1.54% | 0.13% | (0.07)% | 130% | $6,674 | ||
2015 | $9.02 | (0.01) | 0.58 | 0.57 | (0.04) | (0.37) | (0.41) | $9.18 | 6.82% | 1.31% | 1.51% | (0.13)% | (0.33)% | 152% | $6,685 | ||
2014 | $9.29 | 0.03 | (0.27) | (0.24) | (0.03) | — | (0.03) | $9.02 | (2.58)% | 1.35% | 1.55% | 0.31% | 0.11% | 128% | $4,491 | ||
2013 | $7.21 | (0.04) | 2.21 | 2.17 | (0.09) | — | (0.09) | $9.29 | 30.38% | 1.52% | 1.59% | 0.16% | 0.09% | 123% | $3,100 |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Operating Expenses (before expense waiver) | Net Investment Income (Loss) | Net Investment Income (Loss) (before expense waiver) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
A Class | |||||||||||||||||
2017 | $8.43 | (0.03) | 3.44 | 3.41 | — | — | — | $11.84 | 40.45% | 1.78% | 1.98% | (0.36)% | (0.56)% | 124% | $12,855 | ||
2016 | $9.03 | (0.03) | (0.37) | (0.40) | (0.06) | (0.14) | (0.20) | $8.43 | (4.47)% | 1.79% | 1.99% | (0.32)% | (0.52)% | 130% | $14,156 | ||
2015 | $8.88 | (0.05) | 0.58 | 0.53 | (0.01) | (0.37) | (0.38) | $9.03 | 6.48% | 1.76% | 1.96% | (0.58)% | (0.78)% | 152% | $19,796 | ||
2014 | $9.18 | (0.01) | (0.27) | (0.28) | (0.02) | — | (0.02) | $8.88 | (3.06)% | 1.80% | 2.00% | (0.14)% | (0.34)% | 128% | $14,683 | ||
2013 | $7.12 | (0.03) | 2.15 | 2.12 | (0.06) | — | (0.06) | $9.18 | 29.89% | 1.97% | 2.04% | (0.29)% | (0.36)% | 123% | $6,743 | ||
C Class | |||||||||||||||||
2017 | $8.21 | (0.11) | 3.34 | 3.23 | — | — | — | $11.44 | 39.46% | 2.53% | 2.73% | (1.11)% | (1.31)% | 124% | $2,453 | ||
2016 | $8.81 | (0.09) | (0.36) | (0.45) | (0.01) | (0.14) | (0.15) | $8.21 | (5.17)% | 2.54% | 2.74% | (1.07)% | (1.27)% | 130% | $1,579 | ||
2015 | $8.73 | (0.12) | 0.57 | 0.45 | —(3) | (0.37) | (0.37) | $8.81 | 5.59% | 2.51% | 2.71% | (1.33)% | (1.53)% | 152% | $1,479 | ||
2014 | $9.07 | (0.08) | (0.26) | (0.34) | — | — | — | $8.73 | (3.75)% | 2.55% | 2.75% | (0.89)% | (1.09)% | 128% | $713 | ||
2013 | $7.04 | (0.09) | 2.12 | 2.03 | — | — | — | $9.07 | 29.02% | 2.72% | 2.79% | (1.04)% | (1.11)% | 123% | $425 | ||
R Class | |||||||||||||||||
2017 | $8.37 | (0.06) | 3.41 | 3.35 | — | — | — | $11.72 | 40.02% | 2.03% | 2.23% | (0.61)% | (0.81)% | 124% | $939 | ||
2016 | $8.97 | (0.05) | (0.37) | (0.42) | (0.04) | (0.14) | (0.18) | $8.37 | (4.69)% | 2.04% | 2.24% | (0.57)% | (0.77)% | 130% | $658 | ||
2015 | $8.85 | (0.07) | 0.57 | 0.50 | (0.01) | (0.37) | (0.38) | $8.97 | 6.09% | 2.01% | 2.21% | (0.83)% | (1.03)% | 152% | $654 | ||
2014 | $9.15 | (0.04) | (0.25) | (0.29) | (0.01) | — | (0.01) | $8.85 | (3.15)% | 2.05% | 2.25% | (0.39)% | (0.59)% | 128% | $583 | ||
2013 | $7.10 | (0.03) | 2.12 | 2.09 | (0.04) | — | (0.04) | $9.15 | 29.50% | 2.22% | 2.29% | (0.54)% | (0.61)% | 123% | $623 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Per-share amount was less than $0.005. |
(4) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century World Mutual Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of International Opportunities Fund (the “Fund”), one of the funds constituting American Century World Mutual Funds, Inc., as of November 30, 2017, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2017, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of International Opportunities Fund of American Century World Mutual Funds, Inc. as of November 30, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2018
27
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Mr. Thomas, 15) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 69 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired; Executive Vice President, ACC (2007 to 2013); President, ACS (2007 to 2013); Chief Operating Officer, ACC (2007 to 2012) | 69 | None |
Andrea C. Hall (1945) | Director | Since 1997 | Retired | 69 | None |
Jan M. Lewis (1957) | Director | Since 2011 | Retired; President and Chief Executive Officer, Catholic Charities of Northeast Kansas (human services organization) (2006 to 2013) | 69 | None |
James A. Olson (1942) | Director and Chairman of the Board | Since 2007 (Chairman since 2014) | Member, Plaza Belmont LLC (private equity fund manager) (1999 to present) | 69 | Saia, Inc. (2002 to 2012) and EPR Properties (2003 to 2013) |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
M. Jeannine Strandjord (1945) | Director | Since 1994 | Retired | 69 | Euronet Worldwide Inc. and MGP Ingredients, Inc. |
John R. Whitten (1946) | Director | Since 2008 | Retired | 69 | Rudolph Technologies, Inc. |
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 69 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director and President | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 114 | BioMed Valley Discoveries, Inc. |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 15 investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years |
Jonathan S. Thomas (1963) | Director and President since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries |
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present); Vice President, Client Interactions and Marketing, ACIS (2013 to 2014); Director, Client Interactions and Marketing, ACIS (2007 to 2013). Also serves as Vice President, ACIS |
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS |
C. Jean Wade (1964) | Vice President,Treasurer and Chief Financial Officer since 2012 | Vice President, ACS (2000 to present) |
Robert J. Leach (1966) | Vice President since 2006 and Assistant Treasurer since 2012 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present); Associate General Counsel, ACC (2001 to present). Also serves as Vice President, ACIM and ACS |
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Approval of Management Agreement |
At a meeting held on June 29, 2017, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
• | the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund; |
• | the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis; |
• | the investment performance of the Fund, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; |
• | the cost of owning the Fund compared to the cost of owning similar funds; |
• | the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers; |
• | financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor; |
• | strategic plans of the Advisor |
• | possible economies of scale associated with the Advisor’s management of the Fund and other accounts under its management; |
• | data comparing services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices by the Fund and the Advisor regarding financial intermediaries, the nature of services provided by intermediaries, and the terms of share classes utilized; and |
• | any collateral benefits derived by the Advisor from the management of the Fund. |
The Directors held three in-person meetings and one telephonic meeting to review and discuss the information provided. The independent Directors also reviewed responses to supplemental information requests and held active discussions with the Advisor regarding the renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In
31
connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services - Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including without limitation the following:
• | portfolio research and security selection |
• | securities trading |
• | Fund administration |
• | custody of Fund assets |
• | daily valuation of the Fund’s portfolio |
• | shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications |
• | legal services (except the independent Directors’ counsel) |
• | regulatory and portfolio compliance |
• | financial reporting |
• | marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans) |
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment. The Board noted specifically the resources the Advisor has committed during the year to compliance with the Department of Labor fiduciary rule and share class modernization.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review detailed performance information provided by the Advisor during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board receives a report from the Advisor regarding the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the five- and ten-year periods and below its benchmark for the one- and three-year periods reviewed by the Board. The Board discussed the Fund's performance with the Advisor and was satisfied with the efforts being undertaken by the Advisor. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The
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Board, directly and through various committees of the Board, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the Advisor. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, and the fees and expenses of the Fund’s independent Directors (including their independent legal counsel) and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was above the median of the total expense ratios of the Fund’s peer expense universe and was within the range of its peer expense group. The Board discussed with the Advisor the factors that
33
impacted the level of the fee in relation to its peers. The Board and the Advisor agreed to a temporary reduction of the Fund's annual unified management fee of 0.20% (e.g., the Investor Class unified fee will be reduced from 1.73% to 1.53%) for at least one year, beginning August 1, 2017. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Directors also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Board reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor's resources and reasonable profits. The Board found the payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor receives proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
34
Proxy Voting Results |
A special meeting of shareholders was held on October 18, 2017, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect four directors to the Board of Directors of American Century World Mutual Funds, Inc.:
Affirmative | Withhold | ||||||
Thomas W. Bunn | $ | 5,482,015,298 | $ | 72,735,781 | |||
Barry Fink | $ | 5,485,170,607 | $ | 69,580,472 | |||
Jan M. Lewis | $ | 5,489,025,901 | $ | 65,725,178 | |||
Stephen E. Yates | $ | 5,481,872,069 | $ | 72,879,010 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Andrea C. Hall, James A. Olson, M. Jeannine Strandjord, and John R. Whitten.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of 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 fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s 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 fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended November 30, 2017.
The fund hereby designates $233,768 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended November 30, 2017.
The fund hereby designates $546,679, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended November 30, 2017.
For the fiscal year ended November 30, 2017, the fund intends to pass through to shareholders foreign source income of $2,422,303 and foreign taxes paid of $227,593, or up to the maximum amount allowable, as a foreign tax credit. Foreign source income and foreign tax expense per outstanding share on November 30, 2017 are $0.1519 and $0.0143, respectively.
The fund utilized earnings and profits of $836,164 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
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Notes |
38
Notes |
39
Notes |
40
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century World Mutual Funds, Inc. | ||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||
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. | ||
©2018 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91032 1801 |
Annual Report | |
November 30, 2017 | |
International Value Fund |
Table of Contents |
President’s Letter | 2 | |
Performance | 3 | |
Portfolio Commentary | ||
Fund Characteristics | ||
Shareholder Fee Example | ||
Schedule of Investments | ||
Statement of Assets and Liabilities | ||
Statement of Operations | ||
Statement of Changes in Net Assets | ||
Notes to Financial Statements | ||
Financial Highlights | ||
Report of Independent Registered Public Accounting Firm | ||
Management | ||
Approval of Management Agreement | ||
Proxy Voting Results | ||
Additional Information |
Any opinions expressed in this report reflect those of the author 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.
President’s Letter |
Jonathan Thomas
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2017. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional, updated investment and market insights, we encourage you to visit our website, americancentury.com.
Upbeat Earnings, Economic Data Sparked Strong Gains for Global Stocks
Throughout the world, improving economic activity, healthy corporate earnings growth, and supportive central bank policies helped fuel robust double-digit gains for global stocks. The rally began early in the period, largely in response to the economic-growth implications of Donald Trump’s presidential election victory, and it forged ahead with few interruptions through November 2017. The 12-month period included several potential sources of financial market disruption, including acts of terrorism, North Korean saber-rattling, and an active and destructive hurricane season. Yet any resulting volatility was short-lived, as investors remained focused on positive economic and earnings news. Furthermore, in the U.S., the prospect for pro-growth tax reform propelled major stock indices to several record-high levels.
Among the developed markets, equity performance was notably strong in Europe, where solid corporate profits, improving economic growth rates, declining unemployment, and perceived market-friendly election results in France and Germany supported gains. In addition, the European Central Bank continued to provide stimulus support in the wake of persistently low inflation, which also helped stocks advance. Returns for emerging markets stocks were even stronger, bolstered by improving global and local economic and business fundamentals and rising oil prices.
The broad “risk-on” sentiment also extended to the global fixed-income market, where emerging markets bonds and high-yield corporate bonds were top performers. These securities satisfied investor demand for yield as interest rates remained relatively low throughout the world.
With global growth synchronizing and strengthening and central banks pursuing varying degrees of policy normalization, investors likely will face new opportunities and challenges in the months ahead. We believe this scenario warrants a disciplined, diversified, and risk-aware approach, using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of November 30, 2017 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
A Class | MEQAX | 3/31/97 | ||||
No sales charge | 23.45% | 6.49% | 0.59% | — | ||
With sales charge | 16.38% | 5.25% | 0.00% | — | ||
MSCI EAFE Value Index | — | 25.08% | 7.47% | 0.75% | — | — |
Investor Class | ACEVX | 23.59% | 6.75% | 0.84% | — | 4/3/06 |
I Class | ACVUX | 23.86% | 6.99% | 1.04% | — | 4/3/06 |
C Class | ACCOX | 22.41% | 5.70% | -0.17% | — | 4/3/06 |
R Class | ACVRX | 23.09% | 6.22% | 0.34% | — | 4/3/06 |
R6 Class | ACVDX | 24.06% | — | — | 4.86% | 7/26/13 |
Average annual returns since inception are presented when ten years of performance history is not available. Fund returns would have been lower if a portion of the fees had not been waived. Prior to April 10, 2017, the
I Class was referred to as the Institutional Class.
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 and may be subject to a maximum CDSC of 1.00%. 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.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
3
Growth of $10,000 Over 10 Years |
$10,000 investment made November 30, 2007 |
Performance for other share classes will vary due to differences in fee structure. |
Value on November 30, 2017 | |
A Class — $9,996 | |
MSCI EAFE Value Index — $10,776 | |
The A Class’s initial investment is $9,425 to reflect the maximum 5.75% initial sales charge.
Ending value of A Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | |||||
Investor Class | I Class | A Class | C Class | R Class | R6 Class |
1.32% | 1.12% | 1.57% | 2.32% | 1.82% | 0.97% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
4
Portfolio Commentary |
Portfolio Managers: Elizabeth Xie and Vinod Chandrashekaran
Performance Summary
International Value gained 23.59%* for the fiscal year ended November 30, 2017, compared with the 25.08% return of its benchmark, the MSCI EAFE Value Index. Fund results reflect operating expenses, while benchmark returns do not.
Global stock markets delivered robust gains for the fiscal year during a rare period of synchronized economic growth, fed by supportive central bank policies, which also fostered strong corporate earnings growth. The period began with the U.S. stock market rallying on expectations of a business-friendly, pro-growth Trump agenda. Concerns over a wave of populist and nationalistic parties rising to power with negative economic consequences were quelled in part by the victory of centrist candidate Emmanuel Macron in the French presidential election in May. Despite rising geopolitical uncertainty in Asia related to North Korea’s missile tests, Japan and other Asian markets held onto stock gains while European markets continued to rise throughout the year on strong revenue and earnings results along with accelerating economic growth.
Our stock selection process incorporates factors of valuation, quality, and sentiment while minimizing unintended risks among industries and other risk characteristics. Weak stock selection in the financials sector detracted the most from relative results. The telecommunication services, information technology, and utilities sectors also detracted from performance. Conversely, the industrials, real estate, and energy sectors added to relative returns, largely as a result of positive stock selection.
Geographically, stock selection in the United Kingdom, Spain, and Switzerland weighed on the fund’s results along with an underweight to Italy, which also detracted from returns despite positive stock selection in that country. Italian stocks performed very well during the period, and we had some exposure there, but less than the benchmark. In contrast, stock selection in Germany, Japan, and France strongly contributed to relative returns along with a mix of stock selection in Israel and an underweight to that country.
U.K.-Based Holdings Detracted from Performance
In the U.K., an overweight to utility firm Centrica hurt the fund’s performance. The firm lost customers and profits declined. Although the stock had very positive valuation and quality signals, its sentiment reading was weak. A significant overweight in U.K.-based pharmaceutical firm GlaxoSmithKline also detracted from performance after its drug prices faced pressure late in the period as a respiratory drug’s patent approached its expiration. An overweight in ProSiebenSat.1 Media, a Germany-based digital entertainment firm, weighed on results as investors grew concerned about costly e-commerce and online acquisitions. Other detractors included Japanese automaker Subaru, which incurred rising costs and shrinking profits on a stronger yen despite record sales and revenues, and Australian telecommunications firm Telstra, which reported declining core earnings. We trimmed our position in Telstra but remained overweight despite falling sentiment scores due to strong quality and valuation metrics.
*All fund returns referenced in this commentary are for Investor Class shares. Performance for other share classes will vary due to differences in fee structure; when Investor Class performance exceeds that of the fund's benchmark, other share classes may not. See page 3 for returns for all share classes.
5
German and Australian Airlines Among Contributors
Germany-based Deutsche Lufthansa soared on upgraded expectations for 2017 revenues and earnings, fueled by a pickup in traffic. The stock had strong scores for sentiment, valuation, and quality. Avoiding Israel-based Teva Pharmaceutical Industries aided relative returns. The drugmaker’s shares declined after Teva cut its dividend and reduced its sales forecasts. Germany-based Uniper, a portfolio-only energy generation and trading company, also contributed. Its stock performed well on its improved balance sheet as a result of management cost cutting, a raised dividend, and the possibility it would be acquired by Finland's Fortum Oyj. Although its valuation and momentum scores were high, its quality deteriorated and we sold our shares for a profit. Australian airline Qantas Airways also contributed to returns as the global airline industry received a boost on higher traffic and benefited from analyst upgrades.
A Look Ahead
As 2017 comes toward a close, we see a number of potential positives for international value stocks in the coming year. Looking generally at economic growth prospects outside the U.S., we see supportive data indicating we are in the early stages of a broad global economic recovery. This is mirrored by widespread improvement in corporate earnings in both developed and emerging markets that, we believe, should support value stocks. Market sentiment also appears positive and resilient despite ongoing geopolitical concerns. In addition, we continue to believe valuation factors remain historically attractive.
We believe our disciplined investment approach is particularly beneficial during periods of likely volatility, and we adhere to our process regardless of the market environment. We believe that this allows us to take advantage of opportunities presented by market inefficiencies.
6
Fund Characteristics |
NOVEMBER 30, 2017 | |
Top Ten Holdings | % of net assets |
Royal Dutch Shell plc, B Shares | 3.6% |
HSBC Holdings plc (London) | 2.8% |
Allianz SE | 2.2% |
BNP Paribas SA | 1.9% |
GlaxoSmithKline plc | 1.9% |
Toyota Motor Corp. | 1.9% |
Novartis AG | 1.8% |
Rio Tinto plc | 1.7% |
ING Groep NV | 1.7% |
iShares MSCI EAFE Value ETF | 1.7% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 96.9% |
Exchange-Traded Funds | 2.1% |
Total Equity Exposure | 99.0% |
Temporary Cash Investments | 0.6% |
Other Assets and Liabilities | 0.4% |
Investments by Country | % of net assets |
Japan | 22.4% |
United Kingdom | 17.3% |
Germany | 11.0% |
France | 10.2% |
Switzerland | 7.9% |
Australia | 6.2% |
Spain | 4.4% |
Sweden | 2.8% |
Other Countries | 14.7% |
Exchange-Traded Funds* | 2.1% |
Cash and Equivalents** | 1.0% |
* | Category may increase exposure to the countries indicated. The Schedule of Investments provides additional information on the fund's portfolio holdings. |
** | Includes temporary cash investments and other assets and liabilities. |
7
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2017 to November 30, 2017.
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 I 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. 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.
8
Beginning Account Value 6/1/17 | Ending Account Value 11/30/17 | Expenses Paid During Period(1) 6/1/17 - 11/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,074.30 | $6.81 | 1.31% |
I Class | $1,000 | $1,075.50 | $5.78 | 1.11% |
A Class | $1,000 | $1,072.80 | $8.11 | 1.56% |
C Class | $1,000 | $1,068.70 | $11.98 | 2.31% |
R Class | $1,000 | $1,072.00 | $9.40 | 1.81% |
R6 Class | $1,000 | $1,076.70 | $5.00 | 0.96% |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.50 | $6.63 | 1.31% |
I Class | $1,000 | $1,019.50 | $5.62 | 1.11% |
A Class | $1,000 | $1,017.25 | $7.89 | 1.56% |
C Class | $1,000 | $1,013.49 | $11.66 | 2.31% |
R Class | $1,000 | $1,015.99 | $9.15 | 1.81% |
R6 Class | $1,000 | $1,020.26 | $4.86 | 0.96% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
9
Schedule of Investments |
NOVEMBER 30, 2017
Shares | Value | ||||
COMMON STOCKS — 96.9% | |||||
Australia — 6.2% | |||||
Australia & New Zealand Banking Group Ltd. | 59,000 | $ | 1,281,573 | ||
Bendigo and Adelaide Bank Ltd. | 28,633 | 253,734 | |||
CIMIC Group Ltd. | 6,705 | 259,539 | |||
Coca-Cola Amatil Ltd. | 18,131 | 109,135 | |||
Dexus | 28,179 | 221,754 | |||
Fortescue Metals Group Ltd. | 95,254 | 333,326 | |||
Insurance Australia Group Ltd. | 32,040 | 174,784 | |||
Qantas Airways Ltd. | 120,021 | 522,407 | |||
Regis Resources Ltd. | 20,826 | 61,865 | |||
Scentre Group | 38,478 | 123,763 | |||
Telstra Corp. Ltd. | 77,275 | 200,987 | |||
Wesfarmers Ltd. | 7,384 | 246,403 | |||
Westpac Banking Corp. | 36,351 | 873,005 | |||
Whitehaven Coal Ltd. | 29,986 | 88,221 | |||
Woodside Petroleum Ltd. | 7,977 | 188,922 | |||
4,939,418 | |||||
Austria — 0.9% | |||||
Erste Group Bank AG | 2,196 | 95,528 | |||
OMV AG | 10,023 | 623,757 | |||
719,285 | |||||
Belgium — 1.0% | |||||
KBC Group NV | 10,371 | 849,107 | |||
Brazil — 0.1% | |||||
Banco Santander Brasil SA ADR | 10,100 | 88,375 | |||
China — 1.3% | |||||
China CITIC Bank Corp. Ltd., H Shares | 72,000 | 46,710 | |||
China Construction Bank Corp., H Shares | 477,000 | 417,850 | |||
Country Garden Holdings Co. | 129,000 | 204,770 | |||
Industrial & Commercial Bank of China Ltd., H Shares | 233,000 | 182,719 | |||
Tencent Holdings Ltd. | 3,500 | 180,667 | |||
1,032,716 | |||||
Denmark — 0.1% | |||||
TDC A/S | 9,165 | 55,843 | |||
Finland — 1.0% | |||||
UPM-Kymmene Oyj | 17,430 | 523,601 | |||
Valmet Oyj | 13,711 | 252,219 | |||
775,820 | |||||
France — 10.2% | |||||
Air France-KLM(1) | 19,885 | 282,774 | |||
BNP Paribas SA | 20,094 | 1,522,131 | |||
Casino Guichard Perrachon SA | 4,529 | 275,689 |
10
Shares | Value | ||||
CNP Assurances | 27,217 | $ | 613,418 | ||
Credit Agricole SA | 8,600 | 145,030 | |||
Engie SA | 24,663 | 431,707 | |||
Eutelsat Communications SA | 12,437 | 281,761 | |||
Faurecia | 2,635 | 201,631 | |||
Metropole Television SA | 5,170 | 136,008 | |||
Neopost SA | 1,258 | 41,901 | |||
Orange SA | 24,260 | 418,149 | |||
Peugeot SA | 26,744 | 553,153 | |||
Sanofi | 6,043 | 551,692 | |||
SCOR SE | 2,368 | 96,640 | |||
Societe Generale SA | 20,017 | 1,008,953 | |||
TOTAL SA | 17,864 | 1,008,601 | |||
Veolia Environnement SA | 24,370 | 616,555 | |||
8,185,793 | |||||
Germany — 11.0% | |||||
Allianz SE | 7,425 | 1,751,101 | |||
BASF SE | 4,973 | 556,435 | |||
CECONOMY AG | 3,715 | 48,698 | |||
Commerzbank AG(1) | 4,362 | 63,138 | |||
Covestro AG | 4,964 | 517,403 | |||
Daimler AG | 3,218 | 266,269 | |||
Deutsche Lufthansa AG | 20,639 | 709,735 | |||
Deutsche Telekom AG | 14,812 | 264,677 | |||
Deutsche Wohnen SE | 5,690 | 251,600 | |||
E.ON SE | 74,438 | 861,159 | |||
Grand City Properties SA | 3,575 | 81,729 | |||
Hamburger Hafen und Logistik AG | 3,126 | 92,005 | |||
Hannover Rueck SE | 3,440 | 452,222 | |||
HUGO BOSS AG | 2,517 | 207,074 | |||
METRO AG(1) | 18,109 | 353,555 | |||
Muenchener Rueckversicherungs-Gesellschaft AG | 2,258 | 502,635 | |||
ProSiebenSat.1 Media SE | 9,830 | 312,739 | |||
Rheinmetall AG | 1,557 | 198,124 | |||
RTL Group SA | 3,348 | 267,124 | |||
Schaeffler AG Preference Shares | 19,049 | 332,362 | |||
Siemens AG | 4,163 | 566,123 | |||
Telefonica Deutschland Holding AG | 17,743 | 84,391 | |||
Vonovia SE | 1,917 | 90,229 | |||
8,830,527 | |||||
Hong Kong — 1.0% | |||||
Kerry Properties Ltd. | 51,000 | 226,820 | |||
PCCW Ltd. | 424,000 | 252,203 | |||
WH Group Ltd. | 107,500 | 114,457 | |||
Wheelock & Co. Ltd. | 36,000 | 247,854 | |||
841,334 |
11
Shares | Value | ||||
India — 0.5% | |||||
Tata Power Co. Ltd. (The) | 115,642 | $ | 170,500 | ||
Yes Bank Ltd. | 48,189 | 230,094 | |||
400,594 | |||||
Italy — 1.2% | |||||
Assicurazioni Generali SpA | 29,970 | 548,988 | |||
Enel SpA | 30,580 | 198,672 | |||
Fiat Chrysler Automobiles NV | 12,541 | 215,493 | |||
963,153 | |||||
Japan — 22.4% | |||||
Bridgestone Corp. | 19,600 | 893,334 | |||
Brother Industries Ltd. | 17,900 | 443,887 | |||
Canon, Inc. | 9,800 | 374,666 | |||
Daiichikosho Co., Ltd. | 3,700 | 177,453 | |||
Daito Trust Construction Co. Ltd. | 300 | 54,945 | |||
Daiwa House Industry Co. Ltd. | 5,100 | 187,368 | |||
Daiwa Securities Group, Inc. | 14,000 | 87,370 | |||
Fuji Machine Manufacturing Co. Ltd. | 8,900 | 174,061 | |||
Haseko Corp. | 30,800 | 478,581 | |||
Hitachi Chemical Co. Ltd. | 10,600 | 280,184 | |||
Hitachi Construction Machinery Co. Ltd. | 7,200 | 239,502 | |||
Honda Motor Co. Ltd. | 3,700 | 123,488 | |||
Japan Tobacco, Inc. | 5,200 | 172,308 | |||
Kajima Corp. | 60,000 | 632,617 | |||
Kansai Electric Power Co., Inc. (The) | 3,600 | 47,647 | |||
KDDI Corp. | 29,000 | 832,469 | |||
Kirin Holdings Co. Ltd. | 9,900 | 232,184 | |||
Lawson, Inc. | 5,000 | 344,764 | |||
Leopalace21 Corp. | 51,600 | 413,334 | |||
Maeda Corp. | 14,400 | 213,565 | |||
Miraca Holdings, Inc. | 10,800 | 471,360 | |||
Mitsubishi Chemical Holdings Corp. | 47,900 | 521,759 | |||
Mitsubishi UFJ Financial Group, Inc. | 135,200 | 958,415 | |||
Mizuho Financial Group, Inc. | 284,400 | 517,923 | |||
MS&AD Insurance Group Holdings, Inc. | 6,400 | 208,782 | |||
Nichias Corp. | 9,000 | 116,101 | |||
Nippon Electric Glass Co. Ltd. | 8,600 | 335,219 | |||
Nippon Telegraph & Telephone Corp. | 19,700 | 1,033,069 | |||
Nishimatsu Construction Co. Ltd. | 10,200 | 296,752 | |||
NTT DOCOMO, Inc. | 23,600 | 612,129 | |||
ORIX Corp. | 25,300 | 436,473 | |||
Sega Sammy Holdings, Inc. | 25,100 | 303,986 | |||
Shizuoka Bank Ltd. (The) | 16,000 | 158,477 | |||
Sompo Holdings, Inc. | 3,400 | 137,278 | |||
Sony Corp. | 1,700 | 79,134 | |||
Subaru Corp. | 10,200 | 334,467 | |||
Sumitomo Corp. | 6,500 | 101,870 |
12
Shares | Value | ||||
Sumitomo Mitsui Financial Group, Inc. | 11,600 | $ | 471,519 | ||
Suzuki Motor Corp. | 10,900 | 587,953 | |||
Taisei Corp. | 13,300 | 705,767 | |||
Tokyo Electron Ltd. | 1,200 | 223,577 | |||
Tosoh Corp. | 22,500 | 499,198 | |||
Toyota Boshoku Corp. | 16,200 | 336,599 | |||
Toyota Motor Corp. | 23,800 | 1,499,641 | |||
Trend Micro, Inc. | 2,900 | 164,484 | |||
TS Tech Co. Ltd. | 9,300 | 382,453 | |||
17,898,112 | |||||
Netherlands — 1.8% | |||||
ABN AMRO Group NV CVA | 3,278 | 97,020 | |||
ING Groep NV | 74,338 | 1,342,133 | |||
1,439,153 | |||||
Portugal — 1.1% | |||||
EDP - Energias de Portugal SA | 139,466 | 488,975 | |||
Galp Energia SGPS SA | 20,301 | 383,393 | |||
872,368 | |||||
Russia — 0.1% | |||||
Alrosa PJSC | 49,300 | 64,747 | |||
Singapore — 1.9% | |||||
Oversea-Chinese Banking Corp. Ltd. | 76,700 | 711,878 | |||
United Overseas Bank Ltd. | 34,400 | 671,467 | |||
Yangzijiang Shipbuilding Holdings Ltd. | 151,200 | 176,072 | |||
1,559,417 | |||||
South Korea — 1.9% | |||||
GS Holdings Corp. | 3,289 | 184,674 | |||
LG Electronics, Inc. | 3,777 | 313,885 | |||
Lotte Chemical Corp. | 292 | 96,688 | |||
Samsung Electronics Co. Ltd. | 146 | 343,029 | |||
SK Hynix, Inc. | 3,244 | 231,177 | |||
SK Innovation Co. Ltd. | 1,892 | 361,876 | |||
1,531,329 | |||||
Spain — 4.4% | |||||
Banco Bilbao Vizcaya Argentaria SA | 57,826 | 494,891 | |||
Banco Santander SA | 106,963 | 719,300 | |||
Cia de Distribucion Integral Logista Holdings SA | 1,840 | 44,185 | |||
Distribuidora Internacional de Alimentacion SA | 33,424 | 157,426 | |||
Mapfre SA | 150,882 | 507,913 | |||
Repsol SA | 36,154 | 663,915 | |||
Telefonica SA | 90,185 | 924,413 | |||
3,512,043 | |||||
Sweden — 2.8% | |||||
Electrolux AB, Series B | 16,599 | 552,066 | |||
Fabege AB | 10,472 | 217,854 | |||
Industrivarden AB, C Shares | 16,117 | 393,290 | |||
Kinnevik AB, B Shares | 9,988 | 320,450 |
13
Shares | Value | ||||
L E Lundbergforetagen AB, B Shares | 2,401 | $ | 176,251 | ||
Loomis AB, B Shares | 1,955 | 80,647 | |||
NCC AB, B Shares | 16,756 | 348,366 | |||
Peab AB | 12,087 | 108,669 | |||
Tele2 AB, B Shares | 4,212 | 53,924 | |||
2,251,517 | |||||
Switzerland — 7.9% | |||||
Julius Baer Group Ltd. | 5,072 | 298,272 | |||
Nestle SA | 7,941 | 679,885 | |||
Novartis AG | 17,235 | 1,474,676 | |||
Roche Holding AG | 2,584 | 652,051 | |||
Swiss Life Holding AG | 625 | 209,712 | |||
Swiss Re AG | 9,992 | 937,321 | |||
Swisscom AG | 1,444 | 762,085 | |||
UBS Group AG | 12,619 | 218,118 | |||
Zurich Insurance Group AG | 3,507 | 1,059,224 | |||
6,291,344 | |||||
Taiwan — 0.8% | |||||
Catcher Technology Co. Ltd. | 22,000 | 239,248 | |||
Lite-On Technology Corp. | 50,000 | 61,804 | |||
Pegatron Corp. | 50,000 | 114,937 | |||
Taiwan Semiconductor Manufacturing Co. Ltd. ADR | 5,700 | 225,720 | |||
641,709 | |||||
United Kingdom — 17.3% | |||||
3i Group plc | 56,423 | 687,979 | |||
AA plc | 23,799 | 48,625 | |||
Anglo American plc | 15,543 | 285,961 | |||
AstraZeneca plc | 5,028 | 325,192 | |||
BHP Billiton plc | 43,481 | 790,650 | |||
BP plc | 121,272 | 802,800 | |||
Capita plc | 10,320 | 65,188 | |||
Centamin plc | 29,946 | 55,749 | |||
Centrica plc | 317,068 | 617,926 | |||
Evraz plc | 38,514 | 149,265 | |||
Firstgroup plc(1) | 36,674 | 53,994 | |||
G4S plc | 26,776 | 92,374 | |||
GlaxoSmithKline plc | 87,495 | 1,513,901 | |||
HSBC Holdings plc (London) | 225,104 | 2,237,927 | |||
Imperial Brands plc | 8,961 | 371,535 | |||
Investec plc | 11,458 | 80,162 | |||
Legal & General Group plc | 36,347 | 131,391 | |||
Lloyds Banking Group plc | 270,023 | 240,530 | |||
Marks & Spencer Group plc | 40,370 | 171,040 | |||
Rio Tinto plc | 28,965 | 1,372,915 | |||
Royal Dutch Shell plc, B Shares | 87,888 | 2,849,785 | |||
Royal Mail plc | 59,002 | 351,741 | |||
Standard Life Aberdeen plc | 79,214 | 461,305 |
14
Shares | Value | ||||
Thomas Cook Group plc | 34,425 | $ | 55,215 | ||
13,813,150 | |||||
TOTAL COMMON STOCKS (Cost $73,895,284) | 77,556,854 | ||||
EXCHANGE-TRADED FUNDS — 2.1% | |||||
iShares MSCI EAFE ETF | 3,500 | 245,385 | |||
iShares MSCI EAFE Value ETF | 24,100 | 1,335,140 | |||
iShares MSCI Japan ETF | 1,600 | 95,856 | |||
TOTAL EXCHANGE-TRADED FUNDS (Cost $1,646,703) | 1,676,381 | ||||
TEMPORARY CASH INVESTMENTS — 0.6% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 3.75%, 4/15/18 - 2/15/47, valued at $278,903), in a joint trading account at 0.88%, dated 11/30/17, due 12/1/17 (Delivery value $273,996) | 273,989 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.125%, 8/15/44, valued at $235,314), at 0.34%, dated 11/30/17, due 12/1/17 (Delivery value $228,002) | 228,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 722 | 722 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $502,711) | 502,711 | ||||
TOTAL INVESTMENT SECURITIES — 99.6% (Cost $76,044,698) | 79,735,946 | ||||
OTHER ASSETS AND LIABILITIES — 0.4% | 287,604 | ||||
TOTAL NET ASSETS — 100.0% | $ | 80,023,550 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Financials | 32.7 | % |
Consumer Discretionary | 11.5 | % |
Energy | 8.9 | % |
Industrials | 8.3 | % |
Materials | 7.6 | % |
Telecommunication Services | 7.0 | % |
Health Care | 6.2 | % |
Utilities | 4.3 | % |
Information Technology | 3.8 | % |
Consumer Staples | 3.6 | % |
Real Estate | 3.0 | % |
Exchange-Traded Funds | 2.1 | % |
Cash and Equivalents* | 1.0 | % |
*Includes temporary cash investments and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
CVA | - | Certificaten Van Aandelen |
(1) | Non-income producing. |
See Notes to Financial Statements.
15
Statement of Assets and Liabilities |
NOVEMBER 30, 2017 | |||
Assets | |||
Investment securities, at value (cost of $76,044,698) | $ | 79,735,946 | |
Foreign currency holdings, at value (cost of $27,872) | 27,946 | ||
Receivable for capital shares sold | 8,040 | ||
Dividends and interest receivable | 383,555 | ||
80,155,487 | |||
Liabilities | |||
Payable for capital shares redeemed | 55,642 | ||
Accrued management fees | 69,984 | ||
Distribution and service fees payable | 5,715 | ||
Accrued other expenses | 596 | ||
131,937 | |||
Net Assets | $ | 80,023,550 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 74,080,161 | |
Undistributed net investment income | 2,306,515 | ||
Accumulated net realized loss | (58,621 | ) | |
Net unrealized appreciation | 3,695,495 | ||
$ | 80,023,550 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $14,398,465 | 1,606,415 | $8.96 | |||
I Class, $0.01 Par Value | $4,172,769 | 465,203 | $8.97 | |||
A Class, $0.01 Par Value | $9,857,260 | 1,096,859 | $8.99* | |||
C Class, $0.01 Par Value | $4,224,568 | 476,210 | $8.87 | |||
R Class, $0.01 Par Value | $537,167 | 60,162 | $8.93 | |||
R6 Class, $0.01 Par Value | $46,833,321 | 5,215,207 | $8.98 |
*Maximum offering price $9.54 (net asset value divided by 0.9425).
See Notes to Financial Statements.
16
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2017 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $288,880) | $ | 3,214,640 | |
Interest | 3,281 | ||
3,217,921 | |||
Expenses: | |||
Management fees | 914,178 | ||
Distribution and service fees: | |||
A Class | 25,844 | ||
C Class | 42,280 | ||
R Class | 2,529 | ||
Directors' fees and expenses | 2,558 | ||
Other expenses | 12,552 | ||
999,941 | |||
Net investment income (loss) | 2,217,980 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions (net of foreign tax expenses paid (refunded) of $2,641) | 8,521,241 | ||
Foreign currency translation transactions | (85,956 | ) | |
8,435,285 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 7,566,440 | ||
Translation of assets and liabilities in foreign currencies | 23,759 | ||
7,590,199 | |||
Net realized and unrealized gain (loss) | 16,025,484 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 18,243,464 |
See Notes to Financial Statements.
17
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2017 AND NOVEMBER 30, 2016 | ||||||
Increase (Decrease) in Net Assets | November 30, 2017 | November 30, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 2,217,980 | $ | 1,961,451 | ||
Net realized gain (loss) | 8,435,285 | (4,134,276 | ) | |||
Change in net unrealized appreciation (depreciation) | 7,590,199 | (587,266 | ) | |||
Net increase (decrease) in net assets resulting from operations | 18,243,464 | (2,760,091 | ) | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (303,253 | ) | (460,998 | ) | ||
I Class | (197,608 | ) | (145,691 | ) | ||
A Class | (193,052 | ) | (329,220 | ) | ||
C Class | (48,855 | ) | (57,981 | ) | ||
R Class | (6,975 | ) | (7,725 | ) | ||
R6 Class | (1,271,342 | ) | (823,525 | ) | ||
Decrease in net assets from distributions | (2,021,085 | ) | (1,825,140 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 4,056,076 | (14,577,219 | ) | |||
�� | ||||||
Redemption Fees | ||||||
Increase in net assets from redemption fees | 6,221 | 12,179 | ||||
Net increase (decrease) in net assets | 20,284,676 | (19,150,271 | ) | |||
Net Assets | ||||||
Beginning of period | 59,738,874 | 78,889,145 | ||||
End of period | $ | 80,023,550 | $ | 59,738,874 | ||
Undistributed net investment income | $ | 2,306,515 | $ | 1,985,809 |
See Notes to Financial Statements.
18
Notes to Financial Statements |
NOVEMBER 30, 2017
1. Organization
American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. International Value Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth.
The fund offers the Investor Class, I Class (formerly Institutional Class), A Class, C Class, R Class and R6 Class. The A Class may incur an initial sales charge. The A Class and C Class may be subject to a contingent deferred sales charge.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of
19
Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. Certain countries impose taxes on realized gains on the sale of securities registered in their country. The fund records the foreign tax expense, if any, on an accrual basis. The foreign tax expense on realized gains and unrealized appreciation 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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund 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.
20
Redemption Fees — Prior to October 9, 2017, the fund may have imposed a 2.00% redemption fee on shares held less than 60 days. The fee was not applicable to all classes. The redemption fee was retained by the fund to help cover transaction costs that long-term investors may bear when the fund sells securities to meet investor redemptions.
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc. (ACIS), and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. Various funds issued by American Century Strategic Asset Allocations, Inc. own, in aggregate, 10% of the shares of the fund.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that use very similar investment teams and strategies (strategy assets). The strategy assets of the fund also include the assets of NT International Value Fund, one fund in a series issued by the corporation.
The management fee schedule range and the effective annual management fee for each class for the period ended November 30, 2017 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |
Investor Class | 1.100% to 1.300% | 1.28% |
I Class | 0.900% to 1.100% | 1.08% |
A Class | 1.100% to 1.300% | 1.28% |
C Class | 1.100% to 1.300% | 1.28% |
R Class | 1.100% to 1.300% | 1.28% |
R6 Class | 0.750% to 0.950% | 0.93% |
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, 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 ACIS an annual distribution and service fee of 0.25%. The plans provide that the C Class will pay ACIS an annual distribution and service fee of 1.00%, of which 0.25% is paid for individual shareholder services and 0.75% is paid for distribution services. 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. Fees incurred under the plans during the period ended November 30, 2017 are detailed in the Statement of Operations.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
21
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. There were no interfund transactions during the period.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended November 30, 2017 were $88,613,522 and $84,080,320, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2017 | Year ended November 30, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 45,000,000 | 40,000,000 | ||||||||
Sold | 640,164 | $ | 5,234,228 | 401,530 | $ | 2,846,272 | ||||
Issued in reinvestment of distributions | 37,544 | 294,211 | 60,843 | 452,063 | ||||||
Redeemed | (938,412 | ) | (7,864,014 | ) | (1,269,793 | ) | (9,218,798 | ) | ||
(260,704 | ) | (2,335,575 | ) | (807,420 | ) | (5,920,463 | ) | |||
I Class/Shares Authorized | 50,000,000 | 40,000,000 | ||||||||
Sold | 530,867 | 4,319,261 | 781,879 | 5,594,122 | ||||||
Issued in reinvestment of distributions | 25,255 | 197,608 | 19,608 | 145,691 | ||||||
Redeemed | (1,076,651 | ) | (8,996,703 | ) | (810,595 | ) | (5,951,079 | ) | ||
(520,529 | ) | (4,479,834 | ) | (9,108 | ) | (211,266 | ) | |||
A Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 142,161 | 1,174,506 | 213,147 | 1,608,740 | ||||||
Issued in reinvestment of distributions | 24,292 | 191,924 | 43,886 | 327,831 | ||||||
Redeemed | (557,570 | ) | (4,576,658 | ) | (659,017 | ) | (4,756,597 | ) | ||
(391,117 | ) | (3,210,228 | ) | (401,984 | ) | (2,820,026 | ) | |||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 69,598 | 554,958 | 104,947 | 761,997 | ||||||
Issued in reinvestment of distributions | 6,082 | 48,354 | 7,683 | 57,085 | ||||||
Redeemed | (114,545 | ) | (951,482 | ) | (47,991 | ) | (345,801 | ) | ||
(38,865 | ) | (348,170 | ) | 64,639 | 473,281 | |||||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 8,676 | 70,168 | 49,496 | 360,384 | ||||||
Issued in reinvestment of distributions | 878 | 6,952 | 1,035 | 7,694 | ||||||
Redeemed | (10,217 | ) | (83,536 | ) | (39,342 | ) | (286,029 | ) | ||
(663 | ) | (6,416 | ) | 11,189 | 82,049 | |||||
R6 Class/Shares Authorized | 70,000,000 | 40,000,000 | ||||||||
Sold | 5,406,595 | 43,016,719 | 1,603,014 | 11,465,579 | ||||||
Issued in reinvestment of distributions | 163,023 | 1,271,342 | 110,838 | 823,525 | ||||||
Redeemed | (3,506,509 | ) | (29,851,762 | ) | (2,565,732 | ) | (18,469,898 | ) | ||
2,063,109 | 14,436,299 | (851,880 | ) | (6,180,794 | ) | |||||
Net increase (decrease) | 851,231 | $ | 4,056,076 | (1,994,564 | ) | $ | (14,577,219 | ) |
22
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. 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.
• Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
• Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
• Level 3 valuation inputs consist of unobservable data (including a 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 necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 314,095 | $ | 77,242,759 | — | |||
Exchange-Traded Funds | 1,676,381 | — | — | |||||
Temporary Cash Investments | 722 | 501,989 | — | |||||
$ | 1,991,198 | $ | 77,744,748 | — |
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.
The fund invests in common stocks of small companies. Because of this, the fund may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
8. Federal Tax Information
On December 19, 2017, the fund declared and paid the following per-share distributions from net investment income to shareholders of record on December 18, 2017:
Investor Class | I Class | A Class | C Class | R Class | R6 Class |
$0.1623 | $0.1763 | $0.1447 | $0.0920 | $0.1271 | $0.1869 |
The tax character of distributions paid during the years ended November 30, 2017 and November 30, 2016 were as follows:
2017 | 2016 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 2,021,085 | $ | 1,825,140 | ||
Long-term capital gains | — | — |
23
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.
The reclassifications, which are primarily due to the expiration of capital loss carryovers, were made to capital $(2,020,973), undistributed net investment income $123,811, and accumulated net realized loss $1,897,162.
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 76,429,705 | |
Gross tax appreciation of investments | $ | 7,009,474 | |
Gross tax depreciation of investments | (3,703,233 | ) | |
Net tax appreciation (depreciation) of investments | 3,306,241 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | 4,247 | ||
Net tax appreciation (depreciation) | $ | 3,310,488 | |
Undistributed ordinary income | $ | 2,632,901 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the realization to ordinary income for tax purposes of unrealized gains on investments in passive foreign investment companies.
24
Financial Highlights |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||
2017 | $7.40 | 0.21 | 1.51 | 1.72 | (0.16) | $8.96 | 23.59% | 1.30% | 2.47% | 101% | $14,398 | ||
2016 | $7.83 | 0.20 | (0.45) | (0.25) | (0.18) | $7.40 | (3.15)% | 1.31% | 2.86% | 76% | $13,810 | ||
2015 | $8.91 | 0.22 | (0.97) | (0.75) | (0.33) | $7.83 | (8.56)% | 1.31% | 2.70% | 77% | $20,945 | ||
2014 | $8.97 | 0.32 | (0.19) | 0.13 | (0.19) | $8.91 | 1.38% | 1.30% | 3.55% | 89% | $19,068 | ||
2013 | $7.40 | 0.21 | 1.60 | 1.81 | (0.24) | $8.97 | 24.96% | 1.31% | 2.63% | 83% | $17,920 | ||
I Class(3) | |||||||||||||
2017 | $7.41 | 0.23 | 1.51 | 1.74 | (0.18) | $8.97 | 23.86% | 1.10% | 2.67% | 101% | $4,173 | ||
2016 | $7.84 | 0.22 | (0.45) | (0.23) | (0.20) | $7.41 | (2.99)% | 1.11% | 3.06% | 76% | $7,300 | ||
2015 | $8.92 | 0.28 | (1.01) | (0.73) | (0.35) | $7.84 | (8.37)% | 1.11% | 2.90% | 77% | $7,798 | ||
2014 | $8.96 | 0.38 | (0.23) | 0.15 | (0.19) | $8.92 | 1.67% | 1.10% | 3.75% | 89% | $513 | ||
2013 | $7.39 | 0.23 | 1.59 | 1.82 | (0.25) | $8.96 | 25.24% | 1.11% | 2.83% | 83% | $769 | ||
A Class | |||||||||||||
2017 | $7.41 | 0.17 | 1.55 | 1.72 | (0.14) | $8.99 | 23.45% | 1.55% | 2.22% | 101% | $9,857 | ||
2016 | $7.85 | 0.18 | (0.45) | (0.27) | (0.17) | $7.41 | (3.46)% | 1.56% | 2.61% | 76% | $11,029 | ||
2015 | $8.93 | 0.20 | (0.97) | (0.77) | (0.31) | $7.85 | (8.77)% | 1.56% | 2.45% | 77% | $14,838 | ||
2014 | $9.01 | 0.30 | (0.20) | 0.10 | (0.18) | $8.93 | 1.08% | 1.55% | 3.30% | 89% | $15,423 | ||
2013 | $7.43 | 0.20 | 1.60 | 1.80 | (0.22) | $9.01 | 24.67% | 1.56% | 2.38% | 83% | $15,554 |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
C Class | |||||||||||||
2017 | $7.33 | 0.12 | 1.51 | 1.63 | (0.09) | $8.87 | 22.41% | 2.30% | 1.47% | 101% | $4,225 | ||
2016 | $7.78 | 0.13 | (0.46) | (0.33) | (0.12) | $7.33 | (4.21)% | 2.31% | 1.86% | 76% | $3,774 | ||
2015 | $8.85 | 0.13 | (0.95) | (0.82) | (0.25) | $7.78 | (9.39)% | 2.31% | 1.70% | 77% | $3,502 | ||
2014 | $8.97 | 0.23 | (0.19) | 0.04 | (0.16) | $8.85 | 0.41% | 2.30% | 2.55% | 89% | $2,301 | ||
2013 | $7.40 | 0.14 | 1.59 | 1.73 | (0.16) | $8.97 | 23.68% | 2.31% | 1.63% | 83% | $2,009 | ||
R Class | |||||||||||||
2017 | $7.36 | 0.16 | 1.52 | 1.68 | (0.11) | $8.93 | 23.09% | 1.80% | 1.97% | 101% | $537 | ||
2016 | $7.80 | 0.18 | (0.47) | (0.29) | (0.15) | $7.36 | (3.68)% | 1.81% | 2.36% | 76% | $448 | ||
2015 | $8.87 | 0.18 | (0.96) | (0.78) | (0.29) | $7.80 | (8.95)% | 1.81% | 2.20% | 77% | $387 | ||
2014 | $8.97 | 0.28 | (0.21) | 0.07 | (0.17) | $8.87 | 0.78% | 1.80% | 3.05% | 89% | $479 | ||
2013 | $7.40 | 0.18 | 1.59 | 1.77 | (0.20) | $8.97 | 24.32% | 1.81% | 2.13% | 83% | $297 | ||
R6 Class | |||||||||||||
2017 | $7.42 | 0.23 | 1.52 | 1.75 | (0.19) | $8.98 | 24.06% | 0.95% | 2.82% | 101% | $46,833 | ||
2016 | $7.85 | 0.23 | (0.45) | (0.22) | (0.21) | $7.42 | (2.87)% | 0.96% | 3.21% | 76% | $23,378 | ||
2015 | $8.93 | 0.23 | (0.95) | (0.72) | (0.36) | $7.85 | (8.22)% | 0.96% | 3.05% | 77% | $31,418 | ||
2014 | $8.96 | 0.33 | (0.17) | 0.16 | (0.19) | $8.93 | 1.83% | 0.95% | 3.90% | 89% | $562 | ||
2013(4) | $8.21 | 0.06 | 0.69 | 0.75 | — | $8.96 | 9.14% | 0.96%(5) | 2.02%(5) | 83%(6) | $27 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day and do not reflect applicable sales charges, if any. Total returns for periods less than one year are not annualized. |
(3) | Prior to April 10, 2017, the I Class was referred to as the Institutional Class. |
(4) | July 26, 2013 (commencement of sale) through November 30, 2013. |
(5) | Annualized. |
(6) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2013. |
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century World Mutual Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of International Value Fund (the “Fund”), one of the funds constituting American Century World Mutual Funds, Inc., as of November 30, 2017, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2017, by correspondence with the custodian. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of International Value Fund of American Century World Mutual Funds, Inc. as of November 30, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2018
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Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Mr. Thomas, 15) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 69 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired; Executive Vice President, ACC (2007 to 2013); President, ACS (2007 to 2013); Chief Operating Officer, ACC (2007 to 2012) | 69 | None |
Andrea C. Hall (1945) | Director | Since 1997 | Retired | 69 | None |
Jan M. Lewis (1957) | Director | Since 2011 | Retired; President and Chief Executive Officer, Catholic Charities of Northeast Kansas (human services organization) (2006 to 2013) | 69 | None |
James A. Olson (1942) | Director and Chairman of the Board | Since 2007 (Chairman since 2014) | Member, Plaza Belmont LLC (private equity fund manager) (1999 to present) | 69 | Saia, Inc. (2002 to 2012) and EPR Properties (2003 to 2013) |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
M. Jeannine Strandjord (1945) | Director | Since 1994 | Retired | 69 | Euronet Worldwide Inc. and MGP Ingredients, Inc. |
John R. Whitten (1946) | Director | Since 2008 | Retired | 69 | Rudolph Technologies, Inc. |
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 69 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director and President | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 114 | BioMed Valley Discoveries, Inc. |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 15 investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years |
Jonathan S. Thomas (1963) | Director and President since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries |
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present); Vice President, Client Interactions and Marketing, ACIS (2013 to 2014); Director, Client Interactions and Marketing, ACIS (2007 to 2013). Also serves as Vice President, ACIS |
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS |
C. Jean Wade (1964) | Vice President,Treasurer and Chief Financial Officer since 2012 | Vice President, ACS (2000 to present) |
Robert J. Leach (1966) | Vice President since 2006 and Assistant Treasurer since 2012 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present); Associate General Counsel, ACC (2001 to present). Also serves as Vice President, ACIM and ACS |
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Approval of Management Agreement |
At a meeting held on June 29, 2017, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
• | the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund; |
• | the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis; |
• | the investment performance of the Fund, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; |
• | the cost of owning the Fund compared to the cost of owning similar funds; |
• | the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers; |
• | financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor; |
• | strategic plans of the Advisor |
• | possible economies of scale associated with the Advisor’s management of the Fund and other accounts under its management; |
• | data comparing services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices by the Fund and the Advisor regarding financial intermediaries, the nature of services provided by intermediaries, and the terms of share classes utilized; and |
• | any collateral benefits derived by the Advisor from the management of the Fund. |
The Directors held three in-person meetings and one telephonic meeting to review and discuss the information provided. The independent Directors also reviewed responses to supplemental information requests and held active discussions with the Advisor regarding the renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In
32
connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services - Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including without limitation the following:
• | portfolio research and security selection |
• | securities trading |
• | Fund administration |
• | custody of Fund assets |
• | daily valuation of the Fund’s portfolio |
• | shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications |
• | legal services (except the independent Directors’ counsel) |
• | regulatory and portfolio compliance |
• | financial reporting |
• | marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans) |
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment. The Board noted specifically the resources the Advisor has committed during the year to compliance with the Department of Labor fiduciary rule and share class modernization.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review detailed performance information provided by the Advisor during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board receives a report from the Advisor regarding the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the three-, five-, and ten-year periods and below its benchmark for the one-year period reviewed by the Board. The Board discussed the Fund's performance with the Advisor and was satisfied with the efforts being undertaken by the Advisor. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The
33
Board, directly and through various committees of the Board, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the Advisor. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, and the fees and expenses of the Fund’s independent Directors (including their independent legal counsel) and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was below the median of the total expense ratios of the Fund’s peer expense universe and was within the range of its peer expense group. The Board concluded that the management fee paid by the
34
Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Directors also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Board reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor's resources and reasonable profits. The Board found the payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor receives proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
35
Proxy Voting Results |
A special meeting of shareholders was held on October 18, 2017, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect four directors to the Board of Directors of American Century World Mutual Funds, Inc.:
Affirmative | Withhold | ||||||
Thomas W. Bunn | $ | 5,482,015,298 | $ | 72,735,781 | |||
Barry Fink | $ | 5,485,170,607 | $ | 69,580,472 | |||
Jan M. Lewis | $ | 5,489,025,901 | $ | 65,725,178 | |||
Stephen E. Yates | $ | 5,481,872,069 | $ | 72,879,010 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Andrea C. Hall, James A. Olson, M. Jeannine Strandjord, and John R. Whitten.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of 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 fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s 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 fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended November 30, 2017.
For the fiscal year ended November 30, 2017, the fund intends to pass through to shareholders foreign source income of $3,499,526 and foreign taxes paid of $288,880, or up to the maximum amount allowable, as a foreign tax credit. Foreign source income and foreign tax expense per outstanding share on November 30, 2017 are $0.3923 and $0.0324, respectively.
38
Notes |
39
Notes |
40
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century World Mutual Funds, Inc. | ||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||
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. | ||
©2018 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91029 1801 |
Annual Report | |
November 30, 2017 | |
NT Emerging Markets Fund |
Table of Contents |
Performance | 2 | |
Portfolio Commentary | ||
Fund Characteristics | ||
Shareholder Fee Example | ||
Schedule of Investments | ||
Statement of Assets and Liabilities | ||
Statement of Operations | ||
Statement of Changes in Net Assets | ||
Notes to Financial Statements | ||
Financial Highlights | ||
Report of Independent Registered Public Accounting Firm | ||
Management | ||
Approval of Management Agreement | ||
Proxy Voting Results | ||
Additional Information |
Any opinions expressed in this report reflect those of the author 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.
Performance |
Total Returns as of November 30, 2017 | |||||
Average Annual Returns | |||||
Ticker Symbol | 1 year | 5 years | 10 years | Inception Date | |
G Class | ACLKX | 42.75% | 8.14% | 1.13% | 5/12/06 |
MSCI Emerging Markets Index | — | 32.82% | 4.61% | 1.36% | — |
Fund returns would have been lower if a portion of the fees had not been waived. Prior to July 31, 2017, the G Class was referred to as the Institutional Class. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
Growth of $10,000 Over 10 Years |
$10,000 investment made November 30, 2007 |
Value on November 30, 2017 | |
G Class — $11,185 | |
MSCI Emerging Markets Index — $11,447 | |
Ending value of G Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | |
G Class | 1.29% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
2
Portfolio Commentary |
Portfolio Managers: Patricia Ribeiro and Sherwin Soo
In June 2017, portfolio manager Anthony Han left the fund's management team.
Performance Summary
NT Emerging Markets gained 42.75%* for the 12 months ended November 30, 2017. The portfolio’s benchmark, the MSCI Emerging Markets Index, gained 32.82% for the same period.
The fund outperformed its benchmark during the period, primarily due to positive stock selection in the information technology and consumer discretionary sectors. Conversely, investments in the energy and real estate sectors limited relative gains. Regionally, stock selection in China lifted relative performance, while negative stock selection in Brazil hindered performance.
Information Technology Holdings Contributed
Leading sector contribution came primarily from the information technology sector, where standout performers included optical components manufacturer Sunny Optical Technology Group, electronic components maker AAC Technologies Holdings, and IT services company Vakrangee.
Sunny Optical Technology Group benefited from better-than-expected first-half 2017 earnings-per-share growth driven by shipments of camera modules, handset lenses, and automobile lenses. Management raised guidance for growth, particularly with the solid outlook from China smartphone manufacturers. AAC Technologies Holdings also posted solid gains. The company’s management team maintained its full-year guidance and positive outlook for the second half of 2017. In addition, new growth drivers (handset lens) led analysts to upgrade the stock. We believe AAC Technologies’ current business continues to have upside. The company is a leading beneficiary of an acoustics upgrade trend. Strong contributors also included Vakrangee, which started as an e-governance player doing systems integration and providing end-to-end services for various e-governance projects. The company then leveraged this into a role as a business correspondence player providing financial services, e-commerce, and logistics. It aims to expand its network of small outlets (Kendras) in rural and urban areas with the goal of providing last-mile retail touch points for products and services to the unserved and underserved regions of India. Vakrangee’s revenue growth continues to accelerate, supported by the central government’s emphasis on financial inclusion and the addition of new e-commerce, insurance, and other sellers on the network on a regular basis.
The fund’s outperformance in the consumer discretionary sector was driven primarily by K-12 after-school tutoring services provider TAL Education Group and hotel group China Lodging Group. TAL Education Group, a China-based company focusing on premium high-achieving students, continued to benefit from a rapidly growing market for K-12 education in China. Other positives for the stock include its increased course offerings, expansion into more cities, and new services. China Lodging reported stronger-than-expected quarterly sales and margins growth. Visibility into future sales and earnings has led to upward revisions of consensus estimates. The market continues to improve, helping overall room rates.
* Fund returns would have been lower if a portion of the fees had not been waived.
3
Investments in the Energy Sector Detracted
Areas of relative weakness included the energy sector. Tullow Oil, a multinational oil and gas company, continued to deleverage its balance sheet. However, we sold the stock on our belief that it has limited upside due to risks associated with its Ghana assets and its 2018 exploration program.
On an individual stock basis, Brazil-based financial services company Banco do Brasil detracted. The bank’s share price declined in response to government corruption allegations in Brazil. Despite political concerns, our fundamental investment thesis for Banco do Brasil remains intact. While it may take longer, profitability continues to turn around and the bank is expected to deliver earnings growth.
Other notable detractors included China Railway Construction, which traded lower after reporting disappointing first-half 2017 financial results. Management reported a weaker-than-expected operating profit and higher-than-expected operating costs. The stock was also pressured by a slowdown in fixed-asset railway expenditures.
The weak performance of CJ Logistics also weighed on relative performance. Despite reporting financial results in-line with expectations and expanding its domestic parcel market share, the logistics company’s average selling price and margin continued to deteriorate due to intense competition.
Other notable detractors included electronic circuit manufacturer KCE Electronics. The company’s stock was pressured by lower-than-expected earnings and concerns about the rising price of copper, which is a key material in KCE’s products. We consequently eliminated the fund's position in the stock.
Outlook
We continue to believe emerging markets stocks will perform well in 2018. The global macro drivers that supported emerging markets assets in 2017—a synchronized global growth recovery and generally muted but bottoming inflation pressures—remain favorable. The domestic foundation for growth in emerging markets is strong.
The fund continues to invest in companies where fundamentals are strong and improving but share price performance does not fully reflect these factors. Our process is based on individual security selection, but broad themes have emerged.
Consumer discretionary is the largest relative sector position as of period end. Information technology is also an important position. While large in absolute size, information technology is our second-largest relative overweight following consumer discretionary. Within consumer discretionary, we are focused on companies benefiting from increasing discretionary spending, including stronger demand for luxury and quality-of-life goods and services. In information technology, we continue to identify opportunities in consumer-facing technology as well as companies we believe are positioned to benefit from the smartphone component upgrade.
We remain underweight the financials sector. This is our largest relative underweight as of period end.
Geographically, China remains our largest absolute and relative position, while India is our largest relative underweight.
4
Fund Characteristics |
NOVEMBER 30, 2017 | |
Top Ten Holdings | % of net assets |
Tencent Holdings Ltd. | 6.4% |
Samsung Electronics Co. Ltd. | 5.8% |
Alibaba Group Holding Ltd. ADR | 4.1% |
Taiwan Semiconductor Manufacturing Co. Ltd. | 3.9% |
Naspers Ltd., N Shares | 2.3% |
SK Hynix, Inc. | 1.8% |
Ping An Insurance Group Co., H Shares | 1.8% |
AAC Technologies Holdings, Inc. | 1.7% |
Sunny Optical Technology Group Co. Ltd. | 1.7% |
Geely Automobile Holdings Ltd. | 1.7% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 100.3% |
Temporary Cash Investments | 0.5% |
Other Assets and Liabilities | (0.8)% |
Investments by Country | % of net assets |
China | 33.2% |
South Korea | 13.4% |
Taiwan | 9.9% |
Brazil | 8.6% |
India | 7.0% |
Thailand | 4.8% |
Russia | 4.8% |
South Africa | 4.5% |
Indonesia | 3.4% |
Other Countries | 10.7% |
Cash and Equivalents* | (0.3)% |
*Includes temporary cash investments and other assets and liabilities.
5
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2017 to November 30, 2017.
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.
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.
Beginning Account Value 6/1/17 | Ending Account Value 11/30/17 | Expenses Paid During Period(1) 6/1/17 - 11/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
G Class | $1,000 | $1,205.60 | $1.88 | 0.34% |
Hypothetical | ||||
G Class | $1,000 | $1,023.36 | $1.72 | 0.34% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
6
Schedule of Investments |
NOVEMBER 30, 2017
Shares | Value | ||||
COMMON STOCKS — 100.3% | |||||
Argentina — 0.5% | |||||
Banco Macro SA ADR | 25,460 | $ | 2,585,208 | ||
Brazil — 8.6% | |||||
Banco do Brasil SA | 488,100 | 4,462,825 | |||
Itau Unibanco Holding SA ADR | 455,386 | 5,715,094 | |||
Klabin SA | 425,500 | 2,320,236 | |||
Kroton Educacional SA | 937,200 | 5,187,818 | |||
Localiza Rent a Car SA | 676,800 | 4,141,289 | |||
Lojas Renner SA | 353,300 | 3,662,029 | |||
Magazine Luiza SA | 171,900 | 2,983,812 | |||
Multiplan Empreendimentos Imobiliarios SA | 238,418 | 5,064,867 | |||
Petroleo Brasileiro SA ADR(1) | 281,435 | 2,735,548 | |||
Vale SA ADR | 498,793 | 5,337,085 | |||
41,610,603 | |||||
Chile — 0.6% | |||||
Sociedad Quimica y Minera de Chile SA ADR | 52,686 | 2,861,904 | |||
China — 33.2% | |||||
AAC Technologies Holdings, Inc. | 403,500 | 8,140,161 | |||
Alibaba Group Holding Ltd. ADR(1) | 111,102 | 19,673,942 | |||
Anhui Conch Cement Co. Ltd., H Shares | 1,199,000 | 5,769,044 | |||
Beijing Enterprises Water Group Ltd. | 5,412,000 | 4,238,327 | |||
Brilliance China Automotive Holdings Ltd. | 2,600,000 | 6,878,544 | |||
China Gas Holdings Ltd. | 1,934,000 | 5,970,421 | |||
China Lodging Group Ltd. ADR | 59,211 | 6,318,406 | |||
China Railway Construction Corp. Ltd., H Shares | 2,469,500 | 2,934,651 | |||
China Resources Beer Holdings Co. Ltd. | 544,000 | 1,502,666 | |||
CNOOC Ltd. | 1,252,000 | 1,713,154 | |||
Ctrip.com International Ltd. ADR(1) | 82,692 | 3,810,447 | |||
Geely Automobile Holdings Ltd. | 2,279,000 | 8,020,355 | |||
Haier Electronics Group Co. Ltd. | 1,000,000 | 2,682,269 | |||
Industrial & Commercial Bank of China Ltd., H Shares | 9,407,095 | 7,377,067 | |||
Maanshan Iron & Steel Co. Ltd., H Shares(1) | 4,504,000 | 2,221,233 | |||
New Oriental Education & Technology Group, Inc. ADR | 67,512 | 5,729,068 | |||
Nine Dragons Paper Holdings Ltd. | 2,344,000 | 3,899,071 | |||
Ping An Insurance Group Co., H Shares | 861,500 | 8,518,291 | |||
Shenzhou International Group Holdings Ltd. | 449,000 | 4,072,839 | |||
Sunny Optical Technology Group Co. Ltd. | 479,000 | 8,130,281 | |||
TAL Education Group ADR | 159,141 | 4,436,851 | |||
Tencent Holdings Ltd. | 601,400 | 31,043,726 | |||
Weibo Corp. ADR(1) | 36,172 | 3,926,832 | |||
Weichai Power Co. Ltd., H Shares | 2,344,000 | 2,617,372 | |||
159,625,018 |
7
Shares | Value | ||||
Czech Republic— 0.5% | |||||
Moneta Money Bank AS | 604,250 | $ | 2,180,280 | ||
Egypt — 0.5% | |||||
Commercial International Bank Egypt S.A.E. | 291,977 | 1,253,276 | |||
Commercial International Bank Egypt S.A.E. GDR | 298,604 | 1,297,237 | |||
2,550,513 | |||||
Hungary — 1.6% | |||||
OTP Bank plc | 144,912 | 5,540,637 | |||
Richter Gedeon Nyrt | 88,884 | 2,297,612 | |||
7,838,249 | |||||
India — 7.0% | |||||
Bharat Financial Inclusion Ltd.(1) | 189,094 | 2,890,450 | |||
Future Retail Ltd.(1) | 394,940 | 3,376,336 | |||
Godrej Consumer Products Ltd. | 240,881 | 3,610,596 | |||
HDFC Bank Ltd. | 257,246 | 7,413,781 | |||
InterGlobe Aviation Ltd. | 153,224 | 2,666,067 | |||
Larsen & Toubro Ltd. | 147,695 | 2,786,628 | |||
Motherson Sumi Systems Ltd. | 982,236 | 5,589,018 | |||
Praxis Home Retail Ltd. | 19,747 | 6,125 | |||
Vakrangee Ltd. | 465,427 | 5,165,088 | |||
33,504,089 | |||||
Indonesia — 3.4% | |||||
Bank Rakyat Indonesia Persero Tbk PT | 20,322,000 | 4,823,377 | |||
Indofood Sukses Makmur Tbk PT | 5,445,900 | 2,958,058 | |||
Telekomunikasi Indonesia Persero Tbk PT | 11,572,000 | 3,574,585 | |||
United Tractors Tbk PT | 2,052,600 | 5,110,616 | |||
16,466,636 | |||||
Malaysia — 0.6% | |||||
My EG Services Bhd | 6,010,000 | 3,115,528 | |||
Mexico — 1.4% | |||||
Cemex SAB de CV ADR(1) | 260,976 | 1,980,808 | |||
Mexichem SAB de CV | 1,760,982 | 4,582,202 | |||
6,563,010 | |||||
Peru — 1.1% | |||||
Credicorp Ltd. | 25,044 | 5,285,035 | |||
Philippines — 1.0% | |||||
Ayala Land, Inc. | 5,529,300 | 4,731,475 | |||
Russia — 4.8% | |||||
Novatek PJSC GDR | 42,879 | 4,862,854 | |||
Sberbank of Russia PJSC ADR (London) | 440,114 | 7,182,925 | |||
X5 Retail Group NV GDR(1) | 129,666 | 4,804,624 | |||
Yandex NV, A Shares(1) | 182,424 | 6,040,059 | |||
22,890,462 | |||||
South Africa — 4.5% | |||||
Capitec Bank Holdings Ltd. | 57,508 | 4,133,983 | |||
Discovery Ltd. | 323,124 | 3,883,081 | |||
Naspers Ltd., N Shares | 42,122 | 11,300,820 |
8
Shares | Value | ||||
Sappi Ltd. | 336,152 | $ | 2,382,613 | ||
21,700,497 | |||||
South Korea — 13.4% | |||||
CJ Logistics Corp.(1) | 21,264 | 2,970,107 | |||
Doosan Infracore Co. Ltd.(1) | 293,724 | 2,414,642 | |||
Hana Financial Group, Inc. | 125,486 | 5,469,014 | |||
LG Innotek Co. Ltd. | 21,797 | 3,261,738 | |||
Mando Corp. | 17,384 | 5,314,489 | |||
Medy-Tox, Inc. | 7,207 | 3,085,440 | |||
NAVER Corp. | 3,350 | 2,469,058 | |||
Samsung Electronics Co. Ltd. | 11,836 | 27,808,841 | |||
Seegene, Inc.(1) | 100,721 | 3,018,010 | |||
SK Hynix, Inc. | 121,390 | 8,650,614 | |||
64,461,953 | |||||
Taiwan — 9.9% | |||||
Airtac International Group | 417,025 | 7,131,681 | |||
ASPEED Technology, Inc. | 142,000 | 3,332,788 | |||
Hota Industrial Manufacturing Co. Ltd. | 661,517 | 2,939,295 | |||
Land Mark Optoelectronics Corp. | 222,000 | 2,811,776 | |||
Largan Precision Co. Ltd. | 12,000 | 2,077,644 | |||
Powertech Technology, Inc. | 959,000 | 2,917,058 | |||
President Chain Store Corp. | 385,000 | 3,659,904 | |||
Taiwan Paiho Ltd. | 1,040,000 | 3,985,508 | |||
Taiwan Semiconductor Manufacturing Co. Ltd. | 2,503,774 | 18,849,596 | |||
47,705,250 | |||||
Thailand — 4.8% | |||||
Airports of Thailand PCL | 3,000,400 | 5,666,380 | |||
CP ALL PCL | 2,592,700 | 5,795,068 | |||
Kasikornbank PCL | 321,100 | 2,308,655 | |||
Kasikornbank PCL NVDR | 210,400 | 1,466,218 | |||
Minor International PCL | 3,990,000 | 5,315,133 | |||
Srisawad Corp. PCL | 1,242,486 | 2,399,102 | |||
22,950,556 | |||||
Turkey — 1.9% | |||||
BIM Birlesik Magazalar AS | 248,775 | 4,598,737 | |||
Tofas Turk Otomobil Fabrikasi AS | 572,178 | 4,560,689 | |||
9,159,426 | |||||
United Kingdom — 1.0% | |||||
NMC Health plc | 129,515 | 4,996,790 | |||
TOTAL COMMON STOCKS (Cost $330,797,880) | 482,782,482 | ||||
TEMPORARY CASH INVESTMENTS — 0.5% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 3.75%, 4/15/18 - 2/15/47, valued at $1,392,139), in a joint trading account at 0.88%, dated 11/30/17, due 12/1/17 (Delivery value $1,367,645) | 1,367,612 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.125%, 8/15/44, valued at $1,165,873), at 0.34%, dated 11/30/17, due 12/1/17 (Delivery value $1,139,011) | 1,139,000 |
9
Shares | Value | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 30,497 | $ | 30,497 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $2,537,109) | 2,537,109 | ||||
TOTAL INVESTMENT SECURITIES — 100.8% (Cost $333,334,989) | 485,319,591 | ||||
OTHER ASSETS AND LIABILITIES — (0.8)% | (3,825,590 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 481,494,001 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Information Technology | 32.8% | |
Consumer Discretionary | 19.2% | |
Financials | 17.8% | |
Industrials | 6.9% | |
Materials | 6.6% | |
Consumer Staples | 6.3% | |
Energy | 3.1% | |
Health Care | 2.8% | |
Utilities | 2.1% | |
Real Estate | 2.0% | |
Telecommunication Services | 0.7% | |
Cash and Equivalents* | (0.3 | )% |
* Includes temporary cash investments and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
GDR | - | Global Depositary Receipt |
NVDR | - | Non-Voting Depositary Receipt |
(1) | Non-income producing. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
NOVEMBER 30, 2017 | |||
Assets | |||
Investment securities, at value (cost of $333,334,989) | $ | 485,319,591 | |
Foreign currency holdings, at value (cost of $28,544) | 28,300 | ||
Receivable for capital shares sold | 29,307 | ||
Dividends and interest receivable | 78,874 | ||
Other assets | 39,737 | ||
485,495,809 | |||
Liabilities | |||
Payable for investments purchased | 1,720,637 | ||
Payable for capital shares redeemed | 458,757 | ||
Accrued foreign taxes | 1,819,315 | ||
Accrued other expenses | 3,099 | ||
4,001,808 | |||
Net Assets | $ | 481,494,001 | |
G Class Capital Shares, $0.01 Par Value | |||
Shares authorized | 400,000,000 | ||
Shares outstanding | 33,109,094 | ||
Net Asset Value Per Share | $ | 14.54 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 283,668,271 | |
Undistributed net investment income | 2,542,519 | ||
Undistributed net realized gain | 45,123,786 | ||
Net unrealized appreciation | 150,159,425 | ||
$ | 481,494,001 |
See Notes to Financial Statements.
11
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2017 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $948,708) | $ | 6,949,892 | |
Interest | 17,139 | ||
6,967,031 | |||
Expenses: | |||
Management fees | 5,877,201 | ||
Directors' fees and expenses | 14,493 | ||
Other expenses | 55,233 | ||
5,946,927 | |||
Fees waived(1) | (2,563,597 | ) | |
3,383,330 | |||
Net investment income (loss) | 3,583,701 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions (net of foreign tax expenses paid (refunded) of $157,531) | 55,807,510 | ||
Foreign currency translation transactions | (250,203 | ) | |
55,557,307 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments (includes (increase) decrease in accrued foreign taxes of $(1,819,315)) | 111,610,455 | ||
Translation of assets and liabilities in foreign currencies | 91,675 | ||
111,702,130 | |||
Net realized and unrealized gain (loss) | 167,259,437 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 170,843,138 |
(1) | Amount consists of $2,483,641 and $79,956 for G Class and R6 Class, respectively. |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2017 AND NOVEMBER 30, 2016 | ||||||
Increase (Decrease) in Net Assets | November 30, 2017 | November 30, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 3,583,701 | $ | 2,255,060 | ||
Net realized gain (loss) | 55,557,307 | 6,902,767 | ||||
Change in net unrealized appreciation (depreciation) | 111,702,130 | 20,855,213 | ||||
Net increase (decrease) in net assets resulting from operations | 170,843,138 | 30,013,040 | ||||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
G Class | (3,148,286 | ) | (1,209,292 | ) | ||
R6 Class | (409,550 | ) | (111,666 | ) | ||
Decrease in net assets from distributions | (3,557,836 | ) | (1,320,958 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (119,607,753 | ) | 10,227,920 | |||
Net increase (decrease) in net assets | 47,677,549 | 38,920,002 | ||||
Net Assets | ||||||
Beginning of period | 433,816,452 | 394,896,450 | ||||
End of period | $ | 481,494,001 | $ | 433,816,452 | ||
Undistributed net investment income | $ | 2,542,519 | $ | 1,838,101 |
See Notes to Financial Statements.
13
Notes to Financial Statements |
NOVEMBER 30, 2017
1. Organization
American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. NT Emerging Markets Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek capital growth. The fund is not permitted to invest in securities issued by companies assigned the Global Industry Classification Standard or the Bloomberg Industry Classification Standard for the tobacco industry. The fund offers the G Class (formerly Institutional Class). On July 31, 2017, all outstanding R6 Class shares were converted to G Class shares and the fund discontinued offering the R6 Class.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the
14
fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. Certain countries impose taxes on realized gains on the sale of securities registered in their country. The fund records the foreign tax expense, if any, on an accrual basis. The foreign tax expense on realized gains and unrealized appreciation 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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund 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. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
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Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. Various funds issued by American Century Asset Allocation Portfolios, Inc. own, in aggregate, 100% of the shares of the fund. Related parties do not invest in the fund for the purpose of exercising management or control.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that use very similar investment teams and strategies (strategy assets). The strategy assets of the fund also include the assets of Emerging Markets Fund, one fund in a series issued by the corporation. The management fee schedule ranges from 0.900% to 1.500% for the G Class. Prior to July 31, 2017, the annual management fee schedule ranged from 1.050% to 1.650% for the G Class and 0.900% to 1.500% for the R6 Class. From December 1, 2016 through July 30, 2017, the investment advisor agreed to waive 0.250% of the fund's management fee. Effective July 31, 2017, the investment advisor agreed to waive the G Class’s management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors. The effective annual management fee for the period ended November 30, 2017 was 1.24% before waiver and 0.68% after waiver for the G Class.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $3,213 and $2,045,851, respectively. The effect of interfund transactions on the Statement of Operations was $859,070 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended November 30, 2017 were $261,377,190 and $366,943,527, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2017 | Year ended November 30, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
G Class/Shares Authorized | 400,000,000 | 300,000,000 | ||||||||
Sold | 7,513,763 | $ | 91,808,056 | 8,207,796 | $ | 77,497,490 | ||||
Issued in reinvestment of distributions | 316,093 | 3,148,286 | 127,027 | 1,209,292 | ||||||
Redeemed | (13,118,731 | ) | (162,731,010 | ) | (8,182,457 | ) | (83,579,731 | ) | ||
(5,288,875 | ) | (67,774,668 | ) | 152,366 | (4,872,949 | ) | ||||
R6 Class/Shares Authorized | N/A | 40,000,000 | ||||||||
Sold | 1,068,935 | 11,481,250 | 1,966,054 | 19,216,804 | ||||||
Issued in reinvestment of distributions | 41,161 | 409,550 | 11,730 | 111,666 | ||||||
Redeemed | (4,941,581 | ) | (63,723,885 | ) | (411,611 | ) | (4,227,601 | ) | ||
(3,831,485 | ) | (51,833,085 | ) | 1,566,173 | 15,100,869 | |||||
Net increase (decrease) | (9,120,360 | ) | $ | (119,607,753 | ) | 1,718,539 | $ | 10,227,920 |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. 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.
• | Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments. |
• | Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars. |
• | Level 3 valuation inputs consist of unobservable data (including a 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 necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
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The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | ||||||||
Argentina | $ | 2,585,208 | — | — | ||||
Brazil | 13,787,727 | $ | 27,822,876 | — | ||||
Chile | 2,861,904 | — | — | |||||
China | 43,895,546 | 115,729,472 | — | |||||
Mexico | 1,980,808 | 4,582,202 | — | |||||
Peru | 5,285,035 | — | — | |||||
Russia | 6,040,059 | 16,850,403 | — | |||||
Other Countries | — | 241,361,242 | — | |||||
Temporary Cash Investments | 30,497 | 2,506,612 | — | |||||
$ | 76,466,784 | $ | 408,852,807 | — |
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from future adverse political, social and economic developments, fluctuations in currency exchange rates, the possible imposition of exchange controls, and other foreign laws or restrictions. Investing in emerging markets may accentuate these risks.
8. Federal Tax Information
On December 19, 2017, the fund declared and paid a per-share distribution from net realized gains to shareholders of record on December 18, 2017 of $1.4443 for the G Class.
The tax character of distributions paid during the years ended November 30, 2017 and November 30, 2016 were as follows:
2017 | 2016 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 3,557,836 | $ | 1,320,958 | ||
Long-term capital gains | — | — |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
The reclassifications, which are primarily due to tax equalization, were made to capital $5,210,569, undistributed net investment income $678,553, and undistributed net realized gain $(5,889,122).
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As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 335,996,615 | |
Gross tax appreciation of investments | $ | 152,739,374 | |
Gross tax depreciation of investments | (3,416,398 | ) | |
Net tax appreciation (depreciation) of investments | 149,322,976 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (1,825,177 | ) | |
Net tax appreciation (depreciation) | $ | 147,497,799 | |
Undistributed ordinary income | $ | 7,509,134 | |
Accumulated long-term gains | $ | 42,818,797 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the realization to ordinary income for tax purposes of unrealized gains on investments in passive foreign investment companies.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
G Class(3) | |||||||||||||
2017 | $10.27 | 0.09 | 4.26 | 4.35 | (0.08) | $14.54 | 42.75% | 0.69%(4) | 0.74%(4) | 56% | $481,494 | ||
2016 | $9.75 | 0.05 | 0.50 | 0.55 | (0.03) | $10.27 | 5.68% | 1.18% | 0.53% | 75% | $394,433 | ||
2015 | $10.84 | 0.05 | (1.12) | (1.07) | (0.02) | $9.75 | (9.88)% | 1.24% | 0.49% | 61% | $372,802 | ||
2014 | $10.67 | 0.05 | 0.16 | 0.21 | (0.04) | $10.84 | 2.02% | 1.25% | 0.45% | 84% | $323,641 | ||
2013 | $10.05 | 0.04 | 0.63 | 0.67 | (0.05) | $10.67 | 6.66% | 1.42% | 0.38% | 76% | $269,117 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day. Total returns for periods less than one year are not annualized. |
(3) | Prior to July 31, 2017, the G Class was referred to as the Institutional Class. |
(4) | The ratio of operating expenses to average net assets before expense waiver and the ratio of net investment income (loss) to average net assets before expense waiver was 1.25% and 0.18%, respectively. |
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century World Mutual Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of NT Emerging Markets Fund (the “Fund”), one of the funds constituting American Century World Mutual Funds, Inc., as of November 30, 2017, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2017, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of NT Emerging Markets Fund of American Century World Mutual Funds, Inc. as of November 30, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2018
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Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Mr. Thomas, 15) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 69 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired; Executive Vice President, ACC (2007 to 2013); President, ACS (2007 to 2013); Chief Operating Officer, ACC (2007 to 2012) | 69 | None |
Andrea C. Hall (1945) | Director | Since 1997 | Retired | 69 | None |
Jan M. Lewis (1957) | Director | Since 2011 | Retired; President and Chief Executive Officer, Catholic Charities of Northeast Kansas (human services organization) (2006 to 2013) | 69 | None |
James A. Olson (1942) | Director and Chairman of the Board | Since 2007 (Chairman since 2014) | Member, Plaza Belmont LLC (private equity fund manager) (1999 to present) | 69 | Saia, Inc. (2002 to 2012) and EPR Properties (2003 to 2013) |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
M. Jeannine Strandjord (1945) | Director | Since 1994 | Retired | 69 | Euronet Worldwide Inc. and MGP Ingredients, Inc. |
John R. Whitten (1946) | Director | Since 2008 | Retired | 69 | Rudolph Technologies, Inc. |
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 69 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director and President | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 114 | BioMed Valley Discoveries, Inc. |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 15 investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years |
Jonathan S. Thomas (1963) | Director and President since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries |
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present); Vice President, Client Interactions and Marketing, ACIS (2013 to 2014); Director, Client Interactions and Marketing, ACIS (2007 to 2013). Also serves as Vice President, ACIS |
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS |
C. Jean Wade (1964) | Vice President,Treasurer and Chief Financial Officer since 2012 | Vice President, ACS (2000 to present) |
Robert J. Leach (1966) | Vice President since 2006 and Assistant Treasurer since 2012 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present); Associate General Counsel, ACC (2001 to present). Also serves as Vice President, ACIM and ACS |
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Approval of Management Agreement |
At a meeting held on June 29, 2017, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
• | the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund; |
• | the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis; |
• | the investment performance of the Fund, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; |
• | the cost of owning the Fund compared to the cost of owning similar funds; |
• | the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers; |
• | financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor; |
• | strategic plans of the Advisor |
• | possible economies of scale associated with the Advisor’s management of the Fund and other accounts under its management; |
• | data comparing services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices by the Fund and the Advisor regarding financial intermediaries, the nature of services provided by intermediaries, and the terms of share classes utilized; and |
• | any collateral benefits derived by the Advisor from the management of the Fund. |
The Directors held three in-person meetings and one telephonic meeting to review and discuss the information provided. The independent Directors also reviewed responses to supplemental information requests and held active discussions with the Advisor regarding the renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In
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connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services - Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including without limitation the following:
• | portfolio research and security selection |
• | securities trading |
• | Fund administration |
• | custody of Fund assets |
• | daily valuation of the Fund’s portfolio |
• | shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications |
• | legal services (except the independent Directors’ counsel) |
• | regulatory and portfolio compliance |
• | financial reporting |
• | marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans) |
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment. The Board noted specifically the resources the Advisor has committed during the year to compliance with the Department of Labor fiduciary rule and share class modernization.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review detailed performance information provided by the Advisor during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board receives a report from the Advisor regarding the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the three-, five-, and ten-year periods and below its benchmark for the one-year period reviewed by the Board. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through various committees of the Board, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to,
26
information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the Advisor. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, and the fees and expenses of the Fund’s independent Directors (including their independent legal counsel) and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was above the median of the total expense ratios of the Fund’s peer expense universe and was within the range of its peer expense group. The Board discussed with the Advisor the factors that impacted the level of the fee in relation to its peers. The Board and the Advisor agreed to a temporary reduction of the Fund's annual unified management fee of 0.25% (e.g., the Institutional
27
Class unified fee will be reduced from 1.62% to 1.37%) for at least one year, beginning August 1, 2017. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Directors also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Board reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor's resources and reasonable profits. The Board found the payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor receives proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
28
Proxy Voting Results |
A special meeting of shareholders was held on October 18, 2017, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect four directors to the Board of Directors of American Century World Mutual Funds, Inc.:
Affirmative | Withhold | ||||||
Thomas W. Bunn | $ | 5,482,015,298 | $ | 72,735,781 | |||
Barry Fink | $ | 5,485,170,607 | $ | 69,580,472 | |||
Jan M. Lewis | $ | 5,489,025,901 | $ | 65,725,178 | |||
Stephen E. Yates | $ | 5,481,872,069 | $ | 72,879,010 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Andrea C. Hall, James A. Olson, M. Jeannine Strandjord, and John R. Whitten.
29
Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of 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 fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s 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 fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
30
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended November 30, 2017.
The fund hereby designates $4,275,041, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended November 30, 2017.
The fund hereby designates $288,257 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended November 30, 2017.
For the fiscal year ended November 30, 2017, the fund intends to pass through to shareholders foreign source income of $7,892,907 and foreign taxes paid of $948,708, or up to the maximum amount allowable, as a foreign tax credit. Foreign source income and foreign tax expense per outstanding share on November 30, 2017 are $0.2384 and $0.0287, respectively.
The fund utilized earnings and profits of $5,210,569 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
31
Notes |
32
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century World Mutual Funds, Inc. | ||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||
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. | ||
©2018 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91023 1801 |
Annual Report | |
November 30, 2017 | |
NT International Growth Fund |
Table of Contents |
Performance | 2 | |
Portfolio Commentary | ||
Fund Characteristics | ||
Shareholder Fee Example | ||
Schedule of Investments | ||
Statement of Assets and Liabilities | ||
Statement of Operations | ||
Statement of Changes in Net Assets | ||
Notes to Financial Statements | ||
Financial Highlights | ||
Report of Independent Registered Public Accounting Firm | ||
Management | ||
Approval of Management Agreement | ||
Proxy Voting Results | ||
Additional Information |
Any opinions expressed in this report reflect those of the author 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.
Performance |
Total Returns as of November 30, 2017 | |||||
Average Annual Returns | |||||
Ticker Symbol | 1 year | 5 years | 10 years | Inception Date | |
G Class | ACLNX | 32.02% | 8.37% | 2.41% | 5/12/06 |
MSCI EAFE Index | — | 27.27% | 8.23% | 1.55% | — |
MSCI EAFE Growth Index | — | 29.54% | 8.92% | 2.28% | — |
Fund returns would have been lower if a portion of the fees had not been waived. Prior to July 31, 2017, the G Class was referred to as the Institutional Class. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
Growth of $10,000 Over 10 Years |
$10,000 investment made November 30, 2007 |
Value on November 30, 2017 | |
G Class — $12,692 | |
MSCI EAFE Index — $11,659 | |
MSCI EAFE Growth Index — $12,529 | |
Ending value of G Class would have been lower if a portion of the fees had not been waived.
Total Annual Fund Operating Expenses | |
G Class | 0.83% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
2
Portfolio Commentary |
Portfolio Manager: Raj Gandhi and James Gendelman
In December 2017, Jim Zhao was promoted from analyst to co-portfolio manager for Non-US Growth strategies.
NT International Growth gained 32.02%* for the 12 months ended November 30, 2017. The portfolio’s benchmark, the MSCI EAFE Index, increased 27.27% for the same period.
Non-U.S. developed market stocks produced strong gains during the 12-month period, outperforming U.S.-based equities, and growth stocks outpaced their value counterparts. Among non-U.S. developed market stocks, those based in Europe fared the best, followed by Japan and the Far East. The strength in non-U.S. growth equity performance was supported by increasing evidence of a long-duration earnings recovery.
Growth in non-U.S. markets was driven by improved global earnings growth. Growth in Europe was supported by strong revenue and earnings growth. Rising consumer and business confidence, coupled with improved corporate profits, have also led to increased capital spending and employment growth.
Japan-based stocks have benefited from better-than-expected earnings, driven by improved capital spending, consumer confidence, and export growth. In addition, the Japanese economy grew at a 1.4% annual rate in the third quarter and has now expanded for seven consecutive quarters, the longest growth streak in more than a decade.
Overall, the portfolio benefited from an improved market environment. After two years of factors other than earnings driving stock prices, the market has returned to differentiating stock price performance based on fundamentals, allowing stock selection to play a more dominant role in fund performance.
Overall, the fund surpassed its benchmark primarily due to stock selection in the information technology, financials, consumer discretionary, and health care sectors. Regionally, owning stocks based in China, which is not part of the fund’s benchmark, and stock selection in Japan contributed to the fund’s outperformance.
Strong stock selection and, to a lesser extent, an overweight in the information technology sector benefited performance. Regionally, a portfolio-only allocation to China as well as stock decisions in Japan added value.
Internet firms Alibaba Group Holding and Tencent Holdings drove returns in information technology. Alibaba was a strong performer for the full-year period as the company consistently beat estimates. Growth is being driven by strength in its core e-commerce business as well as the company’s ability to use data and technology to drive other verticals such as cloud and payments. Tencent also consistently reported better-than-expected results as the social media company is benefiting from the shift in advertising spend to digital. The company is in the early stages of monetizing its vast user base. The company also benefited from strength in its gaming business.
* Fund returns would have been lower if a portion of the fees had not been waived.
3
In consumer discretionary, luxury goods firm Kering posted strong returns driven by the revitalization of its core Gucci brand which continues to benefit from new designs, store refurbishments, and improved demand for luxury goods. The proliferation of internet models helped online retailer Start Today, which was aided by new shop growth and brand diversification. E-commerce penetration in Japan is behind that in the U.S., and the company is capitalizing on the accelerating trend toward online business.
Stock selection in materials and energy hurt returns. Regionally, stock selection in Spain and portfolio-only positions in Brazil hampered results.
Iron ore producer Fortescue Metals Group, which suffered amid supply/demand imbalances that resulted in weak iron ore prices, detracted from relative returns. We exited the position. In energy, Tullow Oil, whose performance is closely tied to oil prices, was a victim of ongoing weakness in the commodity. We subsequently eliminated the position.
Automotive manufacturer Tata Motors’ stock underperformed despite new model launches. Investments in these new model launches led to unexpected margin pressure. We liquidated the position.
Stock of CRH, a cement and aggregates company, was weak despite reporting in line results. The company expects underlying trends in the U.S. to continue to improve but has experienced weather-related delays.
We remain focused on our disciplined, bottom-up fundamental process of identifying opportunities with accelerating, sustainable growth, where we see upside to consensus estimates. The portfolio is built through bottom-up stock selection within a risk-aware framework. We do not make top down sector or regional allocations. Confidence in sustained earnings growth continues to improve supported by a strong global economic backdrop and confirmed by this strong earnings season and outlook. We expect earnings to continue to be the key driver of stock price performance. Information technology remains the largest sector overweight. This is supported by multiple trends, including the shift from online to digital, strong demand for factory automation solutions, and broad-based improvement in semiconductor demand, due to increased complexity and proliferation into end markets. Consumer discretionary remains a large overweight. Factors supporting our positive view for the sector include the shift in shopping from bricks and mortar to online as well as a general recovery in luxury goods demand. The portfolio has no exposure in the utilities and telecommunication services sectors, where we have not seen examples of companies exhibiting accelerating, sustainable growth that fit our investment process.
Europe remains our largest regional weighting. While the recovery in European earnings is behind that of the U.S., European earnings are the strongest in seven years with evidence of sustainability. Companies in Europe are benefiting from improved revenue growth combined with strong operating leverage. We expect foreign exchange to be less of a headwind going forward as the euro/dollar exchange rate stabilizes.
4
Fund Characteristics |
NOVEMBER 30, 2017 | |
Top Ten Holdings | % of net assets |
Unilever NV CVA | 2.4% |
AIA Group Ltd. | 2.3% |
Lonza Group AG | 1.8% |
Alibaba Group Holding Ltd. ADR | 1.8% |
ASML Holding NV | 1.7% |
Kering | 1.7% |
Treasury Wine Estates Ltd. | 1.7% |
Diageo plc | 1.7% |
adidas AG | 1.6% |
Roche Holding AG | 1.6% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.3% |
Temporary Cash Investments | 1.6% |
Other Assets and Liabilities | 0.1% |
Investments by Country | % of net assets |
United Kingdom | 21.8% |
Japan | 15.2% |
France | 8.8% |
Germany | 7.7% |
Switzerland | 7.0% |
Netherlands | 5.1% |
China | 3.8% |
Denmark | 3.4% |
Australia | 3.1% |
Sweden | 2.9% |
Hong Kong | 2.6% |
Ireland | 2.2% |
Spain | 2.0% |
Brazil | 2.0% |
Other Countries | 10.7% |
Cash and Equivalents* | 1.7% |
*Includes temporary cash investments and other assets and liabilities.
5
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2017 to November 30, 2017.
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.
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.
Beginning Account Value 6/1/17 | Ending Account Value 11/30/17 | Expenses Paid During Period(1) 6/1/17 - 11/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
G Class | $1,000 | $1,117.30 | $1.59 | 0.30% |
Hypothetical | ||||
G Class | $1,000 | $1,023.56 | $1.52 | 0.30% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
6
Schedule of Investments |
NOVEMBER 30, 2017
Shares | Value | ||||
COMMON STOCKS — 98.3% | |||||
Australia — 3.1% | |||||
CSL Ltd. | 133,770 | $ | 14,555,162 | ||
Treasury Wine Estates Ltd. | 1,450,720 | 17,326,573 | |||
31,881,735 | |||||
Austria — 1.5% | |||||
Erste Group Bank AG | 359,494 | 15,638,435 | |||
Belgium — 1.2% | |||||
KBC Group NV | 147,150 | 12,047,637 | |||
Brazil — 2.0% | |||||
Banco do Brasil SA | 321,000 | 2,934,986 | |||
Itau Unibanco Holding SA Preference Shares | 413,300 | 5,210,677 | |||
Localiza Rent a Car SA | 865,500 | 5,295,931 | |||
Lojas Renner SA | 700,300 | 7,258,757 | |||
20,700,351 | |||||
Canada — 0.9% | |||||
Dollarama, Inc. | 72,180 | 8,823,399 | |||
China — 3.8% | |||||
Alibaba Group Holding Ltd. ADR(1) | 105,500 | 18,681,940 | |||
ANTA Sports Products Ltd. | 904,000 | 4,059,824 | |||
TAL Education Group ADR | 146,880 | 4,095,014 | |||
Tencent Holdings Ltd. | 251,300 | 12,971,880 | |||
39,808,658 | |||||
Denmark — 3.4% | |||||
AP Moller - Maersk A/S, B Shares | 5,510 | 9,885,155 | |||
Chr Hansen Holding A/S | 118,800 | 10,791,763 | |||
DSV A/S | 183,630 | 14,143,976 | |||
34,820,894 | |||||
France — 8.8% | |||||
Accor SA | 169,210 | 8,490,403 | |||
ArcelorMittal(1) | 94,590 | 2,863,747 | |||
Arkema SA | 93,100 | 11,397,158 | |||
BNP Paribas SA | 162,780 | 12,330,671 | |||
Danone SA | 178,660 | 15,082,855 | |||
Essilor International Cie Generale d'Optique SA | 30,781 | 3,960,353 | |||
Kering | 39,040 | 17,330,089 | |||
TOTAL SA | 186,361 | 10,521,942 | |||
Valeo SA | 130,281 | 9,458,570 | |||
91,435,788 | |||||
Germany — 7.7% | |||||
adidas AG | 81,960 | 17,090,729 | |||
Deutsche Boerse AG | 48,870 | 5,540,908 | |||
Fresenius Medical Care AG & Co. KGaA | 99,370 | 9,875,689 |
7
Shares | Value | ||||
HeidelbergCement AG | 105,360 | $ | 11,212,550 | ||
Infineon Technologies AG | 268,360 | 7,412,629 | |||
SAP SE | 143,940 | 16,215,443 | |||
Zalando SE(1) | 240,860 | 12,332,568 | |||
79,680,516 | |||||
Hong Kong — 2.6% | |||||
AIA Group Ltd. | 2,914,600 | 23,756,677 | |||
Melco Resorts & Entertainment Ltd. ADR | 117,650 | 3,071,842 | |||
26,828,519 | |||||
India — 0.8% | |||||
HDFC Bank Ltd. | 286,050 | 8,243,906 | |||
Indonesia — 1.1% | |||||
Bank Mandiri Persero Tbk PT | 20,709,400 | 11,363,660 | |||
Ireland — 2.2% | |||||
CRH plc | 257,700 | 8,892,471 | |||
Ryanair Holdings plc ADR(1) | 116,034 | 14,149,186 | |||
23,041,657 | |||||
Italy — 1.1% | |||||
UniCredit SpA(1) | 566,950 | 11,416,627 | |||
Japan — 15.2% | |||||
CyberAgent, Inc. | 176,900 | 6,101,981 | |||
Daikin Industries Ltd. | 106,800 | 12,338,717 | |||
Daito Trust Construction Co. Ltd. | 35,900 | 6,575,051 | |||
FANUC Corp. | 39,100 | 9,784,060 | |||
Keyence Corp. | 26,100 | 15,211,864 | |||
Komatsu Ltd. | 500,000 | 15,586,099 | |||
MonotaRO Co. Ltd. | 264,200 | 7,549,761 | |||
Nintendo Co. Ltd. | 31,000 | 12,585,975 | |||
Nitori Holdings Co. Ltd. | 50,900 | 8,329,725 | |||
Pola Orbis Holdings, Inc. | 273,100 | 9,999,788 | |||
Rakuten, Inc. | 534,100 | 5,491,396 | |||
Recruit Holdings Co. Ltd. | 372,800 | 8,750,684 | |||
Rohm Co. Ltd. | 85,000 | 8,764,973 | |||
Ryohin Keikaku Co. Ltd. | 28,900 | 9,043,071 | |||
Start Today Co. Ltd. | 363,300 | 11,195,903 | |||
Sysmex Corp. | 144,100 | 10,970,979 | |||
158,280,027 | |||||
Mexico — 0.6% | |||||
Grupo Financiero Banorte SAB de CV | 1,038,340 | 6,098,492 | |||
Netherlands — 5.1% | |||||
ASML Holding NV | 99,140 | 17,431,157 | |||
Heineken NV | 110,198 | 11,231,931 | |||
Unilever NV CVA | 431,440 | 24,866,180 | |||
53,529,268 | |||||
Norway — 0.7% | |||||
DNB ASA | 376,560 | 6,874,220 |
8
Shares | Value | ||||
Portugal — 0.5% | |||||
Jeronimo Martins SGPS SA | 287,670 | $ | 5,646,929 | ||
Russia — 1.1% | |||||
Yandex NV, A Shares(1) | 337,080 | 11,160,719 | |||
Spain — 2.0% | |||||
Amadeus IT Group SA | 176,740 | 12,760,672 | |||
CaixaBank SA | 1,020,750 | 4,857,935 | |||
Industria de Diseno Textil SA | 101,295 | 3,589,949 | |||
21,208,556 | |||||
Sweden — 2.9% | |||||
Hexagon AB, B Shares | 222,470 | 10,934,229 | |||
Lundin Petroleum AB(1) | 347,230 | 7,995,620 | |||
Sandvik AB | 670,210 | 11,512,473 | |||
30,442,322 | |||||
Switzerland — 7.0% | |||||
ABB Ltd. | 249,800 | 6,394,018 | |||
Cie Financiere Richemont SA | 128,850 | 11,090,342 | |||
Julius Baer Group Ltd. | 224,230 | 13,186,412 | |||
Lonza Group AG | 72,830 | 19,027,251 | |||
Roche Holding AG | 66,814 | 16,859,962 | |||
Swiss Re AG | 65,550 | 6,149,059 | |||
72,707,044 | |||||
Taiwan — 0.9% | |||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 1,303,000 | 9,809,601 | |||
Thailand — 0.3% | |||||
CP ALL PCL | 1,593,500 | 3,561,708 | |||
United Kingdom — 21.8% | |||||
Ashtead Group plc | 393,993 | 10,127,506 | |||
ASOS plc(1) | 122,421 | 10,039,451 | |||
Associated British Foods plc | 260,810 | 10,355,571 | |||
Aviva plc | 1,807,921 | 12,501,865 | |||
B&M European Value Retail SA | 2,001,420 | 10,341,970 | |||
Bunzl plc | 258,670 | 7,402,980 | |||
Carnival plc | 153,920 | 9,969,261 | |||
Coca-Cola HBC AG | 126,350 | 4,035,810 | |||
Compass Group plc | 447,344 | 9,077,859 | |||
Diageo plc | 497,380 | 17,184,119 | |||
Ferguson plc | 185,880 | 13,420,081 | |||
HSBC Holdings plc (Hong Kong) | 1,192,000 | 11,970,103 | |||
Intertek Group plc | 145,870 | 10,323,087 | |||
Just Eat plc(1) | 445,367 | 4,815,680 | |||
London Stock Exchange Group plc | 326,510 | 16,706,922 | |||
RELX plc | 534,950 | 12,437,057 | |||
Rio Tinto plc | 213,666 | 10,127,575 | |||
Royal Dutch Shell plc, A Shares | 402,342 | 12,876,267 | |||
RPC Group plc | 960,160 | 11,971,382 | |||
St. James's Place plc | 639,660 | 10,507,478 |
9
Shares | Value | ||||
Weir Group plc (The) | 400,100 | $ | 10,561,819 | ||
226,753,843 | |||||
TOTAL COMMON STOCKS (Cost $767,806,916) | 1,021,804,511 | ||||
TEMPORARY CASH INVESTMENTS — 1.6% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 3.75%, 4/15/18 - 2/15/47, valued at $9,243,355), in a joint trading account at 0.88%, dated 11/30/17, due 12/1/17 (Delivery value $9,080,720) | 9,080,498 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.125%, 8/15/44, valued at $7,722,570), at 0.34%, dated 11/30/17, due 12/1/17 (Delivery value $7,567,071) | 7,567,000 | ||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $16,647,498) | 16,647,498 | ||||
TOTAL INVESTMENT SECURITIES — 99.9% (Cost $784,454,414) | 1,038,452,009 | ||||
OTHER ASSETS AND LIABILITIES — 0.1% | 1,392,726 | ||||
TOTAL NET ASSETS — 100.0% | $ | 1,039,844,735 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Financials | 19.1 | % |
Consumer Discretionary | 18.1 | % |
Industrials | 17.3 | % |
Information Technology | 15.1 | % |
Consumer Staples | 11.4 | % |
Health Care | 7.3 | % |
Materials | 6.4 | % |
Energy | 3.0 | % |
Real Estate | 0.6 | % |
Cash and Equivalents* | 1.7 | % |
*Includes temporary cash investments and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
CVA | - | Certificaten Van Aandelen |
(1) | Non-income producing. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
NOVEMBER 30, 2017 | |||
Assets | |||
Investment securities, at value (cost of $784,454,414) | $ | 1,038,452,009 | |
Cash | 13,270 | ||
Foreign currency holdings, at value (cost of $169,638) | 168,629 | ||
Receivable for investments sold | 1,962,943 | ||
Receivable for capital shares sold | 27,454 | ||
Dividends and interest receivable | 2,288,154 | ||
Other assets | 13,420 | ||
1,042,925,879 | |||
Liabilities | |||
Payable for investments purchased | 1,663,237 | ||
Payable for capital shares redeemed | 1,343,846 | ||
Accrued foreign taxes | 67,378 | ||
Accrued other expenses | 6,683 | ||
3,081,144 | |||
Net Assets | $ | 1,039,844,735 | |
G Class Capital Shares, $0.01 Par Value | |||
Shares authorized | 770,000,000 | ||
Shares outstanding | 82,698,098 | ||
Net Asset Value Per Share | $ | 12.57 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 746,781,827 | |
Undistributed net investment income | 12,431,103 | ||
Undistributed net realized gain | 26,663,577 | ||
Net unrealized appreciation | 253,968,228 | ||
$ | 1,039,844,735 |
See Notes to Financial Statements.
11
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2017 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $1,789,776) | $ | 19,374,944 | |
Interest | 26,878 | ||
19,401,822 | |||
Expenses: | |||
Management fees | 9,149,571 | ||
Directors' fees and expenses | 31,039 | ||
Other expenses | 43,815 | ||
9,224,425 | |||
Fees waived - G Class | (2,820,525 | ) | |
6,403,900 | |||
Net investment income (loss) | 12,997,922 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions (net of foreign tax expenses paid (refunded) of $5,376) | 69,963,037 | ||
Foreign currency translation transactions | (269,258 | ) | |
69,693,779 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments (includes (increase) decrease in accrued foreign taxes of $(67,378)) | 201,128,129 | ||
Translation of assets and liabilities in foreign currencies | 200,411 | ||
201,328,540 | |||
Net realized and unrealized gain (loss) | 271,022,319 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 284,020,241 |
See Notes to Financial Statements.
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Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2017 AND NOVEMBER 30, 2016 | ||||||
Increase (Decrease) in Net Assets | November 30, 2017 | November 30, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 12,997,922 | $ | 8,749,888 | ||
Net realized gain (loss) | 69,693,779 | (34,751,807 | ) | |||
Change in net unrealized appreciation (depreciation) | 201,328,540 | (43,642,580 | ) | |||
Net increase (decrease) in net assets resulting from operations | 284,020,241 | (69,644,499 | ) | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
G Class | (7,905,118 | ) | (5,713,153 | ) | ||
R6 Class | (1,009,740 | ) | (434,699 | ) | ||
From net realized gains: | ||||||
R6 Class | — | (1,521,449 | ) | |||
G Class | — | (23,995,241 | ) | |||
Decrease in net assets from distributions | (8,914,858 | ) | (31,664,542 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (164,632,252 | ) | 188,346,075 | |||
Net increase (decrease) in net assets | 110,473,131 | 87,037,034 | ||||
Net Assets | ||||||
Beginning of period | 929,371,604 | 842,334,570 | ||||
End of period | $ | 1,039,844,735 | $ | 929,371,604 | ||
Undistributed net investment income | $ | 12,431,103 | $ | 4,398,902 |
See Notes to Financial Statements.
13
Notes to Financial Statements |
NOVEMBER 30, 2017
1. Organization
American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. NT International Growth Fund (the fund) is one fund in a series issued by the corporation. The fund's investment objective is to seek capital growth. The fund is not permitted to invest in securities issued by companies assigned the Global Industry Classification Standard or the Bloomberg Industry Classification Standard for the tobacco industry. The fund offers the G Class (formerly Institutional Class). On July 31, 2017, all outstanding R6 Class shares were converted to G Class shares and the fund discontinued offering the R6 Class.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund���s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of
14
Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. Certain countries impose taxes on realized gains on the sale of securities registered in their country. The fund records the foreign tax expense, if any, on an accrual basis. The foreign tax expense on realized gains and unrealized appreciation 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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund 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. The fund may elect to treat a portion of its payment to a redeeming shareholder, which represents the pro rata share of undistributed net investment income and net realized gains, as a distribution for federal income tax purposes (tax equalization).
15
Indemnifications — Under the corporation’s organizational documents, its officers and directors are indemnified against certain liabilities arising out of the performance of their duties to the fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. Various funds issued by American Century Asset Allocation Portfolios, Inc. own, in aggregate, 100% of the shares of the fund. Related parties do not invest in the fund for the purpose of exercising management or control.
Management Fees —The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that use very similar investment teams and strategies (strategy assets). The strategy assets of the fund also include the assets of International Growth Fund, one fund in a series issued by the corporation. The management fee schedule ranges from 0.700% to 1.150% for the G Class. Prior to July 31, 2017, the management fee schedule ranged from 0.850% to 1.300% for the G Class and 0.700% to 1.150% for the R6 Class. Effective July 31, 2017, the investment advisor agreed to waive the G Class’s management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors. The effective annual management fee for the period ended November 30, 2017 was 0.90% before waiver and 0.60% after waiver for the G Class.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $457,930 and $179,376, respectively. The effect of interfund transactions on the Statement of Operations was $7,995 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended November 30, 2017 were $568,078,563 and $723,458,277, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2017 | Year ended November 30, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
G Class/Shares Authorized | 770,000,000 | 560,000,000 | ||||||||
Sold | 15,337,677 | $ | 172,998,742 | 21,881,050 | $ | 212,057,635 | ||||
Issued in reinvestment of distributions | 826,031 | 7,905,118 | 2,887,113 | 29,708,394 | ||||||
Redeemed | (21,420,057 | ) | (240,387,705 | ) | (9,532,690 | ) | (97,969,015 | ) | ||
(5,256,349 | ) | (59,483,845 | ) | 15,235,473 | 143,797,014 | |||||
R6 Class/Shares Authorized | N/A | 40,000,000 | ||||||||
Sold | 2,848,050 | 28,985,767 | 5,047,460 | 50,034,983 | ||||||
Issued in reinvestment of distributions | 105,511 | 1,009,740 | 190,102 | 1,956,148 | ||||||
Redeemed | (11,680,227 | ) | (135,143,914 | ) | (742,018 | ) | (7,442,070 | ) | ||
(8,726,666 | ) | (105,148,407 | ) | 4,495,544 | 44,549,061 | |||||
Net increase (decrease) | (13,983,015 | ) | $ | (164,632,252 | ) | 19,731,017 | $ | 188,346,075 |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. 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.
• Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
• Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
• Level 3 valuation inputs consist of unobservable data (including a 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 necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | ||||||||
China | $ | 22,776,954 | $ | 17,031,704 | — | |||
Hong Kong | 3,071,842 | 23,756,677 | — | |||||
Ireland | 14,149,186 | 8,892,471 | — | |||||
Russia | 11,160,719 | — | — | |||||
Other Countries | — | 920,964,958 | — | |||||
Temporary Cash Investments | — | 16,647,498 | — | |||||
$ | 51,158,701 | $ | 987,293,308 | — |
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.
17
8. Federal Tax Information
On December 19, 2017 the fund declared and paid per share distributions of $0.3684 and $0.0815, from net realized gains and net investment income, respectively, to shareholders of record on December 18, 2017 for the G Class.
The tax character of distributions paid during the years ended November 30, 2017 and November 30, 2016 were as follows:
2017 | 2016 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 8,914,858 | $ | 6,524,309 | ||
Long-term capital gains | — | $ | 25,140,233 |
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 period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 790,844,680 | |
Gross tax appreciation of investments | $ | 251,114,191 | |
Gross tax depreciation of investments | (3,506,862 | ) | |
Net tax appreciation (depreciation) of investments | 247,607,329 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (29,367 | ) | |
Net tax appreciation (depreciation) | $ | 247,577,962 | |
Undistributed ordinary income | $ | 15,874,538 | |
Accumulated long-term gains | $ | 29,610,408 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the realization to ordinary income for tax purposes of unrealized gains on investments in passive foreign investment companies.
18
Financial Highlights |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||||
Income From Investment Operations: | Distributions From: | Ratio to Average Net Assets of: | |||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Net Investment Income | Net Realized Gains | Total Distributions | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
G Class(3) | |||||||||||||||
2017 | $9.61 | 0.14 | 2.91 | 3.05 | (0.09) | — | (0.09) | $12.57 | 32.02% | 0.61%(4) | 1.26%(4) | 57% | $1,039,845 | ||
2016 | $10.95 | 0.10 | (1.02) | (0.92) | (0.08) | (0.34) | (0.42) | $9.61 | (8.69)% | 0.98% | 0.98% | 69% | $845,423 | ||
2015 | $11.58 | 0.08 | (0.26) | (0.18) | (0.05) | (0.40) | (0.45) | $10.95 | (1.44)% | 0.97% | 0.69% | 83% | $795,985 | ||
2014 | $12.17 | 0.10 | 0.03 | 0.13 | (0.17) | (0.55) | (0.72) | $11.58 | 1.26% | 0.98% | 0.86% | 67% | $938,672 | ||
2013 | $9.94 | 0.11 | 2.27 | 2.38 | (0.15) | — | (0.15) | $12.17 | 24.27% | 1.02% | 1.01% | 89% | $771,045 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day. Total returns for periods less than one year are not annualized. |
(3) | Prior to July 31, 2017, the G Class was referred to as the Institutional Class. |
(4) | The ratio of operating expenses to average net assets before expense waiver and the ratio of net investment income (loss) to average net assets before expense waiver was 0.91% and 0.96%, respectively. |
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century World Mutual Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of NT International Growth Fund (the “Fund”), one of the funds constituting American Century World Mutual Funds, Inc., as of November 30, 2017, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2017, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of NT International Growth Fund of American Century World Mutual Funds, Inc. as of November 30, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2018
20
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Mr. Thomas, 15) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 69 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired; Executive Vice President, ACC (2007 to 2013); President, ACS (2007 to 2013); Chief Operating Officer, ACC (2007 to 2012) | 69 | None |
Andrea C. Hall (1945) | Director | Since 1997 | Retired | 69 | None |
Jan M. Lewis (1957) | Director | Since 2011 | Retired; President and Chief Executive Officer, Catholic Charities of Northeast Kansas (human services organization) (2006 to 2013) | 69 | None |
James A. Olson (1942) | Director and Chairman of the Board | Since 2007 (Chairman since 2014) | Member, Plaza Belmont LLC (private equity fund manager) (1999 to present) | 69 | Saia, Inc. (2002 to 2012) and EPR Properties (2003 to 2013) |
21
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
M. Jeannine Strandjord (1945) | Director | Since 1994 | Retired | 69 | Euronet Worldwide Inc. and MGP Ingredients, Inc. |
John R. Whitten (1946) | Director | Since 2008 | Retired | 69 | Rudolph Technologies, Inc. |
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 69 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director and President | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 114 | BioMed Valley Discoveries, Inc. |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
22
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 15 investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years |
Jonathan S. Thomas (1963) | Director and President since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries |
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present); Vice President, Client Interactions and Marketing, ACIS (2013 to 2014); Director, Client Interactions and Marketing, ACIS (2007 to 2013). Also serves as Vice President, ACIS |
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS |
C. Jean Wade (1964) | Vice President,Treasurer and Chief Financial Officer since 2012 | Vice President, ACS (2000 to present) |
Robert J. Leach (1966) | Vice President since 2006 and Assistant Treasurer since 2012 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present); Associate General Counsel, ACC (2001 to present). Also serves as Vice President, ACIM and ACS |
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Approval of Management Agreement |
At a meeting held on June 29, 2017, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
• | the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund; |
• | the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis; |
• | the investment performance of the Fund, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; |
• | the cost of owning the Fund compared to the cost of owning similar funds; |
• | the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers; |
• | financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor; |
• | strategic plans of the Advisor |
• | possible economies of scale associated with the Advisor’s management of the Fund and other accounts under its management; |
• | data comparing services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices by the Fund and the Advisor regarding financial intermediaries, the nature of services provided by intermediaries, and the terms of share classes utilized; and |
• | any collateral benefits derived by the Advisor from the management of the Fund. |
The Directors held three in-person meetings and one telephonic meeting to review and discuss the information provided. The independent Directors also reviewed responses to supplemental information requests and held active discussions with the Advisor regarding the renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In
24
connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services - Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including without limitation the following:
• | portfolio research and security selection |
• | securities trading |
• | Fund administration |
• | custody of Fund assets |
• | daily valuation of the Fund’s portfolio |
• | shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications |
• | legal services (except the independent Directors’ counsel) |
• | regulatory and portfolio compliance |
• | financial reporting |
• | marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans) |
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment. The Board noted specifically the resources the Advisor has committed during the year to compliance with the Department of Labor fiduciary rule and share class modernization.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review detailed performance information provided by the Advisor during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board receives a report from the Advisor regarding the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was above its benchmark for the five- and ten-year periods and below its benchmark for the one- and three-year periods reviewed by the Board. The Board discussed the Fund's performance with the Advisor and was satisfied with the efforts being undertaken by the Advisor. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The
25
Board, directly and through various committees of the Board, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the Advisor. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, and the fees and expenses of the Fund’s independent Directors (including their independent legal counsel) and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was above the median of the total expense ratios of the Fund’s peer expense universe and was within the range of its peer expense group. The Board discussed with the Advisor the factors that
26
impacted the level of the fee in relation to its peers and accepted the Advisor's explanation of such factors. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Directors also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Board reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor's resources and reasonable profits. The Board found the payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor receives proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
27
Proxy Voting Results |
A special meeting of shareholders was held on October 18, 2017, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect four directors to the Board of Directors of American Century World Mutual Funds, Inc.:
Affirmative | Withhold | ||||||
Thomas W. Bunn | $ | 5,482,015,298 | $ | 72,735,781 | |||
Barry Fink | $ | 5,485,170,607 | $ | 69,580,472 | |||
Jan M. Lewis | $ | 5,489,025,901 | $ | 65,725,178 | |||
Stephen E. Yates | $ | 5,481,872,069 | $ | 72,879,010 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Andrea C. Hall, James A. Olson, M. Jeannine Strandjord, and John R. Whitten.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of 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 fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s 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 fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended November 30, 2017.
The fund hereby designates $670,261, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended November 30, 2017.
For the fiscal year ended November 30, 2017, the fund intends to pass through to shareholders foreign source income of $20,949,995 and foreign taxes paid of $1,789,776, or up to the maximum amount allowable, as a foreign tax credit. Foreign source income and foreign tax expense per outstanding share on November 30, 2017 are $0.2533 and $0.0216, respectively.
The fund utilized earnings and profits of $1,070,315 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
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Notes |
31
Notes |
32
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century World Mutual Funds, Inc. | ||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||
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. | ||
©2018 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91024 1801 |
Annual Report | |
November 30, 2017 | |
NT International Small-Mid Cap Fund |
Table of Contents |
Performance | 2 | |
Portfolio Commentary | ||
Fund Characteristics | ||
Shareholder Fee Example | ||
Schedule of Investments | ||
Statement of Assets and Liabilities | ||
Statement of Operations | ||
Statement of Changes in Net Assets | ||
Notes to Financial Statements | ||
Financial Highlights | ||
Report of Independent Registered Public Accounting Firm | ||
Management | ||
Approval of Management Agreement | ||
Proxy Voting Results | ||
Additional Information |
Any opinions expressed in this report reflect those of the author 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.
Performance |
Total Returns as of November 30, 2017 | ||||
Average Annual Returns | ||||
Ticker Symbol | 1 year | Since Inception | Inception Date | |
Investor Class | ANTSX | 33.20% | 10.97% | 3/19/15 |
MSCI EAFE Small Cap Index | — | 33.27% | 12.85% | — |
G Class | ANTMX | 34.20% | 11.39% | 3/19/15 |
G Class returns would have been lower if a portion of the fees had not been waived. Prior to July 31, 2017, the G Class was referred to as the Institutional Class. Extraordinary performance is attributable in part to unusually favorable market conditions and may not be repeated or consistently achieved in the future.
Growth of $10,000 Over Life of Class |
$10,000 investment made March 19, 2015 |
Performance for other share classes will vary due to differences in fee structure. |
Value on November 30, 2017 | |
Investor Class — $13,252 | |
MSCI EAFE Small Cap Index — $13,867 | |
Total Annual Fund Operating Expenses | |
Investor Class | G Class |
1.47% | 1.12% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
2
Portfolio Commentary |
Portfolio Managers: Brian Brady and Pratik Patel
Performance Summary
NT International Small-Mid Cap returned 34.20%* for the 12 months ended November 30, 2017. The portfolio outperformed its benchmark, the MSCI EAFE Small Cap Index, which returned 33.27% for the same period.
A global recovery in corporate earnings growth fueled strong gains for non-U.S. stocks, especially non-U.S. small- and mid-cap stocks, which generally outperformed their large-cap counterparts. Within the portfolio, stock selection drove relative outperformance, particularly in the consumer discretionary sector. An underweight and stock selection in the real estate sector also added to relative performance. Stock selection and portfolio overweights in the materials and energy sectors detracted.
From a regional perspective, investments in Japan and New Zealand boosted relative performance, while investments in Canada and Germany detracted.
Consumer Discretionary Holdings Aided Results
Stock selection in the automobiles industry helped drive relative outperformance in the consumer discretionary sector. Brilliance China Automotive Holdings, a standout contributor, is an automobile manufacturer involved in a joint venture with BMW. The company is benefiting from strong demand following a recent product launch, as well as from a consumer shift toward purchasing higher-priced, upgraded cars.
Several industrials stocks were also notable positive contributors. These included Outsourcing, a company that provides outsourcing services for manufacturing companies, and DSV, a global transport and logistics company. Outsourcing’s stock price advanced on strong earnings and revenues performance, as the company capitalized on an improving Japanese economy. Optimism over accelerating growth and improving profit margins in DSV’s air and sea business lifted the stock.
In the consumer staples sector, specialty milk producer a2 Milk was a top contributor. The company benefited from strong demand for its specialty milk products that are free from the beta casein a1 protein. Sales trends were especially strong within Australia and with online shoppers in China.
Materials Stock Was a Key Detractor
Plastic products manufacturer RPC Group was a significant detractor in the materials sector. Early in the reporting period, the stock declined due to investor concerns over the pace of the company’s acquisitions after it announced the purchase of plastic foods manufacturer Letica. Investors were also concerned that a planned rights offering might dilute value for existing shareholders. In our view, these concerns were out of line with fundamentals, and we held onto the position. While the stock subsequently regained some ground, it struggled later in the period after the company issued a cautious growth outlook.
* All fund returns referenced in this commentary are for G Class shares. G Class returns would have been lower if a portion of the fees had not been waived. Performance for other share classes will vary due to differences in fee structure; when G Class performance exceeds that of the fund's benchmark, other share classes may not. See page 2 for returns for all share classes.
3
In the first half of the reporting period, declining crude oil prices weighed on energy stocks, and several energy holdings were notable detractors. These included oil and natural gas production company Seven Generations Energy and oil producer Tullow Oil. Tullow Oil’s stock also declined due to concerns over a planned rights issue and its higher short-term capital requirements to fund
new projects in Africa. Because of these higher capital requirements, the company extended the
timeline for its anticipated cash-flow improvement. We decided to sell our positions in both stocks because of the near-term uncertainty for their businesses.
Elsewhere in the portfolio, Tongda Group Holdings was a detractor. The company supplies casing solutions for consumer electronic products, and its shares declined in May following market speculation that one of its key customers was cutting orders. Given near-term uncertainty for the business, we decided to liquidate our investment.
Outlook
The portfolio continues to invest in non-U.S. small- and mid-cap companies that we believe are demonstrating accelerating and sustainable growth. Our stock selection process continues to drive our sector and country allocations. We continue to find earnings growth opportunities among several companies in the information technology sector, which remains a significant sector overweight. These companies include those with exposure to the latest smartphone components technology as well as firms benefiting from the growth in online entertainment in China. Real estate and materials ended the period as notable underweights because we found more attractive earnings growth opportunities in other sectors. Our largest overweight within the materials sector is in the chemicals industry, where it remains a challenge to find companies with sustainable accelerations in earnings growth.
From a regional standpoint, our bottom-up stock selection has led to an overweight in the emerging markets. In particular, we are finding more companies with accelerating earnings growth in China. Australia and Japan remain notable underweights, as we are finding fewer bottom-up opportunities there.
4
Fund Characteristics |
NOVEMBER 30, 2017 | |
Top Ten Holdings | % of net assets |
Treasury Wine Estates Ltd. | 2.4% |
DSV A/S | 2.4% |
Lonza Group AG | 1.7% |
Teleperformance | 1.6% |
Aroundtown SA | 1.6% |
Rheinmetall AG | 1.6% |
Outsourcing, Inc. | 1.5% |
Kose Corp. | 1.5% |
Trigano SA | 1.5% |
Megachips Corp. | 1.5% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 97.8% |
Temporary Cash Investments | 2.0% |
Other Assets and Liabilities | 0.2% |
Investments by Country | % of net assets |
Japan | 28.9% |
United Kingdom | 16.0% |
France | 12.5% |
Canada | 5.9% |
Germany | 5.7% |
Switzerland | 5.0% |
Australia | 4.2% |
Italy | 3.4% |
China | 3.0% |
Denmark | 2.4% |
Other Countries | 10.8% |
Cash and Equivalents* | 2.2% |
*Includes temporary cash investments and other assets and liabilities. |
5
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2017 to November 30, 2017.
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.
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.
Beginning Account Value 6/1/17 | Ending Account Value 11/30/17 | Expenses Paid During Period(1) 6/1/17 - 11/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,139.40 | $7.94 | 1.48% |
G Class | $1,000 | $1,146.20 | $2.10 | 0.39% |
Hypothetical | ||||
Investor Class | $1,000 | $1,017.65 | $7.49 | 1.48% |
G Class | $1,000 | $1,023.11 | $1.98 | 0.39% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
6
Schedule of Investments |
NOVEMBER 30, 2017
Shares | Value | ||||
COMMON STOCKS — 97.8% | |||||
Australia — 4.2% | |||||
ALS Ltd. | 393,450 | $ | 2,018,949 | ||
Challenger Ltd. | 80,130 | 856,142 | |||
Corporate Travel Management Ltd. | 96,010 | 1,482,016 | |||
Treasury Wine Estates Ltd. | 507,069 | 6,056,143 | |||
10,413,250 | |||||
Belgium — 1.2% | |||||
Galapagos NV(1) | 19,819 | 1,734,925 | |||
Umicore SA | 25,720 | 1,197,487 | |||
2,932,412 | |||||
Canada — 5.9% | |||||
BRP, Inc. | 54,635 | 1,997,545 | |||
Kirkland Lake Gold Ltd. | 200,030 | 2,882,268 | |||
Lundin Mining Corp. | 236,220 | 1,376,874 | |||
Premium Brands Holdings Corp. | 33,970 | 2,804,700 | |||
Sleep Country Canada Holdings, Inc. | 87,510 | 2,213,271 | |||
Trican Well Service Ltd.(1) | 931,370 | 3,378,531 | |||
14,653,189 | |||||
China — 3.0% | |||||
Beijing Enterprises Water Group Ltd. | 2,178,000 | 1,705,668 | |||
Brilliance China Automotive Holdings Ltd. | 1,162,000 | 3,074,180 | |||
China Resources Beer Holdings Co. Ltd. | 1,002,000 | 2,767,778 | |||
7,547,626 | |||||
Denmark — 2.4% | |||||
DSV A/S | 77,934 | 6,002,813 | |||
Finland — 1.7% | |||||
Konecranes Oyj | 51,996 | 2,309,141 | |||
Nokian Renkaat Oyj | 42,963 | 1,877,763 | |||
4,186,904 | |||||
France — 12.5% | |||||
Arkema SA | 14,536 | 1,779,475 | |||
BioMerieux | 16,040 | 1,338,280 | |||
Eurofins Scientific SE | 3,569 | 2,161,377 | |||
Euronext NV | 42,750 | 2,610,001 | |||
Maisons du Monde SA | 82,426 | 3,406,221 | |||
SEB SA | 14,259 | 2,628,430 | |||
SOITEC(1) | 29,299 | 2,243,137 | |||
Solutions 30 SE(1) | 77,786 | 2,452,360 | |||
Teleperformance | 27,407 | 4,059,955 | |||
Trigano SA | 23,730 | 3,754,219 | |||
Ubisoft Entertainment SA(1) | 37,340 | 2,864,730 |
7
Shares | Value | ||||
Worldline SA(1) | 37,330 | $ | 1,838,826 | ||
31,137,011 | |||||
Germany — 5.7% | |||||
Aroundtown SA | 535,082 | 4,033,763 | |||
AURELIUS Equity Opportunities SE & Co. KGaA | 13,040 | 843,860 | |||
Drillisch AG | 35,715 | 2,726,260 | |||
KION Group AG | 16,168 | 1,316,278 | |||
Rheinmetall AG | 31,501 | 4,008,418 | |||
Salzgitter AG | 23,020 | 1,186,249 | |||
14,114,828 | |||||
Hong Kong — 1.5% | |||||
ASM Pacific Technology Ltd. | 113,800 | 1,652,529 | |||
Samsonite International SA | 486,000 | 2,011,470 | |||
3,663,999 | |||||
Israel — 0.3% | |||||
Frutarom Industries Ltd. | 9,190 | 809,831 | |||
Italy — 3.4% | |||||
Davide Campari-Milano SpA | 199,970 | 1,555,768 | |||
FinecoBank Banca Fineco SpA | 278,040 | 2,804,970 | |||
Gima TT SpA(1) | 72,162 | 1,447,260 | |||
Industria Macchine Automatiche SpA | 14,980 | 1,265,286 | |||
Unione di Banche Italiane SpA | 305,820 | 1,468,400 | |||
8,541,684 | |||||
Japan — 28.9% | |||||
Aiful Corp.(1) | 377,500 | 1,293,709 | |||
Anritsu Corp. | 130,300 | 1,246,448 | |||
Coca-Cola Bottlers Japan, Inc. | 91,800 | 3,490,850 | |||
Daifuku Co. Ltd. | 27,000 | 1,476,107 | |||
Don Quijote Holdings Co. Ltd. | 54,400 | 2,621,150 | |||
Hitachi Construction Machinery Co. Ltd. | 75,400 | 2,508,124 | |||
Ichikoh Industries Ltd. | 379,000 | 3,695,706 | |||
Investors Cloud Co. Ltd. | 31,100 | 1,845,682 | |||
Kose Corp. | 24,500 | 3,772,918 | |||
LIXIL Group Corp. | 95,800 | 2,529,301 | |||
Megachips Corp. | 122,100 | 3,721,607 | |||
MISUMI Group, Inc. | 77,300 | 2,260,562 | |||
Nippon Shinyaku Co. Ltd. | 37,800 | 2,710,284 | |||
Omron Corp. | 32,200 | 1,906,722 | |||
Outsourcing, Inc. | 215,300 | 3,791,976 | |||
Penta-Ocean Construction Co. Ltd. | 451,500 | 3,371,345 | |||
PeptiDream, Inc.(1) | 44,400 | 1,488,097 | |||
Persol Holdings Co. Ltd. | 33,400 | 783,793 | |||
Relo Group, Inc. | 98,900 | 2,640,052 | |||
Sanwa Holdings Corp. | 213,300 | 2,821,794 | |||
Seria Co. Ltd. | 30,000 | 1,899,823 | |||
SHO-BOND Holdings Co. Ltd. | 24,100 | 1,534,775 | |||
Sony Financial Holdings, Inc. | 63,200 | 1,071,762 |
8
Shares | Value | ||||
Sumco Corp. | 125,600 | $ | 3,177,506 | ||
THK Co. Ltd. | 95,700 | 3,570,881 | |||
TKP Corp.(1) | 59,200 | 1,254,508 | |||
Tokyo Base Co. Ltd.(1) | 60,000 | 2,470,063 | |||
Topcon Corp. | 74,164 | 1,651,356 | |||
Tsubaki Nakashima Co. Ltd. | 132,300 | 2,957,208 | |||
Vector, Inc. | 183,100 | 2,583,192 | |||
72,147,301 | |||||
Netherlands — 0.5% | |||||
AMG Advanced Metallurgical Group NV | 26,710 | 1,190,139 | |||
New Zealand — 0.8% | |||||
a2 Milk Co. Ltd.(1) | 348,120 | 2,021,203 | |||
Norway — 0.8% | |||||
Asetek A/S | 30,121 | 311,808 | |||
Borr Drilling Ltd.(1) | 395,385 | 1,763,401 | |||
2,075,209 | |||||
Singapore — 1.2% | |||||
Venture Corp. Ltd. | 198,700 | 3,102,715 | |||
Spain — 1.2% | |||||
Masmovil Ibercom SA(1) | 16,985 | 1,557,896 | |||
NH Hotel Group SA | 187,480 | 1,379,426 | |||
2,937,322 | |||||
Sweden — 1.6% | |||||
Loomis AB, B Shares | 45,290 | 1,868,290 | |||
Tele2 AB, B Shares | 162,550 | 2,081,050 | |||
3,949,340 | |||||
Switzerland — 5.0% | |||||
ams AG | 26,660 | 2,594,856 | |||
Logitech International SA | 104,180 | 3,628,759 | |||
Lonza Group AG | 16,681 | 4,358,006 | |||
Partners Group Holding AG | 2,650 | 1,820,405 | |||
12,402,026 | |||||
United Kingdom — 16.0% | |||||
Acacia Mining plc | 323,500 | 754,415 | |||
Ashtead Group plc | 96,730 | 2,486,424 | |||
B&M European Value Retail SA | 617,853 | 3,192,642 | |||
Burford Capital Ltd. | 162,720 | 2,701,731 | |||
Cairn Homes plc(1) | 1,530,393 | 3,242,741 | |||
CVS Group plc | 135,010 | 1,845,589 | |||
DCC plc | 21,182 | 2,051,513 | |||
Fevertree Drinks plc | 62,370 | 1,647,584 | |||
Intermediate Capital Group plc | 255,670 | 3,675,932 | |||
Just Eat plc(1) | 323,470 | 3,497,628 | |||
Keywords Studios plc | 128,797 | 2,562,433 | |||
Melrose Industries plc | 535,495 | 1,441,118 | |||
Rentokil Initial plc | 768,590 | 3,307,074 | |||
RPC Group plc | 226,371 | 2,822,419 |
9
Shares | Value | ||||
Sanne Group plc | 220,080 | $ | 2,173,974 | ||
Segro plc | 355,600 | 2,636,766 | |||
40,039,983 | |||||
TOTAL COMMON STOCKS (Cost $189,700,884) | 243,868,785 | ||||
TEMPORARY CASH INVESTMENTS — 2.0% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 3.75%, 4/15/18 - 2/15/47, valued at $2,782,295), in a joint trading account at 0.88%, dated 11/30/17, due 12/1/17 (Delivery value $2,733,341) | 2,733,274 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.375%, 5/15/44, valued at $2,323,554), at 0.34%, dated 11/30/17, due 12/1/17 (Delivery value $2,277,022) | 2,277,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 4,698 | 4,698 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $5,014,972) | 5,014,972 | ||||
TOTAL INVESTMENT SECURITIES — 99.8% (Cost $194,715,856) | 248,883,757 | ||||
OTHER ASSETS AND LIABILITIES — 0.2% | 554,389 | ||||
TOTAL NET ASSETS — 100.0% | $ | 249,438,146 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Industrials | 24.4 | % |
Consumer Discretionary | 18.1 | % |
Information Technology | 15.5 | % |
Consumer Staples | 9.6 | % |
Financials | 8.6 | % |
Health Care | 6.3 | % |
Materials | 5.6 | % |
Real Estate | 4.4 | % |
Telecommunication Services | 2.5 | % |
Energy | 2.1 | % |
Utilities | 0.7 | % |
Cash and Equivalents* | 2.2 | % |
*Includes temporary cash investments and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS |
(1) | Non-income producing. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
NOVEMBER 30, 2017 | |||
Assets | |||
Investment securities, at value (cost of $194,715,856) | $ | 248,883,757 | |
Foreign currency holdings, at value (cost of $23,953) | 23,808 | ||
Receivable for investments sold | 806,758 | ||
Receivable for capital shares sold | 11,202 | ||
Dividends and interest receivable | 399,575 | ||
250,125,100 | |||
Liabilities | |||
Payable for investments purchased | 435,155 | ||
Payable for capital shares redeemed | 158,220 | ||
Accrued management fees | 91,998 | ||
Accrued other expenses | 1,581 | ||
686,954 | |||
Net Assets | $ | 249,438,146 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 180,259,697 | |
Undistributed net investment income | 831,119 | ||
Undistributed net realized gain | 14,173,372 | ||
Net unrealized appreciation | 54,173,958 | ||
$ | 249,438,146 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $76,483,898 | 5,811,296 | $13.16 | |||
G Class, $0.01 Par Value | $172,954,248 | 13,057,041 | $13.25 |
See Notes to Financial Statements.
11
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2017 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $346,015) | $ | 3,298,535 | |
Interest | 17,746 | ||
3,316,281 | |||
Expenses: | |||
Management fees | 3,096,812 | ||
Directors' fees and expenses | 7,325 | ||
Other expenses | 8,435 | ||
3,112,572 | |||
Fees waived - G Class | (656,086 | ) | |
2,456,486 | |||
Net investment income (loss) | 859,795 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 30,815,475 | ||
Foreign currency translation transactions | (45,043 | ) | |
30,770,432 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 38,729,235 | ||
Translation of assets and liabilities in foreign currencies | 30,263 | ||
38,759,498 | |||
Net realized and unrealized gain (loss) | 69,529,930 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 70,389,725 |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2017 AND NOVEMBER 30, 2016 | ||||||
Increase (Decrease) in Net Assets | November 30, 2017 | November 30, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 859,795 | $ | 143,007 | ||
Net realized gain (loss) | 30,770,432 | (7,312,939 | ) | |||
Change in net unrealized appreciation (depreciation) | 38,759,498 | 1,682,925 | ||||
Net increase (decrease) in net assets resulting from operations | 70,389,725 | (5,487,007 | ) | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | — | (438,707 | ) | |||
G Class | (229,198 | ) | (1,087,818 | ) | ||
R6 Class | (48,848 | ) | (82,548 | ) | ||
Decrease in net assets from distributions | (278,046 | ) | (1,609,073 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (31,989,073 | ) | 11,295,936 | |||
Net increase (decrease) in net assets | 38,122,606 | 4,199,856 | ||||
Net Assets | ||||||
Beginning of period | 211,315,540 | 207,115,684 | ||||
End of period | $ | 249,438,146 | $ | 211,315,540 | ||
Undistributed net investment income | $ | 831,119 | $ | 267,811 |
See Notes to Financial Statements.
13
Notes to Financial Statements |
NOVEMBER 30, 2017
1. Organization
American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. NT International Small-Mid Cap Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek capital growth. The fund is not permitted to invest in securities issued by companies assigned the Global Industry Classification Standard or the Bloomberg Industry Classification Standard for the tobacco industry. The fund offers the Investor Class and G Class (formerly Institutional Class). On July 31, 2017, all outstanding R6 Class shares were converted to G Class shares and the fund discontinued offering the R6 Class.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the
14
fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes.
Investment Income — Dividend income less foreign taxes withheld, if any, is recorded as of the ex-dividend date. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund 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 fund. In addition, in the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
15
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. Various funds issued by American Century Asset Allocation Portfolios, Inc. own, in aggregate, 100% of the shares of the fund. Related parties do not invest in the fund for the purpose of exercising management or control.
Management Fees —The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. The annual management fee is 1.47% for the Investor Class and 1.12% for the G Class. Prior to July 31, 2017, the annual management fee was 1.47% for the Investor Class, 1.27% for the G Class and 1.12% for the R6 Class. Effective July 31, 2017, the investment advisor agreed to waive the G Class’s management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors. The effective annual management fee before waiver for each class for the period ended November 30, 2017 was 1.47% and 1.21% for Investor Class and G Class, respectively. The effective annual management fee after waiver for the period ended November 30, 2017 was 0.79% for the G Class.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund purchases and sales were $65,677 and $258,186, respectively. The effect of interfund transactions on the Statement of Operations was $16,870 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended November 30, 2017 were $287,768,449 and $319,307,796, respectively.
16
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2017 | Year ended November 30, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 80,000,000 | 80,000,000 | ||||||||
Sold | 185,865 | $ | 1,926,572 | 251,243 | $ | 2,516,289 | ||||
Issued in reinvestment of distributions | — | — | 43,010 | 438,707 | ||||||
Redeemed | (668,963 | ) | (8,684,935 | ) | (360,077 | ) | (3,719,805 | ) | ||
(483,098 | ) | (6,758,363 | ) | (65,824 | ) | (764,809 | ) | |||
G Class/Shares Authorized | 140,000,000 | 130,000,000 | ||||||||
Sold | 2,156,750 | 25,135,249 | 2,158,137 | 21,060,150 | ||||||
Issued in reinvestment of distributions | 23,435 | 229,198 | 106,649 | 1,087,818 | ||||||
Redeemed | (2,806,216 | ) | (33,432,000 | ) | (1,517,409 | ) | (15,850,337 | ) | ||
(626,031 | ) | (8,067,553 | ) | 747,377 | 6,297,631 | |||||
R6 Class/Shares Authorized | N/A | 40,000,000 | ||||||||
Sold | 442,046 | 4,634,032 | 646,960 | 6,528,039 | ||||||
Issued in reinvestment of distributions | 4,995 | 48,848 | 8,093 | 82,548 | ||||||
Redeemed | (1,837,661 | ) | (21,846,037 | ) | (82,231 | ) | (847,473 | ) | ||
(1,390,620 | ) | (17,163,157 | ) | 572,822 | 5,763,114 | |||||
Net increase (decrease) | (2,499,749 | ) | $ | (31,989,073 | ) | 1,254,375 | $ | 11,295,936 |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. 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.
• Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
• Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
• Level 3 valuation inputs consist of unobservable data (including a 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 necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | — | $ | 243,868,785 | — | ||||
Temporary Cash Investments | $ | 4,698 | 5,010,274 | — | ||||
$ | 4,698 | $ | 248,879,059 | — |
17
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.
The fund invests in common stocks of small companies. Because of this, the fund may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
The fund’s investment process may result in high portfolio turnover, which could mean high transaction costs, affecting both performance and capital gains tax liabilities to investors.
8. Federal Tax Information
On December 19, 2017, the fund declared and paid a per-share distribution from net realized gains to shareholders of record on December 18, 2017 of $0.5683 for the Investor Class and G Class.
The tax character of distributions paid during the years ended November 30, 2017 and November 30, 2016 were as follows:
2017 | 2016 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 278,046 | $ | 1,609,073 | ||
Long-term capital gains | — | — |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 197,092,784 | |
Gross tax appreciation of investments | $ | 53,233,022 | |
Gross tax depreciation of investments | (1,442,049 | ) | |
Net tax appreciation (depreciation) of investments | 51,790,973 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | 3,429 | ||
Net tax appreciation (depreciation) | $ | 51,794,402 | |
Undistributed ordinary income | $ | 3,085,613 | |
Accumulated long-term gains | $ | 14,298,434 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the realization to ordinary income for tax purposes of unrealized gains on investments in passive foreign investment companies.
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Financial Highlights |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||
2017 | $9.88 | (0.01) | 3.29 | 3.28 | — | $13.16 | 33.20% | 1.48% | (0.10)% | 122% | $76,484 | ||
2016 | $10.29 | (0.01) | (0.33) | (0.34) | (0.07) | $9.88 | (3.12)% | 1.47% | (0.07)% | 138% | $62,162 | ||
2015(3) | $10.00 | 0.02 | 0.27 | 0.29 | — | $10.29 | 2.70% | 1.47%(4) | 0.32%(4) | 118% | $65,428 | ||
G Class(5) | |||||||||||||
2017 | $9.89 | 0.06 | 3.32 | 3.38 | (0.02) | $13.25 | 34.20% | 0.80%(6) | 0.58%(6) | 122% | $172,954 | ||
2016 | $10.30 | 0.01 | (0.33) | (0.32) | (0.09) | $9.89 | (2.97)% | 1.27% | 0.13% | 138% | $135,377 | ||
2015(3) | $10.00 | 0.04 | 0.26 | 0.30 | — | $10.30 | 2.80% | 1.27%(4) | 0.52%(4) | 118% | $133,255 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day. Total returns for periods less than one year are not annualized. |
(3) | March 19, 2015 (fund inception) through November 30, 2015. |
(4) | Annualized. |
(5) | Prior to July 31, 2017, the G Class was referred to as the Institutional Class. |
(6) | The ratio of operating expenses to average net assets before expense waiver and the ratio of net investment income (loss) to average net assets before expense waiver was 1.22% and 0.16%, respectively. |
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century World Mutual Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of NT International Small-Mid Cap Fund (the “Fund”), one of the funds constituting American Century World Mutual Funds, Inc., as of November 30, 2017, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2017, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of NT International Small-Mid Cap Fund of American Century World Mutual Funds, Inc. as of November 30, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2018
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Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Mr. Thomas, 15) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 69 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired; Executive Vice President, ACC (2007 to 2013); President, ACS (2007 to 2013); Chief Operating Officer, ACC (2007 to 2012) | 69 | None |
Andrea C. Hall (1945) | Director | Since 1997 | Retired | 69 | None |
Jan M. Lewis (1957) | Director | Since 2011 | Retired; President and Chief Executive Officer, Catholic Charities of Northeast Kansas (human services organization) (2006 to 2013) | 69 | None |
James A. Olson (1942) | Director and Chairman of the Board | Since 2007 (Chairman since 2014) | Member, Plaza Belmont LLC (private equity fund manager) (1999 to present) | 69 | Saia, Inc. (2002 to 2012) and EPR Properties (2003 to 2013) |
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Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
M. Jeannine Strandjord (1945) | Director | Since 1994 | Retired | 69 | Euronet Worldwide Inc. and MGP Ingredients, Inc. |
John R. Whitten (1946) | Director | Since 2008 | Retired | 69 | Rudolph Technologies, Inc. |
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 69 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director and President | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 114 | BioMed Valley Discoveries, Inc. |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
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Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 15 investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years |
Jonathan S. Thomas (1963) | Director and President since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries |
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present); Vice President, Client Interactions and Marketing, ACIS (2013 to 2014); Director, Client Interactions and Marketing, ACIS (2007 to 2013). Also serves as Vice President, ACIS |
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS |
C. Jean Wade (1964) | Vice President,Treasurer and Chief Financial Officer since 2012 | Vice President, ACS (2000 to present) |
Robert J. Leach (1966) | Vice President since 2006 and Assistant Treasurer since 2012 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present); Associate General Counsel, ACC (2001 to present). Also serves as Vice President, ACIM and ACS |
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Approval of Management Agreement |
At a meeting held on June 29, 2017, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
• | the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund; |
• | the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis; |
• | the investment performance of the Fund, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; |
• | the cost of owning the Fund compared to the cost of owning similar funds; |
• | the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers; |
• | financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor; |
• | strategic plans of the Advisor |
• | possible economies of scale associated with the Advisor’s management of the Fund and other accounts under its management; |
• | data comparing services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices by the Fund and the Advisor regarding financial intermediaries, the nature of services provided by intermediaries, and the terms of share classes utilized; and |
• | any collateral benefits derived by the Advisor from the management of the Fund. |
The Directors held three in-person meetings and one telephonic meeting to review and discuss the information provided. The independent Directors also reviewed responses to supplemental information requests and held active discussions with the Advisor regarding the renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In
24
connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services - Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including without limitation the following:
• | portfolio research and security selection |
• | securities trading |
• | Fund administration |
• | custody of Fund assets |
• | daily valuation of the Fund’s portfolio |
• | shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications |
• | legal services (except the independent Directors’ counsel) |
• | regulatory and portfolio compliance |
• | financial reporting |
• | marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans) |
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment. The Board noted specifically the resources the Advisor has committed during the year to compliance with the Department of Labor fiduciary rule and share class modernization.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review detailed performance information provided by the Advisor during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board receives a report from the Advisor regarding the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was below its benchmark for the one-year period reviewed by the Board. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through various committees of the Board, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to,
25
information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the Advisor. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business to provide shareholders additional content and services.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, and the fees and expenses of the Fund’s independent Directors (including their independent legal counsel) and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was at the median of the total expense ratios of the Fund’s peer expense universe and was within the range of its peer expense group. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
26
Comparison to Fees and Services Provided to Other Clients of the Advisor. The Directors also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Board reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor's resources and reasonable profits. The Board found the payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor receives proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
27
Proxy Voting Results |
A special meeting of shareholders was held on October 18, 2017, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect four directors to the Board of Directors of American Century World Mutual Funds, Inc.:
Affirmative | Withhold | ||||||
Thomas W. Bunn | $ | 5,482,015,298 | $ | 72,735,781 | |||
Barry Fink | $ | 5,485,170,607 | $ | 69,580,472 | |||
Jan M. Lewis | $ | 5,489,025,901 | $ | 65,725,178 | |||
Stephen E. Yates | $ | 5,481,872,069 | $ | 72,879,010 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Andrea C. Hall, James A. Olson, M. Jeannine Strandjord, and John R. Whitten.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of 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 fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s 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 fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
29
Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended November 30, 2017.
For the fiscal year ended November 30, 2017, the fund intends to pass through to shareholders foreign source income of $3,644,550 and foreign taxes paid of $345,297, or up to the maximum amount allowable, as a foreign tax credit. Foreign source income and foreign tax expense per outstanding share on November 30, 2017 are $0.1932 and $0.0183, respectively.
30
Notes |
31
Notes |
32
Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century World Mutual Funds, Inc. | ||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||
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. | ||
©2018 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91025 1801 |
Annual Report | |
November 30, 2017 | |
NT International Value Fund |
Table of Contents |
Performance | 2 | |
Portfolio Commentary | ||
Fund Characteristics | ||
Shareholder Fee Example | ||
Schedule of Investments | ||
Statement of Assets and Liabilities | ||
Statement of Operations | ||
Statement of Changes in Net Assets | ||
Notes to Financial Statements | ||
Financial Highlights | ||
Report of Independent Registered Public Accounting Firm | ||
Management | ||
Approval of Management Agreement | ||
Proxy Voting Results | ||
Additional Information |
Any opinions expressed in this report reflect those of the author 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.
Performance |
Total Returns as of November 30, 2017 | ||||
Average Annual Returns | ||||
Ticker Symbol | 1 year | Since Inception | Inception Date | |
Investor Class | ANTVX | 24.32% | 3.91% | 3/19/15 |
MSCI EAFE Value Index | — | 25.08% | 5.11% | — |
G Class | ANTYX | 24.99% | 4.27% | 3/19/15 |
G Class returns would have been lower if a portion of the fees had not been waived. Prior to July 31, 2017, the G Class was referred to as the Institutional Class.
Growth of $10,000 Over Life of Class |
$10,000 investment made March 19, 2015 |
Performance for other share classes will vary due to differences in fee structure. |
Value on November 30, 2017 | |
Investor Class — $11,094 | |
MSCI EAFE Value Index — $11,442 | |
Total Annual Fund Operating Expenses | |
Investor Class | G Class |
1.31% | 0.96% |
The total annual fund operating expenses shown is as stated in the fund’s prospectus current as of the date of this report. The prospectus may vary from the expense ratio shown elsewhere in this report because it is based on a different time period, includes acquired fund fees and expenses, and, if applicable, does not include fee waivers or expense reimbursements.
Data presented reflect past performance. Past performance is no guarantee of future results. Current performance may be higher or lower than the performance shown. Total returns for periods less than one year are not annualized. Investment return and principal value will fluctuate, and redemption value may be more or less than original cost. 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. To obtain performance data current to the most recent month end, please call 1-800-345-2021 or visit americancentury.com. For additional information about the fund, please consult the prospectus.
2
Portfolio Commentary |
Portfolio Managers: Elizabeth Xie and Vinod Chandrashekaran
Performance Summary
NT International Value gained 24.99%* for the fiscal year ended November 30, 2017, compared with the 25.08% return of its benchmark, the MSCI EAFE Value Index. Fund results reflect operating expenses, while benchmark returns do not.
Global stock markets delivered robust gains for the fiscal year during a rare period of synchronized economic growth, fed by supportive central bank policies, which also fostered strong corporate earnings growth. The period began with the U.S. stock market rallying on expectations of a business-friendly, pro-growth Trump agenda. Concerns over a wave of populist and nationalistic parties rising to power with negative economic consequences were quelled in part by the victory of centrist candidate Emmanuel Macron in the French presidential election in May. Despite rising geopolitical uncertainty in Asia related to North Korea’s missile tests, Japan and other Asian markets held onto stock gains while European markets continued to rise throughout the year on strong revenue and earnings results along with accelerating economic growth.
Our stock selection process incorporates factors of valuation, quality, and sentiment while minimizing unintended risks among industries and other risk characteristics. Weak stock selection in the financials sector detracted the most from relative results. The telecommunication services, information technology, and utilities sectors also detracted from performance. Conversely, the industrials, real estate, and energy sectors added to relative returns, largely as a result of positive stock selection.
Geographically, stock selection in the United Kingdom, Spain, and Switzerland weighed on the fund’s results along with an underweight to Italy, which also detracted from returns despite positive stock selection in that country. Italian stocks performed very well during the period, and we had some exposure there, but less than the benchmark. In contrast, stock selection in Germany, Japan, and France strongly contributed to relative returns along with a mix of stock selection in Israel and an underweight to that country.
U.K.-Based Holdings Detracted from Performance
In the U.K., an overweight to utility firm Centrica hurt the fund’s performance. The firm lost customers and profits declined. Although the stock had very positive valuation and quality signals, its sentiment reading was weak. A significant overweight in U.K.-based pharmaceutical firm GlaxoSmithKline also detracted from performance after its drug prices faced pressure late in the period as a respiratory drug’s patent approached its expiration. An overweight in ProSiebenSat.1 Media, a Germany-based digital entertainment firm, weighed on results as investors grew concerned about costly e-commerce and online acquisitions. Other detractors included Japanese automaker Subaru, which incurred rising costs and shrinking profits on a stronger yen despite record sales and revenues, and Australian telecommunications firm Telstra, which reported declining core earnings. We trimmed our position in Telstra but remained overweight despite falling sentiment scores due to strong quality and valuation metrics.
*All fund returns referenced in this commentary are for G Class shares. G Class returns would have been lower if a portion of the fees had not been waived. Performance for other share classes will vary due to differences in fee structure; when G Class performance exceeds that of the fund's benchmark, other share classes may not. See page 2 for returns for all share classes.
3
German and Australian Airlines Among Contributors
Germany-based Deutsche Lufthansa soared on upgraded expectations for 2017 revenues and earnings, fueled by a pickup in traffic. The stock had strong scores for sentiment, valuation, and quality. Avoiding Israel-based Teva Pharmaceutical Industries aided relative returns. The drugmaker’s shares declined after Teva cut its dividend and reduced its sales forecasts. Germany-based Uniper, a portfolio-only energy generation and trading company, also contributed. Its stock performed well on its improved balance sheet as a result of management cost cutting, a raised dividend, and the possibility it would be acquired by Finland's Fortum Oyj. Although its valuation and momentum scores were high, its quality deteriorated and we sold our shares for a profit. Shares of French automotive parts firm Faurecia rose on global business expansion and strong earnings growth. Australian airline Qantas Airways also contributed to returns as the global airline industry received a boost on higher traffic and benefited from analyst upgrades.
A Look Ahead
As 2017 comes toward a close, we see a number of potential positives for international value stocks in the coming year. Looking generally at economic growth prospects outside the U.S., we see supportive data indicating we are in the early stages of a broad global economic recovery. This is mirrored by widespread improvement in corporate earnings in both developed and emerging markets that, we believe, should support value stocks. Market sentiment also appears positive and resilient despite ongoing geopolitical concerns. In addition, we continue to believe valuation factors remain historically attractive.
We believe our disciplined investment approach is particularly beneficial during periods of likely volatility, and we adhere to our process regardless of the market environment. We believe that this allows us to take advantage of opportunities presented by market inefficiencies.
4
Fund Characteristics |
NOVEMBER 30, 2017 | |
Top Ten Holdings | % of net assets |
Royal Dutch Shell plc, B Shares | 3.5% |
HSBC Holdings plc (London) | 3.0% |
Allianz SE | 2.3% |
Novartis AG | 2.0% |
BNP Paribas SA | 1.9% |
Toyota Motor Corp. | 1.9% |
GlaxoSmithKline plc | 1.9% |
Rio Tinto plc | 1.8% |
ING Groep NV | 1.6% |
Australia & New Zealand Banking Group Ltd. | 1.6% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.2% |
Exchange-Traded Funds | 0.7% |
Total Equity Exposure | 98.9% |
Temporary Cash Investments | 0.7% |
Other Assets and Liabilities | 0.4% |
Investments by Country | % of net assets |
Japan | 22.7% |
United Kingdom | 17.4% |
Germany | 11.1% |
France | 10.5% |
Switzerland | 8.2% |
Australia | 6.2% |
Spain | 4.5% |
Sweden | 2.8% |
South Korea | 2.0% |
Other Countries | 12.8% |
Exchange-Traded Funds* | 0.7% |
Cash and Equivalents** | 1.1% |
*Category may increase exposure to the countries indicated. The Schedule of Investments provides additional information on the fund's portfolio holdings. | |
**Includes temporary cash investments and other assets and liabilities. |
5
Shareholder Fee Example |
Fund shareholders may incur two types of costs: (1) transaction costs, including sales charges (loads) on purchase payments and redemption/exchange fees; and (2) ongoing costs, including management fees; distribution and service (12b-1) fees; and other fund expenses. This example is intended to help you understand your ongoing costs (in dollars) of investing in your fund and to compare these costs with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the period and held for the entire period from June 1, 2017 to November 30, 2017.
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.
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.
Beginning Account Value 6/1/17 | Ending Account Value 11/30/17 | Expenses Paid During Period(1) 6/1/17 - 11/30/17 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,075.60 | $6.71 | 1.29% |
G Class | $1,000 | $1,080.60 | $1.77 | 0.34% |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.60 | $6.53 | 1.29% |
G Class | $1,000 | $1,023.36 | $1.72 | 0.34% |
(1) | Expenses are equal to the class's annualized expense ratio listed in the table above, multiplied by the average account value over the period, multiplied by 183, the number of days in the most recent fiscal half-year, divided by 365, to reflect the one-half year period. Annualized expense ratio reflects actual expenses, including any applicable fee waivers or expense reimbursements and excluding any acquired fund fees and expenses. |
6
Schedule of Investments |
NOVEMBER 30, 2017
Shares | Value | ||||
COMMON STOCKS — 98.2% | |||||
Australia — 6.2% | |||||
Australia & New Zealand Banking Group Ltd. | 699,721 | $ | 15,199,041 | ||
Bendigo and Adelaide Bank Ltd. | 350,735 | 3,108,067 | |||
CIMIC Group Ltd. | 74,477 | 2,882,880 | |||
Coca-Cola Amatil Ltd. | 226,745 | 1,364,833 | |||
Dexus | 294,119 | 2,314,566 | |||
Fortescue Metals Group Ltd. | 1,184,075 | 4,143,479 | |||
Insurance Australia Group Ltd. | 243,421 | 1,327,904 | |||
Qantas Airways Ltd. | 1,419,467 | 6,178,414 | |||
Regis Resources Ltd. | 291,032 | 864,531 | |||
Scentre Group | 567,225 | 1,824,459 | |||
Telstra Corp. Ltd. | 1,004,819 | 2,613,472 | |||
Wesfarmers Ltd. | 81,781 | 2,729,022 | |||
Westpac Banking Corp. | 455,722 | 10,944,608 | |||
Whitehaven Coal Ltd. | 300,999 | 885,565 | |||
Woodside Petroleum Ltd. | 119,137 | 2,821,555 | |||
59,202,396 | |||||
Austria — 0.9% | |||||
Erste Group Bank AG | 10,907 | 474,468 | |||
OMV AG | 135,302 | 8,420,188 | |||
8,894,656 | |||||
Belgium — 1.2% | |||||
KBC Group NV | 135,482 | 11,092,341 | |||
Brazil — 0.1% | |||||
Banco Santander Brasil SA ADR | 92,636 | 810,565 | |||
China — 1.3% | |||||
China CITIC Bank Corp. Ltd., H Shares | 1,286,000 | 834,291 | |||
China Construction Bank Corp., H Shares | 5,727,000 | 5,016,828 | |||
Country Garden Holdings Co. | 1,700,000 | 2,698,519 | |||
Industrial & Commercial Bank of China Ltd., H Shares | 2,704,000 | 2,120,484 | |||
Tencent Holdings Ltd. | 25,100 | 1,295,639 | |||
11,965,761 | |||||
Denmark — 0.1% | |||||
TDC A/S | 168,414 | 1,026,154 | |||
Finland — 0.9% | |||||
UPM-Kymmene Oyj | 192,820 | 5,792,354 | |||
Valmet Oyj | 149,627 | 2,752,445 | |||
8,544,799 | |||||
France — 10.5% | |||||
Air France-KLM(1) | 213,392 | 3,034,535 | |||
BNP Paribas SA | 244,399 | 18,513,353 | |||
Casino Guichard Perrachon SA | 58,289 | 3,548,164 |
7
Shares | Value | ||||
CNP Assurances | 338,451 | $ | 7,628,025 | ||
Credit Agricole SA | 110,000 | 1,855,040 | |||
Engie SA | 313,660 | 5,490,376 | |||
Eutelsat Communications SA | 150,078 | 3,400,028 | |||
Faurecia | 32,944 | 2,520,886 | |||
Metropole Television SA | 78,861 | 2,074,603 | |||
Neopost SA | 14,041 | 467,669 | |||
Orange SA | 325,286 | 5,606,674 | |||
Peugeot SA | 333,941 | 6,906,993 | |||
Sanofi | 72,425 | 6,611,995 | |||
SCOR SE | 36,591 | 1,493,307 | |||
Societe Generale SA | 247,180 | 12,459,053 | |||
TOTAL SA | 192,124 | 10,847,321 | |||
Veolia Environnement SA | 305,706 | 7,734,290 | |||
100,192,312 | |||||
Germany — 11.1% | |||||
Allianz SE | 93,798 | 22,121,180 | |||
BASF SE | 49,524 | 5,541,298 | |||
CECONOMY AG | 59,392 | 778,542 | |||
Commerzbank AG(1) | 54,669 | 791,313 | |||
Covestro AG | 57,232 | 5,965,359 | |||
Daimler AG | 32,874 | 2,720,112 | |||
Deutsche Lufthansa AG | 257,740 | 8,863,172 | |||
Deutsche Telekom AG | 176,788 | 3,159,038 | |||
Deutsche Wohnen SE | 75,080 | 3,319,882 | |||
E.ON SE | 853,363 | 9,872,395 | |||
Grand City Properties SA | 31,310 | 715,783 | |||
Hamburger Hafen und Logistik AG | 38,203 | 1,124,401 | |||
Hannover Rueck SE | 46,761 | 6,147,191 | |||
HUGO BOSS AG | 28,495 | 2,344,289 | |||
METRO AG(1) | 209,747 | 4,095,038 | |||
Muenchener Rueckversicherungs-Gesellschaft AG | 29,228 | 6,506,209 | |||
ProSiebenSat.1 Media SE | 124,108 | 3,948,466 | |||
Rheinmetall AG | 18,232 | 2,319,973 | |||
RTL Group SA | 41,078 | 3,277,451 | |||
Schaeffler AG Preference Shares | 229,994 | 4,012,877 | |||
Siemens AG | 46,389 | 6,308,407 | |||
Telefonica Deutschland Holding AG | 200,081 | 951,645 | |||
Vonovia SE | 23,451 | 1,103,786 | |||
105,987,807 | |||||
Hong Kong — 1.1% | |||||
Kerry Properties Ltd. | 657,500 | 2,924,196 | |||
PCCW Ltd. | 5,916,000 | 3,518,944 | |||
WH Group Ltd. | 1,249,500 | 1,330,366 | |||
Wheelock & Co. Ltd. | 443,000 | 3,049,981 | |||
10,823,487 |
8
Shares | Value | ||||
India — 0.5% | |||||
Tata Power Co. Ltd. (The) | 1,636,147 | $ | 2,412,295 | ||
Yes Bank Ltd. | 539,093 | 2,574,076 | |||
4,986,371 | |||||
Italy — 1.2% | |||||
Assicurazioni Generali SpA | 311,992 | 5,715,043 | |||
Enel SpA | 436,711 | 2,837,220 | |||
Fiat Chrysler Automobiles NV(1) | 161,684 | 2,778,227 | |||
11,330,490 | |||||
Japan — 22.7% | |||||
Bridgestone Corp. | 252,400 | 11,503,953 | |||
Brother Industries Ltd. | 223,000 | 5,529,992 | |||
Canon, Inc. | 127,200 | 4,863,015 | |||
Daiichikosho Co., Ltd. | 36,300 | 1,740,956 | |||
Daiwa House Industry Co. Ltd. | 68,000 | 2,498,235 | |||
Daiwa Securities Group, Inc. | 139,000 | 867,456 | |||
Fuji Machine Manufacturing Co. Ltd. | 104,100 | 2,035,930 | |||
Haseko Corp. | 357,700 | 5,558,069 | |||
Hitachi Chemical Co. Ltd. | 139,300 | 3,682,041 | |||
Hitachi Construction Machinery Co. Ltd. | 91,000 | 3,027,046 | |||
Honda Motor Co. Ltd. | 38,800 | 1,294,958 | |||
Kajima Corp. | 797,000 | 8,403,265 | |||
KDDI Corp. | 374,000 | 10,735,984 | |||
Kirin Holdings Co. Ltd. | 108,900 | 2,554,030 | |||
Lawson, Inc. | 54,000 | 3,723,448 | |||
Leopalace21 Corp. | 637,900 | 5,109,801 | |||
Maeda Corp. | 130,300 | 1,932,469 | |||
Miraca Holdings, Inc. | 142,800 | 6,232,425 | |||
Mitsubishi Chemical Holdings Corp. | 618,000 | 6,731,669 | |||
Mitsubishi UFJ Financial Group, Inc. | 1,636,100 | 11,598,096 | |||
Mizuho Financial Group, Inc. | 3,416,800 | 6,222,356 | |||
MS&AD Insurance Group Holdings, Inc. | 75,200 | 2,453,185 | |||
Nichias Corp. | 119,000 | 1,535,109 | |||
Nippon Electric Glass Co. Ltd. | 92,100 | 3,589,960 | |||
Nippon Telegraph & Telephone Corp. | 256,400 | 13,445,624 | |||
Nishimatsu Construction Co. Ltd. | 107,300 | 3,121,711 | |||
NTT DOCOMO, Inc. | 338,900 | 8,790,271 | |||
ORIX Corp. | 301,800 | 5,206,626 | |||
Sega Sammy Holdings, Inc. | 279,300 | 3,382,606 | |||
Shizuoka Bank Ltd. (The) | 99,000 | 980,575 | |||
Sompo Holdings, Inc. | 46,300 | 1,869,398 | |||
Sony Corp. | 29,400 | 1,368,548 | |||
Subaru Corp. | 132,800 | 4,354,628 | |||
Sumitomo Corp. | 74,900 | 1,173,862 | |||
Sumitomo Mitsui Financial Group, Inc. | 137,900 | 5,605,385 | |||
Suzuki Motor Corp. | 137,900 | 7,438,415 | |||
Taisei Corp. | 154,900 | 8,219,798 |
9
Shares | Value | ||||
Tokyo Electron Ltd. | 13,900 | $ | 2,589,771 | ||
Tosoh Corp. | 289,500 | 6,423,012 | |||
Toyota Boshoku Corp. | 213,100 | 4,427,731 | |||
Toyota Motor Corp. | 289,400 | 18,235,135 | |||
Trend Micro, Inc. | 26,000 | 1,474,681 | |||
TS Tech Co. Ltd. | 118,500 | 4,873,193 | |||
216,404,418 | |||||
Netherlands — 1.6% | |||||
ING Groep NV | 845,039 | 15,256,727 | |||
Portugal — 1.1% | |||||
EDP - Energias de Portugal SA | 1,734,323 | 6,080,625 | |||
Galp Energia SGPS SA | 214,363 | 4,048,337 | |||
10,128,962 | |||||
Russia — 0.1% | |||||
Alrosa PJSC | 626,205 | 822,414 | |||
Singapore — 1.9% | |||||
Oversea-Chinese Banking Corp. Ltd. | 962,900 | 8,936,996 | |||
United Overseas Bank Ltd. | 354,600 | 6,921,575 | |||
Yangzijiang Shipbuilding Holdings Ltd. | 1,789,000 | 2,083,287 | |||
17,941,858 | |||||
South Korea — 2.0% | |||||
GS Holdings Corp. | 42,344 | 2,377,574 | |||
LG Electronics, Inc. | 43,934 | 3,651,106 | |||
Lotte Chemical Corp. | 4,789 | 1,585,745 | |||
Samsung Electronics Co. Ltd. | 1,658 | 3,895,493 | |||
SK Hynix, Inc. | 35,953 | 2,562,118 | |||
SK Innovation Co. Ltd. | 24,565 | 4,698,462 | |||
18,770,498 | |||||
Spain — 4.5% | |||||
Banco Bilbao Vizcaya Argentaria SA | 675,981 | 5,785,240 | |||
Banco Santander SA | 1,280,526 | 8,611,219 | |||
Cia de Distribucion Integral Logista Holdings SA | 28,548 | 685,543 | |||
Distribuidora Internacional de Alimentacion SA | 465,875 | 2,194,252 | |||
Mapfre SA | 1,889,023 | 6,359,003 | |||
Repsol SA | 432,672 | 7,945,381 | |||
Telefonica SA | 1,109,289 | 11,370,419 | |||
42,951,057 | |||||
Sweden — 2.8% | |||||
Electrolux AB, Series B | 198,711 | 6,608,931 | |||
Fabege AB | 147,095 | 3,060,082 | |||
Industrivarden AB, C Shares | 139,150 | 3,395,564 | |||
Kinnevik AB, B Shares | 121,506 | 3,898,334 | |||
L E Lundbergforetagen AB, B Shares | 33,416 | 2,452,985 | |||
Loomis AB, B Shares | 17,045 | 703,136 | |||
NCC AB, B Shares | 222,464 | 4,625,141 | |||
Peab AB | 170,953 | 1,536,968 |
10
Shares | Value | ||||
Tele2 AB, B Shares | 45,010 | $ | 576,242 | ||
26,857,383 | |||||
Switzerland — 8.2% | |||||
Julius Baer Group Ltd. | 64,324 | 3,782,735 | |||
Nestle SA | 86,766 | 7,428,653 | |||
Novartis AG | 218,291 | 18,677,603 | |||
Roche Holding AG | 30,860 | 7,787,267 | |||
Swiss Life Holding AG | 6,337 | 2,126,310 | |||
Swiss Re AG | 123,446 | 11,580,119 | |||
Swisscom AG | 19,221 | 10,144,072 | |||
UBS Group AG | 161,053 | 2,783,781 | |||
Zurich Insurance Group AG | 45,309 | 13,684,738 | |||
77,995,278 | |||||
Taiwan — 0.8% | |||||
Catcher Technology Co. Ltd. | 261,000 | 2,838,356 | |||
Lite-On Technology Corp. | 728,000 | 899,865 | |||
Pegatron Corp. | 498,000 | 1,144,775 | |||
Taiwan Semiconductor Manufacturing Co. Ltd. ADR | 65,680 | 2,600,928 | |||
7,483,924 | |||||
United Kingdom — 17.4% | |||||
3i Group plc | 720,489 | 8,785,097 | |||
AA plc | 339,853 | 694,379 | |||
Anglo American plc | 201,938 | 3,715,266 | |||
AstraZeneca plc | 63,265 | 4,091,744 | |||
BHP Billiton plc | 502,293 | 9,133,595 | |||
BP plc | 1,467,648 | 9,715,577 | |||
Capita plc | 118,686 | 749,700 | |||
Centamin plc | 499,723 | 930,314 | |||
Centrica plc | 3,692,322 | 7,195,870 | |||
Evraz plc | 517,007 | 2,003,709 | |||
Firstgroup plc(1) | 590,701 | 869,676 | |||
G4S plc | 392,919 | 1,355,524 | |||
GlaxoSmithKline plc | 1,049,295 | 18,155,653 | |||
HSBC Holdings plc (London) | 2,847,451 | 28,308,637 | |||
Investec plc | 176,658 | 1,235,924 | |||
Legal & General Group plc | 595,094 | 2,151,207 | |||
Lloyds Banking Group plc | 3,423,488 | 3,049,557 | |||
Marks & Spencer Group plc | 519,733 | 2,202,010 | |||
Rio Tinto plc | 352,607 | 16,713,253 | |||
Royal Dutch Shell plc, B Shares | 1,032,506 | 33,479,198 | |||
Royal Mail plc | 791,653 | 4,719,445 | |||
Standard Life Aberdeen plc | 1,014,923 | 5,910,439 | |||
Thomas Cook Group plc | 453,573 | 727,498 | |||
165,893,272 | |||||
TOTAL COMMON STOCKS (Cost $811,775,053) | 935,362,930 | ||||
EXCHANGE-TRADED FUNDS — 0.7% | |||||
iShares MSCI EAFE ETF | 40,000 | 2,804,400 |
11
Shares | Value | ||||
iShares MSCI EAFE Value ETF | 52,000 | $ | 2,880,800 | ||
iShares MSCI Japan ETF | 22,000 | 1,318,020 | |||
TOTAL EXCHANGE-TRADED FUNDS (Cost $6,723,135) | 7,003,220 | ||||
TEMPORARY CASH INVESTMENTS — 0.7% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 0.75% - 3.75%, 4/15/18 - 2/15/47, valued at $3,655,992), in a joint trading account at 0.88%, dated 11/30/17, due 12/1/17 (Delivery value $3,591,666) | 3,591,578 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 3.375%, 5/15/44, valued at $3,055,557), at 0.34%, dated 11/30/17, due 12/1/17 (Delivery value $2,993,028) | 2,993,000 | ||||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 5,198 | 5,198 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $6,589,776) | 6,589,776 | ||||
TOTAL INVESTMENT SECURITIES — 99.6% (Cost $825,087,964) | 948,955,926 | ||||
OTHER ASSETS AND LIABILITIES — 0.4% | 4,002,509 | ||||
TOTAL NET ASSETS — 100.0% | $ | 952,958,435 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Financials | 33.0 | % |
Consumer Discretionary | 12.0 | % |
Energy | 8.8 | % |
Industrials | 8.5 | % |
Materials | 7.9 | % |
Telecommunication Services | 7.6 | % |
Health Care | 6.4 | % |
Utilities | 4.4 | % |
Information Technology | 3.6 | % |
Consumer Staples | 3.0 | % |
Real Estate | 3.0 | % |
Exchange-Traded Funds | 0.7 | % |
Cash and Equivalents* | 1.1 | % |
*Includes temporary cash investments and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
(1) | Non-income producing. |
See Notes to Financial Statements.
12
Statement of Assets and Liabilities |
NOVEMBER 30, 2017 | |||
Assets | |||
Investment securities, at value (cost of $825,087,964) | $ | 948,955,926 | |
Foreign currency holdings, at value (cost of $335,877) | 336,655 | ||
Receivable for capital shares sold | 24,872 | ||
Dividends and interest receivable | 4,758,886 | ||
954,076,339 | |||
Liabilities | |||
Payable for investments purchased | 420 | ||
Payable for capital shares redeemed | 858,875 | ||
Accrued management fees | 252,432 | ||
Accrued other expenses | 6,177 | ||
1,117,904 | |||
Net Assets | $ | 952,958,435 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 865,341,645 | |
Undistributed net investment income | 25,914,693 | ||
Accumulated net realized loss | (62,248,638 | ) | |
Net unrealized appreciation | 123,950,735 | ||
$ | 952,958,435 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $242,241,544 | 22,999,079 | $10.53 | |||
G Class, $0.01 Par Value | $710,716,891 | 67,105,445 | $10.59 |
See Notes to Financial Statements.
13
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2017 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $2,968,017) | $ | 34,908,781 | |
Interest | 31,544 | ||
34,940,325 | |||
Expenses: | |||
Management fees | 10,192,965 | ||
Directors' fees and expenses | 28,464 | ||
Other expenses | 37,524 | ||
10,258,953 | |||
Fees waived - G Class | (2,248,595 | ) | |
8,010,358 | |||
Net investment income (loss) | 26,929,967 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions (net of foreign tax expenses paid (refunded) of $4,327) | 57,968,691 | ||
Foreign currency translation transactions | (164,356 | ) | |
57,804,335 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 120,941,135 | ||
Translation of assets and liabilities in foreign currencies | 309,633 | ||
121,250,768 | |||
Net realized and unrealized gain (loss) | 179,055,103 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 205,985,070 |
See Notes to Financial Statements.
14
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2017 AND NOVEMBER 30, 2016 | ||||||
Increase (Decrease) in Net Assets | November 30, 2017 | November 30, 2016 | ||||
Operations | ||||||
Net investment income (loss) | $ | 26,929,967 | $ | 24,206,386 | ||
Net realized gain (loss) | 57,804,335 | (83,971,587 | ) | |||
Change in net unrealized appreciation (depreciation) | 121,250,768 | 45,218,406 | ||||
Net increase (decrease) in net assets resulting from operations | 205,985,070 | (14,546,795 | ) | |||
Distributions to Shareholders | ||||||
From net investment income: | ||||||
Investor Class | (6,184,068 | ) | (3,816,917 | ) | ||
G Class | (18,723,887 | ) | (12,359,341 | ) | ||
R6 Class | (2,164,034 | ) | (859,181 | ) | ||
Decrease in net assets from distributions | (27,071,989 | ) | (17,035,439 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (72,123,783 | ) | 105,894,458 | |||
Net increase (decrease) in net assets | 106,789,298 | 74,312,224 | ||||
Net Assets | ||||||
Beginning of period | 846,169,137 | 771,856,913 | ||||
End of period | $ | 952,958,435 | $ | 846,169,137 | ||
Undistributed net investment income | $ | 25,914,693 | $ | 24,685,992 |
See Notes to Financial Statements.
15
Notes to Financial Statements |
NOVEMBER 30, 2017
1. Organization
American Century World Mutual Funds, Inc. (the corporation) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as an open-end management investment company and is organized as a Maryland corporation. NT International Value Fund (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek long-term capital growth. The fund is not permitted to invest in securities issued by companies assigned the Global Industry Classification Standard or the Bloomberg Industry Classification Standard for the tobacco industry. The fund offers the Investor Class and G Class (formerly Institutional Class). On July 31, 2017, all outstanding R6 Class shares were converted to G Class shares and the fund discontinued offering the R6 Class.
2. Significant Accounting Policies
The following is a summary of significant accounting policies consistently followed by the fund in preparation of its financial statements. The fund is an investment company and follows accounting and reporting guidance in accordance with accounting principles generally accepted in the United States of America. This may require management to make certain estimates and assumptions at the date of the financial statements. Actual results could differ from these estimates. Management evaluated the impact of events or transactions occurring through the date the financial statements were issued that would merit recognition or disclosure.
Investment Valuations — The fund determines the fair value of its investments and computes its net asset value per share at the close of regular trading (usually 4 p.m. Eastern time) on the New York Stock Exchange (NYSE) on each day the NYSE is open. The Board of Directors has adopted valuation policies and procedures to guide the investment advisor in the fund’s investment valuation process and to provide methodologies for the oversight of the fund’s pricing function.
Equity securities that are listed or traded on a domestic securities exchange are valued at the last reported sales price or at the official closing price as provided by the exchange. Equity securities traded on foreign securities exchanges are generally valued at the closing price of such securities on the exchange where primarily traded or at the close of the NYSE, if that is earlier. If no last sales price is reported, or if local convention or regulation so provides, the mean of the latest bid and asked prices may be used. Securities traded over-the-counter are valued at the mean of the latest bid and asked prices, the last sales price, or the official closing price. Equity securities initially expressed in local currencies are translated into U.S. dollars at the mean of the appropriate currency exchange rate at the close of the NYSE as provided by an independent pricing service.
Open-end management investment companies are valued at the reported net asset value per share. Repurchase agreements are valued at cost, which approximates fair value.
If the fund determines that the market price for an investment is not readily available or the valuation methods mentioned above do not reflect an investment’s fair value, such investment is valued as determined in good faith by the Board of Directors or its delegate, in accordance with policies and procedures adopted by the Board of Directors. In its determination of fair value, the fund may review several factors including, but not limited to, market information regarding the specific investment or comparable investments and correlation with other investment types, futures indices or general market indicators. Circumstances that may cause the fund to use these procedures to value an investment include, but are not limited to: an investment has been declared in default or is distressed; trading in a security has been suspended during the trading day or a security is not actively trading on its principal exchange; prices received from a regular pricing source are deemed unreliable; or there is a foreign market holiday and no trading occurred.
The fund monitors for significant events occurring after the close of an investment’s primary exchange but before the fund’s net asset value per share is determined. Significant events may include, but are not limited to: corporate announcements and transactions; governmental action and political unrest that could impact a specific investment or an investment sector; or armed conflicts, natural disasters and similar events that could affect investments in a specific country or region. The fund also monitors for significant fluctuations between domestic and foreign markets, as evidenced by the U.S. market or such other indicators that the Board of Directors, or its delegate, deems appropriate. If significant fluctuations in foreign markets are identified, the
16
fund may apply a model-derived factor to the closing price of equity securities traded on foreign securities exchanges. The factor is based on observable market data as provided by an independent pricing service.
Security Transactions — Security transactions are accounted for as of the trade date. Net realized gains and losses are determined on the identified cost basis, which is also used for federal income tax purposes. Certain countries impose taxes on realized gains on the sale of securities registered in their country. The fund records the foreign tax expense, if any, on an accrual basis. The foreign tax expense on realized gains and unrealized appreciation 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. Distributions received on securities that represent a return of capital or long-term capital gain are recorded as a reduction of cost of investments and/or as a realized gain. The fund may estimate the components of distributions received that may be considered nontaxable distributions or long-term capital gain distributions for income tax purposes. Interest income is recorded on the accrual basis and includes accretion of discounts and amortization of premiums.
Foreign Currency Translations — All assets and liabilities initially expressed in foreign currencies are translated into U.S. dollars at prevailing exchange rates at period end. The fund may enter into spot foreign currency exchange contracts to facilitate transactions denominated in a foreign currency. Purchases and sales of investment securities, dividend and interest income, spot foreign currency exchange contracts, and expenses are translated at the rates of exchange prevailing on the respective dates of such transactions. Net realized and unrealized foreign currency exchange gains or losses related to investment securities are a component of net realized gain (loss) on investment transactions and change in net unrealized appreciation (depreciation) on investments, respectively.
Repurchase Agreements — The fund may enter into repurchase agreements with institutions that American Century Investment Management, Inc. (ACIM) (the investment advisor) has determined are creditworthy pursuant to criteria adopted by the Board of Directors. The fund requires that the collateral, represented by securities, received in a repurchase transaction be transferred to the custodian in a manner sufficient to enable the fund to obtain those securities in the event of a default under the repurchase agreement. ACIM monitors, on a daily basis, the securities transferred to ensure the value, including accrued interest, of the securities under each repurchase agreement is equal to or greater than amounts owed to the fund under each repurchase agreement.
Joint Trading Account — Pursuant to an Exemptive Order issued by the Securities and Exchange Commission, the fund, along with certain other funds in the American Century Investments family of funds, may transfer uninvested cash balances into a joint trading account. These balances are invested in one or more repurchase agreements that are collateralized by U.S. Treasury or Agency obligations.
Income Tax Status — It is the fund’s policy to distribute substantially all net investment income and net realized gains to shareholders and to otherwise qualify as a regulated investment company under provisions of the Internal Revenue Code. Accordingly, no provision has been made for income taxes. The fund files U.S. federal, state, local and non-U.S. tax returns as applicable. The fund's tax returns are subject to examination by the relevant taxing authority until expiration of the applicable statute of limitations, which is generally three years from the date of filing but can be longer in certain jurisdictions. At this time, management believes there are no uncertain tax positions which, based on their technical merit, would not be sustained upon examination and for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Multiple Class — All shares of the fund represent an equal pro rata interest in the net assets of the class to which such shares belong, and have identical voting, dividend, liquidation and other rights and the same terms and conditions, except for class specific expenses and exclusive rights to vote on matters affecting only individual classes. Income, non-class specific expenses, and realized and unrealized capital gains and losses of the fund are allocated to each class of shares based on their relative net assets.
Distributions to Shareholders — Distributions from net investment income and net realized gains, if any, are generally declared and paid annually. The fund 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 fund. In addition, in
17
the normal course of business, the fund enters into contracts that provide general indemnifications. The maximum exposure under these arrangements is unknown as this would involve future claims that may be made against a fund. The risk of material loss from such claims is considered by management to be remote.
3. Fees and Transactions with Related Parties
Certain officers and directors of the corporation are also officers and/or directors of American Century Companies, Inc. (ACC). The corporation’s investment advisor, ACIM, the corporation's distributor, American Century Investment Services, Inc., and the corporation’s transfer agent, American Century Services, LLC, are wholly owned, directly or indirectly, by ACC. Various funds issued by American Century Asset Allocation Portfolios, Inc. own, in aggregate, 100% of the shares of the fund. Related parties do not invest in the fund for the purpose of exercising management or control.
Management Fees — The corporation has entered into a management agreement with ACIM, under which ACIM provides the fund with investment advisory and management services in exchange for a single, unified management fee (the fee) per class. The agreement provides that all expenses of managing and operating the fund, except distribution and service fees, brokerage expenses, taxes, interest, fees and expenses of the independent directors (including legal counsel fees), and extraordinary expenses, will be paid by ACIM. The fee is computed and accrued daily based on each class's daily net assets and paid monthly in arrears. The difference in the fee among the classes is a result of their separate arrangements for non-Rule 12b-1 shareholder services, which may be provided indirectly through another American Century Investments mutual fund. It is not the result of any difference in advisory or custodial fees or other expenses related to the management of the fund’s assets, which do not vary by class. The rate of the fee is determined by applying a fee rate calculation formula. This formula takes into account the fund’s assets as well as certain assets, if any, of other clients of the investment advisor outside the American Century Investments family of funds (such as subadvised funds and separate accounts) that use very similar investment teams and strategies (strategy assets). The strategy assets of the fund also include the assets of International Value Fund, one fund in a series issued by the corporation. The management fee schedule ranges from 1.100% to 1.300% for the Investor Class and 0.750% to 0.950% for the G Class. Prior to July 31, 2017, the management fee schedule ranged from 1.100% to 1.300% for the Investor Class, 0.900% to 1.100% for the G Class and 0.750% to 0.950% for the R6 Class. Effective July 31, 2017, the investment advisor agreed to waive the G Class’s management fee in its entirety. The investment advisor expects this waiver to remain in effect permanently and cannot terminate it without the approval of the Board of Directors. The effective annual management fee before waiver for each class for the period ended November 30, 2017 was 1.28% and 1.03% for the Investor Class and G Class, respectively. The effective annual management fee after waiver for the period ended November 30, 2017 was 0.68% for the G Class.
Directors' Fees and Expenses — The Board of Directors is responsible for overseeing the investment advisor’s management and operations of the fund. The directors receive detailed information about the fund and its investment advisor regularly throughout the year, and meet at least quarterly with management of the investment advisor to review reports about fund operations. The fund’s officers do not receive compensation from the fund.
Interfund Transactions — The fund may enter into security transactions with other American Century Investments funds and other client accounts of the investment advisor, in accordance with the 1940 Act rules and procedures adopted by the Board of Directors. The rules and procedures require, among other things, that these transactions be effected at the independent current market price of the security. During the period, the interfund sales were $19,475 and there were no interfund purchases. The effect of interfund transactions on the Statement of Operations was $941 in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended November 30, 2017 were $723,351,994 and $792,014,721, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2017 | Year ended November 30, 2016 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 250,000,000 | 200,000,000 | ||||||||
Sold | 2,144,328 | $ | 20,023,440 | 3,132,613 | $ | 26,218,987 | ||||
Issued in reinvestment of distributions | 706,751 | 6,184,068 | 434,234 | 3,816,917 | ||||||
Redeemed | (2,892,490 | ) | (29,614,935 | ) | (1,552,422 | ) | (14,447,913 | ) | ||
(41,411 | ) | (3,407,427 | ) | 2,014,425 | 15,587,991 | |||||
G Class/Shares Authorized | 640,000,000 | 450,000,000 | ||||||||
Sold | 11,463,291 | 115,098,247 | 15,155,157 | 124,940,633 | ||||||
Issued in reinvestment of distributions | 2,139,873 | 18,723,887 | 1,406,068 | 12,359,341 | ||||||
Redeemed | (13,518,000 | ) | (132,347,786 | ) | (8,401,524 | ) | (73,318,382 | ) | ||
85,164 | 1,474,348 | 8,159,701 | 63,981,592 | |||||||
R6 Class/Shares Authorized | N/A | 40,000,000 | ||||||||
Sold | 1,980,937 | 18,309,291 | 3,801,362 | 32,137,412 | ||||||
Issued in reinvestment of distributions | 247,318 | 2,164,034 | 97,746 | 859,181 | ||||||
Redeemed | (8,948,145 | ) | (90,664,029 | ) | (776,551 | ) | (6,671,718 | ) | ||
(6,719,890 | ) | (70,190,704 | ) | 3,122,557 | 26,324,875 | |||||
Net increase (decrease) | (6,676,137 | ) | $ | (72,123,783 | ) | 13,296,683 | $ | 105,894,458 |
6. Fair Value Measurements
The fund’s investments valuation process is based on several considerations and may use multiple inputs to determine the fair value of the investments held by the fund. 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.
• Level 1 valuation inputs consist of unadjusted quoted prices in an active market for identical investments.
• Level 2 valuation inputs consist of direct or indirect observable market data (including quoted prices for comparable investments, evaluations of subsequent market events, interest rates, prepayment speeds, credit risk, etc.). These inputs also consist of quoted prices for identical investments initially expressed in local currencies that are adjusted through translation into U.S. dollars.
• Level 3 valuation inputs consist of unobservable data (including a 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 necessarily an indication of the risks associated with investing in these securities or other financial instruments. There were no significant transfers between levels during the period.
The following is a summary of the level classifications as of period end. The Schedule of Investments provides additional information on the fund’s portfolio holdings.
Level 1 | Level 2 | Level 3 | ||||||
Assets | ||||||||
Investment Securities | ||||||||
Common Stocks | $ | 3,411,493 | $ | 931,951,437 | — | |||
Exchange-Traded Funds | 7,003,220 | — | — | |||||
Temporary Cash Investments | 5,198 | 6,584,578 | — | |||||
$ | 10,419,911 | $ | 938,536,015 | — |
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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.
The fund invests in common stocks of small companies. Because of this, the fund may be subject to greater risk and market fluctuations than a fund investing in larger, more established companies.
8. Federal Tax Information
On December 19, 2017, the fund declared and paid the following per-share distributions from net investment income to shareholders of record on December 18, 2017:
Investor Class | G Class |
$0.3087 | $0.3795 |
The tax character of distributions paid during the years ended November 30, 2017 and November 30, 2016 were as follows:
2017 | 2016 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 27,071,989 | $ | 17,035,439 | ||
Long-term capital gains | — | — |
The book-basis character of distributions made during the year from net investment income or net realized gains may differ from their ultimate characterization for federal income tax purposes. These differences reflect the differing character of certain income items and net realized gains and losses for financial statement and tax purposes, and may result in reclassification among certain capital accounts on the financial statements.
As of period end, the federal tax cost of investments and the components of distributable earnings on a tax-basis were as follows:
Federal tax cost of investments | $ | 836,635,444 | |
Gross tax appreciation of investments | $ | 134,726,708 | |
Gross tax depreciation of investments | (22,406,226 | ) | |
Net tax appreciation (depreciation) of investments | 112,320,482 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | 82,773 | ||
Net tax appreciation (depreciation) | $ | 112,403,255 | |
Undistributed ordinary income | $ | 30,927,910 | |
Accumulated short-term capital losses | $ | (39,046,850 | ) |
Accumulated long-term capital losses | $ | (16,667,525 | ) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
Accumulated capital losses represent net capital loss carryovers that may be used to offset future realized capital gains for federal income tax purposes. The capital loss carryovers may be carried forward for an unlimited period. Future capital loss carryover utilization in any given year may be subject to Internal Revenue Code limitations.
20
Financial Highlights |
For a Share Outstanding Throughout the Years Ended November 30 (except as noted) | |||||||||||||
Per-Share Data | Ratios and Supplemental Data | ||||||||||||
Income From Investment Operations: | Ratio to Average Net Assets of: | ||||||||||||
Net Asset Value, Beginning of Period | Net Investment Income (Loss)(1) | Net Realized and Unrealized Gain (Loss) | Total From Investment Operations | Distributions From Net Investment Income | Net Asset Value, End of Period | Total Return(2) | Operating Expenses | Net Investment Income (Loss) | Portfolio Turnover Rate | Net Assets, End of Period (in thousands) | |||
Investor Class | |||||||||||||
2017 | $8.73 | 0.24 | 1.83 | 2.07 | (0.27) | $10.53 | 24.32% | 1.29% | 2.44% | 79% | $242,242 | ||
2016 | $9.24 | 0.25 | (0.56) | (0.31) | (0.20) | $8.73 | (3.42)% | 1.30% | 2.88% | 81% | $201,138 | ||
2015(3) | $10.00 | 0.20 | (0.96) | (0.76) | — | $9.24 | (7.60)% | 1.30%(4) | 2.95%(4) | 55% | $194,181 | ||
G Class(5) | |||||||||||||
2017 | $8.75 | 0.29 | 1.84 | 2.13 | (0.29) | $10.59 | 24.99% | 0.69%(6) | 3.04%(6) | 79% | $710,717 | ||
2016 | $9.25 | 0.26 | (0.55) | (0.29) | (0.21) | $8.75 | (3.16)% | 1.10% | 3.08% | 81% | $586,173 | ||
2015(3) | $10.00 | 0.21 | (0.96) | (0.75) | — | $9.25 | (7.50)% | 1.10%(4) | 3.15%(4) | 55% | $544,369 |
Notes to Financial Highlights |
(1) | Computed using average shares outstanding throughout the period. |
(2) | Total returns are calculated based on the net asset value of the last business day. Total returns for periods less than one year are not annualized. |
(3) | March 19, 2015 (fund inception) through November 30, 2015. |
(4) | Annualized. |
(5) | Prior to July 31, 2017, the G Class was referred to as the Institutional Class. |
(6) | The ratio of operating expenses to average net assets before expense waiver and the ratio of net investment income (loss) to average net assets before expense waiver was 1.04% and 2.69%, respectively. |
See Notes to Financial Statements.
Report of Independent Registered Public Accounting Firm |
To the Shareholders and the Board of Directors of American Century World Mutual Funds, Inc.:
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of NT International Value Fund (the “Fund”), one of the funds constituting American Century World Mutual Funds, Inc., as of November 30, 2017, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented. These financial statements and financial highlights are the responsibility of the Fund’s management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of November 30, 2017, by correspondence with the custodian and brokers; when replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to above present fairly, in all material respects, the financial position of NT International Value Fund of American Century World Mutual Funds, Inc. as of November 30, 2017, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2018
22
Management |
The Board of Directors
The individuals listed below serve as directors of the funds. Each director will continue to serve in this capacity until death, retirement, resignation or removal from office. The board has adopted a mandatory retirement age for directors who are not “interested persons,” as that term is defined in the Investment Company Act (independent directors). Independent directors shall retire by December 31 of the year in which they reach their 75th birthday.
Mr. Thomas is an “interested person” because he currently serves as President and Chief Executive Officer of American Century Companies, Inc. (ACC), the parent company of American Century Investment Management, Inc. (ACIM or the advisor). The other directors (more than three-fourths of the total number) are independent. They are not employees, directors or officers of, and have no financial interest in, ACC or any of its wholly owned, direct or indirect, subsidiaries, including ACIM, American Century Investment Services, Inc. (ACIS) and American Century Services, LLC (ACS), and they do not have any other affiliations, positions or relationships that would cause them to be considered “interested persons” under the Investment Company Act. The directors serve in this capacity for seven (in the case of Mr. Thomas, 15) registered investment companies in the American Century Investments family of funds.
The following table presents additional information about the directors. The mailing address for each director is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
Thomas W. Bunn (1953) | Director | Since 2017 | Retired | 69 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired; Executive Vice President, ACC (2007 to 2013); President, ACS (2007 to 2013); Chief Operating Officer, ACC (2007 to 2012) | 69 | None |
Andrea C. Hall (1945) | Director | Since 1997 | Retired | 69 | None |
Jan M. Lewis (1957) | Director | Since 2011 | Retired; President and Chief Executive Officer, Catholic Charities of Northeast Kansas (human services organization) (2006 to 2013) | 69 | None |
James A. Olson (1942) | Director and Chairman of the Board | Since 2007 (Chairman since 2014) | Member, Plaza Belmont LLC (private equity fund manager) (1999 to present) | 69 | Saia, Inc. (2002 to 2012) and EPR Properties (2003 to 2013) |
23
Name (Year of Birth) | Position(s) Held with Funds | Length of Time Served | Principal Occupation(s) During Past 5 Years | Number of American Century Portfolios Overseen by Director | Other Directorships Held During Past 5 Years |
Independent Directors | |||||
M. Jeannine Strandjord (1945) | Director | Since 1994 | Retired | 69 | Euronet Worldwide Inc. and MGP Ingredients, Inc. |
John R. Whitten (1946) | Director | Since 2008 | Retired | 69 | Rudolph Technologies, Inc. |
Stephen E. Yates (1948) | Director | Since 2012 | Retired | 69 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director and President | Since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries | 114 | BioMed Valley Discoveries, Inc. |
The Statement of Additional Information has additional information about the fund's directors and is available without charge, upon request, by calling 1-800-345-2021.
24
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 15 investment companies in the American Century family of funds, unless otherwise noted. No officer is compensated for his or her service as an officer of the funds. The listed officers are interested persons of the funds and are appointed or re-appointed on an annual basis. The mailing address for each officer listed below is 4500 Main Street, Kansas City, Missouri 64111.
Name (Year of Birth) | Offices with the Funds | Principal Occupation(s) During the Past Five Years |
Jonathan S. Thomas (1963) | Director and President since 2007 | President and Chief Executive Officer, ACC (2007 to present). Also serves as Chief Executive Officer, ACS; Executive Vice President, ACIM; Director, ACC, ACIM and other ACC subsidiaries |
Amy D. Shelton (1964) | Chief Compliance Officer and Vice President since 2014 | Chief Compliance Officer, American Century funds, (2014 to present); Chief Compliance Officer, ACIM (2014 to present); Chief Compliance Officer, ACIS (2009 to present); Vice President, Client Interactions and Marketing, ACIS (2013 to 2014); Director, Client Interactions and Marketing, ACIS (2007 to 2013). Also serves as Vice President, ACIS |
Charles A. Etherington (1957) | General Counsel since 2007 and Senior Vice President since 2006 | Attorney, ACC (1994 to present); Vice President, ACC (2005 to present); General Counsel, ACC (2007 to present). Also serves as General Counsel, ACIM, ACS, ACIS and other ACC subsidiaries; and Senior Vice President, ACIM and ACS |
C. Jean Wade (1964) | Vice President,Treasurer and Chief Financial Officer since 2012 | Vice President, ACS (2000 to present) |
Robert J. Leach (1966) | Vice President since 2006 and Assistant Treasurer since 2012 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present); Associate General Counsel, ACC (2001 to present). Also serves as Vice President, ACIM and ACS |
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
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Approval of Management Agreement |
At a meeting held on June 29, 2017, the Fund’s Board of Directors (the "Board") unanimously approved the renewal of the management agreement pursuant to which American Century Investment Management, Inc. (the “Advisor”) acts as the investment advisor for the Fund. Under Section 15(c) of the Investment Company Act, contracts for investment advisory services are required to be reviewed, evaluated, and approved by a majority of a fund’s directors (the “Directors”), including a majority of the independent Directors, each year.
Prior to its consideration of the renewal of the management agreement, the Directors requested and reviewed extensive data and information compiled by the Advisor and certain independent providers of evaluation data concerning the Fund and the services provided to the Fund by the Advisor. This review was in addition to the oversight and evaluation undertaken by the Board and its committees on a continual basis and the information received was supplemental to the extensive information that the Board and its committees receive and consider throughout the year.
In connection with its consideration of the renewal of the management agreement, the Board’s review and evaluation of the services provided by the Advisor included, but was not limited to, the following:
• | the nature, extent, and quality of investment management, shareholder services, and other services provided and to be provided to the Fund; |
• | the wide range of other programs and services provided and to be provided to the Fund and its shareholders on a routine and non-routine basis; |
• | the investment performance of the Fund, including data comparing the Fund's performance to appropriate benchmarks and/or a peer group of other mutual funds with similar investment objectives and strategies; |
• | the cost of owning the Fund compared to the cost of owning similar funds; |
• | the compliance policies, procedures, and regulatory experience of the Advisor and the Fund's service providers; |
• | financial data showing the cost of services provided to the Fund, the profitability of the Fund to the Advisor, and the overall profitability of the Advisor; |
• | strategic plans of the Advisor |
• | possible economies of scale associated with the Advisor’s management of the Fund and other accounts under its management; |
• | data comparing services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices by the Fund and the Advisor regarding financial intermediaries, the nature of services provided by intermediaries, and the terms of share classes utilized; and |
• | any collateral benefits derived by the Advisor from the management of the Fund. |
The Directors held three in-person meetings and one telephonic meeting to review and discuss the information provided. The independent Directors also reviewed responses to supplemental information requests and held active discussions with the Advisor regarding the renewal of the management agreement. The independent Directors had the benefit of the advice of their independent counsel throughout the process.
Factors Considered
The Directors considered all of the information provided by the Advisor, the independent data providers, and independent counsel in connection with the approval. They determined that the information was sufficient for them to evaluate the management agreement for the Fund. In
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connection with their review, the Directors did not identify any single factor as being all-important or controlling, and each Director may have attributed different levels of importance to different factors. In deciding to renew the management agreement, the Board based its decision on a number of factors, including without limitation the following:
Nature, Extent and Quality of Services - Generally. Under the management agreement, the Advisor is responsible for providing or arranging for all services necessary for the operation of the Fund. The Board noted that the Advisor provides or arranges at its own expense a wide variety of services including without limitation the following:
• | portfolio research and security selection |
• | securities trading |
• | Fund administration |
• | custody of Fund assets |
• | daily valuation of the Fund’s portfolio |
• | shareholder servicing and transfer agency, including shareholder confirmations, recordkeeping, and communications |
• | legal services (except the independent Directors’ counsel) |
• | regulatory and portfolio compliance |
• | financial reporting |
• | marketing and distribution (except amounts paid by the Fund under Rule 12b-1 plans) |
The Board noted that many of these services have expanded over time in terms of both quantity and complexity in response to shareholder demands, competition in the industry, changing distribution channels, and the changing regulatory environment. The Board noted specifically the resources the Advisor has committed during the year to compliance with the Department of Labor fiduciary rule and share class modernization.
Investment Management Services. The nature of the investment management services provided to the Fund is quite complex and allows Fund shareholders access to professional money management, instant diversification of their investments within an asset class, the opportunity to easily diversify among asset classes by investing in or exchanging among various American Century Investments funds, and liquidity. In evaluating investment performance, the Board expects the Advisor to manage the Fund in accordance with its investment objectives and approved strategies. Further, the Directors recognize that the Advisor has an obligation to monitor trading activities, and in particular to seek the best execution of fund trades, and to evaluate the use of and payment for research. In providing these services, the Advisor utilizes teams of investment professionals (portfolio managers, analysts, research assistants, and securities traders) who require extensive information technology, research, training, compliance, and other systems to conduct their business. The Board, directly and through its Fund Performance Review Committee, provides oversight of the investment performance process. It regularly reviews investment performance information for the Fund, together with comparative information for appropriate benchmarks and/or peer groups of similarly-managed funds, over different time horizons. The Directors also review detailed performance information provided by the Advisor during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board receives a report from the Advisor regarding the reasons for such results (e.g., market conditions, security selection) and any efforts being undertaken to improve performance. The Fund’s performance was below its benchmark for the one-year period reviewed by the Board. The Board found the investment management services provided by the Advisor to the Fund to be satisfactory and consistent with the management agreement.
Shareholder and Other Services. Under the management agreement, the Advisor provides the Fund with a comprehensive package of transfer agency, shareholder, and other services. The Board, directly and through various committees of the Board, regularly reviews reports and evaluations of such services at its regular meetings. These reports include, but are not limited to,
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information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction (as measured by external as well as internal sources), technology support, new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. Certain aspects of shareholder and transfer agency service level efficiency and the quality of securities trading activities are measured by independent third party providers and are presented in comparison to other fund groups not managed by the Advisor. The Board found the services provided by the Advisor to the Fund under the management agreement to be competitive and of high quality.
Costs of Services and Profitability. The Advisor provides detailed information concerning its cost of providing various services to the Fund, its profitability in managing the Fund (pre- and post-distribution), its overall profitability, and its financial condition. The Directors have reviewed with the Advisor the methodology used to prepare this financial information. This information is considered in evaluating the Advisor’s financial condition, its ability to continue to provide services under the management agreement, and the reasonableness of the current management fee. The Board concluded that the Advisor’s profits were reasonable in light of the services provided to the Fund.
Ethics. The Board generally considers the Advisor’s commitment to providing quality services to shareholders and to conducting its business ethically. They noted that the Advisor’s practices generally meet or exceed industry best practices.
Economies of Scale. The Board also reviewed information provided by the Advisor regarding the possible existence of economies of scale in connection with the management of the Fund. The Board concluded that economies of scale are difficult to measure and predict with precision, especially on a fund-by-fund basis. The Board concluded that the Advisor is appropriately sharing economies of scale through its competitive fee structure, offering competitive fees from fund inception, and through reinvestment in its business to provide shareholders additional content and services. The Board also noted that economies of scale are shared with the Fund and its shareholders through management fee breakpoints that serve to reduce the effective management fee as the assets of the Fund grow.
Comparison to Other Funds’ Fees. The management agreement provides that the Fund pays the Advisor a single, all-inclusive (or unified) management fee for providing all services necessary for the management and operation of the Fund, other than brokerage expenses, expenses attributable to short sales, taxes, interest, extraordinary expenses, and the fees and expenses of the Fund’s independent Directors (including their independent legal counsel) and expenses incurred in connection with the provision of shareholder services and distribution services under a plan adopted pursuant to Rule 12b-1 under the 1940 Act. Under the unified fee structure, the Advisor is responsible for providing all investment advisory, custody, audit, administrative, compliance, recordkeeping, marketing and shareholder services, or arranging and supervising third parties to provide such services. By contrast, most other funds are charged a variety of fees, including an investment advisory fee, a transfer agency fee, an administrative fee, distribution charges, and other expenses. Other than their investment advisory fees and any applicable Rule 12b-1 distribution fees, all other components of the total fees charged by these other funds may be increased without shareholder approval. The Board believes the unified fee structure is a benefit to Fund shareholders because it clearly discloses to shareholders the cost of owning Fund shares, and, since the unified fee cannot be increased without a vote of Fund shareholders, it shifts to the Advisor the risk of increased costs of operating the Fund and provides a direct incentive to minimize administrative inefficiencies. Part of the Board’s analysis of fee levels involves reviewing certain evaluative data compiled by an independent provider comparing the Fund’s unified fee to the total expense ratios of its peers. The unified fee charged to shareholders of the Fund was below the median of the total expense ratios of the Fund’s peer expense universe and was within the range of its peer expense group. The Board concluded that the management fee paid by the Fund to the Advisor under the management agreement is reasonable in light of the services provided to the Fund.
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Comparison to Fees and Services Provided to Other Clients of the Advisor. The Directors also requested and received information from the Advisor concerning the nature of the services, fees, costs, and profitability of its advisory services to advisory clients other than the Fund. They observed that these varying types of client accounts require different services and involve different regulatory and entrepreneurial risks than the management of the Fund. The Board analyzed this information and concluded that the fees charged and services provided to the Fund were reasonable by comparison.
Payments to Intermediaries. The Directors also requested and received a description of payments made to intermediaries by the Fund and the Advisor and services provided in response thereto. These payments include various payments made by the Fund or the Advisor to different types of intermediaries and recordkeepers for distribution and service activities provided for the Fund. The Board reviewed such information and received representations from the Advisor that all such payments by the Fund were made pursuant to the Fund's Rule 12b-1 Plan and that all such payments by the Advisor were made from the Advisor's resources and reasonable profits. The Board found the payments to be reasonable in scope and purpose.
Collateral or “Fall-Out” Benefits Derived by the Advisor. The Board considered the existence of collateral benefits the Advisor may receive as a result of its relationship with the Fund. They concluded that the Advisor’s primary business is managing mutual funds and it generally does not use fund or shareholder information to generate profits in other lines of business, and therefore does not derive any significant collateral benefits from them. The Board noted that additional assets from other clients may offer the Advisor some benefit from increased leverage with service providers and counterparties. Additionally, the Advisor receives proprietary research from broker-dealers that execute fund portfolio transactions, which the Board concluded is likely to benefit other clients of the Advisor, as well as Fund shareholders. The Board also determined that the Advisor is able to provide investment management services to certain clients other than the Fund, at least in part, due to its existing infrastructure built to serve the fund complex. The Board concluded that appropriate allocation methodologies had been employed to assign resources and the cost of those resources to these other clients and, where expressly provided, these other client assets may be included with the assets of the Fund to determine breakpoints in the management fee schedule.
Existing Relationship. The Board also considered whether there was any reason for not continuing the existing arrangement with the Advisor. In this regard, the Board was mindful of the potential disruptions of the Fund’s operations and various risks, uncertainties, and other effects that could occur as a result of a decision not to continue such relationship. In particular, the Board recognized that most shareholders have invested in the Fund on the strength of the Advisor’s industry standing and reputation and in the expectation that the Advisor will have a continuing role in providing advisory services to the Fund.
Conclusion of the Directors. As a result of this process, the Board, including all of the independent Directors, taking into account all of the factors discussed above and the information provided by the Advisor and others in connection with its review and throughout the year, determined that the management fee is fair and reasonable in light of the services provided and that the investment management agreement between the Fund and the Advisor should be renewed.
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Proxy Voting Results |
A special meeting of shareholders was held on October 18, 2017, to vote on the following proposal. The proposal received the required votes and was adopted. A summary of voting results is listed below.
To elect four directors to the Board of Directors of American Century World Mutual Funds, Inc.:
Affirmative | Withhold | ||||||
Thomas W. Bunn | $ | 5,482,015,298 | $ | 72,735,781 | |||
Barry Fink | $ | 5,485,170,607 | $ | 69,580,472 | |||
Jan M. Lewis | $ | 5,489,025,901 | $ | 65,725,178 | |||
Stephen E. Yates | $ | 5,481,872,069 | $ | 72,879,010 |
The other directors whose term of office continued after the meeting include Jonathan S. Thomas, Andrea C. Hall, James A. Olson, M. Jeannine Strandjord, and John R. Whitten.
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Additional Information |
Retirement Account Information
As required by law, distributions you receive from certain retirement accounts 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. You may notify us in writing or in certain situations by telephone or through other electronic means. For systematic withdrawals, your withholding election will remain in effect until revoked or changed by filing a new election. You have the right to revoke your election at any time and change your withholding percentage for future distributions.
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. You can reduce or defer the income tax on a distribution by directly or indirectly rolling such distribution over to another IRA or eligible plan. You should consult your tax advisor for additional information.
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 (or as otherwise required by state law). State taxes will be withheld from your distribution in accordance with the respective state rules.
*Some 403(b), 457 and qualified retirement plan distributions may be subject to 20% mandatory withholding, as they are subject to special tax and withholding rules. Your plan administrator or plan sponsor is required to provide you with a special tax notice explaining those rules at the time you request a distribution. If applicable, federal and/or state taxes may be withheld from your distribution amount.
Proxy Voting Policies
A description of the policies that the fund's investment advisor uses in exercising the voting rights associated with the securities purchased and/or held by the fund is available without charge, upon request, by calling 1-800-345-2021. It is also available on the "About Us" page of 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 fund files its complete schedule of portfolio holdings with the Securities and Exchange Commission (SEC) for the first and third quarters of each fiscal year on Form N-Q. The fund’s 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 fund also makes its complete schedule of portfolio holdings for the most recent quarter of its fiscal year available on its website at americancentury.com and, upon request, by calling 1-800-345-2021.
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Other Tax Information
The following information is provided pursuant to provisions of the Internal Revenue Code.
The fund hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended November 30, 2017.
For the fiscal year ended November 30, 2017, the fund intends to pass through to shareholders foreign source income of $37,815,167 and foreign taxes paid of $2,968,017, or up to the maximum amount allowable, as a foreign tax credit. Foreign source income and foreign tax expense per outstanding share on November 30, 2017 are $0.4197 and $0.0329, respectively.
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Contact Us | americancentury.com | |
Automated Information Line | 1-800-345-8765 | |
Investor Services Representative | 1-800-345-2021 or 816-531-5575 | |
Investors Using Advisors | 1-800-378-9878 | |
Business, Not-For-Profit, Employer-Sponsored Retirement Plans | 1-800-345-3533 | |
Banks and Trust Companies, Broker-Dealers, Financial Professionals, Insurance Companies | 1-800-345-6488 | |
Telecommunications Relay Service for the Deaf | 711 | |
American Century World Mutual Funds, Inc. | ||
Investment Advisor: American Century Investment Management, Inc. Kansas City, Missouri | ||
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. | ||
©2018 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91026 1801 |
ITEM 2. CODE OF ETHICS.
(a) | The registrant has adopted a Code of Ethics for Senior Financial Officers that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer, and persons performing similar functions. |
(b) | No response required. |
(c) | None. |
(d) | None. |
(e) | Not applicable. |
(f) | The registrant’s Code of Ethics for Senior Financial Officers was filed as Exhibit 12 (a)(1) to American Century Asset Allocation Portfolios, Inc.’s Annual Certified Shareholder Report on Form N-CSR, File No. 811-21591, on September 29, 2005, and is incorporated herein by reference. |
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) | The registrant’s board has determined that the registrant has at least one audit committee financial expert serving on its audit committee. |
(a)(2) | John R. Whitten, Andrea C. Hall and Jan M. Lewis are the registrant’s designated audit committee financial experts. They are “independent” as defined in Item 3 of Form N-CSR. |
(a)(3) | Not applicable. |
(b) | No response required. |
(c) | No response required. |
(d) | No response required. |
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) | Audit Fees. |
The aggregate fees billed for each of the last two fiscal years for professional services rendered by the principal accountant for the audit of the registrant’s annual financial statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years were as follows:
FY 2016: $308,958
FY 2017: $314,130
(b) | Audit-Related Fees. |
The aggregate fees billed in each of the last two fiscal years for assurance and related services by the principal accountant that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under paragraph (a) of this Item were as follows:
For services rendered to the registrant:
FY 2016: $0
FY 2017: $0
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant’s investment adviser and its affiliates):
FY 2016: $0
FY 2017: $0
(c) | Tax Fees. |
The aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice, and tax planning were as follows:
For services rendered to the registrant:
FY 2016: $0
FY 2017: $0
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant’s investment adviser and its affiliates):
FY 2016: $0
FY 2017: $0
(d) | All Other Fees. |
The aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant, other than the services reported in paragraphs (a) through (c) of this Item were as follows:
For services rendered to the registrant:
FY 2016: $0
FY 2017: $0
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X (relating to certain engagements for non-audit services with the registrant’s investment adviser and its affiliates):
FY 2016: $0
FY 2017: $0
(e)(1) | In accordance with paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X, before the accountant is engaged by the registrant to render audit or non-audit services, the engagement is approved by the registrant’s audit committee. Pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, the registrant’s audit committee also pre-approves its accountant’s engagements for non-audit services with the registrant’s investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides ongoing services to the registrant, if the engagement relates directly to the operations and financial reporting of the registrant. |
(e)(2) | All services described in each of paragraphs (b) through (d) of this Item were pre-approved before the engagement by the registrant’s audit committee pursuant to paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation S-X. Consequently, none of such services were required to be approved by the audit committee pursuant to paragraph (c)(7)(i)(C). |
(f) | The percentage of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees was less than 50%. |
(g) | The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant were as follows: |
FY 2016: $829,350
FY 2017: $104,750
(h) | The registrant’s investment adviser and accountant have notified the registrant’s audit committee of all non-audit services that were rendered by the registrant’s accountant to the registrant’s investment adviser, its parent company, and any entity controlled by, or under common control with the investment adviser that provides services to the registrant, which services were not required to be pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The notification provided to the registrant’s audit committee included sufficient details regarding such services to allow the registrant’s audit committee to consider the continuing independence of its principal accountant. |
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. 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) | Registrant’s Code of Ethics for Senior Financial Officers, which is the subject of the disclosure required by Item 2 of Form N-CSR, was filed as Exhibit 12(a)(1) to American Century Asset Allocation Portfolios, Inc.’s Certified Shareholder Report on Form N-CSR, File No. 811-21591, on September 29, 2005. |
(a)(2) | Separate certifications by the registrant’s principal executive officer and principal financial officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment Company Act of 1940, are filed and attached hereto as EX-99.CERT. |
(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 EX-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: | January 25, 2018 |
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: | January 25, 2018 |
By: | /s/ C. Jean Wade | ||
Name: C. Jean Wade | |||
Title: Vice President, Treasurer, and | |||
Chief Financial Officer | |||
(principal financial officer) | |||
Date: | January 25, 2018 |