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: | 11-30-2019 |
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Annual Report | |
November 30, 2019 | |
Emerging Markets Fund | |
Investor Class (TWMIX) | |
I Class (AMKIX) | |
Y Class (AEYMX) | |
A Class (AEMMX) | |
C Class (ACECX) | |
R Class (AEMRX) | |
R5 Class (AEGMX) | |
R6 Class (AEDMX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 | |
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 |
![jthomasrev0514a01.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/jthomasrev0514a01.jpg)
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2019. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional investment and market insights, please visit our website, americancentury.com.
Monetary Policy Pivot Improved Investor Sentiment
The reporting period began on a challenging note. Mounting concerns about slowing global economic and earnings growth, the U.S.-China trade dispute and Federal Reserve (Fed) policy soured investor sentiment, driving global stocks lower. After raising rates in September 2018, the Fed hiked again in December and delivered a surprisingly bullish 2019 rate-hike outlook, which worsened the year-end sell-off among global stocks.
However, a key policy pivot from the Fed in early 2019 helped improve investor attitudes worldwide. The central bank abruptly ended its rate-hike campaign and adopted a dovish tone amid weaker global growth and inflation. Similar economic concerns kept central banks in Europe and Japan maintaining or expanding their accommodative policies. Additionally, investors’ earlier worst-case fears about trade and corporate earnings generally eased, which also aided stocks.
Volatility reemerged in the spring, when a Brexit stalemate prompted U.K. Prime Minister Theresa May to resign. This news reignited global fears of a no-deal Brexit. However, those worries subsided as Boris Johnson, a staunch Brexit advocate, succeeded May. Meanwhile, U.S.-China trade policy continued to fuel bouts of volatility. In July, growing concerns about global economic risks encouraged the Fed to cut short-term interest rates for the first time in 10 years. The Fed followed up with additional rate cuts in September and October. Fed easing and a lower interest rate backdrop helped restore investor optimism.
Overall, broad global stock indices advanced for the 12-month period. U.S. stocks generally outperformed non-U.S. stocks, while developed markets broadly outperformed emerging markets.
Looking ahead, we expect volatility to remain a formidable factor as investors react to global growth and trade trends, central bank policy and geopolitical developments. We believe this scenario underscores the importance of using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
![image48a16.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/image48a16.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of November 30, 2019 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWMIX | 10.99% | 4.91% | 4.70% | — | 9/30/97 |
MSCI Emerging Markets Index | — | 7.28% | 3.12% | 3.33% | — | — |
I Class | AMKIX | 11.20% | 5.12% | 4.91% | — | 1/28/99 |
Y Class | AEYMX | 11.43% | — | — | 7.31% | 4/10/17 |
A Class | AEMMX | 5/12/99 | ||||
No sales charge | 10.71% | 4.65% | 4.44% | — | ||
With sales charge | 4.33% | 3.42% | 3.83% | — | ||
C Class | ACECX | 9.97% | 3.91% | 3.67% | — | 12/18/01 |
R Class | AEMRX | 10.46% | 4.39% | 4.17% | — | 9/28/07 |
R5 Class | AEGMX | 11.19% | — | — | 7.15% | 4/10/17 |
R6 Class | AEDMX | 11.45% | 5.29% | — | 5.69% | 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.
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, 2009 |
Performance for other share classes will vary due to differences in fee structure. |
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Value on November 30, 2019 | |
Investor Class — $15,826 | |
MSCI Emerging Markets Index — $13,882 | |
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 |
1.25% | 1.05% | 0.90% | 1.50% | 2.25% | 1.75% | 1.05% | 0.90% |
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
Performance Summary
Emerging Markets returned 10.99%* for the 12 months ended November 30, 2019. The portfolio’s benchmark, the MSCI Emerging Markets Index, returned 7.28% for the same period.
The fund outperformed its benchmark during the period, driven largely by an overweight for most of the year in consumer discretionary and positive stock selection in the sector, as well as stock selection in financials. Conversely, holdings in the consumer staples sector had a negative relative impact. Regionally, stock selection in China and Brazil were key drivers of relative outperformance, while stock choices in South Korea weighed on returns.
Consumer Discretionary Holdings Contributed
Holdings in the consumer discretionary sector were the primary drivers of the fund’s outperformance over the 12-month period. Notable contributors included China-based sporting goods company Li Ning, Brazil-based retailer Magazine Luiza and China-based K-12 education service provider New Oriental Education & Technology Group.
Shares of Li Ning benefited from sales growth, driven by increased consumer demand. The company reported strong core profit results on the back of better-than-expected sales and earnings, while higher consensus estimates reflect the retailer’s healthy demand momentum in athleisure apparel. Magazine Luiza’s stock price appreciated amid economic improvement in Brazil, as the retailer reported solid operating results. Growth in gross merchandise volume remains strong in Magazine Luiza’s online channel and brick-and-mortar stores as investments in execution continue to drive traffic higher. New Oriental Education & Technology’s top-line momentum was strong, driven by online expansion, margin recovery and increased utilization, amid a supportive policy environment.
In the financials sector, Taiwan-based leasing company Chailease Holding and Brazil-based stock exchange B3 were key contributors to the fund’s outperformance. Chailease’s stock price gained on improving spread and yield data, driven by asset quality control and business growth in China. Shares of B3 advanced on record high derivatives volume and strong equity volume, amid improving macroeconomic conditions and structurally low policy rates in Brazil.
Investments in the Consumer Staples Sector Detracted
The fund’s consumer staples holdings weighed on relative performance, driven primarily by South Korea-based cosmetics maker Cosmax and India-based personal care company Godrej Consumer Products. Cosmax shares declined amid slowing sales growth in South Korea and declining sales for Cosmax China, and lower forecasts for U.S. and China operations. Shares of Godrej suffered as domestic sales growth weakened and overseas challenges persisted, particularly weakness in some African markets. We exited positions in Cosmax and Godrej during the period.
On an individual stock basis, NMC Health, a U.K.-based private health care operator in Saudi Arabia and the United Arab Emirates with exposure to Abu Dhabi and Dubai, was a notable detractor. Shares of NMC declined amid concerns over delays in a Saudi joint venture. Further, concerns surrounding the company’s financial health and strategy—which we believe are misplaced—weighed on 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
Other notable detractors included South Africa-based multinational internet group Naspers. Shares declined due to the company’s partial spin-off of its global consumer internet group. The initial market reaction viewed the spin-off as a risk to Naspers, given the increased complexity of its corporate structure.
Outlook
We continue to believe the long-term case for emerging markets stocks remains strong. Improving growth data, dovish U.S. Federal Reserve policy and reduced geopolitical concerns around both U.S.-China trade tensions and Brexit are expected to provide support for emerging markets stock prices. We’ve also seen a recovery in emerging markets earnings.
The fund continues to invest in companies where we believe fundamentals are improving but share price performance does not fully reflect these factors.
Geographically, we increased our exposure to China, shifting from a relative underweight to the fund’s largest overweight versus the benchmark. We believe the softening of trade rhetoric and a trade agreement between the U.S. and China has helped improve conditions in the country and the region. Our holdings are exposed to domestic consumption or government stimulus policies designed to support domestic growth. Ongoing infrastructure investment and a reduction in the value-added tax should further support consumer activity.
We increased our overweight to Brazil during the period. Amid marked economic expansion and positive shifts in the country’s macroeconomic policy, we expect the Brazilian economy to accelerate without excessive inflationary pressure. We are positioned primarily in the private sector, finding opportunities in Brazilian companies positioned to benefit from improving domestic conditions.
Although Saudi Arabia was added to the benchmark in 2019, we did not have exposure to the market at period-end, making it our largest underweight relative to the benchmark. We also reduced our exposure to India as economic growth slowed over the period.
Consumer discretionary remained the largest relative sector position, and we meaningfully increased our exposure during the period. We believe that urbanization and growth of the middle class, as well as the aspirational spending that goes with them are powerful, long-term drivers. We are finding opportunities in companies positioned for strengthening consumer demand in areas such as sportswear, as well as higher standard-of-living spending such as education, automobiles and travel.
Finally, we significantly increased our information technology position over the last year, shifting from a relative underweight to an overweight versus the benchmark. In our view, the sector is improving based on stabilizing memory prices, stronger-than-expected iPhone 11 sales and accelerated 5G-related demand.
We reduced our exposure to the materials and energy sectors, the largest relative underweights as of period-end. Amid commodity volatility and government intervention, sustained earnings acceleration remains challenging for many companies in both sectors. Our holdings represent companies that have earnings catalysts outside commodity prices.
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Fund Characteristics |
NOVEMBER 30, 2019 | |
Top Ten Holdings | % of net assets |
Taiwan Semiconductor Manufacturing Co. Ltd. | 6.4% |
Alibaba Group Holding Ltd. ADR | 6.0% |
Tencent Holdings Ltd. | 5.5% |
Samsung Electronics Co. Ltd. | 4.1% |
HDFC Bank Ltd. | 2.6% |
Naspers Ltd., N Shares | 2.2% |
New Oriental Education & Technology Group, Inc. ADR | 2.0% |
Chailease Holding Co. Ltd. | 2.0% |
Novatek PJSC GDR | 1.9% |
GDS Holdings Ltd. ADR | 1.9% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 97.8% |
Temporary Cash Investments | 2.0% |
Temporary Cash Investments - Securities Lending Collateral | 0.6% |
Other Assets and Liabilities | (0.4)% |
Investments by Country | % of net assets |
China | 35.8% |
Taiwan | 11.0% |
South Korea | 9.7% |
Brazil | 8.8% |
India | 7.6% |
Russia | 4.4% |
South Africa | 4.2% |
Thailand | 3.9% |
Indonesia | 3.0% |
Mexico | 2.4% |
Other Countries | 7.0% |
Cash and Equivalents* | 2.2% |
*Includes temporary cash investments, temporary cash investments - securities lending collateral and other assets and liabilities. |
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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, 2019 to November 30, 2019.
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 6/1/19 | Ending Account Value 11/30/19 | Expenses Paid During Period(1) 6/1/19 - 11/30/19 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,083.80 | $6.53 | 1.25% |
I Class | $1,000 | $1,085.40 | $5.49 | 1.05% |
Y Class | $1,000 | $1,086.10 | $4.71 | 0.90% |
A Class | $1,000 | $1,081.80 | $7.83 | 1.50% |
C Class | $1,000 | $1,079.10 | $11.73 | 2.25% |
R Class | $1,000 | $1,081.50 | $9.13 | 1.75% |
R5 Class | $1,000 | $1,085.40 | $5.49 | 1.05% |
R6 Class | $1,000 | $1,086.30 | $4.71 | 0.90% |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.80 | $6.33 | 1.25% |
I Class | $1,000 | $1,019.80 | $5.32 | 1.05% |
Y Class | $1,000 | $1,020.56 | $4.56 | 0.90% |
A Class | $1,000 | $1,017.55 | $7.59 | 1.50% |
C Class | $1,000 | $1,013.79 | $11.36 | 2.25% |
R Class | $1,000 | $1,016.30 | $8.85 | 1.75% |
R5 Class | $1,000 | $1,019.80 | $5.32 | 1.05% |
R6 Class | $1,000 | $1,020.56 | $4.56 | 0.90% |
(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, 2019
Shares | Value | |||
COMMON STOCKS — 97.8% | ||||
Argentina — 0.3% | ||||
Globant SA(1) | 71,205 | $ | 7,618,935 | |
Brazil — 8.8% | ||||
B3 SA - Brasil Bolsa Balcao | 3,403,200 | 38,230,435 | ||
Banco Bradesco SA ADR | 4,864,636 | 38,187,393 | ||
Cyrela Brazil Realty SA Empreendimentos e Participacoes | 4,031,600 | 25,463,539 | ||
Localiza Rent a Car SA | 2,072,832 | 21,723,683 | ||
Lojas Renner SA | 2,046,860 | 25,043,661 | ||
Magazine Luiza SA | 3,174,718 | 33,894,053 | ||
Pagseguro Digital Ltd., Class A(1) | 403,901 | 13,708,400 | ||
TOTVS SA | 884,300 | 13,290,504 | ||
WEG SA | 1,090,400 | 7,651,885 | ||
217,193,553 | ||||
China — 35.8% | ||||
Alibaba Group Holding Ltd. ADR(1) | 746,623 | 149,324,600 | ||
Anhui Conch Cement Co. Ltd., H Shares | 4,925,500 | 31,496,571 | ||
Baozun, Inc. ADR(1) | 381,691 | 14,492,807 | ||
Brilliance China Automotive Holdings Ltd. | 26,040,000 | 26,883,963 | ||
China Construction Bank Corp., H Shares | 54,801,000 | 43,636,023 | ||
China Education Group Holdings Ltd.(2) | 14,505,000 | 19,644,114 | ||
China Gas Holdings Ltd. | 9,435,400 | 35,084,418 | ||
China International Travel Service Corp. Ltd., A Shares | 1,000,917 | 11,929,180 | ||
China Overseas Land & Investment Ltd. | 3,232,000 | 10,839,821 | ||
CIFI Holdings Group Co. Ltd. | 42,666,888 | 31,075,281 | ||
CNOOC Ltd. | 27,739,000 | 40,263,572 | ||
Country Garden Services Holdings Co. Ltd. | 6,223,000 | 20,116,007 | ||
GDS Holdings Ltd. ADR(1) | 1,001,215 | 46,876,886 | ||
Haier Electronics Group Co. Ltd. | 5,336,000 | 14,830,122 | ||
Industrial & Commercial Bank of China Ltd., H Shares | 61,285,645 | 43,708,020 | ||
Kweichow Moutai Co. Ltd., A Shares | 134,085 | 21,530,556 | ||
Li Ning Co. Ltd. | 9,201,500 | 29,509,750 | ||
Luxshare Precision Industry Co. Ltd., A Shares | 1,491,816 | 7,220,792 | ||
New Oriental Education & Technology Group, Inc. ADR(1) | 409,503 | 49,582,623 | ||
Ping An Insurance Group Co. of China Ltd., H Shares | 3,685,000 | 41,762,416 | ||
Shenzhou International Group Holdings Ltd. | 1,709,800 | 22,536,870 | ||
TAL Education Group ADR(1) | 840,131 | 37,184,198 | ||
Tencent Holdings Ltd. | 3,187,000 | 135,111,423 | ||
884,640,013 | ||||
Colombia — 0.7% | ||||
Bancolombia SA ADR | 333,914 | 16,118,029 | ||
Egypt — 0.8% | ||||
Commercial International Bank Egypt S.A.E. | 2,215,207 | 10,828,679 |
10
Shares | Value | |||
Commercial International Bank Egypt S.A.E. GDR | 1,681,101 | $ | 8,094,698 | |
18,923,377 | ||||
Hungary — 1.1% | ||||
OTP Bank Nyrt | 589,980 | 27,755,246 | ||
India — 7.6% | ||||
Asian Paints Ltd. | 496,192 | 11,800,132 | ||
Bajaj Finance Ltd. | 268,158 | 15,225,735 | ||
Bata India Ltd. | 643,473 | 14,610,091 | ||
HDFC Bank Ltd. | 3,576,662 | 63,556,582 | ||
Indraprastha Gas Ltd. | 2,776,368 | 15,990,173 | ||
Jubilant Foodworks Ltd. | 705,450 | 15,911,557 | ||
Larsen & Toubro Ltd. | 632,391 | 11,727,091 | ||
Nestle India Ltd. | 94,618 | 19,063,602 | ||
Tata Consultancy Services Ltd. | 684,706 | 19,597,222 | ||
187,482,185 | ||||
Indonesia — 3.0% | ||||
Bank Rakyat Indonesia Persero Tbk PT | 137,715,600 | 39,914,042 | ||
Telekomunikasi Indonesia Persero Tbk PT | 118,627,500 | 32,960,753 | ||
72,874,795 | ||||
Mexico — 2.4% | ||||
America Movil SAB de CV, Class L ADR | 864,460 | 13,217,593 | ||
Grupo Aeroportuario del Centro Norte SAB de CV | 2,703,132 | 17,954,128 | ||
Wal-Mart de Mexico SAB de CV | 9,789,545 | 27,249,172 | ||
58,420,893 | ||||
Peru — 0.6% | ||||
Credicorp Ltd. | 75,854 | 16,019,606 | ||
Philippines — 1.2% | ||||
Ayala Land, Inc. | 33,873,700 | 30,328,887 | ||
Russia — 4.4% | ||||
Novatek PJSC GDR | 243,203 | 48,128,624 | ||
Sberbank of Russia PJSC ADR (London) | 1,761,672 | 25,751,174 | ||
Yandex NV, A Shares(1) | 849,422 | 35,650,241 | ||
109,530,039 | ||||
South Africa — 4.2% | ||||
Capitec Bank Holdings Ltd. | 367,044 | 35,516,867 | ||
Kumba Iron Ore Ltd.(2) | 515,546 | 13,215,539 | ||
Naspers Ltd., N Shares | 381,741 | 54,606,892 | ||
103,339,298 | ||||
South Korea — 9.7% | ||||
CJ Logistics Corp.(1)(2) | 225,793 | 30,138,120 | ||
Fila Korea Ltd.(2) | 721,682 | 31,527,572 | ||
Hotel Shilla Co. Ltd.(2) | 175,518 | 12,607,715 | ||
Korea Shipbuilding & Offshore Engineering Co. Ltd.(1) | 201,617 | 20,502,142 | ||
Orion Corp/Republic of Korea | 169,558 | 14,785,992 | ||
Samsung Electro-Mechanics Co. Ltd.(2) | 282,241 | 26,523,939 | ||
Samsung Electronics Co. Ltd. | 2,396,425 | 102,341,126 | ||
238,426,606 | ||||
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Shares | Value | |||
Taiwan — 11.0% | ||||
ASPEED Technology, Inc. | 277,000 | $ | 7,745,848 | |
Chailease Holding Co. Ltd. | 10,769,556 | 48,246,972 | ||
Chroma ATE, Inc. | 1,666,000 | 7,618,300 | ||
Merida Industry Co. Ltd. | 1,979,000 | 11,359,875 | ||
President Chain Store Corp. | 1,338,000 | 13,406,687 | ||
Taiwan Cement Corp. | 12,278,614 | 16,674,152 | ||
Taiwan Cement Corp. Preference Shares | 819,838 | 1,445,591 | ||
Taiwan Semiconductor Manufacturing Co. Ltd. | 15,811,939 | 158,744,811 | ||
Win Semiconductors Corp. | 722,000 | 7,159,465 | ||
272,401,701 | ||||
Thailand — 3.9% | ||||
Airports of Thailand PCL | 8,699,500 | 21,592,206 | ||
CP ALL PCL | 13,945,700 | 34,728,681 | ||
Kasikornbank PCL NVDR | 2,520,300 | 12,919,847 | ||
Minor International PCL | 10,865,400 | 13,833,611 | ||
Muangthai Capital PCL | 6,186,400 | 12,324,848 | ||
95,399,193 | ||||
Turkey — 0.5% | ||||
BIM Birlesik Magazalar AS | 1,611,730 | 12,884,873 | ||
United Arab Emirates — 0.8% | ||||
First Abu Dhabi Bank PJSC | 4,955,930 | 20,524,603 | ||
United Kingdom — 1.0% | ||||
Network International Holdings plc(1) | 1,104,687 | 8,271,403 | ||
NMC Health plc(2) | 537,814 | 17,434,416 | ||
25,705,819 | ||||
TOTAL COMMON STOCKS (Cost $2,070,673,748) | 2,415,587,651 | |||
TEMPORARY CASH INVESTMENTS — 2.0% | ||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.625% - 2.875%, 11/15/20 - 8/15/28, valued at $41,501,223), in a joint trading account at 1.40%, dated 11/29/19, due 12/2/19 (Delivery value $40,726,679) | 40,721,928 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 0.375%, 7/15/27, valued at $9,247,455), at 0.65%, dated 11/29/19, due 12/2/19 (Delivery value $9,065,491) | 9,065,000 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $49,786,928) | 49,786,928 | |||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(3) — 0.6% | ||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $15,485,777) | 15,485,777 | 15,485,777 | ||
TOTAL INVESTMENT SECURITIES — 100.4% (Cost $2,135,946,453) | 2,480,860,356 | |||
OTHER ASSETS AND LIABILITIES — (0.4)% | (10,000,940 | ) | ||
TOTAL NET ASSETS — 100.0% | $ | 2,470,859,416 |
12
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Consumer Discretionary | 24.9 | % |
Financials | 22.6 | % |
Information Technology | 17.3 | % |
Communication Services | 8.9 | % |
Industrials | 6.1 | % |
Consumer Staples | 5.8 | % |
Energy | 3.6 | % |
Materials | 3.1 | % |
Real Estate | 2.8 | % |
Utilities | 2.0 | % |
Health Care | 0.7 | % |
Cash and Equivalents* | 2.2 | % |
*Includes temporary cash investments, temporary cash investments - securities lending collateral 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. |
(2) | Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $46,481,141. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(3) | Investment of cash collateral from securities on loan. At the period end, the aggregate market value of the collateral held by the fund was $49,189,916, which includes securities collateral of $33,704,139. |
See Notes to Financial Statements.
13
Statement of Assets and Liabilities |
NOVEMBER 30, 2019 | |||
Assets | |||
Investment securities, at value (cost of $2,120,460,676) — including $46,481,141 of securities on loan | $ | 2,465,374,579 | |
Investment made with cash collateral received for securities on loan, at value (cost of $15,485,777) | 15,485,777 | ||
Total investment securities, at value (cost of $2,135,946,453) | 2,480,860,356 | ||
Cash | 27,838 | ||
Foreign currency holdings, at value (cost of $2,278,039) | 2,268,119 | ||
Receivable for investments sold | 4,797,596 | ||
Receivable for capital shares sold | 1,944,131 | ||
Dividends and interest receivable | 509,720 | ||
Securities lending receivable | 33,826 | ||
Other assets | 28,676 | ||
2,490,470,262 | |||
Liabilities | |||
Payable for collateral received for securities on loan | 15,485,777 | ||
Payable for capital shares redeemed | 1,855,867 | ||
Accrued management fees | 2,224,845 | ||
Distribution and service fees payable | 44,357 | ||
19,610,846 | |||
Net Assets | $ | 2,470,859,416 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 2,396,706,061 | |
Distributable earnings | 74,153,355 | ||
$ | 2,470,859,416 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $606,668,335 | 53,904,812 | $11.25 | |||
I Class, $0.01 Par Value | $1,325,801,438 | 114,704,227 | $11.56 | |||
Y Class, $0.01 Par Value | $14,637,515 | 1,262,177 | $11.60 | |||
A Class, $0.01 Par Value | $78,703,678 | 7,257,267 | $10.84* | |||
C Class, $0.01 Par Value | $30,003,686 | 3,056,327 | $9.82 | |||
R Class, $0.01 Par Value | $6,825,346 | 627,323 | $10.88 | |||
R5 Class, $0.01 Par Value | $2,443,663 | 211,216 | $11.57 | |||
R6 Class, $0.01 Par Value | $405,775,755 | 35,048,259 | $11.58 |
*Maximum offering price $11.50 (net asset value divided by 0.9425).
See Notes to Financial Statements.
14
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2019 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $5,579,119) | $ | 66,575,247 | |
Securities lending, net | 628,318 | ||
Interest | 567,565 | ||
67,771,130 | |||
Expenses: | |||
Management fees | 26,270,680 | ||
Distribution and service fees: | |||
A Class | 192,827 | ||
C Class | 317,728 | ||
R Class | 32,310 | ||
Directors' fees and expenses | 73,777 | ||
Other expenses | 36,576 | ||
26,923,898 | |||
Net investment income (loss) | 40,847,232 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (164,013,307 | ) | |
Foreign currency translation transactions | (1,563,575 | ) | |
(165,576,882 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 371,070,266 | ||
Translation of assets and liabilities in foreign currencies | (41,356 | ) | |
371,028,910 | |||
Net realized and unrealized gain (loss) | 205,452,028 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 246,299,260 |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2019 AND NOVEMBER 30, 2018 | ||||||
Increase (Decrease) in Net Assets | November 30, 2019 | November 30, 2018 | ||||
Operations | ||||||
Net investment income (loss) | $ | 40,847,232 | $ | 18,203,387 | ||
Net realized gain (loss) | (165,576,882 | ) | (145,900,157 | ) | ||
Change in net unrealized appreciation (depreciation) | 371,028,910 | (316,445,822 | ) | |||
Net increase (decrease) in net assets resulting from operations | 246,299,260 | (444,142,592 | ) | |||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (4,369,482 | ) | (8,646,208 | ) | ||
I Class | (6,026,364 | ) | (7,994,063 | ) | ||
Y Class | (55,971 | ) | (1,759 | ) | ||
A Class | (149,480 | ) | (390,371 | ) | ||
C Class | — | (207,089 | ) | |||
R Class | — | (30,409 | ) | |||
R5 Class | (18,644 | ) | (41,149 | ) | ||
R6 Class | (2,430,490 | ) | (1,815,971 | ) | ||
Decrease in net assets from distributions | (13,050,431 | ) | (19,127,019 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 825,809 | 1,127,728,674 | ||||
Net increase (decrease) in net assets | 234,074,638 | 664,459,063 | ||||
Net Assets | ||||||
Beginning of period | 2,236,784,778 | 1,572,325,715 | ||||
End of period | $ | 2,470,859,416 | $ | 2,236,784,778 |
See Notes to Financial Statements.
16
Notes to Financial Statements |
NOVEMBER 30, 2019
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, 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.
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. The fund may apply a model-derived factor to the closing price
17
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. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of November 30, 2019.
Remaining Contractual Maturity of Agreements | ||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||
Securities Lending Transactions(1) | ||||||||||||
Common Stocks | $ | 15,485,777 | — | — | — | $ | 15,485,777 | |||||
Gross amount of recognized liabilities for securities lending transactions | $ | 15,485,777 |
(1) | Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand. |
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, 6% 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 annual management fee for each class is as follows:
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class |
1.25% | 1.05% | 0.90% | 1.25% | 1.25% | 1.25% | 1.05% | 0.90% |
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, 2019 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 $651,054 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, 2019 were $916,965,062 and $950,477,732, respectively.
20
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2019 | Year ended November 30, 2018 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 1,100,000,000 | 1,150,000,000 | ||||||||
Sold | 22,833,790 | $ | 240,540,598 | 64,760,949 | $ | 771,018,077 | ||||
Issued in reinvestment of distributions | 388,374 | 4,217,739 | 651,370 | 8,389,638 | ||||||
Redeemed | (65,606,525 | ) | (711,808,825 | ) | (42,737,959 | ) | (476,726,066 | ) | ||
(42,384,361 | ) | (467,050,488 | ) | 22,674,360 | 302,681,649 | |||||
I Class/Shares Authorized | 1,520,000,000 | 1,100,000,000 | ||||||||
Sold | 78,665,181 | 874,061,540 | 84,346,072 | 1,028,660,971 | ||||||
Issued in reinvestment of distributions | 474,557 | 5,281,820 | 520,633 | 6,877,558 | ||||||
Redeemed | (50,245,387 | ) | (545,284,007 | ) | (40,057,350 | ) | (447,621,773 | ) | ||
28,894,351 | 334,059,353 | 44,809,355 | 587,916,756 | |||||||
Y Class/Shares Authorized | 30,000,000 | 25,000,000 | ||||||||
Sold | 913,667 | 10,139,043 | 484,086 | 5,451,640 | ||||||
Issued in reinvestment of distributions | 4,968 | 55,447 | 133 | 1,759 | ||||||
Redeemed | (106,700 | ) | (1,190,387 | ) | (34,488 | ) | (368,913 | ) | ||
811,935 | 9,004,103 | 449,731 | 5,084,486 | |||||||
A Class/Shares Authorized | 100,000,000 | 80,000,000 | ||||||||
Sold | 3,294,887 | 33,939,545 | 5,501,637 | 61,911,723 | ||||||
Issued in reinvestment of distributions | 10,533 | 110,381 | 27,068 | 336,722 | ||||||
Redeemed | (3,456,550 | ) | (35,675,172 | ) | (3,444,674 | ) | (38,074,936 | ) | ||
(151,130 | ) | (1,625,246 | ) | 2,084,031 | 24,173,509 | |||||
C Class/Shares Authorized | 45,000,000 | 45,000,000 | ||||||||
Sold | 716,119 | 6,640,072 | 2,206,474 | 23,600,751 | ||||||
Issued in reinvestment of distributions | — | — | 15,833 | 180,175 | ||||||
Redeemed | (1,227,066 | ) | (11,446,164 | ) | (1,007,861 | ) | (9,742,868 | ) | ||
(510,947 | ) | (4,806,092 | ) | 1,214,446 | 14,038,058 | |||||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 220,384 | 2,282,049 | 492,151 | 5,468,250 | ||||||
Issued in reinvestment of distributions | — | — | 2,430 | 30,398 | ||||||
Redeemed | (184,311 | ) | (1,924,685 | ) | (316,573 | ) | (3,426,412 | ) | ||
36,073 | 357,364 | 178,008 | 2,072,236 | |||||||
R5 Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 58,405 | 635,522 | 590,313 | 7,280,374 | ||||||
Issued in reinvestment of distributions | 1,674 | 18,644 | 3,113 | 41,149 | ||||||
Redeemed | (280,786 | ) | (3,093,224 | ) | (165,206 | ) | (1,808,015 | ) | ||
(220,707 | ) | (2,439,058 | ) | 428,220 | 5,513,508 | |||||
R6 Class/Shares Authorized | 450,000,000 | 190,000,000 | ||||||||
Sold | 18,822,132 | 206,418,584 | 19,923,599 | 239,430,383 | ||||||
Issued in reinvestment of distributions | 212,269 | 2,364,675 | 136,929 | 1,810,200 | ||||||
Redeemed | (6,804,815 | ) | (75,457,386 | ) | (4,736,641 | ) | (54,992,111 | ) | ||
12,229,586 | 133,325,873 | 15,323,887 | 186,248,472 | |||||||
Net increase (decrease) | (1,295,200 | ) | $ | 825,809 | 87,162,038 | $ | 1,127,728,674 |
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.
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 | $ | 7,618,935 | — | — | ||||
Brazil | 51,895,793 | $ | 165,297,760 | — | ||||
China | 297,461,114 | 587,178,899 | — | |||||
Colombia | 16,118,029 | — | — | |||||
Mexico | 13,217,593 | 45,203,300 | — | |||||
Peru | 16,019,606 | — | — | |||||
Russia | 35,650,241 | 73,879,798 | — | |||||
Other Countries | — | 1,106,046,583 | — | |||||
Temporary Cash Investments | — | 49,786,928 | — | |||||
Temporary Cash Investments - Securities Lending Collateral | 15,485,777 | — | — | |||||
$ | 453,467,088 | $ | 2,027,393,268 | — |
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing in emerging markets or a significant portion of assets in one country or region may accentuate these risks.
22
8. Federal Tax Information
On December 17, 2019, the fund declared and paid the following per-share distributions from net investment income to shareholders of record on December 16, 2019:
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class |
$0.0101 | $0.0287 | $0.0426 | — | — | — | $0.0287 | $0.0426 |
The tax character of distributions paid during the years ended November 30, 2019 and November 30, 2018 were as follows:
2019 | 2018 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 13,050,431 | $ | 7,757,413 | ||
Long-term capital gains | — | $ | 11,369,606 |
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 | $ | 2,137,109,722 | |
Gross tax appreciation of investments | $ | 445,277,340 | |
Gross tax depreciation of investments | (101,526,706 | ) | |
Net tax appreciation (depreciation) of investments | 343,750,634 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (52,690 | ) | |
Net tax appreciation (depreciation) | $ | 343,697,944 | |
Undistributed ordinary income | $ | 39,272,103 | |
Accumulated short-term capital losses | $ | (256,610,971 | ) |
Accumulated long-term capital losses | $ | (52,205,721 | ) |
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.
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: | 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 | |||||||||||||||||
2019 | $10.19 | 0.17 | 0.94 | 1.11 | (0.05) | — | (0.05) | $11.25 | 10.99% | 1.25% | 1.25% | 1.59% | 1.59% | 39% | $606,668 | ||
2018 | $12.00 | 0.08 | (1.80) | (1.72) | (0.03) | (0.06) | (0.09) | $10.19 | (14.57)% | 1.18% | 1.29% | 0.71% | 0.60% | 36% | $980,765 | ||
2017 | $8.57 | 0.02 | 3.44 | 3.46 | (0.03) | — | (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) | — | (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) | — | (0.01) | $8.10 | (9.93)% | 1.43% | 1.68% | 0.30% | 0.05% | 58% | $399,694 | ||
I Class | |||||||||||||||||
2019 | $10.46 | 0.20 | 0.97 | 1.17 | (0.07) | — | (0.07) | $11.56 | 11.20% | 1.05% | 1.05% | 1.79% | 1.79% | 39% | $1,325,801 | ||
2018 | $12.32 | 0.11 | (1.85) | (1.74) | (0.06) | (0.06) | (0.12) | $10.46 | (14.35)% | 0.98% | 1.09% | 0.91% | 0.80% | 36% | $897,336 | ||
2017 | $8.79 | 0.04 | 3.54 | 3.58 | (0.05) | — | (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) | — | (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) | — | (0.02) | $8.31 | (9.83)% | 1.23% | 1.48% | 0.50% | 0.25% | 58% | $4,797 | ||
Y Class | |||||||||||||||||
2019 | $10.49 | 0.26 | 0.94 | 1.20 | (0.09) | — | (0.09) | $11.60 | 11.43% | 0.90% | 0.90% | 1.94% | 1.94% | 39% | $14,638 | ||
2018 | $12.34 | 0.08 | (1.81) | (1.73) | (0.06) | (0.06) | (0.12) | $10.49 | (14.23)% | 0.83% | 0.94% | 1.06% | 0.95% | 36% | $4,724 | ||
2017(3) | $9.79 | 0.07 | 2.48 | 2.55 | — | — | — | $12.34 | 26.05% | 0.77%(4) | 1.12%(4) | 0.91%(4) | 0.56%(4) | 47%(5) | $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 | 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 | |||||||||||||||||
2019 | $9.81 | 0.14 | 0.91 | 1.05 | (0.02) | — | (0.02) | $10.84 | 10.71% | 1.50% | 1.50% | 1.34% | 1.34% | 39% | $78,704 | ||
2018 | $11.57 | 0.05 | (1.75) | (1.70) | — | (0.06) | (0.06) | $9.81 | (14.80)% | 1.43% | 1.54% | 0.46% | 0.35% | 36% | $72,711 | ||
2017 | $8.26 | —(6) | 3.32 | 3.32 | (0.01) | — | (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 | ||
C Class | |||||||||||||||||
2019 | $8.93 | 0.05 | 0.84 | 0.89 | — | — | — | $9.82 | 9.97% | 2.25% | 2.25% | 0.59% | 0.59% | 39% | $30,004 | ||
2018 | $10.61 | (0.03) | (1.59) | (1.62) | — | (0.06) | (0.06) | $8.93 | (15.39)% | 2.18% | 2.29% | (0.29)% | (0.40)% | 36% | $31,871 | ||
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 | ||
R Class | |||||||||||||||||
2019 | $9.85 | 0.12 | 0.91 | 1.03 | — | — | — | $10.88 | 10.46% | 1.75% | 1.75% | 1.09% | 1.09% | 39% | $6,825 | ||
2018 | $11.64 | 0.02 | (1.75) | (1.73) | — | (0.06) | (0.06) | $9.85 | (14.97)% | 1.68% | 1.79% | 0.21% | 0.10% | 36% | $5,825 | ||
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 |
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) | |||
R5 Class | |||||||||||||||||
2019 | $10.47 | 0.20 | 0.97 | 1.17 | (0.07) | — | (0.07) | $11.57 | 11.19% | 1.05% | 1.05% | 1.79% | 1.79% | 39% | $2,444 | ||
2018 | $12.32 | 0.12 | (1.86) | (1.74) | (0.05) | (0.06) | (0.11) | $10.47 | (14.33)% | 0.98% | 1.09% | 0.91% | 0.80% | 36% | $4,521 | ||
2017(3) | $9.78 | 0.03 | 2.51 | 2.54 | — | — | — | $12.32 | 25.97% | 0.92%(4) | 1.27%(4) | 0.78%(4) | 0.43%(4) | 47%(5) | $46 | ||
R6 Class | |||||||||||||||||
2019 | $10.48 | 0.23 | 0.96 | 1.19 | (0.09) | — | (0.09) | $11.58 | 11.45% | 0.90% | 0.90% | 1.94% | 1.94% | 39% | $405,776 | ||
2018 | $12.34 | 0.12 | (1.84) | (1.72) | (0.08) | (0.06) | (0.14) | $10.48 | (14.28)% | 0.83% | 0.94% | 1.06% | 0.95% | 36% | $239,031 | ||
2017 | $8.81 | 0.06 | 3.53 | 3.59 | (0.06) | — | (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) | — | (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) | — | (0.04) | $8.33 | (9.58)% | 1.08% | 1.33% | 0.65% | 0.40% | 58% | $24,965 |
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) | April 10, 2017 (commencement of sale) through November 30, 2017. |
(4) | Annualized. |
(5) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2017. |
(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.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Emerging Markets Fund, one of the funds constituting the American Century World Mutual Funds, Inc. (the "Fund"), as of November 30, 2019, 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, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Emerging Markets Fund of the American Century World Mutual Funds, Inc. as of November 30, 2019, 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.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of November 30, 2019, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2020
We have served as the auditor of one or more American Century investment companies since 1997.
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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 Jonathan S. Thomas, 16; and Stephen E. Yates, 8) 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 | 66 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 66 | None |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 66 | None |
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 66 | None |
29
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 | |||||
Lynn Jenkins (1963) | Director | Since 2019 | United States Representative, U.S. House of Representatives (2009 to 2018) | 66 | MGP Ingredients, Inc. |
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 66 | None |
John R. Whitten (1946) | Director | Since 2008 | Retired | 66 | Onto Innovation Inc.; Rudolph Technologies, Inc. (2006 to 2019) |
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 81 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director | 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 | 125 | 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.
30
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds. 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 |
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Chief Operating Officer, ACC (2012-2015). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries |
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Investment Operations and Investment Accounting, ACS (2000 to present) |
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). 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 since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) |
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 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 26, 2019, 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; |
• | any economies of scale associated with the Advisor’s management of the Fund and other accounts; |
• | services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; 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 provided by the Directors to the Advisor 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 connection with their review, the Directors did not identify any single factor as being all-important or
32
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.
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 investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor 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, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading
33
activities, portfolio valuation services, auditing services, and legal and operational compliance activities. 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, 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 Investment Company 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. 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.
34
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 such 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 may receive 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
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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 or as an exhibit to its reports on Form N-PORT. The fund’s Forms N-Q and Form N-PORT reports are available on the SEC’s website at sec.gov. 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, 2019.
For the fiscal year ended November 30, 2019, the fund intends to pass through to shareholders foreign source income of $72,154,366 and foreign taxes paid of $5,359,440, 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, 2019 are $0.3339 and $0.0248, respectively.
37
Notes |
38
Notes |
39
Notes |
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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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91030 2001 |
![acihorizblkd32.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/acihorizblkd32.jpg)
Annual Report | |
November 30, 2019 | |
Emerging Markets Small Cap Fund | |
Investor Class (AECVX) | |
I Class (AECSX) | |
A Class (AECLX) | |
C Class (AECHX) | |
R Class (AECMX) | |
R6 Class (AECTX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 | |
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 |
![jthomasrev0514a01.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/jthomasrev0514a01.jpg)
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2019. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional investment and market insights, please visit our website, americancentury.com.
Monetary Policy Pivot Improved Investor Sentiment
The reporting period began on a challenging note. Mounting concerns about slowing global economic and earnings growth, the U.S.-China trade dispute and Federal Reserve (Fed) policy soured investor sentiment, driving global stocks lower. After raising rates in September 2018, the Fed hiked again in December and delivered a surprisingly bullish 2019 rate-hike outlook, which worsened the year-end sell-off among global stocks.
However, a key policy pivot from the Fed in early 2019 helped improve investor attitudes worldwide. The central bank abruptly ended its rate-hike campaign and adopted a dovish tone amid weaker global growth and inflation. Similar economic concerns kept central banks in Europe and Japan maintaining or expanding their accommodative policies. Additionally, investors’ earlier worst-case fears about trade and corporate earnings generally eased, which also aided stocks.
Volatility reemerged in the spring, when a Brexit stalemate prompted U.K. Prime Minister Theresa May to resign. This news reignited global fears of a no-deal Brexit. However, those worries subsided as Boris Johnson, a staunch Brexit advocate, succeeded May. Meanwhile, U.S.-China trade policy continued to fuel bouts of volatility. In July, growing concerns about global economic risks encouraged the Fed to cut short-term interest rates for the first time in 10 years. The Fed followed up with additional rate cuts in September and October. Fed easing and a lower interest rate backdrop helped restore investor optimism.
Overall, broad global stock indices advanced for the 12-month period. U.S. stocks generally outperformed non-U.S. stocks, while developed markets broadly outperformed emerging markets.
Looking ahead, we expect volatility to remain a formidable factor as investors react to global growth and trade trends, central bank policy and geopolitical developments. We believe this scenario underscores the importance of using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
![image48a16.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/image48a16.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of November 30, 2019 | ||||
Average Annual Returns | ||||
Ticker Symbol | 1 year | Since Inception | Inception Date | |
Investor Class | AECVX | 11.36% | 8.04% | 4/7/16 |
MSCI Emerging Markets Small Cap Index | — | 3.39% | 4.40% | — |
I Class | AECSX | 11.52% | 8.25% | 4/7/16 |
A Class | AECLX | 4/7/16 | ||
No sales charge | 11.11% | 7.77% | ||
With sales charge | 4.73% | 6.04% | ||
C Class | AECHX | 10.20% | 6.95% | 4/7/16 |
R Class | AECMX | 10.68% | 7.48% | 4/7/16 |
R6 Class | AECTX | 11.68% | 8.41% | 4/7/16 |
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 Life of Class |
$10,000 investment made April 7, 2016 |
Performance for other share classes will vary due to differences in fee structure. |
![chart-2b26b91c205d570487ea07.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/chart-2b26b91c205d570487ea07.jpg)
Value on November 30, 2019 | |
Investor Class — $13,258 | |
MSCI Emerging Markets Small Cap Index — $11,703 | |
Total Annual Fund Operating Expenses | |||||
Investor Class | I Class | A Class | C Class | R Class | R6 Class |
1.62% | 1.42% | 1.87% | 2.62% | 2.12% | 1.27% |
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.
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Portfolio Commentary |
Portfolio Managers: Patricia Ribeiro and Sherwin Soo
Performance Summary
Emerging Markets Small Cap returned 11.36%* for the 12 months ended November 30, 2019. The portfolio’s benchmark, the MSCI Emerging Markets Small Cap Index, returned 3.39% for the same period.
The fund outperformed its benchmark during the period, primarily due to positive stock selection in the consumer discretionary sector, as well as stock choices in financials and industrials. Conversely, investments in consumer staples and materials limited relative gains. Regionally, stock selection in China and Indonesia lifted relative performance, while an underweight in Taiwan hindered results.
Consumer Discretionary Holdings Contributed
Consumer discretionary drove relative outperformance on a sector basis, driven largely by China-based sporting goods company Li Ning and Brazil-based retailer Magazine Luiza. Shares of Li Ning benefited from sales growth, driven by increased consumer demand. The company reported strong core profit results on the back of better-than-expected sales and earnings, while higher consensus estimates reflect the retailer’s healthy demand momentum in athleisure apparel. Magazine Luiza’s stock price appreciated amid economic improvement in Brazil, as the retailer reported solid operating results. Growth in gross merchandise volume remains strong in Magazine Luiza’s online channel and brick-and-mortar stores as investments in execution continue to drive traffic higher.
The fund’s strong performance in the financials sector was driven primarily by Bank Tabungan Pensiunan Nasional (BTPN) and Taiwan-based leasing company Chailease Holding. BTPN’s shares benefited from strong loan growth and higher loan size, as well as stable asset quality. The bank faces limited competition amid a large opportunity with the unbanked population. Chailease’s stock price gained on improving spread and yield data, driven by asset quality control and business growth in China.
Within industrials, Country Garden Services Holdings was a notable contributor. Shares of the China-based property developer benefited from continued strong contract sales and visible growth in the fragmented markets of China’s lower-tier cities. Elsewhere, China-based data center operator GDS Holdings bolstered relative performance. GDS reported strong sales as it continued to benefit from increased cloud adoption in China. The company’s margins are improving, and we believe GDS’ pipeline remains strong given strong demand for data centers.
Stock Selection in the Consumer Staples Sector Detracted
The fund’s consumer staples holdings weighed on relative performance, driven primarily by South Korea-based cosmetics maker Cosmax and Taiwan-based dietary supplements and skincare products manufacturer TCI. Cosmax’s shares declined amid slowing sales growth in South Korea, declining sales for Cosmax China, and lower forecasts for U.S. and China operations. TCI’s stock price declined as waning near-term consumer demand amid the Chinese government’s clampdown and investigation into potentially false health food claims. A major shareholder’s move to divest shares also weighed on TCI shares. We exited our positions in Cosmax and TCI during the period.
*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 the materials sector, notable detractors included South Korea-based POSCO Chemical, which we exited during the period. Shares declined as the company revised its operating profit lower to account for increases in payroll costs and the slower pace of shipment growth at its rechargeable battery materials unit.
Outlook
We continue to believe the long-term case for emerging markets stocks remains strong. Improving growth data, dovish U.S. Federal Reserve policy and reduced geopolitical concerns around both U.S.-China trade tensions and Brexit are expected to provide support for emerging markets stock prices. We’ve also seen a recovery in emerging markets earnings.
The fund continues to invest in companies where we believe fundamentals are improving but share price performance does not fully reflect these factors.
Geographically, we increased our exposure to China, which remained the fund’s largest overweight versus the benchmark. We believe the softening of trade rhetoric and a trade agreement between the U.S. and China has helped improve conditions in the country and the region. Our holdings are exposed to domestic consumption or government stimulus policies designed to support domestic growth. Ongoing infrastructure investment and a reduction in the value-added tax should further support consumer activity.
We also added to our overweight exposure to Indonesia, amid accommodative monetary policy and improving domestic conditions, primarily by buying Bank Tabungan Pensiunan Nasional. Conversely, we reduced our exposure to South Korea, moving from an overweight to the largest relative market underweight, primarily through the sale of Cosmax.
We significantly increased our information technology position over the last year, shifting from a relative underweight to an overweight versus the benchmark, due in part to a new position in Taiwan-based Win Semiconductors. In our view, the sector is improving based on stabilizing memory prices, stronger-than-expected iPhone 11 sales and accelerated 5G-related demand.
Consumer discretionary remained the largest relative sector position, and we meaningfully increased our exposure during the period. We believe that urbanization and growth of the middle class, as well as the aspirational spending that goes with them are powerful, long-term drivers. We are finding opportunities in companies positioned for strengthening consumer demand in areas such as sportswear, as well as higher standard-of-living spending such as education, automobiles and travel.
We reduced our exposure to the consumer staples sector, largely through the sale of Cosmax and India-based Future Retail. The latter struggled with lower operating margins and weak performance in its small-format stores.
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Fund Characteristics |
NOVEMBER 30, 2019 | |
Top Ten Holdings | % of net assets |
Chailease Holding Co. Ltd. | 2.4% |
Country Garden Services Holdings Co. Ltd. | 2.4% |
Bank Tabungan Pensiunan Nasional Syariah Tbk PT | 2.2% |
Li Ning Co. Ltd. | 2.2% |
Merida Industry Co. Ltd. | 2.1% |
GDS Holdings Ltd. ADR | 2.1% |
Taiwan Union Technology Corp. | 1.7% |
Capitec Bank Holdings Ltd. | 1.7% |
Win Semiconductors Corp. | 1.6% |
Digital Telecommunications Infrastructure Fund | 1.6% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 96.1% |
Exchange-Traded Funds | 1.2% |
Rights | —* |
Total Equity Exposure | 97.3% |
Temporary Cash Investments | 3.1% |
Other Assets and Liabilities | (0.4)% |
*Category is less than 0.05% of total net assets. | |
Investments by Country | % of net assets |
China | 19.7% |
Taiwan | 14.0% |
India | 11.0% |
Brazil | 9.8% |
Indonesia | 7.6% |
South Korea | 7.0% |
Thailand | 5.7% |
Philippines | 4.4% |
South Africa | 3.7% |
Greece | 2.0% |
Other Countries | 11.2% |
Exchange-Traded Funds* | 1.2% |
Cash and Equivalents** | 2.7% |
*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. |
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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, 2019 to November 30, 2019.
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.
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Beginning Account Value 6/1/19 | Ending Account Value 11/30/19 | Expenses Paid During Period(1) 6/1/19 - 11/30/19 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,076.50 | $8.33 | 1.60% |
I Class | $1,000 | $1,077.20 | $7.29 | 1.40% |
A Class | $1,000 | $1,075.00 | $9.62 | 1.85% |
C Class | $1,000 | $1,070.60 | $13.50 | 2.60% |
R Class | $1,000 | $1,073.50 | $10.92 | 2.10% |
R6 Class | $1,000 | $1,077.90 | $6.51 | 1.25% |
Hypothetical | ||||
Investor Class | $1,000 | $1,017.05 | $8.09 | 1.60% |
I Class | $1,000 | $1,018.05 | $7.08 | 1.40% |
A Class | $1,000 | $1,015.79 | $9.35 | 1.85% |
C Class | $1,000 | $1,012.03 | $13.11 | 2.60% |
R Class | $1,000 | $1,014.54 | $10.61 | 2.10% |
R6 Class | $1,000 | $1,018.80 | $6.33 | 1.25% |
(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. |
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Schedule of Investments |
NOVEMBER 30, 2019
Shares | Value | |||
COMMON STOCKS — 96.1% | ||||
Argentina — 1.5% | ||||
Globant SA(1) | 1,310 | $ | 140,170 | |
Brazil — 9.8% | ||||
Arco Platform Ltd., Class A(1) | 2,355 | 101,265 | ||
Banco Inter SA | 13,094 | 139,207 | ||
Cia de Locacao das Americas | 32,100 | 131,169 | ||
Cyrela Brazil Realty SA Empreendimentos e Participacoes | 17,700 | 111,793 | ||
Equatorial Energia SA | 17,000 | 83,038 | ||
Fleury SA | 15,800 | 106,324 | ||
Magazine Luiza SA | 8,927 | 95,307 | ||
TOTVS SA | 8,600 | 129,253 | ||
897,356 | ||||
Chile — 1.2% | ||||
Geopark Ltd. | 6,035 | 108,992 | ||
China — 19.7% | ||||
A-Living Services Co. Ltd., H Shares | 42,500 | 137,114 | ||
Anton Oilfield Services Group | 412,000 | 39,480 | ||
Baozun, Inc. ADR(1) | 1,789 | 67,928 | ||
Brilliance China Automotive Holdings Ltd. | 86,000 | 88,787 | ||
China East Education Holdings Ltd.(1)(2) | 43,000 | 79,531 | ||
China Education Group Holdings Ltd. | 67,000 | 90,738 | ||
China Foods Ltd. | 124,000 | 49,912 | ||
China Resources Cement Holdings Ltd. | 40,000 | 47,872 | ||
CIFI Holdings Group Co. Ltd. | 134,570 | 98,010 | ||
Comba Telecom Systems Holdings Ltd. | 396,000 | 92,089 | ||
Country Garden Services Holdings Co. Ltd. | 67,000 | 216,579 | ||
GDS Holdings Ltd. ADR(1) | 4,042 | 189,246 | ||
Li Ning Co. Ltd. | 62,000 | 198,838 | ||
Maoyan Entertainment(1) | 49,600 | 71,482 | ||
TAL Education Group ADR(1) | 2,449 | 108,393 | ||
Times China Holdings Ltd. | 41,000 | 77,117 | ||
Times Neighborhood Holdings Ltd.(1) | 15,769 | 9,742 | ||
West China Cement Ltd. | 532,000 | 84,259 | ||
Wisdom Education International Holdings Co. Ltd. | 130,000 | 57,305 | ||
1,804,422 | ||||
Egypt — 0.6% | ||||
Juhayna Food Industries | 96,679 | 50,978 | ||
Greece — 2.0% | ||||
Eurobank Ergasias SA(1) | 45,443 | 47,794 | ||
JUMBO SA | 4,464 | 89,517 | ||
OPAP SA | 3,829 | 47,064 | ||
184,375 |
10
Shares | Value | |||
India — 11.0% | ||||
Bata India Ltd. | 4,123 | $ | 93,613 | |
Berger Paints India Ltd. | 17,513 | 121,203 | ||
Crompton Greaves Consumer Electricals Ltd. | 30,609 | 108,636 | ||
Indraprastha Gas Ltd. | 18,128 | 104,406 | ||
Jubilant Foodworks Ltd. | 3,509 | 79,146 | ||
L&T Technology Services Ltd. | 3,305 | 68,685 | ||
Larsen & Toubro Infotech Ltd. | 3,206 | 75,512 | ||
Prestige Estates Projects Ltd. | 31,727 | 134,256 | ||
Torrent Pharmaceuticals Ltd. | 4,428 | 117,171 | ||
Zydus Wellness Ltd. | 5,102 | 102,695 | ||
1,005,323 | ||||
Indonesia — 7.6% | ||||
Ace Hardware Indonesia Tbk PT | 692,400 | 77,554 | ||
Bank Tabungan Pensiunan Nasional Syariah Tbk PT(1) | 733,000 | 205,722 | ||
Jasa Marga Persero Tbk PT | 253,800 | 88,835 | ||
Mitra Adiperkasa Tbk PT | 1,672,800 | 120,351 | ||
Semen Indonesia Persero Tbk PT | 120,100 | 97,456 | ||
Waskita Karya Persero Tbk PT | 299,100 | 25,966 | ||
XL Axiata Tbk PT(1) | 359,700 | 85,154 | ||
701,038 | ||||
Malaysia — 0.9% | ||||
Carlsberg Brewery Malaysia Bhd | 12,100 | 79,200 | ||
Mexico — 1.8% | ||||
Grupo Aeroportuario del Centro Norte SAB de CV | 17,720 | 117,696 | ||
Regional SAB de CV | 8,742 | 47,568 | ||
165,264 | ||||
Philippines — 4.4% | ||||
Bloomberry Resorts Corp. | 551,900 | 121,104 | ||
International Container Terminal Services, Inc. | 42,840 | 104,194 | ||
MacroAsia Corp. | 111,800 | 39,565 | ||
Wilcon Depot, Inc. | 390,300 | 142,146 | ||
407,009 | ||||
Russia — 1.9% | ||||
TCS Group Holding plc GDR | 4,907 | 90,285 | ||
Yandex NV, A Shares(1) | 2,052 | 86,122 | ||
176,407 | ||||
Saudi Arabia — 0.8% | ||||
Leejam Sports Co. JSC | 3,900 | 74,959 | ||
South Africa — 3.7% | ||||
Capitec Bank Holdings Ltd. | 1,627 | 157,436 | ||
Clicks Group Ltd. | 8,132 | 139,088 | ||
JSE Ltd. | 5,232 | 43,890 | ||
340,414 | ||||
South Korea — 7.0% | ||||
CJ Logistics Corp.(1) | 626 | 83,557 | ||
Doosan Bobcat, Inc. | 4,490 | 119,183 |
11
Shares | Value | |||
Fila Korea Ltd. | 2,788 | $ | 121,797 | |
Han Kuk Carbon Co. Ltd. | 13,376 | 84,724 | ||
Hotel Shilla Co. Ltd. | 600 | 43,099 | ||
Hyundai Mipo Dockyard Co. Ltd. | 2,989 | 113,991 | ||
Koh Young Technology, Inc. | 511 | 43,349 | ||
Studio Dragon Corp.(1) | 510 | 32,902 | ||
642,602 | ||||
Taiwan — 14.0% | ||||
Asia Cement Corp. | 78,000 | 116,260 | ||
ASPEED Technology, Inc. | 4,000 | 111,853 | ||
Chailease Holding Co. Ltd. | 49,728 | 222,778 | ||
Chroma ATE, Inc. | 13,000 | 59,447 | ||
ITEQ Corp. | 29,000 | 132,897 | ||
Merida Industry Co. Ltd. | 34,000 | 195,167 | ||
Realtek Semiconductor Corp. | 6,000 | 45,403 | ||
Taiwan Union Technology Corp. | 36,000 | 158,133 | ||
Vanguard International Semiconductor Corp. | 38,000 | 89,256 | ||
Win Semiconductors Corp. | 15,000 | 148,742 | ||
1,279,936 | ||||
Thailand — 5.7% | ||||
Digital Telecommunications Infrastructure Fund | 261,800 | 145,555 | ||
Minor International PCL | 36,700 | 46,726 | ||
Muangthai Capital PCL | 21,900 | 43,630 | ||
Plan B Media PCL, F Shares | 534,500 | 141,384 | ||
Srisawad Corp. PCL | 68,660 | 142,374 | ||
519,669 | ||||
Turkey — 1.4% | ||||
Mavi Giyim Sanayi Ve Ticaret AS, B Shares(1) | 9,103 | 71,519 | ||
Sok Marketler Ticaret AS(1) | 33,378 | 57,337 | ||
128,856 | ||||
United Kingdom — 1.1% | ||||
Network International Holdings plc(1) | 13,527 | 101,284 | ||
TOTAL COMMON STOCKS (Cost $7,385,013) | 8,808,254 | |||
EXCHANGE-TRADED FUNDS — 1.2% | ||||
iShares MSCI India Small-Cap ETF (Cost $104,846) | 2,965 | 107,452 | ||
RIGHTS† | ||||
China† | ||||
Times China Holdings Ltd.(1) (Cost $—) | 1,708 | — | ||
TEMPORARY CASH INVESTMENTS — 3.1% | ||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.625% - 2.875%, 11/15/20 - 8/15/28, valued at $172,827), in a joint trading account at 1.40%, dated 11/29/19, due 12/2/19 (Delivery value $169,602) | 169,582 |
12
Shares | Value | |||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 117,033 | $ | 117,033 | |
TOTAL TEMPORARY CASH INVESTMENTS (Cost $286,615) | 286,615 | |||
TOTAL INVESTMENT SECURITIES — 100.4% (Cost $7,776,474) | 9,202,321 | |||
OTHER ASSETS AND LIABILITIES — (0.4)% | (36,485 | ) | ||
TOTAL NET ASSETS — 100.0% | $ | 9,165,836 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Consumer Discretionary | 27.4 | % |
Information Technology | 18.2 | % |
Industrials | 13.6 | % |
Financials | 12.4 | % |
Materials | 6.0 | % |
Consumer Staples | 5.2 | % |
Communication Services | 3.7 | % |
Real Estate | 3.5 | % |
Health Care | 2.5 | % |
Utilities | 2.0 | % |
Energy | 1.6 | % |
Exchange-Traded Funds | 1.2 | % |
Cash and Equivalents* | 2.7 | % |
*Includes temporary cash investments and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
GDR | - | Global Depositary Receipt |
† | Category is less than 0.05% of total net assets. |
(1) | Non-income producing. |
(2) | Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $75,554. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. At period end, the aggregate market value of the collateral held by the fund was $80,014, all of which is securities collateral. |
See Notes to Financial Statements.
13
Statement of Assets and Liabilities |
NOVEMBER 30, 2019 | |||
Assets | |||
Investment securities, at value (cost of $7,776,474) — including $75,554 of securities on loan | $ | 9,202,321 | |
Foreign currency holdings, at value (cost of $6,569) | 6,288 | ||
Receivable for investments sold | 26,985 | ||
Receivable for capital shares sold | 20,547 | ||
Dividends and interest receivable | 6,241 | ||
Securities lending receivable | 77 | ||
9,262,459 | |||
Liabilities | |||
Disbursements in excess of demand deposit cash | 79,167 | ||
Accrued management fees | 11,643 | ||
Distribution and service fees payable | 889 | ||
Accrued foreign taxes | 4,924 | ||
96,623 | |||
Net Assets | $ | 9,165,836 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 8,082,430 | |
Distributable earnings | 1,083,406 | ||
$ | 9,165,836 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $4,763,917 | 380,542 | $12.52 | |||
I Class, $0.01 Par Value | $2,385,844 | 189,924 | $12.56 | |||
A Class, $0.01 Par Value | $852,563 | 68,383 | $12.47* | |||
C Class, $0.01 Par Value | $683,933 | 55,633 | $12.29 | |||
R Class, $0.01 Par Value | $335,621 | 27,032 | $12.42 | |||
R6 Class, $0.01 Par Value | $143,958 | 11,432 | $12.59 |
*Maximum offering price $13.23 (net asset value divided by 0.9425).
See Notes to Financial Statements.
14
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2019 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $23,839) | $ | 199,455 | |
Interest | 4,330 | ||
Securities lending, net | 1,275 | ||
205,060 | |||
Expenses: | |||
Management fees | 156,593 | ||
Distribution and service fees: | |||
A Class | 2,817 | ||
C Class | 9,756 | ||
R Class | 1,878 | ||
Directors' fees and expenses | 307 | ||
Other expenses | 269 | ||
171,620 | |||
Net investment income (loss) | 33,440 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions (net of foreign tax expenses paid (refunded) of $579) | (290,375 | ) | |
Foreign currency translation transactions | (15,070 | ) | |
(305,445 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments (includes (increase) decrease in accrued foreign taxes of $(4,924)) | 1,379,751 | ||
Translation of assets and liabilities in foreign currencies | (529 | ) | |
1,379,222 | |||
Net realized and unrealized gain (loss) | 1,073,777 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,107,217 |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2019 AND NOVEMBER 30, 2018 | ||||||
Increase (Decrease) in Net Assets | November 30, 2019 | November 30, 2018 | ||||
Operations | ||||||
Net investment income (loss) | $ | 33,440 | $ | 20,668 | ||
Net realized gain (loss) | (305,445 | ) | 517,202 | |||
Change in net unrealized appreciation (depreciation) | 1,379,222 | (2,372,120 | ) | |||
Net increase (decrease) in net assets resulting from operations | 1,107,217 | (1,834,250 | ) | |||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (211,250 | ) | (78,924 | ) | ||
I Class | (47,717 | ) | (11,182 | ) | ||
A Class | (42,563 | ) | (17,599 | ) | ||
C Class | (41,460 | ) | (1,980 | ) | ||
R Class | (13,422 | ) | (2,168 | ) | ||
R6 Class | (8,507 | ) | (4,150 | ) | ||
Decrease in net assets from distributions | (364,919 | ) | (116,003 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (1,788,460 | ) | 529,189 | |||
Net increase (decrease) in net assets | (1,046,162 | ) | (1,421,064 | ) | ||
Net Assets | ||||||
Beginning of period | 10,211,998 | 11,633,062 | ||||
End of period | $ | 9,165,836 | $ | 10,211,998 |
See Notes to Financial Statements.
16
Notes to Financial Statements |
NOVEMBER 30, 2019
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, 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 Directors, or its delegate, deems appropriate. The fund may apply a model-derived factor to the closing price
17
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. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
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.
18
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
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 38% 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, 2019 are detailed in the Statement of Operations.
19
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, 2019 were $6,553,752 and $8,691,724, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2019 | Year ended November 30, 2018 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 40,000,000 | 50,000,000 | ||||||||
Sold | 135,086 | $ | 1,622,100 | 385,055 | $ | 5,438,357 | ||||
Issued in reinvestment of distributions | 19,297 | 210,336 | 5,727 | 78,175 | ||||||
Redeemed | (281,199 | ) | (3,374,805 | ) | (387,314 | ) | (5,315,103 | ) | ||
(126,816 | ) | (1,542,369 | ) | 3,468 | 201,429 | |||||
I Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 120,968 | 1,458,880 | 54,211 | 695,641 | ||||||
Issued in reinvestment of distributions | 4,370 | 47,717 | 820 | 11,182 | ||||||
Redeemed | (46,951 | ) | (576,122 | ) | (4,133 | ) | (52,760 | ) | ||
78,387 | 930,475 | 50,898 | 654,063 | |||||||
A Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 11,855 | 129,000 | 581 | 8,802 | ||||||
Issued in reinvestment of distributions | 3,908 | 42,563 | 1,288 | 17,599 | ||||||
Redeemed | (51,108 | ) | (623,555 | ) | (41,571 | ) | (462,502 | ) | ||
(35,345 | ) | (451,992 | ) | (39,702 | ) | (436,101 | ) | |||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Issued in reinvestment of distributions | 3,835 | 41,460 | 145 | 1,980 | ||||||
Redeemed | (48,347 | ) | (585,000 | ) | — | — | ||||
(44,512 | ) | (543,540 | ) | 145 | 1,980 | |||||
R Class/Shares Authorized | 20,000,000 | 30,000,000 | ||||||||
Sold | 8,751 | 103,794 | 13,676 | 173,754 | ||||||
Issued in reinvestment of distributions | 1,235 | 13,422 | 159 | 2,168 | ||||||
Redeemed | (15,170 | ) | (184,757 | ) | (5,947 | ) | (72,254 | ) | ||
(5,184 | ) | (67,541 | ) | 7,888 | 103,668 | |||||
R6 Class/Shares Authorized | 20,000,000 | 30,000,000 | ||||||||
Issued in reinvestment of distributions | 778 | 8,507 | 304 | 4,150 | ||||||
Redeemed | (9,894 | ) | (122,000 | ) | — | — | ||||
(9,116 | ) | (113,493 | ) | 304 | 4,150 | |||||
Net increase (decrease) | (142,586 | ) | $ | (1,788,460 | ) | 23,001 | $ | 529,189 |
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.
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 | $ | 140,170 | — | — | ||||
Brazil | 101,265 | $ | 796,091 | — | ||||
Chile | 108,992 | — | — | |||||
China | 365,567 | 1,438,855 | — | |||||
Russia | 86,122 | 90,285 | — | |||||
Other Countries | — | 5,680,907 | — | |||||
Exchange-Traded Funds | 107,452 | — | — | |||||
Rights | — | — | — | |||||
Temporary Cash Investments | 117,033 | 169,582 | — | |||||
$ | 1,026,601 | $ | 8,175,720 | — |
The fund may hold financial instruments at their inherent carrying value for financial statement purposes,
which approximates fair value. As of period end, the fund’s disbursements in excess of demand deposit cash
were classified as Level 2.
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing in emerging markets or a significant portion of assets in one country or region 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.
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8. Federal Tax Information
On December 17, 2019, the fund declared and paid the following per-share distributions from net investment income to shareholders of record on December 16, 2019:
Investor Class | I Class | A Class | C Class | R Class | R6 Class |
$0.0467 | $0.0726 | $0.0142 | — | — | $0.0921 |
The tax character of distributions paid during the years ended November 30, 2019 and November 30, 2018 were as follows:
2019 | 2018 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 61 | $ | 100,312 | ||
Long-term capital gains | $ | 364,858 | $ | 15,691 |
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 | $ | 7,823,901 | |
Gross tax appreciation of investments | $ | 1,760,298 | |
Gross tax depreciation of investments | (381,878 | ) | |
Net tax appreciation (depreciation) of investments | 1,378,420 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (5,458 | ) | |
Net tax appreciation (depreciation) | $ | 1,372,962 | |
Undistributed ordinary income | $ | 29,342 | |
Accumulated short-term capital losses | $ | (277,551 | ) |
Post-October capital loss deferral | $ | (41,347 | ) |
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.
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.
Loss deferrals represent certain qualified losses that the fund has elected to treat as having been incurred in the following fiscal year for federal income tax purposes.
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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 | |||||||||||||
2019 | $11.68 | 0.05 | 1.20 | 1.25 | — | (0.41) | (0.41) | $12.52 | 11.36% | 1.61% | 0.43% | 67% | $4,764 |
2018 | $13.66 | 0.04 | (1.86) | (1.82) | (0.14) | (0.02) | (0.16) | $11.68 | (13.59)% | 1.60% | 0.31% | 75% | $5,924 |
2017 | $10.45 | (0.03) | 3.33 | 3.30 | (0.09) | — | (0.09) | $13.66 | 31.85% | 1.61% | (0.16)% | 49% | $6,884 |
2016(3) | $10.00 | 0.04 | 0.41 | 0.45 | — | — | — | $10.45 | 4.50% | 1.60%(4) | 0.59%(4) | 51% | $2,373 |
I Class | |||||||||||||
2019 | $11.69 | 0.07 | 1.21 | 1.28 | — | (0.41) | (0.41) | $12.56 | 11.52% | 1.41% | 0.63% | 67% | $2,386 |
2018 | $13.68 | 0.06 | (1.86) | (1.80) | (0.17) | (0.02) | (0.19) | $11.69 | (13.39)% | 1.40% | 0.51% | 75% | $1,304 |
2017 | $10.46 | 0.01 | 3.32 | 3.33 | (0.11) | — | (0.11) | $13.68 | 32.18% | 1.41% | 0.04% | 49% | $829 |
2016(3) | $10.00 | 0.05 | 0.41 | 0.46 | — | — | — | $10.46 | 4.60% | 1.40%(4) | 0.79%(4) | 51% | $628 |
A Class | |||||||||||||
2019 | $11.66 | 0.02 | 1.20 | 1.22 | — | (0.41) | (0.41) | $12.47 | 11.11% | 1.86% | 0.18% | 67% | $853 |
2018 | $13.64 | 0.01 | (1.86) | (1.85) | (0.11) | (0.02) | (0.13) | $11.66 | (13.82)% | 1.85% | 0.06% | 75% | $1,209 |
2017 | $10.43 | (0.04) | 3.31 | 3.27 | (0.06) | — | (0.06) | $13.64 | 31.57% | 1.86% | (0.41)% | 49% | $1,956 |
2016(3) | $10.00 | 0.02 | 0.41 | 0.43 | — | — | — | $10.43 | 4.30% | 1.85%(4) | 0.34%(4) | 51% | $1,043 |
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) | |
C Class | |||||||||||||
2019 | $11.58 | (0.07) | 1.19 | 1.12 | — | (0.41) | (0.41) | $12.29 | 10.20% | 2.61% | (0.57)% | 67% | $684 |
2018 | $13.55 | (0.10) | (1.85) | (1.95) | —(5) | (0.02) | (0.02) | $11.58 | (14.41)% | 2.60% | (0.69)% | 75% | $1,160 |
2017 | $10.38 | (0.13) | 3.30 | 3.17 | — | — | — | $13.55 | 30.54% | 2.61% | (1.16)% | 49% | $1,355 |
2016(3) | $10.00 | (0.03) | 0.41 | 0.38 | — | — | — | $10.38 | 3.80% | 2.60%(4) | (0.41)%(4) | 51% | $1,038 |
R Class | |||||||||||||
2019 | $11.64 | (0.01) | 1.20 | 1.19 | — | (0.41) | (0.41) | $12.42 | 10.68% | 2.11% | (0.07)% | 67% | $336 |
2018 | $13.62 | (0.03) | (1.86) | (1.89) | (0.07) | (0.02) | (0.09) | $11.64 | (13.98)% | 2.10% | (0.19)% | 75% | $375 |
2017 | $10.41 | (0.07) | 3.32 | 3.25 | (0.04) | — | (0.04) | $13.62 | 31.30% | 2.11% | (0.66)% | 49% | $331 |
2016(3) | $10.00 | 0.01 | 0.40 | 0.41 | — | — | — | $10.41 | 4.10% | 2.10%(4) | 0.09%(4) | 51% | $212 |
R6 Class | |||||||||||||
2019 | $11.70 | 0.09 | 1.21 | 1.30 | — | (0.41) | (0.41) | $12.59 | 11.68% | 1.26% | 0.78% | 67% | $144 |
2018 | $13.69 | 0.08 | (1.86) | (1.78) | (0.19) | (0.02) | (0.21) | $11.70 | (13.25)% | 1.25% | 0.66% | 75% | $240 |
2017 | $10.47 | 0.03 | 3.31 | 3.34 | (0.12) | — | (0.12) | $13.69 | 32.35% | 1.26% | 0.19% | 49% | $277 |
2016(3) | $10.00 | 0.06 | 0.41 | 0.47 | — | — | — | $10.47 | 4.70% | 1.25%(4) | 0.94%(4) | 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) | April 7, 2016 (fund inception) through November 30, 2016. |
(4) | Annualized. |
(5) | 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.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Emerging Markets Small Cap Fund, one of the funds constituting the American Century World Mutual Funds, Inc. (the "Fund"), as of November 30, 2019, 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, the financial highlights for each of the years ended November 30, 2019, 2018, 2017 and for the period April 7, 2016 (fund inception) through November 30, 2016, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Emerging Markets Small Cap Fund of the American Century World Mutual Funds, Inc. as of November 30, 2019, 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 years ended November 30, 2019, 2018, 2017 and for the period April 7, 2016 (fund inception) through November 30, 2016, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of November 30, 2019, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2020
We have served as the auditor of one or more American Century investment companies since 1997.
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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 Jonathan S. Thomas, 16; and Stephen E. Yates, 8) 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 | 66 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 66 | None |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 66 | None |
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 66 | None |
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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 | |||||
Lynn Jenkins (1963) | Director | Since 2019 | United States Representative, U.S. House of Representatives (2009 to 2018) | 66 | MGP Ingredients, Inc. |
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 66 | None |
John R. Whitten (1946) | Director | Since 2008 | Retired | 66 | Onto Innovation Inc.; Rudolph Technologies, Inc. (2006 to 2019) |
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 81 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director | 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 | 125 | 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 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds. 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 |
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Chief Operating Officer, ACC (2012-2015). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries |
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Investment Operations and Investment Accounting, ACS (2000 to present) |
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). 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 since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) |
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 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 26, 2019, 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; |
• | any economies of scale associated with the Advisor’s management of the Fund and other accounts; |
• | services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; 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 provided by the Directors to the Advisor 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 connection with their review, the Directors did not identify any single factor as being all-important or
30
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.
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 investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor 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 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, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance
31
activities. 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, 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 Investment Company 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 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.
32
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 such 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 may receive 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
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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 or as an exhibit to its reports on Form N-PORT. The fund’s Forms N-Q and Form N-PORT reports are available on the SEC’s website at sec.gov. 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, 2019.
The fund hereby designates $364,858, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended November 30, 2019.
For the fiscal year ended November 30, 2019, the fund intends to pass through to shareholders foreign source income of $223,294 and foreign taxes paid of $23,154, 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, 2019 are $0.3018 and $0.0313, respectively.
35
Notes |
36
Notes |
37
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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91033 2001 |
![acihorizblkd32.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/acihorizblkd32.jpg)
Annual Report | |
November 30, 2019 | |
Focused Global Growth Fund | |
Investor Class (TWGGX) | |
I Class (AGGIX) | |
Y Class (AGYGX) | |
A Class (AGGRX) | |
C Class (AGLCX) | |
R Class (AGORX) | |
R5 Class (AGFGX) | |
R6 Class (AGGDX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 | ||
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 |
![jthomasrev0514a01.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/jthomasrev0514a01.jpg)
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2019. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional investment and market insights, please visit our website, americancentury.com.
Monetary Policy Pivot Improved Investor Sentiment
The reporting period began on a challenging note. Mounting concerns about slowing global economic and earnings growth, the U.S.-China trade dispute and Federal Reserve (Fed) policy soured investor sentiment, driving global stocks lower. After raising rates in September 2018, the Fed hiked again in December and delivered a surprisingly bullish 2019 rate-hike outlook, which worsened the year-end sell-off among global stocks.
However, a key policy pivot from the Fed in early 2019 helped improve investor attitudes worldwide. The central bank abruptly ended its rate-hike campaign and adopted a dovish tone amid weaker global growth and inflation. Similar economic concerns kept central banks in Europe and Japan maintaining or expanding their accommodative policies. Additionally, investors’ earlier worst-case fears about trade and corporate earnings generally eased, which also aided stocks.
Volatility reemerged in the spring, when a Brexit stalemate prompted U.K. Prime Minister Theresa May to resign. This news reignited global fears of a no-deal Brexit. However, those worries subsided as Boris Johnson, a staunch Brexit advocate, succeeded May. Meanwhile, U.S.-China trade policy continued to fuel bouts of volatility. In July, growing concerns about global economic risks encouraged the Fed to cut short-term interest rates for the first time in 10 years. The Fed followed up with additional rate cuts in September and October. Fed easing and a lower interest rate backdrop helped restore investor optimism.
Overall, broad global stock indices advanced for the 12-month period. U.S. stocks generally outperformed non-U.S. stocks, while developed markets broadly outperformed emerging markets.
Looking ahead, we expect volatility to remain a formidable factor as investors react to global growth and trade trends, central bank policy and geopolitical developments. We believe this scenario underscores the importance of using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
![image48a16.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/image48a16.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of November 30, 2019 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWGGX | 21.82% | 9.14% | 10.42% | — | 12/1/98 |
MSCI ACWI Index | — | 13.68% | 7.24% | 8.63% | — | — |
MSCI World Index | — | 14.53% | 7.74% | 9.34% | — | — |
I Class | AGGIX | 22.04% | 9.36% | 10.63% | — | 8/1/00 |
Y Class | AGYGX | 22.18% | — | — | 15.18% | 4/10/17 |
A Class | AGGRX | 2/5/99 | ||||
No sales charge | 21.48% | 8.86% | 10.14% | — | ||
With sales charge | 14.49% | 7.58% | 9.49% | — | ||
C Class | AGLCX | 20.53% | 8.05% | 9.31% | — | 3/1/02 |
R Class | AGORX | 21.24% | 8.59% | 9.87% | — | 7/29/05 |
R5 Class | AGFGX | 22.04% | — | — | 15.02% | 4/10/17 |
R6 Class | AGGDX | 22.30% | 9.53% | — | 10.62% | 7/26/13 |
Effective December 1, 2019, the fund's benchmark changed from the MSCI World Index to the MSCI ACWI Index. The fund's investment advisor believes that the MSCI ACWI Index aligns better with the fund's strategy.
Average annual returns since inception are presented when ten years of performance history is not available.
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, 2009 |
Performance for other share classes will vary due to differences in fee structure. |
![chart-b1e4bcba862d5c78b42.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/chart-b1e4bcba862d5c78b42.jpg)
Value on November 30, 2019 | |
Investor Class — $26,964 | |
MSCI World Index — $24,424 | |
MSCI ACWI Index — $22,892 | |
Total Annual Fund Operating Expenses | |||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class |
1.07% | 0.87% | 0.72% | 1.32% | 2.07% | 1.57% | 0.87% | 0.72% |
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
Focused Global Growth (new fund name effective November 22, 2019) returned 21.82%* for the 12 months ended November 30, 2019, outperforming its benchmark, the MSCI World Index, which returned 14.53%.
Strong stock selection in the information technology and industrials sectors contributed to the fund’s outperformance. Conversely, the weak results of our investments in the energy sector limited the fund’s gains. Geographically, our U.S.-based holdings and, to a lesser degree, our U.K.-based holdings lifted relative performance, while our investments in Canada and Switzerland weighed on results. Notably, our exposure in Switzerland included only two holdings: insurance company Zurich Insurance Group and chemicals and biotechnology firm Lonza Group.
Information Technology Holdings Contributed
Strong performers came primarily from the information technology sector, where Worldpay and Keysight Technologies contributed meaningfully. Worldpay gained on news of the payment processing firm’s merger with Fidelity National Information Services (FIS). Upon completion of the merger, our Worldpay holdings converted to shares of FIS. We believe the combined companies will capitalize on the growth of electronic payments worldwide and, therefore, maintained our position in FIS. Keysight, a maker of electronic measurement instruments, continued to report better-than-expected quarterly earnings. As one of the first companies to market 5G technology internationally, Keysight’s role in the development of 5G networks using open radio access network architecture has been the most recent of its cutting-edge developments.
Another area of strength within the fund was the industrials sector, where notable contributors included CoStar Group, a provider of data and analytics to commercial real estate professionals. Strong financial results driven by higher bookings supported stock gains during the period. We like that CoStar is a subscription-based business with a high renewal rate. We are confident it can continue to increase its already-strong market position and raise pricing.
On an individual stock basis, key contributors included internet-enabled television services provider Roku. Better-than-expected profits and revenues drove share price appreciation. We believe Roku’s gross margins and cash flows will continue to accelerate over the next several years, driven by a shift in the company’s revenue composition from hardware toward advertising.
Energy Holdings Detracted
Notable detractors included energy holdings EOG Resources and Pioneer Natural Resources. Headwinds for these oil and gas producers stocks included low oil prices as well as concerns around rising trade uncertainty and the potential impact on global growth and the demand for oil.
The fund’s lack of exposure to Apple and Microsoft—stocks that performed well during the period but that we do not own because they do not fit our investment process—also weighed on relative performance. Robust iPhone sales and strong growth in Apply Pay transactions lifted Apple’s 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
while Microsoft’s stock benefited from better-than-expected quarterly earnings. News that the U.S. Department of Defense awarded a multibillion-dollar defense deal to Microsoft’s cloud platform also drove shares higher.
Outlook
The outlook for global corporate earnings growth remains uncertain. We continue to see a bifurcation in growth trends across industries, with global manufacturing depressed in contrast to generally healthy consumer and service segments. While we believe current global monetary policies are supportive of stocks, we remain vigilant of late-cycle risk. Although the portfolio continues to follow our proven investment approach, it is now a focused fund and has fewer holdings, as indicated in its new name. We continue to invest in companies where we believe business fundamentals are improving and where we have high conviction that improvement is sustainable. Our process is based on individual security selection, but broad themes have emerged.
For example, we retain a bias for companies that are beneficiaries of long-lasting secular growth drivers. These opportunities are generally independent of the overall swings in macroeconomic cycles. We also prefer businesses that have a relatively high level of revenue visibility, such as companies that provide services under long-term contracts, businesses that are subscription based and those companies that rely on aftermarket sales of consumables. We continue to invest in companies exhibiting company-specific growth drivers. These drivers may range from new product innovation, restructuring or self-help programs to other market share gain initiatives. All represent varying forms of catalysts that we believe could allow for sustained revenue and earnings.
Within the financials sector, our investments include several nonbank financial names offering financial data and analytics to their customers. We believe the data segment provides an attractive business, as it is not balance sheet intensive and not dependent on transaction volume. We also have exposure to insurers amid a firming of pricing in the property and casualty markets. Finally, the portfolio remains invested in emerging markets-based banks, which continue to benefit from the rising penetration of financial services in those markets.
In technology, we have identified companies benefiting from long-lasting secular trends, such as e-commerce, payment systems, cloud computing, the rollout of 5G technologies, data center expansion and growth in software innovation. The portfolio retains a large exposure to companies involved in the proliferation of data and information.
Our focus within the health care sector is on companies specializing in medical devices, equipment, tools and production. We believe these companies will benefit from increasing research and development spending driven by secular trends, such as an aging population. Many of these businesses have highly visible revenue models tied to the sale of aftermarket consumables and test kits. We have less exposure to companies where growth is tied directly to the successful commercialization of the product pipeline or where the business is susceptible to political rhetoric around drug pricing.
Within the consumer discretionary sector, we continue to invest in companies with strong brands. The impact of e-commerce is driving diverging trends for many retailers, with traditional brick-and-mortar businesses being forced to adapt or become obsolete. However, we continue to find opportunities in select companies with well-established brands.
6
Fund Characteristics |
NOVEMBER 30, 2019 | |
Top Ten Holdings | % of net assets |
Amazon.com, Inc. | 3.6% |
Visa, Inc., Class A | 3.1% |
Alibaba Group Holding Ltd. ADR | 3.0% |
CRH plc | 2.6% |
American Express Co. | 2.6% |
IHS Markit Ltd. | 2.5% |
AIA Group Ltd. | 2.4% |
ServiceNow, Inc. | 2.3% |
Equinix, Inc. | 2.2% |
Avantor, Inc. | 2.2% |
Types of Investments in Portfolio | % of net assets |
Domestic Common Stocks | 61.5% |
Foreign Common Stocks | 37.5% |
Total Common Stocks | 99.0% |
Temporary Cash Investments | 2.0% |
Other Assets and Liabilities | (1.0)% |
Investments by Country | % of net assets |
United States | 61.5% |
Japan | 6.5% |
United Kingdom | 4.1% |
China | 4.0% |
Hong Kong | 3.7% |
Netherlands | 3.3% |
Switzerland | 3.3% |
Ireland | 2.6% |
India | 2.1% |
Other Countries | 7.9% |
Cash and Equivalents* | 1.0% |
*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, 2019 to November 30, 2019.
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 6/1/19 | Ending Account Value 11/30/19 | Expenses Paid During Period(1) 6/1/19 - 11/30/19 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,124.60 | $5.70 | 1.07% |
I Class | $1,000 | $1,125.20 | $4.63 | 0.87% |
Y Class | $1,000 | $1,126.10 | $3.84 | 0.72% |
A Class | $1,000 | $1,122.70 | $7.02 | 1.32% |
C Class | $1,000 | $1,117.90 | $10.99 | 2.07% |
R Class | $1,000 | $1,121.80 | $8.35 | 1.57% |
R5 Class | $1,000 | $1,126.10 | $4.64 | 0.87% |
R6 Class | $1,000 | $1,126.20 | $3.84 | 0.72% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.70 | $5.42 | 1.07% |
I Class | $1,000 | $1,020.71 | $4.41 | 0.87% |
Y Class | $1,000 | $1,021.46 | $3.65 | 0.72% |
A Class | $1,000 | $1,018.45 | $6.68 | 1.32% |
C Class | $1,000 | $1,014.69 | $10.46 | 2.07% |
R Class | $1,000 | $1,017.20 | $7.94 | 1.57% |
R5 Class | $1,000 | $1,020.71 | $4.41 | 0.87% |
R6 Class | $1,000 | $1,021.46 | $3.65 | 0.72% |
(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, 2019
Shares | Value | |||
COMMON STOCKS — 99.0% | ||||
Austria — 0.3% | ||||
Erste Group Bank AG(1) | 48,559 | $ | 1,737,263 | |
Brazil — 1.5% | ||||
B3 SA - Brasil Bolsa Balcao | 798,100 | 8,965,594 | ||
Canada — 0.5% | ||||
Alimentation Couche-Tard, Inc., B Shares | 56,440 | 1,855,131 | ||
Canada Goose Holdings, Inc.(1) | 35,240 | 1,344,406 | ||
3,199,537 | ||||
China — 4.0% | ||||
Alibaba Group Holding Ltd. ADR(1) | 88,340 | 17,668,000 | ||
GDS Holdings Ltd. ADR(1) | 86,266 | 4,038,974 | ||
Tencent Holdings Ltd. | 17,600 | 746,144 | ||
YY, Inc. ADR(1) | 15,120 | 964,505 | ||
23,417,623 | ||||
France — 1.2% | ||||
Danone SA | 16,920 | 1,392,594 | ||
Pernod Ricard SA | 12,750 | 2,340,844 | ||
TOTAL SA | 63,732 | 3,346,045 | ||
7,079,483 | ||||
Hong Kong — 3.7% | ||||
AIA Group Ltd. | 1,409,800 | 14,122,173 | ||
Hang Seng Bank Ltd. | 115,300 | 2,351,032 | ||
Hong Kong Exchanges & Clearing Ltd. | 170,200 | 5,378,722 | ||
21,851,927 | ||||
Hungary — 1.6% | ||||
OTP Bank Nyrt | 196,613 | 9,249,537 | ||
India — 2.1% | ||||
HDFC Bank Ltd. | 696,230 | 12,371,871 | ||
Indonesia — 0.1% | ||||
Bank Central Asia Tbk PT | 356,500 | 793,195 | ||
Ireland — 2.6% | ||||
CRH plc | 399,205 | 15,261,298 | ||
Japan — 6.5% | ||||
Keyence Corp. | 17,000 | 5,824,857 | ||
MonotaRO Co. Ltd. | 129,300 | 3,645,010 | ||
ORIX Corp. | 203,100 | 3,330,427 | ||
Pan Pacific International Holdings Corp. | 177,500 | 2,878,919 | ||
Shiseido Co. Ltd. | 123,600 | 8,929,919 | ||
Sysmex Corp. | 167,000 | 11,592,551 | ||
Unicharm Corp. | 51,200 | 1,681,136 | ||
37,882,819 | ||||
Mexico — 0.5% | ||||
Grupo Financiero Banorte SAB de CV | 395,201 | 2,073,076 |
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Shares | Value | |||
Grupo Mexico SAB de CV, Series B | 308,120 | $ | 804,127 | |
2,877,203 | ||||
Netherlands — 3.3% | ||||
ASML Holding NV | 8,580 | 2,331,894 | ||
InterXion Holding NV(1) | 38,590 | 3,281,694 | ||
Koninklijke DSM NV | 20,416 | 2,614,015 | ||
NXP Semiconductors NV | 84,980 | 9,821,988 | ||
Unilever NV | 19,350 | 1,146,433 | ||
19,196,024 | ||||
Peru — 0.4% | ||||
Credicorp Ltd. | 10,390 | 2,194,264 | ||
South Korea — 0.7% | ||||
Samsung Electronics Co. Ltd. | 91,860 | 3,922,950 | ||
Sweden — 1.1% | ||||
Epiroc AB, A Shares | 151,950 | 1,773,130 | ||
Hexagon AB, B Shares | 87,080 | 4,919,912 | ||
6,693,042 | ||||
Switzerland — 3.3% | ||||
Lonza Group AG(1) | 28,780 | 9,771,498 | ||
Zurich Insurance Group AG | 23,490 | 9,212,260 | ||
18,983,758 | ||||
United Kingdom — 4.1% | ||||
AstraZeneca plc | 29,730 | 2,869,559 | ||
B&M European Value Retail SA | 296,450 | 1,449,550 | ||
Burberry Group plc | 56,600 | 1,535,976 | ||
Diageo plc | 34,320 | 1,403,041 | ||
London Stock Exchange Group plc | 121,491 | 10,793,682 | ||
Melrose Industries plc | 1,050,910 | 3,117,611 | ||
Prudential plc | 150,900 | 2,684,501 | ||
23,853,920 | ||||
United States — 61.5% | ||||
Abbott Laboratories | 31,290 | 2,673,731 | ||
Adobe, Inc.(1) | 40,417 | 12,510,274 | ||
Advanced Micro Devices, Inc.(1) | 48,000 | 1,879,200 | ||
Agilent Technologies, Inc. | 24,620 | 1,988,557 | ||
Air Products & Chemicals, Inc. | 3,950 | 933,504 | ||
Alphabet, Inc., Class A(1) | 5,755 | 7,505,038 | ||
Amazon.com, Inc.(1) | 11,678 | 21,029,742 | ||
American Express Co. | 126,930 | 15,246,832 | ||
American Tower Corp. | 16,750 | 3,585,002 | ||
AMETEK, Inc. | 37,430 | 3,705,944 | ||
AO Smith Corp. | 49,242 | 2,383,313 | ||
AptarGroup, Inc. | 12,150 | 1,362,258 | ||
Aptiv plc | 97,970 | 9,197,424 | ||
Arthur J Gallagher & Co. | 15,850 | 1,478,330 | ||
Avantor, Inc.(1) | 746,820 | 12,793,027 | ||
Bio-Rad Laboratories, Inc., Class A(1) | 33,534 | 12,386,789 | ||
Boston Scientific Corp.(1) | 48,580 | 2,101,085 |
11
Shares | Value | |||
Brink's Co. (The) | 19,790 | $ | 1,840,470 | |
Burlington Stores, Inc.(1) | 7,940 | 1,786,500 | ||
Catalent, Inc.(1) | 34,230 | 1,779,618 | ||
Charles Schwab Corp. (The) | 164,248 | 8,130,276 | ||
Cheniere Energy, Inc.(1) | 166,160 | 10,059,326 | ||
Cintas Corp. | 7,210 | 1,853,403 | ||
CoStar Group, Inc.(1) | 17,190 | 10,535,063 | ||
Danaher Corp. | 78,740 | 11,494,465 | ||
Elanco Animal Health, Inc.(1) | 73,533 | 2,037,599 | ||
EOG Resources, Inc. | 27,270 | 1,933,443 | ||
Equinix, Inc. | 22,966 | 13,018,277 | ||
Etsy, Inc.(1) | 23,390 | 1,014,892 | ||
Fidelity National Information Services, Inc. | 91,237 | 12,604,392 | ||
Genpact Ltd. | 43,059 | 1,752,501 | ||
Home Depot, Inc. (The) | 14,274 | 3,147,560 | ||
Honeywell International, Inc. | 13,147 | 2,347,397 | ||
IDEXX Laboratories, Inc.(1) | 7,350 | 1,849,113 | ||
IHS Markit Ltd.(1) | 202,220 | 14,691,283 | ||
Illumina, Inc.(1) | 17,100 | 5,484,996 | ||
Keysight Technologies, Inc.(1) | 107,973 | 11,556,350 | ||
L3Harris Technologies, Inc. | 21,050 | 4,232,944 | ||
Liberty Media Corp-Liberty Formula One, Class C(1) | 42,507 | 1,916,641 | ||
Lowe's Cos., Inc. | 19,040 | 2,233,582 | ||
Lyft, Inc., Class A(1) | 18,975 | 929,396 | ||
MarketAxess Holdings, Inc. | 22,163 | 8,949,863 | ||
MasterCard, Inc., Class A | 33,210 | 9,704,958 | ||
Monster Beverage Corp.(1) | 125,460 | 7,505,017 | ||
MSCI, Inc. | 30,230 | 7,835,314 | ||
Nordson Corp. | 10,839 | 1,797,431 | ||
PayPal Holdings, Inc.(1) | 13,300 | 1,436,533 | ||
Pioneer Natural Resources Co. | 47,868 | 6,119,445 | ||
RealPage, Inc.(1) | 37,320 | 2,053,720 | ||
Roku, Inc.(1) | 10,660 | 1,709,544 | ||
Service Corp. International | 36,680 | 1,614,654 | ||
ServiceNow, Inc.(1) | 46,990 | 13,300,050 | ||
Sherwin-Williams Co. (The) | 4,660 | 2,717,386 | ||
Stanley Black & Decker, Inc. | 18,260 | 2,880,332 | ||
Sysco Corp. | 15,260 | 1,229,193 | ||
Teleflex, Inc. | 32,998 | 11,659,513 | ||
Tempur Sealy International, Inc.(1) | 20,710 | 1,757,865 | ||
Texas Instruments, Inc. | 37,910 | 4,557,161 | ||
Under Armour, Inc., Class A(1) | 65,360 | 1,234,650 | ||
Union Pacific Corp. | 41,470 | 7,298,305 | ||
Visa, Inc., Class A | 99,032 | 18,272,394 | ||
Zebra Technologies Corp., Class A(1) | 11,700 | 2,935,998 |
12
Shares | Value | |||
Zoetis, Inc. | 13,318 | $ | 1,605,085 | |
359,163,948 | ||||
TOTAL COMMON STOCKS (Cost $431,809,840) | 578,695,256 | |||
TEMPORARY CASH INVESTMENTS — 2.0% | ||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.625% - 2.875%, 11/15/20 - 8/15/28, valued at $4,820,074), in a joint trading account at 1.40%, dated 11/29/19, due 12/2/19 (Delivery value $4,730,116) | 4,729,564 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.375%, 5/15/27, valued at $1,078,243), at 0.65%, dated 11/29/19, due 12/2/19 (Delivery value $1,052,057) | 1,052,000 | |||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 5,728,778 | 5,728,778 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $11,510,342) | 11,510,342 | |||
TOTAL INVESTMENT SECURITIES — 101.0% (Cost $443,320,182) | 590,205,598 | |||
OTHER ASSETS AND LIABILITIES — (1.0)% | (6,056,760 | ) | ||
TOTAL NET ASSETS — 100.0% | $ | 584,148,838 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Information Technology | 21.8 | % |
Financials | 21.7 | % |
Health Care | 15.9 | % |
Consumer Discretionary | 11.7 | % |
Industrials | 10.7 | % |
Consumer Staples | 4.6 | % |
Materials | 4.0 | % |
Energy | 3.6 | % |
Real Estate | 2.8 | % |
Communication Services | 2.2 | % |
Cash and Equivalents* | 1.0 | % |
*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.
13
Statement of Assets and Liabilities |
NOVEMBER 30, 2019 | |||
Assets | |||
Investment securities, at value (cost of $443,320,182) | $ | 590,205,598 | |
Foreign currency holdings, at value (cost of $28) | 28 | ||
Receivable for capital shares sold | 131,274 | ||
Dividends and interest receivable | 498,677 | ||
Other assets | 1,225 | ||
590,836,802 | |||
Liabilities | |||
Disbursements in excess of demand deposit cash | 5,724,720 | ||
Payable for capital shares redeemed | 398,832 | ||
Accrued management fees | 479,399 | ||
Distribution and service fees payable | 12,335 | ||
Accrued foreign taxes | 72,678 | ||
6,687,964 | |||
Net Assets | $ | 584,148,838 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 352,421,685 | |
Distributable earnings | 231,727,153 | ||
$ | 584,148,838 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $450,413,058 | 33,268,188 | $13.54 | |||
I Class, $0.01 Par Value | $28,238,093 | 2,040,607 | $13.84 | |||
Y Class, $0.01 Par Value | $298,989 | 21,460 | $13.93 | |||
A Class, $0.01 Par Value | $26,932,449 | 2,059,004 | $13.08* | |||
C Class, $0.01 Par Value | $4,960,495 | 450,772 | $11.00 | |||
R Class, $0.01 Par Value | $7,448,047 | 581,859 | $12.80 | |||
R5 Class, $0.01 Par Value | $7,236 | 523 | $13.84 | |||
R6 Class, $0.01 Par Value | $65,850,471 | 4,731,857 | $13.92 |
*Maximum offering price $13.88 (net asset value divided by 0.9425).
See Notes to Financial Statements.
14
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2019 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $219,580) | $ | 6,069,777 | |
Interest | 97,083 | ||
6,166,860 | |||
Expenses: | |||
Management fees | 5,525,603 | ||
Distribution and service fees: | |||
A Class | 64,626 | ||
C Class | 48,245 | ||
R Class | 36,725 | ||
Directors' fees and expenses | 16,746 | ||
Other expenses | 15,858 | ||
5,707,803 | |||
Net investment income (loss) | 459,057 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 93,226,326 | ||
Foreign currency translation transactions | (50,501 | ) | |
93,175,825 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments (includes (increase) decrease in accrued foreign taxes of $(40,875)) | 13,822,404 | ||
Translation of assets and liabilities in foreign currencies | (345 | ) | |
13,822,059 | |||
Net realized and unrealized gain (loss) | 106,997,884 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 107,456,941 |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2019 AND NOVEMBER 30, 2018 | ||||||
Increase (Decrease) in Net Assets | November 30, 2019 | November 30, 2018 | ||||
Operations | ||||||
Net investment income (loss) | $ | 459,057 | $ | 1,616,796 | ||
Net realized gain (loss) | 93,175,825 | 49,211,928 | ||||
Change in net unrealized appreciation (depreciation) | 13,822,059 | (42,444,324 | ) | |||
Net increase (decrease) in net assets resulting from operations | 107,456,941 | 8,384,400 | ||||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (36,935,706 | ) | (48,031,985 | ) | ||
I Class | (1,467,077 | ) | (3,592,399 | ) | ||
Y Class | (546 | ) | (642 | ) | ||
A Class | (2,409,311 | ) | (3,350,308 | ) | ||
C Class | (500,817 | ) | (752,010 | ) | ||
R Class | (660,873 | ) | (892,252 | ) | ||
R5 Class | (540 | ) | (639 | ) | ||
R6 Class | (4,427,325 | ) | (4,170,767 | ) | ||
Decrease in net assets from distributions | (46,402,195 | ) | (60,791,002 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 12,249,882 | 11,146,331 | ||||
Net increase (decrease) in net assets | 73,304,628 | (41,260,271 | ) | |||
Net Assets | ||||||
Beginning of period | 510,844,210 | 552,104,481 | ||||
End of period | $ | 584,148,838 | $ | 510,844,210 |
See Notes to Financial Statements.
16
Notes to Financial Statements |
NOVEMBER 30, 2019
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 Global Growth Fund (formerly 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, 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.
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.
17
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. 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.
18
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).
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, 2019 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, 2019 are detailed in the Statement of Operations.
19
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 $1,120,822 and $1,030,389, respectively. The effect of interfund transactions on the Statement of Operations was $191,553 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, 2019 were $366,263,298 and $400,319,563, respectively.
20
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2019 | Year ended November 30, 2018 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 450,000,000 | 385,000,000 | ||||||||
Sold | 2,039,625 | $ | 25,196,722 | 2,390,301 | $ | 30,414,509 | ||||
Issued in reinvestment of distributions | 3,477,530 | 35,957,657 | 3,851,797 | 46,801,407 | ||||||
Redeemed | (5,409,998 | ) | (65,892,519 | ) | (5,110,511 | ) | (65,185,892 | ) | ||
107,157 | (4,738,140 | ) | 1,131,587 | 12,030,024 | ||||||
I Class/Shares Authorized | 40,000,000 | 50,000,000 | ||||||||
Sold | 1,077,089 | 13,794,877 | 727,393 | 9,577,897 | ||||||
Issued in reinvestment of distributions | 138,538 | 1,461,572 | 269,213 | 3,338,740 | ||||||
Redeemed | (464,877 | ) | (5,764,381 | ) | (2,042,868 | ) | (26,578,900 | ) | ||
750,750 | 9,492,068 | (1,046,262 | ) | (13,662,263 | ) | |||||
Y Class/Shares Authorized | 20,000,000 | 25,000,000 | ||||||||
Sold | 22,544 | 303,359 | 88 | 1,174 | ||||||
Issued in reinvestment of distributions | 51 | 546 | 52 | 642 | ||||||
Redeemed | (1,693 | ) | (22,088 | ) | — | — | ||||
20,902 | 281,817 | 140 | 1,816 | |||||||
A Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 290,672 | 3,485,724 | 451,629 | 5,642,831 | ||||||
Issued in reinvestment of distributions | 233,037 | 2,332,697 | 273,488 | 3,221,690 | ||||||
Redeemed | (660,400 | ) | (7,718,982 | ) | (829,318 | ) | (10,201,574 | ) | ||
(136,691 | ) | (1,900,561 | ) | (104,201 | ) | (1,337,053 | ) | |||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 116,094 | 1,060,561 | 104,011 | 1,117,903 | ||||||
Issued in reinvestment of distributions | 52,006 | 441,007 | 62,611 | 641,132 | ||||||
Redeemed | (169,103 | ) | (1,654,534 | ) | (222,760 | ) | (2,402,989 | ) | ||
(1,003 | ) | (152,966 | ) | (56,138 | ) | (643,954 | ) | |||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 130,276 | 1,543,815 | 83,143 | 1,011,937 | ||||||
Issued in reinvestment of distributions | 67,219 | 660,090 | 76,654 | 889,957 | ||||||
Redeemed | (210,738 | ) | (2,489,964 | ) | (167,806 | ) | (2,035,422 | ) | ||
(13,243 | ) | (286,059 | ) | (8,009 | ) | (133,528 | ) | |||
R5 Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Issued in reinvestment of distributions | 51 | 540 | 52 | 639 | ||||||
R6 Class/Shares Authorized | 65,000,000 | 40,000,000 | ||||||||
Sold | 1,443,634 | 17,087,804 | 1,521,533 | 20,077,660 | ||||||
Issued in reinvestment of distributions | 418,067 | 4,427,325 | 334,272 | 4,170,767 | ||||||
Redeemed | (940,824 | ) | (11,961,946 | ) | (709,871 | ) | (9,357,777 | ) | ||
920,877 | 9,553,183 | 1,145,934 | 14,890,650 | |||||||
Net increase (decrease) | 1,648,800 | $ | 12,249,882 | 1,063,103 | $ | 11,146,331 |
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.
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 | — | $ | 1,737,263 | — | ||||
Brazil | — | 8,965,594 | — | |||||
Canada | $ | 1,344,406 | 1,855,131 | — | ||||
China | 22,671,479 | 746,144 | — | |||||
France | — | 7,079,483 | — | |||||
Hong Kong | — | 21,851,927 | — | |||||
Hungary | — | 9,249,537 | — | |||||
India | — | 12,371,871 | — | |||||
Indonesia | — | 793,195 | — | |||||
Ireland | — | 15,261,298 | — | |||||
Japan | — | 37,882,819 | — | |||||
Mexico | — | 2,877,203 | — | |||||
Netherlands | 13,103,682 | 6,092,342 | — | |||||
South Korea | — | 3,922,950 | — | |||||
Sweden | — | 6,693,042 | — | |||||
Switzerland | — | 18,983,758 | — | |||||
United Kingdom | — | 23,853,920 | — | |||||
Other Countries | 361,358,212 | — | — | |||||
Temporary Cash Investments | 5,728,778 | 5,781,564 | — | |||||
$ | 404,206,557 | $ | 185,999,041 | — |
The fund may hold financial instruments at their inherent carrying value for financial statement purposes,
which approximates fair value. As of period end, the fund’s disbursements in excess of demand deposit cash
were classified as Level 2.
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7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing in emerging markets or a significant portion of assets in one country or region may accentuate these risks.
8. Federal Tax Information
On December 17, 2019, the fund declared and paid a per-share distribution from net realized gains to shareholders of record on December 16, 2019 of $2.0558 for the Investor Class, I Class, Y Class, A Class, C Class, R Class, R5 Class and R6 Class.
On December 17, 2019, the fund declared and paid the following per-share distributions from net investment income to shareholders of record on December 16, 2019:
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class | |||
$0.0028 | $0.0305 | $0.0513 | — | — | — | $0.0305 | $0.0513 |
The tax character of distributions paid during the years ended November 30, 2019 and November 30, 2018 were as follows:
2019 | 2018 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 657,150 | $ | 7,182,024 | ||
Long-term capital gains | $ | 45,745,045 | $ | 53,608,978 |
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 | $ | 446,530,027 | |
Gross tax appreciation of investments | $ | 146,520,399 | |
Gross tax depreciation of investments | (2,844,828 | ) | |
Net tax appreciation (depreciation) of investments | 143,675,571 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (76,769 | ) | |
Net tax appreciation (depreciation) | $ | 143,598,802 | |
Undistributed ordinary income | $ | 309,909 | |
Accumulated long-term gains | $ | 87,818,442 |
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 | |||||||||||||||
2019 | $12.32 | 0.01 | 2.33 | 2.34 | (0.01) | (1.11) | (1.12) | $13.54 | 21.82% | 1.07% | 0.07% | 68% | $450,413 | ||
2018 | $13.67 | 0.04 | 0.11 | 0.15 | (0.03) | (1.47) | (1.50) | $12.32 | 1.27% | 1.07% | 0.29% | 42% | $408,562 | ||
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 | ||
I Class | |||||||||||||||
2019 | $12.57 | 0.03 | 2.39 | 2.42 | (0.04) | (1.11) | (1.15) | $13.84 | 22.04% | 0.87% | 0.27% | 68% | $28,238 | ||
2018 | $13.91 | 0.06 | 0.12 | 0.18 | (0.05) | (1.47) | (1.52) | $12.57 | 1.52% | 0.87% | 0.49% | 42% | $16,210 | ||
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 | ||
Y Class | |||||||||||||||
2019 | $12.65 | 0.01 | 2.43 | 2.44 | (0.05) | (1.11) | (1.16) | $13.93 | 22.18% | 0.72% | 0.42% | 68% | $299 | ||
2018 | $13.98 | 0.08 | 0.12 | 0.20 | (0.06) | (1.47) | (1.53) | $12.65 | 1.62% | 0.72% | 0.64% | 42% | $7 | ||
2017(4) | $11.95 | 0.04 | 1.99 | 2.03 | — | — | — | $13.98 | 16.99% | 0.73%(5) | 0.49%(5) | 54%(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: | 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 | |||||||||||||||
2019 | $11.96 | (0.02) | 2.25 | 2.23 | — | (1.11) | (1.11) | $13.08 | 21.48% | 1.32% | (0.18)% | 68% | $26,932 | ||
2018 | $13.31 | —(3) | 0.12 | 0.12 | — | (1.47) | (1.47) | $11.96 | 1.08% | 1.32% | 0.04% | 42% | $26,256 | ||
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 | ||
C Class | |||||||||||||||
2019 | $10.32 | (0.09) | 1.88 | 1.79 | — | (1.11) | (1.11) | $11.00 | 20.53% | 2.07% | (0.93)% | 68% | $4,960 | ||
2018 | $11.77 | (0.08) | 0.10 | 0.02 | — | (1.47) | (1.47) | $10.32 | 0.27% | 2.07% | (0.71)% | 42% | $4,662 | ||
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 | ||
R Class | |||||||||||||||
2019 | $11.75 | (0.05) | 2.21 | 2.16 | — | (1.11) | (1.11) | $12.80 | 21.24% | 1.57% | (0.43)% | 68% | $7,448 | ||
2018 | $13.14 | (0.03) | 0.11 | 0.08 | — | (1.47) | (1.47) | $11.75 | 0.75% | 1.57% | (0.21)% | 42% | $6,995 | ||
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 |
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) | |||
R5 Class | |||||||||||||||
2019 | $12.57 | 0.03 | 2.39 | 2.42 | (0.04) | (1.11) | (1.15) | $13.84 | 22.04% | 0.87% | 0.27% | 68% | $7 | ||
2018 | $13.90 | 0.06 | 0.12 | 0.18 | (0.04) | (1.47) | (1.51) | $12.57 | 1.52% | 0.87% | 0.49% | 42% | $6 | ||
2017(4) | $11.90 | 0.03 | 1.97 | 2.00 | — | — | — | $13.90 | 16.81% | 0.88%(5) | 0.34%(5) | 54%(6) | $6 | ||
R6 Class | |||||||||||||||
2019 | $12.63 | 0.05 | 2.40 | 2.45 | (0.05) | (1.11) | (1.16) | $13.92 | 22.30% | 0.72% | 0.42% | 68% | $65,850 | ||
2018 | $13.98 | 0.09 | 0.10 | 0.19 | (0.07) | (1.47) | (1.54) | $12.63 | 1.58% | 0.72% | 0.64% | 42% | $48,147 | ||
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 |
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) | 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. |
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.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Focused Global Growth Fund (formerly, Global Growth Fund), one of the funds constituting the American Century World Mutual Funds, Inc. (the "Fund"), as of November 30, 2019, 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, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Focused Global Growth Fund (formerly, Global Growth Fund) of the American Century World Mutual Funds, Inc. as of November 30, 2019, 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.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of November 30, 2019, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2020
We have served as the auditor of one or more American Century investment companies since 1997.
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 Jonathan S. Thomas, 16; and Stephen E. Yates, 8) 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 | 66 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 66 | None |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 66 | None |
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 66 | None |
28
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 | |||||
Lynn Jenkins (1963) | Director | Since 2019 | United States Representative, U.S. House of Representatives (2009 to 2018) | 66 | MGP Ingredients, Inc. |
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 66 | None |
John R. Whitten (1946) | Director | Since 2008 | Retired | 66 | Onto Innovation Inc.; Rudolph Technologies, Inc. (2006 to 2019) |
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 81 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director | 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 | 125 | 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.
29
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds. 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 |
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Chief Operating Officer, ACC (2012-2015). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries |
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Investment Operations and Investment Accounting, ACS (2000 to present) |
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). 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 since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) |
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS |
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
30
Approval of Management Agreement |
At a meeting held on June 26, 2019, 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; |
• | any economies of scale associated with the Advisor’s management of the Fund and other accounts; |
• | services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; 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 provided by the Directors to the Advisor 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 connection with their review, the Directors did not identify any single factor as being all-important or
31
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.
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 investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor 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 one-, three-, five-, and ten-year periods 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, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading
32
activities, portfolio valuation services, auditing services, and legal and operational compliance activities. 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, 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 Investment Company 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. 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
33
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 such 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 may receive 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
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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 or as an exhibit to its reports on Form N-PORT. The fund’s Forms N-Q and Form N-PORT reports are available on the SEC’s website at sec.gov. 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, 2019.
For corporate taxpayers, the fund hereby designates $657,150, or up to the maximum amount allowable, of ordinary income distributions paid during the fiscal year ended November 30, 2019 as qualified for the corporate dividends received deduction.
The fund hereby designates $48,880,567, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended November 30, 2019.
The fund utilized earnings and profits of $3,146,707 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
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Notes |
37
Notes |
38
Notes |
39
Notes |
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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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91028 2001 |
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Annual Report | |
November 30, 2019 | |
Focused International Growth Fund | |
Investor Class (AFCNX) | |
I Class (AFCSX) | |
A Class (AFCLX) | |
C Class (AFCHX) | |
R Class (AFCWX) | |
R6 Class (AFCMX) | |
G Class (AFCGX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 | |
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 |
![jthomasrev0514a01.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/jthomasrev0514a01.jpg)
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2019. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional investment and market insights, please visit our website, americancentury.com.
Monetary Policy Pivot Improved Investor Sentiment
The reporting period began on a challenging note. Mounting concerns about slowing global economic and earnings growth, the U.S.-China trade dispute and Federal Reserve (Fed) policy soured investor sentiment, driving global stocks lower. After raising rates in September 2018, the Fed hiked again in December and delivered a surprisingly bullish 2019 rate-hike outlook, which worsened the year-end sell-off among global stocks.
However, a key policy pivot from the Fed in early 2019 helped improve investor attitudes worldwide. The central bank abruptly ended its rate-hike campaign and adopted a dovish tone amid weaker global growth and inflation. Similar economic concerns kept central banks in Europe and Japan maintaining or expanding their accommodative policies. Additionally, investors’ earlier worst-case fears about trade and corporate earnings generally eased, which also aided stocks.
Volatility reemerged in the spring, when a Brexit stalemate prompted U.K. Prime Minister Theresa May to resign. This news reignited global fears of a no-deal Brexit. However, those worries subsided as Boris Johnson, a staunch Brexit advocate, succeeded May. Meanwhile, U.S.-China trade policy continued to fuel bouts of volatility. In July, growing concerns about global economic risks encouraged the Fed to cut short-term interest rates for the first time in 10 years. The Fed followed up with additional rate cuts in September and October. Fed easing and a lower interest rate backdrop helped restore investor optimism.
Overall, broad global stock indices advanced for the 12-month period. U.S. stocks generally outperformed non-U.S. stocks, while developed markets broadly outperformed emerging markets.
Looking ahead, we expect volatility to remain a formidable factor as investors react to global growth and trade trends, central bank policy and geopolitical developments. We believe this scenario underscores the importance of using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
![image48a16.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/image48a16.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of November 30, 2019 | ||||
Average Annual Returns | ||||
Ticker Symbol | 1 year | Since Inception | Inception Date | |
Investor Class | AFCNX | 20.96% | 10.70% | 3/29/16 |
MSCI ACWI ex-U.S. Index | — | 11.20% | 8.65% | — |
I Class | AFCSX | 21.21% | 10.93% | 3/29/16 |
A Class | AFCLX | 3/29/16 | ||
No sales charge | 20.66% | 10.43% | ||
With sales charge | 13.76% | 8.66% | ||
C Class | AFCHX | 19.85% | 9.61% | 3/29/16 |
R Class | AFCWX | 20.36% | 10.15% | 3/29/16 |
R6 Class | AFCMX | 21.34% | 11.08% | 3/29/16 |
G Class | AFCGX | — | 12.13% | 4/1/19 |
G Class returns would have been lower if a portion of the fees had not been waived.
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 Life of Class |
$10,000 investment made March 29, 2016 |
Performance for other share classes will vary due to differences in fee structure. |
![chart-b8931e2d8ed15c70af7a07.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/chart-b8931e2d8ed15c70af7a07.jpg)
Value on November 30, 2019 | |
Investor Class — $14,530 | |
MSCI ACWI ex-U.S. Index — $13,563 | |
Total Annual Fund Operating Expenses | ||||||
Investor Class | I Class | A Class | C Class | R Class | R6 Class | G Class |
1.23% | 1.03% | 1.48% | 2.23% | 1.73% | 0.88% | 0.88% |
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.
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Portfolio Commentary |
Portfolio Manager: Raj Gandhi and Jim Zhao
Performance Summary
Focused International Growth returned 20.96%* for the fiscal year ended November 30, 2019, compared with the 11.20% return of its benchmark, the MSCI ACWI ex-U.S. Index.
This approximately 40-stock portfolio represents our highest-conviction ideas and is unconstrained by sector and region. Excess returns are driven by stock selection, and discussion of attribution centers on stocks rather than sectors or regions.
Non-U.S. equity markets experienced significant volatility during the period amid global economic uncertainty and U.S.-China trade tensions. Global stocks staged several rallies in the first half of 2019 as U.S. interest rate hikes paused and corporate earnings reports exceeded lowered expectations. Markets gave back some of the gains in the second half as signs of slowing economic growth and escalation of trade disputes dampened investor appetite for risk. Toward the end of the period, stocks rebounded on encouraging earnings reports, anticipation of a U.S.-China trade deal and relief at improved prospects for an orderly Brexit.
Select Stocks Advanced Despite Broad Economic Unease
Selective investments within financials propelled fund returns. Stock of London Stock Exchange Group (LSEG) outperformed for the year, driven by strength in the company’s security clearing and data businesses, which have benefited from demand for clearing of new security classes, increased use of quantitative investment approaches and demand for market data from its Russell division. LSEG’s stock also benefited from news of the company’s proposed acquisition of financial data and technology firm Refinitiv. We believe the acquisition will enhance LSEG’s offerings for two of the strongest trends in financial markets: electronification of trading and demand for data.
Among health care stocks, blood plasma company CSL contributed to outperformance. The company’s leading position within the immunoglobulin market supported growth in a year that saw competitors suffer from shortages and disruptions. CSL has invested heavily in its plasma collection centers, which should help it to maintain its market share gains. Investors drove the stock higher as management reiterated the firm’s strong growth prospects for 2020.
Two Brazil-based holdings, Magazine Luiza and Localiza Rent a Car, ranked among the top individual contributors to fund performance. Magazine Luiza’s stock performed well for the year as the retailer reported better-than-expected results driven by strong comparable-store sales growth and significant gains in e-commerce revenues. A leader in integrating e-commerce with its brick-and-mortar business, we believe the firm is well positioned to capture the robust growth of e-commerce in Brazil. Localiza’s stock advanced on consistently solid results driven by strong revenue growth and rental margins. Improved car and fleet rental volumes offset weak margins in used car sales. We believe these trends will continue as market fragmentation in Brazil offers opportunity for consolidation.
ANTA Sports Products further boosted returns. The shoe and apparel company’s stock posted significant gains for the year on better-than-expected results demonstrating strong revenue and profit growth. Strength in FILA merchandise, for which ANTA owns marketing rights in China, drove the upside revenue surprise. Ongoing strength in mass-market demand continued to benefit ANTA brands in general.
*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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On the downside, Canada Goose Holdings detracted from the fund’s performance. Stock of the apparel manufacturer and retailer weakened during the year as the market reacted to transitory issues, which caused volatility in short-term earnings results. We believe the long-term story remains intact as Canada Goose retains a strong brand presence, is migrating its model away from wholesale toward higher-margin retail and online business and is entering new markets with its own stores.
Portfolio Positioning
We remain focused on our disciplined, bottom-up process aimed at identifying companies with accelerating, sustainable growth. In a tougher environment for earnings growth, we are looking for companies whose growth does not depend on economic improvement. As a result of this selection process, information technology was the fund’s largest overweight position relative to the benchmark at period-end. We are invested in companies that benefit from secular and structural growth drivers, including the ongoing shift to digital and increased corporate spending on technology to increase efficiency and enhance competitive position. We remain underweight in financials, particularly banks, due to the pressures of a low interest rate environment. However, we are finding nonbank opportunities, including financial exchanges, data providers and select insurance companies benefiting from improved pricing trends in the property and casualty business.
The fund’s largest regional exposure remains Europe. We maintain our underweight position in emerging markets as uncertainty around trade has reduced visibility of earnings prospects for many emerging markets companies, especially in China.
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Fund Characteristics |
NOVEMBER 30, 2019 | |
Top Ten Holdings | % of net assets |
CSL Ltd. | 4.1% |
AIA Group Ltd. | 3.5% |
Cellnex Telecom SA | 3.5% |
Schneider Electric SE | 3.3% |
Alibaba Group Holding Ltd. ADR | 3.1% |
AstraZeneca plc | 3.0% |
Recruit Holdings Co. Ltd. | 2.9% |
Koninklijke DSM NV | 2.8% |
Novartis AG | 2.8% |
Zurich Insurance Group AG | 2.8% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 95.9% |
Temporary Cash Investments | 5.8% |
Temporary Cash Investments - Securities Lending Collateral | 2.2% |
Other Assets and Liabilities | (3.9)% |
Investments by Country | % of net assets |
Japan | 17.0% |
Switzerland | 11.6% |
United Kingdom | 9.8% |
France | 9.2% |
China | 6.8% |
Australia | 6.3% |
Spain | 5.3% |
Netherlands | 4.9% |
Sweden | 3.7% |
Germany | 3.7% |
Hong Kong | 3.5% |
Brazil | 3.4% |
Taiwan | 2.5% |
Finland | 2.2% |
India | 2.1% |
Indonesia | 2.0% |
Other Countries | 1.9% |
Cash and Equivalents* | 4.1% |
*Includes temporary cash investments, temporary cash investments - securities lending collateral and other assets and liabilities.
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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, 2019 to November 30, 2019.
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.
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Beginning Account Value 6/1/19 | Ending Account Value 11/30/19 | Expenses Paid During Period(1) 6/1/19 - 11/30/19 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,139.90 | $6.60 | 1.23% |
I Class | $1,000 | $1,142.10 | $5.53 | 1.03% |
A Class | $1,000 | $1,138.80 | $7.94 | 1.48% |
C Class | $1,000 | $1,135.30 | $11.94 | 2.23% |
R Class | $1,000 | $1,137.60 | $9.27 | 1.73% |
R6 Class | $1,000 | $1,141.70 | $4.72 | 0.88% |
G Class | $1,000 | $1,147.00 | $0.00 | 0.00%(2) |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.90 | $6.23 | 1.23% |
I Class | $1,000 | $1,019.90 | $5.22 | 1.03% |
A Class | $1,000 | $1,017.65 | $7.49 | 1.48% |
C Class | $1,000 | $1,013.89 | $11.26 | 2.23% |
R Class | $1,000 | $1,016.40 | $8.74 | 1.73% |
R6 Class | $1,000 | $1,020.66 | $4.46 | 0.88% |
G Class | $1,000 | $1,025.07 | $0.00 | 0.00%(2) |
(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. |
(2) | Other expenses, which include directors' fees and expenses, did not exceed 0.005%. |
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Schedule of Investments |
NOVEMBER 30, 2019
Shares | Value | |||
COMMON STOCKS — 95.9% | ||||
Australia — 6.3% | ||||
CSL Ltd. | 2,690 | $ | 517,321 | |
Treasury Wine Estates Ltd.(1) | 22,500 | 285,251 | ||
802,572 | ||||
Brazil — 3.4% | ||||
Localiza Rent a Car SA | 12,968 | 135,907 | ||
Magazine Luiza SA | 27,291 | 291,366 | ||
427,273 | ||||
Canada — 1.9% | ||||
Canada Goose Holdings, Inc.(1)(2) | 6,460 | 246,449 | ||
China — 6.8% | ||||
Alibaba Group Holding Ltd. ADR(2) | 1,960 | 392,000 | ||
ANTA Sports Products Ltd. | 20,000 | 188,023 | ||
Tencent Holdings Ltd. | 6,600 | 279,804 | ||
859,827 | ||||
Finland — 2.2% | ||||
Neste Oyj | 8,120 | 274,598 | ||
France — 9.2% | ||||
Airbus SE | 1,680 | 246,705 | ||
Dassault Systemes SE | 1,520 | 239,290 | ||
Schneider Electric SE | 4,380 | 422,385 | ||
Teleperformance | 1,080 | 255,659 | ||
1,164,039 | ||||
Germany — 3.7% | ||||
Puma SE | 2,980 | 224,024 | ||
Symrise AG | 2,560 | 248,327 | ||
472,351 | ||||
Hong Kong — 3.5% | ||||
AIA Group Ltd. | 44,800 | 448,768 | ||
India — 2.1% | ||||
HDFC Bank Ltd. ADR | 4,280 | 264,290 | ||
Indonesia — 2.0% | ||||
Bank Central Asia Tbk PT | 114,900 | 255,647 | ||
Japan — 17.0% | ||||
Hoya Corp. | 2,300 | 210,000 | ||
Keyence Corp. | 1,000 | 342,639 | ||
MonotaRO Co. Ltd. | 8,300 | 233,980 | ||
Murata Manufacturing Co. Ltd. | 5,100 | 296,099 | ||
Pan Pacific International Holdings Corp. | 13,200 | 214,094 | ||
Recruit Holdings Co. Ltd. | 10,300 | 373,405 | ||
Shiseido Co. Ltd. | 3,000 | 216,746 | ||
Terumo Corp. | 7,600 | 267,168 | ||
2,154,131 |
10
Shares | Value | |||
Netherlands — 4.9% | ||||
Adyen NV(2) | 349 | $ | 267,538 | |
Koninklijke DSM NV | 2,820 | 361,066 | ||
628,604 | ||||
Spain — 5.3% | ||||
Cellnex Telecom SA(2) | 10,254 | 440,410 | ||
Iberdrola SA | 23,540 | 231,511 | ||
671,921 | ||||
Sweden — 3.7% | ||||
Hexagon AB, B Shares | 3,800 | 214,696 | ||
Telefonaktiebolaget LM Ericsson, B Shares | 28,830 | 260,161 | ||
474,857 | ||||
Switzerland — 11.6% | ||||
Lonza Group AG(2) | 920 | 312,362 | ||
Novartis AG | 3,910 | 360,463 | ||
Partners Group Holding AG | 280 | 236,045 | ||
Temenos AG(2) | 1,380 | 209,099 | ||
Zurich Insurance Group AG | 900 | 352,960 | ||
1,470,929 | ||||
Taiwan — 2.5% | ||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 32,000 | 321,266 | ||
United Kingdom — 9.8% | ||||
AstraZeneca plc | 3,930 | 379,326 | ||
Burberry Group plc | 8,290 | 224,969 | ||
London Stock Exchange Group plc | 3,640 | 323,390 | ||
Melrose Industries plc | 107,250 | 318,166 | ||
1,245,851 | ||||
TOTAL COMMON STOCKS (Cost $9,903,027) | 12,183,373 | |||
TEMPORARY CASH INVESTMENTS — 5.8% | ||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.625% - 2.875%, 11/15/20 - 8/15/28, valued at $347,793), in a joint trading account at 1.40%, dated 11/29/19, due 12/2/19 (Delivery value $341,302) | 341,262 | |||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 393,166 | 393,166 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $734,428) | 734,428 | |||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(3) — 2.2% | ||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $282,329) | 282,329 | 282,329 | ||
TOTAL INVESTMENT SECURITIES — 103.9% (Cost $10,919,784) | 13,200,130 | |||
OTHER ASSETS AND LIABILITIES — (3.9)% | (496,958 | ) | ||
TOTAL NET ASSETS — 100.0% | $ | 12,703,172 |
11
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Information Technology | 16.8 | % |
Health Care | 16.2 | % |
Industrials | 15.7 | % |
Financials | 14.8 | % |
Consumer Discretionary | 14.1 | % |
Communication Services | 5.7 | % |
Materials | 4.7 | % |
Consumer Staples | 3.9 | % |
Energy | 2.2 | % |
Utilities | 1.8 | % |
Cash and Equivalents* | 4.1 | % |
*Includes temporary cash investments, temporary cash investments - securities lending collateral and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
(1) | Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $274,928. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(2) | Non-income producing. |
(3) | Investment of cash collateral from securities on loan. At the period end, the aggregate market value of the collateral held by the fund was $282,329. |
See Notes to Financial Statements.
12
Statement of Assets and Liabilities |
NOVEMBER 30, 2019 | |||
Assets | |||
Investment securities, at value (cost of $10,637,455) — including $274,928 of securities on loan | $ | 12,917,801 | |
Investment made with cash collateral received for securities on loan, at value (cost of $282,329) | 282,329 | ||
Total investment securities, at value (cost of $10,919,784) | 13,200,130 | ||
Foreign currency holdings, at value (cost of $13,233) | 12,696 | ||
Receivable for investments sold | 62,043 | ||
Receivable for capital shares sold | 29,580 | ||
Dividends and interest receivable | 10,641 | ||
Securities lending receivable | 79 | ||
13,315,169 | |||
Liabilities | |||
Disbursements in excess of demand deposit cash | 316,966 | ||
Payable for collateral received for securities on loan | 282,329 | ||
Payable for capital shares redeemed | 947 | ||
Accrued management fees | 10,758 | ||
Distribution and service fees payable | 997 | ||
611,997 | |||
Net Assets | $ | 12,703,172 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 10,024,455 | |
Distributable earnings | 2,678,717 | ||
$ | 12,703,172 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $6,676,932 | 465,597 | $14.34 | |||
I Class, $0.01 Par Value | $2,604,513 | 181,023 | $14.39 | |||
A Class, $0.01 Par Value | $821,574 | 57,532 | $14.28* | |||
C Class, $0.01 Par Value | $787,185 | 56,192 | $14.01 | |||
R Class, $0.01 Par Value | $468,023 | 32,910 | $14.22 | |||
R6 Class, $0.01 Par Value | $182,009 | 12,618 | $14.42 | |||
G Class, $0.01 Par Value | $1,162,936 | 80,132 | $14.51 |
*Maximum offering price $15.15 (net asset value divided by 0.9425).
See Notes to Financial Statements.
13
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2019 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $13,286) | $ | 131,681 | |
Interest | 5,382 | ||
Securities lending, net | 249 | ||
137,312 | |||
Expenses: | |||
Management fees | 118,730 | ||
Distribution and service fees: | |||
A Class | 2,654 | ||
C Class | 10,136 | ||
R Class | 2,158 | ||
Directors' fees and expenses | 304 | ||
Other expenses | 491 | ||
134,473 | |||
Fees waived - G Class | (2,516 | ) | |
131,957 | |||
Net investment income (loss) | 5,355 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 607,086 | ||
Foreign currency translation transactions | (3,858 | ) | |
603,228 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 1,323,463 | ||
Translation of assets and liabilities in foreign currencies | (809 | ) | |
1,322,654 | |||
Net realized and unrealized gain (loss) | 1,925,882 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,931,237 |
See Notes to Financial Statements.
14
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2019 AND NOVEMBER 30, 2018 | ||||||
Increase (Decrease) in Net Assets | November 30, 2019 | November 30, 2018 | ||||
Operations | ||||||
Net investment income (loss) | $ | 5,355 | $ | 53,738 | ||
Net realized gain (loss) | 603,228 | (74,846 | ) | |||
Change in net unrealized appreciation (depreciation) | 1,322,654 | (885,209 | ) | |||
Net increase (decrease) in net assets resulting from operations | 1,931,237 | (906,317 | ) | |||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (31,989 | ) | — | |||
I Class | (5,626 | ) | — | |||
A Class | (3,404 | ) | — | |||
R Class | (167 | ) | — | |||
R6 Class | (2,051 | ) | — | |||
Decrease in net assets from distributions | (43,237 | ) | — | |||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 823,591 | 1,116,468 | ||||
Net increase (decrease) in net assets | 2,711,591 | 210,151 | ||||
Net Assets | ||||||
Beginning of period | 9,991,581 | 9,781,430 | ||||
End of period | $ | 12,703,172 | $ | 9,991,581 |
See Notes to Financial Statements.
15
Notes to Financial Statements |
NOVEMBER 30, 2019
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, A Class, C Class, R Class, R6 Class and G 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 G Class commenced on April 1, 2019.
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.
16
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. 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.
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. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
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.
17
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).
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of November 30, 2019.
Remaining Contractual Maturity of Agreements | ||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||
Securities Lending Transactions(1) | ||||||||||||
Common Stocks | $ | 282,329 | — | — | — | $ | 282,329 | |||||
Gross amount of recognized liabilities for securities lending transactions | $ | 282,329 |
(1) | Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand. |
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 31% of the shares of the fund. Related parties do not invest in the fund for the purpose of exercising management or control.
18
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. Effective April 1, 2019, 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 annual management fee for each class is as follows:
Investor Class | I Class | A Class | C Class | R Class | R6 Class | G Class |
1.23% | 1.03% | 1.23% | 1.23% | 1.23% | 0.88% | 0.00%(1) |
(1) | Annual management fee before waiver was 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, 2019 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, 2019 were $9,739,967 and $9,344,048, respectively.
19
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2019(1) | Year ended November 30, 2018 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 50,000,000 | 50,000,000 | ||||||||
Sold | 181,700 | $ | 2,441,852 | 528,514 | $ | 7,140,621 | ||||
Issued in reinvestment of distributions | 2,828 | 31,989 | — | — | ||||||
Redeemed | (237,365 | ) | (3,054,194 | ) | (469,257 | ) | (6,238,274 | ) | ||
(52,837 | ) | (580,353 | ) | 59,257 | 902,347 | |||||
I Class/Shares Authorized | 30,000,000 | 35,000,000 | ||||||||
Sold | 145,088 | 2,001,579 | 4,325 | 50,773 | ||||||
Issued in reinvestment of distributions | 497 | 5,626 | — | — | ||||||
Redeemed | (29,472 | ) | (392,509 | ) | — | — | ||||
116,113 | 1,614,696 | 4,325 | 50,773 | |||||||
A Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | — | — | 1,672 | 22,494 | ||||||
Issued in reinvestment of distributions | 301 | 3,404 | — | — | ||||||
Redeemed | (45,299 | ) | (601,599 | ) | (358 | ) | (5,089 | ) | ||
(44,998 | ) | (598,195 | ) | 1,314 | 17,405 | |||||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 970 | 13,149 | 3 | 35 | ||||||
Redeemed | (44,793 | ) | (585,022 | ) | — | — | ||||
(43,823 | ) | (571,873 | ) | 3 | 35 | |||||
R Class/Shares Authorized | 20,000,000 | 30,000,000 | ||||||||
Sold | 9,081 | 117,317 | 14,078 | 184,615 | ||||||
Issued in reinvestment of distributions | 15 | 167 | — | — | ||||||
Redeemed | (10,549 | ) | (137,759 | ) | (3,020 | ) | (38,707 | ) | ||
(1,453 | ) | (20,275 | ) | 11,058 | 145,908 | |||||
R6 Class/Shares Authorized | 20,000,000 | 30,000,000 | ||||||||
Sold | 1,611 | 19,127 | — | — | ||||||
Issued in reinvestment of distributions | 181 | 2,051 | — | — | ||||||
Redeemed | (9,399 | ) | (125,437 | ) | — | — | ||||
(7,607 | ) | (104,259 | ) | — | — | |||||
G Class/Shares Authorized | 40,000,000 | N/A | ||||||||
Sold | 84,787 | 1,148,841 | ||||||||
Redeemed | (4,655 | ) | (64,991 | ) | ||||||
80,132 | 1,083,850 | |||||||||
Net increase (decrease) | 45,527 | $ | 823,591 | 75,957 | $ | 1,116,468 |
(1) | April 1, 2019 (commencement of sale) through November 30, 2019 for the G 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.
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 | ||||||||
Canada | $ | 246,449 | — | — | ||||
China | 392,000 | $ | 467,827 | — | ||||
India | 264,290 | — | — | |||||
Other Countries | — | 10,812,807 | — | |||||
Temporary Cash Investments | 393,166 | 341,262 | — | |||||
Temporary Cash Investments - Securities Lending Collateral | 282,329 | — | — | |||||
$ | 1,578,234 | $ | 11,621,896 | — |
The fund may hold financial instruments at their inherent carrying value for financial statement purposes,
which approximates fair value. As of period end, the fund’s disbursements in excess of demand deposit cash
were classified as Level 2.
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing in emerging markets or a significant portion of assets in one country or region may accentuate these risks.
21
8. Federal Tax Information
On December 17, 2019, the fund declared and paid a per-share distribution from net realized gains to shareholders of record on December 16, 2019 of $0.3263 for the Investor Class, I Class, A Class, C Class, R Class, R6 Class and G Class.
The tax character of distributions paid during the years ended November 30, 2019 and November 30, 2018 were as follows:
2019 | 2018 | ||||
Distributions Paid From | |||||
Ordinary income | $ | 43,237 | — | ||
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 | $ | 10,960,823 | |
Gross tax appreciation of investments | $ | 2,321,796 | |
Gross tax depreciation of investments | (82,489 | ) | |
Net tax appreciation (depreciation) of investments | 2,239,307 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (792 | ) | |
Net tax appreciation (depreciation) | $ | 2,238,515 | |
Undistributed ordinary income | — | ||
Accumulated long-term gains | $ | 440,202 |
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 | 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 | |||||||||||||
2019 | $11.92 | 0.02 | 2.46 | 2.48 | (0.06) | $14.34 | 20.96% | 1.24% | 0.13% | 96% | $6,677 | ||
2018 | $12.81 | 0.08 | (0.97) | (0.89) | — | $11.92 | (6.95)% | 1.23% | 0.59% | 82% | $6,180 | ||
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 | |||||||||||||
2019 | $11.96 | 0.02 | 2.49 | 2.51 | (0.08) | $14.39 | 21.21% | 1.04% | 0.33% | 96% | $2,605 | ||
2018 | $12.83 | 0.09 | (0.96) | (0.87) | — | $11.96 | (6.78)% | 1.03% | 0.79% | 82% | $776 | ||
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 | |||||||||||||
2019 | $11.87 | —(5) | 2.44 | 2.44 | (0.03) | $14.28 | 20.66% | 1.49% | (0.12)% | 96% | $822 | ||
2018 | $12.79 | 0.03 | (0.95) | (0.92) | — | $11.87 | (7.19)% | 1.48% | 0.34% | 82% | $1,217 | ||
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 |
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 | |||||||||||||
2019 | $11.70 | (0.09) | 2.40 | 2.31 | — | $14.01 | 19.85% | 2.24% | (0.87)% | 96% | $787 | ||
2018 | $12.70 | (0.07) | (0.93) | (1.00) | — | $11.70 | (7.95)% | 2.23% | (0.41)% | 82% | $1,170 | ||
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 | |||||||||||||
2019 | $11.82 | (0.04) | 2.44 | 2.40 | —(5) | $14.22 | 20.36% | 1.74% | (0.37)% | 96% | $468 | ||
2018 | $12.77 | —(5) | (0.95) | (0.95) | — | $11.82 | (7.44)% | 1.73% | 0.09% | 82% | $406 | ||
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 | —(5) | (0.28) | (0.28) | — | $9.72 | (2.80)% | 1.73%(4) | 0.06%(4) | 47% | $196 | ||
R6 Class | |||||||||||||
2019 | $11.99 | 0.08 | 2.45 | 2.53 | (0.10) | $14.42 | 21.34% | 0.89% | 0.48% | 96% | $182 | ||
2018 | $12.84 | 0.11 | (0.96) | (0.85) | — | $11.99 | (6.62)% | 0.88% | 0.94% | 82% | $242 | ||
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 | ||
G Class | |||||||||||||
2019(6) | $12.94 | 0.12 | 1.45 | 1.57 | — | $14.51 | 12.13% | 0.01%(4)(7) | 1.29%(4)(7) | 96%(8) | $1,163 |
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) | Per-share amount was less than $0.005. |
(6) | April 1, 2019 (commencement of sale) through November 30, 2019. |
(7) | The annualized ratio of operating expenses to average net assets before expense waiver and the annualized ratio of net investment income (loss) to average net assets before expense waiver was 0.89% and 0.41%, respectively. |
(8) | Portfolio turnover is calculated at the fund level. Percentage indicated was calculated for the year ended November 30, 2019. |
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.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Focused International Growth Fund, one of the funds constituting the American Century World Mutual Funds, Inc. (the "Fund"), as of November 30, 2019, 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, the financial highlights for each of the years ended November 30, 2019, 2018, 2017 and for the period March 29, 2016 (fund inception) through November 30, 2016, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Focused International Growth Fund of the American Century World Mutual Funds, Inc. as of November 30, 2019, 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 years ended November 30, 2019, 2018, 2017 and for the period March 29, 2016 (fund inception) through November 30, 2016, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of November 30, 2019, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2020
We have served as the auditor of one or more American Century investment companies since 1997.
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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 Jonathan S. Thomas, 16; and Stephen E. Yates, 8) 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 | 66 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 66 | None |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 66 | None |
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 66 | None |
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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 | |||||
Lynn Jenkins (1963) | Director | Since 2019 | United States Representative, U.S. House of Representatives (2009 to 2018) | 66 | MGP Ingredients, Inc. |
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 66 | None |
John R. Whitten (1946) | Director | Since 2008 | Retired | 66 | Onto Innovation Inc.; Rudolph Technologies, Inc. (2006 to 2019) |
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 81 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director | 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 | 125 | 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 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds. 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 |
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Chief Operating Officer, ACC (2012-2015). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries |
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Investment Operations and Investment Accounting, ACS (2000 to present) |
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). 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 since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) |
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 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 26, 2019, 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; |
• | any economies of scale associated with the Advisor’s management of the Fund and other accounts; |
• | services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; 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 provided by the Directors to the Advisor 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 connection with their review, the Directors did not identify any single factor as being all-important or
30
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.
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 investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor 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 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, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance
31
activities. 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, 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 Investment Company 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 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.
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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 such 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 may receive 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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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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 or as an exhibit to its reports on Form N-PORT. The fund’s Forms N-Q and Form N-PORT reports are available on the SEC’s website at sec.gov. 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, 2019.
The fund hereby designates $10,848, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended November 30, 2019.
The fund utilized earnings and profits of $12,172 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
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Notes |
36
Notes |
37
Notes |
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Notes |
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Notes |
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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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91034 2001 |
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Annual Report | |
November 30, 2019 | |
Global Small Cap Fund | |
Investor Class (AGCVX) | |
I Class (AGCSX) | |
A Class (AGCLX) | |
C Class (AGCHX) | |
R Class (AGCWX) | |
R6 Class (AGCTX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 | |
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 |
![jthomasrev0514a01.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/jthomasrev0514a01.jpg)
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2019. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional investment and market insights, please visit our website, americancentury.com.
Monetary Policy Pivot Improved Investor Sentiment
The reporting period began on a challenging note. Mounting concerns about slowing global economic and earnings growth, the U.S.-China trade dispute and Federal Reserve (Fed) policy soured investor sentiment, driving global stocks lower. After raising rates in September 2018, the Fed hiked again in December and delivered a surprisingly bullish 2019 rate-hike outlook, which worsened the year-end sell-off among global stocks.
However, a key policy pivot from the Fed in early 2019 helped improve investor attitudes worldwide. The central bank abruptly ended its rate-hike campaign and adopted a dovish tone amid weaker global growth and inflation. Similar economic concerns kept central banks in Europe and Japan maintaining or expanding their accommodative policies. Additionally, investors’ earlier worst-case fears about trade and corporate earnings generally eased, which also aided stocks.
Volatility reemerged in the spring, when a Brexit stalemate prompted U.K. Prime Minister Theresa May to resign. This news reignited global fears of a no-deal Brexit. However, those worries subsided as Boris Johnson, a staunch Brexit advocate, succeeded May. Meanwhile, U.S.-China trade policy continued to fuel bouts of volatility. In July, growing concerns about global economic risks encouraged the Fed to cut short-term interest rates for the first time in 10 years. The Fed followed up with additional rate cuts in September and October. Fed easing and a lower interest rate backdrop helped restore investor optimism.
Overall, broad global stock indices advanced for the 12-month period. U.S. stocks generally outperformed non-U.S. stocks, while developed markets broadly outperformed emerging markets.
Looking ahead, we expect volatility to remain a formidable factor as investors react to global growth and trade trends, central bank policy and geopolitical developments. We believe this scenario underscores the importance of using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
![image48a16.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/image48a16.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of November 30, 2019 | ||||
Average Annual Returns | ||||
Ticker Symbol | 1 year | Since Inception | Inception Date | |
Investor Class | AGCVX | 17.93% | 15.50% | 3/29/16 |
MSCI ACWI Small Cap Index | — | 9.93% | 10.17% | — |
I Class | AGCSX | 18.12% | 15.73% | 3/29/16 |
A Class | AGCLX | 3/29/16 | ||
No sales charge | 17.60% | 15.21% | ||
With sales charge | 10.82% | 13.37% | ||
C Class | AGCHX | 16.75% | 14.35% | 3/29/16 |
R Class | AGCWX | 17.34% | 14.94% | 3/29/16 |
R6 Class | AGCTX | 18.34% | 15.92% | 3/29/16 |
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. |
![chart-76dd405ad4cd59929bca07.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/chart-76dd405ad4cd59929bca07.jpg)
Value on November 30, 2019 | |
Investor Class — $16,978 | |
MSCI ACWI Small Cap Index — $14,273 | |
Total Annual Fund Operating Expenses | |||||
Investor Class | I Class | A Class | C Class | R Class | R6 Class |
1.50% | 1.30% | 1.75% | 2.50% | 2.00% | 1.15% |
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: Trevor Gurwich and Federico Laffan
Performance Summary
Global Small Cap returned 17.93%* for the 12-month period ended November 30, 2019, outperforming its benchmark, the MSCI ACWI Small Cap Index, which returned 9.93%.
Global stocks rose strongly over the period, as generally positive earnings news and shifts to more accommodative monetary policy in Europe and the U.S. helped investors revise their pessimism over the global economic outlook and trade policy. U.S. stocks outperformed non-U.S. stocks, aided by resilient U.S. economic and earnings growth. Small-cap non-U.S. stocks lagged their large-cap counterparts. Stock selection drove the fund’s relative outperformance, and was especially favorable in the information technology, health care, consumer discretionary and financials sectors. An overweight to information technology also lifted relative results. Stock selection in materials, consumer staples and industrials detracted. Regionally, stock selection in the U.S. boosted relative performance, while stock selection and an overweight in Canada detracted.
Information Technology Holdings Contributed
Stock selection in the information technology sector was a key contributor to relative outperformance, as several holdings in the software and IT services industries were top performers. These included Avalara, a supplier of cloud-based tax compliance solutions. The stock rose strongly after the company reported strong revenue growth, as tax policy changes in the U.S. fueled subscriptions growth. AVEVA Group, another contributor, supplies engineering and industrial software solutions. It benefited from positive demand trends in its end-user markets and the integration of the Schneider Electric’s software business.
Several China-based investments were also top contributors. The stock of athletic footwear and sportswear manufacturer Li Ning rose strongly over the period, supported by its robust revenue and earnings growth, brand strength and expanding store base. We believe Li Ning is well positioned to benefit from rising disposable incomes and market penetration in China. A-Living Services, another top contributor, provides property management services in China. The company’s strategic acquisitions helped boost its revenue and earnings performance. At the end of September, it announced an acquisition in the public property management space that was well received by investors.
Luxury Coats Manufacturer Detracted
Economic uncertainty created headwinds for several fund holdings. The stock of Canada Goose Holdings fell sharply in the second quarter after the luxury down coats manufacturer reported weaker-than-expected revenue growth. It also faced concerns over the strength of its wholesale business. We continue to own the stock as we remain optimistic about its long-term revenue growth potential, as it expands its store base and broadens into new product areas such as footwear.
Global economic uncertainty also pressured earnings growth for copper and zinc mining company Hudbay Minerals, a leading detractor in materials. Following strong performance earlier in the year, the stock declined in the second and third quarters after the company reported weaker financial
*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
results due to lower copper prices and lower production. Its revenue growth also missed Wall Street expectations. We opted to liquidate our holdings because of uncertainty over its near-term earnings outlook. Elsewhere in the portfolio, the stock of independent oil producer Centennial Resource Development dropped sharply in the first quarter after weaker oil prices led to disappointing earnings growth. The company also announced potential production cuts for 2019, and we exited the position.
Outlook
We will continue to focus on global small-cap companies we believe demonstrate improving, sustainable earnings growth. Stock selection led to an increased position in information technology, which ended the period as our top overweight relative to the benchmark. Within the sector, we continued to focus on companies we expect to benefit from long-term growth drivers such as cloud computing, e-commerce, electronic payments, 5G communications and data centers. Health care also remained a notable overweight, although our stock selection led us to lighten our exposure over the period. We also reduced exposure to financials, which moved to a notable underweight. The fund is also underweight in real estate and materials, as we are cautious about the impact of global economic uncertainty on earnings growth for materials companies in particular.
From a regional standpoint, our bottom-up process led to a continued overweight in Europe. We reduced our weighting in North America, moving to a regional underweight, although we added modestly to our overweight position in Canada. We also added to our emerging markets exposure, ending the period with a slight overweight driven by stock selection. The fund is underweight in Asia, including Japan, as we have found fewer companies in the region that we believe offer the potential for accelerating earnings growth.
6
Fund Characteristics |
NOVEMBER 30, 2019 | |
Top Ten Holdings | % of net assets |
A-Living Services Co. Ltd., H Shares | 1.5% |
Kinsale Capital Group, Inc. | 1.4% |
Ares Management Corp., Class A | 1.4% |
R1 RCM, Inc. | 1.4% |
TopBuild Corp. | 1.3% |
HelloFresh SE | 1.3% |
Skyline Champion Corp. | 1.3% |
Chegg, Inc. | 1.2% |
Detour Gold Corp. | 1.2% |
Li Ning Co. Ltd. | 1.2% |
Types of Investments in Portfolio | % of net assets |
Foreign Common Stocks | 57.1% |
Domestic Common Stocks | 41.8% |
Rights | —* |
Total Equity Exposure | 98.9% |
Temporary Cash Investments | 2.0% |
Temporary Cash Investments - Securities Lending Collateral | 3.2% |
Other Assets and Liabilities | (4.1)% |
*Category is less than 0.05% of total net assets. | |
Investments by Country | % of net assets |
United States | 41.8% |
Canada | 7.5% |
Japan | 6.8% |
United Kingdom | 5.8% |
Sweden | 5.1% |
China | 3.9% |
Germany | 3.5% |
Taiwan | 3.1% |
Switzerland | 3.1% |
Australia | 3.0% |
Belgium | 2.1% |
France | 2.0% |
Israel | 2.0% |
Other Countries | 9.2% |
Cash and Equivalents** | 1.1% |
**Includes temporary cash investments, temporary cash investments - securities lending collateral 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, 2019 to November 30, 2019.
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 6/1/19 | Ending Account Value 11/30/19 | Expenses Paid During Period(1) 6/1/19 - 11/30/19 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,137.40 | $8.09 | 1.51% |
I Class | $1,000 | $1,138.70 | $7.02 | 1.31% |
A Class | $1,000 | $1,135.60 | $9.42 | 1.76% |
C Class | $1,000 | $1,131.60 | $13.41 | 2.51% |
R Class | $1,000 | $1,135.30 | $10.76 | 2.01% |
R6 Class | $1,000 | $1,140.10 | $6.22 | 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, 2019
Shares | Value | |||
COMMON STOCKS — 98.9% | ||||
Australia — 3.0% | ||||
Afterpay Touch Group Ltd.(1) | 6,941 | $ | 148,242 | |
Jumbo Interactive Ltd.(2) | 10,656 | 147,833 | ||
Megaport Ltd.(1)(2) | 16,145 | 105,458 | ||
Seven Group Holdings Ltd.(2) | 9,441 | 122,580 | ||
524,113 | ||||
Belgium — 2.1% | ||||
Argenx SE(1)(2) | 1,238 | 183,964 | ||
Barco NV | 787 | 181,560 | ||
365,524 | ||||
Brazil — 0.7% | ||||
Randon SA Implementos e Participacoes Preference Shares | 52,000 | 131,913 | ||
Canada — 7.5% | ||||
Altus Group Ltd.(2) | 5,402 | 150,718 | ||
Boyd Group Income Fund | 1,176 | 176,520 | ||
BRP, Inc. | 3,584 | 178,053 | ||
Canada Goose Holdings, Inc.(1) | 1,554 | 59,285 | ||
Detour Gold Corp.(1) | 11,886 | 216,906 | ||
ECN Capital Corp. | 23,891 | 80,039 | ||
FirstService Corp. | 1,123 | 107,819 | ||
Gibson Energy, Inc. | 6,634 | 124,459 | ||
Parex Resources, Inc.(1) | 5,589 | 82,554 | ||
TFI International, Inc. | 4,376 | 144,296 | ||
1,320,649 | ||||
China — 3.9% | ||||
A-Living Services Co. Ltd., H Shares | 80,750 | 260,517 | ||
GSX Techedu, Inc. ADR(1) | 11,646 | 204,853 | ||
Li Ning Co. Ltd. | 67,000 | 214,873 | ||
680,243 | ||||
Finland — 1.0% | ||||
Valmet Oyj | 7,469 | 167,071 | ||
France — 2.0% | ||||
Korian SA | 3,743 | 164,581 | ||
SOITEC(1) | 1,756 | 185,574 | ||
350,155 | ||||
Germany — 3.5% | ||||
Evotec SE(1) | 1,662 | 36,831 | ||
HelloFresh SE(1) | 11,646 | 231,758 | ||
Isra Vision AG | 1,827 | 78,035 | ||
Rheinmetall AG | 696 | 74,113 | ||
Varta AG(1) | 1,585 | 202,596 | ||
623,333 |
10
Shares | Value | |||
Hong Kong — 0.7% | ||||
Minth Group Ltd. | 36,000 | $ | 123,728 | |
India — 1.2% | ||||
Indraprastha Gas Ltd. | 7,006 | 40,350 | ||
WNS Holdings Ltd. ADR(1) | 2,800 | 176,736 | ||
217,086 | ||||
Indonesia — 0.7% | ||||
Bank Tabungan Pensiunan Nasional Syariah Tbk PT(1) | 416,800 | 116,978 | ||
Israel — 2.0% | ||||
Kornit Digital Ltd.(1) | 5,291 | 180,423 | ||
Nova Measuring Instruments Ltd.(1) | 4,568 | 164,996 | ||
345,419 | ||||
Italy — 0.6% | ||||
Amplifon SpA | 3,487 | 102,056 | ||
Japan — 6.8% | ||||
Anritsu Corp. | 8,300 | 158,098 | ||
Kobe Bussan Co. Ltd. | 5,200 | 161,311 | ||
Mabuchi Motor Co. Ltd. | 1,900 | 72,533 | ||
Nabtesco Corp. | 5,700 | 175,433 | ||
Nippon Gas Co. Ltd. | 4,600 | 145,462 | ||
Orix JREIT, Inc. | 56 | 123,142 | ||
SHIFT, Inc.(1) | 1,300 | 93,391 | ||
Trust Tech, Inc. | 7,200 | 89,486 | ||
UT Group Co. Ltd. | 6,300 | 178,844 | ||
1,197,700 | ||||
Netherlands — 0.8% | ||||
IMCD NV | 751 | 62,418 | ||
Takeaway.com NV(1)(2) | 947 | 85,101 | ||
147,519 | ||||
Norway — 1.5% | ||||
Bakkafrost P/F | 2,801 | 187,629 | ||
Subsea 7 SA | 7,758 | 81,066 | ||
268,695 | ||||
Singapore — 0.6% | ||||
Mapletree Industrial Trust | 55,100 | 101,163 | ||
South Korea — 1.4% | ||||
Douzone Bizon Co. Ltd. | 2,314 | 139,880 | ||
Studio Dragon Corp.(1) | 1,567 | 101,093 | ||
240,973 | ||||
Sweden — 5.1% | ||||
AAK AB | 6,563 | 119,886 | ||
Biotage AB | 10,055 | 129,899 | ||
Elekta AB, B Shares | 6,345 | 79,586 | ||
Embracer Group AB(1) | 15,317 | 108,375 | ||
Fabege AB | 5,774 | 90,248 | ||
Fastighets AB Balder, B Shares(1) | 3,270 | 136,209 | ||
Lindab International AB | 10,820 | 128,547 |
11
Shares | Value | |||
MIPS AB | 5,479 | $ | 103,315 | |
896,065 | ||||
Switzerland — 3.1% | ||||
Georg Fischer AG | 117 | 114,562 | ||
Landis+Gyr Group AG(1) | 1,456 | 148,631 | ||
SIG Combibloc Group AG(1) | 10,082 | 139,514 | ||
Tecan Group AG | 503 | 135,107 | ||
537,814 | ||||
Taiwan — 3.1% | ||||
Accton Technology Corp. | 22,000 | 114,681 | ||
Airtac International Group | 12,000 | 173,962 | ||
Macronix International | 122,000 | 132,179 | ||
Merida Industry Co. Ltd. | 23,000 | 132,025 | ||
552,847 | ||||
United Kingdom — 5.8% | ||||
Avast plc | 33,903 | 196,234 | ||
AVEVA Group plc | 2,565 | 151,090 | ||
Electrocomponents plc | 25,315 | 213,813 | ||
Hikma Pharmaceuticals plc | 3,029 | 75,001 | ||
Network International Holdings plc(1) | 11,915 | 89,214 | ||
Nomad Foods Ltd.(1) | 6,951 | 145,971 | ||
Trainline plc(1) | 23,363 | 140,954 | ||
1,012,277 | ||||
United States — 41.8% | ||||
10X Genomics, Inc., Class A(1) | 2,122 | 137,697 | ||
Aerojet Rocketdyne Holdings, Inc.(1) | 2,997 | 132,467 | ||
Amedisys, Inc.(1) | 535 | 87,184 | ||
Americold Realty Trust | 2,226 | 83,742 | ||
Ameris Bancorp | 3,743 | 163,382 | ||
ArcBest Corp. | 2,697 | 77,620 | ||
Ares Management Corp., Class A | 7,325 | 242,384 | ||
Avalara, Inc.(1) | 2,063 | 160,976 | ||
Berry Global Group, Inc.(1) | 955 | 44,589 | ||
Boise Cascade Co. | 3,296 | 124,984 | ||
Boot Barn Holdings, Inc.(1) | 4,350 | 173,217 | ||
CACI International, Inc., Class A(1) | 889 | 212,755 | ||
Callaway Golf Co. | 1,381 | 28,697 | ||
CareTrust REIT, Inc. | 2,084 | 43,514 | ||
Chart Industries, Inc.(1) | 322 | 17,774 | ||
Chegg, Inc.(1) | 5,600 | 217,112 | ||
Churchill Downs, Inc. | 1,365 | 177,464 | ||
Clean Harbors, Inc.(1) | 2,082 | 172,077 | ||
Coupa Software, Inc.(1)(2) | 583 | 89,485 | ||
eHealth, Inc.(1) | 1,522 | 140,420 | ||
Ensign Group, Inc. (The) | 3,570 | 155,045 | ||
Essential Properties Realty Trust, Inc. | 6,292 | 164,158 | ||
First Financial Bankshares, Inc. | 4,822 | 166,697 | ||
Five9, Inc.(1) | 1,558 | 106,209 |
12
Shares | Value | |||
Flexion Therapeutics, Inc.(1)(2) | 4,834 | $ | 85,707 | |
Grocery Outlet Holding Corp.(1) | 4,054 | 134,309 | ||
H&E Equipment Services, Inc. | 2,685 | 88,605 | ||
Hamilton Lane, Inc., Class A | 3,548 | 205,784 | ||
Hannon Armstrong Sustainable Infrastructure Capital, Inc. | 7,139 | 209,530 | ||
HealthEquity, Inc.(1) | 1,357 | 85,342 | ||
IAA, Inc.(1) | 2,790 | 126,471 | ||
Inphi Corp.(1) | 1,981 | 137,937 | ||
Inspire Medical Systems, Inc.(1) | 1,753 | 124,393 | ||
Kennametal, Inc. | 2,425 | 84,463 | ||
Kinsale Capital Group, Inc. | 2,404 | 243,429 | ||
Kratos Defense & Security Solutions, Inc.(1) | 2,266 | 40,924 | ||
Lattice Semiconductor Corp.(1) | 955 | 18,040 | ||
Monolithic Power Systems, Inc. | 581 | 93,355 | ||
Navistar International Corp.(1) | 3,724 | 121,589 | ||
NeoGenomics, Inc.(1) | 4,103 | 105,898 | ||
ONE Gas, Inc. | 975 | 86,648 | ||
Optinose, Inc.(1)(2) | 7,256 | 67,771 | ||
Palomar Holdings, Inc.(1) | 3,456 | 188,594 | ||
Paylocity Holding Corp.(1) | 916 | 112,045 | ||
Pennant Group, Inc. (The)(1) | 3,775 | 88,410 | ||
Phreesia, Inc.(1)(2) | 3,065 | 86,188 | ||
Planet Fitness, Inc., Class A(1) | 2,403 | 177,630 | ||
R1 RCM, Inc.(1) | 18,435 | 237,627 | ||
Rapid7, Inc.(1) | 2,406 | 134,904 | ||
Repay Holdings Corp.(1) | 661 | 9,142 | ||
SI-BONE, Inc.(1) | 4,946 | 87,989 | ||
Silk Road Medical, Inc.(1) | 2,548 | 91,779 | ||
Skyline Champion Corp.(1) | 6,741 | 223,666 | ||
SYNNEX Corp. | 699 | 85,844 | ||
Teladoc Health, Inc.(1)(2) | 1,475 | 123,516 | ||
TopBuild Corp.(1) | 2,117 | 233,463 | ||
TriNet Group, Inc.(1) | 1,797 | 98,386 | ||
US Ecology, Inc. | 1,731 | 95,188 | ||
Zynga, Inc., Class A(1) | 13,122 | 81,750 | ||
7,335,965 | ||||
TOTAL COMMON STOCKS (Cost $14,306,166) | 17,359,286 | |||
RIGHTS† | ||||
Norway† | ||||
Bakkafrost P/F(1) (Cost $—) | 80 | 1,022 | ||
TEMPORARY CASH INVESTMENTS — 2.0% | ||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.625% - 2.875%, 11/15/20 - 8/15/28, valued at $164,792), in a joint trading account at 1.40%, dated 11/29/19, due 12/2/19 (Delivery value $161,716) | 161,697 | |||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 196,895 | 196,895 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $358,592) | 358,592 |
13
Shares | Value | |||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(3) — 3.2% | ||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $554,100) | 554,100 | $ | 554,100 | |
TOTAL INVESTMENT SECURITIES — 104.1% (Cost $15,218,858) | 18,273,000 | |||
OTHER ASSETS AND LIABILITIES — (4.1)% | (715,318 | ) | ||
TOTAL NET ASSETS — 100.0% | $ | 17,557,682 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Information Technology | 20.8 | % |
Industrials | 19.9 | % |
Consumer Discretionary | 16.1 | % |
Health Care | 14.1 | % |
Financials | 8.9 | % |
Real Estate | 6.9 | % |
Consumer Staples | 4.4 | % |
Materials | 3.0 | % |
Communication Services | 1.7 | % |
Energy | 1.6 | % |
Utilities | 1.5 | % |
Cash and Equivalents* | 1.1 | % |
* Includes temporary cash investments, temporary cash investments - securities lending collateral and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
† | Category is less than 0.05% of total net assets. |
(1) | Non-income producing. |
(2) | Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $1,092,059. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(3) | Investment of cash collateral from securities on loan. At the period end, the aggregate market value of the collateral held by the fund was $1,152,520, which includes securities collateral of $598,420. |
See Notes to Financial Statements.
14
Statement of Assets and Liabilities |
NOVEMBER 30, 2019 | |||
Assets | |||
Investment securities, at value (cost of $14,664,758) — including $1,092,059 of securities on loan | $ | 17,718,900 | |
Investment made with cash collateral received for securities on loan, at value (cost of $554,100) | 554,100 | ||
Total investment securities, at value (cost of $15,218,858) | 18,273,000 | ||
Foreign currency holdings, at value (cost of $58) | 58 | ||
Receivable for investments sold | 76,777 | ||
Receivable for capital shares sold | 11,472 | ||
Dividends and interest receivable | 13,177 | ||
Securities lending receivable | 849 | ||
Other assets | 1,643 | ||
18,376,976 | |||
Liabilities | |||
Disbursements in excess of demand deposit cash | 160,790 | ||
Payable for collateral received for securities on loan | 554,100 | ||
Payable for investments purchased | 82,793 | ||
Accrued management fees | 20,791 | ||
Distribution and service fees payable | 820 | ||
819,294 | |||
Net Assets | $ | 17,557,682 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 13,812,192 | |
Distributable earnings | 3,745,490 | ||
$ | 17,557,682 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $15,004,716 | 948,951 | $15.81 | |||
I Class, $0.01 Par Value | $556,597 | 34,928 | $15.94 | |||
A Class, $0.01 Par Value | $670,705 | 42,818 | $15.66* | |||
C Class, $0.01 Par Value | $595,494 | 39,123 | $15.22 | |||
R Class, $0.01 Par Value | $523,415 | 33,734 | $15.52 | |||
R6 Class, $0.01 Par Value | $206,755 | 12,900 | $16.03 |
*Maximum offering price $16.62 (net asset value divided by 0.9425).
See Notes to Financial Statements.
15
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2019 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $14,242) | $ | 192,834 | |
Securities lending, net | 7,231 | ||
Interest | 4,238 | ||
204,303 | |||
Expenses: | |||
Management fees | 270,515 | ||
Distribution and service fees: | |||
A Class | 2,857 | ||
C Class | 10,626 | ||
R Class | 2,517 | ||
Directors' fees and expenses | 557 | ||
Other expenses | 1,692 | ||
288,764 | |||
Net investment income (loss) | (84,461 | ) | |
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 1,371,571 | ||
Foreign currency translation transactions | 925 | ||
1,372,496 | |||
Change in net unrealized appreciation (depreciation) on investments | 1,628,442 | ||
Net realized and unrealized gain (loss) | 3,000,938 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 2,916,477 |
See Notes to Financial Statements.
16
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2019 AND NOVEMBER 30, 2018 | ||||||
Increase (Decrease) in Net Assets | November 30, 2019 | November 30, 2018 | ||||
Operations | ||||||
Net investment income (loss) | $ | (84,461 | ) | $ | (197,702 | ) |
Net realized gain (loss) | 1,372,496 | 34,675 | ||||
Change in net unrealized appreciation (depreciation) | 1,628,442 | (1,199,184 | ) | |||
Net increase (decrease) in net assets resulting from operations | 2,916,477 | (1,362,211 | ) | |||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (244,814 | ) | (529,903 | ) | ||
I Class | (19,145 | ) | (47,681 | ) | ||
A Class | (25,394 | ) | (81,489 | ) | ||
C Class | (24,698 | ) | (77,608 | ) | ||
R Class | (8,586 | ) | (17,910 | ) | ||
R6 Class | (6,072 | ) | (18,878 | ) | ||
Decrease in net assets from distributions | (328,709 | ) | (773,469 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (5,349,893 | ) | 7,815,917 | |||
Net increase (decrease) in net assets | (2,762,125 | ) | 5,680,237 | |||
Net Assets | ||||||
Beginning of period | 20,319,807 | 14,639,570 | ||||
End of period | $ | 17,557,682 | $ | 20,319,807 |
See Notes to Financial Statements.
17
Notes to Financial Statements |
NOVEMBER 30, 2019
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, 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.
18
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. 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.
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. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
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.
19
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).
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of November 30, 2019.
Remaining Contractual Maturity of Agreements | ||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||
Securities Lending Transactions(1) | ||||||||||||
Common Stocks | $ | 554,100 | — | — | — | $ | 554,100 | |||||
Gross amount of recognized liabilities for securities lending transactions | $ | 554,100 |
(1) | Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand. |
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 17% of the shares of the fund.
20
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, 2019 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 sales were $2,266 and there were no interfund purchases. The effect of interfund transactions on the Statement of Operations was $(964) 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, 2019 were $29,055,569 and $35,099,906, respectively.
21
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2019 | Year ended November 30, 2018 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 40,000,000 | 50,000,000 | ||||||||
Sold | 362,514 | $ | 5,144,156 | 1,046,645 | $ | 16,045,693 | ||||
Issued in reinvestment of distributions | 19,659 | 242,195 | 36,736 | 522,899 | ||||||
Redeemed | (542,922 | ) | (7,621,732 | ) | (653,315 | ) | (9,818,276 | ) | ||
(160,749 | ) | (2,235,381 | ) | 430,066 | 6,750,316 | |||||
I Class/Shares Authorized | 25,000,000 | 40,000,000 | ||||||||
Sold | 7,591 | 112,985 | 63,911 | 971,359 | ||||||
Issued in reinvestment of distributions | 1,544 | 19,145 | 3,332 | 47,681 | ||||||
Redeemed | (77,886 | ) | (1,089,958 | ) | (23,564 | ) | (325,709 | ) | ||
(68,751 | ) | (957,828 | ) | 43,679 | 693,331 | |||||
A Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 831 | 9,923 | 8,679 | 128,659 | ||||||
Issued in reinvestment of distributions | 2,075 | 25,394 | 5,750 | 81,489 | ||||||
Redeemed | (68,936 | ) | (1,001,875 | ) | (8,474 | ) | (135,368 | ) | ||
(66,030 | ) | (966,558 | ) | 5,955 | 74,780 | |||||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 273 | 4,549 | 351 | 5,042 | ||||||
Issued in reinvestment of distributions | 2,061 | 24,698 | 5,556 | 77,608 | ||||||
Redeemed | (69,074 | ) | (978,912 | ) | (880 | ) | (12,385 | ) | ||
(66,740 | ) | (949,665 | ) | 5,027 | 70,265 | |||||
R Class/Shares Authorized | 20,000,000 | 30,000,000 | ||||||||
Sold | 13,711 | 194,728 | 15,498 | 235,808 | ||||||
Issued in reinvestment of distributions | 707 | 8,586 | 1,270 | 17,910 | ||||||
Redeemed | (17,244 | ) | (246,353 | ) | (3,267 | ) | (48,854 | ) | ||
(2,826 | ) | (43,039 | ) | 13,501 | 204,864 | |||||
R6 Class/Shares Authorized | 20,000,000 | 30,000,000 | ||||||||
Sold | 289 | 4,190 | 258 | 3,917 | ||||||
Issued in reinvestment of distributions | 488 | 6,072 | 1,318 | 18,878 | ||||||
Redeemed | (14,013 | ) | (207,684 | ) | (29 | ) | (434 | ) | ||
(13,236 | ) | (197,422 | ) | 1,547 | 22,361 | |||||
Net increase (decrease) | (378,332 | ) | $ | (5,349,893 | ) | 499,775 | $ | 7,815,917 |
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.
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 | ||||||||
Canada | $ | 59,285 | $ | 1,261,364 | — | |||
China | 204,853 | 475,390 | — | |||||
India | 176,736 | 40,350 | — | |||||
Israel | 345,419 | — | — | |||||
United Kingdom | 145,971 | 866,306 | — | |||||
United States | 7,335,965 | — | — | |||||
Other Countries | — | 6,447,647 | — | |||||
Rights | — | 1,022 | — | |||||
Temporary Cash Investments | 196,895 | 161,697 | — | |||||
Temporary Cash Investments - Securities Lending Collateral | 554,100 | — | — | |||||
$ | 9,019,224 | $ | 9,253,776 | — |
The fund may hold financial instruments at their inherent carrying value for financial statement purposes,
which approximates fair value. As of period end, the fund’s disbursements in excess of demand deposit cash
were classified as Level 2.
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing in emerging markets or a significant portion of assets in one country or region 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.
23
8. Federal Tax Information
On December 17, 2019, the fund declared and paid a per-share distribution from net realized gains to shareholders of record on December 16, 2019 of $0.7803 for the Investor Class, I Class, A Class, C Class, R Class and R6 Class.
The tax character of distributions paid during the years ended November 30, 2019 and November 30, 2018 were as follows:
2019 | 2018 | |||||
Distributions Paid From | ||||||
Ordinary income | — | $ | 435,143 | |||
Long-term capital gains | $ | 328,709 | $ | 338,326 |
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 | $ | 15,322,299 | |
Gross tax appreciation of investments | $ | 3,165,361 | |
Gross tax depreciation of investments | (214,660 | ) | |
Net tax appreciation (depreciation) of investments | 2,950,701 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (55 | ) | |
Net tax appreciation (depreciation) | $ | 2,950,646 | |
Undistributed ordinary income | — | ||
Accumulated long-term gains | $ | 881,099 | |
Late-year ordinary loss deferral | $ | (86,255 | ) |
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.
Loss deferrals represent certain qualified losses that the fund has elected to treat as having been incurred in the following fiscal year for federal income tax purposes.
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 Realized Gains | 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 | |||||||||||||
2019 | $13.66 | (0.06) | 2.44 | 2.38 | (0.23) | $15.81 | 17.93% | 1.51% | (0.39)% | 161% | $15,005 | ||
2018 | $14.80 | (0.13) | (0.24) | (0.37) | (0.77) | $13.66 | (2.73)% | 1.50% | (0.86)% | 147% | $15,159 | ||
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 | |||||||||||||
2019 | $13.74 | (0.02) | 2.45 | 2.43 | (0.23) | $15.94 | 18.12% | 1.31% | (0.19)% | 161% | $557 | ||
2018 | $14.85 | (0.10) | (0.24) | (0.34) | (0.77) | $13.74 | (2.50)% | 1.30% | (0.66)% | 147% | $1,424 | ||
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 | |||||||||||||
2019 | $13.57 | (0.08) | 2.40 | 2.32 | (0.23) | $15.66 | 17.60% | 1.76% | (0.64)% | 161% | $671 | ||
2018 | $14.74 | (0.17) | (0.23) | (0.40) | (0.77) | $13.57 | (2.95)% | 1.75% | (1.11)% | 147% | $1,477 | ||
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 | |||||||||||||
2019 | $13.29 | (0.18) | 2.34 | 2.16 | (0.23) | $15.22 | 16.75% | 2.51% | (1.39)% | 161% | $595 | ||
2018 | $14.56 | (0.28) | (0.22) | (0.50) | (0.77) | $13.29 | (3.71)% | 2.50% | (1.86)% | 147% | $1,407 | ||
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 |
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 Realized Gains | 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) | |||
R Class | |||||||||||||
2019 | $13.48 | (0.12) | 2.39 | 2.27 | (0.23) | $15.52 | 17.34% | 2.01% | (0.89)% | 161% | $523 | ||
2018 | $14.68 | (0.21) | (0.22) | (0.43) | (0.77) | $13.48 | (3.18)% | 2.00% | (1.36)% | 147% | $493 | ||
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 | |||||||||||||
2019 | $13.79 | —(5) | 2.47 | 2.47 | (0.23) | $16.03 | 18.34% | 1.16% | (0.04)% | 161% | $207 | ||
2018 | $14.89 | (0.08) | (0.25) | (0.33) | (0.77) | $13.79 | (2.36)% | 1.15% | (0.51)% | 147% | $361 | ||
2017 | $10.87 | (0.01) | 4.03 | 4.02 | — | $14.89 | 36.86% | 1.16% | (0.09)% | 130% | $366 | ||
2016(3) | $10.00 | —(5) | 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) | 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.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Global Small Cap Fund, one of the funds constituting the American Century World Mutual Funds, Inc. (the "Fund"), as of November 30, 2019, 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, the financial highlights for each of the years ended November 30, 2019, 2018, 2017 and for the period March 29, 2016 (fund inception) through November 30, 2016, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Global Small Cap Fund of the American Century World Mutual Funds, Inc. as of November 30, 2019, 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 years ended November 30, 2019, 2018, 2017 and for the period March 29, 2016 (fund inception) through November 30, 2016, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of November 30, 2019, 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.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2020
We have served as the auditor of one or more American Century investment companies since 1997.
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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 Jonathan S. Thomas, 16; and Stephen E. Yates, 8) 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 | 66 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 66 | None |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 66 | None |
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 66 | None |
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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 | |||||
Lynn Jenkins (1963) | Director | Since 2019 | United States Representative, U.S. House of Representatives (2009 to 2018) | 66 | MGP Ingredients, Inc. |
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 66 | None |
John R. Whitten (1946) | Director | Since 2008 | Retired | 66 | Onto Innovation Inc.; Rudolph Technologies, Inc. (2006 to 2019) |
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 81 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director | 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 | 125 | 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 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds. 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 |
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Chief Operating Officer, ACC (2012-2015). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries |
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Investment Operations and Investment Accounting, ACS (2000 to present) |
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). 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 since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) |
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 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 26, 2019, 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; |
• | any economies of scale associated with the Advisor’s management of the Fund and other accounts; |
• | services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; 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 provided by the Directors to the Advisor 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 connection with their review, the Directors did not identify any single factor as being all-important or
31
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.
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 investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor 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 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, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance
32
activities. 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, 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 Investment Company 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 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.
33
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 such 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 may receive 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
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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 or as an exhibit to its reports on Form N-PORT. The fund’s Forms N-Q and Form N-PORT reports are available on the SEC’s website at sec.gov. 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 $328,747, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended November 30, 2019.
The fund utilized earnings and profits of $38 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
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Notes |
37
Notes |
38
Notes |
39
Notes |
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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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91035 2001 |
![acihorizblkd32.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/acihorizblkd32.jpg)
Annual Report | |
November 30, 2019 | |
International Growth Fund | |
Investor Class (TWIEX) | |
I Class (TGRIX) | |
Y Class (ATYGX) | |
A Class (TWGAX) | |
C Class (AIWCX) | |
R Class (ATGRX) | |
R5 Class (ATGGX) | |
R6 Class (ATGDX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 | ||
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 |
![jthomasrev0514a01.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/jthomasrev0514a01.jpg)
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2019. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional investment and market insights, please visit our website, americancentury.com.
Monetary Policy Pivot Improved Investor Sentiment
The reporting period began on a challenging note. Mounting concerns about slowing global economic and earnings growth, the U.S.-China trade dispute and Federal Reserve (Fed) policy soured investor sentiment, driving global stocks lower. After raising rates in September 2018, the Fed hiked again in December and delivered a surprisingly bullish 2019 rate-hike outlook, which worsened the year-end sell-off among global stocks.
However, a key policy pivot from the Fed in early 2019 helped improve investor attitudes worldwide. The central bank abruptly ended its rate-hike campaign and adopted a dovish tone amid weaker global growth and inflation. Similar economic concerns kept central banks in Europe and Japan maintaining or expanding their accommodative policies. Additionally, investors’ earlier worst-case fears about trade and corporate earnings generally eased, which also aided stocks.
Volatility reemerged in the spring, when a Brexit stalemate prompted U.K. Prime Minister Theresa May to resign. This news reignited global fears of a no-deal Brexit. However, those worries subsided as Boris Johnson, a staunch Brexit advocate, succeeded May. Meanwhile, U.S.-China trade policy continued to fuel bouts of volatility. In July, growing concerns about global economic risks encouraged the Fed to cut short-term interest rates for the first time in 10 years. The Fed followed up with additional rate cuts in September and October. Fed easing and a lower interest rate backdrop helped restore investor optimism.
Overall, broad global stock indices advanced for the 12-month period. U.S. stocks generally outperformed non-U.S. stocks, while developed markets broadly outperformed emerging markets.
Looking ahead, we expect volatility to remain a formidable factor as investors react to global growth and trade trends, central bank policy and geopolitical developments. We believe this scenario underscores the importance of using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
![image48a16.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/image48a16.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of November 30, 2019 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | TWIEX | 16.82% | 4.55% | 6.52% | — | 5/9/91 |
MSCI EAFE Index | — | 12.44% | 4.26% | 5.31% | — | — |
MSCI EAFE Growth Index | — | 18.36% | 6.35% | 6.85% | — | — |
I Class | TGRIX | 17.09% | 4.77% | 6.73% | — | 11/20/97 |
Y Class | ATYGX | 17.27% | — | — | 9.76% | 4/10/17 |
A Class | TWGAX | 10/2/96 | ||||
No sales charge | 16.56% | 4.29% | 6.26% | — | ||
With sales charge | 9.83% | 3.07% | 5.64% | — | ||
C Class | AIWCX | 15.66% | 3.52% | 5.46% | — | 6/4/01 |
R Class | ATGRX | 16.17% | 4.02% | 5.99% | — | 8/29/03 |
R5 Class | ATGGX | 17.09% | — | — | 9.60% | 4/10/17 |
R6 Class | ATGDX | 17.28% | 4.92% | — | 5.52% | 7/26/13 |
Average annual returns since inception are presented when ten years of performance history is not available.
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, 2009 |
Performance for other share classes will vary due to differences in fee structure. |
![chart-7e62569d451e5edd8afa07.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/chart-7e62569d451e5edd8afa07.jpg)
Value on November 30, 2019 | |
Investor Class — $18,821 | |
MSCI EAFE Index — $16,786 | |
MSCI EAFE Growth Index — $19,412 | |
Total Annual Fund Operating Expenses | |||||||
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class |
1.17% | 0.97% | 0.82% | 1.42% | 2.17% | 1.67% | 0.97% | 0.82% |
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 Jim Zhao
Performance Summary
International Growth returned 16.82%* for the fiscal year ended November 30, 2019, outperforming its benchmark, the MSCI EAFE Index, which returned 12.44%.
Stock selection in a broad range of sectors contributed to the fund’s outperformance, including financials, health care and communication services as well as positioning in information technology. Positioning in consumer staples detracted slightly. From a geographic perspective, holdings in Japan and the U.K. benefited returns, as did positioning in China.
Non-U.S. equity markets experienced significant volatility during the period amid global economic uncertainty and U.S.-China trade tensions. Global stocks staged several rallies in the first half of 2019 as U.S. interest rate hikes paused and corporate earnings reports exceeded lowered expectations. Markets gave back some of the gains in the second half as signs of slowing economic growth and escalation of trade disputes dampened investor appetite for risk. Toward the end of the period, stocks rebounded on encouraging earnings reports, anticipation of a U.S.-China trade deal and improved prospects for an orderly Brexit.
Select Stocks Advanced Strongly Despite Broad Economic Unease
Selective investments within financials propelled fund returns. Stock of London Stock Exchange Group (LSEG) outperformed for the year, driven by strength in the company’s security clearing and data businesses, which have benefited from demand for clearing of new security classes, increased use of quantitative investment approaches and demand for market data from its Russell division. LSEG’s stock also benefited from news of the company’s proposed acquisition of financial data and technology firm Refinitiv. We believe the acquisition will enhance LSEG’s offerings for two of the strongest trends in financial markets: electronification of trading and demand for data.
Among health care stocks, blood plasma company CSL contributed to outperformance. The company’s leading position within the immunoglobulin market supported growth in a year that saw competitors suffer from shortages and disruptions. CSL has invested heavily in its plasma collection centers, which should help it to maintain its market share gains. Investors drove the stock higher as management reiterated the firm’s strong growth prospects for 2020.
Cellnex Telecom ranked among the top individual contributors. The European tower company gained significant market share in the past year, which drove better-than-expected earnings and propelled the stock higher. Announcement of an acquisition that should advance the company’s consolidation plans also boosted the stock. Cellnex continued to benefit from the increased use of data in Europe, the sale and leaseback of towers to cellular operators and the expansion of existing sites by adding more tenants.
ANTA Sports Products further boosted returns. The shoe and apparel company’s stock posted significant gains for the year on better-than-expected results demonstrating strong revenue and profit growth. Strength in FILA merchandise, for which ANTA owns marketing rights in China, drove the upside revenue surprise. Ongoing strength in mass-market demand continued to benefit ANTA brands in general.
*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
On the downside, Canada Goose Holdings detracted from the fund’s performance. Stock of the apparel manufacturer and retailer weakened during the year as the market reacted to transitory issues, which caused volatility in short-term earnings results. We believe the long-term story remains intact as Canada Goose retains a strong brand presence, is migrating its model away from wholesale toward higher-margin retail and online business and is entering new markets with its own stores.
Portfolio Positioning
We remain focused on our disciplined, bottom-up process aimed at identifying companies with accelerating, sustainable growth. In a tougher environment for earnings growth, we are looking for companies whose growth does not depend on economic improvement. As a result of this selection process, information technology was the fund’s largest overweight position relative to the benchmark at period-end. We are invested in companies that benefit from secular and structural growth drivers, including the ongoing shift to digital and increased corporate spending on technology to increase efficiency and enhance competitive position. The fund is also overweight in consumer discretionary. Consumer spending has stayed strong, particularly in the U.S., supported by strong employment data, and in China, where demand for premium products remains solid. We remain underweight in financials, particularly banks, due to the pressures of a low interest rate environment. However, we are finding nonbank opportunities, including financial exchanges, data providers and select insurance companies benefiting from improved pricing trends in the property and casualty business.
The fund’s largest regional exposure is in Europe. We continue to be underweight in Japan and Asia in general, as they have more exposure to global trade and cyclical weakness than other markets.
6
Fund Characteristics |
NOVEMBER 30, 2019 | |
Top Ten Holdings | % of net assets |
Nestle SA | 3.4% |
AIA Group Ltd. | 3.0% |
CSL Ltd. | 2.8% |
AstraZeneca plc | 2.5% |
Keyence Corp. | 1.9% |
Cellnex Telecom SA | 1.9% |
Novartis AG | 1.9% |
Recruit Holdings Co. Ltd. | 1.7% |
Schneider Electric SE | 1.7% |
Koninklijke DSM NV | 1.7% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 98.5% |
Temporary Cash Investments | 1.2% |
Temporary Cash Investments - Securities Lending Collateral | 0.8% |
Other Assets and Liabilities | (0.5)% |
Investments by Country | % of net assets |
Japan | 17.2% |
Switzerland | 12.2% |
France | 9.9% |
United Kingdom | 9.6% |
Germany | 5.6% |
Australia | 5.4% |
Sweden | 4.7% |
China | 4.6% |
Netherlands | 4.4% |
Canada | 3.8% |
Hong Kong | 3.5% |
Spain | 3.4% |
Ireland | 2.8% |
Denmark | 2.5% |
Other Countries | 8.9% |
Cash and Equivalents* | 1.5% |
* Includes temporary cash investments, temporary cash investments - securities lending collateral 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, 2019 to November 30, 2019.
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 6/1/19 | Ending Account Value 11/30/19 | Expenses Paid During Period(1) 6/1/19 - 11/30/19 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,114.60 | $6.26 | 1.18% |
I Class | $1,000 | $1,115.50 | $5.20 | 0.98% |
Y Class | $1,000 | $1,116.30 | $4.40 | 0.83% |
A Class | $1,000 | $1,112.60 | $7.57 | 1.43% |
C Class | $1,000 | $1,108.30 | $11.52 | 2.18% |
R Class | $1,000 | $1,111.40 | $8.89 | 1.68% |
R5 Class | $1,000 | $1,115.30 | $5.20 | 0.98% |
R6 Class | $1,000 | $1,116.40 | $4.40 | 0.83% |
Hypothetical | ||||
Investor Class | $1,000 | $1,019.15 | $5.97 | 1.18% |
I Class | $1,000 | $1,020.16 | $4.96 | 0.98% |
Y Class | $1,000 | $1,020.91 | $4.20 | 0.83% |
A Class | $1,000 | $1,017.90 | $7.23 | 1.43% |
C Class | $1,000 | $1,014.14 | $11.01 | 2.18% |
R Class | $1,000 | $1,016.65 | $8.49 | 1.68% |
R5 Class | $1,000 | $1,020.16 | $4.96 | 0.98% |
R6 Class | $1,000 | $1,020.91 | $4.20 | 0.83% |
(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, 2019
Shares | Value | |||
COMMON STOCKS — 98.5% | ||||
Australia — 5.4% | ||||
Aristocrat Leisure Ltd. | 451,610 | $ | 10,363,426 | |
Atlassian Corp. plc, Class A(1) | 47,490 | 6,036,454 | ||
CSL Ltd. | 202,100 | 38,866,356 | ||
Treasury Wine Estates Ltd. | 1,445,300 | 18,323,295 | ||
73,589,531 | ||||
Austria — 0.9% | ||||
Erste Group Bank AG(1) | 356,102 | 12,740,024 | ||
Belgium — 1.3% | ||||
KBC Group NV | 247,850 | 18,044,657 | ||
Brazil — 1.1% | ||||
Localiza Rent a Car SA | 643,896 | 6,748,156 | ||
Magazine Luiza SA | 795,031 | 8,487,942 | ||
15,236,098 | ||||
Canada — 3.8% | ||||
Alimentation Couche-Tard, Inc., B Shares | 448,650 | 14,746,713 | ||
Canada Goose Holdings, Inc.(1)(2) | 326,500 | 12,455,975 | ||
Canadian Pacific Railway Ltd. | 43,430 | 10,344,664 | ||
Intact Financial Corp. | 142,800 | 14,716,474 | ||
52,263,826 | ||||
China — 4.6% | ||||
Alibaba Group Holding Ltd. ADR(1) | 100,940 | 20,188,000 | ||
ANTA Sports Products Ltd. | 843,000 | 7,925,180 | ||
GDS Holdings Ltd. ADR(1) | 292,890 | 13,713,110 | ||
TAL Education Group ADR(1) | 199,650 | 8,836,509 | ||
Tencent Holdings Ltd. | 282,100 | 11,959,502 | ||
62,622,301 | ||||
Denmark — 2.5% | ||||
Carlsberg A/S, B Shares | 47,790 | 6,870,663 | ||
DSV Panalpina A/S | 133,212 | 14,494,990 | ||
Novo Nordisk A/S, B Shares | 237,520 | 13,338,269 | ||
34,703,922 | ||||
Finland — 1.3% | ||||
Neste Oyj | 538,640 | 18,215,429 | ||
France — 9.9% | ||||
Airbus SE | 105,970 | 15,561,523 | ||
Danone SA | 127,550 | 10,497,948 | ||
Dassault Systemes SE | 72,850 | 11,468,572 | ||
Edenred | 199,931 | 9,920,446 | ||
LVMH Moet Hennessy Louis Vuitton SE | 38,750 | 17,371,829 | ||
Peugeot SA | 341,360 | 8,237,463 | ||
Schneider Electric SE | 242,020 | 23,339,183 | ||
Teleperformance | 46,430 | 10,990,983 |
10
Shares | Value | |||
TOTAL SA | 256,760 | $ | 13,480,365 | |
Valeo SA | 377,450 | 14,852,807 | ||
135,721,119 | ||||
Germany — 5.6% | ||||
adidas AG | 50,030 | 15,587,301 | ||
Infineon Technologies AG | 811,584 | 17,336,114 | ||
Puma SE | 119,250 | 8,964,723 | ||
SAP SE | 136,900 | 18,635,017 | ||
Symrise AG | 170,060 | 16,496,302 | ||
77,019,457 | ||||
Hong Kong — 3.5% | ||||
AIA Group Ltd. | 4,062,400 | 40,693,657 | ||
Hong Kong Exchanges & Clearing Ltd. | 212,600 | 6,718,662 | ||
47,412,319 | ||||
Hungary — 0.5% | ||||
OTP Bank Nyrt. | 139,659 | 6,570,172 | ||
India — 0.7% | ||||
HDFC Bank Ltd. | 530,980 | 9,435,411 | ||
Indonesia — 0.7% | ||||
Bank Central Asia Tbk PT | 4,080,300 | 9,078,463 | ||
Ireland — 2.8% | ||||
CRH plc | 386,460 | 14,774,067 | ||
ICON plc(1) | 52,230 | 8,521,847 | ||
Kerry Group plc, A Shares | 119,560 | 15,355,067 | ||
38,650,981 | ||||
Italy — 1.1% | ||||
Nexi SpA(1) | 552,685 | 6,516,507 | ||
Prysmian SpA | 386,710 | 8,811,459 | ||
15,327,966 | ||||
Japan — 17.2% | ||||
Daikin Industries Ltd. | 65,000 | 9,367,042 | ||
Fast Retailing Co. Ltd. | 22,700 | 13,849,328 | ||
GMO Payment Gateway, Inc. | 107,900 | 7,652,578 | ||
Hoya Corp. | 235,900 | 21,538,712 | ||
Keyence Corp. | 77,800 | 26,657,284 | ||
MonotaRO Co. Ltd. | 527,400 | 14,867,581 | ||
Murata Manufacturing Co. Ltd. | 348,900 | 20,256,671 | ||
Nidec Corp. | 98,800 | 14,644,650 | ||
Obic Co. Ltd. | 76,600 | 10,181,623 | ||
Pan Pacific International Holdings Corp. | 1,121,000 | 18,181,790 | ||
Recruit Holdings Co. Ltd. | 650,400 | 23,578,873 | ||
Shimadzu Corp. | 406,300 | 12,287,899 | ||
Shiseido Co. Ltd. | 192,700 | 13,922,293 | ||
Sysmex Corp. | 166,900 | 11,585,610 | ||
Terumo Corp. | 493,300 | 17,341,345 | ||
235,913,279 | ||||
Netherlands — 4.4% | ||||
Adyen NV(1) | 18,868 | 14,463,941 |
11
Shares | Value | |||
ASML Holding NV | 85,090 | $ | 23,125,979 | |
Koninklijke DSM NV | 181,790 | 23,275,948 | ||
60,865,868 | ||||
Poland — 0.2% | ||||
Bank Polska Kasa Opieki SA | 93,360 | 2,497,863 | ||
Spain — 3.4% | ||||
Cellnex Telecom SA(1) | 604,644 | 25,969,481 | ||
Iberdrola SA | 2,032,060 | 19,984,927 | ||
45,954,408 | ||||
Sweden — 4.7% | ||||
Atlas Copco AB, A Shares | 313,870 | 11,492,597 | ||
Hexagon AB, B Shares | 301,320 | 17,024,206 | ||
Lundin Petroleum AB | 367,800 | 11,347,702 | ||
Swedish Match AB | 174,640 | 8,363,385 | ||
Telefonaktiebolaget LM Ericsson, B Shares | 1,801,030 | 16,252,453 | ||
64,480,343 | ||||
Switzerland — 12.2% | ||||
Lonza Group AG(1) | 64,600 | 21,933,245 | ||
Nestle SA | 443,140 | 46,054,056 | ||
Novartis AG | 274,960 | 25,348,543 | ||
Partners Group Holding AG | 18,300 | 15,427,242 | ||
Sika AG | 82,391 | 14,333,770 | ||
Straumann Holding AG | 12,470 | 11,993,032 | ||
Temenos AG(1) | 85,700 | 12,985,345 | ||
Zurich Insurance Group AG | 46,880 | 18,385,303 | ||
166,460,536 | ||||
Taiwan — 1.1% | ||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 1,535,000 | 15,410,715 | ||
United Kingdom — 9.6% | ||||
ASOS plc(1) | 159,210 | 6,569,638 | ||
AstraZeneca plc | 358,540 | 34,606,514 | ||
B&M European Value Retail SA | 2,552,853 | 12,482,668 | ||
Burberry Group plc | 564,330 | 15,314,444 | ||
Ferguson plc | 124,960 | 10,856,444 | ||
Fevertree Drinks plc | 290,560 | 8,211,682 | ||
London Stock Exchange Group plc | 244,890 | 21,756,877 | ||
Melrose Industries plc | 7,150,270 | 21,211,865 | ||
131,010,132 | ||||
TOTAL COMMON STOCKS (Cost $1,046,680,194) | 1,349,224,820 | |||
TEMPORARY CASH INVESTMENTS — 1.2% | ||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.625% - 2.875%, 11/15/20 - 8/15/28, valued at $14,039,699), in a joint trading account at 1.40%, dated 11/29/19, due 12/2/19 (Delivery value $13,777,674) | 13,776,067 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.375%, 5/15/27, valued at $3,130,046), at 0.65%, dated 11/29/19, due 12/2/19 (Delivery value $3,066,166) | 3,066,000 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $16,842,067) | 16,842,067 |
12
Shares | Value | |||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(3) — 0.8% | ||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $11,472,864) | 11,472,864 | $ | 11,472,864 | |
TOTAL INVESTMENT SECURITIES — 100.5% (Cost $1,074,995,125) | 1,377,539,751 | |||
OTHER ASSETS AND LIABILITIES — (0.5)% | (7,447,438 | ) | ||
TOTAL NET ASSETS — 100.0% | �� | $ | 1,370,092,313 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Information Technology | 18.4 | % |
Health Care | 15.0 | % |
Industrials | 14.9 | % |
Consumer Discretionary | 14.5 | % |
Financials | 12.9 | % |
Consumer Staples | 10.4 | % |
Materials | 5.0 | % |
Energy | 3.1 | % |
Communication Services | 2.8 | % |
Utilities | 1.5 | % |
Cash and Equivalents* | 1.5 | % |
* Includes temporary cash investments, temporary cash investments - securities lending collateral and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
(1) | Non-income producing. |
(2) | Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $11,222,814. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(3) | Investment of cash collateral from securities on loan. At the period end, the aggregate market value of the collateral held by the fund was $11,472,864. |
See Notes to Financial Statements.
13
Statement of Assets and Liabilities |
NOVEMBER 30, 2019 | |||
Assets | |||
Investment securities, at value (cost of $1,063,522,261) — including $11,222,814 of securities on loan | $ | 1,366,066,887 | |
Investment made with cash collateral received for securities on loan, at value (cost of $11,472,864) | 11,472,864 | ||
Total investment securities, at value (cost of $1,074,995,125) | 1,377,539,751 | ||
Cash | 10,037 | ||
Foreign currency holdings, at value (cost of $538,078) | 520,580 | ||
Receivable for investments sold | 2,844,058 | ||
Receivable for capital shares sold | 157,519 | ||
Dividends and interest receivable | 2,156,231 | ||
Securities lending receivable | 6,243 | ||
Other assets | 84,719 | ||
1,383,319,138 | |||
Liabilities | |||
Payable for collateral received for securities on loan | 11,472,864 | ||
Payable for capital shares redeemed | 250,613 | ||
Accrued management fees | 1,278,338 | ||
Distribution and service fees payable | 18,556 | ||
Accrued foreign taxes | 206,454 | ||
13,226,825 | |||
Net Assets | $ | 1,370,092,313 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 1,063,425,591 | |
Distributable earnings | 306,666,722 | ||
$ | 1,370,092,313 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $1,162,998,291 | 94,157,445 | $12.35 | |||
I Class, $0.01 Par Value | $74,687,956 | 6,085,361 | $12.27 | |||
Y Class, $0.01 Par Value | $18,691,259 | 1,521,290 | $12.29 | |||
A Class, $0.01 Par Value | $67,856,982 | 5,450,724 | $12.45* | |||
C Class, $0.01 Par Value | $2,694,417 | 225,071 | $11.97 | |||
R Class, $0.01 Par Value | $6,069,434 | 482,648 | $12.58 | |||
R5 Class, $0.01 Par Value | $6,371 | 519 | $12.28 | |||
R6 Class, $0.01 Par Value | $37,087,603 | 3,020,458 | $12.28 |
See Notes to Financial Statements.
14
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2019 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $2,150,689) | $ | 21,053,240 | |
Interest | 233,959 | ||
Securities lending, net | 39,969 | ||
21,327,168 | |||
Expenses: | |||
Management fees | 15,266,705 | ||
Distribution and service fees: | |||
A Class | 167,503 | ||
C Class | 32,673 | ||
R Class | 28,533 | ||
Directors' fees and expenses | 41,052 | ||
Other expenses | 61,409 | ||
15,597,875 | |||
Net investment income (loss) | 5,729,293 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions (net of foreign tax expenses paid (refunded) of $1,229) | 19,737,926 | ||
Foreign currency translation transactions | (224,854 | ) | |
19,513,072 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments (includes (increase) decrease in accrued foreign taxes of $(155,925)) | 180,028,070 | ||
Translation of assets and liabilities in foreign currencies | (36,742 | ) | |
179,991,328 | |||
Net realized and unrealized gain (loss) | 199,504,400 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 205,233,693 |
See Notes to Financial Statements.
15
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2019 AND NOVEMBER 30, 2018 | ||||||
Increase (Decrease) in Net Assets | November 30, 2019 | November 30, 2018 | ||||
Operations | ||||||
Net investment income (loss) | $ | 5,729,293 | $ | 9,806,107 | ||
Net realized gain (loss) | 19,513,072 | 109,630,662 | ||||
Change in net unrealized appreciation (depreciation) | 179,991,328 | (257,563,094 | ) | |||
Net increase (decrease) in net assets resulting from operations | 205,233,693 | (138,126,325 | ) | |||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (113,411,938 | ) | (76,415,742 | ) | ||
I Class | (6,954,669 | ) | (5,107,583 | ) | ||
Y Class | (673,691 | ) | (2,854 | ) | ||
A Class | (6,300,639 | ) | (4,086,063 | ) | ||
C Class | (380,655 | ) | (324,175 | ) | ||
R Class | (308,126 | ) | (180,431 | ) | ||
R5 Class | (561 | ) | (350 | ) | ||
R6 Class | (3,902,361 | ) | (1,801,202 | ) | ||
Decrease in net assets from distributions | (131,932,640 | ) | (87,918,400 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (60,754,535 | ) | 17,365,423 | |||
Net increase (decrease) in net assets | 12,546,518 | (208,679,302 | ) | |||
Net Assets | ||||||
Beginning of period | 1,357,545,795 | 1,566,225,097 | ||||
End of period | $ | 1,370,092,313 | $ | 1,357,545,795 |
See Notes to Financial Statements.
16
Notes to Financial Statements |
NOVEMBER 30, 2019
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, 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.
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.
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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. 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. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
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.
18
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of November 30, 2019.
Remaining Contractual Maturity of Agreements | ||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||
Securities Lending Transactions(1) | ||||||||||||
Common Stocks | $ | 11,472,864 | — | — | — | $ | 11,472,864 | |||||
Gross amount of recognized liabilities for securities lending transactions | $ | 11,472,864 |
(1) | Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand. |
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, 19% 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
19
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, 2019 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |
Investor Class | 1.050% to 1.500% | 1.17% |
I Class | 0.850% to 1.300% | 0.97% |
Y Class | 0.700% to 1.150% | 0.82% |
A Class | 1.050% to 1.500% | 1.17% |
C Class | 1.050% to 1.500% | 1.17% |
R Class | 1.050% to 1.500% | 1.17% |
R5 Class | 0.850% to 1.300% | 0.97% |
R6 Class | 0.700% to 1.150% | 0.82% |
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, 2019 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 $1,562,127 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, 2019 were $900,525,029 and $1,100,186,305, respectively.
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5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2019 | Year ended November 30, 2018 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 1,250,000,000 | 1,150,000,000 | ||||||||
Sold | 2,936,669 | $ | 32,672,588 | 6,514,994 | $ | 87,319,961 | ||||
Issued in reinvestment of distributions | 11,000,262 | 110,112,626 | 5,636,081 | 74,377,220 | ||||||
Redeemed | (18,952,247 | ) | (213,897,065 | ) | (11,335,729 | ) | (151,348,295 | ) | ||
(5,015,316 | ) | (71,111,851 | ) | 815,346 | 10,348,886 | |||||
I Class/Shares Authorized | 90,000,000 | 80,000,000 | ||||||||
Sold | 1,106,320 | 12,258,681 | 2,352,108 | 31,525,036 | ||||||
Issued in reinvestment of distributions | 671,521 | 6,668,204 | 375,314 | 4,920,195 | ||||||
Redeemed | (1,445,190 | ) | (16,173,218 | ) | (3,575,764 | ) | (46,693,872 | ) | ||
332,651 | 2,753,667 | (848,342 | ) | (10,248,641 | ) | |||||
Y Class/Shares Authorized | 30,000,000 | 25,000,000 | ||||||||
Sold | 1,061,894 | 12,025,226 | 684,641 | 8,989,207 | ||||||
Issued in reinvestment of distributions | 65,166 | 646,443 | 211 | 2,854 | ||||||
Redeemed | (130,199 | ) | (1,497,748 | ) | (160,859 | ) | (1,974,982 | ) | ||
996,861 | 11,173,921 | 523,993 | 7,017,079 | |||||||
A Class/Shares Authorized | 80,000,000 | 70,000,000 | ||||||||
Sold | 923,390 | 10,602,327 | 1,051,613 | 14,187,925 | ||||||
Issued in reinvestment of distributions | 614,961 | 6,217,253 | 301,770 | 4,018,061 | ||||||
Redeemed | (1,526,896 | ) | (17,523,483 | ) | (1,531,409 | ) | (20,651,991 | ) | ||
11,455 | (703,903 | ) | (178,026 | ) | (2,446,005 | ) | ||||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 7,853 | 81,463 | 121,747 | 1,629,831 | ||||||
Issued in reinvestment of distributions | 36,374 | 356,101 | 23,686 | 306,426 | ||||||
Redeemed | (190,670 | ) | (2,084,116 | ) | (276,249 | ) | (3,605,194 | ) | ||
(146,443 | ) | (1,646,552 | ) | (130,816 | ) | (1,668,937 | ) | |||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 338,828 | 3,544,091 | 67,863 | 926,078 | ||||||
Issued in reinvestment of distributions | 28,116 | 287,906 | 12,462 | 167,835 | ||||||
Redeemed | (152,739 | ) | (1,796,153 | ) | (69,684 | ) | (948,193 | ) | ||
214,205 | 2,035,844 | 10,641 | 145,720 | |||||||
R5 Class/Shares Authorized | 20,000,000 | 20,000,000 | ||||||||
Issued in reinvestment of distributions | 57 | 561 | 26 | 350 | ||||||
R6 Class/Shares Authorized | 50,000,000 | 40,000,000 | ||||||||
Sold | 893,061 | 9,948,629 | 2,069,352 | 27,346,479 | ||||||
Issued in reinvestment of distributions | 392,562 | 3,894,212 | 137,501 | 1,801,202 | ||||||
Redeemed | (1,520,322 | ) | (17,099,063 | ) | (1,122,461 | ) | (14,930,710 | ) | ||
(234,699 | ) | (3,256,222 | ) | 1,084,392 | 14,216,971 | |||||
Net increase (decrease) | (3,841,229 | ) | $ | (60,754,535 | ) | 1,277,214 | $ | 17,365,423 |
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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.
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 | ||||||||
Australia | $ | 6,036,454 | $ | 67,553,077 | — | |||
Canada | 12,455,975 | 39,807,851 | — | |||||
China | 42,737,619 | 19,884,682 | — | |||||
Ireland | 8,521,847 | 30,129,134 | — | |||||
Other Countries | — | 1,122,098,181 | — | |||||
Temporary Cash Investments | — | 16,842,067 | — | |||||
Temporary Cash Investments - Securities Lending Collateral | 11,472,864 | — | — | |||||
$ | 81,224,759 | $ | 1,296,314,992 | — |
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing in emerging markets or a significant portion of assets in one country or region may accentuate these risks.
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8. Federal Tax Information
On December 17, 2019, the fund declared and paid a per-share distribution from net realized gains to shareholders of record on December 16, 2019 of $0.0372 for the Investor Class, I Class, Y Class, A Class, C Class, R Class, R5 Class and R6 Class.
On December 17, 2019, the fund declared and paid the following per-share distributions from net investment income to shareholders of record on December 16, 2019:
Investor Class | I Class | Y Class | A Class | C Class | R Class | R5 Class | R6 Class |
$0.0104 | $0.0358 | $0.0548 | — | — | — | $0.0358 | $0.0548 |
The tax character of distributions paid during the years ended November 30, 2019 and November 30, 2018 were as follows:
2019 | 2018 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 13,681,516 | $ | 14,923,298 | ||
Long-term capital gains | $ | 118,251,124 | $ | 72,995,102 |
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 | $ | 1,076,668,049 | |
Gross tax appreciation of investments | $ | 307,639,738 | |
Gross tax depreciation of investments | (6,768,036 | ) | |
Net tax appreciation (depreciation) of investments | 300,871,702 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (287,427 | ) | |
Net tax appreciation (depreciation) | $ | 300,584,275 | |
Undistributed ordinary income | $ | 1,437,982 | |
Accumulated long-term gains | $ | 4,644,465 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
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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 | |||||||||||||||
2019 | $11.83 | 0.05 | 1.66 | 1.71 | (0.12) | (1.07) | (1.19) | $12.35 | 16.82% | 1.18% | 0.43% | 68% | $1,162,998 | ||
2018 | $13.80 | 0.08 | (1.28) | (1.20) | (0.13) | (0.64) | (0.77) | $11.83 | (9.23)% | 1.17% | 0.62% | 69% | $1,173,094 | ||
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 | ||
I Class | |||||||||||||||
2019 | $11.76 | 0.07 | 1.66 | 1.73 | (0.15) | (1.07) | (1.22) | $12.27 | 17.09% | 0.98% | 0.63% | 68% | $74,688 | ||
2018 | $13.74 | 0.10 | (1.28) | (1.18) | (0.16) | (0.64) | (0.80) | $11.76 | (9.12)% | 0.97% | 0.82% | 69% | $67,677 | ||
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 | ||
Y Class | |||||||||||||||
2019 | $11.78 | 0.08 | 1.66 | 1.74 | (0.16) | (1.07) | (1.23) | $12.29 | 17.27% | 0.83% | 0.78% | 68% | $18,691 | ||
2018 | $13.75 | 0.15 | (1.30) | (1.15) | (0.18) | (0.64) | (0.82) | $11.78 | (8.95)% | 0.82% | 0.97% | 69% | $6,177 | ||
2017(3) | $11.48 | 0.09 | 2.18 | 2.27 | — | — | — | $13.75 | 19.77% | 0.82%(4) | 1.14%(4) | 57%(5) | $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 | |||||||||||||||
2019 | $11.91 | 0.02 | 1.69 | 1.71 | (0.10) | (1.07) | (1.17) | $12.45 | 16.56% | 1.43% | 0.18% | 68% | $67,857 | ||
2018 | $13.88 | 0.05 | (1.29) | (1.24) | (0.09) | (0.64) | (0.73) | $11.91 | (9.45)% | 1.42% | 0.37% | 69% | $64,784 | ||
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 | ||
C Class | |||||||||||||||
2019 | $11.49 | (0.06) | 1.62 | 1.56 | (0.01) | (1.07) | (1.08) | $11.97 | 15.66% | 2.18% | (0.57)% | 68% | $2,694 | ||
2018 | $13.42 | (0.04) | (1.25) | (1.29) | — | (0.64) | (0.64) | $11.49 | (10.12)% | 2.17% | (0.38)% | 69% | $4,268 | ||
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 | ||
R Class | |||||||||||||||
2019 | $12.02 | (0.01) | 1.71 | 1.70 | (0.07) | (1.07) | (1.14) | $12.58 | 16.17% | 1.68% | (0.07)% | 68% | $6,069 | ||
2018 | $14.00 | 0.02 | (1.30) | (1.28) | (0.06) | (0.64) | (0.70) | $12.02 | (9.68)% | 1.67% | 0.12% | 69% | $3,226 | ||
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 |
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) | |||
R5 Class | |||||||||||||||
2019 | $11.77 | 0.07 | 1.66 | 1.73 | (0.15) | (1.07) | (1.22) | $12.28 | 17.09% | 0.98% | 0.63% | 68% | $6 | ||
2018 | $13.73 | 0.11 | (1.27) | (1.16) | (0.16) | (0.64) | (0.80) | $11.77 | (9.03)% | 0.97% | 0.82% | 69% | $5 | ||
2017(3) | $11.48 | 0.08 | 2.17 | 2.25 | — | — | — | $13.73 | 19.60% | 0.97%(4) | 0.99%(4) | 57%(5) | $6 | ||
R6 Class | |||||||||||||||
2019 | $11.77 | 0.09 | 1.65 | 1.74 | (0.16) | (1.07) | (1.23) | $12.28 | 17.28% | 0.83% | 0.78% | 68% | $37,088 | ||
2018 | $13.75 | 0.14 | (1.29) | (1.15) | (0.19) | (0.64) | (0.83) | $11.77 | (8.93)% | 0.82% | 0.97% | 69% | $38,315 | ||
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 |
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) | April 10, 2017 (commencement of sale) through November 30, 2017. |
(4) | Annualized. |
(5) | 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.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of International Growth Fund, one of the funds constituting the American Century World Mutual Funds, Inc. (the "Fund"), as of November 30, 2019, 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, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of International Growth Fund of the American Century World Mutual Funds, Inc. as of November 30, 2019, 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.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of November 30, 2019, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2020
We have served as the auditor of one or more American Century investment companies since 1997.
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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 Jonathan S. Thomas, 16; and Stephen E. Yates, 8) 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 | 66 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 66 | None |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 66 | None |
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 66 | None |
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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 | |||||
Lynn Jenkins (1963) | Director | Since 2019 | United States Representative, U.S. House of Representatives (2009 to 2018) | 66 | MGP Ingredients, Inc. |
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 66 | None |
John R. Whitten (1946) | Director | Since 2008 | Retired | 66 | Onto Innovation Inc.; Rudolph Technologies, Inc. (2006 to 2019) |
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 81 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director | 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 | 125 | 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 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds. 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 |
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Chief Operating Officer, ACC (2012-2015). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries |
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Investment Operations and Investment Accounting, ACS (2000 to present) |
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). 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 since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) |
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 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 26, 2019, 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; |
• | any economies of scale associated with the Advisor’s management of the Fund and other accounts; |
• | services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; 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 provided by the Directors to the Advisor 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 connection with their review, the Directors did not identify any single factor as being all-important or
31
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.
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 investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor 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 ten-year period and below its benchmark for the one-, three-, and five-year periods 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, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading
32
activities, portfolio valuation services, auditing services, and legal and operational compliance activities. 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, 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 Investment Company 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. 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
33
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 such 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 may receive 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
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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 or as an exhibit to its reports on Form N-PORT. The fund’s Forms N-Q and Form N-PORT reports are available on the SEC’s website at sec.gov. 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 funds hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended November 30, 2019.
The fund hereby designates $118,251,124, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended November 30, 2019.
For the fiscal year ended November 30, 2019, the fund intends to pass through to shareholders foreign source income of $23,193,140 and foreign taxes paid of $2,031,321, 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, 2019 are $0.2091 and $0.0183, respectively.
36
Notes |
37
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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91027 2001 |
![acihorizblkd32.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/acihorizblkd32.jpg)
Annual Report | |
November 30, 2019 | |
International Opportunities Fund | |
Investor Class (AIOIX) | |
I Class (ACIOX) | |
A Class (AIVOX) | |
C Class (AIOCX) | |
R Class (AIORX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 | ||
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 |
![jthomasrev0514a01.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/jthomasrev0514a01.jpg)
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2019. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional investment and market insights, please visit our website, americancentury.com.
Monetary Policy Pivot Improved Investor Sentiment
The reporting period began on a challenging note. Mounting concerns about slowing global economic and earnings growth, the U.S.-China trade dispute and Federal Reserve (Fed) policy soured investor sentiment, driving global stocks lower. After raising rates in September 2018, the Fed hiked again in December and delivered a surprisingly bullish 2019 rate-hike outlook, which worsened the year-end sell-off among global stocks.
However, a key policy pivot from the Fed in early 2019 helped improve investor attitudes worldwide. The central bank abruptly ended its rate-hike campaign and adopted a dovish tone amid weaker global growth and inflation. Similar economic concerns kept central banks in Europe and Japan maintaining or expanding their accommodative policies. Additionally, investors’ earlier worst-case fears about trade and corporate earnings generally eased, which also aided stocks.
Volatility reemerged in the spring, when a Brexit stalemate prompted U.K. Prime Minister Theresa May to resign. This news reignited global fears of a no-deal Brexit. However, those worries subsided as Boris Johnson, a staunch Brexit advocate, succeeded May. Meanwhile, U.S.-China trade policy continued to fuel bouts of volatility. In July, growing concerns about global economic risks encouraged the Fed to cut short-term interest rates for the first time in 10 years. The Fed followed up with additional rate cuts in September and October. Fed easing and a lower interest rate backdrop helped restore investor optimism.
Overall, broad global stock indices advanced for the 12-month period. U.S. stocks generally outperformed non-U.S. stocks, while developed markets broadly outperformed emerging markets.
Looking ahead, we expect volatility to remain a formidable factor as investors react to global growth and trade trends, central bank policy and geopolitical developments. We believe this scenario underscores the importance of using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
![image48a16.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/image48a16.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of November 30, 2019 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | AIOIX | 12.88% | 6.91% | 8.92% | — | 6/1/01 |
MSCI ACWI ex-U.S. Small Cap Growth Index | — | 11.86% | 6.38% | 7.05% | — | — |
I Class | ACIOX | 13.06% | 7.09% | 9.12% | — | 1/9/03 |
A Class | AIVOX | 3/1/10 | ||||
No sales charge | 12.60% | 6.64% | — | 8.72% | ||
With sales charge | 6.16% | 5.39% | — | 8.06% | ||
C Class | AIOCX | 11.77% | 5.83% | — | 7.92% | 3/1/10 |
R Class | AIORX | 12.33% | 6.35% | — | 8.45% | 3/1/10 |
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.
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, 2009 |
Performance for other share classes will vary due to differences in fee structure. |
![chart-e55db91c93b552f4814a07.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/chart-e55db91c93b552f4814a07.jpg)
Value on November 30, 2019 | |
Investor Class — $23,507 | |
MSCI ACWI ex-U.S. Small Cap Growth Index — $19,779 | |
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 |
1.47% | 1.27% | 1.72% | 2.47% | 1.97% |
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: Trevor Gurwich, Federico Laffan and Pratik Patel
Performance Summary
International Opportunities returned 12.88%* for the fiscal year ended November 30, 2019. By comparison, the MSCI ACWI ex-U.S. Small Cap Growth Index (the fund’s benchmark) returned 11.86%.
Non-U.S. small-cap stocks rose over the 12-month period, as positive earnings news and a shift to more accommodative monetary policy from major central banks helped lift investor confidence, more than offsetting uncertainty over the global economic outlook and trade policy. Non-U.S. small-cap stocks lagged their large-cap counterparts. Stock selection drove the fund’s strong relative outperformance, especially in the information technology and financials sectors. An overweight in information technology was also beneficial. Stock selection in materials and consumer staples detracted from relative performance. From a geographic standpoint, stock selection in China contributed, while stock selection in Canada dampened relative results.
Information Technology Companies Were Top Contributors
In information technology, we continued to focus on companies capitalizing on the growth in cloud computing, e-commerce, electronic payments and data centers, and a number were strong contributors to our relative results. Lasertec, a standout performer, supplies advanced laser equipment used in semiconductor manufacturing. The stock rose as the company reported strong revenue and earnings growth, aided in part by an improving outlook for the semiconductor industry. Software company Globant was another notable contributor, and it reported strong results as it capitalized on growth in end-user markets such as analytics and mobile and cloud applications.
Several China-based holdings were also prominent contributors. These included athletic footwear and sportswear manufacturer Li Ning, which we believe is well positioned to benefit from rising disposable incomes and market penetration in China. Li Ning’s expanding store base and brand strength helped drive earnings growth and stock performance. A-Living Services, another contributor, provides property management services in China, where it is capitalizing on its acquisition strategy to boost its revenue and earnings growth.
Mining Company was a Notable Detractor
Copper and zinc mining company Hudbay Minerals detracted from relative performance in the materials sector. After strong performance early in 2019, the stock declined in the second quarter after weaker copper prices and lower production resulted in a first-quarter loss. The company’s revenue growth also missed Wall Street expectations. As global economic uncertainty added to uncertainty for the company’s near-term outlook, we sold the stock in the third quarter.
Elsewhere in the portfolio, Canada Goose Holdings was a prominent detractor. The stock fell sharply in the second quarter after the luxury down coats manufacturer reported weaker-than-expected revenue growth. More recently, concerns over its wholesale business pressured the stock, even though its third-quarter results beat expectations. We held onto the stock as we continue to believe in the company’s long-term revenue growth potential, as it expands its store base and broadens into new product areas such as footwear. Cosmos Pharmaceutical, another
*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
prominent detractor, owns a chain of drugstores, primarily in Japan. The stock declined due to disappointing profits growth, as higher operating expenses weighed on its margins.
Outlook
The fund continues to invest in non-U.S. small- and mid-cap companies we believe are demonstrating accelerating and sustainable growth. Our stock selection process continues to drive our sector and country allocations. For example, we added to our weighting in information technology, our largest sector overweight, as we identified new holdings capitalizing on long-term drivers such as the expansions in cloud computing, electronic payments and 5G communications. We also moved to a notable overweight in industrials. We have focused on industrial companies we believe may offer sustainable and accelerating earnings growth in industries such as commercial services and supplies and machinery. Materials ended the period as our largest sector underweight due to concerns over increased global economic uncertainty and its impact on earnings growth. Stock selection also led to a relative underweight in communication services.
From a regional standpoint, our bottom-up stock selection led to an overweight in Europe. While regional economic growth is moderating, the outlook for European small-cap earnings remains healthy. We added exposure to the emerging markets, where the portfolio is now modestly overweight, as we have found compelling opportunities in select countries, including China. The fund is underweight in Asia, including Japan, due in part to uncertainty over the economic effects of ongoing trade conflicts and Japan’s recent consumer tax increase.
6
Fund Characteristics |
NOVEMBER 30, 2019 | |
Top Ten Holdings | % of net assets |
Intermediate Capital Group plc | 1.9% |
GDS Holdings Ltd. ADR | 1.8% |
Loomis AB, B Shares | 1.7% |
WNS Holdings Ltd. ADR | 1.6% |
A-Living Services Co. Ltd., H Shares | 1.6% |
HelloFresh SE | 1.4% |
Seven Group Holdings Ltd. | 1.4% |
Li Ning Co. Ltd. | 1.4% |
SOITEC | 1.3% |
GSX Techedu, Inc. ADR | 1.3% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.5% |
Rights | —* |
Total Equity Exposure | 99.5% |
Temporary Cash Investments | 0.3% |
Temporary Cash Investments - Securities Lending Collateral | 1.1% |
Other Assets and Liabilities | (0.9)% |
*Category is less than 0.05% of total net assets. | |
Investments by Country | % of net assets |
Japan | 18.3% |
United Kingdom | 13.9% |
China | 7.9% |
Canada | 7.3% |
Germany | 6.6% |
Sweden | 6.4% |
Taiwan | 5.0% |
France | 4.9% |
Australia | 3.6% |
Switzerland | 3.6% |
Brazil | 3.1% |
Norway | 2.6% |
India | 2.6% |
Netherlands | 2.0% |
Other Countries | 11.7% |
Cash and Equivalents* | 0.5% |
*Includes temporary cash investments, temporary cash investments - securities lending collateral 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, 2019 to November 30, 2019.
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 6/1/19 | Ending Account Value 11/30/19 | Expenses Paid During Period(1) 6/1/19 - 11/30/19 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,113.90 | $7.47 | 1.41% |
I Class | $1,000 | $1,114.80 | $6.41 | 1.21% |
A Class | $1,000 | $1,112.70 | $8.79 | 1.66% |
C Class | $1,000 | $1,107.10 | $12.73 | 2.41% |
R Class | $1,000 | $1,110.40 | $10.10 | 1.91% |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.00 | $7.13 | 1.41% |
I Class | $1,000 | $1,019.00 | $6.12 | 1.21% |
A Class | $1,000 | $1,016.75 | $8.39 | 1.66% |
C Class | $1,000 | $1,012.99 | $12.16 | 2.41% |
R Class | $1,000 | $1,015.49 | $9.65 | 1.91% |
(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, 2019
Shares | Value | |||
COMMON STOCKS — 99.5% | ||||
Argentina — 0.7% | ||||
Globant SA(1) | 36,990 | $ | 3,957,930 | |
Australia — 3.6% | ||||
Afterpay Touch Group Ltd.(1) | 236,492 | 5,050,869 | ||
Breville Group Ltd. | 147,461 | 1,716,969 | ||
Saracen Mineral Holdings Ltd.(1) | 2,002,895 | 4,170,756 | ||
Seven Group Holdings Ltd.(2) | 638,081 | 8,284,748 | ||
WiseTech Global Ltd.(2) | 112,560 | 2,075,575 | ||
21,298,917 | ||||
Belgium — 1.7% | ||||
Argenx SE(1) | 42,301 | 6,285,828 | ||
Barco NV | 15,648 | 3,609,977 | ||
9,895,805 | ||||
Brazil — 3.1% | ||||
Azul SA ADR(1) | 80,027 | 2,980,205 | ||
Cia de Locacao das Americas | 1,294,500 | 5,289,664 | ||
Notre Dame Intermedica Participacoes SA | 389,600 | 5,189,207 | ||
Randon SA Implementos e Participacoes Preference Shares | 1,804,300 | 4,577,127 | ||
18,036,203 | ||||
Canada — 7.3% | ||||
ATS Automation Tooling Systems, Inc.(1) | 200,229 | 2,968,086 | ||
Badger Daylighting Ltd.(2) | 44,858 | 1,225,887 | ||
BRP, Inc. | 124,919 | 6,205,981 | ||
Canada Goose Holdings, Inc.(1) | 89,976 | 3,432,584 | ||
Descartes Systems Group, Inc. (The)(1) | 116,242 | 4,976,799 | ||
ECN Capital Corp. | 806,761 | 2,702,768 | ||
Element Fleet Management Corp. | 166,826 | 1,439,303 | ||
FirstService Corp. | 48,900 | 4,694,886 | ||
Gibson Energy, Inc. | 315,356 | 5,916,338 | ||
Kirkland Lake Gold Ltd.(2) | 95,089 | 3,985,964 | ||
TFI International, Inc. | 156,229 | 5,151,570 | ||
42,700,166 | ||||
China — 7.9% | ||||
A-Living Services Co. Ltd., H Shares | 2,831,000 | 9,133,423 | ||
Bosideng International Holdings Ltd. | 6,740,000 | 3,227,540 | ||
GDS Holdings Ltd. ADR(1) | 230,592 | 10,796,317 | ||
GSX Techedu, Inc. ADR(1) | 439,362 | 7,728,378 | ||
Li Ning Co. Ltd. | 2,548,000 | 8,171,585 | ||
Zhongsheng Group Holdings Ltd. | 2,071,000 | 7,342,275 | ||
46,399,518 | ||||
Finland — 1.0% | ||||
Valmet Oyj | 261,902 | 5,858,375 |
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Shares | Value | |||
France — 4.9% | ||||
Alten SA | 44,749 | $ | 5,165,942 | |
Cie Plastic Omnium SA | 167,274 | 4,540,803 | ||
Euronext NV | 72,620 | 5,483,055 | ||
Korian SA | 131,816 | 5,796,000 | ||
SOITEC(1) | 73,423 | 7,759,343 | ||
28,745,143 | ||||
Germany — 6.6% | ||||
Evotec SE(1)(2) | 150,015 | 3,324,383 | ||
HelloFresh SE(1) | 424,177 | 8,441,221 | ||
Isra Vision AG | 64,030 | 2,734,835 | ||
MorphoSys AG(1) | 50,469 | 6,236,729 | ||
Rheinmetall AG | 35,469 | 3,776,907 | ||
Sixt SE | 30,217 | 2,861,289 | ||
Stroeer SE & Co. KGaA | 58,564 | 4,577,913 | ||
Varta AG(1) | 55,092 | 7,041,916 | ||
38,995,193 | ||||
Hong Kong — 1.9% | ||||
Ausnutria Dairy Corp. Ltd.(1) | 2,039,000 | 2,531,440 | ||
Man Wah Holdings Ltd. | 3,692,400 | 2,665,596 | ||
Melco International Development Ltd. | 580,000 | 1,422,801 | ||
Minth Group Ltd. | 1,230,000 | 4,227,390 | ||
10,847,227 | ||||
India — 2.6% | ||||
Bata India Ltd. | 195,338 | 4,435,161 | ||
Indraprastha Gas Ltd. | 243,280 | 1,401,143 | ||
WNS Holdings Ltd. ADR(1) | 146,652 | 9,256,674 | ||
15,092,978 | ||||
Indonesia — 0.7% | ||||
Bank Tabungan Pensiunan Nasional Syariah Tbk PT(1) | 15,459,800 | 4,338,917 | ||
Israel — 1.1% | ||||
Kornit Digital Ltd.(1)(2) | 195,538 | 6,667,846 | ||
Italy — 1.9% | ||||
Amplifon SpA | 179,488 | 5,253,173 | ||
Autogrill SpA | 176,220 | 1,882,744 | ||
FinecoBank Banca Fineco SpA | 302,318 | 3,748,154 | ||
10,884,071 | ||||
Japan — 18.3% | ||||
Anritsu Corp. | 358,600 | 6,830,605 | ||
Ariake Japan Co. Ltd. | 51,500 | 3,672,132 | ||
Aruhi Corp. | 245,100 | 5,574,229 | ||
Cosmos Pharmaceutical Corp. | 27,300 | 5,505,585 | ||
Fancl Corp. | 125,600 | 3,354,313 | ||
Fuji Soft, Inc. | 57,800 | 2,282,108 | ||
GMO Payment Gateway, Inc. | 63,000 | 4,468,141 | ||
Harmonic Drive Systems, Inc. | 60,700 | 2,638,023 | ||
KH Neochem Co. Ltd. | 91,400 | 2,079,337 |
11
Shares | Value | |||
Kobe Bussan Co. Ltd. | 183,200 | $ | 5,683,092 | |
Lasertec Corp. | 87,600 | 7,566,185 | ||
Mabuchi Motor Co. Ltd. | 88,000 | 3,359,398 | ||
Nabtesco Corp. | 197,500 | 6,078,599 | ||
Nihon Kohden Corp. | 130,400 | 3,536,057 | ||
Nihon M&A Center, Inc. | 200,700 | 6,686,195 | ||
Nippon Gas Co. Ltd. | 156,700 | 4,955,202 | ||
Orix JREIT, Inc. | 2,080 | 4,573,860 | ||
Pressance Corp. | 275,700 | 4,427,964 | ||
SCSK Corp. | 96,400 | 5,053,951 | ||
SHIFT, Inc.(1) | 50,200 | 3,606,335 | ||
SHO-BOND Holdings Co. Ltd. | 120,000 | 4,650,745 | ||
Trust Tech, Inc. | 290,800 | 3,614,249 | ||
UT Group Co. Ltd. | 254,000 | 7,210,539 | ||
107,406,844 | ||||
Netherlands — 2.0% | ||||
IMCD NV | 29,502 | 2,452,007 | ||
InterXion Holding NV(1) | 52,593 | 4,472,509 | ||
Takeaway.com NV(1)(2) | 53,327 | 4,792,176 | ||
11,716,692 | ||||
Norway — 2.6% | ||||
Bakkafrost P/F | 94,575 | 6,335,257 | ||
Subsea 7 SA | 279,974 | 2,925,544 | ||
TGS NOPEC Geophysical Co. ASA | 208,333 | 5,918,977 | ||
15,179,778 | ||||
Poland — 0.7% | ||||
Dino Polska SA(1) | 126,302 | 4,351,258 | ||
South Korea — 1.4% | ||||
Douzone Bizon Co. Ltd. | 78,183 | 4,726,128 | ||
Studio Dragon Corp.(1) | 53,083 | 3,424,565 | ||
8,150,693 | ||||
Sweden — 6.4% | ||||
AAK AB | 315,082 | 5,755,604 | ||
Elekta AB, B Shares | 230,023 | 2,885,209 | ||
Embracer Group AB(1)(2) | 523,522 | 3,704,177 | ||
Fabege AB | 342,045 | 5,346,167 | ||
Fastighets AB Balder, B Shares(1) | 152,723 | 6,361,546 | ||
Lindab International AB | 324,971 | 3,860,812 | ||
Loomis AB, B Shares | 235,863 | 9,845,502 | ||
37,759,017 | ||||
Switzerland — 3.6% | ||||
Georg Fischer AG | 4,220 | 4,132,051 | ||
Landis+Gyr Group AG(1) | 53,840 | 5,496,069 | ||
SIG Combibloc Group AG(1) | 348,691 | 4,825,169 | ||
Tecan Group AG | 25,279 | 6,790,014 | ||
21,243,303 | ||||
Taiwan — 5.0% | ||||
Accton Technology Corp. | 755,000 | 3,935,645 |
12
Shares | Value | |||
Airtac International Group | 340,000 | $ | 4,928,916 | |
Chailease Holding Co. Ltd. | 1,398,786 | 6,266,478 | ||
Macronix International | 4,139,000 | 4,484,334 | ||
Merida Industry Co. Ltd. | 1,064,000 | 6,107,583 | ||
Nien Made Enterprise Co. Ltd. | 407,000 | 3,714,863 | ||
29,437,819 | ||||
Turkey — 0.6% | ||||
Ulker Biskuvi Sanayi AS(1) | 850,738 | 3,203,083 | ||
United Kingdom — 13.9% | ||||
Abcam plc | 72,038 | 1,243,735 | ||
Avast plc | 1,138,167 | 6,587,832 | ||
AVEVA Group plc | 97,757 | 5,758,316 | ||
Bellway plc | 99,506 | 4,296,346 | ||
Dechra Pharmaceuticals plc | 85,984 | 3,149,752 | ||
Electrocomponents plc | 873,640 | 7,378,858 | ||
Fevertree Drinks plc | 60,154 | 1,700,047 | ||
Grafton Group plc | 532,154 | 5,763,992 | ||
Hikma Pharmaceuticals plc | 142,989 | 3,540,528 | ||
HomeServe plc | 381,715 | 5,946,920 | ||
Intermediate Capital Group plc | 556,379 | 11,001,432 | ||
Moneysupermarket.com Group plc | 331,048 | 1,456,726 | ||
Network International Holdings plc(1) | 471,575 | 3,530,943 | ||
Nomad Foods Ltd.(1) | 254,229 | 5,338,809 | ||
Rotork plc | 742,932 | 3,147,096 | ||
Trainline plc(1) | 865,250 | 5,220,230 | ||
UNITE Group plc (The) | 393,625 | 6,365,001 | ||
81,426,563 | ||||
TOTAL COMMON STOCKS (Cost $492,057,758) | 583,593,339 | |||
RIGHTS† | ||||
Australia† | ||||
Saracen Mineral Holdings Ltd.(1) | 482,434 | 42,421 | ||
Norway† | ||||
Bakkafrost P/F(1) | 2,695 | 34,495 | ||
TOTAL RIGHTS (Cost $—) | 76,916 | |||
TEMPORARY CASH INVESTMENTS — 0.3% | ||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.625% - 2.875%, 11/15/20 - 8/15/28, valued at $1,464,430), in a joint trading account at 1.40%, dated 11/29/19, due 12/2/19 (Delivery value $1,437,100) | 1,436,932 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.375%, 5/15/27, valued at $329,754), at 0.65%, dated 11/29/19, due 12/2/19 (Delivery value $319,017) | 319,000 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $1,755,932) | 1,755,932 | |||
13
Shares | Value | |||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(3) — 1.1% | ||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $6,594,141) | 6,594,141 | $ | 6,594,141 | |
TOTAL INVESTMENT SECURITIES — 100.9% (Cost $500,407,831) | 592,020,328 | |||
OTHER ASSETS AND LIABILITIES — (0.9)% | (5,076,211 | ) | ||
TOTAL NET ASSETS — 100.0% | $ | 586,944,117 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Industrials | 23.6 | % |
Information Technology | 22.6 | % |
Consumer Discretionary | 16.4 | % |
Health Care | 9.1 | % |
Consumer Staples | 8.1 | % |
Financials | 6.9 | % |
Real Estate | 4.7 | % |
Materials | 2.6 | % |
Energy | 2.5 | % |
Communication Services | 2.0 | % |
Utilities | 1.0 | % |
Cash and Equivalents* | 0.5 | % |
*Includes temporary cash investments, temporary cash investments - securities lending collateral and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
†Category is less than 0.05% of total net assets.
(1) | Non-income producing. |
(2) | Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $18,140,380. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(3) | Investment of cash collateral from securities on loan. At the period end, the aggregate market value of the collateral held by the fund was $19,089,415, which includes securities collateral of $12,495,274. |
See Notes to Financial Statements.
14
Statement of Assets and Liabilities |
NOVEMBER 30, 2019 | |||
Assets | |||
Investment securities, at value (cost of $493,813,690) — including $18,140,380 of securities on loan | $ | 585,426,187 | |
Investment made with cash collateral received for securities on loan, at value (cost of $6,594,141) | 6,594,141 | ||
Total investment securities, at value (cost of $500,407,831) | 592,020,328 | ||
Cash | 1,851 | ||
Foreign currency holdings, at value (cost of $16,216) | 16,268 | ||
Receivable for investments sold | 804,352 | ||
Receivable for capital shares sold | 1,435,851 | ||
Dividends and interest receivable | 1,081,728 | ||
Securities lending receivable | 25,202 | ||
Other assets | 156,030 | ||
595,541,610 | |||
Liabilities | |||
Payable for collateral received for securities on loan | 6,594,141 | ||
Payable for investments purchased | 1,247,706 | ||
Payable for capital shares redeemed | 97,989 | ||
Accrued management fees | 654,768 | ||
Distribution and service fees payable | 2,889 | ||
8,597,493 | |||
Net Assets | $ | 586,944,117 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 543,241,736 | |
Distributable earnings | 43,702,381 | ||
$ | 586,944,117 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $499,296,146 | 49,104,948 | $10.17 | |||
I Class, $0.01 Par Value | $78,575,092 | 7,637,742 | $10.29 | |||
A Class, $0.01 Par Value | $6,067,112 | 602,567 | $10.07* | |||
C Class, $0.01 Par Value | $1,043,574 | 108,577 | $9.61 | |||
R Class, $0.01 Par Value | $1,962,193 | 197,008 | $9.96 |
*Maximum offering price $10.68 (net asset value divided by 0.9425).
See Notes to Financial Statements.
15
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2019 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $726,318) | $ | 7,442,803 | |
Securities lending, net | 125,945 | ||
Interest | 45,585 | ||
7,614,333 | |||
Expenses: | |||
Management fees | 6,261,979 | ||
Distribution and service fees: | |||
A Class | 16,011 | ||
C Class | 12,869 | ||
R Class | 8,100 | ||
Directors' fees and expenses | 13,328 | ||
Other expenses | 32,074 | ||
6,344,361 | |||
Fees waived(1) | (10,913 | ) | |
6,333,448 | |||
Net investment income (loss) | 1,280,885 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (21,017,439 | ) | |
Foreign currency translation transactions | (221,733 | ) | |
(21,239,172 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 73,526,596 | ||
Translation of assets and liabilities in foreign currencies | (79,486 | ) | |
73,447,110 | |||
Net realized and unrealized gain (loss) | 52,207,938 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 53,488,823 |
(1) | Amount consists of $7,246, $3,101, $410, $75 and $81 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, 2019 AND NOVEMBER 30, 2018 | ||||||
Increase (Decrease) in Net Assets | November 30, 2019 | November 30, 2018 | ||||
Operations | ||||||
Net investment income (loss) | $ | 1,280,885 | $ | 200,958 | ||
Net realized gain (loss) | (21,239,172 | ) | 3,045,274 | |||
Change in net unrealized appreciation (depreciation) | 73,447,110 | (38,683,493 | ) | |||
Net increase (decrease) in net assets resulting from operations | 53,488,823 | (35,437,261 | ) | |||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (4,040,078 | ) | (15,648,809 | ) | ||
I Class | (1,741,335 | ) | (1,327,425 | ) | ||
A Class | (235,473 | ) | (1,166,105 | ) | ||
C Class | (37,726 | ) | (206,063 | ) | ||
R Class | (37,055 | ) | (86,554 | ) | ||
Decrease in net assets from distributions | (6,091,667 | ) | (18,434,956 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 344,439,095 | 58,663,854 | ||||
Net increase (decrease) in net assets | 391,836,251 | 4,791,637 | ||||
Net Assets | ||||||
Beginning of period | 195,107,866 | 190,316,229 | ||||
End of period | $ | 586,944,117 | $ | 195,107,866 |
See Notes to Financial Statements.
17
Notes to Financial Statements |
NOVEMBER 30, 2019
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, 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. 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.
18
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. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
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.
19
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of November 30, 2019.
Remaining Contractual Maturity of Agreements | ||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||
Securities Lending Transactions(1) | ||||||||||||
Common Stocks | $ | 6,594,141 | — | — | — | $ | 6,594,141 | |||||
Gross amount of recognized liabilities for securities lending transactions | $ | 6,594,141 |
(1) | Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand. |
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). From December 1, 2018 through March 21, 2019, the investment advisor agreed to waive 0.02% of the fund's management fee. Effective March 22, 2019, the investment advisor terminated the waiver and decreased the annual management fee by 0.20%. The impact of this waiver to the ratio of operating expenses to average net assets was less than 0.005% for each class for the period ended November 30, 2019.
20
The management fee schedule range and the effective annual management fee for each class for the period ended November 30, 2019 are as follows:
Management Fee Schedule Range* | Effective Annual Management Fee | |
Investor Class | 1.200% to 1.550% | 1.45% |
I Class | 1.000% to 1.350% | 1.25% |
A Class | 1.200% to 1.550% | 1.45% |
C Class | 1.200% to 1.550% | 1.45% |
R Class | 1.200% to 1.550% | 1.45% |
*Prior to March 22, 2019, the management fee schedule range was 1.400% to 1.550% for Investor Class, A
Class, C Class and R Class and 1.200% to 1.350% for I Class.
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, 2019 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 $702,532 and $348,474, respectively. The effect of interfund transactions on the Statement of Operations was $(543) in net realized gain (loss) on investment transactions.
4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments and in kind transactions, for the period ended November 30, 2019 were $555,518,473 and $592,434,156, respectively.
For the period ended November 30, 2019, the fund incurred net realized gains of $1,144,026 from redemptions in kind. A redemption in kind occurs when a fund delivers securities from its portfolio in lieu of cash as payment to a redeeming shareholder.
21
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2019 | Year ended November 30, 2018 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 670,000,000 | 180,000,000 | ||||||||
Sold | 1,797,671 | $ | 16,830,632 | 6,497,321 | $ | 74,175,520 | ||||
Issued in connection with reorganization (Note 9) | 40,955,922 | 383,355,227 | — | — | ||||||
Issued in reinvestment of distributions | 451,144 | 3,798,635 | 1,361,687 | 15,058,764 | ||||||
Redeemed | (8,147,671 | ) | (76,163,088 | ) | (7,504,994 | ) | (82,714,974 | ) | ||
35,057,066 | 327,821,406 | 354,014 | 6,519,310 | |||||||
I Class/Shares Authorized | 95,000,000 | 50,000,000 | ||||||||
Sold | 5,139,468 | 48,841,767 | 6,668,295 | 75,104,632 | ||||||
Issued in connection with reorganization (Note 9) | 421,079 | 3,982,794 | — | — | ||||||
Issued in reinvestment of distributions | 199,378 | 1,694,714 | 116,500 | 1,312,375 | ||||||
Redeemed | (3,762,721 | ) | (35,422,411 | ) | (2,016,478 | ) | (22,295,992 | ) | ||
1,997,204 | 19,096,864 | 4,768,317 | 54,121,015 | |||||||
A Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 158,713 | 1,467,674 | 438,179 | 4,956,079 | ||||||
Issued in connection with reorganization (Note 9) | 177,679 | 1,649,159 | — | — | ||||||
Issued in reinvestment of distributions | 27,875 | 233,036 | 105,230 | 1,155,579 | ||||||
Redeemed | (641,483 | ) | (5,872,162 | ) | (749,566 | ) | (8,232,465 | ) | ||
(277,216 | ) | (2,522,293 | ) | (206,157 | ) | (2,120,807 | ) | |||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 3,889 | 34,345 | 87,658 | 947,875 | ||||||
Issued in connection with reorganization (Note 9) | 51,598 | 459,815 | — | — | ||||||
Issued in reinvestment of distributions | 4,318 | 34,674 | 18,225 | 193,355 | ||||||
Redeemed | (110,458 | ) | (984,176 | ) | (160,969 | ) | (1,683,628 | ) | ||
(50,653 | ) | (455,342 | ) | (55,086 | ) | (542,398 | ) | |||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 70,350 | 647,214 | 70,738 | 783,772 | ||||||
Issued in connection with reorganization (Note 9) | 15,327 | 140,954 | — | — | ||||||
Issued in reinvestment of distributions | 4,470 | 37,055 | 7,945 | 86,554 | ||||||
Redeemed | (35,273 | ) | (326,763 | ) | (16,675 | ) | (183,592 | ) | ||
54,874 | 498,460 | 62,008 | 686,734 | |||||||
Net increase (decrease) | 36,781,275 | $ | 344,439,095 | 4,923,096 | $ | 58,663,854 |
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.
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 | $ | 3,957,930 | — | — | ||||
Brazil | 2,980,205 | $ | 15,055,998 | — | ||||
Canada | 3,432,584 | 39,267,582 | — | |||||
China | 18,524,695 | 27,874,823 | — | |||||
India | 9,256,674 | 5,836,304 | — | |||||
Israel | 6,667,846 | — | — | |||||
Netherlands | 4,472,509 | 7,244,183 | — | |||||
United Kingdom | 5,338,809 | 76,087,754 | — | |||||
Other Countries | — | 357,595,443 | — | |||||
Rights | — | 76,916 | — | |||||
Temporary Cash Investments | — | 1,755,932 | — | |||||
Temporary Cash Investments - Securities Lending Collateral | 6,594,141 | — | — | |||||
$ | 61,225,393 | $ | 530,794,935 | — |
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing in emerging markets or a significant portion of assets in one country or region 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.
23
8. Federal Tax Information
On December 17, 2019, the fund declared and paid the following per-share distributions from net investment income to shareholders of record on December 16, 2019:
Investor Class | I Class | A Class | C Class | R Class |
$0.0973 | $0.1185 | $0.0709 | — | $0.0444 |
The tax character of distributions paid during the years ended November 30, 2019 and November 30, 2018 were as follows:
2019 | 2018 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 1,154,494 | $ | 6,196,120 | ||
Long-term capital gains | $ | 4,937,173 | $ | 12,238,836 |
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 merger adjustments, were made to capital $21,866,866 and distributable earnings $(21,866,866).
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 | $ | 510,709,611 | |
Gross tax appreciation of investments | $ | 91,215,860 | |
Gross tax depreciation of investments | (9,905,143 | ) | |
Net tax appreciation (depreciation) of investments | 81,310,717 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (106,705 | ) | |
Net tax appreciation (depreciation) | $ | 81,204,012 | |
Undistributed ordinary income | $ | 5,641,644 | |
Accumulated short-term capital losses | $ | (43,143,275 | ) |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales and the realization for tax purposes of unrealized gains on investments in passive foreign investment companies.
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.
24
9. Reorganization
On December 4, 2018, the Board of Directors approved an agreement and plan of reorganization (the reorganization), whereby the net assets of International Discovery Fund, one fund in a series issued by the corporation, were transferred to International Opportunities Fund in exchange for shares of International Opportunities Fund. The purpose of the transaction was to combine two funds with substantially similar investment objectives and strategies. The financial statements and performance history of International Opportunities Fund survived after the reorganization. The reorganization was effective at the close of the NYSE on March 22, 2019.
The reorganization was accomplished by a tax-free exchange of shares. On March 22, 2019, International Discovery Fund exchanged its shares for shares of International Opportunities Fund as follows:
Original Fund/Class | Shares Exchanged | New Fund/Class | Shares Received | ||
International Discovery Fund – Investor Class | 28,522,874 | International Opportunities Fund – Investor Class | 40,955,922 | ||
International Discovery Fund – I Class | 292,253 | International Opportunities Fund – I Class | 421,079 | ||
International Discovery Fund – A Class | 126,350 | International Opportunities Fund – A Class | 177,679 | ||
International Discovery Fund – C Class | 36,343 | International Opportunities Fund – C Class | 51,598 | ||
International Discovery Fund – R Class | 10,698 | International Opportunities Fund – R Class | 15,327 |
The net assets of International Discovery Fund and International Opportunities Fund immediately before the reorganization were $389,587,949 and $193,535,172, respectively. International Discovery Fund's unrealized appreciation of $8,083,173 was combined with that of International Opportunities Fund. Immediately after the reorganization, the combined net assets were $583,123,121.
Assuming the reorganization had been completed on December 1, 2018, the beginning of the annual reporting period, the pro forma results of operations for the period ended November 30, 2019 are as follows:
Net investment income (loss) | $ | 234,506 | |
Net realized and unrealized gain (loss) | 73,557,788 | ||
Net increase (decrease) in net assets resulting from operations | $ | 73,792,294 |
Because the combined investment portfolios have been managed as a single integrated portfolio since the reorganization was completed, it is not practicable to separate the amounts of revenue and earnings of International Discovery Fund that have been included in the fund’s Statement of Operations since March 22, 2019.
25
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 | |||||||||||||||||
2019 | $9.33 | 0.01 | 1.13 | 1.14 | (0.05) | (0.25) | (0.30) | $10.17 | 12.88% | 1.46% | 1.46% | 0.23% | 0.23% | 124% | $499,296 | ||
2018 | $11.94 | 0.01 | (1.51) | (1.50) | (0.06) | (1.05) | (1.11) | $9.33 | (13.98)% | 1.48% | 1.62% | 0.07% | (0.07)% | 140% | $131,043 | ||
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 | ||
I Class | |||||||||||||||||
2019 | $9.44 | 0.03 | 1.14 | 1.17 | (0.07) | (0.25) | (0.32) | $10.29 | 13.06% | 1.26% | 1.26% | 0.43% | 0.43% | 124% | $78,575 | ||
2018 | $12.07 | 0.04 | (1.54) | (1.50) | (0.08) | (1.05) | (1.13) | $9.44 | (13.81)% | 1.28% | 1.42% | 0.27% | 0.13% | 140% | $53,224 | ||
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 |
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 | |||||||||||||||||
2019 | $9.24 | (0.02) | 1.13 | 1.11 | (0.03) | (0.25) | (0.28) | $10.07 | 12.60% | 1.71% | 1.71% | (0.02)% | (0.02)% | 124% | $6,067 | ||
2018 | $11.84 | (0.02) | (1.50) | (1.52) | (0.03) | (1.05) | (1.08) | $9.24 | (14.25)% | 1.73% | 1.87% | (0.18)% | (0.32)% | 140% | $8,131 | ||
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 | ||
C Class | |||||||||||||||||
2019 | $8.86 | (0.07) | 1.07 | 1.00 | — | (0.25) | (0.25) | $9.61 | 11.77% | 2.46% | 2.46% | (0.77)% | (0.77)% | 124% | $1,044 | ||
2018 | $11.44 | (0.10) | (1.43) | (1.53) | — | (1.05) | (1.05) | $8.86 | (14.93)% | 2.48% | 2.62% | (0.93)% | (1.07)% | 140% | $1,411 | ||
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 | ||
R Class | |||||||||||||||||
2019 | $9.14 | (0.04) | 1.12 | 1.08 | (0.01) | (0.25) | (0.26) | $9.96 | 12.33% | 1.96% | 1.96% | (0.27)% | (0.27)% | 124% | $1,962 | ||
2018 | $11.72 | (0.05) | (1.48) | (1.53) | —(3) | (1.05) | (1.05) | $9.14 | (14.46)% | 1.98% | 2.12% | (0.43)% | (0.57)% | 140% | $1,300 | ||
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 |
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. |
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.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of International Opportunities Fund, one of the funds constituting the American Century World Mutual Funds, Inc. (the "Fund"), as of November 30, 2019, 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, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of International Opportunities Fund of the American Century World Mutual Funds, Inc. as of November 30, 2019, 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.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of November 30, 2019, 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.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2020
We have served as the auditor of one or more American Century investment companies since 1997.
29
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 Jonathan S. Thomas, 16; and Stephen E. Yates, 8) 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 | 66 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 66 | None |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 66 | None |
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 66 | None |
30
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 | |||||
Lynn Jenkins (1963) | Director | Since 2019 | United States Representative, U.S. House of Representatives (2009 to 2018) | 66 | MGP Ingredients, Inc. |
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 66 | None |
John R. Whitten (1946) | Director | Since 2008 | Retired | 66 | Onto Innovation Inc.; Rudolph Technologies, Inc. (2006 to 2019) |
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 81 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director | 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 | 125 | 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.
31
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds. 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 |
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Chief Operating Officer, ACC (2012-2015). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries |
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Investment Operations and Investment Accounting, ACS (2000 to present) |
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). 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 since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) |
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 to present). Also serves as Vice President, ACIM and ACS |
Ward D. Stauffer (1960) | Secretary since 2005 | Attorney, ACC (2003 to present) |
32
Approval of Management Agreement |
At a meeting held on June 26, 2019, 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; |
• | any economies of scale associated with the Advisor’s management of the Fund and other accounts; |
• | services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; 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 provided by the Directors to the Advisor 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 connection with their review, the Directors did not identify any single factor as being all-important or
33
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.
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 investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor 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, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading
34
activities, portfolio valuation services, auditing services, and legal and operational compliance activities. 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, 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 Investment Company 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 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
35
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 such 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 may receive 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.
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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 or as an exhibit to its reports on Form N-PORT. The fund’s Forms N-Q and Form N-PORT reports are available on the SEC’s website at sec.gov. 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, 2019.
The fund hereby designates $4,937,173, or up to the maximum amount allowable, as long-term
capital gain distributions (20% rate gain distributions) for the fiscal year ended November 30, 2019.
For the fiscal year ended November 30, 2019, the fund intends to pass through to shareholders
foreign source income of $8,167,711 and foreign taxes paid of $633,585, 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, 2019 are $0.1417 and $0.0110, respectively.
38
Notes |
39
Notes |
40
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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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91032 2001 |
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Annual Report | |
November 30, 2019 | |
International Value Fund | |
Investor Class (ACEVX) | |
I Class (ACVUX) | |
A Class (MEQAX) | |
C Class (ACCOX) | |
R Class (ACVRX) | |
R6 Class (ACVDX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 | |
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 |
![jthomasrev0514a01.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/jthomasrev0514a01.jpg)
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2019. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional investment and market insights, please visit our website, americancentury.com.
Monetary Policy Pivot Improved Investor Sentiment
The reporting period began on a challenging note. Mounting concerns about slowing global economic and earnings growth, the U.S.-China trade dispute and Federal Reserve (Fed) policy soured investor sentiment, driving global stocks lower. After raising rates in September 2018, the Fed hiked again in December and delivered a surprisingly bullish 2019 rate-hike outlook, which worsened the year-end sell-off among global stocks.
However, a key policy pivot from the Fed in early 2019 helped improve investor attitudes worldwide. The central bank abruptly ended its rate-hike campaign and adopted a dovish tone amid weaker global growth and inflation. Similar economic concerns kept central banks in Europe and Japan maintaining or expanding their accommodative policies. Additionally, investors’ earlier worst-case fears about trade and corporate earnings generally eased, which also aided stocks.
Volatility reemerged in the spring, when a Brexit stalemate prompted U.K. Prime Minister Theresa May to resign. This news reignited global fears of a no-deal Brexit. However, those worries subsided as Boris Johnson, a staunch Brexit advocate, succeeded May. Meanwhile, U.S.-China trade policy continued to fuel bouts of volatility. In July, growing concerns about global economic risks encouraged the Fed to cut short-term interest rates for the first time in 10 years. The Fed followed up with additional rate cuts in September and October. Fed easing and a lower interest rate backdrop helped restore investor optimism.
Overall, broad global stock indices advanced for the 12-month period. U.S. stocks generally outperformed non-U.S. stocks, while developed markets broadly outperformed emerging markets.
Looking ahead, we expect volatility to remain a formidable factor as investors react to global growth and trade trends, central bank policy and geopolitical developments. We believe this scenario underscores the importance of using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
![image48a16.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/image48a16.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
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Performance |
Total Returns as of November 30, 2019 | ||||||
Average Annual Returns | ||||||
Ticker Symbol | 1 year | 5 years | 10 years | Since Inception | Inception Date | |
Investor Class | ACEVX | 3.41% | -0.14% | 3.19% | — | 4/3/06 |
MSCI EAFE Value Index | — | 6.52% | 2.08% | 3.70% | — | — |
I Class | ACVUX | 3.53% | 0.05% | 3.40% | — | 4/3/06 |
A Class | MEQAX | 3/31/97 | ||||
No sales charge | 3.08% | -0.38% | 2.95% | — | ||
With sales charge | -2.90% | -1.54% | 2.34% | — | ||
C Class | ACCOX | 2.29% | -1.12% | 2.17% | — | 4/3/06 |
R Class | ACVRX | 2.91% | -0.62% | 2.69% | — | 4/3/06 |
R6 Class | ACVDX | 3.72% | 0.21% | — | 1.84% | 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.
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, 2009 |
Performance for other share classes will vary due to differences in fee structure. |
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Value on November 30, 2019 | |
Investor Class — $13,697 | |
MSCI EAFE Value Index — $14,380 | |
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 | R6 Class |
1.31% | 1.11% | 1.56% | 2.31% | 1.81% | 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.
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Portfolio Commentary |
Portfolio Managers: Elizabeth Xie and Yulin Long
Effective August 17, 2019, portfolio manager Vinod Chandrashekaran left the fund’s portfolio management team. Yulin Long joined the portfolio management team in November 2019.
Performance Summary
International Value rose 3.41%* for the fiscal year ended November 30, 2019, compared with the 6.52% return of its benchmark, the MSCI EAFE Value Index. Fund results reflect operating expenses, while benchmark returns do not.
Global stock markets delivered positive results over the course of the 12 months, although they experienced pockets of volatility throughout the period. In December 2018, worries over rising interest rates, trade disputes and falling commodity prices pushed equity prices downward. However, a rebound occurred in January 2019 when global central banks pivoted and expressed renewed dedication to stimulus measures and accommodative policies. This helped equity prices recover and supported a rally that lasted into the spring. However, worries regarding continued trade difficulties and moderating growth rates resurfaced, causing volatility throughout much of the period. Concerns over a possible German recession and continued Brexit turmoil also contributed to occasional market upsets. The U.S. Federal Reserve (the Fed) cut rates three times during the period, helping to prop up equity market prices. The European Central Bank and Bank of Japan also continued accommodative low-rate policies. Near the end of the period, the U.S. announced the first stage of a trade deal with China, which also helped bolster equity market valuations.
Our stock selection process is designed to incorporate factors of valuation, quality, growth and sentiment, while minimizing unintended risks among industries and other risk characteristics. Weak stock selection, particularly in the industrials and utilities sectors, detracted most from relative results. Consumer discretionary and financials security choices also detracted from performance. Conversely, positioning within the energy, health care and consumer staples sectors added to relative returns.
Geographically, positioning among companies based in Japan, Australia and the Netherlands weighed most heavily on the fund’s results. In contrast, stock choices within Sweden, the U.K. and Finland contributed most to relative returns.
Industrials and Utilities Holdings Detracted from Performance
Industrials and utilities companies provided some of the largest headwinds to performance during the 12 months. In the construction and engineering industry, an underweight to France-based facilities management company Vinci was a top sector detractor as well as a leading individual detractor. We had some exposure to the stock but less than the benchmark on average, which hurt relative performance as the stock price rose on increased demand for the company’s products and services. Australia-based CIMIC Group also provided a headwind. We have exited the stock. Positioning within the electrical equipment, trading companies and distributors and airlines industries also weighed on relative results.
*All fund returns referenced in this commentary are for Investor Class shares. 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.
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Stock selection within the utilities sector, particularly within electric utilities, also hurt returns. Underweights to Spain-based Iberdrola and Italy-based Enel were among the top detractors from overall performance. The price of Iberdrola increased throughout the period on the back of earnings, which rose for the 12 months.
Elsewhere in the markets, several Japan-based companies provided some of the larger drags on relative returns. Pharmaceutical company Eisai was among the top individual detractors. The stock price fell in late March after it announced it would stop trials of its new Alzheimer’s drug. We have closed the position. Overweights to Isuzu Motors and Mebuki Financial Group also weighed on results. We have since exited our position in Mebuki.
Energy and Health Care Sectors Bolster Results
Stock selection within the energy sector, particularly within the energy equipment and services and oil, gas and consumable fuels industries, provided a benefit to returns. Within the latter industry, reduced exposure to U.K.-based BP was a top contributor to portfolio results. The stock price fell throughout much of the period on low oil prices and disappointing earnings.
Within health care, a position in pharmaceutical company Roche Holding was among the top performers for the 12 months. The price of the Switzerland-based drugmaker rose throughout much of the period on increased revenue. Reduced exposure to pharmaceutical company Teva Pharmaceutical Industries was also beneficial, as was an overweight position in health care equipment and supplies company Hoya. We have since exited our position in Teva.
Companies based in the U.K. also made a significant contribution to performance, as BHP Group, Rio Tinto, 3i Group and the aforementioned BP all benefited relative results.
A Look Ahead
Looking generally at economic prospects outside the U.S., growth appears to be moderating in many areas. In addition, uncertainty is high because of ongoing trade tensions, continued Brexit negotiations and other geopolitical issues. We should note, however, that in December 2019, immediately after the end of the reporting period, a reported trade agreement between the U.S. and China seems to indicate these pressures may be easing, while elections in the U.K. led to some optimism regarding a resolution to the Brexit saga. Both situations may be positive for equity markets. Regardless, central banks seem dedicated to maintaining accommodative policies for the near term, which may continue to support capital markets. However, given the multiple moving pieces, we think it’s reasonable to expect more volatility going forward.
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.
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Fund Characteristics |
NOVEMBER 30, 2019 | |
Top Ten Holdings | % of net assets |
Royal Dutch Shell plc, B Shares | 3.6% |
iShares MSCI EAFE ETF | 2.9% |
GlaxoSmithKline plc | 2.7% |
HSBC Holdings plc | 2.2% |
Toyota Motor Corp. | 1.7% |
BHP Group plc | 1.7% |
Iberdrola SA | 1.6% |
Allianz SE | 1.6% |
Zurich Insurance Group AG | 1.6% |
NTT DOCOMO, Inc. | 1.5% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 93.3% |
Exchange-Traded Funds | 4.0% |
Total Equity Exposure | 97.3% |
Temporary Cash Investments | 3.2% |
Temporary Cash Investments - Securities Lending Collateral | 0.7% |
Other Assets and Liabilities | (1.2)% |
Investments by Country | % of net assets |
Japan | 25.3% |
United Kingdom | 17.9% |
France | 10.2% |
Switzerland | 7.2% |
Germany | 6.8% |
Spain | 4.9% |
Australia | 4.9% |
Singapore | 2.6% |
Italy | 2.2% |
Sweden | 2.2% |
Hong Kong | 2.0% |
Other Countries | 7.1% |
Exchange-Traded Funds* | 4.0% |
Cash and Equivalents** | 2.7% |
*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, temporary cash investments - securities lending collateral and other assets and liabilities.
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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, 2019 to November 30, 2019.
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.
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Beginning Account Value 6/1/19 | Ending Account Value 11/30/19 | Expenses Paid During Period(1) 6/1/19 - 11/30/19 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,049.90 | $6.68 | 1.30% |
I Class | $1,000 | $1,049.90 | $5.65 | 1.10% |
A Class | $1,000 | $1,048.30 | $7.96 | 1.55% |
C Class | $1,000 | $1,044.50 | $11.79 | 2.30% |
R Class | $1,000 | $1,047.20 | $9.24 | 1.80% |
R6 Class | $1,000 | $1,051.30 | $4.89 | 0.95% |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.55 | $6.58 | 1.30% |
I Class | $1,000 | $1,019.55 | $5.57 | 1.10% |
A Class | $1,000 | $1,017.30 | $7.84 | 1.55% |
C Class | $1,000 | $1,013.54 | $11.61 | 2.30% |
R Class | $1,000 | $1,016.04 | $9.10 | 1.80% |
R6 Class | $1,000 | $1,020.31 | $4.81 | 0.95% |
(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, 2019
Shares | Value | |||
COMMON STOCKS — 93.3% | ||||
Australia — 4.9% | ||||
Aurizon Holdings Ltd. | 47,799 | $ | 187,186 | |
Australia & New Zealand Banking Group Ltd. | 34,723 | 584,585 | ||
Commonwealth Bank of Australia | 4,340 | 237,724 | ||
Fortescue Metals Group Ltd. | 35,079 | 230,958 | ||
Santos Ltd. | 9,726 | 53,628 | ||
South32 Ltd. | 98,300 | 179,572 | ||
Telstra Corp. Ltd. | 193,477 | 506,210 | ||
Westpac Banking Corp. | 8,279 | 137,596 | ||
2,117,459 | ||||
Austria — 0.2% | ||||
Raiffeisen Bank International AG | 2,676 | 62,757 | ||
Belgium — 1.1% | ||||
KBC Group NV | 2,471 | 179,900 | ||
Telenet Group Holding NV(1) | 6,558 | 295,845 | ||
475,745 | ||||
Denmark — 0.5% | ||||
Carlsberg A/S, B Shares | 903 | 129,822 | ||
Pandora A/S | 1,778 | 71,557 | ||
201,379 | ||||
Finland — 1.4% | ||||
Fortum Oyj | 4,327 | 101,938 | ||
Kone Oyj, B Shares | 6,500 | 406,798 | ||
Orion Oyj, Class B | 1,955 | 85,062 | ||
593,798 | ||||
France — 10.2% | ||||
AXA SA | 15,202 | 413,317 | ||
BNP Paribas SA | 8,647 | 485,018 | ||
CGG SA(1) | 39,924 | 104,640 | ||
CNP Assurances | 8,911 | 175,862 | ||
Dassault Systemes SE | 1,282 | 201,822 | ||
Hermes International | 413 | 309,245 | ||
Kering SA | 456 | 274,338 | ||
L'Oreal SA | 1,030 | 293,510 | ||
Peugeot SA | 17,965 | 433,519 | ||
Safran SA | 1,055 | 172,377 | ||
Sanofi | 4,254 | 396,505 | ||
Schneider Electric SE | 1,900 | 183,226 | ||
Societe Generale SA | 4,800 | 150,882 | ||
TOTAL SA | 10,961 | 575,472 | ||
Vinci SA | 2,250 | 245,258 | ||
4,414,991 |
10
Shares | Value | |||
Germany — 6.8% | ||||
adidas AG | 1,212 | $ | 377,610 | |
Allianz SE | 2,870 | 687,167 | ||
Bayer AG | 1,746 | 132,161 | ||
Deutsche Post AG | 3,700 | 137,969 | ||
Deutsche Telekom AG | 11,603 | 194,804 | ||
Hamburger Hafen und Logistik AG | 1,462 | 39,489 | ||
Hannover Rueck SE | 708 | 131,549 | ||
MTU Aero Engines AG | 316 | 85,595 | ||
Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen | 1,228 | 352,538 | ||
RTL Group SA | 3,184 | 151,836 | ||
RWE AG | 13,704 | 406,328 | ||
SAP SE | 600 | 81,673 | ||
Siemens AG | 1,300 | 167,716 | ||
2,946,435 | ||||
Hong Kong — 2.0% | ||||
BOC Hong Kong Holdings Ltd. | 26,500 | 90,121 | ||
Galaxy Entertainment Group Ltd. | 13,000 | 85,047 | ||
Hang Seng Bank Ltd. | 8,000 | 163,125 | ||
Hong Kong Exchanges & Clearing Ltd. | 2,000 | 63,205 | ||
Sands China Ltd. | 98,800 | 467,375 | ||
868,873 | ||||
Israel — 1.0% | ||||
Check Point Software Technologies Ltd.(1) | 1,900 | 223,972 | ||
Mizrahi Tefahot Bank Ltd. | 3,510 | 93,787 | ||
Wix.com Ltd.(1) | 900 | 108,801 | ||
426,560 | ||||
Italy — 2.2% | ||||
Enel SpA | 40,992 | 309,568 | ||
Eni SpA | 31,553 | 476,878 | ||
Fiat Chrysler Automobiles NV | 11,200 | 165,655 | ||
952,101 | ||||
Japan — 25.3% | ||||
ABC-Mart, Inc. | 3,600 | 239,857 | ||
Amada Holdings Co. Ltd. | 37,900 | 423,331 | ||
Astellas Pharma, Inc. | 27,000 | 460,839 | ||
Bandai Namco Holdings, Inc. | 2,300 | 139,629 | ||
Brother Industries Ltd. | 12,600 | 250,365 | ||
Chugai Pharmaceutical Co. Ltd. | 2,000 | 174,843 | ||
Daiwa House Industry Co. Ltd. | 2,600 | 79,662 | ||
FANUC Corp. | 900 | 172,254 | ||
Hitachi High-Technologies Corp. | 3,500 | 228,629 | ||
Hitachi Ltd. | 13,100 | 515,508 | ||
Honda Motor Co. Ltd. | 7,600 | 213,753 | ||
Hoya Corp. | 3,000 | 273,913 | ||
Isuzu Motors Ltd. | 22,300 | 261,443 | ||
ITOCHU Corp. | 20,000 | 436,948 | ||
Kao Corp. | 1,500 | 118,104 |
11
Shares | Value | |||
KDDI Corp. | 16,400 | $ | 470,866 | |
Mitsubishi Chemical Holdings Corp. | 16,300 | 121,087 | ||
Mitsubishi UFJ Financial Group, Inc. | 57,400 | 303,627 | ||
Nexon Co. Ltd.(1) | 10,000 | 136,528 | ||
Nintendo Co. Ltd. | 500 | 193,532 | ||
Nitori Holdings Co. Ltd. | 1,300 | 203,872 | ||
NTT DOCOMO, Inc. | 23,100 | 634,374 | ||
ORIX Corp. | 20,800 | 341,078 | ||
Persol Holdings Co. Ltd. | 2,800 | 51,600 | ||
Recruit Holdings Co. Ltd. | 4,200 | 152,262 | ||
Santen Pharmaceutical Co. Ltd. | 11,400 | 213,795 | ||
Sekisui House Ltd. | 11,900 | 257,416 | ||
Shin-Etsu Chemical Co. Ltd. | 3,000 | 321,569 | ||
Shionogi & Co. Ltd. | 2,900 | 170,831 | ||
Shizuoka Bank Ltd. (The) | 38,100 | 290,485 | ||
Showa Denko KK | 4,000 | 107,069 | ||
Softbank Corp. | 22,200 | 301,589 | ||
Sony Corp. | 2,200 | 139,210 | ||
Sumitomo Mitsui Financial Group, Inc. | 7,500 | 273,763 | ||
Takeda Pharmaceutical Co., Ltd. | 5,100 | 207,681 | ||
Tokyo Electron Ltd. | 2,100 | 434,977 | ||
Toyota Motor Corp. | 10,600 | 740,748 | ||
Trend Micro, Inc. | 3,000 | 162,220 | ||
Tsuruha Holdings, Inc. | 3,600 | 429,126 | ||
Welcia Holdings Co. Ltd. | 4,500 | 276,196 | ||
10,924,579 | ||||
Netherlands — 0.9% | ||||
Coca-Cola European Partners plc | 2,497 | 125,998 | ||
NN Group NV | 6,236 | 239,211 | ||
365,209 | ||||
New Zealand — 1.0% | ||||
a2 Milk Co. Ltd.(1) | 18,933 | 188,538 | ||
Meridian Energy Ltd. | 73,016 | 220,743 | ||
409,281 | ||||
Norway — 1.0% | ||||
Aker BP ASA | 14,304 | 409,356 | ||
Equinor ASA | 1,818 | 33,462 | ||
442,818 | ||||
Singapore — 2.6% | ||||
ComfortDelGro Corp. Ltd. | 67,100 | 115,273 | ||
Oversea-Chinese Banking Corp. Ltd. | 38,700 | 304,917 | ||
Singapore Telecommunications Ltd. | 102,900 | 254,491 | ||
United Overseas Bank Ltd. | 24,400 | 460,520 | ||
1,135,201 | ||||
Spain — 4.9% | ||||
Banco Bilbao Vizcaya Argentaria SA | 61,533 | 322,649 | ||
Banco Santander SA | 111,194 | 432,839 |
12
Shares | Value | |||
Iberdrola SA | 70,078 | $ | 689,204 | |
Industria de Diseno Textil SA | 5,862 | 182,342 | ||
Mapfre SA | 90,093 | 253,847 | ||
Telefonica SA | 32,300 | 247,042 | ||
2,127,923 | ||||
Sweden — 2.2% | ||||
Hennes & Mauritz AB, B Shares(2) | 15,498 | 299,011 | ||
Kinnevik AB, B Shares | 12,841 | 293,937 | ||
Lundin Petroleum AB | 11,265 | 347,558 | ||
940,506 | ||||
Switzerland — 7.2% | ||||
Credit Suisse Group AG(1) | 6,300 | 82,494 | ||
Geberit AG | 704 | 377,722 | ||
Kuehne + Nagel International AG | 1,898 | 308,535 | ||
Nestle SA | 3,514 | 365,198 | ||
Novartis AG | 4,832 | 445,462 | ||
Roche Holding AG | 1,500 | 462,150 | ||
Swiss Life Holding AG | 296 | 146,711 | ||
Temenos AG(1) | 850 | 128,793 | ||
UBS Group AG(1) | 9,016 | 109,198 | ||
Zurich Insurance Group AG | 1,742 | 683,174 | ||
3,109,437 | ||||
United Kingdom — 17.9% | ||||
3i Group plc | 28,554 | 395,003 | ||
Anglo American plc | 15,825 | 414,865 | ||
BHP Group plc | 32,623 | 723,386 | ||
BP plc | 72,841 | 452,698 | ||
British American Tobacco plc | 5,028 | 199,323 | ||
Burberry Group plc | 5,238 | 142,146 | ||
Evraz plc | 29,813 | 142,701 | ||
GlaxoSmithKline plc | 51,144 | 1,162,987 | ||
HSBC Holdings plc | 125,123 | 932,870 | ||
Intertek Group plc | 1,001 | 71,373 | ||
Legal & General Group plc | 124,595 | 452,382 | ||
Marks & Spencer Group plc | 28,386 | 71,300 | ||
Rio Tinto plc | 8,751 | 476,710 | ||
Royal Dutch Shell plc, B Shares | 54,532 | 1,543,691 | ||
Sage Group plc (The) | 17,900 | 174,341 | ||
Vodafone Group plc | 182,533 | 362,756 | ||
7,718,532 | ||||
TOTAL COMMON STOCKS (Cost $39,577,437) | 40,233,584 | |||
EXCHANGE-TRADED FUNDS — 4.0% | ||||
iShares MSCI EAFE ETF | 18,284 | 1,246,603 | ||
iShares MSCI EAFE Value ETF | 6,200 | 305,288 | ||
iShares MSCI Japan ETF | 2,950 | 175,319 | ||
TOTAL EXCHANGE-TRADED FUNDS (Cost $1,617,923) | 1,727,210 |
13
Shares | Value | |||
TEMPORARY CASH INVESTMENTS — 3.2% | ||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.625% - 2.875%, 11/15/20 - 8/15/28, valued at $636,064), in a joint trading account at 1.40%, dated 11/29/19, due 12/2/19 (Delivery value $624,193) | $ | 624,120 | ||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 0.375%, 7/15/27, valued at $144,575), at 0.65%, dated 11/29/19, due 12/2/19 (Delivery value $138,007) | 138,000 | |||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 643,466 | 643,466 | ||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $1,405,586) | 1,405,586 | |||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(3) — 0.7% | ||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $308,316) | 308,316 | 308,316 | ||
TOTAL INVESTMENT SECURITIES — 101.2% (Cost $42,909,262) | 43,674,696 | |||
OTHER ASSETS AND LIABILITIES — (1.2)% | (538,024 | ) | ||
TOTAL NET ASSETS — 100.0% | $ | 43,136,672 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Financials | 24.1 | % |
Consumer Discretionary | 11.8 | % |
Health Care | 9.7 | % |
Energy | 9.1 | % |
Communication Services | 8.7 | % |
Industrials | 8.7 | % |
Materials | 6.2 | % |
Information Technology | 5.9 | % |
Consumer Staples | 5.0 | % |
Utilities | 3.9 | % |
Real Estate | 0.2 | % |
Exchange-Traded Funds | 4.0 | % |
Cash and Equivalents* | 2.7 | % |
*Includes temporary cash investments, temporary cash investments - securities lending collateral and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS |
(1) | Non-income producing. |
(2) | Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $293,030. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(3) | Investment of cash collateral from securities on loan. At the period end, the aggregate market value of the collateral held by the fund was $308,316. |
See Notes to Financial Statements.
14
Statement of Assets and Liabilities |
NOVEMBER 30, 2019 | |||
Assets | |||
Investment securities, at value (cost of $42,600,946) — including $293,030 of securities on loan | $ | 43,366,380 | |
Investment made with cash collateral received for securities on loan, at value (cost of $308,316) | 308,316 | ||
Total investment securities, at value (cost of $42,909,262) | 43,674,696 | ||
Foreign currency holdings, at value (cost of $17,509) | 17,477 | ||
Receivable for investments sold | 245,451 | ||
Receivable for capital shares sold | 58,163 | ||
Dividends and interest receivable | 318,018 | ||
Securities lending receivable | 1,818 | ||
44,315,623 | |||
Liabilities | |||
Disbursements in excess of demand deposit cash | 642,107 | ||
Payable for collateral received for securities on loan | 308,316 | ||
Payable for investments purchased | 168,023 | ||
Payable for capital shares redeemed | 17,786 | ||
Accrued management fees | 39,976 | ||
Distribution and service fees payable | 2,743 | ||
1,178,951 | |||
Net Assets | $ | 43,136,672 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 48,420,643 | |
Distributable earnings | (5,283,971 | ) | |
$ | 43,136,672 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $9,136,254 | 1,206,808 | $7.57 | |||
I Class, $0.01 Par Value | $18,980,689 | 2,506,676 | $7.57 | |||
A Class, $0.01 Par Value | $6,531,622 | 859,767 | $7.60* | |||
C Class, $0.01 Par Value | $1,400,161 | 186,434 | $7.51 | |||
R Class, $0.01 Par Value | $574,633 | 76,118 | $7.55 | |||
R6 Class, $0.01 Par Value | $6,513,313 | 859,314 | $7.58 |
*Maximum offering price $8.06 (net asset value divided by 0.9425).
See Notes to Financial Statements.
15
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2019 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $132,598) | $ | 1,815,062 | |
Interest | 9,657 | ||
Securities lending, net | 7,961 | ||
1,832,680 | |||
Expenses: | |||
Management fees | 470,026 | ||
Distribution and service fees: | |||
A Class | 17,583 | ||
C Class | 16,581 | ||
R Class | 2,861 | ||
Directors' fees and expenses | 1,261 | ||
Other expenses | 17,835 | ||
526,147 | |||
Fees waived(1) | (1,374 | ) | |
524,773 | |||
Net investment income (loss) | 1,307,907 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (3,171,743 | ) | |
Foreign currency translation transactions | (2,147 | ) | |
(3,173,890 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 3,146,392 | ||
Translation of assets and liabilities in foreign currencies | (2,681 | ) | |
3,143,711 | |||
Net realized and unrealized gain (loss) | (30,179 | ) | |
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 1,277,728 |
(1) | Amount consists of $306, $556, $220, $47, $18 and $227 for Investor Class, I Class, A Class, C Class, R Class and R6 Class, respectively. |
See Notes to Financial Statements.
16
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2019 AND NOVEMBER 30, 2018 | ||||||
Increase (Decrease) in Net Assets | November 30, 2019 | November 30, 2018 | ||||
Operations | ||||||
Net investment income (loss) | $ | 1,307,907 | $ | 2,031,756 | ||
Net realized gain (loss) | (3,173,890 | ) | (3,943,589 | ) | ||
Change in net unrealized appreciation (depreciation) | 3,143,711 | (6,080,549 | ) | |||
Net increase (decrease) in net assets resulting from operations | 1,277,728 | (7,992,382 | ) | |||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (403,529 | ) | (466,849 | ) | ||
I Class | (357,536 | ) | (130,916 | ) | ||
A Class | (258,329 | ) | (291,034 | ) | ||
C Class | (49,480 | ) | (92,919 | ) | ||
R Class | (19,023 | ) | (17,238 | ) | ||
R6 Class | (577,763 | ) | (1,634,209 | ) | ||
Decrease in net assets from distributions | (1,665,660 | ) | (2,633,165 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (1,950,464 | ) | (23,922,935 | ) | ||
Net increase (decrease) in net assets | (2,338,396 | ) | (34,548,482 | ) | ||
Net Assets | ||||||
Beginning of period | 45,475,068 | 80,023,550 | ||||
End of period | $ | 43,136,672 | $ | 45,475,068 |
See Notes to Financial Statements.
17
Notes to Financial Statements |
NOVEMBER 30, 2019
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, 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.
18
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. 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.
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. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
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.
19
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of November 30, 2019.
Remaining Contractual Maturity of Agreements | ||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||
Securities Lending Transactions(1) | ||||||||||||
Common Stocks | $ | 308,316 | — | — | — | $ | 308,316 | |||||
Gross amount of recognized liabilities for securities lending transactions | $ | 308,316 |
(1) | Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand. |
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.
20
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. Effective August 1, 2019, the investment advisor agreed to waive 0.01% of the fund's management fee. The investment advisor expects this waiver to continue until July 31, 2020 and cannot terminate it prior to such date without the approval of the Board of Directors. The impact of this waiver to the ratio of operating expenses to average net assets was less than 0.005% for each class for the period ended November 30, 2019.
The management fee schedule range and the effective annual management fee for each class for the period ended November 30, 2019 are as follows:
Management Fee Schedule Range | Effective Annual Management Fee | |
Investor Class | 1.100% to 1.300% | 1.29% |
I Class | 0.900% to 1.100% | 1.09% |
A Class | 1.100% to 1.300% | 1.29% |
C Class | 1.100% to 1.300% | 1.29% |
R Class | 1.100% to 1.300% | 1.29% |
R6 Class | 0.750% to 0.950% | 0.94% |
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, 2019 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.
Other Expenses — The fund’s other expenses may include interest charges, clearing exchange fees, proxy solicitation expenses, filing fees for foreign tax reclaims and other miscellaneous expenses. The impact of other expenses to the ratio of operating expenses to average net assets was 0.04% for the period ended November 30, 2019.
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 $43,617 and there were no interfund sales.
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4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended November 30, 2019 were $35,364,837 and $38,039,333, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2019 | Year ended November 30, 2018 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 40,000,000 | 50,000,000 | ||||||||
Sold | 150,004 | $ | 1,109,245 | 349,891 | $ | 3,016,186 | ||||
Issued in reinvestment of distributions | 53,047 | 390,556 | 51,815 | 453,754 | ||||||
Redeemed | (441,896 | ) | (3,294,374 | ) | (562,468 | ) | (4,769,274 | ) | ||
(238,845 | ) | (1,794,573 | ) | (160,762 | ) | (1,299,334 | ) | |||
I Class/Shares Authorized | 40,000,000 | 40,000,000 | ||||||||
Sold | 1,802,912 | 13,322,365 | 1,127,653 | 9,376,389 | ||||||
Issued in reinvestment of distributions | 48,412 | 357,536 | 14,677 | 128,532 | ||||||
Redeemed | (320,303 | ) | (2,383,740 | ) | (631,878 | ) | (5,193,026 | ) | ||
1,531,021 | 11,296,161 | 510,452 | 4,311,895 | |||||||
A Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 29,026 | 218,600 | 94,780 | 825,130 | ||||||
Issued in reinvestment of distributions | 34,759 | 257,913 | 33,039 | 290,590 | ||||||
Redeemed | (206,057 | ) | (1,544,282 | ) | (222,639 | ) | (1,886,645 | ) | ||
(142,272 | ) | (1,067,769 | ) | (94,820 | ) | (770,925 | ) | |||
C Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 11,743 | 88,541 | 11,233 | 97,411 | ||||||
Issued in reinvestment of distributions | 6,595 | 48,966 | 10,599 | 92,411 | ||||||
Redeemed | (126,994 | ) | (941,805 | ) | (202,952 | ) | (1,661,909 | ) | ||
(108,656 | ) | (804,298 | ) | (181,120 | ) | (1,472,087 | ) | |||
R Class/Shares Authorized | 30,000,000 | 30,000,000 | ||||||||
Sold | 15,219 | 112,965 | 38,009 | 327,715 | ||||||
Issued in reinvestment of distributions | 2,572 | 18,972 | 1,967 | 17,188 | ||||||
Redeemed | (30,281 | ) | (231,260 | ) | (11,530 | ) | (99,229 | ) | ||
(12,490 | ) | (99,323 | ) | 28,446 | 245,674 | |||||
R6 Class/Shares Authorized | 45,000,000 | 70,000,000 | ||||||||
Sold | 510,546 | 3,776,617 | 1,459,293 | 12,482,479 | ||||||
Issued in reinvestment of distributions | 79,224 | 577,763 | 186,520 | 1,634,209 | ||||||
Redeemed | (1,891,164 | ) | (13,835,042 | ) | (4,700,312 | ) | (39,054,846 | ) | ||
(1,301,394 | ) | (9,480,662 | ) | (3,054,499 | ) | (24,938,158 | ) | |||
Net increase (decrease) | (272,636 | ) | $ | (1,950,464 | ) | (2,952,303 | ) | $ | (23,922,935 | ) |
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.
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 | $ | 458,771 | $ | 39,774,813 | — | |||
Exchange-Traded Funds | 1,727,210 | — | — | |||||
Temporary Cash Investments | 643,466 | 762,120 | — | |||||
Temporary Cash Investments - Securities Lending Collateral | 308,316 | — | — | |||||
$ | 3,137,763 | $ | 40,536,933 | — |
The fund may hold financial instruments at their inherent carrying value for financial statement purposes,
which approximates fair value. As of period end, the fund’s disbursements in excess of demand deposit cash
were classified as Level 2.
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing in emerging markets or a significant portion of assets in one country or region 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.
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8. Federal Tax Information
On December 17, 2019, the fund declared and paid the following per-share distributions from net investment income to shareholders of record on December 16, 2019:
Investor Class | I Class | A Class | C Class | R Class | R6 Class |
$0.1189 | $0.1311 | $0.1035 | $0.0575 | $0.0882 | $0.1404 |
The tax character of distributions paid during the years ended November 30, 2019 and November 30, 2018 were as follows:
2019 | 2018 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 1,665,660 | $ | 2,633,165 | ||
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 | $ | 43,180,523 | |
Gross tax appreciation of investments | $ | 2,543,861 | |
Gross tax depreciation of investments | (2,049,688 | ) | |
Net tax appreciation (depreciation) of investments | 494,173 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (6,777 | ) | |
Net tax appreciation (depreciation) | $ | 487,396 | |
Undistributed ordinary income | $ | 1,413,693 | |
Accumulated short-term capital losses | $ | (4,712,022 | ) |
Accumulated long-term capital losses | $ | (2,473,038 | ) |
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.
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.
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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 | |||||||||||||
2019 | $7.61 | 0.23 | 0.02 | 0.25 | (0.29) | $7.57 | 3.41% | 1.34% | 3.13% | 87% | $9,136 | ||
2018 | $8.96 | 0.21 | (1.27) | (1.06) | (0.29) | $7.61 | (12.25)% | 1.30% | 2.56% | 80% | $11,008 | ||
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 | ||
I Class | |||||||||||||
2019 | $7.62 | 0.25 | 0.01 | 0.26 | (0.31) | $7.57 | 3.53% | 1.14% | 3.33% | 87% | $18,981 | ||
2018 | $8.97 | 0.22 | (1.26) | (1.04) | (0.31) | $7.62 | (12.05)% | 1.10% | 2.76% | 80% | $7,434 | ||
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 |
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 | |||||||||||||
2019 | $7.64 | 0.22 | 0.01 | 0.23 | (0.27) | $7.60 | 3.08% | 1.59% | 2.88% | 87% | $6,532 | ||
2018 | $8.99 | 0.19 | (1.27) | (1.08) | (0.27) | $7.64 | (12.43)% | 1.55% | 2.31% | 80% | $7,651 | ||
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 | ||
C Class | |||||||||||||
2019 | $7.54 | 0.16 | 0.01 | 0.17 | (0.20) | $7.51 | 2.29% | 2.34% | 2.13% | 87% | $1,400 | ||
2018 | $8.87 | 0.13 | (1.26) | (1.13) | (0.20) | $7.54 | (13.04)% | 2.30% | 1.56% | 80% | $2,224 | ||
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 | ||
R Class | |||||||||||||
2019 | $7.58 | 0.19 | 0.02 | 0.21 | (0.24) | $7.55 | 2.91% | 1.84% | 2.63% | 87% | $575 | ||
2018 | $8.93 | 0.18 | (1.29) | (1.11) | (0.24) | $7.58 | (12.74)% | 1.80% | 2.06% | 80% | $672 | ||
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 |
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) | |||
R6 Class | |||||||||||||
2019 | $7.63 | 0.26 | 0.01 | 0.27 | (0.32) | $7.58 | 3.72% | 0.99% | 3.48% | 87% | $6,513 | ||
2018 | $8.98 | 0.26 | (1.29) | (1.03) | (0.32) | $7.63 | (11.91)% | 0.95% | 2.91% | 80% | $16,485 | ||
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 |
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. |
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.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of International Value Fund, one of the funds constituting the American Century World Mutual Funds, Inc. (the "Fund"), as of November 30, 2019, 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, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of International Value Fund of the American Century World Mutual Funds, Inc. as of November 30, 2019, 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.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of November 30, 2019, 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.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2020
We have served as the auditor of one or more American Century investment companies since 1997.
28
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 Jonathan S. Thomas, 16; and Stephen E. Yates, 8) 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 | 66 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 66 | None |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 66 | None |
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 66 | None |
29
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 | |||||
Lynn Jenkins (1963) | Director | Since 2019 | United States Representative, U.S. House of Representatives (2009 to 2018) | 66 | MGP Ingredients, Inc. |
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 66 | None |
John R. Whitten (1946) | Director | Since 2008 | Retired | 66 | Onto Innovation Inc.; Rudolph Technologies, Inc. (2006 to 2019) |
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 81 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director | 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 | 125 | 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.
30
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds. 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 |
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Chief Operating Officer, ACC (2012-2015). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries |
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Investment Operations and Investment Accounting, ACS (2000 to present) |
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). 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 since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) |
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 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 26, 2019, 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; |
• | any economies of scale associated with the Advisor’s management of the Fund and other accounts; |
• | services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; 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 provided by the Directors to the Advisor 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 connection with their review, the Directors did not identify any single factor as being all-important or
32
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.
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 investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor 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 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, technology support (including
33
cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. 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, 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 Investment Company 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 and the Advisor agreed to a temporary reduction of the Fund's annual unified management fee of 0.01% (e.g., the Investor Class unified fee will be reduced from 1.28% to 1.27%) for at least one year, beginning August 1, 2019. 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,
34
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 such 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 may receive 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
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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 or as an exhibit to its reports on Form N-PORT. The fund’s Forms N-Q and Form N-PORT reports are available on the SEC’s website at sec.gov. 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.
36
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, 2019.
For the fiscal year ended November 30, 2019, the fund intends to pass through to shareholders
foreign source income of $1,921,723 and foreign taxes paid of $111,521, 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, 2019 are $0.3374 and $0.0196, respectively.
37
Notes |
38
Notes |
39
Notes |
40
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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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91029 2001 |
![acihorizblkd32.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/acihorizblkd32.jpg)
Annual Report | |
November 30, 2019 | |
Non-U.S. Intrinsic Value Fund | |
Investor Class (ANTUX) | |
G Class (ANTGX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 | |
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 |
![jthomasrev0514a01.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/jthomasrev0514a01.jpg)
Dear Investor:
Thank you for reviewing this annual report for the 12 months ended November 30, 2019. Annual reports help convey important information about fund returns, including market factors that affected performance during the reporting period. For additional investment and market insights, please visit our website, americancentury.com.
Monetary Policy Pivot Improved Investor Sentiment
The reporting period began on a challenging note. Mounting concerns about slowing global economic and earnings growth, the U.S.-China trade dispute and Federal Reserve (Fed) policy soured investor sentiment, driving global stocks lower. After raising rates in September 2018, the Fed hiked again in December and delivered a surprisingly bullish 2019 rate-hike outlook, which worsened the year-end sell-off among global stocks.
However, a key policy pivot from the Fed in early 2019 helped improve investor attitudes worldwide. The central bank abruptly ended its rate-hike campaign and adopted a dovish tone amid weaker global growth and inflation. Similar economic concerns kept central banks in Europe and Japan maintaining or expanding their accommodative policies. Additionally, investors’ earlier worst-case fears about trade and corporate earnings generally eased, which also aided stocks.
Volatility reemerged in the spring, when a Brexit stalemate prompted U.K. Prime Minister Theresa May to resign. This news reignited global fears of a no-deal Brexit. However, those worries subsided as Boris Johnson, a staunch Brexit advocate, succeeded May. Meanwhile, U.S.-China trade policy continued to fuel bouts of volatility. In July, growing concerns about global economic risks encouraged the Fed to cut short-term interest rates for the first time in 10 years. The Fed followed up with additional rate cuts in September and October. Fed easing and a lower interest rate backdrop helped restore investor optimism.
Overall, broad global stock indices advanced for the 12-month period. U.S. stocks generally outperformed non-U.S. stocks, while developed markets broadly outperformed emerging markets.
Looking ahead, we expect volatility to remain a formidable factor as investors react to global growth and trade trends, central bank policy and geopolitical developments. We believe this scenario underscores the importance of using professionally managed portfolios in pursuit of investment goals. We appreciate your continued trust and confidence in us.
Sincerely,
![image48a16.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/image48a16.jpg)
Jonathan Thomas
President and Chief Executive Officer
American Century Investments
2
Performance |
Total Returns as of November 30, 2019 | |||
Ticker Symbol | Since Inception | Inception Date | |
Investor Class | ANTUX | 6.59% | 12/6/18 |
MSCI ACWI ex-U.S. Index | — | 14.05% | — |
G Class | ANTGX | 8.00% | 12/6/18 |
G Class returns would have been lower if a portion of the fees had not been waived.
Growth of $10,000 Over Life of Class |
$10,000 investment made December 6, 2018 |
Performance for other share classes will vary due to differences in fee structure. |
![chart-a23bcc15a3618ff3b8fa07.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/chart-a23bcc15a3618ff3b8fa07.jpg)
Value on November 30, 2019 | |
Investor Class — $10,659 | |
MSCI ACWI ex-U.S. Index — $11,405 | |
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.
3
Portfolio Commentary |
Portfolio Managers: Alvin Polit and Jonathan Veiga
Performance Summary
Non-U.S. Intrinsic Value returned 8.00%* for the period December 6, 2018 (the fund’s inception), through November 30, 2019. The fund’s benchmark, the MSCI ACWI ex-U.S. Index, returned 14.05% over the same time period. The fund’s return reflects operating expenses, while the index’s return does not.
Growth outperformed value by a significant margin over the year, acting as a headwind for our deep-value strategy. Against this backdrop, several consumer discretionary holdings detracted from the fund’s performance relative to the benchmark. Lack of exposure to the growth-oriented information technology sector also pressured returns. On the other hand, holdings in the real estate and energy sectors were positive contributors.
Consumer Discretionary and Information Technology Detracted
Within the consumer discretionary sector, Japan-based automobile manufacturer Nissan Motor Co. was a notable detractor. Shares were pressured by several factors, including weak automobile sales, management volatility and concerns that Nissan’s relationship with Renault, a major joint venture partner, may be deteriorating. On a positive note, as a leader in electric vehicles, Nissan is well positioned to benefit from anticipated growth in electric vehicle demand in the coming years, and we believe the shares remain cheap. Moreover, the company has improved its corporate governance structure as it increased board independence and established audit, nomination and compensation committees in 2019.
As the market favored cyclical growth stocks, many of the benchmark’s information technology names turned in strong performance. Therefore, our lack of exposure to the information technology sector detracted from performance. Throughout the history of our strategy, we have had limited exposure to information technology given our aversion to obsolescence risk and short product life cycles that are characteristic of the sector.
Our lack of exposure to several benchmark names in the health care sector weighed on our relative performance. The portfolio’s overweight to financials also hurt, and our position in Germany-based Commerzbank was a notable detractor. The bank’s shares underperformed as its restructuring plan moved at a slower pace than the market expected. Shares were also negatively impacted by persistently low interest rates, departures from the company’s senior management team and news that discussions regarding a potential merger with Deutsche Bank had ended without a deal. Additionally, Germany’s overbanked market has pressured loan rates and limited net interest margins. Despite the challenges, the valuation remains very attractive. We are also encouraged by recently announced efforts to further reduce costs and dispose of the noncore Polish bank operations, which should help further strengthen Commerzbank’s already-strong capital ratios.
*Total returns for periods less than one year are not annualized. 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 3 for returns for all share classes.
4
Real Estate and Energy Contributed
During the reporting period, we held only one name in the real estate sector: Fibra Uno Administracion. This is the largest Mexico-based industrial and office REIT. As interest rates in Mexico declined, the relative attractiveness of this yield-oriented name increased. Shares were also supported by strong financial results and by news that the U.S.-Mexico-Canada trade agreement was progressing.
Energy holding Gazprom was a top individual contributor to performance. The Russia-based natural gas company took steps to improve its corporate governance and become more shareholder friendly. Shares spiked after the company announced plans to increase its dividend.
Kia Motors and Capita were other key contributors. Shares of Kia Motors, an automobile manufacturer based in South Korea, rose on expectations that profits will improve as the company strengthened its sport utility vehicle offerings—a segment that has experienced significant industry growth but where the company had lagged historically. A weaker Korean won also supported shares. Capita, a U.K.-based outsources services provider, rebounded after a period of underperformance due to Brexit uncertainty. Capita is moving away from its noncore businesses, and shares were supported by signs that the company’s restructuring is on track. The company also maintained its full-year guidance.
Portfolio Positioning
The portfolio continues to invest in companies where we believe the fundamentals are not being fully reflected by the market. Our process is conducted purely on a bottom-up basis, but broad themes have emerged.
As of November 30, 2019, consumer discretionary is the portfolio’s largest sector overweight. Our bottom-up research has led us to companies in the sector with strong balance sheets and compelling valuations. Many of these holdings are in automobile-related industries. The portfolio also has a notable overweight to financials. The portfolio’s absolute financials exposure as of the end of the period was close to 30% with the vast majority of that exposure allocated to banks. We hold large, well-capitalized banks selling at valuations that we believe are attractive.
Conversely, the portfolio has a notable underweight to consumer staples, driven by valuation. As we approach what may be the end of an economic cycle, investors have been willing to pay up for companies with more durable revenue streams, driving up valuations in the consumer staples sector. We have found more compelling valuations elsewhere.
On a regional basis, we ended the period with an overweight to Europe. This is due in part to compelling value opportunities that we identified in several European banks. Our bottom-up investment approach has also led us to attractively valued holdings in emerging markets, particularly South Korea, Russia, Mexico and Brazil. However, we ended the period with a modest underweight to emerging markets relative to the benchmark.
Our metrics show that the portfolio remains attractive on both an absolute and relative basis, and on average, the companies we own had more conservative capital structures than the index. We believe these characteristics provide strong upside potential with less downside risk.
5
Fund Characteristics |
NOVEMBER 30, 2019 | |
Top Ten Holdings | % of net assets |
Sanofi | 5.1% |
Barclays plc | 4.2% |
Kingfisher plc | 4.1% |
Mitsubishi UFJ Financial Group, Inc. | 4.1% |
Babcock International Group plc | 3.8% |
Fibra Uno Administracion SA de CV | 3.2% |
Aegon NV | 3.1% |
Haseko Corp. | 3.0% |
BNP Paribas SA | 3.0% |
Eni SpA | 3.0% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 94.1% |
Exchange-Traded Funds | 2.7% |
Total Equity Exposure | 96.8% |
Temporary Cash Investments | 5.5% |
Other Assets and Liabilities | (2.3)% |
Investments by Country | % of net assets |
Japan | 21.2% |
United Kingdom | 16.1% |
France | 11.2% |
South Korea | 8.1% |
Netherlands | 7.6% |
Italy | 6.3% |
Russia | 5.2% |
Germany | 4.2% |
Mexico | 3.8% |
China | 2.9% |
Switzerland | 2.5% |
Brazil | 2.3% |
Other Countries | 2.7% |
Exchange-Traded Funds | 2.7% |
Cash and Equivalents* | 3.2% |
*Includes temporary cash investments and other assets and liabilities.
6
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, 2019 to November 30, 2019.
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.
7
Beginning Account Value 6/1/19 | Ending Account Value 11/30/19 | Expenses Paid During Period(1) 6/1/19 - 11/30/19 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,107.50 | $6.92 | 1.31% |
G Class | $1,000 | $1,115.00 | $0.05 | 0.01% |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.50 | $6.63 | 1.31% |
G Class | $1,000 | $1,025.02 | $0.05 | 0.01% |
(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. |
8
Schedule of Investments |
NOVEMBER 30, 2019
Shares | Value | |||
COMMON STOCKS — 94.1% | ||||
Belgium — 1.0% | ||||
Ontex Group NV | 182,282 | $ | 3,465,822 | |
Brazil — 2.3% | ||||
Embraer SA ADR | 493,281 | 8,395,643 | ||
China — 2.9% | ||||
Baidu, Inc. ADR(1) | 52,195 | 6,186,674 | ||
PetroChina Co. Ltd., H Shares | 9,644,000 | 4,429,772 | ||
10,616,446 | ||||
France — 11.2% | ||||
BNP Paribas SA | 196,385 | 11,015,409 | ||
Renault SA | 84,474 | 4,036,979 | ||
Sanofi | 198,926 | 18,541,415 | ||
Societe Generale SA | 240,258 | 7,552,220 | ||
41,146,023 | ||||
Germany — 4.2% | ||||
Commerzbank AG | 1,217,999 | 7,065,692 | ||
Daimler AG | 105,928 | 5,977,825 | ||
Leoni AG(1) | 166,891 | 2,151,896 | ||
15,195,413 | ||||
Italy — 6.3% | ||||
Eni SpA | 722,675 | 10,922,189 | ||
Saras SpA | 3,536,529 | 6,224,873 | ||
UniCredit SpA | 436,551 | 6,045,040 | ||
23,192,102 | ||||
Japan — 21.2% | ||||
Alfresa Holdings Corp. | 120,800 | 2,499,089 | ||
Haseko Corp. | 866,300 | 11,162,043 | ||
Hazama Ando Corp. | 248,300 | 2,011,101 | ||
Iida Group Holdings Co. Ltd. | 264,100 | 4,700,849 | ||
Mazda Motor Corp. | 634,400 | 5,634,621 | ||
Mitsubishi UFJ Financial Group, Inc. | 2,838,600 | 15,015,266 | ||
Mizuho Financial Group, Inc. | 5,677,500 | 8,787,351 | ||
Nippon Television Holdings, Inc. | 406,400 | 5,347,855 | ||
Nissan Motor Co. Ltd. | 1,642,500 | 10,200,062 | ||
NOK Corp. | 101,700 | 1,594,342 | ||
Sumitomo Mitsui Financial Group, Inc. | 161,100 | 5,880,433 | ||
Token Corp. | 23,000 | 1,535,662 | ||
TV Asahi Holdings Corp. | 138,800 | 2,219,155 | ||
Yamazen Corp. | 123,300 | 1,165,939 | ||
77,753,768 |
9
Shares | Value | |||
Mexico — 3.8% | ||||
Cemex SAB de CV ADR | 626,735 | $ | 2,337,721 | |
Fibra Uno Administracion SA de CV | 7,697,200 | 11,750,790 | ||
14,088,511 | ||||
Netherlands — 7.6% | ||||
Aegon NV | 2,508,113 | 11,300,796 | ||
AerCap Holdings NV(1) | 112,946 | 6,981,192 | ||
NN Group NV | 76,962 | 2,952,237 | ||
Signify NV | 226,519 | 6,753,700 | ||
27,987,925 | ||||
Russia — 5.2% | ||||
Gazprom PJSC | 2,209,293 | 8,843,575 | ||
Surgutneftegas PJSC Preference Shares | 18,016,995 | 10,111,699 | ||
18,955,274 | ||||
South Korea — 8.1% | ||||
Hana Financial Group, Inc. | 133,451 | 4,041,256 | ||
Hyundai Mobis Co. Ltd. | 41,009 | 8,510,663 | ||
Hyundai Motor Co. | 105,223 | 10,779,311 | ||
Hyundai Wia Corp. | 36,467 | 1,642,505 | ||
Kia Motors Corp. | 130,311 | 4,774,156 | ||
29,747,891 | ||||
Spain — 1.7% | ||||
Atresmedia Corp. de Medios de Comunicacion SA | 353,970 | 1,528,198 | ||
Tecnicas Reunidas SA(1) | 196,551 | 4,788,473 | ||
6,316,671 | ||||
Switzerland — 2.5% | ||||
Credit Suisse Group AG(1) | 692,251 | 9,064,545 | ||
United Kingdom — 16.1% | ||||
Babcock International Group plc | 1,810,083 | 13,806,644 | ||
Barclays plc | 6,983,845 | 15,475,355 | ||
Capita plc(1) | 4,870,886 | 9,976,851 | ||
Kingfisher plc | 5,573,360 | 15,122,270 | ||
Standard Chartered plc (London) | 499,209 | 4,500,890 | ||
58,882,010 | ||||
TOTAL COMMON STOCKS (Cost $337,038,283) | 344,808,044 | |||
EXCHANGE-TRADED FUNDS — 2.7% | ||||
iShares MSCI EAFE Value ETF (Cost $9,726,146) | 202,942 | 9,992,864 | ||
TEMPORARY CASH INVESTMENTS — 5.5% | ||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.625% - 2.875%, 11/15/20 - 8/15/28, valued at $8,490,470), in a joint trading account at 1.40%, dated 11/29/19, due 12/2/19 (Delivery value $8,332,012) | 8,331,040 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.375%, 5/15/27, valued at $1,894,777), at 0.65%, dated 11/29/19, due 12/2/19 (Delivery value $1,854,100) | 1,854,000 | |||
10
Shares | Value | |||
State Street Institutional U.S. Government Money Market Fund, Premier Class | 10,057,687 | $ | 10,057,687 | |
TOTAL TEMPORARY CASH INVESTMENTS (Cost $20,242,727) | 20,242,727 | |||
TOTAL INVESTMENT SECURITIES — 102.3% (Cost $367,007,156) | 375,043,635 | |||
OTHER ASSETS AND LIABILITIES — (2.3)% | (8,580,809 | ) | ||
TOTAL NET ASSETS — 100.0% | $ | 366,462,826 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Financials | 29.7 | % |
Consumer Discretionary | 23.9 | % |
Industrials | 13.4 | % |
Energy | 12.4 | % |
Health Care | 5.7 | % |
Communication Services | 4.2 | % |
Real Estate | 3.2 | % |
Consumer Staples | 1.0 | % |
Materials | 0.6 | % |
Exchange-Traded Funds | 2.7 | % |
Cash and Equivalents* | 3.2 | % |
*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.
11
Statement of Assets and Liabilities |
NOVEMBER 30, 2019 | |||
Assets | |||
Investment securities, at value (cost of $367,007,156) | $ | 375,043,635 | |
Foreign currency holdings, at value (cost of $73,969) | 73,716 | ||
Receivable for capital shares sold | 381 | ||
Dividends and interest receivable | 1,591,746 | ||
376,709,478 | |||
Liabilities | |||
Disbursements in excess of demand deposit cash | 10,051,463 | ||
Payable for capital shares redeemed | 86,091 | ||
Accrued management fees | 109,098 | ||
10,246,652 | |||
Net Assets | $ | 366,462,826 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 342,621,167 | |
Distributable earnings | 23,841,659 | ||
$ | 366,462,826 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $101,933,580 | 9,602,852 | $10.61 | |||
G Class, $0.01 Par Value | $264,529,246 | 24,581,126 | $10.76 |
See Notes to Financial Statements.
12
Statement of Operations |
FOR THE PERIOD ENDED NOVEMBER 30, 2019(1) | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $1,951,112) | $ | 15,616,562 | |
Interest | 222,233 | ||
15,838,795 | |||
Expenses: | |||
Management fees | 3,826,369 | ||
Directors' fees and expenses | 10,797 | ||
Other expenses | 10,560 | ||
3,847,726 | |||
Fees waived - G Class | (2,452,973 | ) | |
1,394,753 | |||
Net investment income (loss) | 14,444,042 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | 3,990,341 | ||
Foreign currency translation transactions | (180,266 | ) | |
3,810,075 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 8,036,479 | ||
Translation of assets and liabilities in foreign currencies | (19,810 | ) | |
8,016,669 | |||
Net realized and unrealized gain (loss) | 11,826,744 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 26,270,786 |
(1) | December 6, 2018 (fund inception) through November 30, 2019. |
See Notes to Financial Statements.
13
Statement of Changes in Net Assets |
PERIOD ENDED NOVEMBER 30, 2019(1) | ||||
Increase (Decrease) in Net Assets | ||||
Operations | ||||
Net investment income (loss) | $ | 14,444,042 | ||
Net realized gain (loss) | 3,810,075 | |||
Change in net unrealized appreciation (depreciation) | 8,016,669 | |||
Net increase (decrease) in net assets resulting from operations | 26,270,786 | |||
Distributions to Shareholders | ||||
From earnings: | ||||
Investor Class | (491,729 | ) | ||
G Class | (949,592 | ) | ||
Decrease in net assets from distributions | (1,441,321 | ) | ||
Capital Share Transactions | ||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 341,633,361 | |||
Net increase (decrease) in net assets | 366,462,826 | |||
Net Assets | ||||
End of period | $ | 366,462,826 |
(1) | December 6, 2018 (fund inception) through November 30, 2019. |
See Notes to Financial Statements.
14
Notes to Financial Statements |
NOVEMBER 30, 2019
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. Non-U.S. Intrinsic Value Fund (formerly NT Non-U.S. Intrinsic Value Fund) (the fund) is one fund in a series issued by the corporation. The fund’s investment objective is to seek capital appreciation. The fund offers the Investor Class and G Class. All classes of the fund commenced sale on December 6, 2018, 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. 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.
15
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).
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.
16
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 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 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 annual management fee for each class is as follows:
Investor Class | G Class |
1.30% | 0.00%(1) |
(1) | Annual management fee before waiver was 0.95%. |
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 $71,925 and there were no interfund purchases. The effect of interfund transactions on the Statement of Operations was $(20,886) 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, 2019 were $649,433,722 and $306,659,634, respectively.
17
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Period ended November 30, 2019(1) | |||||
Shares | Amount | ||||
Investor Class/Shares Authorized | 130,000,000 | ||||
Sold | 11,270,260 | $ | 112,661,064 | ||
Issued in reinvestment of distributions | 51,009 | 491,729 | |||
Redeemed | (1,718,417 | ) | (16,249,420 | ) | |
9,602,852 | 96,903,373 | ||||
G Class/Shares Authorized | 340,000,000 | ||||
Sold | 29,283,091 | 292,987,696 | |||
Issued in reinvestment of distributions | 98,301 | 949,592 | |||
Redeemed | (4,800,266 | ) | (49,207,300 | ) | |
24,581,126 | 244,729,988 | ||||
Net increase (decrease) | 34,183,978 | $ | 341,633,361 |
(1) | December 6, 2018 (fund inception) through November 30, 2019. |
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.
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 | ||||||||
Brazil | $ | 8,395,643 | — | — | ||||
China | 6,186,674 | $ | 4,429,772 | — | ||||
Mexico | 2,337,721 | 11,750,790 | — | |||||
Netherlands | 6,981,192 | 21,006,733 | — | |||||
Other Countries | — | 283,719,519 | — | |||||
Exchange-Traded Funds | 9,992,864 | — | — | |||||
Temporary Cash Investments | 10,057,687 | 10,185,040 | — | |||||
$ | 43,951,781 | $ | 331,091,854 | — |
The fund may hold financial instruments at their inherent carrying value for financial statement purposes,
which approximates fair value. As of period end, the fund’s disbursements in excess of demand deposit cash
were classified as Level 2.
18
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing in emerging markets or a significant portion of assets in one country or region 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 is owned by a relatively small number of shareholders, and in the event such shareholders redeem, the ongoing operations of the fund may be at risk.
8. Federal Tax Information
On December 17, 2019, the fund declared and paid a per-share distribution from net realized gains to shareholders of record on December 16, 2019 of $0.1312 for the Investor Class and G Class.
On December 17, 2019, the fund declared and paid the following per-share distributions from net investment income to shareholders of record on December 16, 2019:
Investor Class | G Class | ||||
$0.3224 | $0.4671 |
The tax character of distributions paid during the period December 6, 2018 (fund inception) through November 30, 2019 were as follows:
Distributions Paid From | |||
Ordinary income | $ | 1,441,321 | |
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 | $ | 370,144,160 | |
Gross tax appreciation of investments | $ | 28,507,689 | |
Gross tax depreciation of investments | (23,608,214 | ) | |
Net tax appreciation (depreciation) of investments | 4,899,475 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (19,810 | ) | |
Net tax appreciation (depreciation) | $ | 4,879,665 | |
Undistributed ordinary income | $ | 18,961,994 |
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 Period Indicated | |||||||||||||
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 | |||||||||||||
2019(3) | $10.00 | 0.31 | 0.34 | 0.65 | (0.04) | $10.61 | 6.59% | 1.31%(4) | 3.04%(4) | 85% | $101,934 | ||
G Class | |||||||||||||
2019(3) | $10.00 | 0.43 | 0.37 | 0.80 | (0.04) | $10.76 | 8.00% | 0.01%(4)(5) | 4.34%(4)(5) | 85% | $264,529 |
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) | December 6, 2018 (fund inception) through November 30, 2019. |
(4) | Annualized. |
(5) | The annualized ratio of operating expenses to average net assets before expense waiver and the annualized ratio of net investment income (loss) to average net assets before expense waiver was 0.96% and 3.39%, 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.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of Non-U.S. Intrinsic Value Fund, one of the funds constituting the American Century World Mutual Funds, Inc. (the “Fund”), as of November 30, 2019, and the related statements of operations, changes in net assets, and the financial highlights for the period from December 6, 2018 (fund inception) through November 30, 2019, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of Non-U.S. Intrinsic Value Fund of the American Century World Mutual Funds, Inc. as of November 30, 2019, and the results of its operations, the changes in its net assets, and the financial highlights for the period from December 6, 2018 (fund inception) through November 30, 2019, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of November 30, 2019, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2020
We have served as the auditor of one or more American Century investment companies since 1997.
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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 Jonathan S. Thomas, 16; and Stephen E. Yates, 8) 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 | 66 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 66 | None |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 66 | None |
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 66 | None |
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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 | |||||
Lynn Jenkins (1963) | Director | Since 2019 | United States Representative, U.S. House of Representatives (2009 to 2018) | 66 | MGP Ingredients, Inc. |
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 66 | None |
John R. Whitten (1946) | Director | Since 2008 | Retired | 66 | Onto Innovation Inc.; Rudolph Technologies, Inc. (2006 to 2019) |
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 81 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director | 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 | 125 | 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 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds. 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 |
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Chief Operating Officer, ACC (2012-2015). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries |
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Investment Operations and Investment Accounting, ACS (2000 to present) |
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). 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 since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) |
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 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 26, 2019, 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; |
• | any economies of scale associated with the Advisor’s management of the Fund and other accounts; |
• | services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; 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 provided by the Directors to the Advisor 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 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.
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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.
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, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. 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
26
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, 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 Investment Company 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 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 such payments to be reasonable in scope and purpose.
27
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 may receive 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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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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 or as an exhibit to its reports on Form N-PORT. The fund’s Forms N-Q and Form N-PORT reports are available on the SEC’s website at sec.gov. 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 funds hereby designates up to the maximum amount allowable as qualified dividend income for the fiscal year ended November 30, 2019.
The fund hereby designates $199,053 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended November 30, 2019.
For the fiscal year ended November 30, 2019, the fund intends to pass through to shareholders foreign source income of $17,251,434 and foreign taxes paid of $1,741,713, 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, 2019 are $0.5047 and $0.0510, respectively.
The fund utilized earnings and profits of $987,806 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
30
Notes |
31
Notes |
32
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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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-95207 2001 |
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Annual Report | |
November 30, 2019 | |
NT Emerging Markets Fund | |
G Class (ACLKX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 | ||
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, 2019 | |||||
Average Annual Returns | |||||
Ticker Symbol | 1 year | 5 years | 10 years | Inception Date | |
G Class | ACLKX | 12.54% | 5.70% | 5.02% | 5/12/06 |
MSCI Emerging Markets Index | — | 7.28% | 3.12% | 3.33% | — |
Fund returns would have been lower if a portion of the fees had not been waived.
Growth of $10,000 Over 10 Years |
$10,000 investment made November 30, 2009 |
![chart-c2dc0d792c0e586bb39.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/chart-c2dc0d792c0e586bb39.jpg)
Value on November 30, 2019 | |
G Class — $16,324 | |
MSCI Emerging Markets Index — $13,882 | |
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 | 0.91% |
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
Performance Summary
NT Emerging Markets returned 12.54%* for the 12 months ended November 30, 2019. The portfolio’s benchmark, the MSCI Emerging Markets Index, returned 7.28% for the same period.
The fund outperformed its benchmark during the period, driven largely by an overweight for most of the year and positive stock selection in the consumer discretionary sector, as well as stock selection in financials. Conversely, holdings in the consumer staples sector had a negative relative impact. Regionally, stock selection in China and, to a lesser extent, Brazil, were key drivers of relative outperformance, while stock choices in South Korea weighed on returns.
Consumer Discretionary Sector Contributed
Holdings in the consumer discretionary sector were the primary drivers of the fund’s underperformance over the 12-month period, where notable contributors included China-based sporting goods company Li Ning, China-based K-12 tutorial service and test preparation course provider New Oriental Education & Technology Group and Brazil-based retailer Magazine Luiza.
Shares of Li Ning benefited from sales growth, driven by increased consumer demand. The company reported strong core profit results on the back of better-than-expected sales and earnings, while higher consensus estimates reflect the retailer’s healthy demand momentum in athleisure apparel. New Oriental Education & Technology’s top-line momentum was strong, driven by online expansion, margin recovery and increased utilization, amid a supportive policy environment. Magazine Luiza’s stock price appreciated amid economic improvement in Brazil, as the retailer reported solid operating results. Growth in gross merchandise volume remains strong in Magazine Luiza’s online channel and brick-and-mortar stores as investments in execution continue to drive traffic higher.
In the financials sector, Taiwan-based leasing company Chailease Holding and Brazil-based stock exchange B3 were key contributors to the fund’s outperformance. Chailease’s stock price gained on improving spread and yield data, driven by asset quality control and business growth in China. Shares of B3 advanced on record high derivatives volume and strong equity volume, amid improving macroeconomic conditions and structurally low policy rates in Brazil.
Investments in the Consumer Staples Sector Detracted
The fund’s consumer staples holdings weighed on relative performance, driven primarily by South Korea-based cosmetics maker Cosmax and India-based personal care company Godrej Consumer Products. Cosmax shares declined amid slowing sales growth in South Korea and declining sales for Cosmax China. Lower forecasts for the firm’s U.S. and China operations also weighed on the stock. Shares of Godrej suffered as domestic sales growth weakened and overseas challenges persisted, particularly weakness in some African markets. We exited positions in Cosmax and Godrej during the period.
Other notable detractors included NMC Health, a U.K.-based private health care operator in Saudi Arabia and the United Arab Emirates with exposure to Abu Dhabi and Dubai, and South Africa-based multinational internet group Naspers. Shares of NMC declined amid concerns over delays in a Saudi joint venture. Further, concerns surrounding the company’s financial health and strategy—which we believe are misplaced—weighed on the stock. Naspers’ shares declined due to the company’s partial spin-off of its global consumer internet group. Initially, the market viewed the spin-off as a risk to Naspers, given the increased complexity of its corporate structure. Lack of exposure to Gazprom, the Russia-based integrated state-owned energy company, also weighed on relative returns.
*Fund returns would have been lower if a portion of the fees had not been waived.
3
Outlook
We continue to believe the long-term case for emerging markets stocks remains strong. Improving growth data, dovish U.S. Federal Reserve policy and reduced geopolitical concerns around both U.S.-China trade tensions and Brexit are expected to provide support for emerging markets stock prices. We’ve also seen a recovery in emerging markets earnings.
The fund continues to invest in companies where we believe fundamentals are improving but share price performance does not fully reflect these factors.
Geographically, we increased our exposure to China, shifting from a relative underweight to the fund’s largest overweight versus the benchmark. We believe the softening of trade rhetoric and a trade agreement between the U.S. and China has helped improve conditions in the country and the region. Our holdings are exposed to domestic consumption or government stimulus policies designed to support domestic growth. Ongoing infrastructure investment and a reduction in the value-added tax should further support consumer activity.
Although Saudi Arabia was added to the benchmark in 2019, we did not have exposure to the market at period-end, making it our largest underweight relative to the benchmark. We also reduced our exposure to India as economic growth slowed over the period.
Consumer discretionary remained the largest relative sector position, and we meaningfully increased our exposure during the period. We believe that urbanization and growth of the middle class, as well as the aspirational spending that goes with them are powerful, long-term drivers. We are finding opportunities in companies positioned for strengthening consumer demand in areas such as sportswear, as well as higher standard-of-living spending such as education, automobiles and travel.
We reduced our exposure to the consumer staples sector, as certain consumer names were pressured amid the ongoing uncertainty around global trade, which drove disappointing results. Materials and energy were the largest relative underweights. Amid commodity volatility and government intervention, sustained earnings acceleration remains challenging for many companies in both sectors. Our holdings represent companies that have earnings catalysts outside commodity prices.
Finally, we significantly increased our information technology position over the last year, shifting from a relative underweight to an overweight versus the benchmark. In our view, the sector is improving based on stabilizing memory prices, stronger-than-expected iPhone 11 sales and accelerated 5G-related demand.
4
Fund Characteristics |
NOVEMBER 30, 2019 | |
Top Ten Holdings | % of net assets |
Taiwan Semiconductor Manufacturing Co. Ltd. | 6.3% |
Alibaba Group Holding Ltd. ADR | 6.0% |
Tencent Holdings Ltd. | 5.3% |
Samsung Electronics Co. Ltd. | 4.0% |
HDFC Bank Ltd. | 2.5% |
Naspers Ltd., N Shares | 2.1% |
Novatek PJSC GDR | 2.0% |
New Oriental Education & Technology Group, Inc. ADR | 2.0% |
Chailease Holding Co. Ltd. | 1.9% |
GDS Holdings Ltd. ADR | 1.8% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 96.9% |
Temporary Cash Investments | 2.7% |
Temporary Cash Investments - Securities Lending Collateral | 0.6% |
Other Assets and Liabilities | (0.2)% |
Investments by Country | % of net assets |
China | 35.1% |
Taiwan | 10.8% |
South Korea | 9.5% |
Brazil | 8.7% |
India | 7.6% |
Russia | 4.5% |
South Africa | 4.1% |
Thailand | 3.9% |
Indonesia | 2.9% |
Mexico | 2.4% |
Other Countries | 7.4% |
Cash and Equivalents* | 3.1% |
*Includes temporary cash investments, temporary cash investments - securities lending collateral 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, 2019 to November 30, 2019.
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 6/1/19 | Ending Account Value 11/30/19 | Expenses Paid During Period(1) 6/1/19 - 11/30/19 | Annualized Expense Ratio(1) | |
Actual | ||||
G Class | $1,000 | $1,090.90 | $0.05 | 0.01% |
Hypothetical | ||||
G Class | $1,000 | $1,025.02 | $0.05 | 0.01% |
(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. |
6
Schedule of Investments |
NOVEMBER 30, 2019
Shares | Value | ||||
COMMON STOCKS — 96.9% | |||||
Argentina — 0.3% | |||||
Globant SA(1) | 12,398 | $ | 1,326,586 | ||
Brazil — 8.7% | |||||
B3 SA - Brasil Bolsa Balcao | 590,900 | 6,637,977 | |||
Banco Bradesco SA ADR | 823,258 | 6,462,575 | |||
Cyrela Brazil Realty SA Empreendimentos e Participacoes | 699,900 | 4,420,560 | |||
Localiza Rent a Car SA | 361,939 | 3,793,191 | |||
Lojas Renner SA | 357,540 | 4,374,560 | |||
Magazine Luiza SA | 551,588 | 5,888,886 | |||
Pagseguro Digital Ltd., Class A(1) | 69,725 | 2,366,467 | |||
TOTVS SA | 156,400 | 2,350,599 | |||
WEG SA | 189,800 | 1,331,922 | |||
37,626,737 | |||||
China — 35.1% | |||||
Alibaba Group Holding Ltd. ADR(1) | 130,116 | 26,023,200 | |||
Anhui Conch Cement Co. Ltd., H Shares | 879,500 | 5,624,045 | |||
Baozun, Inc. ADR(1) | 67,535 | 2,564,304 | |||
Brilliance China Automotive Holdings Ltd. | 4,648,000 | 4,798,643 | |||
China Construction Bank Corp., H Shares | 9,275,000 | 7,385,342 | |||
China Education Group Holdings Ltd.(2) | 2,509,000 | 3,397,937 | |||
China Gas Holdings Ltd. | 1,669,400 | 6,207,466 | |||
China International Travel Service Corp. Ltd., A Shares | 172,987 | 2,061,703 | |||
China Overseas Land & Investment Ltd. | 606,000 | 2,032,467 | |||
CIFI Holdings Group Co. Ltd. | 7,380,376 | 5,375,298 | |||
CNOOC Ltd. | 4,343,000 | 6,303,929 | |||
Country Garden Services Holdings Co. Ltd. | 1,096,000 | 3,542,848 | |||
GDS Holdings Ltd. ADR(1) | 162,439 | 7,605,394 | |||
Haier Electronics Group Co. Ltd. | 850,000 | 2,362,370 | |||
Industrial & Commercial Bank of China Ltd., H Shares | 10,313,095 | 7,355,148 | |||
Kweichow Moutai Co. Ltd., A Shares | 23,500 | 3,773,488 | |||
Li Ning Co. Ltd. | 1,610,000 | 5,163,364 | |||
Luxshare Precision Industry Co. Ltd., A Shares | 259,700 | 1,257,018 | |||
New Oriental Education & Technology Group, Inc. ADR(1) | 71,127 | 8,612,057 | |||
Ping An Insurance Group Co. of China Ltd., H Shares | 618,000 | 7,003,846 | |||
Shenzhou International Group Holdings Ltd. | 305,100 | 4,021,522 | |||
TAL Education Group ADR(1) | 138,834 | 6,144,793 | |||
Tencent Holdings Ltd. | 543,800 | 23,054,155 | |||
151,670,337 | |||||
Colombia — 0.7% | |||||
Bancolombia SA ADR | 60,211 | 2,906,385 | |||
Egypt — 0.8% | |||||
Commercial International Bank Egypt S.A.E. | 395,253 | 1,932,130 |
7
Shares | Value | ||||
Commercial International Bank Egypt S.A.E. GDR | 308,178 | $ | 1,483,913 | ||
3,416,043 | |||||
Hungary — 1.1% | |||||
OTP Bank Nyrt | 102,839 | 4,837,997 | |||
India — 7.6% | |||||
Asian Paints Ltd. | 86,491 | 2,056,876 | |||
Bajaj Finance Ltd. | 49,351 | 2,802,099 | |||
Bata India Ltd. | 111,322 | 2,527,572 | |||
HDFC Bank Ltd. | 613,825 | 10,907,550 | |||
Indraprastha Gas Ltd. | 504,679 | 2,906,641 | |||
Jubilant Foodworks Ltd. | 122,044 | 2,752,725 | |||
Larsen & Toubro Ltd. | 118,596 | 2,199,250 | |||
Nestle India Ltd. | 16,882 | 3,401,380 | |||
Tata Consultancy Services Ltd. | 121,149 | 3,467,450 | |||
33,021,543 | |||||
Indonesia — 2.9% | |||||
Bank Rakyat Indonesia Persero Tbk PT | 23,038,400 | 6,677,208 | |||
Telekomunikasi Indonesia Persero Tbk PT | 21,166,400 | 5,881,102 | |||
12,558,310 | |||||
Mexico — 2.4% | |||||
America Movil SAB de CV, Class L ADR | 149,554 | 2,286,681 | |||
Grupo Aeroportuario del Centro Norte SAB de CV | 484,804 | 3,220,055 | |||
Wal-Mart de Mexico SAB de CV | 1,752,415 | 4,877,842 | |||
10,384,578 | |||||
Peru — 0.7% | |||||
Credicorp Ltd. | 13,597 | 2,871,550 | |||
Philippines — 1.3% | |||||
Ayala Land, Inc. | 6,043,980 | 5,411,490 | |||
Russia — 4.5% | |||||
Novatek PJSC GDR | 43,854 | 8,678,481 | |||
Sberbank of Russia PJSC ADR (London) | 314,330 | 4,594,707 | |||
Yandex NV, A Shares(1) | 151,559 | 6,360,931 | |||
19,634,119 | |||||
South Africa — 4.1% | |||||
Capitec Bank Holdings Ltd. | 65,491 | 6,337,211 | |||
Kumba Iron Ore Ltd. | 91,219 | 2,338,314 | |||
Naspers Ltd., N Shares | 64,267 | 9,193,199 | |||
17,868,724 | |||||
South Korea — 9.5% | |||||
CJ Logistics Corp.(1)(2) | 40,288 | 5,377,512 | |||
Fila Korea Ltd.(2) | 124,853 | 5,454,358 | |||
Hotel Shilla Co. Ltd. | 31,317 | 2,249,546 | |||
Korea Shipbuilding & Offshore Engineering Co. Ltd.(1) | 32,855 | 3,340,977 | |||
Orion Corp/Republic of Korea | 29,878 | 2,605,456 | |||
Samsung Electro-Mechanics Co. Ltd.(2) | 49,939 | 4,693,078 | |||
Samsung Electronics Co. Ltd. | 408,421 | 17,441,925 | |||
41,162,852 |
8
Shares | Value | ||||
Taiwan — 10.8% | |||||
ASPEED Technology, Inc. | 48,000 | $ | 1,342,241 | ||
Chailease Holding Co. Ltd. | 1,820,788 | 8,157,022 | |||
Chroma ATE, Inc. | 291,000 | 1,330,687 | |||
Merida Industry Co. Ltd. | 343,000 | 1,968,892 | |||
President Chain Store Corp. | 243,000 | 2,434,847 | |||
Taiwan Cement Corp. | 2,142,301 | 2,909,209 | |||
Taiwan Cement Corp. Preference Shares | 142,847 | 251,877 | |||
Taiwan Semiconductor Manufacturing Co. Ltd. | 2,700,774 | 27,114,566 | |||
Win Semiconductors Corp. | 125,000 | 1,239,519 | |||
46,748,860 | |||||
Thailand — 3.9% | |||||
Airports of Thailand PCL | 1,539,200 | 3,820,303 | |||
CP ALL PCL | 2,501,100 | 6,228,436 | |||
Kasikornbank PCL NVDR | 396,600 | 2,033,096 | |||
Minor International PCL | 1,954,900 | 2,488,940 | |||
Muangthai Capital PCL | 1,086,500 | 2,164,578 | |||
16,735,353 | |||||
Turkey — 0.6% | |||||
BIM Birlesik Magazalar AS | 296,836 | 2,373,037 | |||
United Arab Emirates — 0.9% | |||||
First Abu Dhabi Bank PJSC | 890,219 | 3,686,773 | |||
United Kingdom — 1.0% | |||||
Network International Holdings plc(1) | 192,346 | 1,440,201 | |||
NMC Health plc(2) | 95,183 | 3,085,565 | |||
4,525,766 | |||||
TOTAL COMMON STOCKS (Cost $307,006,778) | 418,767,040 | ||||
TEMPORARY CASH INVESTMENTS — 2.7% | |||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.625% - 2.875%, 11/15/20 - 8/15/28, valued at $9,630,087), in a joint trading account at 1.40%, dated 11/29/19, due 12/2/19 (Delivery value $9,450,359) | 9,449,257 | ||||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.375%, 5/15/27, valued at $2,146,018), at 0.65%, dated 11/29/19, due 12/2/19 (Delivery value $2,103,114) | 2,103,000 | ||||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $11,552,257) | 11,552,257 | ||||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(3) — 0.6% | |||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $2,410,349) | 2,410,349 | 2,410,349 | |||
TOTAL INVESTMENT SECURITIES — 100.2% (Cost $320,969,384) | 432,729,646 | ||||
OTHER ASSETS AND LIABILITIES — (0.2)% | (734,083 | ) | |||
TOTAL NET ASSETS — 100.0% | $ | 431,995,563 |
9
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Consumer Discretionary | 24.6 | % |
Financials | 22.2 | % |
Information Technology | 16.9 | % |
Communication Services | 8.7 | % |
Industrials | 6.2 | % |
Consumer Staples | 5.9 | % |
Energy | 3.5 | % |
Materials | 3.1 | % |
Real Estate | 3.0 | % |
Utilities | 2.1 | % |
Health Care | 0.7 | % |
Cash and Equivalents* | 3.1 | % |
*Includes temporary cash investments, temporary cash investments - securities lending collateral 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. |
(2) | Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $7,952,187. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(3) | Investment of cash collateral from securities on loan. At the period end, the aggregate market value of the collateral held by the fund was $8,382,514, which includes securities collateral of $5,972,165. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
NOVEMBER 30, 2019 | |||
Assets | |||
Investment securities, at value (cost of $318,559,035) — including $7,952,187 of securities on loan | $ | 430,319,297 | |
Investment made with cash collateral received for securities on loan, at value (cost of $2,410,349) | 2,410,349 | ||
Total investment securities, at value (cost of $320,969,384) | 432,729,646 | ||
Cash | 6,909 | ||
Foreign currency holdings, at value (cost of $571,962) | 575,007 | ||
Receivable for investments sold | 954,499 | ||
Receivable for capital shares sold | 78 | ||
Dividends and interest receivable | 96,113 | ||
Securities lending receivable | 9,127 | ||
Other assets | 34,533 | ||
434,405,912 | |||
Liabilities | |||
Payable for collateral received for securities on loan | 2,410,349 | ||
Net Assets | $ | 431,995,563 | |
G Class Capital Shares, $0.01 Par Value | |||
Shares authorized | 510,000,000 | ||
Shares outstanding | 37,494,496 | ||
Net Asset Value Per Share | $ | 11.52 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 331,153,675 | |
Distributable earnings | 100,841,888 | ||
$ | 431,995,563 |
See Notes to Financial Statements.
11
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2019 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $1,001,110) | $ | 11,965,712 | |
Securities lending, net | 117,290 | ||
Interest | 106,507 | ||
12,189,509 | |||
Expenses: | |||
Management fees | 3,909,466 | ||
Directors' fees and expenses | 13,448 | ||
Other expenses | 28,683 | ||
3,951,597 | |||
Fees waived | (3,909,466 | ) | |
42,131 | |||
Net investment income (loss) | 12,147,378 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (19,725,545 | ) | |
Foreign currency translation transactions | (344,340 | ) | |
(20,069,885 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 60,259,456 | ||
Translation of assets and liabilities in foreign currencies | (3,539 | ) | |
60,255,917 | |||
Net realized and unrealized gain (loss) | 40,186,032 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 52,333,410 |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2019 AND NOVEMBER 30, 2018 | ||||||
Increase (Decrease) in Net Assets | November 30, 2019 | November 30, 2018 | ||||
Operations | ||||||
Net investment income (loss) | $ | 12,147,378 | $ | 7,969,662 | ||
Net realized gain (loss) | (20,069,885 | ) | 30,175,004 | |||
Change in net unrealized appreciation (depreciation) | 60,255,917 | (98,668,819 | ) | |||
Net increase (decrease) in net assets resulting from operations | 52,333,410 | (60,524,153 | ) | |||
Distributions to Shareholders | ||||||
From earnings | (36,104,267 | ) | (52,688,830 | ) | ||
Capital Share Transactions | ||||||
Proceeds from shares sold | 100,536,971 | 83,983,869 | ||||
Proceeds from reinvestment of distributions | 36,104,267 | 52,688,830 | ||||
Payments for shares redeemed | (123,853,000 | ) | (101,975,535 | ) | ||
Net increase (decrease) in net assets from capital share transactions | 12,788,238 | 34,697,164 | ||||
Net increase (decrease) in net assets | 29,017,381 | (78,515,819 | ) | |||
Net Assets | ||||||
Beginning of period | 402,978,182 | 481,494,001 | ||||
End of period | $ | 431,995,563 | $ | 402,978,182 | ||
Transactions in Shares of the Fund | ||||||
Sold | 9,172,751 | 6,690,534 | ||||
Issued in reinvestment of distributions | 3,643,216 | 3,988,864 | ||||
Redeemed | (11,328,492 | ) | (7,781,471 | ) | ||
Net increase (decrease) in shares of the fund | 1,487,475 | 2,897,927 |
See Notes to Financial Statements.
13
Notes to Financial Statements |
NOVEMBER 30, 2019
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.
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. 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.
14
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. Securities lending income is net of fees and rebates earned by the lending agent for its securities.
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.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
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.
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The
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lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of November 30, 2019.
Remaining Contractual Maturity of Agreements | ||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||
Securities Lending Transactions(1) | ||||||||||||
Common Stocks | $ | 2,410,349 | — | — | — | $ | 2,410,349 | |||||
Gross amount of recognized liabilities for securities lending transactions | $ | 2,410,349 |
(1) | Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand. |
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, 99% 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). The agreement provides that all expenses of managing and operating the fund, except 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 the daily net assets of the fund and paid monthly in arrears. The annual management fee is 0.90%. The investment advisor agreed to waive the fund'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 annual management fee for the period ended November 30, 2019 was 0.00% after waiver.
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 $157,209 and there were no interfund sales.
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4. Investment Transactions
Purchases and sales of investment securities, excluding short-term investments, for the period ended November 30, 2019 were $215,340,575 and $242,391,180, respectively.
5. 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.
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 | $ | 1,326,586 | — | — | ||||
Brazil | 8,829,042 | $ | 28,797,695 | — | ||||
China | 50,949,748 | 100,720,589 | — | |||||
Colombia | 2,906,385 | — | — | |||||
Mexico | 2,286,681 | 8,097,897 | — | |||||
Peru | 2,871,550 | — | — | |||||
Russia | 6,360,931 | 13,273,188 | — | |||||
Other Countries | — | 192,346,748 | — | |||||
Temporary Cash Investments | — | 11,552,257 | — | |||||
Temporary Cash Investments - Securities Lending Collateral | 2,410,349 | — | — | |||||
$ | 77,941,272 | $ | 354,788,374 | — |
6. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing in emerging markets or a significant portion of assets in one country or region may accentuate these risks.
The fund is owned by a relatively small number of shareholders, and in the event such shareholders redeem, the ongoing operations of the fund may be at risk.
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7. Federal Tax Information
On December 17, 2019, the fund declared and paid per-share distributions of $0.3268 from net investment income to shareholders of record on December 16, 2019.
The tax character of distributions paid during the years ended November 30, 2019 and November 30, 2018 were as follows:
2019 | 2018 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 5,981,675 | $ | 7,802,142 | ||
Long-term capital gains | $ | 30,122,592 | $ | 44,886,688 |
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 | $ | 323,304,493 | |
Gross tax appreciation of investments | $ | 119,100,136 | |
Gross tax depreciation of investments | (9,674,983 | ) | |
Net tax appreciation (depreciation) of investments | 109,425,153 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (13,739 | ) | |
Net tax appreciation (depreciation) | $ | 109,411,414 | |
Undistributed ordinary income | $ | 11,797,802 | |
Accumulated short-term capital losses | $ | (20,367,328 | ) |
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.
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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) | |||
G Class | |||||||||||||||||
2019 | $11.19 | 0.31 | 0.94 | 1.25 | (0.15) | (0.77) | (0.92) | $11.52 | 12.54% | 0.01% | 0.91% | 2.80% | 1.90% | 50% | $431,996 | ||
2018 | $14.54 | 0.23 | (2.00) | (1.77) | (0.14) | (1.44) | (1.58) | $11.19 | (13.75)% | 0.01% | 0.95% | 1.78% | 0.84% | 66% | $402,978 | ||
2017 | $10.27 | 0.09 | 4.26 | 4.35 | (0.08) | — | (0.08) | $14.54 | 42.75% | 0.69% | 1.25% | 0.74% | 0.18% | 56% | $481,494 | ||
2016 | $9.75 | 0.05 | 0.50 | 0.55 | (0.03) | — | (0.03) | $10.27 | 5.68% | 1.18% | 1.18% | 0.53% | 0.53% | 75% | $394,433 | ||
2015 | $10.84 | 0.05 | (1.12) | (1.07) | (0.02) | — | (0.02) | $9.75 | (9.88)% | 1.24% | 1.24% | 0.49% | 0.49% | 61% | $372,802 |
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. |
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.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of NT Emerging Markets Fund, one of the funds constituting the American Century World Mutual Funds, Inc. (the "Fund"), as of November 30, 2019, 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, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of NT Emerging Markets Fund of the American Century World Mutual Funds, Inc. as of November 30, 2019, 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.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of November 30, 2019, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2020
We have served as the auditor of one or more American Century investment companies since 1997.
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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 Jonathan S. Thomas, 16; and Stephen E. Yates, 8) 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 | 66 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 66 | None |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 66 | None |
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 66 | None |
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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 | |||||
Lynn Jenkins (1963) | Director | Since 2019 | United States Representative, U.S. House of Representatives (2009 to 2018) | 66 | MGP Ingredients, Inc. |
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 66 | None |
John R. Whitten (1946) | Director | Since 2008 | Retired | 66 | Onto Innovation Inc.; Rudolph Technologies, Inc. (2006 to 2019) |
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 81 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director | 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 | 125 | 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 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds. 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 |
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Chief Operating Officer, ACC (2012-2015). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries |
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Investment Operations and Investment Accounting, ACS (2000 to present) |
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). 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 since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) |
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 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 26, 2019, 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; |
• | any economies of scale associated with the Advisor’s management of the Fund and other accounts; |
• | services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; 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 provided by the Directors to the Advisor 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 connection with their review, the Directors did not identify any single factor as being all-important or
24
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.
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 investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor 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, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading
25
activities, portfolio valuation services, auditing services, and legal and operational compliance activities. 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, 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 Investment Company 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. 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.
26
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 such 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 may receive 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
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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 or as an exhibit to its reports on Form N-PORT. The fund’s Forms N-Q and Form N-PORT reports are available on the SEC’s website at sec.gov. 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.
28
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, 2019.
The fund hereby designates $30,122,592, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended November 30, 2019.
For the fiscal year ended November 30, 2019, the fund intends to pass through to shareholders foreign source income of $12,966,822 and foreign taxes paid of $965,960, 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, 2019 are $0.3458 and $0.0258, respectively.
29
Notes |
30
Notes |
31
Notes |
32
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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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91023 2001 |
![acihorizblkd32.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/acihorizblkd32.jpg)
Annual Report | |
November 30, 2019 | |
NT International Growth Fund | |
G Class (ACLNX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 | ||
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, 2019 | |||||
Average Annual Returns | |||||
Ticker Symbol | 1 year | 5 years | 10 years | Inception Date | |
G Class | ACLNX | 18.27% | 5.42% | 6.92% | 5/12/06 |
MSCI EAFE Index | — | 12.44% | 4.26% | 5.31% | — |
MSCI EAFE Growth Index | — | 18.36% | 6.35% | 6.85% | — |
Fund returns would have been lower if a portion of the fees had not been waived.
Growth of $10,000 Over 10 Years |
$10,000 investment made November 30, 2009 |
![chart-78888eb976e0532a9ada07.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/chart-78888eb976e0532a9ada07.jpg)
Value on November 30, 2019 | |
G Class — $19,535 | |
MSCI EAFE Index — $16,786 | |
MSCI EAFE Growth Index — $19,412 | |
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 | 0.82% |
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 Jim Zhao
Performance Summary
NT International Growth returned 18.27%* for the fiscal year ended November 30, 2019, compared with the 12.44% return of its benchmark, the MSCI EAFE Index.
Stock selection in a broad range of sectors contributed to the fund’s outperformance, including financials and health care as well as positioning in information technology and investments in communication services. Positioning in consumer staples detracted slightly. From a geographic perspective, holdings in Japan, positioning in China and investments in the U.K. benefited returns.
Non-U.S. equity markets experienced significant volatility during the period amid global economic uncertainty and U.S.-China trade tensions. Global stocks staged several rallies in the first half of 2019 as U.S. interest rate hikes paused and corporate earnings reports exceeded lowered expectations. Markets gave back some of the gains in the second half as signs of slowing economic growth and escalation of trade disputes dampened investor appetite for risk. Toward the end of the period, stocks rebounded on encouraging earnings reports, anticipation of a U.S.-China trade deal and improved prospects for an orderly Brexit.
Select Stocks Advanced Strongly Despite Broad Economic Unease
Selective investments within financials propelled fund returns. Stock of London Stock Exchange Group (LSEG) outperformed for the year, driven by strength in the company’s security clearing and data businesses, which have benefited from demand for clearing of new security classes, increased use of quantitative investment approaches and demand for market data from its Russell division. LSEG’s stock also benefited from news of the company’s proposed acquisition of financial data and technology firm Refinitiv. We believe the acquisition will enhance LSEG’s offerings for two of the strongest trends in financial markets: electronification of trading and demand for data.
Among health care stocks, blood plasma company CSL contributed to outperformance. The company’s leading position within the immunoglobulin market supported growth in a year that saw competitors suffer from shortages and disruptions. CSL has invested heavily in its plasma collection centers, which should help it to maintain its market share gains. Investors drove the stock higher as management reiterated the firm’s strong growth prospects for 2020.
Cellnex Telecom ranked among the top individual contributors. The European tower company gained significant market share in the past year, which drove better-than-expected earnings and propelled the stock higher. Announcement of an acquisition that should advance the company’s consolidation plans also boosted the stock. Cellnex continued to benefit from the increased use of data in Europe, the sale and leaseback of towers to cellular operators and the expansion of existing sites by adding more tenants.
ANTA Sports Products further boosted returns. The shoe and apparel company’s stock posted significant gains for the year on better-than-expected results demonstrating strong revenue and profit growth. Strength in FILA merchandise, for which ANTA owns marketing rights in China, drove the upside revenue surprise. Ongoing strength in mass-market demand continued to benefit ANTA brands in general.
*Fund returns would have been lower if a portion of the fees had not been waived.
3
On the downside, Canada Goose Holdings detracted from the fund’s performance. Stock of the apparel manufacturer and retailer weakened during the year as the market reacted to transitory issues, which caused volatility in short-term earnings results. We believe the long-term story remains intact as Canada Goose retains a strong brand presence, is migrating its model away from wholesale toward higher-margin retail and online business and is entering new markets with its own stores.
Portfolio Positioning
We remain focused on our disciplined, bottom-up process aimed at identifying companies with accelerating, sustainable growth. In a tougher environment for earnings growth, we are looking for companies whose growth does not depend on economic improvement. As a result of this selection process, information technology was the fund’s largest overweight position relative to the benchmark at period-end. We are invested in companies that benefit from secular and structural growth drivers, including the ongoing shift to digital and increased corporate spending on technology to increase efficiency and enhance competitive position. The fund remains overweight in consumer discretionary. Consumer spending has remained strong, particularly in the U.S., supported by strong employment data, and in China, where demand for premium products remains solid. We remain underweight in financials, particularly banks, due to the pressures of a low interest rate environment. However, we are finding nonbank opportunities, including financial exchanges, data providers and select insurance companies benefiting from improved pricing trends in the property and casualty business.
The fund’s largest regional exposure is in Europe. We remain underweight in Japan and Asia in general, as they have more exposure to global trade and cyclical weakness than other markets.
4
Fund Characteristics |
NOVEMBER 30, 2019 | |
Top Ten Holdings | % of net assets |
Nestle SA | 4.1% |
AIA Group Ltd. | 3.0% |
CSL Ltd. | 2.8% |
AstraZeneca plc | 2.5% |
Novartis AG | 2.1% |
Keyence Corp. | 2.0% |
Cellnex Telecom SA | 1.9% |
Recruit Holdings Co. Ltd. | 1.7% |
Schneider Electric SE | 1.7% |
ASML Holding NV | 1.7% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 99.4% |
Temporary Cash Investments | 0.9% |
Temporary Cash Investments - Securities Lending Collateral | 0.7% |
Other Assets and Liabilities | (1.0)% |
Investments by Country | % of net assets |
Japan | 17.3% |
Switzerland | 13.1% |
France | 10.0% |
United Kingdom | 9.6% |
Germany | 5.6% |
Australia | 5.4% |
China | 4.6% |
Netherlands | 4.5% |
Sweden | 4.1% |
Canada | 3.8% |
Hong Kong | 3.5% |
Spain | 3.4% |
Ireland | 2.9% |
Denmark | 2.6% |
Other Countries | 9.0% |
Cash and Equivalents* | 0.6% |
* Includes temporary cash investments, temporary cash investments - securities lending collateral 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, 2019 to November 30, 2019.
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 6/1/19 | Ending Account Value 11/30/19 | Expenses Paid During Period(1) 6/1/19 - 11/30/19 | Annualized Expense Ratio(1) | |
Actual | ||||
G Class | $1,000 | $1,122.40 | $0.05 | 0.01% |
Hypothetical | ||||
G Class | $1,000 | $1,025.02 | $0.05 | 0.01% |
(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. |
6
Schedule of Investments |
NOVEMBER 30, 2019
Shares | Value | |||
COMMON STOCKS — 99.4% | ||||
Australia — 5.4% | ||||
Aristocrat Leisure Ltd. | 274,720 | $ | 6,304,202 | |
Atlassian Corp. plc, Class A(1) | 28,940 | 3,678,563 | ||
CSL Ltd. | 121,950 | 23,452,509 | ||
Treasury Wine Estates Ltd. | 870,090 | 11,030,870 | ||
44,466,144 | ||||
Austria — 0.9% | ||||
Erste Group Bank AG(1) | 208,174 | 7,447,702 | ||
Belgium — 1.3% | ||||
KBC Group NV | 150,360 | 10,946,922 | ||
Brazil — 1.1% | ||||
Localiza Rent a Car SA | 390,020 | 4,087,485 | ||
Magazine Luiza SA | 489,599 | 5,227,077 | ||
9,314,562 | ||||
Canada — 3.8% | ||||
Alimentation Couche-Tard, Inc., B Shares | 272,270 | 8,949,265 | ||
Canada Goose Holdings, Inc.(1)(2) | 198,510 | 7,573,156 | ||
Canadian Pacific Railway Ltd. | 26,100 | 6,216,803 | ||
Intact Financial Corp. | 85,970 | 8,859,770 | ||
31,598,994 | ||||
China — 4.6% | ||||
Alibaba Group Holding Ltd. ADR(1) | 61,570 | 12,314,000 | ||
ANTA Sports Products Ltd. | 523,000 | 4,916,808 | ||
GDS Holdings Ltd. ADR(1) | 178,160 | 8,341,451 | ||
TAL Education Group ADR(1) | 119,990 | 5,310,758 | ||
Tencent Holdings Ltd. | 163,900 | 6,948,466 | ||
37,831,483 | ||||
Denmark — 2.6% | ||||
Carlsberg A/S, B Shares | 29,060 | 4,177,892 | ||
DSV Panalpina A/S | 80,932 | 8,806,328 | ||
Novo Nordisk A/S, B Shares | 144,770 | 8,129,763 | ||
21,113,983 | ||||
Finland — 1.4% | ||||
Neste Oyj | 330,650 | 11,181,738 | ||
France — 10.0% | ||||
Airbus SE | 64,450 | 9,464,378 | ||
Danone SA | 77,380 | 6,368,728 | ||
Dassault Systemes SE | 43,880 | 6,907,906 | ||
Edenred | 120,475 | 5,977,891 | ||
LVMH Moet Hennessy Louis Vuitton SE | 23,280 | 10,436,547 | ||
Peugeot SA | 210,560 | 5,081,088 |
7
Shares | Value | |||
Schneider Electric SE | 146,970 | $ | 14,173,042 | |
Teleperformance | 28,240 | 6,685,018 | ||
TOTAL SA | 156,620 | 8,222,833 | ||
Valeo SA | 229,560 | 9,033,277 | ||
82,350,708 | ||||
Germany — 5.6% | ||||
adidas AG | 30,110 | 9,381,044 | ||
Infineon Technologies AG | 493,814 | 10,548,280 | ||
Puma SE | 72,500 | 5,450,251 | ||
SAP SE | 82,280 | 11,200,067 | ||
Symrise AG | 104,030 | 10,091,205 | ||
46,670,847 | ||||
Hong Kong — 3.5% | ||||
AIA Group Ltd. | 2,502,200 | 25,064,905 | ||
Hong Kong Exchanges & Clearing Ltd. | 128,900 | 4,073,544 | ||
29,138,449 | ||||
Hungary — 0.5% | ||||
OTP Bank Nyrt | 84,917 | 3,994,868 | ||
India — 0.7% | ||||
HDFC Bank Ltd. | 327,890 | 5,826,541 | ||
Indonesia — 0.7% | ||||
Bank Central Asia Tbk PT | 2,628,300 | 5,847,836 | ||
Ireland — 2.9% | ||||
CRH plc | 235,092 | 8,987,385 | ||
ICON plc(1) | 32,710 | 5,336,964 | ||
Kerry Group plc, A Shares | 72,520 | 9,313,729 | ||
23,638,078 | ||||
Italy — 1.1% | ||||
Nexi SpA(1) | 336,146 | 3,963,375 | ||
Prysmian SpA | 236,220 | 5,382,439 | ||
9,345,814 | ||||
Japan — 17.3% | ||||
Daikin Industries Ltd. | 40,200 | 5,793,155 | ||
Fast Retailing Co. Ltd. | 13,500 | 8,236,385 | ||
GMO Payment Gateway, Inc. | 65,700 | 4,659,632 | ||
Hoya Corp. | 144,300 | 13,175,228 | ||
Keyence Corp. | 47,600 | 16,309,598 | ||
MonotaRO Co. Ltd. | 324,900 | 9,159,039 | ||
Murata Manufacturing Co. Ltd. | 212,200 | 12,320,051 | ||
Nidec Corp. | 59,900 | 8,878,690 | ||
Obic Co. Ltd. | 46,600 | 6,194,042 | ||
Pan Pacific International Holdings Corp. | 664,400 | 10,776,076 | ||
Recruit Holdings Co. Ltd. | 396,000 | 14,356,140 | ||
Shimadzu Corp. | 247,100 | 7,473,148 | ||
Shiseido Co. Ltd. | 117,300 | 8,474,753 |
8
Shares | Value | |||
Sysmex Corp. | 101,400 | $ | 7,038,830 | |
Terumo Corp. | 288,000 | 10,124,280 | ||
142,969,047 | ||||
Netherlands — 4.5% | ||||
Adyen NV(1) | 11,620 | 8,907,728 | ||
ASML Holding NV | 51,670 | 14,043,005 | ||
Koninklijke DSM NV | 108,550 | 13,898,477 | ||
36,849,210 | ||||
Poland — 0.2% | ||||
Bank Polska Kasa Opieki SA | 57,890 | 1,548,857 | ||
Spain — 3.4% | ||||
Cellnex Telecom SA | 371,217 | 15,943,783 | ||
Iberdrola SA | 1,224,200 | 12,039,776 | ||
27,983,559 | ||||
Sweden — 4.1% | ||||
Atlas Copco AB, A Shares | 189,080 | 6,923,313 | ||
Hexagon AB, B Shares | 181,520 | 10,255,654 | ||
Lundin Petroleum AB | 226,550 | 6,989,728 | ||
Telefonaktiebolaget LM Ericsson, B Shares | 1,105,640 | 9,977,270 | ||
34,145,965 | ||||
Switzerland — 13.1% | ||||
Lonza Group AG(1) | 38,910 | 13,210,875 | ||
Nestle SA | 325,570 | 33,835,400 | ||
Novartis AG | 191,980 | 17,698,623 | ||
Partners Group Holding AG | 10,720 | 9,037,160 | ||
Sika AG | 49,965 | 8,692,537 | ||
Straumann Holding AG | 7,510 | 7,222,748 | ||
Temenos AG(1) | 51,920 | 7,866,968 | ||
Zurich Insurance Group AG | 28,230 | 11,071,184 | ||
108,635,495 | ||||
Taiwan — 1.1% | ||||
Taiwan Semiconductor Manufacturing Co. Ltd. | 939,000 | 9,427,141 | ||
United Kingdom — 9.6% | ||||
ASOS plc(1) | 96,410 | 3,978,260 | ||
AstraZeneca plc | 217,730 | 21,015,441 | ||
B&M European Value Retail SA | 1,550,866 | 7,583,259 | ||
Burberry Group plc | 342,300 | 9,289,129 | ||
Ferguson plc | 75,910 | 6,595,012 | ||
Fevertree Drinks plc | 176,750 | 4,995,233 | ||
London Stock Exchange Group plc | 148,950 | 13,233,235 | ||
Melrose Industries plc | 4,348,780 | 12,901,014 | ||
79,590,583 | ||||
TOTAL COMMON STOCKS (Cost $633,028,258) | 821,864,526 |
9
Shares | Value | |||
TEMPORARY CASH INVESTMENTS — 0.9% | ||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.625% - 2.875%, 11/15/20 - 8/15/28, valued at $6,520,071), in a joint trading account at 1.40%, dated 11/29/19, due 12/2/19 (Delivery value $6,398,386) | $ | 6,397,640 | ||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.375%, 5/15/27, valued at $1,455,105), at 0.65%, dated 11/29/19, due 12/2/19 (Delivery value $1,424,077) | 1,424,000 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $7,821,640) | 7,821,640 | |||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(3) — 0.7% | ||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $5,760,807) | 5,760,807 | 5,760,807 | ||
TOTAL INVESTMENT SECURITIES — 101.0% (Cost $646,610,705) | 835,446,973 | |||
OTHER ASSETS AND LIABILITIES — (1.0)% | (8,296,100 | ) | ||
TOTAL NET ASSETS — 100.0% | $ | 827,150,873 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Information Technology | 18.4 | % |
Health Care | 15.3 | % |
Industrials | 15.1 | % |
Consumer Discretionary | 14.7 | % |
Financials | 12.9 | % |
Consumer Staples | 10.5 | % |
Materials | 5.0 | % |
Energy | 3.3 | % |
Communication Services | 2.7 | % |
Utilities | 1.5 | % |
Cash and Equivalents* | 0.6 | % |
* Includes temporary cash investments, temporary cash investments - securities lending collateral and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS | ||
ADR | - | American Depositary Receipt |
(1) | Non-income producing. |
(2) | Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $6,984,044. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(3) | Investment of cash collateral from securities on loan. At the period end, the aggregate market value of the collateral held by the fund was $7,162,696, which includes securities collateral of $1,401,889. |
See Notes to Financial Statements.
10
Statement of Assets and Liabilities |
NOVEMBER 30, 2019 | |||
Assets | |||
Investment securities, at value (cost of $640,849,898) — including $6,984,044 of securities on loan | $ | 829,686,166 | |
Investment made with cash collateral received for securities on loan, at value (cost of $5,760,807) | 5,760,807 | ||
Total investment securities, at value (cost of $646,610,705) | 835,446,973 | ||
Cash | 4,518 | ||
Foreign currency holdings, at value (cost of $334,171) | 323,325 | ||
Receivable for investments sold | 1,657,498 | ||
Dividends and interest receivable | 1,384,701 | ||
Securities lending receivable | 2,914 | ||
Other assets | 12,925 | ||
838,832,854 | |||
Liabilities | |||
Payable for collateral received for securities on loan | 5,760,807 | ||
Payable for capital shares redeemed | 5,793,536 | ||
Accrued foreign taxes | 127,638 | ||
11,681,981 | |||
Net Assets | $ | 827,150,873 | |
G Class Capital Shares, $0.01 Par Value | |||
Shares authorized | 1,000,000,000 | ||
Shares outstanding | 72,750,439 | ||
Net Asset Value Per Share | $ | 11.37 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 619,777,550 | |
Distributable earnings | 207,373,323 | ||
$ | 827,150,873 |
See Notes to Financial Statements.
11
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2019 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $1,360,557) | $ | 13,152,507 | |
Interest (net of foreign taxes withheld of $145) | 110,537 | ||
Securities lending, net | 21,294 | ||
13,284,338 | |||
Expenses: | |||
Management fees | 6,819,203 | ||
Directors' fees and expenses | 25,692 | ||
Other expenses | 62,725 | ||
6,907,620 | |||
Fees waived | (6,819,203 | ) | |
88,417 | |||
Net investment income (loss) | 13,195,921 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions (net of foreign tax expenses paid (refunded) of $(331)) | 17,307,484 | ||
Foreign currency translation transactions | (146,571 | ) | |
17,160,913 | |||
Change in net unrealized appreciation (depreciation) on: | |||
Investments (includes (increase) decrease in accrued foreign taxes of $(107,593)) | 107,615,998 | ||
Translation of assets and liabilities in foreign currencies | (25,198 | ) | |
107,590,800 | |||
Net realized and unrealized gain (loss) | 124,751,713 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 137,947,634 |
See Notes to Financial Statements.
12
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2019 AND NOVEMBER 30, 2018 | ||||||
Increase (Decrease) in Net Assets | November 30, 2019 | November 30, 2018 | ||||
Operations | ||||||
Net investment income (loss) | $ | 13,195,921 | $ | 17,150,265 | ||
Net realized gain (loss) | 17,160,913 | 91,980,493 | ||||
Change in net unrealized appreciation (depreciation) | 107,590,800 | (172,890,172 | ) | |||
Net increase (decrease) in net assets resulting from operations | 137,947,634 | (63,759,414 | ) | |||
Distributions to Shareholders | ||||||
From earnings | (108,218,409 | ) | (46,157,333 | ) | ||
Capital Share Transactions | ||||||
Proceeds from shares sold | 25,530,950 | 91,937,445 | ||||
Proceeds from reinvestment of distributions | 108,218,409 | 46,157,333 | ||||
Payments for shares redeemed | (232,567,170 | ) | (171,783,307 | ) | ||
Net increase (decrease) in net assets from capital share transactions | (98,817,811 | ) | (33,688,529 | ) | ||
Net increase (decrease) in net assets | (69,088,586 | ) | (143,605,276 | ) | ||
Net Assets | ||||||
Beginning of period | 896,239,459 | 1,039,844,735 | ||||
End of period | $ | 827,150,873 | $ | 896,239,459 | ||
Transactions in Shares of the Fund | ||||||
Sold | 2,530,857 | 7,621,342 | ||||
Issued in reinvestment of distributions | 11,892,133 | 3,761,239 | ||||
Redeemed | (22,184,342) | (13,568,888) | ||||
Net increase (decrease) in shares of the fund | (7,761,352) | (2,186,307) |
See Notes to Financial Statements.
13
Notes to Financial Statements |
NOVEMBER 30, 2019
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.
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. 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.
14
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 less foreign tax withheld, if any, is recorded on the accrual basis and includes accretion of discounts and amortization of premiums. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
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.
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of November 30, 2019.
Remaining Contractual Maturity of Agreements | ||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||
Securities Lending Transactions(1) | ||||||||||||
Common Stocks | $ | 5,760,807 | — | — | — | $ | 5,760,807 | |||||
Gross amount of recognized liabilities for securities lending transactions | $ | 5,760,807 |
(1) | Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand. |
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). The agreement provides that all expenses of managing and operating the fund, except 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 the daily net assets of the fund 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%. The investment advisor agreed to waive the fund’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, 2019 was 0.83% before waiver and 0.00% after waiver.
16
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 $1,053,070 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, 2019 were $579,683,031 and $762,704,636, respectively.
5. 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.
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 | ||||||||
Australia | $ | 3,678,563 | $ | 40,787,581 | — | |||
Canada | 7,573,156 | 24,025,838 | — | |||||
China | 25,966,209 | 11,865,274 | — | |||||
Ireland | 5,336,964 | 18,301,114 | — | |||||
Other Countries | — | 684,329,827 | — | |||||
Temporary Cash Investments | — | 7,821,640 | — | |||||
Temporary Cash Investments - Securities Lending Collateral | 5,760,807 | ��� | — | |||||
$ | 48,315,699 | $ | 787,131,274 | — |
17
6. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing in emerging markets or a significant portion of assets in one country or region may accentuate these risks.
The fund is owned by a relatively small number of shareholders, and in the event such shareholders redeem, the ongoing operations of the fund may be at risk.
7. Federal Tax Information
On December 17, 2019, the fund declared and paid per-share distributions of $0.0657 and $0.1719 from net realized gains and net investment income, respectively to shareholders of record on December 16, 2019.
The tax character of distributions paid during the years ended November 30, 2019 and November 30, 2018 were as follows:
2019 | 2018 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 16,694,228 | $ | 15,877,581 | ||
Long-term capital gains | $ | 91,524,181 | $ | 30,279,752 |
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 | $ | 649,343,017 | |
Gross tax appreciation of investments | $ | 190,042,579 | |
Gross tax depreciation of investments | (3,938,623 | ) | |
Net tax appreciation (depreciation) of investments | 186,103,956 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (167,412 | ) | |
Net tax appreciation (depreciation) | $ | 185,936,544 | |
Undistributed ordinary income | $ | 12,387,328 | |
Accumulated long-term gains | $ | 9,049,451 |
The difference between book-basis and tax-basis unrealized appreciation (depreciation) is attributable primarily to the tax deferral of losses on wash sales.
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 | 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) | |||
G Class | |||||||||||||||||
2019 | $11.13 | 0.17 | 1.50 | 1.67 | (0.22) | (1.21) | (1.43) | $11.37 | 18.27% | 0.01% | 0.84% | 1.60% | 0.77% | 70% | $827,151 | ||
2018 | $12.57 | 0.22 | (1.09) | (0.87) | (0.20) | (0.37) | (0.57) | $11.13 | (7.35)% | 0.01% | 0.82% | 1.75% | 0.94% | 71% | $896,239 | ||
2017 | $9.61 | 0.14 | 2.91 | 3.05 | (0.09) | — | (0.09) | $12.57 | 32.02% | 0.61% | 0.91% | 1.26% | 0.96% | 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% | 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% | 0.97% | 0.69% | 0.69% | 83% | $795,985 |
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. |
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.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of NT International Growth Fund, one of the funds constituting the American Century World Mutual Funds, Inc. (the "Fund"), as of November 30, 2019, 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, the financial highlights for each of the five years in the period then ended, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of NT International Growth Fund of the American Century World Mutual Funds, Inc. as of November 30, 2019, 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.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of November 30, 2019, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2020
We have served as the auditor of one or more American Century investment companies since 1997.
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 Jonathan S. Thomas, 16; and Stephen E. Yates, 8) 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 | 66 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 66 | None |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 66 | None |
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 66 | None |
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 | |||||
Lynn Jenkins (1963) | Director | Since 2019 | United States Representative, U.S. House of Representatives (2009 to 2018) | 66 | MGP Ingredients, Inc. |
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 66 | None |
John R. Whitten (1946) | Director | Since 2008 | Retired | 66 | Onto Innovation Inc.; Rudolph Technologies, Inc. (2006 to 2019) |
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 81 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director | 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 | 125 | 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 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds. 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 |
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Chief Operating Officer, ACC (2012-2015). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries |
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Investment Operations and Investment Accounting, ACS (2000 to present) |
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). 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 since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) |
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 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 26, 2019, 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; |
• | any economies of scale associated with the Advisor’s management of the Fund and other accounts; |
• | services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; 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 provided by the Directors to the Advisor 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 connection with their review, the Directors did not identify any single factor as being all-important or
24
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.
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 investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor 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 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, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading
25
activities, portfolio valuation services, auditing services, and legal and operational compliance activities. 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, 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 Investment Company 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. 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
26
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 such 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 may receive 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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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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 or as an exhibit to its reports on Form N-PORT. The fund’s Forms N-Q and Form N-PORT reports are available on the SEC’s website at sec.gov. 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, 2019.
The fund hereby designates $91,616,753, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended November 30, 2019.
For the fiscal year ended November 30, 2019, the fund intends to pass through to shareholders foreign source income of $14,513,064 and foreign taxes paid of $1,339,683, 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, 2019 are $0.1995 and $0.0184, respectively.
The fund utilized earnings and profits of $231,100 distributed to shareholders on redemption of shares as part of the dividends paid deduction (tax equalization).
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Notes |
30
Notes |
31
Notes |
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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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91024 2001 |
![acihorizblkd32.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/acihorizblkd32.jpg)
Annual Report | |
November 30, 2019 | |
NT International Small-Mid Cap Fund | |
Investor Class (ANTSX) | |
G Class (ANTMX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
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 | ||
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, 2019 | ||||
Average Annual Returns | ||||
Ticker Symbol | 1 year | Since Inception | Inception Date | |
Investor Class | ANTSX | 13.13% | 5.50% | 3/19/15 |
MSCI EAFE Small Cap Index | — | 12.01% | 7.41% | — |
G Class | ANTMX | 14.77% | 6.38% | 3/19/15 |
G Class returns would have been lower if a portion of the fees had not been waived.
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. |
![chart-25cc4783f1a85205b89.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/chart-25cc4783f1a85205b89.jpg)
Value on November 30, 2019 | |
Investor Class — $12,863 | |
MSCI EAFE Small Cap Index — $13,997 | |
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.
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Portfolio Commentary |
Portfolio Managers: Trevor Gurwich, Federico Laffan and Pratik Patel
Performance Summary
NT International Small-Mid Cap returned 14.77%* for the 12 months ended November 30, 2019, outperforming the MSCI EAFE Small Cap Index, which returned 12.01% for the same period.
Positive corporate earnings news and a shift to more accommodative monetary policy by major central banks helped non-U.S. small- and mid-cap stocks end the 12-month period with strong positive performance despite uncertainty over the global economic outlook and trade policies. The fund outperformed the index, assisted by positive stock selection, especially in the information technology and financials sectors. An overweight in information technology also contributed. Stock selection in consumer discretionary and an underweight and stock selection in real estate detracted. From a geographic perspective, investments in the U.K. contributed, while holdings in Canada detracted.
Information Technology Stocks Contributed
Stock selection in information technology helped drive the fund’s relative outperformance, due in part to our focus on companies capitalizing on the growth in cloud computing, e-commerce, electronic payments, 5G communications and data centers. Lasertec, a leading contributor, makes advanced laser equipment used in semiconductor manufacturing. It reported strong revenue and earnings growth, as it capitalized on an improving outlook for the global semiconductor industry. Barco, another contributor, is a global supplier of digital imaging and projecting technology. The stock surged higher after the company reported solid first-quarter growth, boosted by gains in its entertainment division and strong demand trends for its ClickShare wireless presentation system.
While overall stock selection in the materials sector detracted from relative performance, gold producer Kirkland Lake Gold was a strong positive contributor. The stock rose as the company reported increased production and strong earnings growth. Elsewhere in the portfolio, media company Entertainment One was a standout contributor. The stock surged higher in August after the company received an acquisition offer from toymaker Hasbro. This offer was priced at a substantial premium to the stock’s previous closing price, and we sold our position, taking our profits.
Several Materials Stocks were Notable Detractors
Canada Goose Holdings, a global manufacturer and distributor of luxury down coats, was a prominent detractor from relative performance. The stock fell sharply in the second quarter after the company reported weaker-than-expected revenue growth. More recently, it has faced concerns over the strength of its wholesale business and the impact of Hong Kong protests on consumer spending. However, we remain optimistic about the company’s long-term revenue growth potential as it expands its store base and broadens into new product areas such as footwear.
Economic uncertainty acted as headwinds for several materials stocks, including copper and zinc mining company Hudbay Minerals and AMG Advanced Metallurgical Group, a producer of specialty metals and metallurgical vacuum furnace systems. After strong performance early in 2019,
*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 exceeds that of the fund’s benchmark, other share classes may not. See page 2 for returns for all share classes.
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Hudbay’s stock sold off in the second quarter after a decline in copper prices and lower production resulted in weaker-than-expected revenue growth and a first-quarter loss. Our concerns over the impact of global economic uncertainty on Hudbay’s earnings outlook led us to exit the position. We also liquidated our holdings in AMG. The stock dropped sharply in July after the company reported a year-over-year revenue decline and lower earnings and guidance, due in part to weaker specialty metal prices.
Outlook
The fund continues to invest in non-U.S. small- and mid-cap companies we believe are demonstrating accelerating and sustainable growth. Our stock selection process continues to drive our sector and country allocations, and it led to increased exposure to information technology, our largest sector overweight. We continued to focus on companies we expect to benefit from long-term growth drivers such as expansion of cloud computing and e-commerce. The fund is also overweight in health care, consumer staples and industrials. We added to our industrials exposure, focusing on companies we believe offer sustainable and accelerating earnings growth, for example, in the commercial services and supplies and machinery industries. Conversely, we significantly reduced our weighting in materials because of our concerns over global economic uncertainty. Materials ended the period as a notable relative underweight. Real estate and communication services are also underweights due to a relative lack of compelling investment opportunities we found in those sectors.
From a regional standpoint, our bottom-up process led to an overweight in Europe, and we added to our European exposure as our outlook for European small-cap earnings remains healthy despite moderating economic growth. The fund remains overweight in North America, specifically Canada. Stock selection led to an underweight in Asia, including Japan, given uncertainty due in part to the economic effects of ongoing trade conflicts and Japan’s recent consumer tax increase.
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Fund Characteristics |
NOVEMBER 30, 2019 | |
Top Ten Holdings | % of net assets |
Teleperformance | 2.1% |
Intermediate Capital Group plc | 2.1% |
Barco NV | 1.7% |
UNITE Group plc (The) | 1.7% |
Loomis AB, B Shares | 1.7% |
Avast plc | 1.6% |
SOITEC | 1.5% |
HelloFresh SE | 1.5% |
Orix JREIT, Inc. | 1.5% |
Fastighets AB Balder, B Shares | 1.4% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 100.0% |
Rights | —* |
Total Equity Exposure | 100.0% |
Temporary Cash Investments | 0.5% |
Temporary Cash Investments - Securities Lending Collateral | 0.9% |
Other Assets and Liabilities | (1.4)% |
*Category is less than 0.05% of total net assets. | |
Investments by Country | % of net assets |
Japan | 24.2% |
United Kingdom | 18.2% |
France | 9.0% |
Canada | 8.5% |
Germany | 6.9% |
Sweden | 6.8% |
Australia | 4.6% |
Switzerland | 4.6% |
Norway | 2.8% |
Italy | 2.8% |
Belgium | 2.8% |
Netherlands | 2.3% |
Other Countries | 6.5% |
Cash and Equivalents* | —** |
*Includes temporary cash investments, temporary cash investments - securities lending collateral and other assets and liabilities. | |
**Category is less than 0.05% of total net assets. |
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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, 2019 to November 30, 2019.
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 6/1/19 | Ending Account Value 11/30/19 | Expenses Paid During Period(1) 6/1/19 - 11/30/19 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,090.40 | $7.76 | 1.48% |
G Class | $1,000 | $1,097.90 | $0.05 | 0.01% |
Hypothetical | ||||
Investor Class | $1,000 | $1,017.65 | $7.49 | 1.48% |
G Class | $1,000 | $1,025.02 | $0.05 | 0.01% |
(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. |
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Schedule of Investments |
NOVEMBER 30, 2019
Shares | Value | |||
COMMON STOCKS — 100.0% | ||||
Australia — 4.6% | ||||
Afterpay Touch Group Ltd.(1) | 135,548 | $ | 2,894,962 | |
Breville Group Ltd. | 74,340 | 865,581 | ||
Jumbo Interactive Ltd.(2) | 244,441 | 3,391,174 | ||
Saracen Mineral Holdings Ltd.(1) | 1,150,898 | 2,396,588 | ||
Seven Group Holdings Ltd.(2) | 362,215 | 4,702,945 | ||
WiseTech Global Ltd.(2) | 65,799 | 1,213,315 | ||
15,464,565 | ||||
Belgium — 2.8% | ||||
Argenx SE(1)(2) | 24,243 | 3,602,452 | ||
Barco NV | 24,562 | 5,666,427 | ||
9,268,879 | ||||
Canada — 8.5% | ||||
ATS Automation Tooling Systems, Inc.(1) | 122,246 | 1,812,109 | ||
Badger Daylighting Ltd. | 25,911 | 708,100 | ||
BRP, Inc. | 73,626 | 3,657,743 | ||
Canada Goose Holdings, Inc.(1) | 51,743 | 1,973,995 | ||
Colliers International Group, Inc. | 38,253 | 2,766,092 | ||
Descartes Systems Group, Inc. (The)(1) | 73,556 | 3,149,236 | ||
ECN Capital Corp. | 616,601 | 2,065,704 | ||
Element Fleet Management Corp. | 95,811 | 826,616 | ||
FirstService Corp. | 28,675 | 2,753,085 | ||
Gibson Energy, Inc. | 178,089 | 3,341,096 | ||
Kirkland Lake Gold Ltd. | 54,691 | 2,292,551 | ||
TFI International, Inc. | 89,357 | 2,946,500 | ||
28,292,827 | ||||
Finland — 1.0% | ||||
Valmet Oyj | 149,881 | 3,352,625 | ||
France — 9.0% | ||||
Alten SA | 25,567 | 2,951,522 | ||
Cie Plastic Omnium SA | 95,457 | 2,591,266 | ||
Euronext NV | 53,571 | 4,044,791 | ||
Gaztransport Et Technigaz SA | 11,090 | 979,512 | ||
Korian SA | 108,848 | 4,786,088 | ||
Nexity SA | 48,122 | 2,424,776 | ||
SOITEC(1) | 47,694 | 5,040,302 | ||
Teleperformance | 29,998 | 7,101,174 | ||
29,919,431 | ||||
Germany — 6.9% | ||||
Evotec SE(1)(2) | 86,507 | 1,917,024 | ||
HelloFresh SE(1) | 244,362 | 4,862,861 | ||
Isra Vision AG | 37,422 | 1,598,360 |
7
Shares | Value | |||
MorphoSys AG(1) | 29,282 | $ | 3,618,536 | |
Rheinmetall AG | 24,540 | 2,613,135 | ||
Sixt SE | 17,446 | 1,651,985 | ||
Stroeer SE & Co. KGaA | 33,296 | 2,602,729 | ||
Varta AG(1) | 31,672 | 4,048,348 | ||
22,912,978 | ||||
Hong Kong — 1.6% | ||||
Ausnutria Dairy Corp. Ltd.(1) | 1,180,000 | 1,464,983 | ||
Man Wah Holdings Ltd. | 2,115,200 | 1,526,993 | ||
Melco International Development Ltd. | 337,000 | 826,696 | ||
Minth Group Ltd. | 464,000 | 1,594,723 | ||
5,413,395 | ||||
Israel — 1.7% | ||||
Kornit Digital Ltd.(1)(2) | 102,971 | 3,511,311 | ||
Nova Measuring Instruments Ltd.(1) | 59,370 | 2,144,444 | ||
5,655,755 | ||||
Italy — 2.8% | ||||
Amplifon SpA | 103,378 | 3,025,620 | ||
Autogrill SpA | 165,768 | 1,771,075 | ||
FinecoBank Banca Fineco SpA | 368,717 | 4,571,372 | ||
9,368,067 | ||||
Japan — 24.2% | ||||
Anritsu Corp. | 206,600 | 3,935,312 | ||
Ariake Japan Co. Ltd. | 27,600 | 1,967,978 | ||
Aruhi Corp. | 167,700 | 3,813,947 | ||
Cosmos Pharmaceutical Corp. | 17,000 | 3,428,386 | ||
Fancl Corp. | 76,800 | 2,051,045 | ||
Fuji Soft, Inc. | 33,800 | 1,334,520 | ||
GMO Payment Gateway, Inc. | 32,800 | 2,326,270 | ||
Harmonic Drive Systems, Inc. | 34,900 | 1,516,755 | ||
KH Neochem Co. Ltd. | 51,800 | 1,178,442 | ||
Kobe Bussan Co. Ltd. | 106,600 | 3,306,865 | ||
Lasertec Corp. | 48,500 | 4,189,041 | ||
Mabuchi Motor Co. Ltd. | 50,300 | 1,920,201 | ||
Nabtesco Corp. | 109,500 | 3,370,160 | ||
Nihon Kohden Corp. | 75,000 | 2,033,775 | ||
Nihon M&A Center, Inc. | 114,600 | 3,817,827 | ||
Nippon Gas Co. Ltd. | 113,600 | 3,592,285 | ||
Open House Co. Ltd. | 125,200 | 3,355,685 | ||
Orix JREIT, Inc. | 2,199 | 4,835,538 | ||
PeptiDream, Inc.(1) | 49,100 | 2,259,532 | ||
Pigeon Corp. | 75,500 | 3,516,643 | ||
Pressance Corp. | 194,100 | 3,117,402 | ||
SCSK Corp. | 52,300 | 2,741,926 | ||
SHIFT, Inc.(1) | 43,400 | 3,117,827 | ||
SHO-BOND Holdings Co. Ltd. | 87,000 | 3,371,790 | ||
Trust Tech, Inc. | 180,800 | 2,247,098 |
8
Shares | Value | |||
UT Group Co. Ltd. | 146,300 | $ | 4,153,157 | |
Zenkoku Hosho Co. Ltd. | 101,800 | 4,095,468 | ||
80,594,875 | ||||
Netherlands — 2.3% | ||||
IMCD NV | 26,643 | 2,214,386 | ||
InterXion Holding NV(1) | 30,018 | 2,552,731 | ||
Takeaway.com NV(1)(2) | 30,594 | 2,749,298 | ||
7,516,415 | ||||
Norway — 2.8% | ||||
Bakkafrost P/F | 53,189 | 3,562,950 | ||
Subsea 7 SA | 207,968 | 2,173,129 | ||
TGS NOPEC Geophysical Co. ASA | 129,757 | 3,686,544 | ||
9,422,623 | ||||
Portugal — 0.5% | ||||
NOS SGPS SA | 304,274 | 1,650,195 | ||
Singapore — 1.0% | ||||
Mapletree Industrial Trust | 1,780,000 | 3,268,057 | ||
Spain — 0.7% | ||||
Inmobiliaria Colonial Socimi SA | 192,976 | 2,434,129 | ||
Sweden — 6.8% | ||||
AAK AB | 173,993 | 3,178,331 | ||
Elekta AB, B Shares(2) | 134,013 | 1,680,943 | ||
Embracer Group AB(1) | 299,362 | 2,118,135 | ||
Fabege AB | 196,181 | 3,066,311 | ||
Fastighets AB Balder, B Shares(1) | 115,148 | 4,796,391 | ||
Lindab International AB | 185,295 | 2,201,394 | ||
Loomis AB, B Shares | 133,804 | 5,585,308 | ||
22,626,813 | ||||
Switzerland — 4.6% | ||||
Cembra Money Bank AG | 22,926 | 2,384,778 | ||
Georg Fischer AG | 2,507 | 2,454,752 | ||
Landis+Gyr Group AG(1) | 33,825 | 3,452,907 | ||
SIG Combibloc Group AG(1) | 212,945 | 2,946,722 | ||
Tecan Group AG | 14,940 | 4,012,928 | ||
15,252,087 | ||||
United Kingdom — 18.2% | ||||
Abcam plc | 41,623 | 718,620 | ||
Ashmore Group plc | 203,947 | 1,254,939 | ||
Avast plc | 947,888 | 5,486,477 | ||
AVEVA Group plc | 56,744 | 3,342,471 | ||
Bellway plc | 49,365 | 2,131,421 | ||
Dechra Pharmaceuticals plc | 49,355 | 1,807,965 | ||
Diploma plc | 36,512 | 869,290 | ||
Electrocomponents plc | 516,074 | 4,358,817 | ||
Fevertree Drinks plc | 35,271 | 996,814 | ||
Games Workshop Group plc | 41,874 | 3,102,227 | ||
Grafton Group plc | 295,902 | 3,205,043 |
9
Shares | Value | |||
Hikma Pharmaceuticals plc | 81,684 | $ | 2,022,565 | |
HomeServe plc | 243,909 | 3,799,974 | ||
Intermediate Capital Group plc | 350,803 | 6,936,523 | ||
JD Sports Fashion plc | 330,906 | 3,253,743 | ||
Moneysupermarket.com Group plc | 379,714 | 1,670,873 | ||
Nomad Foods Ltd.(1) | 148,735 | 3,123,435 | ||
Rentokil Initial plc | 328,928 | 1,891,976 | ||
Rotork plc | 476,961 | 2,020,430 | ||
Trainline plc(1) | 498,652 | 3,008,469 | ||
UNITE Group plc (The) | 347,086 | 5,612,455 | ||
60,614,527 | ||||
TOTAL COMMON STOCKS (Cost $281,284,444) | 333,028,243 | |||
RIGHTS† | ||||
Australia† | ||||
Saracen Mineral Holdings Ltd.(1) | 277,489 | 24,400 | ||
Norway† | ||||
Bakkafrost P/F(1) | 1,576 | 20,173 | ||
TOTAL RIGHTS (Cost $—) | 44,573 | |||
TEMPORARY CASH INVESTMENTS — 0.5% | ||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.625% - 2.875%, 11/15/20 - 8/15/28, valued at $1,361,384), in a joint trading account at 1.40%, dated 11/29/19, due 12/2/19 (Delivery value $1,335,977) | 1,335,821 | |||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.375%, 5/15/27, valued at $303,583), at 0.65%, dated 11/29/19, due 12/2/19 (Delivery value $297,016) | 297,000 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $1,632,821) | 1,632,821 | |||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(3) — 0.9% | ||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $3,086,992) | 3,086,992 | 3,086,992 | ||
TOTAL INVESTMENT SECURITIES — 101.4% (Cost $286,004,257) | 337,792,629 | |||
OTHER ASSETS AND LIABILITIES — (1.4)% | (4,677,832 | ) | ||
TOTAL NET ASSETS — 100.0% | $ | 333,114,797 |
10
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Industrials | 23.3 | % |
Information Technology | 18.6 | % |
Consumer Discretionary | 12.4 | % |
Real Estate | 10.5 | % |
Health Care | 9.5 | % |
Financials | 9.0 | % |
Consumer Staples | 8.0 | % |
Energy | 3.0 | % |
Materials | 2.7 | % |
Communication Services | 1.9 | % |
Utilities | 1.1 | % |
Cash and Equivalents* | —** |
*Includes temporary cash investments, temporary cash investments - securities lending collateral and other assets and liabilities.
**Category is less than 0.05% of total net assets.
NOTES TO SCHEDULE OF INVESTMENTS |
†Category is less than 0.05% of total net assets.
(1) | Non-income producing. |
(2) | Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $13,773,815. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(3) | Investment of cash collateral from securities on loan. At the period end, the aggregate market value of the collateral held by the fund was $14,634,366, which includes securities collateral of $11,547,374. |
See Notes to Financial Statements.
11
Statement of Assets and Liabilities |
NOVEMBER 30, 2019 | |||
Assets | |||
Investment securities, at value (cost of $282,917,265) — including $13,773,815 of securities on loan | $ | 334,705,637 | |
Investment made with cash collateral received for securities on loan, at value (cost of $3,086,992) | 3,086,992 | ||
Total investment securities, at value (cost of $286,004,257) | 337,792,629 | ||
Cash | 1,273 | ||
Foreign currency holdings, at value (cost of $9,482) | 9,513 | ||
Receivable for investments sold | 581,506 | ||
Dividends and interest receivable | 662,293 | ||
Securities lending receivable | 4,490 | ||
339,051,704 | |||
Liabilities | |||
Payable for collateral received for securities on loan | 3,086,992 | ||
Payable for investments purchased | 362,578 | ||
Payable for capital shares redeemed | 2,374,216 | ||
Accrued management fees | 113,121 | ||
5,936,907 | |||
Net Assets | $ | 333,114,797 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 299,954,698 | |
Distributable earnings | 33,160,099 | ||
$ | 333,114,797 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $93,940,582 | 8,856,375 | $10.61 | |||
G Class, $0.01 Par Value | $239,174,215 | 22,213,526 | $10.77 |
See Notes to Financial Statements.
12
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2019 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $515,149) | $ | 5,227,625 | |
Interest | 101,390 | ||
Securities lending, net | 36,531 | ||
5,365,546 | |||
Expenses: | |||
Management fees | 4,057,276 | ||
Directors' fees and expenses | 10,112 | ||
Other expenses | 10,795 | ||
4,078,183 | |||
Fees waived - G Class | (2,631,313 | ) | |
1,446,870 | |||
Net investment income (loss) | 3,918,676 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (18,176,087 | ) | |
Foreign currency translation transactions | (100,567 | ) | |
(18,276,654 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 63,128,880 | ||
Translation of assets and liabilities in foreign currencies | (7,955 | ) | |
63,120,925 | |||
Net realized and unrealized gain (loss) | 44,844,271 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 48,762,947 |
See Notes to Financial Statements.
13
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2019 AND NOVEMBER 30, 2018 | ||||||
Increase (Decrease) in Net Assets | November 30, 2019 | November 30, 2018 | ||||
Operations | ||||||
Net investment income (loss) | $ | 3,918,676 | $ | 2,532,147 | ||
Net realized gain (loss) | (18,276,654 | ) | 33,788,716 | |||
Change in net unrealized appreciation (depreciation) | 63,120,925 | (65,515,242 | ) | |||
Net increase (decrease) in net assets resulting from operations | 48,762,947 | (29,194,379 | ) | |||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (10,045,152 | ) | (5,214,906 | ) | ||
G Class | (28,156,452 | ) | (12,170,408 | ) | ||
Decrease in net assets from distributions | (38,201,604 | ) | (17,385,314 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | 116,453,710 | 3,241,291 | ||||
Net increase (decrease) in net assets | 127,015,053 | (43,338,402 | ) | |||
Net Assets | ||||||
Beginning of period | 206,099,744 | 249,438,146 | ||||
End of period | $ | 333,114,797 | $ | 206,099,744 |
See Notes to Financial Statements.
14
Notes to Financial Statements |
NOVEMBER 30, 2019
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.
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. 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.
15
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. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
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.
16
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of November 30, 2019.
Remaining Contractual Maturity of Agreements | ||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||
Securities Lending Transactions(1) | ||||||||||||
Common Stocks | $ | 3,086,992 | — | — | — | $ | 3,086,992 | |||||
Gross amount of recognized liabilities for securities lending transactions | $ | 3,086,992 |
(1) | Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand. |
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 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 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.
17
The annual management fee for each class is as follows:
Investor Class | G Class |
1.47% | 0.00%(1) |
(1) | Annual management fee before waiver was 1.12%. |
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 $433,367 and there were no interfund purchases. The effect of interfund transactions on the Statement of Operations was $(169,167) 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, 2019 were $512,277,590 and $428,586,613, respectively.
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2019 | Year ended November 30, 2018 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 120,000,000 | 80,000,000 | ||||||||
Sold | 3,003,767 | $ | 30,525,147 | 119,310 | $ | 1,527,631 | ||||
Issued in reinvestment of distributions | 1,151,967 | 10,045,152 | 404,215 | 5,214,906 | ||||||
Redeemed | (1,553,046 | ) | (15,182,636 | ) | (81,134 | ) | (1,058,906 | ) | ||
2,602,688 | 25,387,663 | 442,391 | 5,683,631 | |||||||
G Class/Shares Authorized | 300,000,000 | 140,000,000 | ||||||||
Sold | 10,187,019 | 105,277,042 | 1,614,756 | 19,145,913 | ||||||
Issued in reinvestment of distributions | 3,225,252 | 28,156,452 | 935,115 | 12,170,408 | ||||||
Redeemed | (4,265,651 | ) | (42,367,447 | ) | (2,540,006 | ) | (33,758,661 | ) | ||
9,146,620 | 91,066,047 | 9,865 | (2,442,340 | ) | ||||||
Net increase (decrease) | 11,749,308 | $ | 116,453,710 | 452,256 | $ | 3,241,291 |
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). |
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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.
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 | $ | 13,305,916 | $ | 319,722,327 | — | |||
Rights | — | 44,573 | — | |||||
Temporary Cash Investments | — | 1,632,821 | — | |||||
Temporary Cash Investments - Securities Lending Collateral | 3,086,992 | — | — | |||||
$ | 16,392,908 | $ | 321,399,721 | — |
7. Risk Factors
The fund is owned by a relatively small number of shareholders, and in the event such shareholders redeem, the ongoing operations of the fund may be at risk.
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing a significant portion of assets in one country or region 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 17, 2019, the fund declared and paid the following per-share distributions from net investment income to shareholders of record on December 16, 2019:
Investor Class | G Class |
$0.1824 | $0.3434 |
The tax character of distributions paid during the years ended November 30, 2019 and November 30, 2018 were as follows:
2019 | 2018 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 7,333,981 | $ | 3,086,384 | ||
Long-term capital gains | $ | 30,867,623 | $ | 14,298,930 |
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.
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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 | $ | 294,233,814 | |
Gross tax appreciation of investments | $ | 48,939,147 | |
Gross tax depreciation of investments | (5,380,332 | ) | |
Net tax appreciation (depreciation) of investments | 43,558,815 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (8,731 | ) | |
Net tax appreciation (depreciation) | $ | 43,550,084 | |
Undistributed ordinary income | $ | 8,584,222 | |
Accumulated short-term capital losses | $ | (18,974,207 | ) |
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.
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.
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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 | |||||||||||||||
2019 | $10.56 | 0.01 | 1.14 | 1.15 | (0.04) | (1.06) | (1.10) | $10.61 | 13.13% | 1.48% | 0.14% | 133% | $93,941 | ||
2018 | $13.16 | 0.01 | (1.73) | (1.72) | (0.11) | (0.77) | (0.88) | $10.56 | (14.20)% | 1.47% | 0.09% | 140% | $66,042 | ||
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) | — | (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 | |||||||||||||||
2019 | $10.72 | 0.16 | 1.13 | 1.29 | (0.18) | (1.06) | (1.24) | $10.77 | 14.77% | 0.01%(5) | 1.61%(5) | 133% | $239,174 | ||
2018 | $13.25 | 0.20 | (1.76) | (1.56) | (0.20) | (0.77) | (0.97) | $10.72 | (12.95)% | 0.00%(6)(7) | 1.56%(6) | 140% | $140,057 | ||
2017 | $9.89 | 0.06 | 3.32 | 3.38 | (0.02) | — | (0.02) | $13.25 | 34.20% | 0.80%(8) | 0.58%(8) | 122% | $172,954 | ||
2016 | $10.30 | 0.01 | (0.33) | (0.32) | (0.09) | — | (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) | 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 1.13% and 0.49%, respectively. |
(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 1.12% and 0.44%, respectively. |
(7) | Ratio was less than 0.005%. |
(8) | 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.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of NT International Small-Mid Cap Fund, one of the funds constituting the American Century World Mutual Funds, Inc. (the "Fund"), as of November 30, 2019, 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, the financial highlights for each of the years ended November 30, 2019, 2018, 2017, 2016 and for the period March 19, 2015 (fund inception) through November 30, 2015, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of NT International Small-Mid Cap Fund of the American Century World Mutual Funds, Inc. as of November 30, 2019, 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 years ended November 30, 2019, 2018, 2017, 2016 and for the period March 19, 2015 (fund inception) through November 30, 2015, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of November 30, 2019, 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.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2020
We have served as the auditor of one or more American Century investment companies since 1997.
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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 Jonathan S. Thomas, 16; and Stephen E. Yates, 8) 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 | 66 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 66 | None |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 66 | None |
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 66 | None |
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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 | |||||
Lynn Jenkins (1963) | Director | Since 2019 | United States Representative, U.S. House of Representatives (2009 to 2018) | 66 | MGP Ingredients, Inc. |
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 66 | None |
John R. Whitten (1946) | Director | Since 2008 | Retired | 66 | Onto Innovation Inc.; Rudolph Technologies, Inc. (2006 to 2019) |
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 81 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director | 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 | 125 | 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 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds. 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 |
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Chief Operating Officer, ACC (2012-2015). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries |
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Investment Operations and Investment Accounting, ACS (2000 to present) |
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). 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 since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) |
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 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 26, 2019, 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; |
• | any economies of scale associated with the Advisor’s management of the Fund and other accounts; |
• | services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; 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 provided by the Directors to the Advisor 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 connection with their review, the Directors did not identify any single factor as being all-important or
27
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.
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 investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor 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- and three-year periods 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, information regarding the operational efficiency and accuracy of the shareholder and transfer agency services provided, staffing levels, shareholder satisfaction, technology support (including cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance
28
activities. 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, 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 Investment Company 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 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 such 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 may receive 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
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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 or as an exhibit to its reports on Form N-PORT. The fund’s Forms N-Q and Form N-PORT reports are available on the SEC’s website at sec.gov. 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.
31
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, 2019.
The fund hereby designates $30,867,623, or up to the maximum amount allowable, as long-term capital gain distributions (20% rate gain distributions) for the fiscal year ended November 30, 2019.
The fund hereby designates $2,804,219 as qualified short-term capital gain distributions for purposes of Internal Revenue Code Section 871 for the fiscal year ended November 30, 2019.
For the fiscal year ended November 30, 2019, the fund intends to pass through to shareholders foreign source income of $5,742,774 and foreign taxes paid of $443,930, 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, 2019 are $0.1848 and $0.0143, respectively.
32
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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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91025 2001 |
![acihorizblkd32.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/acihorizblkd32.jpg)
Annual Report | |
November 30, 2019 | |
NT International Value Fund | |
Investor Class (ANTVX) | |
G Class (ANTYX) |
Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the fund’s shareholder reports like this one will no longer be sent by mail, unless you specifically request paper copies of the reports from the fund or from your financial intermediary, such as a broker-dealer or bank. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.
If you already elected to receive shareholder reports electronically, you will not be affected by this change and you need not take any action. You may elect to receive shareholder reports and other communications from the fund or your financial intermediary electronically by calling or sending an email request to your appropriate contacts as listed on the back cover of this report.
You may elect to receive all future reports in paper free of charge. You can inform the fund or your financial intermediary that you wish to continue receiving paper copies of your shareholder reports by calling or sending an email request to your appropriate contacts as listed on the back cover of this report. Your election to receive reports in paper will apply to all funds held with the fund complex/your financial intermediary.
Table of Contents |
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 | |
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, 2019 | ||||
Average Annual Returns | ||||
Ticker Symbol | 1 year | Since Inception | Inception Date | |
Investor Class | ANTVX | 3.56% | 0.24% | 3/19/15 |
MSCI EAFE Value Index | — | 6.52% | 2.22% | — |
G Class | ANTYX | 4.77% | 0.97% | 3/19/15 |
Fund returns would have been lower if a portion of the fees had not been waived.
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. |
![chart-602e5032fe7a5e95a94.jpg](https://capedge.com/proxy/N-CSR/0000872825-20-000002/chart-602e5032fe7a5e95a94.jpg)
Value on November 30, 2019 | |
Investor Class — $10,116 | |
MSCI EAFE Value Index — $11,089 | |
Total Annual Fund Operating Expenses | |
Investor Class | G Class |
1.30% | 0.95% |
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 Yulin Long
Effective August 17, 2019, portfolio manager Vinod Chandrashekaran left the fund’s portfolio management team. Yulin Long joined the portfolio management team in November 2019.
Performance Summary
NT International Value rose 4.77%* for the fiscal year ended November 30, 2019, compared with the 6.52% return of its benchmark, the MSCI EAFE Value Index. Fund results reflect operating expenses, while benchmark returns do not.
Global stock markets delivered positive results over the course of the 12 months, although they experienced pockets of volatility throughout the period. In December 2018, worries over rising interest rates, trade disputes and falling commodity prices pushed equity prices downward. However, a rebound occurred in January 2019 when global central banks pivoted and expressed renewed dedication to stimulus measures and accommodative policies. This helped equity prices recover and supported a rally that lasted into the spring. However, worries regarding continued trade difficulties and moderating growth rates resurfaced, causing volatility throughout much of the period. Concerns over a possible German recession and continued Brexit turmoil also contributed to occasional market upsets. The U.S. Federal Reserve (the Fed) cut rates three times during the period, helping to prop up equity market prices. The European Central Bank and Bank of Japan also continued accommodative low-rate policies. Near the end of the period, the U.S. announced the first stage of a trade deal with China, which also helped bolster equity market valuations.
Our stock selection process is designed to incorporate factors of valuation, quality, growth and sentiment, while minimizing unintended risks among industries and other risk characteristics. Weak stock selection, particularly in the industrials and utilities sectors, detracted most from relative results. Consumer discretionary and financials security choices also detracted from performance. Conversely, positioning within the health care, energy and consumer staples sectors added to relative returns.
Geographically, positioning among companies based in Japan, Australia and the Netherlands weighed most heavily on the fund’s results. In contrast, stock choices within Hong Kong, Sweden, Finland and the U.K. contributed most to relative returns.
Industrials and Utilities Holdings Detracted from Performance
Industrials and utilities companies provided some of the largest headwinds to performance during the 12 months. In the construction and engineering industry, an underweight to France-based facilities management company Vinci was a top sector detractor as well as a leading individual detractor. We had some exposure to the stock but less than the benchmark on average, which hurt relative performance as the stock price rose on increased demand for the company’s products and services. Australia-based CIMIC Group also provided a headwind. We have exited the stock. Positioning within the electrical equipment, trading companies and distributors and airlines industries also weighed on relative results.
*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
Stock selection within the utilities sector, particularly within electric utilities, also hurt returns. Underweights to Spain-based Iberdrola and Italy-based Enel were among the top detractors from overall performance. The price of Iberdrola increased throughout the period on the back of earnings, which rose for the 12 months.
Elsewhere in the markets, several Japan-based companies provided some of the larger drags on relative returns. Pharmaceutical company Eisai was among the top individual detractors. The stock price fell in late March after it announced it would stop trials of its new Alzheimer’s drug. We have closed the position. Overweights to Isuzu Motors and Mebuki Financial Group also weighed on results. We have since exited our position in Mebuki.
Health Care and Energy Sectors Bolster Results
Within health care, a position in pharmaceutical company Roche Holding was among the top performers for the 12 months. The price of the Switzerland-based drugmaker rose throughout much of the period on increased revenue. Reduced exposure to pharmaceutical company Teva Pharmaceutical Industries was also beneficial, as was an overweight position in health care equipment and supplies company Hoya. We have since exited our position in Teva.
Stock selection within the energy sector, particularly within the energy equipment and services and oil, gas and consumable fuels industries, provided a benefit to returns. Within the latter industry, reduced exposure to U.K.-based BP was a top contributor to portfolio results. The stock price fell throughout much of the period on low oil prices and disappointing earnings.
Companies based in the U.K. also made a significant contribution to performance, as BHP Group, Rio Tinto, 3i Group and the aforementioned BP all benefited relative results.
A Look Ahead
Looking generally at economic prospects outside the U.S., growth appears to be moderating in many areas. In addition, uncertainty is high because of ongoing trade tensions, continued Brexit negotiations and other geopolitical issues. We should note, however, that in December 2019, immediately after the end of the reporting period, a reported trade agreement between the U.S. and China seems to indicate these pressures may be easing, while elections in the U.K. led to some optimism regarding a resolution to the Brexit saga. Both situations may be positive for equity markets. Regardless, central banks seem dedicated to maintaining accommodative policies for the near term, which may continue to support capital markets. However, given the multiple moving pieces, we think it’s reasonable to expect more volatility going forward.
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, 2019 | |
Top Ten Holdings | % of net assets |
Royal Dutch Shell plc, B Shares | 3.6% |
GlaxoSmithKline plc | 2.8% |
HSBC Holdings plc | 2.3% |
iShares MSCI EAFE ETF | 2.0% |
Zurich Insurance Group AG | 1.7% |
BHP Group plc | 1.7% |
Allianz SE | 1.7% |
Toyota Motor Corp. | 1.7% |
Iberdrola SA | 1.6% |
NTT DOCOMO, Inc. | 1.5% |
Types of Investments in Portfolio | % of net assets |
Common Stocks | 95.1% |
Exchange-Traded Funds | 3.0% |
Total Equity Exposure | 98.1% |
Temporary Cash Investments | 1.1% |
Temporary Cash Investments - Securities Lending Collateral | 0.7% |
Other Assets and Liabilities | 0.1% |
Investments by Country | % of net assets |
Japan | 25.8% |
United Kingdom | 18.1% |
France | 10.5% |
Switzerland | 7.3% |
Germany | 6.9% |
Spain | 5.1% |
Australia | 5.0% |
Singapore | 2.6% |
Italy | 2.3% |
Sweden | 2.2% |
Hong Kong | 2.0% |
Other Countries | 7.3% |
Exchange-Traded Funds* | 3.0% |
Cash and Equivalents** | 1.9% |
*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, temporary cash investments - securities lending collateral 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, 2019 to November 30, 2019.
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 6/1/19 | Ending Account Value 11/30/19 | Expenses Paid During Period(1) 6/1/19 - 11/30/19 | Annualized Expense Ratio(1) | |
Actual | ||||
Investor Class | $1,000 | $1,051.00 | $6.63 | 1.29% |
G Class | $1,000 | $1,056.50 | $0.00 | 0.00%(2) |
Hypothetical | ||||
Investor Class | $1,000 | $1,018.60 | $6.53 | 1.29% |
G Class | $1,000 | $1,025.07 | $0.00 | 0.00%(2) |
(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. |
(2) | Other expenses, which include directors' fees and expenses, did not exceed 0.005%. |
6
Schedule of Investments |
NOVEMBER 30, 2019
Shares | Value | |||
COMMON STOCKS — 95.1% | ||||
Australia — 5.0% | ||||
Aurizon Holdings Ltd. | 864,901 | $ | 3,387,037 | |
Australia & New Zealand Banking Group Ltd. | 709,341 | 11,942,241 | ||
Commonwealth Bank of Australia | 87,353 | 4,784,770 | ||
Fortescue Metals Group Ltd. | 669,902 | 4,410,603 | ||
Santos Ltd. | 226,674 | 1,249,845 | ||
South32 Ltd. | 1,919,380 | 3,506,283 | ||
Telstra Corp. Ltd. | 3,712,794 | 9,714,086 | ||
Westpac Banking Corp. | 145,149 | 2,412,351 | ||
41,407,216 | ||||
Austria — 0.1% | ||||
Raiffeisen Bank International AG | 40,737 | 955,356 | ||
Belgium — 1.1% | ||||
KBC Group NV | 46,431 | 3,380,397 | ||
Telenet Group Holding NV(1) | 127,176 | 5,737,167 | ||
9,117,564 | ||||
Denmark — 0.6% | ||||
Carlsberg A/S, B Shares | 24,326 | 3,497,296 | ||
Pandora A/S | 33,841 | 1,361,950 | ||
4,859,246 | ||||
Finland — 1.4% | ||||
Fortum Oyj | 76,848 | 1,810,423 | ||
Kone Oyj, B Shares | 123,585 | 7,734,487 | ||
Orion Oyj, Class B | 37,237 | 1,620,183 | ||
11,165,093 | ||||
France — 10.5% | ||||
AXA SA | 261,607 | 7,112,654 | ||
BNP Paribas SA | 168,510 | 9,451,876 | ||
CGG SA(1) | 794,218 | 2,081,636 | ||
CNP Assurances | 196,923 | 3,886,347 | ||
Dassault Systemes SE | 24,861 | 3,913,798 | ||
Hermes International | 7,583 | 5,677,984 | ||
Kering SA | 9,272 | 5,578,200 | ||
L'Oreal SA | 21,632 | 6,164,268 | ||
Peugeot SA | 347,768 | 8,392,096 | ||
Safran SA | 19,180 | 3,133,838 | ||
Sanofi | 83,660 | 7,797,748 | ||
Schneider Electric SE | 38,000 | 3,664,528 | ||
Societe Generale SA | 94,000 | 2,954,776 | ||
TOTAL SA | 224,670 | 11,795,581 | ||
Vinci SA | 43,000 | 4,687,144 | ||
86,292,474 |
7
Shares | Value | |||
Germany — 6.9% | ||||
adidas AG | 23,926 | $ | 7,454,363 | |
Allianz SE | 59,430 | 14,229,378 | ||
Bayer AG | 32,319 | 2,446,338 | ||
Deutsche Post AG | 74,000 | 2,759,383 | ||
Deutsche Telekom AG | 257,397 | 4,321,473 | ||
Hamburger Hafen und Logistik AG | 38,203 | 1,031,867 | ||
Hannover Rueck SE | 9,239 | 1,716,640 | ||
MTU Aero Engines AG | 6,266 | 1,697,283 | ||
Muenchener Rueckversicherungs-Gesellschaft AG in Muenchen | 19,940 | 5,724,436 | ||
RTL Group SA | 57,155 | 2,725,563 | ||
RWE AG | 269,123 | 7,979,591 | ||
SAP SE | 12,000 | 1,633,456 | ||
Siemens AG | 25,000 | 3,225,305 | ||
56,945,076 | ||||
Hong Kong — 2.0% | ||||
BOC Hong Kong Holdings Ltd. | 540,000 | 1,836,437 | ||
Galaxy Entertainment Group Ltd. | 214,000 | 1,400,010 | ||
Hang Seng Bank Ltd. | 150,600 | 3,070,819 | ||
Hong Kong Exchanges & Clearing Ltd. | 43,100 | 1,362,062 | ||
Sands China Ltd. | 1,907,600 | 9,023,938 | ||
16,693,266 | ||||
Israel — 1.1% | ||||
Check Point Software Technologies Ltd.(1) | 37,679 | 4,441,600 | ||
Mizrahi Tefahot Bank Ltd. | 79,804 | 2,132,361 | ||
Wix.com Ltd.(1) | 18,000 | 2,176,020 | ||
8,749,981 | ||||
Italy — 2.3% | ||||
Enel SpA | 799,026 | 6,034,181 | ||
Eni SpA | 627,471 | 9,483,318 | ||
Fiat Chrysler Automobiles NV | 219,100 | 3,240,621 | ||
18,758,120 | ||||
Japan — 25.8% | ||||
ABC-Mart, Inc. | 69,400 | 4,623,915 | ||
Amada Holdings Co. Ltd. | 740,900 | 8,275,607 | ||
Astellas Pharma, Inc. | 530,500 | 9,054,636 | ||
Bandai Namco Holdings, Inc. | 40,700 | 2,470,827 | ||
Brother Industries Ltd. | 270,200 | 5,368,943 | ||
Chugai Pharmaceutical Co. Ltd. | 40,600 | 3,549,311 | ||
Daiwa House Industry Co. Ltd. | 48,500 | 1,485,999 | ||
FANUC Corp. | 19,600 | 3,751,301 | ||
Hitachi High-Technologies Corp. | 64,100 | 4,187,178 | ||
Hitachi Ltd. | 253,500 | 9,975,671 | ||
Honda Motor Co. Ltd. | 143,000 | 4,021,930 | ||
Hoya Corp. | 59,800 | 5,460,004 | ||
Isuzu Motors Ltd. | 446,900 | 5,239,411 | ||
ITOCHU Corp. | 358,600 | 7,834,472 | ||
Kao Corp. | 27,800 | 2,188,858 |
8
Shares | Value | |||
KDDI Corp. | 339,000 | $ | 9,733,148 | |
Mitsubishi Chemical Holdings Corp. | 330,200 | 2,452,945 | ||
Mitsubishi UFJ Financial Group, Inc. | 1,129,600 | 5,975,215 | ||
Nexon Co. Ltd.(1) | 197,300 | 2,693,696 | ||
Nintendo Co. Ltd. | 9,900 | 3,831,937 | ||
Nitori Holdings Co. Ltd. | 23,300 | 3,654,008 | ||
NTT DOCOMO, Inc. | 445,800 | 12,242,596 | ||
ORIX Corp. | 423,600 | 6,946,179 | ||
Persol Holdings Co. Ltd. | 53,300 | 982,240 | ||
Recruit Holdings Co. Ltd. | 78,700 | 2,853,102 | ||
Santen Pharmaceutical Co. Ltd. | 226,800 | 4,253,385 | ||
Sekisui House Ltd. | 225,400 | 4,875,758 | ||
Shin-Etsu Chemical Co. Ltd. | 57,200 | 6,131,253 | ||
Shionogi & Co. Ltd. | 61,500 | 3,622,802 | ||
Shizuoka Bank Ltd. (The) | 736,300 | 5,613,746 | ||
Showa Denko KK | 74,700 | 1,999,503 | ||
Softbank Corp. | 423,900 | 5,758,723 | ||
Sony Corp. | 44,200 | 2,796,859 | ||
Sumitomo Mitsui Financial Group, Inc. | 136,700 | 4,989,790 | ||
Takeda Pharmaceutical Co., Ltd. | 99,000 | 4,031,458 | ||
Tokyo Electron Ltd. | 39,500 | 8,181,715 | ||
Toyota Motor Corp. | 198,700 | 13,885,535 | ||
Trend Micro, Inc. | 56,800 | 3,071,370 | ||
Tsuruha Holdings, Inc. | 70,400 | 8,391,804 | ||
Welcia Holdings Co. Ltd. | 87,600 | 5,376,609 | ||
211,833,439 | ||||
Netherlands — 1.0% | ||||
Coca-Cola European Partners plc | 61,734 | 3,115,098 | ||
NN Group NV | 128,686 | 4,936,353 | ||
8,051,451 | ||||
New Zealand — 1.0% | ||||
a2 Milk Co. Ltd.(1) | 381,746 | 3,801,493 | ||
Meridian Energy Ltd. | 1,377,255 | 4,163,743 | ||
7,965,236 | ||||
Norway — 1.0% | ||||
Aker BP ASA(2) | 270,414 | 7,738,792 | ||
Equinor ASA | 43,406 | 798,917 | ||
8,537,709 | ||||
Singapore — 2.6% | ||||
ComfortDelGro Corp. Ltd. | 1,395,200 | 2,396,860 | ||
Oversea-Chinese Banking Corp. Ltd. | 742,100 | 5,846,994 | ||
Singapore Telecommunications Ltd. | 1,894,600 | 4,685,706 | ||
United Overseas Bank Ltd. | 447,500 | 8,446,002 | ||
21,375,562 | ||||
Spain — 5.1% | ||||
Banco Bilbao Vizcaya Argentaria SA | 1,259,230 | 6,602,792 | ||
Banco Santander SA | 2,189,673 | 8,523,629 |
9
Shares | Value | |||
Iberdrola SA | 1,367,966 | $ | 13,453,688 | |
Industria de Diseno Textil SA | 107,338 | 3,338,833 | ||
Mapfre SA | 1,743,023 | 4,911,154 | ||
Telefonica SA | 637,114 | 4,872,867 | ||
41,702,963 | ||||
Sweden — 2.2% | ||||
Hennes & Mauritz AB, B Shares(2) | 301,044 | 5,808,191 | ||
Kinnevik AB, B Shares | 233,277 | 5,339,838 | ||
Lundin Petroleum AB | 221,355 | 6,829,447 | ||
17,977,476 | ||||
Switzerland — 7.3% | ||||
Credit Suisse Group AG(1) | 125,000 | 1,636,788 | ||
Geberit AG | 12,164 | 6,526,428 | ||
Kuehne + Nagel International AG | 34,247 | 5,567,114 | ||
Nestle SA | 68,793 | 7,149,426 | ||
Novartis AG | 102,323 | 9,433,150 | ||
Roche Holding AG | 29,472 | 9,080,327 | ||
Swiss Life Holding AG | 3,992 | 1,978,620 | ||
Temenos AG(1) | 18,211 | 2,759,348 | ||
UBS Group AG(1) | 145,344 | 1,760,353 | ||
Zurich Insurance Group AG | 36,606 | 14,356,067 | ||
60,247,621 | ||||
United Kingdom — 18.1% | ||||
3i Group plc | 572,358 | 7,917,727 | ||
Anglo American plc | 343,900 | 9,015,620 | ||
BHP Group plc | 647,214 | 14,351,386 | ||
BP plc | 1,432,632 | 8,903,640 | ||
Burberry Group plc | 98,612 | 2,676,072 | ||
Evraz plc | 600,742 | 2,875,472 | ||
GlaxoSmithKline plc | 1,010,628 | 22,981,137 | ||
HSBC Holdings plc | 2,500,730 | 18,644,507 | ||
Intertek Group plc | 14,535 | 1,036,375 | ||
Legal & General Group plc | 2,591,836 | 9,410,486 | ||
Marks & Spencer Group plc | 666,019 | 1,672,915 | ||
Rio Tinto plc | 172,303 | 9,386,192 | ||
Royal Dutch Shell plc, B Shares | 1,057,293 | 29,929,839 | ||
Sage Group plc (The) | 368,482 | 3,588,911 | ||
Vodafone Group plc | 3,419,329 | 6,795,378 | ||
149,185,657 | ||||
TOTAL COMMON STOCKS (Cost $743,665,829) | 781,820,506 | |||
EXCHANGE-TRADED FUNDS — 3.0% | ||||
iShares MSCI EAFE ETF | 236,000 | 16,090,480 | ||
iShares MSCI EAFE Value ETF | 97,000 | 4,776,280 | ||
iShares MSCI Japan ETF | 59,000 | 3,506,370 | ||
TOTAL EXCHANGE-TRADED FUNDS (Cost $23,533,890) | 24,373,130 |
10
Shares | Value | |||
TEMPORARY CASH INVESTMENTS — 1.1% | ||||
Repurchase Agreement, BMO Capital Markets Corp., (collateralized by various U.S. Treasury obligations, 1.625% - 2.875%, 11/15/20 - 8/15/28, valued at $7,661,829), in a joint trading account at 1.40%, dated 11/29/19, due 12/2/19 (Delivery value $7,518,835) | $ | 7,517,958 | ||
Repurchase Agreement, Fixed Income Clearing Corp., (collateralized by various U.S. Treasury obligations, 2.375%, 5/15/27, valued at $1,711,580), at 0.65%, dated 11/29/19, due 12/2/19 (Delivery value $1,673,091) | 1,673,000 | |||
TOTAL TEMPORARY CASH INVESTMENTS (Cost $9,190,958) | 9,190,958 | |||
TEMPORARY CASH INVESTMENTS - SECURITIES LENDING COLLATERAL(3) — 0.7% | ||||
State Street Navigator Securities Lending Government Money Market Portfolio (Cost $5,989,238) | 5,989,238 | 5,989,238 | ||
TOTAL INVESTMENT SECURITIES — 99.9% (Cost $782,379,915) | 821,373,832 | |||
OTHER ASSETS AND LIABILITIES — 0.1% | 1,136,676 | |||
TOTAL NET ASSETS — 100.0% | $ | 822,510,508 |
MARKET SECTOR DIVERSIFICATION | ||
(as a % of net assets) | ||
Financials | 24.3 | % |
Consumer Discretionary | 11.8 | % |
Health Care | 10.1 | % |
Energy | 9.6 | % |
Communication Services | 8.9 | % |
Industrials | 8.8 | % |
Materials | 6.5 | % |
Information Technology | 6.0 | % |
Consumer Staples | 4.9 | % |
Utilities | 4.0 | % |
Real Estate | 0.2 | % |
Exchange-Traded Funds | 3.0 | % |
Cash and Equivalents* | 1.9 | % |
*Includes temporary cash investments, temporary cash investments - securities lending collateral and other assets and liabilities.
NOTES TO SCHEDULE OF INVESTMENTS |
(1) | Non-income producing. |
(2) | Security, or a portion thereof, is on loan. At the period end, the aggregate value of securities on loan was $5,692,282. The amount of securities on loan indicated may not correspond with the securities on loan identified because securities with pending sales are in the process of recall from the brokers. |
(3) | Investment of cash collateral from securities on loan. At the period end, the aggregate market value of the collateral held by the fund was $5,989,238. |
See Notes to Financial Statements.
11
Statement of Assets and Liabilities |
NOVEMBER 30, 2019 | |||
Assets | |||
Investment securities, at value (cost of $776,390,677) — including $5,692,282 of securities on loan | $ | 815,384,594 | |
Investment made with cash collateral received for securities on loan, at value (cost of $5,989,238) | 5,989,238 | ||
Total investment securities, at value (cost of $782,379,915) | 821,373,832 | ||
Cash | 5,672 | ||
Foreign currency holdings, at value (cost of $356,666) | 356,128 | ||
Receivable for investments sold | 5,004,422 | ||
Receivable for capital shares sold | 11,486 | ||
Dividends and interest receivable | 5,345,440 | ||
Securities lending receivable | 24,617 | ||
832,121,597 | |||
Liabilities | |||
Payable for collateral received for securities on loan | 5,989,238 | ||
Payable for investments purchased | 3,231,778 | ||
Payable for capital shares redeemed | 201,504 | ||
Accrued management fees | 188,569 | ||
9,611,089 | |||
Net Assets | $ | 822,510,508 | |
Net Assets Consist of: | |||
Capital (par value and paid-in surplus) | $ | 863,982,335 | |
Distributable earnings | (41,471,827 | ) | |
$ | 822,510,508 |
Net Assets | Shares Outstanding | Net Asset Value Per Share | ||||
Investor Class, $0.01 Par Value | $181,457,771 | 20,038,482 | $9.06 | |||
G Class, $0.01 Par Value | $641,052,737 | 69,965,083 | $9.16 |
See Notes to Financial Statements.
12
Statement of Operations |
YEAR ENDED NOVEMBER 30, 2019 | |||
Investment Income (Loss) | |||
Income: | |||
Dividends (net of foreign taxes withheld of $2,618,079) | $ | 36,064,898 | |
Interest | 162,361 | ||
Securities lending, net | 147,829 | ||
36,375,088 | |||
Expenses: | |||
Management fees | 8,191,635 | ||
Directors' fees and expenses | 25,064 | ||
Other expenses | 22,986 | ||
8,239,685 | |||
Fees waived(1) | (5,973,233 | ) | |
2,266,452 | |||
Net investment income (loss) | 34,108,636 | ||
Realized and Unrealized Gain (Loss) | |||
Net realized gain (loss) on: | |||
Investment transactions | (57,893,940 | ) | |
Foreign currency translation transactions | (8,867 | ) | |
(57,902,807 | ) | ||
Change in net unrealized appreciation (depreciation) on: | |||
Investments | 59,957,429 | ||
Translation of assets and liabilities in foreign currencies | (50,556 | ) | |
59,906,873 | |||
Net realized and unrealized gain (loss) | 2,004,066 | ||
Net Increase (Decrease) in Net Assets Resulting from Operations | $ | 36,112,702 |
(1) | Amount consists of $5,687 and $5,967,546 for Investor Class and G Class, respectively. |
See Notes to Financial Statements.
13
Statement of Changes in Net Assets |
YEARS ENDED NOVEMBER 30, 2019 AND NOVEMBER 30, 2018 | ||||||
Increase (Decrease) in Net Assets | November 30, 2019 | November 30, 2018 | ||||
Operations | ||||||
Net investment income (loss) | $ | 34,108,636 | $ | 31,448,647 | ||
Net realized gain (loss) | (57,902,807 | ) | 10,420,012 | |||
Change in net unrealized appreciation (depreciation) | 59,906,873 | (144,941,414 | ) | |||
Net increase (decrease) in net assets resulting from operations | 36,112,702 | (103,072,755 | ) | |||
Distributions to Shareholders | ||||||
From earnings: | ||||||
Investor Class | (4,559,475 | ) | (7,142,667 | ) | ||
G Class | (25,029,348 | ) | (25,397,074 | ) | ||
Decrease in net assets from distributions | (29,588,823 | ) | (32,539,741 | ) | ||
Capital Share Transactions | ||||||
Net increase (decrease) in net assets from capital share transactions (Note 5) | (19,624,059 | ) | 18,264,749 | |||
Net increase (decrease) in net assets | (13,100,180 | ) | (117,347,747 | ) | ||
Net Assets | ||||||
Beginning of period | 835,610,688 | 952,958,435 | ||||
End of period | $ | 822,510,508 | $ | 835,610,688 |
See Notes to Financial Statements.
14
Notes to Financial Statements |
NOVEMBER 30, 2019
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.
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. 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.
15
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. Securities lending income is net of fees and rebates earned by the lending agent for its services.
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.
Segregated Assets — In accordance with the 1940 Act, the fund segregates assets on its books and records to cover certain types of investment securities and other financial instruments. ACIM monitors, on a daily basis, the securities segregated to ensure the fund designates a sufficient amount of liquid assets, marked-to-market daily. The fund may also receive assets or be required to pledge assets at the custodian bank or with a broker for collateral requirements.
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.
16
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.
Securities Lending — Securities are lent to qualified financial institutions and brokers. State Street Bank & Trust Co. serves as securities lending agent to the fund pursuant to a Securities Lending Agreement. The lending of securities exposes the fund to risks such as: the borrowers may fail to return the loaned securities, the borrowers may not be able to provide additional collateral, the fund may experience delays in recovery of the loaned securities or delays in access to collateral, or the fund may experience losses related to the investment collateral. To minimize certain risks, loan counterparties pledge collateral in the form of cash and/or securities. The lending agent has agreed to indemnify the fund in the case of default of any securities borrowed. Cash collateral received is invested in the State Street Navigator Securities Lending Government Money Market Portfolio, a money market mutual fund registered under the 1940 Act. The loans may also be secured by U.S. government securities in an amount at least equal to the market value of the securities loaned, plus accrued interest and dividends, determined on a daily basis and adjusted accordingly. By lending securities, the fund seeks to increase its net investment income through the receipt of interest and fees. Such income is reflected separately within the Statement of Operations. The value of loaned securities and related collateral outstanding at period end, if any, are shown on a gross basis within the Schedule of Investments and Statement of Assets and Liabilities.
The following table reflects a breakdown of transactions accounted for as secured borrowings, the gross obligation by the type of collateral pledged, and the remaining contractual maturity of those transactions as of November 30, 2019.
Remaining Contractual Maturity of Agreements | ||||||||||||
Overnight and Continuous | <30 days | Between 30 & 90 days | >90 days | Total | ||||||||
Securities Lending Transactions(1) | ||||||||||||
Common Stocks | $ | 5,989,238 | — | — | — | $ | 5,989,238 | |||||
Gross amount of recognized liabilities for securities lending transactions | $ | 5,989,238 |
(1) | Amount represents the payable for cash collateral received for securities on loan. This will generally be in the Overnight and Continuous column as the securities are typically callable on demand. |
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.
17
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 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. Effective August 1, 2019, the investment advisor agreed to waive 0.01% of the fund’s management fee. The investment advisor expects this waiver to continue until July 31, 2020 and cannot terminate it prior to such date without the approval of the Board of Directors. The impact of this waiver to the ratio of operating expenses to average net assets was less than 0.005%. 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 management fee schedule range and the effective annual management fee before and after waiver for each class for the period ended November 30, 2019 are as follows:
Effective Annual Management Fee | |||
Management Fee Schedule Range | Before Waiver | After Waiver | |
Investor Class | 1.100% to 1.300% | 1.29% | 1.29% |
G Class | 0.750% to 0.950% | 0.94% | 0.00% |
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 $654,254 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, 2019 were $655,194,347 and $678,541,006, respectively.
18
5. Capital Share Transactions
Transactions in shares of the fund were as follows:
Year ended November 30, 2019 | Year ended November 30, 2018 | |||||||||
Shares | Amount | Shares | Amount | |||||||
Investor Class/Shares Authorized | 250,000,000 | 290,000,000 | ||||||||
Sold | 3,625,256 | $ | 31,701,431 | 3,651,240 | $ | 37,375,720 | ||||
Issued in reinvestment of distributions | 546,700 | 4,559,475 | 697,526 | 7,142,667 | ||||||
Redeemed | (8,488,820 | ) | (74,209,312 | ) | (2,992,499 | ) | (28,821,565 | ) | ||
(4,316,864 | ) | (37,948,406 | ) | 1,356,267 | 15,696,822 | |||||
G Class/Shares Authorized | 925,000,000 | 710,000,000 | ||||||||
Sold | 19,857,993 | 175,964,884 | 7,898,598 | 78,787,132 | ||||||
Issued in reinvestment of distributions | 3,004,724 | 25,029,348 | 2,480,183 | 25,397,074 | ||||||
Redeemed | (20,562,049 | ) | (182,669,885 | ) | (9,819,811 | ) | (101,616,279 | ) | ||
2,300,668 | 18,324,347 | 558,970 | 2,567,927 | |||||||
Net increase (decrease) | (2,016,196 | ) | $ | (19,624,059 | ) | 1,915,237 | $ | 18,264,749 |
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.
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 | $ | 9,732,718 | $ | 772,087,788 | — | |||
Exchange-Traded Funds | 24,373,130 | — | — | |||||
Temporary Cash Investments | — | 9,190,958 | — | |||||
Temporary Cash Investments - Securities Lending Collateral | 5,989,238 | — | — | |||||
$ | 40,095,086 | $ | 781,278,746 | — |
19
7. Risk Factors
There are certain risks involved in investing in foreign securities. These risks include those resulting from political events (such as civil unrest, national elections and imposition of exchange controls), social and economic events (such as labor strikes and rising inflation), and natural disasters. Securities of foreign issuers may be less liquid and more volatile. Investing in emerging markets or a significant portion of assets in one country or region 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 is owned by a relatively small number of shareholders, and in the event such shareholders redeem, the ongoing operations of the fund may be at risk.
8. Federal Tax Information
On December 17, 2019, the fund declared and paid the following per-share distributions from net investment income to shareholders of record on December 16, 2019:
Investor Class | G Class |
$0.3065 | $0.4271 |
The tax character of distributions paid during the years ended November 30, 2019 and November 30, 2018 were as follows:
2019 | 2018 | |||||
Distributions Paid From | ||||||
Ordinary income | $ | 29,588,823 | $ | 32,539,741 | ||
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 | $ | 791,489,091 | |
Gross tax appreciation of investments | $ | 58,522,514 | |
Gross tax depreciation of investments | (28,637,773 | ) | |
Net tax appreciation (depreciation) of investments | 29,884,741 | ||
Net tax appreciation (depreciation) on translation of assets and liabilities in foreign currencies | (77,723 | ) | |
Net tax appreciation (depreciation) | $ | 29,807,018 | |
Undistributed ordinary income | $ | 34,817,168 | |
Accumulated short-term capital losses | $ | (74,072,365 | ) |
Accumulated long-term capital losses | $ | (32,023,648 | ) |
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 | 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 | |||||||||||||||
2019 | $9.00 | 0.28 | 0.02 | 0.30 | (0.24) | $9.06 | 3.56% | 1.29% | 1.29% | 3.20% | 3.20% | 82% | $181,458 | ||
2018 | $10.53 | 0.25 | (1.47) | (1.22) | (0.31) | $9.00 | (11.95)% | 1.29% | 1.29% | 2.48% | 2.48% | 76% | $219,273 | ||
2017 | $8.73 | 0.24 | 1.83 | 2.07 | (0.27) | $10.53 | 24.32% | 1.29% | 1.29% | 2.44% | 2.44% | 79% | $242,242 | ||
2016 | $9.24 | 0.25 | (0.56) | (0.31) | (0.20) | $8.73 | (3.42)% | 1.30% | 1.30% | 2.88% | 2.88% | 81% | $201,138 | ||
2015(3) | $10.00 | 0.20 | (0.96) | (0.76) | — | $9.24 | (7.60)% | 1.30%(4) | 1.30%(4) | 2.95%(4) | 2.95%(4) | 55% | $194,181 | ||
G Class | |||||||||||||||
2019 | $9.11 | 0.40 | —(5) | 0.40 | (0.35) | $9.16 | 4.77% | 0.00%(6) | 0.94% | 4.49% | 3.55% | 82% | $641,053 | ||
2018 | $10.59 | 0.38 | (1.48) | (1.10) | (0.38) | $9.11 | (10.79)% | 0.01% | 0.94% | 3.76% | 2.83% | 76% | $616,338 | ||
2017 | $8.75 | 0.29 | 1.84 | 2.13 | (0.29) | $10.59 | 24.99% | 0.69% | 1.04% | 3.04% | 2.69% | 79% | $710,717 | ||
2016 | $9.25 | 0.26 | (0.55) | (0.29) | (0.21) | $8.75 | (3.16)% | 1.10% | 1.10% | 3.08% | 3.08% | 81% | $586,173 | ||
2015(3) | $10.00 | 0.21 | (0.96) | (0.75) | — | $9.25 | (7.50)% | 1.10%(4) | 1.10%(4) | 3.15%(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) | Per-share amount was less than $0.005. |
(6) | Ratio 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.:
Opinion on the Financial Statements and Financial Highlights
We have audited the accompanying statement of assets and liabilities, including the schedule of investments, of NT International Value Fund, one of the funds constituting the American Century World Mutual Funds, Inc. (the "Fund"), as of November 30, 2019, 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, the financial highlights for each of the years ended November 30, 2019, 2018, 2017, 2016 and for the period March 19, 2015 (fund inception) through November 30, 2015, and the related notes. In our opinion, the financial statements and financial highlights present fairly, in all material respects, the financial position of NT International Value Fund of the American Century World Mutual Funds, Inc. as of November 30, 2019, 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 years ended November 30, 2019, 2018, 2017, 2016 and for the period March 19, 2015 (fund inception) through November 30, 2015, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on the Fund’s financial statements and financial highlights based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Fund in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. 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, whether due to error or fraud. The Fund is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting 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.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements and financial highlights, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements and financial highlights. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements and financial highlights. Our procedures included confirmation of securities owned as of November 30, 2019, 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.
DELOITTE & TOUCHE LLP
Kansas City, Missouri
January 16, 2020
We have served as the auditor of one or more American Century investment companies since 1997.
23
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 Jonathan S. Thomas, 16; and Stephen E. Yates, 8) 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 | 66 | SquareTwo Financial; Barings (formerly Babson Capital Funds Trust) (2013 to 2016) |
Chris H. Cheesman (1962) | Director | Since 2019 | Retired. Senior Vice President & Chief Audit Executive, AllianceBernstein (1999 to 2018) | 66 | None |
Barry Fink (1955) | Director | Since 2012 (independent since 2016) | Retired | 66 | None |
Rajesh K. Gupta (1960) | Director | Since 2019 | Partner Emeritus, SeaCrest Investment Management and SeaCrest Wealth Management (2019 to Present); Chief Executive Officer and Chief Investment Officer, SeaCrest Investment Management (2006 to 2019); Chief Executive Officer and Chief Investment Officer, SeaCrest Wealth Management (2008 to 2019) | 66 | None |
24
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 | |||||
Lynn Jenkins (1963) | Director | Since 2019 | United States Representative, U.S. House of Representatives (2009 to 2018) | 66 | MGP Ingredients, Inc. |
Jan M. Lewis (1957) | Director | Since 2011 | Retired | 66 | None |
John R. Whitten (1946) | Director | Since 2008 | Retired | 66 | Onto Innovation Inc.; Rudolph Technologies, Inc. (2006 to 2019) |
Stephen E. Yates (1948) | Director and Chairman of the Board | Since 2012 (Chairman since 2018) | Retired | 81 | None |
Interested Director | |||||
Jonathan S. Thomas (1963) | Director | 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 | 125 | 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.
25
Officers
The following table presents certain information about the executive officers of the funds. Each officer serves as an officer for each of the 16 (in the case of Robert J. Leach, 15) investment companies in the American Century family of funds. 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 |
Patrick Bannigan (1965) | President since 2019 | Executive Vice President and Director, ACC (2012 to present); Chief Financial Officer, Chief Accounting Officer and Treasurer, ACC (2015 to present); Chief Operating Officer, ACC (2012-2015). Also serves as President, ACS; Vice President, ACIM; Chief Financial Officer, Chief Accounting Officer and/or Director, ACIM, ACS and other ACC subsidiaries |
R. Wes Campbell (1974) | Chief Financial Officer and Treasurer since 2018 | Investment Operations and Investment Accounting, ACS (2000 to present) |
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). 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 since 2012 | Senior Vice President, ACS (2017 to present); Vice President, ACS (2000 to 2017) |
Robert J. Leach (1966) | Vice President since 2006 | Vice President, ACS (2000 to present) |
David H. Reinmiller (1963) | Vice President since 2000 | Attorney, ACC (1994 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 26, 2019, 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; |
• | any economies of scale associated with the Advisor’s management of the Fund and other accounts; |
• | services provided and charges to the Advisor's other investment management clients; |
• | acquired fund fees and expenses; |
• | payments and practices in connection with financial intermediaries holding shares of the Fund and the services provided by intermediaries in connection therewith; 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 provided by the Directors to the Advisor 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 connection with their review, the Directors did not identify any single factor as being all-important or
27
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.
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 investment performance information during the management agreement renewal process. If performance concerns are identified, the Fund receives special reviews until performance improves, during which the Board discusses with the Advisor 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 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 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, technology support (including
28
cyber security), new products and services offered to Fund shareholders, securities trading activities, portfolio valuation services, auditing services, and legal and operational compliance activities. 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, 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 Investment Company 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 and the Advisor agreed to a temporary reduction of the Fund's annual unified management fee of 0.01% (e.g., the Investor Class unified fee will be reduced from 1.28% to 1.27%) for at least one year, beginning August 1, 2019. 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,
29
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 such 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 may receive 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
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 American Century Investments’ website at americancentury.com/proxy 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 americancentury.com/proxy. 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 or as an exhibit to its reports on Form N-PORT. The fund’s Forms N-Q and Form N-PORT reports are available on the SEC’s website at sec.gov. 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.
31
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, 2019.
For the fiscal year ended November 30, 2019, the fund intends to pass through to shareholders
foreign source income of $37,938,593 and foreign taxes paid of $2,177,221, 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, 2019 are $0.4215 and $0.0242, respectively.
32
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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. | ||
©2020 American Century Proprietary Holdings, Inc. All rights reserved. CL-ANN-91026 2001 |
ITEM 1. REPORTS TO STOCKHOLDERS.
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, Chris H. Cheesman and Lynn M. Jenkins 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 2018: $310,910
FY 2019: $298,990
(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 2018:$0 FY 2019:$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 2018:$0 FY 2019:$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 2018: $0
FY 2019: $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 2018: $0
FY 2019: $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 2018:$0 FY 2019:$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 2018:$0 FY 2019:$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 2018: $115,750
FY 2019: $119,500
(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 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. DISCLOSURE OF SECURITIES LENDING ACTIVITIES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 13. 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. |
(a)(4) | 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/ Patrick Bannigan | |||
Name: | Patrick Bannigan | |||
Title: | President | |||
Date: | January 24, 2020 |
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/ Patrick Bannigan | ||
Name: | Patrick Bannigan | ||
Title: | President | ||
(principal executive officer) | |||
Date: | January 24, 2020 |
By: | /s/ R. Wes Campbell | ||
Name: | R. Wes Campbell | ||
Title: | Treasurer and | ||
Chief Financial Officer | |||
(principal financial officer) | |||
Date: | January 24, 2020 |