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 811-6441
---------------------------------------------
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
4500 MAIN STREET, KANSAS CITY, MISSOURI 64111
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(Address of principal executive offices) (Zip code)
DAVID C. TUCKER, ESQ., 4500 MAIN STREET, 9TH FLOOR, KANSAS CITY, MISSOURI 64111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 816-531-5575
----------------------------
Date of fiscal year end: DECEMBER 31, 2003
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Date of reporting period: JUNE 30, 2004
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[front cover]
JUNE 30, 2004
American Century Investments
Semiannual Report
[graphic of market line chart]
[graphic of starfish]
[graphic of bridge over creek]
International Bond Fund
[american century logo and text logo]
Table of Contents
Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INTERNATIONAL BOND
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Portfolio at a Glance. . . . . . . . . . . . . . . . . . . . . . . . . . 4
Bond Holdings by Country . . . . . . . . . . . . . . . . . . . . . . . . 5
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 6
FINANCIAL STATEMENTS
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . . 9
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .10
Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . .11
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .12
Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . .16
OTHER INFORMATION
Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .18
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .19
Index Definition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .20
The opinions expressed in the Portfolio Commentary reflect those of the
portfolio management team as of the date of the report, and do not necessarily
represent the opinions of American Century or any other person in the American
Century organization. Any such opinions are subject to change at any time based
upon market or other conditions and American Century disclaims any
responsibility to update such opinions. These opinions may not be relied upon as
investment advice and, because investment decisions made by American Century
funds are based on numerous factors, may not be relied upon as an indication of
trading intent on behalf of any American Century fund. Security examples are
used for representational purposes only and are not intended as recommendations
to purchase or sell securities. Performance information for comparative indices
and securities is provided to American Century by third party vendors. To the
best of American Century's knowledge, such information is accurate at the time
of printing.
Our Message to You
[photo of James E. Stowers III and James E. Stowers, Jr.]
JAMES E. STOWERS III
WITH JAMES E. STOWERS, JR.
We are pleased to provide you with the semiannual report for the American
Century International Bond fund for the six months ended June 30, 2004.
This report contains information that can help you monitor your investment.
You'll find details about your fund's return and holdings as well as data and
analysis that provide insight into the market conditions affecting the fund's
performance.
Through our Web site, americancentury.com, we provide quarterly commentaries on
all American Century portfolios, the views of our senior investment officers,
and other communications about investments, portfolio strategy, and the markets.
We also have many informative resources available in the Education & Planning
section of our site to help you with your investment strategy.
Your next shareholder report for this fund will be the annual report dated
December 31, 2004, available in approximately six months.
As always, we deeply appreciate your investment with American Century
Investments.
Sincerely,
/s/James E. Stowers, Jr.
James E. Stowers, Jr.
FOUNDER AND CHAIRMAN
/s/James E. Stowers III
James E. Stowers III
CO-CHAIRMAN OF THE BOARD
International Bond - Performance
TOTAL RETURNS AS OF JUNE 30, 2004
--------------------------------
AVERAGE ANNUAL RETURNS
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SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
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INVESTOR CLASS 6.93% 7.19% 6.59% 6.78% 1/7/92
- --------------------------------------------------------------------------------
FUND BENCHMARK 7.90% 8.30% 7.50% 7.17%(1) --
- --------------------------------------------------------------------------------
J.P. MORGAN GLOBAL TRADED
GOVERNMENT BOND INDEX 5.36% 6.93% 6.74% 6.69%(1) --
- --------------------------------------------------------------------------------
Advisor Class 6.70% 6.93% -- 4.46% 10/27/98
- --------------------------------------------------------------------------------
(1) Since 12/31/91, the date nearest the Investor Class's inception for which
data are available.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the indices
are provided for comparison. From the fund's inception to December 31, 1997, the
fund benchmark was the J.P. Morgan ECU-Weighted European Index. Since January 1,
1998, the fund benchmark has been the J.P. Morgan Global Traded Government Bond
Index (excluding the U.S. and with Japan weighted at 15%). The fund's total
returns include operating expenses (such as transaction costs and management
fees) that reduce returns, while the total returns of the indices do not.
- ------
2
International Bond - Performance
GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made June 30, 1994
ONE-YEAR RETURNS OVER 10 YEARS
Periods ended June 30
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1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
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Investor
Class 18.63% 4.78% 0.37% 4.40% 2.76% -2.64% -6.23% 18.64% 22.17% 6.93%
- ---------------------------------------------------------------------------------------
Fund
Benchmark 20.63% 5.71% 0.24% 4.68% 3.42% -1.18% -5.97% 19.78% 24.06% 7.90%
- ---------------------------------------------------------------------------------------
J.P. Morgan
Global
Traded
Government
Bond Index 17.46% 2.05% 4.48% 5.87% 3.63% 2.70% -2.55% 13.73% 16.57% 5.36%
- ---------------------------------------------------------------------------------------
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the indices
are provided for comparison. From the fund's inception to December 31, 1997, the
fund benchmark was the J.P. Morgan ECU-Weighted European Index. Since January 1,
1998, the fund benchmark has been the J.P. Morgan Global Traded Government Bond
Index (excluding the U.S. and with Japan weighted at 15%). The fund's total
returns include operating expenses (such as transaction costs and management
fees) that reduce returns, while the total returns of the indices do not.
- ------
3
International Bond - Portfolio Commentary
BY JULIAN LE BERON, PORTFOLIO MANAGER
PERFORMANCE SUMMARY
International Bond returned -1.50%* for the first six months of 2004, performing
in line with the -1.52% return of the fund benchmark. (See page 2 for further
details.) Of course it's worth remembering that International Bond's returns are
reduced by fees, while the returns of the fund benchmark are not.
The first half of 2004 provided a challenging environment for dollar-converted
international bond returns, thanks in part to generally upbeat economic activity
and the depreciation of many foreign currencies versus the U.S. dollar. In
local-currency terms, government-issued international bonds generally produced
modest gains; however, once dollar-converted, those returns generally translated
into losses.
THE EURO ZONE
Global economies remained robust in spite of higher commodity prices,
terrorism-related concerns, and unsettled times in the Middle East. In the
12-nation euro zone, the economic recovery continued, with growth (as measured
by gross domestic product) expanding by a seasonally adjusted 0.6% during the
first quarter of 2004.
Although that backdrop drove up near-term inflationary pressures, the
longer-term outlook remained in line with the European Central Bank's (ECB's)
intents and purposes. As a result, the ECB kept its short-term interest rate
benchmark at 2.00%, expecting that historically low interest rates would
continue to prop up the region's economy.
OTHER EUROPEAN COUNTRIES AND JAPAN
Other countries in Europe also prospered. In the United Kingdom, economic
activity increased at a seasonally adjusted 0.7% during the first quarter of
2004 amid strong domestic demand and investment combined with accelerating
exports and manufacturing activity. Sweden's economy grew by 0.6% over the same
period, fueled in part by its solid recent-year productivity increases.
Favorable consumer spending and an inventory build up boosted Japan's economy:
for the first quarter of 2004, activity grew at a seasonally adjusted 1.4%. In
spite of that robust growth, Japan's heavy dependence on imported oil meant that
rising prices for the commodity began to spark concerns for the times ahead, as
did the possibility of curtailed demand for the country's products from China.
BOND AND CURRENCY RETURNS
Government-issued international bonds generally turned in modest performances in
local-currency terms. For example, benchmark bond indexes from Germany and Spain
(both of which are members of the euro zone)
PORTFOLIO AT A GLANCE
- --------------------------------------------------------------------------------
AS OF AS OF
6/30/04 12/31/03
- --------------------------------------------------------------------------------
Weighted Average
Maturity 6.9 yrs 7.2 yrs
- --------------------------------------------------------------------------------
Average Duration
(Modified) 4.6 yrs 5.1 yrs
- --------------------------------------------------------------------------------
*All fund returns referenced in this commentary
are for Investor Class shares. (continued)
- ------
4
International Bond - Portfolio Commentary
returned approximately 2.0%, which was slightly better than the roughly 1.9%
return for the benchmark bond index for France (also a member of the euro zone).
By comparison, Japan's benchmark bond index returned approximately -1.0%, while
indexes for the U.K. and Sweden returned approximately 0.7% and 2.7%,
respectively.
Once converted into U.S. dollars, however, government-issued international bond
returns generally translated into losses. A surge in U.S. job growth fueled
expectations for the Federal Reserve to raise short-term interest rates, driving
up dollar demand in the process. Although the U.K.'s pound finished more than
one percentage point higher versus the dollar, currencies for the euro zone,
Japan, and Sweden finished with losses of as much as 4.5%.
PORTFOLIO STRATEGIES
On the portfolio front, we underweighted Japanese government bonds compared with
the fund benchmark, which helped to drive up short-term cash holdings (see the
accompanying table). We very modestly reduced the portfolio's Japanese
government bond holdings further still in June, when yields rose in response to
strong economic data.
We think that the near-term outlook for the U.K.'s economy remains favorable. As
a result, we maintained an underweight in the country's government bonds
compared with the fund benchmark while overweighting such securities from the
euro zone. That having been said, the portfolio's percentage of bonds from the
euro zone dropped to an underweight in June because of some tactical sales. But
we plan to bring bond holdings for that region back up to an overweight in the
near future.
We used the forward currency market to adjust International Bond's
foreign-exchange positions, which we consider separately from the portfolio's
bond allocations. As the euro appreciated in late 2003, we began to underweight
the euro relative to the fund benchmark. However, we recently moved to an
approximately in-line euro position because of our near-term expectations
regarding the currency's prospects.
Lastly, we maintained an overweight in high-credit-quality non-government bonds
relative to the fund benchmark.
BOND HOLDINGS BY COUNTRY
- --------------------------------------------------------------------------------
% OF FUND % OF FUND
INVESTMENTS INVESTMENTS
AS OF AS OF
6/30/04 12/31/03
- --------------------------------------------------------------------------------
Germany* 22.3% 29.9%
- --------------------------------------------------------------------------------
United States
(including temporary
cash investments) 18.0% 5.4%
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France*
(including temporary
cash investments) 13.8% 16.7%
- --------------------------------------------------------------------------------
Multi-National 6.5% 6.2%
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Japan 4.7% 8.8%
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Belgium* 4.7% 4.6%
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Austria* 4.5% 4.7%
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Netherlands* 4.4% 4.7%
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Spain* 4.4% 4.6%
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United Kingdom 4.3% 3.4%
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Denmark 3.5% 2.2%
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Italy* 3.0% 3.1%
- --------------------------------------------------------------------------------
Sweden 2.7% 3.7%
- --------------------------------------------------------------------------------
Canada 2.0% 0.7%
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Australia 1.2% 1.3%
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* These are euro zone member countries.
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5
International Bond - Schedule of Investments
JUNE 30, 2004 (UNAUDITED)
Principal Amount Value
- --------------------------------------------------------------------------------
GOVERNMENT BONDS -- 56.8%
AUSTRALIA -- 1.2%
- --------------------------------------------------------------------------------
AUD 10,100,000 Australia Commonwealth,
7.50%, 9/15/09 $ 7,571,303
- --------------------------------------------------------------------------------
AUSTRIA -- 4.5%
- --------------------------------------------------------------------------------
EURO 15,150,000 Republic of Austria,
3.90%, 10/20/05 18,757,019
- --------------------------------------------------------------------------------
EURO 6,400,000 Republic of Austria,
6.25%, 7/15/27 9,240,241
- --------------------------------------------------------------------------------
27,997,260
- --------------------------------------------------------------------------------
BELGIUM -- 4.7%
- --------------------------------------------------------------------------------
EURO 16,620,000 Kingdom of Belgium,
3.75%, 3/28/09 20,355,423
- --------------------------------------------------------------------------------
EURO 5,710,000 Kingdom of Belgium,
8.00%, 3/28/15 9,082,908
- --------------------------------------------------------------------------------
29,438,331
- --------------------------------------------------------------------------------
CANADA -- 2.0%
- --------------------------------------------------------------------------------
EURO 3,500,000 Government of Canada,
4.875%, 7/7/08 4,487,169
- --------------------------------------------------------------------------------
CAD 10,420,000 Government of Canada,
5.25%, 6/1/13 8,013,918
- --------------------------------------------------------------------------------
12,501,087
- --------------------------------------------------------------------------------
DENMARK -- 3.5%
- --------------------------------------------------------------------------------
DKK 79,600,000 Kingdom of Denmark,
8.00%, 3/15/06 14,141,789
- --------------------------------------------------------------------------------
DKK 42,000,000 Kingdom of Denmark,
6.00%, 11/15/09 7,565,671
- --------------------------------------------------------------------------------
21,707,460
- --------------------------------------------------------------------------------
FRANCE -- 10.2%
- --------------------------------------------------------------------------------
EURO 2,450,000 Government of France,
5.50%, 10/25/10 3,245,613
- --------------------------------------------------------------------------------
EURO 3,590,000 Government of France,
5.00%, 10/25/11 4,616,248
- --------------------------------------------------------------------------------
EURO 8,520,000 Government of France,
4.00%, 4/25/14 10,094,434
- --------------------------------------------------------------------------------
EURO 10,000,000 Government of France,
5.50%, 4/25/29 13,138,571
- --------------------------------------------------------------------------------
EURO 23,520,000 Government of France,
5.75%, 10/25/32 32,101,304
- --------------------------------------------------------------------------------
63,196,170
- --------------------------------------------------------------------------------
GERMANY -- 7.2%
- --------------------------------------------------------------------------------
EURO 14,000,000 German Federal Republic,
5.00%, 2/17/06 17,657,467
- --------------------------------------------------------------------------------
EURO 3,030,000 German Federal Republic,
4.125%, 7/4/08 3,778,721
- --------------------------------------------------------------------------------
EURO 3,172,373 German Federal Republic,
4.50%, 1/4/13 3,944,135
- --------------------------------------------------------------------------------
EURO 5,900,000 German Federal Republic,
6.25%, 1/4/24 8,492,282
- --------------------------------------------------------------------------------
EURO 8,340,000 German Federal Republic,
5.625%, 1/4/28 11,154,014
- --------------------------------------------------------------------------------
45,026,619
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
ITALY -- 3.0%
- --------------------------------------------------------------------------------
EURO 11,940,000 Republic of Italy,
7.25%, 11/1/26 $ 19,020,227
- --------------------------------------------------------------------------------
JAPAN -- 4.7%
- --------------------------------------------------------------------------------
JPY 3,263,600,000 Government of Japan,
0.30%, 6/20/08 29,505,849
- --------------------------------------------------------------------------------
NETHERLANDS -- 4.4%
- --------------------------------------------------------------------------------
EURO 6,850,000 Kingdom of Netherlands,
4.00%, 7/15/05 8,468,465
- --------------------------------------------------------------------------------
EURO 5,250,000 Kingdom of Netherlands,
5.25%, 7/15/08 6,823,559
- --------------------------------------------------------------------------------
EURO 9,670,000 Kingdom of Netherlands,
5.00%, 7/15/11 12,458,806
- --------------------------------------------------------------------------------
27,750,830
- --------------------------------------------------------------------------------
SPAIN -- 4.4%
- --------------------------------------------------------------------------------
EURO 10,372,007 Government of Spain,
7.35%, 3/31/07 14,017,510
- --------------------------------------------------------------------------------
EURO 10,640,000 Government of Spain,
5.00%, 7/30/12 13,656,318
- --------------------------------------------------------------------------------
27,673,828
- --------------------------------------------------------------------------------
SWEDEN -- 2.7%
- --------------------------------------------------------------------------------
SEK 34,400,000 Kingdom of Sweden,
3.50%, 4/20/06 4,607,028
- --------------------------------------------------------------------------------
SEK 84,700,000 Kingdom of Sweden,
6.50%, 5/5/08 12,304,411
- --------------------------------------------------------------------------------
16,911,439
- --------------------------------------------------------------------------------
UNITED KINGDOM -- 4.3%
- --------------------------------------------------------------------------------
GBP 1,760,000 U.K. Treasury Stock,
6.75%, 11/26/04 3,223,720
- --------------------------------------------------------------------------------
GBP 7,990,000 U.K. Treasury Stock,
7.50%, 12/7/06 15,337,524
- --------------------------------------------------------------------------------
GBP 3,750,000 U.K. Treasury Stock,
5.00%, 9/7/14 6,690,231
- --------------------------------------------------------------------------------
GBP 1,100,000 U.K. Treasury Stock,
4.25%, 6/7/32 1,827,469
- --------------------------------------------------------------------------------
27,078,944
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TOTAL GOVERNMENT BONDS
(Cost $330,538,688) 355,379,347
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See Notes to Financial Statements. (continued)
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6
International Bond - Schedule of Investments
JUNE 30, 2004 (UNAUDITED)
Principal Amount Value
- --------------------------------------------------------------------------------
CORPORATE BONDS -- 25.2%
FRANCE -- 3.6%
- --------------------------------------------------------------------------------
EURO 17,000,000 Caisse D'Amortissement
de la Dette Sociale,
6.25%, 10/25/07 $ 22,576,986
- --------------------------------------------------------------------------------
GERMANY -- 15.1%
- --------------------------------------------------------------------------------
EURO 14,200,000 DEPFA Deutsche
Pfandbriefbank AG,
5.50%, 2/12/08 18,500,217
- --------------------------------------------------------------------------------
EURO 23,050,000 Eurohypo AG,
5.25%, 9/21/07 29,713,661
- --------------------------------------------------------------------------------
EURO 25,200,000 Kreditanstalt fuer
Wiederaufbau,
5.25%, 1/4/10 32,926,575
- --------------------------------------------------------------------------------
EURO 10,500,000 Landwirtschaftliche
Rentenbank,
4.125%, 1/24/05 12,902,607
- --------------------------------------------------------------------------------
94,043,060
- --------------------------------------------------------------------------------
MULTI-NATIONAL -- 6.5%
- --------------------------------------------------------------------------------
GBP 3,550,000 European Investment Bank,
5.50%, 12/7/09 6,479,648
- --------------------------------------------------------------------------------
EURO 11,700,000 European Investment Bank,
5.625%, 10/15/10 15,570,313
- --------------------------------------------------------------------------------
GBP 4,920,000 European Investment Bank,
6.25%, 4/15/14 9,480,017
- --------------------------------------------------------------------------------
GBP 3,430,000 International Bank
for Reconstruction
& Development
(the World Bank),
6.125%, 12/7/09 6,417,150
- --------------------------------------------------------------------------------
GBP 1,600,000 International Finance Corp.,
5.375%, 12/7/28 2,986,749
- --------------------------------------------------------------------------------
40,933,877
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TOTAL CORPORATE BONDS
(Cost $144,616,146) 157,553,923
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 18.0%
UNITED STATES -- 18.0%
- --------------------------------------------------------------------------------
USD 112,900,000 FHLB Discount Notes,
1.25%, 7/1/04(1)
(Cost $112,900,000) $112,900,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENT
SECURITIES -- 100.0%
(Cost $588,054,834) $625,833,270
================================================================================
See Notes to Financial Statements. (continued)
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7
International Bond - Schedule of Investments
JUNE 30, 2004 (UNAUDITED)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS*
Unrealized
Contracts to Sell Settlement Date Value Gain/(Loss)
- --------------------------------------------------------------------------------
8,101,100 AUD for USD 7/27/04 $ 5,613,428 $ 4,524
- --------------------------------------------------------------------------------
6,245,675 CAD for USD 7/27/04 4,656,460 (92,624)
- --------------------------------------------------------------------------------
2,666,596 CAD for USD 7/27/04 1,988,079 (38,079)
- --------------------------------------------------------------------------------
791,646 CAD for USD 7/27/04 590,212 (11,212)
- --------------------------------------------------------------------------------
109,063,020 DKK for USD 7/27/04 17,863,328 (356,944)
- --------------------------------------------------------------------------------
785,000 EURO for USD 7/27/04 955,684 2,540
- --------------------------------------------------------------------------------
1,875,000 EURO for USD 7/27/04 2,282,686 (31,075)
- --------------------------------------------------------------------------------
7,842,046 EURO for USD 7/27/04 9,547,160 (422,190)
- --------------------------------------------------------------------------------
3,140,000 EURO for USD 7/27/04 3,822,737 (66,607)
- --------------------------------------------------------------------------------
800,000 GBP for USD 7/27/04 1,446,897 (37,505)
- --------------------------------------------------------------------------------
8,467,124 SEK for USD 7/27/04 1,124,406 (14,406)
- --------------------------------------------------------------------------------
45,833,897 SEK for USD 7/27/04 6,086,587 (73,573)
- --------------------------------------------------------------------------------
$55,977,664 $(1,137,151)
===================================
(Value on Settlement Date $54,840,513)
Unrealized
Contracts to Buy Settlement Date Value Gain/(Loss)
- --------------------------------------------------------------------------------
15,296,068 CAD for USD 7/27/04 $ 11,403,978 $ 64,990
- --------------------------------------------------------------------------------
18,463,459 EURO for USD 7/27/04 22,478,010 81,394
- --------------------------------------------------------------------------------
2,265,000 EURO for USD 7/27/04 2,757,484 (9,825)
- --------------------------------------------------------------------------------
4,205,000 EURO for USD 7/27/04 5,119,303 24,123
- --------------------------------------------------------------------------------
16,532,150 EURO for USD 7/27/04 20,126,773 (9,869)
- --------------------------------------------------------------------------------
8,248,873 EURO for USD 7/27/04 10,042,444 66,702
- --------------------------------------------------------------------------------
1,950,000 EURO for USD 7/27/04 2,373,993 (2,931)
- --------------------------------------------------------------------------------
4,220,000 EURO for USD 7/27/04 5,137,564 (56,074)
- --------------------------------------------------------------------------------
1,140,000 GBP for USD 7/27/04 2,061,829 (24,178)
- --------------------------------------------------------------------------------
2,777,946 GBP for USD 7/27/04 5,024,253 96,462
- --------------------------------------------------------------------------------
152,388,600 JPY for USD 7/27/04 1,395,137 (4,863)
- --------------------------------------------------------------------------------
193,328,365 JPY for USD 7/27/04 1,769,946 39,946
- --------------------------------------------------------------------------------
175,240,560 JPY for USD 7/27/04 1,604,350 (14,650)
- --------------------------------------------------------------------------------
748,874,203 JPY for USD 7/27/04 6,856,041 (20,591)
- --------------------------------------------------------------------------------
172,415,880 JPY for USD 7/27/04 1,578,490 18,490
- --------------------------------------------------------------------------------
313,334,760 JPY for USD 7/27/04 2,868,620 27,620
- --------------------------------------------------------------------------------
193,540,650 JPY for USD 7/27/04 1,771,890 1,890
- --------------------------------------------------------------------------------
5,631,360,772 JPY for USD 7/27/04 51,555,840 1,304,957
- --------------------------------------------------------------------------------
$155,925,945 $1,583,593
===================================
(Value on Settlement Date $154,342,352)
*FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS are designed to protect the fund's
foreign investments against declines in foreign currencies (also known as
hedging). The contracts are called "forward" because they allow the fund to
exchange a foreign currency for U.S. dollars on a specific date in the
future -- and at a prearranged exchange rate.
NOTES TO SCHEDULE OF INVESTMENTS
AUD = Australian Dollar
CAD = Canadian Dollar
DKK = Danish Krone
FHLB = Federal Home Loan Bank
GBP = British Pound
JPY = Japanese Yen
SEK = Swedish Krona
USD = United States Dollar
(1) The rate indicated is the yield to maturity at purchase.
See Notes to Financial Statements.
- ------
8
Statement of Assets and Liabilities
JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investment securities, at value (cost of $588,054,834) $625,833,270
- ----------------------------------------------------------------
Cash 81,383
- ----------------------------------------------------------------
Receivable for forward foreign currency exchange contracts 1,733,638
- ----------------------------------------------------------------
Receivable for capital shares sold 1,200,869
- ----------------------------------------------------------------
Interest receivable 12,049,478
- --------------------------------------------------------------------------------
640,898,638
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Foreign currency disbursements in excess,
at value (cost of $431) 432
- ----------------------------------------------------------------
Payable for forward foreign currency exchange contracts 1,287,196
- ----------------------------------------------------------------
Payable for capital shares redeemed 1,332,654
- ----------------------------------------------------------------
Accrued management fees 426,511
- ----------------------------------------------------------------
Distribution fees payable 6,502
- ----------------------------------------------------------------
Service fees payable 6,502
- --------------------------------------------------------------------------------
3,059,797
- --------------------------------------------------------------------------------
NET ASSETS $637,838,841
================================================================================
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Capital paid-in $581,444,045
- ----------------------------------------------------------------
Undistributed net investment income 8,584,453
- ----------------------------------------------------------------
Undistributed net realized gain on investment
and foreign currency transactions 9,584,918
- ----------------------------------------------------------------
Net unrealized appreciation on investments
and translation of assets and liabilities
in foreign currencies 38,225,425
- --------------------------------------------------------------------------------
$637,838,841
================================================================================
INVESTOR CLASS
- --------------------------------------------------------------------------------
Net assets $606,032,132
- ----------------------------------------------------------------
Shares outstanding 45,195,394
- ----------------------------------------------------------------
Net asset value per share $13.41
- --------------------------------------------------------------------------------
ADVISOR CLASS
- --------------------------------------------------------------------------------
Net assets $31,806,709
- ----------------------------------------------------------------
Shares outstanding 2,377,471
- ----------------------------------------------------------------
Net asset value per share $13.38
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- ------
9
Statement of Operations
FOR THE SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
INCOME:
- ----------------------------------------------------------------
Interest (net of foreign taxes withheld $27,856) $ 11,520,988
- --------------------------------------------------------------------------------
EXPENSES:
- ----------------------------------------------------------------
Management fees 2,735,623
- ----------------------------------------------------------------
Distribution fees -- Advisor Class 35,084
- ----------------------------------------------------------------
Service fees -- Advisor Class 35,084
- ----------------------------------------------------------------
Trustees' fees and expenses 35,145
- ----------------------------------------------------------------
Other expenses 4,430
- --------------------------------------------------------------------------------
2,845,366
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 8,675,622
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
NET REALIZED GAIN ON:
- ----------------------------------------------------------------
Investment transactions 119,515
- ----------------------------------------------------------------
Foreign currency transactions 9,850,857
- --------------------------------------------------------------------------------
9,970,372
- --------------------------------------------------------------------------------
CHANGE IN NET UNREALIZED APPRECIATION ON:
- ----------------------------------------------------------------
Investments (1,453,336)
- ----------------------------------------------------------------
Translation of assets and liabilities in foreign currencies (30,439,130)
- --------------------------------------------------------------------------------
(31,892,466)
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS (21,922,094)
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $(13,246,472)
================================================================================
See Notes to Financial Statements.
- ------
10
Statement of Changes in Net Assets
SIX MONTHS ENDED JUNE 30, 2004 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2003
- --------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS 2004 2003
- --------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------
Net investment income $ 8,675,622 $ 14,059,244
- -----------------------------------------------
Net realized gain 9,970,372 28,587,322
- -----------------------------------------------
Change in net unrealized appreciation (31,892,466) 44,366,484
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (13,246,472) 87,013,050
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------
From net investment income:
- -----------------------------------------------
Investor Class (1,466,706) (13,511,035)
- -----------------------------------------------
Advisor Class (51,355) (422,220)
- -----------------------------------------------
From net realized gains:
- -----------------------------------------------
Investor Class (350,639) (27,492,399)
- -----------------------------------------------
Advisor Class (14,759) (870,833)
- --------------------------------------------------------------------------------
Decrease in net assets from distributions (1,883,459) (42,296,487)
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------
Net increase in net assets
from capital share transactions 9,174,477 280,394,380
- --------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS (5,955,454) 325,110,943
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of period 643,794,295 318,683,352
- --------------------------------------------------------------------------------
End of period $637,838,841 $643,794,295
================================================================================
Undistributed net investment income $8,584,453 $1,426,892
================================================================================
See Notes to Financial Statements.
- ------
11
Notes to Financial Statements
JUNE 30, 2004 (UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- American Century International Bond Funds (the trust) is
registered under the Investment Company Act of 1940 (the 1940 Act) as an
open-end management investment company. International Bond Fund (the fund) is
the sole fund issued by the trust. The fund is non-diversified under the 1940
Act. The fund's investment objective is to seek high total return. The fund
pursues its objective by investing in high-quality, nondollar-denominated
government and corporate debt securities issued outside the United States. The
following is a summary of the fund's significant accounting policies.
MULTIPLE CLASS -- The fund is authorized to issue the Investor Class and the
Advisor Class. The share classes differ principally in their respective
shareholder servicing and distribution expenses and arrangements. All shares of
the fund represent an equal pro rata interest in the assets of the class to
which such shares belong, and have identical voting, dividend, liquidation and
other rights and the same terms and conditions, except for class specific
expenses and exclusive rights to vote on matters affecting only individual
classes. Income, non-class specific expenses, and realized and unrealized
capital gains and losses of the fund are allocated to each class of shares based
on their relative net assets.
SECURITY VALUATIONS -- Securities are valued through a commercial pricing
service or at the mean of the most recent bid and asked prices. Debt securities
maturing within 60 days may be valued at cost, plus or minus any amortized
discount or premium. If the investment manager, American Century Investment
Management, Inc. (ACIM), determines that the current market price of a security
owned by a non-money market fund is not readily available, the investment
manager may determine fair value as determined in accordance with procedures
adopted by the Board of Trustees if such fair value determination would
materially impact a fund's net asset value. Valuations may not be readily
available if, for example: an event occurred after the close of the exchange on
which a portfolio security principally trades (but before the close of the New
York Stock Exchange) that was likely to have changed the value of the security;
a security has been declared in default; trading in a security has been halted
during the trading day; or the demand for the security (as reflected by its
trading volume) is insufficient for quoted prices to be reliable.
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 -- Interest income less foreign taxes withheld, if any, is
recorded on the accrual basis and includes accretion of discounts and
amortization of premiums.
FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially expressed
in foreign currencies are translated into U.S. dollars at prevailing exchange
rates at period end. Purchases and sales of investment securities, dividend and
interest income, and certain expenses are translated at the rates of exchange
prevailing on the respective dates of such transactions. Realized and unrealized
gains and losses from foreign currency translations arise from changes in
currency exchange rates.
Net realized and unrealized foreign currency exchange gains or losses occurring
during the holding period of investment securities are a component of realized
gain (loss) on foreign currency transactions and unrealized appreciation
(depreciation) on translation of assets and liabilities in foreign currencies,
respectively. Certain countries may impose taxes on the contract amount of
purchases and sales of foreign currency contracts in their currency. The fund
records the foreign tax expense, if any, as a reduction to the net realized gain
(loss) on foreign currency transactions.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The fund may enter into forward
foreign currency exchange contracts to facilitate transactions of securities
denominated in a foreign currency or to hedge the fund's exposure to foreign
currency exchange rate fluctuations. The net U.S. dollar value of foreign
currency underlying all contractual commitments held by the fund and the
resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. The fund bears the risk of an unfavorable change in
the foreign currency exchange rate underlying the forward contract.
Additionally, losses may arise if the counterparties do not perform under the
contract terms.
REPURCHASE AGREEMENTS -- The fund may enter into repurchase agreements with
institutions that ACIM has determined are creditworthy pursuant to criteria
adopted by the Board of Trustees. Each repurchase agreement is recorded at cost.
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
(continued)
- ------
12
Notes to Financial Statements
JUNE 30, 2004 (UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
equal to or greater than amounts owed to the fund under each repurchase
agreement.
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 federal or state
income taxes.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded on
the ex-dividend date. Distributions from net investment income are expected to
be declared and paid quarterly. Distributions from net realized gains, if any,
are generally declared and paid twice a year.
USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require management to make certain estimates and assumptions at the date of
the financial statements. Actual results could differ from these estimates.
2. FEES AND TRANSACTIONS WITH RELATED PARTIES
MANAGEMENT FEES -- The trust 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 per class. The
Agreement provides that all expenses of the fund, except brokerage commissions,
taxes, portfolio insurance, interest, fees and expenses of those trustees who
are not considered "interested persons" as defined in the 1940 Act (including
counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is
computed daily and paid monthly in arrears. It consists of an Investment
Category Fee based on the average net assets of the funds in a specific fund's
investment category and a Complex Fee based on the average net assets of all the
funds managed by ACIM. The rates for the Investment Category Fee range from
0.4925% to 0.6100% and the rates for the Complex Fee (Investor Class) range from
0.2900% to 0.3100%. The Advisor Class is 0.2500% less at each point within the
Complex Fee range. For the six months ended June 30, 2004, the effective annual
management fee was 0.83% and 0.58% for the Investor and Advisor Classes,
respectively.
DISTRIBUTION AND SERVICE FEES -- The Board of Trustees has adopted a Master
Distribution and Shareholder Services Plan (the plan) for the Advisor Class,
pursuant to Rule 12b-1 of the 1940 Act. The plan provides that the Advisor Class
will pay American Century Investment Services, Inc. (ACIS) an annual
distribution fee equal to 0.25% and an annual service fee equal to 0.25%. The
fees are computed daily and paid monthly in arrears based on the Advisor Class's
average daily closing net assets during the previous month. The distribution fee
provides compensation for expenses incurred by financial intermediaries in
connection with distributing shares of the Advisor Class including, but not
limited to, payments to brokers, dealers, and financial institutions that have
entered into sales agreements with respect to shares of the fund. The service
fee provides compensation for shareholder and administrative services rendered
by ACIS, its affiliates or independent third party providers. Fees incurred
under the plan during the six months ended June 30, 2004, are detailed in the
Statement of Operations.
RELATED PARTIES -- Certain officers and trustees of the trust are also officers
and/or directors, and, as a group, controlling stockholders of American Century
Companies, Inc. (ACC), the parent of the trust's investment manager, ACIM, the
distributor of the trust, American Century Investment Services, Inc., and the
trust's transfer agent, American Century Services Corporation.
ACIM has entered into a Subadvisory Agreement with J.P. Morgan Investment
Management, Inc. (JPMIM) on behalf of the fund. The subadvisor makes investment
decisions for the fund in accordance with the fund's investment objectives,
policies, and restrictions under the supervision of ACIM and the Board of
Trustees. ACIM pays all costs associated with retaining JPMIM as the subadvisor
of the fund. JPMIM is a wholly owned subsidiary of J.P. Morgan Chase & Co.
(JPM). JPM is an equity investor in ACC. The fund has a bank line of credit
agreement with JPMorgan Chase Bank (JPMCB). JPMCB is a wholly owned subsidiary
of JPM.
(continued)
- ------
13
Notes to Financial Statements
JUNE 30, 2004 (UNAUDITED)
3. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, excluding short-term investments,
for the six months ended June 30, 2004, were $297,097,850 and $343,196,785,
respectively.
4. CAPITAL SHARE TRANSACTIONS
The trust has an unlimited number of shares authorized. Transactions in shares
of the fund were as follows:
SHARES AMOUNT
- --------------------------------------------------------------------------------
INVESTOR CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2004
- ---------------------------------------------
Sold 20,865,522 $ 285,844,401
- ---------------------------------------------
Issued in reinvestment of distributions 108,205 1,477,847
- ---------------------------------------------
Redeemed (21,412,602) (289,451,006)
- --------------------------------------------------------------------------------
Net decrease (438,875) $ (2,128,758)
================================================================================
YEAR ENDED DECEMBER 31, 2003
- ---------------------------------------------
Sold 58,294,262 $ 763,965,167
- ---------------------------------------------
Issued in reinvestment of distributions 2,529,876 34,452,587
- ---------------------------------------------
Redeemed (41,073,613) (535,200,227)
- --------------------------------------------------------------------------------
Net increase 19,750,525 $ 263,217,527
================================================================================
ADVISOR CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2004
- ---------------------------------------------
Sold 1,064,891 $14,500,497
- ---------------------------------------------
Issued in reinvestment of distributions 4,233 57,732
- ---------------------------------------------
Redeemed (243,322) (3,254,994)
- --------------------------------------------------------------------------------
Net increase 825,802 $11,303,235
================================================================================
YEAR ENDED DECEMBER 31, 2003
- ---------------------------------------------
Sold 1,505,909 $19,998,856
- ---------------------------------------------
Issued in reinvestment of distributions 93,733 1,278,566
- ---------------------------------------------
Redeemed (310,436) (4,100,569)
- --------------------------------------------------------------------------------
Net increase 1,289,206 $17,176,853
================================================================================
5. BANK LINE OF CREDIT
The fund, along with certain other funds managed by ACIM, has a $650,000,000
unsecured bank line of credit agreement with JPMCB. The fund may borrow money
for temporary or emergency purposes to fund shareholder redemptions. Borrowings
under the agreement bear interest at the Federal Funds rate plus 0.50%. The fund
did not borrow from the line during the six months ended June 30, 2004.
(continued)
- ------
14
Notes to Financial Statements
JUNE 30, 2004 (UNAUDITED)
6. RISK FACTORS
There are certain risks involved in investing in foreign securities. These risks
include those resulting from future adverse political, social, and economic
developments, fluctuations in currency exchange rates, the possible imposition
of exchange controls, and other foreign laws or restrictions.
7. FEDERAL TAX INFORMATION
The 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 June 30, 2004, the components of investments for federal income tax
purposes were as follows:
- --------------------------------------------------------------------------------
Federal tax cost of investments $589,120,560
================================================================================
Gross tax appreciation of investments $38,544,906
- ----------------------------------------------------------
Gross tax depreciation of investments (1,832,196)
- --------------------------------------------------------------------------------
Net tax appreciation of investments $36,712,710
================================================================================
The difference between book-basis and tax-basis cost and unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales.
- ------
15
International Bond - Financial Highlights
For a Share Outstanding Throughout the Years Ended December 31 (except as noted)
- --------------------------------------------------------------------------------
INVESTOR CLASS
- --------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning
of Period $13.64 $12.19 $10.08 $10.25 $10.55 $12.44
- --------------------------------------------------------------------------------
Income From
Investment
Operations
- -----------------
Net Investment
Income(2) 0.18 0.37 0.36 0.39 0.38 0.36
- -----------------
Net Realized
and Unrealized
Gain (Loss) (0.37) 2.03 2.01 (0.56) (0.51) (1.62)
- --------------------------------------------------------------------------------
Total From
Investment
Operations (0.19) 2.40 2.37 (0.17) (0.13) (1.26)
- --------------------------------------------------------------------------------
Distributions
- -----------------
From Net
Investment
Income (0.03) (0.31) (0.26) -- (0.11) (0.43)
- -----------------
From Net
Realized Gains (0.01) (0.64) -- -- (0.06) (0.20)
- --------------------------------------------------------------------------------
Total
Distributions (0.04) (0.95) (0.26) -- (0.17) (0.63)
- --------------------------------------------------------------------------------
Net Asset Value,
End of Period $13.41 $13.64 $12.19 $10.08 $10.25 $10.55
================================================================================
TOTAL RETURN(3) (1.50)% 19.91% 23.53% (1.66)% (1.20)% (10.36)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of
Operating
Expenses
to Average
Net Assets 0.84%(4) 0.84% 0.85% 0.86% 0.87% 0.85%
- -----------------
Ratio of Net
Investment
Income
to Average
Net Assets 2.60%(4) 2.80% 3.28% 3.87% 3.85% 3.27%
- -----------------
Portfolio
Turnover Rate 49% 112% 137% 147% 221% 239%
- -----------------
Net Assets,
End of Period
(in thousands) $606,032 $622,657 $315,491 $115,172 $111,320 $112,968
- --------------------------------------------------------------------------------
(1) Six months ended June 30, 2004 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would
more closely reflect the class expense differences. The calculation of net
asset values to two decimal places is made in accordance with SEC
guidelines and does not result in any gain or loss of value between one
class and another.
(4) Annualized.
See Notes to Financial Statements.
- ------
16
International Bond - Financial Highlights
For a Share Outstanding Throughout the Years Ended December 31 (except as noted)
- --------------------------------------------------------------------------------
ADVISOR CLASS
- --------------------------------------------------------------------------------
2004(1) 2003 2002 2001 2000 1999
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning
of Period $13.62 $12.16 $10.03 $10.23 $10.52 $12.44
- --------------------------------------------------------------------------------
Income From
Investment
Operations
- -----------------
Net Investment
Income(2) 0.14 0.29 0.33 0.36 0.35 0.45
- -----------------
Net Realized
and Unrealized
Gain (Loss) (0.35) 2.08 2.00 (0.56) (0.50) (1.74)
- --------------------------------------------------------------------------------
Total From
Investment
Operations (0.21) 2.37 2.33 (0.20) (0.15) (1.29)
- --------------------------------------------------------------------------------
Distributions
- -----------------
From Net
Investment
Income (0.02) (0.27) (0.20) -- (0.08) (0.43)
- -----------------
From Net
Realized Gains (0.01) (0.64) -- -- (0.06) (0.20)
- --------------------------------------------------------------------------------
Total
Distributions (0.03) (0.91) (0.20) -- (0.14) (0.63)
- --------------------------------------------------------------------------------
Net Asset Value,
End of Period $13.38 $13.62 $12.16 $10.03 $10.23 $10.52
================================================================================
TOTAL
RETURN(3) (1.55)% 19.60% 23.24% (1.96)% (1.35)% (10.61)%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of
Operating
Expenses
to Average
Net Assets 1.09%(4) 1.09% 1.10% 1.11% 1.12% 1.10%
- -----------------
Ratio of Net
Investment
Income
to Average
Net Assets 2.35%(4) 2.55% 3.03% 3.62% 3.60% 3.02%
- -----------------
Portfolio
Turnover Rate 49% 112% 137% 147% 221% 239%
- -----------------
Net Assets,
End of Period
(in thousands) $31,807 $21,137 $3,192 $1,983 $918 $727
- --------------------------------------------------------------------------------
(1) Six months ended June 30, 2004 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(4) Annualized.
See Notes to Financial Statements.
- ------
17
Share Class Information
Two classes of shares are authorized for sale by the fund: Investor Class and
Advisor Class. The total expense ratio for Advisor Class shares is higher than
that of Investor Class shares.
INVESTOR CLASS shares are available for purchase in two ways: 1) directly from
American Century without any commissions or other fees; or 2) through a
broker-dealer, which may require payment of a transaction fee to the broker.
ADVISOR CLASS shares are sold primarily through institutions such as investment
advisors, banks, broker-dealers, insurance companies, and financial advisors.
Advisor Class shares are subject to a 0.50% annual Rule 12b-1 service and
distribution fee. The total expense ratio of Advisor Class shares is 0.25%
higher than the total expense ratio of Investor Class shares.
All classes of shares represent a pro rata interest in the fund and generally
have the same rights and preferences.
- ------
18
Additional Information
RETIREMENT ACCOUNT INFORMATION
As required by law, any distributions you receive from an IRA or certain 403(b),
457 and qualified plans [those not eligible for rollover to an IRA or to another
qualified plan] are subject to federal income tax withholding, unless you elect
not to have withholding apply. Tax will be withheld on the total amount
withdrawn even though you may be receiving amounts that are not subject to
withholding, such as nondeductible contributions. In such case, excess amounts
of withholding could occur. You may adjust your withholding election so that a
greater or lesser amount will be withheld.
If you don't want us to withhold on this amount, you must notify us to not
withhold the federal income tax. Even if you plan to roll over the amount you
withdraw to another tax-deferred account, the withholding rate still applies to
the withdrawn amount unless we have received notice not to withhold federal
income tax prior to the withdrawal. You may notify us in writing or in certain
situations by telephone or through other electronic means. You have the right to
revoke your withholding election at any time and any election you make may
remain in effect until revoked by filing a new election.
Remember, even if you elect not to have income tax withheld, you are liable for
paying income tax on the taxable portion of your withdrawal. If you elect not to
have income tax withheld or you don't have enough income tax withheld, you may
be responsible for payment of estimated tax. You may incur penalties under the
estimated tax rules if your withholding and estimated tax payments are not
sufficient.
State tax will be withheld if, at the time of your distribution, your address is
within one of the mandatory withholding states and you have federal income tax
withheld. State taxes will be withheld from your distribution in accordance with
the respective state rules.
PROXY VOTING GUIDELINES
American Century Investment Management, Inc., the fund's manager, is responsible
for exercising the voting rights associated with the securities purchased and/or
held by the fund. A description of the policies and procedures the manager uses
in fulfilling this responsibility is available without charge, upon request, by
calling 1-800-345-2021. It is also available on American Century's Web site at
americancentury.com and on the Securities and Exchange Commission's Web site at
sec.gov.
RISK FACTORS
There are certain risks involved in investing in foreign securities. These risks
include those resulting from future adverse political, social, and economic
developments, fluctuations in currency exchange rates, the possible imposition
of exchange controls, and other foreign laws or restrictions.
- ------
19
Index Definition
The following index is used to illustrate investment market, sector, or style
performance or to serve as a fund performance comparison. It is not an
investment product available for purchase.
The J.P. MORGAN GLOBAL TRADED GOVERNMENT BOND INDEX (JPM GTGBI) is a
market-capitalization weighted index consisting of regularly traded, fixed-rate
government bonds from certain developed foreign countries in North America,
Europe, Asia, and Australia.
Since January 1998, the FUND BENCHMARK has been the JPM GTGBI with the U.S.
excluded and Japan is weighted at 15%.
Prior to January 1998, the FUND BENCHMARK was the J.P. Morgan ECU-Weighted
European Index.
- ------
20
CONTACT US
AMERICANCENTURY.COM
AUTOMATED INFORMATION LINE:
1-800-345-8765
INVESTOR RELATIONS:
1-800-345-2021 or 816-531-5575
BUSINESS, NOT-FOR-PROFIT,
EMPLOYER-SPONSORED RETIREMENT PLANS:
1-800-345-3533
BANKS AND TRUST COMPANIES, BROKER-DEALERS,
FINANCIAL ADVISORS, INSURANCE COMPANIES:
1-800-345-6488
TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 or 816-444-3485
AMERICAN CENTURY INTERNATIONAL BOND FUNDS
INVESTMENT MANAGER:
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.
The American Century logo, American Century and
American Century Investments are service marks
of American Century Services Corporation.
0408 American Century Investment Services, Inc.
SH-SAN-38981N (c)2004 American Century Services Corporation
ITEM 2. CODE OF ETHICS.
Not applicable for semiannual report filings.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semiannual report filings.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semiannual report filings.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The registrant does not currently have in place procedures by which
shareholders may recommend nominees to the registrant's board.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company
Act of 1940) are effective based on their evaluation of these controls
and procedures as of a date within 90 days of the filing date of this
report.
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940) that occurred during the registrant's last fiscal
half-year that have materially affected, or are reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a)(1) Not applicable for semiannual report filings.
(a)(2) Separate certifications by the registrant's principal executive
officer and principal financial officer, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment
Company Act of 1940, are filed and attached hereto as Exhibit
99.302CERT.
(a)(3) Not applicable.
(b) A certification by the registrant's chief executive officer and chief
financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, is furnished and attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: American Century International Bond Funds
By: /s/ William M. Lyons
--------------------------------------------------
Name: William M. Lyons
Title: President
Date: August 30, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ William M. Lyons
-------------------------------------------------
Name: William M. Lyons
Title: President
(principal executive officer)
Date: August 30, 2004
By: /s/ Maryanne L. Roepke
--------------------------------------------------
Name: Maryanne L. Roepke
Title: Sr. Vice President, Treasurer, and
Chief Accounting Officer
(principal financial officer)
Date: August 30, 2004
