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
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Date of fiscal year end: DECEMBER 31
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Date of reporting period: JUNE 30, 2005
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ITEM 1. REPORTS TO STOCKHOLDERS.
American Century Investments
SEMIANNUAL REPORT
[photo of boy]
JUNE 30, 2005
International Bond Fund
[american century investments logo and text logo]
Table of Contents
Our Message to You. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
INTERNATIONAL BOND
Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Portfolio Commentary. . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Portfolio at a Glance . . . . . . . . . . . . . . . . . . . . . . . . . 4
Types of Investments in Portfolio . . . . . . . . . . . . . . . . . . . 4
Bond Holdings by Country . . . . . . . . . . . . . . . . . . . . . . . . 5
Shareholder Fee Example . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Schedule of Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 8
FINANCIAL STATEMENTS
Statement of Assets and Liabilities . . . . . . . . . . . . . . . . . . . .11
Statement of Operations . . . . . . . . . . . . . . . . . . . . . . . . . .12
Statement of Changes in Net Assets. . . . . . . . . . . . . . . . . . . . .13
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . .14
Financial Highlights. . . . . . . . . . . . . . . . . . . . . . . . . . . .18
OTHER INFORMATION
Approval of Management Agreement for International Bond . . . . . . . . . .21
Share Class Information . . . . . . . . . . . . . . . . . . . . . . . . . .26
Additional Information. . . . . . . . . . . . . . . . . . . . . . . . . . .27
Index Definition. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
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 International
Bond Fund for the six months ended June 30, 2005.
The report includes comparative performance figures, portfolio and market
commentary, summary tables, a full list of portfolio holdings, and financial
statements and highlights. We hope you find this information helpful in
monitoring your investment.
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.
Your next shareholder report for this fund will be the annual report dated
December 31, 2005, 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
AMERICAN CENTURY COMPANIES, INC.
/s/James E. Stowers III
James E. Stowers III
CHAIRMAN OF THE BOARD
AMERICAN CENTURY COMPANIES, INC.
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1
International Bond - Performance
TOTAL RETURNS AS OF JUNE 30, 2005
--------------------------------
AVERAGE ANNUAL RETURNS
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SINCE INCEPTION
1 YEAR 5 YEARS 10 YEARS INCEPTION DATE
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INVESTOR CLASS 8.30% 9.49% 5.62% 6.89% 1/7/92
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FUND BENCHMARK 9.81% 10.61% 6.50% 7.36%(1) --
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J.P. MORGAN GLOBAL TRADED
GOVERNMENT BOND INDEX 7.82% 7.98% 5.83% 6.77%(1) --
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Institutional Class -- -- -- 8.84%(2) 8/2/04
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Advisor Class 8.05% 9.23% -- 4.99% 10/27/98
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(1) Since 12/31/91, the date nearest the Investor Class's inception for which
data are available.
(2) Returns for periods less than one year are not annualized.
Data presented reflect past performance. Past performance is no guarantee of
future results. Current performance may be higher or lower than the performance
shown. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost. To obtain performance data current
to the most recent month end, please call 1-800-345-2021 or visit
americancentury.com. As interest rates rise, bond values will decline.
International investing involves special risks, such as political instability
and currency fluctuations.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
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 index do not.
(continued)
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2
International Bond - Performance
GROWTH OF $10,000 OVER 10 YEARS
$10,000 investment made June 30, 1995
ONE-YEAR RETURNS OVER 10 YEARS
Periods ended June 30
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1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
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Investor Class 4.78% 0.37% 4.40% 2.76% -2.64% -6.23% 18.64% 22.17% 6.93% 8.30%
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Fund benchmark 5.71% 0.24% 4.68% 3.42% -1.18% -5.97% 19.78% 24.06% 7.90% 9.81%
- ----------------------------------------------------------------------------------------------
J.P. Morgan Global
Traded Government
Bond Index 2.05% 4.48% 5.87% 3.63% 2.70% -2.55% 13.73% 16.57% 5.36% 7.82%
- ----------------------------------------------------------------------------------------------
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. As interest rates rise, bond values will decline.
International investing involves special risks, such as political instability
and currency fluctuations.
Unless otherwise indicated, performance reflects Investor Class shares;
performance for other share classes will vary due to differences in fee
structure. For information about other share classes available, please consult
the prospectus. Data assumes reinvestment of dividends and capital gains, and
none of the charts reflect the deduction of taxes that a shareholder would pay
on fund distributions or the redemption of fund shares. Returns for the index
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 index do not.
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3
International Bond - Portfolio Commentary
PORTFOLIO MANAGER: JULIAN LE BERON
PERFORMANCE SUMMARY
On the heels of a double-digit gain for 2004, International Bond returned
- -5.68%* for the six months ended June 30, 2005. By comparison, the fund's
benchmark returned -5.47%. (Please see pages 2 and 3 for more information.) The
fund's return was reduced by operating expenses while the benchmark's was not.
International bonds posted solid returns during the six months in local-currency
terms, helped along by a global economic soft patch and lower benchmark interest
rates in several European countries. But for investors with unhedged exposure to
foreign currencies, the U.S. dollar's strength turned those gains into losses.
We discuss the strategies that we employed for the portfolio in that environment
later on in this commentary.
ECONOMIC PERSPECTIVE
After enjoying its highest calendar-year growth in four years, the euro zone's
economy is expected to have slowed during the first six months of 2005, proving
particularly disappointing during the second quarter. A surge in crude oil
prices and waning momentum in global manufacturing activity weighed on the
region's business and consumer confidence. Collectively, that backdrop helped to
drive up speculation--quashed in late June--that the European Central Bank would
reduce short-term interest rates, which remained at 2.0% and low by historical
standards.
Quantifying that performance, economic activity in the euro zone increased at a
seasonally adjusted 0.5% during the first quarter of 2005 (the most recently
measured period available), with current forecasts calling for a lower reading
for the second quarter. And that same story generally held true for other
European countries such as the U.K., where first-quarter economic growth was
0.4%, and Sweden, where economic growth came in at 0.3%.
In Japan, the economic recovery gained momentum. Increased consumer spending--on
the heels of several quarters of relative weakness--provided a key catalyst. For
the first quarter of 2005, Japan's economy surged by a seasonally adjusted 1.2%,
up substantially from 0.1% during the final quarter of 2004.
PORTFOLIO AT A GLANCE
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AS OF AS OF
6/30/05 12/31/04
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Weighted Average
Maturity 9.0 years 8.4 years
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Average Duration
(Modified) 6.0 years 5.9 years
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TYPES OF INVESTMENTS IN PORTFOLIO
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% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
6/30/05 12/31/04
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Government Bonds 65.6% 67.7%
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Corporate Bonds 29.5% 24.4%
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Temporary Cash
Investments 2.6% 5.2%
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Other Assets
and Liabilities 2.3% 2.7%
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*All fund returns referenced in this commentary are for Investor Class shares.
Returns for periods less than one year are not annualized. (continued)
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4
International Bond - Portfolio Commentary
BOND AND CURRENCY PERSPECTIVE
Government-issued international bonds posted respectable returns for the six
months. In local-currency terms, benchmark bond indexes from Sweden and Denmark
returned approximately 6.5% and 5.4%, respectively. Benchmark bond indexes for
countries within the euro zone--such as France and Germany--generally returned
in the neighborhood of 5.0%, although the Netherlands provided the smallest gain
at 4.7%, and Ireland provided the largest at better than 6.0%. By comparison,
local-currency benchmark bond indexes for the U.K. and Japan returned
approximately 4.9% and 2.0%, respectively.
Unfortunately for investors with unhedged exposure to foreign currencies, the
U.S. dollar's sharp appreciation heavily overshadowed those local-currency
gains. Expectations for an upward trend in short-term interest rates combined
with more vibrant economic growth than in many other parts of the world helped
the U.S. dollar gain solid ground against a host of international currencies.
That left Sweden's krona down more than 15% versus the dollar for the six
months, Europe's euro more than 11% lower, and both the British pound and
Japanese yen down more than 6%.
PORTFOLIO STRATEGY
On the portfolio front, we continued to use the forward currency market to
adjust International Bond's foreign-exchange positions, which we consider
separately from bond allocations.
In addition, we maintained a benchmark-compared overweight in bonds from the
euro zone, while emphasizing a bond maturity structure that we felt would
perform well if the yield gap between short- and long-term bonds decreased. That
structure paid off, given that slower growth in the euro zone and optimism for
lower short-term interest rates helped boost local-currency bond returns, with
long-term securities generally outperforming.
Lastly, we kept part of the portfolio in non-government bonds--an overweight
position compared with the benchmark--generally focusing on European corporate
bonds and mortgage-backed securities.
OUR COMMITMENT
We remain committed to seeking a high total return by investing in high-quality
non-dollar-denominated government and corporate debt securities outside the U.S.
And we'll attempt to do so by employing a combination of fundamental research
and bond and currency valuation models.
BOND HOLDINGS BY COUNTRY
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% OF % OF
NET ASSETS NET ASSETS
AS OF AS OF
6/30/05 12/31/04
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Germany* 31.3% 26.9%
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France* 18.6% 22.3%
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Japan 11.5% 8.6%
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Netherlands* 7.7% 6.6%
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Spain* 5.6% 4.4%
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Italy* 4.8% 4.2%
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Belgium* 4.3% 4.2%
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United Kingdom 4.0% --
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Multi-National 3.6% 6.6%
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Canada 2.2% 0.5%
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Austria* 0.9% 2.4%
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Denmark 0.6% 2.4%
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Sweden -- 1.9%
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Australia -- 1.1%
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Cash and equivalents** 4.9% 7.9%
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* These are euro zone member countries.
** Includes temporary cash investments and other assets and liabilities.
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5
Shareholder Fee Example (Unaudited)
Fund shareholders may incur two types of costs: (1) transaction costs, including
sales charges (loads) on purchase payments and redemption/exchange fees; and (2)
ongoing costs, including management fees; distribution and service (12b-1) fees;
and other fund expenses. This example is intended to help you understand your
ongoing costs (in dollars) of investing in your fund and to compare these costs
with the ongoing cost of investing in other mutual funds.
The example is based on an investment of $1,000 made at the beginning of the
period and held for the entire period from January 1, 2005 to June 30, 2005.
ACTUAL EXPENSES
The table provides information about actual account values and actual expenses
for each class. You may use the information, together with the amount you
invested, to estimate the expenses that you paid over the period. First,
identify the share class you own. Then simply divide your account value by
$1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then
multiply the result by the number under the heading "Expenses Paid During
Period" to estimate the expenses you paid on your account during this period.
If you hold Investor Class shares of any American Century fund, or Institutional
Class shares of the American Century Diversified Bond Fund, in an American
Century account (i.e., not a financial intermediary or retirement plan account),
American Century may charge you a $12.50 semiannual account maintenance fee if
the value of those shares is less than $10,000. We will redeem shares
automatically in one of your accounts to pay the $12.50 fee. In determining your
total eligible investment amount, we will include your investments in all
PERSONAL ACCOUNTS (including American Century Brokerage accounts) registered
under your Social Security number. PERSONAL ACCOUNTS include individual
accounts, joint accounts, UGMA/UTMA accounts, personal trusts, Coverdell
Education Savings Accounts and IRAs (including traditional, Roth, Rollover,
SEP-, SARSEP- and SIMPLE-IRAs), and certain other retirement accounts. If you
have only business, business retirement, employer-sponsored or American Century
Brokerage accounts, you are currently not subject to this fee. We will not
charge the fee as long as you choose to manage your accounts exclusively online.
If you are subject to the Account Maintenance Fee, your account value could be
reduced by the fee amount.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The table also provides information about hypothetical account values and
hypothetical expenses based on the actual expense ratio of each class of your
fund and an assumed rate of return of 5% per year before expenses, which is not
the actual return of a fund's share class. The hypothetical account values and
expenses may not be used to estimate the actual ending account balance or
expenses you paid for the period. You may use this information to compare the
ongoing costs of investing in your fund and other funds. To do so, compare this
5% hypothetical example with the 5% hypothetical examples that appear in the
shareholder reports of the other funds.
(continued)
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6
Shareholder Fee Example (Unaudited)
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.
- --------------------------------------------------------------------------------
EXPENSES PAID
BEGINNING ENDING DURING PERIOD* ANNUALIZED
ACCOUNT VALUE ACCOUNT VALUE 1/1/05 - EXPENSE
1/1/05 6/30/05 6/30/05 RATIO*
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INTERNATIONAL BOND SHAREHOLDER FEE EXAMPLE
- --------------------------------------------------------------------------------
ACTUAL
- --------------------------------------------------------------------------------
Investor Class $1,000 $943.20 $3.95 0.82%
- --------------------------------------------------------------------------------
Institutional Class $1,000 $944.30 $2.99 0.62%
- --------------------------------------------------------------------------------
Advisor Class $1,000 $942.00 $5.15 1.07%
- --------------------------------------------------------------------------------
HYPOTHETICAL
- --------------------------------------------------------------------------------
Investor Class $1,000 $1,020.73 $4.11 0.82%
- --------------------------------------------------------------------------------
Institutional Class $1,000 $1,021.72 $3.11 0.62%
- --------------------------------------------------------------------------------
Advisor Class $1,000 $1,019.49 $5.36 1.07%
- --------------------------------------------------------------------------------
*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
181, the number of days in the most recent fiscal half-year, divided by 365, to
reflect the one-half year period.
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7
International Bond - Schedule of Investments
JUNE 30, 2005 (UNAUDITED)
Principal Amount Value
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GOVERNMENT BONDS -- 65.6%
AUSTRIA -- 0.9%
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AUD 13,100,000 Australia
Commonwealth,
7.50%, 9/15/09 $ 10,853,706
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BELGIUM -- 4.3%
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Euro 33,850,000 Kingdom of Belgium,
3.00%, 3/28/10 41,887,639
- --------------------------------------------------------------------------------
Euro 7,830,000 Kingdom of Belgium,
4.25%, 9/28/14 10,345,436
- --------------------------------------------------------------------------------
52,233,075
- --------------------------------------------------------------------------------
CANADA -- 2.2%
- --------------------------------------------------------------------------------
Euro 3,500,000 Government of Canada,
4.88%, 7/7/08 4,559,410
- --------------------------------------------------------------------------------
CAD 21,550,000 Government of Canada,
5.75%, 6/1/33 21,952,164
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26,511,574
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DENMARK -- 0.6%
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DKK 42,000,000 Kingdom of Denmark,
6.00%, 11/15/09 7,842,881
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FRANCE -- 14.5%
- --------------------------------------------------------------------------------
Euro 14,000,000 Government of France,
4.50%, 7/12/06 17,358,175
- --------------------------------------------------------------------------------
Euro 19,150,000 Government of France,
4.00%, 4/25/14 24,905,085
- --------------------------------------------------------------------------------
Euro 29,750,000 Government of France,
5.00%, 10/25/16 41,975,283
- --------------------------------------------------------------------------------
Euro 17,800,000 Government of France,
5.50%, 4/25/29 27,906,290
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Euro 39,520,000 Government of France,
5.75%, 10/25/32 64,895,166
- --------------------------------------------------------------------------------
177,039,999
- --------------------------------------------------------------------------------
GERMANY -- 22.3%
- --------------------------------------------------------------------------------
Euro 20,860,000 German Federal Republic,
4.50%, 8/18/06 25,928,490
- --------------------------------------------------------------------------------
Euro 75,350,000 German Federal Republic,
4.00%, 2/16/07 94,015,089
- --------------------------------------------------------------------------------
Euro 27,590,000 German Federal Republic,
5.25%, 1/4/11 37,932,916
- --------------------------------------------------------------------------------
Euro 4,300,000 German Federal Republic,
6.25%, 1/4/24 7,107,747
- --------------------------------------------------------------------------------
Euro 24,540,000 German Federal Republic,
5.63%, 1/4/28 38,699,409
- --------------------------------------------------------------------------------
Euro 47,980,000 German Federal Republic,
4.75%, 7/4/34 69,286,500
- --------------------------------------------------------------------------------
272,970,151
- --------------------------------------------------------------------------------
ITALY -- 4.8%
- --------------------------------------------------------------------------------
Euro 31,990,000 Republic of Italy,
7.25%, 11/1/26 58,113,153
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
JAPAN -- 11.5%
- --------------------------------------------------------------------------------
JPY 4,800,600,000 Government of Japan,
0.30%, 6/20/08 $ 43,526,061
- --------------------------------------------------------------------------------
JPY 6,080,000,000 Government of Japan,
0.70%, 9/20/08 55,782,210
- --------------------------------------------------------------------------------
JPY 4,355,000,000 Government of Japan,
1.50%, 3/20/15 40,644,964
- --------------------------------------------------------------------------------
139,953,235
- --------------------------------------------------------------------------------
NETHERLANDS -- 3.3%
- --------------------------------------------------------------------------------
Euro 10,000,000 Kingdom of Netherlands,
3.00%, 7/15/06 12,224,393
- --------------------------------------------------------------------------------
Euro 22,780,000 Kingdom of Netherlands,
3.00%, 7/15/07 28,067,816
- --------------------------------------------------------------------------------
40,292,209
- --------------------------------------------------------------------------------
SPAIN -- 1.2%
- --------------------------------------------------------------------------------
Euro 11,680,000 Government of Spain,
4.25%, 10/31/07 14,816,442
- --------------------------------------------------------------------------------
TOTAL GOVERNMENT BONDS
(Cost $790,778,855) 800,626,425
- --------------------------------------------------------------------------------
CORPORATE BONDS -- 29.5%
FRANCE -- 4.1%
- --------------------------------------------------------------------------------
Euro 39,350,000 Dexia Municipal Agency,
3.50%, 9/21/09 49,483,274
- --------------------------------------------------------------------------------
GERMANY -- 9.0%
- --------------------------------------------------------------------------------
Euro 43,400,000 DEPFA Deutsche
Pfandbriefbank AG,
5.50%, 2/12/08 56,843,594
- --------------------------------------------------------------------------------
Euro 42,050,000 Eurohypo AG,
5.25%, 9/21/07 54,265,653
- --------------------------------------------------------------------------------
111,109,247
- --------------------------------------------------------------------------------
MULTI-NATIONAL -- 3.6%
- --------------------------------------------------------------------------------
GBP 5,000,000 European Investment
Bank, 4.50%, 10/23/08 9,027,291
- --------------------------------------------------------------------------------
GBP 7,150,000 European Investment
Bank, 5.50%, 12/7/09 13,401,884
- --------------------------------------------------------------------------------
GBP 4,920,000 European Investment
Bank, 6.25%, 4/15/14 9,992,387
- --------------------------------------------------------------------------------
GBP 6,300,000 International Bank
for Reconstruction
& Development
(the World Bank),
5.38%, 1/15/14 12,078,678
- --------------------------------------------------------------------------------
44,500,240
- --------------------------------------------------------------------------------
NETHERLANDS -- 4.4%
- --------------------------------------------------------------------------------
Euro 41,750,000 NV Bank Nederlandse
Gemeenten, 4.63%,
8/17/07 53,073,151
- --------------------------------------------------------------------------------
See Notes to Financial Statements. (continued)
- ------
8
International Bond - Schedule of Investments
JUNE 30, 2005 (UNAUDITED)
Principal Amount Value
- --------------------------------------------------------------------------------
SPAIN -- 4.4%
- --------------------------------------------------------------------------------
Euro 42,000,000 Banco Bilbao Vizcaya,
4.25%, 9/26/07 $ 53,102,892
- --------------------------------------------------------------------------------
UNITED KINGDOM -- 4.0%
- --------------------------------------------------------------------------------
Euro 10,000,000 Barclays Bank plc,
2.00%, 7/29/05 12,079,050
- --------------------------------------------------------------------------------
GBP 19,850,000 Network Rail MTN
Finance plc, 4.88%,
3/6/09 36,261,432
- --------------------------------------------------------------------------------
48,340,482
- --------------------------------------------------------------------------------
TOTAL CORPORATE BONDS
(Cost $365,998,011) 359,609,286
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS -- 2.6%
UNITED STATES -- 2.6%
- --------------------------------------------------------------------------------
USD 31,650,000 FHLMC Discount Notes,
2.60%, 7/1/05(1)
(Cost $31,650,000) $ 31,650,000
- --------------------------------------------------------------------------------
TOTAL INVESTMENT
SECURITIES -- 97.7%
(Cost $1,188,426,866) 1,191,885,711
- --------------------------------------------------------------------------------
OTHER ASSETS
AND LIABILITIES -- 2.3% 27,602,172
- --------------------------------------------------------------------------------
TOTAL NET ASSETS -- 100.0% $1,219,487,883
================================================================================
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS*
Contracts to Sell Settlement Date Value Unrealized Gain (Loss)
- --------------------------------------------------------------------------------------
4,733,960 AUD for CHF 7/26/2005 $ 3,593,273 $ 20,473
- --------------------------------------------------------------------------------------
4,111,591 CHF for GBP 7/26/2005 3,214,165 99,102
- --------------------------------------------------------------------------------------
1,413,449 Euro for JPY 7/26/2005 1,711,544 4,616
- --------------------------------------------------------------------------------------
32,733,782 SEK for GBP 7/26/2005 4,195,745 229,413
- --------------------------------------------------------------------------------------
27,842,675 SEK for Euro 7/26/2005 3,568,814 174,546
- --------------------------------------------------------------------------------------
13,450,037 AUD for USD 7/26/2005 10,209,140 (63,104)
- --------------------------------------------------------------------------------------
69,999,091 CAD for USD 7/26/2005 57,076,314 (1,784,775)
- --------------------------------------------------------------------------------------
109,063,020 DKK for USD 7/26/2005 17,725,921 694,086
- --------------------------------------------------------------------------------------
108,886,635 Euro for USD 7/26/2005 131,850,683 4,589,054
- --------------------------------------------------------------------------------------
6,610,000 Euro for USD 7/26/2005 8,004,040 (13,971)
- --------------------------------------------------------------------------------------
31,074,787 Euro for USD 7/26/2005 37,628,418 728,494
- --------------------------------------------------------------------------------------
5,330,000 Euro for USD 7/26/2005 6,454,090 102,128
- --------------------------------------------------------------------------------------
4,580,000 Euro for USD 7/26/2005 5,545,916 (12,206)
- --------------------------------------------------------------------------------------
9,119,042 Euro for USD 7/27/2005 11,042,236 487,102
- --------------------------------------------------------------------------------------
950,000 GBP for USD 7/26/2005 1,699,445 25,451
- --------------------------------------------------------------------------------------
2,220,107 GBP for USD 7/26/2005 3,971,527 64,961
- --------------------------------------------------------------------------------------
940,000 GBP for USD 7/26/2005 1,681,556 26,884
- --------------------------------------------------------------------------------------
1,366,274,017 JPY for USD 7/26/2005 12,358,573 356,028
- --------------------------------------------------------------------------------------
5,816,792 NZD for USD 7/26/2005 4,030,838 60,635
- --------------------------------------------------------------------------------------
$325,562,238 $ 5,788,917
========================================
(Value on Settlement Date $331,351,155)
*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.
See Notes to Financial Statements. (continued)
- ------
9
International Bond - Schedule of Investments
JUNE 30, 2005 (UNAUDITED)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS* (CONTINUED)
Contracts to Buy Settlement Date Value Unrealized Gain (Loss)
- --------------------------------------------------------------------------------------
4,626,499 CHF for AUD 7/26/2005 $ 3,616,685 $ 2,939
- --------------------------------------------------------------------------------------
3,042,516 Euro for SEK 7/26/2005 3,684,179 (59,180)
- --------------------------------------------------------------------------------------
2,427,872 GBP for SEK 7/26/2005 4,343,195 (81,963)
- --------------------------------------------------------------------------------------
1,822,930 GBP for CHF 7/26/2005 3,261,021 (52,247)
- --------------------------------------------------------------------------------------
187,559,031 JPY for Euro 7/26/2005 1,696,557 (19,602)
- --------------------------------------------------------------------------------------
4,260,009 AUD for USD 7/26/2005 3,233,525 (17,714)
- --------------------------------------------------------------------------------------
43,944,940 CAD for USD 7/26/2005 35,832,111 133,541
- --------------------------------------------------------------------------------------
39,685,431 CAD for USD 7/26/2005 32,358,965 766,812
- --------------------------------------------------------------------------------------
3,140,000 CHF for USD 7/26/2005 2,454,641 (128,977)
- --------------------------------------------------------------------------------------
13,264,274 CHF for USD 7/26/2005 10,369,116 (442,711)
- --------------------------------------------------------------------------------------
84,588,543 DKK for USD 7/26/2005 13,748,105 (219,159)
- --------------------------------------------------------------------------------------
18,460,889 Euro for USD 7/26/2005 22,354,266 (260,717)
- --------------------------------------------------------------------------------------
4,837,122 Euro for USD 7/26/2005 5,857,264 (246,675)
- --------------------------------------------------------------------------------------
29,005,462 Euro for USD 7/26/2005 35,122,676 (1,554,761)
- --------------------------------------------------------------------------------------
3,540,208 Euro for USD 7/26/2005 4,286,834 6,970
- --------------------------------------------------------------------------------------
31,821,717 GBP for USD 7/26/2005 56,925,544 (1,089,584)
- --------------------------------------------------------------------------------------
533,255,000 JPY for USD 7/26/2005 4,823,535 (176,465)
- --------------------------------------------------------------------------------------
4,314,198,316 JPY for USD 7/26/2005 39,023,895 (1,165,006)
- --------------------------------------------------------------------------------------
24,552,411 NZD for USD 7/26/2005 17,013,983 (265,022)
- --------------------------------------------------------------------------------------
299,479,944 SEK for USD 7/26/2005 38,386,689 (2,649,204)
- --------------------------------------------------------------------------------------
$338,392,786 $(7,518,725)
========================================
(Value on Settlement Date $345,911,511)
*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 FINANCIAL STATEMENTS
AUD = Australian Dollar
CAD = Canadian Dollar
CHF = Swiss Franc
DKK = Danish Krone
FHLMC = Federal Home Loan Mortgage Corporation
GBP = British Pound
JPY = Japanese Yen
MTN = Medium Term Note
NZD = New Zealand Dollar
SEK = Swedish Krona
USD = United States Dollar
(1) The rate indicated is the yield to maturity at purchase.
See Notes to Financial Statements.
- ------
10
Statement of Assets and Liabilities
JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
ASSETS
- --------------------------------------------------------------------------------
Investment securities, at value (cost of $1,188,426,866) $1,191,885,711
- ------------------------------------------------------------
Cash 30,353
- ------------------------------------------------------------
Foreign currency holdings, at value (cost of $17,691) 17,728
- ------------------------------------------------------------
Receivable for investments sold 3,301,689
- ------------------------------------------------------------
Receivable for forward foreign currency exchange contracts 8,573,235
- ------------------------------------------------------------
Receivable for capital shares sold 1,880,079
- ------------------------------------------------------------
Interest receivable 24,949,971
- --------------------------------------------------------------------------------
1,230,638,766
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payable for forward foreign currency exchange contracts 10,303,043
- ------------------------------------------------------------
Accrued management fees 818,154
- ------------------------------------------------------------
Distribution fees payable 14,843
- ------------------------------------------------------------
Service fees payable 14,843
- --------------------------------------------------------------------------------
11,150,883
- --------------------------------------------------------------------------------
NET ASSETS $1,219,487,883
================================================================================
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Capital paid-in $1,178,771,977
- ------------------------------------------------------------
Undistributed net investment income 22,532,771
- ------------------------------------------------------------
Undistributed net realized gain on investment
and foreign currency transactions 17,836,212
- ------------------------------------------------------------
Net unrealized appreciation on investments and translation
of assets and liabilities in foreign currencies 346,923
- --------------------------------------------------------------------------------
$1,219,487,883
================================================================================
INVESTOR CLASS
- --------------------------------------------------------------------------------
Net assets $1,140,782,502
- ------------------------------------------------------------
Shares outstanding 83,055,808
- ------------------------------------------------------------
Net asset value per share $13.74
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
Net assets $4,480,679
- ------------------------------------------------------------
Shares outstanding 325,935
- ------------------------------------------------------------
Net asset value per share $13.75
- --------------------------------------------------------------------------------
ADVISOR CLASS
- --------------------------------------------------------------------------------
Net assets $74,224,702
- ------------------------------------------------------------
Shares outstanding 5,414,536
- ------------------------------------------------------------
Net asset value per share $13.71
- --------------------------------------------------------------------------------
See Notes to Financial Statements.
- ------
11
Statement of Operations
FOR THE SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED)
- --------------------------------------------------------------------------------
INVESTMENT INCOME
- --------------------------------------------------------------------------------
INCOME:
- ------------------------------------------------------------
Interest (net of foreign taxes withheld $37,610) $ 18,217,038
- --------------------------------------------------------------------------------
EXPENSES:
- ------------------------------------------------------------
Management fees 4,725,123
- ------------------------------------------------------------
Distribution fees -- Advisor Class 69,512
- ------------------------------------------------------------
Service fees -- Advisor Class 69,512
- ------------------------------------------------------------
Trustees' fees and expenses 43,935
- --------------------------------------------------------------------------------
4,908,082
- ------------------------------------------------------------
Amount reimbursed (19)
- --------------------------------------------------------------------------------
4,908,063
- --------------------------------------------------------------------------------
NET INVESTMENT INCOME 13,308,975
- --------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
- --------------------------------------------------------------------------------
NET REALIZED GAIN ON:
- ------------------------------------------------------------
Investment transactions 11,759,870
- ------------------------------------------------------------
Foreign currency transactions 14,194,345
- --------------------------------------------------------------------------------
25,954,215
- --------------------------------------------------------------------------------
CHANGE IN NET UNREALIZED APPRECIATION ON:
- ------------------------------------------------------------
Investments 20,677,743
- ------------------------------------------------------------
Translation of assets and liabilities in foreign currencies (129,838,179)
- --------------------------------------------------------------------------------
(109,160,436)
- --------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS (83,206,221)
- --------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS $ (69,897,246)
================================================================================
See Notes to Financial Statements.
- ------
12
Statement of Changes in Net Assets
SIX MONTHS ENDED JUNE 30, 2005 (UNAUDITED) AND YEAR ENDED DECEMBER 31, 2004
- --------------------------------------------------------------------------------
INCREASE IN NET ASSETS 2005 2004
- --------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------
Net investment income $ 13,308,975 $ 18,468,751
- --------------------------------------------
Net realized gain 25,954,215 36,308,081
- --------------------------------------------
Change in net unrealized appreciation (109,160,436) 39,389,468
- --------------------------------------------------------------------------------
Net increase (decrease) in net assets
resulting from operations (69,897,246) 94,166,300
- --------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------
From net investment income:
- --------------------------------------------
Investor Class (7,065,097) (12,226,892)
- --------------------------------------------
Institutional Class (19,014) (11,715)
- --------------------------------------------
Advisor Class (295,394) (534,099)
- --------------------------------------------
From net realized gains:
- --------------------------------------------
Investor Class (9,001,303) (24,424,453)
- --------------------------------------------
Institutional Class (24,119) (23,556)
- --------------------------------------------
Advisor Class (379,361) (1,072,872)
- --------------------------------------------------------------------------------
Decrease in net assets from distributions (16,784,288) (38,293,587)
- --------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------
Net increase in net assets
from capital share transactions 285,342,469 321,159,940
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS 198,660,935 377,032,653
NET ASSETS
- --------------------------------------------------------------------------------
Beginning of period 1,020,826,948 643,794,295
- --------------------------------------------------------------------------------
End of period $1,219,487,883 $1,020,826,948
================================================================================
Undistributed net investment income $22,532,771 $16,603,301
================================================================================
See Notes to Financial Statements.
- ------
13
Notes to Financial Statements
JUNE 30, 2005 (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, the
Institutional 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. The Institutional Class commenced
sale on August 2, 2004.
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 fund determines that the market price of a portfolio
security is not readily available, or that the valuation methods mentioned above
do not reflect the security's fair value, such security is valued at its fair
value as determined by, or in accordance with procedures adopted by, the Board
of Trustees or its designee if such fair value determination would materially
impact a fund's net asset value. Circumstances that may cause the fund to fair
value a security include: 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; or trading in a security has been
halted during the trading day.
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 American Century Investment Management, Inc. (ACIM) (the
investment advisor) 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
(continued)
- ------
14
Notes to Financial Statements
JUNE 30, 2005 (UNAUDITED)
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
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.
INDEMNIFICATIONS -- Under the trust's organizational documents, its officers and
trustees 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 fund's maximum exposure under these arrangements is unknown as this would
involve future claims that may be made against the fund. The risk of material
loss from such claims is considered by management to be remote.
USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require management to make certain estimates and assumptions at the date of
the financial statements. Actual results could differ from these estimates.
2. FEES AND TRANSACTIONS WITH RELATED PARTIES
MANAGEMENT FEES -- The 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 (the fee) per class.
The Agreement provides that all expenses of the fund, except brokerage
commissions, taxes, 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 and
accrued daily based on the daily net assets of the specific class of shares of
the fund and paid monthly in arrears. The fee consists of (1) an Investment
Category Fee based on the daily net assets of the fund and certain other
accounts managed by the investment advisor that are in the same broad investment
category as the fund and (2) a Complex Fee based on the assets of all the funds
in the American Century family of funds. 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 0.2500% to 0.3100%. The Institutional Class and the Advisor
Class are 0.2000% and 0.2500% less at each point within the Complex Fee range,
respectively. The effective annual management fee for the six months ended June
30, 2005, was 0.82%, 0.62% and 0.57% for the Investor Class, Institutional
Class, and Advisor Class, 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 and accrued daily based on the Advisor Class's daily net
assets and paid monthly in arrears. The distribution fee provides compensation
for expenses incurred by financial intermediaries in connection with
distributing shares of the 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, 2005, are detailed in the Statement of
Operations. During the six months ended June 30, 2005, the Advisor Class
received a reimbursement of its distribution fees of $19. The reimbursement had
no impact on the ratio of operating expenses and the ratio of net investment
income to average net assets.
(continued)
- ------
15
Notes to Financial Statements
JUNE 30, 2005 (UNAUDITED)
2. FEES AND TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
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 advisor, ACIM, the
distributor of the trust, American Century Investment Services, Inc., and the
trust's transfer agent, American Century Services, LLC (formerly 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.
3. INVESTMENT TRANSACTIONS
Investment transactions, excluding short-term investments, for the six months
ended June 30, 2005, were as follows:
- --------------------------------------------------------------------------------
Purchases $1,439,381,703
- --------------------------------------------------------------------------------
Proceeds from sales $1,149,651,101
- --------------------------------------------------------------------------------
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, 2005
- --------------------------------------------
Sold 36,251,353 $ 519,380,663
- --------------------------------------------
Issued in reinvestment of distributions 854,920 12,337,181
- --------------------------------------------
Redeemed (20,209,698) (285,681,106)
- --------------------------------------------------------------------------------
Net increase 16,896,575 $ 246,036,738
================================================================================
YEAR ENDED DECEMBER 31, 2004
- --------------------------------------------
Sold 47,993,169 $ 675,846,991
- --------------------------------------------
Issued in reinvestment of distributions 1,995,138 28,736,799
- --------------------------------------------
Redeemed (29,463,343) (403,535,285)
- --------------------------------------------------------------------------------
Net increase 20,524,964 $ 301,048,505
================================================================================
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2005
- --------------------------------------------
Sold 246,506 $3,539,067
- --------------------------------------------
Issued in reinvestment of distributions 60 859
- --------------------------------------------
Redeemed (6,161) (86,367)
- --------------------------------------------------------------------------------
Net increase 240,405 $3,453,559
================================================================================
PERIOD ENDED DECEMBER 31, 2004(1)
- --------------------------------------------
Sold 87,758 $1,253,555
- --------------------------------------------
Issued in reinvestment of distributions 170 2,476
- --------------------------------------------
Redeemed (2,398) (35,204)
- --------------------------------------------------------------------------------
Net increase 85,530 $1,220,827
================================================================================
(1) August 2, 2004 (commencement of sale) through December 31, 2004.
(continued)
- ------
16
Notes to Financial Statements
JUNE 30, 2005 (UNAUDITED)
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
- --------------------------------------------------------------------------------
SHARES AMOUNT
- --------------------------------------------------------------------------------
ADVISOR CLASS
- --------------------------------------------------------------------------------
SIX MONTHS ENDED JUNE 30, 2005
- --------------------------------------------
Sold 2,927,331 $41,647,821
- --------------------------------------------
Issued in reinvestment of distributions 40,110 577,981
- --------------------------------------------
Redeemed (451,013) (6,373,630)
- --------------------------------------------------------------------------------
Net increase 2,516,428 $35,852,172
================================================================================
YEAR ENDED DECEMBER 31, 2004
- --------------------------------------------
Sold 1,832,224 $25,482,888
- --------------------------------------------
Issued in reinvestment of distributions 97,856 1,407,282
- --------------------------------------------
Redeemed (583,641) (7,999,562)
- --------------------------------------------------------------------------------
Net increase 1,346,439 $18,890,608
================================================================================
5. BANK LINE OF CREDIT
The fund, along with certain other funds managed by ACIM or American Century
Global Investment Management, Inc., has a $575,000,000 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, 2005.
6. RISK FACTORS
There are certain risks involved in investing in foreign securities. These risks
include those resulting from future adverse political, social, and economic
developments, fluctuations in currency exchange rates, the possible imposition
of exchange controls, and other foreign laws or restrictions. Investing in
emerging markets may accentuate these risks.
7. FEDERAL TAX INFORMATION
The 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, 2005, the components of investments for federal income tax
purposes were as follows:
- --------------------------------------------------------------------------------
Federal tax cost of investments $1,188,976,594
================================================================================
Gross tax appreciation of investments $ 30,338,281
- -------------------------------------------------------------
Gross tax depreciation of investments (27,429,164)
- --------------------------------------------------------------------------------
Net tax appreciation of investments $ 2,909,117
================================================================================
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.
- ------
17
International Bond - Financial Highlights
For a Share Outstanding Throughout the Years Ended December 31 (except as noted)
- ----------------------------------------------------------------------------------------------
INVESTOR CLASS
- ----------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- ----------------------------------------------------------------------------------------------
PER-SHARE DATA
- ----------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $14.76 $13.64 $12.19 $10.08 $10.25 $10.55
- ----------------------------------------------------------------------------------------------
Income From
Investment
Operations
- ---------------------
Net Investment
Income(2) 0.16 0.36 0.37 0.36 0.39 0.38
- ---------------------
Net Realized and
Unrealized
Gain (Loss) (0.98) 1.40 2.03 2.01 (0.56) (0.51)
- ----------------------------------------------------------------------------------------------
Total From
Investment
Operations (0.82) 1.76 2.40 2.37 (0.17) (0.13)
- ----------------------------------------------------------------------------------------------
Distributions
- ---------------------
From Net
Investment Income (0.09) (0.21) (0.31) (0.26) -- (0.11)
- ---------------------
From Net
Realized Gains (0.11) (0.43) (0.64) -- -- (0.06)
- ----------------------------------------------------------------------------------------------
Total
Distributions (0.20) (0.64) (0.95) (0.26) -- (0.17)
- ----------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $13.74 $14.76 $13.64 $12.19 $10.08 $10.25
==============================================================================================
TOTAL RETURN(3) (5.68)% 13.10% 19.91% 23.53% (1.66)% (1.20)%
- ----------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ----------------------------------------------------------------------------------------------
Ratio of
Operating
Expenses to Average
Net Assets 0.82%(4) 0.83% 0.84% 0.85% 0.86% 0.87%
- ---------------------
Ratio of Net
Investment Income
to Average
Net Assets 2.28%(4) 2.60% 2.80% 3.28% 3.87% 3.85%
- ---------------------
Portfolio
Turnover Rate 105% 104% 112% 137% 147% 221%
- ---------------------
Net Assets,
End of Period
(in thousands) $1,140,783 $976,828 $622,657 $315,491 $115,172 $111,320
- ----------------------------------------------------------------------------------------------
(1) Six months ended June 30, 2005 (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.
- ------
18
International Bond - Financial Highlights
For a Share Outstanding Throughout the Years Ended December 31 (except as noted)
- --------------------------------------------------------------------------------
INSTITUTIONAL CLASS
- --------------------------------------------------------------------------------
2005(1) 2004(2)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $14.77 $13.37
- --------------------------------------------------------------------------------
Income From Investment Operations
- -----------------------------------------------------
Net Investment Income(3) 0.17 0.17
- -----------------------------------------------------
Net Realized and Unrealized Gain (Loss) (0.98) 1.84
- --------------------------------------------------------------------------------
Total From Investment Operations (0.81) 2.01
- --------------------------------------------------------------------------------
Distributions
- -----------------------------------------------------
From Net Investment Income (0.10) (0.18)
- -----------------------------------------------------
From Net Realized Gains (0.11) (0.43)
- --------------------------------------------------------------------------------
Total Distributions (0.21) (0.61)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $13.75 $14.77
================================================================================
TOTAL RETURN(4) (5.57)% 15.25%
- --------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets 0.62%(5) 0.63%(5)
- -----------------------------------------------------
Ratio of Net Investment Income to Average Net Assets 2.48%(5) 2.88%(5)
- -----------------------------------------------------
Portfolio Turnover Rate 105% 104%(6)
- -----------------------------------------------------
Net Assets, End of Period (in thousands) $4,481 $1,263
- --------------------------------------------------------------------------------
(1) Six months ended June 30, 2005 (unaudited).
(2) August 2, 2004 (commencement of sale) through December 31, 2004.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year
are not annualized. The total return of the classes may not precisely
reflect the class expense differences because of the impact of calculating
the net asset values to two decimal places. If net asset values were
calculated to three decimal places, the total return differences would more
closely reflect the class expense differences. The calculation of net asset
values to two decimal places is made in accordance with SEC guidelines and
does not result in any gain or loss of value between one class and another.
(5) Annualized.
(6) Portfolio turnover is calculated at the fund level. Percentage indicated
was calculated for the year ended December 31, 2004.
See Notes to Financial Statements.
- ------
19
International Bond - Financial Highlights
For a Share Outstanding Throughout the Years Ended December 31 (except as noted)
- ---------------------------------------------------------------------------------------------
ADVISOR CLASS
- ---------------------------------------------------------------------------------------------
2005(1) 2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------------------
PER-SHARE DATA
- ---------------------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $14.75 $13.62 $12.16 $10.03 $10.23 $10.52
- ---------------------------------------------------------------------------------------------
Income From
Investment Operations
- -------------------------
Net Investment
Income(2) 0.14 0.32 0.29 0.33 0.36 0.35
- -------------------------
Net Realized and
Unrealized Gain (Loss) (0.99) 1.42 2.08 2.00 (0.56) (0.50)
- ---------------------------------------------------------------------------------------------
Total From
Investment Operations (0.85) 1.74 2.37 2.33 (0.20) (0.15)
- ---------------------------------------------------------------------------------------------
Distributions
- -------------------------
From Net
Investment Income (0.08) (0.18) (0.27) (0.20) -- (0.08)
- -------------------------
From Net
Realized Gains (0.11) (0.43) (0.64) -- -- (0.06)
- ---------------------------------------------------------------------------------------------
Total Distributions (0.19) (0.61) (0.91) (0.20) -- (0.14)
- ---------------------------------------------------------------------------------------------
Net Asset Value,
End of Period $13.71 $14.75 $13.62 $12.16 $10.03 $10.23
=============================================================================================
TOTAL RETURN(3) (5.80)% 12.93% 19.60% 23.24% (1.96)% (1.35)%
- ---------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 1.07%(4) 1.08% 1.09% 1.10% 1.11% 1.12%
- -------------------------
Ratio of Net
Investment Income
to Average Net Assets 2.03%(4) 2.35% 2.55% 3.03% 3.62% 3.60%
- -------------------------
Portfolio
Turnover Rate 105% 104% 112% 137% 147% 221%
- -------------------------
Net Assets,
End of Period
(in thousands) $74,225 $42,736 $21,137 $3,192 $1,983 $918
- ---------------------------------------------------------------------------------------------
(1) Six months ended June 30, 2005 (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.
- ------
20
Approval of Management Agreement for International Bond
Under Section 15(c) of the Investment Company Act, contracts for investment
advisory services are required to be reviewed, evaluated and approved by a
majority of a fund's independent directors or trustees (the "Directors") each
year. At American Century, this process -- referred to as the "15(c) Process" --
involves at least two board meetings spanning a 30 to 60 day period each year,
as well as meetings of the Corporate Governance Committee (comprised solely of
independent directors), which coordinates the board's 15(c) Process. In addition
to this annual review, the board and its committees oversee and evaluate at
quarterly meetings the nature and quality of significant services performed by
the advisor on behalf of the funds. At these meetings the board reviews fund
performance, provision of shareholder services, audit and compliance
information, and a variety of other reports from the advisor concerning fund
operations. The board, or committees of the board, also holds special meetings,
as needed.
ANNUAL CONTRACT REVIEW PROCESS
As part of the annual 15(c) Process undertaken during this half-year period, the
Directors requested and received extensive data and information compiled by the
advisor and certain independent providers of evaluative data (the "15(c)
Providers") concerning International Bond (the "fund") and the services provided
to the fund under the management agreement. The information included:
* the nature, extent and quality of investment management, shareholder
services and other services provided to the fund under the management
agreement;
* reports on the advisor's activities relating to the wide range of
programs and services the advisor provides to the fund and its shareholders
on a routine and non-routine basis;
* data comparing the cost of owning the fund to the cost of owning a
similar fund;
* data comparing the fund's performance to appropriate benchmarks
and/or a peer group of other mutual funds with similar investment
objectives and strategies;
* financial data showing the profitability of the fund to the advisor
and the overall profitability of the advisor; and
* data comparing services provided and charges to clients of the
advisor other than the fund.
In addition, the board also reviewed information provided by an independent
consultant retained by the board in connection with the 15(c) Process.
In keeping with its practice, the fund's board held two regularly scheduled
meetings and one special meeting to review and discuss the information provided
by the advisor and to complete its negotiations with the advisor regarding the
renewal of the management agreement, including the setting of the applicable
advisory fee. In addition, the independent directors and the Corporate
Governance Committee met to review and discuss the information provided and
evaluate the advisor's performance as manager of the fund. Working through the
Corporate Governance Committee, the board also retained a consultant to assist
it in its evaluation of the profitability of the fund and the advisor, and in
formulating
(continued)
- ------
21
Approval of Management Agreement for International Bond
the board's fee proposals. The board also had the benefit of the advice of its
independent counsel throughout the period.
FACTORS CONSIDERED
The Directors considered all of the information provided by the advisor, the
15(c) Providers, the board's consultant and its independent counsel, and
evaluated such information for each fund for which the board has responsibility.
The Directors did not identify any single factor as being all-important or
controlling, and each Director may have attributed different levels of
importance to different factors. In deciding to renew the agreement under the
terms ultimately determined by the board to be appropriate, the Directors'
decision was based on the following factors.
NATURE, EXTENT AND QUALITY OF SERVICES -- GENERALLY. Under the management
agreement, the advisor is responsible for providing or arranging for all
services necessary for the operation of the fund. The board noted that under the
management agreement, the advisor provides or arranges at its own expense a wide
variety of services including:
* fund construction and design
* portfolio security selection
* initial capitalization/funding
* securities trading
* custody of fund assets
* daily valuation of the fund's portfolio
* shareholder servicing and transfer agency, including shareholder
confirmations, recordkeeping and communications
* legal services
* regulatory and portfolio compliance
* financial reporting
* marketing and distribution
The Directors noted that many of these services have expanded over time both in
terms of quantity and complexity in response to shareholder demands, competition
in the industry and the changing regulatory environment. In performing their
evaluation, the Directors considered information received in connection with the
annual review, as well as information provided on an ongoing basis at their
regularly scheduled board and committee meetings.
INVESTMENT MANAGEMENT SERVICES. The nature of the investment management services
provided is quite complex and allows fund shareholders access to professional
money management, instant diversification of their investments within an asset
class, the opportunity to easily diversify among asset classes, and liquidity.
In evaluating investment performance, the board expects the advisor to manage
the fund in accordance with its investment objectives and approved strategies.
In providing these services, the advisor utilizes teams of investment
professionals (portfolio managers, analysts, research assistants, and securities
traders) who require extensive information technology, research, training,
compliance and other systems to conduct their business. At each quarterly
meeting the board and the Portfolio Committee review investment performance
information for the fund, together with comparative information for appropriate
benchmarks managed similarly to the fund. Further, the Portfolio Committee
reports its assessment to the board. If performance concerns are identified, the
Directors discuss with the advisor
(continued)
- ------
22
Approval of Management Agreement for International Bond
and its portfolio managers the reasons for such results (e.g., market
conditions, security selection) and any efforts being undertaken to improve
performance. International Bond's performance fell below its benchmark for both
one and three year periods during the past year. The board discussed
International Bond's performance with the advisor and was satisfied with the
efforts being undertaken by the advisor.
SHAREHOLDER AND OTHER SERVICES. The advisor provides the fund with a
comprehensive package of transfer agency, shareholder, and other services. The
Quality of Service Committee reviews reports and evaluations of such services at
its regular quarterly meetings, including the annual meeting concerning contract
review, and reports to the board. The Quality of Service Committee reviews
interim reports between regularly scheduled meetings. These reports include, but
are not limited to, information regarding the operational efficiency and
accuracy of the shareholder and transfer agency services provided, staffing
levels, shareholder satisfaction (as measured by external as well as internal
sources), technology support, new products and services offered to fund
shareholders, securities trading activities, portfolio valuation services,
auditing services, and legal and operational compliance activities. Certain
aspects of shareholder and transfer agency service level efficiency and the
quality of securities trading activities are measured by independent third party
providers and are presented in comparison to other fund groups not managed by
the advisor.
COSTS OF SERVICES PROVIDED AND PROFITABILITY TO THE ADVISOR. The advisor
provides detailed information concerning its cost of providing various services
to the fund, its profitability in managing the fund, its overall profitability,
and its financial condition. The Directors have reviewed with the advisor the
methodology used to prepare this financial information. This financial
information regarding the advisor is considered in order to evaluate the
advisor's financial condition, its ability to continue to provide services under
the management agreement, and the reasonableness of the current management fee.
The board has retained a consultant to assist it in this review.
ETHICS OF THE ADVISOR. The Directors generally consider the advisor's commitment
to providing quality services to shareholders and to conducting its business
ethically. They noted that the advisor's practices generally meet or exceed
industry best practices and that the advisor was not implicated in the industry
scandals of 2003 and 2004.
ECONOMIES OF SCALE. The Directors review reports provided by the advisor on
economies of scale for the complex as a whole and the year-over-year changes in
revenue, costs, and profitability. The Directors concluded that economies of
scale are difficult to measure with precision, particularly on a fund-by-fund
basis. This analysis is also complicated by the additional services and content
provided by the advisor and its reinvestment in its ability to provide and
expand those services. Accordingly, the Directors also seek to evaluate
economies of scale by
(continued)
- ------
23
Approval of Management Agreement for International Bond
reviewing other information, such as year-over-year profitability of the advisor
generally, the profitability of its management of the fund specifically, the
expenses incurred by the advisor in providing various functions to the fund, and
the fee breakpoints of competitive funds not managed by the advisor. The
Directors believe the advisor is appropriately sharing economies of scale
through a competitive fee structure, through breakpoints that reduce fees as the
fund complex and the fund increases in size and through reinvestment in its
business to provide shareholders additional content and services. In particular,
separate breakpoint schedules based on the size of the entire fund complex and
on the size of the fund reflect the complexity of assessing economies of scale.
COMPARISON TO OTHER FUNDS' FEES. 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,
taxes, interest, extraordinary expenses, and the fees and expenses of the fund's
independent directors (including their independent legal counsel). Under the
unified fee structure, the advisor is responsible for providing all investment
advisory, custody, audit, administrative, compliance, recordkeeping, marketing
and shareholder services, or arranging and supervising third parties to provide
such services. By contrast, most other funds are charged a variety of fees,
including an investment advisory fee, a transfer agency fee, an administrative
fee, distribution charges and other expenses. Other than their investment
advisory fees and Rule 12b-1 distribution fees, all other components of the
total fees charged by these other funds may be increased without shareholder
approval. The board believes the unified fee structure is a benefit to fund
shareholders because it clearly discloses to shareholders the cost of owning
fund shares, and, since the unified fee cannot be increased without a vote of
fund shareholders, it shifts to the advisor the increased costs of operating the
fund and the risk of administrative inefficiencies. Part of the Directors'
analysis of fee levels involves comparing the fund's unified fee to the total
expense ratio of other funds in the fund's benchmark. The unified fee charged to
shareholders of the fund was in the lowest quartile of the total expense ratios
of its peer group.
COMPARISON TO FEES AND SERVICES PROVIDED TO OTHER CLIENTS OF THE ADVISOR. The
Directors also requested and received information from the advisor concerning
the nature of the services, fees, and profitability of its advisory services to
advisory clients other than the 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 Directors analyzed
this information and concluded that the fees charged and services provided to
the advisor's other clients did not suggest that the fund's fees were
unreasonable by comparison.
COLLATERAL BENEFITS DERIVED BY THE ADVISOR. The Directors reviewed information
from the advisor concerning collateral benefits it receives as a result of its
relationship with the fund. They concluded that the advisor's primary business
is managing mutual funds
(continued)
- ------
24
Approval of Management Agreement for International Bond
and it generally does not use the fund or shareholder information to generate
profits in other lines of business, and therefore does not derive any
significant collateral benefits from them. The Directors noted that the advisor
receives proprietary research from broker dealers that execute fund portfolio
transactions and concluded that this research is likely to benefit fund
shareholders. The Directors also determined that the advisor is able to provide
investment management services to clients other than the fund, at least in part,
due to its existing infrastructure built to serve the fund complex. The
Directors concluded, however, that the assets of those other clients are not
significant and that, in any event, the addition of such other assets to the
assets of the funds that use substantially the same investment management team
and strategy to determine whether breakpoints have been achieved captures for
the shareholders a portion of any benefit that exists.
CONCLUSIONS OF THE DIRECTORS
As a result of this process, the independent directors concluded that the
investment management agreement between the fund and the advisor is fair and
reasonable in light of the services provided and should be renewed.
- ------
25
Share Class Information
Three classes of shares are authorized for sale by the fund: Investor Class,
Institutional Class and Advisor Class. The total expense ratio for Institutional
Class shares is lower than that of Investor Class shares. 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.
INSTITUTIONAL CLASS shares are available to large investors such as endowments,
foundations, and retirement plans, and to financial intermediaries serving these
investors. This class recognizes the relatively lower cost of serving
institutional customers and others who invest at least $5 million ($3 million
for endowments and foundations) in an American Century fund or at least $10
million in multiple funds. In recognition of the larger investments and account
balances and comparatively lower transaction costs, the total expense ratio of
Institutional Class shares is 0.20% less than the total expense ratio of
Investor Class shares.
ADVISOR CLASS shares are sold primarily through institutions such as investment
advisors, banks, broker-dealers, insurance companies, and financial advisors.
Advisor Class shares are subject to a 0.50% annual Rule 12b-1 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.
- ------
26
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 investment advisor, 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 advisor uses in fulfilling this responsibility is available without charge,
upon request, by calling 1-800-345-2021. It is also available on American
Century's Web site at americancentury.com and on the Securities and Exchange
Commission's Web site at sec.gov. Information regarding how the investment
advisor voted proxies relating to portfolio securities during the most recent
12-month period ended June 30 is available on the "About Us" page at
americancentury.com. It is also available at sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The fund files its complete schedule of portfolio holdings with the Securities
and Exchange Commission (SEC) for the first and third quarters of each fiscal
year on Form N-Q. The fund's Form N-Q is available on the SEC's Web site at
sec.gov, and may be reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public Reference Room may be
obtained by calling 1-800-SEC-0330. The fund also makes its complete schedule of
portfolio holdings for the most recent quarter of its fiscal year available on
its Web site at americancentury.com and, upon request, by calling
1-800-345-2021.
- ------
27
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 weighted at 15%.
Prior to January 1998, the FUND BENCHMARK was the J.P. Morgan ECU-Weighted
European Index.
- ------
28
CONTACT US
AMERICANCENTURY.COM
AUTOMATED INFORMATION LINE:
1-800-345-8765
INVESTOR SERVICES REPRESENTATIVE:
1-800-345-2021 or 816-531-5575
BUSINESS, NOT-FOR-PROFIT,
EMPLOYER-SPONSORED RETIREMENT PLANS:
1-800-345-3533
BANKS AND TRUST COMPANIES, BROKER-DEALERS,
FINANCIAL 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 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.
The American Century Investments logo, American Century
and American Century Investments are service marks
of American Century Proprietary Holdings, Inc.
American Century Investment Services, Inc., Distributor
(c)2005 American Century Proprietary Holdings, Inc. All rights reserved.
0508
SH-SAN-44733N
ITEM 2. CODE OF ETHICS.
Not applicable for semiannual report filings.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable for semiannual report filings.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable for semiannual report filings.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. SCHEDULE OF INVESTMENTS.
The schedule of investments is included as part of the report to stockholders
filed under Item 1 of this Form.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PORTFOLIO MANAGERS OF CLOSED-END MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 9. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 10. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
As of the end of the reporting period, the registrant did not have in place
formal procedures by which shareholders may recommend nominees to the
registrant's board. However, all such recommendations directed to the following
address will be forwarded to the Corporate Governance Committee of the board for
consideration: The Corporate Secretary, American Century Funds, P. O. Box
410141, Kansas City, Missouri 64141.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company
Act of 1940) are effective based on their evaluation of these controls
and procedures as of a date within 90 days of the filing date of this
report.
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940) that occurred during the registrant's second
fiscal quarter of the period covered by this report that have
materially affected, or are reasonably likely to materially affect,
the registrant's internal control over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable for semiannual report filings.
(a)(2) Separate certifications by the registrant's principal executive
officer and principal financial officer, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment
Company Act of 1940, are filed and attached hereto as Exhibit
99.302CERT.
(a)(3) Not applicable.
(b) A certification by the registrant's chief executive officer and chief
financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, is furnished and attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: AMERICAN CENTURY INTERNATIONAL BOND FUNDS
By: /s/ William M. Lyons
-------------------------------------------
Name: William M. Lyons
Title: President
Date: August 29, 2005
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 29, 2005
By: /s/ Maryanne L. Roepke
-------------------------------------------
Name: Maryanne L. Roepke
Title: Sr. Vice President, Treasurer, and
Chief Accounting Officer
(principal financial officer)
Date: August 29, 2005
