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
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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)
CHARLES A. ETHERINGTON, 4500 MAIN STREET, KANSAS CITY, MISSOURI 64111
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 816-531-5575
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Date of fiscal year end: 06-30
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Date of reporting period: 12-31-2007
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ITEM 1. REPORTS TO STOCKHOLDERS.
[front cover]
AMERICAN CENTURY INVESTMENTS
Semiannual Report December 31, 2007
[photo of winter]
International Bond Fund
[american century investments logo and text logo ®]
OUR MESSAGE TO YOU
[photo of Jonathan Thomas]
JONATHAN THOMAS
President and CEO
American Century Companies, Inc.
To help you monitor your investment, my colleagues and I take
pride in providing you with the semiannual report for the
American Century® International Bond Fund for the six months
ended December 31, 2007. I am honored to be addressing you in
the "Our Message" space long devoted to company founder Jim
Stowers, Jr. and his son Jim Stowers III.
Jim Stowers III stepped down from the American Century
Companies, Inc. (ACC) board of directors in July 2007, his
final move in a well-planned career transition to pursue new
ventures outside the company. This reflected his family's
support of our company's direction and its leadership team.
The Stowers family remains an integral part of our heritage,
leadership, and financial structure. In fact, Jim Stowers, Jr.
continues as co-chair of the ACC board with Richard Brown, who
has been on the board since 1998.
American Century Investments®, our clients, and our employees
have been my top priority since I became company president and
CEO in March, 2007. We have also added the executive talents of
overall chief investment officer (CIO) Enrique Chang,
international equity CIO Mark On, U.S. growth equity CIO Steve
Lurito, and chief operating officer Barry Fink.
This skilled group, combined with our existing senior
management team, has already had a positive impact on the
development and management of the products and services we take
pride in delivering to you. We believe the ultimate measure of
our performance is our clients' success. Therefore, our focus
continues to be on building a long-term relationship with you
and on delivering superior investment performance across our
product line.
/s/Jonathan Thomas
[photo of James E. Stowers, Jr.]
JAMES E. STOWERS, JR.
Founder and Co-Chairman of the Board
American Century Companies, Inc.
[photo of Richard Brown]
RICHARD BROWN
Co-Chairman of the Board
American Century Companies, Inc.
TABLE OF CONTENTS
Market Perspective. . . . . . . . . . . . . . . . . . . .
. . . . . . 2
Global Fixed-Income Total Returns. . . . . . . . . . . .
. . . . . . 2
INTERNATIONAL BOND
Performance . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . 3
Portfolio Commentary. . . . . . . . . . . . . . . . . . .
. . . . . . 5
Portfolio at a Glance. . . . . . . . . . . . . . . . . .
. . . . . . 5
Types of Investments in Portfolio. . . . . . . . . . . .
. . . . . . 5
Bond Holdings by Country . . . . . . . . . . . . . . . .
. . . . . . 6
Shareholder Fee Example . . . . . . . . . . . . . . . . .
. . . . . . 7
Schedule of Investments . . . . . . . . . . . . . . . . .
. . . . . . 9
FINANCIAL STATEMENTS
Statement of Assets and Liabilities . . . . . . . . . . .
. . . . . . 15
Statement of Operations . . . . . . . . . . . . . . . . .
. . . . . . 17
Statement of Changes in Net Assets. . . . . . . . . . . .
. . . . . . 18
Notes to Financial Statements . . . . . . . . . . . . . .
. . . . . . 19
Financial Highlights. . . . . . . . . . . . . . . . . . .
. . . . . . 24
OTHER INFORMATION
Proxy Voting Results. . . . . . . . . . . . . . . . . . .
. . . . . . 30
Share Class Information . . . . . . . . . . . . . . . . .
. . . . . . 32
Additional Information. . . . . . . . . . . . . . . . . .
. . . . . . 34
Index Definitions . . . . . . . . . . . . . . . . . . . .
. . . . . . 35
The opinions expressed in the Market Perspective and 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.
MARKET PERSPECTIVE
[photo of chief investment officer]
By David MacEwen, Chief Investment Officer, Fixed Income
STELLAR SIX MONTHS FOR INTERNATIONAL BONDS
Following a basically flat first half of the year in dollar
terms, international bond returns soared in the second half of
2007. Subprime mortgage-related credit concerns and signs of
growing economic weakness helped fuel capital movements that
boosted bond returns and weakened the U.S. dollar. The JPMorgan
Government Bond Index - Global, excluding U.S., which is
representative of the securities in which the International
Bond fund invests, returned 11.90% in dollar terms.
An abrupt increase in volatility, heightened illiquidity, and a
broad repricing of risk shook capital markets in the latter
half of 2007. It was a rough period for riskier assets, in
which high-quality strongly outperformed high-yield. Questions
regarding what impact the slowdown of the U.S. housing sector
would have on banks and lenders contributed to a sharp
reduction in capital market liquidity. Short-term money markets
were hit hard in late summer, with liquidity all but
non-existent and funding impossible for some.
In the last four months of 2007, the U.S. Federal Reserve, the
European Central Bank, and the Bank of England took
extraordinary steps to assure the adequate provision of
liquidity to financial markets and to stimulate economic
growth. But it may have been too little too late -- economic
activity in the major developed economies was dampened by a
sharp contraction in the U.S. housing market, a sharp
tightening in credit conditions, and a surge in oil prices.
DOLLAR'S DECLINE BOOSTED RETURNS
In foreign currency markets, the U.S. dollar declined over 7%
against the euro and over 9% against the Japanese yen (see
chart at right). The dollar plummeted to multi-year lows in
trade-weighted terms against several of the U.S.'s major
foreign trade partners. Most higher-yielding and emerging
markets currencies also finished higher against the dollar.
It's worth reminding investors that International Bond is
priced daily in dollars, and stronger foreign currencies buy
more dollars, so dollar weakness benefits the portfolio's
performance.
Global Fixed-Income Total Returns
For the six months ended December 31, 2007*
U.S. DOLLAR RETURNS
U.S. Dollar vs. Euro -7.18%
U.S. Dollar vs. Japanese Yen -9.31%
INTERNATIONAL BOND MARKET RETURNS (IN DOLLARS)
JPMorgan Government Bond Index -- Global,
excluding U.S. 11.90%
JPMorgan Global Traded Government Bond Index 11.42%
*Total returns for periods less than one year are not
annualized.
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2
PERFORMANCE
International Bond
Total Returns as of December 31, 2007
Average Annual
Returns
6 1 5 10 Since Inception
months(1) year years years Inception Date
INVESTOR CLASS 10.39% 9.89% 8.16% 6.50% 6.75% 1/7/92
FUND BENCHMARK(2) 11.90% 11.98% 9.52% 7.62% 7.37%(3) --
JPMORGAN GLOBAL
TRADED GOVERNMENT
BOND INDEX 11.42% 10.81% 6.71% 6.26% 6.54%(3) --
Institutional Class 10.50% 10.13% -- -- 7.17% 8/2/04
A Class(4)
No sales charge* 9.94% 9.31% 7.86% -- 5.17%
With sales charge* 5.02% 4.38% 6.87% -- 4.64% 10/27/98
B Class
No sales charge* -- -- -- -- 2.57%(1)
With sales charge* -- -- -- -- -2.43%(1) 9/28/07
C Class
No sales charge* -- -- -- -- 2.57%(1)
With sales charge* -- -- -- -- 1.57%(1) 9/28/07
R Class -- -- -- -- 2.73%(1) 9/28/07
* Sales charges include initial sales charges and contingent
deferred sales charges (CDSCs), as applicable. A Class shares
have a 4.50% maximum initial sales charge for fixed-income
funds and may be subject to a maximum CDSC of 1.00%. B Class
shares redeemed within six years of purchase are subject to a
CDSC that declines from 5.00% during the first year after
purchase to 0.00% the sixth year after purchase. C Class shares
redeemed within 12 months of purchase are subject to a maximum
CDSC of 1.00%. Please see the Share Class Information pages for
more about the applicable sales charges for each share class.
The SEC requires that mutual funds provide performance
information net of maximum sales charges in all cases where
charges could be applied.
(1) Total returns for periods less than one year are not
annualized.
(2) See Index Definitions page.
(3) Since 12/31/91, the date nearest the Investor Class's
inception for which data are available.
(4) Prior to September 4, 2007, the A Class was referred to as
the Advisor Class. Performance, with sales charge, prior to
that date has been adjusted to reflect the A Class's current
sales charge.
Data presented reflect past performance. Past performance is no
guarantee of future results. Current performance may be higher
or lower than the performance shown. Investment return and
principal value will fluctuate, and redemption value may be
more or less than original cost. To obtain performance data
current to the most recent month end, please call
1-800-345-2021 or visit americancentury.com. 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. 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
Growth of $10,000 Over 10 Years
$10,000 investment made December 31, 1997
One-Year Returns Over 10 Years
Periods ended December 31
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Investor
Class 17.87% -10.36% -1.20% -1.66% 23.53% 19.91% 13.10% -8.23% 8.25% 9.89%
Fund
benchmark 18.49% -9.61% -0.23% -1.16% 25.26% 21.97% 14.39% -8.04% 9.68% 11.98%
JPMorgan
Global
Traded
Government
Bond Index 15.31% -5.08% 2.32% -0.80% 19.37% 14.53% 10.11% -6.53% 5.94% 10.81%
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. 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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4
PORTFOLIO COMMENTARY
International Bond
Portfolio Manager: Jon Jonsson, J.P. Morgan Investment
Management, Inc.
PERFORMANCE SUMMARY
International Bond returned 10.39%* for the six months ended
December 31, 2007. By comparison, the JPMorgan Global Traded
Government Bond Index (JPM GTGBI), returned 11.42%, and the
fund's benchmark -- the JPM GTGBI with the U.S. excluded and
Japan weighted at 15% -- returned 11.90%. Of course, the fund's
results reflect operating expenses, while the returns of the
indices do not.
The portfolio's absolute return reflected U.S. dollar weakness
and the favorable investment climate for high-quality bonds
that prevailed in the second half of 2007 (see the Market
Perspective on page 2). In relative terms, the portfolio
trailed its benchmark primarily because of its exposure to
spread (non-Treasury) sectors that experienced exceptional
volatility.
PORTFOLIO POSITIONING AND STRATEGY
Directionally, global fixed-income markets were difficult to
read. The markets were characterized by huge volatility in
spread sectors, yield curves, and interest rate expectations,
with the dramatic events in the U.S. subprime mortgage sector
and asset-backed securities influencing all corners of the
market.
Our strategy results were mixed, with positioning across spread
sectors dominating portfolio returns versus the benchmark. The
portfolio was positioned strategically to benefit from a
flight-to-quality environment as yields fell. But while
maintaining an allocation to high-quality securities, the
portfolio was also diversified across spread sectors that
experienced exceptional volatility. Our allocations to
corporates and European mortgages provided a significant drag
on performance as spreads (the yield difference between
Treasury and non-Treasury securities) widened and volatility
across these sectors increased.
PORTFOLIO DIVERSIFIER, NOT INCOME PRODUCER
We should remind shareholders that by investing in high-quality
overseas bonds and the local currencies in which they're
denominated, International Bond can be a good fit for investors
looking to diversify their holdings away from the U.S. dollar
at a time when the greenback is trading at relatively low
levels versus many developed-market currencies. However,
because currency exchange rates fluctuate, this directly
impacts the value of the portfolio's bonds and income stream
once converted into U.S. dollars. As a result, International
Bond is not ideally suited to investors looking for a steady
stream of current income.
Portfolio at a Glance
As of As of
12/31/07 6/30/07
Weighted Average Maturity 8.6 years 8.4 years
Average Duration
(Modified) 6.8 years 6.7 years
Types of Investments in Portfolio
% of net % of net
assets as assets as
of of
12/31/07 6/30/07
Government Bonds 61.6% 60.9%
Credit 31.3% 32.4%
Short-Term Investments 3.7% 2.4%
Temporary Cash Investments 3.4% 2.3%
Other Assets and
Liabilities --(1) 2.0%
(1) Category is less than 0.05% of total net assets.
*All fund returns referenced in this commentary are for
Investor Class shares. Total returns for periods less than one
year are not annualized.
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5
International Bond
GLOBAL ECONOMIC AND INTEREST RATE OUTLOOK
We tend to look at the global, developed-nation fixed-income
markets that we typically invest in on a three-part regional
basis -- United Kingdom (U.K.), Eurozone, and Japan. The
central theme going forward appears to be slower economic
growth -- particularly if the U.S. falls into recession --
which would continue to be favorable for bonds. The U.K. and
Eurozone economies look more vulnerable than Japan's.
Focusing first on the U.K, the economy seems to be slowing to
below trend levels. Inflation is a moderate concern, as is the
recent performance of the British pound, but monetary policy
has been restrictive. We expect the Bank of England to cut
rates from 5.5% at the end of 2007 to 4.5% by the end of 2008.
The European Central Bank (ECB) has different issues to deal
with. The growth outlook is less negative, inflation is above
the bank's target, and labor unions are arguing for higher
wages, fueling inflation fears. We expect the ECB to keep rate
changes on hold until any slowdown is firmly entrenched, and to
remain hawkish in its commentary, especially on inflation
risks. We expect an interest rate cut in the second or third
quarter of 2008 if growth responds negatively to developments
in the U.S. and U.K.
Turning to Japan (where inflation has moved into positive
territory), we think global uncertainties as well as weaker
domestic economic data will likely prevent the Bank of Japan
(BOJ) from raising rates to fight inflation in the first half
of 2008. However, a BOJ rate hike is possible in the second
half of the year if we see a meaningful global economic
recovery coupled with a steady rise in Japanese headline
inflation.
Bond Holdings by Country
% of net % of net
assets as assets as
of of
12/31/07 6/30/07
United Kingdom 18.4% 24.0%
Germany* 16.0% 12.0%
Japan 12.6% 9.0%
France* 10.8% 14.3%
Spain* 9.1% 10.3%
Italy* 7.2% 6.5%
Belgium* 4.7% 3.6%
Netherlands* 4.7% 1.4%
Multi-National 4.1% 4.6%
Finland* 3.0% 3.4%
Canada 1.8% 1.9%
Denmark 1.7% 1.9%
Sweden 1.5% 1.6%
Ireland* 0.7% 0.8%
Australia 0.3% 0.4%
Cash and
Equivalents** 3.4% 4.3%
* These countries are members of the Eurozone.
** Includes temporary cash investments and other assets and
liabilities.
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6
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
July 1, 2007 to December 31, 2007 (except as noted).
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.
Please note that the expenses shown in the table are meant to
highlight your ongoing costs only and do not reflect any
transactional costs, such as sales charges (loads) or
redemption/exchange fees. Therefore, the table is useful in
comparing ongoing costs only, and will not help you determine
the relative total costs of owning different funds. In
addition, if these transactional costs were included, your
costs would have been higher.
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7
Expenses Paid
Beginning Ending During
Account Account Period(1) Annualized
Value Value 7/1/07 - Expense
7/1/07 12/31/07 12/31/07 Ratio(1)
ACTUAL
Investor Class $1,000 $1,103.90 $4.39 0.83%
Institutional Class $1,000 $1,105.00 $3.33 0.63%
A Class $1,000 $1,099.40 $5.70 1.08%
B Class $1,000 $1,025.70(2) $4.76(3) 1.83%
C Class $1,000 $1,025.70(2) $4.76(3) 1.83%
R Class $1,000 $1,027.30(2) $3.46(3) 1.33%
HYPOTHETICAL
Investor Class $1,000 $1,020.96 $4.22 0.83%
Institutional Class $1,000 $1,021.97 $3.20 0.63%
A Class $1,000 $1,019.71 $5.48 1.08%
B Class $1,000 $1,015.94(4) $9.27(4) 1.83%
C Class $1,000 $1,015.94(4) $9.27(4) 1.83%
R Class $1,000 $1,018.45(4) $6.75(4) 1.33%
(1) Expenses are equal to the class's annualized expense ratio
listed in the table above, multiplied by the average account
value over the period, multiplied by 184, the number of days in
the most recent fiscal half-year, divided by 366, to reflect
the one-half year period.
(2) Ending account value based on actual return from September
28, 2007 (commencement of sale) through December 31, 2007.
(3) 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 94, the number of days in
the period from September 28, 2007 (commencement of sale)
through December 31, 2007, divided by 366, to reflect the
period. Had the class been available for the full period, the
expenses paid during the period would have been higher.
(4) Ending account value and expenses paid during the period
assumes the class had been available throughout the entire
period and are calculated using the class's annualized expense
ratio listed in the table above.
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8
SCHEDULE OF INVESTMENTS
International Bond
DECEMBER 31, 2007 (UNAUDITED)
Principal Amount Value
Government Bonds -- 61.6%
BELGIUM -- 1.3%
Euro 14,550,000 Kingdom of Belgium, 8.00%,
3/28/15 $ 26,014,269
--------------
CANADA -- 0.8%
Euro 3,500,000 Government of Canada, 4.875%,
7/7/08 5,121,705
CAD 7,701,000 Government of Canada, 5.75%,
6/1/33 9,817,517
--------------
14,939,222
--------------
DENMARK -- 1.7%
DKK 167,000,000 Kingdom of Denmark, 6.00%,
11/15/09 33,744,017
--------------
FINLAND -- 3.0%
Euro 40,000,000 Government of Finland, 5.00%,
4/25/09 59,123,384
--------------
FRANCE -- 4.3%
Euro 15,600,000 Government of France, 5.25%,
4/25/08 22,888,086
Euro 16,550,000 Government of France, 5.50%,
4/25/29 26,951,729
Euro 10,700,000 Government of France, 5.75%,
10/25/32 18,097,721
Euro 11,180,000 Government of France, 4.75%,
4/25/35 16,554,016
--------------
84,491,552
--------------
GERMANY -- 6.7%
Euro 36,000,000 German Federal Republic, 3.50%,
1/4/16 49,917,484
Euro 21,640,000 German Federal Republic,
5.625%, 1/4/28 35,701,502
Euro 6,150,000 German Federal Republic, 4.75%,
7/4/28 9,136,024
Euro 23,880,000 German Federal Republic, 4.75%,
7/4/34 35,563,262
--------------
130,318,272
--------------
ITALY -- 7.2%
Euro 44,550,000 Republic of Italy, 5.25%, 8/1/17 68,712,561
Euro 32,070,000 Republic of Italy, 5.00%, 8/1/34 47,327,668
Euro 20,100,000 Republic of Italy, 4.00%, 2/1/37 25,167,501
--------------
141,207,730
--------------
Principal Amount Value
JAPAN -- 12.0%
JPY 6,670,000,000Government of Japan, 1.20%,
3/20/12 $ 60,406,802
JPY 6,686,400,000Government of Japan, 1.30%,
3/20/15 60,188,433
JPY 1,050,096,000Government of Japan, 1.10%,
9/10/16 9,474,194
JPY 4,118,000,000Government of Japan, 1.70%,
12/20/16 37,818,880
JPY 5,350,000,000Government of Japan, 1.70%,
9/20/17 48,877,349
JPY 660,000,000 Government of Japan, 1.90%,
6/20/25 5,846,679
JPY 1,251,000,000Government of Japan, 2.10%,
12/20/26 11,252,673
--------------
233,865,010
--------------
NETHERLANDS -- 4.7%
Euro 46,000,000 Kingdom of Netherlands, 3.75%,
7/15/09 66,940,370
Euro 18,950,000 Kingdom of Netherlands, 4.00%,
1/15/37 24,846,997
--------------
91,787,367
--------------
SPAIN -- 4.7%
Euro 60,500,000 Government of Spain, 5.40%,
7/30/11 92,239,920
--------------
SWEDEN -- 1.5%
SEK 181,000,000 Government of Sweden, 1.00%,
4/1/12 28,525,899
--------------
UNITED KINGDOM -- 13.7%
GBP 78,600,000 Government of United Kingdom,
6.25%, 11/25/10 164,697,150
GBP 9,100,000 Government of United Kingdom,
8.00%, 6/7/21 24,313,287
GBP 14,150,000 Government of United Kingdom,
4.25%, 6/7/32 27,628,837
GBP 9,500,000 Government of United Kingdom,
4.75%, 12/7/38 20,357,316
GBP 14,300,000 Government of United Kingdom,
4.50%, 12/7/42 29,602,159
--------------
266,598,749
--------------
TOTAL GOVERNMENT BONDS
(Cost $1,134,195,546) 1,202,855,391
--------------
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9
International Bond
Principal Amount Value
Credit -- 31.3%
AUSTRALIA -- 0.3%
AUD 8,100,000 New South Wales Treasury Corp.,
5.50%, 3/1/17 $ 6,469,121
--------------
CANADA -- 1.0%
CAD 4,855,000 Canada Housing Trust, 4.55%,
12/15/12 5,001,690
CAD 14,775,000 Canada Housing Trust, 4.55%,
12/15/12 15,221,417
--------------
20,223,107
--------------
FRANCE -- 6.2%
Euro 28,050,000 Cie Financement Foncier,
3.625%, 1/28/08 40,986,027
JPY 2,750,000,000Cie Financement Foncier, 1.25%,
12/1/11 24,766,616
Euro 37,900,000 Dexia Municipal Agency, 3.25%,
7/12/08 55,065,716
--------------
120,818,359
--------------
GERMANY -- 9.3%
Euro 43,400,000 DEPFA Deutsche Pfandbriefbank
AG, (Covered Bond), 5.50%,
2/12/08 63,517,577
Euro 44,300,000 Eurohypo AG, (Covered Bond),
3.75%, 4/11/11 63,422,737
GBP 21,900,000 KfW, 5.50%, 9/15/09 43,983,444
JPY 1,100,000,000KfW, 2.60%, 6/20/37 10,269,883
--------------
181,193,641
--------------
IRELAND -- 0.7%
Euro 10,000,000 Ulster Bank Finance plc, VRN,
4.86%, 3/31/08, resets
quarterly off the 3-month
Euribor plus 0.09% with no caps 14,456,666
--------------
JAPAN -- 0.6%
JPY 1,280,000,000Development Bank of Japan,
2.30%, 3/19/26 11,806,684
--------------
MULTI-NATIONAL -- 4.1%
GBP 10,550,000 European Investment Bank,
4.75%, 6/6/12 20,891,462
Euro 39,000,000 European Investment Bank,
5.375%, 10/15/12 59,566,529
--------------
80,457,991
--------------
SPAIN -- 4.4%
Euro 43,400,000 AYT Cedulas Cajas VII, 4.00%,
6/23/11 62,116,156
Principal Amount Value
Euro 3,368,765 FTA Santander Auto, VRN, 4.74%,
2/25/08, resets quarterly off
the 3-month Euribor plus 0.06%
with no caps $ 4,886,824
Euro 13,795,457 UCI, VRN, 5.08%, 3/18/08,
resets quarterly off the
3-month Euribor plus 0.14% with
no caps 19,602,885
--------------
86,605,865
--------------
UNITED KINGDOM -- 4.7%
Euro 10,000,000 Barclays Bank plc, VRN, 4.83%,
1/21/08, resets quarterly off
the 3-month Euribor plus 0.18%
with no caps 14,183,291
Euro 10,000,000 HBOS Treasury Services plc,
VRN, 5.05%, 3/14/08, resets
quarterly off the 3-month
Euribor plus 0.10% with no caps 14,442,966
GBP 18,500,000 Network Rail MTN Finance plc,
4.875%, 3/6/09 36,779,670
GBP 12,550,000 Network Rail MTN Finance plc,
4.75%, 11/29/35 25,616,104
--------------
91,022,031
--------------
TOTAL CREDIT
(Cost $547,662,307) 613,053,465
--------------
Short-Term Investments -- 3.7%
BELGIUM -- 3.4%
Euro 46,500,000 Government of Belgium Treasury
Bill, 3.96%, 4/17/08(1) 67,190,913
--------------
FRANCE -- 0.3%
Euro 4,000,000 Government of France Treasury
Bill, 4.21%, 1/31/08(1)(2) 5,827,911
--------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $72,936,957) 73,018,824
--------------
Temporary Cash Investments -- 3.4%
USD 66,667,000 FHLB Discount Notes, 2.75%,
1/2/08(1)
(Cost $66,661,907) 66,661,907
--------------
TOTAL INVESTMENT SECURITIES -- 100.0%
(Cost $1,821,456,717) 1,955,589,587
--------------
OTHER ASSETS AND LIABILITIES(3) 352,108
--------------
TOTAL NET ASSETS -- 100.0% $1,955,941,695
==============
- ------
10
International Bond
Futures Contracts
Underlying
Face
Expiration Amount at Unrealized
Contracts Purchased Date Value Gain (Loss)
Canada 10-year 6% Bond March
336 Future 2008 $ 39,123,684 $ 71,097
March
1,436 Euro-Bobl 5-year 6% Future 2008 226,620,485 (2,779,945)
March
1,757 Euro-Bund 10-year 6% Future 2008 290,559,497 (4,511,322)
-------------- --------------
$556,303,666 $(7,220,170)
============== ==============
Underlying
Face
Expiration Amount at Unrealized
Contracts Sold Date Value Gain (Loss)
March
204 Euro-Schatz 2-year 6% Future 2008 $ 30,826,482 $ 183,975
March
35 Japan 10-year 6% Bond Future 2008 42,862,194 (179,169)
U.K. Treasury 10-year 6% March
323 Future 2008 70,873,913 (35,489)
-------------- --------------
$144,562,589 $ (30,683)
============== ==============
Forward Foreign Currency Exchange Contracts
Settlement Unrealized
Contracts to Sell Date Value Gain (Loss)
$
5,624,064 CHF for AUD 1/25/08 4,972,341 $ 33,043
362,912,281 JPY for AUD 1/25/08 3,264,359 121,628
39,117,461 NOK for AUD 1/25/08 7,156,340 (90,664)
4,241,306 AUD for CHF 1/25/08 3,712,342 (32,200)
9,551,393 Euro for CHF 1/25/08 13,949,743 (154,657)
5,084,662 Euro for CHF 1/25/08 7,426,113 96,949
1,462,606 GBP for CHF 1/25/08 2,901,525 92,714
1,428,684 GBP for CHF 1/25/08 2,834,229 73,800
529,181,488 JPY for CHF 1/25/08 4,759,934 7,751
354,963,773 JPY for CHF 1/25/08 3,192,864 29,785
431,069,046 JPY for CHF 1/25/08 3,877,423 144,471
448,740,408 JPY for CHF 1/25/08 4,036,375 129,516
111,153,376 NOK for CHF 1/25/08 20,334,946 (187,004)
180,189,939 SEK for CHF 1/25/08 27,899,789 623,215
8,011,638 AUD for Euro 1/25/08 7,012,447 40,606
2,911,602 CAD for Euro 1/25/08 2,932,461 15,509
3,708,921 CHF for Euro 1/25/08 3,279,128 (6,094)
6,340,258 CHF for Euro 1/25/08 5,605,542 27,815
9,373,468 CHF for Euro 1/25/08 8,287,260 (13,794)
13,415,689 CHF for Euro 1/25/08 11,861,064 72,676
7,214,343 CHF for Euro 1/25/08 6,378,337 42,386
13,136,041 GBP for Euro 1/25/08 26,059,336 983,701
3,516,683 GBP for Euro 1/25/08 6,976,411 294,194
14,855,169 GBP for Euro 1/25/08 29,469,749 628,537
52,802,260 NOK for Euro 1/25/08 9,659,905 37,645
70,317,230 NOK for Euro 1/25/08 12,864,180 (19,117)
44,388,011 NOK for Euro 1/25/08 8,120,561 (155,494)
66,615,036 NOK for Euro 1/25/08 12,186,882 (38,768)
21,117,780 NOK for Euro 1/25/08 3,863,391 (57,483)
109,015,820 SEK for Euro 1/25/08 16,879,513 573,742
19,961,673 Euro for GBP 1/25/08 29,153,884 380,608
552,057,392 JPY for GBP 1/25/08 4,965,701 185,020
1,933,649,519 JPY for GBP 1/25/08 17,392,984 558,092
12,420,911 AUD for JPY 1/25/08 10,871,807 137,529
- ------
11
International Bond
Settlement Unrealized
Contracts to Sell Date Value Gain (Loss)
$
2,133,852 Euro for JPY 1/25/08 3,116,476 $ 57,794
11,095,314 CHF for NOK 1/25/08 9,809,577 154,508
9,734,283 CHF for NOK 1/25/08 8,606,264 53,844
8,682,472 CHF for NOK 1/25/08 7,676,338 (112,882)
8,800,011 CHF for NOK 1/25/08 7,780,256 (53,703)
8,465,385 Euro for NOK 1/25/08 12,363,637 (137,072)
1,719,524 GBP for NOK 1/25/08 3,411,200 (3,922)
2,312,506 GBP for NOK 1/25/08 4,587,560 131,233
1,937,902 GBP for NOK 1/25/08 3,844,419 55,293
820,335,723 JPY for NOK 1/25/08 7,378,838 274,932
348,592,438 JPY for NOK 1/25/08 3,135,554 34,811
12,516,254 SEK for NOK 1/25/08 1,937,960 (29,314)
6,571,093 Euro for SEK 1/25/08 9,597,035 (165,848)
37,102,230 CAD for USD 1/25/08 37,368,030 139,279
9,400,000 CAD for USD 1/25/08 9,467,342 (177,895)
62,002,381 DKK for USD 1/25/08 12,151,104 189,152
16,000,000 Euro for USD 1/25/08 23,367,889 (294,129)
35,000,000 Euro for USD 1/25/08 51,117,256 898,694
20,000,000 Euro for USD 1/25/08 29,209,861 216,589
4,000,000 Euro for USD 1/25/08 5,841,972 17,328
112,349,524 GBP for USD 1/25/08 222,879,474 7,758,369
7,000,000 GBP for USD 1/25/08 13,886,630 553,319
1,623,235 GBP for USD 1/25/08 3,220,181 (7,409)
2,046,490,312 JPY for USD 1/25/08 18,407,975 584,269
5,796,024,784 JPY for USD 1/25/08 52,134,662 497,307
39,614,933 NOK for USD 1/25/08 7,247,351 (148,473)
--------------------------
$
$913,683,707 15,061,731
==========================
(Value on Settlement Date $928,745,438)
Settlement Unrealized
Contracts to Buy Date Value Gain (Loss)
$
5,631,102 AUD for CHF 1/25/08 4,928,806 $ (76,578)
3,868,910 AUD for JPY 1/25/08 3,386,390 402
8,197,136 AUD for NOK 1/25/08 7,174,810 109,134
4,047,860 CHF for AUD 1/25/08 3,578,790 (101,352)
CHF for
15,791,986 Euro 1/25/08 13,961,994 166,908
CHF for
8,289,733 Euro 1/25/08 7,329,109 (193,953)
3,325,703 CHF for GBP 1/25/08 2,940,317 (53,921)
3,299,259 CHF for GBP 1/25/08 2,916,937 8,909
5,345,592 CHF for JPY 1/25/08 4,726,139 (41,547)
3,640,986 CHF for JPY 1/25/08 3,219,065 (3,584)
4,401,246 CHF for JPY 1/25/08 3,891,225 (130,669)
4,588,582 CHF for JPY 1/25/08 4,056,852 (109,039)
22,573,210 CHF for NOK 1/25/08 19,957,402 (190,540)
31,739,065 CHF for SEK 1/25/08 28,061,108 (461,896)
Euro for
4,774,991 AUD 1/25/08 6,973,841 (79,212)
Euro for
1,992,017 CAD 1/25/08 2,909,328 (38,643)
Euro for
2,227,701 CHF 1/25/08 3,253,542 (19,492)
Euro for
3,842,208 CHF 1/25/08 5,611,518 (21,839)
Euro for
5,674,724 CHF 1/25/08 8,287,895 14,429
Euro for
8,126,928 CHF 1/25/08 11,869,322 (64,419)
- ------
12
International Bond
Settlement Unrealized
Contracts to Buy Date Value Gain (Loss)
Euro for $
4,346,933 CHF 1/25/08 6,348,665 $ (72,059)
Euro for
18,349,502 GBP 1/25/08 26,799,320 (243,717)
Euro for
4,909,375 GBP 1/25/08 7,170,107 (100,498)
Euro for
20,621,582 GBP 1/25/08 30,117,677 19,391
Euro for
6,602,181 NOK 1/25/08 9,642,439 (55,112)
Euro for
8,809,144 NOK 1/25/08 12,865,694 20,631
Euro for
5,531,978 NOK 1/25/08 8,079,415 114,349
Euro for
8,204,327 NOK 1/25/08 11,982,363 (165,751)
Euro for
2,602,250 NOK 1/25/08 3,800,568 (5,339)
Euro for
11,709,301 SEK 1/25/08 17,101,353 (351,901)
GBP for
14,412,527 Euro 1/25/08 28,591,635 (942,858)
2,491,392 GBP for JPY 1/25/08 4,942,435 (208,286)
8,796,729 GBP for JPY 1/25/08 17,450,990 (500,086)
1,161,268,240 JPY for AUD 1/25/08 10,445,491 (563,845)
JPY for
343,671,821 Euro 1/25/08 3,091,294 (82,977)
54,517,935 NOK for CHF 1/25/08 9,973,779 9,695
47,418,612 NOK for CHF 1/25/08 8,674,994 14,886
41,789,605 NOK for CHF 1/25/08 7,645,196 81,740
42,198,525 NOK for CHF 1/25/08 7,720,006 (6,547)
NOK for
67,800,542 Euro 1/25/08 12,403,765 177,200
18,919,593 NOK for GBP 1/25/08 3,461,243 53,965
25,850,438 NOK for GBP 1/25/08 4,729,206 10,414
21,720,536 NOK for GBP 1/25/08 3,973,662 73,950
41,339,232 NOK for JPY 1/25/08 7,562,803 (90,967)
17,524,870 NOK for JPY 1/25/08 3,206,086 35,721
10,648,506 NOK for SEK 1/25/08 1,948,090 39,444
SEK for
62,129,294 Euro 1/25/08 9,619,817 188,630
75,465,058 AUD for USD 1/25/08 66,053,253 738,245
6,189,627 AUD for USD 1/25/08 5,417,673 75,901
3,960,596 AUD for USD 1/25/08 3,466,641 1,080
11,000,000 CAD for USD 1/25/08 11,078,804 (64,442)
15,800,000 CAD for USD 1/25/08 15,913,191 346,075
14,500,000 CAD for USD 1/25/08 14,603,878 345,066
1,869,877 CHF for USD 1/25/08 1,653,194 (48,799)
52,221,491 CHF for USD 1/25/08 46,170,008 (1,290,996)
5,563,591 CHF for USD 1/25/08 4,918,876 (146,209)
10,020,000 DKK for USD 1/25/08 1,963,700 (27,101)
Euro for
4,073,986 USD 1/25/08 5,950,029 (74,664)
Euro for
14,249,201 USD 1/25/08 20,810,859 (129,895)
Euro for
10,778,008 USD 1/25/08 15,741,206 (47,188)
Euro for
9,045,033 USD 1/25/08 13,210,207 (240,118)
Euro for
10,069,341 USD 1/25/08 14,706,202 114,005
4,100,000 GBP for USD 1/25/08 8,133,598 (292,812)
16,400,000 GBP for USD 1/25/08 32,534,391 (683,153)
14,953,665,565 JPY for USD 1/25/08 134,506,722 (2,399,010)
173,908,974 JPY for USD 1/25/08 1,564,294 20,877
463,429,835 NOK for USD 1/25/08 84,782,134 (620,760)
25,118,847 NOK for USD 1/25/08 4,595,365 99,501
10,846,746 NOK for USD 1/25/08 1,984,357 12,670
- ------
13
International Bond
Settlement Unrealized
Contracts to Buy Date Value Gain (Loss)
$
11,304,480 NOK for USD 1/25/08 2,068,097 $ 12,080
47,175,297 NOK for USD 1/25/08 8,630,481 190,752
18,610,260 NOK for USD 1/25/08 3,404,653 (20,784)
123,582,793 SEK for USD 1/25/08 19,134,996 (523,367)
------------ ------------
$971,379,292 $(8,489,875)
============ ============
(Value on Settlement Date $979,869,167)
Notes to Schedule of Investments
AUD = Australian Dollar
CAD = Canadian Dollar
CHF = Swiss Franc
DKK = Danish Krone
Euribor = Euro Interbank Offered Rate
FHLB = Federal Home Loan Bank
GBP = British Pound
JPY = Japanese Yen
MTN = Medium Term Note
NOK = Norwegian Krona
resets = The frequency with which a security's coupon changes,
based on current market conditions or an underlying index. The
more frequently a security resets, the less risk the investor
is taking that the coupon will vary significantly from current
market rates.
SEK = Swedish Krona
USD = United States Dollar
VRN = Variable Rate Note. Interest reset date is indicated.
Rate shown is effective December 31, 2007.
(1) The rate indicated is the yield to maturity at purchase.
(2) Security, or a portion thereof, has been segregated for the
initial margin on futures contracts.
(3) Category is less than 0.05% of total net assets.
See Notes to Financial Statements.
- ------
14
STATEMENT OF ASSETS AND LIABILITIES
DECEMBER 31, 2007 (UNAUDITED)
ASSETS
Investment securities, at value (cost of
$1,821,456,717) $1,955,589,587
Foreign currency holdings, at value (cost of
$7,512,330) 7,609,141
Receivable for forward foreign currency exchange
contracts 20,043,703
Receivable for capital shares sold 7,778,800
Interest receivable 32,808,316
--------------
2,023,829,547
--------------
LIABILITIES
Disbursements in excess of demand deposit cash 221,144
Payable for investments purchased 44,744,061
Payable for forward foreign currency exchange
contracts 13,471,847
Payable for variation margin on futures contracts 138,398
Payable for capital shares redeemed 7,987,548
Accrued management fees 1,302,055
Distribution fees payable 227
Service fees (and distribution fees --
A Class and R Class) payable 20,223
Dividends payable 2,349
--------------
67,887,852
--------------
NET ASSETS $1,955,941,695
==============
See Notes to Financial Statements.
- ------
15
DECEMBER 31, 2007 (UNAUDITED)
NET ASSETS CONSIST OF:
Capital paid in $1,823,633,134
Accumulated net investment loss (28,404,541)
Undistributed net realized gain on investment and
foreign currency transactions 26,844,725
Net unrealized appreciation on investments and
translation of assets and liabilities in foreign
currencies 133,868,377
--------------
$1,955,941,695
==============
INVESTOR CLASS
Net assets $1,706,388,563
Shares outstanding 117,503,367
Net asset value per share $14.52
INSTITUTIONAL CLASS
Net assets $154,689,584
Shares outstanding 10,652,834
Net asset value per share $14.52
A CLASS
Net assets $94,438,757
Shares outstanding 6,525,129
Net asset value per share $14.47
Maximum offering price (net asset value divided by
0.955) $15.15
B CLASS
Net assets $67,479
Shares outstanding 4,651
Net asset value per share $14.51
C CLASS
Net assets $331,503
Shares outstanding 22,845
Net asset value per share $14.51
R CLASS
Net assets $25,809
Shares outstanding 1,778
Net asset value per share $14.52
See Notes to Financial Statements.
- ------
16
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 2007 (UNAUDITED)
INVESTMENT INCOME (LOSS)
INCOME:
Interest (net of foreign taxes withheld of $756,466) $ 35,939,130
------------
EXPENSES:
Management fees 7,198,289
Distribution fees:
A Class 32,303
B Class 60
C Class 373
Service fees:
A Class 32,303
B Class 21
C Class 125
Distribution and service fees:
A Class 73,810
R Class 32
Trustees' fees and expenses 53,045
Other expenses 4,506
------------
7,394,867
------------
NET INVESTMENT INCOME (LOSS) 28,544,263
------------
REALIZED AND UNREALIZED GAIN (LOSS)
NET REALIZED GAIN (LOSS) ON:
Investment transactions (457,554)
Foreign currency transactions 38,805,470
------------
38,347,916
------------
CHANGE IN NET UNREALIZED APPRECIATION (DEPRECIATION)
ON:
Investments 29,007,409
Translation of assets and liabilities in foreign
currencies 77,126,311
------------
106,133,720
------------
NET REALIZED AND UNREALIZED GAIN (LOSS) 144,481,636
------------
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM
OPERATIONS $173,025,899
============
See Notes to Financial Statements.
- ------
17
STATEMENT OF CHANGES IN NET ASSETS
SIX MONTHS ENDED DECEMBER 31, 2007 (UNAUDITED),
SIX MONTHS ENDED JUNE 30, 2007 AND YEAR ENDED DECEMBER 31, 2006
December
Increase (Decrease) 31, June 30, December 31,
in Net Assets 2007 2007(1) 2006
OPERATIONS
Net investment income
(loss) $ 28,544,263 $ 22,512,074 $ 31,933,654
Net realized gain (loss) 38,347,916 (7,994,593) 5,424,329
Change in net unrealized
appreciation
(depreciation) 106,133,720 (22,363,495) 63,355,704
-----------------------------------------------
Net increase (decrease)
in net assets resulting
from operations 173,025,899 (7,846,014) 100,713,687
-----------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment
income:
Investor Class (66,007,945) (2,803,583) (28,566,512)
Institutional Class (6,253,078) (219,137) (1,936,362)
A Class (3,465,855) (109,979) (1,235,411)
B Class (1,894) -- --
C Class (9,293) -- --
R Class (738) -- --
From net realized gains:
Investor Class -- -- (998,578)
Institutional Class -- -- (6,505)
A Class -- -- (48,079)
-----------------------------------------------
Decrease in net assets
from distributions (75,738,803) (3,132,699) (32,791,447)
-----------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net increase (decrease)
in net assets from
capital share transactions 235,755,772 162,108,115 295,279,553
-----------------------------------------------
NET INCREASE (DECREASE)
IN NET ASSETS 333,042,868 151,129,402 363,201,793
NET ASSETS
Beginning of period 1,622,898,827 1,471,769,425 1,108,567,632
-----------------------------------------------
End of period $1,955,941,695 $1,622,898,827 $1,471,769,425
===============================================
Accumulated undistributed
net investment income
(loss) $ (28,404,541) $ 18,789,999 $ 5,906,220
===============================================
(1) The fund's fiscal year end was changed from December 31 to
June 30, resulting in a six-month annual reporting period.
See Notes to Financial Statements.
- ------
18
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2007 (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 nondiversified 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,
non-dollar-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, the A Class (formerly Advisor
Class), the B Class, the C Class and the R Class. The A Class
may incur an initial sales charge. The A Class, B Class and C
Class may be subject to a contingent deferred sales charge. The
share classes differ principally in their respective sales
charges and distribution and shareholder servicing expenses and
arrangements. All shares of the fund represent an equal pro
rata interest in the net assets of the class to which such
shares belong, and have identical voting, dividend, liquidation
and other rights and the same terms and conditions, except for
class specific expenses and exclusive rights to vote on matters
affecting only individual classes. Income, non-class specific
expenses, and realized and unrealized capital gains and losses
of the fund are allocated to each class of shares based on
their relative net assets. Sale of the B Class, C Class and R
Class commenced on September 28, 2007.
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 in greater than
60 days are valued at current market value as provided by 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. Discount notes may be valued through a commercial
pricing service or at amortized cost, which approximates fair
value. Securities traded on foreign securities exchanges and
over-the-counter markets are normally completed before the
close of business on days that the New York Stock Exchange (the
Exchange) is open and may also take place on days when the
Exchange is not open. If an event occurs after the value of a
security was established but before the net asset value per
share was determined that was likely to materially change the
net asset value, that security would be valued as determined in
accordance with procedures adopted by the Board of Trustees. 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 as determined by, or in
accordance with procedures adopted by, the Board of Trustees or
its designee if such determination would materially impact a
fund's net asset value. Certain other circumstances may cause
the fund to use alternative procedures to value a security such
as: a security has been declared in default; trading in a
security has been halted during the trading day; or there is a
foreign market holiday and no trading will commence.
SECURITY TRANSACTIONS -- For financial reporting purposes,
security transactions are accounted for as of the trade date.
Net realized gains and losses are determined on the identified
cost basis, which is also used for federal income tax purposes.
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.
FUTURES CONTRACTS -- The fund may enter into futures contracts
in order to manage the fund's exposure to changes in market
conditions. One of the risks of entering into futures contracts
is the possibility that the change in value of the contract may
not correlate with the changes in value of the underlying
securities. Upon entering into a futures contract, the fund is
required to deposit either cash or securities in an amount
equal to a certain percentage of the contract value (initial
margin). Subsequent payments (variation margin) are made or
received daily, in cash, by the fund. The variation margin is
equal to the daily change in the contract value and is recorded
as unrealized gains and losses. The fund recognizes a realized
gain or loss when the contract is closed or expires. Net
realized and unrealized gains or losses occurring during the
holding period of futures contracts are a component of realized
gain (loss) on investment transactions and unrealized
appreciation (depreciation) on investments, respectively.
- ------
19
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 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. The fund is no longer subject to examination by tax
authorities for years prior to 2004. At this time, management
has not identified any uncertain tax positions that would
materially impact the financial statements. Accordingly, no
provision has been made for federal or state income taxes.
Interest and penalties associated with any federal or state
income tax obligations, if any, are recorded as interest
expense.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders
are recorded on the ex-dividend date. Distributions from net
investment income, if any, are generally declared and paid
quarterly, but may be paid less frequently. 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.
- ------
20
2. FEES AND TRANSACTIONS WITH RELATED PARTIES
On July 27, 2007, the A Class (formerly Advisor Class)
shareholders of the fund approved a change in the class's fee
structure. The change was approved by the Board of Trustees on
December 8, 2006. Effective September 4, 2007, the fee
structure change resulted in an increase of 0.25% in the
unified management fee and a simultaneous decrease of 0.25% in
the total distribution and service fee, resulting in no change
to the total operating expense ratio of the class.
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
each 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, A Class, B Class, C Class and R Class) range
from 0.2500% to 0.3100%. The Institutional Class is 0.2000%
less at each point within the Complex Fee range. Prior to
September 4, 2007, the A Class was 0.2500% less at each point
within the Complex Fee range. The effective annual management
fee for each class of the fund for the six months ended
December 31, 2007 was 0.82% for the Investor Class, B Class, C
Class and R Class, 0.62% for the Institutional Class and 0.74%
for the A Class.
DISTRIBUTION AND SERVICE FEES -- The Board of Trustees has
adopted a separate Master Distribution and Individual
Shareholder Services Plan for each of the A Class, B Class, C
Class and R Class (collectively the plans), pursuant to Rule
12b-1 of the 1940 Act. The plans provide that the A Class will
pay American Century Investment Services, Inc. (ACIS) an annual
distribution and service fee of 0.25%. The plans provide that
the B Class and the C Class will each pay ACIS an annual
distribution fee of 0.75% and service fee of 0.25%. The plans
provide that the R Class will pay ACIS an annual distribution
and service fee of 0.50%. Prior to September 4, 2007, the Board
of Trustees had adopted a Master Distribution and Shareholder
Services Plan for the A Class, pursuant to Rule 12b-1 of the
1940 Act, in which the A Class paid ACIS an annual distribution
fee of 0.25% and service fee of 0.25%. The fees are computed
and accrued daily based on each class's daily net assets and
paid monthly in arrears. The distribution fee provides
compensation for expenses incurred in connection with
distributing shares of the classes including, but not limited
to, payments to brokers, dealers, and financial institutions
that have entered into sales agreements with respect to shares
of the funds. The service fee provides compensation for
individual shareholder services rendered by broker/dealers or
other independent financial intermediaries for A Class, B
Class, C Class and R Class shares. Prior to September 4, 2007,
the service fee provided compensation for shareholder and
administrative services rendered by ACIS, its affiliates or
independent third party providers for A Class shares. Fees
incurred under the plans during the six months ended December
31, 2007, are detailed in the Statement of Operations.
RELATED PARTIES -- Certain officers and trustees of the trust
are also officers and/or directors, and, as a group,
controlling stockholders of American Century Companies, Inc.
(ACC), the parent of the trust's investment advisor, ACIM, the
distributor of the trust, ACIS, and the trust's transfer agent,
American Century Services, LLC.
ACIM has entered into a Subadvisory Agreement with J.P. Morgan
Investment Management, Inc. (JPMIM) (the subadvisor) 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 JPMorgan Chase & Co. (JPM). JPM is
an equity investor in ACC. Prior to December 12, 2007, the fund
had a bank line of credit agreement with JPMorgan Chase Bank
(JPMCB). JPMCB is a wholly owned subsidiary of JPM.
3. INVESTMENT TRANSACTIONS
Purchases and sales of investment securities, excluding
short-term investments, for the six months ended December 31,
2007, were $674,500,930 and $576,147,962, respectively.
- ------
21
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the fund were as follows (unlimited
number of shares authorized):
Six months ended Six months ended Year ended
December 31, 2007(1) June 30, 2007(2) December 31, 2006
Shares Amount Shares Amount Shares Amount
INVESTOR CLASS
Sold 26,058,230 $378,919,238 28,075,839 $386,025,344 49,493,925 $665,869,821
Issued in
reinvestment
of
distributions 3,769,662 54,589,092 169,543 2,349,870 1,822,331 24,837,596
Redeemed (17,537,325) (253,881,900) (18,645,420) (255,394,968) (35,547,787) (477,989,458)
----------------------------------------------------------------------------------
12,290,567 179,626,430 9,599,962 132,980,246 15,768,469 212,717,959
----------------------------------------------------------------------------------
INSTITUTIONAL
CLASS
Sold 3,149,418 45,244,365 2,604,644 35,832,758 6,167,371 85,229,598
Issued in
reinvestment
of
distributions 119,470 1,730,588 1,939 26,878 13,040 179,168
Redeemed (595,435) (8,621,423) (1,071,340) (14,550,687) (221,727) (3,075,151)
----------------------------------------------------------------------------------
2,673,453 38,353,530 1,535,243 21,308,949 5,958,684 82,333,615
----------------------------------------------------------------------------------
A CLASS
Sold 2,331,131 33,990,404 1,482,936 20,383,125 2,635,884 35,416,680
Issued in
reinvestment
of
distributions 223,013 3,221,526 7,622 105,566 90,030 1,226,226
Redeemed (1,353,019) (19,870,492) (920,813) (12,669,771) (2,709,605) (36,414,927)
----------------------------------------------------------------------------------
1,201,125 17,341,438 569,745 7,818,920 16,309 227,979
----------------------------------------------------------------------------------
B CLASS N/A N/A
Sold 4,576 67,270
Issued in
reinvestment
of
distributions 75 1,085
--------------------------
4,651 68,355
--------------------------
C CLASS N/A N/A
Sold 24,201 361,097
Issued in
reinvestment
of
distributions 364 5,282
Redeemed (1,720) (26,228)
--------------------------
22,845 340,151
--------------------------
R CLASS N/A N/A
Sold 1,727 25,130
Issued in
reinvestment
of
distributions 51 738
--------------------------
1,778 25,868
--------------------------
Net increase
(decrease) 16,194,419 $235,755,772 11,704,950 $162,108,115 21,743,462 $295,279,553
==================================================================================
(1) September 28, 2007 (commencement of sale) through December
31, 2007 for the B Class, C Class and R Class.
(2) The fund's fiscal year end was changed from December 31 to
June 30, resulting in a six-month annual reporting period.
- ------
22
5. BANK LINE OF CREDIT
Effective December 12, 2007, the fund, along with certain other
funds managed by ACIM or American Century Global Investment
Management, Inc. (ACGIM), has a $500,000,000 unsecured bank
line of credit agreement with Bank of America, N.A. Prior to
December 12, 2007, the fund, along with certain other funds
managed by ACIM or ACGIM, had a $500,000,000 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, which is subject
to annual renewal, bear interest at the Federal Funds rate plus
0.40%. The fund did not borrow from the line during the six
months ended December 31, 2007.
6. RISK FACTORS
There are certain risks involved in investing in foreign
securities. These risks include those resulting from future
adverse political, social, and economic developments,
fluctuations in currency exchange rates, the possible
imposition of exchange controls, and other foreign laws or
restrictions.
7. FEDERAL TAX INFORMATION
The book-basis character of distributions made during the year
from net investment income or net realized gains may differ
from their ultimate characterization for federal income tax
purposes. These differences reflect the differing character of
foreign currency gains, 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 December 31, 2007, the components of investments for
federal income tax purposes were as follows:
Federal tax cost of investments $1,822,816,125
===============
Gross tax appreciation of investments $136,148,115
Gross tax depreciation of investments (3,374,653)
---------------
Net tax appreciation (depreciation) of
investments $132,773,462
===============
The difference between book-basis and tax-basis cost and
unrealized appreciation (depreciation) is attributable
primarily to the tax deferral of losses on wash sales.
As of June 30, 2007, the fund had accumulated capital losses of
$(11,017,229) which represent net capital loss carryovers that
may be used to offset future realized capital gains for federal
income tax purposes. Capital loss carryovers of $(9,602,222)
and $(1,415,007) expire in 2014 and 2015, respectively.
8. RECENTLY ISSUED ACCOUNTING STANDARDS
The Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 157, "Fair Value
Measurements" (FAS 157), in September 2006, which is effective
for fiscal years beginning after November 15, 2007. FAS 157
defines fair value, establishes a framework for measuring fair
value and expands the required financial statement disclosures
about fair value measurements. Management is currently
evaluating the impact that adopting FAS 157 will have on the
financial statement disclosures.
- ------
23
FINANCIAL HIGHLIGHTS
International Bond
Investor Class
For a Share Outstanding Throughout the Years Ended December 31
(except as noted)
2007(1) 2007(2) 2006 2005 2004(3) 2003(3)
PER-SHARE DATA
Net Asset
Value,
Beginning
of Period $13.69 $13.78 $13.03 $14.76 $13.64 $12.19
-------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net
Investment
Income
(Loss)(4) 0.23 0.20 0.34 0.30 0.36 0.37
Net Realized
and
Unrealized
Gain (Loss) 1.19 (0.26) 0.73 (1.49) 1.40 2.03
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations 1.42 (0.06) 1.07 (1.19) 1.76 2.40
-------- -------- -------- -------- -------- --------
Distributions
From Net
Investment
Income (0.59) (0.03) (0.31) (0.41) (0.59) (0.85)
From Net
Realized
Gains -- -- (0.01) (0.13) (0.05) (0.10)
-------- -------- -------- -------- -------- --------
Total
Distributions (0.59) (0.03) (0.32) (0.54) (0.64) (0.95)
-------- -------- -------- -------- -------- --------
Net Asset
Value, End of
Period $14.52 $13.69 $13.78 $13.03 $14.76 $13.64
======== ======== ======== ======== ======== ========
TOTAL RETURN(5) 10.39% (0.45)% 8.25% (8.23)% 13.10% 19.91%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses to
Average Net
Assets 0.83%(6) 0.83%(6) 0.82% 0.82% 0.83% 0.84%
Ratio of Net
Investment
Income (Loss)
to Average
Net Assets 3.16%(6) 2.95%(6) 2.51% 2.17% 2.60% 2.80%
Portfolio
Turnover Rate 36% 37% 206% 226% 104% 112%
Net Assets,
End of Period
(in thousands) $1,706,389 $1,440,762 $1,317,505 $1,040,576 $976,828 $622,657
(1) Six months ended December 31, 2007 (unaudited).
(2) January 1, 2007 through June 30, 2007. The fund's fiscal
year end was changed from December 31 to June 30, resulting in
a six-month annual reporting period.
(3) Certain distributions in 2004 and 2003 were reclassified
between net investment income and net realized gains to conform
to current year presentation.
(4) Computed using average shares outstanding throughout the
period.
(5) Total return assumes reinvestment of net investment income
and capital gains distributions, if any. Total returns for
periods less than one year are not annualized. The total return
of the classes may not precisely reflect the class expense
differences because of the impact of calculating the net asset
values to two decimal places. If net asset values were
calculated to three decimal places, the total return
differences would more closely reflect the class expense
differences. The calculation of net asset values to two decimal
places is made in accordance with SEC guidelines and does not
result in any gain or loss of value between one class and
another.
(6) Annualized.
See Notes to Financial Statements.
- ------
24
International Bond
Institutional Class
For a Share Outstanding Throughout the Years Ended December 31
(except as noted)
2007(1) 2007(2) 2006 2005 2004(3)(4)
PER-SHARE DATA
Net Asset Value,
Beginning of Period $13.70 $13.78 $13.04 $14.77 $13.37
-------- -------- -------- -------- --------
Income From
Investment Operations
Net Investment
Income
(Loss)(5) 0.24 0.21 0.35 0.36 0.17
Net Realized and
Unrealized Gain
(Loss) 1.19 (0.26) 0.74 (1.52) 1.84
-------- -------- -------- -------- --------
Total From
Investment Operations 1.43 (0.05) 1.09 (1.16) 2.01
-------- -------- -------- -------- --------
Distributions
From Net
Investment Income (0.61) (0.03) (0.34) (0.44) (0.57)
From Net Realized
Gains -- -- (0.01) (0.13) (0.04)
-------- -------- -------- -------- --------
Total Distributions (0.61) (0.03) (0.35) (0.57) (0.61)
-------- -------- -------- -------- --------
Net Asset Value,
End of Period $14.52 $13.70 $13.78 $13.04 $14.77
======== ======== ======== ======== ========
TOTAL RETURN(6) 10.50% (0.34)% 8.43% (7.98)% 15.25%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses to Average
Net Assets 0.63%(7) 0.63%(7) 0.62% 0.62% 0.63%(7)
Ratio of Net
Investment
Income (Loss) to
Average Net Assets 3.36%(7) 3.15%(7) 2.71% 2.37% 2.88%(7)
Portfolio Turnover
Rate 36% 37% 206% 226% 104%(8)
Net Assets, End of
Period (in thousands) $154,690 $109,350 $88,812 $6,329 $1,263
(1) Six months ended December 31, 2007 (unaudited).
(2) January 1, 2007 through June 30, 2007. The fund's fiscal
year end was changed from December 31 to June 30, resulting in
a six-month annual reporting period.
(3) August 2, 2004 (commencement of sale) through December 31,
2004.
(4) Certain distributions in 2004 were reclassified between net
investment income and net realized gains to conform to current
year presentation.
(5) Computed using average shares outstanding throughout the
period.
(6) 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.
(7) Annualized.
(8) Portfolio turnover is calculated at the fund level.
Percentage indicated was calculated for the year ended December
31, 2004.
See Notes to Financial Statements.
- ------
25
International Bond
A Class(1)
For a Share Outstanding Throughout the Years Ended December 31
(except as noted)
2007(2) 2007(3) 2006 2005 2004(4) 2003(4)
PER-SHARE DATA
Net Asset Value,
Beginning of
Period $13.67 $13.77 $13.01 $14.75 $13.62 $12.16
-------- -------- -------- -------- -------- --------
Income From
Investment
Operations
Net Investment
Income (Loss)(5) 0.21 0.18 0.30 0.27 0.32 0.29
Net Realized
and
Unrealized Gain
(Loss) 1.14 (0.26) 0.74 (1.51) 1.42 2.08
-------- -------- -------- -------- -------- --------
Total From
Investment
Operations 1.35 (0.08) 1.04 (1.24) 1.74 2.37
-------- -------- -------- -------- -------- --------
Distributions
From Net
Investment
Income (0.55) (0.02) (0.27) (0.37) (0.56) (0.81)
From Net
Realized Gains -- -- (0.01) (0.13) (0.05) (0.10)
-------- -------- -------- -------- -------- --------
Total
Distributions (0.55) (0.02) (0.28) (0.50) (0.61) (0.91)
-------- -------- -------- -------- -------- --------
Net Asset Value,
End of Period $14.47 $13.67 $13.77 $13.01 $14.75 $13.62
======== ======== ======== ======== ======== ========
TOTAL RETURN(6) 9.94% (0.57)% 8.03% (8.47)% 12.93% 19.60%
RATIOS/SUPPLEMENTAL DATA
Ratio of
Operating
Expenses to
Average Net
Assets 1.08%(7) 1.08%(7) 1.07% 1.07% 1.08% 1.09%
Ratio of Net
Investment
Income
(Loss) to
Average
Net Assets 2.91%(7) 2.70%(7) 2.26% 1.92% 2.35% 2.55%
Portfolio
Turnover Rate 36% 37% 206% 226% 104% 112%
Net Assets, End
of Period (in
thousands) $94,439 $72,787 $65,452 $61,663 $42,736 $21,137
(1) Prior to September 4, 2007, the A Class was referred to as
the Advisor Class.
(2) Six months ended December 31, 2007 (unaudited).
(3) January 1, 2007 through June 30, 2007. The fund's fiscal
year end was changed from December 31 to June 30, resulting in
a six-month annual reporting period.
(4) Certain distributions in 2004 and 2003 were reclassified
between net investment income and net realized gains to conform
to current year presentation.
(5) Computed using average shares outstanding throughout the
period.
(6) Total return assumes reinvestment of net investment income
and capital gains distributions, if any, and does not reflect
applicable sales charges. Total returns for periods less than
one year are not annualized. The total return of the classes
may not precisely reflect the class expense differences because
of the impact of calculating the net asset values to two
decimal places. If net asset values were calculated to three
decimal places, the total return differences would more closely
reflect the class expense differences. The calculation of net
asset values to two decimal places is made in accordance with
SEC guidelines and does not result in any gain or loss of value
between one class and another.
(7) Annualized.
See Notes to Financial Statements.
- ------
26
International Bond
B Class
For a Share Outstanding Throughout the Period Indicated
2007(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period $14.55
--------
Income From Investment Operations
Net Investment Income (Loss)(2) 0.01
Net Realized and Unrealized Gain (Loss) 0.36
--------
Total From Investment Operations 0.37
--------
Distributions
From Net Investment Income (0.41)
--------
Net Asset Value, End of Period $14.51
========
TOTAL RETURN(3) 2.57%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets 1.83%(4)
Ratio of Net Investment Income (Loss) to Average
Net Assets 0.40%(4)
Portfolio Turnover Rate 36%(5)
Net Assets, End of Period (in thousands) $67
(1) September 28, 2007 (commencement of sale) through December
31, 2007 (unaudited).
(2) Computed using average shares outstanding throughout the
period.
(3) Total return assumes reinvestment of net investment income
and capital gains distributions, if any, and does not reflect
applicable sales charges. Total returns for periods less than
one year are not annualized. The total return of the classes
may not precisely reflect the class expense differences because
of the impact of calculating the net asset value 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.
(5) Portfolio turnover is calculated at the fund level.
Percentage indicated was calculated for the six months ended
December 31, 2007.
See Notes to Financial Statements.
- ------
27
International Bond
C Class
For a Share Outstanding Throughout the Period Indicated
2007(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period $14.55
--------
Income From Investment Operations
Net Investment Income (Loss)(2) 0.03
Net Realized and Unrealized Gain (Loss) 0.34
--------
Total From Investment Operations 0.37
--------
Distributions
From Net Investment Income (0.41)
--------
Net Asset Value, End of Period $14.51
========
TOTAL RETURN(3) 2.57%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets 1.83%(4)
Ratio of Net Investment Income (Loss) to Average
Net Assets 0.74%(4)
Portfolio Turnover Rate 36%(5)
Net Assets, End of Period (in thousands) $332
(1) September 28, 2007 (commencement of sale) through December
31, 2007 (unaudited).
(2) Computed using average shares outstanding throughout the
period.
(3) Total return assumes reinvestment of net investment income
and capital gains distributions, if any, and does not reflect
applicable sales charges. Total returns for periods less than
one year are not annualized. The total return of the classes
may not precisely reflect the class expense differences because
of the impact of calculating the net asset value 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.
(5) Portfolio turnover is calculated at the fund level.
Percentage indicated was calculated for the six months ended
December 31, 2007.
See Notes to Financial Statements.
- ------
28
International Bond
R Class
For a Share Outstanding Throughout the Period Indicated
2007(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period $14.55
--------
Income From Investment Operations
Net Investment Income (Loss)(2) 0.07
Net Realized and Unrealized Gain (Loss) 0.33
--------
Total From Investment Operations 0.40
--------
Distributions
From Net Investment Income (0.43)
--------
Net Asset Value, End of Period $14.52
========
TOTAL RETURN(3) 2.73%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets 1.33%(4)
Ratio of Net Investment Income (Loss) to Average
Net Assets 1.77%(4)
Portfolio Turnover Rate 36%(5)
Net Assets, End of Period (in thousands) $26
(1) September 28, 2007 (commencement of sale) through December
31, 2007 (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
value 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.
(5) Portfolio turnover is calculated at the fund level.
Percentage indicated was calculated for the six months ended
December 31, 2007.
See Notes to Financial Statements.
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29
PROXY VOTING RESULTS
A special meeting of shareholders was held on July 27, 2007, to
vote on the following proposals. The proposals received the
required number of votes of the American Century International
Bond Funds or the applicable fund, depending on the proposal,
and were adopted. A summary of voting results is listed below
each proposal.
PROPOSAL 1:
To elect eight Trustees to the Board of Trustees of American
Century International Bond Funds (the proposal was voted on by
all shareholders of funds issued by American Century
International Bond Funds).
Jonathan S. Thomas For: 1,387,037,238
Withhold: 17,998,935
Abstain: 0
Broker Non-Vote: 0
John Freidenrich For: 1,386,309,527
Withhold: 18,726,646
Abstain: 0
Broker Non-Vote: 0
Ronald J. Gilson For: 1,387,278,698
Withhold: 17,757,475
Abstain: 0
Broker Non-Vote: 0
Kathryn A. Hall For: 1,385,933,259
Withhold: 19,102,914
Abstain: 0
Broker Non-Vote: 0
Peter F. Pervere For: 1,387,018,523
Withhold: 18,017,650
Abstain: 0
Broker Non-Vote: 0
Myron S. Scholes For: 1,386,864,037
Withhold: 18,172,136
Abstain: 0
Broker Non-Vote: 0
John B. Shoven For: 1,387,380,662
Withhold: 17,655,511
Abstain: 0
Broker Non-Vote: 0
Jeanne D. Wohlers For: 1,386,910,263
Withhold: 18,125,910
Abstain: 0
Broker Non-Vote: 0
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30
PROPOSAL 2:
To approve a change in the fee structure of the Advisor Class.
This proposal was voted on by the Advisor Class shareholders of
the fund.
For: 30,021,285
Against: 1,986,500
Abstain: 2,165,334
Broker Non-Vote: 7,091,471
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31
SHARE CLASS INFORMATION
Six classes of shares are authorized for sale by the fund:
Investor Class, Institutional Class, A Class, B Class, C Class
and R Class. The total expense ratio of Institutional Class
shares is lower than that of Investor Class shares. The total
expense ratios of A Class, B Class, C Class and R Class shares
are 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; and/or 2) through certain financial intermediaries
(such as banks, broker-dealers, insurance companies and
investment advisors), which may require payment of a
transaction fee to the financial intermediary. The fund's
prospectus contains additional information regarding
eligibility for Investor Class shares.
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 unified management fee of Institutional
Class shares is 0.20% less than the unified management fee of
Investor Class shares.
A CLASS shares are sold primarily through employer-sponsored
retirement plans and through institutions such as investment
advisors, banks, broker-dealers, and insurance companies. A
Class shares are sold at their offering price, which is net
asset value plus an initial sales charge that ranges from 4.50%
to 0.00% for fixed-income funds, depending on the amount
invested. The initial sales charge is deducted from the
purchase amount before it is invested. A Class shares may be
subject to a contingent deferred sales charge (CDSC). There is
no CDSC on shares acquired through reinvestment of dividends or
capital gains. The prospectus contains information regarding
reductions and waivers of sales charges for A Class shares. The
unified management fee for A Class shares is the same as for
Investor Class shares. A Class shares also are subject to a
0.25% annual Rule 12b-1 distribution and service fee.
B CLASS shares are sold primarily through employer-sponsored
retirement plans and through institutions such as investment
advisors, banks, broker-dealers, and insurance companies. B
Class shares redeemed within six years of purchase are subject
to a CDSC that declines from 5.00% during the first year after
purchase to 0.00% after the sixth year. There is no CDSC on
shares acquired through reinvestment of dividends or capital
gains. The unified management fee for B Class shares is the
same as for Investor Class shares. B Class shares also are
subject to a 1.00% annual Rule 12b-1 distribution and service
fee. B Class shares automatically convert to A Class shares
(with lower expenses) eight years after their purchase date.
C CLASS shares are sold primarily through employer-sponsored
retirement plans and through institutions such as investment
advisors, banks, broker-dealers, and insurance companies. C
Class shares redeemed within 12 months of purchase are subject
to a CDSC of 1.00%. There is no CDSC on shares acquired through
reinvestment of dividends or capital gains. The unified
management fee for C Class shares is the same as for Investor
Class shares. C Class shares also are subject to a Rule 12b-1
distribution and service fee of 1.00%.
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32
R CLASS shares are sold primarily through employer-sponsored
retirement plans and through institutions such as investment
advisors, banks, broker-dealers, and insurance companies. The
unified management fee for R Class shares is the same as for
Investor Class shares. R Class shares are subject to a 0.50%
annual Rule 12b-1 distribution and service fee.
All classes of shares represent a pro rata interest in the fund
and generally have the same rights and preferences.
- ------
33
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 website at
americancentury.com and on the Securities and Exchange
Commission's website at sec.gov. Information regarding how the
investment advisor voted proxies relating to portfolio
securities during the most recent 12-month period ended June 30
is available on the "About Us" page at americancentury.com. It
is also available at sec.gov.
QUARTERLY PORTFOLIO DISCLOSURE
The fund files its complete schedule of portfolio holdings with
the Securities and Exchange Commission (SEC) for the first and
third quarters of each fiscal year on Form N-Q. The fund's Form
N-Q is available on the SEC's website at sec.gov, and may be
reviewed and copied at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the Public
Reference Room may be obtained by calling 1-800-SEC-0330. The
fund also makes its complete schedule of portfolio holdings for
the most recent quarter of its fiscal year available on its
website at americancentury.com and, upon request, by calling
1-800-345-2021.
- ------
34
INDEX DEFINITIONS
The following indices are used to illustrate investment market,
sector, or style performance or to serve as fund performance
comparisons. They are not investment products available for
purchase.
The JPMORGAN 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.
The JPMORGAN GOVERNMENT BOND INDEX - GLOBAL (GBI GLOBAL),
EXCLUDING U.S. is a market-capitalization weighted index
consisting of returns from investing in 13 developed government
bond markets with the U.S. excluded.
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.
- ------
35
NOTES
- ------
36
[back cover]
CONTACT US
AMERICANCENTURY.COM
AUTOMATED INFORMATION LINE:
1-800-345-8765
INVESTOR SERVICES REPRESENTATIVE:
1-800-345-2021 or 816-531-5575
INVESTORS USING ADVISORS:
1-800-378-9878
BUSINESS, NOT-FOR-PROFIT,
EMPLOYER-SPONSORED RETIREMENT PLANS:
1-800-345-3533
BANKS AND TRUST COMPANIES, BROKER-DEALERS,
FINANCIAL PROFESSIONALS, INSURANCE COMPANIES:
1-800-345-6488
TELECOMMUNICATIONS 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.
American Century Investment Services, Inc., Distributor
©2008 American Century Proprietary Holdings, Inc. All rights
reserved.
0802
SH-SAN-58083N
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.
During the reporting period, there were no material changes to the procedures by
which shareholders may recommend nominees to the registrant's board.
ITEM 11. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company Act of
1940) are effective based on their evaluation of these controls and
procedures as of a date within 90 days of the filing date of this report.
(b) There were no changes in the registrant's internal control over financial
reporting (as defined in Rule 30a-3(d) under the Investment Company Act of
1940) that occurred during the registrant's second fiscal quarter of the
period covered by this report that have materially affected, or are
reasonably likely to materially affect, the registrant's internal control
over financial reporting.
ITEM 12. EXHIBITS.
(a)(1) Not applicable for semiannual report filings.
(a)(2) Separate certifications by the registrant's principal executive officer
and principal financial officer, pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment
Company Act of 1940, are filed and attached hereto as Exhibit
99.302CERT.
(a)(3) Not applicable.
(b) A certification by the registrant's chief executive officer and chief
financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, is furnished and attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: AMERICAN CENTURY INTERNATIONAL BOND FUNDS
By: /s/ Jonathan S. Thomas
----------------------------------------
Name: Jonathan S. Thomas
Title: President
Date: February 29, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ Jonathan S. Thomas
----------------------------------------
Name: Jonathan S. Thomas
Title: President
(principal executive officer)
Date: February 29, 2008
By: /s/ Robert J. Leach
----------------------------------------
Name: Robert J. Leach
Title: Vice President, Treasurer, and
Chief Financial Officer
(principal financial officer)
Date: February 29, 2008
