ANNUAL REPORT
[american century logo]
American
Century(sm)
November 30, 1996
TWENTIETH
CENTURY
GROUP
International Growth
International Discovery
[front cover]
TABLE OF CONTENTS
Report Highlights............................................1
Our Message to You...........................................2
Period Overview..............................................3
International Growth
(formerly International Equity)
Performance Information...................................4
Management Q & A..........................................5
Schedule of Investments...................................8
Financial Highlights.....................................30
International Discovery
(formerly International Emerging Growth)
Performance Information..................................12
Management Q & A.........................................12
Schedule of Investments..................................16
Financial Highlights.....................................31
Statements of Assets and Liabilities........................23
Statements of Operations....................................24
Statements of Changes in Net Assets.........................25
Notes to Financial Statements...............................26
Report of Independent Auditors..............................32
Notice For IRA and 403(b) Shareholders......................34
Share Classes & Associated Fees.............................35
Background Information
Investment Philosophy & Policies.........................36
Comparative Indices & Rankings...........................36
How Currency Returns Affect Performance..................36
Glossary....................................................37
American Century Investments offers you nearly 70 fund choices covering bonds,
stocks, specialty investments and blended portfolios. To help you find the funds
that may meet your needs, American Century funds have been divided into three
groups based on investment style and objectives. These groups, which appear
below, are designed to help simplify your fund decisions.
American Century Investments -- Family of Funds
BENHAM GROUP AMERICAN CENTURY GROUP TWENTIETH CENTURY GROUP
MONEY MARKET FUNDS ASSET ALLOCATION &
GOVERNMENT BOND FUNDS BALANCED FUNDS U.S. GROWTH FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS INTERNATIONAL FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS
International Growth
International Discovery
We welcome your comments or questions about this report. See the back cover for
ways to contact us by mail, phone or e-mail.
Twentieth Century and the Benham Group are registered marks of American Century
Services Corporation and Benham Management Corporation, respectively. American
Century is a service mark of American Century Services Corporation.
American Century Investments
REPORT HIGHLIGHTS
PERIOD OVERVIEW
o The international economic environment was relatively stable; no political,
economic or currency crises had a global effect.
o The U.S. dollar strengthened considerably against most major foreign
currencies, which reduced the returns from international stocks denominated
in those currencies.
o The central banks of several European countries cut interest rates to
stimulate their economies.
o Eastern Europe showed signs of a strong economic recovery.
o Japan's economy slowed during the period. Other Far Eastern economies were
negatively affected by the strong U.S. dollar's impact on their export
growth.
INTERNATIONAL GROWTH
(FORMERLY INTERNATIONAL EQUITY)
o The fund outperformed its benchmark index and the Lipper** average for
funds in its peer group.
o International Growth had a low exposure to underperforming southeast Asian
companies, which helped its relative performance.
o The management team's stock selection system led it to invest in some of
the strongest European markets and sectors and stay out of some of the
weaker European markets and sectors.
o The fund had a lower exposure to the relatively weak Japanese market than
the benchmark and many other funds in International Growth's Lipper
category.
o The biggest disappointment was the fund's lack of participation in the
strong market rallies in Latin America. The management team was not able to
find companies with accelerating earnings that fit the team's stock
selection system in that region.
INTERNATIONAL DISCOVERY
(FORMERLY INTERNATIONAL EMERGING GROWTH)
o International Discovery posted very strong performance. Its total return
for the period was almost three times higher than the return for its
benchmark index.
o Lipper** ranked the fund first among its 12 peers based on total returns
for the period. Its return was almost double the average return for funds
in its peer group.
o The fund's management team was very successful in finding strong performing
stocks of small companies in Western Europe. These companies benefited from
significant and fundamental changes in Europe's capital markets.
o Increased restructuring and outsourcing by Europe's larger businesses also
provided new opportunities for small European firms.
o Companies in Eastern European nations with expanding economic growth rates
performed well for the fund.
o Ownership of Chinese growth stocks traded in Hong Kong added to fund
performance.
**For more information on Lipper, see page 36.
INTERNATIONAL GROWTH
INVESTOR CLASS*
TOTAL RETURNS: AS OF 11/30/96
6 Months+ 5.82%
1 Year 16.35%
NET ASSETS: $1.34 billion
(AS of 11/30/96)
INCEPTION DATE: 5/9/91
TICKER SYMBOL: TWIEX
INTERNATIONAL DISCOVERY
INVESTOR CLASS*
TOTAL RETURNS: AS OF 11/30/96
6 Months+ 7.19%
1 Year 34.06%
NET ASSETS: $377 million
(AS of 11/30/96)
INCEPTION DATE: 4/1/94
TICKER SYMBOL: TWEGX
*See Share Classes & Associated Fees, page 35.
+Not annualized.
Annual Report Report Highlights 1
OUR MESSAGE TO YOU
[photo of James E. Stowers, Jr. and James E. Stowers III]
The fiscal year ended November 30, 1996, was relatively calm for global
investors, but eventful for our company and the International Growth and
International Discovery funds (formerly International Equity and International
Emerging Growth). American Century's accelerating earnings approach, which
focuses on individual company selection instead of sector or country selection,
worked well during the period. Both funds significantly outperformed their
benchmark index, the Morgan Stanley Europe, Australia, Far East Index (EAFE(R)),
and the average total returns for their respective Lipper fund categories.
On the corporate front, we completed the operational integration of Twentieth
Century and The Benham Group in September. As a result, you now have direct
access to a broader spectrum of funds and services, including the Benham family
of U.S. Treasury, government and municipal funds.
We also changed the name of our company. On January 1, 1997, we began serving
you as American Century Investments, which reflects our expanded identity and
the independent thinking common to Twentieth Century and Benham. American
Century's fund family is divided into three groups -- the Benham Group, the
American Century Group and the Twentieth Century Group. International Growth and
International Discovery will remain in the Twentieth Century Group, reflecting
their adherence to the growth style of investing that we have practiced over the
years.
This report is the first in a new annual report format designed using your
input. We hope you find it more informative and easier to read. American Century
also began to offer two classes of shares for many of our funds, including
International Growth. One class (the Investor Class) is for investors who buy
directly from us and the other (the Advisor Class) is for investors who buy
through financial intermediaries. We've introduced the Advisor Class to be able
to compensate financial intermediaries for the additional services they provide.
These are examples of how we continue to work to provide information and
services that are useful and convenient to investors in our funds. Thank you for
investing with us.
Sincerely,
/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder President and Chief Executive Officer
2 Our Message to You American Century Investments
PERIOD OVERVIEW
INTERNATIONAL ECONOMIC ENVIRONMENT
One of the most important aspects of the year ended November 30, 1996, was that
no political, economic or currency crises had a global effect. In this
relatively stable environment, the funds' management teams could devote their
attention to the basics of global investment analysis such as a strengthening
U.S. dollar, falling European interest rates and their effect on company
earnings.
The dollar gained considerable strength against other major currencies: it
rose approximately 6% against the German mark and almost 13% against the
Japanese yen. The dollar's value increased primarily because interest rates
remained high in the U.S. relative to other countries, making U.S. investments
more attractive, and because of a general perception that the U.S. was no
longer pursuing a weak dollar policy to stimulate U.S. exports. Foreign stock
returns for U.S. investors were reduced significantly when weaker foreign
currencies were converted into (and bought fewer) U.S. dollars (See our
foreign exchange explanation on page 36).
The central banks of several European nations, reacting to weak economic growth
and high unemployment levels, cut their interest rates significantly to
stimulate their economies. Economic restructuring and downsizing of
corporations, as we've seen in the U.S., began to take hold as well. As a
result, the economies of many European nations appear to be in the early stages
of recovery.
Eastern Europe showed signs of a strong recovery after a lengthy transition
period, during which countries in this region lost as much as 50% of their
economic worth. In Poland, real annual economic growth was measured at
approximately 5%.
Japan's economy slowed during the period, despite low inflation and low interest
rates. Some Southeast Asian countries experienced moderate slowdowns in exports,
as a strengthening dollar made their products, particularly in the technology
sector, more expensive on world markets.
INTERNATIONAL STOCK MARKET ENVIRONMENT
Global stock markets as a whole posted solid performance for the period, but
underperformed the excellent returns of the U.S. stock market. The Morgan
Stanley Europe, Asia and Far East Index (EAFE(R)) had an 11.76% one-year total
return in U.S. dollar terms, while the U.S. stock market, as measured by the S&P
500, had a total return of 27.87%.
The difference between the performance of EAFE(R) and the S&P 500 can be
explained by two primary factors. The U.S. market posted a strong rally during
the period; EAFE(R) contains no U.S. stocks. Also, EAFE(R)'s largest country
weightings are in Japan and the United Kingdom. Both the large-cap Japanese
market and the U.K. market enjoyed moderate gains but, when translated into the
strong U.S. dollar, the net returns for U.S. investors were virtually flat.
Other component markets of EAFE(R) had mixed performances, with some of the best
gains coming from Northern Europe -- particularly the Netherlands, France,
Germany, Ireland and Scandinavia -- and Hong Kong. Southern European nations,
such as Italy and Spain, had weaker showings.
Among foreign stocks not represented by EAFE(R), the most significant
developments occurred in the small-capitalization indices of Europe and Japan.
Particularly in Northern Europe, smaller companies benefited from the first
signs of economic strength and, as a result, significantly outperformed many
larger firms. Japan's smaller-capitalization stocks, on the other hand, declined
substantially in the second half of the period.
Emerging markets had inconsistent results. Many eastern European nations,
particularly Poland, Hungary and the Czech Republic, posted very strong gains.
Hong Kong's Hang Seng Index gained 40% for the year in local currency terms.
Southeast Asia's markets were mixed, with gains in Malaysia but losses in
Thailand. Stocks in Mexico and Brazil strengthened after shaking off the
collapse of the Mexican peso in 1994.
Annual Report Period Overview 3
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH
AVERAGE ANNUAL RETURNS(1) (AS OF NOVEMBER 30, 1996)
6 MONTHS(2) 1 YEAR 3 YEARS 5 YEARS LIFE OF FUND
INVESTOR CLASS(3) (INCEPTION 5/9/91)
<S> <C> <C> <C> <C> <C>
INTERNATIONAL GROWTH 5.82% 16.35% 9.77% 13.51% 12.97%
MSCI EAFE(R)Index(4) 3.36% 11.76% 11.35% 9.53% 8.16%
S&P 500(4) 14.41% 27.87% 20.99% 18.21% 16.14%
Average International Fund(5) 3.75% 14.53% 10.08% 11.10% 9.63%
Fund's Ranking Among
International Funds(6) -- 109 of 321 79 of 148 15 of 71 10 of 62
ADVISOR CLASS(3) (INCEPTION 10/2/96)
INTERNATIONAL GROWTH......................................................... 3.69%(2)
MSCI EAFE(R) Index(4)........................................................ 2.91%(2)
S&P 500(4)................................................................... 9.08%(2)
</TABLE>
(1) Returns are defined in the Glossary on page 37.
(2) Not annualized.
(3) See page 35 for share class descriptions and associated fee structures.
(4) See page 36 for more information about these comparative performance
indices.
(5) According to Lipper Analytical Services, Inc. See page 36 for more
information on Lipper.
(6) Rankings determined by Lipper based on average annual total returns for
funds in the "International Funds" category for the periods indicated.
[line graph]
GROWTH OF $10,000 OVER LIFE OF FUND
Value on 11/30/96
S&P 500
$22,977
International Growth
$19,697
MSCI EAFE(R) Index
$15,493
$10,000 investment made 5/9/91
International
Growth S&P 500 MSCI EAFE(R) Index
DATE Account Value Account Value Account Value
5/9/91 (INCEP) $10,000 $10,000 $10,000
6/30/91 $9,784 $9,769 $9,362
9/30/91 $10,431 $10,291 $10,165
12/31/91 $11,014 $11,147 $10,335
3/31/92 $11,642 $10,867 $9,109
6/30/92 $12,349 $11,074 $9,301
9/30/92 $11,839 $11,423 $9,441
12/31/92 $11,547 $11,995 $9,077
3/31/93 $12,542 $12,518 $10,165
6/30/93 $13,069 $12,577 $11,188
9/30/93 $13,922 $12,901 $11,930
12/31/93 $16,472 $13,199 $12,033
3/31/94 $15,873 $12,703 $12,453
6/30/94 $16,087 $12,757 $13,090
9/30/94 $16,665 $13,380 $13,102
12/31/94 $15,689 $13,378 $12,969
3/31/95 $15,170 $14,677 $13,210
6/30/95 $16,049 $16,073 $13,306
9/30/95 $16,906 $17,347 $13,861
12/31/95 $17,554 $18,388 $14,422
3/31/96 $17,960 $19,374 $14,839
6/30/96 $18,817 $20,239 $15,074
9/30/96 $18,862 $20,861 $15,055
11/30/96 $19,697 $22,977 $15,493
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost. Data quoted is for Investor Class only; performance for other
classes will vary due to differences in fee structures (see Average Annual
Returns table above).
PORTFOLIO AT A GLANCE
11/30/96 11/30/95
Number of Companies 101 96
Portfolio Turnover 158% 169%
Expense Ratio (for Investor Class)* 1.65% 1.77%
See Glossary on page 37.
*See page 35 for share class descriptions and associated fee structures.
4 International Growth American Century Investments
INTERNATIONAL GROWTH
MANAGEMENT Q & A
An interview with Ted Tyson, lead manager of the International Growth investment
team.
How did International Growth perform for the the year ended November 30, 1996?
The fund outperformed both its benchmark index and the average return for funds
in its Lipper category. The total return for the fund's Investor Class shares
for the period was 16.35%, compared with an 11.76% total return for EAFE(R) and
a 14.53% average total return for the 321 funds in the Lipper international
funds category.
Why did the fund outperform its benchmark and the Lipper average for the period?
Three factors boosted the fund's relative performance. International Growth had
a low exposure to underperforming southeast Asian companies in which many
international funds invested. Companies located in countries with slowing
economies, such as Indonesia, Thailand and South Korea, didn't produce the
accelerating earnings we seek. Second, in Europe our stock selection system led
us to some of the strongest peforming sectors among large capitalization stocks
- -- automotive and pharmaceutical -- and kept us out of many markets where growth
has stalled, such as Italy and Spain. Third, the fund's weighting in Japan
decreased during the second half of the fund's fiscal year. About one-fifth of
the fund's holdings were in Japan at November 30, while about one-third of
EAFE(R) was comprised of Japanese securities at that time. While EAFE(R)'s
Japanese holdings posted a -4.45% total return for the period, the return for
the fund's Japanese holdings was virtually flat.
Why did the fund's Japanese holdings outperform EAFE(R)'s?
In spite of generally lackluster market conditions in Japan, we could still find
accelerating earnings in pharmaceutical, automotive and selected high technology
companies. Those three sectors outperformed the overall Japanese market and our
stock selection system led us to some of the best performing companies within
those sectors. Drug manufacturer Sankyo Co. Ltd. is one such company. Its newest
drug, Noscal, increases the ability of diabetics to absorb insulin. At this
date, it is the only drug of its kind and is expected to be in use worldwide
within
INTERNATIONAL GROWTH FISCAL YEAR-BY-YEAR RETURNS
(Periods ended November 30)
Year International Growth EAFE(R)
1991 4.51% -1.73%
1992 8.74% -8.11%
1993 31.04% 24.27%
1994 7.28% 14.84%
1995 5.93% 7.57%
1996 16.35% 11.76%
This chart illustrates the historical year-by-year volatility of the fund's
returns since its inception.
*Return from 5/9/91 inception date to 11/30/91.
Annual Report International Growth 5
a year. In the automotive industry, we invested in Toyota Motor Corp. because of
the company's turnaround in the past two years. The company is benefiting from a
weakened yen, making its products more affordable abroad, and from its
successful introduction of sport utility models in the U.S.
What other holdings had a strong positive impact on the fund?
The stocks of German auto makers were strong contributors to performance.
Volkswagen and Daimler-Benz, both of which we added during the last six months
of the period, underwent significant restructurings to lower costs. Volkswagen
improved results by simplifying a diverse and expensive production system while
Daimler-Benz spent large sums over the past four years developing new models.
Those investments started to pay off during the period. In financial services,
we found significant growth in HSBC Holdings, a bank holding company with
market-leading banks in Hong Kong, Shanghai, London and New York. HSBC and
Citicorp are the biggest players in consumer banking in Asia and are enjoying
explosive growth in that highly profitable business.
Where have the disappointments been?
The fund did not participate in strong rallies in Latin America because, other
than Telebras in Brazil, we did not find companies with accelerating earnings.
These markets are pricing in a prospective recovery but until company earnings
show proof of such a recovery, we will not be making additional investments.
Telebras, the Brazilian equivalent of AT&T, has benefited from a rate
restructuring and moves toward privatization. Its shares were up 58% for the
period.
How did the fund's holdings change during the last six months of the period?
Why?
The biggest change was cutting our Japanese position from 30% to 20%. A year
ago, a strong yen made Japanese exports expensive, forcing companies into a
restructuring mode to reduce production costs. This was difficult in a culture
that favors consensus decision making and lifetime employment. But we expected
it would result in improved profitability and earnings. The yen has since
weakened, thereby reducing the pressure on management to restructure. As a
result, we revised our earnings projections downward. Money freed up from
Japanese investments was redeployed in established companies in the United
Kingdom and Germany, where earnings growth improved strongly, partly due to
economic conditions and partly due to corporate restructurings.
TOP TEN HOLDINGS % of fund investments
As of As of
11/30/96 5/31/96
Sandoz 4.7% 3.5%
Sankyo 3.1% 1.8%
HSBC Holdings 2.5% --
Volkswagen 2.5% --
Renaissance Energy 2.3% 1.6%
Daimler-Benz 2.3% --
TELUS 2.2% 1.0%
Telebras ADR 2.2% 1.9%
Cap Gemini Sogeti 2.1% 1.2%
Talisman Energy 2.1% --
TOP FIVE INDUSTRIES % of fund investments
As of As of
11/30/96 5/31/96
Financial Services 10% 9%
Telecommunications 9% 6%
Autos & Auto Parts 9% 3%
Energy-Exploration & Production 7% 2%
Pharmaceuticals 5% 7%
6 International Growth American Century Investments
INTERNATIONAL GROWTH
Why are you less interested in other European countries?
We have seen declining interest rates in Europe for some time but have not seen
the economic recovery that usually follows, except in Great Britain and
Scandinavia. Many European countries are making drastic cuts in government
spending in order to meet a January 1, 1999 deadline for creating a common
European currency. The countries must reduce their budget deficits to less than
3% of gross national product to participate in the European Monetary Union. So
while private industry benefited from lower interest rates, public spending
cutbacks prolonged a low growth environment.
Great Britain did not face this budget-cutting pressure because it left the
European Monetary System (EMS) more than two years ago. The EMS coordinates
European monetary policy and the establishment of the new currency.
You spend a lot of time on the road researching companies for the fund. Where
have your travels taken you and with what results?
I went to the former Soviet republics of Kazakhstan and Azerbaijan to talk to
several major oil companies about the status of developing the enormous oil
fields in these countries. And I traveled to Beijing to talk to U.S. and
Japanese executives in the steel and power industries about growth prospects in
China.
These visits may not have a direct effect on our investments today but are part
of an ongoing effort to get a broader sense of economic developments in the
world. For example, the question of whether China will grow at 10% or 2%
annually over the next 10 years is of major importance because it is such an
enormous country. Its growth affects everything from the cost of bread globally
to rates of inflation around the world. Similarly, what European countries pay
for energy will be greatly influenced by developments in the former Soviet
republics.
INTERNATIONAL GROWTH INVESTMENTS BY COUNTRY
11/30/96 5/31/96
Japan 20% 30%
U.K. 13% 5%
Canada 13% 10%
Switzerland 9% 9%
Germany 9% 6%
France 5% 8%
Hong Kong 4% 1%
Netherlands 4% 4%
Other* 23% 27%
*No other country represented more than 4% of the fund as of 11/30/96.
Annual Report International Growth 7
SCHEDULE OF INVESTMENTS
INTERNATIONAL GROWTH
NOVEMBER 30, 1996
Shares Value
- -------------------------------------------------------------------------------
COMMON STOCKS
ARGENTINA--1.4%
238,500 Banco de Galicia ADR $ 5,306,625
(banking)
600,000 YPF Sociedad Anonima ADR 13,950,000
(oil and gas) ----------
19,256,625
----------
AUSTRALIA--3.3%
2,130,000 Crown Casino(1) 4,889,072
(casino/hotel)
3,697,000 Email 10,592,289
(consumer products manufacturer)
3,179,000 Santos 12,937,735
(oil & gas exploration and production)
4,831,081 Southcorp Holdings 15,886,324
(packaging, wines, and appliances) ----------
44,305,420
----------
BELGIUM--1.3%
288,900 Delhaize-Le Lion 16,951,230
(retail supermarkets) ----------
BERMUDA--0.2%
100,000 Central European Media
Enterprises ADR(1) 2,800,000
(television broadcasting) ----------
CANADA--13.0%
495,000 Bank of Nova Scotia, The 17,185,335
(banking)
1,650,000 Canadian 88 Energy(1) 7,336,322
(oil & gas exploration and production)
501,700 Hollinger 4,777,387
(international newspaper)
420,000 Imasco 10,395,346
(consumer products)
2,600,000 Meridian Gold (Installment Receipts) 5,972,804
(Acquired 7-24-96, Cost $4,740,546)(1)(2)
(gold exploration and production)
1,026,000 QLT Phototherapeutics(1) 19,806,069
(biotechnology)
250,000 Quebecor Printing 4,557,412
(commercial printing)
Shares Value
- -------------------------------------------------------------------------------
892,300 Renaissance Energy(1) $ 31,309,352
(oil & gas exploration and production)
932,400 Rigel Energy(1) 10,226,033
(oil & gas exploration and production)
850,000 Talisman Energy(1) 28,659,824
(oil & gas exploration and production)
370,000 Tarragon Oil and Gas(1) 3,989,403
(oil & gas exploration and production)
1,880,000 TELUS 29,743,970
(telecommunications) -----------
173,959,257
-----------
COLOMBIA--0.3%
340,000 Banco de Bogota 2,017,723
(banking)
500,000 Bavaria 2,006,659
(brewery) ---------
4,024,382
---------
FINLAND--0.4%
70,000 Sampo Insurance A 5,093,430
(insurance) ---------
FRANCE--5.0%
90,540 BIS 9,122,985
(temporary employment agency)
239,000 Banque Nationale de Paris 9,504,890
(banking)
605,200 Cap Gemini Sogeti(1) 28,708,568
(computer consulting services)
60,200 Pathe(1) 14,042,427
(broadcast media)
98,000 Sidel Groupe 6,239,592
(industrial machinery manufacturer) ----------
67,618,462
----------
GERMANY--8.3%
22,000 Bayerische Motoren Werke
Aktiengesellschaft 14,261,378
(automobile manufacturer)
473,000 Daimler-Benz(1) 30,892,620
(automobile manufacturer)
291,600 Deutsche Pfandbrief-und
Hypothekenbank 12,699,199
(mortgage banking)
See Notes to Financial Statements
8 International Growth American Century Investments
SCHEDULE OF INVESTMENTS
INTERNATIONAL GROWTH
NOVEMBER 30, 1996
Shares Value
- -------------------------------------------------------------------------------
31,300 Henkel KGaA(1) $ 1,526,333
(chemical products, household cleaners)
155,000 IVG Holding 5,240,572
(property management)
30,000 SCHMALBACH LUBECA
Aktiengesellschaft(1) 6,602,731
(packaging and container manufacturer)
54,000 SGL Carbon 6,635,891
(graphite products)
84,000 Volkswagen 33,671,001
(automobile manufacturer) -----------
111,529,725
-----------
HONG KONG--4.4%
202,000 Asia Satellite Telecommunications
Holdings ADR(1) 5,125,750
(satellite telecommunications)
4,046,893 CDL Hotels International 2,080,496
(hotels)
1,541,000 Citic Pacific 8,031,855
(diversified operations)
3,317,000 Henderson China Holding 8,322,530
(real estate development)
1,620,515 HSBC Holdings 33,743,264
(financial services)
518,000 Television Broadcasts 1,989,731
(broadcast media) ----------
59,293,626
----------
IRELAND--0.4%
998,792 Independent Newspapers 5,207,901
(international newspaper publisher) ----------
ITALY--2.2%
1,069,000 Arnoldo Mondadori Editore 8,976,613
(publishing and printing)
2,781,000 Parmalat Finanziaria 4,358,546
(dairy production)
1,200,000 Saipem 5,551,065
(oil field machinery and equipment)
4,295,000 Telecom Italia Mobile 10,104,148
(mobile telephone services) ----------
28,990,372
----------
Shares Value
- -------------------------------------------------------------------------------
JAPAN--19.7%
228,000 Acom $ 10,014,495
(consumer finance)
213,000 Advantest 9,093,688
(electronic measuring instruments)
480,000 Bridgestone 8,854,922
(tire and rubber manufacturer)
848,000 Canon 17,878,508
(office automation and equipment)
1,330,000 Fuji Heavy Industries 6,133,878
(transportation equipment)
400,000 Hoya 15,004,173
(glass manufacturer, electronic
components)
1,100,000 Japan Synthetic Rubber 7,324,636
(synthetic rubber producer and
chemicals)
730,000 Kokuyo 19,045,988
(paper products, office equipment
and furniture)
1,518,000 Mitsubishi Heavy Industries 12,401,634
(heavy machinery manufacturing)
1,254,000 Nikon 15,312,162
(diversified operations)
1,375,000 Nippon Kayaku 9,349,058
(pharmaceuticals and chemical
products)
144,000 Promise 7,210,436
(consumer finance)
780,000 Sanden 5,947,556
(automobile air-conditioners)
1,533,000 Sankyo 41,073,923
(pharmaceutical manufacturer)
808,000 Sharp 12,634,427
(consumer electronics)
265,000 Sony 16,970,615
(electronic equipment manufacturer)
54,000 Takefuji(1) 4,032,152
(consumer finance)
1,150,000 Terumo 15,153,512
(medical supplies manufacturer)
533,000 Toyota Motor 14,561,690
(automobile manufacturer)
See Notes to Financial Statements
Annual Report International Growth 9
SCHEDULE OF INVESTMENTS
INTERNATIONAL GROWTH
NOVEMBER 30, 1996
Shares Value
- -------------------------------------------------------------------------------
450,000 Uni-Charm $ 10,870,997
(household products)
235,000 Yamaha 4,066,851
(musical instruments, stereo equipment) -----------
262,935,301
-----------
MEXICO--0.1%
35,600 Kimberly-Clark de Mexico A 691,026
(paper products) -----------
NETHERLANDS--4.4%
102,000 Akzo Nobel 13,527,898
(chemical products manufacturer)
132,936 Stad Rotterdam 5,237,643
(insurance)
800,000 New Holland ADR (1) 16,100,000
(farm machinery manufacturer)
389,900 Stork 12,944,707
(machinery and equipment
manufacturer)
518,000 Verenigd Bezit VNU 10,564,691
(publishing) ----------
58,374,939
----------
NORWAY--0.8%
400,000 Smedvig A 8,403,754
(offshore drilling and oil services)
100,000 Smedvig B(1) 1,992,001
(offshore drilling and oil services) ----------
10,395,755
----------
PORTUGAL--0.8%
390,000 Portugal Telecom ADR 10,335,000
(telecommunications services) ----------
SOUTH AFRICA--1.2%
611,367 South African Breweries 15,408,437
(Acquired 10-4-96 through ----------
11-20-96, Cost $15,567,777)(2)
(brewing and retailing)
SPAIN--2.4%
1,034,000 Compania Telefonica de Espana 22,649,904
(telecommunications)
Shares Value
- -------------------------------------------------------------------------------
46,000 Compania Telefonica de Espana ADR $ 3,036,000
(telecommunications)
225,000 Grupo Cortefiel 6,854,994
(retail apparel) ----------
32,540,898
----------
SWEDEN--0.6%
500,000 Swedbank-Sparbanken Sverige A 8,265,140
(banking) ----------
SWITZERLAND--8.8%
34,500 Adecco 8,887,526
(personnel and employment services)
4,000 Compagnie Financiere Richemont 5,903,550
(tobacco and luxury goods)
180,300 CS Holding (1) 19,180,116
(banking)
53,600 Sandoz 62,299,777
(pharmaceuticals)
33,800 Societe Suisse de Microelectronique
et d' Horlogerie (SMH) 21,586,598
(watch manufacturer) -----------
117,857,567
-----------
THAILAND--0.2%
280,000 Siam Commercial Bank 2,433,353
(banking) -----------
UNITED KINGDOM--12.6%
1,104,091 BBA Group 6,460,721
(diversified manufacturing)
803,000 British Borneo Petroleum Syndicate 8,614,560
(oil & gas exploration and production)
3,542,000 Cable & Wireless 28,349,955
(telecommunications)
9,537 Cadbury Schweppes 82,027
(food & beverage)
1,294,000 Cairn Energy(1) 7,680,789
(oil & gas exploration and production)
1,384,200 Granada Group 20,121,517
(diversified services and media)
3,757,000 Ladbroke Group 12,950,661
(hotels and gaming)
2,000,000 MFI Furniture Group 6,490,590
(furniture manufacturing and retailing)
See Notes to Financial Statements
10 International Growth American Century Investments
SCHEDULE OF INVESTMENTS
INTERNATIONAL GROWTH
NOVEMBER 30, 1996
Shares Value
- -------------------------------------------------------------------------------
1,094,400 Misys $ 18,255,117
(computer software)
1,604,000 Royal Bank of Scotland Group, The 14,132,940
(banking)
1,306,653 Siebe 20,861,816
(diversified engineering)
1,146,019 Stagecoach Holdings 12,198,106
(public transportation)
3,821,000 T & N 12,143,272
(auto equipment manufacturer) -----------
168,342,071
-----------
TOTAL COMMON STOCKS--91.8% 1,226,609,917
(Cost $1,091,634,635) -------------
PREFERRED STOCKS
AUSTRALIA--0.2%
990,095 Village Roadshow A 2,860,902
(entertainment and media)
BRAZIL--2.2%
385,000 Telebras ADR 29,163,750
(telecommunications)
GERMANY--1.0%
281,700 Henkel KGaA 14,030,052
(chemical products, household cleaners) ----------
TOTAL PREFERRED STOCKS--3.4% 46,054,704
(Cost $32,304,900) ----------
TEMPORARY CASH INVESTMENTS--4.8%
Repurchase Agreement (Goldman Sachs & Co.),
5.61%, due 12-2-96, collateralized by $55,540,000
par value U.S. Treasury Bonds, 7.875%,
due 2-15-21 (Delivery value $64,230,014) 64,200,000
(Cost $64,200,000) ----------
TOTAL INVESTMENT SECURITIES--100.0% $1,336,864,621
(Cost $1,188,139,535) ==============
FORWARD FOREIGN CURRENCY CONTRACTS
Contracts Settlement Unrealized
to Sell Dates Value Gain
- ------------------------------------------------------------------------
40,292,300 CHF 12-31-96 $ 30,977,158 $ 339,723
47,485,701 DEM 12-30-96 30,928,258 263,085
92,220,515 FRF 12-31-96 17,662,502 198,614
4,519,780,012 JPY 12-30-96 39,879,174 465,918
25,011,587 NLG 12-31-96 14,521,358 128,004
------------- ------------
$133,968,450 $1,395,344
============= ============
(Value on Settlement Date $135,363,794)
NOTES TO SCHEDULE OF INVESTMENTS ADR = American Depositary Receipt
CHF = Swiss Franc
DEM = German Mark
FRF = French Franc
JPY = Japanese Yen
NLG = Netherlands Guilder
(1) Non-income producing.
(2) Securities were purchased under Rule 144A of the Securities Act of 1933
and, unless registered under the Act or exempted from registration, may
only be sold to qualified institutional investors. The aggregate value of
restricted securities at November 30, 1996, was $21,381,241, which
represented 1.6% of the net assets of International Growth.
See Notes to Financial Statements
Annual Report International Growth 11
INTERNATIONAL DISCOVERY
MANAGEMENT Q & A
An interview with Henrik Strabo, lead manager of the International Discovery
investment team.
How did International Discovery perform for the year ended November 30, 1996?
The fund's performance was very strong. For the one-year period, its total
return was 34.06%, compared with the 11.76% total return of EAFE(R), the fund's
benchmark index of international stocks. Discovery's one-year total return
through November 30 also placed it first among 12 international small company
funds tracked by Lipper Analytical Services. The average one-year return for
that category of funds was 16.93%.
What factors contributed to these strong results?
We found many of the fund's best-performing issues among smaller-sized companies
in Western Europe. This was especially true in such countries as
<TABLE>
6 MONTHS(1) 1 YEAR LIFE OF FUND(2)
AVERAGE ANNUAL RETURNS(3) (as of November 30, 1996)
<S> <C> <C> <C>
International Discovery 7.19% 34.06% 17.32%
MSCI EAFE(R)Index(4) 3.36% 11.76% 8.54%
Average International Small Company Fund(5) 1.80% 16.93% 4.89%
Fund Ranking Among International
Small Company Funds(6) -- 1 of 12 1 of 9
</TABLE>
(1) Not annualized.
(2) The fund's inception date was 4/1/94.
(3) Returns are defined in the Glossary on page 37.
(4) See page 36 for more information about this comparative performance index.
(5) According to Lipper Analytical Services, Inc. See page 36 for more
information on Lipper.
(6) Rankings determined by Lipper based on average annual total returns
for funds in the "International Small Company Funds" category for the
periods indicated.
[line graph]
GROWTH OF $10,000 OVER LIFE OF FUND
Value on 11/30/96
International Discovery
$12,283
MSCI EAFE(R) Index
$12,441
Lipper Int'l Small Co. Average
$11,402
$10,000 investment made 4/1/94
International Lipper Int'l
Discovery Small Co. Average MSCI EAFE(R) Index
DATE Account Value Account Value Account Value
4/1/94 (INCEP) $10,000 $10,000 $10,000
6/30/94 $10,760 $9,818 $10,511
9/30/94 $11,420 $9,974 $10,521
12/31/94 $10,760 $9,351 $10,414
3/31/95 $10,100 $8,938 $10,608
6/30/95 $11,020 $9,389 $10,685
9/30/95 $11,800 $10,005 $11,130
12/31/95 $11,825 $9,968 $11,581
3/31/96 $12,931 $10,679 $11,916
6/30/96 $14,479 $11,312 $12,104
9/30/96 $14,559 $11,081 $12,089
11/30/96 $15,283 $11,402 $12,441
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
PORTFOLIO AT A GLANCE
11/30/96 11/30/95
Number of Companies 183 97
Portfolio Turnover 130% 168%
Expense Ratio (for Investor Class)* 1.88% 2.00%
See Glossary on page 37.
12 International Discovery American Century Investments
INTERNATIONAL DISCOVERY
Germany, the Netherlands, the United Kingdom and throughout Scandinavia. Growing
economic problems in many European economies -- notably the massive underfunding
of several of Europe's government pension systems, and the difficulty Europe
faces in competing with stronger, faster-growing economies throughout the world
- -- have been leading to very significant and fundamental changes in Europe's
capital markets. In Germany, for example, proposed legislation could allow
companies to buy back their own shares for the first time. In addition,
management stock option plans have been introduced across Europe. These changes
were intended to inspire Europe's big businesses to become more
shareholder-oriented and to take more ownership responsibility. Frequently,
companies have also sought to make themselves more competitive by restructuring
to cut costs and to focus more intently on product quality and market share.
Although these changes didn't lead to significant improvements in overall
European economic growth, many small, entrepreneurial-type companies discovered
they had greater opportunities and more capital to work with.
What types of opportunities existed in smaller European firms?
Outsourcing, in particular, became a prevalent trend. For example, many European
firms have had trouble preparing their computer systems for the changeover to a
new millenium (many computers were not designed to accommodate dates beginning
in `20'), as well as a single currency. Those companies turned to smaller
information technology companies for help. We had great success with a Finnish
information technology company called TT Tieto, which is involved with those
activities.
As Europe's capital markets attempted to draw more interest from global
investors, innovative financial services companies also grew quickly. One of our
largest and best-performing positions, for example, was a German financial
services company called Marschollek, Lautenschlaeger und Partner. We found an
unusually large number of smaller European companies that appeared to protect
shareholder interests and offer responsible management in addition to
demonstrating sustainable earnings acceleration.
The fund also had relatively significant positions in Eastern Europe. Why?
Our positions in Eastern European companies on the whole performed very well.
Eastern Europe adds a new dimension to the European investment markets because
some countries in the region have completed their transition to democratic,
more-capitalistic societies and are growing rapidly. In addition, countries such
as Poland, Hungary and the Czech Republic offer large, inexpensive and (most
important) well-educated workforces. Businesses there grew rapidly during the
period as they attracted substantial foreign investment and developed close ties
with Western European
[bar chart]
INTERNATIONAL DISCOVERY FISCAL YEAR-BY-YEAR RETURNS
(Periods ended November 30)
Year International Discovery EAFE(R)
1994 7.80%* 3.49%*
1995 5.75% 7.57%
1996 34.06% 11.76%
This chart illustrates the historical year-by-year volatility of the fund's
returns since its inception.
*Return from 4/1/94 inception date to 11/30/94.
Annual Report International Discovery 13
INTERNATIONAL DISCOVERY
companies. And yet we were able to purchase shares of fast-growing companies at
what we thought were extremely attractive valuations. We held companies in
several types of businesses, including pharmaceuticals, communication,
construction and financials. This diversity underscores the array of
opportunities now available in the region.
What holdings outside of the major markets contributed to the fund's gains?
The fund's largest single market weighting outside of Europe and Japan was in
Hong Kong. We were very attracted to firms trading in Hong Kong that are either
based in China or do a large amount of business in China. The growth of the
Chinese economy is reaccelerating, with inflation falling faster than expected,
and the country's local markets soared during the period. We found several
companies that allowed us to participate in the growth of China while enjoying
the liquidity and shareholder protections offered by the relatively advanced
Hong Kong Stock Exchange. Some of these holdings, such as Shanghai Industrial,
performed extremely well.
What factors hurt fund performance during the period?
Although the fund's overall performance was very good, there were a few factors
that kept it from even higher gains. The fund's smaller-sized Japanese holdings
fell sharply when Japan's over-the-counter (small-capitalization) market
suffered a serious decline in the last half of the period.
What was the fund's position in emerging markets?
International Discovery's total investments in emerging markets was about 24% as
of November 30. A large percentage of this stake was in Hong Kong. Eastern
European companies were also significantly represented. Otherwise, our emerging
market positions were scattered and were not major factors in fund performance.
What is your outlook for the coming period?
There are several developments that we are watching closely. The most important
of these is the coming absorption of Hong Kong into China in 1997. We believe
that China's massive and fast-growing economy and Hong Kong's sophisticated
market system could be a powerful combination. Although we recognize the
possible risks, we will continue to search out companies with the same potential
as Shanghai Industrial, mentioned earlier.
The success of smaller, entrepreneurial-type businesses in Europe during the
past
TOP TEN HOLDINGS % of fund investments
As of As of
11/30/96 5/31/96
Marschollek, Lautenschlaeger
und Partner 2.4% 2.4%
Esselte B 2.2% 2.0%
Internatio-Muller 2.2% --
Getinge Industrier B 2.1% 2.8%
Newcourt Credit 1.9% 1.9%
Reinsurance Australia 1.9% --
Huhtamaki I 1.6% --
Porsche 1.6% --
Sociedad Quimica Y Minera
de Chile ADR 1.5% 1.6%
Havas Advertising 1.5% 2.3%
TOP FIVE INDUSTRIES % of fund investments
As of As of
11/30/96 5/31/96
Financial Services 10% 10%
Computer Software & Services 7% 5%
Business Services 6% 4%
Pharmaceuticals 5% 5%
Retail (Miscellaneous) 5% 3%
14 International Discovery American Century Investments
INTERNATIONAL DISCOVERY
year should, we think, continue well into the future. Europe's businesses cannot
be competitive unless they embrace improvements that specifically benefit
investors, as recent changes have done.
We are also investigating opportunities in South America, particularly in Brazil
and Mexico. We were cautious in entering these markets because their generally
high political risk and recent history of currency problems and economic
instability brought the sustainability of earnings growth into question.
However, these countries seem to be recovering and we do not wish to miss the
gains now possible in these markets.
[bar chart]
INTERNATIONAL DISCOVERY INVESTMENTS BY COUNTRY
11/30/96 5/31/96
U.K. 14% 8%
Netherlands 13% 7%
Sweden 8% 9%
Germany 7% 5%
Japan 7% 13%
Hong Kong 6% 4%
Finland 5% 4%
France 3% 6%
Other* 37% 44%
*No other country represented more than 3% of the fund as of 11/30/96.
Annual Report International Discovery 15
SCHEDULE OF INVESTMENTS
INTERNATIONAL DISCOVERY
NOVEMBER 30, 1996
Shares Value
- -------------------------------------------------------------------------------
COMMON STOCKS, RIGHTS & WARRANTS
ARGENTINA--0.5%
40,000 Siderar Sociedad Anomina, Industrial
Y Commercial A(1) $ 108,445
(steel manufacturer)
1,000,000 Siderca (S.A.I.C.) A 1,640,681
(steel and iron manufacturing) ---------
1,749,126
---------
AUSTRALIA--3.2%
300,000 Bank of Melbourne 2,192,781
(banking)
2,100,000 Davids 2,871,616
(retail and wholesale products)
2,000,000 Reinsurance Australia 7,162,760
(insurance) ----------
12,227,157
----------
AUSTRIA--0.5%
16,000 Wolford 1,896,614
(textiles and apparel) ----------
BELGIUM--0.2%
40,000 Lernout & Hauspie Speech
Products ADR(1) 785,000
(speech technology) ---------
BRAZIL--0.1%
27,000 TV Filme ADR(1) 362,812
(subscription television systems) ---------
CANADA--3.2%
90,000 Mackenzie Financial 1,217,163
(investment management)
200,000 Newcourt Credit 7,277,039
(Acquired 12-4-95 through
5-28-96, Cost $3,480,944)(2)
(financial services)
150,000 Royal Plastics Group(1) 2,667,753
(building products manufacturer)
49,000 Transat(1) 989,477
(commercial air charter service) ----------
12,151,432
----------
Shares Value
- -------------------------------------------------------------------------------
CHILE--1.6%
27,000 Banco BHIF ADR(1) $ 455,625
(banking)
110,000 Sociedad Quimica Y Minera de
Chile ADR 5,720,000
(fertilizers) ---------
6,175,625
---------
COLOMBIA--0.2%
101,000 Compania Colombiana de Tobaco 304,771
(tobacco)
36,000 Compania Nacional de Chocolates 300,944
(confectionary)
17,000 Compania Suramericana de Seguros 316,338
(insurance) ---------
922,053
---------
DENMARK--2.9%
27,000 Christian Hansen Holding B 3,594,353
(food additives producer)
9,000 Falck 2,426,760
(safety and security services)
18,000 Inwear Group(1) 815,025
(clothing designer)
150,000 ISS-International Service System B 4,146,352
(cleaning and maintenance services) ----------
10,982,490
----------
EGYPT--0.4%
37,900 Eastern(1) 654,938
(tobacco)
36,995 Tourah Portland Cement(1) 783,481
(cement) ----------
1,438,419
----------
FINLAND--4.8%
140,000 Huhtamaki I 6,027,727
(confectionary and foods)
40,000 KCI Konecranes 1,231,379
(Acquired 3-19-96 through
7-12-96, Cost $590,009)(1)(2)
(capital goods)
600,000 Tampella(1) 1,640,403
(diversified industrial company)
See Notes to Financial Statements
16 International Discovery American Century Investments
SCHEDULE OF INVESTMENTS
INTERNATIONAL DISCOVERY
NOVEMBER 30, 1996
Shares Value
- -------------------------------------------------------------------------------
700,000 Tamro $ 5,003,014
(Acquired 5-15-96 through
11-20-96, Cost $4,187,106)(2)
(pharmaceuticals distribution)
55,000 TT Tieto 4,238,784
(information technology) ----------
18,141,307
----------
FRANCE--3.2%
7,000 Altran Technologies 2,260,547
(engineering consulting)
207,800 Bouygues Offshore ADR(1) 2,441,650
(oil & gas exploration and production)
8,200 Cipe France 961,081
(security systems)
51,238 Havas Advertising 5,682,063
(advertising)
5,970 Infogrames Entertainment(1) 521,647
(interactive television, ---------
computer games)
11,866,988
----------
GERMANY--1.5%
50,000 Hornbach Baumarkt Aktiengesellschaft 1,544,213
(home improvement retailer)
230,000 Pfeiffer Vacuum Technology ADR(1) 3,910,000
(pump and vacuum manufacturer) ---------
5,454,213
---------
HONG KONG--5.8%
1,000,000 Dickson Concepts International 3,673,047
(watch, writing instrument
and jewelry retailer)
9,000,000 First Signs International Holdings 2,997,284
(wholesale distributor of knitwear)
5,500,000 Guangzhou Investment 2,133,988
(property development)
200,000 Johnson Electric Holdings 505,691
(electric products)
1,000,000 Li & Fung 931,195
(trading)
2,900,000 Peregrine Investment Holdings 5,363,425
(finance and brokerage)
3,500,000 Qingling Motors H 1,493,792
(truck production and sales)
Shares Value
- -------------------------------------------------------------------------------
1,500,000 Shanghai Industrial Holdings $ 4,879,074
(Acquired 5-23-96 through ---------
11-25-96, Cost $2,608,311)(1)(2)
(holding company)
21,977,496
----------
HUNGARY--0.7%
40,000 Danubius Hotels(1) 877,403
(hotel and spa resorts)
50,000 OTP Bank 852,505
(banking)
25,000 Pannonplast Industries 780,019
(chemicals and plastics manufacturer) ---------
2,509,927
---------
INDIA--1.0%
80,000 Gujarat Ambuja Cements 484,295
(cement)
25,000 Indian Hotels 451,402
(hotels)
140,000 Larsen & Toubro 839,483
(engineering equipment)
98,000 Mahindra & Mahindra 784,066
(vehicle manufacturer)
600,000 Oriental Bank of Commerce 1,232,014
(banking) ---------
3,791,260
---------
INDONESIA--1.1%
900,000 Bank Indonesia Raya (Bira) 1,103,411
(banking)
1,350,000 Ciputra Development 1,151,386
(real estate developer)
665,000 Darya Varia Laboratories 1,042,164
(pharmaceuticals)
900,000 Matahari Putra Prima 1,017,058
(department stores) ---------
4,314,019
---------
IRELAND--0.6%
210,000 Arnott 1,395,219
(department stores)
600,000 Heiton Holdings 973,878
(building materials merchandising) ---------
2,369,097
---------
See Notes to Financial Statements
Annual Report International Discovery 17
SCHEDULE OF INVESTMENTS
INTERNATIONAL DISCOVERY
NOVEMBER 30, 1996
Shares Value
- -------------------------------------------------------------------------------
ISRAEL--2.8%
97,600 Laser Industries ADR(1) $ 1,262,700
(surgical laser systems)
80,000 Memco Software ADR(1) 1,540,000
(security software)
71,000 NICE-Systems ADR(1) 1,278,000
(digital recording products)
90,000 Orckit Communications ADR(1) 1,023,750
(digital subscriber line systems)
360,000 Oshap Technologies ADR(1) 1,440,000
(computer software)
193,500 Technomatix Technologies ADR(1) 4,184,438
(CAD/CAM computer software) ----------
10,728,888
----------
ITALY--0.6%
900,000 Banca Fideuram 2,203,400
(banking) ----------
JAPAN--7.0%
30,000 Aeon Credit Service 1,705,100
(credit card services)
35,000 Aim Services 788,641
(restaurants and cafeterias, catering)
70,000 Art Life 830,149
(restaurant, hospitality businesses)
210,000 Canon Copyer Sales 2,195,283
(office equipment retailer)
16,000 Create Medic 203,804
(disposable medical supplies)
60,000 Kansai Kosaido 785,347
(publishing, printing)
105,000 Kanto Biomedical Laboratory 1,752,537
(clinical testing)
60,000 King Jim 1,270,260
(office supplies)
40,000 Laox 614,925
(household electric appliance retailer)
80,000 Matsumotokiyoshi 2,712,698
(supermarket and home
center operator)
60,000 Ministop 1,570,694
(convenience stores)
90,000 Misumi 2,016,076
(industrial parts supplier)
Shares Value
- -------------------------------------------------------------------------------
47,000 Nihon Jumbo $ 1,630,869
(film processing)
42,000 Nippon Kanzai 1,092,107
(building maintenance)
50,000 Nissin 1,396,758
(consumer finance)
20,000 Noritsu Koki 1,062,942
(photo equipment and supplies)
46,000 Okabe 396,012
(building materials)
120,000 Royal 2,266,438
(restaurant chain operator)
100,000 Sodick(1) 922,388
(machine tools)
18,000 Tiemco 1,215,970
(fishing goods retailer) ----------
26,428,998
----------
MALAYSIA--2.5%
450,000 Chemical Company of Malaysia 1,326,672
(chemical manufacturer)
533,333 KFC Holdings (Malaysia) 2,363,803
(fast food retailer)
900,000 MBM Resources 2,154,729
(auto parts)
555,000 Metacorp 1,713,098
(road construction and operation)
1,000,000 United Merchant Group 1,780,768
(financial services) ---------
9,339,070
---------
MEXICO--0.5%
300,000 Acer Computec Latino America(1) 1,092,810
(personal computers and software)
400,000 Organizacion Soriana B 790,624
(retail department stores) ---------
1,883,434
---------
NETHERLANDS--12.8%
50,000 Ahrend Groep 2,578,365
(office furniture manufacturer)
115,000 Cap Gemini 3,384,901
(computer software)
55,000 Ceteco Holding 3,100,701
(household appliance retailer)
See Notes to Financial Statements
18 International Discovery American Century Investments
SCHEDULE OF INVESTMENTS
INTERNATIONAL DISCOVERY
NOVEMBER 30, 1996
Shares Value
- -------------------------------------------------------------------------------
43,000 Goudsmit $ 3,811,924
(diversified company)
101,000 IHC Caland 5,653,051
(engineering construction)
330,000 Internatio-Muller 8,240,918
(engineering and R&D services)
204,976 Kempen 4,097,382
(investment banking)
115,000 Koninklijke Van Ommeren 4,997,393
(tank storage)
180,000 LCI Computer Group(1) 1,632,192
(integrated systems)
28,000 Nagron Nationaal Grondbezit 2,576,279
(construction and property
development)
80,000 Ordina Beheer(1) 3,708,210
(information systems)
50,000 Samas-Groep 1,996,060
(office furniture and supplies)
60,000 Schuttersveld Holding 2,412,654
(diversified manufacturer) ----------
48,190,030
----------
NORWAY--2.8%
140,000 Merkantildata 2,614,501
(information technology)
144,900 Nordlandsbanken 3,010,435
(banking)
45,000 Tandberg(1) 1,218,544
(digital decoding)
240,000 Tomra Systems 3,548,252
(beverage recycling machines) ----------
10,391,732
----------
PHILIPPINES--0.9%
2,500,000 Bankard(1) 760,861
(credit card financing)
560,000 Security Bank(1) 958,685
(banking services)
14,840,000 Southeast Asia Cement(1) 1,580,766
(cement) ---------
3,300,312
---------
Shares Value
- -------------------------------------------------------------------------------
POLAND--1.2%
29,485 Agros Holding(1) $ 714,223
(diversified holding company)
400,000 Bank Inicjatyw Gospodarczych (BIG) H 547,657
(banking)
20,000 Bank Rozwoju Eksportu 649,465
(financial services)
45,800 ComputerLand Poland(1) 892,364
(computer services)
200,000 Elektrim Towarzystwo 1,825,522
(electrical equipment) ---------
4,629,231
---------
SINGAPORE--2.3%
640,000 Datacraft Asia 896,000
(telecommunications equipment)
300,000 Elec & Eltek International 1,038,000
(circuit board manufacturer)
1,400,000 Parkway Holdings 5,290,553
(property management)
800,000 Super Coffeemix Manufacturing 633,155
(coffee and drink mix manufacturer)
1,500,000 Uraco Holdings 941,176
(metal processing and fabrication) ---------
8,798,884
---------
SOUTH AFRICA--1.9%
200,480 The Bidvest Group 1,054,014
(industrial holding company)
300,000 Dimension Data Holding 842,277
(data communication systems)
175,809 JD Group 876,663
(furniture and appliance retailer)
50,000 Metropolitan Life 829,268
(life insurance)
25,000 Perskor Groep Beperk 818,428
(printing, publishing)
355,100 Saambou Holdings 477,316
(financial services)
550,000 Safmarine & Rennies Holdings 1,293,767
(diversified holding company)
180,000 Servgro International 928,781
(hotel, leisure services)
7,200 Servgro International Rights 2,185
(hotel, leisure services) ---------
7,122,699
---------
See Notes to Financial Statements
Annual Report International Discovery 19
SCHEDULE OF INVESTMENTS
INTERNATIONAL DISCOVERY
NOVEMBER 30, 1996
Shares Value
- -------------------------------------------------------------------------------
SPAIN--0.7%
300,000 Prosegur Compania de Seguridad $ 2,441,188
(security services) ---------
SWEDEN--7.9%
65,000 Althin Medical B 1,500,384
(medical instruments)
120,000 Assa Abloy B 1,965,763
(locks and windows manufacturer)
127,600 Catena A 1,425,178
(automobile sales)
370,000 Esselte B 8,485,543
(office supplies, security systems)
270,000 Frontec B(1) 4,905,472
(computer services)
420,000 Getinge Industrier B 8,099,837
(medical equipment manufacturer)
60,000 Hexagon B 1,465,387
(car and truck distribution)
21,600 WM-Data Nordic B 1,807,787
(computer consulting) ----------
29,655,351
----------
SWITZERLAND--0.6%
120 Lindt Und Spruengli 2,355,286
(chocolate products) ----------
THAILAND--2.0%
250,000 Electricity Generating Authority 773,145
(electric utility)
217,600 Hana Microelectronics 1,167,007
(electronics)
325,000 Industrial Finance
Corporation of Thailand 1,024,173
(financial services)
78,900 KR Precision 515,807
(electronics)
170,000 The Pizza Public Company 1,164,612
(fast food retailer)
300,000 Robinson Department Store 364,063
(retail department stores)
350,000 Siam Makro 1,520,846
(wholesale stores)
Shares Value
- -------------------------------------------------------------------------------
200,000 Thai Rung Union Car $ 1,064,788
(automobile manufacturer) ---------
7,594,441
---------
UNITED KINGDOM--14.1%
600,000 Ashtead Group 2,154,001
(equipment and machinery)
150,000 Azlan Group 1,494,433
(networking products)
333,333 Biocompatibles(1) 4,139,288
(biopharmaceuticals)
33,333 Biocompatibles Warrants
(Expiration date 2-14-97)(1) 75,106
(biopharmaceuticals)
173,333 Bodycote International 2,062,076
(diversified operations)
139,700 Brammer 1,512,792
(diversified operations)
180,000 Capita Group 1,411,956
(computer services)
130,000 Carpetright 1,401,194
(carpet retailer)
2,000,000 Caspian Group(1) 1,034,123
(broadcast services)
65,000 Celsis International(1) 113,123
(diagnostic equipment)
347,200 Close Brothers Group 1,888,647
(financial services)
1,800,000 Corporate Services Group 5,084,856
(employment services)
150,400 Dorling Kindersley Holdings 1,350,473
(publishing)
88,000 Dr. Solomon's Group ADR(1) 1,512,500
(applications software)
3,000,000 Freepages Group(1) 2,244,803
(classified information service)
120,000 Goode Durrant 779,880
(vehicle and equipment leasing)
400,000 Harvey Nichols(1) 2,370,915
(retailer)
200,000 JBA Holdings 1,597,425
(software development)
620,000 Kwik-Fit Holdings 2,335,267
(automotive repair centers)
See Notes to Financial Statements
20 International Discovery American Century Investments
SCHEDULE OF INVESTMENTS
INTERNATIONAL DISCOVERY
NOVEMBER 30, 1996
Shares Value
- -------------------------------------------------------------------------------
540,000 London Clubs International $ 3,005,513
(casinos)
90,000 London Forfaiting 419,955
(financial services)
900,000 M.A.I.D.(1) 3,700,141
(computer services
and broadcast media)
245,000 McKechnie 2,374,993
(metal, plastic components)
500,000 Parity 2,963,644
(computer software and consulting)
200,000 PizzaExpress 1,773,982
(restaurant retailer)
200,000 Powerscreen International 2,011,074
(capital goods)
175,000 Sage Group 1,522,808
(computer software)
200,000 VCI 845,794
(audio visual and audio publishing) ----------
53,180,762
----------
TOTAL COMMON STOCKS,
RIGHTS & WARRANTS--92.1% 347,358,741
(Cost $307,796,991) -----------
PREFERRED STOCKS
BRAZIL--1.0%
952,600 Itausa 719,431
(financial holding company)
14,000,000 Lojas Renner 691,324
(apparel retailer)
120,000 Multicanal Particapacoes ADR(1) 1,687,500
(cable television)
365 Saraiva 724,487
(educational book publisher) ---------
3,822,742
---------
GERMANY--5.4%
12,000 Fresenius 2,425,748
(medical equipment, supplies)
66,330 Marschollek, Lautenschlaeger
und Partner 9,229,272
(financial services)
Shares Value
- -------------------------------------------------------------------------------
40,000 Moebel Walther $ 2,574,772
(specialty retailer)
7,500 Porsche 5,876,138
(automobiles) ----------
20,105,930
----------
SWITZERLAND--0.5%
4,000 Liechtenstein Global Trust 2,011,807
(banking) ----------
TOTAL PREFERRED STOCKS --6.9% 25,940,479
(Cost $18,005,198) ----------
TEMPORARY CASH INVESTMENTS --1.0%
Repurchase Agreement (Goldman Sachs & Co.),
5.61%, due 12-2-96, collateralized by
$3,075,000 par value U.S. Treasury Bonds,
8.875%, due 2-15-19
(Delivery value $3,901,823) 3,900,000
(Cost $3,900,000) ----------
TOTAL INVESTMENT SECURITIES--100.0% $377,199,220
(Cost $329,702,189) ============
FORWARD FOREIGN CURRENCY CONTRACTS
Contracts Settlement Unrealized
to Sell Dates Value Gain
- ------------------------------------------------------------------------
1,553,933 CHF 12-31-96 $ 1,194,681 $ 11,331
9,787,651 DEM 12-30-96 6,374,866 54,227
15,622,806 FRF 12-31-96 2,992,152 33,647
458,512,500 JPY 12-30-96 4,045,573 47,265
20,619,532 NLG 12-31-96 11,971,396 105,526
----------- --------
$26,578,668 $251,996
=========== ========
(Value on Settlement Date $26,830,664)
See Notes to Financial Statements
Annual Report International Discovery 21
SCHEDULE OF INVESTMENTS
INTERNATIONAL DISCOVERY
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
CHF = Swiss Franc
DEM = German Mark
FRF = French Franc
JPY = Japanese Yen
NLG = Netherlands Guilder
(1) Non-income producing.
(2) Securities were purchased under Rule 144A of the Securities Act of 1933
and, unless registered under the Act or exempted from registration, may
only be sold to qualified institutional investors. The aggregate value of
restricted securities at November 30, 1996, was $18,390,506, which
represented 4.9% of the net assets of International Discovery.
See Notes to Financial Statements
22 International Discovery American Century Investments
<TABLE>
<CAPTION>
STATEMENTS OF ASSETS AND LIABILITIES
INTERNATIONAL INTERNATIONAL
NOVEMBER 30, 1996 GROWTH DISCOVERY
<S> <C> <C>
ASSETS
Investment securities, at value
(identified cost of $1,188,139,535
and $329,702,189, respectively) (Note 3)...................................$ 1,336,864,621 $ 377,199,220
Foreign currency holdings, at value (identified
cost of $0 and $234, respectively).......................................... -- 231
Cash.......................................................................... 111,203 739,274
Receivable for forward foreign currency exchange contracts.................... 1,395,344 251,996
Receivable for investments sold............................................... 13,031,901 8,707,585
Receivable for capital shares sold............................................ 315,772 12,248
Dividends and interest receivable............................................. 2,670,365 330,495
--------- -------
1,354,389,206 387,241,049
------------- -----------
LIABILITIES
Disbursements in excess of demand deposit cash................................ 1,701,703 211,546
Payable for investments purchased............................................. 4,459,362 9,358,006
Payable for capital shares redeemed........................................... 263,651 20,235
Accrued management fees (Note 2).............................................. 1,551,445 521,886
Distribution fees payable (Note 2)............................................ 728 --
Service fees payable (Note 2)................................................. 728 --
Other liabilities............................................................. 1,094 985
----- ---
7,978,711 10,112,658
--------- ----------
NET ASSETS...................................................................$ 1,346,410,495 $ 377,128,391
================ =============
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus)......................................$ 1,056,903,457 $ 313,053,802
Undistributed net investment income........................................... 273,167 739,552
Accumulated undistributed net realized gain from
investment and foreign currency transactions................................ 139,138,340 15,590,283
Net unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies (Note 3)....................... 150,095,531 47,744,754
- ----------- ----------
$ 1,346,410,495 $ 377,128,391
================ =============
INVESTOR CLASS
Net assets...................................................................$ 1,342,607,910 $ 377,128,391
Shares outstanding............................................................ 153,872,043 49,602,881
Net asset value per share ...................................................$ 8.73 $ 7.60
ADVISOR CLASS
Net assets...................................................................$ 3,802,585 N/A
Shares outstanding............................................................ 435,975 N/A
Net asset value per share....................................................$ 8.72 N/A
</TABLE>
See Notes to Financial Statements
Annual Report Statements of Assets and Liabilities 23
<TABLE>
<CAPTION>
STATEMENTS OF OPERATIONS
INTERNATIONAL INTERNATIONAL
NOVEMBER 30, 1996 GROWTH DISCOVERY
INVESTMENT INCOME (LOSS)
INCOME:
<S> <C> <C>
Dividends (net of foreign taxes withheld
of $2,257,987 and $384,291, respectively)...................................$ 17,587,165 $ 3,054,540
Interest......................................................................... 2,759,165 640,192
--------- -------
20,346,330 3,694,732
---------- ---------
EXPENSES:
Management fees (Note 2)......................................................... 22,647,625 4,690,824
Distribution fees-- Advisor Class (Note 2)....................................... 1,333 --
Shareholder service fees-- Advisor Class (Note 2)................................ 1,333 --
Directors' fees and expenses..................................................... 11,724 2,119
Fees waived by manager (Note 2).................................................. (1,376,006) (269,547)
---------- --------
21,286,009 4,423,396
---------- ---------
NET INVESTMENT (LOSS)............................................................ (939,679) (728,664)
-------- --------
REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY (NOTE 3)
Net realized gain (loss) on:
Investments................................................................. 177,276,237 25,105,031
Foreign currency transactions............................................... (28,046,763) (477,159)
----------- --------
149,229,474 24,627,872
----------- ----------
Change in net unrealized appreciation (depreciation) on:
Investments................................................................. 29,065,247 37,214,047
Translation of assets and liabilities in foreign currencies................. 15,008,634 (724,183)
---------- --------
44,073,881 36,489,864
---------- ----------
Net realized and unrealized gain on
investments and foreign currency................................................. 193,303,355 61,117,736
----------- ----------
Net Increase in Net Assets
Resulting from Operations........................................................$192,363,676 $ 60,389,072
============ ============
</TABLE>
See Notes to Financial Statements
24 Statements of Operations American Century Investments
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
INTERNATIONAL INTERNATIONAL
YEARS ENDED NOVEMBER 30, 1996 AND NOVEMBER 30, 1995 GROWTH DISCOVERY
November 30, November 30, November 30, November 30,
Increase (Decrease) in Net Assets 1996 1995 1996 1995
OPERATIONS
<S> <C> <C> <C> <C>
Net investment income (loss) ................................... $ (939,679) $ 3,130,463 $ (728,664) $ 304,720
Net realized gain (loss) on investments
and foreign currency transactions ........................... 149,229,474 (9,429,329) 24,627,872 (6,179,550)
Change in net unrealized appreciation
on investments and translation of assets and
liabilities in foreign currencies ........................... 44,073,881 75,548,366 36,489,864 12,189,016
---------- ---------- ---------- ----------
Net increase in net assets resulting from operations ........... 192,363,676 69,249,500 60,389,072 6,314,186
----------- ---------- ---------- ---------
DISTRIBUTIONS TO SHAREHOLDERS From net investment income:
Investor Class ............................................ (1,160,402) -- (304,720) --
In excess of net investment income:
Investor Class ............................................ -- -- (344,800) --
From net realized gains from investment transactions:
Investor Class ............................................ -- (64,609,265) -- --
----------- ----------- ---------- ----------
Decrease in net assets from distributions ...................... (1,160,402) (64,609,265) (649,520) --
---------- ----------- -------- ----------
CAPITAL SHARE TRANSACTIONS (NOTE 4)
Net increase (decrease) in net assets from
capital share transactions .................................. (55,234,332) (110,840,659) 202,809,697 (2,936,511)
----------- ------------ ----------- ----------
Net increase (decrease) in net assets .......................... 135,968,942 (106,200,424) 262,549,249 3,377,675
NET ASSETS
Beginning of year .............................................. 1,210,441,553 1,316,641,977 114,579,142 111,201,467
------------- ------------- ----------- -----------
End of year .................................................... $ 1,346,410,495 $ 1,210,441,553 $ 377,128,391 $ 114,579,142
=============== =============== ============= =============
Undistributed net investment income ............................ $ 273,167 $ 1,143,362 $ 739,552 $ 537,032
=============== =============== ============= =============
</TABLE>
See Notes to Financial Statements
Annual Report Statements of Changes in Net Assets 25
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION--American Century World Mutual Funds, Inc. (the Corporation) is
registered under the Investment Company Act of 1940 as an open-end diversified
management investment company. Two series of funds are currently issued as
International Growth, formerly International Equity, and International
Discovery, formerly International Emerging Growth (the Funds). The Funds'
investment objective is to seek capital growth by investing primarily in equity
securities. On September 3, 1996, the Funds implemented a multiple class
structure whereby each Fund is authorized to issue four classes of shares: the
Investor Class, the Institutional Class, the Service Class and the Advisor
Class. The shares outstanding prior to September 3, 1996, are designated as
Investor Class shares. The four classes of shares differ principally in their
respective shareholder servicing and distribution expenses and arrangements. All
shares of each Fund represent an equal pro rata interest in the assets of the
class to which such shares belong, and have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except for class
specific expenses and exclusive rights to vote on matters affecting only
individual classes. Sale of the Advisor Class for International Growth commenced
on October 2, 1996. Sale of the Institutional and Service classes for
International Growth and the Advisor, Institutional and Service classes for
International Discovery had not commenced as of November 30, 1996. The following
significant accounting policies, related to all classes of the Funds, are in
accordance with accounting policies generally accepted in the investment company
industry.
SECURITY VALUATIONS--Portfolio securities traded primarily on a principal
securities exchange are valued at the last reported sales price, or the mean of
the latest bid and asked prices where no last sales price is available.
Securities traded over-the-counter are valued at the mean of the latest bid and
asked prices or, in the case of certain foreign securities, at the last reported
sales price, depending on local convention or regulation. When valuations are
not readily available, securities are valued at fair value as determined in
accordance with procedures adopted by the Board of Directors.
SECURITY TRANSACTIONS--Security transactions are accounted for on the date
purchased or sold. Net realized gains and losses are determined on the
identified cost basis, which is also used for federal income tax purposes.
INVESTMENT INCOME--Dividend income less foreign taxes withheld (if any) is
recorded as of the ex-dividend date. Interest income is recorded on the accrual
basis and includes amortization of discounts and premiums.
FOREIGN CURRENCY TRANSACTIONS--The accounting records of the Funds are
maintained in U.S. dollars. All assets and liabilities initially expressed in
foreign currencies are converted into U.S. dollars at prevailing exchange rates.
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.
Net realized foreign currency exchange gains or losses arise from sales of
portfolio securities, sales of foreign currencies, and the difference between
asset and liability amounts initially stated in foreign currencies and the U.S.
dollar value of the amounts actually received or paid. Net unrealized foreign
currency exchange gains or losses arise from changes in the value of portfolio
securities and other assets and liabilities resulting from changes in the
exchange rates.
Net realized and unrealized foreign currency exchange gains or losses occurring
during the holding period of investments 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.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS--The Funds may enter into forward
foreign currency exchange contracts for the purpose of settling specific
purchases or sales of securities denominated in a foreign currency or to hedge
the Funds' exposure to foreign currency exchange rate fluctuations. When
required, the Funds will segregate liquid assets in an amount sufficient to
cover their obligations under the hedge contracts. The net U.S. dollar value of
foreign currency underlying all contractual commitments held by the Funds and
the resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. Forward contracts involve elements of market risk in
excess of the amount reflected in the Statements of Assets and Liabilities. The
Funds bear 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 Funds may enter into repurchase agreements with
institutions that the Funds' investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The Funds require that the securities purchased in a repurchase
transaction be transferred to the custodian in a manner sufficient to enable the
Funds to obtain those securities in the event of a default under the repurchase
agreement. ACIM monitors, on a daily basis, the value of the securities
transferred to ensure that the value, including accrued interest, of the
securities under each repurchase agreement is equal to or greater than amounts
owed to the Funds under each repurchase agreement.
26 Notes to Financial Statements American Century Investments
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
INCOME TAX STATUS--It is the policy of the Funds to distribute all taxable
income and capital gains to shareholders and to otherwise qualify as a regulated
investment company under provisions of the Internal Revenue Code. Accordingly,
no provision has been made for federal income taxes.
DISTRIBUTIONS TO SHAREHOLDERS--Distributions to shareholders are recorded on the
ex-dividend date. Distributions from net investment income and net realized
gains are declared and paid annually.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences are primarily due to differing
treatments for foreign currency transactions and wash sales.
SUPPLEMENTARY INFORMATION--Certain officers and directors of the Corporation are
also officers and/or directors, and, as a group, controlling stockholders of
American Century Companies, Inc., the parent of the Corporation's investment
manager, ACIM, the Corporation's distributor, American Century Investment
Services, Inc. (ACIS), and the Corporation's transfer agent, American Century
Services Corporation.
USE OF ESTIMATES--The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of increases and decreases in net assets
from operations during the reporting period. Actual results could differ from
those estimates.
- ------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES
The Corporation has entered into Management Agreements with ACIM that provide
each Fund with investment advisory and management services in exchange for a
single, unified management fee per class. Additional fees apply to the Advisor
Class and Service Class shares, as described in the respective prospectuses. The
Agreements provide that all expenses of the Funds, except brokerage commissions,
taxes, interest, expenses of those directors who are not considered "interested
persons" as defined in the Investment Company Act of 1940 (including counsel
fees) and extraordinary expenses, will be paid by ACIM. The fee is computed
daily and paid monthly based on each Fund's average daily closing net assets
during the previous month.
Effective August 1, 1996, ACIM has voluntarily waived a portion of its annual
management fee on the Funds. From August 1, 1996, through November 30, 1996, the
management fees absorbed by ACIM for International Growth and International
Discovery were $1,376,006 and $269,547, respectively.
The annual management fee for each class of International Growth is as follows:
Investor Class Investor Class
(through (effective
July 31, 1996) August 1, 1996) Advisor Class
AVERAGE NET ASSETS
First $1 billion................ 1.90% 1.50% 1.25%
Of the next $1 billion.......... 1.25% 1.20% .95%
Over $2 billion................. 1.00% 1.00% .85%
Annual Report Notes to Financial Statements 27
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
The annual management fee for the Investor Class of International Discovery is
as follows:
Investor Class Investor Class
(through (effective
July 31, 1996) August 1, 1996)
AVERAGE NET ASSETS
First $500 million......................... 2.00% 1.75%
Of the next $500 million................... 2.00% 1.40%
Over $1 billion............................ 2.00% 1.20%
The Board of Directors has adopted a shareholder services and distribution plan
for the Advisor Class, pursuant to Rule 12b-1 of the Investment Company Act of
1940. The Advisor Class Master Distribution and Shareholder Services Plan
provides that the Funds will pay ACIM an annual distribution fee equal to .25%
and service fee equal to .25%. The fees are computed daily and paid monthly
based on each Fund's average daily closing net assets during the previous month.
The distribution fee provides compensation for distribution expenses incurred in
connection with distributing shares of the Advisor Class including, but not
limited to, payments to brokers, dealers, and financial institutions that have
entered into sales agreements with ACIS and/or ACIM. The service fee provides
compensation for shareholder and administrative services rendered by ACIM, its
affiliates or independent third party providers. Fees incurred under the Master
Distribution and Shareholder Services Plan during the period ended November 30,
1996, were $2,666 for International Growth. None were incurred for International
Discovery.
- ------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
Investment transactions (excluding short-term investments) for the year ended
November 30, 1996, were as follows:
INTERNATIONAL INTERNATIONAL
GROWTH DISCOVERY
PURCHASES
Common Stocks....................... $1,934,080,270 $484,405,774
Preferred Stocks.................... 15,262,903 14,234,218
Other Debt Obligations.............. 3,928,805 --
PROCEEDS FROM SALES
Common Stocks....................... $2,005,047,504 $275,767,958
Preferred Stocks.................... 17,639,921 17,673,397
Other Debt Obligations.............. 4,190,484 --
On November 30, 1996, the composition of unrealized appreciation and
(depreciation) of investment securities based on the aggregate cost of
investments for federal income tax purposes was as follows:
INTERNATIONAL INTERNATIONAL
GROWTH DISCOVERY
Appreciation....................... $ 160,644,938 $ 55,886,889
(Depreciation)..................... (11,923,523) (8,667,295)
----------- ----------
Net .............................. $ 148,721,415 $ 47,219,594
============== ============
Federal Tax Cost................... $1,188,143,206 $329,979,626
============== ============
28 Notes to Financial Statements American Century Investments
NOTES TO FINANCIAL STATEMENTS
NOVEMBER 30, 1996
<TABLE>
<CAPTION>
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the Funds were as follows:
INTERNATIONAL GROWTH INTERNATIONAL DISCOVERY
Shares Amount Shares Amount
<S> <C> <C> <C> <C>
INVESTOR CLASS Year ended November 30, 1996:
Shares authorized ($.01 par value) ................ 400,000,000 100,000,000
=========== ===========
Shares sold ....................................... 49,156,430 $ 396,490,732 34,313,861 $ 235,537,402
Shares issued in reinvestment of
distributions ................................... 149,517 1,139,329 109,339 639,633
Shares redeemed ................................... (56,541,549) (456,529,640) (4,907,884) (33,367,338)
----------- ------------ ---------- -----------
Net increase (decrease) ........................... (7,235,602) $ (58,899,579) 29,515,316 $ 202,809,697
========== ============= ========== =============
Year ended November 30, 1995:
Shares authorized ($.01 par value) ................ 300,000,000 100,000,000
===== =========== ===========
Shares sold ....................................... 55,937,551 $ 392,977,541 7,866,729 $ 42,306,561
Shares issued in reinvestment of
distributions ................................... 9,198,989 63,657,003 -- --
Shares redeemed ................................... (80,255,938) (567,475,203) (8,402,017) (45,243,072)
----------- ------------ ---------- -----------
Net (decrease) .................................... (15,119,398) $(110,840,659) (535,288) $ (2,936,511)
=========== ============= ======== =============
ADVISOR CLASS
October 2, 1996* through November 30, 1996:
Shares authorized ($.01 par value)............. 170,000,000
===== ===========
Shares sold.................................... 441,628 $ 3,713,387
Shares redeemed................................ (5,653) (48,140)
------ -------
Net increase .................................. 435,975 $3,665,247
======= ==========
</TABLE>
*Sale of the Advisor Class in International Growth commenced on October 2, 1996.
Sale of the Advisor Class in International Discovery had not commenced as of the
report date.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------
5. SUBSEQUENT EVENTS
The following name changes became effective January 1, 1997:
NEW NAMES FORMER NAMES
<S> <C> <C>
Funds' Issuer: American Century World Mutual Funds, Inc. Twentieth Century World Investors, Inc.
Funds: American Century -- Twentieth Century Twentieth Century International Equity
International Growth Fund
American Century -- Twentieth Century Twentieth Century International Discovery
International Discovery Fund
Investment Manager: American Century Investment Management, Inc. Investors Research Corporation
Parent Company: American Century Companies, Inc. Twentieth Century Companies, Inc.
Distributor: American Century Investment Services, Inc. Twentieth Century Securities, Inc.
Transfer Agent: American Century Services Corporation Twentieth Century Services, Inc.
</TABLE>
Annual Report Notes to Financial Statements 29
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
INTERNATIONAL GROWTH
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
Advisor
Investor Class Class
1996 1995 1994 1993 1992 1996(1)
PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period......... $7.51 $7.47 $7.34 $5.79 $5.33 $8.41
----- ----- ----- ----- ----- -----
Income from Investment Operations
Net Investment Income (Loss) ........... (.01)(2) .01 (.04) (.04) .06 (.01)(2)
Net Realized and Unrealized Gain
on Investment Transactions.............. 1.24 .40 .57 1.78 .41 .32
---- --- --- ---- --- ---
Total from Investment Operations........ 1.23 .41 .53 1.74 .47 .31
---- --- --- ---- --- ---
Distributions
From Net Investment Income.............. (.01) -- -- (.036) (.005) --
In Excess of Net Investment Income...... -- -- -- (.155) (.002) --
From Net Realized Gains
on Investment Transactions.............. -- (.372) (.402) -- -- --
---- ----- ----- ----- ----- -----
Total Distributions..................... (.01) (.372) (.402) (.191) (.007) --
---- ----- ----- ----- ----- -----
Net Asset Value, End of Period............... $8.73 $7.51 $7.47 $7.34 $5.79 $8.72
===== ===== ===== ===== ===== =====
Total Return(3)......................... 16.35% 5.93% 7.28% 31.04% 8.77% 3.69%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets................... 1.65%(4) 1.77% 1.84% 1.90% 1.91% 1.67%(5)
Ratio of Net Investment Income
(Loss) to Average Net Assets............ (.07%) .25% (.53%) (.34%) .95% (.76%)(5)
Portfolio Turnover Rate................. 158% 169% 242% 255% 180% 158%
Average Commission Paid per
Investment Security Traded.............. $.0195 $.0020 --(6) --(6) --(6) $.0195
Net Assets, End
of Period (in thousands)................ $1,342,608 $1,210,442 $1,316,642 $759,238 $215,346 $3,803
</TABLE>
(1) October 2, 1996 (commencement of sale of Advisor Class) through November
30, 1996.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) American Century Investment Management, Inc. had voluntarily waived a
portion of its management fee from August 1, 1996, through November 30,
1996. In absence of the waiver, the ratio of operating expenses to average
net assets would have been 1.76%.
(5) Annualized
(6) Disclosure of average commission paid per investment security traded was
not required prior to the year ended November 30, 1995.
See Notes to Financial Statements
30 Financial Highlights American Century Investments
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
INTERNATIONAL DISCOVERY
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
1996 1995 1994(1)
PER-SHARE DATA
<S> <C> <C> <C>
Net Asset Value, Beginning of Period..................................... $5.70 $5.39 $5.00
----- ----- -----
Income from Investment Operations
Net Investment Income (Loss) ....................................... (.02)(2) .03 (.02)
Net Realized and Unrealized Gain on Investment Transactions......... 1.95 .28 .41
---- --- ---
Total from Investment Operations.................................... 1.93 .31 .39
---- --- ---
Distributions
From Net Investment Income.......................................... (.01) -- --
In Excess of Net Investment Income.................................. (.02) -- --
---- ----- -----
Total Distributions................................................. (.03) -- --
---- ----- -----
Net Asset Value, End of Period........................................... $7.60 $5.70 $5.39
===== ===== =====
Total Return(3)..................................................... 34.06% 5.75% 7.80%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets.................. 1.88%(4) 2.00% 2.00%(5)
Ratio of Net Investment Income (Loss) to Average Net Assets......... (.31%) .27% (.48%)(5)
Portfolio Turnover Rate............................................. 130% 168% 56%
Average Commission Paid per Investment Security Traded.............. $.0054 $.0040 --(6)
Net Assets, End of Period (in thousands)............................ $377,128 $114,579 $111,202
</TABLE>
(1) April 1, 1994 (inception) through November 30, 1994.
(2) Computed using average shares outstanding throughout the period.
(3) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(4) American Century Investment Management, Inc. had voluntarily waived a
portion of its management fee from August 1, 1996, through November 30,
1996. In absence of the waiver, the ratio of operating expenses to average
net assets would have been 1.99%.
(5) Annualized
(6) Disclosure of average commission paid per investment security traded was
not required prior to the year ended November 30, 1995.
See Notes to Financial Statements
Annual Report Financial Highlights 31
REPORT OF INDEPENDENT AUDITORS
The Shareholders and Board of Directors
American Century World Mutual Funds, Inc.
We have audited the accompanying statements of assets and liabilities of
American Century World Mutual Funds, Inc. (formerly Twentieth Century World
Investors, Inc.) (comprised of the American Century-Twentieth Century
International Growth [formerly International Equity] and American
Century-Twentieth Century International Discovery [formerly International
Emerging Growth] portfolios) (the Funds), including the schedules of
investments, as of November 30, 1996, and the related statements of operations
and changes in net assets and the financial highlights for the year then ended.
These financial statements are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audit. The statement of changes in net assets
for the year ended November 30, 1995, and the financial highlights for the
periods from inception to November 30, 1995, for the Funds were audited by other
auditors whose report dated December 29, 1995, expressed an unqualified opinion
on those statements and financial highlights.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of November 30, 1996, by
correspondence with the custodian. As to securities relating to uncompleted
transactions, we performed other audit procedures. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Funds at November 30, 1996, and the results of their operations, changes in
their net assets and the financial highlights for the year then ended in
conformity with generally accepted accounting principles.
/s/Ernst & Young LLP
Kansas City, Missouri
January 3, 1997
32 Report of Independent Auditors American Century Investments
NOTES
Annual Report Notes 33
IMPORTANT NOTICE FOR
ALL IRA AND 403(b) SHAREHOLDERS
As required by law, any distributions you receive from an IRA and certain 403(b)
distributions [not eligible for rollover to an IRA or to another 403(b)] are
subject to federal income tax withholding at the rate of 10% of the total amount
withdrawn, unless you elect not to have withholding apply. If you don't want us
to withhold on this amount, you may send us a written notice not to have the
federal income tax withheld. Your written notice is valid for six months from
the date of receipt at American Century. 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 a written notice not to
withhold federal income tax within six months prior to the withdrawal.
When you plan to withdraw, you may make your election by completing our
Conversions/ Redemptions form or an IRS Form W-4P. Call American Century for
either form. Your written election is valid for only six months from the date of
receipt at American Century. You may revoke your election at any time by sending
a written notice to us.
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.
34 Important Notice American Century Investments
SHARE CLASSES & ASSOCIATED FEES
Until September 3, 1996, International Growth and International Discovery issued
one class of fund shares, reflecting the fact that most investors bought their
American Century fund shares directly from American Century. All investors paid
the same annual unified management fee and did not pay any commissions or other
fees to purchase shares from American Century.
But times have changed. Increasing numbers of investors are purchasing fund
shares through financial intermediaries who expect to be compensated for the
additional services they provide. In September, American Century began to offer
four classes of shares for many of its funds, including International Growth.
The original class of International Growth and International Discovery shares is
called the Investor Class. All shares issued and outstanding before September 3,
1996 have been designated as Investor Class shares. Investor Class shares are
still available to the public. Investor Class shareholders do not pay any
commissions or other fees for purchase of fund shares directly from American
Century. Investors who buy Investor Class shares through a broker-dealer may be
required to pay the broker-dealer a transaction fee. THE PRICE AND PERFORMANCE
OF THE INVESTOR CLASS SHARES ARE LISTED IN NEWSPAPERS. NO OTHER CLASS WILL BE SO
LISTED.
In addition, for International Growth there is an ADVISOR CLASS, which is sold
through banks, broker-dealers, insurance companies and financial advisors.
Advisor Class investors pay an annual management fee that is 0.25% less than
that paid by Investor Class investors, but Advisor Class investors also pay a
0.50% Rule 12b-1 service and distribution fee. Half of that fee is available to
pay for recordkeeping and administrative services and half is available to pay
for distribution services provided by the financial intermediary through which
the Advisor Class shares are purchased.
Both classes of shares represent a pro rata interest in the funds, and generally
have the same rights and conditions. Although International Discovery had not
yet begun to issue shares other than Investor Class as of November 30, 1996, it
is anticipated that the fund will begin to issue such shares in 1997.
Annual Report Share Classes & Associated Fees 35
BACKGROUND INFORMATION
PORTFOLIO MANAGEMENT TEAM
Theodore Tyson, Vice President & Portfolio Manager
Henrik Strabo, Vice President & Portfolio Manager
INVESTMENT PHILOSOPHY & POLICIES
The philosophy behind the Twentieth Century Group's growth funds focuses on
three important principles. Chiefly, the funds seek to own successful companies,
which we define as those whose earnings and revenues are growing at accelerating
rates. In addition, we attempt to keep the funds fully invested, regardless of
short-term market activity. Experience has shown that market gains can occur in
unpredictable spurts and that missing even some of those opportunities may
significantly limit potential for gain. Finally, American Century funds are
managed by teams, rather than by one "star" manager. We believe this enables us
to make better, more consistent management decisions.
In addition to these principles, each fund has its own investment policies:
INTERNATIONAL GROWTH invests primarily in the equity securities of foreign
companies that exhibit accelerating growth. These companies will be located
primarily in developed countries. The fund will typically have significant share
price fluctuations.
INTERNATIONAL DISCOVERY invests primarily in the equity securities of smaller
foreign companies that exhibit accelerating growth. Up to one-half of these
companies can be based in emerging market countries, with the rest of the
portfolio invested in smaller companies in developed economies. The fund holds
the potential for greater share price fluctuation and short-term risk than
International Growth.
COMPARATIVE INDICES & RANKINGS
The S&P 500 is an index created by Standard & Poor's Corporation that is
considered to represent the performance of the U.S. stock market generally. It
is not an investment product available for purchase.
THE MORGAN STANLEY EUROPE, AUSTRALIA, FAR EAST INDEX (EAFE(R)) is a widely
followed group of stocks from 20 different countries. It is not an investment
product available for purchase.
LIPPER ANALYTICAL SERVICES, INC. (Lipper) is an independent mutual fund ranking
service. Rankings are based on average annual total returns for each fund in the
appropriate Lipper category for the periods indicated. The Lipper category for
International Growth is "International Funds." The Lipper category for
International Discovery is "International Small Company Funds."
HOW CURRENCY RETURNS AFFECT FUND PERFORMANCE
For U.S. investors, the total return from international stocks includes the
effects of currency fluctuations -- the movement of international currency
values in relation to the value of the U.S. dollar. Currency exchange rates
come into play when international stock income, gains and losses are converted
into U.S. dollars.
Changing currency values may have a significant impact on the total returns of
international stock funds. The value of the foreign investments held by
international stock funds may be reduced or increased by changes in currency
exchange rates. The dollar value of a foreign security generally decreases when
the value of the dollar rises against the foreign currency in which the security
is denominated. This tended to be the case in 1996 when the dollar increased in
value against most major foreign currencies. (The weakened foreign currencies
bought fewer dollars.) Conversely, the dollar value of a foreign security tends
to increase when the value of the dollar falls against the foreign currency.
(The stronger foreign currency buys more dollars.) In addition, the value of
fund assets may be affected by losses and other expenses incurred in converting
between various currencies in order to purchase and sell foreign securities and
by currency restrictions, exchange control regulations, currency devaluations
and political developments.
36 Background Information American Century Investments
GLOSSARY
RETURNS
o TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.
o AVERAGE ANNUAL TOTAL RETURNS illustrate the annually compounded returns that
would have produced the fund's cumulative total returns if the fund's
performance had been constant over the entire period. Average annual total
returns smooth out variations in a fund's return; they are not the same as
year-by-year results. For fiscal year-by-year total returns, please refer to the
"Financial Highlights" on pages 30 and 31.
STATISTICAL TERMINOLOGY
o EXPENSE RATIO--an amount, expressed as a percentage of total investment, that
shareholders pay annually for mutual fund operating expenses and management
fees. (The expenses and fees are deducted from fund income, not from each
shareholder.) These expenses include shareholder services and salaries for fund
managers and administrative staff. Ideally, the expense ratio should be kept as
low as possible to maximize fund returns but should be high enough to allow the
fund management company to pay for high quality services, equipment and
personnel.
o PORTFOLIO TURNOVER--the percentage of a fund's investment portfolio that is
replaced during a given time period, usually a year. Actively managed portfolios
tend to have higher turnover than passively managed portfolios such as index
funds.
Annual Report Glossary 37
[american century logo]
American
Century(sm)
P.O. Box 419200
Kansas City, Missouri
64141-6200
Person-to-Person Assistance:
1-800-345-2021 or 816-531-5575
Automated Information Line:
1-800-345-8765
Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865
Fax: 816-340-7962
Internet: www.americancentury.com
Twentieth Century International Growth Funds
Investment Manager
American Century Investment Management, Inc.
Kansas City, Missouri
This report and the financial statements contained herein 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.
9701 [recycled logo]
SH-BKT-7315 Recycled
