SEMIANNUAL REPORT
[american century logo]
American
Century(sm)
MAY 31, 1997
TWENTIETH
CENTURY
GROUP
International Growth
International Discovery
[front cover]
TABLE OF CONTENTS
Report Highlights ................................... 1
Our Message to You .................................. 2
International Growth
Performance & Portfolio Information .............. 3
Management Q & A ................................. 4
Schedule of Investments .......................... 7
Financial Highlights .............................29
International Discovery
Performance & Portfolio Information ..............11
Management Q & A .................................12
Schedule of Investments ..........................15
Financial Highlights .............................31
Statements of Assets and Liabilities ................22
Statements of Operations ............................23
Statements of Changes in Net Assets .................24
Notes to Financial Statements .......................25
Share Classes and Retirement
Account Information ..............................35
Background Information
Investment Philosophy and Policies ...............36
How Currency Returns Affect Performance ..........36
Comparative Indices ..............................36
Fund Management Team Leaders .....................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, we have divided American Century funds 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 As a group, international equity markets posted modest returns,
underperforming the U.S. stock market for the six-month period. The total return
for the Morgan Stanley Europe, Australia, Far East Index (EAFE(R)) was 4.04%,
compared to 13.17% for the S&P 500.
o Strong performance by European and Latin American markets was offset by flat
returns in Japan and sharp declines in Far Eastern markets such as Thailand and
the Philippines. European equities benefited from falling interest rates and low
inflation, while Latin American shares rebounded from previous
under-performance, and were bolstered by strong growth prospects and improving
economic conditions.
o Japanese market performance was hampered by the country's sluggish economy.
Declining Japanese foreign investment, combined with a weaker Japanese yen,
adversely affected other Far Eastern markets.
INTERNATIONAL GROWTH
o The investment team's methodology worked well. The fund provided strong
performance for the period, returning 16.58%. The team sought out and found
strong growth stocks that generated excellent returns.
o Execution of the fund's "bottom up" approach led to investments in the shares
of relatively more European companies and fewer firms in Japan and the Far East.
o Holdings in financial services, technology, automotive and pharmaceuticals
performed well.
o The investment team is confident that the rewards of international equity
investing can continue due to several compelling factors. These include the
opening of new investment markets in Eastern Europe and Africa, as well as
Europe's and Japan's belated efforts to address pension deficits, which should
create additional investment demand.
INTERNATIONAL DISCOVERY
o The fund performed well, with a total return for the period of 15.14%.
International Discovery has outperformed EAFE(R) over the three-year period
since the fund's inception.
o The fund's largest regional weighting was in Europe because of the strong
earnings growth available there. Conversely, the fund was relatively
underweighted in Japan and the Far East because growth was more difficult to
find.
o The investment team is watching Europe carefully. Uncertainty over European
Monetary Union could affect the fund's holdings in the short-term.
o In the longer-term the team is confident that its diversified portfolio of
fast-growing successful companies has strong potential to continue to perform
well, regardless of political uncertainties.
INTERNATIONAL GROWTH
INVESTOR CLASS(1)
TOTAL RETURNS: AS OF 5/31/97
6 Months 16.58%(2)
1 Year 23.36%(2)
NET ASSETS: $1.7 billion
(AS OF 5/31/97)
INCEPTION DATE: 5/9/91
TICKER SYMBOL: TWIEX
INTERNATIONAL DISCOVERY
INVESTOR CLASS(1)
TOTAL RETURNS: AS OF 5/31/97
6 Months 15.14%(2)
1 Year 23.42%(2)
NET ASSETS: $583.5 million
(AS of 5/31/97)
INCEPTION DATE: 4/1/94
TICKER SYMBOL: TWEGX
(1) See Share Classes, page 35.
(2) Not annualized.
Semiannual Report Report Highlights 1
OUR MESSAGE TO YOU
[photo of James E. Stowers, Jr. and James E. Stowers III]
The six-month period ended May 31, 1997, was very rewarding for investors
in American Century's international equity funds. The investment team's "bottom
up" approach, which focuses on choosing successful individual companies, worked
well. Both funds significantly outperformed their benchmark index, the Morgan
Stanley Europe, Australia, Far East Index (EAFE(R)), as well as most of their
peer group.
Based on their 1997 year-to-date returns as of May 31, Morningstar ranked
International Growth in the top 2% of 398 funds in its foreign stock funds
category and International Discovery in the top 3%. Furthermore, Morningstar
gave International Growth a four-star rating and International Discovery five
stars for their three-year performance out of 508 foreign stock funds. These
Morningstar proprietary ratings reflect historical, risk-adjusted performance
for investment periods ended May 31, 1997. The top 10% of the funds in an
investment category receive five stars and the next 22.5% receive four stars.*
American Century's international investment team is well positioned to
continue seeking equity opportunities abroad. Portfolio manager Mark Kopinski
returned in April after working with another investment company. He replaced Ted
Tyson, who left to pursue other interests. Kopinski joins portfolio manager
Henrik Strabo and five analysts-a team that Kopinski helped select-to co-manage
both funds and help develop new international funds.
We also strengthened our corporate team. In June, Bill Lyons, American
Century's Chief Operating Officer, became President, assuming full
responsibility for the company's day-to-day operations. With this change we will
be able to spend more time on developing and refining new investment
technologies and tools that build on and leverage the proprietary system we
pioneered 25 years ago. One of our goals is to ensure that we continue to evolve
and innovate-building the investment tools today that will lead us and our
investors to success in the next century.
We appreciate your confidence in American Century and look forward to
continuing to serve you.
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 Chief Executive Officer
* International Growth has a four-star rating for its five-year performance out
of 227 funds. The ratings, which may change monthly, are calculated from the
funds' average annual total returns in excess of 90-day Treasury bill returns
with appropriate fee adjustments, and a risk factor that reflects fund
performance below 90-day Treasury bill returns.
2 Our Message to You American Century Investments
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH
TOTAL RETURNS AS OF MAY 31, 1997
AVERAGE ANNUAL RETURNS
6 MONTHS 1 YEAR 3 YEARS 5 YEARS LIFE OF FUND
INVESTOR CLASS
(inception 5/9/91)
<S> <C> <C> <C> <C> <C>
International Growth ... 16.58% 23.36% 11.96% 12.77% 14.71%
MSCI EAFE(R)Index ...... 4.04% 7.54% 7.69% 10.55% 8.09%(1)
S&P 500 ................ 13.17% 29.48% 25.99% 18.38% 17.09%
ADVISOR CLASS
(inception 10/2/96)
International Growth ... 16.56% .......................................... 20.86%
MSCI EAFE(R)Index ...... 4.04% .......................................... 7.07%
S&P 500 ................ 13.17% .......................................... 23.44%
</TABLE>
(1) For the period from 5/31/91 (date closest to fund's inception for which data
are available) to 5/31/97.
See pages 35-37 for more information about share classes, the comparative
indices and returns.
[mountain graph - data below]
GROWTH OF $10,000 OVER LIFE OF FUND (Investor Class)
INTERNATIONAL
GROWTH MSCI EAFE INDEX S&P 500
DATE ACCT VALUE ACCT VALUE ACCT VALUE
May 31, 91 10000 10000 10000
Jun 30, 91 9596 9265 9604
Sep 30, 91 10231 10060 10117
Dec 31, 91 10802 10228 10959
Mar 31, 92 11418 9014 10683
Jun 30, 92 12112 9205 10887
Sep 30, 92 11611 9344 10908
Dec 31, 92 11325 8983 11793
Mar 31, 93 12301 10060 12306
Jun 30, 93 12818 11072 12365
Sep 30, 93 13654 11806 12683
Dec 31, 93 16155 11908 12976
Mar 31, 94 15568 12324 12488
Jun 30, 94 15778 12954 12542
Sep 30, 94 16344 12967 13155
Dec 31, 94 15387 12834 13152
Mar 31, 95 14879 13073 14429
Jun 30, 95 15741 13168 15802
Sep 30, 95 16581 13717 17054
Dec 31, 95 17216 14273 18077
Mar 31, 96 17614 14685 19047
Jun 30, 96 18455 14917 19898
Sep 30, 96 18500 14899 20509
Dec 31, 96 19700 15136 22222
Mar 31, 97 20789 14899 22821
May 31, 97 22522 15952 25563
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 Total Returns table
above).
The line representing International Growth's total return includes operating
expenses (such as transaction costs and management fees) that reduce returns,
while the total return lines of the S&P 500 and the MSCI EAFE(R) indices do not.
PORTFOLIO AT A GLANCE
5/31/97 11/30/96
Number of Companies 99 101
Portfolio Turnover 71%(1) 158%(2)
Expense Ratio
(for Investor Class) 1.41%(3) 1.65%
(1) Six months ended 5/31/97.
(2) Year ended 11/30/96.
(3) Annualized.
Semiannual Report International Growth 3
INTERNATIONAL GROWTH
MANAGEMENT Q & A
An interview with Henrik Strabo and Mark Kopinski, portfolio managers on
the International Growth investment team.
How did International Growth perform for the six months ended May 31, 1997?
The fund provided strong performance for its investors, returning 16.58%
compared with a 4.04% return for EAFE(R), its benchmark index. For the 12 months
ended May 31, 1997, the fund is up 23.36% compared with EAFE(R)'s 7.54% return.
What explains the fund's strong performance?
Our methodology worked well. We sought out and found strong growth stocks
that generated excellent returns. Execution of our "bottom up" approach led to
investments in the shares of relatively more European companies and fewer firms
in Japan and the Far East. European stocks performed well during the period for
several reasons. Europe is in a different stage of the business cycle than the
United States, characterized by falling interest rates and investor optimism
about continued low rates. This environment benefits stocks as companies enjoy
lower borrowing costs. European shares also surged as many corporations followed
the U.S.'s lead in restructuring to become more competitive globally. Finally,
the growing number of participants in European markets has increased pressure on
European companies to improve stock performance.
Our holdings in Japan, and the Far East were limited by our earnings growth
methodology. Japan's economy has grown at an anemic rate since the early 1990s,
although it has rebounded a little in recent months. We primarily found growing
companies in the technology sector, which is benefiting from growth outside of
Japan. In the Far East, the once-booming economies of Thailand, the Philippines
and Singapore have tumbled as the value of the Japanese yen declined, which
reduced their relative competitiveness.
[bar graph - data below]
INTERNATIONAL GROWTH'S ONE-YEAR RETURNS(1)
(Periods ended May 31)
5/92 5/93 5/94 5/95 5/96 5/97
Internnational Growth 23.43%(2) 5.79% 22.93% -2.89% 17.13% 23.36%
EAFE(R) -3.37%(2) 16.40% 13.57% 4.93% 10.67% 7.54%
This chart illustrates the fund's returns over the past six years and compares
them with EAFE(R)'s returns. International Growth's total returns include
operating expenses, while the index's returns do not. See page 36 for a
description of EAFE(R). Past performance is no guarantee
of future results.
(1) Investor Class.
(2) Returns from 5/31/91(the date closest to fund's inception for which data was
available) to 5/31/92.
4 International Growth American Century Investments
INTERNATIONAL GROWTH
What changes did you make to the portfolio during the period?
We sharply increased holdings in the Netherlands. At the end of the period
these holdings stood at 14%, second only to Japan. The Netherlands has a long
history as the center of trade for Europe and is home to some of the largest,
most profitable businesses in the world. One of the stocks we added during the
period illustrates one way in which the Dutch continue to dominate world trade.
Internationale Nederland Groep (ING) is a financial services company that is
participating in a global boom in its industry. ING has entered southeast Asia,
Eastern Europe and Latin America to serve the increasing demand for insurance,
banking, brokerage services and mutual funds.
Another Dutch company we own is Randstad Holdings, which provides employee
outsourcing and placement services. European labor law has historically favored
unionized labor and offered employers little flexibility in managing their
workforces. With the trend toward corporate restructuring, that is starting to
change. Randstad has gained significant market share in Belgium, the Netherlands
and Luxembourg by providing temporary workers at a time when demand for these
workers is skyrocketing.
Which stocks or sectors added most to the fund's returns?
Holdings in financial services, technology, automotive and pharmaceutical
sectors all performed well during the period. Three holdings, discussed in our
last shareholder report, Telebras, Volkswagen and HSBC Holdings, continued to
lead the list of top performing stocks. Rohm Co. Ltd. was among our
top-performing Japanese stocks. The company supplies electronic parts to digital
cellular phone manufacturers and makes specialized semiconductors used in
computers. Its stock performed well because of the increasing global demand for
digital cellular phone service. Demand for these phones has been so strong that
we added two phone manufacturers to the portfolio during the period: Nokia,
which is based in Finland, and Ericsson, which is a Swedish company.
During the period, the fund continued to have the largest percentage of its
investments in Japan - 22% as of May 31. How did these holdings perform?
The fund has enjoyed solid performance from its Japanese holdings by
focusing on the stocks of electronics companies with high export rates. These
companies are benefiting from three trends: the Japanese yen's weakness relative
to the U.S. dollar, which makes Japanese goods less expensive and more
competitive in the U.S.; strong markets for their products worldwide; and
corporate restructuring that has increased profitability.
TOP TEN HOLDINGS % of fund investments
As of As of
5/31/97 11/30/96
Novartis AG(1) 3.8% 4.7%
ING Groep N.V. 2.8% -
Credit Suisse Group 2.4% -
Phillips Electronics N.V. 2.4% -
Daimler-Benz AG 2.3% 2.3%
HSBC Holdings plc 2.2% 2.5%
British Aerospace plc 2.1% -
Nippon Telegraph & Telephone 2.1% -
Volkswagen AG 2.0% 2.5%
Sankyo Co. Ltd. 1.9% 3.1%
(1) Spinoff from Sandoz on 12/23/96.
See the Schedule of Investments for company nationalities and descriptions.
TOP FIVE INDUSTRIES % of fund investments
As of As of
5/31/97 11/30/96
Electrical &
Electronic Components 11.3% 4%
Communications Services 7.6% 8%
Pharmaceuticals 7.2% 5%
Banking 6.9% 7%
Automobiles & Auto Parts 6.8% 9%
Semiannual Report International Growth 5
Recent parliamentary elections in France have cast doubt on whether European
countries will unite under a single currency. How will the future of the
European Monetary Union (EMU) affect the fund?
The outgoing, conservative French government, like Germany, supported the
need for reduced government spending to qualify for EMU. The incoming, more
liberal French government is less likely to maintain controls on spending. This
shift raises questions about whether the monetary union will occur and, if so,
under what conditions. In the short term, the fund could be affected by rising
interest rates and falling stock prices brought on by uncertainty over EMU. In
the long term, we are confident that the European companies in which the fund
invests will continue the strong earnings growth pattern we identified before
buying their stock. Their growth is driven by factors outside the currency
debate. If European companies are to succeed, they must become competitive
globally. That means they should restructure to be more efficient. They also
must have access to capital markets, which means becoming more profitable,
thereby attracting more investors. These trends will continue, regardless of the
outcome of the economic monetary union debate.
Mark, can you tell us about your involvement with the fund?
I helped launch International Growth in 1991 and rejoined the fund's
management in April after working at another investment company. I strongly
advocate a team management approach and I am happy to see the disciplines I
helped put in place continue. Our team members literally travel the globe to
visit our existing investments and seek out new ones, always with an eye toward
ensuring we have some of the best growth companies in the world in the fund's
portfolio.
What do you see as the outlook for international investing?
People say the world is getting smaller but, for us, the world is getting
bigger as equity markets develop in countries that were formerly under the rule
of communism or a dictatorship. Other parts of the international community are
using the U.S. as a model for dealing with financial issues. As a result, we
have never had a world that looks as promising as it does today in terms of
investment opportunities. A second trend that should improve the outlook for
international investors is the belated effort by Western Europe and Japan to
meet pension deficits. Demographics are forcing these mature economies to move
to more flexible types of retirement plans that are funded jointly by employers
and employees. This will result in a massive build-up of capital seeking
investment opportunities. By investing in the stocks of the companies we
consider to have the strongest growth internationally, the fund is
well-positioned to benefit from this trend.
[bar chart - data below]
INTERNATIONAL GROWTH'S INVESTMENTS BY COUNTRY
5/31/97 11/30/97
Japan 22% 20%
Netherlands 14% 4%
U.K. 11% 13%
Germany 11% 9%
Switzerland 10% 9%
Canada 7% 13%
France 5% 5%
Hong Kong 4% 4%
Other 17% 23%
*No other country represented more than 4% of the fund as of 5/31/97.
6 International Growth American Century Investments
SCHEDULE OF INVESTMENTS
INTERNATIONAL GROWTH
MAY 31, 1997 (UNAUDITED)
Shares Value
- ------------------------------------------------------------------
COMMON STOCKS
ARGENTINA-0.7%
206,000 Telecom Argentina Stet -
France Telecom S.A. ADR $10,995,250
-----------
(communications services)
AUSTRALIA-1.6%
2,374,600 Santos Ltd. 9,720,124
(energy production
and marketing)
1,945,000 Woodside Petroleum Limited 16,404,173
-----------
(energy production
and marketing)
26,124,297
-----------
AUSTRIA-1.1%
103,000 VA Technologie AG 18,203,391
-----------
(business services and supplies)
BERMUDA(1)
27,500 Central European Media
Enterprises Ltd. Cl A(2) 639,375
-----------
(broadcasting and media)
CANADA-7.1%
409,500 Bank of Nova Scotia 17,023,472
(banking)
1,089,000 Bombardier Inc. 22,932,142
(aerospace and defense)
675,000 Moore Corporation Ltd. 15,096,395
(printing and publishing)
110,000 Northern Telecom Ltd.(2) 9,229,568
(communications equipment)
876,000 QLT PhotoTherapeutics, Inc.(2) 19,718,985
(biotechnology)
493,400 Rigel Energy Corp.(2) 6,162,350
(energy production
and marketing)
268,133 St. Laurent Paperboard Inc.
(Acquired 5/16/97
through 5/28/97,
Cost $4,068,934)(2)(3) 4,322,371
(paper and forest products)
Shares Value
- ------------------------------------------------------------------
700,000 Talisman Energy, Inc.(2) $22,949,570
-----------
(energy production
and marketing)
117,434,853
-----------
COLOMBIA-0.1%
340,000 Banco de Bogota 2,112,193
-----------
(banking)
FINLAND-2.0%
246,000 Nokia Corp. Cl A ADR 16,236,000
(communications equipment)
65,000 Raision Tehtaat Oy 5,303,288
(food and beverage)
135,000 Sampo Insurance Company Ltd. 11,801,272
-----------
(insurance)
33,340,560
-----------
FRANCE-4.5%
275,000 AXA-UAP 16,493,221
(insurance)
146,000 Alcatel Alsthom Compagnie
Generale(2) 15,840,089
(communications services)
109,000 Compagnie Generale
des Eaux(2) 13,434,131
(utilities)
9,000 Pinault-Printemps-Redoute SA 3,780,791
(retail - general merchandise)
266,000 Schneider SA(2) 12,804,312
(electrical
and electronic components)
109,000 Societe Generale 12,128,561
-----------
(banking)
74,481,105
-----------
GERMANY-9.5%
451,300 BHW Holding AG(2) 7,890,804
(financial services)
27,000 Bayerische Motoren Werke
(BMW) AG 22,147,757
(automobiles and auto parts)
489,000 Daimler-Benz AG 37,703,606
(automobiles and auto parts)
See Notes to Financial Statements
Semiannual Report Schedule of Investments 7
SCHEDULE OF INVESTMENTS
INTERNATIONAL GROWTH
MAY 31, 1997 (UNAUDITED)
Shares Value
- ------------------------------------------------------------------
143,000 Deutsche Bank AG $7,940,252
(financial services)
291,600 Deutsche Pfandbrief-und
Hypothekenbank AG 17,183,113
(banking)
31,300 Henkel KGaA 1,640,704
(chemicals and resins)
20,000 Mannesmann AG 8,138,376
(industrial machinery
and equipment)
100,000 SGL CARBON Aktiengesellschaft 14,482,556
(electrical
and electronic components)
142,000 Siemens AG 8,020,440
(electrical
and electronic components)
50,000 Volkswagen AG 32,365,875
-----------
(automobiles and auto parts)
157,513,483
-----------
HONG KONG-3.5%
1,220,615 HSBC Holdings plc 37,019,362
(banking)
6,000,000 Hong Kong
Telecommunications Ltd. 13,279,990
(communications services)
2,269,000 New World
Infrastructure Ltd.(2) 7,071,865
-----------
(building
and home improvements)
57,371,217
-----------
ITALY-0.5%
5,558,000 Credito Italiano 8,287,791
-----------
(banking)
JAPAN-21.6%
192,300 Advantest Corp. 13,107,414
(electrical and
electronic components)
709,000 Bridgestone Corp. 16,047,765
(automobiles and auto parts)
787,000 Canon, Inc. 19,980,636
(consumer products)
357,600 Circle K Japan Co., Ltd. 19,111,803
(retail - food and drug)
125,000 Fuji Machine Manufacturing Co. 4,260,080
(industrial equipment
and machinery)
Shares Value
- -------------------------------------------------------------------
455,000 Hoya Corp. $20,714,747
(electrical
and electronic components)
115,000 JUSCO Co. 3,889,582
(retail - food and drug)
87,000 Keyence Corporation 12,578,855
(control and measurement)
252,000 Konami Co., Ltd. 9,000,387
(computer software and services)
579,000 Mitsubishi Estate Co., Ltd. 7,922,974
(real estate)
323,000 Nintendo Co., Ltd. 25,296,269
(electrical
and electronic components)
44,000 Nippon Broadcasting System 4,051,810
(broadcasting and media)
3,700 Nippon Telegraph & Telephone 35,345,755
(communications services)
270,000 Rohm Co. Ltd. 28,116,528
(electrical
and electronic components)
926,000 Sanden Corp. 7,642,618
(automobiles and auto parts)
977,000 Sankyo Co., Ltd. 31,026,550
(pharmaceuticals)
300,000 Sony Corp. 25,328,112
(electrical
and electronic components)
991,000 Sumitomo Realty & Development 7,803,821
(real estate)
6,800 Takefuji Corporation 317,776
(financial services)
1,152,000 Terumo Corporation 20,324,455
(medical equipment
and supplies)
137,000 Toyota Motor Corp. 3,938,035
(automobiles and auto parts)
635,000 Uni-Charm Corporation 21,422,609
(paper and forest products)
1,139,000 Yamaha Corp. 21,663,497
-----------
(leisure)
358,892,078
-----------
MEXICO-0.5%
291,000 Grupo Televisa S.A. GDR(2) 8,329,875
-----------
(broadcasting and media)
See Notes to Financial Statements
8 Schedule of Investments American Century Investments
SCHEDULE OF INVESTMENTS
INTERNATIONAL GROWTH
MAY 31, 1997 (UNAUDITED)
Shares Value
- ------------------------------------------------------------------
NETHERLANDS-14.4%
109,000 Akzo Nobel $14,526,895
(chemicals and resins)
246,153 Assurantieconcern
Stad Rotterdam 11,033,648
(insurance)
510,000 Getronics NV 17,411,133
(computer software
and services)
174,000 Gucci Group N.V. 12,136,500
(retail - apparel)
46,000 Hunter Douglas N.V.(2) 4,063,901
(building
and home improvements)
1,049,559 ING Groep N.V. 46,444,053
(financial services)
214,200 Koninklijke Ahold NV 16,288,846
(retail - food and drug)
710,000 Phillips Electronics N.V. 39,760,000
(electrical
and electronic components)
206,500 Randstad Holdings N.V. 20,772,699
(business services
and supplies)
590,900 Stork N.V. 26,178,724
(business services
and supplies)
1,309,000 VNU Tijdschriftengroep
Nederland 29,610,445
-----------
(printing and publishing)
238,226,844
-----------
NORWAY-1.2%
140,000 Kvaerner ASA 8,020,332
(business services
and supplies)
400,000 Smedvig ASA Cl A 9,772,673
(energy services)
100,000 Smedvig ASA Cl B 2,429,127
-----------
(energy services)
20,222,132
-----------
SPAIN-1.9%
225,000 Cortefiel, S.A. 8,320,638
(retail - specialty)
812,000 Telefonica de Espana 23,449,030
-----------
(communications services)
31,769,668
-----------
Shares Value
- ------------------------------------------------------------------
SWEDEN-2.6%
457,000 Ericsson (L.M.)
Telephone Co. ADR $16,309,188
(communications equipment)
300,000 Hennes & Mauritz AB Cl B 9,806,835
(retail - apparel)
506,000 Skandia Forsakrings AB 17,881,129
-----------
(insurance)
43,997,152
-----------
SWITZERLAND-9.8%
322,000 Credit Suisse Group(2) 40,506,370
(financial services)
8,000 Julius Baer Holding AG 11,012,031
(financial services)
18,000 Nestle S.A. 22,420,382
(food and beverage)
46,600 Novartis AG 63,320,595
(pharmaceuticals)
2,800 Roche Holding AG 24,928,521
-----------
(pharmaceuticals)
162,187,899
-----------
UNITED KINGDOM-11.4%
2,249,554 BBA Group plc 12,336,841
(diversified)
1,741,720 British Aerospace plc 35,480,208
(aerospace and defense)
603,700 British-Borneo Petroleum
Syndicate plc 12,570,030
(energy production
and marketing)
427,000 Cable & Wireless plc 3,493,332
(communications equipment)
1,294,000 Cairn Energy plc(2) 11,106,121
(energy production
and marketing)
1,400,000 Granada Group plc 19,888,774
(diversified)
1,100,000 Guinness plc 10,261,630
(food and beverage)
1,098,979 Misys plc 24,549,199
(computer software
and services)
1,390,000 Next Plc 16,898,081
(retail - apparel)
See Notes to Financial Statements
Semiannual Report Schedule of Investments 9
SCHEDULE OF INVESTMENTS
INTERNATIONAL GROWTH
MAY 31, 1997 (UNAUDITED)
Shares/Principal Amount Value
- ------------------------------------------------------------------
989,000 Royal Bank of Scotland
Group plc $9,728,793
(banking)
1,241,904 Siebe plc 19,536,395
(diversified)
1,202,596 Stagecoach Holdings plc 13,190,380
(transportation) -------------
189,039,784
-------------
TOTAL COMMON STOCKS-94.0% 1,559,168,947
-------------
(Cost $1,306,305,049)
PREFERRED STOCKS
BRAZIL-1.7%
203,000 Telecomunicacoes
Brasileiras S.A. ADR 27,887,125
-----------
(communications services)
GERMANY-1.2%
281,700 Henkel KGaA 15,922,533
(chemicals and resins)
21,000 SAP AG 3,829,375
-----------
(computer software
and services)
19,751,908
-----------
TOTAL PREFERRED STOCKS-2.9% 47,639,033
-----------
(Cost $23,473,402)
TEMPORARY CASH INVESTMENTS
$45,982,000 par value FHLMC Discount 45,904,725
Note, 5.43%, 6/12/97(4)
Repurchase Agreement, Morgan
(J.P.) & Co. Inc.,
5.50%, due 6/2/97,
collateralized by $5,040,000
par value U.S. Treasury Notes,
11.125%, due 8/15/03
(Delivery value $6,202,842) 6,200,000
-----------
Principal Amount Value
- ------------------------------------------------------------------
TOTAL TEMPORARY
CASH INVESTMENTS-3.1% $52,104,725
-----------
(Cost $52,104,725)
TOTAL INVESTMENT SECURITIES-100.0% $1,658,912,705
==============
(Cost $1,381,883,176)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Contracts Settlement Unrealized
to Sell Dates Value (Loss)
- ---------------------- ------------ ------------ ------------
56,760,375 CHF 6/30/97 $ 40,312,480 $(1,441,356)
69,753,911 DEM 6/30/97 40,976,996 (248,800)
132,819,000 FRF 6/30/97 23,094,097 (84,779)
18,585,475 GBP 6/30/97 30,453,416 (304,960)
100,832,210 NLG 6/30/97 52,648,123 (245,613)
------------ ------------
$187,485,112 $(2,325,508)
============ ============
(Value on Settlement Date $185,159,604)
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
CHF = Swiss Franc
DEM = German Mark
FHLMC = Federal Home Loan Mortgage Corporation
FRF = French Franc
GBP = British Pound
GDR = Global Depositary Receipt
JPY = Japanese Yen
NLG = Netherlands Guilder
(1) Country was less than 0.05% of the Fund's total investment securities.
(2) Non-income producing.
(3) Security was 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 May 31, 1997, was $4,322,371, which represented 0.3% of net
assets.
(4) The rates for U.S. Government Agency discount notes are
the yield to maturity at May 31, 1997.
See Notes to Financial Statements
10 Schedule of Investments American Century Investments
INTERNATIONAL DISCOVERY
TOTAL RETURNS AS OF MAY 31, 1997
AVERAGE ANNUAL RETURNS
6 MONTHS 1 YEAR 3 YEARS LIFE OF FUND(1)
International Discovery ..... 15.14% 23.42% 17.04% 19.63%
Lipper International
Small Company Funds ......... 6.81% 10.11% 7.80% 7.90%(2)
MSCI EAFE(R)Index ........... 4.04% 7.54% 7.69% 8.49%
S&P 500 ..................... 13.17% 29.48% 25.99% 26.12%
(1) The fund's inception was 4/1/94.
(2) For the period from 4/7/94 (the date nearest the fund's inception for which
data are available) to 5/31/97.
See pages 36 and 37 for more information about the comparative indices and
returns.
[mountain graph - data below]
GROWTH OF $10,000 OVER LIFE OF FUND
INTERNATIONAL LIPPER INT'L
DISCOVERY SMALL CO EAFE(R)
DATE ACCT VALUE ACCT VALUE ACCT VALUE
Apr 30, 94 10000 10000 10000
Jun 30, 94 10000 9806 10083
Sep 30, 94 10613 10008 10093
Dec 31, 94 10000 9408 9990
Mar 31, 95 9387 8995 10176
Jun 30, 95 10242 9454 10250
Sep 30, 95 10967 10086 10677
Dec 31, 95 10989 10059 11110
Mar 31, 96 12017 10798 11431
Jun 30, 96 13456 11516 11611
Sep 30, 96 13531 11328 11597
Dec 31, 96 14416 11737 11781
Mar 31, 97 15532 12049 11597
May 31, 97 16355 12547 12417
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.
The line representing International Discovery's total return includes operating
expenses (such as transaction costs and management fees) that reduce returns,
while the total return lines of the indices do not.
PORTFOLIO AT A GLANCE
5/31/97 11/30/96
Number of Companies 160 183
Portfolio Turnover 65%(1) 130%(2)
Expense Ratio 1.75%(3) 1.88%
(1) Six months ended 5/31/97.
(2) Year ended 11/30/96.
(3) Annualized.
Semiannual Report International Discovery 11
INTERNATIONAL DISCOVERY
MANAGEMENT Q & A
An interview with Henrik Strabo and Mark Kopinski, portfolio managers on
the International Discovery investment team.
How did International Discovery perform for the six months ended May 31, 1997?
The fund performed very well. Its total return was 15.14% while the total
return of EAFE(R), its benchmark, was just 4.04%. In fact, International
Discovery has outperformed EAFE(R) over the three-year period since the fund's
inception.
Furthermore, the fund significantly outperformed its peers. Morningstar
ranked International Discovery in the top 3% of 398 funds in its foreign stock
funds category, based on the fund's 1997 year-to-date returns as of May 31.
What factors contributed to the fund's strong performance?
First and foremost, our investment approach worked. We sought and found
successful companies that are able to grow their businesses due to great
products, strong competitive positions and experienced management.
Secondly, the performance gap for the reporting period can be explained in
part by the fund's larger relative position in Europe than the index's, and its
smaller relative positions in Japan and Far Eastern countries. As of May 31, 59%
of the fund's investments were invested in Europe and the fund's top five
investments by country were all European, as the chart on page 14 shows.
European stocks rallied during the period because of favorable economic
conditions - falling interest rates, low inflation and optimism about European
Monetary Union (EMU) in 1999.
European equity performance also reflected the fact that a growing
investing population in Europe has put increased pressure on European companies
to improve their financial performance. This may fundamentally change how
companies are run and shareholders are treated. Companies are chopping away at
fat, they're starting to buy back shares, and they're beginning to distribute
stock options to executives to tie their fate to that of shareholders.
The Netherlands has appeared at or near the top of the fund's country weightings
for the past year. Why?
The Netherlands has a long history as the center of trade for Europe and is
home to some of the fastest-growing, most profitable businesses in the world. A
good example is Kempen & Co, a Dutch financial services firm. As of May 31 it
was the fund's fifth-largest holding and one of the portfolio's best performing
stocks for the six-month period. Kempen's growth and performance reflect the
increasing investment sophistication and participation of European citizens.
Why was the fund underweighted in Japanese stocks?
The relative absence of corporate earnings growth, except in export and
technology-driven industries, caused us to focus on faster-growing companies
elsewhere in the world. Even
[bar graph - data below]
INTERNATIONAL DISCOVERY'S ONE-YEAR RETURNS
(Periods ended May 31)
INTL DIS EAFE
1994 9.80%(1) 3.64%(1)
1995 -2.37% 4.93%
1996 33% 10.67%
1997 23.42% 7.54%
This chart illustrates the fund's returns over the past four years and compares
them with EAFE(R)'s returns. International Discovery's total returns include
operating expenses, while the index's returns do not. See page 36 for a
description of EAFE(R). Past performance is no guarantee of future results.
(1) Return from 4/1/94 inception date to 5/31/94.
12 International Discovery American Century Investments
though Japan's stock market is the second-largest in the world (behind only the
U.S.) and makes up about 45% of the non-American global equity market, Japanese
holdings accounted for only 6% of the fund's portfolio as of May 31.
Why were you underweighted in Far Eastern countries?
Again, it was the absence of corporate earnings growth and the fact that we
found more promising opportunities in Europe and elsewhere. The fund's
relatively low exposure to countries such as Thailand, the Philippines and
Singapore paid off when these markets were among the worst performers during the
period. This is ironic because not too long ago these countries were investment
darlings, often referred to as "Tiger" countries. They benefited from the
earlier strength of the Japanese yen, when Japan was investing heavily overseas
and Far Eastern goods and services appeared relatively inexpensive. As the yen
has declined, so too has the relative competitiveness of these Tiger countries.
During the past two decades, these countries were also attractive for
industrial nations because they could provide inexpensive labor. However, the
collapse of communism created other sources of low-cost labor, such as eastern
Europe.
Three of the fund's top performing securities were Hong Kong "red chips." What
are red chips?
Red chips are securities of companies (listed and traded in Hong Kong)
created by the Chinese government to raise capital for financially-strapped
provincial governments with marketable assets. These assets can include such
things as roads, hotels and factories. The three examples that have performed
well for the fund are Beijing Enterprises, Guangnan Holdings, and Guangzhou
Investment Company.
What factor could pose the biggest threat to the fund's performance during the
rest of 1997?
The fund's short-term performance could be affected most by rising interest
rates and falling stock prices in Europe caused by uncertainty over EMU. Europe
is supposed to be united economically under a single currency, the euro, on
January 1, 1999, but that timetable may be threatened by recent political
developments.
After the recent French parliamentary elections, which concluded just after
the close of the fund's May 31 reporting period, France and Germany - Europe's
two largest economies - appeared headed in opposite directions on EMU. French
voters, fed up with high unemployment caused in part by strict EMU-required
spending restrictions, elected a new government that supports increased
TOP TEN HOLDINGS % of fund investments
As of As of
5/31/97 11/30/96
Marschollek, Lautenschlaeger
und Partner AG 3.3% 2.4%
Internatio-Muller NV 2.3% 2.2%
Porsche AG 1.9% 1.6%
Esselte AB CI B 1.8% 2.2%
Kempen & Company NV 1.7% 1.1%
Royal Group Technologies Ltd. 1.7% -
Newcourt Credit Group Inc. 1.6% 1.9%
Rieter Holdings Ltd. 1.6% -
Getinge Industrier AB 1.6% 2.1%
Georg Fischer AG 1.5% -
See the Schedule of Investments for company nationalities and descriptions.
TOP FIVE INDUSTRIES % of fund investments
As of As of
5/31/97 11/30/96
Computer Software & Services 8.4% 7%
Financial Services 7.7% 10%
Electrical
& Electronic Components 5.4% 1%
Business Services & Supplies 5.4% 6%
Banking 5.3% 5%
Semiannual Report International Discovery 13
INTERNATIONAL DISCOVERY
spending and weaker economic restrictions. That conflicts with Germany's
position that EMU start on solid economic foundations, requiring the structural
reforms and welfare cutbacks that French voters rebelled against.
This clash of wills could delay EMU, which might shake European stock
markets. For the better part of two years, European stock and bond markets
rallied as countries cut deficits to meet EMU requirements and investors bet
that interest rates throughout Europe would fall, or converge, with German
interest rates. Now, with the possibility that deficit-reduction requirements
might loosen, there's a concern that interest rates could rise and stock prices
might fall. We are preparing for the possibility of short-term market gyrations,
but in the longer-term we believe we own the types of companies that will
perform well regardless of what happens with EMU.
Given the uncertainties of global investing and the recent strength of the
U.S. stock market, why invest overseas? Why not simply invest in a good U.S.
equity fund?
The investment opportunities we see today around the globe are
unprecedented. The case for international equity investing may be stronger than
ever for investors seeking long-term growth and diversification for the
following reasons:
o New opportunities. The investment world is growing larger. New markets
are opening up in Eastern Europe and Africa, for example. In addition, emerging
small companies are developing interesting new products.
o Increasing demand from individual investors. Individual investing is on
the rise around the world. We're starting to see buildups of private capital
being invested globally.
o A global shift from saving to investing. Low interest rates, faltering
pension programs and increasing awareness of what's required to meet long-term
investment goals are causing individual investors to withdraw money from bank
products and move it into equities.
o Increased equity demand to stem a looming pension crisis. The unfunded
pension liabilities around the world are huge. By 2010, the ratio of workers to
retirees will drop to critical levels in mature economies such as Japan, Great
Britain, Germany and France. These countries need to start funding pension plans
earlier and investing in them more aggressively.
We believe a U.S. equity fund is a logical starting point and a good core
holding for investors with long-term goals who can tolerate short-term price
fluctuations. However, investors who already have core holdings and are seeking
diversification and strong growth potential should find that international
equity funds offer the opportunity to benefit from a variety of exciting global
growth trends. (Please note that international investing involves special risks,
including political instablility and currency fluctuations.)
[bar chart - data below]
INTERNATIONAL DISCOVERY'S INVESTMENTS BY COUNTRY
5/31/97 11/30/96
Netherlands 16% 13%
U.K. 12% 14%
Germany 9% 7%
Switzerland 8% 1%
Sweden 7% 8%
Japan 6% 7%
Canada 5% 3%
Finland 5% 5%
Other* 34% 42%
*No other country represented more than 5% of the fund as of 5/31/97.
14 International Discovery American Century Investments
SCHEDULE OF INVESTMENTS
INTERNATIONAL DISCOVERY
MAY 31, 1997 (UNAUDITED)
Shares Value
- ------------------------------------------------------------------
COMMON STOCKS
AUSTRALIA-0.8%
1,500,000 Reinsurance Australia
Corporation Ltd. $4,736,291
-------------
(insurance)
BRAZIL-0.9%
21,170,000 Companhia de Eletricidade
do Estado da Bahia(1) 1,779,823
(utilities)
14,700,000 Companhia de Saneamento
Basico do Estado
de Sao Paulo(1) 3,502,321
-------------
(utilities)
5,282,144
-------------
CANADA-5.0%
250,000 ATS Automation Tooling
Systems, Inc. 4,374,977
(industrial machinery
and equipment)
160,000 Leitch Technology Corp. 3,793,341
(electrical
and electronic components)
400,000 Newcourt Credit Group, Inc.
(Acquired 12/4/95
through 4/10/97,
Cost $3,480,944)(2) 9,352,649
(financial services)
400,000 Royal Group
Technologies Ltd.(1) 9,788,331
(building
and home improvements)
147,600 YBM Magnex
International Inc.(1) 1,484,414
-------------
(steel)
28,793,712
-------------
DENMARK-2.4%
100,000 Bang & Olufsen Holding A/S 5,983,695
(consumer products)
20,000 Christian Hansen
Holding A/S Cl B 2,399,631
(pharmaceuticals)
21,000 Falck A/S 5,754,891
-------------
(aerospace and defense)
14,138,217
-------------
Shares Value
- ------------------------------------------------------------------
EGYPT-0.7%
70,000 A-Ahram Beverages
Co. GDR(1) $1,202,250
(food and beverage)
38,690 Eastern Tobacco 885,732
(tobacco)
30,000 Egypt International
Pharmaceuticals(1) 1,778,932
(pharmaceuticals)
4,755 Torah Portland Cement Co. 120,640
-------------
(construction and
property development)
3,987,554
-------------
FINLAND-4.5%
320,000 Hansabank Ltd. 3,045,991
(banking)
127,300 Huhtamaki Group 5,588,811
(food and beverage)
95,000 Instrumentarium
Group Cl A 3,986,208
(medical equipment
and supplies)
45,000 OY Hartwall AB 2,098,004
(food and beverage)
170,000 Pohjola Insurance
Group Cl B 4,953,620
(insurance)
80,000 TT Tieto OY 6,744,694
-------------
(computer software
and services)
26,417,328
-------------
FRANCE-3.2%
10,000 Altran Technologies SA 3,211,415
(business services
and supplies)
9,985 FDM Pharma(1) 396,925
(pharmaceuticals)
155,000 Companie Generale
de Geophysique, SA(1) 2,538,125
(energy services)
60,000 Havas Advertising SA 6,374,225
(broadcasting and media)
105,000 Vallourec SA 6,014,894
-------------
(steel)
18,535,584
-------------
See Notes to Financial Statements
Semiannual Report Schedule of Investments 15
SCHEDULE OF INVESTMENTS
INTERNATIONAL DISCOVERY
MAY 31, 1997 (UNAUDITED)
Shares Value
- ------------------------------------------------------------------
GERMANY-5.4%
16,000 Barmag AG(1) $2,790,970
(machinery and equipment)
100,000 Boewe Systec AG 3,623,571
(machinery and equipment)
105,000 Kiekert AG(1) 4,549,692
(automobiles
and auto parts)
270,000 Pfeiffer Vacuum
Technology AG ADR(1) 6,108,750
(industrial equipment
and machinery)
9,250 Porsche AG 11,172,677
(automobiles
and auto parts)
23,000 Rhoen Klinikum AG 2,818,528
-------------
(healthcare)
31,064,188
-------------
HONG KONG-2.9%
400,000 Beijing Enterprises
Holdings Ltd.(1) 2,333,355
(diversified)
1,900,000 Guangnan Holdings 3,052,849
(food and beverage)
9,000,000 Guangzhou Investments
Company Ltd. 4,471,833
(diversified)
1,600,000 Peregrine Investments
Holdings Limited 2,849,584
(financial services)
11,000,000 Top Glory International
Holdings Ltd.(1) 2,328,193
(diversified)
5,400,000 Zhejiang Expressway Co. Ltd.
(Acquired 5/12/97
through 5/29/97,
Cost $1,817,422)(1)(2) 1,951,345
-------------
(construction and
property development)
16,987,159
-------------
HUNGARY-0.7%
36,000 Richter Gedeon Rt. 2,994,582
(pharmaceuticals)
Shares Value
- ------------------------------------------------------------------
14,000 Richter Gedeon Rt.
(Acquired 5/22/97,
Cost $1,092,000)(2) $1,164,560
-------------
(pharmaceuticals)
4,159,142
-------------
INDIA-0.6%
40,000 Gujarat Ambuja Cements Ltd. 298,630
(construction and
property development)
2,050 Indian Hotels
Company Limited 34,659
(leisure)
40,000 Larsen & Toubro Ltd. 238,188
(business services
and supplies)
100,000 Mahindra & Mahindra Ltd. 974,280
(automobiles
and auto parts)
130,000 NIIT Limited 1,315,201
(computer software
and services)
170,000 Oriental Bank
of Commerce(1) 357,632
-------------
(banking)
3,218,590
-------------
INDONESIA-0.3%
1,023,000 PT Bank Bira 1,565,924
-------------
(banking)
IRELAND-0.4%
103,000 Ryanair Holdings plc ADR(1) 2,562,125
-------------
(airlines)
ISRAEL-2.9%
240,000 Bio-Technology
General Corporation(1) 3,450,000
(pharmaceuticals)
210,000 Orckit Communications Ltd.(1) 2,808,750
(communications equipment)
500,000 Oshap Technologies, Ltd.(1) 3,656,250
(computer software
and services)
230,500 Technomatix Technologies
Ltd. ADR(1) 7,116,688
-------------
(computer software
and services)
17,031,688
-------------
See Notes to Financial Statements
16 Schedule of Investments American Century Investments
SCHEDULE OF INVESTMENTS
INTERNATIONAL DISCOVERY
MAY 31, 1997 (UNAUDITED)
Shares Value
- ------------------------------------------------------------------
ITALY-0.8%
200,000 Safilo S.p.A.(1) $4,378,763
-------------
(medical equipment
and supplies)
JAPAN-5.9%
245,000 Canon Copyer Sales Co. 2,551,315
(office equipment
and supplies)
85,000 DeoDeo Corporation 1,792,246
(retail - specialty)
49,000 Fast Retailing Co. Ltd. 1,589,827
(retail - apparel)
44,000 Fujimi Incorporated 2,597,702
(electrical
and electronic components)
105,000 Kansai Kosaido Co. Ltd. 1,328,370
(printing and publishing)
165,000 Kanto Biomedical Laboratory 2,272,043
(healthcare)
145,000 Laox 2,171,350
(retail - specialty)
75,000 Matsumotokiyoshi 2,975,601
(retail - food and drug)
145,000 Meitec 3,831,060
(computer software
and services)
70,000 Ministop Co., Ltd. 2,229,012
(retail - food and drug)
100,000 Misumi Corporation 2,323,680
(machinery and equipment)
43,000 Nichii Gakkan Company 2,294,419
Nippon Kanzai 783,855
(business services)
120,000 Nippon System Development 2,220,405
(computer software
and services)
30,000 Noritsu Koki Co. Limited 1,381,299
(electrical
and electronic components)
10,000 Otsuka Kagu Limited 834,803
(retail - specialty)
55,000 Royal Co. Ltd. 1,079,220
-------------
(restaurants)
34,256,207
-------------
Shares Value
- ------------------------------------------------------------------
LUXEMBOURG-0.4%
37,300 Vilniaus Bankas AB GDR
(Acquired 12/10/96
through 5/1/97,
Cost $1,603,125)(2) $2,144,750
-------------
(banking)
MALAYSIA-0.6%
400,000 MBF Capital Bhd 851,572
(financial services)
500,000 MBM Resources Berhad 1,163,947
(automobiles and auto parts)
277,000 Reliance Pacific Berhad 434,294
(leisure)
750,000 United Merchant Group(1) 1,193,792
-------------
(financial services)
3,643,605
-------------
MEXICO-1.2%
500,000 ARA, S.A. de C.V.(1) 1,636,341
(construction and
property development)
520,000 Corporacion Interamericana
de Entretenimiento S.A.(1) 2,102,603
(leisure)
170,000 Grupo Elektra, S.A.
de C.V. GDR 3,230,000
-------------
(retail - general merchandise)
6,968,944
-------------
NETHERLANDS-15.7%
55,000 Aalberts Industries N.V. 1,447,670
(diversified)
120,000 Apothekers Cooperatie OPG 3,658,918
(pharmaceuticals)
55,000 Cap Gemini N.V. 1,935,005
(computer software
and services)
119,635 Draka Holding N.V. 5,050,784
(electrical
and electronic components)
134,193 Fugro N.V. 3,154,438
(business services
and supplies)
43,000 Goudsmit NV 5,871,990
(business services
and supplies)
See Notes to Financial Statements
Semiannual Report Schedule of Investments 17
SCHEDULE OF INVESTMENTS
INTERNATIONAL DISCOVERY
MAY 31, 1997 (UNAUDITED)
Shares Value
- ------------------------------------------------------------------
410,000 Internatio-Muller NV $13,206,505
(transportation)
101,000 IHC Calland N.V.(1) 5,464,297
(energy services)
322,800 Kempen & Company NV 9,859,314
(financial services)
40,000 Koninklijke Arend Groep NV 2,533,097
(furniture and furnishings)
150,000 Koninklijke Boskalis
Westminster N.V. 3,158,553
(construction and
property development)
175,151 Koninklijke Pakhoed NV 5,933,918
(transportation)
160,000 Koninklijke Van Ommeren N.V. 6,496,404
(transportation)
46,406 Nagron Nationaal
Grondbezit N.V. 4,970,516
(construction and
property development)
82,800 Ordina Beheer N.V.(1) 6,223,163
(computer software
and services)
145,000 QIAGEN N.V.(1) 5,618,750
(biotechnology)
30,000 Samas Groep N.V. 1,141,457
(office equipment
and supplies)
75,000 Schuttersveld Holding NV 3,420,463
(diversified)
20,088 Simac Techniek N.V. 1,638,576
-------------
(computer software
and services)
90,783,818
-------------
NORWAY-3.1%
250,000 Aker Maritime ASA 4,194,808
(energy services)
60,000 Blom ASA 2,169,365
(energy services)
160,000 Nordlandsbanken 3,841,671
(banking)
330,000 Tandberg Television ASA(1) 3,011,837
(communications equipment)
200,000 Tomra Systems ASA 4,577,430
-------------
(environmental services)
17,795,111
-------------
Shares Value
- ------------------------------------------------------------------
PERU-0.4%
100,000 Credicorp Limited $2,262,500
-------------
(financial services)
PHILIPPINES-0.5%
2,800,000 International Container
Terminal Services, Inc.(1) 1,512,796
(transportation)
7,418,000 Solid Group, Inc. 1,392,194
-------------
(electrical
and electronic components)
2,904,990
-------------
POLAND-1.5%
66,000 Agros Holding S.A.(1) 1,747,214
(food and beverage)
65,800 Computerland Poland S.A. 1,822,939
(computer systems)
270,000 Elektrim Spolka
Akcyjna S.A. 2,377,024
(electrical
and electronic components)
55,000 Elektrobudowa SA(1) 931,170
(electrical
and electronic components)
48,000 OPTIMUS S.A. 1,551,438
-------------
(computer systems)
8,429,785
-------------
PORTUGAL-0.7%
325,000 Companhia de Seguros
Mundial Confianca, SA(1) 4,305,732
-------------
(insurance)
SINGAPORE-1.9%
949,000 Datacraft Asia Limited 2,884,960
(communications services)
370,000 Elec & Eltek International
Company Ltd. 2,183,000
(electrical
and electronic components)
1,200,000 Parkway Holdings Ltd. 5,955,959
-------------
(real estate)
11,023,919
-------------
See Notes to Financial Statements
18 Schedule of Investments American Century Investments
SCHEDULE OF INVESTMENTS
INTERNATIONAL DISCOVERY
MAY 31, 1997 (UNAUDITED)
Shares Value
- ------------------------------------------------------------------
SWEDEN-6.5%
350,000 Investment AB Bure $4,341,366
(diversified)
430,000 Esselte AB Cl B 10,167,322
(business services
and supplies)
500,000 Getinge Industrier AB 9,076,814
(medical equipment
and supplies)
95,000 Hexagon AB 2,663,609
(diversified)
110,000 Ortivus AB Cl B(1) 4,235,416
(medical equipment
and supplies)
15,200 OXiGENE, Inc.(1) 505,400
(biotechnology)
75,833 Pricer AB Cl B(1) 2,772,884
(electrical
and electronic components)
70,000 Scandic Hotels AB(1) 1,302,410
(leisure)
150,000 Spectra-Physics AB 2,577,686
-------------
(medical equipment
and supplies)
37,642,907
-------------
SWITZERLAND-7.0%
6,000 Georg Fischer AG 8,577,495
(automobiles and auto parts)
1,000 Gurit-Heberlein AG 3,113,942
(chemicals and resins)
28,000 Rieter Holdings Ltd. 9,115,357
(machinery and equipment)
500 SIG Schweizerische
Industrie-Gesellschaft
Holding AG 1,503,892
(industrial equipment
and machinery)
21,000 Swisslog Holding AG(1) 7,430,998
(machinery and equipment)
240,000 TAG Heuer International
SA ADR(1) 3,420,000
(retail - specialty)
10,000 TEGE S.A.(1) 1,542,817
(food and beverage)
9,500 Vontobel Holding AG CI B 6,185,421
-------------
(financial services)
40,889,922
-------------
Shares Value
- ------------------------------------------------------------------
UNITED KINGDOM-12.0%
600,000 Ashtead Group plc $3,049,470
(industrial machinery
and equipment)
219,500 Azlan Group plc 2,168,218
(computer software
and services)
290,000 Biocompatibles
International plc(1) 6,180,915
(biotechnology)
350,000 Blacks Leisure Group PLC 3,095,786
(retail - apparel)
375,033 Bodycote International plc 4,580,756
(diversified)
1,140,000 Capita Group Plc 4,672,575
(business services
and supplies)
600,000 Caspian Group plc(1) 238,547
(business services
and supplies)
1,000,000 Celsis International Plc(1) 1,672,290
(pharmaceuticals)
300,000 Cobham PLC 3,221,617
(aerospace and defense)
2,500,000 Corporate Services
Group plc 7,439,231
(business services
and supplies)
100,000 Dr. Solomon's
Group Plc ADR(1) 2,031,250
(computer software
and services)
300,000 Go-Ahead Group PLC (The) 2,134,629
(transportation)
370,000 Goode Durrant plc 2,750,999
(automobiles
and auto parts)
255,000 JBA Holdings Plc 3,971,689
(computer software
and services)
225,000 J.D. Weatherspoon plc 4,860,093
(food and beverage)
700,000 London International
Group plc 1,945,267
(pharmaceuticals)
1,075,000 M.A.I.D. plc(1) 3,286,993
(business services
and supplies)
450,000 Parity plc 4,131,540
(business services
and supplies)
417,500 PizzaExpress plc 4,671,653
(restaurants)
320,000 Sage Group plc (The) 3,428,522
-------------
(computer software
and services)
69,532,040
-------------
See Notes to Financial Statements
Semiannual Report Schedule of Investments 19
SCHEDULE OF INVESTMENTS
INTERNATIONAL DISCOVERY
MAY 31, 1997 (UNAUDITED)
Shares Value
- ------------------------------------------------------------------
UNITED STATES-1.2%
260,000 Rofin-Sinar Technologies
Inc.(1) $3,997,500
(electrical
and electronic components)
145,000 Zoran Corporation(1) 2,999,688
-------------
(computer software
and services)
6,997,188
-------------
TOTAL COMMON STOCKS-90.1% 522,439,827
-------------
(Cost $438,167,202)
PREFERRED STOCKS & RIGHTS
BRAZIL-2.1%
80,000 Bompreco S.A. Supermercados
do Nordeste GDR
(Acquired 2/12/97
through 5/29/97,
Cost $1,866,375)(2) 1,816,000
(retail - food and drug)
1,500,000 Cia Riograndense Telecom(1) 2,058,383
(communications services)
80,000,000 Ericsson
Telecomunicacoes S.A. 4,483,886
(communications equipment)
66,775 Saraiva Sa-Livreiros Edit 474,068
(banking)
20,000,000 Telecomunicacoes
de Minas Gerais 3,043,438
(communications services)
248,067 Telecomunicacoes
de Minas Gerais Rights 2,218
-------------
(communications services)
11,877,993
-------------
GERMANY-3.8%
13,877 Fresenius AG 3,073,201
(medical equipment
and supplies)
80,000 Marschollek,
Lautenschlaeger
und Partner AG 19,231,897
-------------
(financial services)
22,305,098
-------------
Shares Value
- ------------------------------------------------------------------
SWITZERLAND-0.6%
6,000 Liechtenstein
Global Trust AG $3,473,461
-------------
(financial services)
TOTAL PREFERRED STOCKS & RIGHTS-6.5% 37,656,552
-------------
(Cost $20,364,086)
TEMPORARY CASH INVESTMENTS --3.4%
Repurchase Agreement,
Morgan (J.P.) & Co. Inc.,
5.50%, due 6/2/97, collateralized
by $15,849,000 par value
U.S. Treasury Notes,
11.125%, due 8/15/03
(Delivery value $19,508,938) 19,500,000
-------------
(Cost $19,500,000)
TOTAL INVESTMENT SECURITIES-100.0% $579,596,379
(Cost $478,031,288) ============
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Contracts Settlement Unrealized
to Sell Dates Value (Loss)
- ------------------------------------- ------------ ------------
14,669,664 CHF 6/30/97 $10,418,721 $(326,540)
23,725,495 DEM 6/30/97 13,937,563 (67,192)
28,057,221 FRF 6/30/97 4,878,490 (19,700)
5,624,101 GBP 6/30/97 9,215,427 (92,283)
39,674,601 NLG 6/30/97 20,715,536 (92,640)
55,997,090 SEK 6/30/97 7,242,345 (56,129)
------------- -------------
$66,408,082 $(654,484)
============= =============
(Value on Settlement Date $65,753,598)
See Notes to Financial Statements
20 Schedule of Investments American Century Investments
SCHEDULE OF INVESTMENTS
INTERNATIONAL DISCOVERY
Notes to Schedule of Investments
ADR = American Depositary Receipt
CHF = Swiss Franc
DEM = German Mark
FRF = French Franc
GBP = British Pound
GDR = Global Depositary Receipt
JPY = Japanese Yen
NLG = Netherlands Guilder
SEK = Swedish Krona
(1) Non-income producing.
(2) Security was 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 May 31, 1997, was $16,429,304, which represented 2.8% of net
assets.
See Notes to Financial Statements
Semiannual Report Schedule of Investments 21
STATEMENTS OF ASSETS AND LIABILITIES
INTERNATIONAL INTERNATIONAL
GROWTH DISCOVERY
MAY 31, 1997 (UNAUDITED)
ASSETS
Investment securities,
at value (identified cost
of $1,381,883,176 and
$478,031,288,
respectively) (Note 3) ................. $1,658,912,705 $ 579,596,379
Foreign currency holdings,
at value (identified cost of
$608,257 and $2,505,868,
respectively) .......................... 608,060 2,504,114
Cash ................................... 6,474,883 224,014
Receivable for
investments sold ....................... 34,691,539 12,812,872
Receivable for
capital shares sold .................... 650,681 114,022
Dividends
and interest receivable ................ 5,744,310 1,124,175
-------------- --------------
1,707,082,178 596,375,576
-------------- --------------
LIABILITIES
Disbursements
in excess of
demand deposit cash .................... 957,742 361,552
Payable for forward
foreign currency
exchange contracts ..................... 2,325,508 654,484
Payable for
investments purchased .................. 14,637,581 10,892,083
Payable for
capital shares redeemed ................ 2,470,977 146,337
Accrued management
fees (Note 2) .......................... 1,916,948 815,915
Distribution fees
payable (Note 2) ....................... 1,277 --
Service fees payable
(Note 2) ............................... 1,277 --
Other liabilities ...................... 3,367 6,698
-------------- --------------
22,314,677 12,877,069
-------------- --------------
Net Assets ............................. $1,684,767,501 $ 583,498,507
============== ==============
NET ASSETS CONSIST OF:
Capital
(par value and
paid-in surplus) ....................... $1,308,209,155 $ 469,150,567
Undistributed
net investment income .................. 4,364,239 702,751
Accumulated undistributed
net realized gain from
investment and foreign
currency transactions .................. 99,088,194 12,884,947
Net unrealized appreciation
on investments and
translation of
assets and liabilities
in foreign currencies
(Note 3) ............................... 273,105,913 100,760,242
-------------- --------------
$1,684,767,501 $ 583,498,507
============== ==============
INVESTOR CLASS
Net assets ............................. $1,678,633,154 $ 583,498,507
Shares outstanding ..................... 184,381,190 69,857,535
Net asset value per share .............. $ 9.10 $ 8.35
ADVISOR CLASS
Net assets ............................. $ 6,134,347 N/A
Shares outstanding ..................... 674,644 N/A
Net asset value per share .............. $ 9.09 N/A
See Notes to Financial Statements
22 Statements of Assets and Liabilities American Century Investments
STATEMENTS OF OPERATIONS
INTERNATIONAL INTERNATIONAL
GROWTH DISCOVERY
FOR THE SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
INVESTMENT INCOME
INCOME:
Dividends (net of foreign
taxes withheld
of $1,740,975
and $672,853, respectively) ............ $ 12,556,197 $ 4,893,320
Interest ............................... 1,976,138 261,836
------------- -------------
14,532,335 5,155,156
------------- -------------
EXPENSES (Note 2):
Management fees ........................ 12,216,177 4,781,049
Distribution fees
- - Advisor Class ........................ 5,801 --
Shareholder services fees
- - Advisor Class ........................ 5,801 --
Directors' fees and expenses ........... 8,506 2,905
Fees waived by manager ................. (2,105,848) (599,815)
------------- -------------
10,130,437 4,184,139
------------- -------------
NET INVESTMENT INCOME .................. 4,401,898 971,017
------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS AND FOREIGN CURRENCY (NOTE 3)
NET REALIZED GAIN (LOSS) ON:
Investments ............................ 113,154,721 17,507,790
Foreign currency transactions .......... (12,719,484) (4,294,771)
------------- -------------
100,435,237 13,213,019
------------- -------------
CHANGE IN NET UNREALIZED APPRECIATION
(DEPRECIATION) ON:
Investments ............................ 142,141,187 66,256,208
Translation of assets
and liabilities in
foreign currencies ..................... (19,130,812) (13,240,720)
------------- -------------
123,010,375 53,015,488
------------- -------------
NET REALIZED AND
UNREALIZED GAIN ON
INVESTMENTS
AND FOREIGN CURRENCY ................... 223,445,612 66,228,507
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS .............. $ 227,847,510 $ 67,199,524
============= =============
See Notes to Financial Statements
Semiannual Report Statements of Operations 23
<TABLE>
<CAPTION>
STATEMENTS OF CHANGES IN NET ASSETS
INTERNATIONAL INTERNATIONAL
GROWTH DISCOVERY
SIX MONTHS ENDED MAY 31, 1997 (UNAUDITED)
AND YEAR ENDED NOVEMBER 30, 1996
Increase in Net Assets 1997 1996 1997 1996
OPERATIONS
Net investment
<S> <C> <C> <C> <C>
income (loss) ..................... $ 4,401,898 $ (939,679) $ 971,017 $ (728,664)
Net realized gain
on investments
and foreigncurrency
transactions ...................... 100,435,237 149,229,474 13,213,019 24,627,872
Change in net unrealized
appreciation (depreciation)
on investments
and translation of assets
and liabilities in
foreign currencies ................ 123,010,375 44,073,881 53,015,488 36,489,864
--------------- --------------- --------------- ---------------
Net increase in net
assets resulting
from operations ................... 227,847,510 192,363,676 67,199,524 60,389,072
--------------- --------------- --------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income:
Investor Class ............... (5,636) (1,160,402) (862,734) (304,720)
In excess of net investment income:
Investor Class ............... -- -- -- (344,800)
From net realized gains from
investment transactions:
Investor Class ............... (140,384,716) -- (16,063,439) --
Advisor Class ................ (405,850) -- -- --
--------------- --------------- --------------- ---------------
Decrease in net assets
from distributions ................ (140,796,202) (1,160,402) (16,926,173) (649,520)
--------------- --------------- --------------- ---------------
CAPITAL SHARE TRANSACTIONS (NOTE 4)
Net increase (decrease)
in net assets from
capital share transactions ........ 251,305,698 (55,234,332) 156,096,765 202,809,697
--------------- --------------- --------------- ---------------
NET INCREASE IN NET ASSETS ........ 338,357,006 135,968,942 206,370,116 262,549,249
NET ASSETS
Beginning of period ............... 1,346,410,495 1,210,441,553 377,128,391 114,579,142
--------------- --------------- --------------- ---------------
End of period ..................... $ 1,684,767,501 $ 1,346,410,495 $ 583,498,507 $ 377,128,391
=============== =============== =============== ===============
Undistributed
net investment income ............. $ 4,364,239 $ 273,167 $ 702,751 $ 739,552
=============== =============== =============== ===============
</TABLE>
See Notes to Financial Statements
24 Statements of Changes in Net Assets American Century Investments
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997 (UNAUDITED)
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
American Century - Twentieth Century International Growth (International Growth)
and American Century - Twentieth Century International Discovery (International
Discovery) (the Funds). The Funds' investment objective is to seek capital
growth by investing primarily in equity securities. The Funds are authorized to
issue three classes of shares: the Investor Class, the Advisor Class and the
Institutional Class. The three 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 Institutional Class for International Growth and
the Advisor and Institutional Classes for International Discovery had not
commenced as of May 31, 1997. 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 portfolio securities are a component of
realized gain (loss) on foreign currency transactions and unrealized
appreciation (depreciation) on translation of assets and liabilities in foreign
currencies, respectively.
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 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 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.
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
Semiannual Report Notes to Financial Statements 25
NOTES TO FINANCIAL STATEMENTS
MAY 31, (UNAUDITED)
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 due to differences in the recognition of income and
expense items for financial reporting and tax purposes.
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
provides each Fund with investment advisory and management services in exchange
for a single, unified management fee per class. 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. A new management agreement, with fees as
indicated below, is expected to replace the existing agreement. Such agreement
is subject to shareholder approval and will be voted on in July, 1997. Results
of the vote were not available at the time this report was printed. From
December 1, 1996 through May 31, 1997, the management fees absorbed by ACIM for
International Growth and International Discovery were $2,105,848 and $599,815,
respectively.
INVESTOR CLASS
Management Effective
Agreement August 1, 1996 ADVISOR CLASS
The annual management fee for each class of International Growth is as follows:
AVERAGE NET ASSETS
First $1 billion ........... 1.90% 1.50% 1.25%
Of the next $1 billion ..... 1.25% 1.20% 0.95%
Over $2 billion ............ 1.00% 1.10% 0.85%
26 Notes to Financial Statements American Century Investments
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997 (UNAUDITED)
INVESTOR CLASS
Management Effective
Agreement August 1, 1996
The annual management fee for the Investor Class of International Discovery is
as follows:
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 0.25%
and service fee equal to 0.25%. The fees are computed daily and paid monthly
based on the Advisor Class'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
six months ended May 31, 1997, were $11,602 in International Growth.
- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
The aggregate cost of investment securities purchased (excluding short-term
investments), for the period ended May 31, 1997, for International Growth and
International Discovery, totaled $1,103,365,987 and $430,103,874, respectively.
Proceeds from investment securities sold (excluding short-term investments), for
the period ended May 31, 1997, for International Growth and International
Discovery, totaled $977,692,924 and $304,856,061, respectively.
As of May 31, 1997, accumulated net unrealized appreciation for
International Growth and International Discovery was $277,026,949 and
$100,846,343, respectively, based on the aggregate cost of investments for
federal income tax purposes of $1,381,885,753 and $478,824,981, respectively.
Accumulated net unrealized appreciation for International Growth and
International Discovery consisted of unrealized appreciation of $289,391,711 and
$107,278,995, respectively, and unrealized depreciation of $12,364,762 and
$6,432,652, respectively.
Semiannual Report Notes to Financial Statements 27
NOTES TO FINANCIAL STATEMENTS
MAY 31, 1997 (UNAUDITED)
4. CAPITAL SHARE TRANSACTIONS
There are 400,000,000 and 100,000,000 shares of the Investor Class
authorized for issuance for International Growth and International Discovery,
respectively, and 170,000,000 shares of the Advisor Class authorized for
issuance for International Growth. Sale of the Advisor Class for International
Discovery had not commenced as of this report date. All shares are $0.01 par
value. Transactions in shares of the Funds were as follows:
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH INTERNATIONAL DISCOVERY
Shares Amount Shares Amount
INVESTOR CLASS
SIX MONTHS ENDED
MAY 31, 1997:
<S> <C> <C> <C> <C>
Sold ........................ 58,611,504 $ 497,096,995 24,838,625 $ 193,039,930
Issued in reinvestment
of distributions ............ 17,809,524 137,887,225 2,369,597 16,757,072
Redeemed .................... (45,911,881) (385,655,007) (6,953,568) (53,700,237)
------------- ------------- ------------- -------------
Net increase ................ 30,509,147 $ 249,329,213 20,254,654 $ 156,096,765
============= ============= ============= =============
Year ended November 30, 1996:
Sold ........................ 49,156,430 $ 396,490,732 34,313,861 $ 235,537,402
Issued in reinvestment
of distributions ............ 149,517 1,139,329 109,339 639,633
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
============= ============= ============= =============
ADVISOR CLASS
SIX MONTHS ENDED MAY 31, 1997:
Sold ........................ 384,564 $3,248,954
Issued in reinvestment
of distributions ............ 52,435 405,850
Redeemed .................... (198,330) (1,678,319)
------------- -------------
Net increase ................ 238,669 $1,976,485
============= =============
October 2, 1996(1) through November 30, 1996:
Sold ........................ 441,628 $3,713,387
Redeemed .................... (5,653) (48,140)
------------- -------------
Net increase ................ 435,975 $3,665,247
============= =============
(1) Commencement of sale of the Advisor Class.
</TABLE>
28 Notes to Financial Statements American Century Investments
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
INTERNATIONAL GROWTH
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
Investor Class
1997(1) 1996 1995 1994 1993 1992
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C> <C>
Beginning of Period ...................... $8.73 $7.51 $7.47 $7.34 $5.79 $5.33
-------- -------- -------- -------- ------- -------
Income From
Investment Operations
Net Investment Income (Loss) ........ 0.02(2) (0.01)(2) 0.01 (0.04) (0.04) 0.06
Net Realized and Unrealized Gain
on Investment Transactions .......... 1.27 1.24 0.40 0.57 1.78 0.41
-------- -------- -------- -------- ------- -------
Total From Investment Operations .... 1.29 1.23 0.41 0.53 1.74 0.47
-------- -------- -------- -------- ------- -------
Distributions
From Net Investment Income .......... - (0.01) - - (0.04) (0.01)
In Excess of Net Investment Income .. - - - - (0.15) -
From Net Realized Gains
on Investment Transactions .......... (0.92) - (0.37) (0.40) - -
-------- -------- -------- -------- ------- -------
Total Distributions ................. (0.92) (0.01) (0.37) (0.40) (0.19) (0.01)
-------- -------- -------- -------- ------- -------
Net Asset Value, End of Period ........... $9.10 $8.73 $7.51 $7.47 $7.34 $5.79
======== ======== ======== ======== ======= =======
Total Return(3) ..................... 16.58% 16.35% 5.93% 7.28% 31.04% 8.77%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ............... 1.41%(4)(5) 1.65%(5) 1.77% 1.84% 1.90% 1.91%
Ratio of Net Investment Income
(Loss) to Average Net Assets ........ 0.59%(4) (0.07%) 0.25% (0.53%) (0.34%) 0.95%
Portfolio Turnover Rate ............. 71% 158% 169% 242% 255% 180%
Average Commission Paid per
Investment Security Traded .......... $0.0305 $0.0195 $0.0020 -(6) -(6) -(6)
Net Assets, End
of Period (in thousands) ............ $1,678,633 $1,342,608 $1,210,442 $1,316,642 $759,238 $215,346
(1) Six months ended May 31, 1997 (unaudited).
(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) Annualized.
(5) American Century Investment Management, Inc. has voluntarily waived a
portion of its management fee effective August 1, 1996 until the new
management agreement is approved, which is expected to be completed this
summer. In absence of the management fee waiver, the ratio of operating
expenses to average net assets would have been 1.70% (annualized) for the
six months ended May 31, 1997 and 1.76% for the year ended November 30,
1996.
(6) Disclosure of average commission paid per investment security traded was
not required prior to the year ended November 30, 1995.
</TABLE>
See Notes to Financial Statements
Semiannual Report Financial Highlights 29
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
INTERNATIONAL GROWTH
For a Share Outstanding Throughout the Years Ended November 30 (except as noted)
Advisor Class
1997(1) 1996(2)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period ............. $8.72 $8.41
--------- ---------
Income From Investment Operations
Net Investment Income (Loss)(3) ............. 0.02 (0.01)
Net Realized and Unrealized Gain
on Investment Transactions .................. 1.27 0.32
--------- ---------
Total From Investment Operations ............ 1.29 0.31
--------- ---------
Distributions
From Net Realized Gains
on Investment Transactions .................. (0.92) -
--------- ---------
Net Asset Value, End of Period ................... $9.09 $8.72
========= =========
Total Return(4) ............................. 16.56% 3.69%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ....................... 1.66%(5) 1.67%(5)
Ratio of Net Investment Income
(Loss) to Average Net Assets ................ 0.34%(5) (0.76)%(5)
Portfolio Turnover Rate ..................... 71% 158%
Average Commission Paid per
Investment Security Traded .................. $0.0305 $0.0195
Net Assets, End
of Period (in thousands) .................... $6,134 $3,803
(1) Six months ended May 31, 1997 (unaudited).
(2) October 2, 1996 (commencement of sale of Advisor Class) through November
30, 1996.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
</TABLE>
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)
1997(1) 1996 1995 1994(2)
PER-SHARE DATA
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period .............. $7.60 $5.70 $5.39 $5.00
---------- ---------- -------- --------
Income From Investment Operations
Net Investment Income (Loss) ................. 0.02(3) (0.02)(3) 0.03 (0.02)
Net Realized and Unrealized
Gain on Investment Transactions .............. 1.07 1.95 0.28 0.41
---------- ---------- -------- --------
Total From Investment Operations ............. 1.09 1.93 0.31 0.39
---------- ---------- -------- --------
Distributions
From Net Investment Income ................... (0.02) (0.01) - -
In Excess of Net Investment Income ........... - (0.02) - -
From Net Realized Gains on
nvestment Transactions ....................... (0.32) - - -
---------- ---------- -------- --------
Total Distributions ........................... (0.34) (0.03) - -
---------- ---------- -------- --------
Net Asset Value, End of Period ..................... $8.35 $7.60 $5.70 $5.39
========== ========== ======== ========
Total Return(4) ............................... 15.14% 34.06% 5.75% 7.80%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ......................... 1.75%(5)(6) 1.88%(6) 2.00% 2.00%(5)
Ratio of Net Investment
Income (Loss) to Average Net Assets ........... 0.43%(5) (0.31%) 0.27% (0.48%)(5)
Portfolio Turnover Rate ....................... 65% 130% 168% 56%
Average Commission Paid per
Investment Security Traded .................... $0.0047 $0.0054 $0.0040 -(7)
Net Assets, End of Period (in thousands) ...... $583,499 $377,128 $114,579 $111,202
(1) Six months ended May 31, 1997 (unaudited).
(2) April 1, 1994 (inception) through November 30, 1994.
(3) Computed using average shares outstanding throughout the period.
(4) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(5) Annualized.
(6) American Century Investment Management, Inc. has voluntarily waived a
portion of its management fee effective August 1, 1996 until the new
management agreement is approved, which is expected to be completed this
summer. In absence of the management fee waiver, the ratio of operating
expenses to average net assets would have been 2.00% (annualized) for the
six months ended May 31, 1997 and 1.99% for the year ended November 31,
1996.
(7) Disclosure of average commission paid per investment security traded was
not required prior to the year ended November 30, 1995.
</TABLE>
See Notes to Financial Statements
Semiannual Report Financial Highlights 31
NOTES
32 Notes American Century Investments
NOTES
Semiannual Report Notes 33
NOTES
34 Notes American Century Investments
SHARE CLASSES AND RETIREMENT ACCOUNT
INFORMATION
SHARE CLASSES
Until September 3, 1996, International Growth and International Discovery
issued one class of fund shares, reflecting the fact that most investors bought
their 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 increasing numbers of investors are purchasing fund shares through
financial intermediaries who are ordinarily compensated for the additional
services they provide. In September 1996, American Century began to offer three
classes of shares for many of its funds, including International Growth and
International Discovery. One class is for investors who still buy directly from
American Century, one is for investors who buy through financial intermediaries,
and the third is for large institutional customers.
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 may also be purchased after September 3, 1996. 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 IS CURRENTLY LISTED.
In addition, there is an Advisor Class, which is sold through banks,
broker-dealers, insurance companies and financial advisors. Advisor Class shares
are subject to 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. The total
expense ratio of the Advisor Class shares is 0.25% higher than the total expense
ratio of the Investor Class shares.
There is also an INSTITUTIONAL CLASS, which recognizes the relatively lower
cost of serving institutional customers and others who invest at least $5
million in an American Century fund or at least $10 million in multiple funds.
As of May 31, 1997, International Discovery had not sold any Advisor Class
shares, and neither fund had sold any Institutional Class shares. All classes of
shares represent a pro rata interest in the funds and generally have the same
rights and preferences.
RETIREMENT ACCOUNT INFORMATION
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
Exchange/Redemption 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.
Semiannual Report Share Classes and Retirement Account Information 35
BACKGROUND INFORMATION
INVESTMENT PHILOSOPHY AND 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.
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 and the first quarter of
1997, 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.
COMPARATIVE INDICES
The following indices are used in the report to serve as fund performance
comparisons. They are not investment products available for purchase.
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.
The MORGAN STANLEY EUROPE, AUSTRALIA, FAR EAST INDEX (EAFE(R)) is a widely
followed group of stocks from 20 different countries.
LIPPER INTERNATIONAL SMALL COMPANY FUNDS measures the average performance
of International Discovery's peer group, as defined and compiled by Lipper
Analytical Services, Inc. Lipper is an independent mutual fund ranking service.
FUND MANAGEMENT TEAM LEADERS
Portfolio Manager Henrik Strabo
Portfolio Manager Mark Kopinski
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 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 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.
PORTFOLIO STATISTICS
o EXPENSE RATIO- the operating expenses of the fund, expressed as a percentage
of average net assets. Shareholders pay an annual fee to the investment manager
for investment advisory and management services. The expenses and fees are
deducted from fund income, not from each shareholder account. (See Note 2 in the
Notes to Financial Statements.)
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.
Semiannual 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 816-444-3485
Fax: 816-340-7962
Internet: www.americancentury.com
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
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.
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SH-BKT-8928 Recycled
