[front cover]
MAY 31, 1999
SEMIANNUAL REPORT
AMERICAN CENTURY
[graphic of stairs]
INTERNATIONAL GROWTH
INTERNATIONAL DISCOVERY
EMERGING MARKETS
GLOBAL GROWTH
[american century logo(reg.sm)]
American
Century
[inside front cover]
Y2K TESTING EFFORTS PAY DIVIDENDS IN PREPAREDNESS
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Y2K, short for the year 2000, refers more specifically to the date change from
December 31, 1999 to January 1, 2000. This date change is significant for
computers because many were originally programmed to process dates with
two-character years -- 99 instead of 1999.
When the calendar rolls to 2000, this can create problems for computers
programmed this way because they will read the date as "00," and may interpret
it as 1900. Most companies have been working to reprogram their computer systems
with four-digit years. Reprogramming is very labor-intensive and requires
testing to ensure that there are no errors and that all lines of code were
successfully changed.
Recognizing the possible impact of the Y2K issue, our senior-level Steering
Committee, programmers, business partners and Y2K team have been working
diligently to make January 1, 2000 a non-event for American Century investors.
Currently, all of our computer systems have been modified, tested and returned
to production. We have an ongoing commitment to testing our systems with our
vendors and business partners and within the industry throughout the rest of the
year.
In March and April of this year, we participated in the Security Industry
Association's (SIA) industry-wide test and successfully processed transactions
for dates up to and beyond 2000. American Century transactions with our partner
firms were processed free of Y2K bugs. We also participated in the Market Data
Test conducted by the SIA and Financial Information Forum in May. Again, the
computer scripts were executed successfully with no Y2K-related errors.
In addition to our testing schedule, our Y2K team has developed contingency
plans. These plans will minimize the impact on our investors and help us
maintain operations in the event of any Y2K-related incidents. We will conduct
practice drills of contingency scenarios during the rest of 1999 and refine
those plans to respond quickly and effectively so that the date change is as
seamless as possible for investors. We expect the year 2000 to be business as
usual at American Century.
Year 2000 Readiness Disclosure
MINIMIZE YOUR MUTUAL FUND TAX HIT
American Century's newest equity fund, Tax-Managed Value, is designed for
long-term growth and to minimize the tax hit you take on your mutual fund
investments each year. The fund is managed to keep taxable distributions
to a minimum by using the following strategies:
* BUY AND HOLD --Low portfolio turnover helps limit realized capital gains
and takes advantage of long-term capital gains tax rates.
* OFFSET GAINS --When gains are realized in the portfolio, they are offset
with capital losses from securities sold in that tax year or losses
carried over from previous years.
* SELL HIGHER-COST SHARES FIRST --Selling shares that cost the most first
helps minimize the taxable gains incurred from a sale.
[left margin]
INTERNATIONAL GROWTH
(TWIEX)
- --------------------------------
INTERNATIONAL DISCOVERY
(TWEGX)
- --------------------------------
EMERGING MARKETS
(TWMIX)
- --------------------------------
GLOBAL GROWTH
(TWGGX)
- --------------------------------
TURN TO THE INSIDE BACK COVER OF THIS REPORT TO SEE A LIST OF AMERICAN CENTURY
FUNDS CLASSIFIED BY OBJECTIVE AND RISK.
[end left margin]
Our Message to You
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[photo of James E. Stowers III and James E. Stowers, Jr.]
James E. Stowers III, seated, with James E. Stowers, Jr.
The six months ended May 31, 1999, saw investment capital leave Europe and
move to developing economies, particularly in Asia, Russia and Latin America,
amid signs that those regions might be in the early stages of an economic
recovery. Emerging markets, which were hardest hit by the economic slowdown and
resulting financial crises that began in fall 1997, appeared to be poised for a
snap-back. At present, we believe growth companies in these regions are selling
at very attractive prices.
Against this backdrop, American Century's quartet of international funds
turned in strong results. The International Discovery, Emerging Markets, and
Global Growth funds posted double-digit returns. Although International Growth's
results trailed those of its sister funds, the fund still outperformed its
benchmark, and its long-term returns remain very robust.
We are especially pleased with the performance of our newest global fund,
Global Growth, which was introduced on December 1. As a global fund, Global
Growth has no geographical restraints and can invest anywhere in the world. The
fund's ability to capitalize on the success of U.S. companies powered its return
for the period.
On the corporate front, our focus continues to be on making it easier to do
business with us and on helping investors reach their financial goals. In March,
we consolidated all our funds under the American Century name. We believe the
American Century nameplate makes it simpler for you to identify your funds.
We have also reclassified our entire family of 71 funds, based on
investment goals and risk levels, so you can more easily choose the funds that
are right for you. A complete list of American Century funds arranged by their
new classifications is on the inside back cover of this report.
We also continue to expand the American Century international investment
team, which has doubled over the past three years. Our portfolio teams have
excellent depth, with an array of experienced managers and analysts. We remain
committed to building and maintaining a talented management group.
Finally, we redesigned and enhanced our Web site, www.americancentury.com.
There you'll find daily fund information, including price and performance data,
market and national news, and a forms center with access to the most-requested
investor forms and applications. You can also sign up to receive fund
prospectuses and shareholder reports electronically.
As always, we appreciate your continued confidence in American Century.
Sincerely,
/signature/
James E. Stowers, Jr.
Chairman of the Board and Founder
/signature/
James E. Stowers III
Vice Chairman of the Board and Chief Executive Officer
[right margin]
Table of Contents
Report Highlights ...................................................... 2
Market Perspective ..................................................... 3
INTERNATIONAL GROWTH
Performance Information ................................................ 4
Management Q&A ......................................................... 5
Schedule of Investments ................................................ 8
Financial Highlights ................................................... 48
INTERNATIONAL DISCOVERY
Performance Information ................................................ 12
Management Q&A ......................................................... 13
Schedule of Investments ................................................ 16
Financial Highlights ................................................... 51
EMERGING MARKETS
Performance Information ................................................ 21
Management Q&A ......................................................... 22
Schedule of Investments ................................................ 25
Financial Highlights ................................................... 54
GLOBAL GROWTH
Performance Information ................................................ 29
Management Q&A ......................................................... 30
Schedule of Investments ................................................ 33
Financial Highlights ................................................... 57
FINANCIAL STATEMENTS
Statements of Assets and
Liabilities ......................................................... 38
Statements of Operations ............................................... 39
Statements of Changes
in Net Assets ....................................................... 40
Notes to Financial
Statements .......................................................... 42
OTHER INFORMATION
Share Class and Retirement
Account Information ................................................. 59
Background Information
Portfolio Managers .................................................. 60
Investment Philosophy
and Policies ..................................................... 60
How Currency Returns Affect
Fund Performance ................................................. 60
Comparative Indices ................................................. 61
Glossary ............................................................... 62
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www.americancentury.com 1
Report Highlights
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MARKET PERSPECTIVE
* For the six months ended May 31, 1999, the once-moribund economies of Asia
and Latin America outpaced Europe, whose economies showed signs of slowing.
* Europe was negatively impacted by the euro's swoon. The euro was hurt by a
sluggish Germany, declining European interest rates, and a flight of money
from European growth stocks to cyclical and commodity stocks, as well as to
Asia and Latin America.
* The outlook for Europe remains bright because corporate restructurings
continue at a rapid pace.
* Asia, especially South Korea and Singapore, was bolstered by lower interest
rates, reduced debt, and export-driven growth; even Japan began a turnaround.
* Mexico's resurgence was fueled by higher oil prices, lower interest rates,
and a robust U.S. economy. Brazil rebounded after the government devalued the
real.
INTERNATIONAL GROWTH
* International Growth's Investor Class shares had a healthy return for the six
months and outperformed its benchmark, the Morgan Stanley Capital
International EAFE Index.
* International Growth's top contributors were technology-related companies,
including telecommunications firms--cellular service and cellular
communications equipment providers.
* Holdings in pharmaceutical companies dampened performance, as did the fund's
stake in banks, automobiles and auto parts manufacturers.
INTERNATIONAL DISCOVERY
* International Discovery posted impressive gains, and outpaced its benchmark.
The decision not to sell several strong growth stocks in the third quarter of
1998 was rewarded when the markets roared back.
* Fund performance was boosted by the dynamic performance of several Asian
economies, including South Korea, Singapore, and Japan.
* Telephone communications, contract manufacturers and cable television
operators were among the fund's largest holdings and also its top
contributors to performance.
EMERGING MARKETS
* Emerging Markets had a strong return and outperformed its benchmark as
emerging markets roared back.
* Fund returns were boosted by strong earnings growth in companies from a
variety of sectors in South Korea, Singapore, Mexico and India.
* Holdings in banks, telecommunications, and electronic component manufacturers
in many developing markets helped performance.
GLOBAL GROWTH
* Global Growth opened December 1, 1998, and performed well during its first
months in operation. It's life-of-fund return as of May 31, 1999, compares
favorably to the gain posted by its benchmark, the MSCI World Free Index.
* Global Growth's 50% stake in fast-growing U.S. companies helped performance.
U.S. holdings that contributed the most to results were found in the
telecommunications, Internet, media and pharmaceutical industries. In Europe,
telecommunications companies, retailers, and financial services companies
added to returns.
[left margin]
INTERNATIONAL GROWTH(1)
(TWIEX)
TOTAL RETURNS: AS OF 5/31/99
6 Months 7.03%(2)
1 Year -2.85%
INCEPTION DATE: 5/9/91
NET ASSETS: $2.8 billion(3)
INTERNATIONAL DISCOVERY(1)
(TWEGX)
TOTAL RETURNS: AS OF 5/31/99
6 Months 16.23%(2)
1 Year -0.37%
INCEPTION DATE: 4/1/94
NET ASSETS: $985.0 million(3)
EMERGING MARKETS(1)
(TWMIX)
TOTAL RETURNS: AS OF 5/31/99
6 Months 24.07%(2)
1 Year 1.88%
INCEPTION DATE: 9/30/97
NET ASSETS: $54.5 million(3)
GLOBAL GROWTH(1)
(TWGGX)
TOTAL RETURNS: AS OF 5/31/99
Since Inception 18.60%(2)
INCEPTION DATE: 12/1/98
NET ASSETS: $118.0 million(3)
(1) Investor Class.
(2) Not annualized.
(3) Includes Investor, Advisor, and
Institutional classes.
Investment terms are defined in the Glossary on page 62.
[end left margin]
2 1-800-345-2021
Market Perspective from Henrik Strabo
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[photo of Henrik Strabo]
Henrik Strabo, Chief Investment Officer of international investments at
American Century
ASSETS EXIT EUROPE
The most significant dynamic affecting the international markets for the
six months ended May 31, 1999, was the dramatic exodus of investment assets out
of Europe and into Japan and the emerging markets of Southeast Asia and Latin
America. Perhaps the most important cause of this rapid migration was the
less-than-successful launch of the euro, the new currency of the Economic and
Monetary Union (EMU). The euro faltered when EMU economies showed signs of
slowing. Germany, which accounts for one-third of EMU output, is currently
growing at less than 2% annually, and, with the exception of Italy, is the
Union's least impressive growth story. European interest rates also declined,
further undermining the euro, which had to compete with rising rates in the
U.S., where the economic boom continued virtually unabated. Finally, fears of
returning global inflation led to a flight from growth stocks to economically
sensitive cyclical and commodity stocks--and to the recovering markets of
emerging Asia and Latin America.
REGIONS ON THE MEND
Inflation concerns and the subsequent flight from growth stocks were
largely driven by the turnaround in Asia and Latin America. As these economies
bottomed out, investors feared that their revival would cause increased global
demand for commodities and infrastructure--resulting in higher prices. The
initial beneficiaries of economic rebounds are usually the commodity producers
and heavy industrials, traditional value stocks.
In Asia, South Korea and Singapore both strengthened, helped by lower
interest rates. South Korean businesses rebounded via export-led growth, a lower
overall cost structure and a reduction of heavy debt burdens. In the more
developed economy of Singapore, which did not suffer from many of the financial
excesses of its neighbors, export growth-- namely in electronics--was robust.
Even Japan, after years of economic stagnation, was on the mend. Foreigners
recognized the Japanese recovery early in the year. Foreign purchases of
Japanese shares hit record volumes during the first calendar quarter of 1999.
In Latin America, Mexico surged ahead, helped along by the rise in oil
prices, lower interest rates, and the strong pull of the resilient U.S. economy.
Brazilian financial markets also rebounded sharply after the government devalued
the real. Brazil drastically reduced interest rates, and stepped back from the
brink of financial collapse to an equilibrium that the equity markets are
rewarding.
A HEALTHY GLOBAL ECONOMY
The current global economy gives investors many more opportunities from
which to choose. Temporary setbacks aside, many constructive trends are in
place, especially in Europe, where corporate restructurings continue at a
phenomenal pace. In the long run, the euro should act as a catalyst for Europe's
burgeoning American-style equity culture and encourage the growth of the
Continent's capital markets.
[right margin]
"THE CURRENT GLOBAL ECONOMY GIVES INVESTORS MANY MORE OPPORTUNITIES FROM WHICH
TO CHOOSE."
MARKET RETURNS
FOR THE SIX MONTHS ENDED MAY 31, 1999
MSCI EUROPE 0.16%
MSCI FAR EAST 15.51%
MSCI EMERGING LATIN AMERICA 17.77%
Source: Lipper Inc.
MARKET PERFORMANCE (GROWTH OF $1.00)
FOR THE SIX MONTHS ENDED MAY 31, 1999
[data shown in line chart]
MSCI Emerging
Latin America MSCI Europe MSCI Far East
Index Index Index
11/30/98 $1.00 $1.00 $1.00
12/31/98 $0.92 $1.04 $1.03
1/31/99 $0.82 $1.04 $1.03
2/28/99 $0.87 $1.01 $1.01
3/31/99 $1.07 $1.02 $1.15
4/30/99 $1.22 $1.05 $1.22
5/31/99 $1.18 $1.00 $1.16
Value on 5/31/99
MSCI Emerging Latin America $1.18
MSCI Europe Index $1.00
MSCI Far East Index $1.16
[end right margin]
www.americancentury.com 3
International Growth--Performance
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<TABLE>
TOTAL RETURNS AS OF MAY 31, 1999
INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 5/9/91) (INCEPTION 10/2/96) (INCEPTION 11/20/97)
INTERNATIONAL MSCI EAFE INTERNATIONAL MSCI EAFE INTERNATIONAL MSCI EAFE
GROWTH (reg.tm) GROWTH (reg.tm) GROWTH (reg.tm)
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) 7.03% 4.01% 6.90% 4.01% 7.03% 4.01%
1 YEAR -2.85% 4.36% -2.97% 4.36% -2.63% 4.36%
- ---------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 16.07% 7.63% -- -- -- --
5 YEARS 12.20% 7.69% -- -- -- --
LIFE OF FUND 14.17% 8.05%(2) 17.23% 8.45%(3) 15.73% 13.63%(4)
</TABLE>
(1) Returns for periods less than one year are not annualized.
(2) Since 4/30/91, the date nearest the class's inception for which data are
available.
(3) Since 9/30/96, the date nearest the class's inception for which data are
available.
(4) Since 11/30/97, the date nearest the class's inception for which data are
available.
See pages 59-62 for information about share classes, the MSCI EAFE Index, and
returns.
GROWTH OF $10,000 OVER LIFE OF FUND
Value on 5/31/99
International Growth $29,069
MSCI EAFE $18,691
$10,000 investment made 5/9/91
[data shown in mountain chart]
International Growth MSCI EAFE
Date Value Value
5/9/91 $10,000 $10,000
6/30/91 $9,784 $9,362
9/30/91 $10,431 $10,164
12/31/91 $11,014 $10,335
3/31/92 $11,642 $9,108
6/30/92 $12,348 $9,300
9/30/92 $11,838 $9,441
12/31/92 $11,547 $9,077
3/31/93 $12,541 $10,165
6/30/93 $13,069 $11,187
9/30/93 $13,921 $11,929
12/31/93 $16,472 $12,032
3/31/94 $15,872 $12,453
6/30/94 $16,086 $13,089
9/30/94 $16,664 $13,102
12/31/94 $15,687 $12,969
3/31/95 $15,170 $13,210
6/30/95 $16,048 $13,306
9/30/95 $16,905 $13,861
12/31/95 $17,552 $14,422
3/31/96 $17,958 $14,839
6/30/96 $18,815 $15,074
9/30/96 $18,860 $15,054
12/31/96 $20,084 $15,293
3/31/97 $21,194 $15,053
6/30/97 $24,070 $17,007
9/30/97 $24,978 $16,888
12/31/97 $24,044 $15,566
3/31/98 $28,360 $17,856
6/30/98 $30,268 $18,045
9/30/98 $24,838 $15,481
12/31/98 $28,616 $18,679
3/31/99 $28,976 $18,939
5/31/99 $29,069 $18,691
The graph at left shows the growth of a $10,000 investment over the life of the
fund, while the chart below shows the fund's year-by-year performance. The MSCI
EAFE Index is provided for comparison in each graph. International Growth's
total returns include operating expenses (such as transaction costs and
management fees) that reduce returns, while the total returns of the MSCI EAFE
Index do not. The graphs are based on Investor Class shares only; performance
for other classes will vary due to differences in fee structures (see the Total
Returns table above). 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.
ONE-YEAR RETURNS OVER LIFE OF FUND (PERIODS ENDING MAY 31)
[data shown in bar chart]
International Growth MSCI EAFE Index
Date Return Return
5/31/91* 1.96% 1.05%
5/31/92 23.43% -3.37%
5/31/93 5.79% 16.40%
5/31/94 22.72% 13.57%
5/31/95 -2.89% 4.93%
5/31/96 17.13% 10.67%
5/31/97 23.36% 7.54%
5/31/98 30.30% 11.11%
5/31/99 -2.85% 4.36%
*From 5/9/91 to 5/31/91.
4 1-800-345-2021
International Growth--Q&A
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[photo of Mark Kopinski and Henrik Strabo]
An interview with Mark Kopinski (left) and Henrik Strabo, portfolio
managers on the International Growth team.
HOW DID INTERNATIONAL GROWTH PERFORM DURING THE FIRST HALF OF ITS FISCAL YEAR?
International Growth posted a healthy 7.03%* return for the six months
ended May 31, 1999. It outperformed its benchmark, the Morgan Stanley Capital
International EAFE Index (EAFE), which gained 4.01%. International Growth also
outpaced most foreign stock funds. According to Lipper, a mutual fund research
firm, the average international fund returned 4.98% for the period.
WHAT WERE THE MAJOR FACTORS INFLUENCING INTERNATIONAL GROWTH'S PERFORMANCE?
Perhaps the dominant factor was the reallocation of investment assets away
from Europe and into Asia and Latin America. In both Europe and the United
States, investors also shifted away from the high-priced growth stocks that have
been in favor for the last few years and put money in value-oriented or cyclical
stocks. This market rotation was particularly pronounced on the Continent.
Although much of Europe showed excellent promise throughout most of last year,
growth tapered off significantly in early 1999, and that impacted International
Growth's performance.
In Japan, large capitalization stocks demonstrated some early signs of
recovery during the first quarter of 1999. The restructuring bug seemed to bite
many companies and there were flurries of announcements. We remained somewhat
cautious, treating many of these announcements with a healthy skepticism. We did
identify a few growth and restructuring strategies that were credible, but on
the whole International Growth entered the period underweighted in Japan
relative to its benchmark index, and therefore was unable to benefit fully from
the Japanese resurgence. We continue to conduct fundamental research on a
company-by-company basis in Japan and will add exposure to firms that are
repositioning themselves for significant future growth.
WHICH INDUSTRIES OR STOCKS CONTRIBUTED THE MOST TO RETURNS?
Almost without exception, International Growth's top contributors were
technology-related companies, including telecommunications firms, and cellular
service and cellular communications equipment providers. Telecommunications
companies represented the largest sector weighting. As the major broadband
carriers of electronic data, telecommunication companies have benefited
enormously from increasing Internet and data traffic. In the United Kingdom,
telecommunications giant Colt Telecom Group, one of the largest competitive
local exchange network carriers in Europe, was the fund's best-performing stock.
Colt carries data for many financial service firms and recently underwent an
aggressive expansion campaign that resulted in greatly increased market
penetration. Six months ago, Colt was operating in six competitive local
exchange networks in three European countries; it now
*All fund returns referenced in this interview are for Investor Class shares.
[right margin]
"ALMOST WITHOUT EXCEPTION, INTERNATIONAL GROWTH'S TOP CONTRIBUTORS WERE
TECHNOLOGY-RELATED COMPANIES, INCLUDING TELECOMMUNICATIONS FIRMS, AND CELLULAR
SERVICE AND CELLULAR COMMUNICATIONS EQUIPMENT PROVIDERS."
PORTFOLIO AT A GLANCE
5/31/99 11/30/98
NO. OF COMPANIES 143 155
MEDIAN MARKET $9.58 $6.31
CAPITALIZATION BILLION BILLION
PORTFOLIO TURNOVER 60%(1) 190%(2)
EXPENSE RATIO (FOR
INVESTOR CLASS) 1.28%(3) 1.33%
(1) Six months ended 5/31/99.
(2) Year ended 11/30/98.
(3) Annualized.
Investment terms are defined in the Glossary on page 62.
[end right margin]
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International Growth--Q&A
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(Continued)
operates in 13 networks in eight European countries.
Mannesman AG, International Growth's largest holding, also benefited from
growth in the cellular telecommunications arena. Mannesman is a German
engineering firm that has rebuilt itself into a telecommunications powerhouse,
offering both cellular and data services. The company, known mostly for its
cellular service network in Germany, continues to expand its pan-European reach,
either through acquisition or by establishing strategic alliances. It has also
aggressively grown its electronic commerce services and high-speed data
communications division. Mannesman's telecommunications unit grew over 30% in
the first four months of 1999.
WHAT OTHER COMMUNICATIONS FIRMS CONTRIBUTED TO RESULTS DURING THE SIX MONTHS?
Nokia, a Finnish company that develops and manufactures mobile phones and
systems for cellular networks worldwide, and Vodafone Group plc, the largest
mobile telecommunications service provider in Britain, added significantly to
returns. Nokia's net revenues jumped 55% in the first quarter of 1999 alone,
driven in part by aggressive sales in Europe, the United States, and parts of
Asia, where demand for Nokia's innovative wireless communication handsets and
telecom infrastructure equipment has been robust. Vodafone has enjoyed rapid
growth in the United Kingdom, its home market, and also internationally,
particularly in the Netherlands, France and Germany. Vodafone recently announced
it would merge with Airtouch Communications (another fund holding). The merger
will give Vodafone access to the U.S. wireless market and add an extremely
important piece as the company expands into a global wireless network leader.
News of the proposed merger lifted stock prices for both Vodafone and Airtouch.
WHAT WERE SOME OF THE OTHER SECTORS OR INDUSTRIES THAT PERFORMED WELL?
Outside of the technology sector, industrial machinery manufacturers and
European retailers turned in strong performances. An example of the former is
Sidel, which makes machinery and molds for the production of specialized
polyethylene (plastic) containers for carbonated beverages, water, oil, juices,
alcohol, and detergents. Sidel's sales have been robust in the United States as
well as in markets in Asia and, to a lesser degree, South America. The company
recently developed new machinery that significantly lowers raw material cost and
can also be used for making plastic bottles for beer. Sidel stands to profit
nicely on the sale of its machinery, and, in an innovative marketing effort,
will also garner a percentage on each bottled beverage sold.
Hennes & Mauritz, a European clothing retailer, is one of the most
successful chains in Europe. It has a similar profile to the Gap in the United
States. The company possesses a phenomenal track record, continues to grow
aggressively, and consistently beats earnings estimates. The stock contributed
significantly to returns and we increased the position as earnings continued to
rise.
WHICH SECTORS OR HOLDINGS WERE DISAPPOINTING DURING THE FIRST HALF?
International Growth's three worst performing sectors were pharmaceuticals,
banks, and auto and auto parts manufacturers. However, problems in these areas
were stock- or company- specific rather than the result of fundamental industry
weakness.
At the beginning of the period, pharmaceutical companies represented just
[left margin]
TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
5/31/99 11/30/98
MANNESMANN AG 2.9% 2.3%
VIVENDI 2.0% 1.7%
TELEFONICA S.A. 1.8% 1.4%
NOKIA CORP. CL A ADR 1.7% 1.4%
BRITISH
TELECOMMUNICATIONS
PLC 1.6% 1.0%
VADAFONE GROUP PLC 1.6% 1.3%
SONY CORP. 1.5% 0.5%
KAO CORP. 1.5% 1.1%
ABB AG 1.5% --
HENNES &
MAURITZ AB CL B 1.4% 1.1%
TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
5/31/99 11/30/98
TELEPHONE
COMMUNICATIONS 14.9% 13.2%*
BANKING 9.2% 7.0%
FINANCIAL SERVICES 7.3% 11.7%
ELECTRICAL & ELECTRONIC
COMPONENTS 5.2% 3.8%*
PRINTING &
PUBLISHING 4.4% 2.9%
*Percentages have been adjusted to reflect security industry reclassification.
[end left margin]
6 1-800-345-2021
International Growth--Q&A
- --------------------------------------------------------------------------------
(Continued)
over 5% of investments. Novartis was one of the largest holdings in the fund for
quite some time, but we began to cut our weighting in response to slowing
growth. Another significant pharmaceutical/foods holding, Unilever, dampened
returns due to sluggish growth in its main European markets.
A disappointment within the banking and financial services sector was
Newcourt Credit Group, a Toronto-based business lender that originates, manages,
and sells asset-based loans (loans backed by assets such as commercial buildings
or property). The company was preparing to be acquired by CIT Group in a
proposed $4.12 billion takeover. However, unexpectedly poor first-quarter
earnings raised the possibility that the merger would not be completed, and that
took the stock down. We began to reduce our position in September 1998 and
completely eliminated the stock during the first quarter of 1999.
Volkswagen was disappointing as well. This is a classic example of a
company whose good product doesn't translate into a strong stock price. Although
the VW's automobile models are very popular in the United States and other
markets, the stock has suffered from a lack of management credibility after
executives issued a statement warning of a looming crisis in global auto demand
and sales.
WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE SIX MONTHS?
In terms of geographical changes, we increased holdings in
Asia--particularly Singapore and Korea--where earnings growth has accelerated
and we believe the potential for further growth is strong. We added to our
Japanese holdings somewhat; however, that increase was primarily the result of
augmenting the position in Sony, which has demonstrated a firm commitment to
restructure its business. We built a small position in Mexico, which is a
petroleum exporter, and whose economy was helped along by the rise in oil prices
and by the resolution of problems in the country's banking infrastructure. We
also beefed up our stake in Hong Kong and slightly trimmed holdings in both
Germany and France.
Our largest industry shift was in pharmaceuticals, which we discussed
earlier. We shaved our stake in food and beverage companies as well--earnings
have tapered off in recent months--and in retail grocery stores, an industry
that has also suffered a general slowdown.
WHAT IS YOUR OUTLOOK FOR INTERNATIONAL INVESTING IN THE SECOND HALF OF THE YEAR?
We are bullish on the long-term opportunities we're seeing in many foreign
markets. Europe continues to benefit from privatizations, corporate
restructurings, the introduction of a common currency (the euro), and structural
changes in European economies. Signs of recovery in Asia are also encouraging.
Since we believe this to be the very early stages of the rebound, we're adding
investments there very selectively. Japan must continue to move forward and show
significant progress in restructuring in order not to impede recovery in the
rest of Asia. Regardless of regional issues, we believe our bottom-up approach
and earnings growth focus should continue to lead us toward companies with good
long-term potential.
[left margin]
TYPES OF INVESTMENTS IN THE PORTFOLIO
AS OF MAY 31, 1999
[data shown in pie chart]
Preferred Stocks 1.3%
Temporary Cash Investments 3.9%
Common Stocks & Rights 94.8%
AS OF NOVEMBER 30, 1998
[data shown in pie chart]
Preferred Stocks 1.0%
Temporary Cash Investments 0.9%
Common Stocks & Rights 98.1%
INTERNATIONAL GROWTH'S INVESTMENTS BY COUNTRY
[data shown in bar chart]
5/31/99 11/30/98
U.K. 18.0% 18.0%
Japan 12.8% 10.3%
France 12.2% 13.2%
Netherlands 7.4% 8.7%
Switzerland 7.1% 8.0%
Germany 5.7% 9.5%
Italy 4.2% 5.3%
Canada 4.1% 3.5%
Other 28.5% 23.5%
[end right margin]
www.americancentury.com 7
International Growth--Schedule of Investments
- --------------------------------------------------------------------------------
This schedule lists all investments owned by the fund, as well as each
security's market value, as of the last day of the reporting period. The
securities are grouped by asset class (such as common stocks, corporate bonds,
temporary cash investments, as applicable), and some asset classes are further
broken down by industry or country.
NOTE: For securities denominated in foreign currencies, the market value is
translated into U.S. dollars based on exchange rates as of the last day of the
reporting period.
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS & RIGHTS-94.8%
AUSTRALIA--1.7%
1,372,000 Australia & New Zealand
Banking Group Ltd. $ 9,952,038
(banking)
553,000 Brambles Industries Limited 14,741,574
(diversified companies)
1,592,000 Broken Hill Proprietary Co. Ltd. 16,331,672
(metals & mining)
3,727,363 Cable & Wireless Optus Limited(1) 7,123,335
(telephone communications) -------------------
48,148,619
-------------------
AUSTRIA(2)
8,300 Bank Austria AG 424,707
(banking) -------------------
BELGIUM--0.9%
420,000 Fortis AG 13,459,367
(insurance)
282,000 UCB SA 12,134,565
(pharmaceuticals) -------------------
25,593,932
-------------------
BRAZIL--0.4%
556,000 Telesp Participacoes S.A. ADR 12,162,500
(telephone communications) -------------------
CANADA--4.1%
924,000 Bombardier Inc. Cl B 14,354,737
(aerospace & defense)
133,000 Canadian National
Railway Company 8,508,463
(railroad)
371,000 JDS Fitel Inc.(1) 25,143,584
(communications equipment)
333,000 Nortel Networks Corp. 24,975,000
(communications equipment)
726,000 Rogers Communications, Inc. Cl B(1) 14,972,626
(broadcasting & media)
173,000 Seagram Co. Ltd. (The) 8,985,188
(food & beverage)
219,000 Teleglobe Inc. 6,626,234
(telephone communications)
169,000 Toronto-Dominion Bank (The) 8,919,779
(banking) -------------------
112,485,611
-------------------
Shares Value
- --------------------------------------------------------------------------------
DENMARK--0.5%
138,900 Tele Danmark A/S $ 14,166,321
(telephone communications) -------------------
FINLAND--2.1%
645,400 Nokia Corp. Cl A ADR 45,823,400
(communications equipment)
156,000 Sampo Insurance Co. plc Cl A 4,714,687
(insurance)
369,682 Sonera Group Oyj 7,223,702
(wireless communications) -------------------
57,761,789
-------------------
FRANCE--12.2%
51,000 Accor SA 12,500,798
(leisure)
67,000 Altran Technologies SA 15,158,801
(business services & supplies)
281,623 Axa-UAP 32,431,022
(insurance)
159,851 Cap Gemini SA 23,005,902
(computer software & services)
132,000 Carrefour SA 17,305,526
(retail-general merchandise)
131,000 Compagnie Francaise d'Etudes
et de Construction Technip 14,198,252
(chemicals & resins)
167,000 Elf Aquitaine SA 24,156,620
(energy-production & marketing)
319,000 Equant NV New York Shares(1) 26,457,062
(telephone communications)
77,000 Groupe Danone 21,184,825
(food & beverage)
160,000 Pinault-Printemps-Redoute SA 27,229,295
(retail-general merchandise)
140,000 Sidel SA 19,404,833
(machinery & equipment)
174,400 Societe Generale Cl A 31,661,017
(banking)
78,300 Societe Television Francaise 1 18,768,079
(broadcasting & media)
730,927 Vivendi 54,083,226
(diversified companies) -------------------
337,545,258
-------------------
See Notes to Financial Statements
8 1-800-345-2021
International Growth--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
GERMANY--5.7%
34,076 Allianz AG $ 9,304,223
(insurance)
190,449 DaimlerChrysler AG 16,423,924
(automobiles & auto parts)
335,730 Deutsche Pfandbrief-und
Hypothekenbank AG 29,040,125
(banking)
207,200 Douglas Holding AG 8,853,273
(retail-general merchandise)
587,680 Mannesmann AG 80,223,062
(industrial equipment & machinery)
207,000 Siemens AG 13,914,266
(electrical & electronic -------------------
components)
157,758,873
-------------------
HONG KONG--1.9%
868,000 Cheung Kong (Holdings) Ltd. 7,051,678
(real estate)
1,148,000 Henderson Land Development
Company Ltd. 5,788,297
(real estate)
214,000 HSBC Holdings plc 7,009,381
(banking)
2,165,000 Swire Pacific Ltd. Cl A 10,329,798
(diversified companies)
212,000 Tommy Hilfiger Corp.(1) 15,913,250
(textiles & apparel)
2,304,000 Wharf (Holdings) Ltd. 5,867,887
(diversified companies) -------------------
51,960,291
-------------------
INDONESIA--0.3%
16,421,000 PT Telekomunikasi Indonesia 7,634,147
(telephone communications) -------------------
IRELAND--1.2%
1,204,926 Bank of Ireland 22,314,763
(banking)
595,027 CRH plc 10,157,344
(construction & property -------------------
development) 32,472,107
-------------------
ITALY--4.2%
534,500 Assicurazioni Generali 18,994,695
(insurance)
1,703,777 Banca Intesa S.p.A. 8,664,885
(financial services)
1,152,000 Mediaset SpA 9,328,326
(broadcasting & media)
2,516,000 Mediolanum SpA 17,121,983
(insurance)
1,417,300 Mondadori (Arnoldo) Editore SpA 24,592,703
(printing & publishing)
6,516,000 Seat Pagine Gialle SpA 8,861,797
(printing & publishing)
Shares Value
- --------------------------------------------------------------------------------
2,839,600 Telecom Italia SpA $ 29,237,777
(telephone communications) -------------------
116,802,166
-------------------
JAPAN--12.8%
662,000 Eisai Company, Ltd. 12,284,985
(pharmaceuticals)
3,338,000 Fuji Heavy Industries Ltd. 21,701,189
(automobiles & auto parts)
1,908,000 Fujitsu Ltd. 31,717,566
(electrical & electronic
components)
622 Japan Telecom Co. Ltd. 7,575,690
(telephone communications)
1,524,000 Kao Corp. 41,638,316
(consumer products)
1,084,000 Kirin Brewery Company, Ltd. 12,390,865
(food & beverage)
2,920 Nippon Telegraph & Telephone 28,355,347
(telephone communications)
700 NTT Data Corp. 4,631,527
(business services & supplies)
440 NTT Mobile Communication
Network, Inc. 23,934,494
(wireless communications)
33,900 Ryohin Keikaku Co. Limited 6,636,884
(retail-general merchandise)
2,065,000 Shiseido Co., Ltd. 30,418,878
(consumer products)
19,000 Shohkoh Fund & Co., Ltd. 10,569,888
(financial services)
451,000 Sony Corp. 42,162,367
(electrical & electronic
components)
939,000 Sumitomo Bank, Ltd. (The) 11,305,246
(banking)
647,000 Takeda Chemical Inds. 28,592,273
(pharmaceuticals)
526,000 Tokyo Electron Ltd. 28,872,320
(electrical & electronic
components)
500,000 Toppan Forms Co., Ltd. 9,422,705
(printing & publishing) -------------------
352,210,540
-------------------
MEXICO--2.2%
550,000 Grupo Televisa S.A. GDR(1) 22,996,875
(broadcasting & media)
356,000 Panamerican Beverages Inc. Cl A 8,254,750
(food & beverage)
359,000 Telefonos de Mexico, S.A. Cl L ADR 28,697,562
(telephone communications) -------------------
59,949,187
-------------------
NETHERLANDS--7.4%
251,277 ASR Verzekeringsgroep N.V. 17,296,403
(insurance)
256,500 Getronics N.V. 9,890,525
(computer software & services)
See Notes to Financial Statements
www.americancentury.com 9
International Growth--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
233,000 Gucci Group N.V. New York Shares $ 15,407,125
(retail-apparel)
371,000 Heineken NV 20,607,787
(food & beverage)
576,516 ING Groep N.V. 30,791,828
(financial services)
510,828 Koninklijke Ahold NV 17,807,422
(retail-food & drug)
196,000 Philips Electronics N.V.
New York Shares(1) 16,856,000
(electrical & electronic
components)
193,750 Unilever N.V. New York Shares 12,654,297
(diversified companies)
328,000 United Pan-Europe
Communications NV(1) 20,082,230
(broadcasting & media)
528,400 VNU N.V. 22,412,353
(printing & publishing)
480,212 Wolters Kluwer NV 19,292,461
(printing & publishing) -------------------
203,098,431
-------------------
PHILIPPINES--0.3%
4,070,000 San Miguel Corporation Cl B 9,145,466
(food & beverage) -------------------
SINGAPORE--1.8%
1,860,900 City Developments Limited 11,111,461
(real estate)
3,675,000 DBS Land Limited 6,519,130
(real estate)
1,154,300 Singapore Press Holdings Ltd. 15,792,162
(printing & publishing)
14,070,000 Singapore Technologies
Engineering Ltd. 15,334,261
(business services & supplies) -------------------
48,757,014
-------------------
SOUTH KOREA--1.8%
201,000 Korea Electric Power Corp. 6,152,802
(utilities)
483,310 Korea Telecom Corporation 27,555,007
(telephone communications)
142,872 Samsung Electronics 9,939,655
(electrical & electronic
components)
14,557 Samsung Electronics Rights(1) 165,720
(electrical & electronic
components)
335,000 Shinhan Bank GDR(1) 6,373,375
(banking)
12,900 SK Telecom Co. Ltd. ADR 183,825
(wireless communications) -------------------
50,370,384
-------------------
Shares Value
- --------------------------------------------------------------------------------
SPAIN--2.4%
809,000 Argentaria SA $ 18,118,205
(banking)
1,034,871 Telefonica S.A.(1) 49,589,008
(telephone communications) -------------------
67,707,213
-------------------
SWEDEN--3.3%
1,113,300 Europolitan Holdings AB 9,639,241
(wireless communications)
1,731,600 Hennes & Mauritz AB Cl B 38,840,002
(retail-apparel)
413,000 Securitas AB Cl B 5,879,772
(business services & supplies)
2,122,900 Skandia Forsakrings AB 36,391,162
(financial services) -------------------
90,750,177
-------------------
SWITZERLAND--7.1%
29,000 ABB AG(1) 41,069,172
(machinery & equipment)
149,000 Credit Suisse Group 25,851,966
(financial services)
12,477 Julius Baer Holding AG 37,741,015
(financial services)
12,300 Nestle S.A. 22,105,935
(food & beverage)
14,755 Novartis AG 21,407,719
(pharmaceuticals)
31,798 Swisscom AG(1) 11,450,486
(telephone communications)
130,000 UBS AG 37,620,716
(banking) -------------------
197,247,009
-------------------
UNITED KINGDOM--18.0%
2,818,238 Amvescap Plc 25,724,017
(financial services)
431,000 AstraZeneca Group plc 17,123,412
(pharmaceuticals)
649,000 Barclays PLC 19,673,498
(banking)
2,285,000 BBA Group plc 16,136,564
(diversified companies)
2,656,250 British Telecommunications plc 44,279,830
(telephone communications)
2,504,000 Cable & Wireless
Communications plc(1) 23,777,998
(telephone communications)
1,037,300 Capita Group Plc 10,257,171
(business services & supplies)
1,715,716 COLT Telecom Group plc(1) 36,211,547
(telephone communications)
765,000 Diageo plc 8,042,340
(food & beverage)
787,776 Dixons Group plc 14,141,472
(retail-specialty)
See Notes to Financial Statements
10 1-800-345-2021
International Growth--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
681,319 Energis plc(1) $ 16,430,915
(telephone communications)
469,000 Glaxo Wellcome plc 13,158,101
(pharmaceuticals)
1,360,000 Imperial Tobacco Group plc 15,288,409
(tobacco)
4,411,000 Invensys plc 20,095,814
(industrial)
1,464,200 Lloyds TSB Group plc 19,343,748
(financial services)
986,715 Logica plc 9,148,640
(computer software & services)
773,000 National Westminster Bank PLC 17,725,920
(banking)
998,000 Next Plc 11,594,559
(retail-general merchandise)
816,514 Orange plc(1) 11,297,013
(wireless communications)
1,045,000 Pearson plc 19,913,588
(printing & publishing)
446,754 Provident Financial plc 6,624,692
(financial services)
2,280,000 Standard Chartered plc 34,484,432
(banking)
5,639,000 TeleWest Communications plc(1) 24,223,009
(broadcasting & media)
2,277,200 Vodafone Group plc 43,358,005
(wireless communications)
2,242,200 WPP Group plc 18,096,357
(business services & supplies) -------------------
496,151,051
-------------------
UNITED STATES--2.5%
228,000 AirTouch Communications, Inc.(1) 22,914,000
(wireless communications)
145,500 Comverse Technology, Inc.(1) 9,825,797
(communications equipment)
334,500 Global TeleSystems Group, Inc.(1) 25,390,641
(telephone communications)
160,000 Schlumberger Ltd. 9,630,000
(energy-services) -------------------
67,760,438
-------------------
TOTAL COMMON STOCKS & RIGHTS 2,618,063,231
(Cost $2,070,504,971) -------------------
Shares Value
- --------------------------------------------------------------------------------
PREFERRED STOCKS-1.3%
BRAZIL
590,270,000 Centrais Electricas Brasileiras
S.A. Cl B $ 12,371,132
(utilities)
553,600,000 Embratel Participacoes S.A. 7,671,132
(telephone communications)
107,680,000 Petroleo Brasileiro S.A. 15,169,700
(energy-production & marketing) -------------------
TOTAL PREFERRED STOCKS 35,211,964
(Cost $40,354,251) -------------------
TEMPORARY CASH INVESTMENTS-3.9%
Repurchase Agreement, Morgan Stanley
Group, Inc., (U.S. Treasury obligations),
in a joint trading account at 4.77%,
dated 5/28/99, due 6/1/99
(Delivery value $4,202,226) 4,200,000
Repurchase Agreement, State Street Boston
Corp., (U.S. Treasury obligations), in a joint
trading account at 4.77%, dated 5/28/99,
due 6/1/99 (Delivery value $104,355,279) 104,300,000
-------------------
TOTAL TEMPORARY CASH INVESTMENTS 108,500,000
(Cost $108,500,000) -------------------
TOTAL INVESTMENT SECURITIES-100.0% $2,761,775,195
(Cost $2,219,359,222) ===================
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Contracts Settlement Unrealized
to Sell Date Value Gain/(Loss)
- --------------------------------------------------------------------------------
15,359,047 CHF 6/30/99 $ 10,086,832 $ 60,396
186,518,101 EURO 6/30/99 194,736,648 1,330,774
33,987,010 GBP 6/30/99 54,408,139 (114,740)
7,446,429,601 JPY 6/30/99 61,510,240 (58,376)
39,533,677 SEK 6/30/99 4,601,036 24,734
---------------------------------------
$325,342,895 $ 1,242,788
=======================================
(Value on Settlement Date $326,585,683)
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
CHF = Swiss Franc
GBP = British Pound
GDR = Global Depositary Receipt
JPY = Japanese Yen
SEK = Swedish Krona
(1) Non-income producing.
(2) Investments in country were less than 0.05% of the total investment
securities.
See Notes to Financial Statements
www.americancentury.com 11
International Discovery--Performance
- --------------------------------------------------------------------------------
<TABLE>
TOTAL RETURNS AS OF MAY 31, 1999
INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 4/1/94) (INCEPTION 4/28/98) (INCEPTION 1/2/98)
INTERNATIONAL MSCI EAFE INTERNATIONAL MSCI EAFE INTERNATIONAL MSCI EAFE
DISCOVERY (reg.tm) DISCOVERY (reg.tm) DISCOVERY (reg.tm)
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) 16.23% 4.01% 16.16% 4.01% 16.32% 4.01%
1 YEAR -0.37% 4.36% -0.65% 4.36% -0.28% 4.36%
- -----------------------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
3 YEARS 19.04% 7.63% -- -- -- --
5 YEARS 16.97% 7.69% -- -- -- --
LIFE OF FUND 18.55% 8.18% 5.57% 3.86%(2) 21.63% 13.79%(3)
</TABLE>
(1) Returns for periods less than one year are not annualized.
(2) Since 4/30/98, the date nearest the class's inception for which data are
available.
(3) Since 12/31/97, the date nearest the class's inception for which data are
available.
See pages 59-62 for information about share classes, the MSCI EAFE Index, and
returns.
GROWTH OF $10,000 OVER LIFE OF FUND
Value on 5/31/99
International Discovery $24,014
MSCI EAFE $15,009
$10,000 investment made 4/1/94
[data shown in mountain chart]
International Discovery MSCI EAFE
Date Value Value
4/1/94 $10,000 $10,000
6/30/94 $10,760 $10,511
9/30/94 $11,420 $10,522
12/31/94 $10,760 $10,414
3/31/95 $10,100 $10,608
6/30/95 $11,020 $10,685
9/30/95 $11,800 $11,131
12/31/95 $11,825 $11,582
3/31/96 $12,931 $11,916
6/30/96 $14,480 $12,105
9/30/96 $14,561 $12,089
12/31/96 $15,513 $12,281
3/31/97 $16,714 $12,088
6/30/97 $18,295 $13,657
9/30/97 $19,792 $13,562
12/31/97 $18,224 $12,500
3/31/98 $21,958 $14,339
6/30/98 $23,590 $14,491
9/30/98 $18,893 $12,432
12/31/98 $21,478 $15,000
3/31/99 $22,713 $15,208
5/31/99 $24,014 $15,009
The graph at left shows the growth of a $10,000 investment over the life of the
fund, while the chart below shows the fund's year-by-year performance. The MSCI
EAFE Index is provided for comparison in each graph. International Discovery's
total returns include operating expenses (such as transaction costs and
management fees) that reduce returns, while the total returns of the MSCI EAFE
Index do not. The graphs are based on Investor Class shares only; performance
for other classes will vary due to differences in fee structures (see the Total
Returns table above). 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.
ONE-YEAR RETURNS OVER LIFE OF FUND (PERIODS ENDING MAY 31)
[data shown in bar chart]
International Discovery MSCI EAFE Index
Date Return Return
5/31/94* 9.80% 3.64%
5/31/95 -2.37% 4.93%
5/31/96 33.00% 10.67%
5/31/97 23.42% 7.54%
5/31/98 36.97% 11.11%
5/31/99 -0.37% 4.36%
*From 4/1/94 to 5/31/94.
12 1-800-345-2021
International Discovery--Q&A
- --------------------------------------------------------------------------------
[photo of Brian Brady, Henrik Strabo and Mark Kopinski]
An interview with Brian Brady (left), Henrik Strabo, and Mark Kopinski,
portfolio managers on the International Discovery team.
HOW DID THE FUND PERFORM FOR THE SIX MONTHS ENDED MAY 31, 1999?
International Discovery posted a very healthy 16.23%* return, compared to
the much smaller 4.01% posted by its benchmark, the Morgan Stanley Capital
International EAFE Index.
One important factor to note is that the EAFE Index is comprised primarily
of large capitalization stocks, while International Discovery invests in much
smaller companies. As a result, the fund's performance will frequently differ
from that of the index.
WHICH FACTORS HAD THE GREATEST IMPACT ON PERFORMANCE OVER THE LAST SIX MONTHS?
Our decision not to sell several strong growth companies during the
tumultuous third quarter of 1998 --which was roiled by global upheaval--was
rewarded after the Federal Reserve lowered interest rates three times later in
the year. These growth companies were the first to roar back when the world
economy began to stabilize and improve later in the year. We also began to see a
turnaround in the fundamentals of companies in Asia and increased our weightings
there. Since we invest in smaller capitalization companies that are highly
dependent on local economies--few small-cap names are world-class
exporters--it's crucial that we ascertain the strength of local demand before we
invest in a company. Holdings were increased in South Korea, Singapore, and even
Japan, whose specialty retail sector showed the first signs of recovery.
After the Asian financial meltdown in 1997, Korea was one of the first
countries to focus on restructuring its economy. We saw statistical evidence of
this restructuring as Korea's industrial productivity picked up and the
country's interest rates began declining. Although corporate Korea, as a whole,
has yet to fully embrace significant reform, small- and medium-sized businesses
have been the first to restructure and create new growth.
We found opportunities in Singapore as well, where lower interest rates
gave a boost to the interest rate-sensitive financial services and real estate
sectors. Singapore also has a number of high-quality, high-tech companies such
as Datacraft Asia Ltd. and Natsteel Electronics.
We started to see a slowdown in European earnings growth, especially in
Germany, and we reduced some of our holdings. International-Mueller NV and
Sartorius AG are companies that posted slower growth. However, more than 53% of
the fund is still invested in European growth stocks.
WERE THERE SPECIFIC INVESTMENT THEMES THAT PROPELLED THE BEST PERFORMING STOCKS
OR SECTORS?
Since the European telecommunications industry was deregulated in 1998, the
sector has attracted several entrepreneurial companies, which have spent
*All fund returns referenced in this interview are for Investor Class shares.
[right margin]
"SINCE WE INVEST IN SMALLER CAPITALIZATION COMPANIES THAT ARE HIGHLY DEPENDENT
ON LOCAL ECONOMIES-- FEW SMALL-CAP NAMES ARE WORLD-CLASS EXPORTERS--IT'S CRUCIAL
THAT WE ALSO ASCERTAIN THE STRENGTH OF LOCAL DEMAND BEFORE WE INVEST IN A
COMPANY."
PORTFOLIO AT A GLANCE
5/31/99 11/30/98
NO. OF COMPANIES 159 176
MEDIAN MARKET $899 $593
CAPITALIZATION MILLION MILLION
PORTFOLIO TURNOVER 55%(1) 178%(2)
EXPENSE RATIO (FOR
INVESTOR CLASS) 1.59%(3) 1.64%
(1) Six months ended 5/31/99.
(2) Year ended 11/30/98.
(3) Annualized.
Investment terms are defined in the Glossary on page 62.
[end right margin]
www.americancentury.com 13
International Discovery--Q&A
- --------------------------------------------------------------------------------
(Continued)
the last few years investing in the requisite hardware and optical fiber
networks. This is enabling them to compete directly with the old telephone
monopolies, such as Deutsche Telekom AG. Three fund holdings--Viatel, Omnicom,
and Global TeleSystems--are now offering voice and data services at very
competitive prices in rapidly expanding markets. Growing Internet usage is also
helping to further expand demand for these services. Our top performer, Viatel,
has one of the largest pan-European data networks. The company's fortunes are
growing as evidenced by revenues which rose 190% to $61.6 million in the first
quarter of 1999.
Another theme boosting sales and earnings among our holdings is the effort
of major corporations to reduce costs by outsourcing manufacturing of
telecommunications and electronic components to contract manufacturers such as
Canadian-based Celestica and Singapore-based Natsteel Electronics. After a firm
designs a high-tech product, it often subcontracts the manufacturing to an
outsourcing company that can achieve economies of scale by building parts for
many companies, and that in turn, lowers the product's cost. For example,
Celestica recently was selected to provide most of Cabletron Systems'
electronics manufacturing. Cabletron is a provider of computer networking
solutions to companies worldwide. On the strength of new contracts and
acquisitions, Celestica's first quarter sales jumped 46% to $1.08 billion.
Outsourcing also is driving sales and earnings at India-based Satyam Computer
Services, which does computer programming and Y2K computer glitch fixes for
companies around the globe.
Another theme that contributed to returns was the expanding market for
cable television. Cable television operators in Europe now realize that they can
upgrade their existing networks to offer customers additional services, such as
Internet and local and long-distance telephone services. One of our best
performers, United International Holdings, owns several cable and telephone
companies worldwide. One of its subsidiaries, publicly traded UPC, operates the
largest group of cable networks in Europe. These networks provide cable
television, phone service, high-speed Internet access, and programming services
in 10 European countries and Israel. In the first quarter, UPC announced it was
expanding into new markets through the purchase of cable companies in the
Netherlands, France, and Slovakia.
WHICH STOCKS DID NOT LIVE UP TO YOUR EXPECTATIONS?
Our largest holding, German financial services company Marschollek,
Lautenschlaeger und Partner, had disappointing stock price performance. Nothing
has changed fundamentally, however. In fact, earnings have been strong and well
above expectations. Thus we are willing to wait out short-term underperformance.
Also, we believe there's still potential upside in both Marschollek's life
insurance and asset management segments.
Netherlands-based information technology consultant Simac Techniek--a
strong performer for many years--was hurt by unexpected losses at the company's
German and British subsidiaries.
Another disappointment was British-based pharmaceutical company Skyepharma,
which uses proprietary technology to develop controlled-release
[left margin]
TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
5/31/99 11/30/98
MARSCHOLLEK,
LAUTENSCHLAEGER
UND PARTNER AG 3.4% 4.5%
CGI GROUP, INC. 2.4% 2.1%
VIATEL, INC. 2.2% 0.6%
ESAT TELECOM
GROUP PLC ADR 2.0% 1.8%
UNITED INTERNATIONAL
HOLDINGS, INC. CL A 2.0% --
HAVAS ADVERTISING SA 1.9% 1.7%
GLOBAL TELESYSTEMS
GROUP, INC. 1.8% 1.0%
DATACRAFT ASIA
LIMITED 1.6% 0.4%
KEMPEN &
COMPANY NV 1.5% 1.4%
NH HOTELES, S.A. 1.5% --
TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
5/31/99 11/30/98
COMPUTER SOFTWARE
& SERVICES 14.4% 8.9%*
BANKING 10.4% 9.0%*
TELEPHONE
COMMUNICATIONS 8.6% 4.5%
FINANCIAL SERVICES 8.3% 13.0%*
BUSINESS SERVICES
& SUPPLIES 7.5% 9.3%
*Percentage has been adjusted to reflect
security industry reclassification.
[end left margin]
14 1-800-345-2021
International Discovery--Q&A
- --------------------------------------------------------------------------------
(Continued)
versions of existing drugs for major pharmaceutical companies. Skyepharma's
earnings were hurt by the delay in its version of SmithKline Beecham's Paxil,
the world's second-best-selling antidepressant. Some investors have grown
impatient, but we still have confidence in management and are willing to wait
until the proposed fourth quarter launch because the new drug's potential is
great. Paxil's annual sales are more than $1 billion.
Besides disappointments in individual stocks, our European holdings as a
whole were hurt by the 9% decline in the value of the euro since its
introduction in January.
WHAT CHANGES DID YOU MAKE IN THE PORTFOLIO DURING THE PERIOD?
A major purchase was Kookmin Bank, Korea's largest retail bank. Kookmin
weathered the economic crisis well because of its conservative mortgage lending
practices and is recovering strongly with the economy. Kookmin acquired Korea
Long Term Credit Bank in 1988, assuming its troubled loan book, but gaining
access to a very large corporate client base. We also invested in Sembcorp
Logistics, a company that has sold off a number of unprofitable subsidiaries in
order to focus on its expanding outsourcing business. Earnings growth is
beginning to expand and the company is in discussions on a number of other
contracts.
Another new holding is software developer Open Text. The company's main
product, Livelink, is a software application similar to LotusNotes, but Livelink
also gives users the ability to communicate across intranets, extranets, and the
Internet. Livelink software has an installed base of three million users
worldwide at 3,600 companies. Open Text is growing at a rapid clip. For its
third fiscal quarter ended March 31, 1999, license revenues were up 87% to $14.3
million.
WHAT IS YOUR OUTLOOK FOR INTERNATIONAL INVESTING GOING FORWARD?
We continue to be positive on the global outlook, especially with Asia now
entering a recovery phase. The world markets are stable, economic growth is
healthy, and inflation is benign. We feel this is a great environment to search
the globe for smaller, fast-growing companies that are well positioned for
tomorrow's opportunities and challenges. With companies in both Asia and Latin
America beginning to show signs of earnings growth, we expect to further broaden
the portfolio as we uncover new and exciting investment ideas.
[right margin]
TYPES OF INVESTMENTS IN THE PORTFOLIO
AS OF MAY 31, 1999
[data shown in pie chart]
Preferred Stocks 5.4%
Temporary Cash Investments 8.0%
Common Stocks & Rights 86.6%
AS OF NOVEMBER 30, 1998
[data shown in pie chart]
Preferred Stocks 8.0%
Temporary Cash Investments 7.7%
Common Stocks & Rights 84.3%
INTERNATIONAL DISCOVERY'S INVESTMENTS BY COUNTRY
[data shown in bar chart]
5/31/99 11/30/98
United States* 16.3% 11.8%
U.K. 9.0% 11.3%
Germany 7.5% 8.3%
Japan 6.5% 5.4%
Canada 6.4% 4.9%
Netherlands 6.3% 10.5%
Singapore 5.4% 1.4%
France 5.1% 7.3%
Switzerland 4.3% 6.8%
Italy 4.1% 4.1%
Other 29.1% 28.2%
*Includes temporary cash investments.
[end right margin]
www.americancentury.com 15
International Discovery--Schedule of Investments
- --------------------------------------------------------------------------------
This schedule lists all investments owned by the fund, as well as each
security's market value, as of the last day of the reporting period. The
securities are grouped by asset class (such as common stocks, corporate bonds,
temporary cash investments, as applicable), and some asset classes are further
broken down by industry or country.
NOTE: For securities denominated in foreign currencies, the market value is
translated into U.S. dollars based on exchange rates as of the last day of the
reporting period.
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS & RIGHTS-86.6%
AUSTRALIA--1.1%
1,619,000 AAPT Limited(1) $ 5,850,200
(telephone communications)
322,000 Computershare Limited(1) 2,941,393
(computer software & services)
55,162 International Contract
Manufacturing Limited(1) 48,212
(communications equipment)
3,287,000 LibertyOne Limited(1) 1,843,793
(computer software & services) -------------------
10,683,598
-------------------
AUSTRIA--0.4%
52,000 VA Technologie AG 4,362,440
(business services & supplies) -------------------
BELGIUM--1.0%
76,261 Telinfo NV 9,584,733
(telephone communications)
7,626 Telinfo NV-STRIPS(1) 159
(telephone communications) -------------------
9,584,892
-------------------
BERMUDA--0.2%
106,000 RSL Communications, Ltd. Cl A(1) 2,391,625
(telephone communications) -------------------
BRAZIL--0.6%
264,000 Unibanco-Uniao de Bancos
Brasileiros S.A. GDR(1) 5,956,500
(banking) -------------------
CANADA--6.4%
1,059,700 CGI Group, Inc.(1) 23,040,864
(business services & supplies)
93,700 Cogeco Cable, Inc. 1,926,061
(broadcasting & media)
265,166 Dorel Industries Inc. Cl B(1) 5,936,351
(furniture & furnishings)
401,600 Open Text Corp.(1) 12,135,850
(computer software & services)
231,000 QLT PhotoTherapeutics Inc.(1) 10,162,715
(pharmaceuticals)
42,000 QLT PhotoTherapeutics Inc. ADR(1) 1,836,188
(pharmaceuticals)
167,000 TLC The Laser Center Inc.(1) 7,327,125
(healthcare) -------------------
62,365,154
-------------------
Shares Value
- --------------------------------------------------------------------------------
CROATIA--0.4%
248,072 Pliva d.d. GDR $ 4,018,766
(pharmaceuticals) -------------------
DENMARK--0.6%
91,595 Vestas Wind Systems A/S(1) 6,287,693
(utilities) -------------------
EGYPT--0.8%
534,938 Egyptian Mobile Phone Network(1) 8,017,616
(wireless communications) -------------------
FINLAND--1.1%
34,000 Pohjola Group Insurance Corp. Cl B 1,559,056
(insurance)
255,160 Tieto Corp. Cl B 8,908,152
(computer software & services) -------------------
10,467,208
-------------------
FRANCE--5.1%
23,000 Altran Technologies SA 5,203,768
(business services & supplies)
25,494 Belvedere S.A.(1) 1,972,716
(food & beverage)
7,411 Clarins 637,178
(consumer products)
9,800 Galeries Lafayette 14,196,167
(retail-general merchandise)
43,482 GFI Informatique(1) 5,301,828
(financial services)
94,619 Havas Advertising SA 18,488,848
(broadcasting & media)
16,000 NRJ SA 3,418,252
(broadcasting & media) -------------------
49,218,757
-------------------
GERMANY--2.7%
12,000 Aixtron AG 2,626,218
(machinery & equipment)
70,411 DIS Deutscher Industrie Service AG 3,522,184
(business services & supplies)
118,000 FortuneCity.com, Inc.(1) 2,176,634
(computer software & services)
120,000 PrimaCom AG(1) 4,877,262
(broadcasting & media)
118,500 SGL CARBON Aktiengesellschaft(1) 8,274,150
(electrical & electronic
components)
55,000 Sixt AG 4,040,937
(business services & supplies) -------------------
25,517,385
-------------------
See Notes to Financial Statements
16 1-800-345-2021
International Discovery--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
GREECE--2.1%
118,705 Delta Informatics S.A. $ 5,519,038
(computer software & services)
136,130 Ethniki General Insurance Co.(1) 8,249,774
(insurance)
54,271 National Bank of Greece S.A. 3,784,892
(banking)
57,336 Panafon SA(1) 1,424,805
(wireless communications)
63,500 Piraeus Bank S.A. 1,863,036
(banking) -------------------
20,841,545
-------------------
HONG KONG--0.9%
1,700,000 Dao Heng Bank Group Ltd. 6,598,536
(banking)
695,000 Wing Hang Bank Ltd. 1,962,733
(banking) -------------------
8,561,269
-------------------
INDIA--1.7%
10,000 Corporation Bank 18,583
(banking)
218,036 Hero Honda Motors Ltd. 4,938,098
(leisure)
550 Indian Hotels Company Limited 4,222
(leisure)
266 Larsen & Toubro Ltd. 1,399
(diversified companies)
49,275 NIIT Limited 2,077,448
(computer software & services)
96,000 Pentafour Software & Exports Ltd. 2,285,714
(computer software & services)
242,000 Satyam Computer 7,560,743
(computer software & services) -------------------
16,886,207
-------------------
IRELAND--3.4%
3,762,556 Anglo Irish Bank Corp. plc 10,333,165
(banking)
355,000 DCC plc 2,885,713
(diversified companies)
526,900 Esat Telecom Group PLC ADR(1) 19,462,369
(telephone communications) -------------------
32,681,247
-------------------
ISRAEL--1.3%
142,100 Fundtech Ltd.(1) 4,591,606
(computer software & services)
99,000 Gilat Satellite Networks Ltd.(1) 5,234,625
(communications equipment)
71,000 Orbotech Ltd.(1) 3,053,000
(control & measurement) -------------------
12,879,231
-------------------
Shares Value
- --------------------------------------------------------------------------------
ITALY--4.1%
522,174 Banca Popolare
Commercio e Industria $ 11,890,412
(banking)
326,341 Banca Popolare di Brescia 12,872,644
(banking)
179,000 Banca Popolare di Lodi 1,949,394
(banking)
560,000 Gruppo Editoriale L'Espresso 9,220,943
(printing & publishing)
5,447,600 Premafin Finanziaria S.p.A.(1) 3,451,748
(insurance) -------------------
39,385,141
-------------------
JAPAN--6.5%
10,200 Bellsystem 24, Inc. 3,491,915
(business services & supplies)
56,000 Benesse Corporation 4,820,475
(education)
114,000 Data Communication System Co. 4,080,978
(computer software & services)
319,000 DeoDeo Corporation 3,150,228
(retail-specialty)
8,000 Don Quijote Co., Ltd.(1) 2,304,242
(retail-general merchandise)
17,512 Fancl Corp. 2,060,829
(consumer products)
48,000 Fast Retailing Co. Ltd. 2,330,576
(retail-apparel)
29,000 Fuji Seal, Inc. 2,625,190
(packaging & containers)
131,000 Fujicco Co., Ltd. 2,253,137
(food & beverage)
159,500 Homac Corp. 3,307,740
(retail-general merchandise)
75,000 Meitec 2,296,013
(computer software & services)
39,000 Nippon System Development 1,794,099
(computer software & services)
259,000 Skylark Co., Ltd. 4,838,333
(restaurants)
83,000 Sumisho Computer Systems Corp. 2,773,156
(computer software & services)
78,400 Tomy Company, Ltd. 5,238,925
(consumer products)
95,000 Toyo Information Systems Co., Ltd. 2,572,110
(business services & supplies)
57,000 UNION TOOL CO. 3,611,900
(machinery & equipment)
68,700 World Co., Ltd. 4,144,106
(retail-apparel)
138,000 Yamada Denki 5,712,381
(retail-specialty) -------------------
63,406,333
-------------------
See Notes to Financial Statements
www.americancentury.com 17
International Discovery--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
LIECHTENSTEIN--0.6%
1,470 Verwaltungs-und Privat-Bank AG $ 6,236,684
(banking) -------------------
MEXICO--1.0%
703,000 Corporacion GEO, S.A. de C.V.
Series B(1) 2,725,844
(real estate)
315,000 Grupo Elektra, S.A. de C.V. GDR 1,712,812
(retail-general merchandise)
2,925,000 Grupo Financiero Banorte
S.A. de C.V. Cl O(1) 3,723,275
(financial services)
765,800 Hylsamex S.A.(1) 1,687,757
(steel) -------------------
9,849,688
-------------------
NETHERLANDS--6.3%
366,581 Aalberts Industries N.V. 8,022,680
(metals & mining)
91,200 Airspray NV(1) 2,262,049
(packaging & containers)
317,000 Athlon Groep N.V. 8,060,822
(business services & supplies)
172,200 IHC Caland N.V. 6,774,548
(energy-services)
278,968 Kempen & Company NV 14,943,342
(financial services)
254,110 Ordina N.V.(1) 6,435,144
(computer software & services)
80,000 QIAGEN N.V.(1) 5,645,000
(biotechnology)
178,553 Unique International NV 4,075,130
(business services & supplies)
87,037 Unit 4(1) 1,773,295
(computer software & services)
43,566 Van der Moolen Holding N.V. 2,833,104
(financial services) -------------------
60,825,114
-------------------
NORWAY--0.5%
358,000 Tandberg ASA(1) 4,799,777
(communications equipment) -------------------
PHILIPPINES--0.4%
1,442,240 Equitable Banking Corp.(1) 3,619,814
(banking) -------------------
POLAND--0.3%
100,392 Softbank S.A. GDR 3,237,642
(computer software & services) -------------------
Shares Value
- --------------------------------------------------------------------------------
PORTUGAL--1.5%
534,604 Banco Mello, S.A. $ 4,930,667
(banking)
337,000 Companhia de Seguros
Mundial Confianca, SA(1) 9,686,221
(insurance) -------------------
14,616,888
-------------------
SINGAPORE--5.4%
4,280,000 Datacraft Asia Limited 15,236,800
(computer software & services)
4,523,800 Keppel Bank 9,913,023
(banking)
3,309,000 Keppel Land Ltd.(1) 5,620,504
(real estate)
3,695,000 Keppel Telecommunications
& Transportation Ltd. 5,055,188
(telephone communications)
1,616,000 Natsteel Electronics Ltd. 5,386,667
(electrical & electronic
components)
1,693,000 Sembcorp Logistics Limited(1) 5,005,391
(transportation)
1,653,000 Singapore Land Limited 4,542,157
(real estate)
1,613,000 Wing Tai Holdings Ltd. 1,814,041
(real estate) -------------------
52,573,771
-------------------
SOUTH KOREA--3.1%
30,700 Dacom Corp. 2,216,064
(telephone communications)
6,598 Dacom Corp. Rights(1) 144,662
(telephone communications)
57,410 Daehan City Gas Co. 1,752,534
(energy-services)
286,000 Housing & Commercial Bank,
Korea(1) 7,838,259
(banking)
351,000 Kookmin Bank 5,313,024
(banking)
83,630 Seoul City Gas Co., Ltd. 2,743,355
(energy-services)
171,000 Shinsegae Department Store Co. 7,642,619
(retail-general merchandise)
60,000 Sindo Ricoh Co. 2,529,831
(office equipment & supplies) -------------------
30,180,348
-------------------
SPAIN--1.5%
1,103,600 NH Hoteles, S.A.(1) 14,088,930
(leisure) -------------------
SWEDEN--2.8%
84,000 Enea Data AB 1,396,014
(computer software & services)
223,000 IBS AB(1) 4,354,001
(computer software & services)
See Notes to Financial Statements
18 1-800-345-2021
International Discovery--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
195,820 Icon Medialab International AB(1) $ 7,282,515
(computer software & services)
897,158 Mandator AB 6,151,702
(computer software & services)
311,000 Modern Times Group MTG AB Cl B(1) 6,831,193
(broadcasting & media)
155,216 Sigma AB Cl B 1,208,609
(computer software & services) -------------------
27,224,034
-------------------
SWITZERLAND--4.3%
3,750 Bank Sarasin & Cie Cl B 6,334,501
(banking)
9,125 Georg Fischer AG 2,975,251
(machinery & equipment)
1,030 Kudelski SA 3,877,631
(electrical & electronic
components)
1,460 Moevenpick Holding AG Bearer 669,133
(leisure)
15,590 PubliGroupe S.A. 9,492,716
(business services & supplies)
37,000 Swisslog Holding AG 4,360,494
(machinery & equipment)
30,000 TAG Heuer International SA(1) 2,779,324
(retail-specialty)
6,630 Vontobel Holding AG Cl B 10,852,130
(financial services) -------------------
41,341,180
-------------------
THAILAND--1.2%
687,000 BEC World Public Co., Limited 3,701,509
(broadcasting & media)
5,963,900 Cogeneration Public Co., Ltd.(1) 4,498,631
(utilities)
5,126,000 National Finance and
Securities Public Co., Ltd. Cl F(1) 2,968,992
(financial services) -------------------
11,169,132
-------------------
UNITED KINGDOM--9.0%
416,400 Ashtead Group plc 1,060,215
(industrial equipment
& machinery)
153,000 Baltimore Technologies plc(1) 2,125,432
(computer software & services)
338,491 Bodycote International plc 4,553,158
(diversified companies)
206,000 Capital Radio plc 2,893,031
(broadcasting & media)
250,300 Close Brothers Group plc 2,755,623
(financial services)
306,000 Cobham PLC 4,532,621
(aerospace & defense)
123,000 Eidos plc(1) 4,096,894
(computer software & services)
522,591 Fibernet Group plc(1) 3,903,910
(computer software & services)
Shares Value
- --------------------------------------------------------------------------------
634,400 Go-Ahead Group PLC (The) $ 8,955,127
(transportation)
2,624,000 J.D. Wetherspoon plc 13,131,070
(food & beverage)
177,941 London Bridge Software
Holdings plc 4,673,111
(computer software & services)
723,000 Man (E D & F) Group plc 3,768,561
(financial services)
147,966 Matalan PLC(1) 1,976,124
(retail-apparel)
406,250 Parity plc 3,932,565
(business services & supplies)
265,000 PizzaExpress plc 3,946,527
(restaurants)
567,100 Psion plc 7,083,380
(computer peripherals)
190,000 Sage Group plc (The) 6,564,334
(computer software & services)
286,600 Shire Pharmaceuticals Group PLC(1) 2,255,724
(pharmaceuticals)
4,430,600 SkyePharma plc(1) 3,973,167
(pharmaceuticals)
150,700 Triad Group PLC 1,037,691
(business services & supplies) -------------------
87,218,265
-------------------
UNITED STATES--8.3%
459,000 Amdocs Ltd.(1) 10,528,312
(computer software & services)
308,200 Celestica Inc.(1) 12,212,425
(electrical & electronic
components)
226,200 Global TeleSystems Group, Inc.(1) 17,169,994
(telephone communications)
270,000 United International
Holdings, Inc. Cl A(1) 19,338,750
(broadcasting & media)
474,000 Viatel, Inc.(1) 21,270,750
(telephone communications) -------------------
80,520,231
-------------------
TOTAL COMMON STOCKS & RIGHTS 841,014,105
(Cost $597,066,215) -------------------
See Notes to Financial Statements
www.americancentury.com 19
International Discovery--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
PREFERRED STOCKS-5.4%
BRAZIL--0.6%
1,204,700,000 Tele Sudeste Celular
Participacoes S.A. $ 5,710,501
(wireless communications) -------------------
GERMANY--4.8%
119,006 Fielmann AG 4,638,427
(retail-specialty)
63,711 Marschollek, Lautenschlaeger
und Partner AG 33,197,624
(financial services)
4,000 Porsche AG 9,108,391
(automobiles & auto parts) -------------------
46,944,442
-------------------
TOTAL PREFERRED STOCKS 52,654,943
(Cost $18,754,283) -------------------
TEMPORARY CASH INVESTMENTS-8.0%
Repurchase Agreement, Morgan Stanley Group,
Inc., (U.S. Treasury obligations), in a joint
trading account at 4.77%, dated 5/28/99,
due 6/1/99 (Delivery value $49,226,076) 49,200,000
Repurchase Agreement, State Street Boston
Corp., (U.S. Treasury obligations), in a joint
trading account at 4.77%, dated 5/28/99,
due 6/1/99 (Delivery value $28,515,105) 28,500,000
-------------------
TOTAL TEMPORARY CASH INVESTMENTS 77,700,000
(Cost $77,700,000) -------------------
TOTAL INVESTMENT SECURITIES-100.0% $971,369,048
(Cost $693,520,498) ===================
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Contracts Settlement Unrealized
to Sell Date Value Gain/(Loss)
- --------------------------------------------------------------------------------
3,630,764 CHF 6/30/99 $ 2,384,452 $ 14,277
58,051,673 EURO 6/30/99 60,609,604 414,188
5,951,234 GBP 6/30/99 9,527,039 (20,091)
1,543,149,240 JPY 6/30/99 12,746,979 (12,098)
11,050,855 SEK 6/30/99 1,286,128 6,914
-------------------------------------
$86,554,202 $403,190
=====================================
(Value on Settlement Date $86,957,392)
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
CHF = Swiss Franc
GBP = British Pound
GDR = Global Depositary Receipt
JPY = Japanese Yen
SEK = Swedish Krona
(1) Non-income producing.
See Notes to Financial Statements
20 1-800-345-2021
Emerging Markets--Performance
- --------------------------------------------------------------------------------
<TABLE>
TOTAL RETURNS AS OF MAY 31, 1999
INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 9/30/97) (INCEPTION 5/12/99) (INCEPTION 1/2/98)
EMERGING MSCI EMERGING MSCI EMERGING MSCI
MARKETS EMF MARKETS EMF MARKETS EMF
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) 24.07% 23.79% -- -- -- --
1 YEAR 1.88% 3.46% -- -- -- --
- -------------------------------------------------------------------------------------------------------
AVERAGE ANNUAL RETURNS
LIFE OF FUND -8.31% -14.28% -2.48% N/A 27.73% 27.67%(2)
</TABLE>
(1) Returns for periods less than one year are not annualized.
(2) Since 1/31/99, the date nearest the class's inception for which data are
available.
See pages 59-62 for information about share classes, the MSCI Emerging Markets
Free Index, and returns.
PERFORMANCE OF $10,000 OVER LIFE OF FUND
Value on 5/31/99
Emerging Markets $8,660
MSCI EMF Index $7,736
$10,000 investment made 9/30/97
[data shown in mountain chart]
Emerging Markets MSCI EMF Index
Date Value Value
9/30/97 $10,000 $10,000
10/31/97 $8,480 $8,359
11/30/97 $8,300 $8,054
12/31/97 $8,360 $8,248
1/31/98 $7,800 $7,601
2/28/98 $8,700 $8,395
3/31/98 $9,060 $8,759
4/30/98 $9,400 $8,664
5/31/98 $8,500 $7,477
6/30/98 $7,800 $6,693
7/31/98 $8,320 $6,905
8/31/98 $6,001 $4,909
9/30/98 $5,880 $5,220
10/31/98 $6,500 $5,769
11/30/98 $6,980 $6,249
12/31/98 $6,780 $6,159
1/31/99 $6,799 $6,060
2/28/99 $6,640 $6,118
3/31/99 $7,440 $6,925
4/30/99 $8,539 $7,781
5/31/99 $8,660 $7,736
The graph at left shows the performance of a $10,000 investment over the life of
the fund. The MSCI Emerging Markets Free Index is provided for comparison.
Emerging Markets' total returns include operating expenses (such as transaction
costs and management fees) that reduce returns, while the total returns of the
MSCI Emerging Markets Free Index do not. The graph is based on Investor Class
shares only; performance for other classes will vary due to differences in fee
structures (see the Total Returns table above). 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.
www.americancentury.com 21
Emerging Markets--Q&A
- --------------------------------------------------------------------------------
[photo of Mark Kopinski and Michael Donnelly]
An interview with Mark Kopinski (left) and Michael Donnelly, portfolio
managers on the Emerging Markets team.
HOW DID EMERGING MARKETS PERFORM FOR THE SIX-MONTH PERIOD ENDED MAY 31, 1999?
Emerging Markets posted a 24.07%* return, compared to 23.79% for its
benchmark, the Morgan Stanley Capital International Emerging Markets Free
Index.
WHICH COUNTRIES OR SECTORS HELPED YOU OUTPERFORM YOUR BENCHMARK?
Asia has been one of the most dynamic regions of late and we were able to
find good growth stocks in both South Korea and Singapore. South Korea has
really been the star of Asia with respect to the resurgence of its corporate
sector. Since September 1998, we have been adding to and expanding the number of
our holdings in South Korea, whose government has put specific initiatives in
place in order to guide companies to restructure quickly and help rebuild the
economy. Many of the South Korean companies we have researched or met in
one-on-one meetings have been keen on restructuring their business and reducing
their debt burdens to more effectively compete in increasingly competitive
domestic and global markets.
In Latin America, we found surprisingly strong earnings performance in
Mexico, which has been the best performing Latin American economy so far in
1999. Interest rates have declined and consumer demand has increased, despite
the turmoil in the rest of Latin America. In addition, strong demand for loans
helped the banking sector, and bankers reduced provisions for non-performing
loans, which directly feeds to the bottom line. Moreover, several sectors of the
Mexican economy, such as telecommunications and cement manufacturing, have been
buoyed by rising prices.
Mexico is an oil exporter, and they received a boost from higher oil prices
in 1999. That revenue flows directly into the country's reserve base, which in
turn allows the government to reduce interest rates and halt the extreme
downward pressure on the overall budget. The robust U.S. economy also helped
fuel growth in Mexico. Spending on infrastructure boosted cement companies and
other construction- related industries. We purchased Cemex SA, the world's
third-largest cement producer. The company's first-quarter sales rose 10% on
strong cement sales in both the United States and Mexico.
We also maintained a lower cash position than the fund's historical
average. After a very rough 1998 --when many markets corrected 50% or more--1999
has given us a much larger menu of companies with good earnings growth. As we
took advantage of these opportunities, we kept cash in the 2%-3% range, compared
to a 4%-6% historical average.
*All fund returns referenced in this interview are for Investor Class shares.
[left margin]
"ASIA HAS BEEN ONE OF THE MOST DYNAMIC REGIONS OF LATE AND WE WERE ABLE TO FIND
GOOD GROWTH STOCKS IN BOTH SOUTH KOREA AND SINGAPORE. SOUTH KOREA HAS REALLY
BEEN THE STAR OF ASIA WITH RESPECT TO THE RESURGENCE OF ITS CORPORATE SECTOR."
PORTFOLIO AT A GLANCE
5/31/99 11/30/98
NO. OF COMPANIES 129 121
MEDIAN MARKET $1.16 $658
CAPITALIZATION BILLION MILLION
PORTFOLIO TURNOVER 102%(1) 270%(2)
EXPENSE RATIO (FOR
INVESTOR CLASS) 2.00%(3) 2.00%
(1) Six months ended 5/31/99.
(2) Year ended 11/30/98.
(3) Annualized.
Investment terms are defined in the Glossary on page 62.
[end left margin]
22 1-800-345-2021
Emerging Markets--Q&A
- --------------------------------------------------------------------------------
(Continued)
WHICH STOCKS OR SECTORS CONTRIBUTED MOST TO RETURNS?
We discovered growing earnings in banks, telecommunications, electronic
component manufacturers, and computer software companies in many developing
markets.
Two of Emerging Markets' top-performing stocks were Mexican banks Grupo
Financiero Bancomer and Grupo Financiero Banorte, both large and liquid stocks.
These banks began to lend again after lower interest rates spurred demand for
commercial loans. Profit margins were aided by reducing provisions for
non-performing loans after government legislation reduced the risk of bad debt
exposure resulting from the 1995 devaluation of the peso. More specifically,
Grupo Financiero Banorte has benefited from having a high concentration of
clients who run businesses that export to the United States.
Another top contributor, cellular phone operator Egyptian Mobile Phone
Network, experienced strong subscriber growth in the first quarter. That growth
should continue for several years because the demand for cellular services is
huge in Egypt, which has very low teledensity and is very populous. Egyptian
Mobile began 1999 with 157,000 customers and grew that 44% to 226,000 by the end
of the first quarter. As in many other emerging markets where local phone
companies are inefficient, cellular phones are in great demand because customers
must wait years to get a phone line hooked up to their homes.
Just as in U.S. stock markets, the Internet has also ignited stock
performance in many overseas markets. Companies that benefited from the trend
included Pacific Internet Ltd., a pan-Asia Internet service provider, and
Singapore-based Datacraft Asia Ltd, which designs, builds, and services data
communication systems throughout Asia and other regions. Computer and
peripherals retailer GES International also got a boost from the Internet when
it began selling hardware and parts via its Web site.
Two Indian software companies--Infosys Technologies, Ltd. and Wipro
Ltd.--continued their record of strong growth. Both companies benefit from their
client relationships in the United States and Europe and the lower cost of
operating in India. Also, because they are located in different time zones than
their Western customers, Wipro and Infosys operate during European and American
non-business hours, thereby enabling them to offer many specialized value added
services and faster turnaround time.
WHY WERE THERE SO MANY BRAZILIAN STOCKS THAT HURT PERFORMANCE?
The short answer is our returns--calculated in U.S. dollars--were
negatively impacted by the devaluation of the Brazilian real in January.
Consequently, seven out of the portfolio's eight worst performing stocks were
Brazilian. These included Celesc, Tele Sudeste Cellular, Banespa, Banco Itau,
Sabesp, Electrobras, and Embratel. Although the local operations of the
companies, for the most part, performed as well as could be expected in a
difficult environment, the sharp currency devaluation contributed to weak
performance when measured in U.S. dollars. We lowered our Brazilian holdings
somewhat during the devaluation and were underweight in the region. Therefore,
the fund did not get a large boost when the Brazilian stock market rebounded
sharply after inflation failed to materialize.
Our position in Petroleo Brasileiro, Brazil's largest oil refiner,
demonstrates what would have happened if we had
[right margin]
TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
5/31/99 11/30/98
EGYPTIAN MOBILE
PHONE NETWORK 2.1% 1.5%
PETROLEO
BRASILEIRO S.A. 1.9% 1.3%
KOREA DATA SYSTEM 1.6% --
TELEFONOS DE MEXICO,
S.A. CL L ADR 2.3% --
PLIVA D.D. GDR 1.6% 1.4%
SURGUTNEFTEGAZ ADR 1.5% --
GRUPO TELEVISA
S.A. GDR 1.5% --
TAIWAN
SEMICONDUCTOR
MANUFACTURING
CO. LTD. ADR 1.5% --
ANHUI CONCH CEMENT
CO. LTD CL H 1.5% 0.9%
YAPI VE KREDI
BANKASI A.S. 1.4% --
TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF AS OF
5/31/99 11/30/98
TELEPHONE
COMMUNICATIONS 9.5% 8.7%*
BANKING 9.3% 11.0%
FOOD & BEVERAGE 8.6% 7.7%
WIRELESS
COMMUNICATIONS 6.5% 12.1%*
ELECTRICAL & ELECTRONIC
COMMUNICATIONS 4.0% 5.3%*
*Percentage has been adjusted to reflect
security industry reclassification.
[end right margin]
www.americancentury.com 23
Emerging Markets--Q&A
- --------------------------------------------------------------------------------
(Continued)
increased our Brazilian exposure in the month following devaluation. Rather than
sell Petroleo Brasileiro during the devaluation, we built the position further
and it is now one of our best performing stocks.
WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO IN THE PAST SIX MONTHS?
We found several good growth opportunities in South Korea. For example,
auto parts supplier Halla Climate Controls received several large contracts from
Ford to supply auto parts. These orders coincided with a pick up in demand for
automobiles in Korea. Another contributor was Shinsegae Department Stores, which
operates both a discount chain and mainline department stores. After the
economic collapse in Asia, the discount chain was able to maintain sales because
consumers cut back on luxury items and moved their purchases to discount shops.
Recently there has been a revival in the fortunes of its mainline department
stores as well. In addition, the company is reducing its debt burden.
We also were able to find growing companies in Singapore and established or
built positions in several technology-related companies.
WHAT IS YOUR OUTLOOK FOR EMERGING MARKETS?
Overall, we are optimistic because we do not currently see a major currency
collapse or economic upheaval on the horizon. During most of 1998, many
companies cut export prices dramatically in an effort to liquefy and stabilize
their balance sheets. In effect, inventory was being dumped on global markets,
severely impacting the profitability of export sales. The dumping peaked during
the latter part of 1998, easing the pressure on the global economy. Most of the
excesses generated by overvalued currencies are now gone, commodity prices
appear to have bottomed, and producers are selling at competitive prices once
again. South Korea was perhaps the first country to lead the way. Now, in stark
contrast to the situation in 1998, economic growth has returned to many of the
countries that suffered currency devaluations, and GDP estimates are being
revised up on a consistent basis.
It's important, though, to monitor the progress of the reform programs
implemented by the International Monetary Fund (IMF). We believe that economies
that accept the program--i.e., adopt fundamental changes in the way in which
fiscal budgets are balanced and corporations are governed--should be able to
foster economic and financial growth. Those that only implement reform on a
piece-meal basis risk the likelihood of stagnation.
We would also like to emphasize the breadth and quality of the companies we
are finding daily in the emerging markets. Exciting finds run the gamut from a
local beverage producer (La Tondenda) to the maker of world-class
pharmaceuticals (Pliva). We intend to continue to search for the best companies
to add to the portfolio in this robust environment.
[left margin]
TYPES OF INVESTMENTS IN THE PORTFOLIO
AS OF MAY 31, 1999
[data shown in pie chart]
Preferred Stocks 9.5%
Common Stocks, Rights & Warrants 90.5%
AS OF NOVEMBER 30, 1998
[data shown in pie chart]
Preferred Stocks 13.2%
Temporary Cash Investments 4.7%
Common Stocks, Rights & Warrants 82.1%
EMERGING MARKETS' INVESTMENTS BY COUNTRY
[data shown in bar chart]
5/31/99 11/30/98
Mexico 12.3% 4.1%
Brazil 12.2% 15.9%
South Korea 10.3% 4.2%
Taiwan (People's Republic of China) 6.5% 2.3%
Singapore 5.6% 5.1%
South Africa 5.5% 6.8%
Turkey 5.0% 0%
Greece 4.5% 7.5%
Russian Federation 4.3% 3.0%
India 4.1% 3.3%
Other 29.7% 47.8%
[end left margin]
24 1-800-345-2021
Emerging Markets--Schedule of Investments
- --------------------------------------------------------------------------------
This schedule lists all investments owned by the fund, as well as each
security's market value, as of the last day of the reporting period. The
securities are grouped by asset class (such as common stocks, corporate bonds,
temporary cash investments, as applicable), and some asset classes are further
broken down by industry or country.
NOTE: For securities denominated in foreign currencies, the market value is
translated into U.S. dollars based on exchange rates as of the last day of the
reporting period.
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS, RIGHTS & WARRANTS-90.5%
BRAZIL--3.1%
14,000 Companhia Brasileira de
Distribuicao Grupo Pao de
Acucar ADR(1) $ 253,750
(retail-general merchandise)
3,500,000 Companhia de Saneamento Basico
do Estado de Sao Paulo 262,702
(utilities)
31,000 Unibanco-Uniao de Bancos
Brasileiros S.A. GDR(1) 699,438
(banking)
15,000,000 Votorantim Celulose e Papel S.A. 398,383
(paper & forest products) -------------------
1,614,273
-------------------
CANADA(2)
29,297 Sedna Geotech, Inc. Warrants(1) --
(metals & mining) -------------------
CHINA--1.2%
4,000,000 Shanghai Petrochemical
Co., Ltd. Cl H 613,817
(chemicals & resins) -------------------
CROATIA--1.6%
50,206 Pliva d.d. GDR 813,337
(pharmaceuticals) -------------------
CZECH REPUBLIC--2.4%
8,000 Ceske Radiokomunikace(1) 295,656
(business services & supplies)
32,000 Komercni Banka a.s.(1) 584,125
(banking)
16,000 SPT Telecom a.s.(1) 265,003
(telephone communications)
1,668 Stredoceska Energetika a.s.(1) 80,327
(utilities) -------------------
1,225,111
-------------------
EGYPT--3.6%
18,000 A-Ahram Beverages Co. GDR(1) 542,700
(food & beverage)
70,969 Egyptian Mobile Phone Network(1) 1,063,679
(wireless communications)
19,000 Orascom Construction Industries(1) 272,801
(construction & property -------------------
development) 1,879,180
-------------------
Shares Value
- --------------------------------------------------------------------------------
ENGLAND--0.4%
50,000 Antofagasta Holdings plc $ 216,983
(diversified companies) -------------------
ESTONIA--0.4%
20,000 Hansabank Ltd.(1) 111,093
(banking)
20,000 Hansabank Ltd.(1) 112,671
(banking) -------------------
223,764
-------------------
FINLAND--1.1%
38,000 Hartwall Oyj Abp 546,503
(food & beverage) -------------------
FRANCE--0.4%
2,772 Belvedere S.A.(1) 214,496
(food & beverage) -------------------
GREECE--4.5%
11,500 Chipita International S.A. 272,870
(food & beverage)
2,250 Commercial Bank of Greece, S.A. 406,179
(banking)
4,000 Delta Informatics S.A. 185,975
(computer software & services)
6,000 EFG Eurobank(1) 285,696
(banking)
15,000 Folli-Follie Abee 308,542
(retail-general merchandise)
260 National Bank of Greece S.A. 18,133
(banking)
20,995 Panafon SA(1) 521,728
(wireless communications)
1,500 Piraeus Bank S.A. 44,009
(banking)
3,000 Titan Cement Company S.A. 277,039
(construction & property -------------------
development) 2,320,171
-------------------
HONG KONG--3.1%
6,500,000 Anhui Conch Cement Co. LTD Cl H 779,522
(construction & property
development)
250,000 China Resources Enterprise Limited 364,293
(diversified companies)
120,000 Johnson Electric Holdings Limited 442,567
(electrical & electronic -------------------
components) 1,586,382
-------------------
See Notes to Financial Statements
www.americancentury.com 25
Emerging Markets--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
HUNGARY--1.0%
6,500 OTP Bank Rt. $ 286,202
(banking)
17,000 Synergon Information
Systems Ltd. GDR(1) 212,500
(computer software & services) -------------------
498,702
-------------------
INDIA--4.1%
24,117 Hero Honda Motors Ltd. 546,204
(leisure)
5,000 Housing Development
Finance Corp. Ltd. 243,438
(financial services)
6,000 Infosys Technologies Ltd. 443,066
(computer software & services)
2,005 Larsen & Toubro Ltd. 10,544
(diversified companies)
3,000 NIIT Limited 126,481
(computer software & services)
6,000 Pentafour Software & Exports Ltd. 142,857
(computer software & services)
4,000 Wipro Limited 371,475
(computer peripherals)
7,000 Zee Telefilms Ltd.(1) 235,285
(broadcasting & media) -------------------
2,119,350
-------------------
INDONESIA--2.4%
25,000 PT Indosat (Persero) Tbk ADR(1) 495,312
(telephone communications)
249,500 PT Tambang Timah Tbk 273,467
(metals & mining)
53,000 PT Telekomunikasi Indonesia ADR 493,562
(telephone communications) -------------------
1,262,341
-------------------
ISRAEL--1.5%
9,000 AudioCodes Ltd.(1) 154,406
(communications equipment)
12,300 Fundtech Ltd.(1) 397,444
(computer software & services)
23,000 Point of Sale Ltd.(1) 227,125
(computer software & services) -------------------
778,975
-------------------
MEXICO--12.3%
100,000 Cemex SA de CV Cl B 449,022
(building & home improvements)
125,000 Corporacion Interamericana
de Entretenimiento S.A. Cl B(1) 399,073
(leisure)
180,000 Fomento Economico Mexica UBD 594,130
(food & beverage)
600,000 Grupo Cementos de Chihuahua,
S.A. de C.V. Cl B 463,440
(construction & property
development)
Shares Value
- --------------------------------------------------------------------------------
38,000 Grupo Elektra, S.A. de C.V. GDR $ 206,625
(retail-general merchandise)
1,880,000 Grupo Financiero Bancomer,
S.A. de C.V. Cl O 640,865
(financial services)
452,000 Grupo Financiero Banorte
S.A. de C.V. Cl O(1) 575,357
(financial services)
60,000 Grupo Iusacell S.A. de
C.V. Series L ADR(1) 742,500
(wireless communications)
19,000 Grupo Televisa S.A. GDR(1) 794,438
(broadcasting & media)
150,600 Hylsamex S.A.(1) 331,909
(steel)
15,000 Telefonos de Mexico, S.A. Cl L ADR 1,199,069
(telephone communications) -------------------
6,396,428
-------------------
PHILIPPINES--3.4%
2,000,000 International Container
Terminal Services, Inc.(1) 202,365
(transportation)
450,000 La Tondena Distillers Inc.(1) 520,368
(food & beverage)
35,000 Metropolitan Bank & Trust Co. 338,042
(banking)
2,000,000 Music Corporation(1) 147,175
(computer peripherals)
245,000 San Miguel Corporation Cl B 550,526
(food & beverage) -------------------
1,758,476
-------------------
POLAND--2.2%
30,000 Agora SA GDR(1) 327,000
(broadcasting & media)
3,000 Bank Przemyslowo-Handlowy S.A. 147,627
(banking)
4,000 Prokom Software SA(1) 131,559
(computer software & services)
17,000 Softbank S.A. GDR 548,250
(computer software & services) -------------------
1,154,436
-------------------
RUSSIAN FEDERATION--4.3%
17,000 Lukoil Holding ADR 620,500
(energy-services)
70,000 SUN Brewing Ltd. GDR(1) 412,170
(food & beverage)
105,000 Surgutneftegaz ADR 800,625
(energy-production & marketing)
60,000 Unified Energy Systems ADR 393,750
(utilities) -------------------
2,227,045
-------------------
SINGAPORE--5.6%
137,000 Allgreen Properties Limited(1) 130,249
(real estate)
See Notes to Financial Statements
26 1-800-345-2021
Emerging Markets--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
64,000 Asia Pulp & Paper Company
Ltd. ADR(1) $ 572,000
(paper & forest products)
53,000 City Developments Limited 316,464
(real estate)
160,000 Datacraft Asia Limited 569,600
(computer software & services)
800,000 GES International Limited(1) 695,652
(computer peripherals)
200,000 Keppel Telecommunications &
Transportation Ltd. 273,623
(telephone communications)
110,000 Natsteel Electronics Ltd. 366,667
(electrical & electronic -------------------
components) 2,924,255
-------------------
SOUTH AFRICA--5.5%
28,000 Anglo American Platinum
Corp. Limited 514,231
(metals & mining)
180,000 BOE Limited 170,192
(financial services)
31,000 DataTec Limited 417,804
(computer peripherals)
23,000 De Beers 493,173
(metals & mining)
20,000 Fedsure Holdings Limited 172,436
(insurance)
200,000 Foschini Limited(1) 357,372
(retail-general merchandise)
12,000 Impala Platinum Holdings Limited 287,308
(metals & mining)
60,000 Ixchange Technology
Holdings Limited(1) 152,404
(computer software & services)
36,000 South African Breweries Ltd. 289,038
(food & beverage) -------------------
2,853,958
-------------------
SOUTH KOREA--10.3%
13,000 Dongwon Securities Co. 281,191
(financial services)
16,000 Halla Climate Control Co. 536,999
(automobile & auto parts)
20,000 Hite Brewery Co. Ltd.(1) 495,847
(food & beverage)
2,743 Hite Brewery Co. Ltd. Rights(1) 27,757
(food & beverage)
5,000 Housing & Commercial
Bank, Korea(1) 137,033
(banking)
22,000 Kookmin Bank 333,010
(banking)
23,771 Korea Data System 824,874
(computer peripherals)
5,000 Korea Electric Power Corp. 153,055
(utilities)
Shares Value
- --------------------------------------------------------------------------------
11,450 Korea Telecom Corporation $ 652,800
(business services & supplies)
48,000 Medison Co. 611,207
(medical equipment & supplies)
6,000 Pohang Iron & Steel Co., Ltd. 554,602
(steel)
2,975 Samsung Electronics 206,972
(electrical & electronic
components)
398 Samsung Electronics Rights(1) 4,531
(electrical & electronic
components)
11,000 Shinsegae Department Store Co. 491,630
(retail-general merchandise)
450 SK Telecom Co. Ltd. ADR 6,412
(wireless communications) -------------------
5,317,920
-------------------
TAIWAN (PEOPLE'S REPUBLIC
OF CHINA)--6.5%
12,000 Asustek Computer Inc.(1) 139,083
(computer peripherals)
17,000 Asustek Computer Inc. GDR(1) 262,225
(computer peripherals)
145,000 China Development Industrial Bank(1) 281,575
(financial services)
766,500 China Steel Corp. 525,064
(steel)
625,000 Delpha Construction Co., Ltd.(1) 330,657
(construction & property
development)
36,000 Hon Hai Precision Industry(1) 211,376
(electrical & electronic
components)
245,000 Lee Chi Enterprises Co., Ltd.(1) 524,465
(leisure)
70,000 President Chain Store Corp. 221,560
(retail-general merchandise)
60,000 Shin Kong Life Insurance Co., Ltd. 101,835
(insurance)
30,000 Taiwan Semiconductor
Manufacturing Co. Ltd. ADR(1) 785,625
(electrical & electronic -------------------
components) 3,383,465
-------------------
THAILAND--2.2%
20,000 Advanced Info Service
Public Co. Limited(1) 243,534
(wireless communications)
150,000 Cogeneration Public Co., Ltd.(1) 113,147
(utilities)
125,000 Italian-Thai Development Public
Co., Limited(1) 314,857
(construction & property
development)
209,000 Land & House Public Co. Limited(1) 258,998
(real estate)
See Notes to Financial Statements
www.americancentury.com 27
Emerging Markets--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
6,000 Siam Cement Public Co.
Limited (The)(1) $ 155,819
(construction & property
development)
174,000 Siam Commercial Bank Public
Co. Limited Warrants(1) 60,938
(banking) -------------------
1,147,293
-------------------
TURKEY--5.0%
15,000,000 Aksigorta A.S. 478,803
(insurance)
45,000,000 Dogan Sirketler Grubu Holding A.S. 629,810
(printing & publishing)
15,000,000 Haci Omer Sabanci Holding AS 368,310
(diversified companies)
8,500,000 Turkiye Garanti Bankasi A.S.(1) 349,588
(banking)
58,500,000 Yapi ve Kredi Bankasi A.S. 746,933
(banking) -------------------
2,573,444
-------------------
UNITED STATES--2.4%
7,800 Comverse Technology, Inc.(1) 526,744
(communications equipment)
12,000 StarMedia Network, Inc.(1) 705,750
(broadcasting & media) -------------------
1,232,494
-------------------
TOTAL COMMON STOCKS,
RIGHTS & WARRANTS 46,882,599
(Cost $37,724,412) -------------------
Shares Value
- --------------------------------------------------------------------------------
PREFERRED STOCKS-9.5%
BRAZIL--9.1%
28,500,000 Centrais Electricas Brasileiras
S.A. Cl B $ 597,315
(utilities)
18,000,000 Companhia Paranaense de
Energia-Copel 136,143
(utilities)
36,000,000 Embratel Participacoes S.A. 498,845
(telephone communications)
7,000,000 Petroleo Brasileiro S.A. 986,143
(energy-production & marketing)
300,000,000 Tele Celular Sul Participacoes S.A. 554,273
(wireless communications)
32,000,000 Tele Centro Sul Participacoes S.A. 339,954
(telephone communications)
43,000,000 Tele Norte Leste Participacoes S.A. 712,529
(telephone communications)
53,000,000 Tele Sudeste Celular
Participacoes S.A. 251,230
(wireless communications)
30,000,000 Telesp Participacoes S.A. 646,074
(telephone communications) -------------------
4,722,506
-------------------
THAILAND--0.4%
174,000 Siam Commercial Bank Public
Co. Limited(1) 178,125
(banking) -------------------
TOTAL PREFERRED STOCKS 4,900,631
(Cost $4,778,874) -------------------
TOTAL INVESTMENT SECURITIES-100.0% $51,783,230
(Cost $42,503,286) ===================
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
GDR = Global Depositary Receipt
(1) Non-income producing.
(2) Investments in country were less than 0.05% of the total investment
securities.
See Notes to Financial Statements
28 1-800-345-2021
Global Growth--Performance
- --------------------------------------------------------------------------------
TOTAL RETURNS AS OF MAY 31,1999
INVESTOR CLASS ADVISOR CLASS
(INCEPTION 12/1/98) (INCEPTION 2/5/99)
GLOBAL MSCI GLOBAL MSCI
GROWTH WORLD FREE GROWTH WORLD FREE
LIFE OF FUND(1) 18.60% 8.04% 6.27% 3.92%(2)
(1) Returns for periods less than one year are not annualized.
(2) Since 2/28/99, the date nearest the class's inception for which data are
available.
See pages 59-62 for information about share classes, the MSCI World Free Index,
and returns.
GROWTH OF $10,000 OVER LIFE OF FUND
Value on 5/31/99
Global Growth $11,860
MSCI World Free Index $10,804
$10,000 investment made 12/1/98
[data shown in mountain chart]
Global Growth MSCI World Free Index
Date Value Value
11/30/98 $10,000 $10,000
12/31/98 $10,860 $10,477
1/31/99 $11,540 $10,693
2/28/99 $11,120 $10,397
3/31/99 $11,720 $10,816
4/30/99 $12,140 $11,232
5/31/99 $11,860 $10,804
The graph at left shows the growth of a $10,000 investment over the life of the
fund. The MSCI World Free Index is provided for comparison. Global Growth's
total returns include operating expenses (such as transaction costs and
management fees) that reduce returns, while the total returns of the MSCI World
Free Index do not. The graph is based on Investor Class shares only; performance
for other classes will vary due to differences in fee structures (see the Total
Returns table above). 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.
www.americancentury.com 29
Global Growth--Q&A
- --------------------------------------------------------------------------------
[photo of Bradley Amoils and Henrik Strabo]
An interview with Bradley Amoils (left) and Henrik Strabo, portfolio
managers on the Global Growth team.
GLOBAL GROWTH OPENED ON DECEMBER 1, 1998. SINCE THIS IS THE FIRST REPORT TO
INVESTORS, WILL YOU TELL US ABOUT GLOBAL GROWTH'S OBJECTIVES AND HOW IT IS
MANAGED?
Certainly, but first we'd like to take this opportunity to welcome
investors to the fund. We're excited about Global Growth's potential, and the
range of opportunities in which the fund is allowed to invest.
Global Growth's charter is similar to American Century's other
foreign-stock funds. The funds share a common objective of long-term growth
through investments in companies that demonstrate accelerating earnings and
revenue growth. However, unlike its sibling funds, which have significant
exposure primarily in foreign stocks, Global Growth has the opportunity to
invest in the United States. Because it has no geographical constraints, Global
Growth can buy the fastest-growing companies, no matter where they are located.
To find stocks for the portfolio, we employ American Century's proprietary
database of more than 15,000 foreign and domestic companies. We are not
restricted by region, market sector, or industry. We also rely on extensive
research provided by our team of investment analysts. They research stocks
individually, but each analyst has expertise in a particular region. Our team
travels frequently, looking for opportunities that fit our growth investment
style. We visit regularly with key executives, government officials, and central
bankers, as well as customers and competitors of the companies we are
considering for investment.
HOW HAS GLOBAL GROWTH PERFORMED SINCE ITS INCEPTION?
It has performed very well in the few months it has been in operation.
Global Growth's life-of-fund return as of May 31, 1999, was 18.60%*. It more
than doubled the return of its benchmark, the MSCI World Free Index, which
gained 8.04% in the same time frame.
WHAT FACTORS INFLUENCED OVERALL PERFORMANCE?
Clearly, the decision to focus investments in the United States and
selectively add companies in Asia was an important factor. Given the
uncertainties surrounding global capital markets after the Asian crisis, we
focused our investments in the United States, which offered the clearest
earnings visibility. Large-capitalization U.S. stocks that are benefiting from
increasing efficiencies through mergers and restructurings provided the most
attractive investment opportunities. Furthermore, U.S. dominance and innovative
leadership in telecommunications, the Internet, media, pharmaceutical, financial
services, and biotechnology compelled us to concentrate our investments in these
arenas. As a result, approximately 50% of the fund was invested in U.S.
companies.
*All fund returns referenced in this interview are for Investor Class shares.
[left margin]
"TO FIND STOCKS FOR THE PORTFOLIO, WE EMPLOY AMERICAN CENTURY'S PROPRIETARY
DATABASE OF MORE THAN 15,000 FOREIGN AND DOMESTIC COMPANIES. WE ARE NOT
RESTRICTED BY REGION, MARKET SECTOR, OR INDUSTRY."
PORTFOLIO AT A GLANCE
5/31/99
NO. OF COMPANIES 197
MEDIAN MARKET $16.5
CAPITALIZATION BILLION
PORTFOLIO TURNOVER 65%(1)
EXPENSE RATIO (FOR
INVESTOR CLASS) 1.30%(2)
(1) From 12/1/98 through 5/31/99.
(2) Annualized.
Investment terms are defined in the Glossary on page 62.
[end left margin]
30 1-800-345-2021
Global Growth--Q&A
- --------------------------------------------------------------------------------
(Continued)
In Europe, the portfolio benefited from a focus on telecommunications,
outsourcing, retailing, and financial services--industries that demonstrated
strong underlying growth in their basic business. However, performance in Europe
was offset by the depreciation of the euro (the new European common currency),
slower than expected economic growth, and negative money flows as investors
concentrated on the United States and Asia. We continued to be cautious in
Japan, where we saw few investment opportunities. Accordingly, we purchased
companies that stood to benefit the most from a formalized restructuring plan or
that were poised to take advantage of an increasingly deregulated Japanese
economy. As stability returned to the world's emerging markets, we put money to
work selectively in Hong Kong, South Korea, and Singapore. We also found
opportunities in Brazil, where corporations began to show signs of earnings
re-acceleration.
WHICH SECTORS OR COMPANIES CONTRIBUTED THE MOST TO RETURNS?
As we mentioned earlier, investors maintained--and perhaps even
intensified--their preference for a handful of U.S. companies for much of the
period. These companies also represented a significant portion of Global
Growth's portfolio.
Several industry groups, particularly in the technology sector, that were
good performers in the United States also fared well abroad. Continued robust
growth in the Internet was the catalyst driving earnings for many of our
technology companies. Internet-related technology holdings that posted strong
gains included Cisco Systems, a maker of Internet routers and equipment, and
software giant Microsoft.
Telecommunications companies, Global Growth's largest industry weighting,
were also among the portfolio's strongest contributors. These companies formed
three groups within the telecommunications area: carriers of electronic voice
and data, cellular service and equipment providers, and cable TV firms.
Companies exhibiting strong growth in one or more of these areas included AT&T
and MCI WorldCom in the United States, UPC and Mannesman in Europe, Nokia in
Finland, and Japan's NTT Data.
DID YOU FIND GROWTH IN MANY SECTORS OUTSIDE THE TECHNOLOGY ARENA?
Global Growth's financial services holdings were helpful. Firms such as
Standard Chartered and the American International Group (AIG) performed
exceptionally well after the U.S. Federal Reserve began to cut interest rate in
what proved to be a successful effort to stabilize world markets. Strong revenue
growth from insurance annuity sales in the United States continued to buoy the
earnings of Sweden's Skandia Holdings.
WHICH SECTORS OR HOLDINGS WERE DISAPPOINTING?
The portfolio's worst-performing holding was American tobacco giant Philip
Morris. Ongoing lawsuits against tobacco manufacturers and recent adverse court
rulings have increased investors' concerns about the future of big tobacco, and
that drove tobacco stocks down across the board. Philip Morris was no exception.
We eliminated the position.
The German retailer, Douglas Holding, also disappointed. Douglas markets a
broad range of high-end retail products, including perfume, jewelry, personal
care products, and books. The
[right margin]
TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF
5/31/99
MCI WORLDCOM INC. 2.2%
TIME WARNER INC. 2.1%
MANNESMANN AG 1.8%
MICROSOFT CORP. 1.7%
GENERAL ELECTRIC CO. (U.S.) 1.6%
UNITED PAN-EUROPE
COMMUNICATIONS NV 1.6%
VIVENDI 1.5%
AMERICAN INTERNATIONAL
GROUP, INC. 1.2%
AMERICAN EXPRESS CO. 1.2%
COMCAST CORP. CL A 1.2%
TOP FIVE INDUSTRIES
% OF FUND INVESTMENTS
AS OF
5/31/99
TELEPHONE COMMUNICATIONS 10.9%
BROADCASTING & MEDIA 9.4%
BANKING 7.0%
FINANCIAL SERVICES 5.0%
DIVERSIFIED COMPANIES 4.8%
[end right margin]
www.americancentury.com 31
Global Growth--Q&A
- --------------------------------------------------------------------------------
(Continued)
healthy economies in Europe and the United States helped drive growth in recent
years. However, sales in Germany, the company's primary market, began to lag in
April when warmer weather pulled people away from shopping and toward outdoor
activities. This shift impacted earnings and ultimately share price, but we're
confident these problems are temporary and are holding Douglas.
WHAT'S YOUR OUTLOOK FOR GLOBAL INVESTING?
We continue to find tremendous opportunities for investing in interesting
and fast-growing companies in almost every corner of the world. We now live in
exciting times as information, capital, goods, and services move freely around
the globe with unprecedented ease. The rapid acceptance of new
technologies--witness the thousands of new Internet users each day--is only
accelerating this incredible trend. The world has truly become a global village
and we want to own those companies that are positioned to take advantage of
major growth opportunities.
After the worldwide economic upheaval last year, the global economy appears
to be on the mend. With this as a backdrop, we feel the outlook for corporate
earnings is healthy. Our focus on fast-growing, highly successful companies will
continue to lead us to areas such as telecommunications, technology, financial
services, and retailing.
[left margin]
"AFTER THE WORLDWIDE ECONOMIC UPHEAVAL LAST YEAR, THE GLOBAL ECONOMY APPEARS TO
BE ON THE MEND. WITH THIS AS A BACKDROP, WE FEEL THE OUTLOOK FOR CORPORATE
EARNINGS IS HEALTHY."
TYPES OF INVESTMENTS IN THE PORTFOLIO
AS OF MAY 31, 1999
[data shown in pie chart]
Preferred Stocks 1.0%
Temporary Cash Investments 7.2%
Common Stocks 91.8%
GLOBAL GROWTH'S INVESTMENTS BY COUNTRY
[data shown in bar chart]
5/31/99
United States 48.5%
U.K. 9.6%
Japan 7.2%
France 6.5%
Germany 4.3%
Netherlands 4.2%
Other 19.7%
[end left margin]
32 1-800-345-2021
Global Growth--Schedule of Investments
- --------------------------------------------------------------------------------
This schedule lists all investments owned by the fund, as well as each
security's market value, as of the last day of the reporting period. The
securities are grouped by asset class (such as common stocks, corporate bonds,
temporary cash investments, as applicable), and some asset classes are further
broken down by industry or country.
NOTE: For securities denominated in foreign currencies, the market value is
translated into U.S. dollars based on exchange rates as of the last day of the
reporting period.
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
COMMON STOCKS-91.8%
AUSTRALIA--0.8%
11,400 Brambles Industries Limited $ 303,895
(diversified companies)
36,800 Broken Hill Proprietary Co. Ltd. 377,516
(metals & mining)
146,810 Cable & Wireless Optus Limited(1) 280,567
(telephone communications) -------------------
961,978
-------------------
AUSTRIA--0.2%
200 Bank Austria AG 10,234
(banking)
2,400 VA Technologie AG 201,343
(business services & supplies) -------------------
211,577
-------------------
BELGIUM--0.4%
10,200 Fortis AG 326,870
(insurance)
4,400 UCB SA 189,334
(pharmaceuticals) -------------------
516,204
-------------------
BRAZIL--0.5%
20,000 Telesp Participacoes S.A. ADR 437,500
(telephone communications)
8,200 Unibanco-Uniao de Bancos
Brasileiros S.A. GDR(1) 185,012
(banking) -------------------
622,512
-------------------
CANADA--2.1%
15,400 Bombardier Inc. Cl B 239,246
(aerospace & defense)
3,000 Canadian National Railway Company 191,920
(railroad)
10,800 JDS Fitel Inc.(1) 731,943
(communications equipment)
6,000 QLT PhotoTherapeutics, Inc.(1) 263,967
(biotechnology)
11,000 Rogers Communications, Inc. Cl B(1) 226,858
(broadcasting & media)
6,000 Seagram Co. Ltd. (The) 311,625
(food & beverage)
7,000 Teleglobe Inc. 211,797
(telephone communications)
6,000 TLC The Laser Center Inc.(1) 263,250
(healthcare) -------------------
2,440,606
-------------------
Shares Value
- --------------------------------------------------------------------------------
FINLAND--0.9%
15,000 Nokia Corp. Cl A ADR $ 1,065,000
(communications equipment) -------------------
FRANCE--6.5%
1,709 Altran Technologies SA 386,663
(business services & supplies)
5,226 Axa-UAP 601,813
(insurance)
2,555 Cap Gemini SA 367,718
(computer software & services)
3,460 Carrefour SA 453,615
(retail-general merchandise)
4,000 Compagnie Francaise d'Etudes et
de Construction Technip 433,534
(chemicals & resins)
6,300 Elf Aquitaine SA 911,298
(energy-production & marketing)
7,600 Equant NV New York Shares(1) 630,325
(telephone communications)
1,800 Groupe Danone 495,230
(food & beverage)
2,000 Pinault-Printemps-Redoute SA 340,366
(retail-general merchandise)
3,500 Societe Generale Cl A 635,399
(banking)
2,500 Societe Television Francaise 1 599,236
(broadcasting & media)
22,945 Vivendi 1,697,761
(diversified companies) -------------------
7,552,958
-------------------
GERMANY--4.3%
500 Allianz AG 136,522
(insurance)
4,342 DaimlerChrysler AG 374,445
(automobiles & auto parts)
6,600 Deutsche Pfandbrief-und
Hypothekenbank AG 570,890
(banking)
6,400 Douglas Holding AG 273,460
(retail-general merchandise)
15,160 Mannesmann AG 2,069,670
(industrial equipment
& machinery)
1,600 Marschollek, Lautenschlaeger
und Partner AG 833,720
(financial services)
10,000 PrimaCom AG(1) 406,438
(broadcasting & media)
See Notes to Financial Statements
www.americancentury.com 33
Global Growth--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
5,000 Siemens AG $ 336,093
(electrical & electronic -------------------
components) 5,001,238
-------------------
HONG KONG--1.1%
14,000 Cheung Kong (Holdings) Ltd. 113,737
(real estate)
44,000 Henderson Land Development
Company Ltd. 221,851
(real estate)
3,600 HSBC Holdings plc 117,915
(banking)
54,500 Swire Pacific Ltd. Cl A 260,034
(diversified companies)
4,000 Tommy Hilfiger Corp.(1) 300,250
(textiles & apparel)
111,000 Wharf (Holdings) Ltd. 282,698
(diversified companies) -------------------
1,296,485
-------------------
INDONESIA--0.2%
497,000 PT Telekomunikasi Indonesia 231,056
(telephone communications) -------------------
IRELAND--0.2%
12,400 Bank of Ireland 229,643
(banking) -------------------
ITALY--2.0%
10,500 Assicurazioni Generali 373,142
(insurance)
24,700 Mediaset SpA 200,008
(broadcasting & media)
60,000 Mediolanum SpA 408,314
(insurance)
35,200 Mondadori (Arnoldo) Editore SpA 610,783
(printing & publishing)
169,000 Seat Pagine Gialle SpA 229,841
(printing & publishing)
44,200 Telecom Italia SpA 455,103
(telephone communications) -------------------
2,277,191
--------------------
JAPAN--7.2%
10,000 Eisai Company, Ltd. 185,574
(pharmaceuticals)
65,000 Fuji Heavy Industries Ltd. 422,582
(automobiles & auto parts)
56,000 Fujitsu Ltd. 930,914
(electrical & electronic
components)
14 Japan Telecom Co. Ltd. 170,514
(telephone communications)
41,000 Kao Corporation 1,120,191
(consumer products)
80 Nippon Telegraph & Telephone 776,859
(telephone communications)
Shares Value
- --------------------------------------------------------------------------------
42 NTT Data Corp. $ 277,892
(business services & supplies)
10 NTT Mobile Communication
Network, Inc. 543,966
(wireless communications)
1,200 Ryohin Keikaku Co. Limited 234,934
(retail-general merchandise)
59,000 Shiseido Co., Ltd. 869,111
(consumer products)
700 Shohkoh Fund & Co., Ltd. 389,417
(financial services)
14,000 Sony Corp. 1,308,810
(electrical & electronic
components)
24,000 Sumitomo Bank, Ltd. (The) 288,952
(banking)
13,000 Takeda Chemical Inds. 574,497
(pharmaceuticals)
16,000 Toppan Forms Co., Ltd. 301,527
(printing & publishing) -------------------
8,395,740
-------------------
MEXICO--1.5%
16,000 Grupo Televisa S.A. GDR(1) 669,000
(broadcasting & media)
14,000 Panamerican Beverages Inc. Cl A 324,625
(food & beverage)
9,000 Telefonos de Mexico, S.A. Cl L ADR 719,438
(telephone communications) -------------------
1,713,063
-------------------
NETHERLANDS--4.2%
4,100 Getronics N.V. 158,094
(computer software & services)
4,400 Gucci Group N.V. New York Shares 290,950
(retail-apparel)
6,800 Heineken NV 377,717
(food & beverage)
17,000 IHC Caland N.V. 668,800
(energy-services)
8,296 ING Groep N.V. 443,091
(financial services)
5,000 Phillips Electronics N.V.
New York Shares(1) 430,000
(electrical & electronic
components)
29,700 United Pan-Europe
Communications NV(1) 1,818,421
(broadcasting & media)
5,500 VNU N.V. 233,285
(printing & publishing)
11,508 Wolters Kluwer NV 462,333
(printing & publishing) -------------------
4,882,691
-------------------
PHILIPPINES--0.3%
128,000 San Miguel Corporation Cl B 287,622
(food & beverage) -------------------
See Notes to Financial Statements
34 1-800-345-2021
Global Growth--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
SINGAPORE--1.2%
37,000 City Developments Limited $ 220,928
(real estate)
215,000 Keppel Telecommunications
& Transportation Ltd. 294,145
(diversified companies)
27,000 Singapore Press Holdings Ltd. 369,391
(printing & publishing)
434,000 Singapore Technologies
Engineering Ltd. 472,997
(business services & supplies) -------------------
1,357,461
-------------------
SOUTH KOREA--0.6%
13,500 Kookmin Bank 204,347
(banking)
8,000 Korea Electric Power Corp. 244,888
(utilities)
11,600 Shinhan Bank GDR(1) 220,690
(banking)
750 SK Telecom Co. Ltd. ADR 10,688
(telephone communications) -------------------
680,613
-------------------
SPAIN--1.1%
15,500 Argentaria SA 347,135
(banking)
19,839 Telefonica S.A.(1) 950,646
(telephone communications) -------------------
1,297,781
-------------------
SWEDEN--2.1%
27,000 Europolitan Holdings AB 233,773
(wireless communications)
26,000 Hennes & Mauritz AB Cl B 583,183
(retail-apparel)
33,000 Modern Times Group
MTG AB Cl B(1) 724,853
(broadcasting & media)
14,000 Securitas AB Cl B 199,314
(business services & supplies)
36,700 Skandia Forsakrings AB 629,118
(financial services) -------------------
2,370,241
-------------------
SWITZERLAND--3.1%
970 ABB AG(1) 1,373,693
(machinery & equipment)
2,100 Credit Suisse Group 364,357
(financial services)
232 Julius Baer Holding AG 701,764
(financial services)
178 Nestle S.A. 319,907
(food & beverage)
140 Novartis AG 203,123
(pharmaceuticals)
Shares Value
- --------------------------------------------------------------------------------
2,186 UBS AG $ 632,607
(banking) -------------------
3,595,451
-------------------
THAILAND--0.4%
102,000 Bangkok Bank Public Co., Limited(1) 316,002
(banking)
142,000 Land & House Public Co. Limited(1) 175,970
(real estate) -------------------
491,972
-------------------
UNITED KINGDOM--9.6%
47,600 Amvescap Plc 434,478
(financial services)
11,600 AstraZeneca Group plc 460,862
(pharmaceuticals)
17,000 Barclays PLC 515,330
(banking)
33,000 BBA Group plc 233,044
(diversified companies)
76,015 British Telecommunications plc 1,267,174
(telephone communications)
36,293 Cable & Wireless
Communications plc(1) 344,639
(telephone communications)
22,000 Capita Group Plc 217,543
(business services & supplies)
30,496 COLT Telecom Group plc(1) 643,642
(telephone communications)
16,124 Dixons Group plc 289,444
(retail-specialty)
9,886 Energis plc(1) 238,414
(telephone communications)
10,700 Glaxo Wellcome plc 300,195
(pharmaceuticals)
24,900 Imperial Tobacco Group plc 279,913
(tobacco)
105,000 Invensys plc 478,363
(industrial)
24,900 Lloyds TSB Group plc 328,957
(financial services)
31,200 Logica plc 289,281
(computer software & services)
20,000 National Westminster Bank PLC 458,627
(banking)
30,300 Next Plc 352,019
(retail-general merchandise)
12,900 Orange plc(1) 178,480
(wireless communications)
38,500 Pearson plc 733,658
(printing & publishing)
63,700 Standard Chartered plc 963,447
(banking)
114,000 TeleWest Communications plc(1) 489,701
(broadcasting & media)
65,156 Vodafone Group plc 1,240,574
(wireless communications)
See Notes to Financial Statements
www.americancentury.com 35
Global Growth--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
52,100 WPP Group plc $ 420,489
(business services & supplies) -------------------
11,158,274
-------------------
UNITED STATES--41.3%
4,500 Allergan, Inc. 418,500
(pharmaceuticals)
8,000 AlliedSignal Inc. 464,500
(aerospace & defense)
7,000 America Online Inc. 835,625
(computer software & services)
11,500 American Express Co. 1,393,656
(financial services)
12,500 American International Group, Inc. 1,428,906
(insurance)
6,000 American Standard Companies Inc.(1) 277,500
(building & home improvements)
6,200 Ameritech Corp. 408,038
(telephone communications)
11,000 Amgen Inc.(1) 696,094
(biotechnology)
10,500 Anheuser-Busch Companies, Inc. 767,156
(food & beverage)
23,000 AT&T Corp. 1,276,500
(telephone communications)
6,300 Banc One Corp. 356,344
(banking)
12,000 BellSouth Corp. 566,250
(telephone communications)
5,000 Biogen, Inc.(1) 545,312
(biotechnology)
6,000 Block (H & R), Inc. 289,125
(personal services)
7,300 Cablevision Systems Corp. Cl A(1) 575,788
(broadcasting & media)
5,300 Carnival Corp. Cl A 217,300
(leisure)
8,000 Chase Manhattan Corp. 580,000
(banking)
7,500 Cisco Systems Inc.(1) 817,266
(computer peripherals)
13,000 Citigroup Inc. 861,250
(banking)
9,000 Coca-Cola Company (The) 614,812
(food & beverage)
7,000 Colgate-Palmolive Co. 699,125
(consumer products)
36,000 Comcast Corp. Cl A 1,388,250
(broadcasting & media)
3,600 EMC Corp. (Mass.)(1) 358,650
(computer peripherals)
10,000 Enron Corp. 713,750
(energy-production & marketing)
5,000 Equitable Companies Inc. 350,938
(financial services)
6,000 Estee Lauder Companies, Inc. 547,500
(consumer products)
Shares Value
- --------------------------------------------------------------------------------
14,000 FDX Corporation(1) $ 770,875
(transportation)
5,800 Gap, Inc. (The) 362,862
(retail-apparel)
18,500 General Electric Co. (U.S.) 1,881,219
(diversified companies)
20,000 General Instrument Corp.(1) 773,750
(communications equipment)
8,500 Gillette Company 433,500
(consumer products)
12,000 Harley-Davidson, Inc. 612,750
(leisure)
6,900 Hartford Financial Services
Group Inc. (The) 436,425
(insurance)
4,000 Hewlett-Packard Co. 377,250
(computer systems)
6,600 Home Depot, Inc. 375,375
(retail-specialty)
6,200 Household International, Inc. 268,925
(financial services)
22,000 Infinity Broadcasting Corp. Cl A(1) 562,375
(broadcasting & media)
4,600 Intel Corp. 249,262
(electrical & electronic
components)
9,000 International Business
Machines Corp. 1,046,812
(computer systems)
10,000 Johnson & Johnson 926,250
(pharmaceuticals)
9,000 Kimberly-Clark Corp. 528,188
(paper & forest products)
9,000 Lucent Technologies Inc. 511,875
(communications equipment)
18,000 McDonald's Corp. 693,000
(restaurants)
30,000 MCI WorldCom, Inc.(1) 2,590,312
(telephone communications)
7,000 Medtronic, Inc. 497,000
(medical equipment & supplies)
18,000 Mellon Bank Corp. 642,375
(banking)
7,000 Merck & Co., Inc. 472,500
(pharmaceuticals)
25,000 Microsoft Corp.(1) 2,017,969
(computer software & services)
8,000 Morgan Stanley Dean Witter,
Discover & Co. 772,000
(financial services)
5,000 Motorola, Inc. 414,062
(communications equipment)
11,000 Pfizer, Inc. 1,177,000
(pharmaceuticals)
11,000 Pitney Bowes Inc. 701,250
(office equipment & supplies)
4,000 Procter & Gamble Co. (The) 373,500
(consumer products)
See Notes to Financial Statements
36 1-800-345-2021
Global Growth--Schedule of Investments
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
Shares Value
- --------------------------------------------------------------------------------
5,000 QUALCOMM Inc.(1) $ 486,094
(communications equipment)
17,400 Qwest Communications
International Inc.(1) 742,219
(telephone communications)
6,000 Schlumberger Ltd. 361,125
(energy-services)
8,300 StarMedia Network, Inc.(1) 488,144
(broadcasting & media)
6,000 State Street Corp. 457,500
(financial services)
10,400 Sun Microsystems, Inc.(1) 621,075
(computer systems)
6,800 Tellabs, Inc.(1) 398,012
(communications equipment)
6,000 Tiffany & Co. 497,250
(retail-specialty)
36,000 Time Warner Inc. 2,450,250
(broadcasting & media)
7,000 Tyco International Ltd. 611,625
(diversified companies)
14,000 Union Pacific Corp. 798,875
(railroad)
4,000 United Technologies Corp. 248,250
(aerospace & defense)
6,000 Univision Communications Inc. Cl A(1) 355,875
(broadcasting & media)
30,000 Wal-Mart Stores, Inc. 1,278,750
(retail-general merchandise)
4,000 Warner-Lambert Co. 248,000
(pharmaceuticals) -------------------
47,959,840
-------------------
TOTAL COMMON STOCKS 106,597,197
(Cost $95,968,775) -------------------
PREFERRED STOCKS-1.0%
BRAZIL
23,270,000 Centrais Electricas Brasileiras
S.A. Cl B 487,703
(utilities)
21,200,000 Embratel Participacoes S.A. 293,764
(telephone communications)
2,380,000 Petroleo Brasileiro S.A. 335,289
(energy-production & marketing) -------------------
TOTAL PREFERRED STOCKS 1,116,756
(Cost $2,189,214) -------------------
Principal Amount Value
- --------------------------------------------------------------------------------
TEMPORARY CASH INVESTMENTS-7.2%
$2,600,000 FHLB Discount Notes,
4.68%, 6/1/99 $ 2,600,000
Repurchase Agreement, Merrill Lynch & Co., Inc.
(U.S. Treasury obligations), in a joint trading
account at 4.75%, dated 5/28/99,
due 6/1/99 (Delivery value $5,803,061) 5,800,000
-------------------
TOTAL TEMPORARY CASH INVESTMENTS 8,400,000
(Cost $8,400,000) -------------------
TOTAL INVESTMENT SECURITIES-100.0% $116,113,953
(Cost $106,557,989) ===================
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Contracts Settlement Unrealized
to Sell Date Value Gain/(Loss)
- --------------------------------------------------------------------------------
4,285,875 EURO 6/30/99 $4,474,724 $30,579
172,414,000 JPY 6/30/99 1,424,203 (1,352)
----------------------------------------
$5,898,927 $29,227
========================================
(Value on Settlement Date $5,928,154)
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
FHLB = Federal Home Loan Bank
GDR = Global Depositary Receipt
JPY = Japanese Yen
(1) Non-income producing.
See Notes to Financial Statements
www.americancentury.com 37
Statements of Assets and Liabilities
- --------------------------------------------------------------------------------
Also known as a balance sheet, this statement breaks down the fund's ASSETS
(such as securities, cash, and other receivables) and LIABILITIES (money owed
for management fees and other expenses) as of the last day of the reporting
period. Subtracting the liabilities from the assets results in the fund's NET
ASSETS. For each class of shares, the net assets divided by the total number of
shares outstanding is the share price, or NET ASSET VALUE PER SHARE.
This statement also breaks down the fund's net assets into capital (shareholder
investments) and performance (investment income and gains/losses).
<TABLE>
<CAPTION>
MAY 31, 1999 (UNAUDITED) INTERNATIONAL INTERNATIONAL EMERGING GLOBAL
GROWTH DISCOVERY MARKETS GROWTH
ASSETS
<S> <C> <C> <C> <C>
Investment securities, at value (identified cost of
$2,219,359,222, $693,520,498, $42,503,286 and
$106,557,989, respectively) (Note 3) ...................... $2,761,775,195 $ 971,369,048 $ 51,783,230 $116,113,953
Foreign currency holdings, at value (identified cost of
$24,743,633, $29,949,727, $2,994,829 and
$1,368,819, respectively) ................................. 24,799,292 29,991,619 2,996,043 1,373,033
Cash ........................................................ 9,596,214 -- -- 1,805,781
Receivable for forward foreign currency exchange contracts .. 1,415,904 435,379 -- 30,579
Receivable for investments sold ............................. 16,544,135 12,237,592 2,536,679 1,745,052
Dividends and interest receivable ........................... 11,535,494 2,076,561 261,323 237,033
-------------- --------------- ------------- ------------
2,825,666,234 1,016,110,199 57,577,275 121,305,431
-------------- --------------- ------------- ------------
LIABILITIES
Disbursements in excess of demand deposit cash .............. -- 761,186 780,539 --
Payable for forward foreign currency exchange contracts ..... 173,116 32,189 -- 1,352
Payable for investments purchased ........................... 8,979,558 29,031,896 2,174,388 3,192,575
Accrued management fees (Note 2) ............................ 3,105,534 1,315,097 93,042 127,830
Distribution fees payable (Note 2) .......................... 6,743 4 3 11
Service fees payable (Note 2) ............................... 6,743 4 3 11
Accrued directors' fees and expenses ........................ 1,343 455 25 53
-------------- --------------- ------------- ------------
12,273,037 31,140,831 3,048,000 3,321,832
-------------- --------------- ------------- ------------
Net Assets .................................................. $2,813,393,197 $ 984,969,368 $ 54,529,275 $117,983,599
============== =============== ============= ============
NET ASSETS CONSIST OF:
Capital (par value and paid in surplus) ..................... $2,214,753,863 $ 688,225,141 $ 50,840,227 $104,791,490
Undistributed net investment income (loss) .................. 5,392,048 (3,102,721) (96,475) 92,182
Accumulated undistributed net realized gain (loss)
on investment and foreign currency transactions ........... 49,536,635 21,552,490 (5,480,612) 3,506,457
Net unrealized appreciation on investments and translation of
assets and liabilities in foreign currencies (Note 3) ..... 543,710,651 278,294,458 9,266,135 9,593,470
-------------- --------------- ------------- ------------
$2,813,393,197 $ 984,969,368 $ 54,529,275 $117,983,599
============== =============== ============= ============
Investor Class, $0.01 Par Value
Net assets .................................................. $2,748,411,044 $ 866,310,212 $ 41,800,176 $117,919,981
Shares outstanding .......................................... 282,430,446 80,943,784 9,646,643 19,872,704
Net asset value per share ................................... $ 9.73 $ 10.70 $ 4.33 $ 5.93
Advisor Class, $0.01 Par Value
Net assets .................................................. $ 31,492,125 $ 18,713 $ 16,949 $ 63,618
Shares outstanding .......................................... 3,238,586 1,754 3,912 10,720
Net asset value per share ................................... $ 9.72 $ 10.67 $ 4.33 $ 5.93
Institutional Class, $0.01 Par Value
Net assets .................................................. $ 33,490,028 $ 118,640,443 $ 12,712,150 N/A
Shares outstanding .......................................... 3,436,649 11,069,870 2,933,696 N/A
Net asset value per share ................................... $ 9.74 $ 10.72 $ 4.33 N/A
</TABLE>
See Notes to Financial Statements
38 1-800-345-2021
Statements of Operations
- --------------------------------------------------------------------------------
This statement shows how the fund's net assets changed during the reporting
period as a result of the fund's operations. In other words, it shows how much
money the fund made or lost as a result of dividend and interest income, fees
and expenses, and investment gains or losses. It does not include shareholder
transactions and distributions.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED INTERNATIONAL INTERNATIONAL EMERGING GLOBAL
MAY 31, 1999 (UNAUDITED) GROWTH DISCOVERY MARKETS GROWTH
INVESTMENT INCOME (LOSS)
Income:
<S> <C> <C> <C> <C>
Dividends (net of foreign taxes
withheld of $3,078,585, $702,121,
$33,499 and $59,357, respectively) ....... $ 20,832,476 $ 3,226,242 $ 231,737 $ 545,867
Interest ................................... 2,243,491 958,570 30,733 148,457
------------- ------------- ----------- ------------
23,075,967 4,184,812 262,470 694,324
------------- ------------- ----------- ------------
Expenses (Note 2):
Management fees ............................ 17,733,214 7,141,286 317,006 601,756
Distribution fees -- Advisor Class ......... 34,544 17 3 18
Service fees -- Advisor Class .............. 34,544 17 3 18
Directors' fees and expenses ............... 10,445 3,341 120 350
------------- ------------- ----------- ------------
17,812,747 7,144,661 317,132 602,142
------------- ------------- ----------- ------------
Net investment income (loss) ............... 5,263,220 (2,959,849) (54,662) 92,182
------------- ------------- ----------- ------------
REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS AND FOREIGN CURRENCY (NOTE 3)
Net realized gain (loss) on:
Investments ................................ 98,295,406 31,874,408 2,505,896 4,069,518
Foreign currency transactions .............. (3,809,384) (582,760) (836,170) (563,061)
------------- ------------- ----------- ------------
94,486,022 31,291,648 1,669,726 3,506,457
------------- ------------- ----------- ------------
Change in net unrealized appreciation
(depreciation) on:
Investments ................................ 169,846,800 129,218,618 7,377,105 11,708,614
Translation of assets and
liabilities in foreign currencies ........ (83,858,190) (23,159,291) (684,910) (2,115,144)
------------- ------------- ----------- ------------
85,988,610 106,059,327 6,692,195 9,593,470
------------- ------------- ----------- ------------
Net realized and unrealized gain on
investments and foreign currency ......... 180,474,632 137,350,975 8,361,921 13,099,927
------------- ------------- ----------- ------------
Net Increase in Net Assets
Resulting from Operations .................. $ 185,737,852 $ 134,391,126 $ 8,307,259 $ 13,192,109
============= ============= =========== ============
</TABLE>
See Notes to Financial Statements
www.americancentury.com 39
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
This statement shows how the fund's net assets changed over the past two
reporting periods. It details how much the fund grew or shrank as a result of
operations (as detailed on the previous page), income and capital gain
distributions, and shareholder investments and redemptions.
<TABLE>
<CAPTION>
SIX MONTHS ENDED MAY 31, 1999 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 1998
INTERNATIONAL GROWTH INTERNATIONAL DISCOVERY
Increase in Net Assets 1999 1998 1999 1998
OPERATIONS
<S> <C> <C> <C> <C>
Net investment income (loss) ....................... $ 5,263,220 $ 7,275,076 $ (2,959,849) $ (2,736,864)
Net realized gain (loss) on investments and
foreign currency transactions .................... 94,486,022 9,916,493 31,291,648 (3,456,660)
Change in net unrealized appreciation (depreciation)
on investments and translation of assets and
liabilities in foreign currencies ................ 85,988,610 289,105,638 106,059,327 77,131,758
--------------- --------------- ------------- -------------
Net increase (decrease) in net assets resulting
from operations .................................. 185,737,852 306,297,207 134,391,126 70,938,234
--------------- --------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income:
Investor Class ................................... (4,441,369) (5,227,590) -- (1,491,376)
Advisor Class .................................... (11,642) (5,388) -- --
Institutional Class .............................. (57,931) (57,980) -- --
From net realized gains on investment transactions:
Investor Class ................................... (38,835,562) (237,083,658) (2,870,478) (33,708,327)
Advisor Class .................................... (345,866) (1,325,086) (40) --
Institutional Class .............................. (225,320) (2,488,279) (229,210) --
--------------- --------------- ------------- -------------
Decrease in net assets from distributions .......... (43,917,690) (246,187,981) (3,099,728) (35,199,703)
--------------- --------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS (NOTE 4)
Net increase in net assets from capital
share transactions ............................... 188,214,132 666,675,328 11,197,423 180,415,416
--------------- --------------- ------------- -------------
Net increase in net assets ......................... 330,034,294 726,784,554 142,488,821 216,153,947
NET ASSETS
Beginning of period ................................ 2,483,358,903 1,756,574,349 842,480,547 626,326,600
--------------- --------------- ------------- -------------
End of period ...................................... $ 2,813,393,197 $ 2,483,358,903 $ 984,969,368 $ 842,480,547
=============== =============== ============= =============
Undistributed net investment income (loss) ......... $ 5,392,048 $ 4,639,770 $ (3,102,721) $ (142,872)
=============== =============== ============= =============
</TABLE>
See Notes to Financial Statements
40 1-800-345-2021
Statements of Changes in Net Assets
- --------------------------------------------------------------------------------
(Continued)
This statement shows how the fund's net assets changed over the past two
reporting periods. It details how much the fund grew or shrank as a result of
operations (as detailed on the previous page), income and capital gain
distributions, and shareholder investments and redemptions.
<TABLE>
<CAPTION>
SIX MONTHS ENDED MAY 31, 1999 (UNAUDITED) AND YEAR ENDED NOVEMBER 30, 1998
EMERGING MARKETS GLOBAL GROWTH
Increase in Net Assets 1999 1998 1999
OPERATIONS
<S> <C> <C> <C>
Net investment income (loss) ....................... $ (54,662) $ (6,575) $ 92,182
Net realized gain (loss) on investments and
foreign currency transactions .................... 1,669,726 (6,498,850) 3,506,457
Change in net unrealized appreciation (depreciation)
on investments and translation of assets and
liabilities in foreign currencies ................ 6,692,195 3,572,630 9,593,470
------------ ------------ ------------
Net increase (decrease) in net assets resulting
from operations .................................. 8,307,259 (2,932,795) 13,192,109
------------ ------------ ------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income:
Investor Class ................................... -- -- --
Advisor Class .................................... -- -- --
Institutional Class .............................. -- -- --
From net realized gains on investment transactions:
Investor Class ................................... -- -- --
Advisor Class .................................... -- -- --
Institutional Class .............................. -- -- --
------------ ------------ ------------
Decrease in net assets from distributions .......... -- -- --
------------ ------------ ------------
CAPITAL SHARE TRANSACTIONS (NOTE 4)
Net increase in net assets from capital
share transactions ............................... 25,097,893 12,227,403 104,791,490
------------ ------------ ------------
Net increase in net assets ......................... 33,405,152 9,294,608 117,983,599
NET ASSETS
Beginning of period ................................ 21,124,123 11,829,515 --
------------ ------------ ------------
End of period ...................................... $ 54,529,275 $ 21,124,123 $117,983,599
============ ============ ============
Undistributed net investment income (loss) ......... $ (96,475) $ (41,813) $ 92,182
============ ============ ============
</TABLE>
See Notes to Financial Statements
www.americancentury.com 41
Notes to Financial Statements
- --------------------------------------------------------------------------------
MAY 31, 1999 (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 company. International Growth Fund (International
Growth), International Discovery Fund (International Discovery), Emerging
Markets Fund (Emerging Markets) and Global Growth Fund (Global Growth) (the
funds) are the funds currently issued by the corporation. The funds' investment
objective is to seek capital growth by investing primarily in equity securities.
International Growth seeks to achieve its investment objective by investing in
securities of issuers in developed markets. International Discovery seeks to
achieve its investment objective by investing in issuers having comparatively
smaller market capitalizations. Emerging Markets seeks to achieve its investment
objective by investing in issuers in emerging market countries. Global Growth
seeks to achieve its investment objective by investing in U.S. and foreign
equity securities of issuers in developed countries. Each fund is 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 net assets of
the class to which such shares belong, and have identical voting, dividend,
liquidation and other rights and the same terms and conditions, except for class
specific expenses and exclusive rights to vote on matters affecting only
individual classes. Sale of the Institutional Class and Advisor Class for
Emerging Markets commenced on January 28, 1999 and May 12, 1999, respectively.
Global Growth's inception date and commencement of the Investor Class was
December 1, 1998. Sale of the Advisor Class for Global Growth commenced on
February 5, 1999. Sale of the Institutional Class for Global Growth had not
commenced as of May 31, 1999. The following significant accounting policies are
in accordance with generally accepted accounting principles; these principles
may require the use of estimates by fund management.
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 as of the
trade. 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 accretion of discounts and amortization of premiums.
FOREIGN CURRENCY TRANSACTIONS -- All assets and liabilities initially
expressed in foreign currencies are translated into U.S. dollars at prevailing
exchange rates at period end. Purchases and sales of investment securities,
dividend and interest income, and certain expenses are translated at the rates
of exchange prevailing on the respective dates of such transactions. Realized
and unrealized gains and losses from foreign currency translations arise from
changes in currency exchange rates.
Net realized and unrealized foreign currency exchange gains or losses
occurring during the holding period of investment securities are a component of
realized gain (loss) on foreign currency transactions and unrealized
appreciation (depreciation) on translation of assets and liabilities in foreign
currencies, respectively.
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS -- The funds may enter into
forward foreign currency exchange contracts to facilitate transactions of
securities denominated in a foreign currency or to hedge the fund's exposure to
foreign currency exchange rate fluctuations. The net U.S. dollar value of
foreign currency underlying all contractual commitments held by the funds and
the resulting unrealized appreciation or depreciation are determined daily using
prevailing exchange rates. 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 collateral, represented by 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
securities transferred to ensure the value, including accrued interest, of the
securities under each repurchase agreement is greater than amounts owed to the
funds under each repurchase agreement.
JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, each fund along with other registered
investment companies having management agreements with ACIM, may transfer
uninvested cash balances into a joint trading account. These balances are
invested in one or more repurchase agreements that are collateralized by U.S.
Treasury or Agency obligations.
INCOME TAX STATUS -- It is the funds' policy to distribute all net
investment income and net realized gains to shareholders and to otherwise
qualify as a regulated investment company under the provisions of the Internal
Revenue Code. Accordingly, no provision has been made for federal or state
income taxes.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions to shareholders are recorded
on the ex-dividend date. Distributions from net investment income and net
realized gains are declared and paid annually.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net realized gains and losses for financial
statement and tax purposes and may result in reclassification among certain
capital accounts.
42 1-800-345-2021
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
At November 30, 1998, Emerging Markets had accumulated net realized capital
loss carryovers for federal income tax purposes of $6,440,968 (expiring 2005
through 2006) which may be used to offset future taxable gains.
ADDITIONAL INFORMATION -- Funds Distributor, Inc. (FDI) is the corporation's
distributor. Certain officers of FDI are also officers of the corporation.
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES
The corporation has entered into a Management Agreement with ACIM that
provides each fund with investment advisory and management services in exchange
for a single, unified management fee per class. The Agreement provides that all
expenses of the funds, except brokerage commissions, taxes, interest, fees and
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 class's average daily closing net assets during the
previous month.
The annual management fee for each class of International Growth is as
follows:
INVESTOR ADVISOR INSTITUTIONAL
CLASS CLASS CLASS
AVERAGE NET ASSETS
First $1 billion .................... 1.50% 1.25% 1.30%
Of the next $1 billion .............. 1.20% 0.95% 1.00%
Over $2 billion ..................... 1.10% 0.85% 0.90%
The annual management fee for each class of International Discovery is as
follows:
INVESTOR ADVISOR INSTITUTIONAL
CLASS CLASS CLASS
AVERAGE NET ASSETS
First $500 million .................. 1.75% 1.50% 1.55%
Of the next $500 million ............ 1.40% 1.15% 1.20%
Over $1 billion ..................... 1.20% 0.95% 1.00%
The annual management fee for each class of Emerging Markets is as follows:
INVESTOR ADVISOR INSTITUTIONAL
CLASS CLASS CLASS
AVERAGE NET ASSETS
First $500 million .................. 2.00% 1.75% 1.80%
Of the next $500 million ............ 1.50% 1.25% 1.30%
Over $1 billion ..................... 1.25% 1.00% 1.05%
www.americancentury.com 43
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
The annual management fee for each class of Global Growth is as follows:
INVESTOR ADVISOR INSTITUTIONAL
CLASS CLASS CLASS
AVERAGE NET ASSETS
First $1 billion .................... 1.30% 1.05% 1.10%
Of the next $1 billion .............. 1.15% 0.90% 0.95%
Over $2 billion ..................... 1.05% 0.80% 0.85%
The Board of Directors has adopted the Advisor Class Master Distribution
and Shareholder Services Plan (the plan), pursuant to Rule 12b-1 of the
Investment Company Act of 1940. The 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 by financial
intermediaries in connection with distributing shares of the Advisor Class
including, but not limited to, payments to brokers, dealers, and financial
institutions that have entered into sales agreements with respect to shares of
the funds. The service fee provides compensation for shareholder and
administrative services rendered by ACIM, its affiliates or independent third
party providers. Fees incurred under the plan during the period ended May 31,
1999, were $69,088, $34, $6 and $36 for International Growth, International
Discovery, Emerging Markets and Global Growth, respectively.
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, and
the corporation's transfer agent, American Century Services Corporation.
- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
Investment transactions, excluding short-term investments, for the six months
ended May 31, 1999, were as follows:
<TABLE>
INTERNATIONAL INTERNATIONAL EMERGING GLOBAL
GROWTH DISCOVERY MARKETS GROWTH
<S> <C> <C> <C> <C>
Purchases ................ $1,619,930,401 $472,253,441 $54,998,110 $155,780,977
Proceeds from sales ...... $1,614,631,091 $493,263,708 $31,804,957 $61,015,081
On May 31, 1999, the composition of unrealized appreciation and depreciation
of investment securities based on the aggregate cost of investments for federal
income tax purposes was as follows:
INTERNATIONAL INTERNATIONAL EMERGING GLOBAL
GROWTH DISCOVERY MARKETS GROWTH
Appreciation ............. $546,133,636 $282,808,739 $10,051,071 $12,056,910
Depreciation ............. (47,987,111) (14,674,111) (1,480,498) (2,500,946)
--------------- --------------- ------------- --------------
Net ...................... $498,146,525 $268,134,628 $ 8,570,573 $ 9,555,964
=============== =============== ============= ==============
Federal Tax Cost ......... $2,263,628,670 $703,234,420 $43,212,657 $106,557,989
=============== =============== ============= ==============
</TABLE>
44 1-800-345-2021
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
4. CAPITAL SHARE TRANSACTIONS
Transactions in shares of the funds were as follows:
<TABLE>
<CAPTION>
INTERNATIONAL GROWTH INTERNATIONAL DISCOVERY
SHARES AMOUNT SHARES AMOUNT
INVESTOR CLASS
<S> <C> <C> <C> <C>
Authorized shares .......................... 400,000,000 220,000,000
=============== ==============
Six months ended May 31, 1999
Sold ....................................... 167,288,286 $1,620,348,339 13,691,484 $137,650,724
Issued in reinvestment of distributions .... 4,146,307 38,365,844 292,629 2,684,217
Redeemed ................................... (153,568,391) (1,499,393,041) (17,607,639) (174,548,909)
--------------- ----------------- -------------- ---------------
Net increase (decrease) .................... 17,866,202 $ 159,321,142 (3,623,526) $ (34,213,968)
=============== ================= ============== ===============
Year ended November 30, 1998
Sold ....................................... 338,695,442 $3,150,048,946 39,468,455 $378,281,301
Issued in reinvestment of distributions .... 29,659,031 237,081,794 4,246,933 33,877,525
Redeemed ................................... (291,295,313) (2,728,685,938) (32,494,579) (295,297,992)
--------------- ----------------- -------------- ---------------
Net increase ............................... 77,059,160 $ 658,444,802 11,220,809 $116,860,834
=============== ================= ============== ===============
ADVISOR CLASS
Authorized shares .......................... 50,000,000 10,000,000
=============== ==============
Six months ended May 31, 1999
Sold ....................................... 1,928,030 $ 18,852,829 588 $6,116
Issued in reinvestment of distributions .... 38,171 353,152 4 40
Redeemed ................................... (1,069,541) (10,507,885) -- --
--------------- ----------------- -------------- ---------------
Net increase ............................... 896,660 $ 8,698,096 592 $6,156
=============== ================= ============== ===============
Year ended November 30, 1998(1)
Sold ....................................... 1,970,051 $18,561,418 1,162 $11,728
Issued in reinvestment of distributions .... 166,517 1,330,469 -- 6
Redeemed ................................... (785,223) (7,325,105) -- --
--------------- ----------------- -------------- ---------------
Net increase ............................... 1,351,345 $12,566,782 1,162 $11,734
=============== ================= ============== ===============
INSTITUTIONAL CLASS
Authorized shares .......................... 50,000,000 25,000,000
=============== ==============
Six months ended May 31, 1999
Sold ....................................... 3,820,579 $38,241,225 5,138,927 $51,949,788
Issued in reinvestment of distributions .... 28,963 267,978 24,968 229,210
Redeemed ................................... (1,875,075) (18,314,309) (683,277) (6,773,763)
--------------- ----------------- -------------- ---------------
Net increase ............................... 1,974,467 $20,194,894 4,480,618 $45,405,235
=============== ================= ============== ===============
Year ended November 30, 1998(2)
Sold ....................................... 4,437,498 $42,547,908 8,496,060 $81,509,088
Issued in reinvestment of distributions .... 318,681 2,546,259 -- --
Redeemed ................................... (5,337,650) (49,430,423) (1,906,808) (17,966,240)
--------------- ----------------- -------------- ---------------
Net increase (decrease) .................... (581,471) $ (4,336,256) 6,589,252 $63,542,848
=============== ================= ============== ===============
</TABLE>
(1) April 28, 1998 (commencement of sale) through November 30, 1998 for
International Discovery.
(2) January 2, 1998 (commencement of sale) through November 30, 1998 for
International Discovery.
www.americancentury.com 45
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
Transactions in shares of the funds were as follows:
<TABLE>
<CAPTION>
EMERGING MARKETS GLOBAL GROWTH
SHARES AMOUNT SHARES AMOUNT
INVESTOR CLASS
<S> <C> <C> <C> <C>
Authorized shares ........................... 50,000,000 220,000,000
=============== ==============
Six months ended May 31, 1999
Sold ........................................ 8,643,964 $34,130,992 24,281,849 $129,841,386
Redeemed .................................... (5,046,921) (19,057,346) (4,409,145) (25,115,295)
--------------- ----------------- -------------- ---------------
Net increase ................................ 3,597,043 $15,073,646 19,872,704 $104,726,091
=============== ================= ============== ===============
Year ended November 30, 1998
Sold ........................................ 11,437,641 $43,805,177
Redeemed .................................... (8,239,183) (31,577,774)
--------------- -----------------
Net increase ................................ 3,198,458 $12,227,403
=============== =================
ADVISOR CLASS
Authorized shares ........................... 12,500,000 25,000,000
=============== ==============
Period ended May 31, 1999(1)
Sold ........................................ 20,643 $ 91,116 11,940 $72,533
Redeemed .................................... (16,731) (73,281) (1,220) (7,134)
--------------- ----------------- -------------- ---------------
Net increase ................................ 3,912 $ 17,835 10,720 $65,399
=============== ================= ============== ===============
INSTITUTIONAL CLASS
Authorized shares ........................... 12,500,000
===============
Period ended May 31, 1999(2)
Sold ........................................ 2,933,696 $10,006,412
--------------- -----------------
Net increase ................................ 2,933,696 $10,006,412
=============== =================
</TABLE>
(1) May 12, 1999 (commencement of sale) through May 31, 1999 for Emerging
Markets and February 5, 1999 (commencement of sale) through May 31, 1999
for Global Growth.
(2) January 28, 1999 (commencement of sale) through May 31, 1999.
46 1-800-345-2021
Notes to Financial Statements
- --------------------------------------------------------------------------------
(Continued)
MAY 31, 1999 (UNAUDITED)
- --------------------------------------------------------------------------------
5. BANK LOANS
Effective December 18, 1998, the funds, along with certain other funds
managed by ACIM, entered into an unsecured $570,000,000 bank line of credit
agreement with Chase Manhattan Bank. Borrowings under the agreement bear
interest at the Federal Funds rate plus 0.40%. The funds may borrow money for
temporary or emergency purposes to fund shareholder redemptions. The funds did
not borrow from the line during the period December 18, 1998 through May 31,
1999.
- --------------------------------------------------------------------------------
6. FUND EVENTS
The following name changes became effective March 1, 1999:
NEW NAME FORMER NAME
FUND: International Growth Fund American Century - Twentieth Century
International Growth Fund
International Discovery Fund American Century - Twentieth Century
International Discovery Fund
Emerging Markets Fund American Century - Twentieth Century
Emerging Markets Fund
Global Growth Fund American Century - Twentieth Century
Global Growth Fund
www.americancentury.com 47
International Growth--Financial Highlights
- --------------------------------------------------------------------------------
This table itemizes investment results and distributions on a per-share
basis to illustrate share price changes for each of the last five fiscal years
(or less, if the share class is not five years old). It also includes several
key statistics for each reporting period, including tOTAL RETURN, INCOME RATIO
(net income as a percentage of average net assets), EXPENSE RATIO (operating
expenses as a percentage of average net assets), and PORTFOLIO TURNOVER (a gauge
of the fund's trading activity).
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
<TABLE>
<CAPTION>
Investor Class
1999(1) 1998 1997 1996 1995 1994
PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ....... $9.25 $9.22 $8.73 $7.51 $7.47 $7.34
---------- ---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net Investment Income (Loss) ............. 0.02(2) 0.03(2) -- (0.01)(2) 0.01 (0.04)
Net Realized and Unrealized Gain on
Investment Transactions .................. 0.63 1.31 1.41 1.24 0.40 0.57
---------- ---------- ---------- ---------- ---------- ----------
Total From Investment Operations ......... 0.65 1.34 1.41 1.23 0.41 0.53
---------- ---------- ---------- ---------- ---------- ----------
Distributions
From Net Investment Income ............... (0.02) (0.03) -- (0.01) -- --
In Excess of Net Investment Income ....... -- -- -- -- -- --
From Net Realized Gains on
Investment Transactions .................. (0.15) (1.28) (0.92) -- (0.37) (0.40)
---------- ---------- ---------- ---------- ---------- ----------
Total Distributions ...................... (0.17) (1.31) (0.92) (0.01) (0.37) (0.40)
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period ............. $9.73 $9.25 $9.22 $8.73 $7.51 $7.47
========== ========== ========== ========== ========== ==========
Total Return(3) .......................... 7.03% 16.74% 18.12% 16.35% 5.93% 7.28%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average
Net Assets ................................. 1.28%(4) 1.33% 1.38%(5) 1.65%(5) 1.77% 1.84%
Ratio of Net Investment Income
(Loss) to Average Net Assets ............... 0.38%(4) 0.33% 0.04% (0.07)% 0.25% (0.53)%
Portfolio Turnover Rate .................... 60% 190% 163% 158% 169% 242%
Net Assets, End of Period (in thousands) ...$2,748,411 $2,448,162 $1,728,617 $1,342,608 $1,210,442 $1,316,642
</TABLE>
(1) Six months ended May 31, 1999 (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. voluntarily waived a portion of
its management fee effective August 1, 1996 through July 30, 1997. In
absence of the management fee waiver, the ratio of operating expenses to
average net assets would have been 1.56% and 1.76% for the years ended
November 30, 1997 and November 30, 1996, respectively.
See Notes to Financial Statements
48 1-800-345-2021
International Growth--Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
<TABLE>
<CAPTION>
Advisor Class
1999(1) 1998 1997 1996(2)
PER-SHARE DATA
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ... $ 9.24 $ 9.20 $ 8.72 $ 8.41
---------- ---------- ---------- ----------
Income From Investment Operations
Net Investment Income (Loss) ......... 0.01(3) -- (0.03) (0.01)(3)
Net Realized and Unrealized
Gain on Investment Transactions ... 0.63 1.33 1.43 0.32
---------- ---------- ---------- ----------
Total From Investment Operations ..... 0.64 1.33 1.40 0.31
---------- ---------- ---------- ----------
Distributions
From Net Investment Income ........... (0.01) (0.01) -- --
From Net Realized Gains on
Investment Transactions ........... (0.15) (1.28) (0.92) --
---------- ---------- ---------- ----------
Total Distributions .................. (0.16) (1.29) (0.92) --
---------- ---------- ---------- ----------
Net Asset Value, End of Period ......... $ 9.72 $ 9.24 $ 9.20 $ 8.72
========== ========== ========== ==========
Total Return(4) ...................... 6.90% 16.58% 17.97% 3.69%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ................ 1.53%(5) 1.58% 1.63% 1.67%(5)
Ratio of Net Investment Income
(Loss) to Average Net Assets ......... 0.13%(5) 0.08% (0.21)% (0.76)%(5)
Portfolio Turnover Rate ................ 60% 190% 163% 158%
Net Assets, End of Period (in thousands) $ 31,492 $ 21,635 $ 9,111 $ 3,803
</TABLE>
(1) Six months ended May 31, 1999 (unaudited).
(2) October 2, 1996 (commencement of sale) 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.
See Notes to Financial Statements
www.americancentury.com 49
International Growth--Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
<TABLE>
<CAPTION>
Institutional Class
1999(1) 1998 1997(2)
PER-SHARE DATA
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ..................................$ 9.28 $ 9.22 $ 9.26
---------- ---------- ----------
Income From Investment Operations
Net Investment Income ............................................... 0.04(3) 0.05(3) --
Net Realized and Unrealized Gain (Loss) on Investment Transactions .. 0.61 1.32 (0.04)
---------- ---------- ----------
Total From Investment Operations .................................... 0.65 1.37 (0.04)
---------- ---------- ----------
Distributions
From Net Investment Income .......................................... (0.04) (0.03) --
From Net Realized Gains on Investment Transactions .................. (0.15) (1.28) --
---------- ---------- ----------
Total Distributions ................................................. (0.19) (1.31) --
---------- ---------- ----------
Net Asset Value, End of Period ........................................$ 9.74 $ 9.28 $ 9.22
========== ========== ==========
Total Return(4) ..................................................... 7.03% 17.14% (0.43)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ..................... 1.08%(5) 1.13% 1.18%(5)
Ratio of Net Investment Income (Loss) to Average Net Assets ........... 0.58%(5) 0.53% (0.53)%(5)
Portfolio Turnover Rate ............................................... 60% 190% 163%
Net Assets, End of Period (in thousands) ..............................$ 33,490 $ 13,562 $ 18,846
</TABLE>
(1) Six months ended May 31, 1999 (unaudited).
(2) November 20, 1997 (commencement of sale) through November 30, 1997.
(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.
See Notes to Financial Statements
50 1-800-345-2021
International Discovery--Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
<TABLE>
<CAPTION>
Investor Class
1999(1) 1998 1997 1996 1995 1994(2)
PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ....... $9.24 $8.54 $7.60 $5.70 $5.39 $5.00
---------- ---------- ---------- ---------- ---------- ----------
Income From Investment Operations
Net Investment Income (Loss) ............. (0.03)(3) (0.03)(3) (0.03) (0.02)(3) 0.03 (0.02)
Net Realized and Unrealized Gain on
Investment Transactions .................. 1.52 1.22 1.31 1.95 0.28 0.41
---------- ---------- ---------- ---------- ---------- ----------
Total From Investment Operations ......... 1.49 1.19 1.28 1.93 0.31 0.39
---------- ---------- ---------- ---------- ---------- ----------
Distributions
From Net Investment Income ............... -- (0.02) (0.02) (0.01) -- --
In Excess of Net Investment Income ....... -- -- -- (0.02) -- --
From Net Realized Gains on
Investment Transactions .................. (0.03) (0.47) (0.32) -- -- --
---------- ---------- ---------- ---------- ---------- ----------
Total Distributions ...................... (0.03) (0.49) (0.34) (0.03) -- --
---------- ---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Period ............. $10.70 $9.24 $8.54 $7.60 $5.70 $5.39
========== ========== ========== ========== ========== ==========
Total Return(4) .......................... 16.23% 14.79% 17.76% 34.06% 5.75% 7.80%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average
Net Assets ................................. 1.59%(5) 1.64% 1.70%(6) 1.88%(6) 2.00% 2.00%(5)
Ratio of Net Investment Income
(Loss) to Average Net Assets ............... (0.67)%(5) (0.36)% (0.37)% (0.31)% 0.27% (0.48)%(5)
Portfolio Turnover Rate .................... 55% 178% 146% 130% 168% 56%
Net Assets, End of Period (in thousands) ... $866,310 $781,551 $626,327 $377,128 $114,579 $111,202
</TABLE>
(1) Six months ended May 31, 1999 (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. voluntarily waived a portion of
its management fee effective August 1, 1996 through July 30, 1997. In
absence of the management fee waiver, the ratio of operating expenses to
average net assets would have been 1.87% and 1.99% for the years ended
November 30, 1997 and November 30, 1996, respectively.
See Notes to Financial Statements
www.americancentury.com 51
International Discovery--Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED
<TABLE>
<CAPTION>
Advisor Class
1999(1) 1998(2)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period ............................... $ 9.22 $ 10.10
---------- ----------
Income From Investment Operations
Net Investment Loss(3) ........................................... (0.04) (0.02)
Net Realized and Unrealized Gain (Loss) on Investment Transactions 1.52 (0.86)
---------- ----------
Total From Investment Operations ................................. 1.48 (0.88)
---------- ----------
Distributions
From Net Investment Income ....................................... -- --
From Net Realized Gains on Investment Transactions ............... (0.03) --
---------- ----------
Total Distributions .............................................. (0.03) --
---------- ----------
Net Asset Value, End of Period ..................................... $ 10.67 $ 9.22
========== ==========
Total Return(4) .................................................. 16.16% (8.71)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets .................. 1.84%(5) 1.89%(5)
Ratio of Net Investment Loss to Average Net Assets ................. (0.92)%(5) (0.60)%(5)
Portfolio Turnover Rate ............................................ 55% 178%
Net Assets, End of Period .......................................... $ 18,713 $ 10,708
</TABLE>
(1) Six months ended May 31, 1999 (unaudited).
(2) April 28, 1998 (commencement of sale) through November 30, 1998.
(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.
See Notes to Financial Statements
52 1-800-345-2021
International Discovery--Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED
<TABLE>
<CAPTION>
Institutional Class
1999(1) 1998(2)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period ........................ $ 9.25 $ 8.18
----------- -----------
Income From Investment Operations
Net Investment Loss(3) .................................... (0.01) --
Net Realized and Unrealized Gain on Investment Transactions 1.51 1.07
----------- -----------
Total From Investment Operations .......................... 1.50 1.07
----------- -----------
Distributions
From Net Investment Income ................................ -- --
From Net Realized Gains on Investment Transactions ........ (0.03) --
----------- -----------
Total Distributions ....................................... (0.03) --
----------- -----------
Net Asset Value, End of Period .............................. $ 10.72 $ 9.25
=========== ===========
Total Return(4) ........................................... 16.32% 13.08%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ........... 1.39%(5) 1.44%(5)
Ratio of Net Investment Loss to Average Net Assets .......... (0.47)%(5) (0.00)%(5)
Portfolio Turnover Rate ..................................... 55% 178%
Net Assets, End of Period (in thousands) .................... $ 118,640 $ 60,918
</TABLE>
(1) Six months ended May 31, 1999 (unaudited).
(2) January 2, 1998 (commencement of sale) through November 30, 1998.
(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.
See Notes to Financial Statements
www.americancentury.com 53
Emerging Markets--Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
<TABLE>
<CAPTION>
Investor Class
1999(1) 1998 1997(2)
PER-SHARE DATA
<S> <C> <C> <C>
Net Asset Value, Beginning of Period ................................. $ 3.49 $ 4.15 $ 5.00
---------- ---------- ----------
Income From Investment Operations
Net Investment Loss(3) ............................................. (0.01) -- (0.01)
Net Realized and Unrealized Gain (Loss) on Investment Transactions . 0.85 (0.66) (0.84)
---------- ---------- ----------
Total From Investment Operations ................................... 0.84 (0.66) (0.85)
---------- ---------- ----------
Net Asset Value, End of Period ....................................... $ 4.33 $ 3.49 $ 4.15
========== ========== ==========
Total Return(4) .................................................... 24.07% (15.90)% (17.00)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets .................... 2.00%(5) 2.00% 2.00%(5)
Ratio of Net Investment Loss to Average Net Assets ................... (0.61)%(5) (0.03)% (0.74)%(5)
Portfolio Turnover Rate .............................................. 102% 270% 36%
Net Assets, End of Period (in thousands) ............................. $ 41,800 $ 21,124 $ 11,830
</TABLE>
(1) Six months ended May 31, 1999 (unaudited).
(2) September 30, 1997 (inception) through November 30, 1997.
(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.
See Notes to Financial Statements
54 1-800-345-2021
Emerging Markets--Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
Advisor Class
1999(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period ........................... $ 4.44
----------
Income From Investment Operations
Net Investment Income(2) ..................................... 0.01
Net Realized and Unrealized Loss on Investment Transactions .. (0.12)
----------
Total From Investment Operations ............................. (0.11)
----------
Net Asset Value, End of Period ................................. $ 4.33
==========
Total Return(3) .............................................. (2.48)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets .............. 2.25%(4)
Ratio of Net Investment Income to Average Net Assets ........... 6.60%(4)
Portfolio Turnover Rate ........................................ 102%
Net Assets, End of Period ...................................... $ 16,949
(1) May 12, 1999 (commencement of sale) through May 31, 1999 (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.
See Notes to Financial Statements
www.americancentury.com 55
Emerging Markets--Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
Institutional
Class
1999(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period .............................. $3.39
---------
Income From Investment Operations
Net Investment Income(2) ........................................ 0.01
Net Realized and Unrealized Gain on Investment Transactions ..... 0.93
---------
Total From Investment Operations ................................ 0.94
---------
Net Asset Value, End of Period .................................... $4.33
=========
Total Return(3) ................................................. 27.73%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ................. 1.80%(4)
Ratio of Net Investment Income to Average Net Assets .............. 0.61%(4)
Portfolio Turnover Rate ........................................... 102%
Net Assets, End of Period (in thousands) .......................... $12,712
(1) January 28, 1999 (commencement of sale) through May 31, 1999 (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.
See Notes to Financial Statements
56 1-800-345-2021
Global Growth--Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
Investor
Class
1999(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period ............................. $5.00
---------
Income From Investment Operations
Net Investment Income(2) ....................................... 0.01
Net Realized and Unrealized Gain on Investment Transactions .... 0.92
---------
Total From Investment Operations ............................... 0.93
---------
Net Asset Value, End of Period ................................... $5.93
=========
Total Return(3) ................................................ 18.60%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ................ 1.30%(4)
Ratio of Net Investment Income to Average Net Assets ............. 0.20%(4)
Portfolio Turnover Rate .......................................... 65%
Net Assets, End of Period (in thousands) ......................... $117,920
(1) Six months ended May 31, 1999 (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.
See Notes to Financial Statements
www.americancentury.com 57
Global Growth--Financial Highlights
- --------------------------------------------------------------------------------
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIOD INDICATED
Advisor
Class
1999(1)
PER-SHARE DATA
Net Asset Value, Beginning of Period ............................ $5.58
---------
Income From Investment Operations
Net Investment Income(2) ...................................... 0.01
Net Realized and Unrealized Gain on Investment Transactions ... 0.34
---------
Total From Investment Operations .............................. 0.35
---------
Net Asset Value, End of Period .................................. $5.93
=========
Total Return(3) ............................................... 6.27%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ............... 1.55%(4)
Ratio of Net Investment Income to Average Net Assets ............ 0.43%(4)
Portfolio Turnover Rate ......................................... 65%
Net Assets, End of Period ....................................... $63,618
(1) February 5, 1999 (commencement of sale) through May 31, 1999 (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.
See Notes to Financial Statements
58 1-800-345-2021
Share Class and Retirement Account Information
- --------------------------------------------------------------------------------
SHARE CLASSES
Three classes of shares are authorized for sale by the funds: Investor
Class, Advisor Class and Institutional Class.
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.
ADVISOR CLASS shares are 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.
INSTITUTIONAL CLASS shares are available to endowments, foundations, defined
benefit pension plans or financial intermediaries serving these investors. This
class 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. In recognition of the larger investments
and account balances and comparatively lower transaction costs, the total
expense ratio of the Institutional Class shares is 0.20% less than the total
expense ratio of the Investor 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)
account] 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 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 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 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.
www.americancentury.com 59
Background Information
- --------------------------------------------------------------------------------
PORTFOLIO MANAGERS
- --------------------------------------------------------------------------------
International Growth
HENRIK STRABO
MARK KOPINSKI
- --------------------------------------------------------------------------------
International Discovery
HENRIK STRABO
MARK KOPINSKI
BRIAN BRADY
- --------------------------------------------------------------------------------
Emerging Markets
MARK KOPINSKI
MIKE DONNELLY, CFA
- --------------------------------------------------------------------------------
Global Growth
HENRIK STRABO
BRADLEY AMOILS
INVESTMENT PHILOSOPHY AND POLICIES
American Century offers 13 growth funds including domestic equity,
specialty, international, and global. The philosophy behind these growth funds
focuses on three important principles. First, the funds seek to own successful
companies, which we define as those with growing earnings and revenues. Second,
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 those opportunities can significantly limit the
potential for gain. Third, the funds are managed by teams, rather than by one
"star." We believe this allows 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. These companies will be located primarily in developed countries.
INTERNATIONAL DISCOVERY invests primarily in the equity securities of
smaller foreign companies. The fund may experience greater share price
fluctuation and short-term risk than International Growth.
EMERGING MARKETS invests primarily in the equity securities of companies in
emerging market countries. The companies may be located or principally traded in
emerging market countries, and also may derive a significant portion of their
business from emerging market countries. This fund may experience greater share
price fluctuation and short-term risk than either International Growth or
International Discovery.
GLOBAL GROWTH invests primarily in equity securities of both U.S. and
foreign companies. These companies will be primarily located in developed
countries.
International investing involves special risks, including political
instability and economic risk. Investing in emerging markets may accentuate
these risks. Historically, share prices of small companies have been more
volatile than those of large companies.
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. As a result, the value of your investment could change based
solely upon changes in the exchange rates between foreign currencies and the
U.S. dollar. 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. (The weakened foreign currency buys 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
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Background Information
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(Continued)
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 a capitalization-weighted index of the stocks of 500 publicly
traded U.S. companies that are considered to be leading firms in dominant
industries. Created by Standard & Poor's Corporation, it is considered to be a
broad measure of U.S. stock market performance.
MORGAN STANLEY CAPITAL INTERNATIONAL (MSCI) has developed several indices
that measure the performance of foreign stock markets. The best known is the
EUROPE, AUSTRALASIA, FAR EAST INDEX (EAFE(reg.tm)), which is a widely followed
group of stocks from 20 countries. Within this index are two narrower indices,
MSCI EUROPE and MSCI FAR EAST, which measure stock performance in 14 European
countries and four Asian countries, respectively.
The MSCI EMERGING MARKETS FREE INDEX (EMF(reg.tm)) represents the
performance of stocks in 26 emerging market countries in Europe, Latin America
and the Pacific Basin. Within this index is a narrower index, MSCI EMERGING
LATIN AMERICA, which measures the performance of stocks in seven Latin American
countries.
The MSCI WORLD FREE INDEX is an index of approximately 1600 companies listed
on stock exchanges in 22 developed market countries--in order of their index
weightings as of 3-31-99: USA, Japan, United Kingdom, Germany, France,
Switzerland, Netherlands, Italy, Canada, Spain, Australia, Sweden, Hong Kong,
Finland, Belgium, Singapore, Denmark, Portugal, Ireland, Austria, Norway, New
Zealand.
www.americancentury.com 61
Glossary
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RETURNS
* 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.
* 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 fiscal year-by-year
results. For fiscal year-by-year total returns, please refer to the "Financial
Highlights" on pages 48-58.
INVESTMENT TERMS
* 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.)
* MEDIAN MARKET CAPITALIZATION -- Market capitalization (market cap) is the
total value of a company's stock and is calculated by multiplying the number of
outstanding common shares by the current share price. The company whose market
cap is in the middle of the portfolio is the median market cap. Half the
companies in the portfolio have values greater than the median, and half have
values that are less. If there is an even number of companies, then the median
is the average of the two companies in the middle.
* NUMBER OF COMPANIES -- the number of different companies held by a fund on a
given date.
* 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.
FUND CLASSIFICATIONS
INVESTMENT OBJECTIVE
The investment objective may be based on the fund's objective as stated in
its prospectus or fund profile, or the fund's categorization by independent
rating organizations based on its management style.
* CAPITAL PRESERVATION -- offers taxable and tax-free money market funds for
relative stability of principal and liquidity.
* INCOME -- offers funds that can provide current income and competitive yields,
as well as a strong and stable foundation and generally lower volatility levels
than stock funds.
* GROWTH & INCOME -- offers funds that emphasize both growth and income,
provided by either dividend-paying equities or a combination of equity and
fixed-income securities.
* GROWTH -- offers funds with a focus on capital appreciation and long-term
growth, generally providing high return potential with corresponding high price
fluctuation risk.
RISK
The classification of funds by risk category is based on quantitative
historical measures as well as qualitative prospective measures. It is not
intended to be a precise indicator of future risk or return levels. The degree
of risk within each category can vary significantly, and some fund returns have
historically been higher than more aggressive funds or lower than more
conservative funds. Please be aware that the fund's category may change over
time. Therefore, it is important that you read a fund's prospectus or fund
profile carefully before investing to ensure its objectives, policies and risk
potential are consistent with your needs.
* CONSERVATIVE -- these funds generally provide lower return potential with
either low or minimal price fluctuation risk.
* MODERATE -- these funds generally provide moderate return potential with
moderate price fluctuation risk.
* AGGRESSIVE -- these funds generally provide high return potential with
corresponding high price fluctuation risk.
62 1-800-345-2021
Notes
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Notes
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64 1-800-345-2021
[inside back cover]
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INVESTMENT OBJECTIVE - CAPITAL PRESERVATION
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RISK LEVEL - CONSERVATIVE
TAXABLE MONEY MARKETS TAX-FREE MONEY MARKETS
Premium Capital Reserve FL Municipal Money Market
Prime Money Market CA Municipal Money Market
Premium Government Reserve CA Tax-Free Money Market
Government Agency Tax-Free Money Market
Money Market
Capital Preservation
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INVESTMENT OBJECTIVE - INCOME
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RISK LEVEL - AGGRESSIVE
TAXABLE BONDS TAX-FREE BONDS
Target 2025* CA High-Yield Municipal
Target 2020* High-Yield Municipal
Target 2015*
Target 2010*
High-Yield
International Bond
RISK LEVEL - MODERATE
TAXABLE BONDS TAX-FREE BONDS
Long-Term Treasury CA Long-Term Tax-Free
Target 2005* Long-Term Tax-Free
Bond CA Insured Tax-Free
Premium Bond
RISK LEVEL - CONSERVATIVE
TAXABLE BONDS TAX-FREE BONDS
Intermediate-Term Bond CA Intermediate-Term Tax-Free
Intermediate-Term Treasury AZ Intermediate-Term Municipal
GNMA FL Intermediate-Term Municipal
Inflation-Adjusted Treasury Intermediate-Term Tax-Free
Limited-Term Bond CA Limited-Term Tax-Free
Target 2000* Limited-Term Tax-Free
Short-Term Government
Short-Term Treasury
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INVESTMENT OBJECTIVE - GROWTH AND INCOME
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RISK LEVEL - AGGRESSIVE
DOMESTIC EQUITY
Small Cap Quantitative
Small Cap Value
RISK LEVEL - MODERATE
ASSET ALLOCATION/BALANCED DOMESTIC EQUITY SPECIALTY
Strategic Allocation: Equity Growth Utilities
Aggressive Equity Index Real Estate
Balanced Tax-Managed Value
Strategic Allocation: Income & Growth
Moderate Value
Strategic Allocation: Equity Income
Conservative
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INVESTMENT OBJECTIVE - GROWTH
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RISK LEVEL - AGGRESSIVE
DOMESTIC EQUITY SPECIALTY INTERNATIONAL
New Opportunities Global Gold Emerging Markets
Giftrust(reg.tm) International Discovery
Vista International Growth
Heritage Global Growth
Growth
Ultra(reg.tm)
Select
RISK LEVEL - MODERATE
SPECIALTY
Global Natural Resources
The investment objective may be based on the fund's objective as stated in its
prospectus or fund profile, or the fund's categorization by independent rating
organizations based on its management style.
The classification of funds by risk category is based on quantitative historical
measures as well as qualitative prospective measures. It is not intended to be a
precise indicator of future risk or return levels. The degree of risk within
each category can vary significantly, and some fund returns have historically
been higher than more aggressive funds or lower than more conservative funds.
Please be aware that a fund's category may change over time. Therefore, it is
important that you read a fund's prospectus or fund profile carefully before
investing to ensure its objectives, policies and risk potential are consistent
with your needs.
For a definition of fund categories, see the Glossary.
* While listed within the Income investment objective, the Target funds do not
pay current dividend income. Income dividends are distributed once a year in
December. The Target funds are listed in all three risk categories due to the
dramatic price volatility investors may experience during certain market
conditions. If held to their target dates, however, they can offer a
conservative, dependable way to invest for a specific time horizon.
Please call 1-800-345-2021 for a prospectus or profile on any American Century
fund. These documents contain important information including charges and
expenses, and you should read them carefully before you invest or send money.
[back cover]
[american century logo(reg.sm)]
American
Century
P.O. BOX 419200
KANSAS CITY, MISSOURI 64141-6200
WWW.AMERICANCENTURY.COM
INVESTOR RELATIONS
1-800-345-2021 OR 816-531-5575
AUTOMATED INFORMATION LINE
1-800-345-8765
FAX:
816-340-7962
TELECOMMUNICATIONS DEVICE FOR THE DEAF
1-800-634-4113 OR 816-444-3485
BUSINESS, NOT-FOR-PROFIT, EMPLOYER-SPONSORED RETIREMENT PLANS
1-800-345-3533
AMERICAN CENTURY WORLD MUTUAL FUNDS, INC.
INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI
THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
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American Century Investments BULK RATE
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
www.americancentury.com COMPANIES
9907 Funds Distributor, Inc.
SH-SAN-16856 (c)1999 American Century Services Corporation
