[front cover]
May 31, 2000
AMERICAN CENTURY(reg.sm)
Semiannual Report
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International Growth
International Discovery
Emerging Markets
Global Growth
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American
Century
[inside front cover]
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[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.
A world of opportunity for business retirement plans.
--------------------------------------------------------------------------------
If you're looking for a new investment opportunity for your company's
retirement plan, American Century's international funds may be a great place to
start. These funds seek out investments in some of the fastest-growing companies
in the world. As part of a balanced retirement plan portfolio, international
funds can be a very rewarding choice over time.
One of our Business Retirement Specialists can help you add an international
fund to your existing plan, or advise you on setting up a new plan that's right
for you. Call us toll-free to learn more: 1-877-726-2368 ext. 9302, weekdays
from 7 a.m. to 5:30 p.m. Central time.
Our Message to You
--------------------------------------------------------------------------------
[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, 2000, rewarded investors in American Century's
global and international equity funds with double-digit returns. All four funds
outperformed their benchmarks.
A major shift in investor sentiment occurred during the period. At the
start, growth stocks -- especially those of Internet- and telecommunications-
related technology companies -- led the U.S. and most international markets
higher. Later, though, concerns about inflation, rising interest rates, and rich
technology-stock valuations sparked a sudden and powerful move into other stock
sectors. The tech-heavy Nasdaq Composite Index lost more than 25% in one week in
early April, which rippled through most international equity markets, causing
our funds to give back some of their gains.
We're also proud to announce that American Century's fund performance
reports, like this one, earned the Communications Seal from DALBAR, Inc., an
independent financial services research firm. They commended us for meeting
investors' needs with an attractive document that's easy to read and understand.
DALBAR also ranked the American Century Web site fifth among the 25 mutual fund
company sites it rated, based on functionality, ease of use, and editorial
content.
We're also pleased to provide investors with two new investment tools. Fund
Advisor,(1) an online advice engine, is designed to give impartial guidance in
choosing the right no-load mutual funds to meet your financial goals.(2) And
American Century is the program manager for Learning Quest(reg.sm), an
educational savings program launched by the state of Kansas on July 1 that
allows parents to invest tax-deferred to meet higher education costs. The summer
issue of the American Century investor newsletter provides more details on these
tools.
As always, we appreciate your continued confidence in American Century.
Sincerely,
/signature/ /signature/
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Vice Chairman of the Board and
Chief Executive Officer
(1) Patent pending.
(2) American Century does not receive sales commissions or direct compensation
for recommending any fund, although it may receive management, service, or
other fees from funds recommended through Fund Advisor. These arrangements
are described in Acumation Inc.'s Form ADV Part II.
[right margin]
Table of Contents
Report Highlights ...................................................... 2
Market Perspective ..................................................... 3
INTERNATIONAL GROWTH
Performance Information ................................................ 4
Management Q&A ......................................................... 5
Schedule of Investments ................................................ 8
INTERNATIONAL DISCOVERY
Performance Information ................................................ 11
Management Q&A ......................................................... 12
Schedule of Investments ................................................ 15
EMERGING MARKETS
Performance Information ................................................ 18
Management Q&A ......................................................... 19
Schedule of Investments ................................................ 22
GLOBAL GROWTH
Performance Information ................................................ 25
Management Q&A ......................................................... 26
Schedule of Investments ................................................ 29
FINANCIAL STATEMENTS
Statements of Assets and
Liabilities ......................................................... 32
Statements of Operations ............................................... 33
Statements of Changes
in Net Assets ....................................................... 34
Notes to Financial
Statements .......................................................... 36
Financial Highlights ................................................... 42
OTHER INFORMATION
Share Class and Retirement
Account Information ................................................. 53
Background Information
Portfolio Managers .................................................. 54
Investment Philosophy
and Policies ..................................................... 54
How Currency Returns Affect
Fund Performance ................................................. 54
Comparative Indices ................................................. 55
Glossary ............................................................... 56
www.americancentury.com 1
Report Highlights
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MARKET PERSPECTIVE
* The six-month period ended May 31, 2000, was marked by a powerful shift in
investor sentiment. As the period opened, growth stocks, especially those of
technology-oriented companies, continued to lead many international markets.
Toward the end of the period, though, higher U.S. interest rates and
uneasiness about rich valuations across the technology sector led investors to
move en masse into other areas. As a result, many international markets moved
lower.
INTERNATIONAL GROWTH
* International Growth gained 10.80% during the six months ended May 31, 2000,
significantly outperforming its benchmark, the Morgan Stanley Capital
International EAFE Index, which rose just 0.61%.
* Wireless telecommunications and electrical equipment companies were among
International Growth's strongest performers. Companies in both groups
benefited from explosive, worldwide growth in wireless communications and the
demand for greater bandwidth capacity on the Internet.
INTERNATIONAL DISCOVERY
* International Discovery was up 14.82% for the six months, far surpassing its
benchmark, the Morgan Stanley Capital International EAFE Index, which gained
0.61%.
* Internet service providers, computer hardware makers, and electrical equipment
companies were among the top contributors to performance. Positions in health
care and biotech companies also provided a boost, as did financial services
companies driven by the new American-style capitalism and equity culture in
many international markets.
EMERGING MARKETS
* Emerging Markets gained 11.39% during the period, outperforming its benchmark,
the Morgan Stanley Capital International Emerging Markets Free Index, which
increased just 0.18%.
* Emerging Markets capitalized on the strength of semiconductor companies, which
were among its top performers for the period. This group was buoyed by the
favorable outlook for this area, which is expected to remain steady, even in
the face of a possible economic slowdown.
* Developments in Russia overshadowed many other emerging markets during the
period. Sentiment about the Russian economy and political system suddenly
turned positive, and favorable economic conditions there gave rise to
attractive opportunities for the fund.
GLOBAL GROWTH
* Global Growth posted a solid gain of 15.16% during the period, outpacing its
benchmark, the Morgan Stanley Capital International World Free Index, which
rose 1.90%.
* A diverse group of stocks contributed to performance, including companies
involved in high-speed fiber-optic communications, television, and
telecommunications. Domestic contributors included energy companies and
computer hardware firms.
* Holdings of financial services companies, the fund's second-largest sector
position, also boosted returns, as European demand for such services increased
amidst sweeping pension reform.
{left margin]
INTERNATIONAL GROWTH(1)
(TWIEX)
TOTAL RETURNS: AS OF 5/31/00
6 Months 10.80%(2)
1 Year 48.27%
INCEPTION DATE: 5/9/91
NET ASSETS: $5.1 billion(3)
INTERNATIONAL DISCOVERY(1)
(TWEGX)
TOTAL RETURNS: AS OF 5/31/00
6 Months 14.82%(2)
1 Year 63.12%
INCEPTION DATE: 4/1/94
NET ASSETS: $2.3 billion(3)
EMERGING MARKETS(1)
(TWMIX)
TOTAL RETURNS: AS OF 5/31/00
6 Months 11.39%(2)
1 Year 44.57%
INCEPTION DATE: 9/30/97
NET ASSETS: $158.3 million(3)
GLOBAL GROWTH(1)
(TWGGX)
TOTAL RETURNS: AS OF 5/31/00
6 Months 15.16%(2)
1 Year 61.77%
INCEPTION DATE: 12/1/98
NET ASSETS: $450.0 million(3)
(1) Investor Class.
(2) Not annualized.
(3) Includes Investor, Advisor, and Institutional classes.
Investment terms are defined in the Glossary on pages 56-57.
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
PERFORMANCE OVERVIEW
Our international and global funds performed well during the six months
ended May 31, 2000. Extreme volatility characterized the markets, so managing
the funds presented some additional challenges. During the first half of the
period, stocks benefited from an optimistic outlook, particularly for the
technology and telecommunications sectors, which carried most indices to new
highs. Around the middle of March, a general discomfort about the strength of
economic activity gave rise to concerns about higher interest rates. The U.S.
Federal Reserve and other central banks around the world actually tightened
monetary policy, which resulted in fears of a global economic slowdown.
Each one of our four equity funds was able to navigate the changing tides
of the foreign markets and posted total returns well ahead of their respective
benchmark indices, as measured by Morgan Stanley Capital International. In
addition, all the funds performed well relative to their peer group averages.
Although periods of volatility in the markets are disconcerting, we manage
our portfolios with the objective of producing strong performance over the long
haul. We focus our efforts on researching and investing in companies that can
formulate and execute solid business plans that either keep them in, or propel
them to, leadership positions in their industries. At the same time, we are
keenly interested in seeing that candidates for the portfolios display superior
earnings growth. Finally, we search for evidence that these companies embrace
the technological developments that allow them to stay ahead of the pack.
THE GLOBAL FREEDOM MACHINE
One such development is what we call the Global Freedom Machine. The
convergence of wireless telecommunication and the Internet has created a class
of companies that is revolutionizing the way we interact. We are moving away
from the personal computer and entering the era of mobile computing and
communication. This is enabling millions of people in Japan and Europe to shop,
trade securities, bank and buy airline tickets using just their mobile phones.
As you review this report, you will see this theme represented in each fund's
portfolios.
In conclusion, we would like to assure you that the team working on these
funds is entirely focused on continuing to provide solid investment performance.
[right margin]
"EACH ONE OF OUR FOUR EQUITY FUNDS WAS ABLE TO NAVIGATE THE CHANGING TIDES OF
THE FOREIGN MARKETS AND POSTED TOTAL RETURNS WELL AHEAD OF THEIR RESPECTIVE
BENCHMARK INDICES, AS MEASURED BY MORGAN STANLEY CAPITAL INTERNATIONAL."
MARKET RETURNS
FOR THE SIX MONTHS ENDED MAY 31, 2000
MSCI EAFE 0.61%
MSCI EMERGING MARKETS FREE 0.18%
MSCI WORLD FREE 1.90%
Source: Lipper Inc.
MARKET PERFORMANCE (GROWTH OF $1.00)
FOR THE SIX MONTHS ENDED MAY 31, 2000
[data for line chart]
MSCI EAFE MSCI EMF MSCI World Free
11/30/1999 $1.00 $1.00 $1.00
12/31/1999 $1.09 $1.13 $1.08
1/31/2000 $1.02 $1.13 $1.02
2/29/2000 $1.05 $1.15 $1.02
3/31/2000 $1.09 $1.15 $1.09
4/30/2000 $1.03 $1.05 $1.05
5/31/2000 $1.01 $1.00 $1.02
Value on 5/31/00
MSCI EAFE $1.01
MSCI EMF $1.00
MSCI World Free $1.02
www.americancentury.com 3
International Growth--Performance
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURNS AS OF MAY 31, 2000
INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 5/9/91) (INCEPTION 10/2/96) (INCEPTION 11/20/97)
INTERNATIONAL INTERNATIONAL INTERNATIONAL
GROWTH MSCI EAFE GROWTH MSCI EAFE GROWTH MSCI EAFE
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) 10.80% 0.61% 10.56% 0.61% 10.92% 0.61%
1 YEAR 48.27% 17.14% 47.75% 17.14% 48.62% 17.14%
===================================================================================================================
AVERAGE ANNUAL RETURNS
3 YEARS 23.33% 10.75% 23.03% 10.75% -- --
5 YEARS 22.09% 10.08% -- -- -- --
LIFE OF FUND 17.50% 9.01%(2) 24.83% 10.76%(3) 27.72% 15.02%(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 53-56 for information about share classes, the MSCI EAFE Index, and
returns.
GROWTH OF $10,000 OVER LIFE OF FUND
$10,000 investment made 5/9/91
Value on 5/31/00
International Growth $43,100
MSCI EAFE $21,895
[data for mountain chart below]
International Growth MSCI EAFE
Date Value Value
5/9/1991 $10,000 $10,000
6/30/1991 $9,784 $9,362
9/30/1991 $10,431 $10,164
12/31/1991 $11,014 $10,335
3/31/1992 $11,642 $9,108
6/30/1992 $12,348 $9,300
9/30/1992 $11,838 $9,441
12/31/1992 $11,547 $9,077
3/31/1993 $12,541 $10,165
6/30/1993 $13,069 $11,187
9/30/1993 $13,921 $11,929
12/31/1993 $16,472 $12,032
3/31/1994 $15,872 $12,453
6/30/1994 $16,086 $13,089
9/30/1994 $16,664 $13,102
12/31/1994 $15,687 $12,969
3/31/1995 $15,170 $13,210
6/30/1995 $16,048 $13,306
9/30/1995 $16,905 $13,861
12/31/1995 $17,552 $14,422
3/31/1996 $17,958 $14,839
6/30/1996 $18,815 $15,074
9/30/1996 $18,860 $15,054
12/31/1996 $20,084 $15,293
3/31/1997 $21,194 $15,053
6/30/1997 $24,070 $17,007
9/30/1997 $24,978 $16,888
12/31/1997 $24,044 $15,566
3/31/1998 $28,360 $17,856
6/30/1998 $30,268 $18,045
9/30/1998 $24,838 $15,481
12/31/1998 $28,616 $18,679
3/31/1999 $28,976 $18,939
6/30/1999 $30,648 $19,420
9/30/1999 $31,755 $20,272
12/31/1999 $47,057 $23,717
3/31/2000 $49,170 $23,690
5/31/2000 $43,100 $21,895
The graph at left shows the growth of a $10,000 investment over the life of the
fund, while the graph below shows the fund's year-by-year performance. The MSCI
EAFE Index is provided for comparison in each graph. Index performance is based
on returns since 4/30/91, the date nearest the class's inception for which data
are available. 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 ENDED MAY 31)
[data for bar chart below]
International Growth MSCI EAFE Index
Date Return Return
5/31/1991* 1.96% 1.05%
5/31/1992 23.43% -3.37%
5/31/1993 5.79% 16.40%
5/31/1994 22.72% 13.57%
5/31/1995 -2.89% 4.93%
5/31/1996 17.13% 10.67%
5/31/1997 23.36% 7.54%
5/31/1998 30.30% 11.11%
5/31/1999 -2.85% 4.36%
5/31/2000 48.27% 17.14%
* From 5/9/91 to 5/31/91.
4 1-800-345-2021
International Growth--Q&A
--------------------------------------------------------------------------------
[photo of Mark Kopinski and Henrik Strabo]
An interview with Mark Kopinski and Henrik Strabo, portfolio managers on
the International Growth team.
HOW DID INTERNATIONAL GROWTH PERFORM FOR THE SIX MONTHS ENDED MAY 31, 2000?
International Growth gained 10.80% for the period, well ahead of the 0.61%
increase posted by its benchmark, the Morgan Stanley Capital International EAFE
Index.* The fund easily outdistanced its peers, as well. The 684 international
funds tracked by Lipper Inc. delivered an average return of 2.25%.
For the year ended May 31, 2000, International Growth gained 48.27%, versus
17.14% for the EAFE Index, and the 25.62% average for 649 international funds
tracked by Lipper. The fund has especially rewarded long-term shareholders,
providing an average annual return of 22.09% over the past five years, versus a
12.16% average for 266 peers tracked, and 10.08% for its benchmark.
BEFORE DISCUSSING YOUR INVESTMENTS, COULD YOU OUTLINE THE STRATEGY THAT ENABLED
YOU TO OUTPERFORM YOUR BENCHMARK AND PEERS?
Our investment philosophy centers on owning successful, fast-growing
businesses. In fact, the most attractive company to us is one whose revenues and
earnings are growing at an accelerating rate. Equally important, we want solid
evidence that a company is able to sustain its growth, and we do extensive
fundamental research and analysis to convince ourselves on this point. In 1999,
American Century's international investment team visited more than 1,400
companies, meeting face-to-face with top management. That's possible when you
have a determined staff of investment professionals who speaks a total of 13
languages.
TURNING TO YOUR PORTFOLIO, WHAT WERE SOME OF INTERNATIONAL GROWTH'S MOST
SUCCESSFUL INVESTMENTS DURING THE PERIOD?
One top-performing stock (up 128%) was Sweden's Skandia Forsakrings AB, the
Nordic region's largest insurer and a major U.S. distributor of variable
annuities--investment contracts that pay income during retirement. Skandia
distributes its packaged financial services, including Web sites and financial
planning software, primarily through investment advisors. The company doubled
its first-quarter profits from a year earlier.
Alcatel Alsthom Compagnie Generale (up 54%), a French telecommunications
equipment company that progressed into our top-10 holdings, has been a
successful investment for us. Alcatel recently acquired Newbridge Networks, a
Canadian manufacturer of network communications systems and products that has
been steadily adding to its franchise of switched telecommunications equipment
over the past two years.
After recovering from difficulties in 1998, Alcatel has been transforming
itself into a leading provider of packet-based Internet and wireless equipment.
The company has a dominant market share in central office equipment, as
* All fund returns referenced in this interview are for Investor Class shares.
[right margin]
"OUR INVESTMENT PHILOSOPHY CENTERS ON OWNING SUCCESSFUL, FAST-GROWING
BUSINESSES. IN FACT, THE MOST ATTRACTIVE COMPANY TO US IS ONE WHOSE REVENUES
AND EARNINGS ARE GROWING AT AN ACCELERATING RATE."
PORTFOLIO AT A GLANCE
5/31/00 11/30/99
NO. OF COMPANIES 113 137
MEDIAN MARKET $14.5 $13.4
CAPITALIZATION BILLION BILLION
PORTFOLIO TURNOVER 57%(1) 117%(2)
EXPENSE RATIO (FOR
INVESTOR CLASS) 1.20%(3) 1.27%
(1) Six months ended 5/31/00.
(2) Year ended 11/30/99.
(3) Annualized.
Investment terms are defined in the Glossary on pages 56-57.
www.americancentury.com 5
International Growth--Q&A
--------------------------------------------------------------------------------
(Continued)
well as in the market for the modem used in digital subscriber line (DSL)
services that are rapidly being introduced to provide high-speed Internet access
to homes in the United States and Europe.
We also were pleased with our investment in an Israeli-based company, Check
Point Software Technologies Ltd., (up 165%). This firm provides "firewall"
software that guards computer networks against intrusion. Its shares got a boost
after the "I Love You" virus crippled e-mail systems worldwide and highlighted
the need for computer network security.
WHAT IS BEHIND YOUR SIGNIFICANT INVESTMENTS IN COMPANIES INVOLVED WITH VARIOUS
ASPECTS OF WIRELESS COMMUNICATIONS?
We're very excited about the investment opportunities arising from the
marriage of wireless communications and the Internet. Our travel abroad has
shown us that the global community is rushing toward what some have called
"ubiquitous communication," made possible by a mobile Internet.
Most Americans access the Internet with a desktop PC, but in Europe and
Japan, the mobile phone is increasingly the medium of choice. In our eyes,
mobile telephony is the ultimate "Global Freedom Machine," enabling people to
communicate whenever they want to and wherever they may be, not just when they
are sitting at their computers.
The mobile information society is an everyday reality in other countries.
Take Finland, for example. This country of five million people has three million
cell phones, and Finns do more than just talk on them. They send lots of e-mail
messages--500 million of them last year.
We have invested in several companies at the forefront of this cordless,
Internet-linked communications revolution, beginning with Finland's Nokia Corp.
Cl A, virtually the founder of mobile communications and the world's leading
producer of cellular phones. Nokia is feverishly working to double the
production capacity of its main plant in Texas. The step-up is necessary as the
number of wireless subscribers worldwide, estimated at 500 million, has been
doubling every 20 months!
Another top-10 holding, Ericsson (L.M.) Telephone Co. ADR, is an important
wireless investment. Ericsson is among the companies developing "third
generation" wireless technology that will enable networks to carry broadband
communications such as videoconferencing and multimedia. This technology has the
potential to change the entire concept of a telephone number. Soon, numbers will
be associated with people, not locations. One will be able to make and receive
calls anywhere in the world with the same cellular handset and the same number.
ALMOST 20% OF THE FUND IS INVESTED IN COMPANIES INVOLVED IN ELECTRICAL
EQUIPMENT. WHERE DID YOU FIND GROWTH IN THAT GROUP?
A number of our investments in this area make electrical components used in
communications networks or personal computers. Two of note are Canada's Nortel
Networks Corp., and Korea-based Samsung Electronics. Nortel is a leading maker
of equipment for high-speed data networks. Samsung Electronics is one of the
world's largest producer of DRAM (memory) chips for personal computers. It is
also a leader in technology for liquid crystal displays (LCDs) used in notebook
computers and hand-held devices.
[left margin]
TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
5/31/00 11/30/99
VODAFONE
AIRTOUCH PLC 3.3% 1.2%
SKANDIA
FORSAKRINGS AB 2.6% 1.4%
NORTEL
NETWORKS CORP. 2.1% 1.7%
NOKIA CORP. CL A ADR 2.1% 1.5%
VIVENDI 1.9% 1.7%
ERICSSON (L.M.)
TELEPHONE CO. ADR 1.7% 0.5%
PHILLIPS ELECTRONICS
N.V. NEW YORK
SHARES 1.6% 1.2%
SAMSUNG ELECTRONICS 1.6% 1.2%
SIEMENS AG 1.6% 0.7%
ALCATEL ALSTHOM
COMPAGNIE
GENERALE 1.6% --
TOP FIVE SECTORS
% OF FUND INVESTMENTS
AS OF AS OF
5/31/00 11/30/99
TECHNOLOGY 26.6% 21.2%
TELECOMMUNICATIONS 14.9% 25.4%
FINANCIAL 14.4% 10.6%
COMMERCIAL SERVICES 10.0% 15.0%
CONSUMER SERVICES 8.9% 6.3%
6 1-800-345-2021
International Growth--Q&A
--------------------------------------------------------------------------------
(Continued)
WHAT ARE SOME OTHER COMPANIES THAT CONTRIBUTED TO YOUR RESULTS?
We added to our investment in one of Germany's best-known industrial
companies, Siemens AG. This conglomerate provides products ranging from
locomotives and automotive electronics to medical equipment and household
appliances. Siemens is shaping a new industrial environment by bringing
information technology into the factory, whether in the form of Internet links
between customers and suppliers, or software aimed at improving or streamlining
industrial processes.
We are also taken with the Swiss multinational, ABB Ltd., one of the
world's biggest electrical engineering companies. ABB is applying information
technology to pursuits such as power transmission, factory automation, and
energy exploration. Its earnings grew 24% in 1999.
WHAT HOLDINGS DID NOT LIVE UP TO YOUR EXPECTATIONS?
One was NTT Data Corp., the data systems development arm of Japan's Nippon
Telegraph & Telephone Corp. NTT Data does computer networking and systems
integration for big companies and government entities. We sold the stock, a
reasonably large position at 1.6% of assets, when orders for the company's
services appeared to be slowing. We also learned that the company was intent on
becoming an Internet service provider. This represented a late move into an
extremely competitive area -- a move we felt might threaten earnings.
Hennes & Mauritz AB, the leading clothing retailer in Europe, lost value
during the first quarter as a result of slowing sales on the Continent and
expansion costs when the company recently opened its first store in New York.
WHAT'S YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
Rising interest rates in the United States and overseas are setting a tone
of volatility and uncertainty in many international markets. Our jobs become
more challenging in times like these. Again and again, we put each company we
own under a microscope to ensure that the fundamentals that led us to buy the
stock are still in place and that the company is in position to sustain its
growth. Our disciplined approach, coupled with our extensive research and
analysis, is designed to lead us to individual companies around the world that
can grow into the foreseeable future. We try to own the best possible set of
companies, regardless of the economic climate.
[right margin]
TYPES OF INVESTMENTS IN THE PORTFOLIO
================================================================================
AS OF MAY 31, 2000
COMMON STOCKS 89.7%
TEMPORARY CASH INVESTMENTS 9.3%
PREFERRED STOCKS 1.0%
[pie chart]
================================================================================
AS OF NOVEMBER 30, 1999
COMMON STOCKS 98.6%
TEMPORARY CASH INVESTMENTS 0.7%
PREFERRED STOCKS 0.7%
[pie chart]
INVESTMENTS BY COUNTRY
% OF FUND INVESTMENTS
AS OF AS OF
5/31/00 11/30/99
U.K. 15.0% 15.7%
FRANCE 13.4% 11.1%
UNITED STATES(1) 12.5% 4.8%
JAPAN 11.8% 26.8%
SWEDEN 8.3% 4.7%
SWITZERLAND 5.9% 3.5%
NETHERLANDS 5.2% 7.1%
ITALY 4.7% 3.4%
OTHER 23.2% 22.9%
(1) Includes temporary cash investments.
www.americancentury.com 7
International Growth--Schedule of Investments
--------------------------------------------------------------------------------
MAY 31, 2000 (UNAUDITED)
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
COMMON STOCKS -- 89.7%
AUSTRALIA -- 1.1%
1,338,700 News Corp. Ltd. (The) ADR $ 60,995
------------------------
CANADA -- 3.1%
1,132,100 Celestica Inc.(1) 52,713
2,021,700 Nortel Networks Corp. 109,804
------------------------
162,517
------------------------
DENMARK -- 2.5%
437,350 ISS A/S(1) 31,777
431,239 Novo Nordisk A/S Cl B 71,579
388,200 Tele Danmark A/S 27,476
------------------------
130,832
------------------------
FINLAND -- 3.8%
2,095,700 Nokia Corp. Cl A ADR 108,976
1,472,777 Sonera Group Oyj 74,790
510,320 Tieto Corp. Cl B 19,997
------------------------
203,763
------------------------
FRANCE -- 13.4%
1,506,714 Alcatel Alsthom
Compagnie Generale 83,558
247,635 Altran Technologies SA 55,813
312,900 Aventis SA 20,396
443,731 Axa 65,566
251,100 Business Objects S.A. ADR(1) 20,088
72,771 Cap Gemini SA 13,672
235,530 Carrefour SA 16,707
208,030 Pinault-Printemps-Redoute SA 44,883
27,900 Sagem SA New Shares 32,850
905,200 Societe Generale Cl A 52,359
84,000 Societe Television Francaise 1 54,204
1,246,600 STMicroelectronics N.V.
New York Shares 74,640
450,900 Suez Lyonnaise des Eaux 75,903
929,927 Vivendi 100,012
------------------------
710,651
------------------------
GERMANY -- 3.5%
94,561 Consors Discount Broker AG 8,857
325,554 EM.TV & Merchandising AG 21,875
99,591 Intershop Communications AG(1) 40,422
85,331 Marschollek Lautenschlaeger
und Partner AG 30,085
581,500 Siemens AG 85,494
------------------------
186,733
------------------------
HONG KONG -- 2.4%
8,988,000 China Telecom (Hong Kong) Ltd.(1) 67,187
2,700,000 Citic Pacific Ltd. 12,855
4,008,200 Hutchison Whampoa Limited 46,293
------------------------
126,335
------------------------
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
ISRAEL -- 1.0%
295,800 Check Point Software
Technologies Ltd.(1) $ 55,592
------------------------
ITALY -- 4.7%
3,366,100 Alleanza Assicurazioni 38,846
12,445,532 Banca Intesa S.p.A. 49,233
1,835,816 Mediaset SpA 28,500
2,032,000 Mediolanum SpA 31,165
1,539,700 Mondadori (Arnoldo) Editore SpA 35,494
3,987,500 Telecom Italia SpA 55,191
204,018 Tiscali SpA(1) 10,170
------------------------
248,599
------------------------
JAPAN -- 11.8%
591,000 Canon, Inc. 27,170
1,943 Fuji Television Network, Inc. 29,535
4,551,000 Hitachi Ltd. 56,271
365,000 Hoya Corp. 33,797
844 Japan Telecom Co. Ltd. 37,002
756,000 Kao Corporation 22,913
38,200 Keyence Corporation 11,419
200,800 KYOCERA CORP. 33,277
2,245,000 Nomura Securities Co., Ltd. 51,396
1,325 NTT Mobile Communications
Network, Inc. 34,141
648,000 PIONEER CORP. 19,760
136,700 Ryohin Keikaku Co. Limited 19,880
2,347,000 Sharp Corporation 42,202
281,400 Sony Corp. 25,430
418,000 Takeda Chemical Industries, Ltd. 28,476
406,000 Tokyo Electron Ltd. 55,317
6,882,000 Toshiba Corp. 66,339
686,000 Toyota Motor Corp. 31,092
------------------------
625,417
------------------------
MEXICO -- 1.3%
271,000 Grupo Televisa S.A. GDR(1) 15,091
1,113,500 Telefonos de Mexico, S.A. Cl L ADR 54,214
------------------------
69,305
------------------------
NETHERLANDS -- 5.2%
315,600 ASM Lithography Holding N.V.
New York Shares(1) 11,273
1,776,300 Getronics N.V. 29,818
633,213 ING Groep N.V. 37,965
1,976,880 Phillips Electronics N.V.
New York Shares 87,353
400,800 Royal Dutch Petroleum Co.
New York Shares 25,025
515,884 United Pan-Europe
Communications NV(1) 13,398
1,399,080 VNU N.V. 71,571
------------------------
276,403
------------------------
8 1-800-345-2021 See Notes to Financial Statements
International Growth--Schedule of Investments
--------------------------------------------------------------------------------
(Continued)
MAY 31, 2000 (UNAUDITED)
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
PORTUGAL -- 0.4%
1,396,882 Telecel-Comunicacaoes Pessoais, SA $ 22,731
------------------------
SOUTH KOREA -- 1.6%
314,338 Samsung Electronics 85,716
------------------------
SPAIN -- 1.5%
444,168 Sogecable, S.A.(1) 16,491
2,968,465 Telefonica S.A.(1) 61,074
------------------------
77,565
------------------------
SWEDEN -- 8.3%
2,154,336 Assa Abloy AB Cl B(1) 41,581
427,200 Atlas Copco AB Cl A 9,199
271,069 Atlas Copco AB Cl B 6,048
4,400,300 Ericsson (L.M.) Telephone Co. ADR 90,069
734,300 Hennes & Mauritz AB Cl B 18,597
397,075 Modern Times Group
MTG AB Cl B(1) 17,831
461,095 NetCom Systems AB Cl B(1) 32,666
5,195,113 Nordic Baltic Holding AB 34,486
2,262,500 Securitas AB Cl B 52,882
5,365,700 Skandia Forsakrings AB 137,686
------------------------
441,045
------------------------
SWITZERLAND -- 5.9%
640,239 ABB Ltd. 79,725
38,943 Adecco SA 30,832
368,780 Credit Suisse Group 69,048
12,295 Julius Baer Holding AG 44,213
34,339 Novartis AG 50,823
29,445 Swatch Group AG (The) Cl B 36,141
------------------------
310,782
------------------------
UNITED KINGDOM -- 15.0%
4,348,158 Amvescap Plc 57,120
1,248,300 Barclays PLC 32,516
3,181,979 Cable & Wireless plc 53,144
1,130,440 Capita Group Plc 25,315
16,626,349 Centrica plc 60,269
2,745,800 CMG plc 38,374
867,033 COLT Telecom Group plc(1) 30,637
1,824,800 Compass Group PLC 20,473
3,562,028 Diageo plc 30,519
675,034 Energis plc(1) 25,683
4,500,700 Hays plc 25,281
1,233,362 Logica plc 33,051
3,776,500 Misys plc 32,640
869,091 Pearson plc 26,245
1,623,800 Prudential Corporation PLC 24,603
2,650,208 SEMA Group plc 36,998
561,200 Shire Pharmaceuticals Group PLC(1) 8,322
5,048,710 TeleWest Communications plc(1) 20,570
38,098,873 Vodafone AirTouch PLC 174,058
3,041,300 WPP Group plc 37,037
------------------------
792,855
------------------------
Shares/Principal Amount ($ in Thousands) Value
--------------------------------------------------------------------------------
UNITED STATES -- 3.2%
404,700 Amdocs Ltd.(1) $ 25,066
367,800 Comverse Technology, Inc.(1) 33,619
428,716 JDS Uniphase Corp.(1) 37,727
123,580 NTL Inc.(1) 7,307
1,370,900 Tyco International Ltd. 64,518
------------------------
168,237
------------------------
TOTAL COMMON STOCKS 4,756,073
------------------------
(Cost $3,664,819)
PREFERRED STOCKS -- 1.0%
BRAZIL -- 0.9%
205,840,000 Petroleo Brasileiro S.A. 48,014
------------------------
GERMANY -- 0.1%
190,000 SAP AG ADR 8,146
------------------------
TOTAL PREFERRED STOCKS 56,160
------------------------
(Cost $49,207)
TEMPORARY CASH INVESTMENTS -- 9.3%
$50,000 FHLB Discount Notes,
6.29%, 6/7/00(2) 49,946
50,000 FHLB Discount Notes,
6.30%, 6/16/00(2) 49,866
50,000 FHLB Discount Notes,
6.32%, 6/21/00(2) 49,810
50,000 FNMA Discount Notes,
6.50%, 6/14/00(2) 49,885
Repurchase Agreement, BA Security
Services, Inc., (U.S. Treasury obligations),
in a joint trading account at 6.34%,
dated 5/31/00, due 6/1/00
(Delivery value $17,803) 17,800
Repurchase Agreement, Deutsche Bank,
(U.S. Treasury obligations), in a
joint trading account at 6.34%,
dated 5/31/00, due 6/1/00
(Delivery value $251,144) 251,100
Repurchase Agreement, Morgan Stanley
Group, Inc., (U.S. Treasury obligations),
in a joint trading account at 6.30%,
dated 5/31/00, due 6/1/00
(Delivery value $22,304) 22,300
------------------------
TOTAL TEMPORARY CASH INVESTMENTS 490,707
------------------------
(Cost $490,726)
TOTAL INVESTMENT SECURITIES -- 100.0% $5,302,940
========================
(Cost $4,204,752)
See Notes to Financial Statements www.americancentury.com 9
International Growth--Schedule of Investments
--------------------------------------------------------------------------------
(Continued)
MAY 31, 2000 (UNAUDITED)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
($ in Thousands)
Contracts Settlement Unrealized
to Sell Date Value Gain
--------------------------------------------------------------------------------
11,431,943,201 JPY 6/30/00 $106,521 $1,285
==============================================
(Value on Settlement Date $107,806)
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total
Investment Securities
COMMERCIAL SERVICES 10.0%
CONSUMER SERVICES 8.9%
CONSUMER (CYCLICAL) 5.1%
CONSUMER (NON-CYCLICAL) 1.0%
ENERGY 1.4%
FINANCIAL 14.4%
HEALTH CARE 4.0%
INDUSTRIALS 1.8%
TEMPORARY CASH INVESTMENTS 9.3%
TECHNOLOGY 26.6%
TELECOMMUNICATIONS 14.9%
UTILITY 2.6%
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
FHLB = Federal Home Loan Bank
FNMA = Federal National Mortgage Association
GDR = Global Depositary Receipt
JPY = Japanese Yen
(1) Non-income producing.
(2) Rate disclosed is the yield to maturity at purchase.
10 1-800-345-2021 See Notes to Financial Statements
International Discovery--Performance
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURNS AS OF MAY 31, 2000
INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 4/1/94) (INCEPTION 4/28/98) (INCEPTION 1/2/98)
INTERNATIONAL INTERNATIONAL INTERNATIONAL
DISCOVERY MSCI EAFE DISCOVERY MSCI EAFE DISCOVERY MSCI EAFE
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) 14.82% 0.61% 14.73% 0.61% 14.96% 0.61%
1 YEAR 63.12% 17.14% 62.79% 17.14% 63.43% 17.14%
=======================================================================================================================
AVERAGE ANNUAL RETURNS
3 YEARS 30.54% 10.75% -- -- -- --
5 YEARS 29.58% 10.08% -- -- -- --
LIFE OF FUND 24.83% 9.58% 29.84% 9.87%(2) 37.41% 15.16%
</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.
See pages 53-56 for information about share classes, the MSCI EAFE Index, and
returns.
GROWTH OF $10,000 OVER LIFE OF FUND
$10,000 investment made 4/1/94
Value on 5/31/00
International Discovery $39,171
MSCI EAFE $17,582
[data for mountain chart below]
International Discovery MSCI EAFE
Date Value Value
4/1/1994 $10,000 $10,000
6/30/1994 $10,760 $10,511
9/30/1994 $11,420 $10,522
12/31/1994 $10,760 $10,414
3/31/1995 $10,100 $10,608
6/30/1995 $11,020 $10,685
9/30/1995 $11,800 $11,131
12/31/1995 $11,825 $11,582
3/31/1996 $12,931 $11,916
6/30/1996 $14,480 $12,105
9/30/1996 $14,561 $12,089
12/31/1996 $15,513 $12,281
3/31/1997 $16,714 $12,088
6/30/1997 $18,295 $13,657
9/30/1997 $19,792 $13,562
12/31/1997 $18,224 $12,500
3/31/1998 $21,958 $14,339
6/30/1998 $23,590 $14,491
9/30/1998 $18,893 $12,432
12/31/1998 $21,478 $15,000
3/31/1999 $22,713 $15,208
6/30/1999 $25,811 $15,595
9/30/1999 $26,843 $16,279
12/31/1999 $40,498 $19,045
3/31/2000 $48,784 $19,024
5/31/2000 $39,171 $17,582
The graph at left shows the growth of a $10,000 investment over the life of the
fund, while the graph 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 ENDED MAY 31)
[data for bar chart below]
International Discovery MSCI EAFE Index
Date Return Return
5/31/1994* 9.80% 3.64%
5/31/1995 -2.37% 4.93%
5/31/1996 33.00% 10.67%
5/31/1997 23.42% 7.54%
5/31/1998 36.97% 11.11%
5/31/1999 -0.37% 4.36%
5/31/2000 63.12% 17.14%
* From 4/1/94 to 5/31/94.
www.americancentury.com 11
International Discovery--Q&A
--------------------------------------------------------------------------------
[photo of Brian Brady, Henrik Strabo, and Mark Kopinski]
An interview with Brian Brady, Henrik Strabo, and Mark Kopinski, portfolio
managers on the International Discovery team.
HOW DID INTERNATIONAL DISCOVERY PERFORM FOR THE SIX MONTHS ENDED MAY 31, 2000?
International Discovery performed well for the period, gaining 14.82%.* Its
return significantly outdistanced its benchmark, the Morgan Stanley Capital
International EAFE Index, which was up just 0.61%. The fund also outperformed
most of its peers. The 75 international small-cap funds tracked by Lipper during
this period had an average return of 7.92%.
Longer-term, the fund gained a remarkable 63.12% for the year ended May 31,
2000, versus 17.14% for the EAFE, and a 52% average return for its 72 peers
tracked during this period. For the five years ended on the same date,
International Discovery posted an average annual return of 29.58%, versus an
average of 18.21% for its 15 Lipper peers, and 10.08% for its benchmark.
BEFORE DISCUSSING YOUR INVESTMENTS, COULD YOU OUTLINE THE STRATEGY THAT HELPED
YOU OUTPERFORM YOUR INDEX AND PEERS?
We follow a disciplined investment approach that seeks to identify
successful, well-managed companies around the world that are experiencing strong
growth. The words "around the world" are important: our success is based on
building the portfolio one company at a time with the best businesses we can
find, no matter where they may be. Just as importantly, our staff conducts
extensive investigation and analysis to make sure these businesses are capable
of sustaining the growth that led us to them in the first place. In fact, in
1999, our staff, who speaks a total of 13 languages, visited more than 1,400
companies, meeting face-to-face with top management.
TURNING TO YOUR PORTFOLIO, WHAT WERE SOME OF INTERNATIONAL DISCOVERY'S MOST
SUCCESSFUL INVESTMENTS?
Our top contributor was Tiscali S.p.A. (up 234%). The firm, which is
Italy's first free Internet service provider, has 2.1 million subscribers, up
31% from just three months ago. Even after the general technology decline
throughout March, April, and May, Tiscali's shares are up 12-fold since they
started trading last October.
Switzerland's Logitech International S.A. (up 150%), is the world's top
computer "mouse" maker, and was also a strong contributor. This company has
pioneered the cordless keyboard and PC video cameras. Logitech has experienced
six consecutive quarters of record revenues.
Another successful investment (up 150%) was Vestas Wind Systems A/S, a
Danish producer of wind turbines. There is a push across Europe to move to
"green electricity" (generated through renewable energy sources such as wind and
wave power), and Vestas is a major producer in a market that expanded almost 40%
in 1999.
* All fund returns referenced in this interview are for Investor Class shares.
[left margin]
"IN 1999, OUR STAFF, WHO SPEAKS A TOTAL OF 13 LANGUAGES, VISITED MORE THAN 1,400
COMPANIES, MEETING FACE-TO-FACE WITH TOP MANAGEMENT."
PORTFOLIO AT A GLANCE
5/31/00 11/30/99
NO. OF COMPANIES 138 168
MEDIAN MARKET $1.28 $1.10
CAPITALIZATION BILLION BILLION
PORTFOLIO TURNOVER 50%(1) 110%(2)
EXPENSE RATIO (FOR
INVESTOR CLASS) 1.35%(3) 1.55%
(1) Six months ended 5/31/00.
(2) Year ended 11/30/99.
(3) Annualized.
Investment terms are defined in the Glossary on pages 56-57.
12 1-800-345-2021
International Discovery--Q&A
--------------------------------------------------------------------------------
(Continued)
TECHNOLOGY-ORIENTED COMPANIES ACCOUNT FOR MORE THAN 30% OF THE FUND. WHAT'S YOUR
PERSPECTIVE ON THESE INVESTMENTS IN LIGHT OF THE STEEP CORRECTION THEY
UNDERWENT?
Foreign markets, especially in Europe, reacted to the technology stock
meltdown in the United States, and tech stocks were pretty much hurt across the
board. Investors particularly appeared to lose patience with unseasoned or
untested high-tech companies, those with no earnings. Our approach is designed
to lead us to technology businesses that are successful today, with strong
fundamentals. Not only do we think they provide the best opportunities for
long-term results, but it has been our experience that successful, growing
businesses--in and out of technology--often snap back the fastest after a broad
market decline.
WHAT ARE SOME INVESTMENTS THAT ILLUSTRATE THIS PHILOSOPHY?
Take Singulus Technologies (up 86%), a position we initiated during the
period. This German company provides equipment for makers of digital videodiscs,
or DVDs. It is a key supplier of technology that seems destined to be the next
step in electronic equipment used for personal entertainment. Along those lines,
we also own shares of Kudelski SA, a Swiss electrical equipment company that
provides conditional access software for set-top cable boxes that will allow
people to buy things they see on TV with the swipe of a card.
Demand for laptop computers and liquid crystal display (LCD) monitors is
growing rapidly in the workplace, and makers of these products are increasing
their production capacity. That's why we've invested in Orbotech Ltd., an
Israeli company making equipment to detect flaws in high-end LCD screens during
the production process.
None of the technology firms in our portfolio are immune to sudden changes
in investor sentiment--no stock is. The key, though, is that the companies we
own are involved in technological advances that seem logical and inevitable. We
believe that helps position them to rebound strongly from downturns that are a
normal part of the investment process.
WHAT ARE OTHER INVESTMENT THEMES THAT PROPELLED THE FUND DURING THE PERIOD?
We have a portion of International Discovery devoted to financial services
companies. The most noteworthy is our largest investment, the German financial
services company, Marschollek, Lautenschlaeger und Partner AG (MLP). We've owned
stock in this company, which is Germany's largest independent insurance broker,
since 1994, and it continues to be a bright spot in the portfolio. MLP rewarded
us over the six months with a 76% increase.
Entrium Direct Bankers AG, a new holding in International Discovery, is
benefiting from the growing popularity of the Internet in Germany, Europe's
largest economy. Entrium is a pioneering, independent telebank offering online
banking services, brokerage loans, mutual funds, and credit cards. It conducts
business by telephone, by mail, and increasingly over the Internet to customers
in Germany and Austria. Its shares have doubled since an initial public offering
last September on Germany's Neuer Market.
These and similar financial services holdings are benefiting from the
American-like "equity culture" that is sweeping across Europe. Ordinary citizens
are investing increasingly in capital markets across the Continent.
[right margin]
TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
5/31/00 11/30/99
MARSCHOLLEK,
LAUTENSCHLAEGER
UND PARTNER AG 4.4% 3.6%
VESTAS WIND
SYSTEMS A/S 2.8% 1.1%
HAVAS ADVERTISING SA 2.2% 2.5%
ORBOTECH LTD. 2.0% 1.0%
SHIRE
PHARMACEUTICALS
GROUP PLC 1.9% 0.8%
GFI INFORMATIQUE 1.9% 1.4%
LOGITECH
INTERNATIONAL S.A. 1.8% 0.4%
GRUPPO EDITORIALE
L'ESPRESSO 1.8% 1.4%
AMDOCS LTD. 1.7% 1.2%
SINGULUS TECHNOLOGIES 1.6% --
TOP FIVE SECTORS
% OF FUND INVESTMENTS
AS OF AS OF
5/31/00 11/30/99
TECHNOLOGY 32.0% 17.8%
COMMERCIAL SERVICES 12.1% 22.9%
FINANCIAL 10.3% 10.3%
CONSUMER SERVICES 9.9% 10.5%
HEALTH CARE 7.5% 3.9%
www.americancentury.com 13
International Discovery--Q&A
--------------------------------------------------------------------------------
(Continued)
Until recently, one invested through a bank in Europe, or one did not invest.
Now, faced with funding their own retirements in the wake of widespread
government pension reform, millions of Europeans are turning to true financial
services providers.
WHAT ARE SOME OTHER COMPANIES THAT CONTRIBUTED TO YOUR RESULTS?
Not every change in the workplace is technological. In Germany, new
government policies allow companies to hire people without having to give them
permanent jobs. That shift has created a demand for temporary, highly skilled
workers such as financial experts and engineers. Many are being provided by a
company whose shares we own called DIS Deutscher Industrie Service AG. These
kinds of workers command a high price, which companies are willing to pay in the
short term because they are saving money in the long run.
Our positions in health care companies gave the fund a boost near the end
of the period. In the United Kingdom, Shire Pharmaceuticals Group PLC has
developed a drug called Reminyl that slows the progress of Alzheimer's disease.
It has received approval for distribution in Sweden and soon expects similar
approval in the rest of Europe. We also own stock in QLT Inc. This Canadian
biotech company, along with its U.S. partner, CIBA Vision Corp., began sales in
the United States of its eye-treatment product, Visudyne. This light-activated
treatment is used to treat macular degeneration, a disease that robs people of
their sight. The product is injected intravenously, then activated by shining
light into the eye.
WHICH STOCKS PERFORMED BELOW YOUR EXPECTATIONS?
Eidos plc, the United Kingdom-based maker of video games such as "Tomb
Raider," announced in March that the sale of new titles had slowed and that it
was delaying the issue of new games. Eidos is Europe's largest maker of video
games, but its share price is down dramatically in 2000. We sold the position in
late January following indications that Eidos' growth would not meet our
expectations.
We were also disappointed by Icon Medialab International AB, the Swedish
Internet consultant. The company suffered losses--the size of which surprised
the market--as it quickly expanded abroad to attract big clients. Icon helps
clients such as the Coca-Cola Co., set up and manage Web sites.
WHAT ARE YOUR PLANS FOR INTERNATIONAL DISCOVERY FOR THE REMAINDER OF 2000?
We will continue practicing the same investment philosophy we have in the
past. That includes taking into account the kinds of changes that swept across
international markets last spring, while not being carried away by them.
International Discovery targets companies with solid fundamentals and strong
earnings, but even those weren't immune to the insecurity that gripped markets
in March, April, and May. We have been through periods like this before. In our
view, the best way to negotiate times of market volatility and uncertainty is by
owning the types of firms our strategy is designed to lead us to: successful,
growing companies with solid management. We believe this practice will continue
to reward all of us as shareholders.
[left margin]
TYPES OF INVESTMENTS IN THE PORTFOLIO
================================================================================
AS OF MAY 31, 2000
COMMON STOCKS 86.5%
TEMPORARY CASH INVESTMENTS 8.5%
PREFERRED STOCKS 5.0%
[pie chart]
================================================================================
AS OF NOVEMBER 30, 1999
COMMON STOCKS 92.6%
TEMPORARY CASH INVESTMENTS 2.5%
PREFERRED STOCKS AND RIGHTS 4.9%
[pie chart]
INVESTMENTS BY COUNTRY
% OF FUND INVESTMENTS
AS OF AS OF
5/31/00 11/30/99
GERMANY 18.3% 13.4%
U.K. 11.6% 13.6%
UNITED STATES(1) 11.4% 7.2%
FRANCE 10.8% 9.0%
SWITZERLAND 8.6% 4.9%
CANADA 5.3% 6.0%
NETHERLANDS 4.7% 4.3%
ITALY 4.2% 4.1%
SWEDEN 4.0% 2.7%
OTHERS 21.1% 34.8%
(1) Includes temporary cash investments.
14 1-800-345-2021
International Discovery--Schedule of Investments
--------------------------------------------------------------------------------
MAY 31, 2000 (UNAUDITED)
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
COMMON STOCKS -- 86.5%
AUSTRALIA -- 0.5%
2,217,448 Austar United
Communications Limited(1) $ 6,727
6,046,298 Davnet Limited(1) 4,845
------------------------
11,572
------------------------
BELGIUM -- 0.7%
153,574 Telinfo NV 15,957
------------------------
CANADA -- 5.3%
462,600 Biovail Corp. International(1) 21,858
664,100 Celestica Inc.(1) 30,922
1,281,300 CGI Group Inc.(1) 15,608
860,000 Dimethaid Research Inc.(1) 6,429
429,900 MGI Software Corp.(1) 5,165
647,500 QLT PhotoTherapeutics Inc.(1) 31,766
340,500 Royal Group Technologies Ltd.(1) 7,341
------------------------
119,089
------------------------
DENMARK -- 3.8%
145,300 Falck A/S 22,115
1,748,154 Vestas Wind Systems A/S 64,165
------------------------
86,280
------------------------
EGYPT -- 0.5%
295,652 Egyptian Mobile Phone Network(1) 12,146
------------------------
FINLAND -- 1.0%
467,700 Comptel Plc 8,315
562,884 Data Fellows Oyj(1) 5,817
444,993 Stonesoft Oyj(1) 7,075
133,622 Talentum Oyj 981
------------------------
22,188
------------------------
FRANCE -- 10.8%
43,040 A Novo 10,264
77,318 Altran Technologies SA 17,426
194,600 Business Objects S.A. ADR(1) 15,568
182,351 Clarins 17,889
40,740 Devoteam SA(1) 3,959
338,677 Elior(1) 4,118
213,311 FI System(1) 10,164
162,592 Galeries Lafayette 30,411
261,067 GFI Informatique 42,116
2,264,740 Havas Advertising SA 49,879
554,445 Integra-Net SA(1) 8,452
9,128 NRJ SA 5,037
262,403 Riber SA(1) 4,025
47,655 Self Trade(1) 405
11,290 SR Teleperformance 3,648
276,772 Transiciel SA 21,496
------------------------
244,857
------------------------
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
GERMANY -- 13.9%
10,017 ADVA AG Optical Networking $ 5,199
58,174 Aixtron AG 14,961
284,318 Dialog Semiconductor plc(1) 13,826
247,328 Direkt Anlage Bank AG(1) 8,535
136,046 DIS Deutscher Industrie Service AG 16,413
635,938 Entrium Direct Bankers AG(1) 30,629
65,963 Epcos AG(1) 8,072
718,577 Fantastic Corp.(1) 9,509
212,313 Heyde AG Beratung Software(1) 31,967
89,877 Intershop Communications AG(1) 36,479
610,904 Kamps AG 16,283
97,614 PrimaCom AG(1) 4,285
291,356 SCM Microsystems, Inc.(1) 20,708
369,628 Singulus Technologies(1) 36,987
214,399 Software AG(1) 19,008
100,729 Tecis Holding AG 12,717
195,107 Telesens AG(1) 8,589
148,299 Thiel Logistik AG(1) 9,431
118,478 Tiscon Infosystems AG(1) 11,745
------------------------
315,343
------------------------
GREECE -- 0.8%
553,880 Folli-Follie Abee 12,232
378,700 Maillis 5,288
------------------------
17,520
------------------------
INDIA -- 1.3%
509,240 Satyam Computer 29,038
------------------------
IRELAND -- 0.7%
382,900 CBT Group Public
Limited Co. ADR(1) 16,201
------------------------
ISRAEL -- 2.4%
68,700 AudioCodes Ltd.(1) 5,017
35,900 Gilat Satellite Networks Ltd.(1) 2,902
544,100 Orbotech Ltd.(1) 46,045
------------------------
53,964
------------------------
ITALY -- 4.2%
1,693 Bipop-Carire SPA 15,409
215,046 Buffetti SpA 4,203
492,310 Class Editori S.p.A. 7,551
3,140,741 Gruppo Editoriale L'Espresso 41,709
505,841 Tiscali SpA(1) 25,214
------------------------
94,086
------------------------
JAPAN -- 3.7%
42,000 Colin Corp. 3,620
48,100 Dentsu Tec Inc. 5,127
47,517 Fancl Corp. 4,360
61,000 Fast Retailing Co. Ltd. 25,980
231,300 Shinkawa Ltd. 10,827
171,200 Sunkus & Associates Inc. 5,316
18,000 TOHOKU PIONEER CORP.(1) 1,168
See Notes to Financial Statements www.americancentury.com 15
International Discovery--Schedule of Investments
--------------------------------------------------------------------------------
(Continued)
MAY 31, 2000 (UNAUDITED)
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
200,000 Yamada Denki $ 15,942
148,000 Yushin Precision Equipment
Co., Ltd. 11,756
------------------------
84,096
------------------------
MEXICO -- 0.9%
3,063,600 Corporacion Interamericana
de Entretenimiento S.A. Cl B(1) 12,216
588,400 Grupo Iusacell S.A.
de C.V. Series L ADR(1) 7,796
------------------------
20,012
------------------------
NETHERLANDS -- 4.7%
322,200 ASR Verzekeringsgroep N.V. 16,723
375,944 Computer Services
Solutions Holding NV 9,792
483,041 CSM NV 10,164
192,959 Exact Holding NV(1) 9,393
300,524 Fox Kids Europe NV(1) 4,005
280,052 Fugro N.V. 15,688
240,508 Kempen & Company NV 10,301
126,932 OpenTV Corp.(1) 5,732
96,100 QIAGEN N.V.(1) 14,484
100,609 Van der Moolen Holding N.V. 4,888
132,866 Versatel Telecom International NV(1) 4,809
------------------------
105,979
------------------------
NORWAY -- 2.4%
326,300 Petroleum Geo-Services ASA ADR(1) 6,220
1,173,200 Tandberg ASA(1) 21,318
1,138,400 Tomra Systems ASA 24,144
626,433 Visma ASA(1) 3,524
------------------------
55,206
------------------------
POLAND -- 0.2%
97,347 Softbank S.A. 4,031
------------------------
SINGAPORE -- 1.3%
4,378,000 Datacraft Asia Limited 30,427
------------------------
SOUTH AFRICA -- 0.2%
2,724,007 Ixchange Technology
Holdings Limited(1) 5,287
------------------------
SOUTH KOREA -- 0.1%
216,228 Insung Information 2,824
------------------------
SWEDEN -- 4.0%
593,701 Arkivator AB 14,903
669,854 Framfab AB(1) 9,827
1,678,450 IBS AB(1) 9,550
174,509 Information Highway AB(1) 8,244
1,644,957 Mandator AB 16,792
297,335 Modern Times Group
MTG AB Cl B(1) 13,352
150,209 Proffice AB Cl B(1) 4,525
508,273 Sigma AB Cl B 14,460
------------------------
91,653
------------------------
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
SWITZERLAND -- 8.6%
35,658 Charles Voegele Holding AG(1) $ 6,994
3,530 Disetronic Holding AG 22,650
147,388 Gretag Imaging Group 28,034
2,904 Kudelski SA(1) 32,408
71,415 Logitech International S.A.(1) 41,812
151,000 Mettler-Toledo International, Inc.(1) 5,917
9,664 PubliGroupe S.A. 6,836
8,372 Straumann AG 10,450
48,500 Swisslog Holding AG 22,645
7,677 Vontobel Holding AG Cl B 16,610
------------------------
194,356
------------------------
UNITED KINGDOM -- 11.6%
2,402,700 Baltimore Technologies plc(1) 16,376
135,664 Bookham Technology plc(1) 6,249
443,800 BTG Plc(1) 5,468
538,100 Capital Radio plc 10,236
698,993 Fibernet Group plc(1) 15,574
642,400 Independent Energy
Holdings plc ADR(1) 14,293
86,295 London Bridge Software
Holdings plc 808
2,287,800 Man (E D & F) Group plc 17,374
2,753,620 Manchester United Plc 13,405
2,437,896 Matalan PLC 19,062
100,000 NDS Group plc ADR(1) 6,625
731,873 NXT plc(1) 9,318
272,138 Oxford GlycoSciences Plc(1) 5,952
1,050,830 Parthus Technologies plc(1) 2,526
3,459,347 Psion plc 28,396
3,578,012 Saatchi & Saatchi plc 16,963
1,949,960 Sage Group plc (The) 18,942
2,842,700 Shire Pharmaceuticals Group PLC(1) 42,155
9,746,400 SkyePharma plc(1) 13,577
------------------------
263,299
------------------------
UNITED STATES -- 2.9%
627,000 Amdocs Ltd.(1) 38,835
201,600 UnitedGlobalCom Cl A(1) 9,670
672,800 Viatel, Inc.(1) 16,799
------------------------
65,304
------------------------
TOTAL COMMON STOCKS 1,960,715
------------------------
(Cost $1,377,332)
PREFERRED STOCKS -- 5.0%
BRAZIL -- 0.6%
915,000,000 Companhia de Transmissao
de Energia Eletrica Paulista(1) 3,666
245,873,000 Empresa Paulista de Transmissao
de Energia SA 1,938
219,000 Tele Celular Sul Participacoes
SA ADR 7,419
------------------------
13,023
------------------------
16 1-800-345-2021 See Notes to Financial Statements
International Discovery--Schedule of Investments
--------------------------------------------------------------------------------
(Continued)
MAY 31, 2000 (UNAUDITED)
Shares/Principal Amount ($ in Thousands) Value
--------------------------------------------------------------------------------
GERMANY -- 4.4%
208,030 Marschollek, Lautenschlaeger
und Partner AG $ 98,928
------------------------
TOTAL PREFERRED STOCKS 111,951
------------------------
(Cost $31,504)
TEMPORARY CASH INVESTMENTS -- 8.5%
$25,000 FHLB Discount Notes,
6.27%, 6/1/00(2) 25,000
50,000 FHLB Discount Notes,
6.30%, 6/16/00(2) 49,866
50,000 FHLB Discount Notes,
6.32%, 6/21/00(2) 49,810
Repurchase Agreement, BA Security
Services, Inc., (U.S. Treasury obligations),
in a joint trading account at 6.34%,
dated 5/31/00, due 6/1/00
(Delivery value $68,712) 68,700
------------------------
TOTAL TEMPORARY CASH INVESTMENTS 193,376
------------------------
(Cost $193,363)
TOTAL INVESTMENT SECURITIES -- 100.0% $2,266,042
==========================
(Cost $1,602,199)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
($ in Thousands)
Contracts Settlement Unrealized
to Sell Date Value Gain
--------------------------------------------------------------------------------
1,735,748,240 JPY 6/30/00 $16,173 $195
========================================
(Value on Settlement Date $16,368)
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total
Investment Securities
COMMERCIAL SERVICES 12.1%
CONSUMER SERVICES 9.9%
CONSUMER (CYCLICAL) 6.0%
CONSUMER (NON-CYCLICAL) 2.0%
ENERGY 0.7%
FINANCIAL 10.3%
HEALTH CARE 7.5%
INDUSTRIALS 7.0%
TEMPORARY CASH INVESTMENTS 8.5%
TECHNOLOGY 32.0%
TELECOMMUNICATIONS 4.0%
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
FHLB = Federal Home Loan Bank
JPY = Japanese Yen
(1) Non-income producing.
(2) Rate disclosed is the yield to maturity at purchase.
See Notes to Financial Statements www.americancentury.com 17
Emerging Markets--Performance
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURNS AS OF MAY 31, 2000
INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
(INCEPTION 9/30/97) (INCEPTION 5/12/99) (INCEPTION 1/28/99)
EMERGING EMERGING EMERGING
MARKETS MSCI EMF MARKETS MSCI EMF MARKETS MSCI EMF
<S> <C> <C> <C> <C> <C> <C>
6 MONTHS(1) 11.39% 0.18% 11.23% 0.18% 11.37% 0.18%
1 YEAR 44.57% 17.75% 44.11% 17.75% 44.80% 17.75%
=======================================================================================================================
AVERAGE ANNUAL RETURNS
LIFE OF FUND 8.80% -3.44% 38.19% 15.65%(2) 58.40% 35.76%(3)
</TABLE>
(1) Returns for periods less than one year are not annualized.
(2) Since 4/30/99, the date nearest the class's inception for which data are
available.
(3) Since 1/31/99, the date nearest the class's inception for which data are
available.
See pages 53-56 for information about share classes, the MSCI Emerging Markets
Free Index, and returns.
GROWTH OF $10,000 OVER LIFE OF FUND
$10,000 investment made 9/30/97
Value on 5/31/00
Emerging Markets $12,520
MSCI EMF Index $9,111
[data for mountain chart below]
Emerging Markets MSCI EMF Index
Date Value Value
9/30/1997 $10,000 $10,000
10/31/1997 $8,480 $8,359
11/30/1997 $8,300 $8,054
12/31/1997 $8,360 $8,248
1/31/1998 $7,800 $7,601
2/28/1998 $8,700 $8,395
3/31/1998 $9,060 $8,759
4/30/1998 $9,400 $8,664
5/31/1998 $8,500 $7,477
6/30/1998 $7,800 $6,693
7/31/1998 $8,320 $6,905
8/31/1998 $6,001 $4,909
9/30/1998 $5,880 $5,220
10/31/1998 $6,500 $5,769
11/30/1998 $6,980 $6,249
12/31/1998 $6,780 $6,159
1/31/1999 $6,799 $6,060
2/28/1999 $6,640 $6,118
3/31/1999 $7,440 $6,925
4/30/1999 $8,539 $7,781
5/31/1999 $8,660 $7,736
6/30/1999 $9,759 $8,614
7/31/1999 $9,479 $8,380
8/31/1999 $9,559 $8,456
9/30/1999 $9,379 $8,170
10/31/1999 $9,879 $8,344
11/30/1999 $11,239 $9,093
12/31/1999 $13,980 $10,250
1/31/2000 $13,660 $10,311
2/29/2000 $15,439 $10,447
3/31/2000 $15,799 $10,498
4/30/2000 $13,259 $9,503
5/31/2000 $12,520 $9,111
The graph at left shows the growth of a $10,000 investment over the life of the
fund, while the graph below shows the fund's year-by-year performance. The MSCI
Emerging Markets Free Index is provided for comparison in each graph. Emerging
Market's 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 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 ENDED MAY 31)
[data for bar chart below]
Emerging Markets MSCI EMF Index
Date Return Return
5/31/1998* -15.00% -25.24%
5/31/1999 1.88% 3.46%
5/31/2000 44.57% 17.75%
* From 9/30/97 to 5/31/98.
18 1-800-345-2021
Emerging Markets--Q&A
--------------------------------------------------------------------------------
[photo of Mark Kopinski and Michael Donnelly]
An interview with Mark Kopinski and Michael Donnelly, portfolio managers on
the Emerging Markets team.
HOW DID EMERGING MARKETS PERFORM DURING THE SIX MONTHS ENDED MAY 31, 2000?
The fund performed well during this volatile period, particularly from a
comparative standpoint. Emerging Markets gained 11.39%, which far outdistanced
the 0.18% return of its benchmark, the Morgan Stanley Capital International
Emerging Markets Free Index.*
The fund also significantly outperformed most other emerging markets funds.
The 195 emerging markets funds tracked by Lipper during the period posted an
average return of just 2.93%.
Emerging Markets looked just as impressive from a longer-term perspective.
For the year ended May 31, 2000, the fund returned 44.57%. This compared
favorably with the 17.75% return for the index and a 23.51% average gain for 185
emerging markets funds tracked by Lipper. Based on these figures, Emerging
Markets ranked thirteenth out of the 185 funds** for the one-year period.
WHY DID EMERGING MARKETS PERFORM SO WELL COMPARED WITH ITS INDEX AND OTHER
FUNDS?
We successfully executed our investment strategy. Our process led us to
some outstanding technology companies that elevated fund performance through the
beginning of March. The constant search for growing companies capable of
attracting additional investor interest provided a competitive advantage.
Even though emerging market technology stocks suffered a correction in the
latter half of the six-month period (which corresponded to the decline of the
Nasdaq Composite Index in the United States), the overall contribution of our
technology investments we found was positive. And it is worth noting that those
stocks were starting to rebound as the period ended.
WHAT CHANGES DID YOU MAKE WHEN TECHNOLOGY STOCKS BEGAN TO CORRECT IN MARCH?
We did not make any major changes. In fact, it is crucial to emphasize that
our commitment to our approach is just as important as the approach itself. We
stayed with most of our companies because we remained convinced that they were
sound investments. However, we pared back some of our positions and verified
that we still had compelling reasons for sticking with each holding.
Our commitment to technology companies may cause short-term pain, but
markets do recover. The portfolio declined sharply in April, but it started to
bounce back at the end of May.
CAN YOU PROVIDE US WITH A REFRESHER ON YOUR INVESTMENT STRATEGY?
We scour the globe for companies whose earnings are growing at strong and
sustainable rates. This company focus makes us bottom-up investors, rather than
top-down -- we do not rely solely on economic models to tell us what countries
or sectors in which to
* All fund returns referenced in this interview are for Investor Class shares.
**Lipper rankings are based on average annual returns.
[right margin]
"WE SCOUR THE GLOBE FOR COMPANIES WHOSE EARNINGS ARE GROWING AT STRONG AND
SUSTAINABLE RATES. THIS COMPANY FOCUS MAKES US BOTTOM-UP INVESTORS, RATHER THAN
TOP-DOWN -- WE DO NOT RELY SOLELY ON ECONOMIC MODELS TO TELL US WHAT COUNTRIES
OR SECTORS IN WHICH TO INVEST."
PORTFOLIO AT A GLANCE
5/31/00 11/30/99
NO. OF COMPANIES 104 120
MEDIAN MARKET $1.63 $1.19
CAPITALIZATION BILLION BILLION
PORTFOLIO TURNOVER 85%(1) 168%(2)
EXPENSE RATIO (FOR
INVESTOR CLASS) 2.00%(3) 2.00%
(1) Six months ended 5/31/00.
(2) Year ended 11/30/99.
(3) Annualized.
Investment terms are defined in the Glossary on pages 56-57.
www.americancentury.com 19
Emerging Markets--Q&A
--------------------------------------------------------------------------------
(Continued)
invest. Instead, we analyze individual companies, particularly their earnings,
management, and business plans. As a group, we talked with more than 1,400
companies over the last 12 months, in most cases with the chief executive or
chief financial officers. We want to own the stocks of successful, growing
companies that are leaders in their fields.
WHAT WERE SOME OF THE KEY DEVELOPMENTS IN EMERGING MARKETS OVER THE LAST SIX
MONTHS?
An important development that may have been missed by U.S. investors
happened in Russia, where sentiment about the political system and the economy
suddenly turned positive. Two events were primarily responsible. First, the
Russian people elected a Duma (Congress) that is committed to free market
policies and economic reform. Second, a new Russian president, Vladimir Putin,
was elected in March.
While many news reports focused on the fact that Putin is a former KGB
agent, our perception is that he is intelligent, pragmatic, and an economic
reformer. The Russian people appear to be drawn to and energized by their new
president.
Favorable economic conditions have also helped. Increased sales of Russia's
energy reserves -- particularly natural gas -- combined with higher energy
prices, have allowed Russia to rebuild its government coffers and reduce foreign
debt. As a result, Russian banks are more liquid, the economy is experiencing
robust growth, the currency has stabilized, and foreign investment is returning.
These factors raised our confidence in several growing Russian companies.
We have added to the fund's Russian exposure by purchasing companies whose
earnings are growing substantially in this environment. Two energy companies,
Lukoil Holding and Surgutneftegaz Oil, are good examples of the types of Russian
investments we are making.
DIDN'T CHANGES IN THE U.S. CAPITAL MARKETS ALSO HAVE A STRONG IMPACT ON
EMERGING MARKETS?
That is true. The Federal Reserve raised short-term interest rates by a
full percentage point during the six months, which rippled around the world and
helped trigger other rate increases. The resulting sharp decline in the Nasdaq
Composite Index also echoed globally. The declining confidence in the strength
of the U.S. economy has far-reaching implications in the emerging markets.
However, growth opportunities still abound -- particularly in technology
and telecommunications -- and many companies are still expanding and increasing
their earnings.
SIMILAR TO RUSSIA, TAIWAN IS ANOTHER PLACE WHERE YOU INCREASED YOUR HOLDINGS
SIGNIFICANTLY. IN FACT, IT BECAME YOUR SECOND-LARGEST COUNTRY HOLDING, BEHIND
BRAZIL. WHAT WAS THE STORY THERE?
This is a good example of where changes in country exposure do not tell the
whole tale. The real story here is semiconductors.
Stocks of semiconductor companies were among the top performers during the
period. We believe the outlook for this group remains favorable, even if the
economy slows. We anticipate continued high demand for chips, particularly in
the expanding telecommunications sector where the barriers to market entry are
high for potential competitors.
[left margin]
TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
5/31/00 11/30/99
SAMSUNG ELECTRONICS 2.3% 2.1%
TAIWAN
SEMICONDUCTOR
MANUFACTURING
CO. LTD. 2.1% 1.7%
UNITED
MICROELECTRONICS
CORP. 2.1% --
PETROLEO
BRASILEIRO S.A. 2.1% 2.1%
AFRICAN BANK
INVESTMENTS
LIMITED 2.0% --
ASM PACIFIC
TECHNOLOGY LIMITED 2.0% 1.0%
YAPI VE KREDI
BANKASI A.S. 1.8% 1.4%
TELE NORTE LESTE
PARTICIPACOES S.A. 1.6% 1.1%
SK TELECOM CO., LTD. 1.5% --
HON HAI PRECISION
INDUSTRY 1.4% 1.1%
TOP FIVE SECTORS
% OF FUND INVESTMENTS
AS OF AS OF
5/31/00 11/30/99
TECHNOLOGY 21.3% 16.3%
TELECOMMUNICATIONS 15.8% 17.2%
FINANCIAL 13.4% 8.6%
BASIC MATERIALS 11.4% 17.7%
CONSUMER (CYCLICAL) 8.8% 8.4%
20 1-800-345-2021
Emerging Markets--Q&A
--------------------------------------------------------------------------------
(Continued)
It happens that three leading global semiconductor companies are located in
Taiwan: United Microelectronics Corporation, Taiwan Semiconductor Manufacturing
Company Ltd., and Windbond Electronics Corporation, which together represented
5.5% of the fund as of May 31.
The fund's top holding on this date, Korea's Samsung Electronics, is also
involved in semiconductor manufacturing, as well as many other businesses,
including consumer electronics, mobile phones, monitors, televisions, and home
appliances.
SHIFTING GEARS, WAS THERE A SITUATION WHERE YOUR PROCESS WAS NOT AS EFFECTIVE?
Let's talk about South Africa, a case where the country exposure told a big
part of the story. One of the potential risks of global investing is currency
depreciation. South Africa was an example where a weakening currency affected
fund returns. It did not matter how strong South African company earnings growth
or stock prices were -- U.S. investors had to overcome an 11% loss for anything
priced in the South African rand. The gap in interest rates between South Africa
and the United States, coupled with the concern about violence in neighboring
Zimbabwe, helped cause rand depreciation.
LOOKING AHEAD, WHAT IS YOUR OUTLOOK FOR THE NEXT SIX MONTHS?
It is pretty much business as usual for us, but we are being much more
selective. The Federal Reserve has shaken things up with interest rate
increases. In a rising rate environment -- where any earnings shortfall tends to
be punished severely by the market -- sustainability is particularly important,
so we are rechecking our analysis very carefully and asking lots of tough
questions. This should help us manage our downside risk in the coming months.
[right margin]
TYPES OF INVESTMENTS IN THE PORTFOLIO
================================================================================
AS OF MAY 31, 2000
COMMON STOCKS, RIGHTS
AND WARRANTS 86.2%
PREFERRED STOCKS AND RIGHTS 9.1%
TEMPORARY CASH INVESTMENTS 4.7%
[pie chart]
================================================================================
AS OF NOVEMBER 30, 1999
COMMON STOCKS, RIGHTS
AND WARRANTS 92.1%
PREFERRED STOCKS
AND WARRANTS 7.9%
[pie chart]
INVESTMENTS BY COUNTRY
% OF FUND INVESTMENTS
AS OF AS OF
5/31/00 11/30/99
BRAZIL 13.1% 10.5%
TAIWAN
(REPUBLIC OF CHINA) 11.8% 6.9%
MEXICO 10.8% 11.6%
SOUTH AFRICA 8.1% 8.4%
SOUTH KOREA 7.7% 6.3%
RUSSIAN FEDERATION 6.2% 4.1%
POLAND 4.3% 2.2%
TURKEY 4.3% 3.9%
HONG KONG 4.1% 7.3%
OTHER 29.6% 38.8%
www.americancentury.com 21
Emerging Markets--Schedule of Investments
--------------------------------------------------------------------------------
MAY 31, 2000 (UNAUDITED)
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
COMMON STOCKS, RIGHTS & WARRANTS -- 86.2%
ARGENTINA -- 1.3%
188,900 Banco Rio de la Plata S.A. Cl B $ 1,243
414,400 Siderca S.A.I.C. 771
------------------------
2,014
------------------------
BRAZIL -- 4.0%
70,300 Aracruz Celulose S.A. ADR 1,178
57,904,000 Companhia Siderurgica Nacional 1,891
98,600 Embratel Participacoes S.A. ADR 2,064
105,300 Tele Centro Oeste Celular
Participacoes SA ADR 1,073
------------------------
6,206
------------------------
CZECH REPUBLIC -- 0.8%
56,500 Komercni Banka a.s.(1) 1,220
------------------------
EGYPT -- 1.8%
62,400 A-Ahram Beverages Co. GDR
(Acquired 6/4/98-4/17/00,
Cost $1,094)(1)(2) 1,109
41,993 Egyptian Mobile Phone Network(1) 1,725
------------------------
2,834
------------------------
ESTONIA -- 0.8%
157,840 Hansabank Ltd. 1,211
------------------------
FINLAND -- 1.2%
117,900 Hartwall Oyj Abp 1,863
------------------------
GREECE -- 2.6%
29,250 Alpha Credit Bank 1,241
79,565 Folli-Follie Abee 1,757
82,900 Maillis 1,158
------------------------
4,156
------------------------
HONG KONG -- 4.1%
7,500,000 Angang New Steel Co. Ltd. Cl H(1) 587
888,000 ASM Pacific Technology Limited 3,145
248,000 China Telecom (Hong Kong) Ltd.(1) 1,854
68,200 Hutchison Whampoa Limited 788
------------------------
6,374
------------------------
HUNGARY -- 3.4%
56,900 BorsodChem Rt. 1,888
107,500 Magyar Tavkozlesi Rt.(1) 746
46,000 North American Bus Industries Rt.(1) 906
13,600 Pannonplast Rt. 307
25,683 Richter Gedeon Rt. 1,509
------------------------
5,356
------------------------
INDIA -- 3.9%
275,000 Associated Cement
Companies Ltd.(1) 700
122,644 ICICI Bank Ltd. ADR(1) 1,886
8,200 Infosys Technologies Limited 1,286
149,105 Larsen & Toubro Ltd. 632
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
1,200,000 National Aluminium Co. Ltd. $ 1,292
29,000 Zee Telefilms Ltd. 336
------------------------
6,132
------------------------
ISRAEL -- 3.0%
9,500 AudioCodes Ltd.(1) 694
8,400 Check Point Software
Technologies Ltd.(1) 1,579
10,600 Gilat Satellite Networks Ltd.(1) 857
19,300 Orbotech Ltd.(1) 1,633
------------------------
4,763
------------------------
MEXICO -- 10.8%
454,841 Cemex SA de CV Cl A 1,928
486,972 Corporacion Interamericana
de Entretenimiento S.A. Cl B(1) 1,942
3,080,000 Grupo Financiero Bancomer,
S.A. de C.V. Cl O(1) 1,572
1,501,000 Grupo Financiero Banorte
S.A. de C.V. Cl O(1) 2,053
51,000 Grupo Gigante SA de CV(1) 78
157,000 Grupo Iusacell S.A.
de C.V. Series L ADR(1) 2,080
20,500 Grupo Televisa S.A. GDR(1) 1,142
45,900 Telefonos de Mexico, S.A. Cl L ADR 2,235
138,200 Tubos de Acero de Mexico, SA ADR 1,866
44,300 TV Azteca SA DE CV ADR 418
770,000 Wal-Mart de Mexico SA
de CV Series V(1) 1,588
------------------------
16,902
------------------------
PEOPLES REPUBLIC OF CHINA -- 2.2%
1,573,821 Eastern Communications
Co., Ltd. Cl B 1,561
97,500 PetroChina Co. Ltd. ADR(1) 1,962
------------------------
3,523
------------------------
PHILIPPINES -- 0.2%
3,117,900 Music Corporation(1) 373
271,294 Music Corporation Warrants(1) --
------------------------
373
------------------------
POLAND -- 4.3%
135,564 Elektrim Spolka Akcyjna S.A.(1) 1,758
289,904 Mostostal Zabrze -- Holding S.A.(1) 854
99,600 Polski Koncern Naftowy SA GDR
(Acquired 11/22/99-5/31/00,
Cost $1,031)(2) 934
37,941 Softbank S.A. 1,571
200,000 Telekomunikacja Polska S.A. GDR
(Acquired 10/25/99-2/17/00,
Cost $1,332)(1)(2) 1,405
32,000 Telekomunikacja Polska S.A.(1) 225
------------------------
6,747
------------------------
22 1-800-345-2021 See Notes to Financial Statements
Emerging Markets--Schedule of Investments
--------------------------------------------------------------------------------
(Continued)
MAY 31, 2000 (UNAUDITED)
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
RUSSIAN FEDERATION -- 6.2%
33,000 Gorkovsky Auto Plant
(GAZ) Rights(1) $ 1,077
28,400 Lukoil Holding ADR 1,569
210,000 Norilsk Nickel(1) 1,937
105,200 Rostelecom ADR 1,598
114,100 Surgutneftegaz ADR(1) 1,647
143,000 Unified Energy Systems ADR 1,966
------------------------
9,794
------------------------
SINGAPORE -- 1.1%
256,000 Datacraft Asia Limited 1,779
------------------------
SOUTH AFRICA -- 8.1%
1,572,172 African Bank Investments Limited(1) 3,165
77,500 Compagnie Financiere Richemont
AG Depositary Receipts 1,912
65,300 Coronation Holdings Limited 1,048
260,000 Dimension Data Holdings Ltd.(1) 1,813
32,800 Impala Platinum Holdings Limited 1,097
305,000 Iscor Limited 684
614,300 Ixchange Technology
Holdings Limited(1) 1,192
578,200 Profurn Limited 316
1,538,500 Softline Limited(1) 1,526
------------------------
12,753
------------------------
SOUTH KOREA -- 7.7%
56,600 Hite Brewery Co., Ltd. 1,829
104,950 Hyundai Electronics Industries Co.(1) 1,635
51,960 Insung Information 679
26,920 Korea Telecom Corp. 2,002
13,001 Samsung Electronics 3,545
6,800 SK Telecom Co., Ltd. 2,318
------------------------
12,008
------------------------
TAIWAN (REPUBLIC OF CHINA) -- 11.8%
124,817 Asustek Computer Inc. 1,260
1,075,000 China Development
Industrial Bank(1) 1,640
1,606,500 China Steel Corp.(1) 1,189
736,000 Far Eastern Textile Ltd. 1,194
247,400 Hon Hai Precision Industry(1) 2,264
559,600 President Chain Store Corp. 2,152
640,000 Taiwan Semiconductor
Manufacturing Co. Ltd. 3,261
1,072,200 United Microelectronics Corp.(1) 3,254
734,820 Winbond Electronics Corp.(1) 2,218
------------------------
18,432
------------------------
THAILAND -- 1.2%
158,000 Advanced Info Service
Public Co. Limited(1) 1,815
------------------------
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
TURKEY -- 4.3%
16,078,000 Brisa Bridgestone Sabanci
Lastik San. Ve Tic A.S. $ 1,045
66,356,100 Dogan Sirketler Grubu Holding A.S. 1,536
93,635,779 Trakya Cam Sanayii A.S. 1,232
231,097,570 Yapi ve Kredi Bankasi A.S.(1) 2,853
------------------------
6,666
------------------------
UNITED STATES -- 1.4%
4,200 Comverse Technology, Inc.(1) 384
13,700 Golden Telecom Inc.(1) 411
37,500 UTStarcom Inc.(1) 1,441
------------------------
2,236
------------------------
TOTAL COMMON STOCKS,
RIGHTS & WARRANTS 135,157
------------------------
(Cost $121,918)
PREFERRED STOCKS & RIGHTS -- 9.1%
BRAZIL
293,000,000 Banco Bradesco SA 1,986
60,800 Companhia Vale do Rio Doce Cl A 1,518
156,950,000 Companhia de Transmissao
de Energia Eletrica Paulista(1) 629
44,278,000 Empresa Paulista de Transmissao
de Energia SA 349
13,850,000 Petroleo Brasileiro S.A. 3,231
124,966,142 Tele Norte Leste Participacoes S.A. 2,469
191,368 Tele Norte Leste Participacoes
S.A. Rights(1) 1
252,600,000 Telemig Celular Participacoes SA 735
442,000 Usinas Siderurgicas de Minas
Gerais S.A. Cl A 1,941
47,680,000 Votorantim Celulose e Papel SA 1,518
------------------------
TOTAL PREFERRED STOCKS & RIGHTS 14,377
------------------------
(Cost $14,113)
TEMPORARY CASH INVESTMENTS -- 4.7%
Repurchase Agreement, Merrill Lynch & Co., Inc.,
(U.S. Treasury obligations), in a joint trading
account at 6.25%, dated 5/31/00,
due 6/1/00 (Delivery value $7,301) 7,300
------------------------
(Cost $7,300)
TOTAL INVESTMENT SECURITIES -- 100.0% $156,834
========================
(Cost $143,331)
See Notes to Financial Statements www.americancentury.com 23
Emerging Markets--Schedule of Investments
--------------------------------------------------------------------------------
(Continued)
MAY 31, 2000 (UNAUDITED)
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total
Investment Securities
BASIC MATERIALS 11.4%
COMMERCIAL SERVICES 6.5%
CONSUMER SERVICES 2.4%
CONSUMER (CYCLICAL) 8.8%
CONSUMER (NON-CYCLICAL) 3.9%
ENERGY 5.9%
FINANCIAL 13.4%
HEALTH CARE 0.9%
INDUSTRIALS 3.1%
TEMPORARY CASH INVESTMENTS 4.7%
TECHNOLOGY 21.3%
TELECOMMUNICATIONS 15.8%
UTILITY 1.9%
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
GDR = Global Depositary Receipt
(1) Non-income producing.
(2) Security was purchased under Rule 144A of the Securities Act of 1933 or is a
private placement and, unless registered under the Act or exempted from
registration, may only be sold to qualified institutional investors. The
aggregate value of restricted securities at May 31, 2000, was $3,448 which
represented 2.2% of net assets.
24 1-800-345-2021 See Notes to Financial Statements
Global Growth--Performance
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
TOTAL RETURNS AS OF MAY 31, 2000
INVESTOR CLASS ADVISOR CLASS
(INCEPTION 12/1/98) (INCEPTION 2/5/99)
GLOBAL MSCI GLOBAL MSCI
GROWTH WORLD FREE GROWTH WORLD FREE
<S> <C> <C> <C> <C>
6 MONTHS(1) 15.16% 1.90% 15.16% 1.90%
1 YEAR 61.77% 13.56% 61.37% 13.56%
===========================================================================================
AVERAGE ANNUAL RETURNS
LIFE OF FUND 54.59% 15.06% 50.71% 11.19%(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 53-56 for information about share classes, the MSCI World Free Index,
and returns.
GROWTH OF $10,000 OVER LIFE OF FUND
$10,000 investment made 12/1/98
Value on 5/31/00
Global Growth $19,186
MSCI World Free Index $12,342
[data for mountain chart below]
Global Growth MSCI World Free Index
Date Value Value
12/1/1998 $10,000 $10,000
12/31/1998 $10,860 $10,487
1/31/1999 $11,540 $10,714
2/28/1999 $11,120 $10,427
3/31/1999 $11,720 $10,858
4/30/1999 $12,140 $11,286
5/31/1999 $11,859 $10,868
6/30/1999 $12,679 $11,371
7/31/1999 $12,959 $11,336
8/31/1999 $13,019 $11,313
9/30/1999 $13,299 $11,201
10/31/1999 $14,319 $11,782
11/30/1999 $16,658 $12,111
12/31/1999 $20,206 $13,090
1/31/2000 $19,505 $12,339
2/29/2000 $22,925 $12,371
3/31/2000 $22,484 $13,224
4/30/2000 $20,180 $12,664
5/31/2000 $19,186 $12,342
The graph at left shows the growth of a $10,000 investment over the life of the
fund, while the graph below shows the fund's year-by-year performance. The MSCI
World Free Index is provided for comparison in each graph. 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 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 ENDED MAY 31)
[data for bar chart below]
Global Growth MSCI World Free Index
Date Return Return
5/31/1999* 18.60% 8.68%
5/31/2000 61.77% 13.56%
* From 12/1/98 to 5/31/99.
www.americancentury.com 25
Global Growth--Q&A
--------------------------------------------------------------------------------
[photo of Bradley Amoils and Henrik Strabo]
An interview with Bradley Amoils and Henrik Strabo, portfolio managers on
the Global Growth team.
HOW DID GLOBAL GROWTH PERFORM DURING THE SIX MONTHS ENDED MAY 31, 2000?
Global Growth performed well during this short but volatile time frame,
especially compared with its benchmark and peer group. The fund gained 15.16%,
far outdistancing the 1.90% return of its benchmark, the Morgan Stanley Capital
International World Free Index.*
Similarly, the fund significantly outperformed most other global funds. The
264 global funds tracked by Lipper during the period posted an average return of
just 5.61%.
Global Growth looks even more impressive from a longer-term perspective.
For the year ended May 31, 2000, the fund returned 61.77%, compared with just
13.56% for the index and a 23.29% average for 258 global funds tracked by Lipper
during this period.
BEFORE REVIEWING YOUR INVESTMENTS, COULD YOU OUTLINE THE KEYS TO YOUR INVESTMENT
APPROACH?
We are growth investors. We focus on owning successful companies
experiencing strong growth that appears to be sustainable. To find these growing
businesses, we do a tremendous amount of fundamental analysis, much of it
involving face-to-face meetings with leaders of companies that appear to have
the growth characteristics we demand. In 1999, our international team, which
speaks a total of 13 languages, visited more than 1,400 companies.
Importantly, we follow a "bottom-up" investment process, investing in
individual companies that meet our strict requirements, as opposed to targeting
sectors, industries, or even specific regions. We believe this approach enables
us to own the best possible set of companies at any given time.
TURNING TO YOUR PORTFOLIO, WHAT WERE SOME OF GLOBAL GROWTH'S MOST SUCCESSFUL
INVESTMENTS DURING THE PERIOD?
Nortel Networks Corporation (up 46%) was one of our top contributors. The
Canadian company is a leading provider of fiber-optic technology for the
high-speed communications networks that businesses and consumers rely on to use
the Internet. In fact, the company estimates that its products carry more than
75% of North American Internet traffic. Nortel's earnings continue to be driven
by the rapid expansion of electronic commerce, which is requiring ever-greater
communications capacity on the Internet.
Television Francais (up 91%) was another strong performer. The company
manages TF1, one of the most-watched television stations in France, and produces
news, drama, documentaries, sports, and children's programs. It also publishes
and distributes videocassettes, publishes and records music on tapes and CDs,
and operates a home shopping program. Television Francais recently joined
France's benchmark CAC index, gaining the attention of index-tracking funds. It
also benefited from
* All fund returns referenced in this interview are for Investor Class shares.
[left margin]
"GLOBAL GROWTH LOOKS EVEN MORE IMPRESSIVE FROM A LONGER-TERM PERSPECTIVE. FOR
THE YEAR ENDED MAY 31, 2000, THE FUND RETURNED 61.77%, COMPARED WITH JUST 13.56%
FOR THE INDEX AND A 23.29% AVERAGE FOR 258 GLOBAL FUNDS TRACKED BY LIPPER DURING
THIS PERIOD."
PORTFOLIO AT A GLANCE
5/31/00 11/30/99
NO. OF COMPANIES 159 182
MEDIAN MARKET $19.9 $18.3
CAPITALIZATION BILLION BILLION
PORTFOLIO TURNOVER 62%(1) 133%(2)
EXPENSE RATIO (FOR
INVESTOR CLASS) 1.30%(3) 1.30%
(1) Six months ended 5/31/00.
(2) Year ended 11/30/99.
(3) Annualized.
Investment terms are defined in the Glossary on pages 56-57.
26 1-800-345-2021
Global Growth--Q&A
--------------------------------------------------------------------------------
(Continued)
spending on TV advertising, which reached record levels in France during the
spring.
Sonera Group Oyj (up more than 30%) is also a noteworthy holding. Finland's
biggest phone company, Sonera offers an array of fixed line and mobile voice,
video, and data services. Two out of three Finns own a cell phone, so it is not
surprising that Sonera was the first operator in the world to offer wireless
Internet service, making it possible for people to send and receive e-mails and
surf the Internet using their cellular handsets. It is now pioneering the
transformation of mobile phones into billing devices, whereby users can make
purchases by dialing numbers on their mobile phones (at "smart" vending
machines, for example), and pay the charges on their next phone bill.
FINANCIAL SERVICES REPRESENTS YOUR SECOND-LARGEST SECTOR WEIGHTING. WHAT'S
DRAWING YOU TO THAT AREA?
The demand for financial products is rapidly expanding in the United
States and abroad. In Europe particularly, citizens are taking a more proactive
role in their financial well-being--many for the first time--and are turning to
financial services firms for help. We've spread our investments among several
U.S. and international financial services companies. Domestically, we own such
industry pacesetters as American Express, Citigroup Inc., and Charles Schwab &
Co. Inc.
American Express is one of the leading global financial services companies.
The company has about 48 million credit cards in force worldwide, including its
new Blue Card, which contains an embedded computer chip. The card facilitates
purchases and payments online, a move to capture the business of younger,
technology-savvy consumers. It also appeals to those who perceive security on
the Internet as a major drawback to online transactions.
Citigroup is a truly global financial services company. It provides a broad
range of financial products and services, the most prominent being consumer
banking and credit, and corporate and investment banking, to about 100 million
consumers, corporations, and institutions worldwide. The 1998 merger of Citicorp
and Travelers Group brought together such brand names as Citibank, Travelers,
Salomon Smith Barney, CitiFinancial, and Primerica under Citigroup's trademark.
Charles Schwab is the biggest discount broker in the United States, and is
the epitome of an Internet-savvy company--half of its 7.1 million active
accounts are online, and the company's site is consistently rated among the best
for online trading. The San Francisco-based Schwab, which gets one of every five
trades done by online investors, is also moving toward global wireless delivery
of its financial services.
In Europe, we continue to receive stellar performance from Sweden's Skandia
Forsakrings AB, one of our 10 largest positions, which gained 126% during the
six-month period. This company provides packaged financial services -- including
variable annuities, Web sites, and financial planning software -- for
independent financial advisors in 26 countries. In fact, the majority of its
profits come from annuity sales in the United States.
[right margin]
TOP TEN HOLDINGS
% OF FUND INVESTMENTS
AS OF AS OF
5/31/00 11/30/99
VODAFONE
AIRTOUCH PLC 2.7% 0.3%
GENERAL ELECTRIC
CO. (U.S.) 2.1% 0.9%
CISCO SYSTEMS INC. 1.7% 1.0%
SKANDIA
FORSAKRINGS AB 1.6% 0.7%
NOKIA CORP. CL A 1.5% 1.4%
MARSCHOLLEK,
LAUTENSCHLAEGER
UND PARTNER AG 1.5% 1.1%
CITIGROUP INC. 1.5% 0.6%
VIVENDI 1.3% 1.4%
ERICSSON (L.M.)
TELEPHONE CO. 1.3% 0.3%
ALCATEL ALSTHOM
COMPAGNIE
GENERALE 1.3% 0.7%
TOP FIVE SECTORS
% OF FUND INVESTMENTS
AS OF AS OF
5/31/00 11/30/99
TECHNOLOGY 29.4% 23.9%
FINANCIAL 17.3% 9.9%
TELECOMMUNICATIONS 11.0% 18.9%
CONSUMER SERVICES 8.7% 8.7%
COMMERCIAL SERVICES 7.9% 16.5%
www.americancentury.com 27
Global Growth--Q&A
--------------------------------------------------------------------------------
(Continued)
YOU HAVE MORE THAN A THIRD OF THE FUND IN U.S. COMPANIES. WHAT ARE SOME OF YOUR
KEY INVESTMENTS THERE?
One is a company called Enron Corp. based in Houston. This company is the
world's leading trader of gas and electricity. New markets for these commodities
have sprung up in the wake of the deregulation of utilities in the United States
and abroad over the last several years. The company will soon be trading another
commodity--broadband communications capacity. The company also provides energy
services--lighting, cooling, and electrical power to corporations and
institutions.
We also own EMC Corporation, a company whose computer hardware helps keep
the Internet running. EMC is a leading provider of enterprise storage systems.
In effect, its technology ties together all of the computers and working parts
in a company's Web site, and stores the huge amounts of information companies
need to conduct business on the Internet. EMC's customers include companies like
Home Depot in the United States, Bertelsmann of Germany, and Korea Telecom. To
put the future demand for data storage in perspective, experts estimate that 96%
of the storage servers that will be deployed on the Internet by 2005 have yet to
be installed.
WHAT HOLDINGS DID NOT MEET YOUR EXPECTATIONS?
The spring meltdown in U.S. technology stocks rippled through the
international markets, and our exposure to some of the harder-hit companies
detracted from performance. Two former top-10 holdings are particularly notable
because they declined while representing a significant percentage of the
portfolio. One is Microsoft, and the other is America Online (AOL). Both stocks
were down close to 30% for the six months. Microsoft's recent legal woes are
well documented. AOL's outlook continues to be exciting, especially its pending
merger with media giant Time Warner.
Of course, not all technology stocks posted negative returns. Despite
losing ground during the tech sell-off, top-10 holding Cisco Systems still
gained 28%.
WHAT ARE YOUR PLANS FOR GLOBAL GROWTH FOR THE NEXT SIX MONTHS?
Although interest rate increases in the United States have raised the
degree of volatility and uncertainty in many global markets, it is still pretty
much business as usual for us. Our primary focus always remains on finding
companies, one at a time, that are demonstrating strong growth.
In times of rising interest rates, companies that miss their earnings
estimates tend to be severely punished. That makes our insistence on a company's
ability to sustain its growth all the more important. With that in mind, we
check our holdings for any signs that their growth might be about to slow. We
believe this approach, applied with great discipline, will continue to reward
investors over time.
[left margin]
TYPES OF INVESTMENTS IN THE PORTFOLIO
================================================================================
AS OF MAY 31, 2000
COMMON STOCKS 91.0%
TEMPORARY CASH INVESTMENTS 6.9%
PREFERRED STOCKS 2.1%
[pie chart]
================================================================================
AS OF NOVEMBER 30, 1999
COMMON STOCKS 93.6%
TEMPORARY CASH INVESTMENTS 4.5%
PREFERRED STOCKS 1.9%
[pie chart]
INVESTMENTS BY COUNTRY
% OF FUND INVESTMENTS
AS OF AS OF
5/31/00 11/30/99
UNITED STATES(1) 38.2% 35.9%
U.K. 11.7% 9.1%
FRANCE 9.2% 7.9%
SWEDEN 6.2% 3.1%
JAPAN 6.1% 15.7%
SWITZERLAND 4.7% 2.1%
GERMANY 4.6% 7.7%
OTHER 19.3% 18.5%
(1) Includes temporary cash investments.
28 1-800-345-2021
Global Growth--Schedule of Investments
--------------------------------------------------------------------------------
MAY 31, 2000 (UNAUDITED)
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
COMMON STOCKS -- 91.0%
AUSTRALIA -- 0.8%
76,200 News Corp. Ltd. (The) ADR $ 3,472
------------------------
CANADA -- 1.4%
85,500 Nortel Networks Corp. 4,644
31,500 QLT PhotoTherapeutics Inc.(1) 1,545
------------------------
6,189
------------------------
DENMARK -- 1.8%
24,500 ISS A/S(1) 1,780
28,374 Novo Nordisk A/S Cl B 4,710
23,200 Tele Danmark A/S 1,642
------------------------
8,132
------------------------
FINLAND -- 2.8%
133,900 Nokia Corp. Cl A ADR 6,963
80,734 Sonera Group Oyj 4,100
37,800 Tieto Corp. Cl B 1,481
------------------------
12,544
------------------------
FRANCE -- 9.2%
103,100 Alcatel Alsthom
Compagnie Generale 5,718
9,829 Altran Technologies SA 2,215
19,800 Aventis SA 1,291
21,713 Axa 3,208
16,600 Business Objects S.A. ADR(1) 1,328
15,273 GFI Informatique 2,464
89,840 Havas Advertising SA 1,979
11,400 Pinault-Printemps-Redoute SA 2,459
2,000 Sagem SA New Shares 2,355
48,400 Societe Generale Cl A 2,799
4,200 Societe Television Francaise 1 2,710
41,000 STMicroelectronics N.V.
New York Shares 2,455
28,200 Suez Lyonnaise des Eaux 4,747
54,345 Vivendi 5,845
------------------------
41,573
------------------------
GERMANY -- 3.0%
23,969 Direkt Anlage Bank AG(1) 827
19,743 EM.TV & Merchandising AG 1,326
21,407 GfK AG(1) 875
19,738 Heyde AG Beratung Software(1) 2,972
5,953 Intershop Communications AG(1) 2,416
36,000 Siemens AG 5,293
------------------------
13,709
------------------------
HONG KONG -- 1.8%
516,000 China Telecom (Hong Kong) Ltd.(1) 3,857
222,000 Citic Pacific Ltd. 1,057
266,700 Hutchison Whampoa Limited 3,080
------------------------
7,994
------------------------
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
ISRAEL -- 0.9%
23,000 Check Point Software
Technologies Ltd.(1) $ 4,322
------------------------
ITALY -- 3.6%
281,500 Alleanza Assicurazioni 3,249
1,039,946 Banca Intesa S.p.A. 4,114
30,727 Buffetti SpA(1) 600
122,060 Gruppo Editoriale L'Espresso 1,621
107,200 Mediolanum SpA 1,644
46,200 Mondadori (Arnoldo) Editore SpA 1,065
220,700 Telecom Italia SpA 3,055
18,052 Tiscali SpA(1) 900
------------------------
16,248
------------------------
JAPAN -- 6.1%
50,000 Canon, Inc. 2,299
92 Fuji Television Network, Inc. 1,398
196,000 Hitachi Ltd. 2,423
16,000 Hoya Corp. 1,482
28 Japan Telecom Co. Ltd. 1,228
2,000 Keyence Corp. 598
8,200 KYOCERA CORP. 1,359
105,000 Nomura Securities Co., Ltd. 2,404
78 NTT Mobile Communications
Network, Inc. 2,010
7,600 Ryohin Keikaku Co. Limited 1,105
109,000 Sharp Corp. 1,960
21,100 Sony Corp. 1,907
14,000 Tokyo Electron Ltd. 1,908
453,000 Toshiba Corp. 4,367
24,000 Toyota Motor Corp. 1,088
------------------------
27,536
------------------------
MEXICO -- 0.8%
19,200 Grupo Televisa S.A. GDR(1) 1,069
56,200 Telefonos de Mexico, S.A. Cl L ADR 2,736
------------------------
3,805
------------------------
NETHERLANDS -- 2.9%
68,100 Getronics N.V. 1,143
32,162 ING Groep N.V. 1,928
79,600 Phillips Electronics N.V.
New York Shares 3,517
23,800 Royal Dutch Petroleum Co.
New York Shares 1,486
21,793 United Pan-Europe
Communications NV(1) 566
85,600 VNU N.V. 4,379
------------------------
13,019
------------------------
PORTUGAL -- 0.3%
87,501 Telecel-Comunicacaoes
Pessoais, SA(1) 1,424
------------------------
SOUTH KOREA -- 0.6%
10,620 Samsung Electronics 2,896
------------------------
See Notes to Financial Statements www.americancentury.com 29
Global Growth--Schedule of Investments
--------------------------------------------------------------------------------
(Continued)
MAY 31, 2000 (UNAUDITED)
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
SPAIN -- 1.1%
30,642 Sogecable, S.A.(1) $ 1,138
53,841 Telefonica Publicidad e
Informacion, S.A. 1,644
111,333 Telefonica S.A.(1) 2,291
------------------------
5,073
------------------------
SWEDEN -- 6.2%
93,600 Assa Abloy AB Cl B(1) 1,878
35,200 Atlas Copco AB Cl A 758
26,444 Atlas Copco AB Cl B(1) 590
281,100 Ericsson (L.M.) Telephone Co. ADR 5,754
40,200 Hennes & Mauritz AB Cl B 1,018
48,373 Modern Times Group
MTG AB Cl B(1) 2,172
25,383 NetCom Systems AB Cl B(1) 1,798
366,209 Nordic Baltic Holding AB 2,431
186,600 Securitas AB Cl B 4,361
287,600 Skandia Forsakrings AB 7,380
------------------------
28,140
------------------------
SWITZERLAND -- 4.7%
42,328 ABB Ltd. 5,271
2,633 Adecco SA 2,085
25,800 Credit Suisse Group 4,831
1,049 Julius Baer Holding AG 3,772
2,197 Novartis AG 3,252
1,794 Swatch Group AG (The) Cl B 2,202
------------------------
21,413
------------------------
UNITED KINGDOM -- 11.7%
254,000 Amvescap Plc 3,337
81,200 Barclays PLC 2,115
165,324 Cable & Wireless plc 2,761
64,000 Capita Group Plc 1,433
995,691 Centrica plc 3,609
158,000 CMG plc 2,208
29,665 COLT Telecom Group plc(1) 1,048
117,100 Compass Group PLC 1,314
303,377 Diageo plc 2,599
46,099 Energis plc(1) 1,754
304,100 Hays plc 1,708
63,700 Logica plc 1,707
215,700 Misys plc 1,864
27,419 Oxford GlycoSciences Plc(1) 600
58,400 Pearson plc 1,764
86,900 Prudential Corp. PLC 1,317
245,340 Psion plc 2,014
224,793 Saatchi & Saatchi plc 1,066
167,300 SEMA Group plc 2,336
155,600 Shire Pharmaceuticals Group PLC(1) 2,307
107,463 TeleWest Communications plc(1) 438
2,661,761 Vodafone AirTouch PLC 12,160
124,600 WPP Group plc 1,517
------------------------
52,976
------------------------
Shares ($ in Thousands) Value
--------------------------------------------------------------------------------
UNITED STATES -- 31.3%
42,900 Allergan, Inc. $ 2,947
28,900 Amdocs Ltd.(1) 1,790
51,100 America Online Inc.(1) 2,708
70,500 American Express Co. 3,794
59,000 AT&T Wireless Group(1) 1,685
38,100 Cardinal Health, Inc. 2,472
36,600 Chase Manhattan Corp. 2,734
136,400 Cisco Systems Inc.(1) 7,762
108,900 Citigroup Inc. 6,772
41,400 Clorox Co. (The) 1,640
23,200 Colgate-Palmolive Co. 1,221
32,600 Comverse Technology, Inc.(1) 2,980
16,800 Corning Inc. 3,250
32,700 EMC Corp. (Mass.)(1) 3,803
32,700 Emerson Electric Co. 1,929
54,900 Enron Corp. 4,001
56,200 Gemstar International Group Ltd.(1) 2,387
11,500 Genentech, Inc.(1) 1,235
180,400 General Electric Co. (U.S.) 9,494
19,900 Hewlett-Packard Co. 2,390
25,500 Home Depot, Inc. 1,245
35,200 Infinity Broadcasting Corp. Cl A(1) 1,113
18,400 Intel Corp. 2,295
20,400 International Business
Machines Corp. 2,189
12,752 JDS Uniphase Corp.(1) 1,122
9,600 Juniper Networks, Inc.(1) 1,682
19,200 KLA-Tencor Corp.(1) 951
38,000 Kohl's Corp.(1) 1,966
37,800 Lucent Technologies Inc. 2,169
44,800 McDonald's Corp. 1,604
90,900 Medtronic, Inc. 4,693
14,000 Micromuse Inc.(1) 1,393
81,700 Microsoft Corp.(1) 5,109
18,200 Nextel Communications, Inc.(1) 1,685
8,300 ONI Systems Corp. 191
30,600 Oracle Corp.(1) 2,197
125,900 Pfizer, Inc. 5,610
11,900 QUALCOMM Inc.(1) 789
71,500 Qwest Communications
International Inc.(1) 3,025
107,100 Schwab (Charles) Corp. 3,079
24,500 Siebel Systems, Inc.(1) 2,866
42,600 Solectron Corp.(1) 1,408
45,900 Sun Microsystems, Inc.(1) 3,516
53,000 Tiffany & Co. 3,230
37,800 Time Warner Inc. 2,984
111,400 Tyco International Ltd. 5,243
20,400 Univision Communications Inc. Cl A(1) 2,101
30 1-800-345-2021 See Notes to Financial Statements
Global Growth--Schedule of Investments
--------------------------------------------------------------------------------
(Continued)
MAY 31, 2000 (UNAUDITED)
Shares/Principal Amount ($ in Thousands) Value
--------------------------------------------------------------------------------
18,400 VeriSign, Inc.(1) $ 2,490
18,400 Veritas Software Corp.(1) 2,143
77,600 Wal-Mart Stores, Inc. 4,472
------------------------
141,554
------------------------
TOTAL COMMON STOCKS 412,019
------------------------
(Cost $366,450)
PREFERRED STOCKS -- 2.1%
BRAZIL -- 0.5%
9,660,000 Petroleo Brasileiro S.A. 2,253
------------------------
GERMANY -- 1.6%
14,294 Marschollek, Lautenschlaeger
und Partner AG 6,798
14,000 SAP AG ADR 600
------------------------
7,398
------------------------
TOTAL PREFERRED STOCKS 9,651
------------------------
(Cost $7,568)
TEMPORARY CASH INVESTMENTS -- 6.9%
$9,500 FNMA Discount Notes,
6.32%, 6/1/00(2) 9,500
Repurchase Agreement, Merrill Lynch & Co., Inc.,
(U.S. Treasury obligations), in a joint trading
account at 6.25%, dated 5/31/00,
due 6/1/00 (Delivery value $21,804) 21,800
------------------------
TOTAL TEMPORARY CASH INVESTMENTS 31,300
------------------------
(Cost $31,300)
TOTAL INVESTMENT SECURITIES -- 100.0% $452,970
========================
(Cost $405,318)
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
($ in Thousands)
Contracts Settlement Unrealized
to Sell Date Value Gain
--------------------------------------------------------------------------------
500,817,000 JPY 6/30/00 $4,667 $56
=======================================
(Value on Settlement Date $4,723)
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total
Investment Securities
COMMERCIAL SERVICES 7.9%
CONSUMER SERVICES 8.7%
CONSUMER (CYCLICAL) 5.1%
CONSUMER (NON-CYCLICAL) 1.2%
ENERGY 1.7%
FINANCIAL 17.3%
HEALTH CARE 7.1%
INDUSTRIALS 1.9%
TEMPORARY CASH INVESTMENTS 6.9%
TECHNOLOGY 29.4%
TELECOMMUNICATIONS 11.0%
UTILITY 1.8%
NOTES TO SCHEDULE OF INVESTMENTS
ADR = American Depositary Receipt
FNMA = Federal National Mortgage Association
GDR = Global Depositary Receipt
JPY = Japanese Yen
(1) Non-income producing.
(2) Rate disclosed is the yield to maturity at purchase.
See Notes to Financial Statements www.americancentury.com 31
Statements of Assets and Liabilities
--------------------------------------------------------------------------------
This statement breaks down the fund's ASSETS (such as securities, cash, and
other receivables) and LIABILITIES (money owed for securities purchased,
management fees, and other liabilities) 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 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>
INTERNATIONAL INTERNATIONAL EMERGING GLOBAL
GROWTH DISCOVERY MARKETS GROWTH
MAY 31, 2000 (UNAUDITED)
ASSETS (In Thousands Except Per-Share Amounts)
<S> <C> <C> <C> <C>
Investment securities, at value (identified cost
of $4,204,752, $1,602,199, $143,331
and $405,318, respectively) (Note 3) .............. $5,302,940 $2,266,042 $156,834 $452,970
Cash ................................................ 13,864 16,706 34 7,019
Foreign currency holdings, at value (identified
cost $12,867, $12,429, $2,593 and
$643, respectively) ............................... 12,867 12,602 2,583 643
Receivable for investments sold ..................... 18 8,305 2,592 262
Receivable for forward foreign currency contracts ... 1,285 195 -- 56
Receivable for capital shares sold .................. 12,447 -- -- --
Dividends and interest receivable ................... 9,073 1,860 359 500
---------------- ---------------- ---------------- ---------------
5,352,494 2,305,710 162,402 461,450
---------------- ---------------- ---------------- ---------------
LIABILITIES
Payable for investments purchased ................... 201,045 41,700 3,845 10,962
Accrued management fees (Note 2) .................... 5,065 2,622 264 489
Distribution fees payable (Note 2) .................. 27 -- -- --
Service fees payable (Note 2) ....................... 27 -- -- --
Payable for directors' fees and expenses ............ 3 1 -- --
Accrued expenses and other liabilities .............. 2 3,612 -- 7
---------------- ---------------- ---------------- ---------------
206,169 47,935 4,109 11,458
---------------- ---------------- ---------------- ---------------
NET ASSETS .......................................... $5,146,325 $2,257,775 $158,293 $449,992
================ ================ ================ ===============
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus) ............. $3,400,484 $1,434,886 $131,268 $369,797
Accumulated net investment loss ..................... (2,942) (12,451) (838) (611)
Accumulated undistributed net realized gain on
investment and foreign currency transactions ...... 651,850 171,258 14,374 33,182
Net unrealized appreciation on investments and
translation of assets and liabilities
in foreign currencies (Note 3) .................... 1,096,933 664,082 13,489 47,624
---------------- ---------------- ---------------- ---------------
$5,146,325 $2,257,775 $158,293 $449,992
================ ================ ================ ===============
INVESTOR CLASS, $0.01 PAR VALUE
($ AND SHARES IN FULL)
Net assets ....................................... $4,676,881,614 $1,959,554,783 $126,300,369 $449,692,544
Shares outstanding ................................. 341,550,542 118,437,660 20,179,523 48,693,675
Net asset value per share .......................... $13.69 $16.55 $6.26 $9.24
ADVISOR CLASS, $0.01 PAR VALUE
($ AND SHARES IN FULL)
Net assets .........................................$134,016,825 $564,964 $349,432 $299,165
Shares outstanding ................................. 9,807,765 34,210 56,042 32,417
Net asset value per share .......................... $13.66 $16.51 $6.24 $9.23
INSTITUTIONAL CLASS, $0.01 PAR VALUE
($ AND SHARES IN FULL)
Net assets .........................................$335,426,482 $297,655,089 $31,643,373 NA
Shares outstanding ................................. 24,457,264 17,953,838 5,044,710 NA
Net asset value per share .......................... $13.71 $16.58 $6.27 NA
</TABLE>
32 1-800-345-2021 See Notes to Financial Statements
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.
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED MAY 31, 2000 (UNAUDITED)
INTERNATIONAL INTERNATIONAL EMERGING GLOBAL
GROWTH DISCOVERY MARKETS GROWTH
INVESTMENT LOSS (In Thousands)
INCOME:
<S> <C> <C> <C> <C>
Dividends (net of foreign taxes withheld of
$2,808, $547, $63 and $159, respectively) ...... $ 19,136 $ 3,446 $ 742 $ 1,291
Interest ......................................... 8,332 4,377 170 757
-------------- -------------- ------------- --------------
27,468 7,823 912 2,048
-------------- -------------- ------------- --------------
EXPENSES (Note 2):
Management fees .................................. 30,078 16,242 1,629 2,655
Distribution fees -- Advisor Class ............... 133 1 -- --
Service fees -- Advisor Class .................... 133 1 -- --
Directors' fees and expenses ..................... 14 5 1 1
-------------- -------------- ------------- --------------
30,358 16,249 1,630 2,656
-------------- -------------- ------------- --------------
NET INVESTMENT LOSS .............................. (2,890) (8,426) (718) (608)
-------------- -------------- ------------- --------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY (NOTE 3)
NET REALIZED GAIN (LOSS) ON:
Investments (net of foreign taxes withheld of
$0, $414, $120 and $0, respectively) ........... 695,835 193,006 16,995 35,980
Foreign currency transactions .................... (23,396) (16,919) (1,408) (2,373)
-------------- -------------- ------------- --------------
672,439 176,087 15,587 33,607
-------------- -------------- ------------- --------------
CHANGE IN NET UNREALIZED APPRECIATION ON:
Investments (net of foreign taxes accrued
of $0, $393, $0 and $0, respectively) .......... (170,973) 54,499 (9,649) (5,431)
Translation of assets and liabilities
in foreign currencies .......................... (117,151) (46,368) (2,046) (7,805)
-------------- -------------- ------------- --------------
(288,124) 8,131 (11,695) (13,236)
-------------- -------------- ------------- --------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS AND FOREIGN CURRENCY ............... 384,315 184,218 3,892 20,371
-------------- -------------- ------------- --------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS ...................... $381,425 $175,792 $3,174 $19,763
============== ============== ============= ==============
</TABLE>
See Notes to Financial Statements www.americancentury.com 33
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
This statement shows how the fund's net assets changed over the past two
reporting periods. It details how much a fund grew or shrank as a result of
operations (as detailed on the previous page for the most recent period), income
and capital gain distributions, and shareholder investments and redemptions.
FOR THE SIX MONTHS ENDED MAY 31, 2000 (UNAUDITED) AND YEAR ENDED
NOVEMBER 30, 1999
INTERNATIONAL GROWTH INTERNATIONAL DISCOVERY
Increase in Net Assets 2000 1999 2000 1999
OPERATIONS (In Thousands)
<S> <C> <C> <C> <C>
Net investment loss ......................... $ (2,890) $ (1,810) $ (8,426) $ (6,609)
Net realized gain on investments and
foreign currency transactions ............. 672,439 245,120 176,087 107,033
Change in net unrealized appreciation
on investments and translation of assets
and liabilities in foreign currencies ..... (288,124) 927,334 8,131 480,104
---------------- --------------- -------------- ---------------
Net increase in net assets
resulting from operations ................. 381,425 1,170,644 175,792 580,528
---------------- --------------- -------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income:
Investor Class ............................ (1,386) (4,441) -- --
Advisor Class ............................. -- (12) -- --
Institutional Class ....................... (348) (58) -- --
From net realized gains on investment transactions:
Investor Class ............................ (206,126) (38,836) (84,602) (2,871)
Advisor Class ............................. (3,481) (346) (5) --
Institutional Class ....................... (7,788) (225) (11,177) (229)
---------------- --------------- -------------- ---------------
Decrease in net assets
from distributions .......................... (219,129) (43,918) (95,784) (3,100)
---------------- --------------- -------------- ---------------
CAPITAL SHARE TRANSACTIONS (NOTE 4)
Net increase in net assets from
capital share transactions ................ 1,088,778 285,166 586,865 170,993
---------------- --------------- -------------- ---------------
NET INCREASE IN NET ASSETS .................. 1,251,074 1,411,892 666,873 748,421
NET ASSETS
Beginning of period ......................... 3,895,251 2,483,359 1,590,902 842,481
---------------- --------------- -------------- ---------------
End of period ............................... $5,146,325 $3,895,251 $2,257,775 $1,590,902
================ =============== ============== ===============
Accumulated undistributed
net investment income (loss) .............. $(2,942) $1,682,440 $(12,451) $1
================ =============== ============== ===============
</TABLE>
34 1-800-345-2021 See Notes to Financial Statements
Statements of Changes in Net Assets
--------------------------------------------------------------------------------
(Continued)
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED MAY 31, 2000 (UNAUDITED) AND YEAR ENDED
NOVEMBER 30, 1999
EMERGING MARKETS GLOBAL GROWTH
Increase in Net Assets 2000 1999 2000 1999
OPERATIONS (In Thousands)
<S> <C> <C> <C> <C>
Net investment loss ........................... $ (718) $ (151) $ (608) $ (251)
Net realized gain on investments and
foreign currency transactions ............... 15,587 5,443 33,607 11,818
Change in net unrealized appreciation
on investments and translation of assets
and liabilities in foreign currencies ....... (11,695) 22,611 (13,236) 60,860
---------------- --------------- -------------- ---------------
Net increase in net assets
resulting from operations ................... 3,174 27,903 19,763 72,427
---------------- --------------- -------------- ---------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income:
Investor Class .............................. -- -- -- --
Advisor Class ............................... -- -- -- --
Institutional Class ......................... -- -- -- --
From net realized gains on investment transactions:
Investor Class .............................. -- -- (11,989) --
Advisor Class ............................... -- -- (6) --
Institutional Class ......................... -- -- -- --
---------------- --------------- -------------- ---------------
Decrease in net assets from distributions ..... -- -- (11,995) --
---------------- --------------- -------------- ---------------
CAPITAL SHARE TRANSACTIONS (NOTE 4)
Net increase in net assets from
capital share transactions .................. 56,110 49,982 208,289 161,508
---------------- --------------- -------------- ---------------
NET INCREASE IN NET ASSETS .................... 59,284 77,885 216,057 233,935
NET ASSETS
Beginning of period ........................... 99,009 21,124 233,935 --
---------------- --------------- -------------- ---------------
End of period ................................. $158,293 $99,009 $449,992 $233,935
================ =============== ============== ===============
Accumulated undistributed
net investment income (loss) ................ $(838) -- $(611) $(3)
================ =============== ============== ===============
</TABLE>
See Notes to Financial Statements www.americancentury.com 35
Notes to Financial Statements
--------------------------------------------------------------------------------
MAY 31, 2000 (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 (the 1940 Act) as an
open-end management investment 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 are
diversified under the 1940 Act. 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. The following significant
accounting policies are in accordance with generally accepted accounting
principles; these policies may require the use of estimates by fund management.
MULTIPLE CLASS -- 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 for Global Growth had not commenced as of May 31, 2000.
SECURITY VALUATIONS -- Portfolio securities traded primarily on a principal
securities exchange are valued at the last reported sales price, or at 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 date. Net realized gains and losses are determined on the identified cost
basis, which is also used for federal income tax purposes.
Certain countries impose taxes on realized gains on the sale of their
securities. The funds record the foreign tax expense, if any, on an accrual
basis. The realized and unrealized tax provision reduces the net realized gain
(loss) on investments and net unrealized appreciation (depreciation) on
investments, respectively.
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.
36 1-800-345-2021
Notes to Financial Statements
--------------------------------------------------------------------------------
(Continued)
MAY 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
At November 30, 1999, Emerging Markets had accumulated net realized capital
loss carryovers for federal income tax purposes of $864,075 (expiring in 2005
through 2006) which may be used to offset future taxable gains.
ADDITIONAL INFORMATION -- Funds Distributor, Inc. (FDI) is a distributor of
the corporation. 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, under
which ACIM 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 1940 Act (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 CLASS ADVISOR CLASS INSTITUTIONAL CLASS
FUND 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 CLASS ADVISOR CLASS INSTITUTIONAL CLASS
FUND 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 CLASS ADVISOR CLASS INSTITUTIONAL CLASS
FUND 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 37
Notes to Financial Statements
--------------------------------------------------------------------------------
(Continued)
MAY 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES (CONTINUED)
The annual management fee for each class of Global Growth is as follows:
INVESTOR CLASS ADVISOR CLASS INSTITUTIONAL CLASS
FUND 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 1940
Act. 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 six months ended May 31, 2000, were $265,100, $1,011, $896, and $565
for International Growth, International Discovery, Emerging Markets and Global
Growth, respectively.
Effective March 13, 2000, American Century Investment Services, Inc. (ACIS),
became a distributor of the corporation.
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, 2000, were as follows:
INTERNATIONAL INTERNATIONAL EMERGING GLOBAL
GROWTH DISCOVERY MARKETS GROWTH
(In Thousands)
Purchases $3,267,606 $1,466,033 $176,532 $411,288
(In Thousands)
Proceeds
from sales $2,715,868 $1,116,432 $129,200 $234,898
On May 31, 2000, 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
(In Thousands)
Appreciation $1,208,794 $723,366 $16,193 $56,218
Depreciation (131,020) (64,682) (3,159) (8,970)
-------------- ----------------- ------------- ----------
Net $1,077,774 $658,684 $13,034 $47,248
============== ================= ============= ==========
Federal Tax Cost $4,255,166 $1,607,358 $143,800 $405,722
============== ================= ============= ==========
38 1-800-345-2021
Notes to Financial Statements
--------------------------------------------------------------------------------
(Continued)
MAY 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS
<TABLE>
<CAPTION>
Transactions in shares of the funds were as follows:
INTERNATIONAL GROWTH INTERNATIONAL DISCOVERY
SHARES AMOUNT SHARES AMOUNT
INVESTOR CLASS (In Thousands)
<S> <C> <C> <C> <C>
SHARES AUTHORIZED ......................... 400,000 220,000
============= =============
SIX MONTHS ENDED APRIL 30, 2000
Sold ...................................... 206,227 $3,042,789 56,127 $1,061,047
Issued in reinvestment of distributions ... 13,028 174,814 4,876 79,167
Redeemed .................................. (162,040) (2,411,702) (35,216) (663,856)
------------- ------------- ------------- -------------
Net increase .............................. 57,215 $ 805,901 25,787 $ 476,358
============= ============= ============= =============
YEAR ENDED NOVEMBER 30, 1999
Sold ...................................... 320,765 $3,280,242 37,751 $438,699
Issued in reinvestment of distributions ... 4,146 38,366 292 2,684
Redeemed .................................. (305,140) (3,152,773) (29,960) (326,356)
------------- ------------- ------------- -------------
Net increase .............................. 19,771 $ 165,835 8,083 $115,027
============= ============= ============= =============
ADVISOR CLASS (In Thousands)
SHARES AUTHORIZED ......................... 50,000 10,000
============= =============
SIX MONTHS ENDED APRIL 30, 2000
Sold ...................................... 12,378 $179,106 30 $576
Issued in reinvestment of distributions ... 240 3,225 -- 5
Redeemed .................................. (7,259) (107,489) -- --
------------- ------------- ------------- -------------
Net increase .............................. 5,359 $ 74,842 30 $581
============= ============= ============= =============
YEAR ENDED NOVEMBER 30, 1999
Sold ...................................... 5,156 $53,457 9 $104
Issued in reinvestment of distributions ... 38 354 -- --
Redeemed .................................. (2,817) (29,358) (6) (72)
------------- ------------- ------------- -------------
Net increase .............................. 2,377 $24,453 3 $ 32
============= ============= ============= =============
INSTITUTIONAL CLASS (In Thousands)
SHARES AUTHORIZED ......................... 50,000 25,000
============= =============
SIX MONTHS ENDED APRIL 30, 2000
Sold ...................................... 18,062 $261,993 9,680 $177,831
Issued in reinvestment of distributions ... 582 7,853 680 11,091
Redeemed .................................. (4,305) (61,811) (4,360) (78,996)
------------- ------------- ------------- -------------
Net increase .............................. 14,339 $208,035 6,000 $109,926
============= ============= ============= =============
YEAR ENDED NOVEMBER 30, 1999
Sold ...................................... 12,802 $138,337 9,013 $98,171
Issued in reinvestment of distributions ... 29 268 25 229
Redeemed .................................. (4,174) (43,727) (3,673) (42,466)
------------- ------------- ------------- -------------
Net increase .............................. 8,657 $ 94,878 5,365 $55,934
============= ============= ============= =============
</TABLE>
www.americancentury.com 39
Notes to Financial Statements
--------------------------------------------------------------------------------
(Continued)
MAY 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
4. CAPITAL SHARE TRANSACTIONS (CONTINUED)
<TABLE>
<CAPTION>
EMERGING MARKETS GLOBAL GROWTH
SHARES AMOUNT SHARES AMOUNT
INVESTOR CLASS (In Thousands)
<S> <C> <C> <C> <C>
SHARES AUTHORIZED ......................... 50,000 220,000
============= =============
SIX MONTHS ENDED APRIL 30, 2000
Sold ...................................... 21,423 $154,472 35,336 $355,659
Issued in reinvestment of distributions ... -- -- 1,224 11,806
Redeemed .................................. (15,898) (113,559) (15,952) (159,354)
------------- ------------- ------------- -------------
Net increase .............................. 5,525 $ 40,913 20,608 $208,111
============= ============= ============= =============
YEAR ENDED NOVEMBER 30, 1999
Sold ...................................... 21,920 $99,527 38,263 $226,492
Issued in reinvestment of distributions ... -- -- -- --
Redeemed .................................. (13,316) (59,675) (10,178) (65,071)
------------- ------------- ------------- -------------
Net increase .............................. 8,604 $39,852 28,085 $161,421
============= ============= ============= =============
ADVISOR CLASS (In Thousands)
SHARES AUTHORIZED ......................... 12,500 25,000
============= =============
SIX MONTHS ENDED APRIL 30, 2000
Sold ...................................... 624 $4,921 19 $174
Issued in reinvestment of distributions ... -- -- -- 4
Redeemed .................................. (593) (4,692) -- --
------------- ------------- ------------- -------------
Net increase .............................. 31 $ 229 19 $178
============= ============= ============= =============
YEAR ENDED NOVEMBER 30, 1999(1)
Sold ...................................... 70 $328 15 $94
Issued in reinvestment of distributions ... -- -- -- --
Redeemed .................................. (44) (204) (1) (7)
------------- ------------- ------------- -------------
Net increase .............................. 26 $124 14 $87
============= ============= ============= =============
INSTITUTIONAL CLASS (In Thousands)
SHARES AUTHORIZED ......................... 12,500 25,000
============= =============
SIX MONTHS ENDED APRIL 30, 2000
Sold ...................................... 9,953 $66,695
Issued in reinvestment of distributions ... -- --
Redeemed .................................. (7,842) (51,727)
------------- -------------
Net increase .............................. 2,111 $14,968
============= =============
YEAR ENDED NOVEMBER 30, 1999(2)
Sold ...................................... 2,934 $10,006
Issued in reinvestment of distributions ... -- --
Redeemed .................................. -- --
------------- -------------
Net increase .............................. 2,934 $10,006
============= =============
</TABLE>
(1) May 12, 1999 (commencement of sale) through November 30, 1999 for Emerging
Markets and February 5, 1999 (commencement of sale) through November 30,
1999 for Global Growth.
(2) January 28, 1999 (commencement of sale) through November 30, 1999 for
Emerging Markets.
40 1-800-345-2021
Notes to Financial Statements
--------------------------------------------------------------------------------
(Continued)
MAY 31, 2000 (UNAUDITED)
--------------------------------------------------------------------------------
5. BANK LOANS
The funds, along with certain other funds managed by ACIM, entered into an
unsecured $620,000,000 bank line of credit agreement with Chase Manhattan Bank.
The funds may borrow money for temporary or emergency purposes to fund
shareholder redemptions. Borrowings under the agreement bear interest at the
Federal Funds rate plus 0.50%. The funds did not borrow from the line during the
six months ended May 31, 2000.
www.americancentury.com 41
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).
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
Investor Class
2000(1) 1999 1998 1997 1996 1995
PER-SHARE DATA
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ...... $13.02 $9.25 $9.22 $8.73 $7.51 $7.47
--------- --------- --------- --------- --------- ---------
Income From Investment Operations
Net Investment Income (Loss) ............ (0.01)(2) (0.01)(2) 0.03(2) --(3) (0.01)(2) 0.01
Net Realized and Unrealized Gain
on Investment Transactions .............. 1.41 3.95 1.31 1.41 1.24 0.40
--------- --------- --------- --------- --------- ---------
Total From Investment Operations ........ 1.40 3.94 1.34 1.41 1.23 0.41
--------- --------- --------- --------- --------- ---------
Distributions
From Net Investment Income .............. (0.01) (0.02) (0.03) --(3) (0.01) --
From Net Realized Gains
on Investment Transactions .............. (0.72) (0.15) (1.28) (0.92) -- (0.37)
--------- --------- --------- --------- --------- ---------
Total Distributions ..................... (0.73) (0.17) (1.31) (0.92) (0.01) (0.37)
--------- --------- --------- --------- --------- ---------
Net Asset Value, End of Period ............ $13.69 $13.02 $9.25 $9.22 $8.73 $7.51
========= ========= ========= ========= ========= =========
TOTAL RETURN(4) ......................... 10.80% 43.22% 16.74% 18.12% 16.35% 5.93%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ..................... 1.20%(5) 1.27% 1.33% 1.38%(6) 1.65%(6) 1.77%
Ratio of Net Investment Income (Loss)
to Average Net Assets .....................(0.12)%(5) (0.06)% 0.33% 0.04% (0.07)% 0.25%
Portfolio Turnover Rate ................... 57% 117% 190% 163% 158% 169%
Net Assets, End of Period (in millions) ... $4,677 $3,702 $2,448 $1,729 $1,343 $1,210
</TABLE>
(1) Six months ended May 31, 2000 (unaudited).
(2) Computed using average shares outstanding throughout the period.
(3) Per-share amount was less than $0.005.
(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 1.56% and 1.76% for the years ended
November 30, 1997 and November 30, 1996, respectively.
42 1-800-345-2021 See Notes to Financial Statements
International Growth--Financial Highlights
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
Advisor Class
2000(1) 1999 1998 1997 1996(2)
PER-SHARE DATA
<S> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ...... $12.99 $9.24 $9.20 $8.72 $8.41
--------- --------- --------- --------- ---------
Income From Investment Operations
Net Investment Income (Loss) ............(0.02)(3) (0.04)(3) --(3)(4) (0.03) (0.01)(3)
Net Realized and Unrealized
Gain on Investment Transactions ......... 1.38 3.94 1.33 1.43 0.32
--------- --------- --------- --------- ---------
Total From Investment Operations ........ 1.36 3.90 1.33 1.40 0.31
--------- --------- --------- --------- ---------
Distributions
From Net Investment Income .............. --(4) --(4) (0.01) -- --
From Net Realized Gains
on Investment Transactions .............. (0.69) (0.15) (1.28) (0.92) --
--------- --------- --------- --------- ---------
Total Distributions ..................... (0.69) (0.15) (1.29) (0.92) --
--------- --------- --------- --------- ---------
Net Asset Value, End of Period ............ $13.66 $12.99 $9.24 $9.20 $8.72
========= ========= ========= ========= =========
TOTAL RETURN(5) ......................... 10.56% 42.86% 16.58% 17.97% 3.69%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ..................... 1.45%(6) 1.52% 1.58% 1.63% 1.67%(6)
Ratio of Net Investment
Income (Loss) to Average Net Assets .......(0.37)%(6) (0.31)% 0.08% (0.21)% (0.76)%(6)
Portfolio Turnover Rate ................... 57% 117% 190% 163% 158%
Net Assets, End of Period
(in thousands) ............................$134,017 $61,317 $21,635 $9,111 $3,803
</TABLE>
(1) Six months ended May 31, 2000 (unaudited).
(2) October 2, 1996 (commencement of sale) through November 30, 1996.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(6) Annualized.
See Notes to Financial Statements www.americancentury.com 43
International Growth--Financial Highlights
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
Institutional Class
2000(1) 1999 1998 1997(2)
PER-SHARE DATA
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........ $13.05 $9.28 $9.22 $9.26
---------- ---------- ---------- ----------
Income From Investment Operations
Net Investment Income (Loss) .............. 0.02(3) --(3)(4) 0.05(3) --(4)
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ......... 1.39 3.96 1.32 (0.04)
---------- ---------- ---------- ----------
Total From Investment Operations .......... 1.41 3.96 1.37 (0.04)
---------- ---------- ---------- ----------
Distributions
From Net Investment Income ................ (0.03) (0.04) (0.03) --
From Net Realized Gains
on Investment Transactions ................ (0.72) (0.15) (1.28) --
---------- ---------- ---------- ----------
Total Distributions ....................... (0.75) (0.19) (1.31) --
---------- ---------- ---------- ----------
Net Asset Value, End of Period .............. $13.71 $13.05 $9.28 $9.22
========== ========== ========== ==========
TOTAL RETURN(5) ........................... 10.92% 43.40% 17.14% (0.43)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ....................... 1.00%(6) 1.07% 1.13% 1.18%(6)
Ratio of Net Investment Income
(Loss) to Average Net Assets ................ 0.08%(6) 0.14% 0.53% (0.53)%(6)
Portfolio Turnover Rate ..................... 57% 117% 190% 163%
Net Assets, End of Period
(in thousands) ..............................$335,426 $132,031 $13,562 $18,846
</TABLE>
(1) Six months ended May 31, 2000 (unaudited).
(2) November 20, 1997 (commencement of sale) through November 30, 1997.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(6) Annualized.
44 1-800-345-2021 See Notes to Financial Statements
International Discovery--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).
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
Investor Class
2000(1) 1999 1998 1997 1996 1995
PER-SHARE
<S> <C> <C> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ...... $15.20 $9.24 $8.54 $7.60 $5.70 $5.39
--------- --------- --------- --------- --------- ---------
Income From Investment Operations
Net Investment Income (Loss) ............(0.07)(2) (0.07)(2) (0.03)(2) (0.03) (0.02)(2) 0.03
Net Realized and Unrealized Gain
on Investment Transactions .............. 2.30 6.06 1.22 1.31 1.95 0.28
--------- --------- --------- --------- --------- ---------
Total From Investment Operations ........ 2.23 5.99 1.19 1.28 1.93 0.31
--------- --------- --------- --------- --------- ---------
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 .............. (0.88) (0.03) (0.47) (0.32) -- --
--------- --------- --------- --------- --------- ---------
Total Distributions ..................... (0.88) (0.03) (0.49) (0.34) (0.03) --
--------- --------- --------- --------- --------- ---------
Net Asset Value, End of Period ............ $16.55 $15.20 $9.24 $8.54 $7.60 $5.70
========= ========= ========= ========= ========= =========
TOTAL RETURN(3) ......................... 14.82% 65.12% 14.79% 17.76% 34.06% 5.75%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating
Expenses
to Average Net Assets ..................... 1.35%(4) 1.55% 1.64% 1.70%(5) 1.88%(5) 2.00%
Ratio of Net Investment Income (Loss)
to Average Net Assets ..................... (0.71)%(4) (0.65)% (0.36)% (0.37)% (0.31)% 0.27%
Portfolio Turnover Rate ................... 50% 110% 178% 146% 130% 168%
Net Assets, End of Period (in thousands) ..$1,959,555 $1,408,624 $781,551 $626,327 $377,128 $114,579
</TABLE>
(1) Six months ended May 31, 2000 (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 1.87% and 1.99% for the years ended
November 30, 1997 and November 30, 1996, respectively.
See Notes to Financial Statements www.americancentury.com 45
International Discovery--Financial Highlights
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
Advisor Class
2000(1) 1999 1998(2)
PER-SHARE DATA
<S> <C> <C> <C>
Net Asset Value, Beginning of Period .................. $15.14 $9.22 $10.10
------------ ------------ ------------
Income From Investment Operations
Net Investment Loss(3) .............................. (0.05) (0.07) (0.02)
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ................... 2.26 6.02 (0.86)
------------ ------------ ------------
Total From Investment Operations .................... 2.21 5.95 (0.88)
------------ ------------ ------------
Distributions
From Net Realized Gains
on Investment Transactions .......................... (0.84) (0.03) --
------------ ------------ ------------
Net Asset Value, End of Period ........................ $16.51 $15.14 $9.22
============ ============ ============
TOTAL RETURN(4) ..................................... 14.73% 64.82% (8.71)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ..... 1.60%(5) 1.80% 1.89%(5)
Ratio of Net Investment Loss to Average Net Assets .... (0.96)%(5) (0.90)% (0.60)%(5)
Portfolio Turnover Rate ............................... 50% 110% 178%
Net Assets, End of Period (in thousands) .............. $565 $56,791 $10,708
</TABLE>
(1) Six months ended May 31, 2000 (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.
46 1-800-345-2021 See Notes to Financial Statements
International Discovery--Financial Highlights
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
Institutional Class
2000(1) 1999 1998(2)
PER-SHARE DATA
<S> <C> <C> <C>
Net Asset Value, Beginning of Period .................. $15.24 $9.25 $8.18
------------ ------------ ------------
Income From Investment Operations
Net Investment Loss(3) .............................. (0.05) (0.04) --(4)
Net Realized and Unrealized Gain
on Investment Transactions .......................... 2.30 6.06 1.07
------------ ------------ ------------
Total From Investment Operations .................... 2.25 6.02 1.07
------------ ------------ ------------
Distributions
From Net Realized Gains
on Investment Transactions .......................... (0.91) (0.03) --
------------ ------------ ------------
Net Asset Value, End of Period ........................ $16.58 $15.24 $9.25
============ ============ ============
TOTAL RETURN(5) ..................................... 14.96% 65.37% 13.08%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ................................. 1.15%(6) 1.35% 1.44%(6)
Ratio of Net Investment Loss to Average Net Assets .... (0.51)%(6) (0.45)% --(6)
Portfolio Turnover Rate ............................... 50% 110% 178%
Net Assets, End of Period (in thousands) .............. $297,655 $182,222 $60,918
</TABLE>
(1) Six months ended May 31, 2000 (unaudited).
(2) January 2, 1998 (commencement of sale) through November 30, 1998.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(6) Annualized.
See Notes to Financial Statements www.americancentury.com 47
Emerging Markets--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).
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
Investor Class
2000(1) 1999 1998 1997(2)
PER-SHARE DATA
<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Period ........ $5.62 $3.49 $4.15 $5.00
---------- ---------- ---------- ----------
Income From Investment Operations
Net Investment Loss(3) .................... (0.03) (0.01) --(4) (0.01)
Net Realized and Unrealized Gain
(Loss) on Investment Transactions ......... 0.67 2.14 (0.66) (0.84)
---------- ---------- ---------- ----------
Total From Investment Operations .......... 0.64 2.13 (0.66) (0.85)
---------- ---------- ---------- ----------
Net Asset Value, End of Period .............. $6.26 $5.62 $3.49 $4.15
========== ========== ========== ==========
TOTAL RETURN(5) ........................... 11.39% 61.03% (15.90)% (17.00)%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ....................... 2.00%(6) 2.00% 2.00% 2.00%(6)
Ratio of Net Investment Loss
to Average Net Assets .......................(0.90)%(6) (0.33)% (0.03)% (0.74)%(6)
Portfolio Turnover Rate ..................... 85% 168% 270% 36%
Net Assets, End of Period
(in thousands) ..............................$126,300 $82,359 $21,124 $11,830
</TABLE>
(1) Six months ended May 31, 2000 (unaudited).
(2) September 30, 1997 (inception) through November 30, 1997.
(3) Computed using average shares outstanding throughout the period.
(4) Per-share amount was less than $0.005.
(5) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(6) Annualized.
48 1-800-345-2021 See Notes to Financial Statements
Emerging Markets--Financial Highlights
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED
Advisor Class
2000(1) 1999(2)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period .......................... $ 5.61 $ 4.44
------- -------
Income From Investment Operations
Net Investment Income (Loss)(3) ............................. (0.04) --(4)
Net Realized and Unrealized Gain on Investment Transactions.. 0.67 1.17
------- -------
Total From Investment Operations ............................ 0.63 1.17
------- -------
Net Asset Value, End of Period ................................ $ 6.24 $ 5.61
======= =======
TOTAL RETURN(5) ............................................. 11.23% 26.35%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ............. 2.25%(6) 2.25%(6)
Ratio of Net Investment Income (Loss) to Average Net Assets ... (1.15)%(6) 0.02%(6)
Portfolio Turnover Rate ....................................... 85% 168%
Net Assets, End of Period (in thousands) ...................... $ 349 $ 143
</TABLE>
(1) Six months ended May 31, 2000 (unaudited).
(2) May 12, 1999 (commencement of sale) through November 30, 1999.
(3) Computed using average shares outstanding throughout the period.
(4) Per-Share amount was less than $0.005.
(5) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(6) Annualized.
See Notes to Financial Statements www.americancentury.com 49
Emerging Markets--Financial Highlights
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED
Institutional Class
2000(1) 1999(2)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period ........................... $ 5.63 $ 3.39
---------- ----------
Income From Investment Operations
Net Investment Loss(3) ....................................... (0.02) --(4)
Net Realized and Unrealized Gain on Investment Transactions .. 0.66 2.24
---------- ----------
Total From Investment Operations ............................. 0.64 2.24
---------- ----------
Net Asset Value, End of Period ................................. $ 6.27 $ 5.63
========== ==========
TOTAL RETURN(5) .............................................. 11.37% 66.08%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets .............. 1.80%(6) 1.80%(6)
Ratio of Net Investment Loss to Average Net Assets ............. (0.70)%(6) (0.05)%(6)
Portfolio Turnover Rate ........................................ 85% 168%
Net Assets, End of Period (in thousands) ....................... $ 31,643 $ 16,507
</TABLE>
(1) Six months ended May 31, 2000 (unaudited).
(2) January 28, 1999 (commencement of sale) through November 30, 1999.
(3) Computed using average shares outstanding throughout the period.
(4) Per-Share amount was less than $0.005.
(5) Total return assumes reinvestment of dividends and capital gains
distributions, if any. Total returns for periods less than one year are not
annualized.
(6) Annualized.
50 1-800-345-2021 See Notes to Financial Statements
Global 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).
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED NOVEMBER 30 (EXCEPT AS NOTED)
Investor Class
2000(1) 1999(2)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period .......................... $8.33 $5.00
------------ ------------
Income From Investment Operations
Net Investment Loss(3) ...................................... (0.01) (0.01)
Net Realized and Unrealized Gain on Investment Transactions.. 1.28 3.34
------------ ------------
Total From Investment Operations ............................ 1.27 3.33
------------ ------------
Distributions
From Net Realized Gains on Investment Transactions .......... (0.36) --
------------ ------------
Net Asset Value, End of Period ................................ $9.24 $8.33
============ ============
TOTAL RETURN(4) ............................................. 15.16% 66.60%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ............. 1.30%(5) 1.30%
Ratio of Net Investment Loss to Average Net Assets ............ (0.30)%(5) (0.20)%
Portfolio Turnover Rate ....................................... 62% 133%
Net Assets, End of Period (in thousands) ...................... $449,693 $233,823
</TABLE>
(1) Six months ended May 31, 2000 (unaudited).
(2) December 1, 1998 (inception) through November 30, 1999.
(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 51
Global Growth--Financial Highlights
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
FOR A SHARE OUTSTANDING THROUGHOUT THE PERIODS INDICATED
Advisor Class
2000(1) 1999(2)
PER-SHARE DATA
<S> <C> <C>
Net Asset Value, Beginning of Period .......................... $8.31 $5.58
------------ ------------
Income From Investment Operations
Net Investment Loss(3) ...................................... (0.03) (0.03)
Net Realized and Unrealized Gain on Investment Transactions.. 1.30 2.76
------------ ------------
Total From Investment Operations ............................ 1.27 2.73
------------ ------------
Distributions
From Net Realized Gains on Investment Transactions .......... (0.35) --
------------ ------------
Net Asset Value, End of Period ................................ $9.23 $8.31
============ ============
TOTAL RETURN(4) ............................................. 15.16% 48.92%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses to Average Net Assets ............. 1.55%(5) 1.55%(5)
Ratio of Net Investment Loss to Average Net Assets ............ (0.55)%(5) (0.40)%(5)
Portfolio Turnover Rate ....................................... 62% 133%
Net Assets, End of Period (in thousands) ...................... $299 $112
</TABLE>
(1) Six months ended May 31, 2000 (unaudited).
(2) February 5, 1999 (commencement of sale) through November 30, 1999.
(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.
52 1-800-345-2021 See Notes to Financial Statements
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 tax 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 53
Background Information
--------------------------------------------------------------------------------
INVESTMENT PHILOSOPHY AND POLICIES
American Century offers 14 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
small- to medium-sized foreign companies. To enable the fund to maintain its
emphasis on small- to medium-sized growth companies, the fund closed to new
investors on January 28, 2000. We continue to accept investments into existing
accounts. 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 or 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 located primarily 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
[left margin]
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
54 1-800-345-2021
Background Information
--------------------------------------------------------------------------------
(Continued)
foreign currency buys more dollars.) In addition, the value of fund assets may
be affected by losses and other expenses incurred in converting between various
currencies in order to purchase and sell foreign securities and by currency
restrictions, exchange control regulations, currency devaluations and political
developments.
COMPARATIVE INDICES
The following indices are used in the report to serve as fund performance
comparisons. They are not investment products available for purchase.
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 represents the performance of stocks in developed
market countries (including the United States) that are available for purchase
by global investors.
www.americancentury.com 55
Glossary
--------------------------------------------------------------------------------
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 42-52.
INVESTMENT TERMS
* 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.
* PRICE/BOOK RATIO-- a stock value measurement calculated by dividing a
company's stock price by its book value per share, with the result expressed as
a multiple instead of as a percentage. (Book value per share is calculated by
subtracting a company's liabilities from its assets, then dividing that value by
the number of outstanding shares.)
* PRICE/EARNINGS (P/E) RATIO-- a stock value measurement calculated by dividing
a company's stock price by its earnings per share, with the result expressed as
a multiple instead of as a percentage. (Earnings per share is calculated by
dividing the after-tax earnings of a corporation by its outstanding shares.)
TYPES OF STOCKS
* BLUE CHIP STOCKS-- stocks of the most established companies in American
industry. They are generally large, fairly stable companies that have
demonstrated consistent earnings and usually have long-term growth potential.
Examples include General Electric and Coca-Cola.
* CYCLICAL STOCKS-- generally considered to be stocks whose price and earnings
fluctuations tend to follow the ups and downs of the business cycle. Examples
include the stocks of automobile manufacturers, steel producers, and textile
operators.
* GROWTH STOCKS-- stocks of companies that have experienced above-average
earnings growth and are expected to continue such growth. These stocks often
sell at high P/E ratios. Examples can include the stocks of high-tech, health
care and consumer staple companies.
* LARGE-CAPITALIZATION ("LARGE-CAP") STOCKS-- the stocks of companies with a
market capitalization (the total value of a company's outstanding stock) of more
than $9.2 billion. This is Lipper's market capitalization breakpoint as of May
31, 2000, although it may be subject to change based on market fluctuations. The
Dow Jones Industrial Average and the S& P 500 Index generally consist of stocks
in this range.
* MEDIUM-CAPITALIZATION ("MID-CAP") STOCKS-- the stocks of companies with a
market capitalization (the total value of a company's outstanding stock) of
between $2.2 billion and $9.2 billion. This is Lipper's market capitalization
breakpoint as of May 31, 2000, although it may be subject to change based on
market fluctuations. The S&P 400 Index and Russell 2500 Index generally consist
of stocks in this range.
56 1-800-345-2021
Glossary
--------------------------------------------------------------------------------
(Continued)
* SMALL-CAPITALIZATION ("SMALL-CAP") STOCKS-- the stocks of companies with a
market capitalization (the total value of a company's outstanding stock) of less
than $2.2 billion. This is Lipper's market capitalization breakpoint as of May
31, 2000, although it may be subject to change based on market fluctuations. The
S&P 600 Index and the Russell 2000 Index generally consist of stocks in this
range.
* VALUE STOCKS-- generally considered to be stocks that are purchased because
they are relatively inexpensive. These stocks are typically characterized by low
P/E ratios.
FUND CLASSIFICATIONS
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.
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 correspondingly 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.
* 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
correspondingly high price-fluctuation risk.
www.americancentury.com 57
Notes
--------------------------------------------------------------------------------
58 1-800-345-2021
Notes
--------------------------------------------------------------------------------
www.americancentury.com 59
Notes
--------------------------------------------------------------------------------
60 1-800-345-2021
[inside back cover]
===============================================================================
INVESTMENT OBJECTIVE - CAPITAL PRESERVATION
===============================================================================
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
===============================================================================
INVESTMENT OBJECTIVE - INCOME
===============================================================================
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
===============================================================================
INVESTMENT OBJECTIVE - GROWTH AND INCOME
===============================================================================
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 Large Cap Value
Strategic Allocation: Tax-Managed Value
Moderate Income & Growth
Strategic Allocation: Value
Conservative Equity Income
===============================================================================
INVESTMENT OBJECTIVE - GROWTH
===============================================================================
RISK LEVEL - AGGRESSIVE
DOMESTIC EQUITY SPECIALTY INTERNATIONAL
Veedot(reg.sm) Global Gold Emerging Markets
New Opportunities International Discovery
Giftrust(reg.tm) International Growth
Vista Global Growth
Heritage
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]
Who we are
American Century offers investors more than 70 mutual funds that span the
investment spectrum. We currently manage $100 billion for roughly 2 million
individuals, institutions and corporations, with a range of services designed to
make investing easy and convenient.
For four decades, American Century has been a leader in performance, service and
innovation. From pioneering the use of computer technology in investing to
allowing investors to conduct transactions and receive financial advice over the
Internet, we have remained committed to building long-term relationships and to
helping investors achieve their dreams.
In a very real sense, investors put their future in our hands. With so much at
stake, our work continues to be guided by one central belief, shared by every
person at American Century: WE SUCCEED ONLY IF OUR INVESTORS SUCCEED.
[left margin]
[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
BANKS AND TRUST COMPANIES, BROKER-DEALERS,
FINANCIAL ADVISORS, INSURANCE COMPANIES
1-800-345-6488
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.
--------------------------------------------------------------------------------
American Century Investments PRSRT STD
P.O. Box 419200 U.S. POSTAGE PAID
Kansas City, MO 64141-6200 AMERICAN CENTURY
www.americancentury.com COMPANIES
0007 American Century Investment Services, Inc.
SH-SAN-20950 (c)2000 American Century Services Corporation
