TWENTIETH CENTURY
Premium Reserves
Semiannual Report
September 30,
1995
[company logo]
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TWENTIETH CENTURY PREMIUM RESERVES, INC.
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TABLE OF CONTENTS
Our Message to You ........................................................ 2
Investment Philosophy ..................................................... 3
Period Overview ........................................................... 4
Investment Review
Twentieth Century Premium Managed Bond ............................... 5
Twentieth Century Premium Government Reserve ......................... 7
Twentieth Century Premium Capital Reserve ............................ 7
Statements of Assets and Liabilities ...................................... 8
Statements of Operations .................................................. 9
Statements of Changes in Net Assets 10
Notes to Financial Statements ............................................. 12
Schedules of Investments .................................................. 14
Financial Highlights ...................................................... 18
Important Notice for All IRA and 403(b) Shareholders
As required by law, any distributions you receive from an IRA and certain
403(b) distributions [not eligible for rollover to an IRA or to another 403(b)]
are subject to federal income tax withholding at the rate of 10% of the total
amount withdrawn, unless you elect not to have withholding apply. If you don't
want us to withhold on this amount, you may send us a written notice not to have
the federal income tax withheld. Your written notice is valid for six months
from the date of receipt at Twentieth Century. Even if you plan to roll over the
amount you withdraw to another tax-deferred account, the withholding rate still
applies to the withdrawn amount, unless we have received a written notice not to
withhold federal income tax within six months prior to the withdrawal.
When you plan to withdraw, you may make your election by completing our
Conversions/Redemptions form or an IRS Form W-4P. Call Twentieth Century for
either form. Your written election is valid for only six months from the date of
receipt at Twentieth 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.
1
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September 30, 1995 (Unaudited)
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OUR MESSAGE TO YOU
[photo of James E. Stowers and James E. Stowers III in left margin]
A continuation of moderate economic growth and subdued inflation provided a
positive environment for fixed income investors during the six months ended
September 30, 1995. Short-term interest rates declined approximately one-half of
1%, while intermediate and long-term rates fell nearly 1%, producing positive
total returns across the maturity spectrum. Given that long-term security prices
are more sensitive to interest changes than are securities with shorter
maturities, our long-term funds posted better performance results than did our
short-term funds for the period. We expect a continuation of _this moderate
economic growth with minimal upward pressure on inflation and some further
declines in interest rates. We are currently managing the Premium Reserves funds
to take advantage of this favorable environment. For further _information,
please see the Investment Review beginning on page 5.
During this six-month period, the Premium Reserves management team members
had their first occasion to work with their new colleagues at The Benham Group.
The June 1995 merger of the parent company of your funds' investment manager
with the parent of The Benham Group's investment manager has substantially
increased the resources available to your fund managers to use in making
investment decisions. Additionally, the integration of the two firms has created
an even broader range family of mutual funds.
As the combined Twentieth Century/Benham company continues to grow, you
will see greater efforts to enhance the information and services you receive.
For example, this Twentieth Century Premium Reserves Semiannual Report has been
expanded to include a synopsis of the investment philosophy that guides your
funds. You will also receive a consolidated statement in January that will
summarize your account history with Twentieth Century.
We appreciate your confidence in the Twentieth Century family of funds and
remain committed to providing you with high quality investment management and
service, along with a wide selection of funds designed to help you pursue your
investment objectives.
Sincerely,
/s/James E. Stowers /s/James E. Stowers III
James E. Stowers James E. Stowers III
Chairman of the Board and Founder President
2
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TWENTIETH CENTURY PREMIUM RESERVES, INC.
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INVESTMENT PHILOSOPHY
The Premium Reserves funds were introduced on April 1, 1993, to provide
institutional investors, including defined contribution plan participants, and
substantial individual investors with additional money-market and fixed income
investment opportunities. All three funds have minimum investment requirements
of $100,000, and each has a .45% all-inclusive management fee.
Conservative, quality securities are the emphasis for the Premium Reserves
funds. Premium Managed Bond purchases only investment-grade securities--that is
securities rated Baa or above by Moody's Investors Service, Inc. or BBB or above
by Standard & Poor's Corporation. The fund does not buy junk bonds--those rated
Ba or lower by Moody's or BB or lower by Standard & Poor's and considered to
have speculative characteristics by both agencies.
Premium Government Reserve purchases only securities issued or guaranteed
by the U.S. government and its agencies and instrumentalities. Premium Capital
Reserve purchases high quality government and corporate money-market securities,
those rated at least P-1 by Moody's or A-1 by Standard & Poor's.
Investment Objectives and Strategy
- - - - - - ----------------------------------
oPremium Government Reserve is a money-market fund1 designed for investors
whose priority is protection of principal with very little credit risk. The
fund invests in money-market securities backed by the U.S. government and
its agencies and maintains a weighted average portfolio maturity of 90 days
or less. The fund seeks to preserve a $1 share price.
oPremium Capital Reserve seeks maximum current income consistent with
principal preservation. It invests in commercial paper, securities issued by
the U.S. government or its agencies, certificates of deposit and other
short-term notes, bonds or debentures. Its weighted average portfolio
maturity must be 90 days or less. As a money-market fund, Premium Capital
Reserve seeks to maintain a constant net asset value of $1 a share.
oPremium Managed Bond is designed for investors who seek a high level of
current income and are willing to assume the greater risk of a fund with a
fluctuating share price. There are no maturity restrictions on the
individual securities in which Premium Managed Bond may invest, but weighted
average duration of the fund's securities portfolio must be at least 3.5
years. Under normal conditions, at least 65% of Premium Managed Bond's
assets will be invested in corporate, sovereign government and municipal
bonds. The balance of the fund's assets can be invested in shorter-term debt
securities.
1Money-market funds are neither insured nor guaranteed by the U.S. government,
and there is no assurance that these funds will maintain a stable $1 share
price.
3
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September 30, 1995 (Unaudited)
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PERIOD OVERVIEW
Two factors--continued moderate economic growth and accompanying low
inflation--were the primary impetuses for sharply declining interest rates
throughout the six-month period ended September 30, 1995. While the economy has
continued to grow overall, that growth has been relatively slow. Gross domestic
product, which averaged 4% in 1994, fell to an annualized rate of 2.7% during
the first quarter of 1995 and fell even further--to an annualized 1.1%--during
the second quarter. Although the third-quarter figure rebounded to 4.2%, 1995
has shown a significant slowdown from 1994. Mirroring that slow growth,
year-over-year inflation, as measured by the Consumer Price Index, was a modest
2.5% at the end of September 1995. These circumstances prompted the Federal
Reserve Board to lower short-term interest rates from 6.0% to 5.75% in early
July. As a result, two-year Treasury note yields declined from 6.81% on March 31
to 5.87% on September 30. During the same period, 30-year Treasury bond yields
fell from 7.44% to 6.51%. While these lower rates are good for most fixed income
investors given that declining rates drive up prices on most bonds, declining
rates lower yields, available to investors in money-market securities.
Falling interest rates generated higher bond prices and positive total
returns across the maturity spectrum for fixed income investors. Longer-term
securities, which generally are more interest rate sensitive than short-term
issues, did best in this environment. Keep in mind that when interest rates
fall, bond prices rise, and when interest rates rise, bond prices fall. During
periods of rising interest rates, shorter maturities can help reduce the effect
of falling bond prices on a fund's net asset value.
4
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Twentieth Century premium reserves, Inc.
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INVESTMENT REVIEW--PREMIUM MANAGED BOND
TWENTIETH CENTURY
PREMIUM MANAGED BOND
Exploiting the effect of declining interest rates on long-term bonds,
Premium Managed Bond's portfolio managers kept the weighted average maturity
between nine and 10 years throughout the six-month period while maintaining a
weighted average duration1 of 5.48 years. Duration is a measure of a bond fund's
sensitivity to interest rate changes. It is based upon the total present value
of all principal and interest payments to be received, is calculated at
prevailing interest rates and is expressed in years. The greater a security's
duration, the more sensitive is its price to changes in interest rates.
This duration was somewhat higher (that is, slightly more aggressive) than
the average duration for the fund's benchmark index, the Lehman Brothers
Aggregate Bond Index. In a period of falling rates, it allowed Premium Managed
Bond to return 8.91%. In comparison, the Lehman Brothers Aggregate Bond Index
posted an 8.18% return for the six months, and the five-year Treasury note
gained 7.70%.
More than half of Premium Managed Bond's portfolio was invested in
corporate securities during the period. This weighting reflected the portfolio
managers' confidence in generally improving corporate financial conditions as
well as improvements in credit quality in the corporate market as a result of
the continuing economic recovery. All corporate bonds in the fund's portfolio
were investment-grade--AAA, AA, A or BBB. The fund continued to maintain
approximately two-thirds of its assets in the highest two of these grades. The
remainder of the fund's portfolio was invested in Treasury securities and to a
lesser extent in mortgage-backed securities issued by agencies of the federal
government. The fund held fewer mortgages over the period because
mortgage-backed bonds generally do not perform as well as Treasuries when
interest rates decline.
Quick Fund Facts -- Premium Managed Bond
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Objective: High level of current income.
Inception date: April 1, 1993
Size: $16,587,564 (as of September 30, 1995)
1 Duration is different from dollar-weighted average portfolio maturity in that
it attempts to measure the interest-rate sensitivity of a security's total
cash flows as opposed to just its final maturity. Duration of a portfolio
will change in response to a change in interest rates while average maturity
may not.
[company logo]
5
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September 30, 1995(Unaudited)
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INVESTMENT REVIEW--PREMIUM MANAGED BOND
Average Annual Total Returns--Premium Managed Bond
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Premium Managed Bond Lehman Aggregate
1 Year (9/30/94 to 9/30/95) 14.80% 14.06%
Inception (4/1/93 to 9/30/95) 5.69% 6.21%
$100,000 OVER LIFE OF FUND - PREMIUM MANAGED BOND [mountain graph]
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$100,000 Value on 9/30/95:
investment $114,820 Premium Managed Bond
made on 4/1/93 $116,270 Lehman Aggregate
(inception date)
[graph data]
Growth S&P 500
4/1/93 100000 100000
4/30/93 100740 100700
5/31/93 100300 100820
6/30/93 101870 102650
7/31/93 102460 103230
8/31/93 104460 105040
9/30/93 104620 105330
10/31/93 104890 105720
11/30/93 104020 104820
12/31/93 104530 105390
1/31/94 105970 106820
2/28/94 103370 104960
3/31/94 100910 102370
4/30/94 99910 101550
5/30/94 99770 101540
6/30/94 99530 101320
7/31/94 101650 103330
8/31/94 101540 103460
9/30/94 100020 101930
10/31/94 99810 101840
11/30/94 99590 101620
12/31/94 100250 102320
1/31/95 102120 104340
2/28/95 104630 106820
3/31/95 105430 107480
4/30/95 106990 108980
5/31/95 111950 113200
6/30/95 112630 114030
7/31/95 112070 113770
8/31/95 113680 115150
9/30/95 114820 116270
Quality Diversification (as of September 30, 1995)
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(Moody's Rating) % of fund investments
AAA 44%
AA 23%
A 24%
BBB 9%
Average Years to Maturity (as of September 30, 1995)
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Years 10.1
Average years to maturity indicates the average time until the principal on the
Fund's bonds is expected to be repaid, weighted by dollar amount.
Duration (as of September 30, 1995)
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Years 5.48
Duration is a measure of the sensitivity of a portfolio to changes in interest
rates. As the duration of a fund increases, the impact of a change in interest
rates on the value of its portfolio also increases.
Past performance is not predictive of future performance. Source: Lipper
Analytical Services, Inc.
Asset Allocation -- Premium [pie chart]
Government Bond (as of September 30, 1995)
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U.S. Treasury Securities 29%
Mortgage-Backed Securities 10%
Corporate Bonds 50%
Sovereign Governments & Agencies 6%
Temporary Cash Investments 5%
6
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TWENTIETH CENTURY PREMIUM RESERVES, INC.
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INVESTMENT REVIEW--PREMIUM GOVERNMENT RESERVE & PREMIUM CAPITAL RESERVE
TWENTIETH CENTURY
PREMIUM GOVERNMENT RESERVE
& PREMIUM CAPITAL RESERVE
Premium Government Reserve posted a total return of 2.81%, and Premium
Capital Reserve produced a 2.85% total return for the six-month period. Premium
Government Reserve's seven-day effective yield as of September 30, 1995, was
5.46% while Premium Capital Reserve's seven-day effective yield was 5.59%.
Declining interest rates result in reduced yields for money-market funds
because investing in shorter maturities means reinvesting even more quickly at
continually declining interest rates. To counter this effect, Twentieth Century
portfolio managers extended the funds' weighted average maturities to
approximately 60 days, closer to the longer end of their allowable 90-day
maturity ranges. Extending weighted average maturities for both funds enabled
them to maintain higher yields longer.
Premium Government Reserve invested in government-agency securities
throughout the period. Premium Capital Reserve invested primarily in commercial
paper rated A-1+, the highest rating.
As of September 30, 1995, $1.5 million, or approximately 1.2%, of Premium
Capital Reserve's assets were invested in taxable variable-rate notes issued by
Orange County, California. For further iscussion, please see Note 2 of the
accompanying Notes to Financial Statements on page 13.
Quick Fund Facts --
Premium Government Reserve
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Objective: High level of current income consistent with
principal preservation.
Inception date: April 1, 1993
Size: $20,189,388 (as of September 30, 1995)
Weighted Average Portfolio Maturity: 90 days or less.
Asset Allocation -- Premium [pie chart]
Government Reserve (as of September 30, 1995)
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U.S. Government Agency Discount Notes 96%
Other U.S. Government Agency Securities 3%
Temporary Cash Investments 1%
Quick Fund Facts --
Premium Capital Reserve
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Objective: Maximum current income consistent with
principal preservation.
Inception date: April 1, 1993
Size: $126,019,946 (as of September 30, 1995)
Weighted Average Portfolio Maturity: 90 days or less.
Asset Allocation -- Premium [pie chart]
Capital Reserve (as of September 30, 1995)
- - - - - - ----------------------------------------------------------------
Commercial Paper 97%
Municipal Obligations 1%
U.S. Government Agency Securities 2%
7
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<TABLE>
<CAPTION>
September 30, 1995 (Unaudited)
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STATEMENTS OF ASSETS AND LIABILITIES
Premium Premium Premium
Government Capital Managed
Reserve Reserve Bond
<S> <C> <C> <C>
Assets
Investment securities, at value (amortized cost for
Government Reserve and Capital Reserve; identified
cost of $15,869,407 for Managed Bond).................. $19,893,484 $127,387,236 $16,135,112
Cash .................................................... 371,146 -- --
Receivable for investment sold........................... -- -- 188,866
Interest receivable...................................... 3,870 44,528 276,714
-------------- -------------- --------------
20,268,500 127,431,764 16,600,692
-------------- -------------- --------------
Liabilities
Disbursements in excess of demand deposit cash........... -- 127,183 3,743
Payable for investments purchased........................ -- 1,000,000 --
Payable for capital shares redeemed...................... 67,250 217,408 1,219
Accrued management fees (Note 2)......................... 8,323 45,460 5,559
Dividends payable........................................ 3,525 21,685 2,598
Other liabilities........................................ 14 82 9
-------------- -------------- --------------
79,112 1,411,818 13,128
-------------- -------------- --------------
Net Assets Applicable
to Outstanding Shares...................................... $20,189,388 $126,019,946 $16,587,564
============== ============== ==============
Capital Shares, $.01 par value
Authorized............................................... 1,000,000,000 1,000,000,000 1,000,000,000
============== ============== ==============
Outstanding.............................................. 20,189,388 126,020,776 1,659,943
============== ============== ==============
Net Asset Value Per Share................................ $1.00 $1.00 $9.99
============== ============== ==============
Net Assets Consist of:
Capital (par value and paid-in surplus).................. $20,189,388 $126,020,776 $16,408,918
Accumulated undistributed net realized (loss)
from security transactions............................. -- (830) (87,059)
Net unrealized appreciation
on investments (Note 3)................................ -- -- 265,705
-------------- -------------- --------------
$20,189,388 $126,019,946 $16,587,564
============== ============== ==============
</TABLE>
See Notes to Financial Statements
8
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<TABLE>
<CAPTION>
Six Months Ended September 30, 1995 (Unaudited) TWENTIETH CENTURY PREMIUM RESERVES, INC.
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STATEMENTS OF OPERATIONS
Premium Premium Premium
Government Capital Managed
Reserve Reserve Bond
<S> <C> <C> <C>
Investment Income
Interest income.......................................... $581,686 $4,579,686 $ 439,714
Expenses:
Management fees (Note 2)............................... 42,937 336,145 28,807
Directors' fees and expenses........................... 151 1,107 98
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43,088 337,252 28,905
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Net investment income...................................... 538,598 4,242,434 410,809
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Realized and Unrealized Gain
on Investments (Note 3)
Net realized gain on investments......................... -- 1,049 97,562
Change in net unrealized gain on investments............. -- -- 567,251
-------------- -------------- -------------
Net realized and unrealized................................ -- 1,049 664,813
gain on investments -------------- -------------- -------------
Net Increase in Net Assets
Resulting from Operations.................................. $538,598 $4,243,483 $1,075,622
============== ============== =============
</TABLE>
See Notes to Financial Statements
9
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<TABLE>
<CAPTION>
Six Months Ended September 30, 1995 (Unaudited) and Year Ended March 31, 1995
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STATEMENTS OF CHANGES IN NET ASSETS
Premium
Government
Reserve
September 30, 1995 March 31, 1995
<S> <C> <C>
Increase (Decrease) in Net Assets
Operations
Net investment income ..................................... $ 538,598 $ 450,343
Net realized gain (loss) on investments ................... -- --
Change in net unrealized appreciation on investments....... -- --
-------------- --------------
Net increase in net assets resulting from operations....... 538,598 450,343
-------------- --------------
Distributions to Shareholders
From net investment income ................................ (538,598) (450,343)
-------------- --------------
Capital Share Transactions
Proceeds from shares sold ................................. 14,737,317 21,734,495
Proceeds from reinvestment of distributions ............... 511,490 439,332
Payments for shares redeemed .............................. (11,440,214) (11,251,555)
-------------- --------------
Net increase (decrease) in net assets from
capital share transactions ................................ 3,808,593 10,922,272
-------------- --------------
Net increase (decrease) in net assets ..................... 3,808,593 10,922,272
Net Assets
Beginning of period ....................................... 16,380,795 5,458,523
-------------- --------------
End of period ............................................. $ 20,189,388 $ 16,380,795
============== ==============
Transactions in shares of the Funds:
Sold ...................................................... 14,737,317 21,734,495
Issued in reinvestment of distributions ................... 511,490 439,332
Redeemed .................................................. (11,440,214) (11,251,555)
-------------- --------------
Net increase (decrease) ................................... 3,808,593 10,922,272
============== ==============
</TABLE>
See Notes to Financial Statements
10
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<TABLE>
<CAPTION>
TWENTIETH CENTURY PREMIUM RESERVES, INC.
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Premium Premium
Capital Managed
Reserve Bond
September 30, 1995 March 31, 1995 September 30, 1995 March 31, 1995
<S> <C> <C> <C>
$ 4,242,434 $ 2,672,163 $ 410,809 $ 538,013
1,049 (1,879) 97,562 (105,993)
-- -- 567,251 12,200
-------------- -------------- ------------- -------------
4,243,483 2,670,284 1,075,622 444,220
-------------- -------------- ------------- -------------
(4,242,434) (2,672,163) (410,809) (538,013)
-------------- -------------- ------------- -------------
165,508,756 151,700,499 6,686,059 4,647,560
4,082,870 2,620,638 404,357 540,493
(182,000,944) (54,713,857) (1,501,898) (2,839,612)
-------------- -------------- ------------- -------------
(12,409,318) 99,607,280 5,588,518 2,348,441
-------------- -------------- ------------- -------------
(12,408,269) 99,605,401 6,253,331 2,254,648
138,428,215 38,822,814 10,334,233 8,079,585
-------------- -------------- ------------- -------------
$126,019,946 $138,428,215 $16,587,564 $10,334,233
============== ============== ============= =============
165,508,756 151,700,499 679,777 500,181
4,082,870 2,620,638 40,985 57,827
(182,000,944) (54,713,857) (152,696) (304,557)
-------------- -------------- ------------- -------------
(12,409,318) 99,607,280 568,066 253,451
============== ============== ============= =============
</TABLE>
See Notes to Financial Statements
11
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September 30, 1995 (Unaudited)
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NOTES TO FINANCIAL STATEMENTS
1. Organization and Summary of Significant Accounting Policies
Organization--
Twentieth Century Premium Reserves, Inc. (the Corporation) was
organized as a Maryland corporation on January 7, 1993 and is registered
under the Investment Company Act of 1940, as amended, as an open-end
diversified investment company. Three series of shares are currently issued
which invest primarily in fixed income securities: Premium Government
Reserve, Premium Capital Reserve and Premium Managed Bond (the Funds). The
following significant accounting policies are in accordance with accounting
policies generally accepted in the industry.
Security Valuations--
Securities of Premium Managed Bond are valued through valuations
obtained from a commercial pricing service or at the mean of the bid and
asked prices. When valuations are not readily available, securities are
valued at fair value as determined in good faith by the board of directors.
The securities held by Premium Capital Reserve and Premium Government
Reserve are valued at amortized method which approximates current value.
Security Transactions--
Security transactions are accounted for on the date purchased or sold.
Net realized gains and losses are determined on the identified cost basis,
which is also used for federal income tax purposes.
Investment Income--
Interest income is recorded on the accrual basis and includes
amortization of premiums and discounts.
Repurchase Agreements--
Securities pledged as collateral for repurchase agreements are held by
the Federal Reserve Bank and are designated as being held on the Funds'
behalf by its custodian under a book-entry system. The Funds monitor the
adequacy of the collateral daily and can require the seller to provide
additional collateral in the event the market value of the securities
pledged falls below the carrying value of the repurchase agreement.
Income Tax Status--
It is the Funds' policy to distribute all of its taxable income and
capital gains to its shareholders and to otherwise qualify as a regulated
investment company under provisions of the Internal Revenue Code.
Accordingly, no provision has been made for federal or state taxes.
Distributions to Shareholders--
Dividends for all of the Funds are declared daily and distributed
monthly. Premium Capital Reserve and Premium Government Reserve do not
expect to realize any long-term capital gains, and accordingly, do not
expect to pay any capital gain distributions. Net realized gains in excess
of available capital loss carryovers will be distributed each December to
shareholders of Premium Managed Bond. At March 31, 1995, Premium Managed
Bond has an accumulated net realized capital loss carryover of $184,621
(expiring in 2002 and 2003) which can be used to offset future taxable
capital gains. Premium Capital Reserve has an accumulated net realized
Capital loss carryover of $81,879, which will be offset against future
short-term capital gains.
The character of distributions made during the year from net
investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes due to differences in the
recognition of income and expense items for financial statement and tax
purposes.
12
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TWENTIETH CENTURY PREMIUM RESERVES, INC.
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NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. Organization and Summary of Significant Accounting Policies (continued)
Supplementary Information--
Certain officers and directors of the Corporation are also officers
and/or directors, and, as a group, controlling stockholders of Twentieth
Century Companies, Inc., the parent of the Corporation's investment
manager, Investors Research Corporation (IRC).
2. Management Agreement and Other Transactions With Affiliates
The Management Agreement with IRC provides for a monthly management
fee computed by multiplying the applicable fee for each Fund by the average
daily net assets of such Fund during the previous month. The Agreement
further provides that all expenses of the Corporation, except brokerage
commissions, taxes, interest, expenses of those directors not considered
"interested directors" as defined in the Investment Company Act of 1940
(including counsel fees) and extraordinary expenses, will be paid by IRC.
The Agreement may be terminated by either party upon 60 days' notice. The
current annual management fee for each Fund is .45%.
Premium Capital Reserve owns $1,500,000 of taxable variable-rate notes
issued by Orange County, California, which filed for bankruptcy protection
on December 6, 1994. On December 13, 1994, Twentieth Century Companies,
Inc. (TCC) arranged for the issuance of an irrevocable standby letter of
credit by Chase Manhattan Bank in favor of Premium Capital Reserve. In July
1995, a new letter of credit arrangement was entered into with State Street
Bank and Trust Company. The terms of this letter of credit provide for the
payment of up to $1,000,000 to the Premium Capital Reserve Fund should
Orange County default in the payment of principal and/or interest on such
note. Since the letter of credit only covers a portion of the amount of the
Orange County note held, the Fund continues to be exposed to some risk of
loss of principal and/or interest on the Orange County security. The market
value of this security on September 30, 1995 was $1,417,500. TCC has agreed
to reimburse State Street Bank for any payments made by the bank to the
Fund under this letter of credit. The value of the letter of credit is not
considered material to the Fund's financial statements.
3. Investment Transactions
Premium Managed Bond had purchases and sales (excluding short-term
securities) for the period ending September 30, 1995 of $4,457,314 and
$3,356,237, respectively, for U.S. Government obligations; purchases and
sales of corporate obligations were $5,234,890 and $1,170,946,
respectively.
As of September 30, 1995, the gross unrealized appreciation of Premium
Managed Bond was $265,705. The aggregate cost of investments for federal
income tax purposes was the same as the cost for financial reporting
purposes.
13
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September 30, 1995 (Unaudited)
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SCHEDULES OF INVESTMENTS
PREMIUM GOVERNMENT RESERVE
Average Portfolio Maturity-66 Days
- - - - - - --------------------------------------------------------------------------------
Principal Amount Value
- - - - - - --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY DISCOUNT NOTES
$ 750,000 FHLMC, 5.66%, 10-4-95 $ 749,646
2,550,000 FHLMC, 5.63%-5.66%, 10-16-95 2,543,998
1,700,000 FNMA, 5.66%,10-16-95 1,695,991
945,000 FFCB, 5.60%, 10-18-95 942,501
1,125,000 FNMA, 5.65%-5.79%, 10-20-95 1,121,609
1,900,000 FHLMC, 5.60%, 10-24-95 1,893,202
1,360,000 FHLB, 5.46%, 11-6-95 1,352,574
390,000 FHLB, 5.52%, 11-13-95 387,429
1,000,000 FHLMC, 5.60%, 11-16-95 992,844
265,000 FHLB, 5.46%, 11-28-95 262,669
2,100,000 FHLMC, 5.58%, 12-1-95 2,080,127
100,000 FNMA, 5.50%, 12-7-95 98,976
120,000 FHLB, 5.45%, 12-18-95 118,583
120,000 FHLB, 5.75%, 1-2-96 118,217
130,000 FNMA, 5.75%, 1-8-96 127,944
1,200,000 FHLB, 5.49%, 2-6-96 1,176,576
250,000 FHLMC, 5.51%, 2-8-96 245,026
160,000 FNMA, 5.51%, 2-12-96 156,718
800,000 FHLB, 5.58%, 2-15-96 783,012
1,000,000 FNMA, 5.56%, 2-21-96 977,914
100,000 FHLB, 5.75%, 2-26-96 97,636
805,000 FHLB, 5.02%, 2-28-96 788,156
255,000 FFCB, 5.64%, 3-4-96 248,808
180,000 FHLMC, 5.60%, 7-1-96 172,328
-----------------
Total U.S. Government
Agency Discount Notes--96.2% 19,132,484
-----------------
OTHER U.S. GOVERNMENT
AGENCY SECURITIES
FHLMC, 5.60%, 7-1-96 500,000
-----------------
TOTAL U.S. GOVERNMENT
AGENCY SECURITIES --2.5% 500,000
-----------------
TEMPORARY CASH INVESTMENTS
Repurchase Agreement
(Goldman Sachs & Co.), 6.30%,
due 10-2-95; collateralized by
$205,000 par value U.S. Treasury Bonds,
10.375%, due 11-15-09
(Delivery value $261,137) 261,000
-----------------
Total Temporary
Cash Investments--1.3% 261,000
-----------------
Total Investment Securities--100.0% $19,893,484
=================
PREMIUM CAPITAL RESERVE
Average Portfolio Maturity-58 Days
- - - - - - --------------------------------------------------------------------------------
Principal Amount Value
- - - - - - --------------------------------------------------------------------------------
COMMERCIAL PAPER
Agricuture --3.9%
$5,000,000 Cargill Financial Services Corp.,
5.62%, 10-5-95 (Acquired 7-7-95;
Cost $4,929,750)+ $ 4,996,878
Automobiles & Auto Parts--5.5%
5,000,000 Daimler-Benz North America
Corp., 5.95%, 12-6-95 4,945,458
2,100,000 Paccar Financial Corp.,
5.67%, 11-30-95 2,080,155
-----------------
7,025,613
-----------------
Banking--8.6%
3,100,000 Abbey National PLC,
5.66%, 12-7-95 3,067,345
2,000,000 ABN AMRO North American,
5.56%, 3-5-96 1,951,813
5,900,000 Societe Generale,
5.71%, 10-24-95 5,878,476
-----------------
10,897,634
-----------------
Chemicals & Resins--5.5%
1,300,000 Air Products & Chemical,
5.75%, 10-20-95 1,296,055
5,900,000 du Pont (E.I.) de Nemours & Co.,
5.50%-5.68%, 11-15-95
through 8-1-96 5,759,367
-----------------
7,055,422
-----------------
Communications Services--7.1%
5,970,000 Ameritech Capital Funding
Corp., 5.58%, 12-11-95
(Acquired 6-26-95,
Cost $5,814,541)+ 5,904,300
2,000,000 AT & T Corp., 5.58%, 2-6-96 1,960,320
1,200,000 U.S. West Communications
Inc., 5.72%, 10-19-95 1,196,568
-----------------
9,061,188
-----------------
Diversified Companies--3.1%
2,000,000 General Electric Capital
Corp., 5.63%, 2-9-96 1,959,026
14
<PAGE>
TWENTIETH CENTURY PREMIUM RESERVES, INC.
- - - - - - --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
PREMIUM CAPITAL RESERVE (CONT.)
- - - - - - --------------------------------------------------------------------------------
Principal Amount Value
- - - - - - --------------------------------------------------------------------------------
$2,000,000 Hanson Finance (U.K.) PLC,
5.67%, 11-28-95 $ 1,981,730
-----------------
3,940,756
-----------------
Education--3.4%
4,390,000 Stanford University,
5.59%, 1-25-96 4,310,926
-----------------
Electrical & Electronic Components--9.3 %
6,000,000 Emerson Electric Co.,
5.68%, 10-30-95 5,972,547
5,900,000 Panasonic Finance Inc.,
6.15%, 10-5-95 (Acquired
9-29-95; Cost $5,893,953)+ 5,895,968
-----------------
11,868,515
-----------------
Energy--1.5%
1,946,000 Statoil (Den Norske Stats
Oljeselskap A/S),
5.76%, 10-5-95 1,944,755
-----------------
Financial Services--7.4%
4,500,000 American Express Credit
Corp., 5.70%, 11-6-95 4,474,350
4,900,000 Goldman Sachs Group, L.P.,
5.77%, 10-6-95 4,896,073
-----------------
9,370,423
-----------------
Industrial Equipment & Machinery--3.1%
4,000,000 Dover Corp., 5.73%, 10-4-95
(Acquired 8-29-95;
Cost $3,977,080)+ 3,998,090
-----------------
Insurance--15.3%
5,600,000 American Family Financial
Services Inc., 5.75%, 10-3-95
through 10-4-95 5,597,668
3,500,000 American General Corp.,
5.72%, 10-11-95 3,494,439
2,000,000 Aon Corp.,
5.67%, 12-11-95 1,977,635
2,100,000 Chubb Capital Corp.,
5.73%, 10-19-95 2,093,983
2,400,000 SAFECO Credit Co. Inc.,
5.71%, 10-27-95 2,390,103
3,900,000 USAA Capital Corp.,
5.70%, 10-27-95 3,883,945
-----------------
19,437,773
-----------------
Metals & Mining--1.6%
$2,000,000 U.S. Borax & Chemical Corp.,
5.67%, 11-16-95 (Acquired
8-9-95; Cost $1,968,815)+ $ 1,985,510
-----------------
Pharmaceuticals--2.7%
3,400,000 Sandoz Corp.,
5.72%, 10-18-95 3,390,816
-----------------
Publishing--3.6%
4,600,000 Reed Elsevier Inc.,
5.71%-5.73%, 10-2-95
through 10-25-95,
(Acquired 8-29-95
through 9-20-95;
Cost $4,574,898)+ 4,593,443
-----------------
Sovereign Governments & Agencies--7.5%
4,000,000 Canadian Wheat Board,
5.55%-5.58%, 2-27-96 3,907,744
5,700,000 Kingdom of Sweden,
5.70%, 12-22-95 5,625,995
-----------------
9,533,739
-----------------
Transportation Services--2.5%
3,200,000 United Parcel Service,
5.70%, 10-12-95 3,194,427
-----------------
Utilities (Electric)--4.9%
6,300,000 Southern California Edison Co.,
5.72%, 10-18-95 6,282,983
-----------------
Total Commercial Paper--96.5% 122,888,891
-----------------
MUNICIPAL OBLIGATIONS
750,000 Orange County, CA, FRN,
6.825%, 6-30-96
(LOC: State Street Bank)++ 750,000
750,000 Orange County, CA, FRN,
6.825%, 6-30-96++ 750,000
-----------------
Total Municipal Obligations--1.2% 1,500,000
-----------------
U. S. GOVERNMENT
AGENCY SECURITIES
2,000,000 FNMA Discount Note,
5.59%, 7-1-96 1,998,345
1,000,000 SLMA, MTN,
5.90%, 10-4-96 1,000,000
-----------------
Total U.S. Government
Agency Securities--2.3% 2,998,345
-----------------
Total Investment Securities--100.0% $127,387,236
=================
See Notes to Financial Statements
15
<PAGE>
September 30, 1995 (Unaudited)
- - - - - - --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
PREMIUM MANAGED BOND
Average Portfolio Maturity -- 10.1 Years
Creditworthiness (Quality) Distribution
AAA 44%
AA 23%
A 24%
BBB 9%
---
100%
===
- - - - - - --------------------------------------------------------------------------------
Principal Amount Value
- - - - - - --------------------------------------------------------------------------------
U.S. TREASURY SECURITIES
$1,000,000 U.S. Treasury Note,
4.375%, 11-15-96 $ 985,340
700,000 U.S. Treasury Note,
5.625%, 6-30-97 697,690
300,000 U.S. Treasury Note,
7.125%, 9-30-99 311,937
400,000 U.S. Treasury Note,
7.75%, 1-31-00 426,140
600,000 U.S. Treasury Note,
6.25%, 8-31-00 605,754
200,000 U.S. Treasury Note,
6.50%, 8-15-05 204,954
400,000 U.S. Treasury Bond,
7.125%, 2-15-23 424,280
300,000 U.S. Treasury Bond,
7.50%, 11-15-24 333,858
200,000 U.S. Treasury Bond,
7.625%, 2-15-25 226,422
400,000 U.S. Treasury Bond,
6.875%, 8-15-25 420,164
-----------------
Total U.S. Treasury Securities--28.7% 4,636,539
(Cost $4,556,679) -----------------
MORTGAGE-BACKED SECURITIES*
1,722,748 FNMA Pool #272894,
6.00%, 3-1-00 1,675,323
-----------------
Total Mortgage-Backed
Securities*--10.4% 1,675,323
(Cost $1,706,866) -----------------
CORPORATE BONDS
Automobiles & Auto Parts--5.3%
300,000 Chrysler Financial Corp.,
5.375%, 10-15-98 291,750
200,000 Ford Motor Credit Co.,
6.75%, 5-15-05 198,500
$350,000 General Motors Co.,
7.00%, 6-15-03 $ 356,125
-----------------
846,375
-----------------
Banking--7.0%
400,000 Chase Manhattan Corp.,
8.80%, 2-1-00 411,000
200,000 First Bank System,
7.625%, 5-1-05 212,500
300,000 First USA Bank,
5.75%, 1-15-99 292,875
200,000 First Union Corp.,
8.77%, 11-15-04 217,250
-----------------
1,133,625
-----------------
Chemicals & Resins--2.5%
300,000 Arco Chemical Co.,
10.25%, 11-1-10 395,625
-----------------
Communications Services--3.9%
400,000 Motorola, Inc.,
6.50%, 9-1-25 401,000
200,000 TKR Cable I Inc.,
10.50%, 10-30-99 224,000
-----------------
625,000
-----------------
Consumer Products--1.9%
300,000 Nabisco, Inc.,
8.00%, 1-15-00 315,375
-----------------
Financial Services--9.6%
500,000 Associates Corp., NA,
6.625%, 6-15-05 495,000
400,000 Keycorp, MTN,
7.30%, 2-3-03 413,500
300,000 Lehman Brothers
Holdings Inc., MTN,
9.17%, 2-28-02 331,125
300,000 Paine Webber Group Inc.,
7.875%, 2-15-03 311,625
-----------------
1,551,250
-----------------
Insurance--3.7%
300,000 American General Corp.,
6.75%, 6-15-05 299,250
300,000 London Insurance Group,
6.875%, 9-15-05 298,500
-----------------
597,750
-----------------
See Notes to Financial Statements
16
<PAGE>
TWENTIETH CENTURY PREMIUM RESERVES, INC.
- - - - - - --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS
PREMIUM MANAGED BOND (CONT.)
- - - - - - --------------------------------------------------------------------------------
Principal Amount Value
- - - - - - --------------------------------------------------------------------------------
Paper & Forest Products--1.5%
$200,000 Boise Cascade,
9.45%, 11-1-09 $ 236,750
-----------------
Pharmaceuticals--3.5%
500,000 Lilly (Eli) & Co.,
8.375%, 2-7-05 561,250
-----------------
Retail (General Merchandise)--4.2%
300,000 Sears, Roebuck & Co. Inc.,
9.375%, 11-1-11 363,375
300,000 Wal-Mart Stores, Inc.,
7.50%, 5-15-04 318,000
-----------------
681,375
-----------------
Tobacco Products--1.3%
200,000 Philip Morris Companies, Inc.,
7.625%, 5-15-02 209,250
-----------------
Utilities--5.6%
500,000 Consolidated Natural Gas,
7.375%, 4-1-05 530,000
400,000 Duke Power Co.,
6.875%, 8-1-23 377,500
-----------------
907,500
-----------------
Total Corporate Bonds--50.0% 8,061,125
(Cost $7,859,924) -----------------
SOVEREIGN GOVERNMENTS & AGENCIES
500,000 Hydro Quebec,
8.05%, 7-7-24 545,625
400,000 Province of Ontario
Global Bonds 7.625%,
6-22-04 424,500
-----------------
Total Sovereign
Governments & Agencies--6.0% 970,125
(Cost $953,938) -----------------
TEMPORARY CASH INVESTMENTS
Repurchase Agreement (Goldman
Sachs & Co.), 6.30%, due 10-2-95;
collateralized by $640,000 par value
U.S. Treasury Notes, 11.75% due
2-15-01 (Delivery value $792,416) 792,000
-----------------
Total Temporary Cash Investments--4.9 792,000
(Cost $792,000) -----------------
Total Investment Securities--100.0% $16,135,112
(Cost $15,869,407) =================
NOTES TO SCHEDULES OF INVESTMENTS
FFCB = Federal Farm Credit Banks
FHLB = Federal Home Loan Banks
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
LOC = Letter of Credit
MTN = Medium Term Note
VRN = Variable Rate Note, rates shown effective at 9-30-95. Weighted average
portfolio maturity is calculated using date indicated.
*Remaining expected average life is indicated and used for calculating the
weighted average portfolio maturity.
+Private placement securities exempt from registration under the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional investors. The aggregate value
of these securities at September 30, 1995, was $27,374,189, which represented
21.7% of the net assets.
++ This security has been downgraded by both Moody's and S&P, due to the
bankruptcy filing of Orange County, California. According to Securities and
Exchange Commission Regulations, this security is no longer considered an
eligible security without Board of Directors approval. On December 7, 1994, the
Board of Directors determined that it was not in the best interest of the Fund
to dispose of this security. This security was originally due to mature on July
10, 1995. Orange County revised the terms of this security to extend the
maturity to June 30, 1996. The revised terms also included an increase in the
security's interest rate and an interest payment schedule requiring partial
payments of interest prior to June 30, 1996, (with the remaining interest
payments due at maturity). See Note 2 of the accompanying Notes to the Financial
Statements.
17
<PAGE>
<TABLE>
<CAPTION>
September 30, 1995 (Unaudited)
- - - - - - ------------------------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
INCOME FROM
INVESTMENT OPERATIONS DISTRIBUTIONS RATIOS/SUPPLEMENTAL DATA
------------------------- ---------------- ---------------------------
Net Realized
and Ratio of Ratio of Net
Net Asset Unrealized Total Dividends Net Asset Operating Investment Net
Value, Net Gains from from Net Value, Expenses Income to Portfolio Assets,
Beginning Investment (Losses)on Investment Investment Total End of Total to Average Average Turnover End of
of Period Income Securities Operations Income Distributions Period Return1 Net Assets Net Assets Rate Period
Premium
Govermnent
Reserve
Year Ended March 31,
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1994 $1.00 $.027 -- $.027 $(.027) $(.027) $1.00 2.75% .45% 2.72% -- $ 5,458,523
1995 1.00 .045 -- .045 (.045) (.045) 1.00 4.62% .45% 4.84% -- 16,380,795
Six Months Ended
September 30, 1995 (Unaudited)
1.00 .028 -- .028 (.028) (.028) 1.00 2.81% .44% 5.53%* -- 20,189,388
Premium
Capital
Reserve
Year Ended March 31,
1994 $1.00 $.028 -- $.028 $(.028) $(.028) $1.00 2.81% .45% 2.83% -- $ 38,822,814
1995 1.00 .046 -- .046 (.046) (.046) 1.00 4.66% .45% 4.76% -- 138,428,215
Six Months Ended
September 30, 1995 (Unaudited)
1.00 .028 -- .028 (.028) (.028) 1.00 2.85% .45% 5.62%* -- 126,019,946
Premium
Managed
Bond
Year Ended March 31,
1994 $10.00 $.462 $(.36) $.102 $(.462) $(.462) $9.64 .92% .45% 4.65% 144% $ 8,079,585
1995 9.64 .588 (.18) .408 (.588) (.588) 9.46 4.48% .45% 6.30% 51% 10,334,233
Six Months Ended
September 30, 1995 (Unaudited)
9.46 .305 .53 .835 (.305) (.305) 9.99 8.91% .44% 6.20%* 37% 16,587,564
</TABLE>
1 Actual total return for period indicated.
* Annualized
See Notes to Financial Statements
18
<PAGE>
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19
<PAGE>
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20
<PAGE>
Twentieth Century Premium Reserves, Inc. TWENTIETH CENTURY
Premium Reserves
Investment Manager
Investors Research Corporation
Kansas City, Missouri
This report and the financial Semiannual Report
statements contained herein
are submitted for the general September 30, 1995
information of the shareholders
of the corporation. The report
is not authorized for distribution
to prospective investors in the
corporation unless preceded
or accompanied by an effective
prospectus.
[company logo]
Investments That Work(TM)
- - - - - - ---------------------------------------
P.O. Box 419200
- - - - - - ---------------------------------------
Kansas City, Missouri
- - - - - - ---------------------------------------
64141-6200
- - - - - - ---------------------------------------
Person-to-person assistance:
1-800-345-2021 or 816-531-5575
- - - - - - ---------------------------------------
Automated information line:
1-800-345-8765
- - - - - - ---------------------------------------
Telecommunications Device for the Deaf:
1-800-634-4113 or 816-753-1865
- - - - - - ---------------------------------------
Fax: 816-340-7962
- - - - - - ---------------------------------------
[company logo]
SH-BKT-3638
9511 Recycled
(C) 1995 Twentieth Century Services, Inc.
