TWENTIETH CENTURY
Premium Reserves
Annual Report
March 31,
1996
[company logo]
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TABLE OF CONTENTS
Our Message to You ................................................ 1
Investment Philosophy ............................................. 2
Period Overview ................................................... 3
Investment Review
Premium Managed Bond .......................................... 5
Premium Government Reserve & Premium Capital Reserve........... 7
Schedules of Investments
Premium Government Reserve & Premium Capital Reserve........... 9
Premium Managed Bond ..........................................11
Statements of Assets and Liabilities ..............................14
Statements of Operations ..........................................15
Statements of Changes in Net Assets ...............................16
Notes to Financial Statements .....................................18
Financial Highlights ..............................................20
Report of Independent Auditors ....................................21
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IMPORTANT NOTICE FOR ALL IRA AND 403(B) SHAREHOLDERS
Any distribution you receive from an IRA and certain 403(b) distributions
[those 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federal income tax withholding at the rate of 10% of the total amount withdrawn,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
this amount, you may send us a written election not to have federal income tax
withheld. Your written election is valid for six months from the date of receipt
by 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withdrawn amount, unless we have received a written election not to withhold
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 by 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.
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INDEX USED FOR PERFORMANCE COMPARISON
The index listed below is used in this report to serve as a comparison for the
performance of a fund.
LEHMAN AGGREGATE BOND INDEX is composed of the Lehman Government/Corporate Index
and the Lehman Mortgage-Backed Securities Index. It also includes Treasury
issues, agency issues, corporate bond issues and mortgage-backed securities. It
is not an investment product available for purchase.
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<PAGE>
March 31, 1996
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OUR MESSAGE TO YOU
The bond market gave a very respectable performance during the 12 months
ended March 31, 1996, although the final three months were marked by a sharp
downturn that stripped away roughly one-third of the gains captured earlier in
the period. Inspired by a slow-growth economy, minimal inflation and two Federal
Reserve interest-rate cuts, the market staged a dramatic rally in the first
three quarters, with the benchmark 30-year Treasury bond gaining approximately
26%. The rally withered in the March 1996 quarter, however, due to renewed fears
of rapid growth and higher inflation. For the full 12-month period, prices of
90-day Treasury bills advanced 5.42%, while the price of 30-year Treasury bonds
rose 17.5%.
[picture of James E. Stowers and James E. Stowers III on left side of page]
Against this backdrop, Premium Managed Bond fund chalked up an 11.53% total
return, placing it firmly in the top quartile of general bond funds, as measured
by Lipper Analytical Services. Premium Government Reserves and Premium Capital
Reserves, both money market funds*, returned 5.49% and 5.58% and their seven-day
yields at March 31, 1996, were 4.99% and 4.94%, respectively.
These solid results reflect both the market conditions (discussed on page
3) and two other key factors: our conservative investment strategy, and the
benefits that resulted after combining forces with The Benham Group.
The Premium Reserve Funds are managed not to be short-term performance
leaders, but to deliver consistently competitive results over time. They give
preference to quality investments, which typically exhibit less price volatility
than lower-rated securities of similar maturity. Though they may lag slightly
during market rallies, such securities may retain more of their value in a
downturn.
To help meet this goal of consistent performance, the funds' portfolio
managers relocated in mid-year to the northern California headquarters of The
Benham Group. Sharing resources and experience with the Benham investment
managers is providing both teams with greater information flow, enhanced
credit-analysis capability, and more extensive quantitative research. As the
period ended, the joint management group was working to expand the
credit-analysis team, construct a new analytical database and otherwise increase
our combined company's ability to scrutinize and select the most appropriate
investments.
We are confident these efforts will continue to benefit the funds and you,
their shareholders, in the years to come. We appreciate your continued support
of the Twentieth Century family of funds.
Sincerely,
/s/James E. Stowers /s/James E. Stowers III
James E. Stowers James E. Stowers III
Chairman of the Board and Founder President
*Investments in these funds are not insured, nor are they guaranteed by
the U.S. government.
While each fund seeks to maintain a stable net asset value of $1.00 per share,
there is no assurance that it will be able to do so.
1
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INVESTMENT PHILOSOPHY
For institutional investors and individual investors with substantial
investable assets, the Twentieth Century Premium Reserve Funds provide
conservatively managed fixed income investment opportunities. Each fund requires
a minimum investment of $100,000 and has an all-inclusive management fee of
0.45%.
The strengths of the Premium Reserve Funds are conservative investment
policies and quality securities. The funds focus on quality securities and limit
investments in leveraged derivatives or other inherently speculative
instruments.
PREMIUM GOVERNMENT RESERVE, a U.S. government money market fund, seeks to
protect an investor's principal by investing primarily in money market
instruments backed by the federal government and its agencies. These fixed
income securities, which mature in one year or less, are considered among the
safest of investments. The weighted average portfolio maturity is 90 days or
less.
PREMIUM CAPITAL RESERVE, a general money market fund, seeks to provide the
maximum current income possible while preserving an investor's principal. It
invests in a wide variety of short-term notes, bonds or debentures, such as
commercial paper, U.S. government and agency securities, and certificates of
deposit. Like Premium Government Reserve's holdings, at least 75% of these
instruments must be rated P-1 by Moody's Investors Service, Inc. and A-1 by
Standard & Poor's Corporation. The weighted average portfolio maturity is 90
days or less.
PREMIUM MANAGED BOND, a bond fund, is designed for investors who seek a
high level of current income and are willing to accept moderate fluctuation in
share price. It may invest in government, agency, corporate and other fixed
income securities of any maturity and owns bonds rated Baa or above by Moody's
and BBB or above by Standard & Poor's. The weighted average duration is 3.5
years or longer.
In managing Premium Managed Bond, comparisons are made to a custom-designed
index that approximates the historic average weightings of A-rated bond funds:
primarily investment-grade corporate bonds and, to a lesser extent, Treasury and
mortgage-backed securities and cash. The index is reviewed regularly to ensure
its continued validity.
PORTFOLIO MANAGEMENT TEAM
- ----------------------------------
Bud Hoops, Portfolio Manager
Bob Gahagan, Portfolio Manager
Jeffrey Houston, Portfolio Manager
2
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PERIOD OVERVIEW
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MARKET SUMMARY
The Federal Reserve seemed to have achieved its desired "soft landing" for
the U.S. economy in 1995, primarily by raising short-term interest rates seven
times after February 1994. As a result, 1995 dawned with a moderate-growth,
low-inflation scenario favorable for bond investors, and the bond market surged
ahead.
NEW FEDERAL RESERVE POLICY
By the second quarter, slowdowns in auto, home and retail sales and a
dramatic jump in unemployment rates provided ample evidence that economic growth
- - at an annual rate of just 1.3% - was too slow. In response, the Fed reversed
course, lowering its target for the federal funds rate (the rate at which it
loans money to major banks) from 6.00% to 5.75% in July. This was yet another
positive for bond prices, which rise when interest rates fall.
Despite the change at the Fed, economic results in the third and fourth
quarters continued to be mixed. Reduced corporate spending, continued softness
in autos and housing activity, poor holiday retail sales and lagging consumer
confidence prompted the Fed to drop the federal funds rate another
quarter-percent, to 5.50%, in December. By December 31, yields on 30-year
Treasury bonds were 1.5% below March 31, 1995, rates, and prices had climbed by
as much as 26%, reflecting both actual and anticipated credit-easing by the Fed.
BUDGET IMPASSE
Although both growth and inflation remained anemic - in 1995, the consumer
price index advanced just 2.5%, the lowest annual rate since 1986 - the bond
market entered 1996 in a state of uncertainty. Political wrangling over the
federal budget, which shut down the national government twice in the fourth
quarter, delayed the release of key economic data and raised questions about its
reliability. The failure of Congress and the White House to resolve their
differences also raised concerns about federal debt repayment.
Finally, a much-higher-than-expected employment figure released in early
March suggested a rapid increase in economic growth. The news triggered a 3%
drop in bond prices, one of the biggest single-day downturns ever. Other news,
including a seven-year high for the Commodities Research Bureau index of
strategic commodity prices, kept the market off-balance in the remaining weeks
of the quarter, which proved to be the worst since 1987. Between January and
March, long-term bond yields rose approximately 0.75%, paring roughly one-third
of the price gains earned in the prior nine months.
3
March 31, 1996
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PERIOD OVERVIEW (CONTINUED)
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MARKET OUTLOOK
The bond market has moved toward a recovery, albeit on wobbly legs, as
investors try to piece together an accurate picture of the U.S. economy. We
expect the market to remain volatile until additional (and presumably less
skewed) data prove or disprove an economic resurgence. Employment reports point
toward a re-acceleration of the economy, yet other indicators contradict this
conclusion. Exports are not growing. Capital spending - especially for
technology - is declining. And, after five years of improvements, corporate
earnings growth may be slowing.
The Premium Reserve Funds have assumed neutral positions in the midst of
this jumble and will remain cautious until management has confidence in what the
economic indicators are saying.
The big questions throughout the remainder of 1996 will be political.
First, will the members of Congress finally agree in this, an election year, on
the spending cuts needed to balance the federal budget? Second, will the
presidential candidates embrace populist positions (e.g., programs that
stimulate job growth or higher wage increases )? Or will they champion fiscal
restraint and slow-but-steady growth? Any action by Congress or the candidates
that is viewed as inflationary could be detrimental to the bond market.
4
March 31, 1996
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PREMIUM MANAGED BOND
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MANAGEMENT Q & A
A discussion with Bud Hoops, a portfolio manager on the Premium Managed
Bond management team.
Q: How did the fund perform?
A: Premium Managed Bond enjoyed a very good year, on both an absolute and a
relative basis. Its 12-month total return was 11.53%, or about 0.75 percentage
points better than the Lehman Aggregate Bond Index. As of March 31, the fund's
total returns ranked 20th among the 112 general bond funds tracked by Lipper
Analytical Services, Inc. for the prior 12 months.*
Q: Why did the fund perform so well compared to the index and its peers?
A: The most important factor was the fund's duration. Throughout 1995, we
kept the fund's average duration about 10% longer than the Lehman index.
However, as soon as it became clear that the bond market rally might falter, we
changed direction. By March 8, when the surprisingly strong employment numbers
were announced (see page 3), the fund had already assumed a neutral position.
Another reason the fund outperformed was a significant increase in
corporate securities. We took advantage of steadily improving results for
American business and gradually raised corporates during 1995 from less than 40%
of the portfolio to approximately 60% of the fund's assets before scaling back
at (continued on the next page)
QUICK FUND FACTS
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PREMIUM MANAGED BOND
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STRATEGY:
High level of current
income.
INCEPTION DATE:
April 1, 1993
SIZE:
$20.3 million
(as of March 31, 1996)
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AVERAGE ANNUAL TOTAL RETURNS
PREMIUM Lehman
MANAGED BOND Aggregate*
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Year ended 3/31/96 11.53% 10.79%
Inception 4/1/93 5.55% 5.99%
to 3/31/96
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ASSET ALLOCATION [pie chart]
(as of March 31, 1996)
Temporary Cash Investments 8%
Sovereign Governments & Agencies 7%
Mortgage-Backed Securities 15%
Corporate Bonds 45%
U.S. Treasury Securities 25%
Percent of fund investments.
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$100,000 OVER LIFE OF FUND
[mountain graph]
$100,000 investment made on 4/1/93 (Inception date)
PREMIUM LEHMAN AGGREATE*
MANAGED BOND BOND INDEX
4/1/93 $100,000 $100,000
4/30/93 $100,740 $100,700 Value on 3/31/96:
5/31/93 $100,300 $100,820 -----------------
6/30/93 $101,870 $102,650 $117,580 PREMIUM MANAGED BOND
7/31/93 $102,460 $103,230 $119,070 Lehman Aggregate*
8/31/93 $104,460 $105,040
9/30/93 $104,620 $105,330
10/31/93 $104,890 $105,720
11/30/93 $104,020 $104,820
12/31/93 $104,530 $105,390
1/31/94 $105,970 $106,820
2/28/94 $103,370 $104,960
3/31/94 $100,910 $102,370
4/30/94 $99,910 $101,550
5/30/94 $99,770 $101,320
7/31/94 $101,650 $103,330
8/31/94 $101,540 $103,460
9/30/94 $100,020 $101,930
10/31/94 $99,810 $101,840
11/30/94 $99,590 $101,620
12/31/94 $100,250 $102,320
1/31/95 $102,120 $104,340
2/28/95 $104,630 $106,820
3/31/95 $105,430 $107,480
4/30/95 $106,990 $108,980
5/31/95 $111,950 $113,200
6/30/95 $112,630 $114,030
7/31/95 $112,070 $113,770
8/31/95 $113,680 $115,150
9/30/95 $114,820 $116,270
10/31/95 $116,560 $117,780
11/30/95 $118,530 $119,540
12/31/95 $120,400 $121,220
01/31/96 $121,110 $122,030
02/29/96 $118,510 $119,910
03/31/96 $117,580 $119,070
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.
*Source: Lipper Analytical Services, Inc.
5
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PREMIUM MANAGED BOND
(continued from the previous page)
year end. All of these securities were investment-grade. Among them were a
number of BBB-rated issues from improving companies like Boise-Cascade, Delta
Airlines and Time-Warner. As their corporate fortunes improve, so will the
potential for a ratings upgrade and a significant price increase in their
securities.
Q: What are your plans for the fund in the coming months?
A: Because the external environment is full of contradictions, we began the
new year in a neutral position relative to the fund's peer group. We will
maintain that position until the statistics provide clarity about the economy
and inflation. In the interim, we are working to increase the portfolio's yield
while maintaining the overall asset quality.
For example, an in-depth evaluation of market sectors showed that
higher-quality corporate securities have become relatively expensive compared to
Treasury issues. In addition, we suspect that corporate earnings growth may slow
this year. For these reasons, we began shifting assets during the January
quarter from corporates to a comparatively inexpensive sector:
government-guaranteed, mortgage-backed securities. These involve some prepayment
risk (i.e., the possibility that mortgagees will pay off their loans early by
refinancing when interest rates fall), but our modeling programs suggest that
this risk is more than offset by the extra yield. We will continue to look for
such opportunities in the coming months.
QUALITY DIVERSIFICATION (as of March 31, 1996)
- -------------------------------------------------
(Moody's Rating) % of fund investments
AAA 48%
AA 12%
A 24%
BBB 16%
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100%
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AVERAGE WEIGHTED MATURITY (as of March 31, 1996)
- ------------------------------------------------
Years 9.3
Average weighted 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 March 31,1996)
- ------------------------------
Years 5.28
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 itsportfolio also increases.
Premium Managed Bond schedule of investments begins on page 11.
6
March 31, 1996
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PREMIUM GOVERNMENT RESERVE & PREMIUM CAPITAL RESERVE
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MANAGEMENT Q & A
A discussion with Bob Gahagan, a portfolio manager on the Premium
Government Reserve and Premium Capital Reserve management team.
Q: How did the funds perform during the period?
A: Premium Government Reserve, which invests in short-term government
securities, posted a total return of 5.49%, compared to a 5.42% return on 90-day
Treasury bills. Premium Capital Reserve, which invests in a wider range of
short-term instruments, had a total return of 5.58%. As of March 31, their
current seven-day yields were 4.99% and 4.94%, respectively.
Q: How were the funds positioned over the past year?
A: Both funds had longer-than-average maturities during the first nine
months, when interest rates were falling significantly. At the peak, their
average maturities were nearly 70 days, compared to a norm of 50 to 60 days. By
January, however, we felt that further declines in short-term rates were
unlikely because the marketplace had priced in more credit-easing by the Fed
than was realistic. In response, we trimmed the average maturities back to more
normal or "neutral" levels.
As the year progressed, we continued to stress credit quality in the
Capital Reserve Fund. At the end of the period, we had invested 98% of the
portfolio in securities with the highest ratings: A-1+ or AAA. (Credit quality
is less of an issue for Government Reserve; the majority of its holdings are
backed by what is considered the strongest credit: the U.S. government and its
agencies.)
QUICK FUND FACTS
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PREMIUM GOVERNMENT RESERVE
--------------------------
STRATEGY:
High level of current
income consistent with
principal preservation.
INCEPTION DATE:
April 1, 1993
SIZE:
$26.2 million
(as of March 31, 1996)
WEIGHTED AVERAGE
PORTFOLIO MATURITY:
55 days
PREMIUM GOVERNMENT RESERVE
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AVERAGE ANNUAL TOTAL RETURNS**
PREMIUM 90-day
GOVERNMENT RESERVE Treasury Bill Index*
------------------ -------------------
Year ended 3/31/96 5.49% 5.42%
Inception 4/1/93 4.28% 4.50%
to 3/31/96
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SEVEN-DAY CURRENT YIELD (as of March 31, 1996)
Premium Government Reserve 4.99%
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ASSET ALLOCATION [pie chart]
(as of March 31, 1996)
Temporary Cash Investments 2%
U.S. Treasury Securities 6%
U.S. Government Agencies 92%
Percent of fund investments.
*Source: Lipper Analytical Services, Inc.
**Investments in these funds are not insured, nor are they guaranteed by the
U.S. government. While each fund seeks to maintain a stable net asset value of
$1.00 per share, there is no assurance that it will be able to do so.
7
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PREMIUM GOVERNMENT RESERVE & PREMIUM CAPITAL RESERVE
Q: Did you make any other changes to the funds?
A: With Premium Capital Reserve, the most significant adjustment was our
decision to eliminate the securities of Japanese banks and some Japanese
corporations from the portfolio. Six months ago we concluded that the persistent
recession in Japan, large portfolios of problem loans and various shortcomings
inherent in the Japanese banking system could cause that country's banks to
stumble. We trimmed our holdings before news broke that, in fact, a number of
Japanese banks had started to fail.
Though we sense that the deficiencies of the Japanese banking systems are
slowly being corrected, we are reluctant to own securities from financial
institutions in Japan until we have more confidence about the overall economic
picture there.
QUICK FUND FACTS
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PREMIUM CAPITAL RESERVE
-----------------------
STRATEGY:
High level of current
income consistent with
principal preservation.
INCEPTION DATE:
April 1, 1993
SIZE:
$133.4 million
(as of March 31, 1996)
WEIGHTED AVERAGE
PORTFOLIO MATURITY:
49 days
PREMIUM CAPITAL RESERVE
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AVERAGE ANNUAL TOTAL RETURNS**
PREMIUM 90-day
CAPITAL RESERVE Treasury Bill Index*
Year ended 3/31/96 5.58% 5.42%
Inception 4/1/93 4.35% 4.50%
to 3/31/96
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SEVEN-DAY CURRENT YIELD (as of March 31, 1996)
Premium Capital Reserve 4.94%
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ASSET ALLOCATION [pie chart]
(as of March 31, 1996)
Certificates of Deposit 5%
Municipal Obligations 1%
Other Corporate Debt 6%
U.S. GovernmentAgencies 8%
Commercial Paper 80%
Percent of fund investments.
*Source: Lipper Analytical Services, Inc.
**Investments in these funds are not insured, nor are they guaranteed by the
U.S. government. While each fund seeks to maintain a stable net asset value of
$1.00 per share, there is no assurance that it will be able to do so.
Premium Government Reserve and Premium Capital Reserve schedules of investments
begin on page 9.
8
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SCHEDULES OF INVESTMENTS March 31, 1996
PREMIUM GOVERNMENT RESERVE
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Principal Amount Value
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U.S. GOVERNMENT AGENCY DISCOUNT NOTES* -- 80.6%
$ 150,000 FHLB, 5.42%, 4-11-96 $ 149,774
3,000,000 FHLMC, 5.25%, 4-11-96 2,995,692
1,900,000 FNMA, 5.43%, 4-12-96 1,896,970
665,000 FHLMC, 5.25%, 4-18-96 663,320
1,500,000 FNMA, 5.36%, 4-22-96 1,495,380
1,500,000 FFCB, 5.30%, 4-23-96 1,495,325
160,000 FNMA, 5.36%, 4-26-96 159,396
795,000 FHLB, 5.36%, 4-29-96 791,692
190,000 FHLB, 5.40%, 5-1-96 189,141
1,000,000 FFCB, 5.30%, 5-8-96 994,625
900,000 FFCB, 5.30%, 5-13-96 894,351
1,000,000 FFCB, 5.30%, 5-21-96 992,750
1,000,000 FHLMC, 5.22%, 5-28-96 991,735
2,600,000 FNMA, 5.31%, 6-4-96 2,576,011
500,000 FHLB, 5.21%, 6-14-96 494,707
500,000 FHLMC, 5.22%, 6-21-96 494,195
180,000 FHLMC, 5.18%, 7-1-96 177,452
2,000,000 FHLB, 5.18%, 7-11-96 1,972,000
750,000 FHLB, 5.16%, 7-15-96 739,106
1,000,000 FHLB, 5.16%, 7-16-96 985,278
300,000 FNMA, 5.16%, 11-20-96 289,961
----------
21,438,861
----------
OTHER U.S. GOVERNMENT AGENCY SECURITIES* -- 11.8%
645,000 FHLB, 7.75%, 4-25-96 645,874
1,000,000 FHLB, 6.01%, 5-15-96 1,000,552
500,000 FNMA, 5.76%, 9-3-96 500,000
1,000,000 FFCB, VRN, MTN, 5.175%,
4-17-96, resets monthly off the
1-month LIBOR minus .20%
with no caps, final maturity
3-17-97 998,878
----------
3,145,304
----------
U.S. TREASURY SECURITIES* -- 5.7%
1,500,000 U.S. Treasury Note,
7.875%, 7-31-96 1,514,018
----------
TEMPORARY CASH INVESTMENTS -- 1.9%
Repurchase Agreement (Goldman Sachs & Co., Inc.),
5.30%, due 4-1-96; collateralized by $430,000 par value
U.S. TreasuryBonds, 8.875%, due 8-15-17
(Delivery value $513,227) 513,000
----------
TOTAL INVESTMENT SECURITIES-- 100.0% 26,611,183
==========
PREMIUM CAPITAL RESERVE
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Principal Amount Value
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COMMERCIAL PAPER*
AGRICULTURE -- 4.1%
$5,600,000 Cargill Financial Services Corp.,
5.45%, 7-9-96 (Acquired 11-7-95,
Cost $5,393,142)+ $ 5,516,070
----------
CHEMICALS & RESINS -- 1.9%
2,500,000 du Pont (E.I.) de Nemours &
Co., 5.50%, 8-1-96 (Acquired
8-10-95, Cost $2,363,646)+ 2,453,402
----------
COMMUNICATIONS EQUIPMENT -- 3.0%
4,000,000 Motorola Credit Corp.,
5.20%, 4-12-96 3,993,645
----------
COMPUTER SYSTEMS -- 3.7%
5,000,000 Hitachi Credit America Corp.,
5.44%, 4-30-96 4,978,089
----------
DIVERSIFIED COMPANIES -- 3.7%
5,000,000 General Electric Capital Corp.,
5.32%, 4-23-96 4,983,744
----------
See Notes to Financial Statements
9
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SCHEDULES OF INVESTMENTS (CONTINUED) March 31, 1996
PREMIUM CAPITAL RESERVE (CONTINUED)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
EDUCATION -- 8.4%
$5,000,000 Stanford University,
5.05%, 6-25-96 $ 4,940,382
6,300,000 Yale University, 5.25%, 4-23-96 6,279,788
----------
11,220,170
----------
ELECTRICAL & ELECTRONIC COMPONENTS -- 1.4%
1,900,000 Siemens Corp., 5.27%, 5-24-96 1,885,259
----------
FINANCIAL SERVICES -- 2.8%
2,200,000 Dresdner U.S. Finance Inc.,
5.45%, 4-2-96 2,199,667
1,600,000 Morgan Stanley Group, Inc.,
5.12%, 7-26-96 1,573,604
----------
3,773,271
----------
FOOD & BEVERAGE -- 2.5%
3,300,000 Bass Finance (CI) LTD, 5.17%, 4-1-96 3,300,000
----------
INSURANCE -- 13.1%
3,050,000 Aon Corp., 5.37%, 4-25-96 3,039,081
2,138,000 Metlife Funding Inc., 5.26%, 6-13-96 2,115,196
6,000,000 Principal Mutual Life Insurance Co.,
5.26%, 4-11-96 through 4-12-96 5,991,087
6,400,000 USAA Capital Corp., 5.17%, 4-25-96 6,377,941
----------
17,523,305
----------
PHARMACEUTICALS -- 9.3%
6,000,000 Sandoz Corp., 5.25%, 4-10-96 5,992,125
6,400,000 Warner-Lambert Co., 5.26%-5.50%,
5-3-96 through 7-24-96 6,355,766
----------
12,347,891
----------
RETAIL (GENERAL MERCHANDISE) -- 4.8%
6,400,000 Southland Corp., 5.18%, 4-24-96 6,378,820
----------
SOVEREIGN GOVERNMENTS &AGENCIES -- 16.6%
$6,200,000 National Australia Funding
5.36%, 4-8-96 6,193,538
3,000,000 Ontario Hydro, 5.35%, 4-15-96 2,993,758
1,200,000 Royal Bank of Canada, 5.29%, 6-17-96 1,186,422
5,500,000 Sweden (Kingdom of), 5.37%,
4-2-96 (Acquired 1-9-96,
Cost $5,431,085)+ 5,499,180
6,400,000 Toronto-Dominion Bank,
5.08%-5.60%, 4-22-96
through 6-24-96 6,345,605
----------
22,218,503
----------
UTILITIES (ELECTRIC) -- 4.8%
6,500,000 National Rural Utilities Cooperative
Finance Corp., 5.25%-5.27%,
5-7-96 through 5-13-96 6,463,629
----------
TOTAL COMMERCIAL PAPER-- 80.1% 107,035,798
-----------
CERTIFICATES OF DEPOSIT -- 5.2%
3,000,000 ABN Amro Bank Chicago,
5.54%, 11-6-96 3,000,152
4,000,000 Deutsche Bank Financial,
5.07%, 6-7-96 3,999,518
----------
6,999,670
----------
MUNICIPAL OBLIGATIONS -- 1.1%
1,500,000 Orange County, CA, VRN, 5.3125%
plus bonus of .95%, 4-1-96,
resets monthly off the 1-month LIBOR
with no caps, final maturity
6-30-96++ 1,500,000
----------
OTHER CORPORATE DEBT -- 6.0%
1,000,000 Abbey National Treasury, VRN, MTN,
5.31%, 4-21-96, resets monthly off
the 1-month LIBOR minus .10% with no
caps, final maturity 2-21-97 999,482
See Notes to Financial Statements
10
- --------------------------------------------------------------------------------
PREMIUM CAPITAL RESERVE (CONTINUED)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
$2,000,000 Bayerische Landesbank,
VRN, 5.16%, 4-3-96, resets
monthly off the 1-month
LIBOR minus .10% with no
caps, final maturity 3-3-97 $ 1,998,027
5,000,000 Wachovia Bank of NC, VRN, 5.1875%,
4-5-96, resets monthly off
the 1-month LIBOR minus .125%
with no caps, final maturity
1-3-97 4,996,448
----------
7,993,957
----------
U.S. GOVERNMENTAGENCY SECURITIES* -- 7.5%
3,500,000 FFCB, VRN, 5.175%, 4-17-96,
resets monthly off the 1-month
LIBOR minus .20% with no caps,
final maturity 3-17-97 3,496,074
2,000,000 FNMA, 5.59%, 7-1-96 1,999,444
3,500,000 FNMA, 5.30%, 12-26-96 3,510,574
1,000,000 SLMA, MTN, 5.90%, 10-4-96 1,000,000
----------
10,006,092
----------
TEMPORARY CASH INVESTMENTS -- 0.1%
153,000 Units of Temporary Investments,
Inc. (TempFund Portfolio) 153,000
----------
TOTAL INVESTMENT SECURITIES-- 100.0% $ 133,688,517
==========
PREMIUM MANAGED BOND
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
U.S. TREASURY SECURITIES* -- 24.8%
$1,000,000 U.S. Treasury Note,
4.375%, 11-15-96 $ 994,050
700,000 U.S. Treasury Note,
5.625%, 6-30-97 700,301
500,000 U.S. Treasury Note,
5.125%, 2-28-98 494,310
300,000 U.S. Treasury Note,
7.125%, 9-30-99 310,218
400,000 U.S. Treasury Note,
7.75%, 1-31-00 422,764
1,100,000 U.S. Treasury Note,
5.75%, 10-31-00 1,083,874
400,000 U.S. Treasury Bond,
7.125%, 2-15-23 412,384
300,000 U.S. Treasury Bond,
7.50%, 11-15-24 324,687
200,000 U.S. Treasury Bond,
6.875%, 8-15-25 203,154
300,000 U.S. Treasury Bond,
6.00%, 2-15-26 274,080
----------
(Cost $5,201,265) 5,219,822
----------
MORTGAGE-BACKED
SECURITIES** -- 15.1%
1,650,836 FNMA Pool #272894,
6.00%, 3-1-00 1,591,390
1,616,344 GNMA Pool #313107,
7.00%, 5-15-04 1,586,102
----------
(Cost $3,212,058) 3,177,492
----------
CORPORATE BONDS
AIRLINES -- 2.4%
500,000 Delta Air Lines, Inc.,
Equipment Trust Certificates,
7.541%, 10-11-11 495,600
----------
AUTOMOBILES & AUTO PARTS -- 2.6%
200,000 Ford Motor Credit Co.,
6.75%, 5-15-05 196,750
350,000 General Motors Co.,
7.00%, 6-15-03 352,625
----------
549,375
----------
See Notes to Financial Statements
11
- --------------------------------------------------------------------------------
SCHEDULES OF INVESTMENTS (CONTINUED) March 31, 1996
PREMIUM MANAGED BOND (CONTINUED)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
BANKING -- 6.9%
$ 400,000 Chase Manhattan Corp.,
8.80%, 2-1-00 $ 409,500
200,000 First Union Corp.,
8.77%, 11-15-04 214,750
300,000 First USA Bank,
5.75%, 1-15-99 294,375
500,000 National Bank of Canada,
8.125%, 8-15-04 531,875
----------
1,450,500
----------
CHEMICALS & RESINS -- 1.8%
300,000 ARCO Chemical Co.,
10.25%, 11-1-10 388,500
----------
COMMUNICATIONS SERVICES -- 1.9%
400,000 Motorola Inc., 6.50%, 9-1-25,
put date 9-1-05 399,500
----------
ENERGY (PRODUCTION & MARKETING) -- 4.0%
300,000 The Coastal Corp.,
10.25%, 10-15-04 359,625
500,000 Columbia Gas Systems,
6.80%, 11-28-05 492,500
----------
852,125
----------
FINANCIAL SERVICES -- 10.5%
500,000 Associates Corp., NA,
6.625%, 6-15-05 491,875
300,000 Lehman Brothers Holdings Inc.,
6.625%, 11-15-00 298,125
300,000 Merrill Lynch & Co., Inc.,
7.00%, 3-15-06 300,375
300,000 Paine Webber Group Inc.,
7.875%, 2-15-03 310,875
300,000 Shearson Lehman, MTN,
9.17%, 2-28-02 328,875
500,000 Spieker Properties,
6.80%, 12-15-01 487,500
----------
2,217,625
----------
FOOD & BEVERAGE -- 1.0%
$ 200,000 Seagram Co. Ltd.,
8.35%, 11-15-06 $ 219,000
----------
INSURANCE -- 2.8%
$ 300,000 Delphi Financial Group, Inc., 288,750
8%, 10-1-03
300,000 London Insurance Group, 295,500
6.875%, 9-15-05 ----------
584,250
----------
MEDIA & BROADCAST -- 1.4%
300,000 Time Warner Inc., 6.85%,
1-15-26, put date 1-15-03 293,625
----------
PAPER & FOREST PRODUCTS -- 1.7%
200,000 Boise Cascade Corp.,
9.45%, 11-1-09 233,500
100,000 Georgia-Pacific Corp.,
9.50%, 12-1-11 115,750
----------
349,250
----------
PHARMACEUTICALS -- 2.6%
500,000 Lilly (Eli) & Co., 8.375%, 2-7-05 554,375
----------
RETAIL (GENERAL MERCHANDISE) -- 1.7%
300,000 Sears, Roebuck & Co., Inc.,
9.375%, 11-1-11 356,625
----------
STEEL -- 1.4%
300,000 USX Corp., MTN, 7.75%, 1-21-98 306,000
----------
TOBACCO PRODUCTS -- 1.0%
200,000 Philip Morris Companies, Inc.,
7.625%, 5-15-02 207,750
----------
UTILITIES (ELECTRIC) -- 1.8%
400,000 Duke Power Co., 6.875%, 8-1-23 368,500
----------
TOTAL CORPORATE BONDS-- 45.5% 9,592,600
(Cost $9,609,199) ----------
See Notes to Financial Statements
12
- --------------------------------------------------------------------------------
PREMIUM MANAGED BOND (CONTINUED)
- --------------------------------------------------------------------------------
Principal Amount Value
- --------------------------------------------------------------------------------
SOVEREIGN GOVERNMENTS & AGENCIES -- 6.9%
$ 500,000 Hydro-Quebec, 8.05%, 7-7-24,
put date 7-7-06 $ 544,375
500,000 Korea Electric Power,
6.375%, 12-1-03 482,500
400,000 Province of Ontario Global
Bonds, 7.625%, 6-22-04 422,000
----------
(Cost $1,456,123) 1,448,875
----------
TEMPORARY CASH INVESTMENTS -- 7.7%
Repurchase Agreement (Goldman Sachs & Co., Inc.),
5.30%, due 4-1-96; collateralized by $475,000
par value U.S. Treasury Bonds, 11.62%,
due 11-15-02 (Delivery value $610,269) 610,000
1,003,000 Units of Participation in Provident
Institutional Funds (TempFund Portfolio) 1,003,000
----------
(Cost $610,269) 1,613,000
==========
TOTAL INVESTMENT SECURITIES-- 100.0% $ 21,051,789
(Cost $21,091,645) ==========
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
GNMA = Government National Mortgage Association
LIBOR = London Interbank Offered Rate
MTN = Medium Term Note
SLMA = Student Loan Marketing Association
resets = The frequency with which a fixed-income security's coupon changes,
based on current market conditions or an underlying index. The more
frequently a security resets, the less risk the investor is taking that the
coupon will vary significantly from current market rates.
VRN = Variable Rate Note, rates shown were effective at 3-31-96. Interest reset
date is indicated and used in calculating the average weighted portfolio
maturity.
* The rates for U.S. Government Agency Discount Notes and commercial paper are
the yield to maturity at March 31, 1996. The rates for U.S. Government Agency
securities and U.S. Treasury securities are the stated coupon rates.
** Remaining expected life is indicated and used for calculating the average
weighted portfolio maturity.
+ Private placement securities exempt from registration under rule 144A of the
Securities Act of 1933. These securities may only be resold in transactions
exempt from registration, normally to qualified institutional investors. The
aggregate value of these securities at March 31, 1996, was $13,468,652, which
represented 10.1% of the net assets of Premium Capital Reserve.
++ This security has been downgraded by both Moody's and S&P, due to the
bankruptcy filing of Orange County, California. The Board of Directors made
the determination 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. The terms of this security were revised in 1995 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. The market value of this security on March 31, 1996
was $1,468,200.
See Notes to Financial Statements
13
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
STATEMENTS OF ASSETS AND LIABILITIES
PREMIUM PREMIUM PREMIUM
GOVERNMENT CAPITAL MANAGED
March 31, 1996 RESERVE RESERVE BOND
-----------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C>
Investment securities, at value
(amortized cost for Government
Reserve and Capital Reserve; identified
cost of $21,091,645
for Managed Bond)(Note 3)................ $26,611,183 $133,688,517 $21,051,789
Cash........................................ 4,151 515,538 32,551
Receivable for investments sold............. -- -- 473,594
Interest receivable......................... 71,566 275,657 318,164
---------- ---------- ----------
26,686,900 134,479,712 21,876,098
---------- ---------- ----------
LIABILITIES
Disbursements in excess of demand
deposit cash............................. 476,623 882,637 --
Payable for investments purchased........... -- -- 1,579,584
Payable for capital shares redeemed......... 1,038 86,315 2,393
Accrued management fees (Note 2)............ 10,606 50,816 7,255
Dividends payable........................... 7,852 43,062 7,339
Other liabilities........................... 17 217 10
---------- ---------- ----------
496,136 1,063,047 1,596,581
---------- ---------- ----------
NET ASSETS APPLICABLE TO
OUTSTANDING SHARES....................... $26,190,764 $133,416,665 $20,279,517
========== ========== ==========
CAPITAL SHARES, $.01 PAR VALUE
Authorized..................................1,000,000,000 1,000,000,000 100,000,000
========== ========== ==========
Outstanding................................. 26,190,764 133,417,304 2,041,414
========== ========== ==========
NET ASSET VALUE PER SHARE................... $ 1.00 $ 1.00 $ 9.93
========== ========== ==========
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus)..... $26,190,764 $133,417,323 $20,339,976
Accumulated undistributed net realized
(loss) from security transactions....... -- (658) (20,603)
Net unrealized (depreciation) on
investments (Note 3).................... -- -- (39,856)
---------- ---------- ----------
$26,190,764 $133,416,665 $20,279,517
========== ========== ==========
See Notes to Financial Statements
</TABLE>
14
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
PREMIUM PREMIUM PREMIUM
GOVERNMENT CAPITAL MANAGED
March 31, 1996 RESERVE RESERVE BOND
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
INVESTMENT INCOME
Interest income............................. $ 1,223,656 $ 8,305,914 $ 1,037,250
---------- ---------- ----------
Expenses:
Management fees (Note 2).................... 93,671 626,948 68,907
Directors' fees and expenses................ 272 1,835 197
---------- ---------- ----------
93,943 628,783 69,104
---------- ---------- ----------
NET INVESTMENT INCOME....................... 1,129,713 7,677,131 968,146
---------- ---------- ----------
REALIZED AND UNREALIZED GAINON INVESTMENTS (Note 3)
Net realized gainon investments............. -- 1,221 164,018
Change in net unrealized gain on investments -- -- 261,690
---------- ---------- ----------
NET GAIN ON INVESTMENTS..................... -- 1,221 425,708
---------- ---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS................ $1,129,713 $7,678,352 $1,393,854
========== ========== ==========
See Notes to Financial Statements
</TABLE>
15
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------
STATEMENTS OF CHANGES IN NET ASSETS
PREMIUM
Years Ended March 31, 1996 GOVERNMENT
and March 31, 1995 RESERVE
- -----------------------------------------------------------------------------------------------
1996 1995
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
<S> <C> <C>
Net investment income.................................... $ 1,129,713 $450,343
Net realized gain (loss) on investments.................. -- --
Change in net unrealized appreciation on investments..... -- --
---------- ----------
Net increase in net assets resulting from operations..... 1,129,713 450,343
---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income............................... (1,129,713) (450,343)
---------- ----------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold................................ 39,673,000 21,734,495
Proceeds from reinvestment of distributions.............. 1,068,845 439,332
Payments for shares redeemed............................. (30,931,876) (11,251,555)
---------- ----------
Net increase (decrease) in net assets from
capital share transactions.......................... 9,809,969 10,922,272
---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS......................... 9,809,969 10,922,272
NET ASSETS
Beginning of year........................................ 16,380,795 5,458,523
---------- ----------
End of year.............................................. $26,190,764 $16,380,795
========== ==========
TRANSACTIONS IN SHARES OF THE FUNDS:
Sold..................................................... 39,673,000 21,734,495
Issued in reinvestment of distributions.................. 1,068,845 439,332
Redeemed................................................. (30,931,876) (11,251,555)
---------- ----------
Net increase (decrease).................................. 9,809,969 10,922,272
========== ==========
See Notes to Financial Statements
</TABLE>
16
<TABLE>
<CAPTION>
PREMIUM PREMIUM
Years Ended March 31, 1996 CAPITAL MANAGED
and March 31, 1995 RESERVE BOND
- ------------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS 1996 1995 1996 1995
OPERATIONS
<S> <C> <C> <C> <C>
Net investment income.................................... $7,677,131 $2,672,163 $968,146 $538,013
Net realized gain (loss) on investments.................. 1,221 (1,879) 164,018 (105,993)
Change in net unrealized appreciation on investments..... -- -- 261,690 12,200
---------- ---------- ---------- ----------
Net increase in net assets resulting from operations..... 7,678,352 2,670,284 1,393,854 444,220
---------- ---------- ---------- ----------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income............................... (7,677,131) (2,672,163) (968,146) (538,013)
---------- ---------- ---------- ----------
CAPITAL SHARE TRANSACTIO
Proceeds from shares sold................................ 299,774,625 151,700,499 14,360,300 4,647,560
Proceeds from reinvestment of distributions.............. 7,350,635 2,620,638 949,722 540,493
Payments for shares redeemed............................. (312,138,031) (54,713,857) (5,790,446) (2,839,612)
---------- ---------- ---------- ----------
Net increase (decrease) in net assets from
capital share transactions.......................... (5,012,771) 99,607,280 9,519,576 2,348,441
---------- ---------- ---------- ----------
NET INCREASE (DECREASE) IN NET ASSETS......................... (5,011,550) 99,605,401 9,945,284 2,254,648
NET ASSETS
Beginning of year........................................ 138,428,215 38,822,814 10,334,233 8,079,585
---------- ---------- ---------- ----------
End of year.............................................. $133,416,665 $ 138,428,215 $ 20,279,517 $ 10,334,233
========== ========== ========== ==========
TRANSACTIONS IN SHARES OF THE FUNDS:
Sold..................................................... 299,774,625 151,700,499 1,428,902 500,181
Issued in reinvestment of distributions.................. 7,350,635 2,620,638 94,806 57,827
Redeemed................................................. (312,138,050) (54,713,857) (574,171) (304,557)
---------- ---------- ---------- ----------
Net increase (decrease).................................. (5,012,790) 99,607,280 949,537 253,451
========== ========== ========== ==========
See Notes to Financial Statements
</TABLE>
17
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS March 31, 1996
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
management 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 held by 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 cost 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 their 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 income taxes.
Distributions to Shareholders--
Premium Capital Reserve and Premium Government Reserve declare dividends
daily from total net investment income which are distributed monthly. Net
investment income dividends from Premium Managed Bond 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 make 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, 1996, Premium Managed Bond
has an accumulated net realized capital loss carryover of $11,160 (expiring in
2003) which
18
- --------------------------------------------------------------------------------
may be used to offset future taxable 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.
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
closing value of such Fund's net assets 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%.
3. INVESTMENT TRANSACTIONS
Premium Managed Bond had purchases and sales (excluding short-term
securities) for the year ended March 31, 1996, of $11,722,989 and $8,461,915,
respectively, for U.S. government obligations;* purchases and sales of corporate
obligations were $11,599,057 and $5,345,741, respectively.
As of March 31, 1996, the aggregate cost of investments for federal income
tax purposes for Premium Managed Bond was $21,101,089. The composition of
unrealized appreciation and (depreciation) of investment securities based on the
federal tax cost was $209,161 and $258,461, respectively. Net unrealized
depreciation based on cost for federal income tax purposes was $49,300.
19
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (For a Share Outstanding Throughout the Period)
INCOME FROM
INVESTMENT OPERATIONS DISTRIBUTIONS
------------------------------------------------ -------------------------
Net Realized
and
Net Asset Unrealized Total Dividends Net Asset
Value, Net Gains from from Net Value,
Beginning Investment (Losses) on Investment Investment Total End of
of Period Income Securities Operations Income Distributions Period
PREMIUM GOVERNMENT RESERVE
Year Ended March 31,
<S> <C> <C> <C> <C> <C> <C> <C>
1994 $1.00 $.027 -- $.027 $(.027) $(.027) $1.00
1995 1.00 .045 -- .045 (.045) (.045) 1.00
1996 1.00 .053 -- .053 (.053) (.053) 1.00
PREMIUM CAPITAL RESERVE
Year Ended March 31,
1994 $1.00 $.028 -- $.028 $(.028) $(.028) $1.00
1995 1.00 .046 -- .046 (.046) (.046) 1.00
1996 1.00 .054 -- .054 (.054) (.054) 1.00
PREMIUM MANAGED BOND
Year Ended March 31,
1994 $10.00 $.462 $(.360) $ .102 $(.462) $(.462) $9.64
1995 9.64 .588 (.180) .408 (.588) (.588) 9.46
1996 9.46 .607 .470 1.077 (.607) (.607) 9.93
(table continued below)
RATIOS/SUPPLEMENTAL DATA
---------------------------------------------------
(table continued) Ratio of Ratio of Net
Operating Investment Net
Expenses Income to Portfolio Assets,
Total to Average Average Turnover End of
Return Net Assets Net Assets Rate Period
PREMIUM GOVERNMENT RESERVE
Year Ended March 31,
1994 2.75% .45% 2.72% -- $ 5,458,523
1995 4.62% .45% 4.84% -- 16,380,795
1996 5.49% .44% 5.30% -- 26,190,764
PREMIUM CAPITAL RESERVE
Year Ended March 31,
1994 2.81% .45% 2.83% -- $ 38,822,814
1995 4.66% .45% 4.76% -- 138,428,215
1996 5.58% .45% 5.50% -- 133,416,665
PREMIUM MANAGED BOND
Year Ended March 31,
1994 .92% .45% 4.65% 144% $ 8,079,585
1995 4.48% .45% 6.30% 51% 10,334,233
1996 11.53% .43% 6.08% 92% 20,279,517
See Notes to Financial Statements
</TABLE>
20
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
The Shareholders and Board of Directors
Twentieth Century Premium Reserves, Inc.
We have audited the accompanying statements of assets and liabilities of
Twentieth Century Premium Reserves, Inc. (comprised of the Premium Government
Reserve, Premium Capital Reserve and Premium Managed Bond portfolios) (the
Funds), including the schedules of investments, as of March 31, 1996, and the
related statements of operations for the year then ended and statements of
changes in net assets for each of the two years then ended and the financial
highlights for each of the three years then ended. These financial statements
and financial highlights are the responsibility of the Funds' management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and the financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements.
Our procedures included confirmation of securities owned as of March 31,
1996, by correspondency with the custodian. As to securities relating to
uncompleted transactions, we performed other audit procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the financial position of
each of the respective Funds comprising Twentieth Century Premium Reserves, Inc.
at March 31, 1996, and the results of their operations, changes in their net
assets, and the financial highlights for the periods indicated above, in
conformity with generally accepted accounting principles.
/s/Ernst & Young LLP
Kansas City, Missouri
April 26, 1996
21
TWENTIETH CENTURY PREMIUM RESERVES, INC. TWENTIETH CENTURY
Premium Reserves
Investment Manager
INVESTORS RESEARCH CORPORATION Annual Report
Kansas City, Missouri
March 31, 1996
This report and the financial
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.
[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
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Fax: 816-340-7962
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[company logo]
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SH-BKT-4826
9605 Recycled
Twentieth Century Services, Inc.
Twentieth Century Securities, Inc.
