ANNUAL
REPORT
[american century logo(reg. sm)]
American
Century(reg.tm)
MARCH 31, 1998
BENHAM
GROUP
Premium Government Reserve
Premium Capital Reserve
TABLE OF CONTENTS
Report Highlights ......................................................... 1
Our Message to You ........................................................ 2
Services Update ........................................................... 3
Credit Review ............................................................. 4
Premium Government Reserve
Performance & Portfolio Information ............................ 5
Management Q & A ............................................... 6
Schedule of Investments ........................................ 8
Financial Highlights ........................................... 20
Premium Capital Reserve
Performance & Portfolio Information ............................ 9
Management Q & A ............................................... 10
Schedule of Investments ........................................ 12
Financial Highlights ........................................... 21
Statements of Assets and Liabilities ...................................... 15
Statements of Operations .................................................. 16
Statements of Changes in Net Assets ....................................... 17
Notes to Financial Statements ............................................. 18
Independent Auditors' Report .............................................. 22
Retirement Account Information ............................................ 23
Background Information
Investment Philosophy & Policies ............................... 24
Comparative Indices ............................................ 24
Lipper Rankings ................................................ 24
Investment Team Leaders ........................................ 24
Glossary .................................................................. 25
American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios.
We've organized our funds into three distinct groups, based on investment style
and objectives, to help simplify your fund decisions. These groups appear below.
AMERICAN CENTURY INVESTMENTS--FAMILY OF FUNDS
- -------------------------------------------------------------------------------
Benham American Century Twentieth Century
Group Group Group
- -------------------------------------------------------------------------------
MONEY MARKET FUNDS ASSET ALLOCATION & GROWTH FUNDS
GOVERNMENT BOND FUNDS BALANCED FUNDS INTERNATIONAL FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS
- -------------------------------------------------------------------------------
Premium Government Reserve
Premium Capital Reserve
We welcome your comments or questions about this report. See the back cover for
ways to contact us by mail, phone or e-mail.
American Century and Benham Group are registered marks of American Century
Services Corporation.
AMERICAN CENTURY INVESTMENTS
REPORT HIGHLIGHTS
CREDIT REVIEW
* Corporate credit conditions remained healthy during the past year.
* Thanks to our credit research team, our money market funds have avoided
Japanese banks, which continued to deteriorate as a result of the Asian
financial meltdown.
* Our credit team has doubled in size over the past year; a larger and more
diverse group will give us a better opportunity to add value to our funds.
PREMIUM GOVERNMENT RESERVE
* The fund returned 5.25% for the fiscal year ended March 31, 1998. (See Total
Returns on page 5.)
* We shortened Premium Government Reserve's average maturity in early 1998
because we weren't getting much extra yield for longer-maturity securities.
* With money market yields in a narrow range, we bought more agency securities
when yields were at the top of the range and did more selling when yields
were at the bottom of the range.
* We cut back on government discount notes because we found more attractive
values among traditional government notes.
* It's likely that the Federal Reserve will keep interest rates steady in the
coming months, but if the Fed moves, we expect it to raise rates.
* We plan to maintain the portfolio's current neutral positioning until there
is a clearer direction for interest rates.
PREMIUM CAPITAL RESERVE
* The fund returned 5.38% for the fiscal year ended March 31, 1998 (See Total
Returns on page 9.)
* We left the portfolio in a neutral position for most of the period,
reflecting the prevailing uncertainty about the future direction of interest
rates.
* The financial crisis in Southeast Asia had little impact on Premium Capital
Reserve. We reduced our modest Japanese industrial holdings and replaced
them with higher-quality U.S. securities.
* To help boost the fund's yield, we bought more variable-rate notes, whose
yields are typically higher than those of fixed-rate securities.
* We believe interest rates should remain stable in the near term, especially
while U.S. economic strength and Asian economic weakness continue to offset
each other.
* As long as interest rates remain stable, we plan to maintain the portfolio's
current neutral positioning. In addition, we'll look to diversify our
holdings with commercial paper issued by U.S. industrial companies.
PREMIUM
GOVERNMENT RESERVE
TOTAL RETURNS: AS OF 3/31/98
6 Months 2.59%*
1 Year 5.25%
7-DAY CURRENT YIELD: 5.10%
NET ASSETS: $44.5 million
(AS OF 3/31/98)
INCEPTION DATE: 4/1/93
TICKER SYMBOL: TWPXX
PREMIUM
CAPITAL RESERVE
TOTAL RETURNS: AS OF 3/31/98
6 Months 2.67%*
1 Year 5.38%
7-DAY CURRENT YIELD: 5.22%
NET ASSETS: $182.5 million
(AS OF 3/31/98)
INCEPTION DATE: 4/1/93
TICKER SYMBOL: TCRXX
* Not annualized.
Past performance does not guarantee future results.
Money market funds are neither insured nor guaranteed by the U.S. government.
Yields will fluctuate, and there can be no assurance that the funds will be able
to maintain a stable $1.00 share price.
ANNUAL REPORT REPORT HIGHLIGHTS 1
OUR MESSAGE TO YOU
[photo of James E. Stowers, Jr. and James E. Stowers III]
During the 12 months ended March 31, 1998, the Federal Reserve held
short-term interest rates steady against a backdrop of low inflation, an
improving federal budget, and a healthy economy. As a result, money market
yields were relatively stable. Shareholders in Premium Government Reserve and
Premium Capital Reserve continued to enjoy competitive money market returns.
The past year has been eventful for American Century. We gained a powerful
business partner in January, when J.P. Morgan became a substantial minority
shareholder. The new business partnership will allow both companies to offer
investors a highly diverse menu of investment options and services.
Another significant event was the retirement of Jim Benham, founder of the
Benham Group, in December. With the integration of Benham and Twentieth Century
successfully completed, Jim felt it was time to step back from the business.
Much of the Benham culture has become a part of American Century, including the
educational investor seminar program Jim created. Two of his sons, Jim A. Benham
and Tim Benham, remain with the company to carry on the Benham tradition.
We're also working hard to prepare our computer systems for the year 2000
(Y2K). The Y2K problem, which has been widely publicized in the financial press,
refers to the possible inability of computer systems to distinguish between the
years 1900 and 2000 when the new millenium begins. Like other financial
companies, many of our computer operations involve some type of date comparison
or date calculation. Although much of our system is already Y2K compliant, we
anticipate the rest will be in compliance by the end of this year.
In closing, we are proud to note that 1998 marks the 40th year since
American Century launched its first mutual funds. Not many fund companies can
claim a 40-year track record, or a fund family that includes nearly 70 stock,
bond, money market and blended (stock and bond) funds that provide investors
with such a wide range of choice and flexibility. We believe American Century
has an outstanding group of funds to help you reach your financial goals.
Thank you for your investment.
Sincerely,
/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Chief Executive Officer
2 OUR MESSAGE TO YOU AMERICAN CENTURY INVESTMENTS
SERVICES UPDATE
We get many questions from money market investors about our services. Here
are answers to several frequently asked questions.
IS THERE A FEE FOR WRITING CHECKS AGAINST MY MONEY MARKET FUND?
No. You can write as many checks as you want at no charge, as long as each
one is for $100 or more.
BESIDES WRITING A CHECK, HOW ELSE CAN I ACCESS MY MONEY?
There are a couple of easy ways. First, we can send a check directly to you
at your address of record. All you need to do is give us a call or write us a
letter requesting the check, and we'll send it right out to you.
We can also make automatic deposits from your money market fund to your bank
account. Just make sure we have all of your bank information on file, and then
give us a call to request a direct transfer to your bank account.
IS THERE A LIMIT TO THE NUMBER OF EXCHANGES I CAN MAKE OUT OF MY MONEY MARKET
FUND?
No. Exchanges involve moving money from one American Century fund to
another. Although there is a limit of six exchanges per calendar year out of our
bond and stock funds, there is no limit for money market funds.
Exchanges can be made by:
* calling an Investor Services representative
(1-800-345-2021)
* dialing into our Automated Information Line
(1-800-345-8765)
* writing us a letter
* connecting to our Web site
(www.americancentury.com)
You can also make exchanges through our Automatic Exchange plan or Open
Order service.
HOW DO OPEN ORDERS WORK?
Open Orders enable you to buy or sell shares in a mutual fund automatically
at a price you designate. Here's how it works:
* To Buy--select a fund in which you wish to invest and specify a price at
which you'd like to buy shares. Because the object is to buy low, the price
you specify must be at or below the fund's last closing price. If the fund's
price closes at or below your specified price, we will automatically move
the amount you designated from your money market fund into an account in the
fund you selected.
* To Sell--select a fund in which you own shares and specify a price at which
you'd like to sell them. Because the object is to sell high, the price you
specify must be at or above the fund's last closing price (we can't place
stop-loss orders). If the fund's price closes at or above your specified
price, we'll sell the number of shares you designated and move the proceeds
into your money market fund.
Some other notes about Open Orders:
* Open Orders last for a maximum of 90 days and may be canceled or extended
whenever you choose.
* Once you've placed, canceled, or modified your Open Order, we'll send a
letter confirming your decision to your address of record.
IF YOU HAVE ANY QUESTIONS ABOUT OUR SERVICES, CALL US TOLL-FREE AT
1-800-345-2021 OR E-MAIL US AT OUR WEB SITE (WWW.AMERICANCENTURY.COM).
ANNUAL REPORT SERVICES UPDATE 3
CREDIT REVIEW
CREDIT CONDITIONS STILL STRONG OVERALL
During the year ended March 31, 1998, corporate credit conditions in the
U.S. remained healthy. The U.S. economy grew by 3.6% for the year, which boosted
earnings growth for many businesses and helped keep corporate credit quality at
its highest level this decade.
ASIAN FLU
We've written before about the domestic problems facing Japanese banks, from
overcapacity to weak underwriting to bad real estate loans. The financial
meltdown in Asia has broadened the scope of their problems and further weakened
their credit quality. By repeating domestic lending mistakes across Asia,
Japanese banks have become more vulnerable than ever.
Our credit research team anticipated the Japanese banking system's problems
some time ago. Our money market funds have not invested in any securities issued
or backed by Japanese banks over the past year, and there are no Japanese banks
currently on our "approved list"--the list of money market security issuers that
meet our stringent internal credit requirements.
It is clear that the Japanese government needs to take some corrective
action to reform its banking system, but instead it is simply pouring money into
the system just to keep it afloat. Until serious reform occurs (if it ever
does), our funds will continue to stay away from the Japanese banking sector.
In contrast, there are several non-financial Japanese companies on our
approved list. These companies have several characteristics that we like:
* WORLDWIDE FOCUS--they do business on a global scale, and by exporting to
other regions, they've been able to offset economic weakness at home.
* MARKET DOMINATION--they are among the top companies in their respective
industries worldwide.
* DEEP POCKETS--all have the financial resources to survive challenges like
the Asian economic downturn.
CREDIT TEAM EXPANSION
American Century's corporate credit analysis team added four members during
the fiscal year ended March 31, bringing the total number of analysts to nine.
The tenth member of our team will begin in June.
A larger and more diverse credit team gives us a better opportunity to add
value to our funds. For example, we've expanded our international expertise,
which gives our fund managers more investment alternatives without compromising
our high credit standards.
In addition, we are able to look into and get comfortable in complex areas
that others are not as familiar with, such as asset-backed securities. As a
result, our management teams can get better value out of their investments in
these areas.
- --------------------------------------------------------------------------------
CORPORATE CREDIT RESEARCH TEAM
- --------------------------------------------------------------------------------
Director Greg Afiesh
Senior Analyst Ed Grant
Analysts Michael Difley, Kristine Iwafuchi, Lynda Lowry,
Gina Sanchez, Tom Vaiana, Daniel Baker
Associate Analysts Sudha Mani, Kalpesh Dadbhawala
- --------------------------------------------------------------------------------
4 CREDIT REVIEW AMERICAN CENTURY INVESTMENTS
<TABLE>
<CAPTION>
PREMIUM GOVERNMENT RESERVE
AVERAGE ANNUAL RETURNS
6 MONTHS 1 YEAR 3 YEARS LIFE OF FUND(2)
- ------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF MARCH 31, 1998(1)
<S> <C> <C> <C> <C>
Premium Government Reserve ............... 2.59% 5.25% 5.27% 4.63%
90-Day Treasury Bill Index ............... 2.14% 4.74% 5.10% 4.67%
Average Institutional U.S. Government
Money Market Fund(3) ..................... 2.63% 5.33% 5.33% 4.74%(4)
Fund's Ranking Among Institutional
U.S. Government Money Market Funds(3) .... -- 54 out of 81 44 out of 69 37 out of 49(4)
</TABLE>
(1) Returns for periods less than one year are not annualized.
(2) Inception date was April 1, 1993.
(3) According to Lipper Analytical Services.
(4) Since 4/30/93, the date nearest the fund's inception for which data are
available.
See pages 24-25 for more information about returns, the comparative index and
Lipper fund rankings.
YIELDS AS OF MARCH 31, 1998
7-DAY 7-DAY
CURRENT EFFECTIVE
YIELD YIELD
Premium Government Reserve 5.10% 5.23%
Yields are defined in the Glossary on page 25.
PORTFOLIO AT A GLANCE
3/31/98 3/31/97
Number of Securities 27 29
Weighted Average Maturity 49 days 40 days
Expense Ratio 0.45% 0.45%
Past performance does not guarantee future results.
Money market funds are neither insured nor guaranteed by the U.S. government.
Yields will fluctuate, and there can be no assurance that the fund will be able
to maintain a stable $1.00 share price.
Many of the investment terms in this report are defined in the Glossary on page
25.
ANNUAL REPORT PREMIUM GOVERNMENT RESERVE 5
PREMIUM GOVERNMENT RESERVE
MANAGEMENT Q & A
An interview with Amy O'Donnell, a portfolio manager on the Premium
Government Reserve fund investment team.
HOW DID THE FUND PERFORM DURING THE PAST YEAR?
For the fiscal year ended March 31, 1998, Premium Government Reserve's total
return was 5.25%, compared with the 5.33% average return of the 81
"Institutional U.S. Government Money Market Funds" tracked by Lipper Analytical
Services. (See the Total Returns table on the previous page for other fund
performance comparisons.)
Although the fund is categorized as an institutional fund, it is intended
for "high net worth" individuals rather than institutions. Institutional funds
tend to have higher minimum balances (e.g., $1 million or more) and lower
expenses (an average of 0.18% per year, compared to the fund's 0.45%). However,
for individuals who are able to meet Premium Government Reserve's $100,000
minimum investment, the fund generally provides better yields than are available
from non-institutional government money market funds.
For example, the fund's 7-day effective yield as of March 31, 1998, was
5.23%, compared with the 5.00% yield of the average non-institutional government
money market fund (according to Lipper).
YOU SHORTENED THE FUND'S AVERAGE MATURITY DURING THE PAST SIX MONTHS. WHY?
In the first quarter of 1998, many market participants began to expect the
Federal Reserve to lower interest rates. As a result, investors pushed the
yields on longer-term money market securities lower. We sold many of the fund's
longer-term securities at a profit and invested in shorter-term securities
without giving up much yield. These transactions shortened the fund's average
maturity from around 60 days at the end of 1997 to 45-50 days in March.
Overall, though, we remained pretty neutral throughout the fiscal year. We
consider an average maturity of 40-60 days to be a neutral position for the
fund. We take a neutral position when we're unsure about the future direction of
interest rates. With the economic turmoil in Asia calling into question further
U.S. economic growth, we didn't feel that there was an iron-clad case for
believing that short-term interest rates would rise or fall.
WHY DID YOU REDUCE THE FUND'S STAKE IN GOVERNMENT AGENCY DISCOUNT NOTES OVER THE
PAST SIX MONTHS (SEE THE ACCOMPANYING CHART)?
We found more attractive securities in other segments of the market. For
instance, we added some agency notes issued by the Federal Farm Credit Bank
(FFCB) in December when they offered better yields than many discount notes.
[pie charts]
PORTFOLIO COMPOSITION BY SECURITY TYPE (as of 3/31/98)
U.S. Government Agency
Discount Notes 66%
U.S. Government
Agency Notes 30%
Repurchase Agreements 4%
PORTFOLIO COMPOSITION BY SECURITY TYPE (as of 9/30/97)
U.S. Government Agency
Discount Notes 93%
U.S. Government Agency
Variable-Rate Notes 4%
U.S. Government
Agency Notes 3%
6 PREMIUM GOVERNMENT RESERVE AMERICAN CENTURY INVESTMENTS
PREMIUM GOVERNMENT RESERVE
In addition, we found opportunities to buy traditional government agency
notes in "odd lots." An odd lot is a security trade for less than the normal
trading unit of a million dollars. Because of their unusual size, odd lots often
have higher yields than comparable conventional (or round) lots. Finding good
deals among odd lots helped us enhance the fund's yield.
WHAT OTHER STRATEGIES DID YOU USE TO ENHANCE RETURNS?
One strategy was "range trading," which we use when money market yields
remain in a very narrow range, as they did during much of the past six months.
When market forces--such as supply and demand imbalances or unexpected economic
news--pushed yields to the high end of this range, we tended to buy agency
securities; when yields dipped to the low end of the range, we did more selling.
By actively exploiting these opportunities, we were able to increase total
returns.
WHAT ARE REPURCHASE AGREEMENTS AND WHY ARE THEY IN THE FUND'S PORTFOLIO?
In a repurchase agreement, also known as a "repo," the fund buys U.S.
government securities from a seller, and the seller agrees to buy the securities
back at a prearranged price and date. The repos we invested in were very liquid,
short-term securities with maturities of one to seven days.
Repos are a good place to park cash temporarily while we look for other
investment opportunities, but the main reason we're currently holding them is
because their yields tend to spike up at the end of calendar quarters. As we
went into the end of the first quarter -- which coincides with the end of the
fund's fiscal year -- we increased our holdings in repos to take advantage of
that phenomenon.
WHAT'S YOUR OUTLOOK FOR INTEREST RATES OVER THE NEXT SIX MONTHS?
The answer hinges in large part on the economic health of Asia. When
problems in that region first surfaced last year, many observers argued that the
U.S. economy would slow in response and inflationary threats would cool.
However, recent evidence indicates that the effects of Asia's turmoil on the
U.S. economy have been fairly mild. Unless the Asian crisis has a more dramatic
slowing effect on U.S. economic growth in the months to come, there could be
upward pressure on interest rates.
We believe there's about an even chance that the Fed will hold rates steady
over the near term. But if the Fed chooses to act, we think that it is more
likely to raise rates to stave off potential inflation rather than to cut them
to stimulate the economy.
WITH THAT OUTLOOK IN MIND, WHAT IS YOUR STRATEGY GOING FORWARD?
Until we have a better feel for where interest rates are headed, we plan to
keep the fund's average maturity in a neutral range. That way, we'll be able to
reinvest assets quickly to capture rising yields if the Fed raises interest
rates.
[pie charts]
PORTFOLIO COMPOSITION BY MATURITY (as of 3/31/98)
1-30 Days 47%
31-60 Days 21%
61-90 Days 12%
91-180 Days 16%
181-397 Days 4%
PORTFOLIO COMPOSITION BY MATURITY (as of 9/30/97)
1-30 Days 70%
31-60 Days 1%
61-90 Days 7%
91-180 Days 22%
ANNUAL REPORT PREMIUM GOVERNMENT RESERVE 7
SCHEDULE OF INVESTMENTS
PREMIUM GOVERNMENT RESERVE
MARCH 31, 1998
Principal Amount Value
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY DISCOUNT NOTES(1)
$1,482,000 FHLB Discount Note, 5.48%,
7/6/98 $ 1,460,343
3,000,000 FHLMC Discount Note, 5.39%,
4/15/98 2,993,712
5,000,000 FHLMC Discount Note, 5.60%,
4/23/98 4,982,889
816,000 FHLMC Discount Note, 5.48%,
4/24/98 813,143
5,000,000 FHLMC Discount Note, 5.38%,
4/30/98 4,978,351
1,500,000 FHLMC Discount Note, 5.40%,
6/4/98 1,485,600
1,000,000 FHLMC Discount Note, 5.29%,
6/12/98 989,420
300,000 FNMA Discount Note, 5.55%,
4/7/98 299,722
400,000 FNMA Discount Note, 5.48%,
4/9/98 399,513
900,000 FNMA Discount Note, 5.47%,
5/7/98 895,077
2,000,000 FNMA Discount Note, 5.40%,
5/11/98 1,988,000
1,277,000 FNMA Discount Note, 5.37%,
5/14/98 1,268,809
3,000,000 FNMA Discount Note, 5.37%,
5/18/98 2,978,967
2,000,000 FNMA Discount Note, 5.37%,
5/20/98 1,985,382
963,000 FNMA Discount Note, 5.41%,
6/5/98 953,593
328,000 FNMA Discount Note, 5.45%,
6/12/98 324,425
128,000 FNMA Discount Note, 5.45%,
6/17/98 126,508
143,000 FNMA Discount Note, 5.45%,
6/24/98 141,182
1,000,000 FNMA Discount Note, 5.39%,
7/14/98 984,429
900,000 FNMA Discount Note, 5.38%,
8/20/98 881,035
---------------------
TOTAL U.S. GOVERNMENT
AGENCY DISCOUNT NOTES--66.2% 30,930,100
---------------------
Principal Amount Value
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES(1)
$5,000,000 FFCB, 5.62%, 4/1/98 $ 5,000,000
2,000,000 FFCB, 5.65%, 7/1/98 1,999,965
1,700,000 FHLB, 5.79%, 10/23/98 1,701,782
2,000,000 FNMA, 6.00%, 4/17/98 2,000,178
2,000,000 FNMA MTN, VRN, 5.32%, 7/1/98 1,997,836
1,460,000 SLMA, 6.25%, 6/30/98 1,462,341
---------------------
TOTAL U.S. GOVERNMENT
AGENCY SECURITIES--30.3% 14,162,102
---------------------
TEMPORARY CASH INVESTMENTS--3.5%
Repurchase Agreement, Merrill Lynch & Co.,
Inc., (U.S. Treasury obligations), in a joint
trading account at 5.90%, dated 3/31/98,
due 4/1/98 (Delivery value $1,623,266) 1,623,000
---------------------
TOTAL INVESTMENT SECURITIES--100.0% $46,715,202
=====================
NOTES TO SCHEDULE OF INVESTMENTS
FFCB = Federal Farm Credit Bank
FHLB = Federal Home Loan Bank
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
MTN = Medium Term Note
SLMA = Student Loan Marketing Association
VRN = Variable Rate Note. Interest reset date is indicated and used in
calculating the weighted average portfolio maturity. Coupon rate indicated
is effective March 31, 1998.
(1) The rates for U.S. Government Agency Discount Notes are the yield to
maturity at purchase. The rates for U.S. Government Agency securities are
the stated coupon rates.
See Notes to Financial Statements
8 PREMIUM GOVERNMENT RESERVE AMERICAN CENTURY INVESTMENTS
<TABLE>
<CAPTION>
PREMIUM CAPITAL RESERVE
AVERAGE ANNUAL RETURNS
6 MONTHS 1 YEAR 3 YEARS LIFE OF FUND(2)
- -----------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF MARCH 31, 1998(1)
<S> <C> <C> <C> <C>
Premium Capital Reserve ................. 2.67% 5.38% 5.36% 4.71%
90-Day Treasury Bill Index .............. 2.14% 4.74% 5.10% 4.67%
Average Institutional
Money Market Fund(3) .................... 2.67% 5.40% 5.38% 4.80%(4)
Fund's Ranking Among Institutional
Money Market Funds(3) ................... -- 103 out of 177 80 out of 144 61 out of 95(4)
</TABLE>
(1) Returns for periods less than one year are not annualized.
(2) Inception date was April 1, 1993.
(3) According to Lipper Analytical Services.
(4) Since 4/30/93, the date nearest the fund's inception for which data are
available.
See pages 24-25 for more information about returns, the comparative index and
Lipper fund rankings.
YIELDS AS OF MARCH 31, 1998
7-DAY 7-DAY
CURRENT EFFECTIVE
YIELD YIELD
Premium Capital Reserve 5.22% 5.35%
Yields are defined in the Glossary on page 25.
PORTFOLIO AT A GLANCE
3/31/98 3/31/97
Number of Issuers 59 42
Weighted Average Maturity 50 days 46 days
Expense Ratio 0.45% 0.45%
Past performance does not guarantee future results.
Money market funds are neither insured nor guaranteed by the U.S. government.
Yields will fluctuate, and there can be no assurance that the fund will be able
to maintain a stable $1.00 share price.
Many of the investment terms in this report are defined in the Glossary on page
25.
ANNUAL REPORT PREMIUM CAPITAL RESERVE 9
PREMIUM CAPITAL RESERVE
MANAGEMENT Q & A
An interview with Denise Tabacco and John Walsh, portfolio managers on the
Premium Capital Reserve fund investment team.
HOW DID THE FUND PERFORM DURING THE PAST YEAR?
For the fiscal year ended March 31, 1998, Premium Capital Reserve's total
return was 5.38%, compared with the 5.40% average return of the 177
"Institutional Money Market Funds" tracked by Lipper Analytical Services. (See
the Total Returns table on the previous page for other fund performance
comparisons.)
Although the fund is categorized as an institutional fund, it is intended
for "high net worth" individuals rather than institutions. Institutional funds
tend to have higher minimum balances (e.g., $1 million or more) and lower
expenses (an average of 0.18% per year, compared to the fund's 0.45%). However,
for individuals who are able to meet Premium Capital Reserve's $100,000 minimum
investment, the fund generally provides better yields than are available from
non-institutional money market funds.
For example, the fund's 7-day effective yield as of March 31, 1998, was
5.35%, compared with the 4.92% yield of the average non-institutional money
market fund (according to Lipper).
HOW WAS THE FUND POSITIONED DURING THE FISCAL YEAR?
We consider a weighted average maturity of 50-60 days to be a neutral
position, which we take when we're unsure about the future direction of interest
rates. We moved the fund from a slightly defensive position in the first several
months of the period to a more neutral stance for the remainder of the year.
After beginning the fiscal year with an average maturity of around 45 days,
we shortened to a more defensive posture of 30-40 days in May. At the time, we
were concerned that the Federal Reserve would raise interest rates to reduce
inflationary pressures, and we wanted to be in a position to quickly translate
those higher rates into a higher fund yield.
In the months that followed, however, the inflation threat subsided, and the
Fed held interest rates steady. As a result, we extended the fund's average
maturity to 60 days in July. Given an uncertain outlook for interest rates
stemming from the countervailing forces of an economic slowdown in Southeast
Asia and a strong U.S. economy, we maintained an average maturity of 55-60 days
until late November.
The average maturity dipped in December, reflecting a temporary scarcity of
attractively priced, longer-maturity paper. When supply bounced back in early
1998, we extended the average maturity back out to about 50-60 days, where it
remained until the end of the period.
DID THE FINANCIAL PROBLEMS IN SOUTHEAST ASIA HAVE ANY IMPACT ON THE FUND?
No. Our credit group spotted the Japanese banking sector's deterioration
quite some time ago (see page 4). As a result, the fund's Japanese holdings were
minimal and limited to the securities of a handful of strong Japanese industrial
companies, like Toyota.
[pie charts]
PORTFOLIO COMPOSITION BY SECURITY TYPE (as of 3/31/98)
Commercial Paper 66%
Variable-Rate Notes 18%
Cds 8%
Asset-Backed Securities 7%
Other 1%
PORTFOLIO COMPOSITION BY SECURITY TYPE (as of 9/30/97)
Commercial Paper 68%
Variable-Rate Notes 17%
Asset-Backed Securities 10%
CDs 4%
Other 1%
10 PREMIUM CAPITAL RESERVE AMERICAN CENTURY INVESTMENTS
PREMIUM CAPITAL RESERVE
As the problems in Southeast Asia intensified, our conservative investment
approach led us to further reduce our Japanese industrial holdings. Our credit
analysis team continues to closely monitor events in the region to anticipate
the impact of continued Asian weakness on other sectors and economies.
To offset the reduction in Japanese industrial holdings, we added
high-quality asset-backed commercial paper (short-term securities backed by a
pool of loans or other debt) issued by U.S. companies. We were also able to
boost the fund's yield by increasing our investment in variable-rate notes
(VRNs).
HOW DO VRNS HELP ENHANCE THE FUND'S YIELD?
VRNs are debt securities whose interest rates change when a designated base
rate changes. Their yields are typically higher than fixed-rate securities. When
choosing VRNs, a primary factor we consider is how the market anticipates Fed
interest rate changes and how that affects different types of VRNs.
For example, some VRNs are tied to the London Interbank Offered Rate (LIBOR)
, a money market rate that most banks and corporations track when determining
the rate they'll pay to investors on short-term debt. Others are tied to the
federal funds rate, the lending rate targeted by the Fed for large overnight
loans between commercial banks.
The yields on LIBOR-related securities tend to anticipate Fed actions,
rising before interest rate hikes and falling in advance of rate cuts. When we
believe the Fed is poised to raise interest rates, we typically choose
securities tied to LIBOR to capture the higher yields as early as possible.
Conversely, when we think that the Fed is poised to reduce rates, we lean toward
VRNs tied to the federal funds rate because their yields typically stay higher
longer than the yields of LIBOR-related securities.
WHAT'S YOUR OUTLOOK FOR INTEREST RATES GOING FORWARD?
We believe rates should remain stable over the near term, though market
sentiment is currently divided. On one hand, the strength of the U.S.
economy--as evidenced by very low unemployment, strong retail sales and low
inventories--has the potential to re-ignite inflationary pressures and force the
Fed to raise rates. On the other hand, we don't know if the economic slowdown in
Southeast Asia has had its full impact on the U.S. economy. If problems in Asia
translate into slower U.S. economic growth, the Fed could cut rates.
GIVEN THAT OUTLOOK, HOW WILL YOU MANAGE THE FUND OVER THE NEXT SIX MONTHS?
We plan to maintain the fund's average maturity around our neutral position
of 50-60 days until there is definitive and sustained evidence of the direction
of U.S. economic growth, inflation and interest rates. Additionally, we'll look
for attractively priced commercial paper backed by U.S. industrial companies to
diversify away from financial services and bank holdings.
[pie charts]
PORTFOLIO COMPOSITION BY CREDIT RATING (as of 3/31/98)
A1+ 72%
A1 28%
PORTFOLIO COMPOSITION BY CREDIT RATING (as of 9/30/97)
A1+ 74%
A1 21%
A2 5%
ANNUAL REPORT PREMIUM CAPITAL RESERVE 11
SCHEDULE OF INVESTMENTS
PREMIUM CAPITAL RESERVE
MARCH 31, 1998
Principal Amount Value
- --------------------------------------------------------------------------------
COMMERCIAL PAPER(1)
BANKING--7.3%
$ 1,000,000 Abbey National North America
Corp., 5.42%, 4/1/98 $ 1,000,000
1,500,000 Bankers Trust New York Corp.,
5.60%, 4/16/98 1,496,499
1,100,000 Garanti Funding Corporation,
5.55%, 4/20/98 (LOC:
Bayerische Verensbank A.G.) 1,096,778
2,000,000 Generale Bank S.A., 5.50%,
4/7/98 1,998,167
4,900,000 IMI Funding Co. (USA),
5.52%-5.68%, 6/4/98 through
6/29/98 4,838,455
4,500,000 National Australia Funding
(Delaware), Inc., 5.40%, 5/26/98 4,462,875
--------------------
14,892,774
--------------------
CREDIT CARD & TRADE RECEIVABLES--7.6%
1,000,000 Charta Corporation, 5.57%,
4/13/98 (AMBAC) (Acquired
3/2/98, Cost $993,502)(2) 998,143
5,000,000 Corporate Receivables Corp.,
5.52%, 5/12/98 (LOC: Citibank,
N.A.) (Acquired 3/12/98, Cost
$4,953,233)(2) 4,968,567
4,800,000 Dakota Certificates (Citibank),
Series 1995-7, 5.45%-5.50%,
4/3/98 through 4/24/98
(Acquired 1/20/98 through
2/24/98, Cost $4,762,791)(2) 4,794,440
4,800,000 WCP Funding Inc., 5.52%-5.53%,
5/27/98 through 5/28/98
(AMBAC) (Acquired 3/17/98
through 3/24/98, Cost
$4,749,156)(2) 4,758,276
--------------------
15,519,426
--------------------
DIVERSIFIED COMPANIES--3.4%
7,100,000 Mitsubishi International,
5.50%-5.65%, 4/6/98 through
5/22/98 7,063,861
--------------------
EDUCATION--0.5%
1,100,000 Leland Stanford University, 5.57%,
4/30/98 1,095,064
--------------------
Principal Amount Value
- --------------------------------------------------------------------------------
ELECTRICAL PRODUCTS--1.7%
$ 3,500,000 Siemens Corp., 5.50%, 6/19/98 $ 3,457,757
--------------------
FINANCIAL SERVICES--16.5%
4,000,000 Ameritech Capital Funding Corp.,
5.43%, 4/10/98 3,994,570
10,200,000 Ford Motor Credit, 5.46%-5.49%,
4/3/98 through 6/4/98 10,158,388
7,000,000 General Electric Capital Corp.,
5.37%-5.47%, 4/1/98
through 6/5/98 6,955,595
3,500,000 General Electric Capital Services,
Inc., 5.47%, 4/14/98 3,493,087
5,700,000 General Motors Acceptance Corp.,
5.43%, 4/27/98 5,677,647
3,500,000 Hitachi Credit America Corp.,
5.55%-5.57%, 4/16/98
through 6/11/98 3,474,528
--------------------
33,753,815
--------------------
FOOD & BEVERAGE--1.0%
2,000,000 Brown-Foreman Corp., 5.55%,
4/13/98 1,996,300
--------------------
INSURANCE--5.4%
5,000,000 American Family Financial Services,
Inc., 5.48%-5.52%, 4/2/98
through 4/21/98 4,993,411
3,000,000 SAFECO Corporation, 5.50%,
4/8/98 (Acquired 1/27/98,
Cost $2,967,458)(2) 2,996,791
3,000,000 USAA Capital Corp., 5.44%,
4/13/98 2,994,560
--------------------
10,984,762
--------------------
LEISURE--2.0%
4,200,000 Fuji Photo Film Finance, 5.52%,
5/14/98 4,172,308
--------------------
METALS & MINING--2.1%
4,400,000 Rio Tinto, America, 5.42%-5.46%,
4/17/98 through
5/15/98 (Acquired 1/14/98 through
2/10/98, Cost $4,337,628)(2) 4,376,608
--------------------
PUBLISHING--0.9%
1,881,000 Reed Elsevier Inc., 5.55%, 4/8/98 1,878,970
--------------------
See Notes to Financial Statements
12 PREMIUM CAPITAL RESERVE AMERICAN CENTURY INVESTMENTS
SCHEDULE OF INVESTMENTS
PREMIUM CAPITAL RESERVE
MARCH 31, 1998
Principal Amount Value
- --------------------------------------------------------------------------------
RETAIL--1.8%
$ 3,800,000 Southland Corp., 5.42%-5.52%,
6/12/98 through 8/18/98 $ 3,748,161
--------------------
SECURITY BROKERS & DEALERS--14.5%
5,000,000 BT Securities Corp., 5.37%,
7/15/98 4,921,687
8,000,000 Credit Suisse First Boston, 5.41%,
4/22/98 7,974,719
8,500,000 Goldman Sachs Group, L.P.,
5.42%-5.70%, 4/15/98
through 5/6/98 8,472,893
3,500,000 Merrill Lynch & Co., Inc.,
5.45%-5.51%, 5/15/98 through
5/20/98 3,475,008
5,000,000 Morgan Stanley, Dean Witter,
Discover & Co., 5.43%-5.47%,
5/8/98 through 5/26/98 4,969,216
--------------------
29,813,523
--------------------
SOVEREIGN GOVERNMENTS &
AGENCIES--0.7%
1,500,000 Kingdom of Sweden, 5.55%,
5/4/98 1,492,369
--------------------
UTILITIES--0.5%
1,000,000 National Rural Utilities Cooperative
Finance Corp., 5.50%, 4/24/98 996,435
--------------------
TOTAL COMMERCIAL PAPER--65.9% 135,242,133
--------------------
CORPORATE DEBT
5,000,000 Abbey National Treasury Services PLC,
Series 1A, VRN, 5.57%, 4/15/98,
resets monthly off the
1-month LIBOR minus 0.12%
with no caps 4,999,348
4,000,000 American Express Centurion Bank,
VRN, 5.63%, 4/11/98,
resets monthly off the 1-month LIBOR
minus 0.06% with no caps 4,000,000
2,000,000 First Bank N.A., VRN, 5.59%,
4/15/98, resets monthly off the
1-month LIBOR minus 0.10%
with no caps 1,999,816
Principal Amount Value
- --------------------------------------------------------------------------------
$ 1,500,000 General American Life Insurance
Company, VRN, 5.89%, 4/1/98,
resets monthly off the 1-month
LIBOR plus 0.20% with no caps
(Acquired 7/7/97, Cost
$1,500,000)(2)(3) $ 1,500,000
4,500,000 General American Life Insurance
Company, VRN, 5.89%, 4/1/98,
resets monthly off the 1-month
LIBOR plus 0.20% with no caps,
(Acquired 1/3/97, Cost
$4,500,000)(2)(3) 4,500,000
8,000,000 Key Bank, N.A., VRN, 5.69%, 4/1/98,
resets daily off Fed
Funds plus 0.07% with no caps 7,998,136
358,000 Merrill Lynch & Co., Inc., VRN,
6.00%, 4/1/98, resets daily off
Fed Funds plus 0.375% with
no caps 358,226
2,000,000 Merrill Lynch & Co., Inc., VRN,
5.96%, 4/6/98, resets monthly off
the 3-month LIBOR plus
0.15% with no caps 2,004,198
6,000,000 Transamerica Occidental Life Insurance
Co., VRN, 5.69%, 4/1/98, resets
monthly off the 1-month LIBOR
with no caps (Acquired 6/30/97, Cost
$6,000,000)(2)(3) 6,000,000
1,600,000 Travelers Insurance Company (The),
VRN, 5.74%, 4/9/98, resets monthly
off the 1-month LIBOR
plus 0.05% with no caps
(Acquired 6/9/97, Cost
$1,600,000)(2)(3) 1,600,000
3,000,000 Travelers Insurance Company (The),
VRN, 5.74%, 4/23/98, resets monthly
off the 1-month LIBOR
plus 0.05% with no caps
(Acquired 5/23/97, Cost
$3,000,000)(2)(3) 3,000,000
--------------------
TOTAL CORPORATE DEBT--18.5% 37,959,724
--------------------
See Notes to Financial Statements
ANNUAL REPORT PREMIUM CAPITAL RESERVE 13
SCHEDULE OF INVESTMENTS
PREMIUM CAPITAL RESERVE
MARCH 31, 1998
Principal Amount Value
- --------------------------------------------------------------------------------
ASSET-BACKED SECURITIES
$ 609,648 Americredit Automobile
Receivables Trust, Series
1997 C, Cl A1, 5.66%, 9/5/98 $ 609,648
672,119 Americredit Automobile
Receivables Trust, Series
1997 D, Cl A1, 5.80%, 11/5/98 672,119
3,000,000 ABSIT 97-C, VRN, 5.69%,
4/15/98, resets monthly off the
1-month LIBOR with no caps
(Acquired 6/11/97, Cost
$3,000,000)(2) 3,000,000
384,129 Barnett Auto Trust,
Series 1997 A, Cl A1, 5.65%,
10/15/98 (Acquired 9/18/97, Cost
$384,129)(2) 384,129
1,173,384 Capital Equipment Receivables
Trust, Series 1997-1, Cl A1,
5.79%, 12/15/98 1,173,384
1,236,349 Ford Credit Auto Owner Trust,
Series 1997 B, Cl A1, 5.75%,
10/15/98 1,236,349
4,375,962 Ford Credit Auto Owner Trust,
Series 1998 A, Cl A1, 5.55%,
2/15/99 4,375,962
3,000,000 Racers Series 1997-MM-8-5,
VRN, 5.68%, 4/29/98,
resets monthly off the
1-month LIBOR minus 0.01%
with no caps (Acquired 8/29/97, Cost
$3,000,000)(2) 3,000,000
--------------------
TOTAL ASSET-BACKED SECURITIES--7.0% 14,451,591
--------------------
CERTIFICATES OF DEPOSIT
2,000,000 ABN Amro Bank N.V., 5.79%,
3/26/99 2,000,754
4,000,000 Bayerische Landesbank
Gironzentrale, 5.66%, 2/22/99 4,000,000
2,000,000 Caisse Nationale de Credit
Agricole Indosuez, 5.90%,
8/11/98 2,000,000
Principal Amount Value
- --------------------------------------------------------------------------------
$ 3,000,000 Deutsche Bank, A.G., 5.70%,
3/5/99 $ 2,998,669
4,500,000 Royal Bank of Canada, 5.82%,
8/25/98 4,501,903
--------------------
TOTAL CERTIFICATES OF DEPOSIT--7.6% 15,501,326
--------------------
BANK NOTES--1.0%
2,000,000 BankBoston, N.A., 5.83%, 4/9/98 2,000,000
--------------------
TOTAL INVESTMENT SECURITIES--100.0% $205,154,774
====================
NOTES TO SCHEDULE OF INVESTMENTS
AMBAC = AMBAC Assurance Corporation
LIBOR = London Interbank Offered Rate
LOC = Letter of Credit
VRN = Variable Rate Note. Interest reset date is indicated and used in
calculating the weighted average portfolio maturity. Coupon rate indicated
is effective March 31, 1998.
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.
(1) The rates for commercial paper are the yield to maturity at purchase.
(2) Security was purchased under Rule 144A or Section 4(2) of the Securities Act
of 1933 or is otherwise restricted as to resale and, unless registered under
the Act or exempted from registration, may only be sold to qualified
institutional investors. The aggregate value of restricted securities at
March 31, 1998, was $45,876,954, which represented 25.1% of net assets.
Restricted securities which were considered illiquid represented 5.8% of net
assets.
(3) Funding Agreement.
See Notes to Financial Statements
14 PREMIUM CAPITAL RESERVE AMERICAN CENTURY INVESTMENTS
STATEMENTS OF ASSETS AND LIABILITIES
PREMIUM PREMIUM
MARCH 31, 1998 GOVERNMENT RESERVE CAPITAL RESERVE
ASSETS
Investment securities, at value
(amortized cost and cost for
federal income tax purposes)
(Note 1) ............................. $ 46,715,202 $ 205,154,774
Interest receivable .................... 250,677 567,741
Receivable for capital shares sold ..... 3,937 381,938
--------------- ---------------
46,969,816 206,104,453
--------------- ---------------
LIABILITIES
Disbursements in excess of
demand deposit cash .................. 217,578 828,306
Payable for capital shares
redeemed ............................. 2,213,612 22,606,361
Accrued management fees
(Note 2) ............................. 18,113 79,087
Dividends payable ...................... 25,761 103,774
Accrued expenses and
other liabilities .................... 48 235
--------------- ---------------
2,475,112 23,617,763
--------------- ---------------
Net Assets ............................. $ 44,494,704 $ 182,486,690
=============== ===============
CAPITAL SHARES, $0.01 PAR VALUE
Authorized ............................. 1,000,000,000 1,000,000,000
=============== ===============
Outstanding ............................ 44,495,084 182,491,064
=============== ===============
Net Asset Value Per Share .............. $ 1.00 $ 1.00
=============== ===============
NET ASSETS CONSIST OF:
Capital (par value and
paid-in surplus) ..................... $ 44,495,084 $ 182,491,064
Accumulated net realized
loss on investments .................. (380) (4,374)
--------------- ---------------
$ 44,494,704 $ 182,486,690
=============== ===============
See Notes to Financial Statements
ANNUAL REPORT STATEMENTS OF ASSETS AND LIABILITIES 15
STATEMENTS OF OPERATIONS
PREMIUM PREMIUM
YEAR ENDED MARCH 31, 1998 GOVERNMENT RESERVE CAPITAL RESERVE
INVESTMENT INCOME
Income:
Interest ................................. $ 2,522,970 $ 9,678,027
----------- -----------
Expenses (Note 2):
Management fees .......................... 203,339 763,533
Directors' fees and expenses ............. 423 1,584
----------- -----------
203,762 765,117
----------- -----------
Net investment income .................... 2,319,208 8,912,910
----------- -----------
Net realized loss
on investments ......................... (380) (3,329)
----------- -----------
Net Increase in Net Assets
Resulting from Operations ................ $ 2,318,828 $ 8,909,581
=========== ===========
See Notes to Financial Statements
16 STATEMENTS OF OPERATIONS AMERICAN CENTURY INVESTMENTS
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31, 1998 PREMIUM PREMIUM
AND MARCH 31, 1997 GOVERNMENT RESERVE CAPITAL RESERVE
Increase in Net Assets 1998 1997 1998 1997
OPERATIONS
<S> <C> <C> <C> <C>
Net investment income ........... $ 2,319,208 $ 1,536,552 $ 8,912,910 $ 7,139,688
Net realized loss
on investments ................ (380) -- (3,329) (387)
------------- ------------- ------------- -------------
Net increase in net assets
resulting from operations ..... 2,318,828 1,536,552 8,909,581 7,139,301
------------- ------------- ------------- -------------
DISTRIBUTIONS TO SHAREHOLDERS
From net investment income ...... (2,319,208) (1,536,552) (8,912,910) (7,139,688)
------------- ------------- ------------- -------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold ....... 115,269,165 57,200,249 380,763,052 244,535,922
Proceeds from reinvestment
of distributions .............. 2,261,393 1,457,750 8,514,911 6,775,632
Payments for shares redeemed .... (111,873,462) (46,010,775) (360,745,777) (230,769,999)
------------- ------------- ------------- -------------
Net increase in net assets
from capital share transactions 5,657,096 12,647,224 28,532,186 20,541,555
------------- ------------- ------------- -------------
Net increase in net assets ...... 5,656,716 12,647,224 28,528,857 20,541,168
NET ASSETS
Beginning of year ............... 38,837,988 26,190,764 153,957,833 133,416,665
------------- ------------- ------------- -------------
End of year ..................... $ 44,494,704 $ 38,837,988 $ 182,486,690 $ 153,957,833
============= ============= ============= =============
TRANSACTIONS IN SHARES
OF THE FUNDS
Sold ............................ 115,269,165 57,200,249 380,763,071 244,535,922
Issued in reinvestment
of distributions .............. 2,261,393 1,457,750 8,514,911 6,775,632
Redeemed ........................ (111,873,462) (46,010,775) (360,745,777) (230,769,999)
------------- ------------- ------------- -------------
Net increase .................... 5,657,096 12,647,224 28,532,205 20,541,555
============= ============= ============= =============
</TABLE>
See Notes to Financial Statements
ANNUAL REPORT STATEMENTS OF CHANGES IN NET ASSETS 17
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- American Century Premium Reserves, Inc. (the Corporation) is
registered under the Investment Company Act of 1940 as an open-end diversified
management investment company. American Century - Benham Premium Government
Reserve Fund (Government Reserve) and American Century - Benham Premium Capital
Reserve Fund (Capital Reserve) (the Funds) are two of the three funds issued by
the Corporation. The investment objective of Government Reserve and Capital
Reserve is to obtain as high a level of current income as is consistent with
preservation of capital and maintenance of liquidity. The following significant
accounting policies, related to the Funds, are in accordance with accounting
policies generally accepted in the investment company industry.
SECURITY VALUATIONS -- Securities are valued at amortized cost, which
approximates current value. When valuations are not readily available,
securities are valued at fair value as determined in accordance with procedures
adopted by the Board of Directors.
SECURITY TRANSACTIONS -- Security transactions are accounted for on the date
purchased or sold. Net realized gains and losses are determined on the
identified cost basis, which is also used for federal income tax purposes.
INVESTMENT INCOME -- Interest income is recorded on the accrual basis and
includes accretion of discounts and amortization of premiums.
REPURCHASE AGREEMENTS -- The Funds may enter into repurchase agreements with
institutions that the Funds' investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The Funds require that the collateral, represented by securities, received
in a repurchase transaction be transferred to the custodian in a manner
sufficient to enable the Funds to obtain those securities in the event of a
default under the repurchase agreement. ACIM monitors, on a daily basis, the
securities transferred to ensure the value, including accrued interest, of the
securities under each repurchase agreement is equal to or greater than amounts
owed to the Funds under each repurchase agreement.
JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Funds, along with other registered
investment companies having management agreements with ACIM, may transfer
uninvested cash balances into a joint trading account held at the Funds'
custodian. These balances are invested in one or more repurchase agreements that
are collateralized by U.S. Treasury or Agency obligations.
INCOME TAX STATUS -- It is the Funds' policy to distribute all net
investment income and net realized capital gains to shareholders and to
otherwise qualify as a regulated investment company under the provisions of the
Internal Revenue Code. Accordingly, no provision has been made for federal or
state income taxes.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income
are declared daily and distributed monthly. The Funds do not expect to realize
any long-term capital gains and, accordingly do not expect to pay any long-term
capital gains distributions.
At March 31, 1998, accumulated net realized short-term capital loss
carryovers of $2,814 for Capital Reserve (expiring 2004 through 2006) may be
used to offset future taxable gains. The Fund has elected to treat $1,560 of net
capital losses incurred in the five month period ended March 31, 1998, as having
been incurred in the following fiscal year.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net capital gains and losses for financial statement
and tax purposes and may result in reclassification among certain capital
accounts.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the period. Actual results could differ from
these estimates.
ADDITIONAL INFORMATION -- Effective January 15, 1998, Funds Distributor,
Inc. (FDI) became the Corporation's distributor. Certain officers of FDI are
also officers of the Corporation.
18 NOTES TO FINANCIAL STATEMENTS AMERICAN CENTURY INVESTMENTS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES
The Corporation has entered into a Management Agreement with ACIM that
provides the Funds with investment advisory and management services in exchange
for a single, unified fee. The Agreement provides that all expenses of the
Funds, except brokerage commissions, taxes, interest, expenses of those
directors who are not considered "interested persons" as defined in the
Investment Company Act of 1940 (including counsel fees) and extraordinary
expenses, will be paid by ACIM. The fee is computed daily and paid monthly based
on each Fund's average daily closing net assets during the previous month. The
annual management fee for each Fund is 0.45%.
Certain officers and directors of the Corporation are also officers and/or
directors, and, as a group, controlling stockholders of American Century
Companies, Inc., the parent of the Corporation's investment manager, ACIM, the
Corporation's transfer agent, American Century Services Corporation, and the
registered broker-dealer, American Century Investment Services, Inc.
ANNUAL REPORT NOTES TO FINANCIAL STATEMENTS 19
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
PREMIUM GOVERNMENT RESERVE
For a Share Outstanding Throughout the Years Ended March 31
1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C>
Beginning of Year .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
---------- ---------- ---------- ---------- ----------
Income From
Investment Operations
Net Investment Income .... 0.05 0.05 0.05 0.05 0.03
---------- ---------- ---------- ---------- ----------
Distributions
From Net Investment Income (0.05) (0.05) (0.05) (0.05) (0.03)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
========== ========== ========== ========== ==========
Total Return(1) .......... 5.25% 5.07% 5.49% 4.62% 2.75%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ...... 0.45% 0.45% 0.44% 0.45% 0.45%
Ratio of Net Investment
Income to Average
Net Assets ............... 5.13% 4.96% 5.30% 4.84% 2.72%
Net Assets, End
of Year (in thousands) ..... $ 44,495 $ 38,838 $ 26,191 $ 16,381 $ 5,459
</TABLE>
(1) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
See Notes to Financial Statements
20 FINANCIAL HIGHLIGHTS AMERICAN CENTURY INVESTMENTS
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
PREMIUM CAPITAL RESERVE
For a Share Outstanding Throughout the Years Ended March 31
1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C>
Beginning of Year .......... $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
----------- ----------- ----------- ----------- -----------
Income From
Investment Operations
Net Investment Income .... 0.05 0.05 0.05 0.05 0.03
----------- ----------- ----------- ----------- -----------
Distributions
From Net Investment Income (0.05) (0.05) (0.05) (0.05) (0.03)
----------- ----------- ----------- ----------- -----------
Net Asset Value, End of Year $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
=========== =========== =========== =========== ===========
Total Return(1) .......... 5.38% 5.13% 5.58% 4.66% 2.81%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ...... 0.45% 0.45% 0.45% 0.45% 0.45%
Ratio of Net Investment
Income to Average
Net Assets ............... 5.26% 5.01% 5.50% 4.76% 2.83%
Net Assets, End
of Year (in thousands) ..... $ 182,487 $ 153,958 $ 133,417 $ 138,428 $ 38,823
(1) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
</TABLE>
See Notes to Financial Statements
ANNUAL REPORT FINANCIAL HIGHLIGHTS 21
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
American Century Premium Reserves, Inc.:
We have audited the accompanying statements of assets and liabilities,
including the schedules of investments, of American Century - Benham Premium
Government Reserve Fund and American Century - Benham Premium Capital Reserve
Fund (the "Funds"), two of the funds comprising American Century Premium
Reserves, Inc., as of March 31, 1998, and the related statements of operations
and changes in net assets for the year then ended, and the financial highlights
for the year then ended. These financial statements and the financial highlights
are the responsibility of the Funds' management. Our responsibility is to
express an opinion on these financial statements and the financial highlights
based on our audits. The financial statements and the financial highlights of
the Funds for each of the years in the four-year period ended March 31, 1997
were audited by other auditors whose report, dated April 25, 1997, expressed an
unqualified opinion on those statements and financial highlights.
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 at March
31, 1998 by correspondence with the custodian and broker. 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, such financial statements and financial highlights present
fairly, in all material respects, the financial position of American Century -
Benham Premium Government Reserve Fund and American Century - Benham Premium
Capital Reserve Fund as of March 31, 1998, the results of their operations, the
changes in their net assets, and the financial highlights for the year then
ended in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
April 30, 1998
22 INDEPENDENT AUDITORS' REPORT AMERICAN CENTURY INVESTMENTS
RETIREMENT ACCOUNT INFORMATION
As required by law, any distributions you receive from an IRA and certain
403(b) distributions [not eligible for rollover to an IRA or to another 403(b)]
are subject to federal income tax withholding at the rate of 10% of the total
amount withdrawn, unless you elect not to have withholding apply. If you don't
want us to withhold on this amount, you may send us a written notice not to have
the federal income tax withheld. Your written notice is valid for six months
from the date of receipt at American Century. Even if you plan to roll over the
amount you withdraw to another tax-deferred account, the withholding rate still
applies to the withdrawn amount unless we have received a written notice not to
withhold federal income tax within six months prior to the withdrawal.
When you plan to withdraw, you may make your election by completing our
Exchange/ Redemption form or an IRS Form W-4P. Call American Century for either
form. Your written election is valid for only six months from the date of
receipt at American Century. You may revoke your election at any time by sending
a written notice to us.
Remember, even if you elect not to have income tax withheld, you are liable
for paying income tax on the taxable portion of your withdrawal. If you elect
not to have income tax withheld or you don't have enough income tax withheld,
you may be responsible for payment of estimated tax. You may incur penalties
under the estimated tax rules if your withholding and estimated tax payments are
not sufficient.
ANNUAL REPORT RETIREMENT ACCOUNT INFORMATION 23
BACKGROUND INFORMATION
INVESTMENT PHILOSOPHY & POLICIES
The Benham Group offers 39 fixed-income funds, ranging from money market
funds to long-term bond funds and including both taxable and tax-exempt funds.
Each fund is managed to provide a "pure play" on a specific sector of the
fixed-income market. To ensure adherence to this principle, the basic structure
of each fund's portfolio is tied to a specific market index. Fund managers
attempt to add value by making modest portfolio adjustments based on their
analysis of prevailing market conditions. Investment decisions are made by
management teams, which meet regularly to discuss market analysis and investment
strategies.
In addition to these principles, each fund has its own investment policies:
PREMIUM GOVERNMENT RESERVE and PREMIUM CAPITAL RESERVE seek to provide
interest income while maintaining a stable share price. Premium Government
Reserve invests in U.S. government money market securities, while Premium
Capital Reserve invests in a diversified portfolio of money market securities.
An investment in the funds is neither insured nor guaranteed by the U.S.
government, and there can be no assurance that the funds will be able to
maintain a stable net asset value of $1 per share.
COMPARATIVE INDICES
The following index is used in the report for a fund performance comparison.
It is not an investment product available for purchase.
The 90-DAY TREASURY BILL INDEX is derived from secondary market interest
rates as published by the Federal Reserve Bank.
LIPPER RANKINGS
LIPPER ANALYTICAL SERVICES, INC. is an independent mutual fund ranking
service that groups funds according to their investment objectives. Rankings are
based on average annual returns for each fund in a given category for the
periods indicated. Rankings are not included for periods less than one year.
The Lipper categories for the Premium Reserve Money Market funds are:
INSTITUTIONAL U.S. GOVERNMENT MONEY MARKET FUNDS (Premium Government
Reserve)--funds with dollar-weighted average maturities of less than 90 days
that intend to maintain a stable net asset value and that invest principally in
financial instruments issued or guaranteed by the U.S. government, its agencies
or instrumentalities.
INSTITUTIONAL MONEY MARKET FUNDS (Premium Capital Reserve)--funds with
dollar-weighted average maturities of less than 90 days that intend to maintain
a stable net asset value and that invest in high-quality financial instruments
rated in the top two grades.
- --------------------------------------------------------------------------------
INVESTMENT TEAM LEADERS
- --------------------------------------------------------------------------------
Portfolio Managers Amy O'Donnell, Denise Tabacco,
John Walsh
Credit Research Manager Greg Afiesh
- --------------------------------------------------------------------------------
24 BACKGROUND INFORMATION AMERICAN CENTURY INVESTMENTS
GLOSSARY
RETURNS
* TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.
* AVERAGE ANNUAL RETURNS illustrate the annually compounded returns that would
have produced the fund's cumulative total returns if the fund's performance had
been constant over the entire period. Average annual returns smooth out
variations in a fund's return; they are not the same as fiscal year-by-year
results. For fiscal year-by-year returns, please refer to the "Financial
Highlights" on pages 20-21.
YIELDS
* 7-DAY CURRENT YIELD is calculated based on the income generated by an
investment in the fund over a seven-day period and is expressed as an annual
percentage rate.
* 7-DAY EFFECTIVE YIELD is calculated similarly, although this figure is
slightly higher than the fund's 7-Day Current Yield because of the effects of
compounding. The 7-Day Effective Yield assumes that income earned from the
fund's investments is reinvested and generating additional income.
PORTFOLIO STATISTICS
* NUMBER OF SECURITIES--the number of different securities held by a fund on a
given date.
* WEIGHTED AVERAGE MATURITY (WAM)--a measure of the sensitivity of a
fixed-income portfolio to interest rate changes. WAM indicates the average time
until the securities in the portfolio mature, weighted by dollar amount. The
longer the WAM, the more interest rate exposure and sensitivity the portfolio
has.
* EXPENSE RATIO--the operating expenses of the fund, expressed as a percentage
of average net assets. Shareholders pay an annual fee to the investment manager
for investment advisory and management services. The expenses and fees are
deducted from fund income, not from each shareholder account. (See Note 2 in the
Notes to Financial Statements.)
TYPES OF FIXED-INCOME SECURITIES
* ASSET-BACKED SECURITIES--debt securities that represent ownership in a pool of
receivables, such as credit card debt, auto loans or mortgages.
* CERTIFICATES OF DEPOSIT (CDS)--CDs represent a bank's obligation to repay
money deposited with it for a specified period of time.
* COMMERCIAL PAPER (CP)--short-term debt issued by large corporations to raise
cash and to cover current expenses in anticipation of future revenues.
* REPURCHASE AGREEMENTS (REPOS)--short-term debt agreements in which a fund buys
a security at one price and simultaneously agrees to sell it back to the seller
at a slightly higher price on a specified date (usually within seven days).
* U.S. GOVERNMENT AGENCY NOTES--intermediate-term debt securities issued by U.S.
government agencies (such as the Federal Farm Credit Bank and the Federal Home
Loan Bank). Some agency notes are backed by the full faith and credit of the
U.S. government, while most are guaranteed only by the issuing agency. These
notes are issued with maturities ranging from three months to 30 years, but the
funds only invest in those with remaining maturities of 13 months or less.
* U.S. GOVERNMENT AGENCY DISCOUNT NOTES--short-term debt securities issued by
U.S. government agencies (such as the Federal Farm Credit Bank and the Federal
Home Loan Bank). Some agency discount notes are backed by the full faith and
credit of the U.S. government, while most are guaranteed only by the issuing
agency. These notes are issued at a discount and achieve full value at maturity
(typically one year or less).
* U.S. TREASURY BILLS (T-BILLS)--short-term debt securities issued by the U.S.
Treasury and backed by the direct "full faith and credit" pledge of the U.S.
government. T-bills are issued with maturities ranging from three months to one
year.
* U.S. TREASURY NOTES (T-NOTES)--intermediate-term debt securities issued by the
U.S. Treasury and backed by the direct "full faith and credit" pledge of the
U.S. government. T-notes are issued with maturities ranging from two to 10
years, but the funds only invest in those with remaining maturities of 13 months
or less.
* VARIABLE-RATE NOTES (VRNS)--debt securities whose interest rates change when a
designated base rate changes. The base rate is often the federal funds rate, the
90-day Treasury bill rate or the London Interbank Offered Rate.
ANNUAL REPORT GLOSSARY 25
[american century logo(reg. sm)]
American
Century(reg.tm)
P.O. BOX 419200
KANSAS CITY, MISSOURI
64141-6200
INVESTOR SERVICES:
1-800-345-2021 OR 816-531-5575
AUTOMATED INFORMATION LINE:
1-800-345-8765
TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 OR 816-444-3485
FAX: 816-340-7962
INTERNET: WWW.AMERICANCENTURY.COM
AMERICAN CENTURY PREMIUM RESERVES, INC.
INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI
THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
(c) 1998 AMERICAN CENTURY SERVICES CORPORATION
FUNDS DISTRIBUTOR, INC.
9805 [recycled logo]
SH-BKT-12404 Recycled
<PAGE>
ANNUAL
REPORT
[american century logo(reg. sm)]
American
Century(reg.tm)
MARCH 31, 1998
BENHAM
GROUP
Premium Bond
TABLE OF CONTENTS
Report Highlights ....................................................... 1
Our Message to You ...................................................... 2
Market Perspective ...................................................... 3
Performance & Portfolio Information ..................................... 4
Management Q & A ........................................................ 5
Schedule of Investments ................................................. 8
Statement of Assets and Liabilities ..................................... 12
Statement of Operations ................................................. 13
Statements of Changes in Net Assets ..................................... 14
Notes to Financial Statements ........................................... 15
Financial Highlights .................................................... 17
Independent Auditors' Report ............................................ 18
Retirement Account Information .......................................... 19
Background Information
Investment Philosophy & Policies ............................. 20
Comparative Indices .......................................... 20
Lipper Rankings .............................................. 20
Investment Team Leaders ...................................... 20
Glossary ................................................................ 21
American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios.
We've organized our funds into three distinct groups, based on investment style
and objectives, to help simplify your fund decisions. These groups appear below.
AMERICAN CENTURY INVESTMENTS--FAMILY OF FUNDS
- -------------------------------------------------------------------------------
Benham American Century Twentieth Century
Group Group Group
- -------------------------------------------------------------------------------
MONEY MARKET FUNDS ASSET ALLOCATION & GROWTH FUNDS
GOVERNMENT BOND FUNDS BALANCED FUNDS INTERNATIONAL FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS
- -------------------------------------------------------------------------------
Premium Bond
We welcome your comments or questions about this report. See the back cover for
ways to contact us by mail, phone or e-mail.
American Century and Benham Group are registered marks of American Century
Services Corporation.
AMERICAN CENTURY INVESTMENTS
REPORT HIGHLIGHTS
MARKET PERSPECTIVE
* Favorable economic conditions continued during the 12 months ended March 31,
1998. Low inflation and healthy economic growth provided an excellent
backdrop for investors in U.S. financial markets.
* Low inflation--and low inflation expectations--caused interest rates to
fall.The U.S. bond market rallied, with intermediate- and long-term
securities producing double-digit returns.
* Long-term Treasury yields fell sharply. However, short-term Treasury yields
remained relatively stable, reflecting the fact that the Federal Reserve
kept short-term interest rates unchanged during the period.
* Falling long-term rates and relatively stable short-term rates created a
flat Treasury yield curve. In other words, long-term bonds didn't yield much
more than short-term securities. Bond investors lost some incentive for
taking on the risk of longer-maturity securities.
* Treasury securities outperformed other sectors such as corporates, agencies
and mortgage-backeds. Treasurys typically outperform other bond sectors when
interest rates fall sharply.
* Supply and demand factors were also favorable. A federal budget surplus
resulted in less Treasury issuance, and overseas financial woes made U.S.
bonds attractive to foreign investors.
MANAGEMENT Q & A
* Premium Bond posted its second-highest fiscal-year total return since it
opened in 1993. Only in the year ended March 31, 1996, has the fund's
fiscal-year return been higher than 11%. (See Total Returns on page 4.)
* As well as the fund performed for the period, it was outperformed by its
benchmark, the Lehman Aggregate Bond Index. One reason was Premium Bond's
overweighting in corporate bonds, which underperformed. In addition, a
slightly conservative duration for part of the year held the fund back a bit
when rates fell and bonds rallied. (Duration is a measure of interest rate
sensitivity.)
* Although we positioned the portfolio's asset mix close to the benchmark's
during the first part of the year, the corporate bond sell-off in the fourth
quarter of 1997 provided an opportunity to expand our corporate bond
holdings.
* Because we expect interest rates to remain relatively low going forward, we
will look to build positions in corporate bonds, mortgage-backed securities
and other bonds that offer higher yields than Treasury bonds.
PREMIUM BOND
TOTAL RETURNS: AS OF 3/31/98
6 Months 4.18%*
1 Year 11.14%
30-DAY SEC YIELD: 5.87%
NET ASSETS: $65.2 million
(AS OF 3/31/98)
INCEPTION DATE: 4/1/93
TICKER SYMBOL: ACBPX
* Not annualized.
Many of the investment terms in this report are defined in the Glossary on page
21.
ANNUAL REPORT REPORT HIGHLIGHTS 1
OUR MESSAGE TO YOU
[photo of James E. Stowers, Jr. and James E. Stowers III]
The U.S. bond market rallied during the 12 months ended March 31, 1998. Low
inflation, a strong U.S. dollar, an improving federal budget, and a healthy
economy created an ideal environment for bonds. Premium Bond's double-digit
returns reflected this environment.
The past year has been eventful for American Century. We gained a powerful
business partner in January when J.P. Morgan, one of the oldest, largest and
most respected financial service institutions in the U.S., became a substantial
minority shareholder. The new business partnership will allow both companies to
offer investors a highly diverse menu of investment options and services.
Another significant event was the retirement of Jim Benham, founder of the
Benham Group, in December. With the integration of Benham and Twentieth Century
successfully completed, Jim felt it was time to step back from the business.
Much of the Benham culture has become a part of American Century, including the
educational investor seminar program Jim created. Two of his sons, Jim A. Benham
and Tim Benham, remain with the company to carry on the Benham tradition.
We're also working hard to prepare our computer systems for the year 2000
(Y2K). The Y2K problem, which has been widely publicized in the financial press,
refers to the possible inability of computer systems to distinguish between the
years 1900 and 2000 when the new millennium begins. Like other financial
companies, many of our computer operations involve some type of date comparison
or date calculation. Although much of our system is already Y2K compliant, we
anticipate the rest will be in compliance by the end of this year.
In closing, we are proud to note that 1998 marks the 40th year since
American Century launched its first mutual funds. Not many fund companies can
claim a 40-year track record, or a fund family that includes nearly 70 stock,
bond, money market and blended (stock and bond) funds that provide investors
with such a wide range of choice and flexibility. We believe American Century
has an outstanding lineup of funds to help you reach your financial goals.
Thank you for your investment.
Sincerely,
/s/James E. Stowers, Jr. /s/James E. Stowers III
James E. Stowers, Jr. James E. Stowers III
Chairman of the Board and Founder Chief Executive Officer
2 OUR MESSAGE TO YOU AMERICAN CENTURY INVESTMENTS
MARKET PERSPECTIVE
[line graph - data below]
FALLING AND FLATTENING TREASURY YIELD CURVE
3/31/97 3/31/98
YEARS TO
MATURITY
1 5.997% 5.380%
2 6.411% 5.559%
3 6.562% 5.581%
4 6.655% 5.597%
5 6.748% 5.612%
6 6.779% 5.620%
7 6.811% 5.628%
8 6.842% 5.635%
9 6.874% 5.643%
10 6.905% 5.651%
11 6.915% 5.665%
12 6.924% 5.679%
13 6.934% 5.693%
14 6.943% 5.707%
15 6.953% 5.721%
16 6.962% 5.735%
17 6.972% 5.749%
18 6.981% 5.763%
19 6.991% 5.777%
20 7.000% 5.792%
21 7.010% 5.806%
22 7.019% 5.820%
23 7.029% 5.834%
24 7.038% 5.848%
25 7.048% 5.862%
26 7.057% 5.876%
27 7.067% 5.890%
28 7.076% 5.904%
29 7.086% 5.918%
30 7.095% 5.932%
DOUBLE-DIGIT RETURNS
While U.S. stocks grabbed most of the attention, U.S. bonds quietly posted
double-digit returns for the 12 months ended March 31, 1998. Inflation--and
inflation expectations--remained low, and interest rates generally fell,
boosting bond prices. Long-term bonds, which are most sensitive to interest rate
changes, outperformed intermediate- and short-term securities. For example, the
30-year Treasury bond produced a total return of 22.6%, the 10-year Treasury
note returned 15.4% and the two-year Treasury note returned 7.5%.
SECTOR RETURNS STRONG BUT VARIED
Most U.S. bond sectors performed well. Treasury securities finished on top,
despite strong demand for higher-yielding securities such as corporate and
mortgage-backed bonds. These securities suffered setbacks that reduced their
returns. For example, the Asian crisis hurt the performance of corporate bonds
as investors questioned corporate financial health. Falling interest rates
triggered a wave of mortgage refinancing, which had a negative effect on
mortgage-backed securities. When mortgages are refinanced, it shortens the life
of mortgage-backed securities and forces investors to reinvest in lower-yielding
securities. But despite the volatility, mortgages and corporates produced
double-digit returns--the Lehman Brothers Fixed-Rate Mortgage-Backed Securities
Index returned 11.1%, and the Lehman Brothers Corporate Bond Index returned
13.0%.
ECONOMIC STORY UNCHANGED
Healthy economic growth and low inflation continued to prevail during the
period. The U.S. economy grew by 3.6% for the year, powered by strong consumer
spending, and unemployment remained below 5%. Long-term interest rates trended
downward as inflation expectations remained low. Asia's economic problems, which
translated into lower commodity and export prices, exerted downward pressure on
U.S. prices. The consumer price index, viewed as the broadest gauge of costs for
U.S. goods and services, rose by just 1.4% for the year.
FLATTENING YIELD CURVE
The Federal Reserve, not seeing any convincing signs of inflation, left
short-term interest rates unchanged at 5.5%. However, yields on long-term
Treasury bonds fell more than a full percentage point. This resulted in the
"flat" yield curve shown in the accompanying graph. The yield difference between
a six-month Treasury bill and a 30-year Treasury bond was just 68 basis points
on March 31, 1998, compared with 182 basis points at the start of the period. (A
basis point equals 0.01%.)
DIMINISHING SUPPLY, STRONG DEMAND
The U.S. government is projected to generate a budget surplus for the first
time in 30 years. As a result, the Treasury is reducing the amount of new
securities it issues. At the same time, demand remains strong. Global investors
are attracted to U.S. Treasury bonds, particularly in times of political or
financial unrest. This "flight to quality" was illustrated during the Asian
crisis in late October, when stock markets throughout the world fell sharply. We
expect these favorable supply and demand factors to continue in 1998.
ANNUAL REPORT MARKET PERSPECTIVE 3
<TABLE>
<CAPTION>
PERFORMANCE & PORTFOLIO INFORMATION
AVERAGE ANNUAL RETURNS
6 MONTHS 1 YEAR 3 YEARS LIFE OF FUND(2)
- -------------------------------------------------------------------------------------------------------------
TOTAL RETURNS AS OF MARCH 31, 1998(1)
<S> <C> <C> <C> <C>
Premium Bond .............................. 4.18% 11.14% 9.03% 6.45%
Lehman Aggregate Bond Index ............... 4.55% 11.99% 9.18% 6.94%
Average A-Rated Corporate Debt Fund(3) .... 4.15% 11.63% 8.73% 6.60%(4)
Fund's Ranking Among
A-Rated Corporate Debt Funds(3) ........... -- 79 out of 139 35 out of 113 32 out of 65(4)
(1) Returns for periods less than one year are not annualized.
(2) Inception date was April 1, 1993.
(3) According to Lipper Analytical Services.
(4) Since 4/30/93, the date nearest the fund's inception for which data are
available.
</TABLE>
See pages 20-21 for more information about returns, the comparative index and
Lipper fund rankings.
[mountain graph - data below]
GROWTH OF $100,000 OVER LIFE OF FUND
$100,000 investment made 4/1/93
Value on 3/31/98
Premium Bond Lehman Aggregate Bond Index
4/1/93 $100,000 $100,000
Apr-93 $100,740 $100,700
May-93 $100,300 $100,820
Jun-93 $101,870 $102,650
Jul-93 $102,460 $103,230
Aug-93 $104,460 $105,040
Sep-93 $104,620 $105,330
Oct-93 $104,890 $105,720
Nov-93 $104,020 $104,820
Dec-93 $104,530 $105,390
Jan-94 $105,970 $106,820
Feb-94 $103,370 $104,960
Mar-94 $100,910 $102,370
Apr-94 $99,910 $101,550
May-94 $99,770 $101,540
Jun-94 $99,530 $101,320
Jul-94 $101,650 $103,330
Aug-94 $101,540 $103,460
Sep-94 $100,020 $101,930
Oct-94 $99,810 $101,840
Nov-94 $99,590 $101,620
Dec-94 $100,250 $102,320
Jan-95 $102,120 $104,340
Feb-95 $104,630 $106,820
Mar-95 $105,430 $107,480
Apr-95 $106,990 $108,980
May-95 $111,950 $113,200
Jun-95 $112,630 $114,030
Jul-95 $112,070 $113,770
Aug-95 $113,680 $115,150
Sep-95 $114,820 $116,270
Oct-95 $116,560 $117,780
Nov-95 $118,530 $119,540
Dec-95 $120,400 $121,220
Jan-96 $121,110 $122,030
Feb-96 $118,510 $119,910
Mar-96 $117,580 $119,070
Apr-96 $116,750 $118,400
May-96 $116,420 $118,160
Jun-96 $117,860 $119,750
Jul-96 $118,130 $120,080
Aug-96 $117,910 $119,880
Sep-96 $119,980 $121,960
Oct-96 $122,820 $124,670
Nov-96 $125,150 $126,800
Dec-96 $123,690 $125,620
Jan-97 $123,960 $126,010
Feb-97 $124,310 $126,320
Mar-97 $122,960 $124,920
Apr-97 $124,600 $126,790
May-97 $125,630 $127,990
Jun-97 $127,030 $129,510
Jul-97 $130,500 $133,000
Aug-97 $129,230 $131,870
Sep-97 $131,170 $133,810
Oct-97 $133,140 $135,750
Nov-97 $133,530 $136,380
Dec-97 $134,640 $137,750
Jan-98 $136,400 $139,520
Feb-98 $136,090 $139,410
Mar-98 $136,650 $139,890
Past performance does not guarantee future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
The line representing the fund's total return includes operating expenses (such
as transaction costs and management fees) that reduce returns, while the index's
total return line does not.
PORTFOLIO AT A GLANCE
3/31/98 3/31/97
Number of Securities 98 47
Weighted Average Maturity 10.7 years 8.6 years
Average Duration 4.7 years 4.6 years
Expense Ratio 0.45% 0.45%
YIELD AS OF MARCH 31, 1998
30-DAY
SEC
YIELD
Premium Bond 5.87%
Yield is defined in the Glossary on page 21.
4 PERFORMANCE & PORTFOLIO INFORMATION AMERICAN CENTURY INVESTMENTS
MANAGEMENT Q&A
An interview with Bud Hoops and Jeff Houston, portfolio managers on the
Premium Bond fund investment team.
HOW DID THE FUND PERFORM OVER THE LAST YEAR?
Premium Bond produced a double-digit total return for the fiscal year ended
March 31, 1998, reflecting the generally strong performance of the U.S. bond
market. The fund returned 11.14%, while its benchmark, the Lehman Aggregate Bond
Index, returned 11.99%. (See the Total Returns table on the previous page for
other fund performance comparisons.)
WHAT CAUSED THE RETURN DISPARITY BETWEEN THE FUND AND ITS BENCHMARK?
Two factors caused most of the difference--the fund's duration and its asset
allocation.
Duration measures a portfolio's sensitivity to changes in interest rates.
The longer a fund's duration, the more you gain when rates fall, and the more
you lose when rates rise. Conversely, a shorter duration means a bond
portfolio's price fluctuates less when rates change. Premium Bond's duration was
shorter than that of its benchmark at various times during the fiscal year, so
the fund didn't benefit as much from the declining interest rate environment as
the benchmark.
The second factor behind the performance gap was our decision to overweight
corporate bonds, which underperformed Treasurys. The Asian economic crisis
created concerns about a global slowdown and the possible negative effects on
corporate profits and credit quality. This led to a corporate bond sell-off
during the fourth quarter of 1997, when many bond investors switched to the
relative safety of Treasury securities.
[bar graph - data below]
PREMIUM BOND'S ONE-YEAR RETURNS SINCE INCEPTION
(Periods ended March 31)
Premium Bond Lehman Aggregate Bond Index
3/94 0.92% 2.37%
3/95 4.48% 4.99%
3/96 11.53% 10.79%
3/97 4.57% 4.91%
3/98 11.14% 11.99%
This graph illustrates the fund's returns since its inception and compares them
with the index's returns. The fund's total returns include operating expenses,
while the index's do not. See page 20 for a definition of the index.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate, and redemption value may be more or less than
original cost.
ANNUAL REPORT MANAGEMENT Q & A 5
MANAGEMENT Q&A
Although investor demand eventually returned as corporates became a better
value relative to Treasurys, the intensity of the fourth-quarter downturn was
enough to affect the fund's overall performance.
WHAT CHANGES DID YOU MAKE TO THE PORTFOLIO DURING THE YEAR?
During the first half of the fiscal year, we brought the portfolio more in
line with its benchmark. By September, the fund more closely resembled the
taxable U.S. fixed-income market as a whole, which includes a blend of Treasury
bonds, mortgage-backed securities and corporate bonds.
However, we boosted our holdings in corporate bonds during the past six
months. By March 31, 1998, about 26% of the fund was invested in corporates,
compared to 20% for the benchmark.
WHY DID YOU EXPAND THE FUND'S CORPORATE BOND HOLDINGS?
The corporate bond sell-off in the fourth quarter of 1997, while painful in
the short term, provided a window of opportunity to find good bonds with
attractive yields relative to Treasury securities. Corporate bonds have
traditionally offered higher yields than Treasurys to compensate for their
greater credit risk. The spread, or difference, between corporate and Treasury
yields fluctuates as market conditions change.
For most of the 1990s, the yield spreads between high-grade corporate bonds
and Treasurys of similar maturity have narrowed because corporates generally
benefited from improving economic conditions and strong investor demand. This
declining yield spread made finding attractive values among corporate securities
more difficult--until the fourth-quarter sell-off widened the spread.
CAN YOU GIVE SOME EXAMPLES OF RECENT PURCHASES?
In late 1997 and early 1998, we bought what we considered to be bonds of
well-run corporations in industry sectors we favored. For example, we purchased
bonds issued by Ameritech, a regional telephone company with a strong balance
sheet. At the time, demand for corporate bonds was low, while supply was heavy
because of falling interest rates. As a result, the bond was priced attractively
compared with Treasurys, and we were confident that we could sell it later at a
higher price. Typically, a bond rated AA like Ameritech would offer only a
modest yield advantage over a comparable U.S. Treasury note. Instead, at the
time we bought it, the bond's yield was 72 basis points more than the 10-year
Treasury note yield.
In addition, we found value in sectors as diverse as AAA-rated utility bonds
in California, regional electric companies in the United Kingdom, and various
asset-backed security sectors.
[pie charts]
PORTFOLIO COMPOSITION BY SECURITY TYPE (as of 3/31/98)
U.S. Treasury Securities 27%
Corporate Bonds 26%
Mortgage-Backed
Securities 25%
Asset-Backed Securities 7%
Cash 7%
Other 8%
PORTFOLIO COMPOSITION BY SECURITY TYPE (as of 9/30/97)
U.S. Treasury Securities 47%
Corporate Bonds 18%
Mortgage-Backed
Securities 17%
Cash 7%
U.S. Government
Agency Notes 5%
Other 6%
6 MANAGEMENT Q & A AMERICAN CENTURY INVESTMENTS
MANAGEMENT Q&A
(Asset-backed securities are debt securities that represent ownership in a pool
of assets, such as credit card debt, auto loans or home equity loans.) We liked
asset-backed securities because we found good values and yields along with a AAA
rating.
WHAT IS THE POTENTIAL IMPACT OF A FEDERAL BUDGET SURPLUS ON THE FUND?
It should be mostly positive. The surplus means the government's borrowing
needs will shrink, and the Treasury has already announced reductions in the
amount of securities it will issue going forward. The lower supply of Treasurys
should boost their prices, and we also expect investors to buy more bonds in
other sectors of the U.S. market as Treasurys become scarcer. All else being
equal, the end result should be higher prices and lower yields for all U.S. bond
sectors, as well as favorable returns for fund holdings.
WHAT IS YOUR OUTLOOK FOR THE U.S. BOND MARKET?
As long as inflation stays low and economic growth remains healthy, the bond
market should be a good place to be. Although unemployment is low and wage
pressures are mounting, there is still no sign of inflation. U.S. economic
growth is strong, but it has constraints --the Asian economic crisis is
projected to reduce U.S. growth somewhat. The federal government is running its
first budget surplus in 30 years, which reduces bond supply and exerts downward
pressure on interest rates. The stock market could become more volatile as it
attempts to scale new heights, possibly prompting investors to buy bonds as a
diversification vehicle.
WITH THIS OUTLOOK IN MIND, WHAT IS YOUR STRATEGY FOR THE FUND GOING FORWARD?
Because we believe that interest rates are likely to remain within their
current range--between 5.50% and 6.25% for the 30-year Treasury bond, for
example--we intend to keep the fund's duration near that of its benchmark, which
is currently 4.5 years. In addition, we will continue to emphasize corporate
bonds, mortgage-backed securities and other investments that offer higher yields
than U.S. Treasury bonds. We'll be working closely with our credit research
staff to uncover attractively valued securities with the potential to enhance
returns.
[pie charts]
PORTFOLIO COMPOSITION BY CREDIT RATING (as of 3/31/98)
AAA 74%
AA 3%
A 9%
BBB 14%
PORTFOLIO COMPOSITION BY CREDIT RATING (as of 9/30/97)
AAA 79%
AA 3%
A 9%
BBB 9%
ANNUAL REPORT MANAGEMENT Q & A 7
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
Principal Amount Value
- --------------------------------------------------------------------------------
U.S. TREASURY SECURITIES
$ 5,000,000 U.S. Treasury Notes, 6.25%,
3/31/99(1) $ 5,036,000
300,000 U.S. Treasury Notes, 7.125%,
9/30/99 306,525
1,000,000 U.S. Treasury Notes, 5.625%,
12/31/99 1,000,800
400,000 U.S. Treasury Notes, 7.75%,
1/31/00(1) 414,740
1,000,000 U.S. Treasury Notes, 6.375%,
5/15/00(1) 1,015,220
200,000 U.S. Treasury Notes, 6.625%,
7/31/01 205,768
1,000,000 U.S. Treasury Notes, 7.50%,
11/15/01(1) 1,059,070
1,000,000 U.S. Treasury Notes, 6.625%,
3/31/02(1) 1,033,030
300,000 U.S. Treasury Notes, 5.50%,
1/31/03 297,996
200,000 U.S. Treasury Notes, 6.625%,
5/15/07 212,270
1,000,000 U.S. Treasury Bonds, 12.00%,
8/15/08 1,469,070
1,000,000 U.S. Treasury Bonds, 9.25%,
2/15/16 1,354,570
1,400,000 U.S. Treasury Bonds, 8.875%,
8/15/17 1,857,226
400,000 U.S. Treasury Bonds, 7.125%,
2/15/23 456,588
300,000 U.S. Treasury Bonds, 7.50%,
11/15/24 358,968
475,000 U.S. Treasury Bonds, 7.625%,
2/15/25 576,593
300,000 U.S. Treasury Bonds, 6.00%,
2/15/26 299,973
850,000 U.S. Treasury Bonds, 6.375%,
8/16/27 898,560
250,000 U.S. Treasury Bonds, 6.125%,
11/15/27 256,390
--------------------
TOTAL U.S. TREASURY SECURITIES -- 26.8% 18,109,357
--------------------
(Cost $17,464,361)
Principal Amount Value
- --------------------------------------------------------------------------------
U.S. GOVERNMENT AGENCY SECURITIES
$1,000,000 FHLMC, 6.10%, 11/27/00 $ 1,000,660
500,000 FHLMC, 7.09%, 11/24/06 503,605
500,000 FNMA MTN, 7.00%, 2/20/07 513,750
1,000,000 FNMA MTN, 7.49%, 5/22/07 1,029,620
--------------------
TOTAL U.S. GOVERNMENT
AGENCY SECURITIES -- 4.5% 3,047,635
--------------------
(Cost $2,998,072)
MORTGAGE-BACKED SECURITIES(2)
982,226 FHLMC Pool #E68523,
6.50%, 10/7/03 987,205
461,158 FHLMC Pool #D75034, 8.50%,
10/1/26 482,260
987,527 FHLMC Pool #C00578, 6.50%,
1/1/28 979,171
1,317,499 FNMA Pool #272894, 6.00%,
2/1/09 1,304,573
887,972 FNMA Pool #392607, 7.00%,
7/1/12 904,540
946,739 FNMA Pool #405425, 7.00%,
12/1/27 957,426
757,500 FNMA Pool #413812, 6.50%,
1/1/28 750,143
1,279,895 GNMA Pool #313107, 7.00%,
11/15/22 1,298,324
107,560 GNMA Pool #407141, 9.25%,
2/15/25 116,343
327,648 GNMA Pool #408099, 8.75%,
3/15/25 352,162
154,034 GNMA Pool #407254, 9.25%,
3/15/25 166,612
229,054 GNMA Pool #432437, 7.50%,
4/15/27 235,215
950,958 GNMA Pool #447692, 7.50%,
5/15/27 976,537
896,568 GNMA Pool #423061, 8.00%,
6/15/27 929,523
565,919 GNMA Pool #443782, 7.50%,
11/15/27 581,141
158,205 GNMA Pool #461011, 7.50%,
11/15/27 162,461
See Notes to Financial Statements
8 SCHEDULE OF INVESTMENTS AMERICAN CENTURY INVESTMENTS
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
Principal Amount Value
- --------------------------------------------------------------------------------
$ 699,320 GNMA Pool #467626, 7.00%,
2/15/28 $ 707,208
693,000 GNMA Pool #458862, 7.50%,
2/15/28 711,586
-----------------
TOTAL MORTGAGE-BACKED
SECURITIES -- 18.6% 12,602,430
-----------------
(Cost $12,442,011)
FORWARD COMMITMENTS
2,000,000 FNMA purchase, 7.00%, settlement
4/1/98 2,021,874
2,000,000 FNMA purchase, 7.50%, settlement
4/13/98 2,051,874
-----------------
TOTAL FORWARD COMMITMENTS -- 6.0% 4,073,748
-----------------
(Cost $4,074,375)
ASSET-BACKED SECURITIES(2)
600,000 California Infrastructure SCE-1,
Series 1997-1, Class A6, 6.38%,
4/27/05 608,523
1,000,000 CIT RV Trust, Series 1997 A,
Class A6, 6.35%, 11/15/00 1,006,835
600,000 Green Tree Financial Corp.,
Series 1995-7, Class A3, 6.35%,
11/15/26 602,583
1,000,000 Money Store (The) Home Equity
Trust, Series 1997 C, Class AF6,
6.67%, 3/1/03 1,007,045
404,599 Textron Financial Corp. Receivables
Trust, Series 1997 A, Class A,
6.05%, 3/16/09 (Acquired
9/18/97, Cost $499,337)(3) 405,062
500,000 United Companies Financial Corp.,
Home Equity Loan, Series
1996 D1, Class A5, 6.92%,
10/15/18 509,143
500,000 United Companies Financial Corp.,
Home Equity Loan, Series
1997 C, Class A7, 6.85%,
1/15/29 505,578
398,696 World Omni Automobile Lease
Securitization, Series 1996 B,
Class A2, 6.20%, 11/15/02 399,858
-----------------
TOTAL ASSET-BACKED SECURITIES -- 7.5% 5,044,627
-----------------
(Cost $4,995,412)
Principal Amount Value
- --------------------------------------------------------------------------------
CORPORATE BONDS
AIRLINES -- 0.7%
$ 461,785 Delta Air Lines, Inc., 7.54%,
10/11/11 $ 485,211
-----------------
AUTOMOBILES & AUTO PARTS -- 0.5%
350,000 General Motors Corp., 7.00%,
6/15/03 362,082
-----------------
BANKING -- 3.0%
250,000 Corestates Capital Corp., 5.875%,
10/15/03 245,890
200,000 First Union Corp., 8.77%,
11/15/04 208,642
300,000 MBNA Corp., 6.875%, 10/1/99 303,144
500,000 MBNA Global Capital Securities,
VRN, 6.45%, 5/1/98, resets
quarterly off the 3-month LIBOR
plus 0.80% with no caps 460,676
500,000 National Bank of Canada, 8.125%,
8/15/04 542,290
300,000 Santander Financial Issuances Ltd.,
6.375%, 2/15/11 291,396
-----------------
2,052,038
-----------------
CHEMICALS & RESINS -- 0.6%
300,000 ARCO Chemical Co., 10.25%,
11/1/10 400,599
-----------------
COMMUNICATIONS SERVICES -- 4.0%
350,000 Ameritech Capital Funding, 6.15%,
1/15/08 347,928
350,000 Cable & Wireless Communications,
6.625%, 3/6/05 352,191
400,000 TCI Communications, Inc., 6.375%,
9/15/99 400,552
500,000 TKR Cable Inc., 10.50%,
10/30/99 552,445
500,000 WorldCom Inc., 8.875%, 1/15/01 545,000
500,000 WorldCom Inc., 7.55%, 4/1/04 525,970
-----------------
2,724,086
-----------------
See Notes to Financial Statements
ANNUAL REPORT SCHEDULE OF INVESTMENTS 9
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
Principal Amount Value
- --------------------------------------------------------------------------------
ELECTRICAL & ELECTRONIC COMPONENTS -- 1.0%
$ 200,000 Anixter International Inc., 8.00%,
9/15/03 $ 211,604
500,000 Yorkshire Power Finance, 6.15%,
2/25/03 (Acquired 2/19/98,
Cost $500,000)(3) 496,925
-----------------
708,529
-----------------
ENERGY (PRODUCTION & MARKETING) -- 1.7%
750,000 Enron Corp., 6.625%, 11/15/05 759,075
400,000 Seagull Energy Corp., 7.50%,
9/15/27 415,068
-----------------
1,174,143
-----------------
FINANCIAL SERVICES -- 4.4%
400,000 Advanta Corp., MTN, Series B,
7.00%, 5/1/01 383,796
500,000 Associates Corp., N.A., 6.625%,
6/15/05 510,095
400,000 Dean Witter, Discover & Co.,
6.875%, 3/1/03 411,080
200,000 Ford Motor Credit Co., 6.75%,
5/15/05 204,848
550,000 Lehman Brothers Holdings Inc.,
6.625%, 11/15/00 555,385
250,000 Lehman Brothers Holdings Inc.,
MTN, Series 1998 E, 6.00%,
2/26/01 248,023
300,000 Paine Webber Group Inc., 7.875%,
2/15/03 317,193
400,000 Wharf International Finance Ltd.,
7.625%, 3/13/07 358,532
-----------------
2,988,952
-----------------
INSURANCE -- 0.7%
450,000 Zurich Capital Trust I, 8.38%,
6/1/37 (Acquired
5/28/97 through 6/11/97, Cost
$452,966)(3) 491,576
-----------------
LEISURE -- 0.5%
350,000 Hilton Hotels Corp., 7.00%,
7/15/04 353,301
-----------------
MACHINERY & EQUIPMENT -- 0.5%
300,000 Time Warner Inc., 6.85%,
1/15/26 311,184
-----------------
Principal Amount Value
- --------------------------------------------------------------------------------
MEDICAL EQUIPMENT & SUPPLIES -- 0.7%
$ 450,000 United States Surgical Corp.,
7.25%, 3/15/08 $ 450,288
-----------------
METALS & MINING -- 0.9%
600,000 Barrick Gold Corp., 7.50%,
5/1/07 633,876
-----------------
OFFICE EQUIPMENT & SUPPLIES -- 0.6%
350,000 Xerox Capital Trust, 8.00%,
2/1/27 (Acquired 7/17/97,
Cost $364,084)(3) 371,774
-----------------
PRINTING & PUBLISHING -- 0.4%
250,000 News America Inc., 6.625%,
1/9/08 (Acquired 2/12/98,
Cost $248,938)(3) 247,230
-----------------
RAILROAD -- 0.6%
350,000 Norfolk Southern Corp., 7.90%,
5/15/97 397,173
-----------------
REAL ESTATE -- 2.2%
500,000 Chelsea GCA Realty Partners,
7.25%, 10/21/07 510,315
450,000 Price REIT, Inc. (The), 7.25%,
11/1/00 458,604
500,000 Spieker Properties, Inc., 6.80%,
12/15/01 509,060
-----------------
1,477,979
-----------------
RETAIL (GENERAL MERCHANDISE) -- 0.6%
300,000 Sears, Roebuck & Co., Inc.,
9.375%, 11/1/11 373,872
-----------------
TOBACCO -- 0.4%
250,000 Philip Morris Companies Inc.,
7.00%, 7/15/05 256,252
-----------------
UTILITIES -- 1.9%
350,000 CalEnergy Co. Inc., 7.63%,
10/15/07 350,921
500,000 Columbia Gas System, Inc. (The),
6.80%, 11/28/05 512,500
400,000 Duke Power Co., 6.875%, 8/1/23 394,520
-----------------
1,257,941
-----------------
TOTAL CORPORATE BONDS -- 25.9% 17,518,086
-----------------
(Cost $17,203,901)
See Notes to Financial Statements
10 SCHEDULE OF INVESTMENTS AMERICAN CENTURY INVESTMENTS
SCHEDULE OF INVESTMENTS
MARCH 31, 1998
Principal Amount Value
- --------------------------------------------------------------------------------
SOVEREIGN GOVERNMENTS & AGENCIES -- 0.9%
$ 500,000 Hydro-Quebec, 8.05%, 7/7/24 $ 580,050
-----------------
(Cost $540,931)
MUNICIPAL OBLIGATION -- 2.8%
2,000,000 Massachusetts Water Resource
Auth. Rev., Series 1993 C,
4.75%, 12/1/23 (MBIA) 1,867,760
-----------------
(Cost $1,857,202)
TEMPORARY CASH INVESTMENTS
Repurchase Agreement, Goldman Sachs & Co.,
Inc., (U.S. Treasury obligations), in a joint
trading account at 5.65%, dated 3/31/98,
due 4/1/98 (Delivery value $1,503,236) 1,503,000
Repurchase Agreement, Merrill Lynch & Co., Inc.,
(U.S. Treasury obligations), in a joint trading
account at 5.90%, dated 3/31/98, due
4/1/98 (Delivery value $3,191,523) 3,191,000
------------------
TOTAL TEMPORARY
CASH INVESTMENTS -- 7.0% 4,694,000
------------------
(Cost $4,694,000)
TOTAL INVESTMENT SECURITIES -- 100.0% $67,537,693
==================
(Cost $66,270,265)
NOTES TO SCHEDULE OF INVESTMENTS
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
GNMA = Government National Mortgage Association
LIBOR = London Interbank Offered Rate
MBIA = MBIA Insurance Corp.
MTN = Medium Term Note
VRN = Variable Rate Note. Interest reset date is indicated and used in
calculating the weighted average portfolio maturity. Coupon rate indicated
is effective March 31, 1998.
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.
(1) Security, or a portion thereof, has been segregated for the forward
commitments.
(2) Final maturity indicated. Expected remaining maturity used for purposes of
calculating the weighted average portfolio maturity.
(3) Security was purchased under Rule 144A or section 4(2) of the Securities
Act of 1933 and, unless registered under the Act or exempted from
registration, may only be sold to qualified institutional investors. The
aggregate value of restricted securities at March 31, 1998, was
$2,012,567, which represented 3.1% of net assets.
See Notes to Financial Statements
ANNUAL REPORT SCHEDULE OF INVESTMENTS 11
STATEMENT OF ASSETS AND LIABILITIES
MARCH 31, 1998
ASSETS
Investment securities, at value
(identified cost of $66,270,265)
(Note 3) ............................................... $67,537,693
Cash ..................................................... 916
Receivable for capital shares sold ....................... 1,071,222
Interest receivable ...................................... 713,494
-----------
69,323,325
-----------
LIABILITIES
Disbursements in excess
of demand deposit cash ................................. 539
Payable for investments purchased ........................ 4,084,042
Payable for capital shares redeemed ...................... 1,300
Accrued management fees (Note 2) ......................... 24,390
Dividends payable ........................................ 41,914
-----------
4,152,185
-----------
Net Assets ............................................... $65,171,140
===========
CAPITAL SHARES, $0.01 PAR VALUE
Authorized ............................................... 100,000,00
===========
Outstanding .............................................. 6,418,885
===========
Net Asset Value Per Share ................................ $ 10.15
===========
NET ASSETS CONSIST OF:
Capital (par value and paid-in surplus) .................. $63,501,81
Undistributed net investment income ...................... 21,897
Accumulated undistributed net
realized gain on investments ........................... 380,005
Net unrealized appreciation on
investments (Note 3) ................................... 1,267,428
-----------
$65,171,140
===========
See Notes to Financial Statements
12 STATEMENT OF ASSETS AND LIABILITIES AMERICAN CENTURY INVESTMENTS
STATEMENT OF OPERATIONS
YEAR ENDED MARCH 31, 1998
INVESTMENT INCOME
Income:
Interest ................................................ $3,729,929
----------
Expenses (Note 2):
Management fees ......................................... 258,139
Directors' fees and expenses ............................ 541
----------
258,680
----------
Net investment income ................................... 3,471,249
----------
REALIZED AND UNREALIZED
GAIN ON INVESTMENTS (NOTE 3)
Net realized gain on investments ........................ 817,782
Change in net unrealized
appreciation on investments ........................... 1,701,053
----------
Net realized and unrealized
gain on investments ................................... 2,518,835
----------
Net Increase in Net Assets
Resulting from Operations ............................. $5,990,084
==========
See Notes to Financial Statements
ANNUAL REPORT STATEMENT OF OPERATIONS 13
STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED MARCH 31, 1998
AND MARCH 31, 1997
Increase in Net Assets 1998 1997
OPERATIONS
Net investment income .................. $ 3,471,249 $ 1,269,694
Net realized gain (loss)
on investments ....................... 817,782 (7,433)
Change in net unrealized
appreciation (depreciation)
on investments ....................... 1,701,053 (393,769)
------------ ------------
Net increase in net assets
resulting from operations ............ 5,990,084 868,492
------------ ------------
DISTRIBUTIONS TO
SHAREHOLDERS
From net investment income ............. (3,471,249) (1,269,694)
From net realized gains from
investment transactions ............. (387,844) --
------------ ------------
Decrease in net assets
from distributions ................... (3,859,093) (1,269,694)
------------ ------------
CAPITAL SHARE TRANSACTIONS
Proceeds from shares sold .............. 72,857,318 7,964,953
Proceeds from reinvestment
of distributions ..................... 3,796,289 1,246,658
Payments for shares redeemed ........... (35,363,449) (7,339,935)
------------ ------------
Net increase in net assets
from capital share transactions ...... 41,290,158 1,871,676
------------ ------------
Net increase in net assets ............. 43,421,149 1,470,474
NET ASSETS
Beginning of year ...................... 21,749,991 20,279,517
------------ ------------
End of year ............................ $ 65,171,140 $ 21,749,991
============ ============
Undistributed net
investment income .................... $ 21,897 --
============ ============
TRANSACTIONS IN SHARES
OF THE FUNDS
Sold ................................... 7,303,108 805,036
Issued in reinvestment
of distributions ..................... 376,344 126,431
Redeemed ............................... (3,489,976) (743,472)
------------ ------------
Net increase ........................... 4,189,476 187,995
============ ============
See Notes to Financial Statements
14 STATEMENTS OF CHANGES IN NET ASSETS AMERICAN CENTURY INVESTMENTS
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- American Century Premium Reserves, Inc. (the Corporation) is
registered under the Investment Company Act of 1940 as an open-end diversified
management investment company. American Century - Benham Premium Bond Fund
(Premium Bond) is one of the three funds issued by the Corporation. The
investment objective of Premium Bond is to obtain a high level of income from
investments in a portfolio of longer-term bonds and other debt obligations. The
following significant accounting policies, related to the Fund, are in
accordance with accounting policies generally accepted in the investment company
industry.
SECURITY VALUATIONS -- Securities are valued through a commercial pricing
service or at the mean of the most recent bid and asked prices. When valuations
are not readily available, securities are valued at fair value as determined in
accordance with procedures adopted by the Board of Directors.
SECURITY TRANSACTIONS -- Security transactions are accounted for on the date
purchased or sold. Net realized gains and losses are determined on the
identified cost basis, which is also used for federal income tax purposes.
INVESTMENT INCOME -- Interest income is recorded on the accrual basis and
includes accretion of discounts and amortization of premiums.
FORWARD COMMITMENTS -- The Fund may purchase and sell U.S. government
securities on a firm commitment basis. Under these arrangements, the securities'
prices and yields are fixed on the date of the commitment, but payment and
delivery are scheduled for a future date. During this period, securities are
subject to market fluctuations. The Fund maintains segregated accounts
consisting of cash or liquid securities in an amount sufficient to meet the
purchase price.
REPURCHASE AGREEMENTS -- The Fund may enter into repurchase agreements with
institutions that the Fund's investment manager, American Century Investment
Management, Inc. (ACIM), has determined are creditworthy pursuant to criteria
adopted by the Board of Directors. Each repurchase agreement is recorded at
cost. The Fund requires that the collateral, represented by securities, received
in a repurchase transaction be transferred to the custodian in a manner
sufficient to enable the Fund to obtain those securities in the event of a
default under the repurchase agreement. ACIM monitors, on a daily basis, the
securities transferred to ensure the value, including accrued interest, of the
securities under each repurchase agreement is equal to or greater than amounts
owed to the Fund under each repurchase agreement.
JOINT TRADING ACCOUNT -- Pursuant to an Exemptive Order issued by the
Securities and Exchange Commission, the Fund, along with other registered
investment companies having management agreements with ACIM, may transfer
uninvested cash balances into a joint trading account held at the Fund's
custodian. These balances are invested in one or more repurchase agreements that
are collateralized by U.S. Treasury or Agency obligations.
INCOME TAX STATUS -- It is the Fund's policy to distribute all net
investment income and net realized capital gains to shareholders and to
otherwise qualify as a regulated investment company under the provisions of the
Internal Revenue Code. Accordingly, no provision has been made for federal or
state income taxes.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income
are declared daily and distributed monthly. Distributions from net realized
gains are declared and paid annually.
The character of distributions made during the year from net investment
income or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net capital gains and losses for financial statement
and tax purposes and may result in reclassification among certain capital
accounts.
USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of increases and decreases in
net assets from operations during the period. Actual results could differ from
these estimates.
ADDITIONAL INFORMATION -- Effective January 15, 1998, Funds Distributor,
Inc. (FDI) became the Corporation's distributor. Certain officers of FDI are
also officers of the Corporation.
ANNUAL REPORT NOTES TO FINANCIAL STATEMENTS 15
NOTES TO FINANCIAL STATEMENTS
MARCH 31, 1998
- --------------------------------------------------------------------------------
2. TRANSACTIONS WITH RELATED PARTIES
The Corporation has entered into a Management Agreement with ACIM that
provides the Fund with investment advisory and management services in exchange
for a single, unified management fee. The Agreement provides that all expenses
of the Fund, except brokerage commissions, taxes, interest, expenses of those
directors who are not considered "interested persons" as defined in the
Investment Company Act of 1940 (including counsel fees) and extraordinary
expenses, will be paid by ACIM. The fee is computed daily and paid monthly based
on the Fund's average daily closing net assets during the previous month. The
annual management fee for the Fund is 0.45%.
Certain officers and directors of the Corporation are also officers and/or
directors, and, as a group, controlling stockholders of American Century
Companies, Inc., the parent of the Corporation's investment manager, ACIM, the
Corporation's transfer agent, American Century Services Corporation, and the
registered broker-dealer, American Century Investment Services, Inc.
- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
Purchases of investment securities, excluding short-term investments,
totaled $112,762,209, including U.S. Treasury and Agency obligations totaling
$94,862,365. Sales of investment securities, excluding short-term investments,
totaled $73,627,005, including U.S. Treasury and Agency obligations totaling
$71,102,376.
As of March 31, 1998, accumulated net unrealized appreciation was
$1,259,064, based on the aggregate cost of investments for federal income tax
purposes of $66,278,629, which consisted of unrealized appreciation of
$1,358,015 and unrealized depreciation of $98,951.
16 NOTES TO FINANCIAL STATEMENTS AMERICAN CENTURY INVESTMENTS
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
For a Share Outstanding Throughout the Years Ended March 31
1998 1997 1996 1995 1994
PER-SHARE DATA
Net Asset Value,
<S> <C> <C> <C> <C> <C>
Beginning of Year ........... $ 9.76 $ 9.93 $ 9.46 $ 9.64 $ 10.00
---------- ---------- ---------- ---------- ----------
Income From Investment
Operations
Net Investment Income ..... 0.61 0.61 0.61 0.59 0.46
Net Realized and Unrealized
Gain (Loss) on Investments 0.45 (0.17) 0.47 (0.18) (0.36)
---------- ---------- ---------- ---------- ----------
Total From Investment
Operations ................ 1.06 0.44 1.08 0.41 0.10
---------- ---------- ---------- ---------- ----------
Distributions
From Net Investment Income (0.61) (0.61) (0.61) (0.59) (0.46)
From Net Realized
Capital Gains ............. (0.06) -- -- -- --
---------- ---------- ---------- ---------- ----------
Total Distributions ....... (0.67) (0.61) (0.61) (0.59) (0.46)
---------- ---------- ---------- ---------- ----------
Net Asset Value, End of Year $ 10.15 $ 9.76 $ 9.93 $ 9.46 $ 9.64
========== ========== ========== ========== ==========
Total Return(1) ........... 11.14% 4.57% 11.53% 4.48% 0.92%
RATIOS/SUPPLEMENTAL DATA
Ratio of Operating Expenses
to Average Net Assets ....... 0.45% 0.45% 0.43% 0.45% 0.45%
Ratio of Net Investment
Income to Average
Net Assets ................ 6.06% 6.20% 6.08% 6.30% 4.65%
Portfolio Turnover .......... 138% 63% 92% 51% 144%
Net Assets, End
of Period (in thousands) .... $ 65,171 $ 21,750 $ 20,280 $ 10,334 $ 8,080
(1) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
</TABLE>
See Notes to Financial Statements
ANNUAL REPORT FINANCIAL HIGHLIGHTS 17
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Shareholders,
American Century Premium Reserves, Inc.:
We have audited the accompanying statement of assets and liabilities,
including the schedule of investments, of American Century - Benham Premium Bond
Fund (the "Fund"), one of the funds comprising American Century Premium
Reserves, Inc., as of March 31, 1998, and the related statements of operations
and changes in net assets for the year then ended, and the financial highlights
for the year then ended. These financial statements and the financial highlights
are the responsibility of the Fund's management. Our responsibility is to
express an opinion on these financial statements and the financial highlights
based on our audit. The financial statements and the financial highlights of the
Fund for each of the years in the four-year period ended March 31, 1997 were
audited by other auditors whose report, dated April 25, 1997, expressed an
unqualified opinion on those statements and financial highlights.
We conducted our audit 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 at March
31, 1998 by correspondence with the custodian and brokers. 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 audit provides a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of American Century -
Benham Premium Bond Fund as of March 31, 1998, the results of its operations,
the changes in its net assets, and the financial highlights for the year then
ended in conformity with generally accepted accounting principles.
Deloitte & Touche LLP
Kansas City, Missouri
April 30, 1998
18 INDEPENDENT AUDITORS' REPORT AMERICAN CENTURY INVESTMENTS
RETIREMENT ACCOUNT INFORMATION
As required by law, any distributions you receive from an IRA and certain
403(b) distributions [not eligible for rollover to an IRA or to another 403(b)]
are subject to federal income tax withholding at the rate of 10% of the total
amount withdrawn, unless you elect not to have withholding apply. If you don't
want us to withhold on this amount, you may send us a written notice not to have
the federal income tax withheld. Your written notice is valid for six months
from the date of receipt at American Century. Even if you plan to roll over the
amount you withdraw to another tax-deferred account, the withholding rate still
applies to the withdrawn amount unless we have received a written notice not to
withhold federal income tax within six months prior to the withdrawal.
When you plan to withdraw, you may make your election by completing our
Exchange/ Redemption form or an IRS Form W-4P. Call American Century for either
form. Your written election is valid for only six months from the date of
receipt at American Century. You may revoke your election at any time by sending
a written notice to us.
Remember, even if you elect not to have income tax withheld, you are liable
for paying income tax on the taxable portion of your withdrawal. If you elect
not to have income tax withheld or you don't have enough income tax withheld,
you may be responsible for payment of estimated tax. You may incur penalties
under the estimated tax rules if your withholding and estimated tax payments are
not sufficient.
ANNUAL REPORT RETIREMENT ACCOUNT INFORMATION 19
BACKGROUND INFORMATION
INVESTMENT PHILOSOPHY & POLICIES
The Benham Group offers 39 fixed-income funds, ranging from money market
funds to long-term bond funds and including both taxable and tax-exempt funds.
Each fund is managed to provide a "pure play" on a specific sector of the
fixed-income market. To ensure adherence to this principle, the basic structure
of each fund's portfolio is tied to a specific market index. Fund managers
attempt to add value by making modest portfolio adjustments based on their
analysis of prevailing market conditions. Investment decisions are made by
management teams, which meet regularly to discuss market analysis and investment
strategies.
PREMIUM BOND seeks a high level of income from investment in longer-term
bonds and other debt instruments. It is designed for investors whose primary
goal is a level of income higher than is generally provided by money market or
short- and intermediate-term securities and who can accept the generally greater
price volatility associated with longer-term bonds.
COMPARATIVE INDICES
The following index is used in the report for fund performance comparisons.
It is not an investment product available for purchase.
The LEHMAN AGGREGATE BOND INDEX is composed of the Lehman
Government/Corporate Index and the Lehman Mortgage-Backed Securities Index. It
reflects the price fluctuations of Treasury securities, U.S. government agency
securities, corporate bond issues and mortgage-backed securities.
LIPPER RANKINGS
LIPPER ANALYTICAL SERVICES, INC. is an independent mutual fund ranking
service that groups funds according to their investment objectives. Rankings are
based on average annual returns for each fund in a given category for the
periods indicated. Rankings are not included for periods less than one year.
The Lipper category for Premium Bond is:
CORPORATE DEBT FUNDS RATED A --funds that invest at least 65% of their
assets in government issues or corporate debt issues rated A or better.
- --------------------------------------------------------------------------------
INVESTMENT TEAM LEADERS
- --------------------------------------------------------------------------------
Portfolio Managers Bud Hoops, Jeff Houston
Credit Research Manager Greg Afiesh
- --------------------------------------------------------------------------------
20 BACKGROUND INFORMATION AMERICAN CENTURY INVESTMENTS
GLOSSARY
RETURNS
* TOTAL RETURN figures show the overall percentage change in the value of a
hypothetical investment in the fund and assume that all of the fund's
distributions are reinvested.
* AVERAGE ANNUAL RETURNS illustrate the annually compounded returns that would
have produced the fund's cumulative total returns if the fund's performance had
been constant over the entire period. Average annual returns smooth out
variations in a fund's return; they are not the same as fiscal year-by-year
results. For fiscal year-by-year returns, please refer to the "Financial
Highlights" on page 17.
YIELDS
* 30-DAY SEC YIELD represents net investment income earned by the fund over a
30-day period, expressed as an annual percentage rate based on the fund's share
price at the end of the 30-day period. The SEC yield should be regarded as an
estimate of the fund's rate of investment income, and it may not equal the
fund's actual income distribution rate, the income paid to a shareholder's
account, or the income reported in the fund's financial statements.
PORTFOLIO STATISTICS
* NUMBER OF SECURITIES--the number of different securities held by a fund on a
given date.
* WEIGHTED AVERAGE MATURITY (WAM)--a measure of the sensitivity of a
fixed-income portfolio to interest rate changes. WAM indicates the average time
until the securities in the portfolio mature, weighted by dollar amount. The
longer the WAM, the more interest rate exposure and sensitivity the portfolio
has.
* AVERAGE DURATION--another measure of the sensitivity of a fixed-income
portfolio to interest rate changes. Duration is a time-weighted average of the
interest and principal payments of the securities in a portfolio. As the
duration of a portfolio increases, so does the impact of a change in interest
rates on the value of the portfolio.
* EXPENSE RATIO--the operating expenses of the fund, expressed as a percentage
of average net assets. Shareholders pay an annual fee to the investment manager
for investment advisory and management services. The expenses and fees are
deducted from fund income, not from each shareholder account. (See Note 2 in the
Notes to Financial Statements.)
TYPES OF FIXED-INCOME SECURITIES
* ASSET-BACKED SECURITIES--debt securities that represent ownership in a pool of
assets, such as credit card debt, auto loans or home equity loans.
* CORPORATE BONDS--debt securities or instruments issued by companies and
corporations.
* MORTGAGE-BACKED SECURITIES--debt securities that represent ownership in pools
of mortgage loans.
* U.S. GOVERNMENT AGENCY SECURITIES--debt securities issued by U.S. government
agencies (such as the Federal Home Loan Bank and the Federal Farm Credit Bank).
Government agency securities include discount notes (maturing in one year or
less) and medium-term notes, debentures and bonds (maturing in three months to
50 years).
* U.S. TREASURY SECURITIES--debt securities issued by the U.S. Treasury and
backed by the direct "full faith and credit" pledge of the U.S. government.
Treasury securities include bills (maturing in one year or less), notes
(maturing in two to 10 years) and bonds (maturing in more than 10 years).
ANNUAL REPORT GLOSSARY 21
[american century logo(reg. sm)]
American
Century(reg.tm)
P.O. BOX 419200
KANSAS CITY, MISSOURI
64141-6200
INVESTOR SERVICES:
1-800-345-2021 OR 816-531-5575
AUTOMATED INFORMATION LINE:
1-800-345-8765
TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113 OR 816-444-3485
FAX: 816-340-7962
INTERNET: WWW.AMERICANCENTURY.COM
AMERICAN CENTURY PREMIUM RESERVES, INC.
INVESTMENT MANAGER
AMERICAN CENTURY INVESTMENT MANAGEMENT, INC.
KANSAS CITY, MISSOURI
THIS REPORT AND THE STATEMENTS IT CONTAINS ARE SUBMITTED FOR THE GENERAL
INFORMATION OF OUR SHAREHOLDERS. THE REPORT IS NOT AUTHORIZED FOR DISTRIBUTION
TO PROSPECTIVE INVESTORS UNLESS PRECEDED OR ACCOMPANIED BY AN EFFECTIVE
PROSPECTUS.
(c) 1998 AMERICAN CENTURY SERVICES CORPORATION
FUNDS DISTRIBUTOR, INC.
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SH-BKT-12405 Recycled
