UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-10155
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AMERICAN CENTURY VARIABLE PORTFOLIOS II, INC.
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(Exact name of registrant as specified in charter)
4500 MAIN STREET, KANSAS CITY, MISSOURI 64111
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(Address of principal executive offices) (Zip code)
DAVID C. TUCKER, ESQ., 4500 MAIN STREET, 9TH FLOOR, KANSAS CITY, MISSOURI 64111
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(Name and address of agent for service)
Registrant's telephone number, including area code: 816-531-5575
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Date of fiscal year end: DECEMBER 31, 2003
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Date of reporting period: DECEMBER 31, 2003
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ITEM 1. REPORTS TO STOCKHOLDERS.
DECEMBER 31, 2003
American Century Variable Portfolios II
Annual Report
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VP Inflation Protection
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TABLE OF CONTENTS
VP INFLATION PROTECTION
Performance............................................................... 2
Portfolio Commentary...................................................... 3
Portfolio at a Glance.................................................. 3
Types of Investments in Portfolio...................................... 4
Schedule of Investments................................................... 5
FINANCIAL STATEMENTS
Statement of Assets and Liabilities....................................... 6
Statement of Operations................................................... 7
Statement of Changes in Net Assets........................................ 8
Notes to Financial Statements............................................. 9
Financial Highlights...................................................... 12
Report of Independent Auditors............................................ 13
OTHER INFORMATION
Management................................................................ 14
Share Class Information................................................... 17
Additional Information.................................................... 18
The opinions expressed in the Portfolio Commentary reflect those of the
portfolio management team as of the date of the report, and do not necessarily
represent the opinions of American Century or any other person in the American
Century organization. Any such opinions are subject to change at any time based
upon market or other conditions and American Century disclaims any
responsibility to update such opinions. These opinions may not be relied upon as
investment advice and, because investment decisions made by American Century
funds are based on numerous factors, may not be relied upon as an indication of
trading intent on behalf of any American Century fund. Security examples are
used for representational purposes only and are not intended as recommendations
to purchase or sell securities. Performance information for comparative indices
and securities is provided to American Century by third party vendors. To the
best of American Century's knowledge, such information is accurate at the time
of printing.
VP Inflation Protection - Performance
TOTAL RETURNS AS OF DECEMBER 31, 2003
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SINCE INCEPTION
1 YEAR INCEPTION DATE
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CLASS II(1) 5.61% 5.61% 12/31/02
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CITIGROUP U.S. INFLATION-LINKED
SECURITIES INDEX(2) 8.26% 8.26% --
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BLENDED INDEX 5.75% 5.75% --
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(1) The total return for Class II would have been lower if the distribution fee
had not been waived from December 31, 2002 to March 31, 2003.
(2) The Citigroup U.S. Inflation-Linked Securities Index is not subject to the
tax code diversification and other regulatory requirements limiting the type
and amount of securities that the fund may own.
The performance information presented does not include charges and deductions
imposed by the insurance company separate account under the variable annuity or
variable life insurance contracts. The inclusion of such charges could
significantly lower performance. Please refer to the insurance company separate
account prospectus for a discussion of the charges related to the insurance
contracts.
GROWTH OF $10,000 OVER LIFE OF CLASS
$10,000 investment made December 31, 2002
The charts on the performance page give historical return data for the fund.
Returns for the indices are provided for comparison. The fund's total returns
include operating expenses (such as transaction costs and management fees) that
reduce returns, while the total returns of the indices do not. Unless otherwise
indicated, the charts are based on Class II shares; performance for other
classes will vary due to differences in fee structures. Past performance does
not guarantee future results. None of the charts reflect the deduction of taxes
that a shareholder would pay on fund distributions or the redemption of fund
shares. Investment return and principal value will fluctuate, and redemption
value may be more or less than original cost.
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2
VP Inflation Protection -
Portfolio Commentary
BY JEREMY FLETCHER, PORTFOLIO MANAGER
PERFORMANCE SUMMARY
VP Inflation Protection returned +5.61%* for its first fiscal year, which ended
December 31, 2003. (Please see the previous page for details.) By comparison,
the custom benchmark returned +5.75%. The benchmark represents a blend that's
55% Citigroup U.S. Inflation-Linked Securities Index, 25% Citigroup 1-3 Year
Government Sponsored Index, and 20% Citigroup 15-Year Mortgage Index.
Unlike the benchmark, however, VP Inflation Protection's return is reduced by
management fees and transaction costs. Yet rather than underperforming the
benchmark by that amount, VP Inflation Protection's return was only 14 basis
points lower.
ECONOMIC BACKDROP
After a lackluster start early in 2003, the U.S. economy appeared to finally
find sustainably firm footing. Helping to underscore that achievement, growth
accelerated to an 8.2% annualized pace (as measured by seasonally adjusted gross
domestic product) during the third quarter, marking the fastest three-month rate
in almost two decades. Activity slowed from that torrid pace during the year's
final three months, but nevertheless came in at a respectable initially
estimated 4.0% annualized rate, capping 3.1% growth for 2003.
Other upbeat economic news around year-end included solid manufacturing
improvement, rising consumer confidence, and increased industrial production. In
addition, weekly jobless claims dropped to the lowest level since early 2001.
A host of factors facilitated that revival, but the Federal Reserve reducing
interest rates to approximately 45-year lows in June, and plans to keep them
there for a "considerable period," stands out. White House efforts to stimulate
growth through the Job and Growth tax relief package helped as well.
In spite of the economic revival, deflation--a decline in prices--remained a Fed
concern. Inflation, as measured by the consumer price index, rose 1.9% last
year, down from 2.4% in 2002. Excluding food and energy components, so-called
"core" prices rose an even more docile 1.1%, compared with 2002's 1.9%. But the
chance of an outright decline in prices became a less worrisome concern by early
December, according to the Fed.
MARKET BACKDROP
Within the taxable bond market, the turning economic tide created a particularly
strong undertow for traditional Treasury securities. Amid growing signs of
improvement and a cessation to major hostilities in Iraq, the safe-haven allure
of Treasurys dimmed. In addition, with mortgage rates dropping close to record
lows early in the year, many mortgage fund managers added Treasurys to hedge
against record refinancings. But
PORTFOLIO AT A GLANCE
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AS OF AS OF
12/31/03 6/30/03
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30-Day SEC Yield,
Class II 0.32% -0.58%
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Weighted Average
Maturity 8.2 years 7.9 years
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Average Duration 7.0 years 7.0 years
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*All fund returns and yields referenced
in this commentary are for Class II shares. (continued)
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3
VP Inflation Protection -
Portfolio Commentary
Treasury demand slumped and supply increased as that trade evaporated,
pressuring yields higher.
Government agency bonds weathered an additional set of concerns. On one front,
Congressional discussions regarding the oversight of government-sponsored
entities (GSEs) dampened such securities' performance; questions about the
leadership and accounting practices of GSEs canvassed the other, squeezing
returns.
Mortgage-backed securities finished 2003 on an upbeat note. But for the year as
a whole, such securities continued to face the largest and longest mortgage
refinancing wave in history, which resulted in more than $2 trillion in
fixed-rate paydowns--greater than two-thirds of the existing market.
Inflation-indexed bonds solidly outperformed many other types of taxable
securities. An across-the-board increase in market, if not Fed, expectations for
inflation provided an important ingredient. Such expectations drove up demand
for inflation-indexed securities, while simultaneously decreasing demand for
many other bond types.
PORTFOLIO STRATEGIES
Much of the incoming cash that VP Inflation Protection received during the year
went to work in Treasury inflation-indexed securities (TIIS). We added short-
and long-term TIIS as well as maturities between those two extremes in an effort
to create performance reflective of the entire TIIS market. We believe that
strategy helped us to keep the portfolio's interest rate sensitivity in close
proximity to that of the benchmark too.
We also established a position in government agency inflation-indexed
securities, which offer higher yields than like-maturity TIIS. That position is
demonstrated by the portfolio's holdings of inflation-indexed notes that mature
in 2007 and were issued by the Tennessee Valley Authority. Other government
agency bonds added included ones issued by the Federal Home Loan Bank and
zero-coupon bonds issued by the Resolution Funding Corporation.
Money also went to work in mortgage-backed securities. For this portion, we
often favored current-coupon mortgage-backed securities for forward settlement.
Then we employed a technique known as "mortgage rolls," which is where a
mortgage pass-through is bought and then swapped for a new, similar one before
its settlement date. In addition, we added some asset-backed and commercial
mortgage-backed securities.
TYPES OF INVESTMENTS IN PORTFOLIO
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AS OF AS OF
12/31/03 6/30/03
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U.S. Treasury Securities
& Equivalents 56.6% 48.7%
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U.S. Government
Agency Securities 18.0% 20.8%
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U.S. Government Agency
Mortgage-Backed
Securities 9.7% 15.2%
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Asset-Backed Securities 5.3% --
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Commercial Paper 4.0% --
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Collateralized
Mortgage Obligations -- 3.5%
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Temporary
Cash Investments 6.4% 11.8%
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4
VP Inflation Protection -
Schedule of Investments
DECEMBER 31, 2003
Principal Amount Value
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U.S. TREASURY SECURITIES
& EQUIVALENTS -- 56.6%
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$1,693,000 REFCORP STRIPS -- COUPON,
2.49%, 10/15/06(1) $ 1,582,185
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2,802,433 U.S. Treasury Inflation Indexed
Bonds, 3.625%, 4/15/28 3,473,267
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2,532,128 U.S. Treasury Inflation Indexed
Bonds, 3.875%, 4/15/29 3,281,480
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1,717,740 U.S. Treasury Inflation Indexed
Notes, 3.625%, 1/15/08 1,900,252
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1,720,337 U.S. Treasury Inflation Indexed
Notes, 3.875%, 1/15/09 1,943,176
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1,099,620 U.S. Treasury Inflation Indexed
Notes, 4.25%, 1/15/10 1,278,738
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1,700,768 U.S. Treasury Inflation Indexed
Notes, 3.50%, 1/15/11 1,911,770
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2,315,160 U.S. Treasury Inflation Indexed
Notes, 3.00%, 7/15/12 2,524,610
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3,122,661 U.S. Treasury Inflation Indexed
Notes, 1.875%, 7/15/13 3,101,196
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TOTAL U.S. TREASURY
SECURITIES & EQUIVALENTS
(Cost $20,582,259) 20,996,674
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U.S. GOVERNMENT AGENCY
SECURITIES -- 18.0%
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1,000,000 FHLB, 5.125%, 3/6/06 1,064,464
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1,250,000 FHLB, 2.75%, 3/14/08 1,228,124
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4,086,985 TVA Inflation Indexed Notes,
3.375%, 1/15/07(2) 4,384,313
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TOTAL U.S. GOVERNMENT
AGENCY SECURITIES
(Cost $6,656,522) 6,676,901
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U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES(3) -- 9.7%
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1,000,000 FHLMC, 5.00%, settlement
date 1/20/04(4) 1,018,750
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500,000 FHLMC, 5.50%, settlement
date 1/20/04(4) 518,125
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670,000 FHLMC, 5.50%, 12/1/33(4) 678,437
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1,000,000 FNMA, 5.50%, settlement
date 1/20/04(4) 1,036,249
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330,000 FNMA, 6.00%, settlement
date 1/14/04(4) 341,138
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TOTAL U.S. GOVERNMENT AGENCY
MORTGAGE-BACKED SECURITIES
(Cost $3,584,386) 3,592,699
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Principal Amount Value
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ASSET-BACKED SECURITIES(3) -- 5.3%
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$ 500,000 Ameriquest Mortgage
Securities Inc., Series 2003-5,
Class A3 SEQ, 3.03%, 7/25/33 $ 499,413
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500,000 Atlantic City Electric Transition
Funding LLC, Series 2003-1,
Class A1 SEQ, 2.89%, 7/20/11 499,850
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130,000 Residential Asset Mortgage
Products Inc., Series 2003 RZ4,
Class A4 SEQ, 4.04%, 12/25/30 129,791
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310,000 Saxon Asset Securities Trust,
Series 2003-3, Class AF3,
3.60%, 12/25/33 312,715
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500,000 WFS Financial Owner Trust,
Series 2002-3, Class A4 SEQ,
3.50%, 2/20/10 511,676
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TOTAL ASSET-BACKED SECURITIES
(Cost $1,947,857) 1,953,445
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COMMERCIAL PAPER -- 4.0%
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1,500,000 Falcon Asset Securitization Corp.,
1.08%, 1/21/04 (Acquired
12/10/03, Cost $1,498,110)(1)(5)
(Cost $1,499,100) 1,499,090
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TEMPORARY CASH INVESTMENTS -- 6.4%
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2,365,000 SLMA Discount Notes,
0.75%, 1/5/04(1)
(Cost $2,364,802) 2,364,811
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TOTAL INVESTMENT SECURITIES -- 100.0%
(Cost $36,634,926) $37,083,620
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NOTES TO SCHEDULE OF INVESTMENTS
FHLB = Federal Home Loan Bank
FHLMC = Federal Home Loan Mortgage Corporation
FNMA = Federal National Mortgage Association
REFCORP = Resolution Funding Corporation
SEQ = Sequential Payer
SLMA = Student Loan Mortgage Association
STRIPS = Separate Trading of Registered Interest and Principal of Securities
TVA = Tennessee Valley Authority
(1) The rate indicated is the yield to maturity at purchase.
(2) Security, or a portion thereof, has been segregated for when-issued
securities and forward commitments.
(3) Final maturity indicated, unless otherwise noted.
(4) When-issued security or forward commitment.
(5) Security was purchased under Rule 144A of the Securities Act of 1933
or is a private placement and, unless registered under the Act or exempted
from registration, may only be sold to qualified institutional investors.
The aggregate value of restricted securities at December 31, 2003, was
$1,499,090, which represented 4.4% of net assets.
See Notes to Financial Statements.
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5
Statement of Assets and Liabilities
DECEMBER 31, 2003
ASSETS
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Investment securities, at value (cost of $36,634,926) $37,083,620
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Cash 64,257
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Receivable for investments sold 4,502
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Interest receivable 290,199
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37,442,578
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LIABILITIES
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Payable for investments purchased 3,593,425
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Accrued management fees 13,504
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Distribution fees payable 6,745
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3,613,674
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NET ASSETS $33,828,904
================================================================================
NET ASSETS CONSIST OF:
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Capital paid in $33,396,005
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Accumulated net realized loss on investment transactions (15,795)
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Net unrealized appreciation on investments 448,694
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$33,828,904
================================================================================
CLASS II
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Net assets $33,828,904
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Shares outstanding (25 million shares authorized) 3,281,666
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Net asset value per share $10.31
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See Notes to Financial Statements.
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6
Statement of Operations
YEAR ENDED DECEMBER 31, 2003
INVESTMENT INCOME
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INCOME:
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Interest $337,208
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EXPENSES:
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Management fees 61,608
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Distribution fees -- Class II 30,730
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92,338
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Amount waived (1,858)
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90,480
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NET INVESTMENT INCOME 246,728
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REALIZED AND UNREALIZED GAIN (LOSS)
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Net realized loss on investment transactions (8,731)
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Change in net unrealized appreciation on investments 448,631
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NET REALIZED AND UNREALIZED GAIN 439,900
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $686,628
================================================================================
See Notes to Financial Statements.
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7
Statement of Changes in Net Assets
YEAR ENDED DECEMBER 31, 2003 AND PERIOD ENDED DECEMBER 31, 2002
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INCREASE IN NET ASSETS 2003 2002(1)
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OPERATIONS
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Net investment income $ 246,728 $ 21
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Net realized loss (8,731) --
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Change in net unrealized appreciation 448,631 63
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Net increase in net assets
resulting from operations 686,628 84
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DISTRIBUTIONS TO SHAREHOLDERS
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From net investment income -- Class II (246,728) (21)
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From net realized gains -- Class II (7,064) --
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Decrease in net assets from distributions (253,792) (21)
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CAPITAL SHARE TRANSACTIONS
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Sold -- Class II 49,003,099 3,000,000
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Issued in reinvestment
of distributions -- Class II 250,818 --
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Redeemed -- Class II (18,857,912) --
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Net increase in net assets
from capital share transactions 30,396,005 3,000,000
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NET INCREASE IN NET ASSETS 30,828,841 3,000,063
NET ASSETS
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Beginning of period 3,000,063 --
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End of period $33,828,904 $3,000,063
================================================================================
TRANSACTIONS IN SHARES OF THE FUND
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Sold -- Class II 4,796,831 300,000
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Issued in reinvestment
of distributions -- Class II 27,649 --
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Redeemed -- Class II (1,842,814) --
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Net increase in shares outstanding 2,981,666 300,000
================================================================================
(1) For the one day ended December 31, 2002 (inception).
See Notes to Financial Statements.
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8
Notes to Financial Statements
DECEMBER 31, 2003
1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION -- American Century Variable Portfolios II, Inc. (the corporation)
is registered under the Investment Company Act of 1940 (the 1940 Act) as an
open-end management investment company. VP Inflation Protection Fund (the fund)
is one fund in a series issued by the corporation. The fund is diversified under
the 1940 Act. The fund pursues long-term total return using a strategy that
seeks to protect against U.S. inflation. The following is a summary of the
fund's significant accounting policies.
MULTIPLE CLASS -- The fund is authorized to issue Class I and Class II. The
share classes differ principally in their respective shareholder servicing and
distribution expenses and arrangements. All shares of the fund represent an
equal pro rata interest in the assets of the class to which such shares belong,
and have identical voting, dividend, liquidation and other rights and the same
terms and conditions, except for class specific expenses and exclusive rights to
vote on matters affecting only individual classes. Income, non-class specific
expenses, and realized and unrealized capital gains and losses of the fund are
allocated to each class of shares based on their relative net assets. Sale of
the Class I shares had not commenced as of December 31, 2003. The fund is
authorized to issue 25 million shares for each class.
SECURITY VALUATIONS -- Securities are valued through a commercial pricing
service or at the mean of the most recent bid and asked prices. Discount notes
may be valued through a commercial pricing service or at amortized cost, which
approximates fair 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 as of the trade
date. Net realized gains and losses are determined on the identified cost basis,
which is also used for federal income tax purposes.
INVESTMENT INCOME -- Interest income is recorded on the accrual basis and
includes accretion of discounts and amortization of premiums.
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. These balances are invested in one or
more repurchase agreements that are collateralized by U.S. Treasury or Agency
obligations.
WHEN-ISSUED AND FORWARD COMMITMENTS -- The fund may engage in securities
transactions on a when-issued or forward 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 will
segregate cash, cash equivalents or other appropriate liquid securities on its
records in amounts sufficient to meet the purchase price.
INCOME TAX STATUS -- It is the fund's policy to distribute all net investment
income and net realized gains to shareholders and to otherwise qualify as a
regulated investment company under provisions of the Internal Revenue Code.
Accordingly, no provision has been made for federal or state income taxes.
DISTRIBUTIONS TO SHAREHOLDERS -- Distributions from net investment income for
the fund are declared daily and paid monthly. Distributions from net realized
gains for the fund, if any, are generally declared and paid annually.
The character of distributions made during the year from net investment income
or net realized gains may differ from their ultimate characterization for
federal income tax purposes. These differences reflect the differing character
of certain income items and net realized gains and losses for financial
statement and tax purposes, and may result in reclassification among certain
capital accounts on the financial statements.
USE OF ESTIMATES -- The financial statements are prepared in conformity with
accounting principles generally accepted in the United States of America, which
may require management to make certain estimates and assumptions at the date of
the financial statements. Actual results could differ from these estimates.
(continued)
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9
Notes to Financial Statements
DECEMBER 31, 2003
2. FEES AND TRANSACTIONS WITH RELATED PARTIES
MANAGEMENT FEES -- The corporation has entered into a Management Agreement with
ACIM, under which ACIM provides the fund with investment advisory and management
services in exchange for a single, unified management fee per class. The
Agreement provides that all expenses of the fund, except brokerage commissions,
taxes, portfolio insurance, interest, fees and expenses of those directors who
are not considered "interested persons" as defined in the 1940 Act (including
counsel fees) and extraordinary expenses, will be paid by ACIM. The fee is
computed daily and paid monthly in arrears. It consists of an Investment
Category Fee based on the average net assets of the funds in a specific fund's
investment category and a Complex Fee based on the average net assets of all the
funds managed by ACIM. The rates for the Investment Category Fee range from
0.1625% to 0.2800%. The rates for the Complex Fee for Class II range from
0.2900% to 0.3100%. The effective annual management fee for the year ended
December 31, 2003 was 0.50% for Class II.
DISTRIBUTION FEES -- The Board of Directors has adopted the Master Distribution
Plan (the plan) for Class II, pursuant to Rule 12b-1 of the 1940 Act. The plan
provides that Class II will pay American Century Investment Services, Inc.
(ACIS) an annual distribution fee equal to 0.25%. The fee is computed daily and
paid monthly in arrears based on the Class II average daily closing net assets
during the previous month. The distribution fee provides compensation for
expenses incurred in connection with distributing shares of Class II including,
but not limited to, payments to brokers, dealers, and financial institutions
that have entered into sales agreements with respect to shares of the fund. All
or a portion of the distribution fees were voluntarily waived during the year
ended December 31, 2003. Fees incurred under the plan during the year ended
December 31, 2003, are detailed in the Statement of Operations.
RELATED PARTIES -- Certain officers and directors of the corporation are also
officers and/or directors, and, as a group, controlling stockholders of American
Century Companies, Inc. (ACC), the parent of the corporation's investment
manager, ACIM, the distributor of the corporation, ACIS, and the corporation's
transfer agent, American Century Services Corporation.
(continued)
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10
Notes to Financial Statements
DECEMBER 31, 2003
3. INVESTMENT TRANSACTIONS
Purchases of investment securities, excluding short-term investments, for the
year ended December 31, 2003, totaled $56,539,231, of which $54,304,286
represented U.S. Treasury and Agency obligations. Sales of investment
securities, excluding short-term investments, for the year ended December 31,
2003, totaled $23,799,371, of which $23,519,303 represented U.S. Treasury and
Agency obligations.
As of December 31, 2003 the components of investments for federal income tax
purposes were as follows:
- --------------------------------------------------------------------------------
Federal tax cost of investments $36,686,702
================================================================================
Gross tax appreciation of investments $399,007
- -----------------------------------------------------------------
Gross tax depreciation of investments (2,089)
- --------------------------------------------------------------------------------
Net tax appreciation of investments $396,918
================================================================================
The difference between book-basis and tax-basis unrealized appreciation
(depreciation) is attributable primarily to the tax deferral of losses on wash
sales.
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11
VP Inflation Protection - Financial Highlights
FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED DECEMBER 31 (EXCEPT AS NOTED)
- --------------------------------------------------------------------------------
CLASS II
- --------------------------------------------------------------------------------
2003 2002(1)
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value, Beginning of Period $10.00 $10.00
- --------------------------------------------------------------------------------
Income From Investment Operations
- ---------------------------------------------------------
Net Investment Income 0.24 --(2)
- ---------------------------------------------------------
Net Realized and Unrealized Gain 0.31 --(2)
- --------------------------------------------------------------------------------
Total From Investment Operations 0.55 --(2)
- --------------------------------------------------------------------------------
Distributions
- ---------------------------------------------------------
From Net Investment Income (0.24) --(2)
- ---------------------------------------------------------
From Net Realized Gains --(2) --
- --------------------------------------------------------------------------------
Total Distributions (0.24) --(2)
- --------------------------------------------------------------------------------
Net Asset Value, End of Period $10.31 $10.00
================================================================================
TOTAL RETURN(3) 5.61% 0.00%
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating Expenses to Average Net Assets(4) 0.74% 0.50%(5)
- ---------------------------------------------------------
Ratio of Net Investment Income to Average Net Assets(4) 2.00% 0.25%(5)
- ---------------------------------------------------------
Portfolio Turnover Rate 198% 0%
- ---------------------------------------------------------
Net Assets, End of Period (in thousands) $33,829 $3,000
- --------------------------------------------------------------------------------
(1) December 31, 2002 (inception).
(2) Per share amount was less than $0.005.
(3) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. Total returns for periods less than one year are
not annualized.
(4) ACIM waived the distribution fee from December 31, 2002 through March 31,
2003. In absence of the waiver, the annualized ratios of operating expenses
to average net assets and net investment income to average net assets would
have been 0.75% and 1.99% for the year ended December 31, 2003 and 0.75% and
0.00% for the period ended December 31, 2002, respectively.
(5) Annualized.
See Notes to Financial Statements.
- ------
12
Report of Independent Auditors
To the Directors of the American Century Variable Portfolios II, Inc.
and the Shareholders of the American Century VP Inflation Protection Fund:
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the American Century VP Inflation
Protection Fund (the sole fund comprising the American Century Variable
Portfolios II, Inc., hereafter referred to as the "Fund") at December 31, 2003,
the results of its operations for the year then ended, and the changes in its
net assets and the financial highlights for each of the periods presented, in
conformity with accounting principles generally accepted in the United States of
America. These financial statements and highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States of America,
which require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 2003 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where securities purchased had not been received, provide a reasonable basis for
our opinion.
PricewaterhouseCoopers LLP
Kansas City, Missouri
February 12, 2004
- ------
13
Management
The individuals listed below serve as directors or officers of the fund. Each
director serves until his or her successor is duly elected and qualified or
until he or she retires. Mandatory retirement age for independent directors is
75, although the remaining independent directors may temporarily waive this
requirement on a case-by-case basis. Those listed as interested directors are
"interested" primarily by virtue of their engagement as officers of American
Century Companies, Inc. (ACC) or its wholly-owned subsidiaries, including the
fund's investment advisor, American Century Investment Management, Inc. (ACIM);
the fund's principal underwriter, American Century Investment Services, Inc.
(ACIS); and the fund's transfer agent, American Century Services Corporation
(ACSC).
The other directors (more than two-thirds of the total number) are independent;
that is, they are not employees or officers of, and have no financial interest
in, ACC or any of its wholly-owned subsidiaries, including ACIM, ACIS, and ACSC.
The directors serve in this capacity for eight registered investment companies
in the American Century family of funds.
All persons named as officers of the fund also serve in similar capacities for
the other 12 investment companies advised by ACIM, unless otherwise noted. Only
officers with policy-making functions are listed. No officer is compensated for
his or her service as an officer of the fund. The listed officers are interested
persons of the fund and are appointed or re-appointed on an annual basis.
INDEPENDENT DIRECTORS
- --------------------------------------------------------------------------------
ALBERT EISENSTAT (73), 1665 Charleston Road, Mountain View, CA 94043
POSITION(S) HELD WITH FUND: Director
LENGTH OF TIME SERVED (YEARS): 7
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: General Partner, Discovery Ventures
(Venture capital firm, 1996 to 1998)
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 35
OTHER DIRECTORSHIPS HELD BY DIRECTOR: Independent Director, Sungard Data Systems
(1991 to present); Independent Director, Business Objects S/A (1994 to present);
Independent Director, Commercial Metals (1983 to 2001)
- --------------------------------------------------------------------------------
RONALD J. GILSON (57), 1665 Charleston Road, Mountain View, CA 94043
POSITION(S) HELD WITH FUND: Director
LENGTH OF TIME SERVED (YEARS): 7
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Charles J. Meyers Professor of Law
and Business, Stanford Law School (1979 to present); Mark and Eva Stern
Professor of Law and Business, Columbia University School of Law (1992 to
present); Counsel, Marron, Reid & Sheehy (a San Francisco law firm, 1984 to
present)
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 35
OTHER DIRECTORSHIPS HELD BY DIRECTOR: None
- --------------------------------------------------------------------------------
KATHRYN A. HALL (45), 1665 Charleston Road, Mountain View, CA 94043
POSITION(S) HELD WITH FUND: Director
LENGTH OF TIME SERVED (YEARS): 1
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: President and Chief Investment
Officer, Offit Hall Capital Management, LLC (April 2002 to present); President
and Managing Director, Laurel Management Company, L.L.C. (1996 to April 2002)
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 35
OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Princeton University Investment
Company (1997 to present); Director, Stanford Management Company (2001 to
present); Director, UCSF Foundation (2000 to present); Director, San Francisco
Day School (1999 to present)
- --------------------------------------------------------------------------------
(continued)
- ------
14
Management
INDEPENDENT DIRECTORS (CONTINUED)
- --------------------------------------------------------------------------------
MYRON S. SCHOLES (62), 1665 Charleston Road, Mountain View, CA 94043
POSITION(S) HELD WITH FUND: Director
LENGTH OF TIME SERVED (YEARS): 22
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Partner, Oak Hill Capital
Management (1999 to present); Principal, Long-Term Capital Management
(investment advisor, 1993 to January 1999); Frank E. Buck Professor of Finance,
Stanford Graduate School of Business (1981 to present)
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 35
OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Dimensional Fund Advisors
(investment advisor, 1982 to present); Director, Smith Breeden Family of Funds
(1992 to present)
- --------------------------------------------------------------------------------
KENNETH E. SCOTT (75), 1665 Charleston Road, Mountain View, CA 94043
POSITION(S) HELD WITH FUND: Director
LENGTH OF TIME SERVED (YEARS): 31
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Ralph M. Parsons Professor of Law
and Business, Stanford Law School (1972 to present)
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 35
OTHER DIRECTORSHIPS HELD BY DIRECTOR: None
- --------------------------------------------------------------------------------
JOHN B. SHOVEN (56), 1665 Charleston Road, Mountain View, CA 94043
POSITION(S) HELD WITH FUND: Director
LENGTH OF TIME SERVED (YEARS): Less than 1
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Professor of Economics, Stanford
University (1977 to present)
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 35
OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Cadence Design Systems (1992 to
present); Director, Watson Wyatt Worldwide (2002 to present); Director,
Palmsource Inc. (2002 to present)
- --------------------------------------------------------------------------------
JEANNE D. WOHLERS (58), 1665 Charleston Road, Mountain View, CA 94043
POSITION(S) HELD WITH FUND: Director
LENGTH OF TIME SERVED (YEARS): 18
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Director and Partner, Windy Hill
Productions, LP (educational software, 1994 to 1998)
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 35
OTHER DIRECTORSHIPS HELD BY DIRECTOR: Director, Indus International (software
solutions, January 1999 to present); Director, Quintus Corporation (automation
solutions, 1995 to present)
- --------------------------------------------------------------------------------
INTERESTED DIRECTOR
- --------------------------------------------------------------------------------
WILLIAM M. LYONS (48), 4500 Main Street, Kansas City, MO 64111
POSITION(S) HELD WITH FUND: Director, Chairman of the Board
LENGTH OF TIME SERVED (YEARS): 5
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Executive Officer, ACC and
other ACC subsidiaries (September 2000 to present); President, ACC (June 1997 to
present); President, ACIM (September 2002 to present); President, ACIS (July
2003 to present); Chief Operating Officer, ACC (June 1996 to September 2000);
Also serves as: Executive Vice President, ACSC and other ACC subsidiaries
NUMBER OF PORTFOLIOS IN FUND COMPLEX OVERSEEN BY DIRECTOR: 35
OTHER DIRECTORSHIPS HELD BY DIRECTOR: None
- --------------------------------------------------------------------------------
(continued)
- ------
15
Management
OFFICERS
- --------------------------------------------------------------------------------
WILLIAM M. LYONS (48), 4500 Main Street, Kansas City, MO 64111
POSITION(S) HELD WITH FUND: President
LENGTH OF TIME SERVED (YEARS): 2
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: See entry under "Interested
Directors."
- --------------------------------------------------------------------------------
ROBERT T. JACKSON (57), 4500 Main Street, Kansas City, MO 64111
POSITION(S) HELD WITH FUND: Executive Vice President
LENGTH OF TIME SERVED (YEARS): 2
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Chief Administrative Officer, ACC
(August 1997 to present); Chief Financial Officer, ACC (May 1995 to October
2002); President, ACSC (January 1999 to present); Executive Vice President, ACC
(May 1995 to present); Also serves as: Executive Vice President and Chief
Financial Officer, ACIM, ACIS, and other ACC subsidiaries; and Treasurer, ACIM
- --------------------------------------------------------------------------------
MARYANNE ROEPKE, CPA (47), 4500 Main Street, Kansas City, MO 64111
POSITION(S) HELD WITH FUND: Senior Vice President, Treasurer and Chief
Accounting Officer
LENGTH OF TIME SERVED (YEARS): 2
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President (April 1998
to present) and Assistant Treasurer (September 1985 to present), ACSC
- --------------------------------------------------------------------------------
DAVID C. TUCKER (45), 4500 Main Street, Kansas City, MO 64111
POSITION(S) HELD WITH FUND: Senior Vice President and General Counsel
LENGTH OF TIME SERVED (YEARS): 4
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Senior Vice President, ACIM, ACIS,
ACSC, and other ACC subsidiaries (June 1998 to present); General Counsel, ACC,
ACIM, ACIS, ACSC, and other ACC subsidiaries (June 1998 to present)
- --------------------------------------------------------------------------------
ROBERT LEACH (37), 4500 Main Street, Kansas City, MO 64111
POSITION(S) HELD WITH FUND: Controller
LENGTH OF TIME SERVED (YEARS): 6
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACSC (February 2000
to present); Controller-Fund Accounting, ACSC (June 1997 to present)
- --------------------------------------------------------------------------------
C. JEAN WADE (39), 4500 Main Street, Kansas City, MO 64111
POSITION(S) HELD WITH FUND: Controller(1)
LENGTH OF TIME SERVED (YEARS): 6
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, ACSC (February 2000
to present); Controller-Fund Accounting, ACSC (June 1997 to present)
- --------------------------------------------------------------------------------
JON ZINDEL (36), 4500 Main Street, Kansas City, MO 64111
POSITION(S) HELD WITH FUND: Tax Officer
LENGTH OF TIME SERVED (YEARS): 5
PRINCIPAL OCCUPATION(S) DURING PAST 5 YEARS: Vice President, Corporate Tax, ACSC
(April 1998 to present); Vice President, ACIM, ACIS, and other ACC subsidiaries
(April 1999 to present); President, American Century Employee Benefit Services,
Inc. (January 2000 to December 2000); Treasurer, American Century Ventures, Inc.
(December 1999 to January 2001); Treasurer, American Century Employee Benefit
Services, Inc. (December 2000 to December 2003)
- --------------------------------------------------------------------------------
(1) Ms. Wade serves in a similar capacity for the other seven investment
companies advised by ACIM.
The SAI has additional information about the fund's directors and is available
without charge upon request by calling 1-800-345-6488.
- ------
16
Share Class Information
Two classes of shares are authorized for sale by the fund: Class I and Class II.
(Sale of Class I shares had not commenced as of December 31, 2003.)
CLASS I shares are sold through insurance company separate accounts. Class I
shareholders do not pay any commissions or other fees to American Century for
the purchase of fund shares.
CLASS II shares are sold through insurance company separate accounts. Class II
shares are subject to a 0.25% Rule 12b-1 distribution fee, which is available to
pay for distribution services provided by the financial intermediary through
which the Class II shares are purchased. The total expense ratio of Class II
shares is higher than the total expense ratio of the Class I shares.
All classes of shares represent a pro rata interest in the fund and generally
have the same rights and preferences. Because all shares of the fund are sold
through insurance company separate accounts, additional fees may apply.
- ------
17
Additional Information
INDEX DEFINITIONS
The following indices are used to illustrate investment market, sector, or style
performance or to serve as fund performance comparisons. They are not investment
products available for purchase.
The BLENDED INDEX is considered the benchmark for VP Inflation Protection. It
consists of a mix of three Citigroup (formerly Salomon Smith Barney) indices in
the following proportions: 55% Citigroup Inflation-Linked Securities Index, 25%
Citigroup Government Sponsored 1- to 3-Year Index, and 20% Citigroup 15-Year
Mortgage Index.
The CITIGROUP U.S. INFLATION-LINKED SECURITIES INDEX (ILSI)(SM) measures the
return of bonds with fixed-rate coupon payments that adjust for inflation as
measured by the Consumer Price Index (CPI).
PROXY VOTING GUIDELINES
American Century Investment Management, Inc., the fund's manager, is responsible
for exercising the voting rights associated with the securities purchased and/or
held by the fund. A description of the policies and procedures the manager uses
in fulfilling this responsibility is available without charge, upon request, by
calling 1-800-378-9878. It is also available on American Century's Web site at
www.americancentury.com and on the Securities and Exchange Commission's Web site
at www.sec.gov.
- ------
18
Notes
- ------
19
Notes
- ------
20
[back cover]
CONTACT US
WWW.AMERICANCENTURY.COM
AUTOMATED INFORMATION LINE:
1-800-345-8765
INVESTMENT PROFESSIONAL SERVICE REPRESENTATIVES:
1-800-345-6488
TELECOMMUNICATIONS DEVICE FOR THE DEAF:
1-800-634-4113
AMERICAN CENTURY VARIABLE PORTFOLIOS II, 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.
0402 American Century Investment Services, Inc.
SH-ANN-36969 (c)2004 American Century Services Corporation
ITEM 2. CODE OF ETHICS.
(a) The registrant has adopted a Code of Ethics for Senior Financial
Officers that applies to the registrant's principal executive officer,
principal financial officer, principal accounting officer, and persons
performing similar functions.
(b) No response required.
(c) None.
(d) None.
(e) Not applicable.
(f) The registrant's Code of Ethics for Senior Financial Officers was
filed as Exhibit 10(a) to American Century Mutual Fund, Inc.'s Annual
Certified Shareholder Report on Form N-CSR, File No. 811-0816, on
December 23, 2003, and is incorporated herein by reference.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
(a)(1) The registrant's board has determined that the registrant has at least
one audit committee financial expert serving on its audit committee.
(a)(2) Albert Eisenstat is the registrant's designated audit committee
financial expert. He is "independent" as defined in Item 3 of Form
N-CSR.
(a)(3) Not applicable.
(b) No response required.
(c) No response required.
(d) No response required.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
(a) Audit Fees.
The aggregate fees billed for each of the last two fiscal years for
professional services rendered by the principal accountant for the audit of the
registrant's annual financial statements or services that are normally provided
by the accountant in connection with statutory and regulatory filings or
engagements for those fiscal years were as follows:
FY 2002: $9,738
FY 2003: $11,174
(b) Audit-Related Fees.
The aggregate fees billed in each of the last two fiscal years for
assurance and related services by the principal accountant that are reasonably
related to the performance of the audit of the registrant's financial statements
and are not reported under paragraph (a) of this Item were as follows:
For services rendered to the registrant:
FY 2002: $ 0
FY 2003: $ 0
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X (relating to certain engagements for non-audit services
with the registrant's investment adviser and its affiliates):
FY 2002: $ 0
FY 2003: $ 0
(c) Tax Fees
The aggregate fees billed in each of the last two fiscal years for
professional services rendered by the principal accountant for tax compliance,
tax advice, and tax planning were as follows:
For services rendered to the registrant:
FY 2002: $ 0
FY 2003: $7,200
These services included review of federal and state income tax forms
and federal excise tax forms.
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X (relating to certain engagements for non-audit services
with the registrant's investment adviser and its affiliates):
FY 2002: $ 0
FY 2003: $ 0
(d) All Other Fees.
The aggregate fees billed in each of the last two fiscal years for
products and services provided by the principal accountant, other than the
services reported in paragraphs (a) through (c) of this Item were as follows:
For services rendered to the registrant:
FY 2002: $ 0
FY 2003: $ 0
Fees required to be approved pursuant to paragraph (c)(7)(ii) of Rule
2-01 of Regulation S-X (relating to certain engagements for non-audit services
with the registrant's investment adviser and its affiliates):
FY 2002: $ 0
FY 2003: $ 0
(e)(1) In accordance with paragraph (c)(7)(i)(A) of Rule 2-01 of Regulation
S-X, before the accountant is engaged by the registrant to render
audit or non-audit services, the engagement is approved by the
registrant's audit committee of the board of directors. Pursuant to
paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X, the registrant's
audit committee also pre-approves its accountant's engagements for
non-audit services with the registrant's investment adviser, its
parent company, and any entity controlled by, or under common control
with the investment adviser that provides ongoing services to the
registrant, if the engagement relates directly to the operations and
financial reporting of the registrant.
(e)(2) All services described in each of paragraphs (b) through (d) of this
Item were pre-approved before the engagement by the registrant's audit
committee pursuant to paragraph (c)(7)(i)(A) of Rule 2-01 of
Regulation S-X. Consequently, none of such services were required to
be approved by the audit committee pursuant to paragraph (c)(7)(i)(C).
(f) The percentage of hours expended on the principal accountant's
engagement to audit the registrant's financial statements for the most
recent fiscal year that were attributed to work performed by persons
other than the principal accountant's full-time, permanent employees
was less than 50%.
(g) The aggregate non-audit fees billed by the registrant's accountant for
services rendered to the registrant, and rendered to the registrant's
investment adviser (not including any sub-adviser whose role is
primarily portfolio management and is subcontracted with or overseen
by another investment adviser), and any entity controlling, controlled
by, or under common control with the adviser that provides ongoing
services to the registrant for each of the last two fiscal years of
the registrant were as follows:
FY 2002: $ 454,250
FY 2003: $ 92,650
(h) The registrant's investment adviser and accountant have notified the
registrant's audit committee of all non-audit services that were
rendered by the registrant's accountant to the registrant's investment
adviser, its parent company, and any entity controlled by, or under
common control with the investment adviser that provides services to
the registrant, which services were not required to be pre-approved
pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X. The
notification provided to the registrant's audit committee included
sufficient details regarding such services to allow the registrant's
audit committee to consider the continuing independence of its
principal accountant.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable prior to the first reporting period ending after
January 1, 2004.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial
officer have concluded that the registrant's disclosure controls and
procedures (as defined in Rule 30a-3(c) under the Investment Company
Act of 1940) are effective based on their evaluation of these controls
and procedures as of a date within 90 days of the filing date of this
report.
(b) There were no changes in the registrant's internal control over
financial reporting (as defined in Rule 30a-3(d) under the Investment
Company Act of 1940) that occurred during the registrant's last fiscal
half-year that have materially affected, or are reasonably likely to
materially affect, the registrant's internal control over financial
reporting.
ITEM 11. EXHIBITS.
(a)(1) Registrant's Code of Ethics for Senior Financial Officers, which is
the subject of the disclosure required by Item 2 of Form N-CSR, was
filed as Exhibit 10(a) to American Century Mutual Fund, Inc.'s
Certified Shareholder Report on Form N-CSR, File No. 811-3706, on
December 23, 2003.
(a)(2) Separate certifications by the registrant's principal executive
officer and principal financial officer, pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 and Rule 30a-2(a) under the Investment
Company Act of 1940, are filed and attached hereto as Exhibit
99.302CERT.
(a)(3) Not applicable.
(b) A certification by the registrant's chief executive officer and chief
financial officer, pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002, is furnished and attached hereto as Exhibit 99.906CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
Registrant: American Century Variable Portfolios II, Inc.
By: /s/ William M. Lyons
-----------------------------------------------
Name: William M. Lyons
Title: President
Date: April 15, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/ William M. Lyons
-----------------------------------------------
Name: William M. Lyons
Title: President
(principal executive officer)
Date: April 15, 2004
By: /s/ Maryanne L. Roepke
-----------------------------------------------
Name: Maryanne L. Roepke
Title: Sr. Vice President, Treasurer, and
Chief Accounting Officer
(principal financial officer)
Date: April 15, 2004