TWENTIETH CENTURY PREMIUM RESERVES INC, 485BPOS, 1996-08-30

TWENTIETH CENTURY PREMIUM RESERVES INC
485BPOS, 1996-08-30

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As filed with the Securities and Exchange Commission on August 30, 1996

1933 Act File No. 33-57430; 1940 Act File No. 811-7446

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No.

Post-Effective Amendment No. __5__ __X__

REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. __5__ __X__
(Check appropriate box or boxes.)

TWENTIETH CENTURY PREMIUM RESERVES, INC.
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(Exact Name of Registrant as Specified in Charter)

Twentieth Century Tower, 4500 Main Street, Kansas City, MO 64111
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(Address of Principal Executive Offices) (Zip Code)

Registrant's Telephone Number, Including Area Code (816) 531-5575

James E. Stowers, Jr.
Twentieth Century Tower, 4500 Main Street, Kansas City, MO 64111
-----------------------------------------------------------------
(Name and address of Agent for Service)

Approximate Date of Proposed Public Offering September 3, 1996

It is proposed that this filing will become effective (check appropriate box)
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on September 3, 1996 pursuant to paragraph (b) of Rule 485
_____ 60 days after filing pursuant to paragraph (a) of Rule 485
_____ on (date) pursuant to paragraph (a) of Rule 485
_____ 75 days after filing pursuant to paragraph (a)(2) of Rule 485
_____ on (date) pursuant to paragraph (a)(2) of Rule 485

The Registrant has registered an indefinite number or amount of securities under
the Securities Act of 1933 pursuant to Rule 24f-2. The Rule 24f-2 notice for the
fiscal year ended March 31, 1996, was filed on May 30, 1996.

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Cross Reference Sheet
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Item No. Page No.
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Part A. Prospectus
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1. Cover Page Cover Page
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2. Synopsis N/A
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3. Condensed Financial Information 5-7
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4. General Description of Registrant Cover Page,
8-16, 31-32
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5. Management of the Fund 30-31
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6. Capital Stock and Other Securities 28-32
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7. Purchase of Securities Being Offered Cover Page,
18-19, 27
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8. Redemption or Repurchase 21-24
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9. Pending Legal Proceedings N/A
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Part B. - Statement of Additional Information
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10. Cover Page Cover Page
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11. Table of Contents Cover Page
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12. General Information and History N/A
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13. Investment Objectives and Policies 3-12
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14. Management of the Fund 12-15
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15. Control Persons and Principal Holders of Securities
16
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16. Investment Advisory and Other Services 13-14
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17. Brokerage Allocation 17-18
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18. Capital Stock and Other Securities 16
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19. Purchase, Redemption and Pricing of Securities Being
Offered 18-19
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20. Tax Status 16
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21. Underwriters N/A
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22. Calculation of Performance Data N/A
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23. Financial Statements 19
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<PAGE>
TWENTIETH CENTURY

PREMIUM RESERVES

PROSPECTUS

SEPTEMBER 3,

1996

TWENTIETH CENTURY PREMIUM RESERVES
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TWENTIETH CENTURY

Twentieth Century Premium Reserves, Inc. is a diversified, open-end
management investment company whose shares are offered, without a sales charge,
to substantial investors, particularly institutional and corporate investors.
Twentieth Century currently offers three series of shares.

MONEY MARKET FUNDS

TWENTIETH CENTURY
PREMIUM GOVERNMENT RESERVE

TWENTIETH CENTURY
PREMIUM CAPITAL RESERVE

The objective of each of these money market funds is to obtain as high a
level of current income as is consistent with the preservation of principal and
liquidity within the guidelines established for each fund. INVESTMENTS IN THESE
FUNDS ARE NOT INSURED, NOR ARE THEY GUARANTEED BY THE U.S. GOVERNMENT. WHILE
EACH FUND SEEKS TO MAINTAIN A STABLE NET ASSET VALUE OF $1.00 PER SHARE, THERE
IS NO ASSURANCE THAT IT WILL BE ABLE TO DO SO.

BOND FUND

TWENTIETH CENTURY
PREMIUM MANAGED BOND

This fund seeks a high level of income from investments in a portfolio of
bonds and other debt obligations having a weighted average adjusted duration of
3.5 years or greater.

There is no assurance that the funds will achieve their respective
objectives.

MINIMUM INITIAL INVESTMENT

The minimum initial investment for each of the funds is $100,000.

This Prospectus sets forth information about the funds that you should know
before investing. You should read this Prospectus carefully and retain it for
future reference. Additional information is included in the Statement of
Additional Information dated September 3, 1996, and filed with the Securities
and Exchange Commission. It is incorporated in this Prospectus by reference. To
obtain a copy with charge, call or write:

Twentieth Century Mutual Funds
4500 Main Street o P.O. Box 419385
Kansas City, MO 64141-6385 o 1-800-345-3533
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-345-1833 o In Missouri: 816-753-0700
Internet: http://www.twentieth-century.com

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

<PAGE>

TABLE OF CONTENTS
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TRANSACTION AND OPERATING
EXPENSE TABLE..............................4
FINANCIAL HIGHLIGHTS.........................5

INFORMATION REGARDING THE FUNDS

INVESTMENT POLICIES OF THE FUNDS.............8
Twentieth Century Premium
Government Reserve........................8
Twentieth Century Premium
Capital Reserve...........................9
Twentieth Century Premium
Managed Bond.............................10
FUNDAMENTALS OF FIXED
INCOME INVESTING..........................11

OTHER INVESTMENT PRACTICES, THEIR
CHARACTERISTICS AND RISKS.................12

Repurchase Agreements....................12
Foreign Securities.......................12
Forward Currency Exchange Contracts......12
Interest Rate Futures Contracts
and Options Thereon....................13
Derivative Securities....................14
Portfolio Lending........................15
Portfolio Turnover.......................15
Rule 144A Securities.....................16
When-Issued Securities...................16
Investment Company Act Rule 2a-7.........16
PERFORMANCE ADVERTISING.....................17

HOW TO INVEST WITH TWENTIETH CENTURY AND THE BENHAM GROUP

HOW TO OPEN AN ACCOUNT......................18
By Mail..................................18
By Wire..................................18
By Exchange..............................18
In Person................................19
Subsequent Investments....................19
By Mail..................................19
By Telephone.............................19
By Wire..................................19
In Person................................19
Automatic Investment Plan................19
HOW TO EXCHANGE FROM ONE
ACCOUNT TO ANOTHER .......................19
By Mail .................................20
By Telephone.............................20
HOW TO REDEEM SHARES........................20
By Telephone.............................20
By Mail .................................20
By Check-A-Month.........................20
Other Automatic Redemptions..............20
Redemption Proceeds.......................20
By Check.................................20
By Wire and ACH..........................20
Redemption of Shares in
Low-Balance Accounts....................21
SIGNATURE GUARANTEE.........................21
SPECIAL SHAREHOLDER SERVICES................21
Automated Information Line...............21
CheckWriting.............................21
Open Order Service.......................22
Tax-Qualified Retirement Plans...........22
IMPORTANT POLICIES REGARDING
YOUR INVESTMENTS.........................22
REPORTS TO SHAREHOLDERS.....................23
EMPLOYER-SPONSORED RETIREMENT PLANS AND
INSTITUTIONAL ACCOUNTS....................24

ADDITIONAL INFORMATION YOU SHOULD KNOW

SHARE PRICE.................................25
When Share Price is Determined...........25
How Share Price is Determined............25
Where to Find Information
About Share Price......................26
DISTRIBUTIONS...............................26

TAXES.......................................27
Tax-Deferred Accounts....................27
Taxable Accounts.........................27

MANAGEMENT..................................28
Investment Management....................28
Code of Ethics...........................29
Transfer and Administrative Services.....29
DISTRIBUTION OF FUND SHARES.................30
FURTHER INFORMATION
ABOUT TWENTIETH CENTURY...................30

TRANSACTION AND OPERATING EXPENSE TABLE
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PREMIUM PREMIUM PREMIUM
GOVERNMENT CAPITAL MANAGED
RESERVE RESERVE BOND

SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases..... none none none
Maximum Sales Load Imposed on
Reinvested Dividends........................ none none none
Deferred Sales Load......................... none none none
Redemption Fee(1)........................... none none none
Exchange Fee................................ none none none
ANNUAL FUND OPERATING EXPENSES
(as a percentage of net assets):
Management Fees........................... 0.45% 0.45% 0.45%
12b-1 Fees................................ none none none
Other Expenses(2)......................... 0.00% 0.00% 0.00%
Total Fund Operating Expenses............. 0.45% 0.45% 0.45%
Example: You would pay the following
expenses on a $1,000 investment, assuming
a 5% annual return and redemption at the
end of each time period: 1 year $ 5 $ 5 $ 5
3 years 14 14 14
5 years 25 25 25
10 years 57 57 57

(1) Redemption proceeds sent by wire transfer are subject to a $10 processing
fee.

(2) Other expenses, which include the fees and expenses (including legal counsel
fees) of those directors who are not "interested persons" as defined in the
Investment Company Act, were 0.0013 of 1% of average net assets for the most
recent fiscal year.

The purpose of this table is to help you understand the various costs and
expenses that you, as a shareholder, will bear directly or indirectly in
connection with an investment in shares of the funds offered by this Prospectus.
The example set forth above assumes reinvestment of all dividends and
distributions and uses a 5% annual rate of return as required by Securities and
Exchange Commission regulations.

NEITHER THE 5% RATE OF RETURN NOR THE EXPENSES SHOWN ABOVE SHOULD BE
CONSIDERED INDICATIONS OF PAST OR FUTURE RETURNS AND EXPENSES. ACTUAL RETURNS
AND EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.

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NO PERSON IS AUTHORIZED BY THE FUNDS TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS OR IN OTHER PRINTED
OR WRITTEN MATERIAL ISSUED BY OR ON BEHALF OF THE FUNDS, AND YOU SHOULD NOT RELY
ON ANY OTHER INFORMATION OR REPRESENTATION.

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FINANCIAL HIGHLIGHTS--
PREMIUM GOVERNMENT RESERVE (For a Share Outstanding Throughout the Period)

The Financial Highlights for the periods presented have been audited by
Ernst & Young LLP, independent auditors, whose report thereon appears in the
fund's annual report. That annual report, which is incorporated by reference
into the Statement of Additional Information, contains additional performance
information and will be made available on request and without charge.

Year ended March 31 1996 1995 1994
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NET ASSET VALUE,
BEGINNING OF PERIOD.............. $ 1.00 $ 1.00 $ 1.00
------- ------- -------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income......... .053 .045 .027

Net Realized and Unrealized
Gain (Loss) on Investment
Transactions.................. -- -- --
------- ------- -------

Total from
Investment Operations......... .053 .045 .027
------- ------- -------
DISTRIBUTIONS
From Net
Investment Income............. (.053) (.045) (.027)

Total Distributions........... (.053) (.045) (.027)
------- ------- -------
NET ASSET VALUE,
END OF PERIOD.................... $1.00 $1.00 $1.00
======= ======= =======
TOTAL RETURN
................................. 5.49% 4.62% 2.75%

RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to ............ .44% .45% .45%

Ratio of Net Investment Income
to Average Net Assets............ 5.30% 4.84% 2.72%

Portfolio Turnover Rate.......... -- -- --

Net Assets, End
of Period (in thousands) ........ $26,191 $16,381 $5,459

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FINANCIAL HIGHLIGHTS (CONTINUED)--
PREMIUM CAPITAL RESERVE (For a Share Outstanding Throughout the Period)

Year ended March 31 1996 1995 1994
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NET ASSET VALUE,
BEGINNING OF PERIOD.............. $ 1.00 $ 1.00 $ 1.00
------- ------- -------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income......... .054 .046 .028

Net Realized and Unrealized
Gain (Loss) on Investment
Transactions.................. -- -- --
------- ------- -------

Total from
Investment Operations......... .054 .046 .028
------- ------- -------
DISTRIBUTIONS
From Net
Investment Income............. (.054) (.046) (.028)

Total Distributions........... (.054) (.046) (.028)
------- ------- -------
NET ASSET VALUE,
END OF PERIOD.................... $1.00 $1.00 $1.00
======= ======= =======
TOTAL RETURN..................... 5.58% 4.66% 2.81%

RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets............ .45% .45% .45%

Ratio of Net Investment Income
to Average Net Assets....... 5.50% 4.76% 2.83%

Portfolio Turnover Rate....... -- -- --

Net Assets, End
of Period (in thousands) ..... $133,417 $138,428 $38,823

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FINANCIAL HIGHLIGHTS (CONTINUED)--
PREMIUM MANAGED BOND (For a Share Outstanding Throughout the Period)

Year ended March 31 1996 1995 1994
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NET ASSET VALUE,
BEGINNING OF PERIOD.............. $ 9.46 $ 9.64 $10.00
------- ------- -------
INCOME FROM
INVESTMENT OPERATIONS
Net Investment Income......... .607 .588 .462

Net Realized and Unrealized
Gain (Loss) on Investment
Transactions.................. .470 (.180) (.360)
------- ------- -------

Total from
Investment Operations......... 1.077 .408 .102
------- ------- -------
DISTRIBUTIONS
From Net
Investment Income............. (.607) (.588) (.462)

Total Distributions........... (.607) (.588) (.462)
------- ------- -------
NET ASSET VALUE,
END OF PERIOD.................... $9.93 $9.46 $9.64
======= ======= =======
TOTAL RETURN..................... 11.53% 4.48% .92%

RATIOS/SUPPLEMENTAL DATA
Ratio of Expenses to
Average Net Assets............ .43% .45% .45%

Ratio of Net Investment Income
to Average Net Assets......... 6.08% 6.30% 4.65%

Portfolio Turnover Rate....... 92% 51% 144%

Net Assets, End
of Period (in thousands) .... $20,280 $10,334 $8,080

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INFORMATION REGARDING THE FUNDS
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INVESTMENT POLICIES
OF THE FUNDS

The fund's have adopted certain investment restrictions that are set forth
in the Statement of Additional Information. Those restrictions, as well as the
investment objectives identified on the cover page of this Prospectus and any
other investment policies designated as "fundamental" in this Prospectus or in
the Statement of Additional Information, cannot be changed without shareholder
approval. The funds have implemented additional investment policies and
practices to guide their activities in the pursuit of their respective
investment objectives. These policies and practices, which are described
throughout this Prospectus, are not designated as fundamental policies and may
be changed without shareholder approval.

For an explanation of the securities ratings referred to in the fund
descriptions below, see "An Explanation of Fixed Income Securities Ratings" in
the Statement of Additional Information.

TWENTIETH CENTURY PREMIUM
GOVERNMENT RESERVE

Twentieth Century Premium Government Reserve ("Premium Government Reserve")
seeks to obtain as high a level of current income as is consistent with
preservation of capital and maintenance of liquidity within the standards of
investment prescribed for such fund. Premium Government Reserve expects, but
cannot guarantee, that it will maintain a constant share price of $1.00 by
purchasing only securities having remaining maturities of not more than 13
months and by maintaining a weighted average portfolio maturity of not more than
90 days.

Premium Government Reserve will invest substantially all of its assets in a
portfolio of U.S. dollar denominated securities issued or guaranteed by the U.S.
government and its agencies and instrumentalities. Specifically, it may invest
in (1) direct obligations of the United States, such as Treasury bills, notes
and bonds, which are supported by the full faith and credit of the United
States, and (2) obligations (including mortgage-related securities) issued or
guaranteed by agencies and instrumentalities of the U.S. government. These
agencies and instrumentalities may include, but are not limited to, the
Government National Mortgage Association, Federal National Mortgage Association,
Federal Home Loan Mortgage Corporation, Student Loan Marketing Association,
Federal Farm Credit Banks, Federal Home Loan Banks, and Resolution Funding
Corporation. The securities of some of these agencies and instrumentalities,
such as the Government National Mortgage Association, are guaranteed as to
principal and interest by the U.S. Treasury, and other securities are supported
by the right of the issuer, such as the Federal Home Loan Banks, to borrow from
the Treasury. Other obligations, including those issued by the Federal National
Mortgage Association and the Federal Home Loan Mortgage Corporation, are
supported only by the credit of the instrumentality.

Mortgage-related securities that may be purchased are mortgage pass-through
certificates and collateralized mortgage obligations ("CMOs") issued by a U.S.
agency or instrumentality. A mortgage pass-through certificate is a debt
security generally collateralized by a pool of mortgages, while a CMO is a debt
security that is generally collateralized by a portfolio or pool of mortgages or
mortgage-backed securities. With both types of securities, the issuer's
obligation to make interest and principal payments is secured by the underlying
pool or portfolio of mortgages or securities.

The market value of mortgage-related securities, even those in which the
underlying pool of mortgage loans is guaranteed as to the payment of principal
and interest by the U. S. government, is not insured. When interest rates rise,
the market value of those securities may decrease in the same manner as other
debt, but when interest rates decline, their market value may not increase as
much as other debt

instruments because of the prepayment feature inherent in the underlying
mortgages. If such securities are purchased at a premium, a fund will suffer a
loss if the obligation is prepaid. Prepayments will be reinvested at prevailing
rates, which may be less than the rate paid by the prepaid obligation.

For the purpose of determining the weighted average portfolio maturity of a
fund, the manager shall consider the maturity of a mortgage-related security to
be the remaining expected average life of the security. The average life of such
securities is likely to be substantially less than the original maturity as a
result of prepayments of principal on the underlying mortgages, especially in a
declining interest rate environment. In determining the remaining expected
average life, the manager makes assumptions regarding prepayments on underlying
mortgages. In a rising interest rate environment, those prepayments generally
decrease, and may decrease below the rate of prepayment assumed by the manager
when purchasing those securities. Such slowdown may cause the remaining maturity
of those securities to lengthen, which will increase the relative volatility of
those securities and, hence, the fund holding the securities. (See "Fundamentals
of Fixed Income Investing," page 11.)

Premium Government Reserve will invest only in mortgage-related securities
that have a stated final maturity of 397 days or less.

Because of its strict credit and maturity requirements, the level of
current income produced by the fund may not be as high as that produced by funds
that invest in riskier and more speculative securities with longer maturities.
(See "Investment Company Act Rule 2a-7," page 16.)

TWENTIETH CENTURY PREMIUM
CAPITAL RESERVE

Twentieth Century Premium Capital Reserve ("Premium Capital Reserve") seeks
to obtain as high a level of current income as is consistent with preservation
of capital and maintenance of liquidity within the standards of investment
prescribed for such fund. Premium Capital Reserve expects, but cannot guarantee,
that it will maintain a constant share price of $1.00 by purchasing only
securities having remaining maturities of not more than 13 months and by
maintaining a weighted average portfolio maturity of not more than 90 days.

Premium Capital Reserve will invest substantially all of its assets in a
diversified portfolio of U.S. dollar denominated money market instruments.
Specifically, it may invest in the following:

(1) Securities issued or guaranteed by the U.S. government and its agencies
and instrumentalities, as described under "Premium Government Reserve."

(2) Commercial paper.

(3) Short-term notes, bonds, debentures, or other debt instruments.

(4) Certificates of deposit, bankers acceptances and time deposit
obligations of U.S. banks, foreign branches of U.S. banks
(Eurodollars), U.S. branches and agencies of foreign banks (Yankee
dollars) and foreign branches of foreign banks.

With the exception of the obligations of foreign branches of U.S. banks and
U.S. branches of foreign banks, which are limited to 25% of net assets, these
classes of securities may be held in any proportion, and such proportion may
vary as market conditions change.

All portfolio holdings are limited to those that at the time of purchase
have a short-term rating of A-1 by Standard & Poor's Corporation (S&P), or P-1
by Moody's Investors Service, Inc. (Moody's), or if they have no short-term
rating are issued or guaranteed by an entity having a long-term rating of at
least AA by S&P or Aa by Moody's.

Eurodollar and Yankee dollar investments involve risks that are different
from investments in securities of U.S. banks. These risks may include future
unfavorable political and economic

developments, possible withholding taxes, seizure of foreign deposits, currency
controls, interest limitations or other governmental restrictions that might
affect payment of principal or interest. Additionally, there may be less public
information available about foreign banks and their branches. Foreign branches
of foreign banks are not regulated by U.S. banking authorities, and generally
are not bound by accounting, auditing and financial reporting standards
comparable to U.S. banks. Although these factors are carefully considered when
making investments, there are no limits on the amount of fund assets which can
be invested in any one type of instrument or in any foreign country.

TWENTIETH CENTURY PREMIUM
MANAGED BOND

Twentieth Century Premium Managed Bond ("Premium Managed 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. Under normal market conditions, at
least 65% of Premium Managed Bond's assets will be invested in bonds. The
balance of the fund's assets will be invested in shorter-term debt securities.

There are no maturity restrictions on the individual securities in which
Premium Managed Bond may invest, but the weighted average adjusted duration of
the fund's securities portfolio must be 3.5 years or greater. Adjusted duration,
which is an indication of the relative sensitivity of a security's market value
to changes in interest rates, is based upon the aggregate of the present value
of all principal and interest payments to be received, discounted at the current
market rate of interest, and expressed in years.

Adjusted duration is different than dollar-weighted average portfolio
maturity in that it attempts to measure the interest rate sensitivity of a
security, as opposed to its expected final maturity. Further, the adjusted
duration of a portfolio will change in response to a change in interest rates,
whereas average maturity may not. Duration is generally shorter than remaining
time to final maturity because it gives weight to periodic interest payments, as
well as the payment of principal at maturity. The longer the duration of a
portfolio, the more sensitive its market value is to interest rate fluctuation.
However, due to factors other than interest rate changes that affect the price
of a specific security, there generally is not an exact correlation between the
price volatility of a security indicated by adjusted duration and the actual
price volatility of a security.

Subject to the aggregate portfolio duration minimum, the manager will
actively manage the portfolio, adjusting the weighted average portfolio maturity
in response to expected changes in interest rates. During periods of rising
interest rates, a shorter weighted average maturity may be adopted in order to
reduce the effect of bond price declines on the fund's net asset value. When
interest rates are falling and bond prices rising, a longer weighted average
portfolio maturity may be adopted.

To achieve its objective, Premium Managed Bond may invest in a diversified
portfolio of high- and medium-grade debt securities. The fund may invest in
securities which, at the time of purchase, are rated by a nationally recognized
statistical rating organization or, if not rated, are of equivalent investment
quality as determined by management, as follows: short-term notes within the two
highest categories (for example, at least MIG-2 by Moody's or SP-2 by S&P);
corporate, sovereign government, and municipal bonds within the four highest
categories (for

example, at least Baa by Moody's or BBB by S&P), although the fund expects to
invest in tax-exempt municipal bonds only when the expected return on such
securities is equal to or greater than other eligible investments; securities of
the U.S. government and its agencies and instrumentalities (as described under
" Twentieth Century Premium Government Reserve," page 8); and other types of
securities rated at least P-2 by Moody's or A-2 by S&P. There is no limit on the
amount of investments that can be made in securities rated in a particular
rating category. According to Moody's, bonds rated Baa are medium-grade and
possess some speculative characteristics. A BBB rating by S&P indicates S&P's
belief that a security exhibits a satisfactory degree of safety and capacity for
repayment, but is more vulnerable to adverse economic conditions or changing
circumstances.

For the purpose of determining adjusted duration, the manager shall
consider the maturity of a security issued by the Government National Mortgage
Association, or other mortgage-related security, to be the remaining expected
average life of the security. The average life of such securities is likely to
be substantially less than the original maturity as a result of prepayments of
principal of the underlying mortgages.

FUNDAMENTALS OF
FIXED INCOME INVESTING

HISTORICAL YIELDS
[line graph - graph data]

30-YEAR 20-YEAR 3-MONTH
TREASURY TAX-EXEMPT TREASURY
BONDS BONDS BILLS

1/91 8.19% 7.14% 6.38%
2/91 8.20 7.00 6.26
3/91 8.25 6.84 5.93
4/91 8.18 6.67 5.69
5/91 8.26 6.65 5.69
6/91 8.4 6.72 5.69
7/91 8.34 6.61 5.68
8/91 8.06 6.6 5.48
9/91 7.81 6.43 5.25
10/91 7.91 6.4 4.97
11/91 7.94 6.5 4.46
12/91 7.4 6.25 3.96
1/92 7.76 6.33 3.94
2/92 7.79 6.35 4.02
3/92 7.96 6.4 4.14
4/92 8.04 6.43 3.77
5/92 7.84 6.25 3.77
6/92 7.78 6.13 3.65
7/92 7.46 5.78 3.24
8/92 7.41 6.01 3.22
9/92 7.38 6.04 2.74
10/92 7.62 6.34 3.01
11/92 7.6 6.08 3.34
12/92 7.4 6.04 3.14
1/93 7.2 5.9 2.97
2/93 6.9 5.45 3
3/93 6.92 5.61 2.96
4/93 6.93 5.52 2.96
5/93 6.98 5.54 3.11
6/93 6.67 5.32 3.08
7/93 6.56 5.38 3.1
8/93 6.09 5.15 3.07
9/93 6.02 4.99 2.98
10/93 5.97 5 3.1
11/93 6.3 5.24 3.2
12/93 6.35 5.1 3.06
1/94 6.24 4.97 3.03
2/94 6.66 5.26 3.43
3/94 7.09 5.87 3.55
4/94 7.31 6.04 3.95
5/94 7.43 5.99 4.24
6/94 7.61 6.05 4.22
7/94 7.39 5.91 4.36
8/94 7.45 5.96 4.66
9/94 7.82 6.17 4.77
10/94 7.97 6.36 5.15
11/94 8 6.64 5.71
12/94 7.88 6.45 5.69
1/95 7.7 6.12 6
2/95 7.44 5.78 5.94
3/95 7.43 5.77 5.87
4/95 7.34 5.81 5.86
5/95 6.65 5.55 5.8
6/95 6.62 5.77 5.57
7/95 6.85 5.77 5.58
8/95 6.65 5.73 5.45
9/95 6.5 5.67 5.41
10/95 6.33 5.49 5.51
11/95 6.13 5.31 5.49
12/95 5.95 5.18 5.08

BOND PRICE VOLATILITY

For a given change in interest rates, longer maturity bonds experience a greater
change in price, as shown below:

Price of a 7% Price of same
coupon bond bond if its Percent
Years to now trading yield increases change
Maturity to yield 7% to 8% in price

1 year $100.00 $99.06 -0.94%
3 years 100.00 97.38 -2.62%
10 years 100.00 93.20 -6.80%
30 years 100.00 88.69 -11.31%

Over time, the level of interest rates available in the marketplace
changes. As prevailing rates fall, the prices of bonds and other securities that
trade on a yield basis rise. On the other hand, when prevailing interest rates
rise, bond prices fall.

Generally, the longer the maturity of a debt security, the higher its yield
and the greater its price volatility. Conversely, the shorter the maturity, the
lower the yield but the greater the price stability.

These factors operating in the marketplace have a similar impact on bond
portfolios. A change in the level of interest rates causes the net asset value
per share of any bond fund, except money market funds, to change. If sustained
over time, it would also have the impact of raising or lowering the yield of the
fund.

In addition to the risk arising from fluctuating interest rate levels, debt
securities are subject to credit risk. When a security is purchased, its
anticipated yield is dependent on the timely payment by the borrower of each
interest and principal installment. Credit analysis and resultant bond ratings
take into account the relative likelihood that such timely payment will occur.
As a result, lower-rated bonds tend to sell at higher yield levels than
top-rated bonds of similar maturity. In addition, as economic, political and
business developments unfold, lower-quality bonds, which possess lower levels of
protection with regard to timely payment, usually exhibit more price fluctuation
than do higher-quality bonds of like maturity.

The investment practices of all fixed income funds involve these
relationships. The maturity and credit quality of each fund have implications
for the degree of price volatility and the yield level to be expected from each.

OTHER INVESTMENT PRACTICES,
THEIR CHARACTERISTICS AND RISKS

REPURCHASE AGREEMENTS

Each fund may invest in repurchase agreements when such transactions
present an attractive short-term return on cash that is not otherwise committed
to the purchase of securities pursuant to the investment policies of that fund.

A repurchase agreement occurs when, at the time the fund purchases an
interest-bearing obligation, the seller (a bank or a broker-dealer registered
under the Securities Exchange Act of 1934) agrees to repurchase it on a
specified date in the future at an agreed-upon price. The repurchase price
reflects an agreed-upon interest rate during the time the fund's money is
invested in the security.

Since the security purchased constitutes security for the repurchase
obligation, a repurchase agreement can be considered a loan collateralized by
the security purchased. The fund's risk is the ability of the seller to pay the
agreed-upon repurchase price on the repurchase date. If the seller defaults, the
fund may incur costs in disposing of the collateral, which would reduce the
amount realized thereon. If the seller seeks relief under the bankruptcy laws,
the disposition of the collateral may be delayed or limited. To the extent the
value of the security decreases, the fund could experience a loss.

The funds will limit repurchase agreement transactions to securities issued
by the United States government, its agencies and instrumentalities, and will
enter into such transactions with those banks and securities dealers who are
deemed creditworthy pursuant to criteria adopted by the funds' board of
directors.

Each of the funds may invest in repurchase agreements with respect to any
security in which that fund is authorized to invest, even if the remaining
maturity of the underlying security would make that security ineligible for
purchase by such fund. No fund will invest more than 10% of its assets in
repurchase agreements maturing in more than seven days.

FOREIGN SECURITIES

Premium Capital Reserve and Premium Managed Bond may each invest an
unlimited amount of their assets in the debt securities of those foreign issuers
whose principal business activities are in developed countries when these
securities meet their respective standards of selection, including credit
quality. Securities of foreign issuers may trade in the U.S. or foreign
securities markets.

Investments in foreign securities may present certain risks, including
those resulting from fluctuations in currency exchange rates, future political
and economic developments, reduced availability of public information concerning
issuers, and the fact that foreign issuers are not generally subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements comparable to those applicable to domestic issuers.

FORWARD CURRENCY
EXCHANGE CONTRACTS

Some of the securities held by Premium Managed Bond may be denominated in
foreign currencies. As a result, the value of the portfolio may be affected by
changes in the exchange rate between foreign currencies and the U.S. dollar, as
well as by changes in the market value of the securities themselves. The
performance of foreign currencies relative to the dollar may be an important
factor in the fund's overall performance.

To protect against adverse movements in exchange rates between currencies,
the fund may, for hedging purposes only, enter into

forward currency exchange contracts. A forward currency exchange contract
obligates the fund to purchase or sell a specific currency at a future date at a
specific price.

The fund may elect to enter into a forward currency exchange contract with
respect to a specific purchase or sale of a security, or with respect to the
fund's portfolio positions generally.

By entering into a forward currency exchange contract with respect to the
specific purchase or sale of a security denominated in a foreign currency, the
fund can "lock in" an exchange rate between the trade and settlement dates for
that purchase or sale. This practice is sometimes referred to as "transaction
hedging." The fund may enter into transaction hedging contracts with respect to
all or a substantial portion of its foreign securities trades.

When the manager believes that a particular currency may decline in value
compared to the dollar, the fund may enter into a forward currency exchange
contract to sell an amount of foreign currency equal to the value of some or all
of the fund's portfolio securities denominated in that currency. This practice
is sometimes referred to as "portfolio hedging." The fund may not enter into a
portfolio hedging transaction where the fund would be obligated to deliver an
amount of foreign currency in excess of the aggregate value of the fund's
portfolio securities or other assets denominated in that currency.

The fund will make use of portfolio hedging to the extent deemed
appropriate by the manager. However, it is anticipated that the fund will enter
into portfolio hedges much less frequently than transaction hedges.

If the fund enters into a forward contract, the fund, when required, will
instruct its custodian bank to segregate cash or liquid high-grade securities in
a separate account in an amount sufficient to cover its obligation under the
contract. Those assets will be valued at market daily, and if the value of the
segregated securities declines, additional cash or securities will be added so
that the value of the account is not less than the amount of the fund's
commitment.

Predicting the relative future values of currencies is very difficult, and
there is no assurance that any attempt to protect the fund against adverse
currency movements through the use of forward currency exchange contracts will
be successful. In addition, the use of forward currency exchange contracts tends
to limit the potential gains that might result from a positive change in the
relationship between the foreign currency and the U.S. dollar.

INTEREST RATE FUTURES CONTRACTS
AND OPTIONS THEREON

For options sold, the fund will segregate cash or high-quality debt
securities equal to the value of securities underlying the option unless the
option is otherwise covered.

The fund will deposit in a segregated account with its custodian bank
high-quality debt obligations or cash in an amount equal to the fluctuating
market value of long futures contracts it has purchased, less any margin
deposited on its long position. It may hold cash or acquire such debt
obligations for the purpose of making these deposits.

The fund will purchase or sell futures contracts and options thereon only
for the purpose of hedging against changes in the market value of its portfolio
securities or changes in the market value of securities that it may wish to
include in its portfolio. The fund will enter into futures and option
transactions only to the extent that the sum of the amount of margin deposits on
its existing futures positions and premiums paid for related options does not
exceed 5% of its assets.

Since futures contracts and options thereon can replicate movements in the
cash markets for

the securities in which a fund invests without the large cash investments
required for dealing in such markets, they may subject a fund to greater and
more volatile risks than might otherwise be the case. The principal risks
related to the use of such instruments are: (1) the correlation between
movements in the market price of the portfolio investments (held or intended)
being hedged and in the price of the offsetting futures contract or option may
be imperfect; (2) the possible lack of a liquid secondary market for closing out
futures or option positions; (3) the need for additional portfolio management
skills and techniques; and (4) losses due to unanticipated market price
movements. For a hedge to be completely effective, the price change of the
hedging instrument should equal the price change of the securities being hedged.
Such equal price changes are not always possible because the investment
underlying the hedging instrument may not be the same investment that is being
hedged.

The manager will attempt to create a closely correlated hedge but hedging
activity may not be completely successful in eliminating market value
fluctuation. The ordinary spreads between prices in the cash and futures
markets, due to the differences in the natures of those markets, are subject to
distortion. Due to the possibility of distortion, a correct forecast of general
interest rate trends by the manager may still not result in a successful
transaction. The manager may be incorrect in its expectations as to the extent
of interest rate movements or the time span within which the movements take
place.

See the Statement of Additional Information for further information about
these instruments and their risks.

DERIVATIVE SECURITIES

To the extent permitted by its investment objectives and policies, each of
the funds may invest in securities that are commonly referred to as "derivative"
securities. Generally, a derivative is a financial arrangement the value of
which is based on, or "derived" from, a traditional security, asset, or market
index. Certain derivative securities are more accurately described as
"index/structured" securities. Index/structured securities are derivative
securities whose value or performance is linked to other equity securities (such
as depositary receipts or S&P 500 futures), currencies, interest rates, indices
or other financial indicators ("reference indices").

Some "derivatives" such as mortgage-related and other asset-backed
securities are in many respects like any other investment, although they may be
more volatile or less liquid than more traditional debt securities.

There are many different types of derivatives and many different ways to
use them. Futures and options are commonly used for traditional hedging purposes
to attempt to protect a fund from exposure to changing interest rates,
securities prices, or currency exchange rates and for cash management purposes
as a low-cost method of gaining exposure to a particular securities market
without investing directly in those securities.

No fund may invest in a derivative security unless the reference index or
the instrument to which it relates is an eligible investment for the fund. For
example, a bond whose interest rate is indexed to the return on two year
treasury securities would be a permissible investment (assuming it otherwise
meets the other requirements for the funds), while a security whose underlying
value is linked to the price of oil would not be a permissible investment since
the funds may not invest in oil and gas leases or futures.

The return on a derivative security may increase or decrease, depending
upon changes in the reference index or instrument to which it relates.

There are a range of risks associated with derivative investments,
including:

o the risk that the underlying security, interest rate, market index or
other financial asset will not move in the direction the portfolio
manager anticipates;

o the possibility that there may be no liquid secondary market, or the
possibility that price fluctuation limits may be imposed by

the exchange, either of which may make it difficult or impossible to
close out a position when desired;

o the risk that adverse price movements in an instrument can result in a
loss substantially greater than a fund's initial investment; and

o the risk that the counterparty will fail to perform its obligations.

The board of directors has approved the manager's policy regarding
investments in derivative securities. That policy specifies factors that must be
considered in connection with a purchase of derivative securities. The policy
also establishes a committee that must review certain proposed purchases before
the purchases can be made. The manager will report on fund activity in
derivative securities to the board of directors as necessary. In addition, the
board will review the manager's policy for investments in derivative securities
annually.

PORTFOLIO LENDING

In order to realize additional income, each of the funds may lend its
portfolio securities to persons not affiliated with it and who are deemed to be
creditworthy. Such loans must be secured continuously by cash collateral
maintained on a current basis in an amount at least equal to the market value of
the securities loaned, or by irrevocable letters of credit. During the existence
of the loan, the fund must continue to receive the equivalent of the interest
and dividends paid by the issuer on the securities loaned and interest on the
investment of the collateral. The fund must have the right to call the loan and
obtain the securities loaned at any time on five days' notice, including the
right to call the loan to enable the fund to vote the securities, if applicable.
Such loans may not exceed one-third of the fund's net assets valued at market.

PORTFOLIO TURNOVER

The portfolio turnover rate of Premium Managed Bond is shown in the
Financial Highlights table on page 5 of this Prospectus.

In order to achieve the investment objectives of the funds, the manager
will purchase and sell securities for the funds without regard to the length of
time the security has been held and, accordingly, it can be expected that the
rate of portfolio turnover for each fund may be substantial.

Each fund intends to purchase a given security whenever the manager
believes it will contribute to the stated objective of the fund, even if the
same security has only recently been sold. In selling a given security, the
manager keeps in mind that (1) profits from sales of securities held less than
three months must be limited in order to meet the requirements of Subchapter M
of the Internal Revenue Code, and (2) profits from sales of securities may be
taxed to shareholders as ordinary income. Subject to those considerations, a
fund will sell a given security, no matter for how long or for how short a
period it has been held in the portfolio and no matter whether the sale is at a
gain or at a loss, if the manager believes that such security is not fulfilling
its purpose.

Since investment decisions are based on the anticipated contribution of the
security in question to a fund's objectives, the rate of portfolio turnover is
irrelevant when the manager believes a change is in order to achieve those
objectives. Accordingly, a fund's annual portfolio turnover rate cannot be
anticipated and may be comparatively high.

Since the manager does not take portfolio turnover rate into account in
making investment decisions, (1) the manager has no intention of accomplishing
any particular rate of portfolio turnover, whether high or low, and (2) the
portfolio turnover rates should not be considered as a representation of the
rates that will be attained in the future.

The portfolio turnover of each of the funds may be higher than some other
mutual funds with similar investment objectives. Higher turnover would generate
correspondingly greater trading expenses, which is a cost that each fund pays
directly.

RULE 144A SECURITIES

The funds may, from time to time, purchase Rule 144A securities when they
present attractive investment opportunities that otherwise meet the funds'
criteria for selection. Rule 144A securities are securities that are privately
placed with and traded among qualified institutional buyers rather than the
general public. Although Rule 144A securities are considered "restricted
securities," they are not necessarily illiquid.

With respect to securities eligible for resale under Rule 144A, the staff
of the Securities and Exchange Commission has taken the position that the
liquidity of such securities in the portfolio of a fund offering redeemable
securities is a question of fact for the board of directors to determine, such
determination to be based upon a consideration of the readily available trading
markets and the review of any contractual restrictions. Accordingly, the board
of directors is responsible for developing and establishing the guidelines and
procedures for determining the liquidity of Rule 144A securities. As allowed by
Rule 144A, the board of directors of the funds has delegated the day-to-day
function of determining the liquidity of Rule 144A securities to the manager.
The board retains the responsibility to monitor the implementation of the
guidelines and procedures it has adopted.

Since the secondary market for such securities is limited to certain
qualified institutional investors, the liquidity of such securities may be
limited accordingly and a fund may, from time to time, hold a Rule 144A security
that is illiquid. In such an event, the funds' manager will consider appropriate
remedies to minimize the effect on such fund's liquidity. Premium Government
Reserve and Premium Capital Reserve may invest up to 10% of their respective
assets in illiquid securities (securities that may not be sold within seven days
at approximately the price used in determining the net asset value of fund
shares), while Premium Managed Bond may invest up to 15% of its assets in such
securities.

WHEN-ISSUED SECURITIES

Each of the funds may sometimes purchase new issues of securities on a
when-issued basis without limit when, in the opinion of the manager, such
purchases will further the investment objectives of the funds. The price of
when-issued securities is established at the time the commitment to purchase is
made. Delivery of and payment for these securities typically occur 15 to 45 days
after the commitment to purchase. Market rates of interest on debt securities at
the time of delivery may be higher or lower than those contracted for on the
when-issued security. Accordingly, the value of each security may decline prior
to delivery, which could result in a loss to a fund. A separate account for each
fund consisting of cash or high-quality liquid debt securities in an amount at
least equal to the when-issued commitments will be established and maintained
with the custodian. No income will accrue to the fund prior to delivery.

INVESTMENT COMPANY ACT RULE 2A-7

Premium Government Reserve and Premium Capital Reserve each operate
pursuant to Rule 2a-7 under the Investment Company Act of 1940. That Rule
permits valuation of portfolio securities on the basis of amortized cost. To
rely on the Rule, each fund must be diversified with regard to 100% of its
assets other than U.S. government securities. This operating policy is more
restrictive than the Investment Company Act, which requires a diversified
investment company to be diversified with regard to only 75% of its assets. A
fundamental policy, changeable only by shareholder vote, applicable to each fund
would require only 75% of each fund's assets to be diversified. However, because
of the restriction contained in Rule 2a-7, the fundamental policy would give
each fund the ability to invest, with respect to 25% of each fund's assets, more
than 5% of its assets in any one issuer only in the event that Rule 2a-7 is
amended in the future.

PERFORMANCE ADVERTISING

From time to time, the funds may advertise performance data. Fund
performance may be shown by presenting one or more performance measurements,
including cumulative total return or average annual total return, yield and
effective yield.

Cumulative total return data is computed by considering all elements of
return, including reinvestment of dividends and capital gains distributions,
over a stated period of time. Average annual total return is determined by
computing the annual compound return over a stated period of time that would
have produced a fund's cumulative total return over the same period if the
fund's performance had remained constant throughout.

A quotation of yield reflects a fund's income over a stated period of time,
expressed as a percentage of the fund's share price. In the case of Premium
Government Reserve and Premium Capital Reserve, yield is calculated by measuring
the income generated by an investment in the fund over a seven-day period (net
of fund expenses). This income is then "annualized." That is, the amount of
income generated by the investment over the seven-day period is assumed to be
generated over each similar period each week throughout a full year and is shown
as a percentage of the investment. The "effective yield" is calculated in a
similar manner but, when annualized, the income earned by the investment is
assumed to be reinvested. The effective yield will be slightly higher than the
yield because of the compounding effect of the assumed reinvestment.

With respect to Premium Managed Bond, yield is calculated by adding over a
30-day (or one-month) period all interest and dividend income (net of fund
expenses) calculated on each day's market values, dividing this sum by the
average number of fund shares outstanding during the period, and expressing the
result as a percentage of the fund's share price on the last day of the 30-day
(or one-month) period. The percentage is then annualized. Capital gains and
losses are not included in the calculation.

Yields are calculated according to accounting methods that are standardized
in accordance with SEC rules for all stock and bond funds. Because yield
accounting methods differ from the methods used for other accounting purposes, a
fund's yield may not equal the income paid on your shares or the income reported
in a fund's financial statements.

The funds may also include in advertisements data comparing performance
with the performance of non-related investment media, published editorial
comments and performance rankings compiled by independent organizations (such as
Lipper Analytical Services or Donoghue's Money Fund Report) and publications
that monitor the performance of mutual funds. Performance information may be
quoted numerically or may be presented in a table, graph or other illustration.
In addition, fund performance may be compared to well-known indices of market
performance including the Lehman Brothers Government Corporate Index, Salomon
Bond Index, Donoghue's Money Fund Average and the Bank Rate Monitor National
Index of 2 1/2 -year CD rates. A fund's performance may also be compared, on a
relative basis, to other funds in our fund family. This relative comparison,
which may be based upon historical or expected fund performance, volatility or
other fund characteristics, may be presented numerically, graphically or in
text. Fund performance may also be combined or blended with other funds in our
fund family, and that combined or blended performance may be compared to the
same indices to which individual funds may be compared.

All performance information advertised by the funds is historical in nature
and is not intended to represent or guarantee future results. The value of the
fund shares when redeemed may be more or less than their original cost.

HOW TO INVEST WITH TWENTIETH CENTURY AND THE BENHAM GROUP
- --------------------------------------------------------------------------------

The following section explains how to invest with Twentieth Century Mutual
Funds and The Benham Group, including purchases, redemptions, exchanges and
special services. You will find more detail about doing business with us by
referring to the Investor Services Guide that you will receive when you open an
account.

If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan or through a bank, broker-dealer or other
financial intermediary, the following sections, as well as the information
contained in our Investor Services Guide, may not apply to you. Please read
"Employer-Sponsored Retirement Plans and Institutional Accounts," page 24.

HOW TO OPEN AN ACCOUNT

To open an account, you must complete and sign an application, furnishing
your taxpayer identification number. (You must also certify whether you are
subject to withholding for failing to report income to the IRS.) Investments
received without a certified taxpayer identification number will be returned.

The minimum investment is $100,000. The minimum investment requirements may
be different for some types of retirement accounts. Call one of our
Institutional Service Representatives for information on our retirement plans,
which are available for individual investors or for those investing through
their employers.

Please note: If you register your account as belonging to multiple owners
(e.g., as joint tenants), you must provide us with specific authorization on
your application in order for us to accept written or telephone instructions
from a single owner. Otherwise, all owners will have to agree to any
transactions that involve the account (whether the transaction request is in
writing or over the telephone).

You may invest in the following ways:

BY MAIL

Send a completed application and check or money order payable in U.S.
dollars to Twentieth Century Mutual Funds.

BY WIRE

You may make your initial investment by wiring funds. To do so, call us or
mail a completed application and provide your bank with the following
information:

RECEIVING BANK AND ROUTING NUMBER:
Commerce Bank, N.A. (101000019)

BENEFICIARY (BNF):
Twentieth Century Services, Inc.
4500 Main St., Kansas City, MO 64141-6200

BENEFICIARY ACCOUNT NUMBER (BNF ACCT):
2804918

REFERENCE FOR BENEFICIARY (RFB):
Twentieth Century account number into which you are investing. If more than
one, leave blank and see Bank to Bank Information below.

ORIGINATOR TO BENEFICIARY (OBI):
Name and address of owner of account into which you are investing.

BANK TO BANK INFORMATION
(BBI OR FREE FORM TEXT):
o Taxpayer identification or social security number.
o If more than one account, account numbers and amount to be invested in
each account.
o Current tax year, previous tax year or rollover designation if an IRA.
Specify whether IRA, SEP-IRA or SARSEP-IRA.

BY EXCHANGE

Call 1-800-345-3533 from 7 a.m. to 7 p.m. Central time to get information
on opening an account by exchanging from another Twentieth Century or Benham
account. See page 19 for more information on exchanges.

IN PERSON

If you prefer to work with a representative in person, please visit one of
our Investors Centers, located at:

4500 Main Street
Kansas City, MO 64111

1665 Charleston Road
Mountain View, CA 94043

2000 S. Colorado Blvd.
Denver, CO 80222

SUBSEQUENT INVESTMENTS

Subsequent investments may be made by an automatic bank, payroll or
government direct deposit (see Automatic Investment Plan, this page) or by any
of the methods below. The minimum investment requirement for subsequent
investments: $250 for checks submitted without the remittance portion of a
previous statement or confirmation, $50 for all other types of subsequent
investments.

BY MAIL

When making subsequent investments, enclose your check with the remittance
portion of the confirmation of a previous investment. If the remittance slip is
not available, indicate your name, address and account number on your check or a
separate piece of paper. (Please be aware that the investment minimum for
subsequent purchases is higher without a remittance slip.)

BY TELEPHONE

Once your account is open, you may make investments by telephone if you
have authorized us (by choosing "Full Services" on your application) to draw on
your bank account. You may call an Investor Services Representative or use our
Automated Information Line.

BY WIRE

You may make subsequent investments by wire. Follow the wire transfer
instructions on page 18 and indicate your account number.

IN PERSON

You may make subsequent investments in person at one of our Investors
Centers. The locations of our three Investors Centers are listed on this page.

AUTOMATIC INVESTMENT PLAN

You may elect on your application to make investments automatically by
authorizing us to draw on your bank account regularly. Such investments must be
at least the equivalent of $50 per month. You also may choose an automatic
payroll or government direct deposit. If you are establishing a new account,
check the appropriate box under "Automatic Investments" on your application to
receive more information. If you would like to add a direct deposit to an
existing account, please call one of our Investor Services Representatives.

HOW TO EXCHANGE FROM ONE
ACCOUNT TO ANOTHER

As long as you meet any minimum initial investment requirements, you may
exchange your fund shares to our other funds up to six times per year per
Premium Managed Bond account. There is no limit on the number of exchanges you
may make from Premium Capital Reserve and Premium Government Reserve. For any
single exchange, the shares of each fund being acquired must have a value of at
least $100. However, we will allow investors to set up an Automatic Exchange
Plan between any two funds in the amount of at least $50 per month. See our
Investor Services Guide for further information about exchanges.

BY MAIL

You may direct us in writing to exchange your shares from one Twentieth
Century or Benham account to another. For additional information, please see our
Investor Services Guide.

BY TELEPHONE

You can make exchanges over the phone (either with an Institutional Service
Representative or using our Automated Information Line -- see page 21) if you
have authorized us to accept telephone instructions. You can authorize this by
selecting "Full Services" on your application or by calling us at 1-800-345-3533
to get the appropriate form.

HOW TO REDEEM SHARES

We will redeem or "buy back" your shares at any time. Redemptions will be
made at the next net asset value determined after a complete redemption request
is received.

Please note that a request to redeem shares in an IRA or 403(b) plan must
be accompanied by an executed IRS Form W4-P and a reason for withdrawal as
specified by the IRS.

BY TELEPHONE

If you have authorized us to accept telephone instructions, you may redeem
your shares by calling an Institutional Service Representative.

BY MAIL

Your written instructions to redeem shares may be made either by a
redemption form, which we will send you upon request, or by a letter to us.
Certain redemptions may require a signature guarantee. Please see "Signature
Guarantee," page 21.

BY CHECK-A-MONTH

You may redeem shares by Check-A-Month. A Check-A-Month plan automatically
redeems enough shares each month to provide you with a check for an amount you
choose (minimum $50). To set up a Check-A-Month plan, please call and request
our Check-A-Month brochure.

OTHER AUTOMATIC REDEMPTIONS

You may elect to make redemptions automatically by authorizing us to send
funds to you or your account at a bank or other financial institution. To set up
automatic redemptions, call one of our Institutional Service Representatives.

REDEMPTION PROCEEDS

Please note that shortly after a purchase of shares is made by check or
electronic draft (also known as an ACH draft) from your bank, we may wait up to
15 days or longer to send redemption proceeds (to allow your purchase funds to
clear). No interest is paid on the redemption proceeds after the redemption is
processed but before your redemption proceeds are sent.

Redemption proceeds may be sent to you in one of the following ways:

BY CHECK

Ordinarily, all redemption checks will be made payable to the registered
owner(s) of the shares and will be mailed only to the address of record. For
more information, please refer to our Investor Services Guide.

BY WIRE AND ACH

You may authorize us to transmit redemption proceeds by wire or ACH. These
services will be effective 15 days after we receive the authorization.

Your bank will usually receive wired funds within 48 hours of transmission.
Electronically transferred funds may be received up to seven days after
transmission. Wired funds are subject to a $10 fee to cover bank wire charges,
which is deducted from redemption proceeds. Once the funds are transmitted, the
time of receipt and the funds' availability are not under our control.

REDEMPTION OF SHARES IN
LOW-BALANCE ACCOUNTS

Whenever the shares held in an account have a value of less than the
required minimum, a letter will be sent advising you of the necessity to bring
the value of the shares held in the account up to the minimum. If action is not
taken within 90 days of the letter's date, the shares held in the account will
be redeemed and the proceeds from the redemption will be sent by check to your
address of record. We reserve the right to increase the investment minimums.

SIGNATURE GUARANTEE

To protect your accounts from fraud, some transactions will require a
signature guarantee. Which transactions will require a signature guarantee will
depend on which service options you elect when you open your account. For
example, if you choose "In Writing Only," a signature guarantee would be
required when:

o Redeeming more than $25,000
o Establishing or increasing a Check-A-Month or automatic transfer on an
existing account

You may obtain a signature guarantee from a bank or trust company, credit
union, broker-dealer, securities exchange or association, clearing agency or
savings association, as defined by federal law.

For a more in-depth explanation of our signature guarantee policy, or if
you live outside the United States and would like to know how to obtain a
signature guarantee, please consult our Investor Services Guide.

We reserve the right to require a signature guarantee on any transaction,
or to change this policy at any time.

SPECIAL SHAREHOLDER SERVICES

We offer several service options to make your account easier to manage.
These are listed on the account application. Please make note of these options
and elect the ones that are appropriate for you. Be aware that the Full Services
option offers you the most flexibility. You will find more information about
each of these service options in our Investor Services Guide.

Our special shareholder services include:

AUTOMATED INFORMATION LINE

We offer an Automated Information Line, 24 hours a day, seven days a week,
at 1-800-345-8765. By calling the Automated Information Line, you may listen to
fund prices, yields and total return figures. You may also use the Automated
Information Line to make investments into your accounts (if we have your bank
information on file) and obtain your share balance, value and most recent
transactions. If you have authorized us to accept telephone instructions, you
also may exchange shares from one fund to another via the Automated Information
Line. Redemption instructions cannot be given via the Automated Information
Line.

CHECKWRITING

We offer CheckWriting as a service option for Premium Reserves accounts.
CheckWriting allows you to redeem shares in your account by writing a draft
("check") against your account balance. (Shares held in certificate form may not
be redeemed by check.) There is no limit on the number of checks you can write,
but each one must be for at least $100.

When you write a check, you will continue to receive dividends on all
shares until your check is presented for payment to our clearing bank. If you
redeem all shares in your account by check, any accrued distributions on the
redeemed shares will be paid to you in cash on the next monthly distribution
date.

If you want to add CheckWriting to an existing account, contact us by phone
or mail for an appropriate form. For a new account, you may elect CheckWriting
on your purchase application by choosing the Full Services option. CheckWriting
is not available for any account held in an IRA or 403(b) plan.

CheckWriting redemptions may only be made on checks provided by us.
Currently, there is no charge for checks or for the CheckWriting service.

We will return checks drawn on insufficient funds or on funds from
investments made by any means other than by wire within the previous 15 days.
Neither we nor our clearing bank will be liable for any loss or expenses
associated with returned checks. Your account may be assessed a $15 service
charge for checks drawn on insufficient funds.

A stop payment may be ordered on a check written against your account. We
will use reasonable efforts to stop a payment, but we cannot guarantee that we
will be able to do so. If we are successful in fulfilling a stop-payment order,
your account may be assessed a $15 fee.

OPEN ORDER SERVICE

Through our open order service, you may designate a price at which to buy
shares of a variable-priced fund by exchange from one of our money market funds,
or a price at which to sell shares of a variable-priced fund by exchange to one
of our money market funds. The designated purchase price must be equal to or
lower, or the designated sale price equal to or higher, than the variable-priced
fund's net asset value at the time the order is placed. If the designated price
is met within 90 calendar days, we will execute your exchange order
automatically at that price (or better). Open orders not executed within 90 days
will be canceled.

If the fund you have selected deducts a distribution from its share price,
your order price will be adjusted accordingly so the distribution does not
inadvertently trigger an open order transaction on your behalf. If you close or
re-register the account from which the shares are to be redeemed, your open
order will be canceled.

Because of their time-sensitive nature, open order transactions are
accepted only by telephone or in person. These transactions are subject to
exchange limitations described in each fund's prospectus, except that orders and
cancellations received before 2 p.m. Central time are effective the same day,
and orders or cancellations received after 2 p.m. Central time are effective the
next business day.

TAX-QUALIFIED RETIREMENT PLANS

The fund is available for your tax-deferred retirement plan. Call or write
us and request the appropriate forms for:

o Individual Retirement Accounts (IRAs)
o 403(b) plans for employees of public school systems and non-profit
organizations
o Profit sharing plans and pension plans for corporations and other
employers

You can also transfer your tax-deferred plan to us from another company or
custodian. Call or write us for a Request to Transfer form.

IMPORTANT POLICIES REGARDING
YOUR INVESTMENTS

Every account is subject to policies that could affect your investment.
Please refer to the Investor Services Guide for further information about the
policies discussed below, as well as further detail about the services we offer.

(1) We reserve the right for any reason to suspend the offering of shares
for a period of time, or to reject any specific purchase order
(including purchases by exchange). Additionally, purchases may be
refused if, in the opinion of the manager, they are of a size that
would disrupt the management of the fund.

(2) We reserve the right to make changes to any stated investment
requirements, including those that relate to purchases, transfers and
redemptions. In addition, we may also alter, add to or terminate any
investor services and privileges. Any changes may affect all
shareholders or only certain series or classes of shareholders.

(3) Shares being acquired must be qualified for sale in your state of
residence.

(4) Transactions requesting a specific price and date, other than open
orders, will be refused.

(5) If a transaction request is made by a corporation, partnership, trust,
fiduciary, agent or unincorporated association, we will require
evidence satisfactory to us of the authority of the individual making
the request.

(6) We have established procedures designed to assure the authenticity of
instructions received by telephone. These procedures include requesting
personal identification from callers, recording telephone calls, and
providing written confirmations of telephone transactions. These
procedures are designed to protect shareholders from unauthorized or
fraudulent instructions. If we do not employ reasonable procedures to
confirm the genuineness of instructions, then we may be liable for
losses due to unauthorized or fraudulent instructions. The company, its
transfer agent and investment advisor will not be responsible for any
loss due to instructions they reasonably believe are genuine.

(7) All signatures should be exactly as the name appears in the
registration. If the owner's name appears in the registration as Mary
Elizabeth Jones, she should sign that way and not as Mary E. Jones.

(8) Unusual stock market conditions have in the past resulted in an
increase in the number of shareholder telephone calls. If you
experience difficulty in reaching us during such periods, you may send
your transaction instructions by mail, express mail or courier service,
or you may visit one of our Investors Centers. You may also use our
Automated Information Line if you have requested and received an access
code and are not attempting to redeem shares.

(9) If you fail to provide us with the correct certified taxpayer
identification number, we may reduce any redemption proceeds by $50 to
cover the penalty the IRS will impose on us for failure to report your
correct taxpayer identification number on information reports.

(10) We will perform special inquiries on shareholder accounts. A research
fee of $15 may be applied.

REPORTS TO SHAREHOLDERS

At the end of each calendar quarter, we will send you a consolidated
statement that summarizes all of your Twentieth Century and Benham holdings, as
well as an individual statement for each fund you own that reflects all
year-to-date activity in your account. You may request a statement of your
account activity at any time.

With the exception of most automatic transactions and CheckWriting
activity, each time you invest, redeem, transfer or exchange shares, we will
send you a confirmation of the transaction. CheckWriting activity will be
confirmed monthly. See the Investor Services Guide for more detail.

Carefully review all the information relating to transactions on your
statements and confirmations to ensure that your instructions were acted on
properly. Please notify us immediately in writing if there is an error. If you
fail to provide notification of an error with reasonable promptness, i.e.,
within 30 days of non-automatic transactions or within 30 days of the date of
your consolidated quarterly statement, in the case of automatic transactions, we
will deem you to have ratified the transaction.

No later than January 31 of each year, we will send you reports that you
may use in completing your U.S. income tax return. See the Investor Services
Guide for more information.

Each year, we will send you an annual and a semiannual report relating to
your fund, each of which is incorporated herein by reference. The annual report
includes audited financial statements and a list of portfolio securities as of
the fiscal year end. The semiannual report includes unaudited financial
statements for the first six months of the fiscal year, as well as a list of
portfolio securities at the end of the period. You also will receive an

updated prospectus at least once each year. Please read these materials
carefully as they will help you understand your fund.

EMPLOYER SPONSORED RETIREMENT PLANS AND INSTITUTIONAL ACCOUNTS

Information contained in our Investor Services Guide pertains to
shareholders who invest directly with Twentieth Century rather than through an
employer-sponsored retirement plan or through a financial intermediary.

If you own or are considering purchasing fund shares through an
employer-sponsored retirement plan, your ability to purchase shares of the
funds, exchange them for shares of other Twentieth Century or Benham funds, and
redeem them will depend on the terms of your plan. If you own or are considering
purchasing fund shares through a bank, broker-dealer, insurance company or other
financial intermediary, your ability to purchase, exchange and redeem shares
will depend on your agreement with, and the policies of, such financial
intermediary.

You may reach one of our Institutional Service Representatives by calling
1-800-345-3533 to request information about our funds and services, to obtain a
current prospectus or to get answers to any questions about our funds that you
are unable to obtain through your plan administrator or financial intermediary.

ADDITIONAL INFORMATION YOU SHOULD KNOW
- --------------------------------------------------------------------------------

SHARE PRICE

WHEN SHARE PRICE IS DETERMINED

The price of your shares is also referred to as their net asset value. Net
asset value is determined by calculating the total value of a fund's assets,
deducting total liabilities and dividing the result by the number of shares
outstanding. Net asset value is determined at the close of regular trading on
each day that the New York Stock Exchange is open.

Investments and requests to redeem or exchange shares will receive the
share price next determined after we receive your investment, redemption or
exchange request. For example, investments and requests to redeem or exchange
shares received by us or one of our agents before the close of business on the
New York Stock Exchange, usually 3 p.m. Central time, are effective on, and will
receive the price determined, that day as of the close of the Exchange.
Investment, redemption and exchange requests received thereafter are effective
on, and receive the price determined as of the close of the Exchange on, the
next day the Exchange is open.

Investments are considered received only when your check or wired funds are
received by us. Wired funds are considered received on the day they are
deposited in our bank account if your telephone call is received before the
close of business on the Exchange and the money is deposited that day.

Investments by telephone pursuant to your prior authorization to us to draw
on your bank account are considered received at the time of your telephone call.

Investment and transaction instructions received by us on any business day
by mail prior to the close of business on the Exchange, usually 3 p.m. Central
time, will receive that day's price. Investments and instructions received after
that time will receive the price determined on the next business day.

If you invest in fund shares through an employer-sponsored retirement plan
or other financial intermediary, it is the responsibility of your plan
recordkeeper or financial intermediary to transmit your purchase, exchange and
redemption requests to the funds' transfer agent prior to the applicable cut-off
time and to make payment for any purchase transactions in accordance with the
funds' procedures or any contractual arrangement with the funds or the funds'
distributor in order for you to receive that day's price.

Redemption requests made by CheckWriting are considered received by us when
the CheckWriting check is presented to our clearing bank for payment.

HOW SHARE PRICE IS DETERMINED

The valuation of assets for determining net asset value may be summarized
as follows:

Portfolio securities of Premium Managed Bond, except as otherwise noted,
listed or traded on a domestic securities exchange are valued at the last sale
price on that exchange. Portfolio securities primarily traded on foreign
securities exchanges are generally valued at the preceding closing values of
such securities on the exchange where primarily traded. If no sale is reported,
or if local convention or regulation so provides, the mean of the latest bid and
asked prices is used. Depending on local convention or regulation, securities
traded over-the-counter are priced at the mean of the latest bid and asked
prices, or at the last sale price. When market quotations are not readily
available, securities and other assets are valued at fair value as determined in
accordance with procedures adopted by the board of directors.

Debt securities not traded on a principal securities exchange are valued
through valuations obtained from a commercial pricing service or at the most
recent mean of the bid and asked prices provided by investment dealers in
accordance with procedures established by the board of directors.

The value of an exchange-traded foreign security is determined in its
national currency as of the close of trading on the foreign exchange on which it
is traded or as of the close of

business on the New York Stock Exchange, usually 3 p.m. Central time, if that is
earlier. That value is then converted to dollars at the prevailing foreign
exchange rate.

Trading in securities on European and Far Eastern securities exchanges and
over-the-counter markets is normally completed at various times before the close
of business on each day that the New York Stock Exchange is open. If an event
were to occur after the value of a security was established but before the net
asset value per share was determined, which was likely to materially change the
net asset value, then that security would be valued at fair value as determined
in accordance with procedures adopted by the board of directors.

Trading of these securities in foreign markets may not take place on every
New York Stock Exchange business day. In addition, trading may take place in
various foreign markets on Saturdays or on other days when the Exchange is not
open and on which a fund's net asset value is not calculated. Therefore, such
calculation does not take place contemporaneously with the determination of the
prices of many of the portfolio securities used in such calculation and the
value of the fund's portfolio may be affected on days when shares of the fund
may not be purchased or redeemed.

The securities held in the portfolios of Premium Capital Reserve and
Premium Government Reserve are valued at amortized cost. When a security is
valued at amortized cost, it is valued at its cost when purchased and thereafter
by assuming a constant amortization to maturity of any discount or premium,
regardless of the impact of fluctuating interest rates on the market value of
the investment.

WHERE TO FIND INFORMATION
ABOUT SHARE PRICE

Upon satisfaction of the National Association of Securities Dealers, Inc.
publication requirements, the net asset value of Premium Managed Bond will be
published in leading newspapers daily. The yields of Premium Capital Reserve and
Premium Government Reserve will be published weekly in leading financial
publications and daily in many local newspapers. The net asset values also may
be obtained by calling us.

DISTRIBUTIONS

At the close of each day, including Saturdays, Sundays and holidays, net
income of the funds is determined and declared as a distribution. The
distribution will be paid monthly on the last Friday of each month, except for
year-end distribution, which will be paid on the last business day of the year.

You will begin to participate in the distributions the day after your
purchase is effective. (See "When Share Price is Determined," page 25.) If you
redeem shares, you will receive the distribution declared for the day of the
redemption. If all shares are redeemed (other than by CheckWriting), the
distribution on the redeemed shares will be included with your redemption
proceeds.

Distributions from net realized securities gains, if any, generally are
declared and paid once a year, but the funds may make distributions on a more
frequent basis to comply with the distribution requirements of the Internal
Revenue Code and Regulations, in all events in a manner consistent with the
provisions of the Investment Company Act of 1940.

Distributions will be reinvested unless you elect to receive them in cash.
Distributions of less than $10 generally will be reinvested. Distributions made
shortly after a purchase made by check or ACH may be held up to 15 days. You may
elect to have distributions on shares held in Individual Retirement Accounts and
403(b) plans paid in cash only if you are at least 59 1/2 years old or
permanently and totally disabled. Distribution checks normally are mailed within
seven days after the record date. Please consult our Investor Services Guide for
further information regarding your distribution options.

The board of directors may elect not to distribute capital gains in whole
or in part to take advantage of loss carryover.

TAXES

Each fund has elected to be taxed as a regulated investment company under
Subchapter M of the Internal Revenue Code, which means that since each fund
distributes all of its income, it pays no income taxes.

TAX-DEFERRED ACCOUNTS

If the fund shares are purchased through tax-deferred accounts, such as a
qualified employer-sponsored retirement or savings plan, income and capital
gains distributions paid by the fund will generally not be subject to current
taxation, but will accumulate in your account under the plan on a tax-deferred
basis.

Employer-sponsored retirement and savings plans are governed by complex tax
rules. If you elect to participate in your employer's plan, consult your plan
administrator, your plan's summary plan description, or a professional tax
adviser regarding the tax consequences of participation in the plan,
contributions to, and withdrawals or distributions from the plan.

TAXABLE ACCOUNTS

If the fund shares are purchased through taxable accounts, distributions of
net investment income and net short-term capital gains are taxable to you as
ordinary income, except as described below. The dividends from net income do not
qualify for the 70% dividends-received deduction for corporations since they are
derived from interest income. Distributions from net long-term capital gains are
taxable as long-term capital gains regardless of the length of time the shares
on which such distributions are paid have been held by the shareholder.

Dividends and interest received by Premium Managed Bond on foreign
securities may give rise to withholding and other taxes imposed by foreign
countries. Tax conventions between certain countries and the United States may
reduce or eliminate such taxes. Foreign countries generally do not impose taxes
on capital gains in respect of investments by non-resident investors. The
foreign taxes paid by the fund will reduce its dividends.

Although it is not anticipated that it will happen, if more than 50% of the
value of Premium Managed Bond's total assets at the end of any fiscal year
consists of securities of foreign corporations, the fund may qualify for and
make an election with the Internal Revenue Service with respect to such fiscal
year so that fund shareholders may be able to claim a foreign tax credit in lieu
of a deduction for foreign income taxes paid by the fund. If such an election is
made, the foreign taxes paid by the fund will be treated as income received by
you.

Distributions are taxable to you regardless of whether they are taken in
cash or reinvested, even if the value of your shares is below your cost. If you
purchase shares shortly before a distribution, you must pay income taxes on the
distribution, even though the value of your investment (plus cash received, if
any) remains the same. In addition, the share price at the time you purchase
shares may include unrealized gains in the securities held in the investment
portfolio of the fund. If these portfolio securities are subsequently sold and
the gains are realized, they will, to the extent not offset by capital losses,
be paid to you as a distribution of capital gains and will be taxable to you as
short-term or long-term capital gains.

In January of the year following the distribution, if you own shares in
taxable accounts, you will receive a Form 1099-DIV notifying you of the status
of your distributions for federal income tax purposes.

Distributions to taxable accounts also may be subject to state and local
taxes, even if all or a substantial part of such distributions are derived from
interest on U.S. government obligations which, if you received them directly,
would be exempt from state income tax. However, most but not all states allow
this tax exemption to pass

through to fund shareholders when a fund pays distributions to its shareholders.
You should consult your tax adviser about the tax status of such distributions
in your own state.

If you have not complied with certain provisions of the Internal Revenue
Code and Regulations, we are required by federal law to withhold and remit to
the IRS 31% of reportable payments (which may include dividends, capital gains
distributions and redemptions). Those regulations require you to certify that
the Social Security number or tax identification number you provide is correct
and that you are not subject to 31% withholding for previous under-reporting to
the IRS. You will be asked to make the appropriate certification on your
application. PAYMENTS REPORTED BY US THAT OMIT YOUR SOCIAL SECURITY NUMBER OR
TAXPAYER IDENTIFICATION NUMBER WILL SUBJECT TWENTIETH CENTURY TO A PENALTY OF
$50, WHICH WILL BE CHARGED AGAINST YOUR ACCOUNT IF YOU FAIL TO PROVIDE THE
CERTIFICATION BY THE TIME THE REPORT IS FILED AND IS NOT REFUNDABLE.

Premium Managed Bond may adjust its dividends to take currency fluctuations
into account, which may cause the dividends to vary. If the fund's dividends
exceed its taxable income in any year, which is sometimes the result of
currency-related losses, all or a portion of the fund's dividends may be treated
as a return of capital to shareholders for tax purposes. Any return of capital
will reduce the cost basis of your shares, which will result in a higher
reported capital gain or a lower reported capital loss when you sell your
shares. The Form 1099-DIV you receive in January will specify if any
distributions included a return of capital.

Redemption of shares of Premium Managed Bond (including redemptions made in
an exchange transaction) will be a taxable transaction for federal income tax
purposes and shareholders will generally recognize gain or loss in an amount
equal to the difference between the basis of the shares and the amount received.
Assuming that shareholders hold such shares as a capital asset, the gain or loss
will be a capital gain or loss and will generally be long term if shareholders
have held such shares for a period of more than one year. If a loss is realized
on the redemption of fund shares, the reinvestment in additional fund shares
within 30 days before or after the redemption may be subject to the "wash sale"
rules of the Code, resulting in a postponement of the recognition of such loss
for federal income tax purposes.

MANAGEMENT

INVESTMENT MANAGEMENT

Under the laws of the State of Maryland, the board of directors is
responsible for managing the business and affairs of the funds. Acting pursuant
to an investment management agreement entered into with the funds, Investors
Research Corporation ("Investors Research") serves as the investment manager of
the funds. Its principal place of business is Twentieth Century Tower, 4500 Main
Street, Kansas City, Missouri 64111. Investors Research has been providing
investment advisory services to investment companies and institutional clients
since 1958.

In June 1995, Twentieth Century Companies, Inc. ("TCC"), the parent of
Investors Research, acquired Benham Management International, Inc. In the
acquisition, Benham Management Corporation ("BMC"), the investment adviser to
the Benham Group of Mutual Funds, became a wholly-owned subsidiary of TCC.
Certain employees of BMC provide investment management services to Twentieth
Century funds, while certain Twentieth Century employees provide investment
management services to Benham funds.

Investors Research supervises and manages the investment portfolio of the
funds and directs the purchase and sale of their investment securities.
Investors Research utilizes a team of portfolio managers, assistant portfolio
managers and analysts acting together to manage the assets of the funds. The
team meets regularly to

review portfolio holdings and to discuss purchase and sale activity. The team
adjusts holdings in the funds' portfolios and the funds' asset mix as it deems
appropriate in pursuit of the funds' investment objectives. Individual portfolio
manager members of the team may also adjust portfolio holdings of the funds as
necessary between team meetings.

The portfolio manager members of the teams managing the funds described in
this Prospectus and their work experience for the last five years are as
follows:

NORMAN E. HOOPS, Senior Vice President and Fixed Income Portfolio Manager,
joined the Twentieth Century mutual fund family as Vice President and Portfolio
Manager in November 1989. In April 1993, he became Senior Vice President. He is
a member of the team that manages Premium Managed Bond.

ROBERT V. GAHAGAN, Vice President and Portfolio Manager, has worked for the
Twentieth Century mutual fund family since May 1983. He became a Portfolio
Manager in December 1991. Prior to that he served as Assistant Portfolio
Manager. He is a member of the team that manages Premium Capital Reserve.

JEFFREY L. HOUSTON, Portfolio Manager, has worked for Twentieth Century
since 1990.

AMY O'DONNELL, Portfolio Manager, joined Benham in 1987, becoming a member
of its portfolio department in 1988. In 1992 she assumed her current position as
a Portfolio Manager of three Benham funds. She is a member of the team that
manages Premium Capital Reserve.

BRIAN HOWELL, Portfolio Manager, joined Benham in 1987 as a research
assistant, and assumed his current position as Co-manager or Assistant Manager
of three Benham funds in January 1994. He is a member of the team that manages
Premium Government Reserve.

The activities of Investors Research are subject only to directions of the
funds' board of directors. Investors Research pays all the expenses of the funds
except brokerage, taxes, interest, fees and expenses of the non-interested
person directors (including counsel fees) and extraordinary expenses.

For the services provided to the funds, Investors Research receives a fee
of .45% of each fund's average net assets during the year. The fee is paid and
computed each month by multiplying .45% of the aggregate average daily closing
value of each fund's net assets during the previous month by a fraction, the
numerator of which is the number of days in the previous month, and the
denominator of which is 365 (366 in leap years).

CODE OF ETHICS

The funds and Investors Research have adopted a Code of Ethics, which
restricts personal investing practices by employees of Investors Research and
its affiliates. Among other provisions, the Code of Ethics requires that
employees with access to information about the purchase or sale of securities in
the funds' portfolios obtain preclearance before executing personal trades. With
respect to portfolio managers and other investment personnel, the Code of Ethics
prohibits acquisition of securities in an initial public offering, as well as
profits derived from the purchase and sale of the same security within 60
calendar days. These provisions are designed to ensure that the interests of
fund shareholders come before the interests of the people who manage those
funds.

TRANSFER AND
ADMINISTRATIVE SERVICES

Twentieth Century Services, Inc., 4500 Main Street, Kansas City, Missouri,
64111, acts as transfer, administrative services and dividend paying agent for
the funds. It provides facilities, equipment and personnel to the funds and is
paid for such services by Investors Research.

Certain recordkeeping and administrative services that would otherwise be
performed by Twentieth Century Services, Inc., may be performed by an insurance
company or other entity providing similar services for various retirement plans
using shares of the funds as a

funding medium, by broker-dealers for their customers investing in shares of the
funds or by sponsors of multi mutual fund no- or low- transaction fee programs.
Investors Research may enter into contracts to pay them for such recordkeeping
and administrative services out of its unified management fee.

From time to time, special services may be offered to shareholders who
maintain higher share balances in our family of funds. These services may
include the waiver of minimum investment requirements, expedited confirmation of
shareholder transactions, newsletters and a team of personal representatives.
Any expenses associated with these special services will be paid by Investors
Research.

Investors Research and Twentieth Century Services, Inc., are both wholly
owned by Twentieth Century Companies, Inc. James E. Stowers Jr., chairman of the
board of directors of the funds controls Twentieth Century Companies by virtue
of his ownership of a majority of its common stock.

DISTRIBUTION OF FUND SHARES

The funds' shares are distributed by Twentieth Century Securities, Inc., a
registered broker-dealer and an affiliate of the funds' investment manager.
Investors Research pays all expenses for promoting and distributing the funds.

FURTHER INFORMATION
ABOUT TWENTIETH CENTURY

Twentieth Century Premium Reserves, Inc., a diversified, open-end
management investment company, was organized as a Maryland corporation in
January 1993. Its business and affairs are managed by its officers under the
direction of its board of directors.

The principal office of the funds is Twentieth Century Tower, 4500 Main
Street, P.O. Box 419200, Kansas City, Missouri 64141-6200. All inquiries may be
made by mail to that address, or by phone to 1-800-345-3533. (For international
callers: 816-531-5575.)

Twentieth Century Premium Reserves issues three series of $.01 par value
shares. Each series is commonly referred to as a fund. The assets belonging to
each series of shares are held separately by the custodian.

Each share, irrespective of series, is entitled to one vote for each dollar
of net asset value applicable to such share on all questions, except those
matters which must be voted on separately by the series of shares affected.
Matters affecting only one series are voted upon only by that series.

Shares have non-cumulative voting rights, which means that the holders of
more than 50% of the votes entitled to be cast for the election of directors can
elect all of the directors if they choose to do so, and in such event the
holders of the remaining shares will not be able to elect any person or persons
to the board of directors.

Unless required by the Investment Company Act, it will not be necessary for
the funds to hold annual meetings of shareholders. As a result, shareholders may
not vote each year on the election of directors or the appointment of auditors.
However, pursuant to the fund's bylaws, the holders of at least 10% of the votes
entitled to be cast may request the funds to hold a special meeting of
shareholders. We will assist in the communication with other shareholders.

WE RESERVE THE RIGHT TO CHANGE ANY OF OUR POLICIES, PRACTICES AND
PROCEDURES DESCRIBED IN THIS PROSPECTUS, INCLUDING THE STATEMENT OF ADDITIONAL
INFORMATION, WITHOUT SHAREHOLDER APPROVAL EXCEPT IN THOSE INSTANCES WHERE
SHAREHOLDER APPROVAL IS EXPRESSLY REQUIRED.

This page has been left blank for your notes.

TWENTIETH CENTURY
PREMIUM RESERVES

PROSPECTUS

SEPTEMBER 3, 1996

TWENTIETH CENTURY MUTUAL FUNDS
and THE BENHAM GROUP
- ------------------------------------------

P.O. BOX 419385
KANSAS CITY, MISSOURI
64141-6385
- ------------------------------------------
Person-to-person assistance:
1-800-345-3533 OR 816-531-5575

- ------------------------------------------
Automated Information Line:
1-800-345-8765
- ------------------------------------------

Telecommunications Device for the Deaf:
1-800-345-1833 OR 816-753-0700
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TWENTIETH CENTURY
PREMIUM RESERVES
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TWENTIETH CENTURY
PREMIUM RESERVES

STATEMENT OF ADDITIONAL INFORMATION

SEPTEMBER 3,

1996

TWENTIETH CENTURY PREMIUM RESERVES
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This statement is not a Prospectus but should be read in conjunction with
the current Prospectus of Twentieth Century Premium Reserves, Inc. dated
September 3, 1996. Please retain this document for future reference.

To obtain the Prospectus, call Twentieth Century toll-free at
1-800-345-3533 (816-531-5575 for international calls), or write to P.O. Box
419385, Kansas City, Missouri 64141-6385.

TABLE OF CONTENTS

Page

Investment Objectives of the Funds 3
Selection of Investments 3
Investment Restrictions 4
An Explanation of Fixed
Income Securities Ratings 5
Forward Currency Exchange Contracts 7
Interest Rate Futures Contracts
and Related Options 8
Officers and Directors 12
Management 14
Custodians 15
Independent Auditors 15
Capital Stock 16
Taxes 16
Brokerage 17
Performance Advertising 17
Redemptions in Kind 19
Holidays 19
Financial Statements 19

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INVESTMENT OBJECTIVES
OF THE FUNDS

The investment objective of each series of shares issued by Twentieth
Century Premium Reserves, Inc. is described on the cover page of the Prospectus.
In achieving its objective, each fund must conform to certain policies, some of
which are designated in the Prospectus or in this Statement of Additional
Information as "fundamental" and cannot be changed without shareholder approval.

Neither the Securities and Exchange Commission nor any other federal or
state agency participates in or supervises the management of the funds or their
investment practices or policies.

SELECTION OF INVESTMENTS

TWENTIETH CENTURY PREMIUM
GOVERNMENT RESERVE

The manager will invest the Twentieth Century Premium Government Reserve
("Premium Government Reserve") portfolio in debt securities payable in U.S.
currency. Such securities must be obligations issued or guaranteed by the U.S.
government or its agencies and instrumentalities, including repurchase
agreements for such securities. The manager intends to purchase securities that
have quality and maturity characteristics that will allow Premium Government
Reserve to be designated as a money market fund and enable it to maintain a
stable offering price per share.

The manager will invest the Premium Government Reserve portfolio in direct
obligations of the United States, such as Treasury bills, Treasury notes and
U.S. government bonds, that are supported by the full faith and credit of the
United States. The manager may also invest in agencies and instrumentalities of
the U.S. government. The securities of some of such agencies and
instrumentalities are supported by the full faith and credit of the U.S.
Treasury; others are supported by the right of the issuer to borrow from the
Treasury; still others are supported only by the credit of the agency or
instrumentality. Such agencies and instrumentalities include, but are not
limited to, the Government National Mortgage Association, Federal National
Mortgage Association, Federal Home Loan Mortgage Corporation, Student Loan
Marketing Association, Federal Farm Credit Banks, Federal Home Loan Banks, and
Resolution Funding Corporation. Purchase of such securities may be made outright
or on a when-issued basis and may be made subject to repurchase agreements.

TWENTIETH CENTURY PREMIUM CAPITAL RESERVE

Management will invest the Twentieth Century Premium Capital Reserve
("Premium Capital Reserve") portfolio in debt securities payable in U.S.
currency. Such securities may be obligations issued or guaranteed by the U.S.
government or its agencies and instrumentalities of the same types and from the
same issuers as described above under "Premium Government Reserve." In addition,
Premium Capital Reserve may invest in obligations issued by corporations and
others. It also may invest in repurchase agreements for all of such securities.
The manager intends to purchase securities with quality and maturity
characteristics that will allow Premium Capital Reserve to be designated as a
money market fund and enable it to maintain a stable offering price per share.

TWENTIETH CENTURY PREMIUM MANAGED BOND

Management will invest the Twentieth Century Premium Managed Bond ("Premium
Managed Bond") portfolio in high- and medium-grade debt securities payable in
both U.S. and foreign currencies. The fund may invest in securities that, at the
time of purchase, are rated by a nationally recognized statistical rating
organization or, if not rated, are of equivalent investment quality as
determined by the management, as follows: short-term notes within the two
highest categories; corporate, sovereign government and municipal bonds within
the four highest categories; securities of the U.S.

government and its agencies and instrumentalities; and other types of securities
rated at least P-2 by Moody's or A-2 by S&P. Premium Managed Bond may also
purchase securities under repurchase agreements as described in the Prospectus
and purchase and sell interest rate futures contracts and related options. (See
"Interest Rate Futures Contracts and Related Options," page 8.)

Premium Managed Bond may buy and sell interest rate futures contracts
relating to debt securities ("debt futures," i.e., futures relating to debt
securities, and "bond index futures," i.e., futures relating to indices on types
or groups of bonds) and write and buy put and call options relating to interest
rate futures contracts for the purpose of hedging against (i) declines or
possible declines in the market value of debt securities or (ii) inability to
participate in advances in the market values of debt securities at times when
the fund is not fully invested in long-term debt securities; provided that it
may not purchase or sell futures contracts or related options if immediately
thereafter the sum of the amount of margin deposits on its existing futures
positions and premiums paid for related options would exceed 5% of the fund's
assets.

INVESTMENT COMPANY ACT RULE 2A-7

Premium Government Reserve and Premium Capital Reserve each operates
pursuant to Investment Company Act Rule 2a-7, which permits valuation of
portfolio securities on the basis of amortized cost. As required by the Rule,
the board of directors has adopted procedures designed to stabilize, to the
extent reasonably possible, each fund's price per share as computed for the
purpose of sales and redemptions at $1.00. While the day-to-day operation of
each fund has been delegated to the manager, the quality requirements
established by the procedures limit investments to certain U.S.
dollar-denominated instruments that the board of directors has determined
present minimal credit risks and that have been rated in one of the two highest
rating categories as determined by a nationally recognized statistical rating
organization or, in the case of an unrated security, of comparable quality. The
procedures require review of each fund's portfolio holdings at such intervals as
are reasonable in light of current market conditions to determine whether the
fund's net asset value calculated by using available market quotations deviates
from the per-share value based on amortized cost. The procedures also prescribe
the action to be taken if such deviation should occur.

INVESTMENT RESTRICTIONS

Fundamental policies that may be changed only with shareholder approval
provide that no series of shares:

(1) Intended to be designated as a money market fund shall invest more than
10% of its assets in illiquid investments, while no non-money market
series of shares shall invest more than 15% of its assets in illiquid
investments.

(2) Shall lend its portfolio securities except to unaffiliated persons and
subject to the rules and regulations adopted under the Investment
Company Act of 1940 (the "Investment Company Act"). No such rules and
regulations have been issued, but it is the fund's policy that such
loans must be secured continuously by cash collateral maintained on a
current basis in an amount at least equal to the market value of the
securities loaned or by irrevocable letters of credit. During the
existence of the loan, a fund must continue to receive the equivalent
of the interest and dividends paid by the issuer on the securities
loaned and interest on the investment of the collateral; the fund must
have the right to call the loan and obtain the securities loaned at any
time on five days' notice, including the right to call the loan to
enable the fund to vote the securities. To comply with the regulations
of certain state securities administrators, such loans may not exceed
one-third of the fund's net assets taken at market.

(3) Shall, with regard to 75% of its portfolio, purchase the security of
any one issuer if such purchase would cause more than 5% of a fund's
assets at market to be invested in the securities of such issuer,
except U.S. government securities, or if the purchase would cause more
than 10% of the outstanding voting securities of any one issuer to be
held in a fund's portfolio. Note: As a matter of operating policy and
not a fundamental policy, Premium Government Reserve and Premium
Capital Reserve have elected to comply with Rule 2a-7 under the
Investment Company Act, which requires diversification of 100% of their
respective portfolios, not 75% as stated in this restriction.

(4) Shall invest for control or for management, or concentrate its
investment in a particular company or a particular industry. No more
than 25% of the assets of a fund, exclusive of cash and U.S. government
securities, will be invested in securities of any one industry.

(5) Shall buy securities on margin or sell short (unless it owns or by
virtue of its ownership of other securities has the right to obtain
securities equivalent in kind and amount to the securities sold);
however, a fund may make margin deposits in connection with the use of
any financial instrument or any transaction in securities permitted by
its fundamental policies.

(6) Shall invest in the securities of other investment companies except by
purchases in the open market involving only customary brokers'
commission and no sales charges.

(7) Shall issue any senior security.

(8) Shall underwrite any securities.

(9) Shall purchase or sell commodities or commodity contracts except that
Premium Managed Bond may, for non-speculative purposes, buy or sell
interest rate futures contracts on debt securities (debt futures and
bond index futures) and related options.

(10)Shall borrow any money, except in an amount not in excess of 5% of the
total assets of the series, and then only for emergency and
extraordinary purposes. Note: This investment restriction does not
prohibit escrow and collateral arrangements in connection with
investment in interest rate futures contracts and related options by
Premium Managed Bond.

The Investment Company Act imposes certain additional restrictions upon
acquisition by the funds of securities issued by insurance companies, brokers,
dealers, underwriters or investment advisers, and upon transactions with
affiliated persons as therein defined. It also defines and forbids the creation
of cross and circular ownership.

AN EXPLANATION OF FIXED
INCOME SECURITIES RATINGS

As described in the Prospectus, the funds invest in fixed income
securities. Those investments, however, are subject to certain credit quality
restrictions, as noted in the Prospectus. The following is a description of the
rating categories referenced in the Prospectus disclosure.

The following summarizes the highest four ratings used by Standard & Poor's
Corporation ("S&P") for bonds:

AAA - This is the highest rating assigned by S&P to a debt obligation and
indicates an extremely strong capacity to pay interest and repay principal.

AA - Debt rated AA is considered to have a very strong capacity to pay
interest and repay principal and differs from AAA issues only to a small
degree.

A - Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes
in circumstances and economic conditions than debt in higher-rated
categories.

BBB - Debt rated BBB is regarded as having an adequate capacity to pay
interest and repay principal although it is somewhat more susceptible to
the adverse effects of changes

in circumstances and economic conditions than debt in higher rated
categories.

To provide more detailed indications of credit quality, the AA, A and BBB
ratings may be modified by the addition of a plus or minus sign to show relative
standing within these major rating categories.

Commercial paper rated A-1 by S&P indicates that the degree of safety
regarding timely payment is strong. Those issues determined to possess extremely
strong safety characteristics are denoted A-1+. Capacity for timely payment on
commercial paper rated A-2 is satisfactory, but the relative degree of safety is
not as high as for issues designated A-1.

The rating SP-1 is the highest rating assigned by S&P to municipal notes
and indicates very strong or strong capacity to pay principal and interest.
Those issues determined to possess overwhelming safety characteristics are given
a plus (+) designation.

The following summarizes the highest four ratings used by Moody's Investors
Service, Inc. ("Moody's") for bonds:

Aaa - Bonds that are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to
as "gilt edge." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such
issues.

Aa - Bonds that are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally
known as high-grade bonds. They are rated lower than the best bonds because
margins of protection may not be as large as in Aaa securities, or
fluctuation of protective elements may be of greater amplitude, or there
may be other elements present that make the long-term risks appear somewhat
larger than in Aaa securities.

A - Bonds that are rated A possess many favorable investment attributes and
are to be considered as upper medium-grade obligations. Factors giving
security to principal and interest are considered adequate, but elements
may be present that suggest a susceptibility to impairment sometime in the
future.

Baa - Bonds that are rated Baa are considered as medium-grade obligations
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and, in fact, have speculative characteristics as well.

Moody's applies numerical modifiers 1, 2 and 3 with respect to bonds rated
Aa, A and Baa. The modifier 1 indicates that the bond being rated ranks in the
higher end of its generic rating category; the modifier 2 indicates a mid-range
ranking; and the modifier 3 indicates a ranking in the lower end of that generic
rating category.

The rating Prime-1 or P-1 is the highest commercial paper rating assigned
by Moody's. Issuers rated Prime-1 (or related supporting institutions) are
considered to have a superior capacity for repayment of short-term promissory
obligations. Issuers rated Prime-2 or P-2 (or related supporting institutions)
are considered to have a strong capacity for repayment of short-term promissory
obligations. This will normally be evidenced by many of the characteristics of
issuers rated Prime-1 but to a lesser degree. Earnings trends and coverage
ratios, while sound, will be more subject to variation. Capitalization
characteristics, while still appropriated, may be more affected by external
conditions. Ample alternate liquidity is maintained.

The following summarizes the highest rating used by Moody's for short-term
notes and variable rate demand obligations:

MIG-1; VMIG-1 - Obligations bearing these designations are of the best
quality, enjoying strong protection by established cash flows, superior
liquidity support or demonstrated broad-based access to the market for
refinancing.

FORWARD CURRENCY
EXCHANGE CONTRACTS

Premium Managed Bond conducts its foreign currency exchange transactions
either on a spot (i.e., cash) basis at the spot rate prevailing in the foreign
currency exchange market or through entering into forward currency exchange
contracts ("forward contracts") to purchase or sell foreign currencies.

The fund expects to use forward contracts under two circumstances:

(1) When the manager wishes to "lock in" the U.S. dollar price of a
security when the fund is purchasing or selling a security denominated
in a foreign currency, the fund would be able to enter into a forward
contract to do so;

(2) When the manager believes that the currency of a particular foreign
country may suffer a substantial decline against the U.S. dollar, a
fund would be able to enter into a forward contract to sell foreign
currency for a fixed U.S. dollar amount approximating the value of some
or all of its portfolio securities denominated in such foreign
currency.

As to the first circumstance, when the fund enters into a trade for the
purchase or sale of a security denominated in a foreign currency, it may be
desirable to establish (lock in) the U.S. dollar cost or proceeds. By entering
into forward contracts in U.S. dollars for the purchase or sale of a foreign
currency involved in an underlying security transaction, the fund will be able
to protect itself against a possible loss between trade and settlement dates
resulting from the adverse change in the relationship between the U.S. dollar
and the subject foreign currency.

Under the second circumstance, when the manager believes that the currency
of a particular country may suffer a substantial decline relative to the U.S.
dollar, a fund could enter into a forward contract to sell for a fixed dollar
amount the amount in foreign currencies approximating the value of some or all
of its portfolio securities denominated in such foreign currency. The fund will
place cash or high-grade liquid securities in a separate account with its
custodian in an amount equal to the value of the forward contracts entered into
under the second circumstance. If the value of the securities placed in the
separate account declines, additional cash or securities will be placed in the
account on a daily basis so that the value of the account equals the amount of
the fund's commitments with respect to such contracts.

The precise matching of forward contracts in the amounts and values of
securities involved generally would not be possible since the future values of
such foreign currencies will change as a consequence of market movements in the
values of those securities between the date the forward contract is entered into
and the date it matures. Predicting short-term currency market movements is
extremely difficult, and the successful execution of short-term hedging strategy
is highly uncertain. The manager does not intend to enter into such contracts on
a regular basis. Normally, consideration of the prospect for currency parities
will be incorporated into the long-term investment decisions made with respect
to overall diversification strategies. However, the manager believes that it is
important to have flexibility to enter into such forward contracts when it
determines that the fund's best interests may be served.

Generally, the fund will not enter into a forward contract with a term of
greater than one year. At the maturity of the forward contract, the fund may
either sell the portfolio security and make delivery of the foreign currency, or
it may retain the security and terminate the obligation to deliver the foreign
currency by purchasing an "offsetting" forward contract with the same currency
trader obligating the fund to purchase, on the same maturity date, the same
amount of the foreign currency.

It is impossible to forecast with absolute precision the market value of
portfolio securities at the expiration of the forward contract. Accordingly, it
may be necessary for the fund to purchase additional foreign currency on the
spot market (and bear the expense of such purchase) if the market value of the
security is less than the amount of foreign currency the fund is obligated to
deliver and if a decision is made to sell the security and make delivery of the
foreign currency the fund is obligated to deliver.

INTEREST RATE FUTURES
CONTRACTS AND RELATED OPTIONS

The fund will not purchase or sell futures contracts and options thereon
for speculative purposes but rather only for the purpose of hedging against
changes in the market value of its portfolio securities or changes in the market
value of securities that the management team may wish to include in the
portfolio of the fund. The fund may sell a future, write a call or purchase a
put on a future if the management anticipates that a general market or market
sector decline may adversely affect the market value of any or all of the fund's
holdings. The fund may buy a future, purchase a call or sell a put on a future
if the fund management anticipates a significant market advance in the type of
securities it intends to purchase for the fund's portfolio at a time when the
fund is not invested in debt securities to the extent permitted by its
investment policies. The fund may purchase a future or a call option thereon as
a temporary substitute for the purchase of individual securities, which may then
be purchased in an orderly fashion. As securities are purchased, corresponding
futures positions would be terminated by offsetting sales.

The "sale" of a debt future means the acquisition by the fund of an
obligation to deliver the related debt securities (i.e., those called for by the
contract) at a specified price on a specified date. The "purchase" of a debt
future means the acquisition by the fund of an obligation to acquire the related
debt securities at a specified time on a specified date. The "sale" of a bond
index future means the acquisition by the fund of an obligation to deliver an
amount of cash equal to a specified dollar amount times the difference between
the index value at the close of the last trading day of the future and the price
at which the future is originally struck. No physical delivery of the bonds
making up the index is expected to be made. The "purchase" of a bond index
future means the acquisition by the fund of an obligation to take delivery of
such an amount of cash.

Unlike when the fund purchases or sells a bond, no price is paid or
received by the fund upon the purchase or sale of a futures contract. Initially,
the fund will be required to deposit an amount of cash or securities equal to a
varying specified percentage of the contract amount. This amount is known as
initial margin. Cash held in the margin account is not income producing.
Subsequent payments, called variation margin, to and from the broker, will be
made on a daily basis as the price of the underlying debt securities or index
fluctuates, making the futures contract more or less valuable, a process known
as mark to the market. Changes in variation margin are recorded by the fund as
unrealized net gains or losses. At any time prior to expiration of the future,
the fund may elect to close the position by taking an opposite position that
will operate to terminate its position in the future. A final determination of
variation margin is then made; additional cash is required to be paid by or
released to the fund and the fund realizes a loss or a gain.

When the fund writes an option on a futures contract it becomes obligated,
in return for the premium received, to assume a position in a specified futures
contract at a specified exercise price at any time during the term of the
option. If the fund has written a call, it becomes obligated

to assume a "long" position in a futures contract, which means that it is
required to take delivery of the underlying securities. If it has written a put,
it is obligated to assume a "short" position in a futures contract.

If the fund writes an option on a futures contract it will be required to
deposit initial and variation margin pursuant to requirements similar to those
applicable to futures contracts. Premiums received from the writing of an option
on a future are included in the initial margin deposit.

For options sold, the fund will segregate cash or high-quality debt
securities equal to the value of securities underlying the option unless the
option is otherwise covered.

The fund will deposit in a segregated account with its custodian bank
high-quality debt obligations maturing in one year or less, or cash, in an
amount equal to the fluctuating market value of long futures contracts it has
purchased less any margin deposited on its long position. It may hold cash or
acquire such debt obligations for the purpose of making these deposits.

Changes in variation margin are recorded by the fund as unrealized gains or
losses. Initial margin payments will be deposited in the fund's custodian bank
in an account registered in the broker's name; access to the assets in that
account may be made by the broker only under specified conditions. At any time
prior to expiration of a futures contract or an option thereon, the fund may
elect to close the position by taking an opposite position that will operate to
terminate its position in the futures contract or option. A final determination
of variation margin is made at that time; additional cash is required to be paid
by or released to it and it realizes a loss or gain.

Although futures contracts by their terms call for the actual delivery or
acquisition of the underlying securities or cash, in most cases the contractual
obligation is fulfilled without having to make or take delivery. The fund does
not intend to make or take delivery of the underlying obligation. All
transactions in futures contracts and options thereon are made, offset or
fulfilled through a clearinghouse associated with the exchange on which the
instruments are traded. Although the fund intends to buy and sell futures
contracts only on exchanges where there appears to be an active secondary
market, there is no assurance that a liquid secondary market will exist for any
particular futures contract at any particular time. In such event, it may not be
possible to close a futures contract position. Similar market liquidity risks
occur with respect to options.

The use of futures contracts and options thereon to attempt to protect
against the market risk of a decline in the value of portfolio securities is
referred to as having a "short futures position." The use of futures contracts
and options thereon to attempt to protect against the market risk that a fund
might not be fully invested at a time when the value of the securities in which
it invests is increasing is referred to as having a "long futures position." The
fund must operate within certain restrictions as to long and short positions in
futures contracts and options thereon under a rule (CFTC Rule) adopted by the
Commodity Futures Trading Commission (CFTC) under the Commodity Exchange Act
(CEA) to be eligible for the exclusion provided by the CFTC Rule from
registration by the fund with the CFTC as a "commodity pool operator" (as
defined under the CEA), and must represent to the CFTC that it will operate
within such restrictions. Under these restrictions, the fund will not, as to any
positions, whether long, short or a combination thereof, enter into futures
contracts and options thereon for which the aggregate initial margins and
premiums exceed 5% of the fair market value of the fund's assets after taking
into account unrealized profits and losses on options the fund has entered into;
in the case of an option that is "in-the-money" (as defined under the CEA), the
in-the-money amount may be excluded in computing such 5%. (In general, a call
option on a futures contract is in-the-money if the value of the futures
contract that is the subject of the put is exceeded by the strike price of the
put.) Under the restrictions, the fund also must, as to short

positions, use futures contracts and options thereon solely for bona fide
hedging purposes within the meaning and intent of the applicable provisions
under the CEA. As to its long positions that are used as part of the fund's
portfolio strategy and are incidental to the fund's activities in the underlying
cash market, the "underlying commodity value" (see next page) of the fund's
futures contracts and options thereon must not exceed the sum of (i) cash set
aside in an identifiable manner, or short-term U.S. debt obligations or other
U.S. dollar-denominated, high-quality, short-term money market instruments so
set aside, plus any funds deposited as margin; (ii) cash proceeds from existing
investments due in 30 days; and (iii) accrued profits held at the futures
commission merchant. [There are described above the segregated accounts that a
fund must maintain with its custodian bank as to its options and futures
contracts activities due to Securities and Exchange Commission (SEC)
requirements. The fund will, as to its long positions, be required to abide by
the more restrictive of these SEC and CFTC requirements.] The underlying
commodity value of a futures contract is computed by multiplying the size
(dollar amount) of the futures contract by the daily settlement price of the
futures contract. For an option on a futures contract, that value is the
underlying commodity value of the futures contract underlying the option.

Since futures contracts and options thereon can replicate movements in the
cash markets for the securities in which the fund invests without the large cash
investments required for dealing in such markets, they may subject the fund to
greater and more volatile risks than might otherwise be the case. The principal
risks related to the use of such instruments are (i) the correlation between
movements in the market price of the portfolio investment (held or intended)
being hedged and in the price of the offsetting futures contract or option may
be imperfect; (ii) possible lack of liquid secondary market for closing out
futures or options positions; (iii) the need for additional portfolio management
skills and techniques; (iv) losses due to unanticipated market price movements;
and (v) the bankruptcy or failure of a futures commission merchant holding
margin deposits made by the fund and the fund's inability to obtain repayment of
all or part of such deposits. For a hedge to be completely effective, the price
change of the hedging instrument should equal the price change of the security
being hedged. Such equal price changes are not always possible because the
investment underlying the hedging instrument may not be the same investment that
is being hedged. The manager will attempt to create a closely correlated hedge,
but hedging activity may not be completely successful in eliminating market
value fluctuation. The ordinary spreads between prices in the cash and futures
markets, due to the differences in the natures of those markets, are subject to
the following factors, which may create distortions. First, all participants in
the futures market are subject to margin deposit and maintenance requirements.
Rather than meeting additional margin deposit requirements, investors may close
futures contracts through offsetting transactions that could distort the normal
relationship between the cash and futures markets. Second, the liquidity of the
futures market depends on participants entering into offsetting transactions
rather than making or taking delivery. To the extent participants decide to make
or take delivery, liquidity in the futures market could be reduced, thus
producing distortion. Third, from the point of view of speculators, the deposit
requirements in the futures market are less onerous than margin requirements in
the securities market. Therefore, increased participation by speculators in the
futures market may cause temporary price distortions. Due to the possibility of
distortion, a correct forecast of general interest trends by fund management may
still not result in a successful transaction. The management may be incorrect in
its expectations as to the extent of various interest rate movements or the time
span within which the movements take place.

The risk of imperfect correlation between movements in the price of a bond
index future

and movements in the price of the securities that are the subject of the hedge
increases as the composition of the fund's portfolio diverges from the
securities included in the applicable index. The price of the bond index future
may move more than or less than the price of the securities being hedged. If the
price of the bond index future moves less than the price of the securities that
are the subject of the hedge, the hedge will not be fully effective, but if the
price of the securities being hedged has moved in an unfavorable direction, the
fund would be in a better position than if it had not hedged at all. If the
price of the securities being hedged has moved in a favorable direction, this
advantage will be partially offset by the futures contract. If the price of the
futures contract moves more than the price of the security, the fund will
experience either a loss or a gain on the futures contract that will not be
completely offset by movements in the price of the securities that are the
subject of the hedge. To compensate for the imperfect correlation of movements
in the price of the securities being hedged and movements in the price of the
bond index futures, the fund may buy or sell bond index futures in a greater
dollar amount than the dollar amount of securities being hedged if the
historical volatility of the prices of such securities being hedged is less than
the historical volatility of the bond index. It is also possible that, where the
fund has sold futures contracts to hedge its securities against a decline in the
market, the market may advance and the value of securities held in the portfolio
may decline. If this occurred, the fund would lose money on the futures contract
and also experience a decline in value in its portfolio securities. However,
while this could occur for a brief period or to a very small degree, over time
the value of a portfolio of debt securities will tend to move in the same
direction as the market indices upon which the futures contracts are based.

Where bond index futures are purchased to hedge against a possible increase
in the price of funds before the fund is able to invest in securities in an
orderly fashion, it is possible that the market may decline instead; if the fund
then concludes not to invest in securities at that time because of concern as to
possible further market decline or for other reasons, it will realize a loss on
the futures contract that is not offset by a reduction in the price of the
securities it had anticipated purchasing.

The risks of investment in options on bond indices may be greater than
options on securities. Because exercises of bond index options are settled in
cash, when the fund writes a call on a bond index it cannot provide in advance
for its potential settlement obligations by acquiring and holding the underlying
securities. The fund can offset some of the risk of its writing position by
holding a portfolio of bonds similar to those on which the underlying index is
based. However, the fund cannot, as a practical matter, acquire and hold a
portfolio containing exactly the same securities as the underlying index and, as
a result, bears a risk that the value of the securities held will vary from the
value of the index. Even if the fund could assemble a portfolio that exactly
reproduced the composition of the underlying index, it still would not be fully
covered from a risk standpoint because of the "timing risk" inherent in writing
index options. When an index option is exercised, the amount of cash that the
holder is entitled to receive is determined by the difference between the
exercise price and the closing index level on the date when the option is
exercised. As with other kinds of options, the fund, as the call writer, will
not learn that it has been assigned an option until the next business day at the
earliest. The time lag between exercise and notice of assignment poses no risk
for the writer of a covered call on a specific underlying security because
there, the writer's obligation is to deliver the underlying security, not to pay
its value as of a fixed time in the past. So long as the writer already owns the
underlying security, it can satisfy its settlement obligation by simply
delivering it, and the risk that its value may have declined since the exercise
date is borne by the exercising option holder. In contrast, even if the writer
of an index call holds securities that exactly

match the composition of the underlying index, it will not be able to satisfy
its assignment obligation by delivering those securities. Instead, it will be
required to pay cash in an amount based on the closing index value on the
exercise date; by the time it learns that it has been assigned, the index may
have declined with a corresponding decline in the value of its portfolio. This
"timing risk" is an inherent limitation on the ability of index call writers to
cover their risk exposure by holding securities positions.

If the fund has purchased an index option and exercises it before the
closing index value for that day is available, it runs the risk that the level
of the underlying index may subsequently change. If such a change causes the
exercised option to fall out-of-the-money, the fund will be required to pay the
difference between the closing index value and the exercise price of the option
(times the applicable multiplier) to the assigned writer.

OFFICERS AND DIRECTORS

The principal officers and directors of the corporation, their principal
business experience during the past five years, and their affiliation with
Investors Research Corporation and its affiliated companies are listed below.
Unless otherwise noted, the business address of each director and officer is
4500 Main Street, Kansas City, Missouri 64111. Those directors that are
"interested persons" as defined in the Investment Company Act are indicated by
an asterisk (*).

JAMES E. STOWERS JR.,* chairman, principal executive officer and director;
chairman, director and controlling shareholder of Twentieth Century Companies,
Inc., parent corporation of Investors Research Corporation and Twentieth Century
Services, Inc.; chairman and director of Investors Research Corporation,
Twentieth Century Services, Inc., Twentieth Century Investors, Inc., Twentieth
Century World Investors, Inc., Twentieth Century Capital Portfolios, Inc., TCI
Portfolios, Inc., and Twentieth Century Strategic Asset Allocations, Inc.

JAMES E. STOWERS III,* president and director; president and director,
Twentieth Century Companies, Inc., Investors Research Corporation, Twentieth
Century Services, Inc., Twentieth Century Investors, Inc., Twentieth Century
World Investors, Inc., Twentieth Century Capital Portfolios, Inc., TCI
Portfolios, Inc., and Twentieth Century Strategic Asset Allocations, Inc.

THOMAS A. BROWN, director; 2029 Wyandotte, Kansas City, Missouri; chief
executive officer, Associated Bearing Company, a corporation engaged in the sale
of bearings and power transmission products; director, Twentieth Century
Investors, Inc., Twentieth Century World Investors, Inc., Twentieth Century
Capital Portfolios, Inc., TCI Portfolios, Inc., and Twentieth Century
Strategic Asset Allocations, Inc.

ROBERT W. DOERING, M.D., director; 6406 Prospect, Kansas City, Missouri;
general surgeon; director, Twentieth Century Investors, Inc., Twentieth Century
World Investors, Inc., Twentieth Century Capital Portfolios, Inc., TCI
Portfolios, Inc., and Twentieth Century Strategic Asset Allocations, Inc.

LINSLEY L. LUNDGAARD, director; 18630 East Via Hermosa, Rio Verde, Arizona;
retired; formerly vice president and national sales manager, Flour Milling
Division, Cargill, Inc; director, Twentieth Century Investors, Inc., Twentieth
Century World Investors, Inc., Twentieth Century Capital Portfolios, Inc., TCI
Portfolios, Inc., and Twentieth Century Strategic Asset Allocations, Inc.

DONALD H. PRATT, director; P.O. Box 419917, Kansas City, Missouri;
president, Butler Manufacturing Company; director, Twentieth Century Investors,
Inc., Twentieth Century World Investors, Inc., Twentieth Century Capital
Portfolios, Inc., TCI Portfolios, Inc., and Twentieth Century Strategic Asset
Allocations, Inc.

LLOYD T. SILVER JR., director; 2300 West 70th Terrace, Mission Hills,
Kansas; president, LSC, Inc., manufacturer representative; director, Twentieth
Century Investors, Inc., Twentieth

Century World Investors, Inc., Twentieth Century Capital Portfolios, Inc., TCI
Portfolios, Inc., and Twentieth Century Strategic Asset Allocations, Inc.

M. JEANNINE STRANDJORD, 2330 Shawnee Mission Parkway, Westwood, Kansas;
director; senior vice president and treasurer, Sprint Corporation; director,
Twentieth Century Investors, Inc., Twentieth Century World Investors, Inc.,
Twentieth Century Capital Portfolios, Inc., TCI Portfolios, Inc., and Twentieth
Century Strategic Asset Allocations, Inc.

JOHN M. URIE, director; 5511 N.W. Flint Ridge Road, Kansas City, Missouri;
consultant; director, Twentieth Century Investors, Inc., Twentieth Century World
Investors, Inc., Twentieth Century Capital Portfolios, Inc., TCI Portfolios,
Inc., and Twentieth Century Strategic Asset Allocations, Inc.

WILLIAM M. LYONS, executive vice president and general counsel; executive
vice president, secretary and general counsel, Twentieth Century Investors, Inc.
and Twentieth Century World Investors, Inc.; executive vice president and
general counsel, Twentieth Century Capital Portfolios, Inc., TCI Portfolios,
Inc., Twentieth Century Strategic Asset Allocations, Inc., Twentieth Century
Companies, Inc., Investors Research Corporation and Twentieth Century Services,
Inc.

ROBERT T. JACKSON, executive vice president and principal financial
officer; treasurer, Twentieth Century Companies, Inc. and Investors Research
Corporation; executive vice president and treasurer, Twentieth Century Services,
Inc.; executive vice president-finance, Twentieth Century Investors, Inc., TCI
Portfolios, Inc., Twentieth Century World Investors, Inc., Twentieth Century
Premium Reserves, Inc., Twentieth Century Capital Portfolios, Inc., and
Twentieth Century Strategic Asset Allocations, Inc.; formerly executive vice
president, Kemper Corporation.

PATRICK A. LOOBY, vice president and secretary; vice president and
secretary, Twentieth Century Capital Portfolios, Inc., TCI Portfolios, Inc., and
Twentieth Century Strategic Asset Allocations, Inc.; vice president, Twentieth
Century Investors, Inc., Twentieth Century World Investors, Inc., and Twentieth
Century Services, Inc.

MARYANNE ROEPKE, CPA, vice president, treasurer and principal accounting
officer; vice president and treasurer, Twentieth Century Investors, Inc.,
Twentieth Century World Investors, Inc., Twentieth Century Capital Portfolios,
Inc., and TCI Portfolios, Inc.; vice president, Twentieth Century Services,
Inc., and Twentieth Century Strategic Asset Allocations, Inc.

C. JEAN WADE, CPA, controller; controller, Twentieth Century Investors,
Inc.; formerly accountant, Baird, Kurtz & Dobson.

The board of directors has established four standing committees: the
executive committee, the audit committee, the compliance committee and the
nominating committee.

Messrs. Stowers Jr., Stowers III, and Urie constitute the executive
committee of the board of directors. The committee performs the functions of the
board of directors between meetings of the board, subject to the limitations on
its power set out in the Maryland General Corporation Law, and except for
matters required by the Investment Company Act to be acted upon by the whole
board.

Messrs. Lundgaard (chairman), Urie and Doering and Ms. Strandjord
constitute the audit committee. The functions of the audit committee include
recommending the engagement of the corporation's independent auditors, reviewing
the arrangements for and scope of the annual audit, reviewing comments made by
the independent auditors with respect to internal controls and the
considerations given or the corrective action taken by management and reviewing
nonaudit services provided by the independent accountants.

Messrs. Brown (chairman), Pratt and Silver constitute the compliance
committee. The functions of the compliance committee include

reviewing the results of the funds' compliance testing program, reviewing
quarterly reports from the manager of the funds regarding various compliance
matters and monitoring the implementation of the funds' Code of Ethics,
including any violations thereof.

The nominating committee has, as its principal role, the consideration and
recommendation of individuals for nomination as directors. The names of
potential director candidates are drawn from a number of sources, including
recommendations from members of the board, management and shareholders. This
committee also reviews and makes recommendations to the board with respect to
the composition of board committees and other board-related matters, including
its organization, size, composition, responsibilities, functions, and
compensation. The members of the nominating committee are Messrs. Urie
(chairman), Lundgaard and Stowers III.

The directors of the corporation also serve as directors of five other
investment companies in the Twentieth Century mutual fund complex. Each director
who is not an "interested person" as defined in the Investment Company Act
receives for service as a member of the board of all six companies an annual
director's fee of $36,000, a fee of $1,000 per regular board meeting attended
and $500 per special board meeting and committee meeting attended. In addition,
those directors who are not "interested persons" who serve as chairman of a
committee of the board of directors receive an additional $2,000 for such
services. These fees and expenses are divided among the Twentieth Century
investment companies based upon their relative net assets. Under the terms of
the management agreement with Investors Research Corporation, the funds are
responsible for paying such fees and expenses. Set forth below is the aggregate
compensation paid for the periods indicated by the corporation and by the
Twentieth Century family of funds as a whole to each director of the corporation
who is not an "interested person" as defined in the Investment Company Act.

Aggregate Total Compensation from
Compensation the Twentieth Century
Director from the corporation1 Family of Funds2
- --------------------------------------------------------------------------------
Thomas A. Brown $215 $44,000
Robert W. Doering, M.D. 212 44,000
Linsley L. Lundgaard 222 46,000
Donald H Pratt 186 28,000
Lloyd T. Silver Jr. 212 44,000
Jeannine Strandjord 210 44,000
John M. Urie 222 46,000
- --------------------------------------------------------------------------------

1 Includes compensation actually paid by the corporation during the fiscal year
ended March 31, 1996.

2 Includes compensation paid by the six investment company members of the
Twentieth Century family of funds for the calendar year ended December 31,
1995.

Those directors who are "interested persons," as defined in the Investment
Company Act, receive no fee as such for serving as a director. The salaries of
such individuals, who are also officers of the corporation, are paid by
Investors Research Corporation.

MANAGEMENT

A description of the responsibilities and method of compensation of
Twentieth Century's investment manager, Investors Research Corporation
("Investors Research"), appears in the Prospectus under the caption
"Management."

During its most recent fiscal year, the management fees paid to Investors
Research were as follows:

- --------------------------------------------------------------------------------
Year Ended Year Ended Year Ended
Fund March 31, 1996 March 31, 1995 March 31, 1994
- --------------------------------------------------------------------------------
PREMIUM GOVERNMENT
RESERVE
Management Fees $ 93,671 $ 41,736 $ 20,845
Average Net Assets 21,173,072 9,274,419 4,628,311

PREMIUM CAPITAL
RESERVE
Management Fees $ 626,948 $ 251,963 $ 101,492
Average Net Assets 140,458,302 55,990,638 22,565,287

PREMIUM MANAGED
BOND
Management Fees $ 68,907 $ 38,340 $ 32,413
Average Net Assets 15,955,006 8,625,557 7,204,853
- --------------------------------------------------------------------------------

The management agreement shall continue in effect until the earlier of the
expiration of two years from the date of its execution or until the

first meeting of shareholders following such execution and for as long
thereafter as its continuance is specifically approved at least annually by (i)
the board of directors of Twentieth Century or by the vote of a majority of
outstanding shares (as defined in the Investment Company Act) and (ii) by the
vote of a majority of the directors of Twentieth Century who are not parties to
the agreement or interested persons of Investors Research, cast in person at a
meeting called for the purpose of voting on such approval.

The management agreement provides that it may be terminated at any time
without payment of any penalty by the board of directors of Twentieth Century,
or by a vote of Twentieth Century's shareholders, on 60 days' written notice to
Investors Research and that it shall be automatically terminated if it is
assigned.

The management agreement provides that Investors Research shall not be
liable to Twentieth Century or its shareholders for anything other than willful
misfeasance, bad faith, gross negligence or reckless disregard of its
obligations and duties.

The management agreement also provides that Investors Research and its
officers, directors and employees may engage in other business, devote time and
attention to any other business whether of a similar or dissimilar nature, and
render services to others.

Certain investments may be appropriate for the funds and also for other
clients advised by Investors Research. Investment decisions for the funds and
other clients are made with a view to achieving their respective investment
objectives after consideration of such factors as their current holdings,
availability of cash for investment, and the size of their investment generally.
A particular security may be bought or sold for only one client, or in different
amounts and at different times for more than one but less than all clients. In
addition, purchases or sales of the same security may be made for two or more
clients on the same date. Such transactions will be allocated among clients in a
manner believed by Investors Research to be equitable to each. In some cases
this procedure could have an adverse effect on the price or amount of the
securities purchased or sold by a fund.

In addition to managing the funds, on August 1, 1996, Investors Research
also was acting as an investment advisor to nine institutional accounts and to
six registered investment companies within the Twentieth Century mutual fund
complex.

Twentieth Century Services, Inc. provides physical facilities, including
computer hardware and software and personnel, for the day-to-day administration
of Twentieth Century and Investors Research. Investors Research pays Twentieth
Century Services, Inc. for such services.

As stated in the Prospectus, all of the stock of Twentieth Century
Services, Inc. and Investors Research is owned by Twentieth Century Companies,
Inc.

CUSTODIANS

Chase Manhattan Bank, 770 Broadway, 10th Floor, New York, New York
10003-9598, Boatmen's First National Bank of Kansas City, 10th and Baltimore,
Kansas City, Missouri 64105 and United Missouri Bank of Kansas City, N.A., 10th
and Grand, Kansas City, Missouri 64105, each serves as custodian of the assets
of the funds. The custodians take no part in determining the investment policies
of the funds or in deciding which securities are purchased or sold by the funds.
The funds, however, may invest in certain obligations of the custodians and may
purchase or sell certain securities from or to the custodians.

INDEPENDENT AUDITORS

Ernst & Young LLP, One Kansas City Place, Kansas City, Missouri 64105,
serves as Twentieth Century's independent auditors, providing services including
(1) audit of the annual financial statements, (2) assistance and consultation in
connection with SEC filings and (3) review of the annual federal income tax
return filed for each fund by Twentieth Century.

CAPITAL STOCK

Twentieth Century's capital stock is described in the Prospectus under the
caption, "Further Information About Twentieth Century."

The corporation currently has three series of shares outstanding. Twentieth
Century may in the future issue one or more additional series of shares without
a vote of the shareholders. The assets belonging to each series of shares are
held separately by the custodian and the shares of each series represent a
beneficial interest in the principal, earnings and profits (or losses) of
investment and other assets held for that series. Your rights as a shareholder
are the same for all series of securities unless otherwise stated. Within their
respective series, all shares have equal redemption rights. Each share, when
issued, is fully-paid and non-assessable. Each share, irrespective of series, is
entitled to one vote for each dollar of net asset value represented by such
share on all questions.

In the event of complete liquidation or dissolution of Twentieth Century,
shareholders of each series of shares shall be entitled to receive, pro rata,
all of the assets less the liabilities of that series.

As of June 30, 1996, the following shareholders held in excess of 5% of the
votes of the stated series of the corporation:

- --------------------------------------------------------------------------------
Shareholder and
Fund Percentage Held
- --------------------------------------------------------------------------------
Premium Capital Chase Manhattan Bank
Reserve as Trustee for CTS Corp.
Retirement & Savings Plan
New York, New York - 16.0%

United Missouri Bank
as Trustee for The Insilco
Corporation Employee
Thrift Plan Trust
Kansas City, Missouri - 16.3%

Premium Chase Manhattan Bank
Government Reserve as Trustee for
Newport Service Corporation
Money Purchase
Pension Trust - 12.8%

Twentieth Century
Companies, Inc.
Kansas City, Missouri - 5.0%

Premium Twentieth Century
Managed Bond Companies, Inc. - 15.3%

Chase Manhattan Bank
as Trustee for Old Dominion
401(k) Retirement
Plan Trust - 6.2%

United Missouri Bank
as Trustee for The Insilco
Corporation Employee
Thrift Plan Trust - 6.1%

Other than the shares owned by Twentieth Century Companies, Inc., ownership
of which company could be attributed to certain officers and directors of the
corporation, as of June 30, 1996, the shares of the corporation owned
beneficially and of record by the officers and directors of the corporation in
the aggregate were less than 1% of the shares offered by any fund.

TAXES

Each fund intends to qualify under the Internal Revenue Code (the "Code")
as a regulated investment company. If they qualify, they will not be subject to
U.S. federal income tax on net investment income and net capital gains, which
are distributed to its shareholders within certain time periods specified in the
Code. Amounts not distributed on a timely basis would be subject to federal and
state corporate income tax and to a nondeductible 4% excise tax.

Each fund intends to distribute annually all of its net ordinary income and
net capital gains.

Distributions from net investment income and net short-term capital gains
are taxable to shareholders as ordinary income. The dividends received deduction
available to corporate shareholders for dividends received from the corporation
will apply to ordinary income distributions only to the extent that they are
attributable to the corporation's dividend income from U.S. corporations. In
addition, the dividends received deduction will be limited if the shares with
respect to which the dividends are received are treated as debt-financed or are
deemed to have been held less than 46 days by a fund.

Distributions from net long-term capital gains are taxable to a shareholder
as long-term capital gains regardless of the length of time the shares on which
such distributions are paid have been held by the shareholder. However,
shareholders should note that any loss realized upon the sale or redemption of
shares held for six months or less will be treated as a long-term capital loss
to the extent of any distribution of long-term capital gain to the shareholder
with respect to such shares.

Redemption of shares of a fund will be a taxable transaction for federal
income tax purposes and shareholders will generally recognize gain or loss in an
amount equal to the difference between the basis of the shares and the amount
received. Assuming that shareholders hold such shares as a capital asset, the
gain or loss will be a capital gain or loss and will generally be long term if
shareholders have held such shares for a period of more than one year. If a loss
is realized on the redemption of fund shares, the reinvestment in additional
fund shares within 30 days before or after the redemption may be subject to the
"wash sale" rules of the Code, resulting in a postponement of the recognition of
such loss for federal income tax purposes.

In addition to the federal income tax consequences described above relating
to an investment in shares issued by the corporation, there may be other
federal, state or local tax considerations that depend upon the circumstances of
each particular investor. Prospective shareholders are therefore urged to
consult their tax advisers with respect to the effect of this investment on
their own situations.

BROKERAGE

Under the terms of the Management Agreement between the funds and Investors
Research, Investors Research has the responsibility for determining what
securities shall be purchased and sold and selecting the brokers or dealers to
execute such transactions. Investors Research seeks to obtain prompt execution
of orders at the most favorable prices or yields.

Purchases are made directly from issuers, underwriters, broker-dealers or
banks. In many transactions, the selection of the broker-dealer is determined by
the availability of the desired security and its offering price. In other
transactions, the selection is a function of the selection of market and the
negotiation of price, as well as the broker-dealer's general execution,
operational and financial capabilities in the type of transaction involved.

Investors Research receives statistical and other information and services
without cost from brokers and dealers. Investors Research evaluates such
information and services, together with all other information that it may have,
in supervising and managing the funds. Because such information and services may
vary in amount, quality and reliability, their influence in selecting brokers
varies from none to very substantial. Investors Research proposes to continue to
place some of the funds' brokerage business with one or more brokers who provide
information and services.

The brokerage and research services received by Investors Research may be
used with respect to one or more of the funds and/or the other funds and
accounts over which it has investment discretion, and not all of such services
may be used by Investors Research in managing the portfolios of the funds. Such
information and services are in addition to and not in lieu of the services
required to be performed by Investors Research. Investors Research does not
utilize brokers that provide such information and services for the purpose of
reducing the expense of providing required services to the funds.

PERFORMANCE ADVERTISING

Individual fund performance may be compared to various indices including
the Lehman Brothers Government Corporate Index, the Salomon Bond Index,
Donoghue's Money Fund Average and Bank Rate Monitor National Index of 21/2-year
CD rates.

Average annual total return is calculated by determining each fund's
cumulative total return for the stated period and then computing the annual
compound return that would produce the cumulative total return if the fund's
performance had been constant over that period. Cumulative total return includes
all elements of return, including reinvestment of dividends and capital gains
distributions.

The funds may also advertise average annual total return over periods of
time other than one, five and 10 years and cumulative total return over various
time periods.

The yield of Premium Government Reserve and Premium Capital Reserve is
calculated by measuring the income generated by an investment in the fund over a
seven-day period (net of fund expenses). This income is then "annualized." That
is, the amount of income generated by the investment over the seven-day period
is assumed to be generated over each similar period throughout a full year and
is shown as a percentage of the investment. The "effective yield" is calculated
in a similar manner but, when annualized, the income earned by the investment is
assumed to be reinvested. The effective yield will be slightly higher than the
yield because of the compounding effect of the assumed reinvestment.

Based upon these methods of calculation, the yield and effective yield for
Premium Government Reserve and Premium Capital Reserve for the seven days ended
March 31, 1996, the last seven days of the fiscal year, were as follows:

- -------------------------------------------------------
Effective
Fund Yield Yield
- -------------------------------------------------------
Premium Government Reserve 4.99% 5.12%
Premium Capital Reserve 4.94 5.07
- -------------------------------------------------------

The yield of Premium Managed Bond is calculated by adding over a 30-day (or
one-month) period all interest and dividend income (net of fund expenses)
calculated on each day's market values, dividing this sum by the average number
of fund shares outstanding during the period, and expressing the result as a
percentage of the fund's share price on the last day of the 30-day (or
one-month) period. The percentage is then annualized. Capital gains and losses
are not included in the calculation. The yield of Premium Managed Bond for the
30-day period ended March 31, 1996, was 6.14%.

The funds may also elect to advertise cumulative total return and average
annual total return, computed as described above. The cumulative total return
since inception is 17.58% and average annual total return of Premium Managed
Bond for the year ended March 31, 1996 was 11.53%.

ADDITIONAL PERFORMANCE COMPARISONS

Investors may judge the performance of the funds by comparing their
performance to the performance of other mutual funds or mutual fund portfolios
with comparable investment objectives and policies through various mutual fund
or market indices such as the EAFE(R) Index and those prepared by Dow Jones &
Co., Inc., Standard & Poor's Corporation, Shearson Lehman Brothers, Inc. and The
Russell 2000 Index, and to data prepared by Lipper Analytical Services, Inc.,
Morningstar, Inc. and the Consumer Price Index. Comparisons may also be made to
indices or data published in Money, Forbes, Barron's, The Wall Street Journal,
The New York Times, Business Week, Pensions and Investments, USA Today, and
other similar publications or services. In addition to performance information,
general information about the funds that appears in a publication such as those
mentioned above or in the prospectus under the heading "Performance Advertising"
may be included in advertisements and in reports to shareholders.

PERMISSIBLE ADVERTISING INFORMATION

From time to time, the funds may, in addition to any other permissible
information, include the following types of information in advertisements,
supplemental sales literature and reports to

shareholders: (1) discussions of general economic or financial principles (such
as the effects of compounding and the benefits of dollar-cost averaging); (2)
discussions of general economic trends; (3) presentations of statistical data to
supplement such discussions; (4) descriptions of past or anticipated portfolio
holdings for one or more of the funds; (5) descriptions of investment strategies
for one or more of the funds; (6) descriptions or comparisons of various savings
and investment products (including, but not limited to, qualified retirement
plans and individual stocks and bonds), which may or may not include the funds;
(7) comparisons of investment products (including the funds) with relevant
market or industry indices or other appropriate benchmarks; (8) discussions of
fund rankings or ratings by recognized rating organizations; and (9)
testimonials describing the experience of persons that have invested in one or
more of the funds. The funds may also include calculations, such as hypothetical
compounding examples, which describe hypothetical investment results in such
communications. Such performance examples will be based on an express set of
assumptions and are not indicative of the performance of any of the funds.

REDEMPTIONS IN KIND

While Twentieth Century expects that, under normal conditions, all
redemptions will be paid in cash, if the manager determines that it would be
detrimental to the best interests of a fund's remaining shareholders to make
payment in cash, that fund may pay redemption proceeds in amounts in excess of
$250,000 in whole or in part by a distribution in kind of readily marketable
securities.

In addition to the policy just mentioned, the funds have elected to be
governed by Rule 18f-1 under the Investment Company Act of 1940, pursuant to
which the funds are obligated to redeem shares solely in cash up to the lesser
of $250,000 or 1% of the net asset value of a fund during any 90-day period for
any one shareholder. Should redemptions by any shareholder exceed such
limitation, the fund will have the option, subject to the necessary finding by
the manager stated above, of redeeming the excess in cash or in kind. If shares
are redeemed in kind, the redeeming shareholder might incur brokerage costs in
converting the assets to cash. The securities delivered will be selected at the
sole discretion of the manager and will not necessarily be representative of the
entire portfolio and will be securities that the manager regards as least
desirable. The method of valuing securities used to make redemptions in kind
will be the same as the method of valuing portfolio securities described in the
Prospectus under the caption "How Share Price is Determined," and such valuation
will be made as of the same time the redemption price is determined.

HOLIDAYS

Twentieth Century does not determine the net asset value of its shares on
days when the New York Stock Exchange is closed. Currently, the Exchange is
closed on Saturdays and Sundays and on holidays, namely New Year's Day,
Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving and Christmas.

FINANCIAL STATEMENTS

The financial statements of the various series of shares of Twentieth
Century for the fiscal year ended March 31, 1996, are included in the annual
report to shareholders, which is incorporated herein by reference. You may
receive copies without charge upon request to Twentieth Century at the address
and phone number shown on the cover of this statement.

TWENTIETH CENTURY
PREMIUM RESERVES

STATEMENT OF
ADDITIONAL INFORMATION

SEPTEMBER 3, 1996

TWENTIETH CENTURY MUTUAL FUNDS
and THE BENHAM GROUP
- -------------------------------------------

P.O. BOX 419385
KANSAS CITY, MISSOURI
64141-6385
- -------------------------------------------
Person-to-person assistance:
1-800-345-3533 OR 816-531-5575
- -------------------------------------------
Automated Information Line:
1-800-345-8765
- -------------------------------------------
Telecommunications Device for the Deaf:
1-800-345-1833 OR 816-753-0700
- -------------------------------------------
Fax: 816-340-4360
- -------------------------------------------
Internet: Http://Www.Twentieth-Century.Com
- -------------------------------------------

TWENTIETH CENTURY
PREMIUM RESERVES
- --------------------------------------------------------------------------------

SH-BKT-5798 [recycled logo]
9609 Recycled

<PAGE>
PART C. OTHER INFORMATION.

ITEM 24. Financial Statements and Exhibits.

(a) Financial Statements

(i) Financial Statements filed in Part A of the Registration
Statement:

1. Financial Highlights.

(ii) Financial Statements filed in Part B of the Registration
Statement (each of the following financial statements is
contained in the Registrant's Annual Report dated March 31,
1996, and which are incorporated by reference in Part B of
this Registration Statement):

1. Statements of Assets and Liabilities at March 31, 1996.

2. Statements of Operations for the year ended March 31,
1996.

3. Statements of Changes in Net Assets for the year ended
March 31, 1996.

4. Notes to Financial Statements as of March 31, 1996.

5. Schedule of Investments at March 31, 1996.

6. Report of Independent Auditors dated April 26, 1996.

b) Exhibits (all exhibits not filed herein are being incorporated
herein by reference).

1. (a) Articles of Incorporation of Twentieth Century
Premium Reserves, Inc., dated January 7, 1993
(filed electronically as an exhibit to
Post-Effective Amendment No. 4 on Form N-1A on July
31, 1996, File No. 33-57430).

(b) Articles Supplementary of Twentieth Century
Premium Reserves, Inc., dated April 24, 1995 (filed
electronically as an exhibit to Post-Effective
Amendment No. 4 on Form N-1A on July 31, 1996, File
No. 33-57430).

2. By-Laws of Twentieth Century Premium Reserves, Inc.
(filed electronically as an exhibit to Post-Effective
Amendment No. 4 on Form N-1A on July 31, 1996, File No.
33-57430).

3. Voting Trust Agreements - None.

4. Specimen securities (filed as Exhibit 4 to
Post-Effective Amendment No. 1 to the Registration
Statement on Form N-1A of the Registrant, Commission
File No. 33-57430).

5. Management Agreement dated as of March 16, 1993,
between Twentieth Century Premium Reserves, Inc. and
Investors Research Corporation (filed electronically as
an exhibit to Post-Effective Amendment No. 4 on Form
N-1A on July 31, 1996, File No. 33-57430).

6. Underwriting Agreements - None.

7. Bonus and Profit Sharing Plan, Etc. - None.

8. (a) Custodian Agreement, dated as of March 16, 1993,
by and between Twentieth Century Premium Reserves,
Inc. and United States Trust Company of New York
(filed electronically as an exhibit to
Post-Effective Amendment No. 4 on Form N-1A on
July 31, 1996, File No. 33-57430).

(b) Custodian Agreement, dated as of March 16, 1993, by
and between Twentieth Century Premium Reserves,
Inc. and Boatmen's First National Bank of Kansas
City (filed electronically as an exhibit to
Post-Effective Amendment No. 4 on Form N-1A on July
31, 1996, File No. 33-57430).

(c) Custodian Agreement, dated as of September 21, 1994
for ACH transactions, between Twentieth Century
Premium Reserves, Inc. and United Missouri Bank of
Kansas City, N.A. (filed electronically as an
exhibit to Post-Effective Amendment No. 4 on Form
N-1A on July 31, 1996, File No. 33-57430).

(d) Custody Agreement dated September 12, 1995, between
UMB Bank, N.A., Investors Research Corporation,
Twentieth Century Investors, Inc., Twentieth
Century World Investors, Inc., Twentieth Century
Premium Reserves, Inc. and Twentieth Century
Capital Portfolios, Inc. (filed as an Exhibit to
Pre-Effective Amendment No. 4 on Form N-1A of
Twentieth Century Strategic Asset Allocations,
Inc., Commission File No. 33-79482).

(e) Amendment No. 1 to Custody Agreement dated January
25, 1996, between UMB Bank, N.A., Investors
Research Corporation, Twentieth Century Investors,
Inc., Twentieth Century World Investors, Inc.,
Twentieth Century Premium Reserves, Inc. and
Twentieth Century Capital Portfolios, Inc. (filed
as an Exhibit to Pre-Effective Amendment No. 4 on
Form N-1A of Twentieth Century Strategic Asset
Allocations, Inc., Commission File No. 33-79482).

9. Transfer Agency Agreement, dated as of March 16, 1993,
by and between Twentieth Century Premium Reserves, Inc.
and Twentieth Century Services, Inc. (filed
electronically as an exhibit to Post-Effective
Amendment No. 4 on Form N-1A on July 31, 1996, File No.
33-57430).

10. Opinion and Consent of Counsel (filed herein as
EX-99.B10).

11. Consent of Ernst & Young LLP (filed herein as
EX-99.B11).

12. (a) Annual Report of the Registrant dated March 31,
1996 (filed electronically on May 30, 1996).

(b) Semiannual Report of the Registrant dated September
30, 1995 (filed electronically on November 27,
1995).

13. Agreements of Initial Capital, Etc. - None.

14. Model Retirement Plans (filed as Exhibits 14a, 14b, 14c
and 14d to Pre-Effective Amendment No. 2 to the
Registration Statement on Form N-1A of Twentieth
Century World Investors, Inc., Commission File No.
33-39242, filed May 6, 1991).

15. 12b-1 Plans - None.

16. Schedule of Computation for Performance Advertising
Quotations (filed electronically as an exhibit to
Post-Effective Amendment No. 4 on Form N-1A on July 31,
1996, File No. 33-57430).

17. Power of Attorney (filed electronically as an exhibit
to Post-Effective Amendment No. 4 on Form N-1A on July
31, 1996, File No. 33-57430).

27. (a) Financial Data Schedule for Premium Government
Reserve (EX-27.5.1).

(b) Financial Data Schedule for Premium Capital Reserve
(EX-27.5.2).

ITEM 25. Persons Controlled by or Under Common Control with
Registrant - None.

ITEM 26. Number of Holders of Securities.

Number of Record Holders
Title of Services as of June 30, 1996
----------------- ---------------------
Premium Government Reserve 83
Premium Capital Reserve 388
Premium Managed Bond 63

ITEM 27. Indemnification.

The Registrant is a Maryland corporation. Section 2-418 of the
Maryland General Corporation Law allows a Maryland corporation
to indemnify its officers, directors, employees and agents to
the extent provided in such statute.

Article XIII of the Registrant's Articles of Incorporation,
Exhibit 1, requires the indemnification of the Registrant's
directors and officers to the extent permitted by Section
2-418 of the Maryland General Corporation Law, the Investment
Company Act of 1940 and all other applicable laws.

The Registrant intends to purchase an insurance policy
insuring its officers and directors against certain
liabilities which such officers and directors may incur while
acting in such capacities and providing reimbursement to the
Registrant for sums which it may be permitted or required to
pay to its officers and directors by way of indemnification
against such liabilities, subject in either case to clauses
respecting deductibility and participation.

ITEM 28. Business and Other Connections of Investment Advisor.

Investors Research Corporation, the investment advisor, is
engaged in the business of managing investments for registered
investment companies, deferred compensation plans and other
institutional investors.

ITEM 29. Principal Underwriters - None.

ITEM 30. Location of Accounts and Records.

All accounts, books and other documents required to be
maintained by Section 31(a) of the 1940 Act, and the rules
promulgated thereunder, are in the possession of Registrant,
Twentieth Century Services, Inc. and Investors Research
Corporation, all located at 4500 Main Street, Kansas City,
Missouri 64111.

ITEM 31. Management Services - None.

ITEM 32. Undertakings.

(a) Not Applicable.

(b) Not Applicable.

(c) The Registrant hereby undertakes to furnish each
person to whom a prospectus is delivered with a copy
of the Registrant's latest annual report to
shareholders, upon request and without charge.

(d) The Registrant hereby undertakes that it will, if
requested to do so by the holders of at least 10% of
the Registrant's outstanding shares, call a meeting
of shareholders for the purpose of voting upon the
question of the removal of a director and to assist
in communication with other shareholders as required
by Section 16(c).

<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, the Registrant certifies that it meets all the
requirements for effectiveness of this Post-Effective Amendment No. 5 to its
Registration Statement pursuant to Rule 485(b) promulgated under the Securities
Act of 1933, as amended, and has duly caused this Post-Effective Amendment No. 5
to its Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Kansas City, State of Missouri on the
30th day of August, 1996.
Twentieth Century Premium Reserves, Inc.
(Registrant)

By: /s/ James E. Stowers III
James E. Stowers III, President

Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 5 has been signed below by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>

Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman of the Board, Director August 30, 1996
- ------------------------- and Principal Executive Officer
James E. Stowers, Jr.

/s/ James E. Stowers III President and Director August 30, 1996
- -------------------------
James E. Stowers, III

* Executive Vice President-Finance August 30, 1996
- ------------------------- and Principal Financial Officer
Robert T. Jackson

* Treasurer and Principal Accounting August 30, 1996
- ------------------------- Officer
Maryanne Roepke

* Director August 30, 1996
- -------------------------
Thomas A. Brown

* Director August 30, 1996
- -------------------------
Robert W. Doering, M.D.

* Director August 30, 1996
- -------------------------
Linsley L. Lundgaard

* Director August 30, 1996
- -------------------------
Donald H. Pratt

* Director August 30, 1996
- -------------------------
Lloyd T. Silver, Jr.

* Director August 30, 1996
- -------------------------
M. Jeannine Strandjord

* Director August 30, 1996
- -------------------------
John M. Urie

*By /s/ James E. Stowers III
James E. Stowers III
Attorney-in-Fact

</TABLE>

EXHIBIT INDEX

EXHIBIT NUMBER DESCRIPTION OF DOCUMENT

EX-99B1a Articles of Incorporation of Twentieth Century Premium
Reserves, Inc., dated January 7, 1993 (filed electronically
as Exhibit 1a to Post-Effective Amendment No. 4 on Form N-1A,
filed on July 31, 1996, and incorporated herein by
reference).

EX-99.B1b Articles Supplementary of Twentieth Century Premium Reserves,
Inc., dated April 24, 1995 (filed electronically as Exhibit
1b to Post-Effective Amendment No. 4 on Form N-1A, filed on
July 31, 1996 and incorporated herein by reference).

EX-99.B2 By-Laws of Twentieth Century Premium Reserves, Inc. (filed
electronically as Exhibit 2 to Post-Effective Amendment No. 4
on Form N-1A, filed on July 31, 1996 and incorporated herein
by reference).

EX-99.B4 Specimen certificate representing shares of common stock of
Twentieth Century Premium Reserves, Inc. (filed as Exhibit 4
to Post-Effective Amendment No. 1 to the Registration
Statement on Form N-1A of the Registrant, Commission File NO.
33-57430, filed on October 22, 1993, and incorporated herein
by reference).

EX-99.B5 Management Agreement dated as of March 16, 1993, between
Twentieth Century Premium Reserves, Inc. and Investors
Research Corporation. (filed electronically as Exhibit 5 to
Post-Effective Amendment No. 4 on Form N-1A, filed on July
31, 1996, and incorporated herein by reference).

EX-99.B8a Custodian Agreement, dated as of March 16, 1993, by and
between Twentieth Century Premium Reserves, Inc. and United
States Trust Company of New York (filed electronically as
Exhibit 8a to Post-Effective Amendment No. 4 on Form N-1A,
filed on July 31, 1996, and incorporated herein by
reference).

EX-99.B8b Custodian Agreement, dated as of March 16, 1993, by and
between Twentieth Century Premium Reserves, Inc. and
Boatmen's First National Bank of Kansas City (filed
electronically as Exhibit 8b to Post-Effective Amendment No.
4 on Form N-1A, filed on July 31, 1996, and incorporated
herein by reference).

EX-99.B8c Custodian Agreement, dated as of September 21, 1994 for ACH
transactions, between Twentieth Century Premium Reserves,
Inc. and United Missouri Bank of Kansas City, N.A. (filed
electronically as Exhibit 8c to Post-Effective Amendment No.
4 on Form N-1A, filed on July 31, 1996, and incorporated
herein by reference).

EX-99.B8d Custody Agreement dated September 12, 1995, between UMB Bank,
N.A., Investors Research Corporation, Twentieth Century
Investors, Inc., Twentieth Century World Investors, Inc.,
Twentieth Century Premium Reserves, Inc. and Twentieth
Century Capital Portfolios, Inc. (filed as an Exhibit to
Pre-Effective Amendment No. 4 on Form N-1A of Twentieth
Century Strategic Asset Allocations, Inc., Commission File
NO. 33-79482, filed February 5, 1996, and incorporated by
reference).

EX-99.B8e Amendment No. 1 to Custody Agreement dated January 25, 1996,
between UMB Bank, N.A., Investors Research Corporation,
Twentieth Century Investors, Inc., Twentieth Century World
Investors, Inc., Twentieth Century Premium Reserves, Inc. and
Twentieth Century Capital Portfolios, Inc. (filed as an
Exhibit to Pre-Effective Amendment No. 4 on Form N-1A of
Twentieth Century Strategic Asset Allocations, Inc.,
Commission File No. 33-79482, filed February 5, 1996, and
incorporated herein by reference).

EX-99.B9 Transfer Agency Agreement dated as of March 18, 1993, by and
between Twentieth Century Premium Reserves, Inc. and
Twentieth Century Services, Inc. (filed electronically as
Exhibit 9 to Post-Effective Amendment No. 4 on Form N-1A,
filed on July 31, 1996, and incorporated herein by
reference).

EX-99.B10 Opinion and Consent of Counsel.

EX-99.B11 Consent of Ernst & Young LLP.

EX-99.B12a Annual Report of Twentieth Century Premium Reserves, Inc. for
the year ended March 31, 1996 (filed electronically on May
30, 1996).

EX-99.B12b Semiannual Report of Twentieth Century Premium Reserves, Inc.
for the six months ended September 30, 1995 (filed
electronically on November 27, 1995).

EX-99.B14 Model Retirement Plans (filed as Exhibits 14a, 14b, 14c and
14d to Pre-Effective Amendment No. 2 to the Registration
Statement on Form N-1A of Twentieth Century World Investors,
Inc., Commission File No. 33-39242, filed May 6, 1991).

EX-99.B16 Schedules for Computation of Advertising Performance
Quotations (filed electronically as Exhibit 16 to
Post-Effective Amendment No. 4 on Form N-1A, filed on July
31, 1996, and incorporated herein by reference).

EX-99.B17 Power of Attorney (filed electronically as Exhibit 17 to
Post-Effective Amendment No. 4 on Form N-1A, filed on July
31, 1996, and incorporated herein by reference).

EX-27.5.1 Financial Data Schedule for Premium Government Reserve.

EX-27.5.2 Financial Data Schedule for Premium Capital Reserve.

EX-27.5.3 Financial Data Schedule for Premium Managed Bond.

PATRICK A. LOOBY
Attorney and Counselor at Law
4500 Main Street, P.O. Box 410141
Kansas City, Missouri 64141-0141
Telephone (816) 340-4349
Telecopier (816) 340-4964

August 30, 1996

Twentieth Century Premium Reserves, Inc.
Twentieth Century Tower
4500 Main Street
Kansas City, Missouri 64111

Ladies and Gentlemen:

As a counsel to Twentieth Century Premium Reserves, Inc., I am generally
familiar with its affairs. Based upon this familiarity, and upon the examination
of such documents as I have deemed relevant, it is my opinion that the shares of
the Corporation described in Post-Effective Amendment No. 5 to its Registration
Statement on Form N-1A, to be filed with the Securities and Exchange Commission
on August 30, 1996, will, when issued, be validly issued, fully paid and
nonassessable.

For the record, it should be stated that I am an officer of Twentieth
Century Premium Reserves, Inc. and of Twentieth Century Services, Inc., an
affiliated corporation of Investors Research Corporation, the investment adviser
of Twentieth Century Premium Reserves, Inc.

I hereby consent to the use of this opinion as an exhibit to Post-Effective
Amendment No. 5.

Very truly yours,

/s/ Patrick A. Looby
Patrick A. Looby

PL/dnh

Consent of Independent Auditors

We consent to the references to our firm under the captions "Financial
Highlights" and "Independent Auditors" in the Post-Effective Amendment No. 5 to
the Registration Statement (Form N-1A) and related prospectus of Twentieth
Century Premium Reserves, Inc. and to the incorporation by reference of our
report dated April 26, 1996, with respect to the financial statements of
Twentieth Century Premium Reserves, Inc. included in its Annual Report to
Shareholders for the year ended August 30, 1996.

/s/ Ernst & Young LLP
ERNST & YOUNG LLP

Kansas City, Missouri
August 30, 1996

<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> PREMIUM CAPITAL RESERVE

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 133688517
<RECEIVABLES> 275657
<ASSETS-OTHER> 515538
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 134479712
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1063047
<TOTAL-LIABILITIES> 1063047
<SENIOR-EQUITY> 1334173
<PAID-IN-CAPITAL-COMMON> 132083150
<SHARES-COMMON-STOCK> 133417304
<SHARES-COMMON-PRIOR> 138430094
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (658)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 133416665
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 8305914
<OTHER-INCOME> 0
<EXPENSES-NET> 628783
<NET-INVESTMENT-INCOME> 7677131
<REALIZED-GAINS-CURRENT> 1221
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 7678352
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7677131
<DISTRIBUTIONS-OF-GAINS> 1221
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 299774625
<NUMBER-OF-SHARES-REDEEMED> 312138050
<SHARES-REINVESTED> 7350635
<NET-CHANGE-IN-ASSETS> (5011550)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (7879)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 626948
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 628783
<AVERAGE-NET-ASSETS> 140458302
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> PREMIUM GOVERNMENT RESERVE

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 26611183
<RECEIVABLES> 71566
<ASSETS-OTHER> 4151
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 26686900
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 496136
<TOTAL-LIABILITIES> 496136
<SENIOR-EQUITY> 261908
<PAID-IN-CAPITAL-COMMON> 25928856
<SHARES-COMMON-STOCK> 26190764
<SHARES-COMMON-PRIOR> 16380795
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 26190764
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1223656
<OTHER-INCOME> 0
<EXPENSES-NET> 93943
<NET-INVESTMENT-INCOME> 1129713
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1129713
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1129713
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 39673000
<NUMBER-OF-SHARES-REDEEMED> 30931876
<SHARES-REINVESTED> 1068845
<NET-CHANGE-IN-ASSETS> 9809969
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 93671
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 93943
<AVERAGE-NET-ASSETS> 21173072
<PER-SHARE-NAV-BEGIN> 1.00
<PER-SHARE-NII> 0.05
<PER-SHARE-GAIN-APPREC> 0.00
<PER-SHARE-DIVIDEND> 0.05
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 1.00
<EXPENSE-RATIO> 0.44
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>

<ARTICLE> 6
<SERIES>
<NUMBER> 3
<NAME> PREMIUM MANAGED BOND

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1996
<PERIOD-END> MAR-31-1996
<INVESTMENTS-AT-COST> 21091645
<INVESTMENTS-AT-VALUE> 21051789
<RECEIVABLES> 791758
<ASSETS-OTHER> 32551
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 21876098
<PAYABLE-FOR-SECURITIES> 1579584
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 16997
<TOTAL-LIABILITIES> 1596581
<SENIOR-EQUITY> 202795
<PAID-IN-CAPITAL-COMMON> 20137181
<SHARES-COMMON-STOCK> 2041414
<SHARES-COMMON-PRIOR> 1091877
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (20603)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 20279517
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1037250
<OTHER-INCOME> 0
<EXPENSES-NET> 69104
<NET-INVESTMENT-INCOME> 968146
<REALIZED-GAINS-CURRENT> 164018
<APPREC-INCREASE-CURRENT> 261690
<NET-CHANGE-FROM-OPS> 1393854
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 968146
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 1428902
<NUMBER-OF-SHARES-REDEEMED> 574171
<SHARES-REINVESTED> 94806
<NET-CHANGE-IN-ASSETS> 9945284
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (184621)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 68907
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 69104
<AVERAGE-NET-ASSETS> 15955006
<PER-SHARE-NAV-BEGIN> 9.46
<PER-SHARE-NII> 0.61
<PER-SHARE-GAIN-APPREC> 0.47
<PER-SHARE-DIVIDEND> 0.61
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.93
<EXPENSE-RATIO> 0.43
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>