AMERICAN CENTURY PREMIUM RESERVES INC, 485BPOS, 1997-07-30

AMERICAN CENTURY PREMIUM RESERVES INC
485BPOS, 1997-07-30

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As filed with the Securities and Exchange Commission on July 30, 1997

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. __6__ __X__

REGISTRATION STATEMENT
UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. __6__ __X__
(Check appropriate box or boxes.)

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

American 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 III
American Century Tower, 4500 Main Street, Kansas City, MO 64111
-----------------------------------------------------------------
(Name and address of Agent for Service)

Approximate Date of Proposed Public Offering August 1, 1997

It is proposed that this filing will become effective (check appropriate box)
_____ immediately upon filing pursuant to paragraph (b) of Rule 485
__X__ on August 1, 1997 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, 1997, was filed on May 30, 1997.

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<PAGE>
================================================================================
Cross Reference Sheet
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Item No. Page No.
================================================================================

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, 27-28
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5. Management of the Fund 26-27
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6. Capital Stock and Other Securities 24-28
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7. Purchase of Securities Being Offered Cover Page,
17-18, 23
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8. Redemption or Repurchase 19-20
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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 1
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12. General Information and History N/A
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13. Investment Objectives and Policies 2-10
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14. Management of the Fund 10-12
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15. Control Persons and Principal Holders of Securities
13
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16. Investment Advisory and Other Services 11-12
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17. Brokerage Allocation 14
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18. Capital Stock and Other Securities 13
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19. Purchase, Redemption and Pricing of Securities Being
Offered 16
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20. Tax Status 13-14
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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 16
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<PAGE>
PROSPECTUS

[american century logo]
American
Century(sm)

AUGUST 1, 1997

BENHAM
GROUP(R)

Premium Government Reserve
Premium Capital Reserve
Premium Bond

[front cover]

AMERICAN CENTURY INVESTMENTS
FAMILY OF FUNDS

American Century Investments offers you nearly 70 fund choices covering
stocks, bonds, money markets, specialty investments and blended portfolios. To
help you find the funds that may meet your investment needs, American Century
funds have been divided into three groups based on investment style and
objectives. These groups, which appear below, are designed to simplify your fund
decisions.

AMERICAN CENTURY INVESTMENTS

Benham Group American Century Group Twentieth Century(R) Group

MONEY MARKET FUNDS ASSET ALLOCATION &
GOVERNMENT BOND FUNDS BALANCED FUNDS GROWTH FUNDS
DIVERSIFIED BOND FUNDS CONSERVATIVE EQUITY FUNDS INTERNATIONAL FUNDS
MUNICIPAL BOND FUNDS SPECIALTY FUNDS

Premium Government
Reserve
Premium Capital Reserve
Premium Bond

PROSPECTUS
AUGUST 1, 1997

Premium Government Reserve
Premium Capital Reserve
Premium Bond

AMERICAN CENTURY PREMIUM RESERVES, INC.

American Century Premium Reserves, Inc. is a part of American Century
Investments, a family of funds that includes nearly 70 no-load mutual funds
covering a variety of investment opportunities. Three of the funds from our
Benham Group that invest primarily in fixed income securities are described in
this Prospectus. Their investment objectives are listed on page 2 of this
Prospectus. The other funds are described in separate prospectuses.

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

This Prospectus gives you information about the funds that you should know
before investing. Please read this Prospectus carefully and retain it for future
reference. Additional information is included in the Statement of Additional
Information dated August 1, 1997, and filed with the Securities and Exchange
Commission. It is incorporated into this Prospectus by reference. To obtain a
copy without charge, call or write:

American Century Investments
4500 Main Street o P.O. Box 419200
Kansas City, Missouri 64141-6200 o 1-800-345-2021
International calls: 816-531-5575
Telecommunications Device for the Deaf:
1-800-634-4113 o In Missouri: 816-444-3485
Internet: www.americancentury.com

Additional information, including this Prospectus and the Statement of
Additional Information, may be obtained by accessing the Web site maintained by
the SEC (www.sec.gov).

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.

Prospectus 1

INVESTMENT OBJECTIVES OF THE FUNDS

AMERICAN CENTURY - BENHAM
PREMIUM GOVERNMENT RESERVE FUND

AMERICAN CENTURY - BENHAM
PREMIUM CAPITAL RESERVE FUND

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. While Premium
Government Reserve and Premium Capital Reserve seek to maintain a stable net
asset value of $1.00 per share, there is no assurance that they will be able to
do so. Investments in the funds are not insured, nor are they guaranteed by the
U.S. government or any other agency.

AMERICAN CENTURY - BENHAM
PREMIUM BOND FUND

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. Investments in the funds are not insured, nor are they
guaranteed by the U.S. government or any other agency.

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

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.

2 Investment Objectives American Century Investments

TABLE OF CONTENTS

Investment Objective of the Funds..............................................2
Transaction and Operating Expense Table........................................4
Financial Highlights...........................................................5

INFORMATION REGARDING THE FUNDS

Investment Policies of the Funds...............................................8
Premium Government Reserve..................................................8
Premium Capital Reserve.....................................................9
Premium Bond...............................................................10
Fundamentals of Fixed Income Investing........................................11
Other Investment Practices, Their
Characteristics and Risks..................................................11
Repurchase Agreements......................................................11
Foreign Securities.........................................................12
Forward Currency Exchange Contracts........................................12
Interest Rate Futures Contracts
and Options Thereon.....................................................13
Derivative Securities......................................................13
Portfolio Lending..........................................................14
Portfolio Turnover.........................................................14
Rule 144A Securities.......................................................15
When-Issued Securities.....................................................15
Investment Company Act Rule 2a-7...........................................15
Performance Advertising.......................................................15

HOW TO INVEST WITH AMERICAN CENTURY INVESTMENTS

American Century Investments..................................................17
Investing in American Century.................................................17
How to Open an Account........................................................17
By Mail..................................................................17
By Wire..................................................................17
By Exchange..............................................................18
In Person................................................................18
Subsequent Investments.....................................................18
By Mail..................................................................18
By Telephone.............................................................18
By Online Access.........................................................18
By Wire..................................................................18
In Person................................................................18
Automatic Investment Plan..................................................18
How to Exchange from One Account to Another ..................................18
By Mail .................................................................19
By Telephone.............................................................19
By Online Access.........................................................19
How to Redeem Shares..........................................................19
By Mail..................................................................19
By Telephone ............................................................19
By Check-A-Month.........................................................19
Other Automatic Redemptions..............................................19
Redemption Proceeds........................................................19
By Check.................................................................19
By Wire and ACH..........................................................19
Redemption of Shares in Low-Balance Accounts...............................20
Signature Guarantee...........................................................20
Special Shareholder Services..................................................20
Automated Information Line...............................................20
CheckWriting.............................................................20
Online Account Access....................................................21
Open Order Service.......................................................21
Tax-Qualified Retirement Plans...........................................21
Important Policies Regarding Your Investments.................................21
Reports to Shareholders.......................................................22
Employer-Sponsored Retirement Plans and
Institutional Accounts.....................................................22

ADDITIONAL INFORMATION YOU SHOULD KNOW

Share Price...................................................................23
When Share Price is Determined.............................................23
How Share Price is Determined..............................................23
Where to Find Information About Share Price................................24
Distributions.................................................................24
Taxes.........................................................................24
Tax-Deferred Accounts......................................................24
Taxable Accounts...........................................................25
Management....................................................................26
Investment Management......................................................26
Code of Ethics.............................................................27
Transfer and Administrative Services.......................................27
Distribution of Fund Shares...................................................27
Further Information About American Century....................................27

Prospectus Table of Contents 3

<TABLE>
<CAPTION>
TRANSACTION AND OPERATING EXPENSE TABLE

Premium Government Premium Capital Premium
Reserve Reserve Bond

SHAREHOLDER TRANSACTION EXPENSES:

<S> <C> <C> <C>
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 year $ 5 $ 5 $ 5
$1,000 investment, assuming a 5% annual return and 3 years 14 14 14
redemption at the end of each time period: 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.
</TABLE>

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.

4 Transaction and Operating Expense Table American Century Investments

FINANCIAL HIGHLIGHTS
PREMIUM GOVERNMENT RESERVE

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, which is incorporated by reference into the Statement of
Additional Information. The annual report contains additional performance
information and will be made available upon request and without charge. The
information presented is for a share outstanding throughout the years ended
March 31.

1997 1996 1995 1994

PER-SHARE DATA

<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year............... $1.00 $1.00 $1.00 $1.00
-------- -------- -------- --------
Income From Investment Operations

Net Investment Income......................... 0.05 0.05 0.05 0.03
-------- -------- -------- --------
Distributions

From Net Investment Income.................... (0.05) (0.05) (0.05) (0.03)
-------- -------- -------- --------
Net Asset Value, End of Year..................... $1.00 $1.00 $1.00 $1.00
======== ======== ======== ========
TOTAL RETURN(1)............................... 5.07% 5.49% 4.62% 2.75%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets......................... 0.45% 0.44% 0.45% 0.45%

Ratio of Net Investment Income
to Average Net Assets......................... 4.96% 5.30% 4.84% 2.72%

Net Assets, End of Year (in thousands)........ $38,838 $26,191 $16,381 $5,459

(1) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
</TABLE>

Prospectus Financial Highlights 5

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
PREMIUM CAPITAL RESERVE

1997 1996 1995 1994

PER-SHARE DATA

<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year............... $1.00 $1.00 $1.00 $1.00
-------- -------- -------- --------
Income From Investment Operations

Net Investment Income......................... 0.05 0.05 0.05 0.03
-------- -------- -------- --------
Distributions

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets......................... 0.45% 0.45% 0.45% 0.45%

Ratio of Net Investment Income
to Average Net Assets......................... 5.01% 5.50% 4.76% 2.83%

Net Assets, End of Year (in thousands)........ $153,958 $133,417 $138,428 $38,823

(1) Total return assumes reinvestment of dividends and capital gains
distributions, if any.
</TABLE>

6 Financial Highlights American Century Investments

<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
PREMIUM BOND

1997 1996 1995 1994

PER-SHARE DATA

<S> <C> <C> <C> <C>
Net Asset Value, Beginning of Year............... $9.93 $9.46 $9.64 $10.00
-------- -------- -------- --------
Income From Investment Operations

Net Investment Income......................... 0.61 0.61 0.59 0.46

Net Realized and Unrealized
Gain (Loss) on Investments.................... (0.17) 0.47 (0.18) (0.36)
-------- -------- -------- --------
Total from Investment Operations.............. 0.44 1.08 0.41 0.10
-------- -------- -------- --------
Distributions

From Net Investment Income.................... (0.61) (0.61) (0.59) (0.46)
-------- -------- -------- --------
Net Asset Value, End of Year..................... $9.76 $9.93 $9.46 $9.64
======== ======== ======== ========
TOTAL RETURN(1)............................... 4.57% 11.53% 4.48% 0.92%

RATIOS/SUPPLEMENTAL DATA

Ratio of Operating Expenses
to Average Net Assets......................... 0.45% 0.43% 0.45% 0.45%

Ratio of Net Investment Income
to Average Net Assets......................... 6.20% 6.08% 6.30% 4.65%

Portfolio Turnover............................ 63% 92% 51% 144%

Net Assets, End of Year (in thousands)........ $21,750 $20,280 $10,334 $8,080

(1) Total return assumes reinvestment of dividends and capital gains
distributions, if any.

</TABLE>

Prospectus Financial Highlights 7

INFORMATION REGARDING THE FUNDS

INVESTMENT POLICIES OF THE FUNDS

The funds 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 page 2 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.

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

8 Information Regarding the Funds American Century Investments

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 15.

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, or P-1 by
Moody's Investors Service, Inc., 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.

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

Prospectus Information Regarding the Funds 9

that invest in riskier and more speculative securities with longer maturities.
See "Investment Company Act Rule 2a-7," page 15.

PREMIUM BOND

Premium Bond seeks a high level of income from investment in longer-term
bonds and other debt instruments. It is designed for investors whose primary
goal is a level of income higher than is generally provided by money market or
short- and intermediate-term securities and who can accept the generally greater
price volatility associated with longer-term bonds. Under normal market
conditions, at least 65% of Premium 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 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 from 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 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 "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.

10 Information Regarding the Funds American Century Investments

FUNDAMENTALS OF FIXED INCOME INVESTING

[line graph - data below]

HISTORICAL YIELDS

30-YEAR 20-YEAR 3-MONTH
TREASURY TAX-EXEMPT TREASURY
BOND.......BONDS...BILLS
1/92 8%.......6% ......4%
2/92 8%.......6% ......4%
3/92 8%.......6% ......4%
4/92 8%.......6% ......4%
5/92 8%.......6% ......4%
6/92 8%.......6% ......4%
7/92 7%.......6% ......3%
8/92 7%.......6% ......3%
9/92 7%.......6% ......3%
10/92 8%.......6% ......3%
11/92 8%.......6% ......3%
12/92 7%.......6% ......3%
1/93 7%.......6% ......3%
2/93 7%.......5% ......3%
3/93 7%.......6% ......3%
4/93 7%.......6% ......3%
5/93 7%.......6% ......3%
6/93 7%.......5% ......3%
7/93 7%.......5% ......3%
8/93 6%.......5% ......3%
9/93 6%.......5% ......3%
10/93 6%.......5% ......3%
11/93 6%.......5% ......3%
12/93 6%.......5% ......3%
1/94 6%.......5% ......3%
2/94 7%.......5% ......3%
3/94 7%.......6% ......4%
4/94 7%.......6% ......4%
5/94 7%.......6% ......4%
6/94 8%.......6% ......4%
7/94 7%.......6% ......4%
8/94 7%.......6% ......5%
9/94 8%.......6% ......5%
10/94 8%.......6% ......5%
11/94 8%.......7% ......6%
12/94 8%.......6% ......6%
1/95 8%.......6% ......6%
2/95 7%.......6% ......6%
3/95 7%.......6% ......6%
4/95 7%.......6% ......6%
5/95 7%.......6% ......6%
6/95 7%.......6% ......6%
7/95 7%.......6% ......6%
8/95 7%.......6% ......5%
9/95 7%.......6% ......5%
10/95 6%.......5% ......6%
11/95 6%.......5% ......5%
12/95 6%.......5% ......5%
1/96 6%.......5% ......5%
2/96 6%.......5% ......5%
3/96 7%.......6% ......5%
4/96 7%.......6% ......5%
5/96 7%.......6% ......5%
6/96 7%.......6% ......5%
7/96 7%.......6% ......5%
8/96 7%.......6% ......5%
9/96 7%.......6% ......5%
10/96 7%.......6% ......5%
11/96 6%.......6% ......5%
12/96 7%.......6% ......5%

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

For additional information, see "Investment Restrictions" in the Statement
of Additional Information.

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.

Prospectus Information Regarding the Funds 11

The funds will limit repurchase agreement transactions to securities issued
by the U.S. 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. Premium Government Reserve and Premium Capital Reserve
will not purchase a security or enter into a repurchase agreement if, as a
result, more than 10% of its net assets would be held in illiquid securities
(including repurchase agreements maturing in more than seven days), while
Premium Bond will not purchase a security or enter into a repurchase agreement
if, as a result, more than 15% of its net assets would be held in illiquid
securities.

FOREIGN SECURITIES

Premium Capital Reserve and Premium 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, clearance and settlement risk, 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 Bond may be denominated in foreign
currencies. As a result, the value of the fund's 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 U.S. 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 U.S. 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 either denominated in, or whose value is tied
to, 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, or whose value is tied to, 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 currency exchange 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

12 Information Regarding the Funds American Century Investments

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

Prospectus Information Regarding the Funds 13

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
because 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, a fund may lend its portfolio
securities. Such loans may not exceed one-third of the fund's net assets valued
at market except (i) through the purchase of debt securities in accordance with
its investment objective, policies and limitations, or (ii) by engaging in
repurchase agreements with respect to portfolio securities.

PORTFOLIO TURNOVER

The portfolio turnover rate of Premium Bond is shown in the Financial
Highlights table on page 7 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.

Investment decisions are based on the anticipated contribution of the
security in question to a fund's objectives. The manager believes that the rate
of portfolio turnover is irrelevant when it determines 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,

14 Information Regarding the Funds American Century Investments

(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 the funds pay
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 investors 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. The staff also
acknowledges that, while the Board retains ultimate responsibility, it may
delegate this function to the manager. Accordingly, the Board has established
guidelines and procedures for determining the liquidity of Rule 144A securities
and 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 buyers, 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 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.

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

Prospectus Information Regarding the Funds 15

return is determined by computing the annual compound return over a stated
period of time that would have produced the 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 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. Fund 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.

16 Information Regarding the Funds American Century Investments

HOW TO INVEST WITH
AMERICAN CENTURY INVESTMENTS

AMERICAN CENTURY INVESTMENTS

The funds offered by this Prospectus are a part of the American Century
Investments family of mutual funds. Our family provides a full range of
investment opportunities, from the aggressive equity growth funds in our
Twentieth Century Group, to the fixed income funds in our Benham Group, to the
moderate risk and specialty funds in our American Century Group. Please call
1-800-345-2021 for a brochure or prospectuses for the other funds in the
American Century Investments family.

To reduce expenses and demonstrate respect for our environment, we have
initiated a project through which we will eliminate duplicate copies of most
financial reports and prospectuses to most households and deliver account
statements to most households in a single envelope, even if they have more than
one account. If additional copies of financial reports and prospectuses or
separate mailing of account statements is desired, please contact us at
1-800-345-2021.

INVESTING IN AMERICAN CENTURY

The following section explains how to invest in American Century funds,
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 22.

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 Investor
Services 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 American Century Investments.

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:

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

o BENEFICIARY (BNF):
American Century Services Corporation
4500 Main St., Kansas City, Missouri 64111

o BENEFICIARY ACCOUNT NUMBER (BNF ACCT):
2804918

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

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

Prospectus How To Invest With American Century Investments 17

o 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, SIMPLE Employer or SIMPLE
Employee.

BY EXCHANGE

Call 1-800-345-2021 from 7 a.m. to 7 p.m. Central time to get information
on opening an account by exchanging from another American Century account. See
this page for more information on exchanges.

IN PERSON

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

4500 Main Street
Kansas City, Missouri 64111

4917 Town Center Drive
Leawood, Kansas 66211

1665 Charleston Road
Mountain View, California 94043

2000 S. Colorado Blvd.
Denver, Colorado 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 investment slip 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 investment
slip portion of the confirmation of a previous investment. If the investment
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 investments is higher without an investment 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 ONLINE ACCESS

Once your account is open, you may make investments online if you have
authorized us (by choosing "Full Services" on your application) to draw on your
bank account.

BY WIRE

You may make subsequent investments by wire. Follow the wire transfer
instructions on page 17 and indicate your account number.

IN PERSON

You may make subsequent investments in person at one of our Investor
Centers. The locations of our four Investor 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 investment requirements, you may exchange
your Premium Bond shares to our other funds up to six times per year. There is
no limit on the number of exchanges you may make from Premium Capital Reserve
and Premium Government Reserve. An exchange request will be processed as of the
same day it is received, if it is received before the funds' net asset values
are calculated, which is one hour prior to the close of the New York Stock
Exchange for the funds issued by the American Century Target Maturities Trust,
and at the

18 How To Invest With American Century Investments American Century Investments

close of the Exchange for all of our other funds. See "When Share Price is
Determined," page 23.

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 American
Century account to another. For additional information, please see our Investor
Services Guide.

BY TELEPHONE

You can make exchanges over the telephone (either with an Investor Services
Representative or using our Automated Information Line -- see page 20) 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 1-800-345-2021
to get the appropriate form.

BY ONLINE ACCESS

You can make exchanges online if you have authorized us to accept
instructions over the Internet. You can authorize this by selecting "Full
Services" on your application or by calling us at 1-800-345-2021 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 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 20.

BY TELEPHONE

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

BY CHECK-A-MONTH

You may redeem shares by a Check-A-Month plan, which 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 Investor Services 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 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.

Prospectus How To Invest With American Century Investments 19

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; or

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 shareholders of the funds.
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.

20 How To Invest With American Century Investments American Century Investments

ONLINE ACCOUNT ACCESS

You may contact us 24 hours a day, seven days a week at
www.americancentury.com to access your fund's daily share price, receive updates
on major market indices and view historical performance of your fund. If you
select "Full Services" on your application, you can use your personal access
code and Social Security number to view your account balance and account
activity, make subsequent investments from your bank account or exchange shares
from one fund to another.

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; or

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. Once you have mailed or otherwise transmitted your
transaction instructions to us, they may not be modified or canceled.

(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

Prospectus How To Invest With American Century Investments 21

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 per hour 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 American Century 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 American 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 American Century 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 Investor Services 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.

22 How To Invest With American Century Investments American Century Investments

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. For all American Century funds, except funds issued by the American
Century Target Maturities Trust, net asset value is determined at the close of
regular trading on each day that the New York Stock Exchange is open, usually 3
p.m. Central time. The net asset values for the Target Maturities funds are
determined one hour prior to the close of the Exchange.

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 time as of which the net
asset value is determined, are effective on, and will receive the price
determined, that day. Investment, redemption and exchange requests received
thereafter are effective on, and receive the price determined on, the next day
the Exchange is open.

Investments are considered received only when your payment is received by
us. Wired funds are considered received on the day they are deposited in our
bank account if they are deposited before the time as of which the net asset
value of the fund is determined.

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 time as of which the net asset value of the fund is
determined, 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 for receiving orders 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 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, if that
is earlier. That value is then converted to dollars at the prevailing foreign
exchange rate.

Prospectus Additional Information You Should Know 23

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 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 value of each fund may also be
obtained by calling us or by accessing our Web site (www.americancentury.com).

DISTRIBUTIONS

At the close of each day, including Saturdays, Sundays and holidays, net
income and, with regard to Premium Capital Reserve and Premium Government
Reserve, net realized gains on portfolio securities, 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 23. 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 on Premium Bond, 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. Premium
Capital Reserve and Premium Government Reserve do not expect to realize any
long-term capital gains, and accordingly, do not expect to pay any capital gains
distributions.

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.

TAXES

Each fund has elected to be taxed 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 fund shares are purchased through tax-deferred accounts, such as a
qualified employer-sponsored

24 Additional Information You Should Know American Century Investments

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
advisor regarding the tax consequences of participation in the plan,
contributions to, and withdrawals or distributions from the plan.

TAXABLE ACCOUNTS

If 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 of the
fund 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 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 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 a
taxable account, you will receive a Form 1099-DIV notifying you of the status of
your distributions for federal income tax purposes.

Distributions may also 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 advisor 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 American 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 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

Prospectus Additional Information You Should Know 25

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 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, American
Century Investment Management, Inc. serves as the investment manager of the
funds. Its principal place of business is American Century Tower, 4500 Main
Street, Kansas City, Missouri 64111. The manager has been providing investment
advisory services to investment companies and institutional clients since it was
founded in 1958.

The manager supervises and manages the investment portfolio of each fund
and directs the purchase and sale of its investment securities. It 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 as they deem 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 American Century 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 Bond.

JEFFREY L. HOUSTON, Portfolio Manager, joined American Century as an
Investment Analyst in 1990. He became a Portfolio Manager in 1994. He is a
member of the team that manages Premium Bond.

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

DENISE TOBACCO, Portfolio Manager, joined American Century in 1988,
becoming a member of its portfolio department in 1991. In 1995 she assumed her
current position as a Portfolio Manager. She is a member of the teams that
manage Premium Capital Reserve and Premium Government Reserve.

The activities of the manager are subject only to directions of the funds'
Board of Directors. The manager 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, the manager receives a fee of 0.45%
of each fund's average net assets during the year. The fee is paid and computed
each month by multiplying 0.45% 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).

26 Additional Information You Should Know American Century Investments

CODE OF ETHICS

The funds and the manager have adopted a Code of Ethics, which restricts
personal investing practices by employees of the manager 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

American Century Services Corporation, 4500 Main Street, Kansas City,
Missouri, 64111 acts as transfer agent and dividend-paying agent for the funds.
It provides facilities, equipment and personnel to the funds and is paid for
such services by the manager.

Certain recordkeeping and administrative services that would otherwise be
performed by the transfer agent 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 and financial
advisors for their customers investing in shares of American Century or by
sponsors of multi mutual fund no- or low-transaction fee programs. The manager
or an affiliate may enter into contracts to pay them for such recordkeeping and
administrative services out of its unified management fee.

Although there is no sales charge levied by the funds, transactions in
shares of the funds may be executed by brokers or investment advisors who charge
a transaction-based fee or other fee for their services. Such charges may vary
among broker-dealers or financial advisors, but in all cases will be retained by
the broker-dealer or financial advisor and not remitted to the funds or the
manger. You should be aware of the fact that these transactions may be made
directly with American Century without incurring such fees.

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 the manager.

The manager and the transfer agent are both wholly owned by American
Century Companies, Inc. James E. Stowers Jr., Chairman of the funds' Board of
Directors, controls American Century Companies by virtue of his ownership of a
majority of its common stock.

DISTRIBUTION OF FUND SHARES

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

FURTHER INFORMATION ABOUT AMERICAN CENTURY

American Century Premium Reserves, Inc., the issuer of the funds, 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 American 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 telephone to 1-800-345-2021
(international calls: 816-531-5575).

American Century Premium Reserves, Inc. 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 cast in an election of directors can elect all of the
directors if they choose to do so, and in such event

Prospectus Additional Information You Should Know 27

the holders of the remaining votes 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 funds' 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.

28 Additional Information You Should Know American Century Investments

NOTES

Prospectus Notes 29

P.O. Box 419200
Kansas City, Missouri
64141-6200

Investor Services:
1-800-345-2021 or 816-531-5575

Automated Information Line:
1-800-345-8765

Telecommunications Device for the Deaf:
1-800-634-4113 or 816-444-3485

Fax: 816-340-7962

Internet: www.americancentury.com

[american century logo]
American
Century(sm)

9708 [recycled logo]
SH-BKT-8901 Recycled
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION

[american century logo]
American
Century(sm)

AUGUST 1, 1997

BENHAM
GROUP(R)

Premium Government Reserve
Premium Capital Reserve
Premium Bond

[front cover]

STATEMENT OF ADDITIONAL INFORMATION
AUGUST 1, 1997

AMERICAN CENTURY PREMIUM RESERVES, INC.

This Statement is not a prospectus but should be read in conjunction with the
current Prospectus of American Century Premium Reserves, Inc. dated August 1,
1997. Please retain this document for future reference.To obtain the Prospectus,
call American Century toll-free at 1-800-345-2021 (816-531-5575 for
international calls), or write to P.O. Box 419200, Kansas City, Missouri
64141-6200.

TABLE OF CONTENTS

Investment Objectives of the Funds.............................................2
Selection of Investments.......................................................2
Investment Restrictions........................................................3
An Explanation of Fixed Income Securities Ratings..............................4
Forward Currency Exchange Contracts............................................5
Interest Rate Futures Contracts and Related Options............................6
Officers and Directors........................................................10
Management....................................................................11
Custodians....................................................................12
Independent Auditors..........................................................12
Capital Stock.................................................................13
Taxes.........................................................................13
Brokerage.....................................................................14
Performance Advertising.......................................................14
Redemptions in Kind...........................................................16
Holidays......................................................................16
Financial Statements..........................................................16

Statement of Additional Information 1

INVESTMENT OBJECTIVES OF THE FUNDS

The investment objective of each series of shares issued by American
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

PREMIUM GOVERNMENT RESERVE

The manager will invest the 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.

PREMIUM CAPITAL RESERVE

The manager will invest the 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.

PREMIUM BOND

The manager will invest the Premium 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 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 6.)

Premium 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

2 American Century Investments

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 Invest-ment 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 as follows:

(1) The funds shall not issue senior securities, except as permitted under
the Investment Company Act of 1940.

(2) The funds shall not borrow money, except that the funds may borrow
money for temporary or emergency purposes (not for leveraging or investment) in
an amount not exceeding 331/3% of the funds' total assets (including the amount
borrowed) less liabilities (other than borrowings).

(3) The funds shall not lend any security or make any other loan if, as a
result, more than 331/3% of the funds' total assets would be lent to other
parties, except, (i) through the purchase of debt securities in accordance with
its investment objective, policies and limitations, or (ii) by engaging in
repurchase agreements with respect to portfolio securities.

(4) The funds shall not concentrate their investments in securities of
issuers in a particular industry (other than securities issued or guaranteed by
the U.S. government or any of its agencies or instrumentalities).

(5) The funds shall not purchase or sell real estate unless acquired as a
result of ownership of securities or other instruments. This policy shall not
prevent the funds from investment in securities or other instruments backed by
real estate or securities of companies that deal in real estate or are engaged
in the real estate business.

(6) The funds shall not act as an underwriter of securities issued by
others, except to the extent that the funds may be considered an underwriter
within the meaning of the Securities Act of 1933 in the disposition of
restricted securities.

(7) The funds shall not purchase or sell physical commodities unless
acquired as a result of ownership of securities or other instruments; provided
that this limitation shall not prohibit the funds from purchasing or selling
options and futures contracts or from investing in securities or other
instruments backed by physical commodities.

(8) The funds shall not invest for purposes of exercising control over
management.

In addition, the funds have adopted the following non-fundamental
investment restrictions:

(1) As an operating policy, a fund shall not purchase additional investment
securities at any time during which outstanding borrowings exceed 5% of the
total assets of the fund.

(2) As an operating policy, a fund may not purchase any security or enter
into a repurchase agreement if, as a result, more than 15% of its net assets
(10% for money market funds) would

Statement of Additional Information 3

be invested in repurchase agreements not entitling the holder to payment of
principal and interest within seven days and in securities that are illiquid by
virtue of legal or contractual restrictions on resale or the absence of a
readily available market.

(3) As an operating policy, a fund shall not sell securities short, unless
it owns or has the right to obtain securities equivalent in kind and amount to
the securities sold short, and provided that transaction in futures contracts
and options are not deemed to constitute selling securities short.

(4) As an operating policy, a fund shall not purchase securities on margin,
except that the fund may obtain such short-term credits as are necessary for the
clearance of transactions, and provided that margin payments in connection with
futures contracts and options on futures contracts shall not constitute
purchasing securities on margin.

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 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. 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

4 American Century Investments

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 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

Statement of Additional Information 5

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

6 American Century Investments

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 adopted by the Commodity
Futures Trading Commission under the Commodity Exchange Act to be eligible for
the exclusion provided by the rule from registration by the fund with the CFTC
as a "commodity pool operator" (as defined under the Commodity Exchange Act),
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 Commodity Exchange Act), the
in-the-money amount may be excluded in

Statement of Additional Information 7

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 Commodity Exchange Act. 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 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

8 American Century Investments

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

Statement of Additional Information 9

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 American Century Premium Reserves,
Inc., their principal business experience during the past five years, and their
affiliations with the funds' investment manager, American Century Investment
Management, Inc. and its transfer agent, American Century Services Corporation,
are listed below. The address at which each director and officer below may be
contacted is American Century Tower, 4500 Main Street, Kansas City, Missouri
64111. All persons named as officers of the Corporation also serve in similar
capacities for other funds advised by the manager. Those directors that are
"interested persons" as defined in the Investment Company Act of 1940 are
indicated by an asterisk(*).

JAMES E. STOWERS JR.,* Chairman of the Board and Director; Chairman of
the Board, Director and controlling shareholder of American Century Companies,
Inc., parent corporation of American Century Investment Management, Inc. and
American Century Services Corporation; Chairman of the Board and Director of
American Century Investment Management, Inc. and American Century Services
Corporation; father of James E. Stowers III.

JAMES E. STOWERS III,* President, Chief Executive Officer and Director;
Chief Executive Officer and Director, American Century Companies, Inc.;
President, Chief Executive Officer and Director, American Century Investment
Management, Inc. and American Century Services Corporation.

THOMAS A. BROWN, Director; Chief Executive Officer, Associated Bearing
Company, a corporation engaged in the sale of bearings and power transmission
products.

ROBERT W. DOERING, M.D., Director; retired, formerly general surgeon.

D. D. (DEL) HOCK, Director; Chairman, Public Service Company of Colorado;
Director, Service Tech, Inc. and Hathaway Corporation.

LINSLEY L. LUNDGAARD, Vice Chairman of the Board and Director; retired;
formerly Vice President and National Sales Manager, Flour Milling Division,
Cargill, Inc.

DONALD H. PRATT, Director; President and Director, Butler Manufacturing
Company.

LLOYD T. SILVER JR., Director; President, LSC, Inc., manufacturer's
representative.

M. JEANNINE STRANDJORD, Director; Senior Vice President and Treasurer,
Sprint Corporation; Director, DST Systems, Inc.

WILLIAM M. LYONS, Executive Vice President, Chief Operating Officer,
Secretary and General Counsel; President, Chief Operating Officer and General
Counsel, American Century Companies, Inc.; Executive Vice President, Chief
Operating Officer and General Counsel, American Century Investment Management,
Inc. and American Century Services Corporation.

ROBERT T. JACKSON, Executive Vice President and Principal Financial
Officer; Executive Vice President and Treasurer, American Century Companies,
Inc., American Century Investment Management, Inc. and American Century
Services Corporation; formerly Executive Vice President, Kemper Corporation.

MARYANNE ROEPKE, CPA, Vice President, Treasurer and Principal Accounting
Officer; Vice President, American Century Services Corporation.

PATRICK A. LOOBY, Vice President; Vice President, American Century
Services Corporation.

C. JEAN WADE, CPA, Controller.

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 Lundgaard 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), Doering and Hock and Ms. Strandjord
constitute the Audit Committee. The functions of the Audit Committee include
recommending the engagement of the funds' independent accountants, reviewing
the arrangements for and scope of the annual audit, reviewing comments made by
the independent accountants with respect to internal

10 American Century Investments

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 to the Board regarding various compliance matters and
monitoring the implementation of the funds' Code of Ethics, including 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. Pratt
(Chairman), Lundgaard and Stowers III.

The Directors of the corporation also serve as Directors for other funds
advised by the manager. 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 of such investment companies an annual director's fee of
$44,000, and an additional fee of $1,000 per regular Board meeting attended and
$500 per special Board 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 six investment companies based upon
their relative net assets. Under the terms of the management agreement with the
manager, the funds are responsible for paying such fees and expenses. Set forth
below is the aggregate compensation paid for the periods indicated by the funds
and by the American Century family of funds as a whole to each Director who is
not an "interested person" as defined in the Investment Company Act.

Aggregate Total Compensation from
Compensation the American Century
Director from the corporation 1 Family of Funds 2
- -----------------------------------------------------------------------------
Thomas A. Brown $249 $46,333
Robert W. Doering, M.D. 233 42,833
Linsley L. Lundgaard 251 46,333
Donald H. Pratt 243 44,667
Lloyd T. Silver Jr. 238 44,333
M. Jeannine Strandjord 238 43,833
John M. Urie 3 136 37,167
D.D. (Del) Hock 111 8,833
- -----------------------------------------------------------------------------

1 Includes compensation actually paid by the corporation during the fiscal
year ended March 31, 1997.

2 Includes compensation paid by the fifteen investment company members of
the American Century family of funds for the calendar year ended December 31,
1996.

3 Mr. Hock replaced Mr. Urie as a director effective October 31, 1996.

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 funds, are paid by the manager.

MANAGEMENT

A description of the responsibilities and method of compensation of funds'
investment manager, American Century Investment Management, Inc., appears in the
Prospectus under the caption "Management."

During its three most recent fiscal years, the management fees paid to the
manager were as follows:

Year Ended Year Ended Year Ended
Fund March 31, 1997 March 31, 1996 March 31, 1995
- -----------------------------------------------------------------------------
PREMIUM GOVERNMENT
RESERVE
Management Fees $ 138,640 $ 93,671 $ 41,736
Average Net Assets 30,981,550 21,173,072 9,274,419

PREMIUM CAPITAL
RESERVE
Management Fees $ 640,040 $ 626,948 $ 251,963
Average Net Assets 142,439,917 140,458,302 55,990,638

PREMIUM BOND
Management Fees $ 91,566 $ 68,907 $ 38,340
Average Net Assets 20,468,595 15,955,006 8,625,557
- -----------------------------------------------------------------------------

Statement of Additional Information 11

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 funds'
Board of Directors or by the vote of a majority of outstanding votes (as defined
in the Investment Company Act) and (ii) by the vote of a majority of the
Directors of the funds who are not parties to the agreement or interested
persons of the manager, 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 funds' Board of Directors, or by a vote of
the funds' shareholders, on 60 days' written notice to the manager and that it
shall be automatically terminated if it is assigned.

The management agreement provides that the manager shall not be liable to
the funds 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 the manager 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 the manager. 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 the manager 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 July 1, 1997, the manager also was
acting as an investment advisor to nine institutional accounts and to five
registered investment companies American Century Mutual Funds, Inc., American
Century World Mutual Funds, Inc., American Century Capital Portfolios, Inc.,
American Century Strategic Asset Allocations, Inc., and American Century
Variable Portfolios, Inc.

American Century Services Corporation provides physical facilities,
including computer hardware and software and personnel, for the day-to-day
administration of the funds and the manager pays American Century Services
Corporation for such services.

As stated in the Prospectus, all of the stock of American Century
Services Corporation and American Century Investment Management, Inc. is owned
by American Century Companies, Inc.

CUSTODIANS

Chase Manhattan Bank, 770 Broadway, 10th Floor, New York, New York
10003-9598, and Commerce Bank, N.A., 1000 Walnut, 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

At a meeting held on December 12, 1996, the Board of Directors of the
corporation appointed Deloitte & Touche LLP, 1010 Grand Avenue, Suite 400,
Kansas City, Missouri 64106 as the independent auditors of the funds to examine
the financial statements of the funds for the fiscal year ending March 31, 1998.
The appointment of Deloitte & Touche was recommended by the Audit Committee of
the Board of Directors. As the independent auditors of the funds, Deloitte &
Touche will provide 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
American Century.

Ernst & Young LLP, One Kansas City Place, 1200 Main Street, Kansas City,
Missouri 64105, served as independent auditors for the funds for all fiscal
years ending prior to March 31, 1998.

12 American Century Investments

CAPITAL STOCK

The funds' capital stock is described in the Prospectus under the caption,
"Further Information About American Century."

The corporation currently has three series of shares outstanding. The funds
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 the funds,
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, 1997, 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 Corporation
Retirement Savings Plan
New York, New York - 16.16%

Premium Chase Manhattan Bank
Government Reserve as Trustee for Lorillard Inc.
Hourly Paid Employees
Profit Sharing Plan
New York, New York - 19.16%

United Missouri Bank
as Trustee for Fish & Richardson PC
Profit Sharing Plan
Kansas City, Missouri - 14.05%

United Missouri Bank
as Trustee for The Insilco Corporation
Employee Thrift Plan Trust
Kansas City, Missouri - 7.87%

Shareholder and
Fund Percentage Held
- -----------------------------------------------------------------------------
Premium Chase Manhattan Bank
Government Reserve as Trustee for
Newport Service Corporation
Money Purchase
Pension Trust
New York, New York - 6.58%

Premium Bond Trustees of
Presbyterian Healthcare System
Retirement Plan and Trust
Kansas City, Missouri - 43.16%

United Missouri Bank
as Custodian for Presbyterian
Healthcare System 403(b) Plan
Kansas City, Missouri - 11.53%

American Century
Investment Management, Inc.
Kansas City, Missouri - 6.32%
- -----------------------------------------------------------------------------

Other than the shares owned by American Century Companies, Inc., ownership
of which company could be attributed to certain officers and directors of the
corporation, as of June 30, 1997, 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 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 Internal
Revenue 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

Statement of Additional Information 13

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 Internal Revenue 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 the
manager, the manager has the responsibility for determining what securities
shall be purchased and sold and selecting the brokers or dealers to execute such
transactions. The manager 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.

The manager receives statistical and other information and services without
cost from brokers and dealers. The manager 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. The manager 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 the manager 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 the manager 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 the manager. The manager 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

FUND PERFORMANCE

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

14 American Century Investments

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, 1997, the last seven days of the fiscal year, were as follows:

- -----------------------------------------------------------------------------
Effective
Fund Yield Yield
- -----------------------------------------------------------------------------
Premium Government Reserve 5.02% 5.15%
Premium Capital Reserve 4.95 5.07
- -----------------------------------------------------------------------------

The yield of Premium 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 Bond for the 30-day
period ended March 31, 1997, was 6.50%.

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 22.96% and average annual total return of Premium Bond for
the year ended March 31, 1997, was 4.57%.

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.

Statement of Additional Information 15

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 the funds expect 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, 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. Such securities will not necessarily be representative of the
entire portfolio and may 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

The funds do not determine the net asset value of their 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, Martin Luther King
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving and Christmas.

FINANCIAL STATEMENTS

The financial statements of the funds for the fiscal year ended March 31,
1997, are included in the Annual Report to shareholders for that period, which
is incorporated herein by reference. In addition, the funds' unaudited financial
statements for the six months ended September 30, 1996, are included in the
Semiannual Report to shareholders which is incorporated herein by reference.
With respect to the unaudited financial statements incorporated herein, all
adjustments, in the opinion of management, necessary for a fair presentation of
the financial position and results of operation for the periods indicated have
been made. The results of operations of the funds for the respective periods
indicated are not necessarily indicative of the results for the entire year. You
may receive copies of the Annual and Semiannual Reports without charge upon
request to the funds at the address and phone number shown on the cover of this
Statement.

16 American Century Investments

P.O. Box 419200
Kansas City, Missouri
64141-6200

Investor Services:
1-800-345-2021 or 816-531-5575

Automated Information Line:
1-800-345-8765

Telecommunications Device for the Deaf:
1-800-634-4113 or 816-444-3485

Fax: 816-340-7962

Internet: www.americancentury.com

[american century logo]
American
Century(sm)

9708 [recycled logo]
SH-BKT-8900 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, 1997,
and which are incorporated by reference in Part B of this
Registration Statement):

1. Statements of Assets and Liabilities at March 31, 1997.

2. Statements of Operations for the year ended March 31, 1997.

3. Statements of Changes in Net Assets for the year ended March
31, 1997.

4. Notes to Financial Statements as of March 31, 1997.

5. Schedule of Investments at March 31, 1997.

6. Report of Independent Auditors dated April 25, 1997.

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).

(c) Articles of Amendment of Twentieth Century Premium
Reserves, Inc., dated December 2, 1996 (filed herein as
EX-99.B1c).

(d) Articles Supplementary of American Century Premium
Reserves, Inc., dated December 2, 1996 (filed herein as
EX-99.B1d).

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 copy of stock certificate-all series (filed herein
as EX-99.B4).

5. Management Agreement dated as of August 1, 1997, between
American Century Premium Reserves, Inc. and American Century
Investment Management, Inc. (filed herein as EX-99.B5).

6. (a) Distribution Agreement between TCI Portfolios, Inc.,
Twentieth Century Capital Portfolios, Inc., Twentieth
Century Investors, Inc., Twentieth Century Premium Reserves,
Inc., Twentieth Century Strategic Asset Allocations, Inc.,
Twentieth Century World Investors, Inc. and Twentieth
Century Securities, Inc. dated September 3, 1996 (filed as
an Exhibit to Post-Effective Amendment No. 21 on Form N-1A
of American Century Variable Portfolios, Inc., Commission
File No. 811-5188).

(b) Amendment No. 1 to Distribution Agreement between
American Century Variable Portfolios, Inc., American Century
Capital Portfolios, Inc., American Century Mutual Funds,
Inc., American Century Premium Reserves, Inc., American
Century Strategic Asset Allocations, Inc., American Century
World Mutual Funds, Inc. and American Century Investment
Services, Inc. dated June 13, 1997 (filed as an Exhibit to
Post- Effective Amendment No. 21 on Form N-1A of American
Century Variable Portfolios, Inc., Commission File No.
811-5188).

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

8. (a) Global Custody Agreement between The Chase Manhattan
Bank and the Twentieth Century and Benham funds, dated
August 9, 1996. (filed as an Exhibit to Post-Effective
Amendment No. 31 on Form N-1A of American Century Government
Income Trust, Commission File No. 2-99222).

(b) Master Agreement between Commerce Bank, N.A. and
Twentieth Century Services, Inc. dated January 22, 1997
(filed as an Exhibit to Post- Effective Amendment No. 76 on
Form N-1A of American Century Mutual Funds, Inc., Commission
File No. 2-14213).

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. Annual Report of the Registrant dated March 31, 1997 (filed
electronically on May 30, 1997).

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 herein as EX-99.B16).

17. Power of Attorney (filed herein as EX-99.B17).

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, 1997
----------------- ---------------------
Premium Government Reserve 164
Premium Capital Reserve 433
Premium Managed Bond 86

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.

American Century Investment Management, Inc., 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, American Century Services
Corporation and American Century Investment Management, Inc., 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. 6 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. 6
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 July, 1997.

American 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. 6 has been signed below by the following persons in
the capacities and on the dates indicated.

Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman of the Board July 30, 1997
- ------------------------- and Director
James E. Stowers, Jr.

/s/ James E. Stowers III President, Director and July 30, 1997
- ------------------------- Principal Executive Officer
James E. Stowers, III

* Executive Vice President-Finance July 30, 1997
- ------------------------- and Principal Financial Officer
Robert T. Jackson

* Vice President, Treasurer and July 30, 1997
- ------------------------- Principal Accounting Officer
Maryanne Roepke

* Director July 30, 1997
- -------------------------
Thomas A. Brown

* Director July 30, 1997
- -------------------------
Robert W. Doering, M.D.

* Director July 30, 1997
- -------------------------
Linsley L. Lundgaard

* Director July 30, 1997
- -------------------------
Donald H. Pratt

* Director July 30, 1997
- -------------------------
Lloyd T. Silver, Jr.

* Director July 30, 1997
- -------------------------
M. Jeannine Strandjord

* Director July 30, 1997
- -------------------------
D. D. (Del) Hock

*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.B1c Articles of Amendment of Twentieth Century Premium Reserves,
Inc., dated December 2, 1996.

EX-99.B1d Articles Supplementary of American Century Premium Reserves,
Inc., dated December 2, 1996.

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 copy of stock certificate-all series.

EX-99.B5 Management Agreement dated as of August 1, 1997, between
American Century Premium Reserves, Inc. and American Century
Investment Management, Inc.

EX-99.B6a Distribution Agreement between TCI Portfolios, Inc.,
Twentieth Century Capital Portfolios, Inc., Twentieth Century
Investors, Inc., Twentieth Century Premium Reserves, Inc.,
Twentieth Century Strategic Asset Allocations, Inc.,
Twentieth Century World Investors, Inc. and Twentieth Century
Securities, Inc. dated September 3, 1996 (filed as an Exhibit
to Post-Effective Amendment No. 21 on Form N-1A of American
Century Variable Portfolios, Inc., Commission File No.
811-5188).

EX-99.B6b Amendment No. 1 to Distribution Agreement between American
Century Variable Portfolios, Inc., American Century Capital
Portfolios, Inc., American Century Mutual Funds, Inc.,
American Century Premium Reserves, Inc., American Century
Strategic Asset Allocations, Inc., American Century World
Mutual Funds, Inc. and American Century Investment Services,
Inc. dated June 13, 1997 (filed as an Exhibit to Post-
Effective Amendment No. 21 on Form N-1A of American Century
Variable Portfolios, Inc., Commission File No. 811-5188).

EX-99.B8a Global Custody Agreement between The Chase Manhattan Bank and
the Twentieth Century and Benham funds, dated August 9, 1996.
(filed as an Exhibit to Post-Effective Amendment No. 31 on
Form N-1A of American Century Government Income Trust,
Commission File No. 2-99222).

EX-99.B8b Master Agreement between Commerce Bank, N.A. and Twentieth
Century Services, Inc. dated January 22, 1997 (filed as an
Exhibit to Post- Effective Amendment No. 76 on Form N-1A of
American Century Mutual Funds, Inc., Commission File No.
2-14213).

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.B12 Annual Report of Twentieth Century Premium Reserves, Inc. for
the year ended March 31, 1997 (filed electronically on May
30, 1997).

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.

EX-99.B17 Power of Attorney.

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 Bond.

ARTICLES OF AMENDMENT

TWENTIETH CENTURY PREMIUM RESERVES, INC.

The undersigned, William M. Lyons, in accordance with the Maryland
General Corporation Law, does hereby certify that:

1. He is the duly elected Executive Vice President of Twentieth Century
Premium Reserves, Inc., a Maryland corporation (the "Corporation").

2. The amendment to the Articles of Incorporation of the Corporation,
which was approved as of November 23, 1996 by the Board of Directors of the
Corporation at a meeting pursuant to Section 2-605(a)(4) of the Maryland General
Corporation Law, is as follows:

The Articles of Incorporation of the Corporation are hereby
amended by deleting all of the present Article SECOND and inserting in
lieu therefor the following Article SECOND:

"SECOND: The name of the Corporation is

American Century Premium Reserves, Inc."

3. The amendment shall be effective January 1, 1997.

IN WITNESS WHEREOF, the undersigned hereby acknowledges that these
Articles of Amendment are the act of the Corporation and states, that to the
best of his knowledge, information and belief, the matters and facts stated
herein are true in all material respects, and that this statement is made under
penalties of perjury.

Dated this 2nd day of December, 1996.

/s/ William M. Lyons
William M. Lyons
Executive Vice President
Witness:

/s/ Charles A. Etherington
Charles A. Etherington
Assistant Secretary

AMERICAN CENTURY PREMIUM RESERVES, INC.

ARTICLES SUPPLEMENTARY

AMERICAN CENTURY PREMIUM RESERVES, INC., a Maryland corporation whose
principal Maryland office is located in Baltimore, Maryland (the "Corporation"),
hereby certifies to the State Department of Assessments and Taxation of Maryland
that:

FIRST: The Corporation is registered as an open-end company under the
Investment Company Act of 1940.

SECOND: Pursuant to authority expressly vested in the Board of
Directors of the Corporation by Section 2-605(a)(4) of the Maryland General
Corporation Law, the Board of Directors of the Corporation has renamed the duly
established and allocated series of the Corporation's stock as follows:

NEW SERIES NAME PRIOR SERIES NAME
--------------- -----------------
American Century - Benham Premium Twentieth Century Premium
Managed Bond Fund Bond
American Century - Benham Premium Twentieth Century Premium
Government Reserve Fund Government Reserve
American Century - Benham Premium Twentieth Century Premium
Capital Reserve Fund Capital Reserve

The name changes shall be effective on January 1, 1997.

THIRD: Except as otherwise provided by the express provisions of these
Articles Supplementary, nothing herein shall limit, by inference or otherwise,
the discretionary right of the Board of Directors to serialize, classify or
reclassify and issue any unissued shares of any Series or Class or any unissued
shares that have not been allocated to a Series or Class, and to fix or alter
all terms thereof, to the full extent provided by the Articles of Incorporation
of the Corporation.

FOURTH: A description of the series and classes of shares, including
the preferences, conversion and other rights, voting powers, restrictions,
limitations as to dividends, qualifications, and terms and conditions for
redemption is set forth in the Articles of Incorporation of the Corporation and
is not changed by these Articles Supplementary, except with respect to the
creation and/or designation of the various Series.

FIFTH: The Board of Directors of the Corporation duly adopted
resolutions renaming the Series, as set forth in Article SECOND.

<PAGE>

IN WITNESS WHEREOF, AMERICAN CENTURY PREMIUM RESERVES, INC. has caused
these Articles Supplementary to be signed and acknowledged in its name and on
its behalf by its Executive Vice President and its corporate seal to be hereunto
affixed and attested to by its Secretary on this 2nd day of December, 1996.

AMERICAN CENTURY PREMIUM
ATTEST: RESERVES, INC.

/s/ Patrick A. Looby /s/ William M. Lyons
Name: Patrick A. Looby Name: William M. Lyons
Title: Secretary Title: Executive Vice President

THE UNDERSIGNED Executive Vice President of AMERICAN CENTURY PREMIUM
RESERVES, INC., who executed on behalf of said Corporation the foregoing
Articles Supplementary to the Charter, of which this certificate is made a part,
hereby acknowledges, in the name of and on behalf of said Corporation, the
foregoing Articles Supplementary to the Charter to be the corporate act of said
Corporation, and further certifies that, to the best of his knowledge,
information and belief, the matters and facts set forth therein with respect to
the approval thereof are true in all material respects under the penalties of
perjury.

Dated: December 2, 1996 /s/ William M. Lyons
William M. Lyons, Executive Vice President

Specimen Stock Certificate

AMERICAN CENTURY - (name of series)

A Series of the Capital Stock of
American Century Premium Reserves, Inc.
Incorporated Under the Laws of the State of Maryland

NUMBER DATED SHARES

This is to Certify that

IS THE OWNER OF THE FULLY PAID AND NON-ASSESSABLE SHARES STATED ABOVE OF
American Century - (name of series)
(name of class)

A series of the Capital Stock, Par Value $0.01, of American Century
Premium Reserves, Inc.

(american century logo)
American
Century (sm)

[printed vertically along right margin]
Countersigned:

By---------------Transfer Clerk

The Corporation will furnish without charge to each Shareholder who so
requests the designations and the preferences, conversion and other rights,
voting powers, restrictions, limitations as to dividends, qualifications, and
terms and conditions of redemption of each series and class of stock of the
Corporation.

This certificate and the shares represented hereby are issued and shall be
held subject to all the provisions of the Articles of Incorporation of the
Corporation and all amendments thereto, copies of which are on file at the
executive offices of the Corporation, and the holder hereof by acceptance of
this certificate consents and agrees to be bound by all of said provisions.

This certificate is not valid until countersigned by an authorized Transfer
Clerk of the Corporation.

WITNESS the facsimile signatures of the Corporation's duly authorized
officers.

/s/Patrick A. Looby /s/James E. Stowers III
Patrick A. Looby James E. Stowers III
SECRETARY PRESIDENT

[front of certificate]

FOR VALUE RECEIVED,-----------------------------HEREBY SELL, ASSIGN AND TRANSFER

unto----------------------------------------------------------------------------
- --------------------------------------------------------------------------------
of the Common Stock represented by the within Certificate, and do hereby
irrevocably constitute and appoint

- ------------------------------------------------------------------------Attorney
to transfer the said Stock on the books of the within named issuer with full
power of substitution in the premises.

DATED:------------------- -------------------------------
Signature

-------------------------------
Signature

(signature guarantee stamp)

[printed vertically along far right margin]

NOTICE: The signature(s) on this assignment must correspond with the
name(s) as written upon the face of the certificate, in every particular,
without alteration or any change whatever.

The signature(s) must be guaranteed by a bank or trust company, credit
union, broker-dealer, securities exchange or association, clearing agency or
savings association, as defined by federal law. Notarized or witnessed
signatures are not acceptable as guaranteed signatures.

[back of certificate]

MANAGEMENT AGREEMENT

THIS MANAGEMENT AGREEMENT ("Agreement"), is made as of the 1st day of
August, 1997, by and between AMERICAN CENTURY PREMIUM RESERVES, INC., a Maryland
corporation (hereinafter called the "Corporation"), and AMERICAN CENTURY
INVESTMENT MANAGEMENT, INC., a Delaware corporation (hereinafter called the
"Investment Manager").

WHEREAS, the parties hereto desire to enter into this Agreement to
arrange for investment management services to be provided by Investment Manager
for all series of shares issued by the Corporation.

IN CONSIDERATION of the mutual promises and agreements herein
contained, the parties agree as follows:

1. Investment Management Services. The Investment Manager shall
supervise the investments of each series of shares of the Corporation
contemplated as of the date hereof, and such subsequent series of shares as the
Corporation shall select the Investment Manager to manage. In such capacity, the
Investment Manager shall either directly, or through the utilization of others
as contemplated by Section 7 below, maintain a continuous investment program for
each such series, determine what securities shall be purchased or sold by each
series, secure and evaluate such information as it deems proper and take
whatever action is necessary or convenient to perform its functions, including
the placing of purchase and sale orders.

2. Compliance With Laws. All functions undertaken by the Investment
Manager hereunder shall at all times conform to, and be in accordance with, any
requirements imposed by: (1) the Investment Company Act of 1940, as amended (the
"Investment Company Act"), and any rules and regulations promulgated thereunder;
(2) any other applicable provisions of law; (3) the Articles of Incorporation of
the Corporation as amended from time to time; (4) the Bylaws of the Corporation
as amended from time to time; and (5) the registration statements of the
Corporation, as amended from time to time, filed under the Securities Act of
1933 and the Investment Company Act.

3. Board Supervision. All of the functions undertaken by the Investment
Manager hereunder shall at all times be subject to the direction of the Board of
Directors of the Corporation, its executive committee, or any committee or
officers of the Corporation acting under the authority of the Board of
Directors.

4. Payment Of Expenses. The Investment Manager will pay all of the
expenses of each series of the Corporation's shares that it shall manage, other
than interest, taxes, brokerage commissions, extraordinary expenses and the fees
and expenses of those directors who are not "interested person" as defined in
Investment Company Act (hereinafter referred to as the "Independent Directors")
(including counsel fees). The Investment Manager will provide the Corporation
with all physical facilities and personnel required to carry on the business of
each series that the Investment Manager shall manage, including but not limited
to office space, office furniture, fixtures and equipment, office supplies,
computer hardware and software and salaried and hourly paid personnel. The
Investment Manager may at its expense employ others to provide all or any part
of such facilities and personnel.

5. Account Fees. The Corporation, by resolution of the Board of
Directors, including a majority of the Independent Directors, may from time to
time authorize the imposition of a fee as a direct charge against shareholder
accounts of one or more of the series, such fee to be retained by the
Corporation or to be paid to the Investment Manager to defray expenses which
would otherwise be paid by the Investment Manager in accordance with the
provisions of paragraph 4 of this Agreement. At least sixty (60) days prior
written notice of the intent to impose such fee must be given to the
shareholders of the affected series.

6. Management Fees.

(a) In consideration of the services provided by the Investment
Manager, each series of shares of the Corporation managed by the Investment
Manager shall pay to the Investment Manager a per annum management fee
(hereinafter, the "Applicable Fee"), as follows:

Name of Series Applicable Fee
-------------- --------------
American Century - Benham Premium Government Reserve Fund 0.45%
American Century - Benham Premium Capital Reserve Fund 0.45%
American Century - Benham Premium Bond Fund 0.45%

(b) On the first business day of each month, each series of shares
shall pay the management fee at the rate specified by subparagraph (a) of this
paragraph 6 to the Investment Manager for the previous month. The fee for the
previous month shall be calculated by multiplying the Applicable Fee for such
series by the aggregate average daily closing value of the series' net assets
during the previous month, and further multiplying that product by a fraction,
the numerator of which shall be the number of days in the previous month, and
the denominator of which shall be 365 (366 in leap years).

(c) In the event that the Board of Directors of the Corporation shall
determine to issue any additional series of shares for which it is proposed that
the Investment Manager serve as investment manager, the Corporation and the
Investment Manager shall enter into an Addendum to this Agreement setting forth
the name of the series, the Applicable Fee and such other terms and conditions
as are applicable to the management of such series of shares.

7. Subcontracts. In rendering the services to be provided pursuant to
this Agreement, the Investment Manager may, from time to time, engage or
associate itself with such persons or entities as it determines is necessary or
convenient in its sole discretion and may contract with such persons or entities
to obtain information, investment advisory and management services, or such
other services as the Investment Manager deems appropriate. Any fees,
compensation or expenses to be paid to any such person or entity shall be paid
by the Investment Manager, and no obligation to such person or entity shall be
incurred on behalf of the Corporation. Any arrangement entered into pursuant to
this paragraph shall, to the extent required by law, be subject to the approval
of the Board of Directors of the Corporation, including a majority of the
Independent Directors, and the shareholders of the Corporation.

8. Continuation Of Agreement. This Agreement shall continue in effect,
unless sooner terminated as hereinafter provided, for a period of two years from
the execution hereof, and for as long thereafter as its continuance is
specifically approved at least annually (a) by the Board of Directors of the
Corporation or by the vote of a majority of the outstanding voting securities of
the Corporation, and (b) by the vote of a majority of the directors of the
Corporation, who are not parties to the agreement or interested persons of any
such party, cast in person at a meeting called for the purpose of voting on such
approval.

9. Termination. This Agreement may be terminated by the Investment
Manager at any time without penalty upon giving the Corporation 60 days' written
notice, and may be terminated at any time without penalty by the Board of
Directors of the Corporation or by vote of a majority of the outstanding voting
securities of the Corporation on 60 days' written notice to the Investment
Manager.

10. Effect Of Assignment. This Agreement shall automatically terminate
in the event of assignment by the Investment Manager, the term "assignment" for
this purpose having the meaning defined in Section 2(a)(4) of the Investment
Company Act.

11. Other Activities. Nothing herein shall be deemed to limit or
restrict the right of the Investment Manager, or the right of any of its
officers, directors or employees (who may also be a director, officer or
employee of the Corporation), to engage in any other business or to devote time
and attention to the management or other aspects of any other business, whether
of a similar or dissimilar nature, or to render services of any kind to any
other corporation, firm, individual or association.

12. Standard Of Care. In the absence of willful misfeasance, bad faith,
gross negligence, or reckless disregard of its obligations or duties hereunder
on the part of the Investment Manager, it, as an inducement to it to enter into
this Agreement, shall not be subject to liability to the Corporation or to any
shareholder of the Corporation for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.

13. Separate Agreement. The parties hereto acknowledge that certain
provisions of the Investment Company Act, in effect, treat each series of shares
of an investment company as a separate investment company. Accordingly, the
parties hereto hereby acknowledge and agree that, to the extent deemed
appropriate and consistent with the Investment Company Act, this Agreement shall
be deemed to constitute a separate agreement between the Investment Manager and
each series of shares of the Corporation managed by the Investment Manager.

14. Use of the Names "American Century", "Twentieth Century", and
"Benham". The names "American Century", "Twentieth Century", and "Benham" and
all rights to the use of the names "American Century", "Twentieth Century", and
"Benham" are the exclusive property of American Century Services Corporation
and/or its affiliate, Benham Management Corporation (collectively, "ACSC"). ACSC
has consented to, and granted a non-exclusive license for, the use by the
Corporation of the names "American Century", "Twentieth Century", and "Benham"
in the name of the Corporation and any series of shares thereof. Such consent
and non-exclusive license may be revoked by ACSC in its discretion if ACSC, the
Investment Manager, or a subsidiary or affiliate of either of them is not
employed as the investment adviser of each series of shares of the Corporation.
In the event of such revocation, the Corporation and each series of shares
thereof using the names "American Century", "Twentieth Century", or "Benham"
shall cease using the names "American Century", "Twentieth Century", or
"Benham", unless otherwise consented to by ACSC or any successor to its interest
in such names.

IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective duly authorized officers as of the day and year
first above written.

AMERICAN CENTURY PREMIUM AMERICAN CENTURY INVESTMENT
RESERVES, INC. MANAGEMENT, INC.

By: /s/James E. Stowers III By: /s/James E. Stowers III
Name:James E. Stowers III Name:James E. Stowers III
Title:President Title:President

Attest: /s/Patrick A. Looby Attest: /s/William M. Lyons
Name:Patrick A. Looby Name:William M. Lyons
Title:Secretary Title:Secretary

DAVID H. REINMILLER
Attorney at Law
4500 Main Street, P.O. Box 418210
Kansas City, Missouri 64141-9210
Telephone (816) 340-4046
Telecopier (816) 340-4964

July 30, 1997

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

Ladies and Gentlemen:

As a counsel to American 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. 6 to its Registration
Statement on Form N-1A, to be filed with the Securities and Exchange Commission
on July 30, 1997, will, when issued, be validly issued, fully paid and
nonassessable.

For the record, it should be stated that I am an officer and employee of
American Century Services Corporation, an affiliated corporation of American
Century Investment Management, Inc., the investment adviser of American Century
Premium Reserves, Inc.

I hereby consent to the use of this opinion as an exhibit to Post-Effective
Amendment No. 6.

Very truly yours,

/s/David H. Reinmiller
David H. Reinmiller

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. 6 to
the Registration Statement (Form N-1A) and related Prospectus of American
Century Premium Reserves, Inc. (formerly Twentieth Century Premium Reserves,
Inc.) and to the incorporation by reference of our report dated April 25, 1997,
with respect to the financial statements of American Century Premium Reserves,
Inc. included in its Annual Report to Shareholders for the year ended March 31,
1997.

/s/ Ernst & Young LLP
ERNST & YOUNG LLP

Kansas City, Missouri
July 25, 1997

SCHEDULE OF COMPUTATION OF PERFORMANCE
ADVERTISING QUOTATIONS

A. Total Return Calculations

Set forth below are calculations of each type of total return performance
quotation included in the Statement of Additional Information of American
Century Premium Reserves, Inc.

1. AVERAGE ANNUAL TOTAL RETURN. The average annual return of Premium
Managed Bond, as quoted in the Statement of Additional Information,
was 4.57%.

This return was calculated as follows:

n
P(1+T) = ERV

where,

P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of the hypothetical $1,000 payment
at the end of 1 year.

Applying the actual return figures of Premium Managed Bond for the 1 year
period ended March 31, 1997:

1
1,000 (1 + 4.57) = $1,045.7

^1/1
T = (1,045.7) - 1
1,000.0

T = 4.57%

2. CUMULATIVE TOTAL RETURN. The cumulative total return of Premium
Managed Bond from April 1, 1993 to March 31, 1997 as quoted in the
Statement of Additional Information, was 22.96%.

This return was calculated as follows:

(ERV - P)
C = -------
P

where,

C = cumulative total return
P = a hypothetical initial payment of $1,000
ERV = ending redeemable value of the hypothetical $1,000 payment at the
end of the 1 year period.

Applying the actual return figures for the 3 year period ended March 31,
1997:

(1,229.60 - 1,000)
C = ----------------
1,000

C = 22.96%

B. Yield Calculations

Set forth below are representative calculations of each type of yield
quotation included in the Statement of Additional Information of American
Century Premium Reserves, Inc.

1. PREMIUM GOVERNMENT RESERVE YIELD. The yield for Premium Government
Reserve for the seven days ended March 31, 1997, as quoted in the
Statement of Additional Information, was 5.02%.

The yield was computed as follows:

I 365
Y = --- X ---
B 7

where,

Y = yield
I = total income of hypothetical account of one share over seven day
period
B = beginning account value ($100)

Applying the actual figures of Premium Government Reserve for the seven day
period ended March 31, 1997:

Y = .0963 365
----- X ---
100 7

Y = 5.02%

Thirty-day yields are calculated similarly, with the appropriate
substitutions.

2. PREMIUM GOVERNMENT RESERVE EFFECTIVE YIELD. The effective yield for
Premium Government Reserve for the seven days ended March 31, 1997, as
quoted in the Statement of Additional Information, was 5.15%.

The effective yield was computed as follows:

( I ) ^365/7
EF = (1 + ---) - 1
( B )

where,

EF = effective yield
I = total income of hypothetical account of one share over seven day
period
B = beginning account value ($100)

Applying the actual figures of Premium Government Reserve for the seven day
period ended March 31, 1997:

EF = (1 + .0963)^365/7
(1 + -----) - 1
( 100 )

EF = 5.15%

3. PREMIUM MANAGED BOND YIELD. The yield for Premium Managed Bond for the
thirty days ended March 31, 1997, as quoted in the Statement of
Additional Information, was 6.50%.

The yield was calculated as follows:

[(a - b )^6 ]
Y = 2 * [(----- + 1) - 1]
[(c * d ) ]

where,

Y = yield
a = total income during thirty day period
b = expense accrued for the period
c = average daily number of shares outstanding during the period
d = maximum offering price per share on last day of period

Applying the actual figures of Premium Managed Bond for the thirty day
period ended March 31, 1997:

[(123028.64 - 8049.84 )^6 ]
2 * [(------------------- + 1) - 1]
[(2202677.277 * 9.76 ) ]

Y = 6.50%

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that the undersigned, American Century
Premium Reserves, Inc., hereinafter called the "Corporation", and certain
directors and officers of the Corporation, do hereby constitute and appoint
James E. Stowers, Jr., James E. Stowers III, William M. Lyons, and Patrick A.
Looby, and each of them individually, their true and lawful attorneys and agents
to take any and all action and execute any and all instruments which said
attorneys and agents may deem necessary or advisable to enable the Corporation
to comply with the Securities Act of 1933 and/or the Investment Company Act of
1940, as amended, and any rules, regulations, orders, or other requirements of
the United States Securities and Exchange Commission thereunder, in connection
with the registration under the Securities Act of 1933 and/or the Investment
Company Act of 1940, as amended, including specifically, but without limitation
of the foregoing, power and authority to sign the name of the Corporation in its
behalf and to affix its corporate seal, and to sign the names of each of such
directors and officers in their capacities as indicated, to any amendment or
supplement to the Registration Statement filed with the Securities and Exchange
Commission under the Securities Act of 1933 and/or the Investment Company Act of
1940, as amended, and to any instruments or documents filed or to be filed as a
part of or in connection with such Registration Statement; and each of the
undersigned hereby ratifies and confirms all that said attorneys and agents
shall do or cause to be done by virtue hereof.

IN WITNESS WHEREOF, the Corporation has caused this Power to be
executed by its duly authorized officers on this the 15th day of February, 1997.

AMERICAN CENTURY PREMIUM RESERVES, INC.

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

SIGNATURE AND TITLE

/s/ James E. Stowers, Jr. /s/ Robert W. Doering
James E. Stowers, Jr. Robert W. Doering, M.D.
Chairman and Director Director

/s/ James E. Stowers III /s/ Linsley L. Lundgaard
James E. Stowers III Linsley L. Lundgaard
President, Director and Director
Principal Executive Officer

/s/ Robert T. Jackson /s/ Donald H. Pratt
Robert T. Jackson Donald H. Pratt
Executive Vice President, Director
Principal Financial Officer

/s/ Maryanne Roepke /s/ Lloyd T. Silver
Maryanne Roepke Lloyd T. Silver
Vice President and Treasurer, Director
Principal Accounting Officer

/s/ Thomas A. Brown /s/ M. Jeannine Strandjord
Thomas A. Brown M. Jeannine Strandjord
Director Director

/s/ D.D. ("Del") Hock
D.D. ("Del") Hock
Director
Attest:

By: /s/ Patrick A. Looby
Patrick A. Looby, Secretary

<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ANNUAL REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC.
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> AMERICAN CENTURY-BENHAM PREMIUM CAPITAL RESERVE

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 150,969,750
<INVESTMENTS-AT-VALUE> 150,969,750
<RECEIVABLES> 2,148,724
<ASSETS-OTHER> 1,196,782
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 154,315,256
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 357,423
<TOTAL-LIABILITIES> 357,423
<SENIOR-EQUITY> 1,539,589
<PAID-IN-CAPITAL-COMMON> 152,419,289
<SHARES-COMMON-STOCK> 153,958,859
<SHARES-COMMON-PRIOR> 133,417,304
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (1,045)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 153,957,833
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 7,781,071
<OTHER-INCOME> 0
<EXPENSES-NET> 641,383
<NET-INVESTMENT-INCOME> 7,139,688
<REALIZED-GAINS-CURRENT> (387)
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 7,139,301
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 7,139,688
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 244,535,922
<NUMBER-OF-SHARES-REDEEMED> 230,769,999
<SHARES-REINVESTED> 6,775,632
<NET-CHANGE-IN-ASSETS> 20,541,168
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (658)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 640,040
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 641,383
<AVERAGE-NET-ASSETS> 142,439,917
<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
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE ANNUAL REPORT OF AMERICAN CENTURY MUTUAL FUNDS, INC.
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH REPORT.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> AMERICAN CENTURY-BENHAM PREMIUM GOVERNMENT RESERVE

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 39,094,999
<INVESTMENTS-AT-VALUE> 39,094,999
<RECEIVABLES> 448,968
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 39,543,967
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 705,979
<TOTAL-LIABILITIES> 705,979
<SENIOR-EQUITY> 388,380
<PAID-IN-CAPITAL-COMMON> 38,449,608
<SHARES-COMMON-STOCK> 38,837,988
<SHARES-COMMON-PRIOR> 26,190,764
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 38,837,988
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,675,484
<OTHER-INCOME> 0
<EXPENSES-NET> 138,932
<NET-INVESTMENT-INCOME> 1,536,552
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> 0
<NET-CHANGE-FROM-OPS> 1,536,552
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,536,552
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 57,200,249
<NUMBER-OF-SHARES-REDEEMED> 46,010,775
<SHARES-REINVESTED> 1,457,750
<NET-CHANGE-IN-ASSETS> 12,647,224
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 138,640
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 138,932
<AVERAGE-NET-ASSETS> 30,981,550
<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>

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> MAR-31-1997
<INVESTMENTS-AT-COST> 21,795,974
<INVESTMENTS-AT-VALUE> 21,362,349
<RECEIVABLES> 423,574
<ASSETS-OTHER> 484
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 21,786,407
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 36,416
<TOTAL-LIABILITIES> 36,416
<SENIOR-EQUITY> 22,294
<PAID-IN-CAPITAL-COMMON> 22,189,358
<SHARES-COMMON-STOCK> 2,229,409
<SHARES-COMMON-PRIOR> 2,041,414
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> (28,036)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (433,625)
<NET-ASSETS> 21,749,991
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1,361,449
<OTHER-INCOME> 0
<EXPENSES-NET> 91,755
<NET-INVESTMENT-INCOME> 1,269,694
<REALIZED-GAINS-CURRENT> (7,433)
<APPREC-INCREASE-CURRENT> (393,769)
<NET-CHANGE-FROM-OPS> 868,492
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 1,269,694
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 805,036
<NUMBER-OF-SHARES-REDEEMED> 743,472
<SHARES-REINVESTED> 126,431
<NET-CHANGE-IN-ASSETS> 1,470,474
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (20,603)
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 91,566
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 91,755
<AVERAGE-NET-ASSETS> 20,468,595
<PER-SHARE-NAV-BEGIN> 9.93
<PER-SHARE-NII> 0.61
<PER-SHARE-GAIN-APPREC> (0.17)
<PER-SHARE-DIVIDEND> 0.61
<PER-SHARE-DISTRIBUTIONS> 0.00
<RETURNS-OF-CAPITAL> 0.00
<PER-SHARE-NAV-END> 9.76
<EXPENSE-RATIO> 0.45
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0.00

</TABLE>