AMERICAN CENTURY PREMIUM RESERVES, INC.
PROSPECTUS SUPPLEMENT
Premium Government Reserve
Premium Capital Reserve
Premium Bond
SUPPLEMENT DATED JUNE 1, 1998
Prospectus dated August 1, 1997
The following disclosure should be inserted after the section "Rule 144A
Securities" found on page 15 of the Prospectus.
INVESTMENTS IN COMPANIES WITH LIMITED OPERATING HISTORIES
The funds may invest in the securities of issuers with limited operating
histories. The manager considers an issuer to have a limited operating history
if that issuer has a record of less than three years of continuous operation.
Investments in securities of issuers with limited operating history may
involve greater risks than investments in securities of more mature issuers. By
their nature, such issuers present limited operating history and financial
information upon which the manager may base its investment decision on behalf of
the funds. In addition, financial and other information regarding such issuers,
when available, may be incomplete or inaccurate.
Premium Bond and Premium Capital Reserve will not invest more than 5% of
their total assets in the securities of issuers with less than a three-year
operating history. The manager will consider periods of capital formation,
incubation, consolidation, and research and development in determining whether a
particular issuer has a record of three years of continuous operation.
The following disclosure is added on page 23 of the Prospectus, following the
last paragraph under the heading "When Share Price is Determined."
We have contractual relationships with certain financial intermediaries in which
such intermediaries represent that they have systems to track the time at which
investment orders are received and to segregate orders received at different
times. Based on these representations, the funds have authorized such
intermediaries and their designees to accept purchase and redemption orders on
the funds' behalf up to the applicable cut-off time. The funds will be deemed to
have received such orders upon acceptance by the duly authorized intermediary,
and such orders will be priced at the funds' net asset value next determined
after acceptance on the funds' behalf by such intermediary.
The following disclosure is added on page 27 of the Prospectus, following the
last paragraph under the heading "Transfer and Administrative Services."
Pursuant to a Sub-Administration Agreement with the manager, Funds
Distributor, Inc. (FDI) serves as the Co-Administrator for the funds. FDI is
responsible for (i) providing certain officers of the funds and (ii) reviewing
and filing marketing and sales literature on behalf of the funds. The fees and
expenses of FDI are paid by the manager out of its unified fee.
YEAR 2000 ISSUES
Many of the world's computer systems currently cannot properly recognize or
process date-sensitive information relating to the Year 2000 and beyond. The
funds and the manager depend upon the computer systems of various service
providers, including the transfer agent, for their day-to-day operations.
Inadequate remediation of the Year 2000 problem by these service providers and
others with whom they interact could have an adverse effect on the funds'
operations, including pricing, securities trading and settlement, and the
provision of shareholder services.
The transfer agent, in cooperation with the manager, has assembled a team of
information technology professionals who are taking steps to address Year 2000
issues with respect to its own computers and to obtain satisfactory assurances
that comparable steps are being taken by the funds' and the manager's other
major service providers and vendors. The key phases of the remediation plan
include: an inventory of all internal systems, vendor products and services and
data providers (substantially completed in 1997); an assessment of all systems
for date reliance and the impact of the century rollover on each (substantially
completed with respect to critical systems in early 1998); and the renovation
and testing of affected systems (targeted for completion with respect to
critical systems by the end of 1998). The manager will pay for the remediation
effort with revenues from its management fee, so that the funds will not
directly bear any of the cost.
In light of these remediation efforts, the funds do not anticipate a material
adverse impact on its business, operations or financial condition relating to
Year 2000 issues. However, there can be no assurance that the remediation plan
will be sufficient and timely or that interaction with other noncomplying
computer systems will not have a material adverse effect on the funds' business,
operations or financial condition.
In addition, companies in which the funds invest may have Year 2000 computer
problems. The value of their securities could go down if they do not fix their
problems in time or if fixing them is very expensive. Before making an
investment decision about a company, the manager asks it about its Year 2000
readiness. However, the manager cannot be sure that the information it receives
is complete and accurate, and there is no guarantee that portfolio companies'
Year 2000 problems will not hurt the funds' performance.
The following disclosure replaces the first sentence under the heading
"Distribution of Fund Shares" found on page 27 of the Prospectus.
The funds' shares are distributed by FDI, a registered broker-dealer. FDI is
a wholly-owned indirect subsidiary of Boston Institutional Group, Inc. FDI's
principal business address is 60 State Street, Suite 1300, Boston, Massachusetts
02109.
The following disclosure should be inserted as the last paragraph under the
heading "Distribution of Fund Shares" on page 27 of the Prospectus.
Investors may open accounts with American Century only through the
distributor. All purchase transactions in the funds offered by this Prospectus
are processed by the transfer agent, which is authorized to accept any
instructions relating to fund accounts. All purchase orders must be accepted by
the distributor. All fees and expenses of FDI in acting as distributor for the
funds are paid by the manager.
[american century logo(reg.sm)]
American
Century(reg.tm)
P.O. Box 419200
Kansas City, Missouri
64141-6200
1-800-345-2021 or 816-531-5575
SH-SPL-12610 9805
