POST-EFFECTIVE AMENDMENT NO. 37

-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BtMM1QCabVFE8T5F8dnRBo5AjkNyehGzb6kRtgXhs+po3XiJ5H357fosyyhpMxkW Hkd27cu21qbXgRHKg5D0lA== 0000717316-04-000015.txt : 20041025 0000717316-04-000015.hdr.sgml : 20041025 20041025154801 ACCESSION NUMBER: 0000717316-04-000015 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20041025 DATE AS OF CHANGE: 20041025 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN CENTURY CALIFORNIA TAX FREE & MUNICIPAL FUNDS CENTRAL INDEX KEY: 0000717316 IRS NUMBER: 946562826 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1933 Act SEC FILE NUMBER: 002-82734 FILM NUMBER: 041094035 BUSINESS ADDRESS: STREET 1: 1665 CHARLESTON RD CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 BUSINESS PHONE: 8003218321 MAIL ADDRESS: STREET 1: 1665 CHARLESTON RD CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 FORMER COMPANY: FORMER CONFORMED NAME: BENHAM CALIFORNIA TAX FREE TRUST / DATE OF NAME CHANGE: 19960815 FORMER COMPANY: FORMER CONFORMED NAME: BENHAM CALIFORNIA TAX FREE & MUNICIPAL FUNDS DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: BENHAM CALIFORNIA TAX FREE TRUST DATE OF NAME CHANGE: 19910218 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN CENTURY CALIFORNIA TAX FREE & MUNICIPAL FUNDS CENTRAL INDEX KEY: 0000717316 IRS NUMBER: 946562826 STATE OF INCORPORATION: MA FISCAL YEAR END: 0831 FILING VALUES: FORM TYPE: 485APOS SEC ACT: 1940 Act SEC FILE NUMBER: 811-03706 FILM NUMBER: 041094036 BUSINESS ADDRESS: STREET 1: 1665 CHARLESTON RD CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 BUSINESS PHONE: 8003218321 MAIL ADDRESS: STREET 1: 1665 CHARLESTON RD CITY: MOUNTAIN VIEW STATE: CA ZIP: 94043 FORMER COMPANY: FORMER CONFORMED NAME: BENHAM CALIFORNIA TAX FREE TRUST / DATE OF NAME CHANGE: 19960815 FORMER COMPANY: FORMER CONFORMED NAME: BENHAM CALIFORNIA TAX FREE & MUNICIPAL FUNDS DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: BENHAM CALIFORNIA TAX FREE TRUST DATE OF NAME CHANGE: 19910218 485APOS 1 pea37-2004.htm POST-EFFECTIVE AMENDMENT NO. 37 POST-EFFECTIVE AMENDMENT NO. 37

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM N-1A

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

Pre-Effective Amendment No. [ ]

Post-Effective Amendment No. 37 [X]

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

Amendment No. 41 [X]

(Check appropriate box or boxes.)

AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)

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

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

David C. Tucker, Esq., 4500 Main Street, 9th Floor, Kansas City, MO 64111
- --------------------------------------------------------------------------------
(Name and Address of Agent for Service)

Approximate Date of Proposed Public Offering: January 1, 2005

It is proposed that this filing will become effective (check appropriate box)

[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[X] on (January 1, 2005) pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) of rule 485.

If appropriate, check the following box:

[ ] This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.

YOUR
AMERICAN CENTURY INVESTMENTS
PROSPECTUS

INVESTOR CLASS

CALIFORNIA TAX-FREE MONEY MARKET FUND

CALIFORNIA LIMITED-TERM TAX-FREE FUND

CALIFORNIA INTERMEDIATE-TERM TAX-FREE FUND

CALIFORNIA LONG-TERM TAX-FREE FUND

JANUARY 1, 2005

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO
TELLS YOU OTHERWISE IS COMMITTING A CRIME.

American Century
Investment Services, Inc.

Dear Investor,

American Century Investments is committed to helping you achieve your financial
goals. That's why we focus on achieving superior results and building long-term
relationships with our investors. We believe an important first step is to
provide you with an easy-to-read prospectus.

In the prospectus, you will find the information you need to make confident
decisions about your investments. For example, you can find a fund's objectives,
performance history, fees and much more. Additionally, this information is
useful when comparing funds.

We realize you may have questions after reading this prospectus. If so, please
contact our Investor Relations Representatives at 1-800-345-2021. They are
available weekdays from 7 a.m. to 7 p.m. and Saturdays from 9 a.m. to 2 p.m.
Central time. If you prefer, you can visit our Web site, americancentury.com,
for information that may help answer many of your questions.

Thank you for considering American Century for your investment needs.

Sincerely,

Donna Byers
Senior Vice President
Direct Sales and Services

American Century Services Corporation

American Century Investments, Inc.
P.O. Box 419200, Kansas City, MO 64141-6200

The American Century logo, American Century and American Century Investments are
service marks of American Century Services Corporation.

TABLE OF CONTENTS

AN OVERVIEW OF THE FUNDS......................................................X

FUND PERFORMANCE HISTORY......................................................X

California Tax-Free Money Market Fund...................................X
California Limited-Term Tax-Free Fund
California Intermediate-Term Tax-Free Fund
California Long-Term Tax-Free Fund......................................X

FEES AND EXPENSES.............................................................X

OBJECTIVES, STRATEGIES AND RISKS..............................................X

BASICS OF FIXED-INCOME INVESTING..............................................X

MANAGEMENT....................................................................X

INVESTING WITH AMERICAN CENTURY...............................................X

SHARE PRICE AND DISTRIBUTIONS.................................................X

TAXES.........................................................................X

FINANCIAL HIGHLIGHTS..........................................................X

THIS SYMBOL IS USED THROUGHOUT THE BOOK TO HIGHLIGHT
DEFINITIONS OF KEY INVESTMENT TERMS AND TO PROVIDE OTHER HELPFUL
INFORMATION.

AN OVERVIEW OF THE FUNDS

WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?

The funds seek safety of principal and high current income that is exempt from
federal and California income taxes.

WHAT ARE THE FUNDS' PRIMARY INVESTMENT STRATEGIES AND PRINCIPAL RISKS?

The fund managers invest at least 80% of the funds' assets in DEBT SECURITIES
issued by cities, counties and other municipalities in California and U.S.
territories, such as Puerto Rico, that have interest exempt from federal and
California income taxes. Each of the funds invests in different types of these
municipal debt securities and has different risks. The following chart shows the
differences among the funds' primary investments and principal risks. It is
designed to help you compare these funds with each other; it should not be used
to compare these funds with other mutual funds. A more detailed description of
the funds' investment strategies and risks begins on page x.

DEBT SECURITIES INCLUDE FIXED-INCOME INVESTMENTS SUCH AS
NOTES, BONDS, COMMERCIAL PAPER AND U.S. TREASURY SECURITIES. VERY
SHORT-TERM DEBT SECURITIES (THOSE WITH MATURITIES SHORTER THAN
397 DAYS) ARE CALLED MONEY MARKET INSTRUMENTS.

FUND PRIMARY INVESTMENTS PRINCIPAL RISKS

LOWER INCOME California Tax-Free High-quality, very California economic risk
MORE LIQUID Money Market short-term debt securities Lowest credit risk
SHORTER TERM Lowest interest rate risk
Lowest liquidity risk

California Limited-Term Quality debt securities California economic risk
Tax-Free with a weighted average Moderate credit risk
maturity of 1-5 years Low interest rate risk
Moderate liquidity risk

California Intermediate- Quality debt securities California economic risk
Term Tax-Free with a weighted average Moderate credit risk
maturity of 5-10 years Moderate interest rate risk
Moderate liquidity risk

California Long-Term Quality debt securities California economic risk
HIGHER INCOME Tax-Free with a weighted Moderate credit risk
LESS LIQUID average maturity High interest rate risk
LONGER TERM of 10 or more years Moderate liquidity risk

At any given time your shares may be worth more or less than the price you paid
for them. In other words, it is possible to lose money by investing in the
funds.

WHO MAY WANT TO INVEST IN THE FUNDS?

The funds may be a good investment if you are

o a California resident or taxpayer

o seeking current tax-free income

o comfortable with risk based on California's economy

o comfortable with the funds' other investment risks

o seeking diversification by investing in a fixed-income mutual fund

WHO MAY NOT WANT TO INVEST IN THE FUNDS?

The funds may not be a good investment if you are

o investing in an IRA or other tax-advantaged retirement plan

o investing for long-term growth

o looking for the added security of FDIC insurance

AN INVESTMENT IN THE FUNDS IS NOT A BANK DEPOSIT, AND IT IS
NOT INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION (FDIC) OR ANY OTHER GOVERNMENT AGENCY.

FUND PERFORMANCE HISTORY

CALIFORNIA TAX-FREE MONEY MARKET FUND

ANNUAL TOTAL RETURNS

The following bar chart shows the performance of the fund's Investor Class
shares for each of the last 10 calendar years. It indicates the volatility of
the fund's historical returns from year to year. Account fees are not reflected
in the chart below. If they had been included, returns would be lower than those
shown.

CALIFORNIA TAX-FREE MONEY MARKET FUND - INVESTOR CLASS(1)

2003 0.60%
2002 1.06%
2001 2.20%
2000 3.30%
1999 2.66%
1998 2.95%
1997 3.19%
1996 3.07%
1995 3.41%
1994 2.42%

(1) AS OF SEPTEMBER 30, 2004, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN WAS 0.47%.

The highest and lowest quarterly returns for the periods reflected in the bar chart are:

HIGHEST LOWEST

California Tax-Free Money Market 0.89% (2Q 2000) 0.10% (3Q 2003)
- --------------------------------------------------------------------------------

AVERAGE ANNUAL TOTAL RETURNS

The following table shows the average annual total returns of the fund's
Investor Class shares for the periods indicated.

FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2003 1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET
Investor Class 0.60% 1.96% 2.48%
- --------------------------------------------------------------------------------

CALIFORNIA LIMITED-TERM TAX-FREE FUND
CALIFORNIA INTERMEDIATE-TERM TAX-FREE FUND
CALIFORNIA LONG-TERM TAX-FREE FUND

ANNUAL TOTAL RETURNS

The following bar charts show the performance of the funds' Investor Class
shares for each of the last 10 calendar years or for each full calendar year in
the life of a fund if less than 10 years. They indicate the volatility of the
funds' historical returns from year to year. Account fees are not reflected in
the charts below. If they had been included, returns would be lower than those
shown.

CALIFORNIA LIMITED-TERM TAX-FREE FUND -- INVESTOR CLASS(1)

2003 2.45%
2002 6.37%
2001 4.95%
2000 7.03%
1999 1.13%
1998 4.91%
1997 5.34%
1996 3.93%
1995 8.32%
1994 -0.61%

(1) AS OF SEPTEMBER 30, 2004, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN WAS 0.85%.

The highest and lowest quarterly returns for the periods reflected in the bar
chart are:

HIGHEST LOWEST

California Limited-Term Tax-Free 3.09% (3Q 2002) -1.58% (2Q 2004)
- --------------------------------------------------------------------------------

CALIFORNIA INTERMEDIATE-TERM TAX-FREE FUND -- INVESTOR CLASS(1)

2003 3.23%
2002 8.80%
2001 4.35%
2000 10.14%
1999 -1.09%
1998 5.59%
1997 7.45%
1998 4.25%
1995 13.52%
1994 -3.72%

(1) AS OF SEPTEMBER 30, 2004, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN WAS 1.96%.

The highest and lowest quarterly returns for the periods reflected in the bar
chart are:

HIGHEST LOWEST

California Intermediate-Term Tax-Free 5.25% (1Q 1995) -3.98% (1Q 1994)
- --------------------------------------------------------------------------------

CALIFORNIA LONG-TERM TAX-FREE FUND -- INVESTOR CLASS(1)

2003 4.51%
2002 8.69%
2001 4.23%
2000 14.92%
1999 -5.22%
1998 6.31%
1997 9.74%
1996 3.59%
1995 19.80%
1994 -6.51%

(1) AS OF SEPTEMBER 30, 2004, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN WAS 2.80%.

The highest and lowest quarterly returns for the periods reflected in the bar
chart are:

HIGHEST LOWEST

California Long-Term Tax-Free 7.13% (1Q 1995) -5.71% (1Q 1994)
- --------------------------------------------------------------------------------

AVERAGE ANNUAL TOTAL RETURNS

The following table shows the average annual total returns of the funds'
Investor Class shares calculated three different ways.

Return Before Taxes shows the actual change in the value of fund shares over the
time periods shown, but does not reflect the impact of taxes on fund
distributions or the sale of fund shares. The two after-tax returns take into
account taxes that may be associated with owning fund shares. Return After Taxes
on Distributions is a fund's actual performance, adjusted by the effect of taxes
on distributions made by the fund during the periods shown. Return After Taxes
on Distributions and Sale of Fund Shares is further adjusted to reflect the tax
impact on any change in the value of fund shares as if they had been sold on the
last day of the period.

After-tax returns are calculated using the historical highest federal marginal
income tax rates and do not reflect the impact of state and local taxes. Actual
after-tax returns depend on an investor's tax situation and may differ from
those shown. After-tax returns shown are not relevant to investors who hold fund
shares through tax-deferred arrangements such as 401(k) plans or IRAs.

The benchmarks are unmanaged indices that have no operating costs and are
included in the table for performance comparison.

INVESTOR CLASS

FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2003 1 YEAR 5 YEARS 10 YEARS

- --------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE

Return Before Taxes 2.45% 4.36% 4.35%

Return After Taxes on Distributions 2.45% 4.33% 4.33%

Return After Taxes on Distributions
and Sale of Fund Shares 2.54% 4.23% 4.27%

Lehman Brothers 3-Year Municipal Bond Index 2.68% 4.82% 4.86%
(reflects no deduction for fees,
expenses and taxes)
- --------------------------------------------------------------------------------
CALIFORNIA INTERMEDIATE-TERM TAX-FREE

Return Before Taxes 3.23% 5.01% 5.14%

Return After Taxes on Distributions 3.23% 4.94% 5.03%

Return After Taxes on Distributions
and Sale of Fund Shares 3.47% 4.87% 5.00%

Lehman Brothers 5-Year General Obligation Index 4.19% 5.47% 5.41%
(reflects no deduction for fees,
expenses and taxes)
- --------------------------------------------------------------------------------
CALIFORNIA LONG-TERM TAX-FREE

Return Before Taxes 4.51% 5.22% 5.73%

Return After Taxes on Distributions 4.50% 5.22% 5.63%

Return After Taxes on Distributions
and Sale of Fund Shares 4.55% 5.16% 5.59%

Lehman Brothers Long-Term Municipal Bond Index 6.13% 5.95% 6.40%
(reflects no deduction for fees,
expenses and taxes)

Performance information is designed to help you see how fund returns can vary.
Keep in mind that past performance (before and after taxes) does not predict how
a fund will perform in the future.

For current performance information, including yields, please call us at
1-800-345-2021 or visit us at americancentury.com.

FEES AND EXPENSES

There are no sales loads, fees or other charges

o to buy fund shares directly from American Century

o to reinvest dividends in additional shares

o to exchange into the same class of shares of other American Century funds

o to redeem your shares other than a $10 fee to redeem by wire

The following tables describe the fees and expenses you may pay if you buy and
hold shares of the funds.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
INVESTOR CLASS
Maximum Account Maintenance Fee $25(1)
- --------------------------------------------------------------------------------

(1) APPLIES ONLY TO INVESTORS WHOSE TOTAL ELIGIBLE INVESTMENTS WITH AMERICAN
CENTURY ARE LESS THAN $10,000. SEE Account Maintenance Fee UNDER Investing
with American Century FOR MORE DETAILS.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)

MANAGEMENT DISTRIBUTION AND OTHER TOTAL ANNUAL FUND
FEE(1) SERVICE (12B-1) FEES EXPENSES(2) OPERATING EXPENSES
- ----------------------------------------------------------------------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET
Investor Class 0.50% None 0.02% 0.52%
- ----------------------------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE
Investor Class 0.50% None 0.00% 0.50%
- ----------------------------------------------------------------------------------------------------
CALIFORNIA INTERMEDIATE-TERM TAX-FREE
Investor Class 0.50% None 0.00% 0.50%
- ----------------------------------------------------------------------------------------------------
CALIFORNIA LONG-TERM TAX-FREE
Investor Class 0.50% None 0.00% 0.50%
- ----------------------------------------------------------------------------------------------------

(1) BASED ON ASSETS OF ALL CLASSES OF A PARTICULAR FUND DURING THE FUNDS' MOST
RECENT FISCAL YEAR. THE FUNDS HAVE STEPPED FEE SCHEDULES. AS A RESULT, THE
FUNDS' MANAGEMENT FEE RATES GENERALLY DECREASE AS FUND ASSETS INCREASE AND
INCREASE AS FUND ASSETS DECREASE.

(2) OTHER EXPENSES INCLUDE FEES AND EXPENSES OF THE FUNDS' INDEPENDENT TRUSTEES
AND THEIR LEGAL COUNSEL, INTEREST AND, FOR MONEY MARKET FUNDS, PORTFOLIO
INSURANCE.

EXAMPLE

The examples in the table below are intended to help you compare the costs of
investing in a fund with the costs of investing in other mutual funds. Of
course, your actual costs may be higher or lower. Assuming you . . .

o invest $10,000 in the fund

o redeem all of your shares at the end of the periods shown below

o earn a 5% return each year

o incur the same operating expenses as shown above

.. . . your cost of investing in the fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET
Investor Class $53 $167 $290 $652
- --------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE
Investor Class $51 $160 $279 $627
- --------------------------------------------------------------------------------
CALIFORNIA INTERMEDIATE-TERM TAX-FREE
Investor Class $51 $160 $279 $627
- --------------------------------------------------------------------------------
CaLIFORNIA LONG-TERM TAX-FREE
Investor Class $51 $160 $279 $627
- --------------------------------------------------------------------------------

OBJECTIVES, STRATEGIES AND RISKS

CALIFORNIA TAX-FREE MONEY MARKET FUND

WHAT ARE THE FUND'S INVESTMENT OBJECTIVES?

The fund seeks safety of principal and high current income that is exempt from
federal and California income taxes.

HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVES?

The fund's assets are invested in HIGH-QUALITY, very short-term debt securities
of which at least 80% must have interest payments exempt from federal and
California income taxes. Cities, counties and other MUNICIPALITIES in California
and U.S. territories, such as Puerto Rico, usually issue these securities for
public projects, such as schools and roads. Income from these securities is
exempt from regular federal income tax, state tax and the alternative minimum
tax.

A HIGH-QUALITY DEBT SECURITY IS ONE THAT HAS BEEN RATED BY
AN INDEPENDENT RATING AGENCY IN ITS TOP TWO CREDIT QUALITY
CATEGORIES OR DETERMINED BY THE ADVISOR TO BE OF COMPARABLE
QUALITY. THE DETAILS OF THE FUND'S CREDIT QUALITY STANDARDS ARE
DESCRIBED IN THE STATEMENT OF ADDITIONAL INFORMATION.

MUNICIPALITIES INCLUDE STATES, CITIES, COUNTIES,
INCORPORATED TOWNSHIPS, THE DISTRICT OF COLUMBIA AND U.S.
TERRITORIES AND POSSESSIONS. THEY CAN ISSUE PRIVATE ACTIVITY
BONDS AND PUBLIC PURPOSE BONDS.

A description of the fund's policies and procedures with respect to the
disclosure of the fund's portfolio securities is available in the fund's
statement of additional information.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

Because high-quality, very short-term debt securities are among the safest
securities available, the interest they pay is among the lowest for
income-paying securities. Accordingly, the yield on this fund will likely be
lower than the yield on funds that invest in longer-term or lower-quality
securities.

Because the fund invests in California municipal securities, it will be
sensitive to events that affect California's economy. It may be riskier than
funds that invest in a larger universe of securities.

When determining whether to sell a security, fund managers consider, among other
things, current and anticipated changes in interest rates, the credit quality of
a particular issuer, comparable alternatives, general market conditions and any
other factor deemed relevant by the fund managers.

CALIFORNIA LIMITED-TERM TAX-FREE FUND
CALIFORNIA INTERMEDIATE-TERM TAX-FREE FUND
CALIFORNIA LONG-TERM TAX-FREE FUND

WHAT ARE THE FUNDS' INVESTMENT OBJECTIVES?

These funds seek safety of principal and high current income that is exempt from
federal and California income taxes.

HOW DO THE FUNDS PURSUE THEIR INVESTMENT OBJECTIVES?

The fund managers buy QUALITY debt securities, and will invest at least 80% of
the funds' assets in debt securities with interest payments exempt from federal
and California income taxes. Cities, counties and other MUNICIPALITIES in
California and U.S. territories, such as Puerto Rico, usually issue these
securities for public projects, such as schools and roads.

A QUALITY DEBT SECURITY IS ONE THAT HAS BEEN RATED BY AN
INDEPENDENT RATING AGENCY IN THE TOP FOUR CREDIT QUALITY
CATEGORIES OR DETERMINED BY THE ADVISOR TO BE OF COMPARABLE
CREDIT QUALITY. THE DETAILS OF THE FUNDS' CREDIT QUALITY
STANDARDS ARE DESCRIBED IN THE STATEMENT OF ADDITIONAL
INFORMATION.

MUNICIPALITIES INCLUDE STATES, CITIES, COUNTIES,
INCORPORATED TOWNSHIPS, THE DISTRICT OF COLUMBIA AND U.S.
TERRITORIES AND POSSESSIONS. THEY CAN ISSUE PRIVATE ACTIVITY
BONDS AND PUBLIC PURPOSE BONDS.

The funds may purchase securities in a number of different ways to seek higher
rates of return. For example, by using when-issued and forward commitment
transactions, the funds may purchase securities in advance to generate
additional income.

The funds also may invest in derivative instruments such as options, futures
contracts, options on futures contracts, and swap agreements (including, but not
limited to, credit default swap agreements), or in mortgage- or asset-backed
securities, provided that such investment are in keeping with the funds'
investment objective.

In the event of exceptional market or economic conditions, the funds may, as a
temporary defensive measure, invest all or a substantial portion of their assets
in cash or cash-equivalent securities. To the extent the funds assume a
defensive position, they will not be pursuing their investment objectives and
may generate taxable income. The funds generally limit their purchase of debt
securities to investment-grade obligations.

A description of the funds' policies and procedures with respect to the
disclosure of the funds' portfolio securities is available in the funds'
statement of additional information.

WHAT ARE THE DIFFERENCES BETWEEN THE FUNDS?

The funds differ in the maturity of the debt securities they purchase. This
difference is shown in the chart below.

TYPICAL MATURITY WEIGHTED
OF INVESTMENTS AVERAGE MATURITY

California Limited-Term Tax-Free 1-10 years 1-5 years

California Intermediate-Term Tax-Free 4 or more years 5-10 years

California Long-Term Tax-Free 7 or more years 10 or more years

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUNDS?

Because the funds have different WEIGHTED AVERAGE MATURITIES, each fund will
respond differently to changes in interest rates. Funds with longer weighted
average maturities are generally more sensitive to interest rate changes. When
interest rates rise, the funds' share values will decline, but the share values
of funds with longer weighted average maturities generally will decline further.

WEIGHTED AVERAGE MATURITY IS DESCRIBED IN MORE DETAIL UNDER
Basics of Fixed-Income Investing.

Because the funds invest in California municipal securities, they will be
sensitive to events that affect California's economy. They may be riskier than
funds that invest in a larger universe of securities.

The use of derivative instruments involves risks different from, or possibly
greater than, the risks associated with investing directly in securities and
other traditional instruments. Derivatives are subject to a number of risks
including, liquidity, interest rate, market, and credit risk. They also involve
the risk of mispricing or improper valuation, the risk that changes in the value
of the derivative may not correlate perfectly with the underlying asset, rate or
index, and the risk of default or bankruptcy of the other party to the swap
agreement. Gains or losses involving some futures, options, and other
derivatives may be substantial -- in part because a relatively small price
movement in these securities may result in an immediate and substantial gain or
loss for the fund.

At any given time your shares may be worth more or less than the price you paid
for them. In other words, it is possible to lose money by investing in the
funds.

BASICS OF FIXED-INCOME INVESTING

DEBT SECURITIES

When a fund buys a debt security, also called a fixed-income security, it is
essentially lending money to the security's issuer. Notes, bonds, commercial
paper and U.S. Treasury securities are examples of debt securities. After the
debt security is first sold by the issuer, it may be bought and sold by other
investors. The price of the debt security may rise or fall based on many
factors, including changes in interest rates, liquidity and credit quality.

The fund managers decide which debt securities to buy and sell by

o determining which debt securities help a fund meet its maturity
requirements

o identifying debt securities that satisfy a fund's credit quality standards

o evaluating current economic conditions and assessing the risk of inflation

o evaluating special features of the debt securities that may make them more
or less attractive

WEIGHTED AVERAGE MATURITY

Like most loans, debt securities eventually must be repaid or refinanced at some
date. This date is called the maturity date. The number of days left to a debt
security's maturity date is called the remaining maturity. The longer a debt
security's remaining maturity, generally the more sensitive its price is to
changes in interest rates.

Because a bond fund will own many debt securities, the fund managers calculate
the average of the remaining maturities of all the debt securities the fund owns
to evaluate the interest rate sensitivity of the entire portfolio. This average
is weighted according to the size of the fund's individual holdings and is
called the weighted average maturity. The following chart shows how fund
managers would calculate the weighted average maturity for a fund that owned
only two debt securities.

AMOUNT OF PERCENT OF REMAINING WEIGHTED
SECURITY OWNED PORTFOLIO MATURITY MATURITY

Debt Security A $100,000 25% 4 years 1 year

Debt Security B $300,000 75% 12 years 9 years

Weighted Average Maturity 10 years

TYPES OF RISK

The basic types of risk the funds face are described below.

INTEREST RATE RISK

Generally, interest rates and the prices of debt securities move in opposite
directions. When interest rates fall, the prices of most debt securities rise;
when interest rates rise, prices fall. Because the funds invest primarily in
debt securities, changes in interest rates will affect the funds' performance.
This sensitivity to interest rate changes is called interest rate risk.

The degree to which interest rate changes affect fund performance varies and is
related to the weighted average maturity of a particular fund. For example, when
interest rates rise, you can expect the share value of a long-term bond fund to
fall more than that of a short-term bond fund; when rates fall, the opposite is
true.

The following table shows the likely effect of a 1% (100 basis points) increase
in interest rates on the price of 7% coupon bonds of differing maturities:

REMAINING MATURITY CURRENT PRICE PRICE AFTER 1% INCREASE CHANGE 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%

CREDIT RISK

Credit risk is the risk that an obligation won't be paid and a loss will result.
A high credit rating indicates a high degree of confidence by the rating
organization that the issuer will be able to withstand adverse business,
financial or economic conditions and make interest and principal payments on
time. Generally, a lower credit rating indicates a greater risk of non-payment.
A lower rating also may indicate that the issuer has a more senior series of
debt securities, which means that if the issuer has difficulties making its
payments, the more senior series of debt is first in line for payment.

Credit quality may be lower when the issuer has any of the following: a high
debt level, a short operating history, a difficult, competitive environment or a
less stable cash flow.

The fund managers do not invest solely on the basis of a debt security's credit
rating; they also consider other factors, including potential returns. Higher
credit ratings usually mean lower interest rate payments, so the managers often
purchase debt securities that aren't the highest rated to increase return. If a
fund purchases lower-rated debt securities, it assumes additional credit risk.

Debt securities rated in one of the highest four categories by a nationally
recognized securities rating organization are considered investment grade.
Although they are considered investment grade, an investment in these debt
securities still involves some credit risk because even a AAA rating is not a
guarantee of payment. For a complete description of the ratings system, see the
Statement of Additional Information. The funds' credit quality restrictions
apply at the time of purchase; the funds will not necessarily sell debt
securities if they are downgraded by a rating agency.

LIQUIDITY RISK

Debt securities can become difficult to sell, or less liquid, for a variety of
reasons, such as lack of an active trading market. The chance that a fund will
have difficulty selling its debt securities is called liquidity risk.

A COMPARISON OF BASIC RISK FACTORS

The following chart depicts the basic risks of investing in the funds. It is
designed to help you compare these funds with each other; it shouldn't be used
to compare these funds with other mutual funds.

INTEREST RATE RISK CREDIT RISK LIQUIDITY RISK

California Tax-Free Money Market Lowest Lowest Lowest

California Limited-Term Tax-Free Low Moderate Moderate

California Intermediate-Term Tax-Free Moderate Moderate Moderate

California Long-Term Tax-Free High Moderate Moderate

The funds engage in a variety of investment techniques as they pursue their
investment objectives. Each technique has its own characteristics and may pose
some level of risk to the funds. If you would like to learn more about these
techniques, please review the Statement of Additional Information before making
an investment.

MANAGEMENT

WHO MANAGES THE FUNDS?

The Board of Trustees, investment advisor and fund management teams play key
roles in the management of the funds.

THE BOARD OF TRUSTEES

The Board of Trustees oversees the management of the funds and meets at least
quarterly to review reports about fund operations. Although the Board of
Trustees does not manage the funds, it has hired an investment advisor to do so.
More than three-fourths of the trustees are independent of the funds' advisor;
that is, they have never been employed by and have no financial interest in the
advisor or any of its affiliated companies (other than as shareholders of
American Century funds).

THE INVESTMENT ADVISOR

The funds' investment advisor is American Century Investment Management, Inc.
(the advisor). The advisor has been managing mutual funds since 1958 and is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.

The advisor is responsible for managing the investment portfolios of the funds
and directing the purchase and sale of their investment securities. The advisor
also arranges for transfer agency, custody and all other services necessary for
the funds to operate.

For the services it provided to the funds, the advisor received a unified
management fee based on a percentage of the daily net assets of each specific
class of shares of the funds. The percentage rate used to calculate the
management fee for each class of shares of a fund is determined daily using a
two-component formula that takes into account (i) the daily net assets of the
accounts managed by the advisor that are in the same broad investment category
as each of the funds (the "Category Fee") and (ii) the assets of all funds in
the American Century family of funds (the "Complex Fee"). The management fee is
calculated daily and paid monthly in arrears.

The Statement of Additional Information contains detailed information about the
calculation of the management fee. Out of that fee, the advisor paid all
expenses of managing and operating the funds except brokerage expenses, taxes,
interest, fees and expenses of the independent trustees (including legal counsel
fees), and extraordinary expenses. A portion of the management fee may be paid
by the funds' advisor to unaffiliated third parties who provide recordkeeping
and administrative services that would otherwise be performed by an affiliate of
the advisor.

MANAGEMENT FEES PAID BY THE FUNDS TO THE ADVISOR
AS A PERCENTAGE OF AVERAGE NET ASSETS FOR THE
MOST RECENT FISCAL YEAR ENDED AUGUST 31, 2004 INVESTOR CLASS

California Tax-Free Money Market 0.49%

California Limited-Term Tax-Free 0.50%

California Intermediate-Term Tax-Free 0.50%

California Long-Term Tax-Free 0.50%

THE FUND MANAGEMENT TEAMS

The advisor uses a team of portfolio managers, assistant portfolio managers and
analysts to manage the funds. The teams meet regularly to review portfolio
holdings and discuss purchase and sale activity. Team members buy and sell
securities for a fund as they see fit, guided by a fund's investment objectives
and strategy.

CALIFORNIA TAX-FREE MONEY MARKET

The fund is managed by the Money Market Team, whose members are identified below.

G. DAVID MACEWEN

Mr. MacEwen, Chief Investment Officer - Fixed Income and Senior Vice President,
supervises the American Century Money Market team. He has been a member of the
team since July 2001. He joined American Century in May 1991 as a Municipal
Portfolio Manager. He has a bachelor's degree in economics from Boston
University and an MBA in finance from the University of Delaware.

STEVEN M. PERMUT

Mr. Permut, Senior Vice President, Director of Municipal Investments and Senior
Portfolio Manager, has been a member of the team since January 1988. He joined
American Century in June 1987. He has a bachelor's degree in business and
geography from State University of New York - Oneonta and an MBA in finance from
Golden Gate University - San Francisco.

DENISE LATCHFORD

Ms. Latchford, Vice President and Senior Portfolio Manager, has been a member of
the team since January 1996. She joined American Century in 1988, becoming a
member of its investment management department in 1991. She has a bachelor's
degree in accounting from San Diego State University and an MBA in finance from
Golden Gate University - San Francisco.

ALAN KRUSS

Mr. Kruss, Portfolio Manager, has been a member of the team since November 2001.
He joined American Century in 1997 as an Investment Administrator. He has a
bachelor's degree in finance from San Francisco State University.

TODD PARDULA

Mr. Pardula Vice President and Portfolio Manager, has been a member of the team
since May 1994. He joined American Century in February 1990 as an Investor
Services Representative. He also was an Associate Municipal Credit Analyst for
two years. He has a bachelor's degree in finance from Santa Clara University. He
is a CFA charterholder.

LYNN PASCHEN

Ms. Paschen, Portfolio Manager, joined the team in October 2000 as a
Fixed-Income Trader and was promoted to Portfolio Manager in February 2003. She
joined American Century in 1998 as a Senior Fund Accountant. She has a
bachelor's degree in finance from the University of Iowa and a master's degree
from Golden Gate University - San Francisco.

CALIFORNIA LIMITED-TERM TAX-FREE
CALIFORNIA INTERMEDIATE-TERM TAX-FREE
CALIFORNIA LONG-TERM TAX-FREE

The funds are managed by the Municipal Bond team, whose members are identified
below.

G. DAVID MACEWEN

Mr. MacEwen, Chief Investment Officer - Fixed Income and Senior Vice President,
supervises the American Century Municipal Bond team. He has been a member of the
team since May 1991, when he joined American Century as a Municipal Portfolio
Manager. He has a bachelor's degree in economics from Boston University and an
MBA in finance from the University of Delaware.

STEVEN M. PERMUT

ROBERT J. MILLER

Mr. Miller, Vice President and Portfolio Manager, has been a member of the team
since April 2000. He joined American Century in June 1998 as a Senior Municipal
Analyst. He has a bachelor's degree in business administration-finance from San
Jose State University and an MBA from New York University.

KENNETH M. SALINGER

Mr. Salinger, Vice President and Portfolio Manager, has been a member of the
team since October 1996. He joined American Century in April 1992. He has a
bachelor's degree in quantitative economics from the University of California -
San Diego. He is a CFA charterholder.

CODE OF ETHICS

American Century has a Code of Ethics designed to ensure that the interests of
fund shareholders come before the interests of the people who manage the funds.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or profiting from the purchase and sale of the same security within 60 calendar
days. It also contains limits on short-term transactions in American
Century-managed funds. In addition, the Code of Ethics requires portfolio
managers and other employees with access to information about the purchase or
sale of securities by the funds to obtain approval before executing permitted
personal trades.

FUNDAMENTAL INVESTMENT POLICIES

Fundamental investment policies contained in the Statement of Additional
Information and the investment objectives of the funds may not be changed
without shareholder approval. The Board of Trustees may change any other
policies and investment strategies.

INVESTING WITH AMERICAN CENTURY

SERVICES AUTOMATICALLY AVAILABLE TO YOU

Most accounts automatically will have access to the services listed below when
the account is opened. If you do not want these services, see CONDUCTING
BUSINESS IN WRITING. If you have questions about the services that apply to your
account type, please call us.

CONDUCTING BUSINESS IN WRITING

If you prefer to conduct business in writing only, you can indicate this on the
account application. If you choose this option, you must provide written
instructions to invest, exchange and redeem. All account owners must sign
transaction instructions (with signatures guaranteed for redemptions in excess
of $100,000). If you want to add services later, you can complete an Investor
Service Options form. By choosing this option, you are not eligible to enroll
for exclusive online account management to waive the account maintenance fee.
See ACCOUNT MAINTENANCE FEE in this section.

A NOTE ABOUT MAILINGS TO SHAREHOLDERS

To reduce the amount of mail you receive from us, we may deliver a single copy
of certain investor documents (such as shareholder reports and prospectuses) to
investors who share an address, even if accounts are registered under different
names. If you prefer to receive multiple copies of these documents individually
addressed, please call 1-800-345-2021. If you invest in American Century mutual
funds through a financial intermediary, please contact them directly. For
American Century Brokerage accounts, please call 1-888-345-2071.

YOUR RESPONSIBILITY FOR UNAUTHORIZED TRANSACTIONS

American Century and its affiliated companies use procedures reasonably designed
to confirm that telephone, electronic and other instructions are genuine. These
procedures include recording telephone calls, requesting personalized security
codes or other information, and sending confirmation of transactions. If we
follow these procedures, we are not responsible for any losses that may occur
due to unauthorized instructions. For transactions conducted over the Internet,
we recommend the use of a secure Internet browser. In addition, you should
verify the accuracy of your confirmation statements immediately after you
receive them.

WAYS TO MANAGE YOUR ACCOUNT

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ONLINE
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americancentury.com

OPEN AN ACCOUNT

If you are a current or new investor, you can open an account by completing and
submitting our online application. Current investors also can open an account by
exchanging shares from another American Century account.

EXCHANGE SHARES

Exchange shares from another American Century account.

MAKE ADDITIONAL INVESTMENTS

Make an additional investment into an established American Century account if
you have authorized us to invest from your bank account.

SELL SHARES*

Redeem shares and proceeds will be electronically transferred to your authorized
bank account.

* ONLINE REDEMPTIONS UP TO $25,000 PER DAY.

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BY TELEPHONE
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Investor Relations

1-800-345-2021

Business, Not-For-Profit and
Employer-Sponsored Retirement Plans

1-800-345-3533

Automated Information Line

1-800-345-8765

OPEN AN ACCOUNT

If you are a current investor, you can open an account by exchanging shares from
another American Century account.

EXCHANGE SHARES

Call or use our Automated Information Line if you have authorized us to accept
telephone instructions.

MAKE ADDITIONAL INVESTMENTS

Call or use our Automated Information Line if you have authorized us to invest
from your bank account.

SELL SHARES

Call a Service Representative.

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BY WIRE
- --------------------------------------------------------------------------------

Please remember, if you request redemptions by wire, $10 will be deducted from
the amount redeemed. Your bank also may charge a fee.

OPEN AN ACCOUNT

Call to set up your account or mail a completed application to the address
provided in the BY MAIL OR Fax section. Give your bank the following information
to wire money.

o Our bank information
Commerce Bank N.A.
Routing No. 101000019
Account No. Please call for the appropriate account number

o The fund name

o Your American Century account number, if known*

o Your name

o The contribution year (for IRAs only)

*FOR ADDITIONAL INVESTMENTS ONLY

MAKE ADDITIONAL INVESTMENTS

Follow the BY WIRE - OPEN AN ACCOUNT instructions.

SELL SHARES

You can receive redemption proceeds by wire or electronic transfer.

EXCHANGE SHARES

Not available.

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BY MAIL OR FAX
- --------------------------------------------------------------------------------
P.O. Box 419200
Kansas City, MO 64141-6200

Fax

816-340-7962

OPEN AN ACCOUNT

Send a signed, completed application and check or money order payable to
American Century Investments.

EXCHANGE SHARES

Send written instructions to exchange your shares from one American Century
account to another.

MAKE ADDITIONAL INVESTMENTS

Send your check or money order for at least $50 with an investment slip or $250
without an investment slip. If you don't have an investment slip, include your
name, address and account number on your check or money order.

SELL SHARES

Send written instructions or a redemption form to sell shares. Call a Service
Representative to request a form.

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AUTOMATICALLY
- --------------------------------------------------------------------------------

OPEN AN ACCOUNT

Not available.

EXCHANGE SHARES

Send written instructions to set up an automatic exchange of your shares from
one American Century account to another.

MAKE ADDITIONAL INVESTMENTS

With the automatic investment service, you can purchase shares on a regular
basis. You must invest at least $600 per year per account.

SELL SHARES

If you have at least $10,000 in your account, you may sell shares automatically
by establishing Check-A-Month or Automatic Redemption plans.

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IN PERSON
- --------------------------------------------------------------------------------

If you prefer to handle your transactions in person, visit one of our Investor
Centers and a representative can help you open an account, make additional
investments, and sell or exchange shares.

4500 Main Street 4917 Town Center Drive
Kansas City, Missouri Leawood, Kansas
8 a.m. to 5 p.m., Monday - Friday 8 a.m. to 5p.m., Monday - Friday
8 a.m. to noon, Saturday

1665 Charleston Road 10350 Park Meadows Drive
Mountain View, California Littleton, Colorado
8 a.m. to 5 p.m., Monday - Friday 8:30 a.m. to 5 p.m., Monday - Friday

MINIMUM INITIAL INVESTMENT AMOUNTS

To open an account, the minimum investment for California Tax-Free Money Market
is $2,500. The minimum for all other funds is $5,000. These funds are not
available for retirement accounts.

ACCOUNT MAINTENANCE FEE

If you hold Investor Class shares of any American Century fund, or Institutional
Class shares of the American Century Diversified Bond fund, in an American
Century account (i.e., not a financial intermediary or retirement plan account),
we may charge you a $12.50 semiannual account maintenance fee if the value of
those shares is less than $10,000. We will determine the amount of your total
eligible investments twice per year, generally the last Friday in October and
April. If the value of those investments is less than $10,000 at that time, we
will redeem shares automatically in one of your accounts to pay the $12.50 fee.
Please note that you may incur a tax liability as a result of the redemption. In
determining your total eligible investment amount, we will include your
investments in all PERSONAL ACCOUNTS (including American Century Brokerage
accounts) registered under your Social Security number. We will not charge the
fee as long as you choose to manage your accounts exclusively online. You may
enroll for exclusive online account management on our Web site. To find out more
about exclusive online account management, visit americancentury.com/info/demo.

PERSONAL ACCOUNTS INCLUDE INDIVIDUAL ACCOUNTS, JOINT
ACCOUNTS, UGMA/UTMA ACCOUNTS, PERSONAL TRUSTS, COVERDELL
EDUCATION SAVINGS ACCOUNTS, IRAS (INCLUDING TRADITIONAL, ROTH,
ROLLOVER, SEP-, SARSEP- AND SIMPLE-IRAS), AND CERTAIN OTHER
RETIREMENT ACCOUNTS. IF YOU HAVE ONLY BUSINESS, BUSINESS
RETIREMENT, EMPLOYER-SPONSORED OR AMERICAN CENTURY BROKERAGE
ACCOUNTS, YOU ARE CURRENTLY NOT SUBJECT TO THIS FEE, BUT YOU MAY
BE SUBJECT TO OTHER FEES.

REDEMPTIONS

Your redemption proceeds will be calculated using the NET ASSET VALUE (NAV) next
determined after we receive your transaction request in good order.

A FUND'S NET ASSET VALUE, OR NAV, IS THE PRICE OF THE FUND'S
SHARES.

However, we reserve the right to delay delivery of redemption proceeds up to
seven days. For example, each time you make an investment with American Century,
there is a seven-day holding period before we will release redemption proceeds
from those shares, unless you provide us with satisfactory proof that your
purchase funds have cleared. For funds with CheckWriting privileges, we will not
honor checks written against shares subject to this seven-day holding period.
Investments by wire generally require only a one-day holding period. If you
change your address, we may require that any redemption request made within 15
days be submitted in writing and be signed by all authorized signers with their
signatures guaranteed. If you change your bank information, we may impose a
15-day holding period before we will transfer or wire redemption proceeds to
your bank.

In addition, we reserve the right to honor certain redemptions with securities,
rather than cash, as described in the next section.

SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

If, during any 90-day period, you redeem fund shares worth more than $250,000
(or 1% of the value of a fund's assets if that amount is less than $250,000), we
reserve the right to pay part or all of the redemption proceeds in excess of
this amount in readily marketable securities instead of in cash. The fund
managers would select these securities from the fund's portfolio.

We will value these securities in the same manner as we do in computing the
fund's net asset value. We may provide these securities in lieu of cash without
prior notice. Also, if payment is made in securities, you may have to pay
brokerage or other transaction costs to convert the securities to cash.

If your redemption would exceed this limit and you would like to avoid being
paid in securities, please provide us with an unconditional instruction to
redeem at least 15 days prior to the date on which the redemption transaction is
to occur. The instruction must specify the dollar amount or number of shares to
be redeemed and the date of the transaction. This minimizes the effect of the
redemption on a fund and its remaining investors.

REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS

If your account balance falls below the minimum initial investment amount for
any reason other than as a result of market fluctuation, we will notify you and
give you 90 days to meet the minimum. If you do not meet the deadline, American
Century reserves the right to redeem the shares in the account and send the
proceeds to your address of record. Please note that you may incur a tax
liability as a result of the redemption.

SIGNATURE GUARANTEES

A signature guarantee - which is different from a notarized signature - is a
warranty that the signature presented is genuine. We may require a signature
guarantee for the following transactions:

o Your redemption or distribution check, Check-A-Month or automatic
redemption is made payable to someone other than the account owners

o Your redemption proceeds or distribution amount is sent by wire or EFT to a
destination other than your personal bank account

o You are transferring ownership of an account over $100,000

MODIFYING OR CANCELING AN INVESTMENT

Investment instructions are irrevocable. That means that once you have mailed or
otherwise transmitted your investment instruction, you may not modify or cancel
it. Each fund reserves the right to suspend the offering of shares for a period
of time and to reject any specific investment (including a purchase by
exchange). Additionally, we may refuse a purchase if, in our judgment, it is of
a size that would disrupt the management of a fund.

ABUSIVE TRADING PRACTICES

Short-term trading and other so-called market timing practices are not defined
or explicitly prohibited by any federal or state law. However, short-term
trading and other abusive trading practices may disrupt portfolio management
strategies and harm fund performance. If the cumulative amount of short-term
trading activity is significant relative to a fund's net assets, the fund may
incur trading costs that are higher than necessary as securities are first
purchased then quickly sold to meet the redemption request. In such case, the
fund's performance could be negatively impacted by the increased trading costs
created by short-term trading if the additional trading costs are significant.

Because of the potentially harmful effects of abusive trading practices, the
funds' board of trustees has approved American Century's abusive trading
policies and procedures, which are designed to reduce the frequency and effect
of these activities in our funds. These policies and procedures include
monitoring trading activity, imposing trading restrictions on certain accounts,
imposing redemption fees on certain funds, and using fair value pricing when
current market prices are not readily available. Although these efforts are
designed to discourage abusive trading practices, they cannot eliminate the
possibility that such activity will occur and will vary depending on the type of
fund, the class of shares or whether the shares are held directly or indirectly
with American Century. American Century seeks to exercise its judgment in
implementing these tools to the best of its abilities in a manner that it
believes is consistent with shareholder interests.

American Century uses a variety of techniques to monitor for and detect abusive
trading practices. These techniques may change from time to time as determined
by American Century in its sole discretion. To minimize harm to the funds and
their shareholders, we reserve the right to reject any purchase order (including
exchanges) from any shareholder we believe has a history of abusive trading or
whose trading, in our judgment, has been or may be disruptive to the funds. In
making this judgment, we may consider trading done in multiple accounts under
common ownership or control.

Currently, for shares held directly with American Century, we may deem the sale
of all or a substantial portion of a shareholder's purchase of fund shares to be
abusive if the sale is made

o within seven days of the purchase, or

o within 30 days of the purchase, if it happens more than once per year.

To the extent practicable, we try to use the same approach for defining abusive
trading for shares held through financial intermediaries. American Century
reserves the right, in its sole discretion, to identify other trading practices
as abusive and to modify its monitoring and other practices as necessary to deal
with novel or unique abusive trading practices.

In addition, American Century reserves the right to accept purchases and
exchanges in excess of the trading restrictions discussed above if it believes
that such transactions would not be inconsistent with the best interests of fund
shareholders or this policy.

American Century's policies do not permit us to enter into arrangements with
fund shareholders that permit such shareholders to engage in frequent purchases
and redemptions of fund shares. Due to the complexity and subjectivity involved
in identifying abusive trading activity and the volume of shareholder
transactions American Century handles, there can be no assurance that American
Century's efforts will identify all trades or trading practices that may be
considered abusive. In addition, American Century's ability to monitor trades
that are placed by the individual shareholders within group, or omnibus,
accounts maintained by financial intermediaries is severely limited because
American Century does not have access to the underlying shareholder account
information. However, American Century monitors aggregate trades placed in
omnibus accounts and seeks to work with financial intermediaries to discourage
shareholders from engaging in abusive trading practices and to impose
restrictions on excessive trades. There may be limitations on the ability of
financial intermediaries to impose restrictions on the trading practices of
their clients. As a result, American Century's ability to monitor and discourage
abusive trading practices in omnibus accounts may be limited.

INVESTING THROUGH FINANCIAL INTERMEDIARIES

If you do business with us through a financial intermediary, your ability to
purchase, exchange, redeem and transfer shares will be affected by the policies
of that entity. Some policy differences may include

o minimum investment requirements

o exchange policies

o fund choices

o cutoff time for investments

o trading restrictions

Please contact your FINANCIAL INTERMEDIARY for a complete description of its
policies. Copies of the funds' annual reports, semiannual reports and Statement
of Additional Information are available from your intermediary.

FINANCIAL INTERMEDIARIES INCLUDE BANKS, BROKER-DEALERS,
INSURANCE COMPANIES AND INVESTMENT ADVISORS.

Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, the advisor will pay such
service providers a fee for performing those services. Also, the advisor and the
funds' distributor may make payments for various additional services or other
expenses out of their profits or other available sources. Such expenses may
include distribution services, shareholder services or marketing, promotional or
related expenses. The amount of any payments described by this paragraph is
determined by the advisor or the distributor and is not paid by you.

Although fund share transactions may be made directly with American Century at
no charge, you also may purchase, redeem and exchange fund shares through
financial intermediaries that charge a transaction-based or other fee for their
services. Those charges are retained by the intermediary and are not shared with
American Century or the funds.

The funds have authorized certain financial intermediaries to accept orders on
each fund's behalf. American Century has contracts with these intermediaries
requiring them to track the time investment orders are received and to comply
with procedures relating to the transmission of orders. Orders must be received
by the intermediary on a fund's behalf before the time the net asset value is
determined in order to receive that day's share price. If those orders are
transmitted to American Century and paid for in accordance with the contract,
they will be priced at the net asset value next determined after your request is
received in the form required by the intermediary.

RIGHT TO CHANGE POLICIES

We reserve the right to change any stated investment requirement, including
those that relate to purchases, exchanges and redemptions. We also may alter,
add or discontinue any service or privilege. Changes may affect all investors or
only those in certain classes or groups. In addition, from time to time we may
waive a policy on a case-by-case basis, as the advisor deems appropriate.

SHARE PRICE AND DISTRIBUTIONS

SHARE PRICE

American Century will price the fund shares you purchase, exchange or redeem at
the net asset value (NAV) next determined after your order is received and
accepted by the fund's transfer agent, or other financial intermediary with the
authority to accept orders on the fund's behalf. We determine the NAV of each
fund as of the close of regular trading (usually 4 p.m. Eastern time) on the New
York Stock Exchange (NYSE) on each day the NYSE is open. On days when the NYSE
is closed (including certain U.S. national holidays), we do not calculate the
NAV. A fund's NAV is the current value of the fund's assets, minus any
liabilities, divided by the number of shares outstanding.

The fund values portfolio securities for which market quotations are readily
available at their market price. As a general rule, equity securities listed on
a U.S. exchange are valued at the last current reported sale price as of the
time of valuation. Securities listed on the NASDAQ National Market System
(Nasdaq) are valued at the Nasdaq Official Closing Price (NOCP), as determined
by Nasdaq, or lacking an NOCP, at the last current reported sale price as of the
time of valuation. The fund may use pricing services to assist in the
determination of market value. Unlisted securities for which market quotations
are readily available are valued at the last quoted sale price or the last
quoted ask price, as applicable, except that debt obligations with 60 days or
less remaining until maturity may be valued at amortized cost. Exchange-traded
options, futures and options on futures are valued at the settlement price as
determined by the appropriate clearing corporation.

If the fund determines that the market price for a portfolio security is not
readily available or that the valuation methods mentioned above do not reflect
the security's fair value, such security is valued at its fair value as
determined in good faith by, or in accordance with procedures adopted by, the
fund's board or its designee (a process referred to as "fair valuing" the
security). Circumstances that may cause the fund to fair value a security
include, but are not limited to:

o for funds investing in foreign securities, if, after the close of the
foreign exchange on which a portfolio security is principally traded,
but before the close of the NYSE, an event occurs that may materially
affect the value of the security;

o for funds that invest in debt securities, a debt security has been
declared in default; or

o trading in a security has been halted during the trading day.

If such circumstances occur, the fund will fair value the security if the fair
valuation would materially impact the fund's NAV. While fair value
determinations involve judgments that are inherently subjective, these
determinations are made in good faith in accordance with procedures adopted by
the fund's board.

The effect of using fair value determinations is that the fund's NAV will be
based, to some degree, on security valuations that the board or its designee
believes are fair rather than being solely determined by the market.

With respect to any portion of the fund's assets that are invested in one or
more open-end management investment companies that are registered with the SEC
(RICs), the fund's NAV will be calculated based upon the NAVs of such RICs.
These RICs are required by law to explain the circumstances under which they
will use fair value pricing and the effects of using fair value pricing in their
prospectuses.

Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day.

Trading of securities in foreign markets may not take place every day the NYSE
is open. Also, trading in some foreign markets and on some electronic trading
networks may take place on weekends or holidays when the fund's NAV is not
calculated. So, the value of the fund's portfolio may be affected on days when
you will not be able to purchase, exchange or redeem fund shares.

DISTRIBUTIONS

Federal tax laws require each fund to make distributions to its shareholders in
order to qualify as a regulated investment company. Qualification as a regulated
investment company means that the funds will not be subject to state or federal
income tax on amounts distributed. The distributions generally consist of
dividends and interest received by a fund, as well as CAPITAL GAINS realized by
a fund on the sale of its investment securities.

CAPITAL GAINS ARE INCREASES IN THE VALUES OF CAPITAL ASSETS, SUCH
AS STOCK, FROM THE TIME THE ASSETS ARE PURCHASED.

MONEY MARKET FUNDS

A money market fund declares distributions from net income daily. These
distributions are paid on the last business day of each month. Distributions are
reinvested automatically in additional shares unless you elect to have dividends
and/or capital gains sent to another American Century account, to your bank
electronically, or to your home address or to another address by check.

Except as described in the next paragraph, you will begin to participate in fund
distributions the next business day after your purchase is effective. If you
redeem shares, you will receive the distribution declared for the day you
redeem.

You will begin to participate in fund distributions on the day your instructions
to purchase are received if you

o notify us of your purchase prior to 11 a.m. Central time AND

o pay for your purchase by bank wire transfer prior to 3 p.m. Central time on
the same day.

Also, we will wire your redemption proceeds to you by the end of the business
day if you request your redemption before 11 a.m. Central time.

OTHER FUNDS

Each fund pays distributions from net income monthly, and generally pays capital
gain distributions, if any, once a year, usually in December. A fund may make
more frequent distributions, if necessary, to comply with Internal Revenue Code
provisions. Distributions are reinvested automatically in additional shares
unless you elect to have dividends and/or capital gains sent to another American
Century account, to your bank electronically, or to your home address or to
another address by check.

You will participate in fund distributions when they are declared, starting the
next business day after your purchase is effective. For example, if you purchase
shares on a day that a distribution is declared, you will not receive that
distribution. If you redeem shares, you will receive any distribution declared
on the day you redeem. If you redeem all shares, we will include any
distributions received with your redemption proceeds.

TAXES

TAX-EXEMPT INCOME

Most of the income that the funds receive from municipal securities is exempt
from California and regular federal income taxes. However, corporate
shareholders should be aware that distributions are subject to California's
corporate franchise tax.

TAXABLE INCOME

The funds' investment performance also is based on sources other than income
from municipal securities. These investment performance sources, while not the
primary source of fund distributions, will generate taxable income to you. Some
of these investment performance sources are

o MARKET DISCOUNT PURCHASES. The funds may buy a tax-exempt security for a
price less than the principal amount of the bond. If the price of the bond
increases over time, a portion of the gain may be treated as ordinary
income and taxable as ordinary income if it is distributed to shareholders.

o CAPITAL GAINS. When a fund sells a security, even a tax-exempt municipal
security, it can generate a capital gain or loss, which you must report on
your tax return.

o TEMPORARY INVESTMENTS. Some temporary investments, such as securities loans
and repurchase agreements, can generate taxable income.

TAXABILITY OF DISTRIBUTIONS

Fund distributions may consist of income such as dividends and interest earned
by a fund from its investments, or capital gains generated by a fund from the
sale of its investment securities. Distributions of income are generally exempt
from regular federal income tax. However, if distributions are federally
taxable, such distributions may be designated as QUALIFIED DIVIDEND INCOME. If
so, and if you meet a minimum required holding period with respect to your
shares of the fund, such distributions of income are taxed as long-term capital
gains.

QUALIFIED DIVIDEND INCOME IS A DIVIDEND RECEIVED BY A FUND FROM
THE STOCK OF A DOMESTIC OR QUALIFYING FOREIGN CORPORATION, PROVIDED
THAT THE FUND HAS HELD THE STOCK FOR A REQUIRED HOLDING PERIOD.

For capital gains and for income distributions designated as qualified dividend
income, the following rates apply:

TAX RATE FOR 10% TAX RATE FOR
TYPE OF DISTRIBUTION AND 15% BRACKETS ALL OTHER BRACKETS

Short-term capital gains Ordinary Income Ordinary Income

Long-term capital gains (> 1 year)
and Qualified Dividend Income 5% 15%

The tax status of any distribution of capital gains is determined by how long
the fund held the underlying security that was sold, not by how long you have
been invested in the fund or whether you reinvest your distributions in
additional shares or take them in cash. American Century or your financial
intermediary will inform you of the tax status of fund distributions for each
calendar year in an annual tax mailing (Form 1099-DIV).

Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, you may want to consult your tax professional about
federal, state and local tax consequences.

TAXES ON TRANSACTIONS

Your redemptions--including exchanges to other American Century funds--are
subject to capital gains tax. The table above can provide a general guide for
your potential tax liability when selling or exchanging fund shares. Short-term
capital gains are gains on fund shares you held for 12 months or less. Long-term
capital gains are gains on fund shares you held for more than 12 months. If your
shares decrease in value, their sale or exchange will result in a long-term or
short-term capital loss. However, you should note that loss realized upon the
sale or exchange 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 and will be disallowed to the extent of any distribution of tax-exempt
income to you with respect to those shares. 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. This may result in a postponement of the recognition of
such loss for federal income tax purposes.

If you have not certified to us that your Social Security number or tax
identification number is correct and that you are not subject to withholding, we
are required to withhold and pay to the IRS the applicable federal withholding
tax rate on taxable dividends, capital gains distributions and redemption
proceeds.

BUYING A DIVIDEND

Purchasing fund shares in a taxable account shortly before a distribution is
sometimes known as buying a dividend. In taxable accounts, you must pay income
taxes on the distribution whether you reinvest the distribution or take it in
cash. In addition, you will have to pay taxes on the distribution whether the
value of your investment decreased, increased or remained the same after you
bought the fund shares.

The risk in buying a dividend is that the fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. The funds distribute those gains to you, after subtracting any losses,
even if you did not own the shares when the gains occurred.

If you buy a dividend, you incur the full tax liability of the distribution
period, but you may not enjoy the full benefit of the gains realized in the
fund's portfolio.

FINANCIAL HIGHLIGHTS

UNDERSTANDING THE FINANCIAL HIGHLIGHTS

The tables on the next few pages itemize what contributed to the changes in
share price during the most recently ended fiscal year. They also show the
changes in share price for this period in comparison to changes over the last
five fiscal years.

On a per-share basis, each table includes as appropriate

o share price at the beginning of the period

o investment income and capital gains or losses

o distributions of income and capital gains paid to investors

o share price at the end of the period

Each table also includes some key statistics for the period as appropriate

o TOTAL RETURN - the overall percentage of return of the fund, assuming the
reinvestment of all distributions

o EXPENSE RATIO - the operating expenses of the fund as a percentage of
average net assets

o NET INCOME RATIO - the net investment income of the fund as a percentage of
average net assets

o PORTFOLIO TURNOVER - the percentage of the fund's investment portfolio that
is replaced during the period

The Financial Highlights have been audited by PricewaterhouseCoopers LLP,
independent registered public accounting firm. Their Independent Auditors'
Report and the financial statements are included in the funds' Annual Report,
which is available upon request.

CALIFORNIA TAX-FREE MONEY MARKET - FINANCIAL HIGHLIGHTS
INVESTOR CLASS

RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.52% 0.51% 0.51% 0.50% 0.49%
- -------------------------
Ratio of Net Investment
Income to Average
Net Assets 0.57% 0.76% 1.24% 2.84% 3.07%
- -------------------------
Net Assets, End of Period
(in thousands) $600,882 $621,747 $528,188 $551,722 $640,476
- --------------------------------------------------------------------------------

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

CALIFORNIA LIMITED-TERM TAX-FREE - FINANCIAL HIGHLIGHTS
INVESTOR CLASS

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED AUGUST 31
- --------------------------------------------------------------------------------
2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $10.70 $10.82 $10.69 $10.40 $10.27
- --------------------------------------------------------------------------------
Income From
Investment Operations
- -------------------------
Net Investment Income 0.28 0.30 0.35 0.42 0.41
- -------------------------
Net Realized and
Unrealized Gain (Loss) 0.01 (0.10) 0.16 0.29 0.13
- --------------------------------------------------------------------------------
Total From
Investment Operations 0.29 0.20 0.51 0.71 0.54
- --------------------------------------------------------------------------------
Distributions
- -------------------------
From Net
Investment Income (0.28) (0.30) (0.35) (0.42) (0.41)
- -------------------------
From Net
Realized Gains --(1) (0.02) (0.03) -- --
- --------------------------------------------------------------------------------
Total Distributions (0.28) (0.32) (0.38) (0.42) (0.41)
- --------------------------------------------------------------------------------
Net Asset Value,
End of Period $10.71 $10.70 $10.82 $10.69 $10.40
================================================================================
TOTAL RETURN(2) 2.75% 1.87% 4.91% 6.94% 5.44%

RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.50% 0.51% 0.51% 0.51% 0.51%
- -------------------------
Ratio of Net Investment
Income to Average
Net Assets 2.59% 2.78% 3.30% 3.97% 4.05%
- -------------------------
Portfolio Turnover Rate 55% 34% 50% 63% 97%
- -------------------------
Net Assets, End of Period
(in thousands) $219,949 $228,030 $205,066 $163,929 $142,205
- --------------------------------------------------------------------------------

(1) Per-share amount was less than $0.005.

(2) Total return assumes reinvestment of net investment income and capital gains
distributions, if any.

CALIFORNIA INTERMEDIATE-TERM TAX-FREE - FINANCIAL HIGHLIGHTS
INVESTOR CLASS

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED AUGUST 31
- --------------------------------------------------------------------------------
2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $11.28 $11.55 $11.47 $11.08 $10.85
- --------------------------------------------------------------------------------
Income From
Investment Operations
- -------------------------
Net Investment Income 0.44 0.45 0.47 0.50 0.50
- -------------------------
Net Realized and
Unrealized Gain (Loss) 0.13 (0.23) 0.15 0.39 0.23
- --------------------------------------------------------------------------------
Total From
Investment Operations 0.57 0.22 0.62 0.89 0.73
- --------------------------------------------------------------------------------
Distributions
- -------------------------
From Net
Investment Income (0.44) (0.45) (0.47) (0.50) (0.50)
- -------------------------
From Net
Realized Gains -- (0.04) (0.07) -- --
- --------------------------------------------------------------------------------
Total Distributions (0.44) (0.49) (0.54) (0.50) (0.50)
- --------------------------------------------------------------------------------
Net Asset Value,
End of Period $11.41 $11.28 $11.55 $11.47 $11.08
================================================================================
TOTAL RETURN(1) 5.13% 1.91% 5.63% 8.22% 6.95%

RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.50% 0.51% 0.51% 0.51% 0.51%
- -------------------------
Ratio of Net Investment
Income to Average
Net Assets 3.87% 3.89% 4.13% 4.45% 4.64%
- -------------------------
Portfolio Turnover Rate 20% 25% 41% 94% 73%
- -------------------------
Net Assets, End of Period
(in thousands) $418,655 $451,131 $477,494 $449,975 $444,571
- --------------------------------------------------------------------------------

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

CALIFORNIA LONG-TERM TAX-FREE - FINANCIAL HIGHLIGHTS
INVESTOR CLASS

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED AUGUST 31
- ---------------------------------------------------------------------------------
2004 2003 2002 2001 2000
- ---------------------------------------------------------------------------------
PER-SHARE DATA
- ---------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $11.43 $11.75 $11.70 $11.11 $10.86
- ---------------------------------------------------------------------------------
Income From
Investment Operations
- -------------------------
Net Investment Income 0.51 0.53 0.53 0.55 0.56
- -------------------------
Net Realized and
Unrealized Gain (Loss) 0.26 (0.32) 0.05 0.59 0.25
- ---------------------------------------------------------------------------------
Total From
Investment Operations 0.77 0.21 0.58 1.14 0.81
- ---------------------------------------------------------------------------------
Distributions
- -------------------------
From Net
Investment Income (0.51) (0.53) (0.53) (0.55) (0.56)
- -------------------------
From Net
Realized Gains --(1) -- -- -- --
- ---------------------------------------------------------------------------------
Total Distributions (0.51) (0.53) (0.53) (0.55) (0.56)
- ---------------------------------------------------------------------------------
Net Asset Value,
End of Period $11.69 $11.43 $11.75 $11.70 $11.11
=================================================================================
TOTAL RETURN(2) 6.83% 1.81% 5.14% 10.55% 7.79%

RATIOS/SUPPLEMENTAL DATA
- ---------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.50% 0.51% 0.51% 0.51% 0.51%
- -------------------------
Ratio of Net Investment
Income to Average
Net Assets 4.39% 4.54% 4.58% 4.87% 5.24%
- -------------------------
Portfolio Turnover Rate 19% 23% 43% 31% 24%
- -------------------------
Net Assets, End of Period
(in thousands) $468,891 $497,165 $327,150 $331,090 $303,480
- ---------------------------------------------------------------------------------

(1) Per-share amount was less than $0.005.

(2) Total return assumes reinvestment of net investment income and capital gains
distributions, if any.

MORE INFORMATION ABOUT THE FUNDS IS CONTAINED IN THESE DOCUMENTS

ANNUAL AND SEMIANNUAL REPORTS

Annual and semiannual reports contain more information about the funds'
investments and the market conditions and investment strategies that
significantly affected the funds' performance during the most recent fiscal
period.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI contains a more detailed, legal description of the funds' operations,
investment restrictions, policies and practices. The SAI is incorporated by
reference into this prospectus. This means that it is legally part of this
prospectus, even if you don't request a copy.

You may obtain a free copy of the SAI or annual and semiannual reports, and ask
questions about the funds or your accounts, by contacting American Century at
the address or telephone numbers listed below.

You also can get information about the funds (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.

IN PERSON SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for location and hours.

ON THE INTERNET o EDGAR database at sec.gov
o By email request at publicinfo@sec.gov

BY MAIL SEC Public Reference Section
Washington, D.C. 20549-0102

This prospectus shall not constitute an offer to sell securities of a fund in
any state, territory, or other jurisdiction where the fund's shares have not
been registered or qualified for sale, unless such registration or qualification
is not required, or under any circumstances in which such offer or solicitation
would be unlawful.

FUND REFERENCE FUND CODE TICKER NEWSPAPER LISTING
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET FUND
Investor Class 930 BCTXX AmC CATF
- --------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE FUND
Investor Class 936 BCSTX CaLtdTF
- --------------------------------------------------------------------------------
CALIFORNIA INTERMEDIATE-TERM TAX-FREE FUND
Investor Class 931 BCITX CaIntTF
- --------------------------------------------------------------------------------
CALIFORNIA LONG-TERM TAX-FREE FUND
Investor Class 932 BCLTX CaLgTF
- --------------------------------------------------------------------------------

Investment Company Act File No. 811-0816

AMERICAN CENTURY INVESTMENTS
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021 or 816-531-5575
americancentury.com

0501
SH-PRS-xxxx

YOUR
AMERICAN CENTURY INVESTMENTS
PROSPECTUS

INVESTOR CLASS

CALIFORNIA HIGH-YIELD MUNICIPAL FUND

JANUARY 1, 2005

EFFECTIVE JANUARY 30, 2003, CALIFORNIA HIGH-YIELD MUNICIPAL CLOSED TO NEW RETAIL
INVESTORS, BUT IS AVAILABLE THROUGH FINANCIAL INTERMEDIARIES. ANY SHAREHOLDER
WITH AN OPEN ACCOUNT AS OF JANUARY 30, 2003 MAY MAKE ADDITIONAL INVESTMENTS AND
REINVEST DIVIDENDS AND CAPITAL GAINS DISTRIBUTIONS AS LONG AS SUCH ACCOUNT
REMAINS OPEN.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO
TELLS YOU OTHERWISE IS COMMITTING A CRIME.

American Century
Investment Services, Inc.

Dear Investor,

Thank you for considering American Century for your investment needs.

Sincerely,

Donna Byers
Senior Vice President
Direct Sales and Services

American Century Services Corporation

American Century Investments, Inc.
P.O. Box 419200, Kansas City, MO 64141-6200

The American Century logo, American Century and American Century Investments are
service marks of American Century Services Corporation.

TABLE OF CONTENTS

AN OVERVIEW OF THE FUND......................................................X

FUND PERFORMANCE HISTORY.....................................................X

FEES AND EXPENSES............................................................X

OBJECTIVES, STRATEGIES AND RISKS.............................................X

BASICS OF FIXED-INCOME INVESTING.............................................X

MANAGEMENT...................................................................X

INVESTING WITH AMERICAN CENTURY..............................................X

SHARE PRICE AND DISTRIBUTIONS................................................X

TAXES........................................................................X

MULTIPLE CLASS INFORMATION...................................................X

FINANCIAL HIGHLIGHTS.........................................................X

THIS SYMBOL IS USED THROUGHOUT THE BOOK TO HIGHLIGHT DEFINITIONS
OF KEY INVESTMENT TERMS AND TO PROVIDE OTHER HELPFUL INFORMATION.

AN OVERVIEW OF THE FUND

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

This fund seeks high current income that is exempt from federal and California
income tax.

WHAT ARE THE FUND'S PRIMARY INVESTMENT STRATEGY AND PRINCIPAL RISKS?

The fund managers invest at least 80% of the fund's assets in municipal
securities with income payments exempt from federal and California income taxes.
Cities, counties and other municipalities in California and U. S. territories
usually issue these securities for public projects, such as schools, roads, and
water and sewer systems.

o INTEREST RATE RISK - Generally, when interest rates rise, the value of the
fund's fixed-income securities will decline. The opposite is true when
interest rates decline.

o CREDIT RISK - The value of the fund's fixed-income securities will be
affected adversely by any erosion in the ability of the issuers of these
securities to make interest and principal payments as they become due.

o LIQUIDITY RISK - The market for lower-quality debt securities, including
junk bonds, is generally less liquid than the market for higher-quality
debt securities, and at times it may become difficult to sell the
lower-quality debt securities.

o PRINCIPAL LOSS - It is possible to lose money by investing in the fund.

A more detailed description of the fund's investment strategies and risks begins
on page x.

WHO MAY WANT TO INVEST IN THE FUND?

The fund may be a good investment if you are

o a California resident or taxpayer

o seeking current tax-free income

o comfortable with risk based on California's economy

o comfortable with the fund's other investment risks

o seeking diversification by investing in a fixed-income mutual fund

WHO MAY NOT WANT TO INVEST IN THE FUND?

The fund may not be a good investment if you are

o investing in an IRA or other tax-advantaged retirement plan

o investing for long-term growth

o looking for the added security of FDIC insurance

AN INVESTMENT IN THE FUND IS NOT A BANK DEPOSIT, AND IT IS NOT
INSURED OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
(FDIC) OR ANY OTHER GOVERNMENT AGENCY.

FUND PERFORMANCE HISTORY

ANNUAL TOTAL RETURNS

CALIFORNIA HIGH-YIELD MUNICIPAL FUND - INVESTOR CLASS(1)

2003 5.72%
2002 9.10%
2001 5.02%
2000 12.70%
1999 -3.31%
1998 6.73%
1997 10.50%
1996 5.89%
1995 18.29%
1994 -5.36%

(1) AS OF SEPTEMBER 30, 2004, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN WAS 4.63%.

The highest and lowest quarterly returns for the periods reflected in the bar
chart are:

HIGHEST LOWEST

California High-Yield Municipal 7.18% (1Q 1995) -4.54% (1Q 1994)
- --------------------------------------------------------------------------------

AVERAGE ANNUAL TOTAL RETURNS

The following table shows the average annual total returns of the fund's
Investor Class shares calculated three different ways.

Return Before Taxes shows the actual change in the value of fund shares over the
periods shown, but does not reflect the impact of taxes on fund distributions or
the sale of fund shares. The two after-tax returns take into account taxes that
may be associated with owning fund shares. Return After Taxes on Distributions
is a fund's actual performance, adjusted by the effect of taxes on distributions
made by the fund during the period shown. Return After Taxes on Distributions
and Sale of Fund Shares is further adjusted to reflect the tax impact on any
change in the value of fund shares as if they had been sold on the last day of
the period.

The benchmark is an unmanaged index that has no operating costs and is included
in the table for performance comparison.

INVESTOR CLASS

FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2003 1 YEAR 5 YEARS 10 YEARS

- --------------------------------------------------------------------------------
CALIFORNIA HIGH-YIELD MUNICIPAL

Return Before Taxes 5.72% 5.71% 6.32%

Return After Taxes on Distributions 5.73% 5.71% 6.25%

Return After Taxes on Distributions
and Sale of Fund Shares 5.61% 5.66% 6.19%

Lehman Brothers Long-Term Municipal Bond Index 6.13% 5.95% 6.40%
(reflects no deduction for fees, expenses
and taxes)

Performance information is designed to help you see how fund returns can vary.
Keep in mind that past performance (before and after taxes) does not predict how
a fund will perform in the future.

For current performance information, including yields, please call us at
1-800-345-2021 or visit us at americancentury.com.

FEES AND EXPENSES

There are no sales loads, fees or other charges

o to buy fund shares directly from American Century

o to reinvest dividends in additional shares

o to exchange into the same class of shares of other American Century funds

o to redeem your shares other than a $10 fee to redeem by wire

The following tables describe the fees and expenses you may pay if you buy and
hold shares of the fund.

SHAREHOLDER FEES (FEES PAID DIRECTLY FROM YOUR INVESTMENT)
- --------------------------------------------------------------------------------
Investor Class
Maximum Account Maintenance Fee $25(1)
- --------------------------------------------------------------------------------

(1) APPLIES ONLY TO INVESTORS WHOSE TOTAL ELIGIBLE INVESTMENTS WITH AMERICAN
CENTURY ARE LESS THAN $10,000. SEE Account Maintenance Fee UNDER Investing
with American Century FOR MORE DETAILS.

ANNUAL FUND OPERATING EXPENSES (EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)

MANAGEMENT DISTRIBUTION AND OTHER TOTAL ANNUAL FUND
FEE(1) SERVICE (12B-1) FEES EXPENSES(2) OPERATING EXPENSES

- -----------------------------------------------------------------------------------------------
CALIFORNIA HIGH-YIELD MUNICIPAL
Investor Class 0.53% None 0.00% 0.53%
- -----------------------------------------------------------------------------------------------

(1) BASED ON ASSETS OF ALL CLASSES OF THE FUND DURING THE FUND'S MOST RECENT
FISCAL YEAR. THE FUND HAS A STEPPED FEE SCHEDULE. AS A RESULT, THE FUND'S
MANAGEMENT FEE RATE GENERALLY DECREASES AS FUND ASSETS INCREASE AND
INCREASES AS FUND ASSETS DECREASE.

(2) OTHER EXPENSES INCLUDE THE FEES AND EXPENSES OF THE FUND'S INDEPENDENT
TRUSTEES AND THEIR LEGAL COUNSEL, AS WELL AS INTEREST.

EXAMPLE

The examples in the table below are intended to help you compare the costs of
investing in the fund with the costs of investing in other mutual funds. Of
course, your actual costs may be higher or lower. Assuming you . . .

o invest $10,000 in the fund

o redeem all of your shares at the end of the periods shown below

o earn a 5% return each year

o incur the same operating expenses as shown above

. . . your cost of investing in the fund would be:

1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
CALIFORNIA HIGH-YIELD MUNICIPAL
Investor Class $54 $170 $296 $664
- --------------------------------------------------------------------------------

OBJECTIVES, STRATEGIES AND RISKS

WHAT IS THE FUND'S INVESTMENT OBJECTIVE?

The fund seeks high current income that is exempt from federal and California
income taxes.

HOW DOES THE FUND PURSUE ITS INVESTMENT OBJECTIVE?

The fund managers must invest at least 80% of the fund's assets in MUNICIPAL
SECURITIES with income payments exempt from federal and California income taxes.
Cities, counties and other municipalities in California and U.S. territories,
such as Puerto Rico, usually issue these securities for public projects, such as
schools, roads and water and sewer systems.

MUNICIPAL SECURITIES ARE A DEBT OBLIGATION ISSUED BY OR ON BEHALF
OF A STATE, ITS POLITICAL SUBDIVISIONS, AGENCIES OR INSTRUMENTALITIES,
THE DISTRICT OF COLUMBIA OR A U.S. TERRITORY OR POSSESSION.

The fund managers also may buy long- and intermediate-term debt securities with
income payments exempt from regular federal income tax, but not exempt from the
federal alternative minimum tax. Cities, counties and other municipalities
usually issue these securities (called private activity bonds) to fund
for-profit private projects, such as athletic stadiums, airports and apartment
buildings.

The fund managers seek to invest in securities that will result in a high yield
for the fund. To accomplish this, the fund managers buy investment-grade
securities, securities rated below investment grade, including so-called junk
bonds and bonds that are in technical or monetary default, or unrated securities
determined by the advisor to be of similar quality. The issuers of these
securities often have short financial histories or questionable credit or have
had and may continue to have problems making interest and principal payments.

Although California High-Yield Municipal invests primarily for income, it also
employs techniques designed to realize capital appreciation. For example, the
fund managers may select bonds with maturities and coupon rates that position
the fund for potential capital appreciation for a variety of reasons, including
their view on the direction of future interest-rate movements and the potential
for a credit upgrade.

The fund also may invest in derivative instruments such as options, futures
contracts, options on futures contracts, and swap agreements (including, but not
limited to, credit default swap agreements), or in mortgage- or asset-backed
securities, provided that such investments are in keeping with the fund's
investment objective.

In the event of exceptional market or economic conditions, the fund may, as a
temporary defensive measure, invest all or a substantial portion of its assets
in cash or cash-equivalent securities. To the extent the fund assumes a
defensive position , it will not be pursuing its investment objectives and may
generate taxable income.

A description of the fund's policies and procedures with respect to the
disclosure of the fund's portfolio securities is available in the fund's
statement of additional information.

WHAT ARE THE PRINCIPAL RISKS OF INVESTING IN THE FUND?

The fund's investments often have high credit risk, which helps the fund pursue
a higher yield than more conservatively managed bond funds. Issuers of
high-yield securities are more vulnerable to real or perceived economic changes
(such as an economic downturn or a prolonged period of rising interest rates),
political changes or adverse developments specific to the issuer. These factors
may be more likely to cause an issuer of low-quality bonds to default on its
obligation to pay the interest and principal due under its securities.

The fund may invest in securities rated below investment grade or that are
unrated, including bonds that are in technical or monetary default. By
definition, the issuers of many of these securities have had and may continue to
have problems making interest and principal payments.

The market for lower-quality debt securities is generally less liquid than the
market for higher-quality securities. Adverse publicity and investor
perceptions, as well as new and proposed laws, also may have a greater negative
impact on the market for lower-quality securities.

Because the fund typically invests in intermediate-term and long-term bonds, the
fund's interest rate risk is higher than for funds with shorter weighted average
maturities, such as money market and short-term bond funds. See the discussion
on page X for more information about the effects of changing interest rates on
the fund's portfolio.

The fund is NONDIVERSIFIED. As such, it may hold large positions in a small
number of securities. If so, a price change in any one of those securities may
have a greater impact on the fund's share price than would be the case in a
diversified fund.

A NONDIVERSIFIED FUND MAY INVEST A GREATER PERCENTAGE OF ITS
ASSETS IN A SMALLER NUMBER OF SECURITIES THAN A DIVERSIFIED FUND.

Some or all of the fund's income may be subject to the federal alternative
minimum tax.

Because the fund invests primarily in municipal securities, it will be sensitive
to events that affect California's economy. California High-Yield Municipal may
have a higher level of risk than funds that invest in a larger universe of
securities.

At any given time your shares may be worth more or less than the price you paid
for them. In other words, it is possible to lose money by investing in the fund.

BASICS OF FIXED-INCOME INVESTING

DEBT SECURITIES

The fund managers decide which debt securities to buy and sell by

o determining which debt securities help a fund meet its maturity
requirements

o identifying debt securities that satisfy a fund's credit quality standards

o evaluating current economic conditions and assessing the risk of inflation

o evaluating special features of the debt securities that may make them more
or less attractive

WEIGHTED AVERAGE MATURITY

AMOUNT OF PERCENT OF REMAINING WEIGHTED
SECURITY OWNED PORTFOLIO MATURITY MATURITY

Debt Security A $100,000 25% 4 years 1 year

Debt Security B $300,000 75% 12 years 9 years

Weighted Average Maturity 10 years

TYPES OF RISK

The basic types of risk the fund faces are described below.

INTEREST RATE RISK

Generally, interest rates and the prices of debt securities move in opposite
directions. When interest rates fall, the prices of most debt securities rise;
when interest rates rise, prices fall. Because the fund invests primarily in
debt securities, changes in interest rates will affect the fund's performance.
This sensitivity to interest rate changes is called interest rate risk.

The following table shows the likely effect of a 1% (100 basis points) increase
in interest rates on the price of 7% coupon bonds of differing maturities:

REMAINING MATURITY CURRENT PRICE PRICE AFTER 1% INCREASE CHANGE 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%

CREDIT RISK

Debt securities rated in one of the highest four categories by a nationally
recognized securities rating organization are considered investment grade.
Although they are considered investment grade, an investment in these debt
securities still involves some credit risk because even a AAA rating is not a
guarantee of payment. For a complete description of the ratings system, see the
Statement of Additional Information. The fund's credit quality restrictions
apply at the time of purchase; the funds will not necessarily sell debt
securities if they are downgraded by a rating agency.

The fund engages in a variety of investment techniques as it pursues its
investment objectives. Each technique has its own characteristics and may pose
some level of risk to the fund. If you would like to learn more about these
techniques, please review the Statement of Additional Information before making
an investment.

LIQUIDITY RISK

MANAGEMENT

WHO MANAGES THE FUND?

The Board of Trustees, investment advisor and fund management team play key
roles in the management of the fund.

THE BOARD OF TRUSTEES

The Board of Trustees oversees the management of the fund and meets at least
quarterly to review reports about fund operations. Although the Board of
Trustees does not manage the fund, it has hired an investment advisor to do so.
More than three-fourths of the trustees are independent of the fund's advisor;
that is, they have never been employed by and have no financial interest in the
advisor or any of its affiliated companies (other than as shareholders of
American Century funds).

THE INVESTMENT ADVISOR

The fund's investment advisor is American Century Investment Management, Inc.
(the advisor). The advisor has been managing mutual funds since 1958 and is
headquartered at 4500 Main Street, Kansas City, Missouri 64111.

The advisor is responsible for managing the investment portfolio of the fund and
directing the purchase and sale of its investment securities. The advisor also
arranges for transfer agency, custody and all other services necessary for the
fund to operate.

For the services it provided to the fund, the advisor received a unified
management fee based on a percentage of the daily net assets of each specific
class of shares of the fund. The percentage rate used to calculate the
management fee for each class of shares of each specific fund is determined
daily using a two-component formula that takes into account (i) the daily net
assets of the accounts managed by the advisor that are in the same broad
investment category as the fund (the "Category Fee") and (ii) the assets of all
the funds in the American Century family of funds (the "Complex Fee"). The
management fee is calculated daily and paid monthly in arrears.

The Statement of Additional Information contains detailed information about the
calculation of the management fee. Out of that fee, the advisor paid all
expenses of managing and operating the fund except brokerage expenses, taxes,
interest, fees and expenses of the independent trustees (including legal counsel
fees), and extraordinary expenses. A portion of the management fee may be paid
by the fund's advisor to unaffiliated third parties who provide recordkeeping
and administrative services that would otherwise be performed by an affiliate of
the advisor.

MANAGEMENT FEE PAID BY THE FUND TO THE ADVISOR
AS A PERCENTAGE OF AVERAGE NET ASSETS FOR THE MOST
RECENT FISCAL YEAR ENDED AUGUST 31, 2004 INVESTOR CLASS

California High-Yield Municipal 0.53%
- --------------------------------------------------------------------------------

THE FUND MANAGEMENT TEAM

The advisor uses a team of portfolio managers, assistant portfolio managers and
analysts to manage the fund. The team meets regularly to review portfolio
holdings and discuss purchase and sale activity. Team members buy and sell
securities for a fund as they see fit, guided by the fund's investment
objectives and strategy.

The fund is managed by the Municipal Bond team, whose members are identified
below.

G. DAVID MACEWEN

STEVEN M. PERMUT

ROBERT J. MILLER

KENNETH M. SALINGER

CODE OF ETHICS

American Century has a Code of Ethics designed to ensure that the interests of
fund shareholders come before the interests of the people who manage the fund.
Among other provisions, the Code of Ethics prohibits portfolio managers and
other investment personnel from buying securities in an initial public offering
or profiting from the purchase and sale of the same security within 60 calendar
days. It also contains limits on short-term transactions in American Century-
managed funds. In addition, the Code of Ethics requires portfolio managers and
other employees with access to information about the purchase or sale of
securities by the fund to obtain approval before executing permitted personal
trades.

FUNDAMENTAL INVESTMENT POLICIES

Fundamental investment policies contained in the Statement of Additional
Information and the investment objectives of the fund may not be changed without
shareholder approval. The Board of Trustees may change any other policies and
investment strategies.

INVESTING WITH AMERICAN CENTURY

SERVICES AUTOMATICALLY AVAILABLE TO YOU

CONDUCTING BUSINESS IN WRITING

A NOTE ABOUT MAILINGS TO SHAREHOLDERS

YOUR RESPONSIBILITY FOR UNAUTHORIZED TRANSACTIONS

WAYS TO MANAGE YOUR ACCOUNT

- --------------------------------------------------------------------------------
ONLINE
- --------------------------------------------------------------------------------

AMERICANCENTURY.COM

OPEN AN ACCOUNT

EXCHANGE SHARES

Exchange shares from another American Century account.

MAKE ADDITIONAL INVESTMENTS

Make an additional investment into an established American Century account if
you have authorized us to invest from your bank account.

SELL SHARES*

Redeem shares and proceeds will be electronically transferred to your authorized
bank account.

* ONLINE REDEMPTIONS UP TO $25,000 PER DAY.

- --------------------------------------------------------------------------------
BY TELEPHONE
- --------------------------------------------------------------------------------

Investor Relations

1-800-345-2021

Business, Not-For-Profit and
Employer-Sponsored Retirement Plans

1-800-345-3533

Automated Information Line

1-800-345-8765

OPEN AN ACCOUNT

If you are a current investor, you can open an account by exchanging shares from
another American Century account.

EXCHANGE SHARES

Call or use our Automated Information Line if you have authorized us to accept
telephone instructions.

MAKE ADDITIONAL INVESTMENTS

Call or use our Automated Information Line if you have authorized us to invest
from your bank account.

SELL SHARES

Call a Service Representative.

- --------------------------------------------------------------------------------
BY WIRE
- --------------------------------------------------------------------------------

Please remember, if you request redemptions by wire, $10 will be deducted from
the amount redeemed. Your bank also may charge a fee.

OPEN AN ACCOUNT

Call to set up your account or mail a completed application to the address
provided in the BY MAIL OR FAX section. Give your bank the following information
to wire money.

o Our bank information

Commerce Bank N.A.
Routing No. 101000019
Account No. Please call for the appropriate account number

o The fund name

o Your American Century account number, if known*

o Your name

o The contribution year (for IRAs only)

*FOR ADDITIONAL INVESTMENTS ONLY

MAKE ADDITIONAL INVESTMENTS

Follow the BY WIRE -- OPEN AN ACCOUNT instructions.

SELL SHARES

You can receive redemption proceeds by wire or electronic transfer.

EXCHANGE SHARES

Not available.

- --------------------------------------------------------------------------------
BY MAIL OR FAX
- --------------------------------------------------------------------------------

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

Fax

816-340-7962

OPEN AN ACCOUNT

Send a signed, completed application and check or money order payable to
American Century Investments.

EXCHANGE SHARES

Send written instructions to exchange your shares from one American Century
account to another.

MAKE ADDITIONAL INVESTMENTS

SELL SHARES

Send written instructions or a redemption form to sell shares. Call a Service
Representative to request a form.

- --------------------------------------------------------------------------------
AUTOMATICALLY
- --------------------------------------------------------------------------------

OPEN AN ACCOUNT

Not available.

EXCHANGE SHARES

Send written instructions to set up an automatic exchange of your shares from
one American Century account to another.

MAKE ADDITIONAL INVESTMENTS

With the automatic investment service, you can purchase shares on a regular
basis. You must invest at least $600 per year per account.

SELL SHARES

If you have at least $10,000 in your account, you may sell shares automatically
by establishing Check-A-Month or Automatic Redemption plans.

- --------------------------------------------------------------------------------
IN PERSON
- --------------------------------------------------------------------------------

If you prefer to handle your transactions in person, visit one of our Investor
Centers and a representative can help you open an account, make additional
investments, and sell or exchange shares.

4500 Main Street 4917 Town Center Drive
Kansas City, Missouri Leawood, Kansas
8 a.m. to 5 p.m., Monday - Friday 8 a.m. to 5 p.m., Monday - Friday
8 a.m. to noon, Saturday

1665 Charleston Road 10350 Park Meadows Drive
Mountain View, California Littleton, Colorado
8 a.m. to 5 p.m., Monday - Friday 8:30 a.m. to 5 p.m., Monday - Friday

MINIMUM INITIAL INVESTMENT AMOUNTS

To open an account, the minimum investment is $5,000 for all accounts. This fund
is not available for retirement accounts.

ACCOUNT MAINTENANCE FEE

PERSONAL ACCOUNTS INCLUDE INDIVIDUAL ACCOUNTS, JOINT ACCOUNTS,
UGMA/UTMA ACCOUNTS, PERSONAL TRUSTS, COVERDELL EDUCATION SAVINGS
ACCOUNTS, IRAS (INCLUDING TRADITIONAL, ROTH, ROLLOVER, SEP-, SARSEP-
AND SIMPLE-IRAS), AND CERTAIN OTHER RETIREMENT ACCOUNTS. IF YOU HAVE
ONLY BUSINESS, BUSINESS RETIREMENT, EMPLOYER-SPONSORED OR AMERICAN
CENTURY BROKERAGE ACCOUNTS, YOU ARE CURRENTLY NOT SUBJECT TO THIS FEE,
BUT YOU MAY BE SUBJECT TO OTHER FEES.

REDEMPTIONS

Your redemption proceeds will be calculated using the NET ASSET VALUE (NAV) next
determined after we receive your transaction request in good order.

A FUND'S NET ASSET VALUE, OR NAV, IS THE PRICE OF THE FUND'S
SHARES.

SPECIAL REQUIREMENTS FOR LARGE REDEMPTIONS

REDEMPTION OF SHARES IN LOW-BALANCE ACCOUNTS

SIGNATURE GUARANTEES

A signature guarantee -- which is different from a notarized signature -- is a
warranty that the signature presented is genuine. We may require a signature
guarantee for the following transactions:

o Your redemption or distribution check, Check-A-Month or automatic
redemption is made payable to someone other than the account owners

o Your redemption proceeds or distribution amount is sent by wire or EFT to a
destination other than your personal bank account

o You are transferring ownership of an account over $100,000

MODIFYING OR CANCELING AN INVESTMENT

Investment instructions are irrevocable. That means that once you have mailed or
otherwise transmitted your investment instruction, you may not modify or cancel
it. The fund reserves the right to suspend the offering of shares for a period
of time and to reject any specific investment (including a purchase by
exchange). Additionally, we may refuse a purchase if, in our judgment, it is of
a size that would disrupt the management of a fund.

ABUSIVE TRADING PRACTICES

Currently, for shares held directly with American Century, we may deem the sale
of all or a substantial portion of a shareholder's purchase of fund shares to be
abusive if the sale is made

o within seven days of the purchase, or

o within 30 days of the purchase, if it happens more than once per year.

INVESTING THROUGH FINANCIAL INTERMEDIARIES

o minimum investment requirements

o exchange policies

o fund choices

o cutoff time for investments

o trading restrictions

Please contact your FINANCIAL INTERMEDIARY for a complete description of its
policies. Copies of the fund's annual report, semiannual report and Statement of
Additional Information are available from your intermediary.

FINANCIAL INTERMEDIARIES INCLUDE BANKS, BROKER-DEALERS, INSURANCE
COMPANIES AND INVESTMENT ADVISORS.

Certain financial intermediaries perform recordkeeping and administrative
services for their clients that would otherwise be performed by American
Century's transfer agent. In some circumstances, the advisor will pay such
service providers a fee for performing those services. Also, the advisor and the
fund's distributor may make payments for various additional services or other
expenses out of their profits or other available sources. Such expenses may
include distribution services, shareholder services or marketing, promotional or
related expenses. The amount of any payments described by this paragraph is
determined by the advisor or the distributor and is not paid by you.

The fund has authorized certain financial intermediaries to accept orders on the
fund's behalf. American Century has contracts with these intermediaries
requiring them to track the time investment orders are received and to comply
with procedures relating to the transmission of orders. Orders must be received
by the intermediary on a fund's behalf before the time the net asset value is
determined in order to receive that day's share price. If those orders are
transmitted to American Century and paid for in accordance with the contract,
they will be priced at the net asset value next determined after your request is
received in the form required by the intermediary.

RIGHT TO CHANGE POLICIES

SHARE PRICE AND DISTRIBUTIONS

SHARE PRICE

o for funds that invest in debt securities, a debt security has been
declared in default; or

o trading in a security has been halted during the trading day.

Securities and other assets quoted in foreign currencies are valued in U.S.
dollars based on the prevailing exchange rates on that day.

DISTRIBUTIONS

Federal tax laws require the fund to make distributions to its shareholders in
order to qualify as a regulated investment company. Qualification as a regulated
investment company means that the fund will not be subject to state or federal
income tax on amounts distributed. The distributions generally consist of
dividends and interest received by the fund, as well as CAPITAL GAINS realized
by the fund on the sale of its investment securities. The fund pays
distributions from net income monthly and generally pays distributions of
capital gains, if any, once a year, usually in December. The fund may make more
frequent distributions, if necessary, to comply with Internal Revenue Code
provisions. Distributions are reinvested automatically in additional shares
unless you elect to have dividends and/or capital gains sent to another American
Century account, to your bank electronically, or to your home address or to
another address by check.

CAPITAL GAINS ARE INCREASES IN THE VALUES OF CAPITAL ASSETS, SUCH
AS STOCK, FROM THE TIME THE ASSETS ARE PURCHASED.

TAXES

TAX-EXEMPT INCOME

Most of the income that the fund receives from municipal securities is exempt
from California and regular federal income taxes. However, corporate
shareholders should be aware that distributions are subject to California's
corporate franchise tax.

The fund also may purchase private activity bonds. The income from these
securities is subject to the federal alternative minimum tax. If you are subject
to the alternative minimum tax, distributions from the fund that represent
income derived from private activity bonds are taxable to you. Consult your tax
advisor to determine whether you are subject to the alternative minimum tax.

TAXABLE INCOME

The fund's investment performance also is based on sources other than income
from municipal securities. These investment performance sources, while not the
primary source of fund distributions, will generate taxable income to you. Some
of these investment performance sources are

o MARKET DISCOUNT PURCHASES. The fund may buy a tax-exempt security for a
price less than the principal amount of the bond. If the price of the bond
increases over time, a portion of the gain may be treated as ordinary
income and taxable as ordinary income if it is distributed to shareholders.

o CAPITAL GAINS. When the fund sells a security, even a tax-exempt municipal
security, it can generate a capital gain or loss, which you must report on
your tax return.

o TEMPORARY INVESTMENTS. Some temporary investments, such as securities loans
and repurchase agreements, can generate taxable income.

TAXABILITY OF DISTRIBUTIONS

QUALIFIED DIVIDEND INCOME IS A DIVIDEND RECEIVED BY A FUND FROM
THE STOCK OF A DOMESTIC OR QUALIFYING FOREIGN CORPORATION, PROVIDED
THAT THE FUND HAS HELD THE STOCK FOR A REQUIRED HOLDING PERIOD.

For capital gains and for income distributions designated as qualified dividend
income, the following rates apply:

TAX RATE FOR 10% TAX RATE FOR
TYPE OF DISTRIBUTION AND 15% BRACKETS ALL OTHER BRACKETS

Short-term capital gains Ordinary Income Ordinary Income

Long-term capital gains (> 1 year)
and Qualified Dividend Income 5% 15%

Distributions also may be subject to state and local taxes. Because everyone's
tax situation is unique, you may want to consult your tax professional about
federal, state and local tax consequences.

TAXES ON TRANSACTIONS

BUYING A DIVIDEND

The risk in buying a dividend is that the fund's portfolio may build up taxable
gains throughout the period covered by a distribution, as securities are sold at
a profit. The fund distributes those gains to you, after subtracting any losses,
even if you did not own the shares when the gains occurred.

If you buy a dividend, you incur the full tax liability of the distribution
period, but you may not enjoy the full benefit of the gains realized in the
fund's portfolio.

MULTIPLE CLASS INFORMATION

American Century offers four classes of shares of the fund through financial
intermediaries: Investor Class, A Class, B Class and C Class. The shares offered
by this prospectus are Investor Class shares, which have no upfront or deferred
charges, commissions or 12b-1 fees.

The other classes have different fees, expenses and/or minimum investment
requirements from the class offered by this prospectus. The difference in the
fee structures between the classes is the result of their separate arrangements
for shareholder and distribution services. It is not the result of any
difference in advisory or custodial fees or other expenses related to the
management of the fund's assets, which do not vary by class. Different fees and
expenses will affect performance. For additional information concerning the A, B
or C Class shares, call us at 1-800-378-9878.

You also can contact a sales representative or financial intermediary who offers
that class of shares.

Except as described herein, all classes of shares of the fund have identical
voting, dividend, liquidation and other rights, preferences, terms and
conditions. The only differences among the classes are (a) each class may be
subject to different expenses specific to that class; (b) each class has a
different identifying designation or name; (c) each class has exclusive voting
rights with respect to matters solely affecting such class; (d) each class may
have different exchange privileges; and (e) the B Class provides for automatic
conversion from that class into shares of the A Class of the same fund after
eight years.

FINANCIAL HIGHLIGHTS

UNDERSTANDING THE FINANCIAL HIGHLIGHTS

The table on the next page itemizes what contributed to the changes in share
price during the most recently ended fiscal year. It also shows the changes in
share price for this period in comparison to changes over the last five fiscal
years.

On a per-share basis, the table includes as appropriate

o share price at the beginning of the period

o investment income and capital gains or losses

o distributions of income and capital gains paid to investors

o share price at the end of the period

The table also includes some key statistics for the period as appropriate

o TOTAL RETURN - the overall percentage of return of the fund, assuming the
reinvestment of all distributions

o EXPENSE RATIO - the operating expenses of the fund as a percentage of
average net assets

o NET INCOME RATIO - the net investment income of the fund as a percentage of
average net assets

o PORTFOLIO TURNOVER - the percentage of the fund's investment portfolio that
is replaced during the period

CALIFORNIA HIGH-YIELD MUNICIPAL - FINANCIAL HIGHLIGHTS
INVESTOR CLASS

FOR A SHARE OUTSTANDING THROUGHOUT THE YEARS ENDED AUGUST 31
- --------------------------------------------------------------------------------
INVESTOR CLASS
- --------------------------------------------------------------------------------
2004 2003 2002 2001 2000
- --------------------------------------------------------------------------------
PER-SHARE DATA
- --------------------------------------------------------------------------------
Net Asset Value,
Beginning of Period $9.65 $9.84 $9.79 $9.44 $9.36
- --------------------------------------------------------------------------------
Income From
Investment Operations
- -------------------------
Net Investment Income 0.52 0.52 0.52 0.52 0.52
- -------------------------
Net Realized and
Unrealized Gain (Loss) 0.28 (0.19) 0.05 0.35 0.08
- --------------------------------------------------------------------------------
Total From
Investment Operations 0.80 0.33 0.57 0.87 0.60
- --------------------------------------------------------------------------------
Distributions
- -------------------------
From Net
Investment Income (0.52) (0.52) (0.52) (0.52) (0.52)
- --------------------------------------------------------------------------------
Net Asset Value,
End of Period $9.93 $9.65 $9.84 $9.79 $9.44
================================================================================
TOTAL RETURN(1) 8.48% 3.35% 6.07% 9.50% 6.70%

RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------
Ratio of Operating
Expenses to Average
Net Assets 0.53% 0.54% 0.54% 0.54% 0.54%
- -------------------------
Ratio of Net Investment
Income to Average
Net Assets 5.30% 5.24% 5.37% 5.45% 5.64%
- -------------------------
Portfolio Turnover Rate 19% 30% 32% 47% 52%
- -------------------------
Net Assets, End of Period
(in thousands) $332,434 $334,032 $373,061 $336,400 $318,197
- --------------------------------------------------------------------------------

(1) Total return assumes reinvestment of net investment income and capital
gains distributions, if any. The total return of the classes may not
precisely reflect the class expense differences because of the impact of
calculating the net asset values to two decimal places. If net asset values
were calculated to three decimal places, the total return differences would
more closely reflect the class expense differences. The calculation of net
asset values to two decimal places is made in accordance with SEC guidelines
and does not result in any gain or loss of value between one class and
another.

MORE INFORMATION ABOUT THE FUND IS CONTAINED IN THESE DOCUMENTS

ANNUAL AND SEMIANNUAL REPORTS

Annual and semiannual reports contain more information about the fund's
investments and the market conditions and investment strategies that
significantly affected the fund's performance during the most recent fiscal
period.

STATEMENT OF ADDITIONAL INFORMATION (SAI)

The SAI contains a more detailed, legal description of the fund's operations,
investment restrictions, policies and practices. The SAI is incorporated by
reference into this prospectus. This means that it is legally part of this
prospectus, even if you don't request a copy.

You may obtain a free copy of the SAI or annual and semiannual reports, and ask
questions about the fund or your accounts, by contacting American Century at the
address or telephone numbers listed below.

You also can get information about the fund (including the SAI) from the
Securities and Exchange Commission (SEC). The SEC charges a duplicating fee to
provide copies of this information.

IN PERSON SEC Public Reference Room
Washington, D.C.
Call 202-942-8090 for location and hours.

ON THE INTERNET o EDGAR database at sec.gov
o By email request at publicinfo@sec.gov

BY MAIL SEC Public Reference Section
Washington, D.C. 20549-0102

FUND REFERENCE FUND CODE TICKER NEWSPAPER LISTING
- --------------------------------------------------------------------------------
CALIFORNIA HIGH-YIELD MUNICIPAL FUND
Investor Class 933 BCHYX CaHYMu

Investment Company Act File No. 811-0816

AMERICAN CENTURY INVESTMENTS
P.O. Box 419200
Kansas City, Missouri 64141-6200
1-800-345-2021 or 816-531-5575
americancentury.com

0501
SH-PRS-xxxx

YOUR
AMERICAN CENTURY INVESTMENTS
PROSPECTUS

A CLASS
B CLASS
C CLASS

CALIFORNIA HIGH-YIELD MUNICIPAL FUND

JANUARY 1, 2005

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANYONE WHO
TELLS YOU OTHERWISE IS COMMITTING A CRIME.

American Century
Investment Services, Inc.

Dear Investor:

American Century Investments is committed to helping people make the most of
their financial opportunities. That's why we are focused on achieving superior
results and building long-term relationships with investors.

We believe our relationship with you begins with an easy to read prospectus that
provides you with the information you need to feel confident about your
investment decisions.

Naturally, you may have questions about investing after you read through the
prospectus. Please contact your investment professional with questions or for
more information about our funds.

Sincerely,

Brian Jeter
Senior Vice President

Third Party Sales and Services
American Century Investment Services, Inc.

American Century Investments
P.O. Box 419786, Kansas City, MO 64141-6786

The American Century logo, American Century and American Century Investments are
service marks of American Century Services Corporation.

TABLE OF CONTENTS

AN OVERVIEW OF THE FUND.......................................................X