POST-EFFECTIVE AMENDMENT NO. 39

-----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, LYKUuN/i9yoDzmr+z3QW20FZmE+U0yAYslzR9MN5NAzpOPbTLQ7VrIeLy1Pp440o kTSPFQAMUGqMfUYpA5O71Q== 0000717316-05-000021.txt : 20051013 0000717316-05-000021.hdr.sgml : 20051013 20051013121228 ACCESSION NUMBER: 0000717316-05-000021 CONFORMED SUBMISSION TYPE: 485APOS PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20051013 DATE AS OF CHANGE: 20051013 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: 051136402 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: 1933 Act SEC FILE NUMBER: 002-82734 FILM NUMBER: 051136403 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 pea39a-2005.htm POST-EFFECTIVE AMENDMENT NO. 39 POST-EFFECTIVE AMENDMENT NO. 39

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. 39 [X]

and/or

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

Amendment No. 43 [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, 2006

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, 2006) 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.

JANUARY 1, 2006

AMERICAN CENTURY
INVESTMENTS
PROSPECTUS

California Limited-Term Tax-Free Fund

California Long-Term Tax-Free Fund

California Tax-Free Bond Fund

California Tax-Free Money Market Fund

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

American Century
Investment Services, Inc. Distributor

TABLE OF CONTENTS

AN OVERVIEW OF THE FUNDS......................................................XX

FUND PERFORMANCE HISTORY......................................................XX

California Limited-Term Tax-Free Fund, California
Long-Term Tax-Free Fund and California Tax-Free
Bond Fund...............................................................XX

California Tax-Free Money Market Fund...................................XX

FEES AND EXPENSES.............................................................XX

OBJECTIVES, STRATEGIES AND RISKS..............................................XX

California Limited-Term Tax-Free Fund, California
Long-Term Tax-Free Fund and California Tax-Free Bond Fund...............XX

California Tax-Free Money Market Fund...................................XX

BASICS OF FIXED-INCOME INVESTING..............................................XX

MANAGEMENT....................................................................XX

INVESTING WITH AMERICAN CENTURY...............................................XX

SHARE PRICE AND DISTRIBUTIONS.................................................XX

TAXES.........................................................................XX

FINANCIAL HIGHLIGHTS..........................................................XX

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 portfolio 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 payments 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.

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
- --------------------------------------------------------------------------------
California Tax-Free High-quality, very California economic risk
Money Market short-term debt securities Lowest credit risk
Lowest interest rate risk
Lowest liquidity risk
- --------------------------------------------------------------------------------
California Quality debt securities California economic risk
Limited-Term with a weighted average Moderate credit risk
Tax-Free maturity of 1-5 years Low interest rate risk
Moderate liquidity risk
- --------------------------------------------------------------------------------
California Tax-Free Quality debt securities California economic risk
Bond of all maturity ranges Moderate credit risk
Moderate interest rate
risk
Moderate liquidity risk
- --------------------------------------------------------------------------------
California Long-Term Quality debt securities California economic risk
Tax-Free with a weighted Moderate credit risk
average maturity High interest rate risk
of 10 or more years Moderate liquidity risk
- --------------------------------------------------------------------------------

The description of the risks for California Tax-Free Bond in each category
(interest rate, credit and liquidity) represents our best estimate of the fund's
overall risk on average. Because the fund may invest in securities of all
maturity ranges, the risks may fluctuate as the portfolio manager repositions
the fund in response to changing market conditions.

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.

A more detailed description of the funds' investment strategies and risks may be
found under the heading OBJECTIVES, STRATEGIES AND RISKS, which begins on page
X.

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 LIMITED-TERM TAX-FREE FUND
CALIFORNIA LONG-TERM TAX-FREE FUND
CALIFORNIA TAX-FREE BOND 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)

1995 8.32%
1996 3.93%
1997 5.34%
1998 4.91%
1999 1.13%
2000 7.03%
2001 4.95%
2002 6.37%
2003 2.45%
2004 1.38%

(1) AS OF SEPTEMBER 30, 2005, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN WAS 0.76%.

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

1995 19.80%
1996 3.59%
1997 9.74%
1998 6.31%
1999 -5.22%
2000 14.92%
2001 4.23%
2002 8.69%
2003 4.51%
2004 4.10%

(1) AS OF SEPTEMBER 30, 2005, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN WAS 2.57%.

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) -2.85% (1Q 1996)
- --------------------------------------------------------------------------------

CALIFORNIA TAX-FREE BOND FUND -- INVESTOR CLASS(1)

1995 13.52%
1996 4.25%
1997 7.45%
1998 5.59%
1999 -1.09%
2000 10.14%
2001 4.35%
2002 8.80%
2003 3.23%
2004 2.80%

(1) AS OF SEPTEMBER 30, 2005, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN WAS 1.63%.

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

HIGHEST LOWEST
- --------------------------------------------------------------------------------
California Tax-Free Bond 5.25% (1Q 1995) -2.18% (2Q 2004)
- --------------------------------------------------------------------------------

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, 2004 1 YEAR 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE

- --------------------------------------------------------------------------------
Return Before Taxes 1.38% 4.41% 4.55%

- --------------------------------------------------------------------------------
Return After Taxes on Distributions 1.38% 4.38% 4.54%

- --------------------------------------------------------------------------------
Return After Taxes on Distributions 1.83% 4.25% 4.45%
and Sale of Fund Shares

- --------------------------------------------------------------------------------
Lehman Brothers 3-Year Municipal Bond Index 1.78% 4.78% 4.97%
(reflects no deduction for fees, expenses and
taxes)

- --------------------------------------------------------------------------------
CALIFORNIA LONG-TERM TAX-FREE

- --------------------------------------------------------------------------------
Return Before Taxes 4.10% 7.21% 6.87%

- --------------------------------------------------------------------------------
Return After Taxes on Distributions 4.10% 7.21% 6.79%

- --------------------------------------------------------------------------------
Return After Taxes on Distributions 4.21% 6.91% 6.64%
and Sale of Fund Shares

- --------------------------------------------------------------------------------
Lehman Brothers Long-Term Municipal Bond Index 6.27% 8.74% 8.07%
(reflects no deduction for fees, expenses and
taxes)

- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE BOND

- --------------------------------------------------------------------------------
Return Before Taxes 2.80% 5.82% 5.83%

- --------------------------------------------------------------------------------
Return After Taxes on Distributions 2.80% 5.75% 5.72%

- --------------------------------------------------------------------------------
Return After Taxes on Distributions 3.19% 5.58% 5.63%
and Sale of Fund Shares

- --------------------------------------------------------------------------------
Lehman Brothers 5-Year General Obligation Index 2.95% 5.93% 5.87%
(reflects no deduction for fees, expenses and
taxes)
- --------------------------------------------------------------------------------

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)

1995 3.41%
1996 3.07%
1997 3.19%
1998 2.95%
1999 2.66%
2000 3.30%
2001 2.20%
2002 1.06%
2003 0.60%
2004 0.76%

(1) AS OF SEPTEMBER 30, 2005, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN WAS 1.33%.

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.

- --------------------------------------------------------------------------------

INVESTOR CLASS

- --------------------------------------------------------------------------------
Investor Class 0.76% 1.58% 2.31%
- --------------------------------------------------------------------------------

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)
- ------------------------------------------------------------------------------------------
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEE(1) (12B-1) FEES EXPENSES(2) EXPENSES
- ------------------------------------------------------------------------------------------
CALIFORNIA LIMITED-TERM TAX-FREE

- ------------------------------------------------------------------------------------------
Investor Class 0.49% None 0.00% 0.49%
- ------------------------------------------------------------------------------------------
CALIFORNIA LONG-TERM TAX-FREE

- ------------------------------------------------------------------------------------------
Investor Class 0.49% None 0.03% 0.52%
- ------------------------------------------------------------------------------------------

(1) BASED ON ASSETS 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:

- --------------------------------------------------------------------------------
Investor Class $50 $157 $274 $615

- --------------------------------------------------------------------------------
CALIFORNIA LONG-TERM TAX-FREE

- --------------------------------------------------------------------------------
Investor Class $50 $157 $274 $615
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE BOND

- --------------------------------------------------------------------------------
Investor Class $50 $157 $274 $615

- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET

- --------------------------------------------------------------------------------
Investor Class $53 $167 $290 $652
- --------------------------------------------------------------------------------

OBJECTIVES, STRATEGIES AND RISKS

CALIFORNIA LIMITED-TERM TAX-FREE FUND
CALIFORNIA LONG-TERM TAX-FREE FUND
CALIFORNIA TAX-FREE BOND 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 portfolio 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.

California Limited-Term Tax-Free will typically invest in California municipal
securities with maturities of one to ten years. Under normal market conditions,
the fund's weighted average maturity is expected to be one to five years.
California Long-Term Tax-Free will typically invest in California municipal
securities with maturities of seven or more years. Under normal market
conditions, the fund's weighted average maturity is expected to be ten or more
years. By contrast, California Tax-Free Bond may invest in California municipal
securities of all maturity ranges, and therefore its weighted average maturity
may fluctuate as the portfolio manager repositions the fund in response to
changing market conditions.

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.

When determining whether to sell a security, portfolio 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 portfolio managers.

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

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 a 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.

There is no guarantee that all of the funds' income will remain exempt from
federal or state income taxes. Income from municipal bonds held by a fund could
be declared taxable because of unfavorable changes in tax laws, adverse
interpretations by the Internal Revenue Service or state tax authorities, or
noncompliant conduct of a bond issuer.

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 policies and procedures with respect to the disclosure of
the fund's portfolio securities is available in the 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.

There is no guarantee that all of the fund's income will remain exempt from
federal or state income taxes. Income from municipal bonds held by a fund could
be declared taxable because of unfavorable changes in tax laws, adverse
interpretations by the Internal Revenue Service or state tax authorities, or
noncompliant conduct of a bond issuer.

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 portfolio 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 portfolio 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
portfolio managers would calculate the weighted average maturity for a fund that
owned only two debt securities.

- --------------------------------------------------------------------------------
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 portfolio 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. The description of the risks for
California Tax-Free Bond in each category represents our best estimate of the
fund's overall risk on average. Because the fund may invest in securities of all
maturity ranges, the risks may fluctuate as the portfolio manager repositions
the fund in response to changing market conditions.

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INTEREST RATE CREDIT LIQUIDITY
RISK RISK RISK
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California Tax-Free Money Market Lowest Lowest Lowest
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California Limited-Term Tax-Free Low Moderate Moderate
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California Tax-Free Bond Moderate Moderate Moderate
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California Long-Term Tax-Free High Moderate Moderate
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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 provides to the funds, the advisor receives 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, 2005
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Investor Class
- --------------------------------------------------------------------------------

California Limited-Term Tax-Free 0.49%
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California Long-Term Tax-Free 0.49%
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California Tax-Free Bond 0.49%
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California Tax-Free Money Market 0.49%
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A discussion regarding the basis for the Board of Trustee's approval of the
funds' investment advisory contract with the advisor is available in the funds'
report to shareholders dated August 31, 2005.

THE FUND MANAGEMENT TEAMS

The advisor uses teams of portfolio managers and analysts to manage funds. These
teams are organized by broad investment categories, such as money markets and
taxable bonds. The individuals listed below serve as the lead portfolio managers
for the funds. As such, they are ultimately responsible for security selection
and portfolio construction for the funds, as well as compliance with stated
investment objectives and cash flow monitoring. Other members of the investment
teams provide research and analytical support but generally do not make
day-to-day investment decisions for the funds.

CALIFORNIA LIMITED-TERM TAX-FREE

CALIFORNIA TAX-FREE BOND

ROBERT J. MILLER

Mr. Miller, Vice President and Portfolio Manager, has been a member of the
Municipal Bond team since joining American Century in June 1998. He became a
portfolio manager in February 2001. He has a bachelor's degree in business
administration-finance from San Jose State University and an MBA from New York
University.

CALIFORNIA LONG-TERM TAX-FREE

G. DAVID MACEWEN

Mr. MacEwen, Chief Investment Officer - Fixed Income, supervises the American
Century Municipal Bond team. He has been a member of the Municipal Bond team
since joining American Century in May 1991. In 2000, he was named senior vice
president and senior portfolio manager and served in that capacity until being
named to his current position in 2001. He has a bachelor's degree in economics
from Boston University and an MBA in finance from the University of Delaware.

CALIFORNIA TAX-FREE MONEY MARKET

TODD PARDULA

Mr. Pardula, Vice President and Portfolio Manager, has been a member of the
Money Market team since May 1994. He joined American Century in February 1990
and became a portfolio manager in April 1994. He has a bachelor's degree in
finance from Santa Clara University. He is a CFA charterholder.

The statement of additional information provides additional information about
the other accounts managed by the portfolio managers, if any, the structure of
their compensation, and their ownership of fund securities.

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 and/or the advisor may
change any other policies and investment strategies.

INVESTING DIRECTLY WITH AMERICAN CENTURY

SERVICES AUTOMATICALLY AVAILABLE TO YOU

Most accounts automatically will have access to the services listed under WAYS
TO MANAGE YOUR ACCOUNT 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). 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. If you want to add online and telephone
services later, you can complete an Investor Service Options form.

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 automatically redeem shares in one of your accounts to pay the $12.50 fee.
Please note that you may incur 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.

WIRE PURCHASES

CURRENT INVESTORS: If you would like to make a wire purchase into an existing
account, your bank will need the following information. (To invest in a new
fund, please call us first to set up the new account.)

o American Century's bank information: Commerce Bank N.A., Routing No.
101000019, Account No. 2804918

o Your American Century account number and fund name

o Your name

o The contribution year (for IRAs only)

NEW INVESTORS: To make a wire purchase into a new account, please complete an
application prior to wiring money.

WAYS TO MANAGE YOUR ACCOUNT

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

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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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.

o 4500 MAIN STREET, KANSAS CITY, MISSOURI -- 8 A.M. TO 5 P.M., MONDAY -
FRIDAY

o 4917 TOWN CENTER DRIVE, LEAWOOD, KANSAS -- 8 A.M. TO 5 P.M., MONDAY -
FRIDAY, 8 A.M. TO NOON, SATURDAY

o 1665 CHARLESTON ROAD, MOUNTAIN VIEW, CALIFORNIA -- 8 A.M. TO 5 P.M., MONDAY
- FRIDAY

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

INVESTOR SERVICES REPRESENTATIVE: 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. The Automated Information Line
is available only to Investor Class shareholders.

MAKE ADDITIONAL INVESTMENTS: Call or use our Automated Information Line if you
have authorized us to invest from your bank account. The Automated Information
Line is available only to Investor Class shareholders.

SELL SHARES: Call a Service Representative.

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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: You may sell shares automatically by establishing Check-A-Month or
Automatic Redemption plans.

SEE ADDITIONAL POLICIES AFFECTING YOUR INVESTMENT FOR MORE INFORMATION ABOUT
INVESTING WITH US.

INVESTING THROUGH A FINANCIAL INTERMEDIARY

If you do business with us through a financial intermediary or a retirement
plan, 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 or plan sponsor 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 or plan sponsor.

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 payments may be
made for one or more of the following: (1) distribution services, which include
expenses incurred by intermediaries for their sales activities with respect to
the funds, such as preparing, printing and distributing sales literature and
advertising materials and compensating registered representatives or other
employees of such intermediary for their sales activities; (2) shareholder
services, such as providing individual and custom investment advisory services
to clients of the intermediary; and (3) marketing and promotional services,
including business planning assistance, educating personnel about the funds, and
sponsorship of sales meetings, which may include covering costs of providing
speakers, meals and other entertainment. The distributor may sponsor seminars
and conferences designed to educate intermediaries about the funds and may cover
the expenses associated with attendance at such meetings, including travel
costs. These payments and activities are intended to provide an incentive to
intermediaries to sell the funds by ensuring that they are educated about the
funds, and to help such intermediaries defray costs associated with offering the
funds. The amount of any payments described by this paragraph is determined by
the advisor or the distributor, and all such amounts are paid out of the
available assets of the advisor and distributor, and not by you or the funds. As
a result, the total expense ratio of the funds will not be affected by any such
payments.

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.

SEE ADDITIONAL POLICIES AFFECTING YOUR INVESTMENT FOR MORE INFORMATION ABOUT
INVESTING WITH US.

ADDITIONAL POLICIES AFFECTING YOUR INVESTMENT

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.

LIMITATIONS ON SALE

As of the date of this prospectus the funds were registered for sale in the
following states: Arizona, California, Colorado, District of Columbia, Florida,
Hawaii, New Mexico, Nevada, New York (except California Limited-Term Tax-Free),
Oregon, Texas, Utah, Washington and the Virgin Islands.

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

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 portfolio
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. For Investor Class shares, 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. You also may incur
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 You have chosen to conduct business in writing only and would like to
redeem over $100,000.

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 EFT (ACH or
wire) to a destination other than your personal bank account.

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

o You change your address and request a redemption over $100,000 within
15 days.

o You change your bank information and request a redemption within 15
days.

We reserve the right to require a signature guarantee for other
transactions, at our discretion.

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. American Century seeks to exercise
its judgment in implementing these tools to the best of its ability 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 vary depending on the type of fund, the
class of shares or whether the shares are held directly or indirectly with
American Century. They 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 individual shareholders within group, or omnibus, accounts
maintained by financial intermediaries is severely limited because American
Century generally 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.

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.

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 us or your financial professional. For American Century
Brokerage accounts, please call 1-888-345-2071.

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. 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.

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 a debt security has been declared in default or
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
(known as registered investment companies, or 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.

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 should 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.

CALIFORNIA TAX-FREE MONEY MARKET FUND

California Tax-Free Money Market 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) 5% 15%
and Qualified Dividend Income
- --------------------------------------------------------------------------------

If a fund's distributions exceed its income and capital gains realized during
the tax year, all or a portion of the distributions made by the fund in that tax
year will be considered a return of capital. A return of capital distribution is
generally not subject to tax, but will reduce your cost basis in the fund and
result in higher realized capital gains (or lower realized capital losses) upon
the sale of fund shares.

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.

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 a 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.

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 Report of Independent
Registered Public Accounting Firm and the financial statements are included in
the funds' annual report, which is available upon request.

CALIFORNIA LIMITED-TERM TAX-FREE FUND

Investor Class

[Will insert 8/31/05 audited information]

CALIFORNIA LONG-TERM TAX-FREE FUND

Investor Class

[Will insert 8/31/05 audited information]

CALIFORNIA TAX-FREE BOND FUND

Investor Class

[Will insert 8/31/05 audited information]

CALIFORNIA TAX-FREE MONEY MARKET FUND

Investor Class

[Will insert 8/31/05 audited information]

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, online at americancentury.com or 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.

- --------------------------------------------------------------------------------
Investor Class 936 BCSTX CaLtdTF
- --------------------------------------------------------------------------------
CALIFORNIA LONG-TERM TAX-FREE FUND

- --------------------------------------------------------------------------------
Investor Class 932 BCLTX CaLgTF
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE BOND FUND

- --------------------------------------------------------------------------------
Investor Class 931 BCITX CaIntTF
- --------------------------------------------------------------------------------
CALIFORNIA TAX-FREE MONEY MARKET FUND

- --------------------------------------------------------------------------------
Investor Class 930 BCTXX AmC CATF
- --------------------------------------------------------------------------------

Investment Company Act File No. 811-3706

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

0601

SH-PRS-45854

JANUARY 1, 2006

AMERICAN CENTURY INVESTMENTS
PROSPECTUS

California High-Yield Municipal Fund

THE FUND IS CLOSED TO NEW SELF-DIRECTED RETAIL INVESTORS BUT IS AVAILABLE
THROUGH FINANCIAL INTERMEDIARIES. SELF-DIRECTED RETAIL INVESTORS WITH OPEN
ACCOUNTS MAY MAKE ADDITIONAL INVESTMENTS AND REINVEST DIVIDENDS AND CAPITAL
GAINS DISTRIBUTIONS AS LONG AS SUCH ACCOUNTS REMAIN OPEN.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

American Century
Investment Services, Inc., Distributor

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 taxes.

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

The portfolio 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 may be
found under the heading OBJECTIVES, STRATEGIES AND RISKS, which begins on page
X.

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

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. The returns of the fund's other
classes of shares will differ from those shown in the chart, depending on the
expenses of those classes. Account fees are not reflected in the chart below. If
they had been included, returns would be lower than those shown.

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

1995 18.29%
1996 5.89%
1997 10.50%
1998 6.73%
1999 -3.31%
2000 12.70%
2001 5.02%
2002 9.10%
2003 5.72%
2004 6.73%

(1) AS OF SEPTEMBER 30, 2005, THE END OF THE MOST RECENT CALENDAR QUARTER, THE
FUND'S YEAR-TO-DATE RETURN WAS 5.71%.

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) -2.06% (4Q 1999)
- --------------------------------------------------------------------------------

AVERAGE ANNUAL TOTAL RETURNS

The following table shows the average annual total returns of the fund's
Investor Class shares calculated three different ways. Additional tables show
the average annual total returns of the fund's other share classes calculated
before the impact of taxes.

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, 2004 1 YEAR 5 YEARS 10 YEARS LIFE OF CLASS(1)
- ---------------------------------------------------------------------------------------
Return Before Taxes 6.73% 7.82% 7.60% N/A
- ---------------------------------------------------------------------------------------
Return After Taxes on Distributions 6.73% 7.82% 7.53% N/A
- ---------------------------------------------------------------------------------------
Return After Taxes on Distributions 6.24% 7.53% 7.36% N/A
and Sale of Fund Shares
- ---------------------------------------------------------------------------------------
Lehman Brothers Long-Term
Municipal Bond Index 6.27% 8.74% 8.07% N/A
(reflects no deduction for fees,
expenses and taxes)
- ---------------------------------------------------------------------------------------

(1) ONLY CLASSES WITH PERFORMANCE HISTORY FOR LESS THAN 10 YEARS SHOW RETURNS
FOR LIFE OF CLASS.

- ---------------------------------------------------------------------------------------
A CLASS(1)
- ---------------------------------------------------------------------------------------
FOR THE CALENDAR YEAR ENDED
DECEMBER 31, 2004 1 YEAR 5 YEARS 10 YEARS LIFE OF CLASS(2)
- ---------------------------------------------------------------------------------------
Return Before Taxes 6.46% N/A N/A 6.50%(3)
- ---------------------------------------------------------------------------------------
Lehman Brothers Long-Term
Municipal Bond Index 6.27% N/A N/A 6.78%
(reflects no deduction for fees,
expenses and taxes)
- ---------------------------------------------------------------------------------------

(1) RETURNS ASSUME THE DEDUCTION OF ALL SALES LOADS, CHARGES AND OTHER FEES
ASSOCIATED WITH THE FUND. YOUR ACTUAL RETURNS MAY VARY DEPENDING ON THE
CIRCUMSTANCES OF YOUR INVESTMENT.

(2) THE INCEPTION DATE FOR THE A CLASS IS JANUARY 31, 2003.

(3) CLASS RETURNS WOULD HAVE BEEN LOWER IF SERVICE AND DISTRIBUTION FEES HAD
NOT BEEN VOLUNTARILY WAIVED FROM JANUARY 31, 2003 TO MARCH 10, 2003.

- ---------------------------------------------------------------------------------------
B CLASS(1)
- ---------------------------------------------------------------------------------------
FOR THE CALENDAR YEAR ENDED
DECEMBER 31, 2004 1 YEAR 5 YEARS 10 YEARS LIFE OF CLASS(2)
- ---------------------------------------------------------------------------------------
Return Before Taxes 5.67% N/A N/A 5.72%(3)
- ---------------------------------------------------------------------------------------
Lehman Brothers Long-Term
Municipal Bond Index 6.27% N/A N/A 6.78%
(reflects no deduction for fees,
expenses and taxes)
- ---------------------------------------------------------------------------------------

(1) RETURNS ASSUME THE DEDUCTION OF ALL SALES LOADS, CHARGES AND OTHER FEES
ASSOCIATED WITH THE FUND. YOUR ACTUAL RETURNS MAY VARY DEPENDING ON THE
CIRCUMSTANCES OF YOUR INVESTMENT.

(2) THE INCEPTION DATE FOR THE B CLASS IS JANUARY 31, 2003.

(3) CLASS RETURNS WOULD HAVE BEEN LOWER IF SERVICE AND DISTRIBUTION FEES HAD
NOT BEEN VOLUNTARILY WAIVED FROM JANUARY 31, 2003 TO FEBRUARY 19, 2003.

- ---------------------------------------------------------------------------------------
C CLASS
- ---------------------------------------------------------------------------------------
FOR THE CALENDAR YEAR ENDED
DECEMBER 31, 2004 1 YEAR 5 YEARS 10 YEARS LIFE OF CLASS(1)
- ---------------------------------------------------------------------------------------
Return Before Taxes 5.67% N/A N/A 5.86%(2)
- ---------------------------------------------------------------------------------------
Lehman Brothers Long-Term
Municipal Bond Index 6.27% N/A N/A 6.78%
(reflects no deduction for fees,
expenses and taxes)
- ---------------------------------------------------------------------------------------

(1) THE INCEPTION DATE FOR THE C CLASS IS JANUARY 31, 2003.

(2) CLASS RETURNS WOULD HAVE BEEN LOWER IF SERVICE AND DISTRIBUTION FEES HAD
NOT BEEN VOLUNTARILY WAIVED FROM JANUARY 31, 2003 TO MARCH 4, 2003.

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
the fund will perform in the future.

For current performance information, including yields, please call us or visit
americancentury.com.

FEES AND EXPENSES

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 A CLASS B CLASS C CLASS
- ---------------------------------------------------------------------------------------
Maximum Sales Charge (Load) None 4.50% None None
Imposed on Purchases
(as a percentage of offering price)
- ---------------------------------------------------------------------------------------
Maximum Deferred Sales Charge (Load) None None(1) 5.00%(2) 1.00%(3)
(as a percentage of the original offering
price for B Class shares or the lower
of the original offering price or redemption
proceeds for A and C Class shares)
- ---------------------------------------------------------------------------------------
Maximum Account Maintenance Fee $25(4) None None None
- ---------------------------------------------------------------------------------------

(1) INVESTMENTS OF $1 MILLION OR MORE IN A CLASS SHARES MAY BE SUBJECT TO A
CONTINGENT DEFERRED SALES CHARGE OF 1.00% IF THE SHARES ARE REDEEMED WITHIN
ONE YEAR OF THE DATE OF PURCHASE.

(2) THIS CHARGE IS 5.00% DURING THE FIRST YEAR AFTER PURCHASE, DECLINES OVER
THE NEXT FIVE YEARS AS SHOWN ON PAGE X, AND IS ELIMINATED AFTER SIX YEARS.

(3) THE CHARGE IS 1.00% DURING THE FIRST YEAR AFTER PURCHASE AND IS ELIMINATED
THEREAFTER.

(4) 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)
- --------------------------------------------------------------------------------
DISTRIBUTION TOTAL ANNUAL
MANAGEMENT AND SERVICE OTHER FUND OPERATING
FEE(1) (12B-1) FEES EXPENSES(2) EXPENSES
- --------------------------------------------------------------------------------
Investor Class 0.52% None 0.00% 0.52%
- --------------------------------------------------------------------------------
A Class 0.52% 0.25%(3) 0.00% 0.77%
- --------------------------------------------------------------------------------
B Class 0.52% 1.00%(3) 0.00% 1.52%
- --------------------------------------------------------------------------------
C Class 0.52% 1.00%(3)(4) 0.00% 1.52%(4)
- --------------------------------------------------------------------------------

(1) BASED ON ASSETS 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.

(3) THE 12B-1 FEE IS DESIGNED TO PERMIT INVESTORS TO PURCHASE SHARES THROUGH
BROKER-DEALERS, BANKS, INSURANCE COMPANIES AND OTHER FINANCIAL
INTERMEDIARIES. THE FEE MAY BE USED TO COMPENSATE SUCH FINANCIAL
INTERMEDIARIES FOR DISTRIBUTION AND OTHER SHAREHOLDER SERVICES. FOR MORE
INFORMATION, SEE Service, Distribution and Administrative Fees, PAGE X.

(4) EFFECTIVE JANUARY 2, 2004, THE DISTRIBUTION AND SERVICE FEES FOR C CLASS
INCREASED FROM 0.75% TO 1.00%.

EXAMPLE

The examples in the tables 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
- --------------------------------------------------------------------------------
Investor Class $53 $167 $290 $652
- --------------------------------------------------------------------------------
A Class $525 $685 $858 $1,358
- --------------------------------------------------------------------------------
B Class $554 $778 $924 $1,600
- --------------------------------------------------------------------------------
C Class $154 $478 $824 $1,800
- --------------------------------------------------------------------------------

The table above reflects a deduction for charges payable upon redemption. You
would pay the following expenses if you did not redeem your shares and thus did
not incur such charges.

- --------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- --------------------------------------------------------------------------------
Investor Class $53 $167 $290 $652
- --------------------------------------------------------------------------------
A Class $525 $685 $858 $1,358
- --------------------------------------------------------------------------------
B Class $154 $478 $824 $1,600
- --------------------------------------------------------------------------------
C Class $154 $478 $824 $1,800
- --------------------------------------------------------------------------------

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 portfolio 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 portfolio 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 portfolio managers seek to invest in securities that will result in a high
yield for the fund. To accomplish this, the portfolio 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
portfolio 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 policies and procedures with respect to the disclosure of
the fund's portfolio securities is available in the 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.

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 fund.

BASICS OF FIXED-INCOME INVESTING

DEBT SECURITIES

The portfolio 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

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AMOUNT OF PERCENT OF REMAINING WEIGHTED
SECURITY OWNED PORTFOLIO MATURITY MATURITY
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Debt Security A $100,000 25% 4 years 1 year
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Debt Security B $300,000 75% 12 years 9 years
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Weighted Average Maturity 10 years
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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:

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 fund will not necessarily sell debt
securities if they are downgraded by a rating agency.

LIQUIDITY RISK

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.

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 provides to the fund, the advisor receives 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 the 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 pays 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 fund's 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 FEES PAID BY THE FUND TO THE ADVISOR
AS A PERCENTAGE OF AVERAGE NET ASSETS FOR THE MOST
RECENT FISCAL YEAR ENDED AUGUST 31, 2005
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INVESTOR
CLASS A CLASS B CLASS C CLASS
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California High-Yield Municipal 0.52% 0.52% 0.52% 0.52%
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A discussion regarding the basis for the Board of Trustees' approval of the
fund's investment advisory contract with the advisor is available in the fund's
report to shareholders dated August 31, 2005.

THE FUND MANAGEMENT TEAM

The advisor uses teams of portfolio managers and analysts to manage funds. These
teams are organized by broad investment categories, such as money markets and
taxable bonds. The individual listed below serves as the lead portfolio manager
for the fund. As such, he is ultimately responsible for security selection and
portfolio construction for the fund, as well as compliance with stated
investment objectives and cash flow monitoring. Other members of the investment
team provide research and analytical support but generally do not make
day-to-day investment decisions for the fund.

STEVEN M. PERMUT

Mr. Permut, Senior Vice President and Senior Portfolio Manager, has been a
member of the Municipal Bond team since June 1987. He joined American Century in
June 1987 and became a portfolio manager in June 1990. 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.

The statement of additional information provides additional information about
the other accounts managed by the portfolio manager, if any, the structure of
his compensation, and his ownership of fund securities.

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 and/or the advisor may change any
other policies and investment strategies.

INVESTING DIRECTLY WITH AMERICAN CENTURY

SERVICES AUTOMATICALLY AVAILABLE TO YOU

CONDUCTING BUSINESS IN WRITING

ACCOUNT MAINTENANCE FEE

WIRE PURCHASES

o American Century's bank information: Commerce Bank N.A., Routing No.
101000019, Account No. 2804918

o Your American Century account number and fund name

o Your name

o The contribution year (for IRAs only)

NEW INVESTORS: To make a wire purchase into a new account, please complete an
application prior to wiring money.

WAYS TO MANAGE YOUR ACCOUNT
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ONLINE
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