AMERICAN CENTURY CAPITAL PRESERVATION FUND, INC.
              AMERICAN CENTURY CAPITAL PRESERVATION FUND II, INC.
                    AMERICAN CENTURY GOVERNMENT INCOME TRUST

                              PROSPECTUS SUPPLEMENT

       Capital Preservation o Capital Preservation II o Government Agency
     Short-Term Treasury o Intermediate-Term Treasury o Long-Term Treasury
                              ARM Fund o GNMA Fund

                          SUPPLEMENT DATED MAY 16, 1997
          Prospectus dated September 3, 1996 (revised January 1, 1997)

WEIGHTED AVERAGE MATURITY

On pages 2 and 13, the  references to Capital  Preservation's  weighted  average
maturity are hereby changed from 60 days to 90 days.

On page 14, the reference to Government  Agency's  weighted  average maturity is
hereby changed from 60 days to 90 days.

SPECIAL MEETING OF SHAREHOLDERS

The Board of Trustees has requested  that the following  matters be submitted to
shareholders  of the Funds for approval at a Special  Meeting of Shareholders to
be held on July 30, 1997.  The record date for the meeting is May 16, 1997,  for
each fund other than Capital  Preservation  and Capital  Preservation  II, which
will have a record  date of June 2,  1997.  If you own shares of the Funds as of
the close of business on that date, you will be entitled to vote at the meeting.
Proxy materials  containing more information  about these proposals are expected
to be first sent to shareholders on June 2, 1997.

ALL FUNDS EXCEPT CAPITAL PRESERVATION AND CAPITAL PRESERVATION II WILL VOTE ON
THE FOLLOWING PROPOSALS

1.   To  ratify  the  selection  of  Coopers &  Lybrand  LLP as the  independent
     auditors of each Fund for its current fiscal year;

2.   To vote on the approval of a Management  Agreement  with  American  Century
     Investment Management, Inc.;

3.   To approve the adoption of standardized  investment limitations by amending
     or  eliminating  certain  of  the  Funds'  current  fundamental  investment
     limitations;

5.   Only for the ARM Fund. Approval of amendments to its fundamental investment
     objective; and

7.   To transact such other business which may come before the meeting, although
     we are not aware of any other items to be considered.

Proposals  4 and 6 do not  apply to the funds  offered  by this  Prospectus.  If
approved  by  shareholders,  the  Management  Agreement  in  Proposal  2 and the
amendments  to  the  Funds'  fundamental  investment  limitations  would  become
effective on August 1, 1997.

FURTHER INFORMATION ABOUT PROPOSAL 2

The proposed Management  Agreement with American Century Investment  Management,
Inc.  ("ACIM")  is  substantially  different  from the Funds'  current  Advisory
Agreement with Benham Management  Corporation ("BMC"). The most important change
is a difference in the way  management  fees are  calculated  under the proposed
agreement. Rather than paying separate investment advisory fees, transfer agency
fees, and operating  costs,  it is proposed that the Funds pay one "unified" fee
which would cover not just the investment  advisory fee, but nearly all expenses
of the Funds.  The expenses covered under the unified fee would include fees for
administrative services, transfer agency services,  custodian fees, printing and
mailing costs for shareholder materials and shareholder meeting expenses, all of
which are charged to the Funds under the current  arrangements  with BMC.  While
the  fees  paid  under  the  proposed  Management  Agreement  are  not  directly
comparable  to  those  of the  Funds'  current  agreements  with  their  service
providers, the effect of the proposed Management Agreement would have been a net
decrease in total expenses paid by all of the American  Century funds as a group
if the proposed  Management  Agreement had been in effect during 12 months ended
December 31, 1996.  However,  if the proposed  Management  Agreement had been in
effect during such period,  the total expense ratios of some Funds may have been
higher.  In no case is the proposed  management  fee of any Fund higher than the
maximum total expense ratio payable under the current Advisory Agreement.

If the proposed Management Agreement is approved,  the investment  management of
the  Funds  will not  change in any way.  Certain  employees  of ACIM  currently
provide investment  management services to the Funds through an arrangement with
BMC by  which  certain  employees  of BMC  also  provide  investment  management
services to funds  managed by ACIM.  If the  proposed  Management  Agreement  is
approved,  ACIM intends to consolidate the investment management capabilities of
the two advisors in ACIM. The same  investment  teams that currently  manage the
Funds will continue under the proposed Management Agreement with ACIM.

The table below depicts the effect of the proposed  Management  Agreement on the
Funds for the 12 month period ended December 31, 1996:

After Expense Reimbursements
- ------------------------------------------------------------------------------
                   Management Fee       Other Expenses      Total Expenses
                 Current  Proposed    Current  Proposed   Current   Proposed
- ------------------------------------------------------------------------------
ARM               0.26%     0.60%      0.32%     0.00%      0.58%     0.60%
- ------------------------------------------------------------------------------
GNMA              0.28%     0.60%      0.28%     0.00%      0.56%     0.60%
- ------------------------------------------------------------------------------
Govt Agency       0.05%     0.48%      0.28%     0.00%      0.33%     0.48%
Money Market
- ------------------------------------------------------------------------------
Intermediate      0.65%     0.51%      0.23%     0.01%      0.88%     0.52%
Treasury
- ------------------------------------------------------------------------------
Long Treasury     0.29%     0.51%      0.33%     0.01%      0.62%     0.52%
- ------------------------------------------------------------------------------
Short Treasury    0.23%     0.51%      0.40%     0.02%      0.63%     0.53%
- ------------------------------------------------------------------------------

Absent the effect of voluntary fee waivers and contractual expense  limitations,
the management  fee,  other  expenses and total expenses of the following  Funds
under the current Advisory Agreement would have been, respectively:  ARM, 0.26%,
0.32% and 0.58%;  Capital  Preservation II, 0.45%,  0.31% and 0.76%;  Government
Agency Money Market, 0.27%, 0.28% and 0.55%;  Intermediate-Term Treasury, 0.28%,
0.24% and 0.52%;  Long-Term  Treasury,  0.29%,  0.33% and 0.62%;  and Short-Term
Treasury, 0.28%, 0.40% and 0.68%.

FURTHER INFORMATION ABOUT PROPOSAL 3

Currently the Funds have fundamental investment  restrictions which vary between
the Funds  and those of other  funds in the  American  Century  family of mutual
funds. The Funds also have investment restrictions which reflect legal and other
requirements  which are no longer  applicable to the Funds.  In the interests of
efficiency in Fund management and  compliance,  we have analyzed the fundamental
investment  limitations  and  policies of the Funds in an effort to  formulate a
standard set of policies for all American  Century funds which  reflect  current
industry  practice and will allow the Funds to respond to changes in  regulatory
and industry  practice  without the expense and delay of a shareholder  vote. It
should be noted that the  adoption of the  proposed  changes is not  expected to
substantially affect the way the Funds are managed.

FURTHER INFORMATION ABOUT PROPOSAL 5

Changes in the markets in which the ARM Fund invests have made changes advisable
for the Fund to effectively pursue its investment objective. The amendment would
allow the Fund to broaden  its  investment  universe  to include  other types of
short-term  U.S.  government  securities.  This is, in part,  a response  to the
investment  manager's  opinion that the market for  adjustable  rate  government
securities  has not  developed  as fully as the  overall  market for  government
securities. If the amendment is approved, the Fund's name will change to "Benham
Short-Term Government Fund" on August 1, 1997.

CAPITAL PRESERVATION AND CAPITAL PRESERVATION II WILL VOTE ON THE FOLLOWING
PROPOSAL.

The Board of Directors of American Century Capital  Preservation  Fund, Inc. and
American Century Capital  Preservation Fund II, Inc. have unanimously  agreed to
enter into an Agreement  and Plan of  Reorganization  with the American  Century
Government  Income Trust. The Agreement  provides for the consolidation of these
Funds into a new portfolio of American Century  Government Income Trust which is
also  called  Capital  Preservation.  The new Fund has an  identical  investment
objective  and  substantially  identical  investment  policies  as the  existing
Capital Preservation Fund. The proposed consolidation of Funds will not decrease
the  dollar  value  of any  shareholder's  account.  The Fund  combinations  are
contingent upon shareholder  approval.  If the reorganization is approved, it is
expected to occur on September 2, 1997. A decision  regarding an  investment  in
these Funds should be made in light of the proposed consolidation.


                         P.O. Box 419200               [american century logo]
                         Kansas City, Missouri                American
                         64141-6200                          Century(sm)
                         1-800-345-2021 or 816-531-5575

SH-SPL-8737 9705

                        AMERICAN CENTURY INVESTMENT TRUST

                              PROSPECTUS SUPPLEMENT

                               Prime Money Market

                          SUPPLEMENT DATED MAY 16, 1997
          Prospectus dated September 3, 1996 (revised January 1, 1997)

SPECIAL MEETING OF SHAREHOLDERS

The Board of Trustees has requested  that the following  matters be submitted to
shareholders  of Prime  Money  Market  for  approval  at a  Special  Meeting  of
Shareholders to be held on July 30, 1997, to consider the following proposals:

1.   To  ratify  the  selection  of  Coopers &  Lybrand  LLP as the  independent
     auditors for the Fund for its current fiscal year;

2.   To vote on the approval of a Management  Agreement  with  American  Century
     Investment Management, Inc.;

3.   To approve the adoption of standardized  investment limitations by amending
     or  eliminating  certain  of  the  Fund's  current  fundamental  investment
     limitations; and

7.   To transact such other business which may come before the meeting, although
     we are not aware of any other items to be considered.

Proposals  4, 5 and 6 do not apply to the fund offered by this  Prospectus.  The
record date for the meeting is May 16, 1997. If you own shares of the Fund as of
the close of business on that date, you will be entitled to vote at the meeting.
Proxy materials  containing more information  about these proposals are expected
to be first sent to shareholders  on June 2, 1997. If approved by  shareholders,
the  Management  Agreement  in  Proposal  2 and  the  amendments  to the  Fund's
fundamental investment limitations would become effective on August 1, 1997.

FURTHER INFORMATION ABOUT PROPOSAL 2

The proposed Management  Agreement with American Century Investment  Management,
Inc.  ("ACIM")  is  substantially  different  from the Fund's  current  Advisory
Agreement with Benham Management  Corporation ("BMC"). The most important change
is a difference in the way  management  fees are  calculated  under the proposed
agreement. Rather than paying separate investment advisory fees, transfer agency
fees, and operating  costs,  it is proposed that the Fund pays one "unified" fee
which would cover not just the investment  advisory fee, but nearly all expenses
of the Fund.  The expenses  covered under the unified fee would include fees for
administrative services, transfer agency services,  custodian fees, printing and
mailing costs for shareholder materials and shareholder meeting expenses, all of
which are charged to the Fund under the current arrangements with BMC. While the
fees paid under the proposed Management Agreement are not directly comparable to
those of the Fund's current agreements with its service providers, the effect of
the  proposed  Management  Agreement  would  have been a net  decrease  in total
expenses  paid by all of the American  Century  funds as a group if the proposed
Management  Agreement  had been in effect  during 12 months  ended  December 31,
1996. However,  if the proposed  Management  Agreement had been in effect during
such period,  the total expense ratios of some funds may have been higher. In no
case is the proposed  management  fee of any fund higher than the maximum  total
expense ratio payable under the current Advisory Agreement.

If the proposed Management Agreement is approved,  the investment  management of
the Fund will not change in any way. Certain employees of ACIM currently provide
investment  management  services to the Fund through an arrangement  with BMC by
which certain employees of BMC also provide  investment  management  services to
funds managed by ACIM. If the proposed  Management  Agreement is approved,  ACIM
intends  to  consolidate  the  investment  management  capabilities  of the  two
advisors in ACIM. The same investment  teams that currently manage the Fund will
continue under the proposed Management Agreement with ACIM.

The table below depicts the effect of the proposed  Management  Agreement on the
Fund for the 12 month period ended December 31, 1996:

After Expense Reimbursements
- -----------------------------------------------------------------------
   Management Fee           Other Expenses          Total Expenses
  Current   Proposed      Current   Proposed     Current    Proposed
- -----------------------------------------------------------------------
   0.18%      0.49%        0.32%      0.01%        0.50%      0.50%
- -----------------------------------------------------------------------

Absent the effect of voluntary fee waivers and contractual expense  limitations,
the  management  fee,  other  expenses and total  expenses of Prime Money Market
under the current arrangements would have been,  respectively:  0.31%, 0.31% and
0.62%. Under the proposed Management Agreement they would have been 0.59%, 0.01%
and 0.60%.

FURTHER INFORMATION ABOUT PROPOSAL 3

Currently the Fund has fundamental  investment  restrictions which vary from the
funds  within the American  Century  family of mutual  funds.  The Fund also has
investment  restrictions which reflect legal and other requirements which are no
longer applicable to the Fund. In the interests of efficiency in Fund management
and  compliance,  we have analyzed the  fundamental  investment  limitations and
policies in an effort to  formulate a standard  set of policies for all American
Century funds which reflect current industry practice and will allow the Fund to
respond to changes in regulatory and industry  practice  without the expense and
delay of a  shareholder  vote.  It  should  be noted  that the  adoption  of the
proposed  changes is not  expected to  substantially  affect the way the Fund is
managed.


                         P.O. Box 419200               [american century logo]
                         Kansas City, Missouri               American
                         64141-6200                         Century(sm)
                         1-800-345-2021 or 816-531-5575

SH-SPL-8769 9705

                    AMERICAN CENTURY TARGET MATURITIES TRUST

                              PROSPECTUS SUPPLEMENT

                     Target 2000 o Target 2005 o Target 2010
                     Target 2015 o Target 2020 o Target 2025

                          SUPPLEMENT DATED MAY 16, 1997
                        Prospectus dated January 1, 1997

SPECIAL MEETING OF SHAREHOLDERS

The Board of Trustees has requested  that the following  matters be submitted to
shareholders  of the Funds for approval at a Special  Meeting of Shareholders to
be held on July 30, 1997, to consider the following proposals:

1.   To  ratify  the  selection  of  Coopers &  Lybrand  LLP as the  independent
     auditors for each Fund for its current fiscal year;

2.   To vote on the approval of a Management  Agreement  with  American  Century
     Investment Management, Inc.;

3.   To approve the adoption of standardized  investment limitations by amending
     or  eliminating  certain  of  the  Funds'  current  fundamental  investment
     limitations; and

7.   To transact such other business which may come before the meeting, although
     we are not aware of any other items to be considered.

Proposals 4, 5 and 6 do not apply to the funds offered by this  Prospectus.  The
record date for the meeting is May 16,  1997.  If you own shares of the Funds as
of the close of  business  on that  date,  you will be  entitled  to vote at the
meeting.  Proxy materials  containing more information about these proposals are
expected  to be first sent to  shareholders  on June 2,  1997.  If  approved  by
shareholders,  the Management  Agreement in Proposal 2 and the amendments to the
Funds'  fundamental  investment  limitations would become effective on August 1,
1997.

FURTHER INFORMATION ABOUT PROPOSAL 2

The proposed Management  Agreement with American Century Investment  Management,
Inc.  ("ACIM")  is  substantially  different  from the Funds'  current  Advisory
Agreement with Benham Management  Corporation ("BMC"). The most important change
is a difference in the way  management  fees are  calculated  under the proposed
agreement. Rather than paying separate investment advisory fees, transfer agency
fees, and operating  costs,  it is proposed that the Funds pay one "unified" fee
which would cover not just the investment  advisory fee, but nearly all expenses
of the Funds.  The expenses covered under the unified fee would include fees for
administrative services, transfer agency services,  custodian fees, printing and
mailing costs for shareholder materials and shareholder meeting expenses, all of
which are charged to the Funds under the current  arrangements  with BMC.  While
the  fees  paid  under  the  proposed  Management  Agreement  are  not  directly
comparable  to  those  of the  Funds'  current  agreements  with  their  service
providers, the effect of the proposed Management Agreement would have been a net
decrease in total expenses paid by all of the American  Century funds as a group
if the proposed  Management  Agreement had been in effect during 12 months ended
December 31, 1996.  However,  if the proposed  Management  Agreement had been in
effect during such period,  the total expense ratios of some Funds may have been
higher.  In no case is the proposed  management  fee of any Fund higher than the
maximum total expense ratio payable under the current Advisory Agreement.

If the proposed Management Agreement is approved,  the investment  management of
the  Funds  will not  change in any way.  Certain  employees  of ACIM  currently
provide investment  management services to the Funds through an arrangement with
BMC by  which  certain  employees  of BMC  also  provide  investment  management
services to funds  managed by ACIM.  If the  proposed  Management  Agreement  is
approved,  ACIM intends to consolidate the investment management capabilities of
the two advisors in ACIM. The same  investment  teams that currently  manage the
Funds will continue under the proposed Management Agreement with ACIM.

The table below depicts the effect of the proposed  Management  Agreement on the
Funds for the 12 month period ended December 31, 1996:

AFTER EXPENSE REIMBURSEMENTS
- ------------------------------------------------------------------------------
                 Management Fee       Other Expenses       Total Expenses
               Current  Proposed     Current  Proposed    Current  Proposed
- ------------------------------------------------------------------------------
Target 2000     0.25%     0.59%       0.31%     0.01%       0.56%    0.60%
Target 2005     0.26%     0.59%       0.33%     0.01%       0.59%    0.60%
Target 2010     0.25%     0.59%       0.40%     0.01%       0.65%    0.60%
Target 2015     0.24%     0.59%       0.40%     0.01%       0.64%    0.60%
Target 2020     0.30%     0.59%       0.30%     0.01%       0.60%    0.60%
Target 2025     0.24%     0.59%       0.42%     0.01%       0.66%    0.60%
- ------------------------------------------------------------------------------

Absent the effect of voluntary fee waivers and contractual expense  limitations,
the management  fee,  other  expenses and total expenses of the following  Funds
under the current Advisory Agreement would have been, respectively: Target 2010,
0.29%, 0.40% and 0.69%; Target 2015, 0.27%, 0.40% and 0.67%; Target 2020, 0.28%,
0.30% and 0.58%; and Target 2025, 0.43%, 0.42% and 0.85%.

FURTHER INFORMATION ABOUT PROPOSAL 3

Currently the Funds have fundamental investment  restrictions which vary between
the Funds  and those of other  funds in the  American  Century  family of mutual
funds. The Funds also have investment restrictions which reflect legal and other
requirements  which are no longer  applicable to the Funds.  In the interests of
efficiency in fund management and  compliance,  we have analyzed the fundamental
investment  limitations  and  policies of the Funds in an effort to  formulate a
standard set of policies for all American  Century funds which  reflect  current
industry  practice and will allow the Funds to respond to changes in  regulatory
and industry  practice  without the expense and delay of a shareholder  vote. It
should be noted that the  adoption of the  proposed  changes is not  expected to
substantially affect the way the Funds are managed.


                         P.O. Box 419200               [american century logo]
                         Kansas City, Missouri               American
                         64141-6200                         Century(sm)
                         1-800-345-2021 or 816-531-5575

SH-SPL-8771 9705

                        AMERICAN CENTURY MUNICIPAL TRUST

                              PROSPECTUS SUPPLEMENT

      Arizona Intermediate-Term Municipal o Florida Municipal Money Market
          Florida Intermediate-Term Municipal o Tax-Free Money Market
                Intermediate-Term Tax-Free o Long-Term Tax-Free

                          SUPPLEMENT DATED MAY 16, 1997
          Prospectus dated September 3, 1996 (revised January 1, 1997)

WEIGHTED AVERAGE MATURITY

On  page 14  under  the  heading  "Portfolio  Investment  Quality  and  Maturity
Guidelines--Money Market Funds", item (2) is hereby replaced with the following:

(2) Maintains a dollar-weighted average maturity of 90 days or less; and

SPECIAL MEETING OF SHAREHOLDERS

The Board of Trustees has requested  that the following  matters be submitted to
shareholders  of the Funds for approval at a Special  Meeting of Shareholders to
be held on July 30, 1997, to consider the following proposals:

1.   To  ratify  the  selection  of  Coopers &  Lybrand  LLP as the  independent
     auditors for each Fund for its current fiscal year;

2.   To vote on the approval of a Management  Agreement  with  American  Century
     Investment Management, Inc.;

3.   To approve the adoption of standardized  investment limitations by amending
     or  eliminating  certain  of  the  Funds'  current  fundamental  investment
     limitations; and

7.   To transact such other business which may come before the meeting, although
     we are not aware of any other items to be considered.

Proposals  4, 5 and 6 do not  apply to funds  offered  by this  Prospectus.  The
record date for the meeting is May 16,  1997.  If you own shares of the Funds as
of the close of  business  on that  date,  you will be  entitled  to vote at the
meeting.  Proxy materials  containing more information about these proposals are
expected  to be first sent to  shareholders  on June 2,  1997.  If  approved  by
shareholders,  the Management  Agreement in Proposal 2 and the amendments to the
Funds'  fundamental  investment  limitations would become effective on August 1,
1997.

FURTHER INFORMATION ABOUT PROPOSAL 2

The proposed Management  Agreement with American Century Investment  Management,
Inc.  ("ACIM")  is  substantially  different  from the Fund's  current  Advisory
Agreement with Benham Management  Corporation ("BMC"). The most important change
is a difference in the way  management  fees are  calculated  under the proposed
agreement. Rather than paying separate investment advisory fees, transfer agency
fees, and operating  costs,  it is proposed that the Funds pay one "unified" fee
which would cover not just the investment  advisory fee, but nearly all expenses
of the Funds.  The expenses covered under the unified fee would include fees for
administrative services, transfer agency services,  custodian fees, printing and
mailing costs for shareholder materials and shareholder meeting expenses, all of
which are charged to the Funds under the current  arrangements  with BMC.  While
the  fees  paid  under  the  proposed  Management  Agreement  are  not  directly
comparable  to  those  of the  Funds'  current  agreements  with  their  service
providers, the effect of the proposed Management Agreement would have been a net
decrease in total expenses paid by all of the American  Century funds as a group
if the proposed  Management  Agreement had been in effect during 12 months ended
December 31, 1996.  However,  if the proposed  Management  Agreement had been in
effect during such period,  the total expense ratios of some Funds may have been
higher.  In no case is the proposed  management  fee of any Fund higher than the
maximum total expense ratio payable under the current Advisory Agreement.

If the proposed Management Agreement is approved,  the investment  management of
the  Funds  will not  change in any way.  Certain  employees  of ACIM  currently
provide investment  management services to the Funds through an arrangement with
BMC by  which  certain  employees  of BMC  also  provide  investment  management
services to funds  managed by ACIM.  If the  proposed  Management  Agreement  is
approved,  ACIM intends to consolidate the investment management capabilities of
the two advisors in ACIM. The same  investment  teams that currently  manage the
Funds will continue under the proposed Management Agreement with ACIM.

The table below depicts the effect of the proposed  Management  Agreement on the
Funds for the 12 month period ended December 31, 1996:

AFTER EXPENSE REIMBURSEMENTS
- -----------------------------------------------------------------------------
                   Management Fee       Other Expenses     Total Expenses
                 Current  Proposed    Current  Proposed   Current  Proposed
- -----------------------------------------------------------------------------
AZ                0.16%     0.51%      0.35%     0.01%      0.51%    0.52%
Intermediate
Municipal
- -----------------------------------------------------------------------------
FL                0.04%     0.51%      0.47%     0.02%      0.51%    0.53%
Intermediate
Municipal
- -----------------------------------------------------------------------------
FL Money          0.48%     0.50%      0.19%     0.00%      0.67%    0.50%
Market
- -----------------------------------------------------------------------------
Intermediate      0.37%     0.51%      0.31%     0.01%      0.68%    0.52%
Tax-Free
- -----------------------------------------------------------------------------
Long              0.36%     0.51%      0.32%     0.01%      0.68%    0.52%
Tax-Free
- -----------------------------------------------------------------------------
Tax-Free          0.36%     0.50%      0.29%     0.00%      0.66%    0.50%
Money Market
- -----------------------------------------------------------------------------

Absent the effect of voluntary fee waivers and contractual expense  limitations,
the management  fee,  other  expenses and total expenses of the following  funds
under  the  current  Advisory  Agreement  would  have  been,  respectively:   AZ
Intermediate  Municipal,  0.44%,  0.36% and 0.80%;  FL  Intermediate  Municipal,
0.43%,  0.47% and 0.90%;  Intermediate  Tax-Free,  0.43%,  0.31% and 0.73%; Long
Tax-Free,  0.43%,  0.32% and 0.75%; and Tax-Free Money Market,  0.43%, 0.29% and
0.72%.

FURTHER INFORMATION ABOUT PROPOSAL 3

Currently the Funds have fundamental investment  restrictions which vary between
the Funds  and those of other  funds in the  American  Century  family of mutual
funds. The Funds also have investment restrictions which reflect legal and other
requirements  which are no longer  applicable to the Funds.  In the interests of
efficiency in fund management and  compliance,  we have analyzed the fundamental
investment  limitations  and  policies of the Funds in an effort to  formulate a
standard set of policies for all American  Century funds which  reflect  current
industry  practice and will allow the Funds to respond to changes in  regulatory
and industry  practice  without the expense and delay of a shareholder  vote. It
should be noted that the  adoption of the  proposed  changes is not  expected to
substantially affect the way the Funds are managed.


                         P.O. Box 419200               [american century logo]
                         Kansas City, Missouri               American
                         64141-6200                         Century(sm)
                         1-800-345-2021 or 816-531-5575

SH-SPL-8772 9705

            AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL FUNDS

                              PROSPECTUS SUPPLEMENT

      California Tax-Free Money Market o California Municipal Money Market
    California Limited-Term Tax-Free o California Intermediate-Term Tax-Free
        California Long-Term Tax-Free o California High-Yield Municipal
                           California Insured Tax-Free

                          SUPPLEMENT DATED MAY 16, 1997
                        Prospectus dated January 1, 1997

WEIGHTED AVERAGE MATURITY

On  page 13  under  the  heading  "Portfolio  Investment  Quality  and  Maturity
Guidelines--Money Market Funds," item (2) is hereby replaced with the following:

(2)  Maintains a dollar-weighted average maturity of 90 days or less; and

SPECIAL MEETING OF SHAREHOLDERS

The Board of Trustees has requested  that the following  matters be submitted to
shareholders  of the Funds for approval at a Special  Meeting of Shareholders to
be held on July 30, 1997, to consider the following proposals:

1.   To  ratify  the  selection  of  Coopers &  Lybrand  LLP as the  independent
     auditors for each Fund for its current fiscal year;

2.   To vote on the approval of a Management  Agreement  with  American  Century
     Investment Management, Inc.;

3.   To approve the adoption of standardized  investment limitations by amending
     or  eliminating  certain  of  the  Funds'  current  fundamental  investment
     limitations; and

7.   To transact such other business which may come before the meeting, although
     we are not aware of any other items to be considered.

Proposals 4, 5 and 6 do not apply to the funds offered by this  Prospectus.  The
record date for the meeting is May 16,  1997.  If you own shares of the Funds as
of the close of  business  on that  date,  you will be  entitled  to vote at the
meeting.  Proxy materials  containing more information about these proposals are
expected  to be first sent to  shareholders  on June 2,  1997.  If  approved  by
shareholders,  the Management  Agreement in Proposal 2 and the amendments to the
Funds'  fundamental  investment  limitations would become effective on August 1,
1997.

FURTHER INFORMATION ABOUT PROPOSAL 2

The proposed Management  Agreement with American Century Investment  Management,
Inc.  ("ACIM")  is  substantially  different  from the Funds'  current  Advisory
Agreement with Benham Management  Corporation ("BMC"). The most important change
is a difference in the way  management  fees are  calculated  under the proposed
agreement. Rather than paying separate investment advisory fees, transfer agency
fees, and operating  costs,  it is proposed that the Funds pay one "unified" fee
which would cover not just the investment  advisory fee, but nearly all expenses
of the Funds.  The expenses covered under the unified fee would include fees for
administrative services, transfer agency services,  custodian fees, printing and
mailing costs for shareholder materials and shareholder meeting expenses, all of
which are charged to the Funds under the current  arrangements  with BMC.  While
the  fees  paid  under  the  proposed  Management  Agreement  are  not  directly
comparable  to  those  of the  Funds'  current  agreements  with  their  service
providers, the effect of the proposed Management Agreement would have been a net
decrease in total expenses paid by all of the American  Century funds as a group
if the proposed  Management  Agreement had been in effect during 12 months ended
December 31, 1996.  However,  if the proposed  Management  Agreement had been in
effect during such period,  the total expense ratios of some funds may have been
higher.  In no case is the proposed  management  fee of any fund higher than the
maximum total expense ratio payable under the current Advisory Agreement.

If the proposed Management Agreement is approved,  the investment  management of
the  Funds  will not  change in any way.  Certain  employees  of ACIM  currently
provide investment  management services to the Funds through an arrangement with
BMC by  which  certain  employees  of BMC  also  provide  investment  management
services to funds  managed by ACIM.  If the  proposed  Management  Agreement  is
approved,  ACIM intends to consolidate the investment management capabilities of
the two advisors in ACIM. The same  investment  teams that currently  manage the
Funds will continue under the proposed Management Agreement with ACIM.

The table below depicts the effect of the proposed  Management  Agreement on the
Funds for the 12 month period ended December 31, 1996:

AFTER EXPENSE REIMBURSEMENTS
- -------------------------------------------------------------------------------
                 Management Fee         Other Expenses        Total Expenses
                Current  Proposed     Current  Proposed    Current   Proposed
- -------------------------------------------------------------------------------
Cal              0.31%     0.54%       0.20%     0.01%       0.51%     0.55%
High Yield
Municipal
- -------------------------------------------------------------------------------
Cal
Insured          0.29%     0.51%       0.20%     0.01%       0.49%     0.52%
Tax-Free
- -------------------------------------------------------------------------------
Cal
Intermediate     0.29%     0.51%       0.19%     0.01%       0.48%     0.52%
Tax-Free
- -------------------------------------------------------------------------------
Cal Limited      0.30%     0.51%       0.20%     0.01%       0.50%     0.52%
Tax-Free
- -------------------------------------------------------------------------------
Cal Long         0.29%     0.51%       0.19%     0.01%       0.48%     0.52%
Tax-Free
- -------------------------------------------------------------------------------
Cal
Municipal        0.29%     0.50%       0.23%     0.00%       0.52%     0.50%
Money Market
- -------------------------------------------------------------------------------
Cal
Tax-Free         0.29%     0.50%       0.20%     0.00%       0.49%     0.50%
Money Market
- -------------------------------------------------------------------------------

FURTHER INFORMATION ABOUT PROPOSAL 3

Currently the Funds have fundamental investment  restrictions which vary between
the Funds  and those of other  funds in the  American  Century  family of mutual
funds. The Funds also have investment restrictions which reflect legal and other
requirements  which are no longer  applicable to the Funds.  In the interests of
efficiency in fund management and  compliance,  we have analyzed the fundamental
investment  limitations  and  policies of the Funds in an effort to  formulate a
standard set of policies for all American  Century funds which  reflect  current
industry  practice and will allow the Funds to respond to changes in  regulatory
and industry  practice  without the expense and delay of a shareholder  vote. It
should be noted that the  adoption of the  proposed  changes is not  expected to
substantially affect the way the Funds are managed.


                         P.O. Box 419200               [american century logo]
                         Kansas City, Missouri               American
                         64141-6200                         Century(sm)
                         1-800-345-2021 or 816-531-5575

SH-SPL-8773 9705

                    AMERICAN CENTURY GOVERNMENT INCOME TRUST

                              PROSPECTUS SUPPLEMENT

                           Inflation-Adjusted Treasury

                          SUPPLEMENT DATED MAY 16, 1997
                       Prospectus dated February 10, 1997

SPECIAL MEETING OF SHAREHOLDERS

The Board of Trustees has requested  that the following  matters be submitted to
shareholders of Inflation-Adjusted Treasury for approval at a Special Meeting of
Shareholders to be held on July 30, 1997, to consider the following proposals:

1.   To  ratify  the  selection  of  Coopers &  Lybrand  LLP as the  independent
     auditors for the Fund for its current fiscal year;

2.   To vote on the approval of a Management  Agreement  with  American  Century
     Investment Management, Inc.;

3.   To approve the adoption of standardized  investment limitations by amending
     or  eliminating  certain  of  the  Fund's  current  fundamental  investment
     limitations; and

7.   To transact such other business which may come before the meeting, although
     we are not aware of any other items to be considered.

Proposals  4, 5 and 6 do not apply to the fund offered by this  Prospectus.  The
record date for the meeting is May 16, 1997. If you own shares of the Fund as of
the close of business on that date, you will be entitled to vote at the meeting.
Proxy materials  containing more information  about these proposals are expected
to be first sent to shareholders  on June 2, 1997. If approved by  shareholders,
the  Management  Agreement  in  Proposal  2 and  the  amendments  to the  Fund's
fundamental investment limitations would become effective on August 1, 1997.

FURTHER INFORMATION ABOUT PROPOSAL 2

The proposed Management  Agreement with American Century Investment  Management,
Inc.  ("ACIM")  is  substantially  different  from the Fund's  current  Advisory
Agreement with Benham Management  Corporation ("BMC"). The most important change
is a difference in the way  management  fees are  calculated  under the proposed
agreement. Rather than paying separate investment advisory fees, transfer agency
fees, and operating  costs,  it is proposed that the Fund pays one "unified" fee
which would cover not just the investment  advisory fee, but nearly all expenses
of the Fund.  The expenses  covered under the unified fee would include fees for
administrative services, transfer agency services,  custodian fees, printing and
mailing costs for shareholder materials and shareholder meeting expenses, all of
which are charged to the Fund under the current arrangements with BMC. While the
fees paid under the proposed Management Agreement are not directly comparable to
those of the Fund's current agreements with its service providers, the effect of
the  proposed  Management  Agreement  would  have been a net  decrease  in total
expenses  paid by all of the American  Century  funds as a group if the proposed
Management  Agreement  had been in effect  during 12 months  ended  December 31,
1996. However,  if the proposed  Management  Agreement had been in effect during
such period,  the total expense ratios of some funds may have been higher. In no
case is the proposed  management  fee of any fund higher than the maximum  total
expense ratio payable under the current Advisory Agreement.

If the proposed Management Agreement is approved,  the investment  management of
the Fund will not change in any way. Certain employees of ACIM currently provide
investment  management  services to the Fund through an arrangement  with BMC by
which certain employees of BMC also provide  investment  management  services to
funds managed by ACIM. If the proposed  Management  Agreement is approved,  ACIM
intends  to  consolidate  the  investment  management  capabilities  of the  two
advisors in ACIM. The same investment  teams that currently manage the Fund will
continue under the proposed Management Agreement with ACIM.

The table below depicts the effect of the proposed  Management  Agreement on the
Fund for the 12 month period ended December 31, 1996:

AFTER EXPENSE REIMBURSEMENTS
- -----------------------------------------------------------------------
   Management Fee           Other Expenses          Total Expenses
  Current   Proposed      Current   Proposed     Current    Proposed
- -----------------------------------------------------------------------
   0.00%      0.44%        0.50%      0.06%        0.50%      0.50%
- -----------------------------------------------------------------------

Absent the effect of voluntary fee waivers and contractual expense  limitations,
the management  fee,  other  expenses and total  expenses of  Inflation-Adjusted
Treasury under the current  Advisory  Agreement  would have been,  respectively:
0.28%, 2.09% and 2.37%. Under the proposed Management  Agreement they would have
been 0.51%, 0.07% and 0.58%.

FURTHER INFORMATION ABOUT PROPOSAL 3

Currently the Fund has fundamental  investment  restrictions which vary from the
funds  within the American  Century  family of mutual  funds.  The Fund also has
investment  restrictions which reflect legal and other requirements which are no
longer applicable to the Fund. In the interests of efficiency in Fund management
and  compliance,  we have analyzed the  fundamental  investment  limitations and
policies in an effort to  formulate a standard  set of policies for all American
Century funds which reflect current industry practice and will allow the Fund to
respond to changes in regulatory and industry  practice  without the expense and
delay of a  shareholder  vote.  It  should  be noted  that the  adoption  of the
proposed  changes is not  expected to  substantially  affect the way the Fund is
managed.

                         P.O. Box 419200               [american century logo]
                         Kansas City, Missouri                American
                         64141-6200                          Century(sm)
                         1-800-345-2021 or 816-531-5575

SH-SPL-8735 9705